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…
The Indian Credit Rating agencies are governed by the Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999 (“the Regulations”). SEBI however recognizing the need for more stringent oversight introduced the SEBI (Credit Rating Agencies) Regulations, 2018, which replaced the earlier regulations. These updated regulations aimed to reinforce the credibility and accountability of…
A credit rating is an opinion of a particular credit agency regarding the ability and willingness of an entity (government, business, or individual) to fulfill its financial obligations in completeness and within the established due dates. A credit rating also signifies the likelihood a debtor will default. Credit ratings date back to the early 20th…
Introduction A third-party guarantee is a legal commitment made by an external party—the guarantor—to assume responsibility for a borrower’s debt or obligation in the event of default. This form of financial assurance adds an additional layer of security to loan transactions, enhancing the lender’s confidence and reducing credit risk. Commonly used in personal, commercial, and…
Introduction Straight-Through Processing (STP) in credit delivery refers to the end-to-end automation of the lending lifecycle—from loan application to disbursement—without the need for manual intervention. This digital transformation facilitates seamless data capture, rule-based processing, automatic routing, transaction confirmation, and final settlement, thereby enabling an efficient, accurate, and scalable credit delivery system. To ensure the successful…
IntroductionIn both business and personal finance, the need for funds often arises to meet various requirements such as working capital, large purchases, or expansion projects. Among the various funding options available, term loans remain one of the most commonly utilized instruments, offering structured financing with defined repayment schedules. Types of Term Loans Common Applications of…
In consortium lending system, two or more lenders join together to finance a single borrower. The lending banks formally join together, by way of an inter-se agreement to meet the credit needs of a borrower. Here, the sanction of limits to a borrower is completed with common appraisal, common documentation and monitoring the advance with…
A term loan appraisal is a specific type of project appraisal that focuses on evaluating a particular loan, whereas a project appraisal is a broader assessment of a project’s overall feasibility. Term Loan Appraisal Definition:Term loans can be classified as either short-term or long-term, with repayment periods typically ranging from one to twenty years. The…
Any credit facility provided to a borrower company engaged in an infrastructure facility is known as ‘infrastructure lending’. The activities such as developing, or operating, and maintaining, or developing, operating, and maintaining any infrastructure facility of the following sector are called infrastructure projects. Public sector units registered under the Companies Act may be provided infrastructure…
Deferred Payment Guarantee is a guarantee for a payment usually on installments which has been deferred or postponed. Banks issue DPG in the cases of purchase of capital goods/machinery where the seller offers credit to the buyer and buyer’s bank guarantees the due payments to the seller. Here the seller draws drafts of different maturities…
