International factoring usually has two factors viz. export factor and import factor. The export factor looks at financing the exporter and collection of account receivables. The import factor evaluates the importer in respect of collecting the dues in time and assessment of chances of default by the importer. The exporter on receipt of export order…
The term forfaiting refers to a form of trade finance involving discounting of export bills receivables such as drafts drawn under LC, bills of exchange, promissory notes, or other instruments on without recourse basis. The export of capital goods involves account receivables of medium and long term maturities. It is a general practice that the…
The major difference between wholesale banking and retail banking is in the type of clientele. Retail banking, also known as consumer banking, refers to the offering of banking services to individuals and lower-tier businesses. Services offered in retail banking related both on deposits as well as loans and advances. Deposit products avail retail customers are…
National Bank of Agriculture and Rural Development (NABARD) was initially promoted by Reserve Bank of India in 1982 under National Bank of Agriculture and Rural Development Act 1981. By its establishment NABARD substituted Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation…
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 unorganized sector of our population to the formal banking sector. Typically this segment of population is from the lower income that used to meet its financial needs through limited…
RBI introduced Lead Bank scheme in 1969, on the basis of recommendations of D.R.Gadgil study group. The study group suggested adaption of ‘area approach’ for adequate banking facilities in rural area. The scheme envisages every district across the country shall be assigned to a commercial bank which has major presence in that district to perform…
Service area approach (SAA) is an improved version of area approach of Lead Bank Scheme. Under SAA plan each commercial bank / RRB branch in rural and semi-urban area is designated to serve 15 to 25 villages for planned and orderly development of rural and semi-urban areas. The designated branch of a bank has to…
The Government of India has amended the rules under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Central Registry) Rules, 2011(Referred as principal rules). The amendment to principal rules came into force from the date same were published in the gazette of India Part II section3 sub-section. (i) (January 22, 2016) .…
The weaker sections of our society are the socially backward/ minority communities at national level or the people belonging to economically low income group. Normally, such people may not easily get timely and adequate credit without the priority credit dispensation of RBI. As per RBI’s priority sector approved plan, Banks have to achieve weaker section…
The MSMED Act 2006 classifies Micro, Small & Medium Enterprises (MSMEs) in two categories viz. Manufacturing Enterprises and Service Enterprises. The manufacturing enterprises are those who are engaged in manufacture or production of goods pertaining to any industry listed in first schedule to the industries (Development and Regulation) Act 1951 or an enterprise employing plant…