Updated as per RBI master circular dated April 2, 2024 Regulated entities like Banks and Financial institutions have to take into account RBI guidelines while sanctioning loans to individuals for different purposes. A loan may be granted by the Bank for the purchase of a plot, subject to a declaration obtained from the borrower that…
The idea of the Government on the MSME sector has been to manufacture goods in the country with “zero defects” and to ensure that the goods have “zero effect” on the environment. That is to say that we should manufacture goods in such a way that they carry zero defects and that our exported goods…
Today (September 4, 2020) announced that PSL guidelines have been comprehensively reviewed to align it with emerging national priorities and bring a sharper focus on inclusive development, after having wide-ranging discussions with all stakeholders. “Revised PSL guidelines will enable better credit penetration to credit deficient areas; increase the lending to small and marginal farmers and…
Definition: The priority sector is defined as the sectors that the Government of India and Reserve Bank of India consider as important for the development of the basic needs of the country and are to be given priority over other sectors while lending. The role of lenders is assigned by the Reserve Bank of India…
The basic distinctions between retail banking and wholesale banking/Corporate banking are apparent in their target audiences, services offered, customer relationships, and risk profiles. Retail banking business is targeted at individuals, salaried professionals, micro, small, and medium enterprises, Self Help Groups (SHGs), and Non-Resident Indians (NRIs). Retail bankers offer a variety of deposit schemes to individuals…
Pari-passu is a Latin phrase used in contract law that means “equal footing”. Thus pari passu charge means, having equivalent charge/ rights or say charge-holders have equal rights over the asset on which pari-passu charge is created. Most of the large borrowers are financed by multiple banks in a consortium or under a Joint Lending…
[Updated up to December 28, 2023, in terms of RBI circular dated 28.12.2023] MSME stands for Micro, Small and Medium Enterprises. MSMEs are businesses that produce, process, and preserve goods and commodities. The government of India (GoI), vide Gazette Notification S.O. 2119 (E) dated June 26, 2020, has notified new criteria for classifying the enterprises…
What is a negative lien? Let us first understand what is a negative lien. Actually, there is no legal definition of the term ‘negative lien’ in any of the Indian legislative enactments. However, as it is understood in the normal course of business, it is merely a negative covenant which restricts a person from creating…
Scheduled Commercial banks in India have seen a sharp rise in unsecured loans – mostly personal loans and credit cards – that has outpaced the overall bank credit growth of about 15% over the past year, catching the attention of the Banking Regulator. The high growth seen in consumer credit and increasing dependency of NBFCs…
The Supreme Court on Thursday in a significant ruling upheld the constitutionality of Insolvency and Bankruptcy Code (IBC), including allowing creditors to initiate insolvency proceedings against personal guarantors. The Court dismissed over 200 petitions that challenged the legal validity of the code. The provisions relating to personal guarantors were introduced under the Insolvency and Bankruptcy…