Risk to banks and borrowers in innovative upfront disbursal of housing loans

Some banks have introduced innovative Housing Loan Schemes in association with developers/builders. The normal process of these schemes, is upfront disbursal of sanctioned individual housing loans to the builders without linking the disbursals to various stages of construction of the housing project, Interest/EMI on the housing loan availed of by the individual borrower being serviced…

Full details of the recovery process through SARFAESI ACT 2002

(This article gives the details like rights of secured creditors, Application of mind and care is required in the service of notice of SARFAESI DEMAND NOTICE, POSSESSION NOTICE & SALE NOTICE, Special care to be taken while taking possession of movable properties, method of sale of secured property by way of inviting tenders from the public or by…

Know the difference between credit rating agencies and Credit information bureaus in India

The difference between  Credit rating agencies and credit information bureaus lies in their meaning and functions. Credit information bureaus in India (CIB): Credit Information bureaus maintain a repository of credit information of individual borrowers, offer comprehensive risk management tools, and provide lenders with portfolio reviews of borrowers that help them study a borrower’s behaviour and…

Discussion Paper on Expected Loss Based Approach for Loan Loss Provisioning by Banks

In the Statement on Developmental and Regulatory Policies announced by RBI on Friday, RBI said that as a step towards converging with globally accepted prudential norms, it will issue a discussion paper on the proposed transition for stakeholder comments. Banks currently follow the incurred loss approach for provisioning on their loan assets, whereby provisions on…

RBI issues guidelines to market participants regarding exchange of variation margin (VM) for NCCDs

In today’s (June 8, 2022) statement of development and regulatory policies the Reserve Bank of India issued guidelines to market participants regarding the exchange of variation margin (VM) for non-centrally cleared derivatives (NCCDs). Derivatives are financial instruments whose value is derived from other underlying assets. There are mainly four types of derivative contracts such as…