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 up to :December 28, 2018 Categories under priority sector under revised guidelines: As per RBI circular RPCD.CO.Plan.BC10/04.09.01/2014-15 dated July 1, 2014, Medium Enterprises, Social Infrastructure and Renewable Energy will form part of priority sector, in addition to the earlier existing categories like Agriculture,Micro Small enterprises,Export credit,education,housing loan, and others (credit to weaker sections). The…
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…
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…
(This article explains the definition of non-performing assets (NPAs), classification of assets, Income recognition and provisioning requirement under prudential norms for all type of accounts including NPA norms for Agricultural loan and specialy KCC) Internationally income from Non-Performing Assets (NPAs) is not recognized on accrual basis but is booked as income only when it is…
The government on Tuesday (September 25, 2018) announced 3 new major initiatives viz. Quick loan for MSME, Financial inclusion index, and Geographical mapping of banking services. The Finance Minister on Tuesday launched a new portal “Quick loan for MSME” which sets, for a new benchmark in loan processing and reduces the turnaround time from 20-25…