What is securitisation?

The ‘Securitisation’ is a two-stage process in which pool of assets are structured or packaged and sold by an originator(Banks and financial institutions)  to a bankruptcy remote* special purpose vehicle (SPV). In the first stage there is sale of single asset or pooling and sale of pool of assets to a SPV in return for…

Collateral free agricultural loan limit enhanced up to 1.60 lakh

Currently the banks are mandated to extend collateral-free agriculture loans up to Rs.1 lakh. This limit of Rs.1 lakh was fixed in the year 2010.In view of overall inflation and rise in agriculture input cost since 2010, Reserve Bank of India vide its circular RBI/2018-19/118 FIDD.CO.FSD.BC.No.13/05.05.010/2018-19 dated February 7, 2019 advised all the scheduled commercial…

Kisan Credit Card (KCC) Scheme for Animal Husbandry and Fisheries

Pursuant to the announcement in the interim budget 2019, the Reserve Bank of India carried out circular asking banks to extend the facilities of Kisan Credit Card (KCC) to Animal Husbandry farmers and Fisheries to help them meet their working capital requirements. According to RBI circular FIDD.CO.FSD.BC.12/05.05.010/2018-19 dated Feb 4, 2019, the new KCC facility…

What is a syndication of credit line?

The syndication of loans is an internationally practiced model for financing credit requirements of a borrower in lieu of consortium advance. Apparently, the syndication of credit line is similar to consortium finance but slightly different in certain aspects. First of all, there is no restriction with regard to quantum of credit involved for credit syndication.…

What is a consortium lending?

In consortium lending system, two or more lenders join together to finance a single borrower. The lending banks formally join together, by way of an inter-se agreement to meet the credit needs of a borrower. Here, the sanction of limits to a borrower is completed with common appraisal, common documentation and monitoring the advance with…

What is a multiple banking arrangement?

The multiple banking arrangements are similar to a consortium advance and loan syndication, wherein several lenders finance a single borrower. However, there are many structural and operational differences among them. In multiple banking arrangements, a borrower borrows simultaneously from more than one bank independent of each other. Each lending bank takes separate loan documents and…

What are the latest guidelines on Priority sector lending and targets?

Updated on September 4, 2020: RBI revised priority credit lending guidelines. In the new guidelines, Bank finance to start-ups (up to ₹50 crores); loans to farmers for installation of solar power plants for solarisation of grid-connected agriculture pumps, and loans for setting up Compressed Bio-Gas (CBG) plants have been included as fresh categories eligible for…