The principles of lending revolve mainly around the concepts of safety, profitability and liquidity of advance. The criteria for lending get changed or modified from time to time in response to changing the state of the economy. Traditionally commercial banks in India used to provide security oriented finance to trade and industry. Big industrial houses and…
(This post explains the essence of Mortgage of properties and several forms of mortgage of immovable properties in India viz. Equitable Mortgage, Simple Mortgage, English mortgage, Mortgage by conditional Sale, Usufructuary Mortgage, and Anomalous Mortgage which are major types of mortgage systems currently existent in India.) The essence of Mortgage of properties: The transfer of…
Various types of guarantees are issued by the banks on behalf of their customers. Bank Guarantees (BG) is also known as Letter of Guarantees which can be broadly classified as (i) Financial Guarantees and (ii) Performance guarantees. Earnest money Deposit guarantee or Bid Bond Guarantee, Guarantee for Payment of Customs duty (specific or continuing), Advance…
The fund based finance in banks is in different forms. The facilities like Overdrafts,Cash Credit A/c, Bills Finance, Demand Loans, Term Loans etc, wherein immediate flow of funds available to borrowers, are called funds based facility. The non fund based facilities like issuance of letter of guarantee, letter of credit wherein banks get fee income…
The main concern of a bank is that security available to it should be good enough to fall back upon, in the event of adverse circumstances. The role of loan documentation in bank is to establish a legal relationship between the lender and the borrower when the dispute goes to the court of law. Thus,…
The charge creation means establishment of lender’s right to recover from the specified assets of the borrower, in case the recovery is difficult in normal course. The mode of bank charge on different securities depends upon nature of facility and type of security. Banks grant loan or extend CC facility against marking lien on term…
(This article gives the details like rights of secured creditors, Application of mind and care is required in the service of notice of SARFAESI DEMAND NOTICE, POSSESSION NOTICE & SALE NOTICE, Special care to be taken while taking possession of movable properties, method of sale of secured property by way of inviting tenders from the public or by…
With a view to match the global capital measures and capital standards prescribed by the Basel Committee on Banking Supervision (BCBS) framework, Reserve Bank of India introduced a risk asset ratio system for banks (including foreign banks) in India as a capital adequacy measure. The Basel code on capital adequacy stipulates how much capital a…