The role of RBI as a lender and Banker to Government
In terms of Section 20 of the RBI Act 1934, RBI has the responsibility to undertake the receipts and payments of the Central Government and to carry out the exchange, remittance and other banking operations, including the management of the public debt of the Union. In addition to that RBI has the right to transact…
Read article
What is correspondent banking?
Generally, correspondent banking arrangement involves two banks establishing reciprocal accounts with each other through bilateral agreements. These accounts are established to enable the domestic bank to make payments or money transfers on behalf of the foreign bank. The most common services provided by correspondent banks are currency exchange, wire transfer, handling business transactions and trade…
Read article
What are the strategies used for reducing NPA?
(This post elucidates on recovery and monitoring process of NPA accounts,advantage and disadvantage of Compromise settlement, and gains of NPA recovery) The asset of the bank, classified as NPA ceases to generate income to the bank. In addition to stoppage of income generation to the banks, banks are required to make provision for NPA. Therefore,…
Read article
CGTMSE guarantee for credit facility covered by collateral security
The Credit Guarantee fund Trust for Micro Small Enterprises (CGTMSE) has been providing guarantee coverage to any collateral / third party guarantee free credit facilities extended by eligible institutions (Member lending institutions (MLI) like banks, financial institutions, select NBFCs and Small Finance banks etc.). Hitherto, all activities* that come under manufacturing and service sector as…
What is Inter Bank Participation Certificate – IBPC?
Banks troubled with capital constraints sell their “excess baggage” of loan assets to other banks in the form of ‘Inter Bank Participation Certificate (IBPC). These IBPC transactions are aimed to fill the short-term requirements of banks and are typically bought back by the seller bank within three to four months, depending on the agreement. Reserve…
Read article