[The article explains the method of determining Lending rate of a bank under MCLR regime, method of calculating MCLR and the position of existing loans etc. Updated till 01.04.2016)]. The banks in India set their lending rates on loans and advances with reference to ‘Base Rate’ which is computed on the basis of the cost…
In simple terms, External Commercial Borrowings (ECB) means commercial borrowings availed (in the form of bank loans, trade credits, and securitized instruments) from external sources (from abroad) with a minimum average maturity of three years. The borrowings under ECB take place in two channels namely automatic route and approved routes. Eligible borrowers like Corporate Importers,…
The Reserve Bank of India has relaxed rules for rescheduling/restructuring of ECBs by permitting an increase in the total cost of borrowing offshore. In suppression of earlier provisions, this year the banking regulator has delegated powers to the designated AD category-I banks to allow changes/modification in the draw-down and repayment schedules notwithstanding the average maturity period or…
All scheduled and non-scheduled banks – public, private, foreign, cooperative, regional rural and local area banks whether or not included in the II Schedule to RBI act 1934 will observe public holiday on second and fourth Saturdays from September 01, 2015. The remaining Saturdays will be called as working Saturdays and will observe full working…
As a security and risk mitigation measure RBI vide its circular dated May 07, 2015 directed that with effect from September 01, 2015 all debit and credit, domestic and international cards issued by the banks shall be EMV Chip and PIN based cards. However in view of various banks expressing difficulties in meeting the above…
On a review of withdrawal through POS, it has been decided by RBI to enhance the cash withdrawal at POS from Rs.1000/- to Rs.2000/- per day in Tier III to VI centres with immediate effect. The cash withdrawal limit of Rs.1000/- per day through POS in Tier I & II centres remain unchanged. As per…
(A manufacturing unit needs to hold the stock of raw material, work-in-process, finished goods for a length of time in the workplace before dispatching the final products to the customers.This article explains how to calculate holding period for stocks and book debts collection) In simple term, operating cycle means the length of time required to…
(Nayak Committee norms for computation of working capital limits) The term working capital means sum of the funds invested at various current assets used in the operating cycle, by the industrial and trading establishments. Operating cycle means the length of time required to convert ‘Non-Cash current assets’, (like raw material (RM), work in process (WIP), finished goods (FG),…
(This post explains the definitions of working capital , Operating cycle and various methods of working capital appraisal viz. Tandon’s first method, Tandon’s second method,Turnover method or Nayak committee norms, Cash budget method, Chore committee norms, Maximum permissible bank finance, Minimum permissible bank finance and Important things to note in assessment of working capital…
The Government of India has reduced the criteria of Crop loss from 50% to 33% for providing input subsidy (compensation) to the farmers. Accordingly, Reserve Bank decided to allow SLBC/DLCC/Banks to take view on rescheduling of loans if the crop loss is 33% or more. Banks may allow maximum period of repayment of up to…