RBI has issued a circular, making it mandatory for banks to link all new floating rate retail loans like personal loan, housing loan, auto loans and floating rate loans to MSMEs to an external benchmark effective October 1, 2019. The circular dated September 4, 2019, permitted the banks to choose one of the several benchmarks…
The Reserve Bank of India (RBI) on Monday (26.08.2019) announced modalities for providing 2 per cent interest subsidy on short-term loans of up to Rs 2 lakh for farmers engaged in fisheries and animal husbandry through Kisan Credit Card (KCC). With this interest subvention, such farmers will get short-term loan of up to Rs 2…
A revised Model Educational Loan Scheme (2015) for Pursuing Higher Education in India & abroad was formulated by IBA and circulated to member banks for adaption and implementations vide IBA circular no. CIR/RB-ELS/6 dated 17th August 2015. The scheme provides broad guidelines to the banks for operationalizing the educational loan scheme and the implementing bank…
Term loan application received from educational institutions run by trusts, private management, requires appraisal of the project as well as appraisal of the management. First step of appraisal of project involves verification of whether the institution has the necessary approval from the Government agencies to run the school. Secondly, bank has to verify whether the…
The Cash Credit limit (known as working capital limit) is sanctioned by banks and financial institutions to industrial and trading establishments for their investment on various types of current assets used in the operating cycle. This facility offers the borrowers flexibility and comfort to withdraw funds from the bank as per their financial requirement from…
Reserve Bank of India on Friday (August 02, 2019) reminded all the commercial banks that they are not permitted to charge foreclosure charges / pre-payment penalties on home loans / all floating rate term loans sanctioned to individual borrowers. The above norm of prohibiting banks charging foreclosure charges/pre-payment penalties on floating rate loan is already…
As per existing External Commercial Borrowings policy norms, ECB proceeds could not be utilized by the borrowers for the following purposes. (i) Working capital purposes, (ii) General corporate purposes, (iii)Repayment of Rupee loans except when the ECB is availed from foreign equity holder for a minimum average maturity period of 5 years.(iv) On-lending for above…
Banks & Financial Institutions are generally free to determine the lending rates on loans and advances. The method to arrive at Lending Rate has changed drastically over the last decade. The Lending Rate like BPLR, Base Rate, and MCLR internal benchmark rates are used by individual banks to determine the interest rates on their credits.…
Securitization is the process in which certain types of assets are pooled so that they can be repackaged into interest-bearing securities. The interest and principal payments from the assets are passed through to the purchasers of the securities.Both Asset-backed securities (ABS) and mortgage-backed securities (MBS) are fixed-income financial securities collateralized (backed) by a pool of…
In our previous article we have explained about the Reverse Mortgage Loan (RML) Scheme, which offers regular income to senior citizen against pledging of their home with the lender. However, the RML product has not met with much success, because the scheme is not as supportive as expected to old age people. This is for…