Risk management and capital Management are two sides of the same coin. Both of these indicate that the sufficient capital contribution in the business provides stable resources to help the owner to absorb any losses arising from the risks in a business. The objective of Capital management as well as its risk appetite is to…
In the financial market many investors prefer for investments in bond portfolio which can provide them the decent yields with a lower level of volatility than equities. Further, the bonds issued by corporates offer with a higher income than the money market funds or bank instruments. However, the volatility in interest rate in the financial…
In simple words the bank capital is the difference between a bank’s assets and liabilities. However, Banking regulators all over the word have their own definition of regulatory capital of banks in closer alignment with Basel Framework. The core banking regulatory framework across the banking sector consists of international standards enacted by the Basel Committee…
Scenario Analysis is a financial process through which investors & business managers can determine the amount of risk they are taking before making the investment or starting a new project. It is a way of structured thinking in which the earnings or value impact is computed for different interest rate scenario that may seem relatively…
Delivery versus payment (DvP) is the mode of settlement system that stipulates that cash payment must be made prior to or simultaneously with the delivery of the security. The system ensures that unless the funds are paid, the securities are not delivered and vice versa and it completely eliminates the settlement risk in transactions. The…
Corporation, Allahabad Bank and Dhana Lkshmi Banks are taken out of Prompt Corrective Action (PCA) Framework. Pursuant to Government of India has infused fresh capital on February 21, 2019 into various banks including Allahabad Bank and Corporation Bank. Allahabad resevied Rs.6896 crre and Corporation Bank had received Rs.9086 crore. The infusion of fresh capital has…
In simple words, Commercial Real Estate (CRE) can be described as any property which is used for non-residential purposes such as housing buildings, hotels, restaurants, gymnasiums, hospitals, condominiums, shopping malls, office blocks, theatres, amusement parks, cold storages, warehouses, educational institutions, industrial parks etc. In terms of Basel II definition if the repayment primarily depends on…
A foreign currency convertible bond (FCCB) is a special kind of convertible bond issued in a currency different than the issuer’s domestic currency. Multinational companies and governments routinely issue bonds denominated in various currencies to benefit from lower borrowing costs, and also match their currency inflows and outflows. FCCB gives investors an opportunity to convert…
In securitization, credit enhancement refers to a risk-reduction technique that increases the credit profile of structured financial products or transactions. Credit enhancement may be divided into First Loss facility and Second Loss facility. First loss facility represents the first level of financial support to a special purpose vehicle (SPV) as part of the process in…
The ‘Securitisation’ is a two-stage process in which pool of assets are structured or packaged and sold by an originator(Banks and financial institutions) to a bankruptcy remote* special purpose vehicle (SPV). In the first stage there is sale of single asset or pooling and sale of pool of assets to a SPV in return for…