Appraisal: Loan application for construction, alteration, renovation of school building

Term loan application received from educational institutions run by trusts, private management, requires appraisal of the project as well as appraisal of the management. First step of appraisal of project involves verification of whether the institution has the necessary approval from the Government agencies to run the school. Secondly, bank has to verify whether the…

Banks are prohibited from levying foreclosure charges/ pre-payment penalties

Reserve Bank of India on Friday (August 02, 2019) reminded all the commercial banks that they are not permitted to charge foreclosure charges / pre-payment penalties on home loans / all floating rate term loans sanctioned to individual borrowers. The above norm of prohibiting banks charging foreclosure charges/pre-payment penalties on floating rate loan is already…

Asset-backed securities (ABS) and mortgage-backed securities (MBS) explained

Both Asset-backed securities (ABS) and mortgage-backed securities (MBS) are fixed income financial securities collateralized (backed) by a pool of assets such as Auto loans, Education Loans, Housing Loan, credit card debts, and receivables etc. This pool of assets is characteristically a group of small and illiquid assets which are unable to be sold individually. Basically,…

What is stock audit?

Inspection of assets charged to the lender at a regular interval is an important and desired activity of banks for monitoring and ensuring end-use of funds.  Besides carrying out unit inspections, banks study the borrowers’ books of accounts, conducting meaningful scrutiny of quarterly progress reports and also the no-lien accounts maintained with other banks at…