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Category Archives: Loans and advances

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How bank managers conduct unit inspection?

Loans and advancesBy Surendra NaikMay 11, 20204 Comments

With the economy hit by the COVID-19 crisis, banks are now preparing for a possible spike in bad loans. According to experts, bad loans (NPAs) of the banks are expected to rise to 11-11.5% of the total advances by March 2021. In this context of default risk by the COVID induced lockdown continues to exacerbate…

Kisan Credit Card (KCC) scheme for farmers,animal-husbandary and fisheries

Priority Sector AdvancesBy Surendra NaikMay 7, 2020

Kisan Credit Accounts are normally short term crop loans emerged as an innovative credit delivery mechanism to meet the production credit requirements of the farmers in a timely and hassle-free manner. The repayment period may be fixed as per the anticipated harvesting and marketing period for the crops for which a loan has been granted. …

Bad Loans (NPA) in Banks: Why do we have this state of affairs?

NPA managementBy Surendra NaikMay 4, 2020

The BSR-1 released by RBI at every quarter shows that small borrowal accounts the credit limit up to ₹ 0.2 million constitute only a share of 7.3 percent in total outstanding credit of the banks. From the above stats, we may infer that it is the large borrowers who have been heavily damaging banking industries…

Now you get ‘Electronic Cards’ for your Overdraft Accounts

Retail loansBy Surendra NaikApril 24, 2020

On Thursday (April 23, 2020) Reserve Bank of India permitted all scheduled commercial banks to issue electronic cards to natural persons having Overdraft Accounts.  The cards will be issued to accounts in the nature of personal loan without any specific end-use restrictions.  Hitherto, banks have been permitted to issue debit cards to customers having Saving…

Interest subvention on short term crop loan: RBI extends the time limit

Priority Sector AdvancesBy Surendra NaikApril 21, 2020

RBI today (April 21, 2020) announced that “to ensure that farmers do not have to pay penal interest and at the same time continue getting the benefits of interest subvention scheme, Government has decided to continue the availability of 2% IS and 3% PRI to farmers for the extended period of repayment up to 31.05.2020…

Asset Classification and Provisioning under COVID19 Regulatory Package

NPA managementBy Surendra NaikApril 19, 20202 Comments

On Friday (April 17), the Reserve Bank of India announced freezing of classification of non-performing assets for three months starting March 1, in view of the widespread impact of the Covid-19 pandemic and the subsequent nationwide lockdown.  “In respect of all accounts for which lending institutions decide to grant moratorium and which were standard as…

COVID19 Regulatory Package: RBI extends Resolution Timelines on stressed assets under the Prudential Framework

NPA managementBy Surendra NaikApril 18, 2020

In terms of the existing Prudential Framework, lenders are required to implement a resolution plan in respect of entities in default within 180 days from the end of Review Period of 30 days. As announced in the RBI Governor’s statement on Friday (17.04.2020), on a review aimed at alleviating the lingering impact of Covid19 on…

FAQs on rescheduling of Term Loans and Working Capital payments

Loans and advancesBy Surendra NaikMarch 29, 2020

On March 27, 2020 (Friday), the Monetary Policy Committee (MPC) of RBI announced certain regulatory measures to mitigate the burden of debt servicing brought about by disruptions on account of COVID-19 pandemic and to ensure the continuity of viable businesses. With regard to rescheduling of Term Loans, Working Capital payments, and NPA classification certain common…

Lending to NBFCs for on-lending to be classified as Priority sector up to a cap

Loans and advancesBy Surendra NaikMarch 23, 2020

Today (Monday, March 23, 2020), RBI advised commercial banks that their loans to registered NBFCs (other than MFIs) for on-lending to be eligible for classification as priority sector is extended for FY 2020-21. The circular further said that existing loans disbursed under the on-lending model will continue to be classified under the Priority Sector till…

Single borrower/ group exposure limit and priority sector lending target of banks explained

Loans and advancesBy Surendra NaikMarch 15, 2020

Update: The Reserve Bank of India (RBI) on Friday (May 22, 2020) raised the group exposure limit of banks to 30% from 25% for a temporary period till 30 June 2021. The limit will be restored to 25% after the deadline unless the RBI decides otherwise. As a prudential measure, aimed at better risk management…

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