The diversion of funds means utilization of funds by the borrower in deviation of sanction terms of the lender, including any of the following occurrences.
Siphoning of funds:
The siphoning of funds refers to the occurrence of a situation that the unit has failed in meeting its payment/repayment commitments to the lender bank and also the funds borrowed from the bank was not utilized for the specific purpose for which the credit was released. In addition to utilizing the funds for the purpose unrelated to the operation of the unit, the borrower has no evidence to show that the financed funds are available in any other form of assets with the unit. The decision to reckon the case as siphoning of funds is required to be thoughtfully taken by the lender on the basis of objective facts and circumstances of the case.
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