Question

According to the Reserve Bank of India, in Small Scale Industrial Units, an industrial unit is considered sick_______________________________.

• A. if the borrowing accounts remain substandard for more than six months.
• B. if the unit has not functioned to due labour unrest
• C. if the unit has cash losses for one year
• D. when the ratio of current assets to current liabilities is more than 1 : 1

Answer 1

Answer: (A)

if the borrowing accounts remain substandard for more than six months.

An industrial unit is considered sick if:

Any of the borrowal accounts of the unit remains substandard for more than six months i.e. principal or interest, in respect of any of its borrowal accounts has remained overdue for a period exceeding one year.

The requirement of overdue period exceeding one year will remain unchanged even if the present period for classification of an account as sub-standard, is reduced in due course.