Advances against security of Sovereign Gold Bonds (SGB)
The Sovereign Gold Bonds (SGB) are government securities issued under section 3 (iii) of the government securities Act. The holder of an SGB can borrow against the security of SGB or offer it as collateral security for any loan. Banks can create a pledge, hypothecation or lien against the security (in accordance with the provisions…
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Advances against pledge of Gold jewels/coins/ornaments
The scheduled commercial banks including public sector banks as well as co-operative banks are lending against the security of jewels. They accept them for pledge after satisfying the ownership of the jewel and the prospective borrower is the account holder of the bank. The borrower shall give a declaration letter to the bank stating that…
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Clarity on bank lending to InvITs
Banks are generally permitted to lend to those InvITs where none of the underlying SPVs, which have existing bank loans, is facing ‘financial difficulty’. In view of banks and stakeholders seeking clarification on the provision of credit facilities to Infrastructure Investment Trusts (InvITs), RBI on October 15, 2019, clarified that the banks are permitted to…
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RBI raises lending capacities of Micro Finance Institutions
RBI in its Statement on Developmental and Regulatory Policies announced, on Friday, October 4, 2019, raising the household income limit for borrowers of NBFC-MFIs from the current level of ₹ 1.00 lakh for rural areas and ₹ 1.60 lakh for urban/semi-urban areas to ₹ 1.25 lakh and ₹ 2.00 lakh, respectively. The Y.H.Malegam sub-committee of…
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Portfolio Risk Fund for Microfinance programme aimed at budding MSMEs
Microfinance means giving small loans to individuals or small businesses to meet their business requirement. The beneficiaries of Microfinance programmes are the persons who may be outside the formal banking channel. The microcredit programmes are run primarily by SIDBI in the field of Industry and Service, NABARD in the field of agriculture. The scheme of…
RBI asks Banks to link external benchmark for all floating rate loans from October 1, 2019
RBI has issued a circular, making it mandatory for banks to link all new floating rate retail loans like personal loan, housing loan, auto loans and floating rate loans to MSMEs to an external benchmark effective October 1, 2019. The circular dated September 4, 2019, permitted the banks to choose one of the several benchmarks…
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