Pari passu charge is one of the most commonly used security structures in consortium and multiple banking arrangements in India. When two or more banks lend to the same borrower against the same asset, understanding pari passu charge becomes essential for every credit officer, branch manager and JAIIB aspirant. This Read more…
Letter of Credit (LC) and the ‘Standby Letter of Credit’ (SBLC) are used by Importers and Exporters in International Trade to ensure financial safety so that payment of the supplier is assured of payment once he has performed his obligation. While LC is used as a primary method of payment, Read more…
What Is CGTMSE? CGTMSE — the Credit Guarantee Fund Trust for Micro and Small Enterprises — is a joint initiative of the Government of India and SIDBI, established in August 2000. Its core purpose is to remove the biggest barrier MSME borrowers face: the demand for collateral security. Under the Read more…
What Is Interest Coverage Ratio in Banking? The Interest Coverage Ratio (ICR) — also called the Times Interest Earned (TIE) ratio — measures how many times a business can pay its interest obligations from its operating earnings. In simple terms, if a company earns ₹3 in operating profit for every Read more…
At present, the process for getting KCC finance requires customer to visit a bank branch in-person along with the proof of land ownership and other documents. Sometimes, the customer may be required to visit the bank branch multiple times. The Turn Around Time (TAT) from loan application to disbursement has Read more…
What does CERSAI mean? CERSAI is the acronym for Central Registry of Securitisation Asset Reconstruction and Security Interest, which is a central online security registry of India In simple words, it is an online database of all the properties mortgaged with banks. How? When a Bank finance against a property, Read more…
CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) is a government-backed guarantee scheme that enables banks to extend collateral-free loans up to ₹2 crore to micro and small enterprises. It was established jointly by the Ministry of MSME and SIDBI in 2000 to remove the collateral barrier that Read more…
A letter of credit is issued (opened) bank a Bank on the request of his buyer customer in favour of seller, which is an undertaking by the bank to make payment to the seller if fulfills his obligations. The process of Letter of Credit is described in the following images and also Read more…
Infrastructure and core industries projects have a long gestation periods and large capital investments. The repayment period for loans to such sectors should be corresponding to their gestation period of cash flows. However, Banks were unable to provide such long tenor financing due to asset-liability mismatch issues. Banks were restricting Read more…
A mortgage is the transfer of interest in an immovable property to a lender as security for repayment of a loan, defined under Section 58 of the Transfer of Property Act, 1882. Indian law recognises six types of mortgage — simple, conditional sale, usufructuary, English, equitable (deposit of title deeds), Read more…