It is inevitable for banks to ascertain that bank could easily take possession of such security based on documents obtained from the borrower with very little expenses and dispose-off the same to recover its dues when the account goes bad. Banks obtain different types of documents from the borrower based on the type of security…
A legal document is a written agreement between two or more parties that can be relied upon in court. They can be used to establish contractual relationships, grant rights, or provide evidence for legal obligations. It is inevitable for banks to ascertain that they could easily take possession of such security based on documents obtained…
Banks may lend up to 80 to 85 percent of the face value of NSCs or KVPs in the form of a loan or overdraft facility. Process To get a loan, the NSC or KVP holder must pledge the certificates to the lender. On application, the concerned post office where the certificates were purchased will…
Banks offer loans against securities for customers’ short-term funding needs. Loans against shares, government bonds, insurance policies, NSCs, and other investments come under this category. For loans against shares, debenture banks are required to strictly observe regulatory restrictions on ‘Exposure Norms’ as explained below. Restrictions on Holding Shares in Companies In terms of Section 19(2)…
The concept of compound interest or compounding interest is the interest is added back to the principal sum while charging interest for the next period so that interest is earned on that added interest. That is as a result of reinvesting interest, compound Interest (CI) / Cumulative Interest are calculated both on the principal amount…
A loan against a term deposit, also known as a loan against a fixed deposit (FD), is a secured loan that allows bank depositors to borrow against the security of the deposits. Loans or cash credit limits can be availed against Fixed Deposits, or Cash Certificate and Recurring deposits. Loans can be availed against domestic…
Book debts are typically made up of sums owed for goods or services supplied or work carried out on credit. Any sum due under a loan may also be treated as a book debt. Book debts in the balance sheet are classified as current assets (Trade Receivables). However, it is important to know that all…
A loan against insurance policies is available to Life Insurance policyholders on the surrender value of the policy which is usually acquired after paying premiums for at least three years. Surrender value (cash value) in an insurance policy refers to the amount of money an insurance company pays to the policyholder if they decide to…
A document of title to goods is a formal document that proves ownership of goods or property. A document of title to goods is used in the ordinary course of business to prove possession or control of goods. Section 2(4) of the Sale of Goods Act defines a document of title to goods as “A…
Banks and non-banking financial institutions lend for purchase or construct a new home. For a smooth home loan (also known as housing loan in some banks) process, the prospective borrower must submit a duly filled application along with important documents such as identity proof, address proof, income proof, etc. If there is a co-borrower they…