What is Projected Net Working Capital?

Projected net working capital (NWC) is the difference between a company’s projected current assets and current liabilities. (i) Projected current assets are the aggregate current assets of a seller, excluding excluded assets, projected as of the Closing Date, and expressly including the value of the inventory as determined consistent with past practice, (ii) Projected current…

Cardinal principles of lending

Three cardinal principles of bank lending have been followed by commercial banks in the employment of their funds. These are the principles of safety, liquidity, and profitability. Safety The important principle of lending is safety which refers to the important fact that the borrower should be able to repay the loan based on character, capacity…

RBI shortens the frequency of reporting by lenders to Credit Information Companies(CIC)

The Reserve Bank of India in exercise of the powers conferred by sub-section (1) of section 11 of the Credit Information Companies (Regulation) Act, 2005 (CICRA, 2005), directed that Credit Information Companies (CICs) and Credit Institutions (CIs )shall keep the credit information collected/maintained by them updated regularly on a fortnightly basis (i.e., as on 15th…

Interest Subvention Scheme for Agri and allied activities through KCC during 2024-25

Modified Interest Subvention Scheme for Short Term Loans for Agriculture and Allied Activities availed through Kisan Credit Card (KCC) during the financial year 2024-25 To provide short-term crop loans and short-term loans for allied activities including animal husbandry, dairy, fisheries, beekeeping, etc. up to an overall limit of ₹3 lakh to farmers through KCC at…

Characteristics, Importance, and Benefits of Credit Ratings

Credit rating agencies provide an objective and unbiased evaluation of the credit risk of diverse entities, including individuals, groups, businesses, non-profit organisations, governments, and even nations. They provide transparency and consistency in assessing institutions/borrowers’ creditworthiness, making it easier for lenders and investors to make informed decisions. The main characteristics of credit rating are that these…

What is Credit Rating and the Role of Credit Rating Agencies (CRA) in India

Credit Rating is an opinion provided by a Credit Rating Agency regarding the ability and willingness of an entity (Government, corporate, municipality, Bank lending, etc. to fulfill its financial obligations in completeness and within the established due dates. Such ratings are based on a comprehensive analysis of various factors, including the issuer’s financial health, debt…

Functions of credit information companies (CIC) and membership to CIC

A Credit Information Company (CIC) is an independent third-party agency registered under CIC laws that collects financial data of individuals about their loans, credit cards, and other related information and shares it with its members, who generally happen to be banks and other financial institutions. The Credit Information Companies (Regulation) Act, 2005 (“CIC Act”), is…