Banking · Credit Management / NPA Accounts
An infrastructure company has a large term loan under the Hybrid Annuity Model. An annuity payment from NHAI is delayed, leaving insufficient funds in the Escrow account on the due date. The company maintains a Debt Service Reserve Account (DSRA) equivalent to two quarters of debt servicing. What is the correct operational procedure for the credit officer?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Report the account as SMA-1 on the due date and freeze all operations in the DSRA.
- 2Restructure the loan installment immediately by shifting the due date to avoid SMA classification.
- 3Utilize the funds from the DSRA to meet the installment and interest dues to keep the account standard, and then ensure it is replenished when the annuity arrives.✓
- 4Wait for the NHAI payment for 15 days without taking action as it is a government entity.
Correct answer
Utilize the funds from the DSRA to meet the installment and interest dues to keep the account standard, and then ensure it is replenished when the annuity arrives.
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