The Government of India has since amended the prevention of money laundering rules 2005, keeping in mind the problems faced by person who change their name due to marriage or otherwise, in submitting ‘officially valid documents’. In rule 2 (1) clause (d) of PML third amendment, an explanation is inserted which reads as under. “Explanation:…
In view of providing old age income security to the Non-Resident Indians (NRI), the investment option for NRIs under FEMA, 1999 is now introduced. Under the scheme, notified by RBI on October 29, 2015 the Non-Resident Indians (NRIs) may subscribe to the NPS governed and administered by the Pension Fund Regulatory and Development Authority (PFRDA)…
Loan to value ratio means Loan amount disbursed by the bank proportionate to the property value.LTV ratio is calculated by dividing the amount borrowed by the appraised value of the property, expressed as a percentage. For example, if you buy a home appraised at Rs.1 Crore for its appraised value and make a Rs.20 lac…
Leasing Finance: A lease is a contract between the owner (lessor) and the user (lessee). There are various types of lease viz. operating lease, finance lease, etc. In terms of lease agreement, the lessor pays money to the supplier who in turn delivers the article to the lessee. The lessee (hirer of the article) makes…
Bills finance is short term and self- liquidating finance in nature. Demand Bills are purchased and Usance bills are discounted and the bills drawn under Letter of Credit (LC may be on sight draft or usance draft) are negotiated by the banks. The advantage of bills finance is that the seller of goods (borrower) gets immediate…
A Cash Credit (CC) account is a credit facility extended to a borrower in the form of running account (like a current account). Under this facility the borrower is permitted to continuously overdraw from his account up to a certain specified amount sanctioned by the bank. This type of funding is provided by banks on…
Overdraft means allowing the customer to draw cheques over and above credit balance in his account. Overdraft is usually allowed to Current Account Customers and in exceptional cases SB A/c holders are also allowed to overdraw their account. The high rate of interest is charged on the daily debit balance of overdraft account. There are…
The meaning of credit risk in the business of lending is easy enough to understand and explain. Credit risk arises when a bank borrower or counter- party fails to meet his obligations according to specified schedule in terms of predetermined agreement either due to genuine problems or willful default. Credit risk mitigation strategies in a…
The Fixed charge is a charge on a defined property offered to the lender as security which should be clearly identifiable. During the existence of fixed charge, the borrower cannot change either the nature/identity of the property or otherwise dispose off the property. The securities commonly covered under fixed charge are a mortgage of immovable properties…
The Reserve Bank of India has recently launched National Mission for Capacity Building of Bankers for financing MSME sector (NAMCABS) for sensitizing and on imparting skills to bank officials. The main focus will be to up-skill 3 lakh banking personnel who have joined the system over the past six years and perhaps who have very…