2017 GS Paper I, all questions

UPSC Prelims 2017 · GS Paper I

Question 64: Economy and Social Development

Which of the following statements best describes the term ‘Scheme for Sustainable Structuring of Stressed Assets (S4A)’, recently seen in the news ?

aIt is a procedure for considering ecological costs of developmental schemes formulated by the Government.
bIt is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties.
cIt is a disinvestment plan of the Government regarding Central Public Sector Undertakings.
dIt is an important provision in ‘The Insolvency and Bankruptcy Code’ recently implemented by the Government.

AnswerUPSC’s answer is (b).

The Scheme for Sustainable Structuring of Stressed Assets (S4A), announced by the RBI in June 2016, let banks restructure the debt of large companies whose projects were operationally viable but over-leveraged. The unsustainable part of the debt is converted into equity or redeemable preference shares, and banks have to cut the debt to a level the firm can service. It is a banking scheme, not an environmental process, a disinvestment plan or a provision of the Insolvency and Bankruptcy Code.

Why each option is right or wrong
  • (a) Wrong: it has nothing to do with ecological costs of projects.
  • (b) Right: it is an RBI scheme to rework the finances of big troubled corporates.
  • (c) Wrong: it is not a disinvestment plan for public sector undertakings.
  • (d) Wrong: it is an RBI scheme, not a provision of the Insolvency and Bankruptcy Code.

Worth knowing: The RBI withdrew S4A in February 2018, replacing its older restructuring schemes with a harmonised framework; the answer is as it stood in 2017.

Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 2017, General Studies Paper I, Series A. The paper on upsc.gov.in.