Bills finance is short term and self- liquidating finance in nature. Demand Bills are purchased and Usance bills are discounted and the bills drawn under Letter of Credit (LC may be on sight draft or usance draft) are negotiated by the banks. The advantage of bills finance is that the seller of goods (borrower) gets immediate…
A Cash Credit (CC) account is a credit facility extended to a borrower in the form of running account (like a current account). Under this facility the borrower is permitted to continuously overdraw from his account up to a certain specified amount sanctioned by the bank. This type of funding is provided by banks on…
Overdraft means allowing the customer to draw cheques over and above credit balance in his account. Overdraft is usually allowed to Current Account Customers and in exceptional cases SB A/c holders are also allowed to overdraw their account. The high rate of interest is charged on the daily debit balance of overdraft account. There are…
In general terms loans and advances are synonyms for fund based credit facilities. However, they are differentiated by the banks on the basis of the purpose of a facility, tenure and repayment system and nature of prime security available to the credit facility etc. In banking parlance, the word ‘Loan’ refer to sum paid to…
Charge creation means the establishment of lender’s right over specified assets of the borrower in order to recover principle and interest in default from the borrower. The charge can be created against the same assets by more than one lender. The lender in whose favour charge is first created is called holder of ‘First Charge’.…
Most of the large borrowers are financed by multiple banks in a consortium or under Joint Lending Arrangement (JLA). Each bank that participates in the joint lending program takes the share of the certain percentage of total amount of finance under uniform terms and conditions including the rate of interest. The loan program of multiple banks will…
The Fixed charge is a charge on a defined property offered to the lender as security which should be clearly identifiable. During the existence of fixed charge, the borrower cannot change either the nature/identity of the property or otherwise dispose off the property. The securities commonly covered under fixed charge are a mortgage of immovable properties…
The Reserve Bank of India has recently launched National Mission for Capacity Building of Bankers for financing MSME sector (NAMCABS) for sensitizing and on imparting skills to bank officials. The main focus will be to up-skill 3 lakh banking personnel who have joined the system over the past six years and perhaps who have very…
Condonation of delay by Registrar of Companies: If a company is unable to file the registration of charge within a period of thirty days of the date of creation of the charge/modification of charge, it may prepare an application in the form CHG-10 supported by a declaration from the company signed by the company secretary…
Yes, lender bank or Financial Institution (FI) can also file application form for registration of charge with the Registrar of Companies. However, it is the responsibility of the company to register the each charge against its assets. If the borrower company fails to file form for registration of charge with ROC, the lender bank or…