[This writing provides insight of internal and external causes of rural indebtedness, challenges before banks and financial institution in rural areas, operation of formal and informal lending system in rural areas and discusses experts’ suggestion on facing high level of delinquency in lending to agriculture sector especially to small and marginal farmers, oral lessees, tenant…
When a borrower defaults to make repayment of loan interest and or principal for more than 90 days, the bank and financial institutions classify such loan accounts as non-performing assets (NPAs). The NPA account causes multiple damages to the bank. It ceases to generate income to the bank. It reduces the recycling of funds for…
Reserve Bank on Monday (June 8, 2015) released Strategic Debt Restructuring scheme which paves way to ensure more ‘skin in the game’ of promoters. While unveiling the new scheme, RBI has invited reference to its circular dated Feb 26, 2014 on “Framework for Revitalising Distressed Assets in the Economy – Guidelines on Joint Lenders’ Forum…
Students who belong to minority communities’ viz. Muslims, Christians, Sikhs, Buddhists, Jains, and Parsis are eligible for 100% interest subsidy on education loan. This assistance is available to students who have secured admission in foreign Universities to pursue higher studies (i.e Post-Graduate Diploma, Masters, M.Phil and Ph.D level) and whose overall family income is not…
The overdraft extended by banks up to Rupees Five thousand in Pradhan Mantri Jan-Dhan Yojana (PMJDY) accounts will be eligible for classification under priority sector advances. RBI circular dated 25.02.2015 notifies that the overdraft under PMJDY can be classified as priority sector advances (‘others’ category) as also weaker sections, provided the borrowers household annual income…
TReDS (Trade Receivables Discounting System) is an institutional setup for flow of finance to micro, small and medium enterprises (MSMEs) through multiple financiers at a competitive rate. The model outlined for TReDS in the paper, envisages its operation both in primary market segment as well as a secondary market segment as authorised payment system under…
Pissiculture is one of the allied activities classified under priority sector lending. Both term loan and cash credit facilities can be considered under the scheme. The facility is extended by the banks for cost of digging of pond or renovation of existing pond, stocking of spawn/fingerlings of fish, seeds, nets, application of lime cakes, fertilizers,…
In terms of Section 15 of the Credit Information Companies (Regulation) Act, 2005(CICRA), every credit institution shall become the member of at least one Credit Information Company. Normally to adhere the above regulation most of the Banks and Financial institutions become the member of CIBIL to seek CIR of borrower entity, all the partners, promoters,…
Commercial Banks are eligible to claim interest subvention of 2% p.a in respect of short term crop loans granted by them at 7% p.a to farmers in rural and semi-urban areas. The interest subvention will be allowed on the loan amount up to Rs.300000/- disbursed from the bank’s own source of funds. Interest subvention of…
The interest rate on advance levied by banks comprises ‘Base Rate’ of the respective bank and ‘Spread’ over the base rate decided by the banks Board. Though ‘Base Rate’ is constant for computation of interest on all advances, the ‘Spread’ over base rate varies on each category of advances depending upon tenure of loan, risk…