Pursuant to the announcement in the interim budget 2019, the Reserve Bank of India carried out circular asking banks to extend the facilities of Kisan Credit Card (KCC) to Animal Husbandry farmers and Fisheries to help them meet their working capital requirements. According to RBI circular FIDD.CO.FSD.BC.12/05.05.010/2018-19 dated Feb 4, 2019, the new KCC facility…
The syndication of loans is an internationally practiced model for financing credit requirements of a borrower in lieu of consortium advance. Apparently, the syndication of credit line is similar to consortium finance but slightly different in certain aspects. First of all, there is no restriction with regard to quantum of credit involved for credit syndication.…
In consortium lending system, two or more lenders join together to finance a single borrower. The lending banks formally join together, by way of an inter-se agreement to meet the credit needs of a borrower. Here, the sanction of limits to a borrower is completed with common appraisal, common documentation and monitoring the advance with…
The multiple banking arrangements are similar to a consortium advance and loan syndication, wherein several lenders finance a single borrower. However, there are many structural and operational differences among them. In multiple banking arrangements, a borrower borrows simultaneously from more than one bank independent of each other. Each lending bank takes separate loan documents and…
Updated on September 4, 2020: RBI revised priority credit lending guidelines. In the new guidelines, Bank finance to start-ups (up to ₹50 crores); loans to farmers for installation of solar power plants for solarisation of grid-connected agriculture pumps, and loans for setting up Compressed Bio-Gas (CBG) plants have been included as fresh categories eligible for…
The draft on guidelines on Loan System for Delivery of Bank Credit released by RBI on December 6, 2018 states that the new guidelines on ‘Loan System for Delivery of Bank Credit’ for borrowers having aggregate fund-based working capital limit of ₹1500 million and above from the banking system will be effective from April 1,…
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).…
[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…
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…
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…