What is the meaning of fixed charge,floating charge and crystallization of charge?
The Fixed charge is a charge on a defined property offered to the lender as security which should be clearly identifiable. During the existence of fixed charge, the borrower cannot change either the nature/identity of the property or otherwise dispose off the property. The securities commonly covered under fixed charge are a mortgage of immovable properties…
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Banks can register a charge on their own if the borrower company fails to register
Yes, lender bank or Financial Institution (FI) can also file application form for registration of charge with the Registrar of Companies. However, it is the responsibility of the company to register the each charge against its assets. If the borrower company fails to file form for registration of charge with ROC, the lender bank or…
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Understanding some important terms related to bills of exchange
A Bill of exchange is a written, unconditional order by one party (the drawer) to another party (the drawee) to pay a specified sum of money to a third party (the payee) at a predetermined date or on demand. The bill of exchange serves as a promise to pay and acts as a credit instrument,…
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Co-Lending by Banks and NBFCs: A Win-Win for Priority Sector Lending
Co-lending between banks and Non-Banking Financial Companies (NBFCs) is a strategic partnership model designed to expand credit access in underserved segments while ensuring efficient risk-sharing. Under this framework, both banks and NBFCs jointly finance loans to Priority Sector Assets (PSAs), with each contributing a pre-agreed share and managing the process collaboratively. For banks, this model…
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RBI’s Draft Rules on Foreign Exchange Guarantees: What You Need to Know
The Reserve Bank of India (RBI) has recently released draft guidelines on foreign exchange guarantees, setting out clear conditions for Indian citizens and institutions involved in such transactions. These rules are designed to ensure compliance with the Foreign Exchange Management Act (FEMA) and bring greater transparency to cross-border dealings. Key Highlights of the Draft Rules…
Definition of NPA and Asset Classifications of irregular loans
(This article explains the definition of non-performing assets (NPAs), classification of assets, Income recognition, and provisioning requirement under prudential norms for all types of accounts including NPA norms for Agricultural loans and especially KCC) Asset classification, in the context of financial institutions like banks, involves categorizing loans and advances into different classes based on their…
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