In terms of Section 15 of the Credit Information Companies (Regulation) Act, 2005(CICRA), every credit institution shall become a member of at least one Credit Information Company. Normally to adhere to the above regulation most of the Banks and Financial institutions become members of CIBIL to seek CIR of the borrower entity, all the partners,…
The main concern of a bank is that security available to it should be good enough to fall back upon, in the event of adverse circumstances. The role of loan documentation in the bank is to establish a legal relationship between the lender and the borrower when the dispute goes to a court of law.…
The article explains various types of charges created by banks to establish their rights over the specified security when the borrower defaults. The charge creation means establishing the lender’s right to recover from the specified assets of the borrower, in case the recovery is difficult in the normal course. The mode of bank charge on…
Interest rate risk is the potential for investment losses that can be prompted by a move upward in the prevailing rates for new debt instruments. Interest rate changes can affect many investments, but it impacts the value of bonds and other fixed-income securities most directly. As interest rates rise bond prices fall, and vice versa.…
The interest rate on advance levied by banks comprises the BPLR, Base rate, MCLR rate, or external benchmarks like Repo-linked lending of the respective bank, and the ‘Spread’ over the cost of lending is decided by the bank’s Board. The determination of ‘Spread’ varies on each category of advance depending upon the tenure of the…
RBI on Monday, in its notification, observed that consequent to the implementation of Ind AS, some Asset Reconstruction Companies (ARCs) have been recognising management fees even though the said fee had not been realised for more than 180 days. In view of the above the notification said that ARCs preparing their financial statements as per…
(This article gives the details like rights of secured creditors, Application of mind and care is required in the service of notice of SARFAESI DEMAND NOTICE, POSSESSION NOTICE & SALE NOTICE, Special care to be taken while taking possession of movable properties, method of sale of secured property by way of inviting tenders from the public or by…
In the case of running accounts like current accounts or cash credit accounts, normally there is no specific appropriation of funds to exact debit. In such cases, it is the first item on the debit side that is discharged or reduced by the first item on the credit side. This principle was originally formulated in…
The banker’s right to combine different accounts of a person against the debt it holds against the same person is called the right to set off. The right of set-off is available to the bank only when the money owed to the bank is a certain sum, which should be due at the time of…
In this article, we’ll explain what credit migration risk and credit metrics are, and how to incorporate them into the financial analysis of companies by lenders and investors. Credit Migration risks: Credit ratings for public companies or Governments are similar to credit scores for individuals. These ratings for the long-term and short-term are provided by…