Question

What is the primary conceptual distinction between Diversion of Funds and Siphoning of Funds as categorized by RBI guidelines?

Q: Answer-What is the primary conceptual distinction between Diversion of Funds and Siphoning of Funds as cate...

o Diversion Focuses on the misapplication of purpose e.g., sanction was for buying raw material, but used for buying machinery or transferred to sister concerns. o Siphoning Focuses on permanent lossextraction removing money out of the business structure altogether through bogus transactions, shell companies, or personal accounts.

A Diversion involves criminal intent to defraud, whereas Siphoning is always a minor accounting error.

B Diversion involves deploying funds for non-sanctioned business/operational activities, whereas Siphoning involves permanently extracting funds from the business for unauthorized personal or non-business gains.

C Diversion applies exclusively to individual borrowers, while Siphoning applies only to public sector banks.

D Diversion is monitored by CERSAI, whereas Siphoning is governed by SEBI.

E Diversion requires immediate SARFAESI action, while Siphoning cannot be prosecuted under law.

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What is the primary conceptual distinction between Diversion of Funds and Siphoning of Funds as categorized by RBI guidelines?

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