IntroductionCredit control is a structured approach employed by businesses and financial institutions to manage credit risk and ensure that customers meet their payment obligations in a timely manner. It plays a pivotal role in sustaining financial stability and optimizing cash flow. What is Credit Control?Credit control refers to the procedures used by businesses to determine…
[The identification of a ‘wilful defaulter’ is done on the basis of eventual conclusion that the default is intentional, deliberate and calculated. The process of categorizations of the ‘wilful defaulter’ is required to be done thoughtfully on the basis of track record of the borrower/guarantor and not on the basis of an isolated transaction or incident.…
Ratings are based on a comprehensive evaluation of the strengths and weaknesses of the company fundamentals including financials along with an in-depth study of the industry and macroeconomic, regulatory, and political environment. Some factors that may be considered for credit rating are the Issuer Company’s operational efficiency, level of technological development, financials, competence and effectiveness…
Credit rating agencies provide an objective and unbiased evaluation of the credit risk of diverse entities, including individuals, groups, businesses, non-profit organisations, governments, and even nations. They provide transparency and consistency in assessing institutions/borrowers’ creditworthiness, making it easier for lenders and investors to make informed decisions. The main characteristics of credit rating are that these…
(This post narrates the background of introducing the ‘bankruptcy law’ and in what way the new law is likely flags the problem loans and protects the interest of lenders.) The ‘Insolvency and Bankruptcy Code, 2016’ bill will be shortly enacted as an ‘ACT’ which will be dealing with resolutions of insolvency and bankruptcy. The fundamental…
Credit Rating is an opinion provided by a Credit Rating Agency regarding the ability and willingness of an entity (Government, corporate, municipality, Bank lending, etc. to fulfill its financial obligations in completeness and within the established due dates. Such ratings are based on a comprehensive analysis of various factors, including the issuer’s financial health, debt…
Article:The Reserve Bank of India (RBI) has issued a directive prohibiting banks and other regulated entities from levying pre-payment penalties on floating rate loans availed by individual borrowers for non-business purposes. The new framework, titled Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025, will come into effect from January 1, 2026. This move…
IntroductionCredit underwriting is a critical process through which lenders evaluate a borrower’s creditworthiness and ability to repay a loan. With the advent of technology, traditional manual underwriting methods are increasingly being replaced by automated solutions. One such innovation is Straight-Through Processing (STP), which enables end-to-end automation of financial transactions, thereby improving speed, accuracy, and customer…
Introduction In the evolving landscape of credit delivery, the mechanisms of consortium lending, multiple banking arrangements, and syndicated loans serve as important frameworks for financing large borrowers. These arrangements enable sharing of credit exposure among financial institutions and contribute to risk mitigation. However, they also necessitate strong inter-bank coordination and transparency to function effectively and…
Meaning of Loan Disbursement Loan disbursement refers to the actual release of funds by the lender following the approval of a loan application. It marks a crucial step in enabling the borrower to utilize the loan for the intended purposes—such as purchasing assets or property, funding education, undertaking home renovations, covering travel expenses, or financing…
