Service area approach (SAA) is a developed version of the ‘area approach’ structure of the Lead Bank Scheme. Under SAA plan each commercial bank / RRB branch in a rural and semi-urban area is designated to serve 15 to 25 villages for the planned and orderly development of the areas. The designated branch of a…
Background: In October 1969, the study group lead by Prof. D. R. Gadgil (Gadgil Study Group) recommended the adoption of an ‘Area Approach‘ to evolve plans and programmes for the development of an adequate banking and credit structure in the rural areas. Further, under the chairmanship of Shri F. K. F. Nariman (Nariman Committee) a…
[This post offers updated guidelines/instructions on SHG-Bank linkage programme at one place based on various circulars issued by Reserve Bank of India on the subject up to June 30, 2020] The Self Help Group-Bank Linkage Programme (SBLP) was started in 1992 at the initiative of NABARD. The basic idea of the SBLP is to link…
The credit facilities extended to MSMEs under ‘Distressed Assets Fund – Subordinate Debt for Stressed MSMEs scheme’ as a special dispensation, are backed by a guarantee from the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). RBI vide its circular dated July 1, 2020 permitted all the scheduled commercial banks to reckon the…
[Definition of Micro, Small and Medium Enterprises as per Section 7 (I) of the Micro Small and Medium Enterprises Development Act, 2006 modified with effect from July 1,2020] Government of India (GoI), vide Gazette Notification S.O. 2119 (E) dated June 26, 2020, has notified new criteria for classifying the enterprises as Micro, Small, and Medium…
Lien is akin to a bailment. It is the claim or legal right to retain goods or securities that are typically used as collateral to satisfy a debt. However, there is no legal definition of the term ‘negative lien’ in any of the Indian legislative enactment. But as it is understood in the normal course…
Emergency Credit Line Guarantee Scheme (ECLGS) which is also known as Guaranteed Emergency Credit Line (GECL) scheme is a 100% collateral free fund-based working capital term loan extended by the banks, NBFCs and Financial Institutions (FIs) to Business entities /MSMEs including borrowers of MUDRA loans constituted as Proprietorship, Partnership, a registered company, trusts, and Limited…
The National Company Law Tribunal (NCLT) is the adjudicating authority (quasi-judicial authority) for the insolvency resolution process of companies and limited liability partnerships under the Insolvency and Bankruptcy Code, 2016. Previously, there were four different legal forums viz. High Courts, Company Law Boards, Board for Industrial and Financial Reconstruction (BIFR), and Debt Recovery Tribunal (DRT)…
Updated on June 8, 2020 In view of the extension of moratorium by another three months, i.e., up to August 31, 2020, Government has decided to continue the availability of 2% Interest Subvention and 3% Prompt repayment Incentive (PRI) to farmers for the extended period of repayment up to August 31, 2020, or date of…
(The following post explains the difference between Funded Interest Term Loan (FITL) and Working Capital Term Loan (WCTL) What is FITL? Funded Interest Term Loan in a short form known as FITL. When the manufacturing units face severe financial crises, not able to meet their loan obligations, banks extend the FITL facility to such units…