Question

Why is the sudden influx of funds coming from other banks to liquidate an outstanding loan amount treated as an Early Warning Signal (EW

  • S of potential fraud or wrongdoing?
A It indicates that the borrower has secured a lower interest rate from a competitor bank.
B It may signal evergreen practices, accommodation entries, or diversion of funds borrowed elsewhere to conceal default/NPA status.
C It automatically cancels the legal enforceability of existing personal guarantees.
D It exempts the borrower from paying pre-payment penalty fees.
E It transfers the primary liability of the loan to the Reserve Bank of India.
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