Banking & Finance MCQs - 2026-06-20

The framework aims to prevent evergreening of stressed assets by mandating strict timelines and resolution processes, not to incentivize it. Evergreening is a practice where banks try to hide the true status of a non-performing asset by granting additional loans to the defaulting borrower.

The framework mandates that lenders must undertake a review of the borrower account within 30 days of default. This 30-day period is known as the 'Review Period'.

The new framework aims to provide a comprehensive and harmonized approach for the early identification, reporting, and resolution of stressed assets, replacing previous disparate guidelines.

The framework applies to Regulated Entities (REs) of the RBI (banks and NBFCs) and also covers the Lending Service Providers (LSPs) engaged by them, making both accountable.

A key provision of the enhanced framework is that the loan disbursement and repayment must be executed directly between the Regulated Entity (RE) and the borrower's bank account, without any pass-through to the Lending Service Provider (LSP).

The primary objective of RBI's enhanced framework is to protect consumers from predatory lending practices, ensure transparency, and promote responsible conduct in the digital lending ecosystem.