Questions and Answers
What does the term 'diversion of funds' refer to in the context of wilful default?
Which behavior qualifies a borrower as a 'wilful defaulter'?
What constitutes 'disposal of assets' in the context of a borrower being deemed a 'wilful defaulter'?
Which action indicates 'siphoning off funds' by a borrower?
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All of the following behaviors can classify a borrower as a 'wilful defaulter' EXCEPT:
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Study Notes
Criteria for Wilful Default
- Definition: A "wilful defaulter" is a borrower who fails to meet payment obligations while demonstrating specific behaviors.
- Capacity to Pay: Indicates that the borrower has the financial means to repay but intentionally decides not to fulfill these obligations.
- Diversion of Funds: Occurs when the borrower misuses or redirects funds acquired through a credit facility away from their intended purpose.
- Siphoning Off Funds: Involves the borrower extracting or withdrawing funds received through a credit facility for personal use rather than repayment.
- Disposal of Assets: The borrower may sell or transfer ownership of movable or immovable assets linked to the credit facility without informing the lender.
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Description
Test your knowledge on the criteria for identifying a wilful defaulter in lending scenarios. This quiz explores the behaviors indicating that a borrower with the capacity to pay may choose not to fulfill their obligations. Understand the nuances of fund diversion and siphoning in the context of credit facilities.
