Introduction: Term loan is a type of loan where a fixed amount of money is borrowed from a financial institution for a specified period. These loans can be classified as short-term, medium-term, or long-term, with repayment periods typically ranging from one to twenty years. The repayment amount includes both the principal and interest, which may…
It is inevitable for banks to ascertain that bank could easily take possession of such security based on documents obtained from the borrower with very little expenses and dispose-off the same to recover its dues when the account goes bad. Banks obtain ‘Different Types of Documents‘ from the borrower based on the type of security…
Receivables financing, also referred to as bills finance, is a facility offered by banks and financial institutions that enables businesses to convert their outstanding invoices (accounts receivable) into immediate liquidity. This form of short-term funding supports effective working capital management by bridging the gap between the delivery of goods or services and the receipt of…
A legal document is a written agreement between two or more parties that can be relied upon in court. They can be used to establish contractual relationships, grant rights, or provide evidence for legal obligations. It is inevitable for banks to ascertain that they could easily take possession of such security based on documents obtained…
TReDS (Trade Receivables Discounting System) is an institutional setup for the flow of finance to micro, small, and medium enterprises (MSMEs) through multiple financiers at a competitive rate. The model outlined for TReDS in the paper, envisages its operation both in the primary market segment as well as a secondary market segment as authorised payment…
(This post explains the essence of Mortgage of properties and several forms of mortgage of immovable properties in India viz. Equitable Mortgage, Simple Mortgage, English mortgage, Mortgage by conditional Sale, Usufructuary Mortgage, and Anomalous Mortgage which are major types of mortgage systems currently existent in India.) The essence of Mortgage of properties: The transfer of…
The credit facilities given by the banks where actual bank funds are not involved are termed as ‘non-fund based facilities’. Various types of guarantees are issued by the banks on behalf of their customers. Bank Guarantees (BG) is also known as Letter of Guarantees which can be broadly classified as (i) Financial Guarantees and (ii)…
The article explains various types of charges created by banks to establish their rights over the specified security when the borrower defaults. The charge creation means establishing the lender’s right to recover from the specified assets of the borrower, in case the recovery is difficult in the normal course. The mode of bank charge on…
Charge creation means the establishment of the lender’s right over specified assets of the borrower in order to recover principal and interest in default from the borrower. The charge can be created against the same assets by more than one lender. The lender in whose favour charge is first created is called the holder of…
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…