A fee charged by a lender to a borrower for the unused/underutilized working capital limit and or undisbursed loan amount is known as commitment charge. A commitment fee is generally specified in the sanction endorsement of loans as a fixed percentage of fee payable by the borrower on the the undisbursed or unutilzed loan amount. Such…
Bridge loan is a temporary short term loan taken by a person or company for a period ranging from 2-3 weeks to 52 weeks. Such loans are known as bridge loan because the loan helps in bridging the gap between short-term cash requirements and long-term loans or permanent source of funding. Bridge loans are also…
The Reserve Bank of India on Monday (12.02.2018) scrapped all existing frameworks for revitalizing distressed assets such as Corporate Debt Restructuring (CDR) scheme , Flexible restructuring of long-term project loans(5/25) scheme, Strategic Debt Restructuring (SDR) scheme, Scheme for Sustainable Structuring of Stressed Assets(S4A). The Joint Lendes’ Foroum (JLF) as an institutional mechanism for resolution of…
The first item a bank which shows interest to takeover of loan from another lender is to verify the statement of existing Home loan account as well as statement of SB account maintained by the proposed borrower in the existing bank. Do remember that loan transfer is only possible when borrower is regular in loan…
We have been receiving lots of queries from our readers about Prime Minister’s Employment Generation Programme (PMEGP). Some of the frequently asked questions are answered here. Q: I’m in the business of readymade garments, hosiery goods, other articles of clothing and clothing accessories such as gloves, ties, braces etc. Whether I’m eligible for loan under…
Demand loan is a form of short term fiance provided by the banks to their customers. Unlike term loans where loans are granted on a fixed tenure and that shall be repaid in installments as per terms and conditions of the sanction, the demand loans work on the specific demand of the lender.In the other…
There are different types of bank borrowers. They may be classified as individuals, partnership firms, private limited, public limited companies, large corporate, public sector undertakings, multinational companies etc. The financial and non-financial credit facilities required to the above customers are many. We can divide them in to retail borrowers and corporate borrowers. Retail Borrowers: The…
(This posts elucidates different types of credit facilities extended by the banks) You may be aware that banks lend various types of credit facilities to their customers viz.Demand Loans, consumer loans, home loans, education loans, term lending, working capital finance, export credit, Bank Guarantee, Letter of credit, etc. Bank finance to their customers is not…
There are two basic types of loans granted by lenders namely Secured and Unsecured loans. The secured loans are those loans which are granted by the lenders taking security from the borrower against the loan. The security may be prime security or collateral security.Prime security is an asset acquired by a borrower under a loan…
At present, the Asset Reconstruction companies viz. the Securitization Companies / Reconstruction Companies (SC/RCs) are permitted to convert a portion of debt into shares of the borrower company as a measure of asset reconstruction subject to a condition that their shareholding does not exceed 26% of the post converted equity of the company under reconstruction.…