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Category Archives: Loans and advances

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Interest Equalisation Scheme for Export Credit

Foreign Exchange, Priority Sector AdvancesBy Surendra NaikNovember 29, 2018

The interest Equalisation Scheme (IES) for pre and post shipment rupee export credit is being implemented by Directorate (DGFT) through commercial banks.The scheme came into effect from 01.04.2015 and is for a period of 5 years.(The scheme was earlier called as ‘interest subvention scheme’  which was  existing for the period from August 2010 to 31.03.2015).…

Difference between Gross NPA and Net NPA explained

NPA managementBy Surendra NaikNovember 19, 2018

[This article elucidates the gains of NPA recovery and the difference between Gross NPA and Net NPA] An asset (loan and advances of the bank) becomes non-performing asset (NPA) when it ceases to generate income for the bank. If interest and or installment of principal amount of loan remain ‘overdue’* for a period of more…

What is Mortgage Backed Security (MBS)?

Loans and advancesBy Surendra NaikNovember 13, 2018

A mortgage-backed security (MBS) is a bond type security in which the collateral is provided by a pool of mortgages. For example, A borrows money from Bank ‘B’ mortgaging his house to Bank ‘B’. The Bank ‘B’ sells the mortgage to a company ‘C’ (which may be a government agency or investment bank or private…

What is the difference between ‘Loan waiver’ and Loan ‘Written- off’?

Loans and advancesBy Surendra NaikOctober 9, 2018

Let us take an example, one of your friends borrowed a sum of Rs.10000/-from you, but he was unable to repay because of his unusual financial difficulties. You have realized the situation of your friend that the repayment of loan is beyond his control; so you forgave the loan amount given to him and informed…

Definition of NPA and Asset Classifications

NPA managementBy Surendra NaikSeptember 28, 20187 Comments

(This article  explains the definition of non-performing assets (NPAs), classification of assets, Income recognition and provisioning requirement under prudential norms for all type of accounts including NPA norms for Agricultural loan  and specialy KCC) Internationally income from Non-Performing Assets (NPAs) is not recognized on accrual basis but is booked as income only when it is…

MSME loans up to 1 Crore within 59 minutes: FM

Bank News, Loans and advancesBy Surendra NaikSeptember 26, 20181 Comment

The government on Tuesday (September 25, 2018) announced 3 new major initiatives viz. Quick loan for MSME, Financial inclusion index, and Geographical mapping of banking services. The Finance Minister on Tuesday launched a new portal “Quick loan for MSME” which sets, for a new benchmark in loan processing and reduces the turnaround time from 20-25…

Monetary limit for filing cases in DRT rose up to Rs.20 lakh

Bank News, Loans and advances, NPA managementBy Surendra NaikSeptember 11, 2018

The notification  dated  September 6, 2018 of finance ministry, Government of India increased the monetary limit up to Rs.20 lakh for filing loan recovery application in the Debt Recovery Tribunals (DRT) by banks and financial institutions. It is reported that there are 38,376 cases pending in 39 debt recovery tribunals (DRTs) in the country, as…

Overdraft facility under PMJDY scheme now doubled

Bank News, Priority Sector AdvancesBy Surendra NaikSeptember 5, 2018

Mr. Arun Jaitley Finance Minister of India announced today (September 5, 2018) that the Government of India decided to make Pradhan Mantri Jan Dhan Yojana ( PMJDY)  an open-ended scheme, meaning that the scheme will continue indefinitely. The minister said that in view of the above scheme has been “runway success” the Government made it…

How to calculate legal due date of a bill payable after date/after sight?

Loans and advancesBy Surendra NaikAugust 8, 2018

The calculation of legal due date of a bills of exchange is dependent on the type of bills of exchange viz. Demand bill or term bill. As the name suggests, a demand bill or sight bill is payable on demand (on presentation)/at sight.  Whereas, a term bill (also known as ‘Usance Bill’) is payable after…

FAQs on education loan scheme

Loans and advancesBy Surendra NaikJune 24, 20182 Comments

Q: How the education loan granted to a minor student binds him to repay the loan, as he is not the executant of loan documents? What is the procedure to be followed in cases of minor students as borrowers? Reply: If the student is a minor, then the parent/guardian would execute loan documents on behalf…

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