RBI issues guidelines on loan system for delivery of bank credit


The Reserve Bank of India (RBI) on Monday, in “draft guidelines on loan system for delivery of bank credit”, said that borrowers who have a total working capital limit of Rs 150 crore and above should have at least 40% of it as working capital loans from October 1, 2018.


The Reserve Bank of India (RBI) on Monday, in “draft guidelines on loan system for delivery of bank credit”, said that borrowers who have a total working capital limit of Rs 150 crore and above should have at least 40% of it as working capital loans from October 1, 2018. It will be revised to 60% from April 1, 2019.

Banks provide working capital finance by way of cash creditor overdraft, working capital demand loan, purchase or discount of bills, bank guarantee, letter of credit, factoring, of which cash credit (CC) is by far the most popular mode of working capital financing. While CC has its benefits, RBI said, it also poses several regulatory challenges such as perpetual roll overs, transmission of liquidity management from the borrowers to banks or RBI, hampering of smooth transmission of monetary policy.

“In respect of borrowers having aggregate fund based working capital limit of Rs 150 crore and above from the banking system, a minimum level of ‘loan component’ of 40% shall be effective from October 1, 2018,” the central bank said.

The central bank said that for such borrowers, availing up to 40% of the total fund-based working capital limits will be allowed from the loan component. “Drawings in excess of the minimum loan component threshold may be allowed in the form of cash credit facility,” it said.

In its bi-monthly monetary policy in April, RBI had proposed to stipulate a minimum level of ‘loan component’ in fund based working capital finance for larger borrowers “with a view to promoting greater credit discipline among working capital borrowers”.

Source :-express.com/market/rbi-issues-guidelines-on-loan-system-for-delivery-of-bank-credit/1202342/


Prompt Corrective Action (PCA)

Bank of Maharashtra has become the sixth bank in the last one year to fall under the Reserve Bank of India’s Prompt Corrective Action (PCA). The triggering of PCA means there will be several restrictions imposed on the banks from lending to the distribution of dividends etc. These banks are Central Bank of India, IDBI Bank, UCO Bank, Dena Bank, Bank of Maharashtra and Indian Overseas Bank.

What is PCA?

PCA norms allow the regulator to place certain restrictions such as halting branch expansion and stopping dividend payment. It can even cap a bank’s lending limit to one entity or sector. Other corrective actions that can be imposed on banks include special audit, restructuring operations and activation of the recovery plan. Banks’ promoters can be asked to bring in new management, too. The RBI can also supersede the bank’s board, under PCA. The provisions of the revised PCA framework effective April 1, 2017, based on the financials of the banks for the year ended March 31, 2017. The framework will be reviewed after three years.

When is PCA invoked?

The PCA is invoked when certain risk thresholds are breached. There are three risk thresholds which are based on certain levels of asset quality, profitability, capital and the like. The third such threshold, which is maximum tolerance limit, sets net NPA at over 12 per cent and negative return on assets for four consecutive years.

More banks to follow

Clearly, the rising NPAs, lower credit offtake and falling profitability have put PSBs in a tight spot. There are half a dozen PSBs that fall under the PAC. These banks will have to very restricted lending to conserve capital, which is fast drying up because of NPA provisioning. Many will focus on fee-based income or transaction banking where capital is not required. It is not a good news as PSBs control two third of the banking in terms of advances and deposits.

Pressure on government to pump in more capital

The act of RBI invoking PAC will impact these PSBs credit rating and also affect their ability to raise capital from the market. The government has limited resources to provide capital from the budget. In the last two years, the government had allocated Rs 25 crore each and the capital for the next two year is pegged at Rs 10,000 crore each. Though finance minister Arun Jaitley has said the government will infuse more if required, there is no announcement so far. The divestment route is also not the option as the valuations of PSBs is at rock bottom.

Merger and acquisitions

Most of the PSBs that are falling under PAC are small and mid -sized banks with the exception of IDBI Bank. These banks are now a good candidate for the merger as they government is very keen on pushing consolidation amongst the PSBs. There has been resistance in the past the current NDA government looks more serious. The SBI merger with associate banks was a bold one as five banks of the size of private sector ICICI Bank were merged with the parent.

Private sector to gain market share

The current stalemate at the PSBs is offering a big opportunity for private sector to gain market share in retail as well as corporate lending. The private sector banks have a very comfortable capital adequacy ratio, which offers a big opportunity to them to lend. In fact, the market share of private banks remained at 14-15 per cent in the advances and deposits for a long time, but now many of these banks have the scale and also the products to expand in both retail and corporate lending.

Source :-https://www.bankersadda.com/2017/06/prompt-corrective-action-pca-current.html

How do credit-risk funds work?

Credit-risk funds that invest in securities with lower ratings are gaining popularity among investors as there is a potential for investors to earn double-digit returns.

What are credit-risk funds ?
Credit-risk funds are debt funds which have at least 65% of their investments in less than AA-rated paper. They generate high returns by taking higher credit risk and by investing in lower-rated papers. Such companies offer higher interest rates and as and when their ratings move up, they offer a benefit of capital gains. The interest risk in these funds is low as most of them have a lower duration. These funds typically have the potential to give.

How do these funds work ?
Credit-risk funds make returns in two ways: one, they earn interest income on the securities they hold. Secondly, since they invest in lower-rated securities, if the rating of a security is upgraded, they have the potential to make capital gains.

What is the tax treatment of these funds ?
Dividends are exempt from tax, but the scheme has to pay a dividend-distribution tax of 28.84%. Returns you earn within three years of investment are subject to short-term capital gains tax. This will be as per your income-tax slab. After three years, you are eligible for longterm capital gains tax at 20% with the benefit of indexation.

How should investors choose a credit-risk fund ?
Credit-risk funds have a higher liquidity risk. If a bond with a lower rating in the portfolio defaults or faces a further downgrade, it may be difficult for the fund manager to exit this holding. Financial planners advise investors to choose large-sized funds in this category. Higher assets give the fund manager better scope to diversify and spread risks. Investors should also look at a fund with a lower expense ratio and make .

Source :https://economictimes.indiatimes.com/mf/analysis/how-do-credit-risk-funds-work/articleshow/64955637.cms

New NPA Resolution Framework Long-Term Positive

The Reserve Bank’s revised framework for quicker and time-bound resolution of stressed assets is a long-term positive for banks, says a report. The report states that the new framework has the potential to bring about a big change in the approach of banks to monitor their exposures and resolution of non-performing assets (NPAs).

“The streamlining of the NPA resolution process affords simplicity, timeliness and credibility, and is long- term positive for the banking sector,” Krishnan Sitaraman, a senior director at Crisil, said in the report today.

The apex bank in a dramatic move on Monday had discontinued programmes for banks to restructure their defaulted loans such as corporate debt restructuring (CDR), sustainable structuring of stressed assets (S4A), strategic debt restructuring (SDR), among others, and made the Insolvency and Bankruptcy Code as the main tool to deal with defaulters. Lenders will now have to work out a resolution plan for defaults within 180 days, failing which the account would be referred to the bankruptcy courts.

The agency feels that the upshot of the strong statement of intent by RBI will be structural streamlining, standardising and harmonising of the resolution process leading to greater transparency, credibility and efficiency.

The central bank has also asked lenders to report credit information, including classification of an account as special mention account (SMA) to the Central Repository of Information on Large Credits (CRILC) on all borrowers having an aggregate exposure of Rs 5 crore and above.The lenders will have to report to CRILC, all borrower entities in default on a weekly basis, at the close of business on every Friday, or the preceding working day if Friday happens to be a holiday.

The first such weekly report shall be submitted for the week ending February 23, 2018. The central bank has also asked all lenders to put in place board-approved policies, with timeliness, for resolution of stressed assets under the new framework.

“By mandating weekly information on large delinquent accounts, by directing that a resolution plan be scripted immediately after default, and by setting stringent timelines for referring an account to the Insolvency and Bankruptcy Code process, the RBI is establishing an ecosystem where NPAs would get recognised on time and their resolutions are structurally quicker than before,” the report said.

The RBI also said under the new framework the resolution plan which may involve restructuring, change in ownership in respect of ‘large’ accounts, will require independent credit evaluation of the residual debt by credit rating agencies (CRAs) authorised by it

Independent credit evaluation of the residual debt in resolution plans, and minimum investment grade rating for any upgrade of NPAs, will improve investor and other stakeholder confidence over the long term, said Crisil.

According to the agency, in recent years, several steps such as CDR SDR, S4A were conceived to resolve the stressed assets situation but to limited success. “The RBI move has come at the right hour because the asset quality pressures are near their peak and it will improve the ability of banks to transit to the new regime,” the report said.

Source :- Click Here To Read More

Advantages of a Fixed Deposit Account

Many times you may have heard people advising you to invest your money in a FD account. So what is FD? Fixed Deposit or FD is a type of term deposit that gives you a fixed rate of interest until maturity. By investing in FDs you can save and earn money at the same time. It also offers a higher rate of interest compared to a regular savings account. Apart from this, there are other advantages of having a FD account.

KAIJS Bank – Fixed Deposit

Mentioned below are a few advantages of having a FD account:

Assured Return – If you invest your money in a fixed deposit account, you are assured a return. You will earn interest on your deposited amount, but the rate of interest depends on the tenure you have chosen. Banks in India are offering around 7% to 8% interest on Fixed Deposits at present.

Flexible Payment – FDs allow you to choose how you wish to receive interest. You can choose to be paid annually, monthly or during maturity.

Flexible Tenures – Fixed Deposits have flexible tenures. You can open a FD account for as less as 7 days. The tenure options are not the same for every bank. Also, it is not mandatory for you to have an account with a particular bank to open a FD account with it.

Helps during Emergency – During emergencies when you are in need of money, a FD can help you a lot. Many banks offer loans against Fixed Deposits. Up to 90% of the deposit can be availed as loan. Some banks allow partial withdrawals of FDs as well.

KAIJS Bank – Recurring Deposit

Risk Management – Financial instruments such as mutual funds, gold, etc., may provide high returns, but are also very risky. To adjust this market risk, it becomes important to invest in debt instruments. FDs will help you manage this risk as the returns are fixed.

Easy to Withdraw – You can withdraw the amount you have deposited in your FD account at any time. For premature withdrawals, banks may charge you a small penalty.

KAIJS Bank – Special Fixed Deposit

Saving Habit – Fixed Deposits help people in developing a habit of saving money. When you invest a certain amount in FD, that amount cannot be used until you withdraw it or maturity.

Read More : https://yourstory.com/mystory/86cae0936c-advantages-of-a-fixed-deposit-account

Tips to Use Internet Banking Safely

Consumers aren’t the only ones at risk of online fraud. From recent data breaches at major retailers to increasing incidents of fraudulent emails, businesses are increasingly at risk of email and online fraud.  Many online safety precautions that apply to consumers can also protect businesses.

At the same time, it’s important for businesses to have a company-wide security plan in place to ensure employees help protect sensitive company data. Companies with dedicated IT departments work hard to protect their sensitive data and have probably taken all the necessary precautions.  If you own or manage a small business without the safety net of IT personnel, here are five best practices that will help protect your information.

1. Keep Financial Data Separate
For business users in particular, use a dedicated work station to perform all company banking activity. Use other computers to access the Internet and conduct non-banking business. When it’s time to retire the computer that was used to access company banking, be sure to back up all sensitive information  and erase the hard drive before recycling it.

2. Know Who’s Asking
As a general rule of thumb, banks don’t send emails or text messages that ask for personal information such as account and/or social security numbers.  Banks will also not require you to verify account information in this manner.  Never share any personal information, especially social security or tax ID numbers, account numbers, or login and password information via email or text. Should you need to communicate sensitive information with your bank via email, be sure to use secure mail within the bank’s secure online banking platform.
Also on the rise are emails to businesses that appear to be from suppliers. Like fraudulent banking emails, these emails may look legitimate but will ask for sensitive financial information. If you see an email asking you to provide sensitive financial information – even one that may look like it’s from your bank or supplier – call to verify before responding.

Kallapanna Awade Ichalkaranji Janata Sahakari Bank

3. Keep Your Passwords Secret
Do not share passwords and do not leave any documents that contain access to financial data in an unsecured area.  Change your passwords regularly for better protection, using a combination of letters, numbers and special characters when possible. Change your wireless network default password as well as the default SSID (name used to identify your network). Don’t broadcast your SSID and consider using encryption on your network.

4. No Phishing Allowed
Beware of phishing emails. These emails are designed to prompt you to click links provided within the email to verify or change your account in some way.  Often, the links included in the email are ways for fraudsters to install malicious software (also called Malware) onto the computer or device you use to access your email.  This Malware can be used to obtain personal information.

Kallapanna Awade Ichalkaranji Janata Sahakari Bank

5. Protect Your Computer
With cyber attacks on the rise, it’s more important than ever to install antivirus software on your computer or network. Equally important is ensuring you are regularly running and updating this software to prevent viruses from infecting your computer. In addition, installing and enabling the following software programs will help you combat malicious cyber activity:Anti-spam software: Helps prevent spam and junk email from entering your inbox, which helps guard against phishing emails

  • Anti-spam software: Helps prevent spam and junk email from entering your inbox, which helps guard against phishing emails
  • Firewall: Helps prevent unauthorized access to your computer through viruses and malware
  • Anti-spyware software: Blocks the installation of spyware on your computer, which can monitor or control your computer use and send you pop-ups or redirect you to malicious websites

Keep your computer operating system and Internet browser current; this provides additional protection against fraud and theft.

Kallapanna Awade Ichalkaranji Janata Sahakari Bank

NIACL Assistants Recruitment

NIACL Assistants Recruitment 2018 Notification, 685 Posts, Online Form Begins


The New India Assurance Co. Ltd. has released NIACL 2018 Recruitment Notification regarding the 685 Assistants Vacancies. All aspirants who want to pursue a career in this field applied for this as it is a good opportunity. This time, the organization is released a huge number of posts so that this golden opportunity can be easily grabbed by all the aspiring individuals. NIACL Recruitment 2018 Notification is expected to be released any time on the official site.

NIACL 2018 Vacancy Details :

NIACL 2018 Recruitment Notification has been revealed whereby the company has offered total 685 seats for the post of NIACL Assistant III Cadre.

  • Name of Organization – New India Assurance Company Limited (NIACL)
  • Total Number of Posts – 685
  • Name of Posts – Assistants Class III
  • Job Location – All Over India

Pay Scale:-  All the applicants who’ll qualify the final stage or the Interview round will be offered this job of Assistant Cadre III which will be paid Rs. 14,435 to 40,080. For further more details regarding the pay scale of Assistant, you can refer to the official website.

NIACL 2018 Eligibility Criteria :

Educational Qualification: – The candidate must have a Degree in any discipline. Equivalent to degree course can also apply for Assistant Post in NIACL 2018 Recruitment.

Age Limit: – The age limit for the candidates applying for Assistant Cadre III should possess a minimum age of 18 years and not more than 30 years. Age Relaxation will be provided as per the government norms and regulations.

NIACL 2018 Application Fee :

The application fee payment can be done through any online mode i.e. Debit Card, Credit Card, Net Banking, etc from any recognized bank of India. Reserved Category i.e. SC/ST/PWD/Ex. Sm/Females have to pay Rs. 100/- only while General and OBC have to pay Rs. 600/- as recruitment fee.

  • SC/ ST/ PWD/ Ex.Sm– Rs. 100/-
  • General / OBC – Rs.600/-


Read More :-https://www.wifistudy.com/niacl

प्रधानमंत्री आवास योजना सर्वांसाठी घर ( शहरी )

प्रधानमंत्री आवास योजना (शहरी)  ही प्रधानमंत्री नरेंद्र मोदी यांची दृष्टी आहे ज्यात एकाच ठिकाणी सर्व लाभ पोचविल्या जातील. सरकारने, ९ राज्यात ३५ अशी शहरे शोधली आहेत ज्यात शहरी गरीबांसाठी घरबांधणी सुरु केल्या जाईल.ही योजना म्हणजे सर्वांसाठी घरे या योजनेचाच एक भाग आहे. सर्वांसाठी घरे ही योजना प्रमुखत: दोन विभागांमध्ये विभाजित केल्या गेली आहे:प्रधानमंत्री आवास योजना (शहरी) आणि प्रधानमंत्री आवास योजना (ग्रामीण).



आर्थिक दृष्ट्या दुर्बल घटक / अल्प उत्पन्न गटांसाठी परवडणाऱ्या घरांची निर्मिती

पात्रता – अ) आर्थिक दुर्बल घटक / अल्प उत्पन्न धारकांकरीता

वार्षिक कौटुंबिक उत्पन्न :- रु ६.०० लाख पर्यंत

अनुदान :- ६.५० %

मिळणारी सबसिडी रक्कम :-  रु २,६७,२८० /- पर्यंत

पात्रता – आ) मध्यम उत्पन्न धारकांकरीता

वार्षिक कौटुंबिक उत्पन्न :- रु १२.०० लाख – रु १८.०० लाख पर्यंत

अनुदान :-  ४.०० % –  ३.०० %

मिळणारी सबसिडी रक्कम :- रु २,३५,०६८ / –  रु २,३०,१५६ / – पर्यंत

कुटुंबियांचे भारतात कुठेही पक्के घर नाही अशा व्यक्ती या योजनेस पात्र राहतील.
केवळ नगरपालिका व महानगरपालिका हद्दीतील घरांकरिता सदर योजना लागू राहील.
बँकेच्या कर्जाच्या इतर अटी लागू राहतील.


Model Compensation Policy

Introduction :

Technological progress in payment and settlement systems and the qualitative changes in operational systems and processes that have been undertaken by various players in the market have enabled market forces of competition to come into play to improve efficiencies in providing better service to the users of the system. It will be the bank’s endeavor to offer services to its customers with best possible utilization of its technology infrastructure. Withdrawal of the Reserve Bank of India instructions to banks on time frame for collection of outstation cheques, payment of interest on delayed collection of outstation cheques/instruments, with effect from 1st November, 2004, had offered bank further opportunities to increase its efficiency for better performance. This Compensation policy of the bank is therefore, designed to cover areas relating to unauthorized debiting of account, payment of interest to customers for delayed collection of cheques / instruments, payment of cheques after acknowledgement of stop payment instructions, remittances within India, foreign exchange services, lending etc. The policy is based on principles of transparency and fairness in the treatment of customers.

The objective of this policy is to establish a system whereby the bank compensates the customer for any financial loss he / she might incur due to deficiency in service on the part of the bank or any act of omission or commission directly attributable to the bank. By ensuring that the customer is compensated without having to ask for it, the bank expects instances when the customer has to approach Banking Ombudsman or any other Forum for redressal to come down significantly.

It is reiterated that the policy covers only compensation for financial losses which customers might incur due to deficiency in the services offered by the bank which can be measured directly and as such the commitments under this policy are without prejudice to any right the bank will have in defending its position before any forum duly constituted to adjudicate banker-customer disputes.

Unauthorised / Erroneous Debit :

If the bank has raised an unauthorized / erroneous direct debit to an account, the entry will be reversed immediately on being informed of the erroneous debit, after verifying the position. In the event the unauthorized / erroneous debit has resulted in a financial loss for the customer by way of reduction in the minimum balance applicable for payment of interest on savings bank deposit or payment of additional interest to the bank in a loan account, the bank will compensate the customer for such loss. Further, if the customer has suffered any financial loss incidental to return of a cheque or failure of direct debit instructions due to insufficiency of balance on account of the unauthorized/erroneous debit, the bank will compensate the customer to the extent of such financial losses.

In case verification of the entry reported to be erroneous by the customer does not involve a third party, the bank shall endeavour to complete the process of verification within a maximum period of 7 working days from the date of reporting of erroneous debit. In case, the verification involves a third party or where verifications are to be done at overseas centres, the bank shall complete the verification process within a maximum peroid of one month from the date of reporting of erroneous transaction by the customer.

Erroneous transaction reported by customers (card holder) in respect of credit card operations which require reference to a merchant establishment will be handled as per rules laid down by MasterCard International, VISA Cards International / Other Card Services Provider.

In respect of claims by the customer (card holder) due to usage of cards at ATMs involving net work/s of ATMs of our Bank and other Banks/ Bank groups such as Cash Tree, BANCS, State Bank of India network arrangements / any other arrangement made in future, process of verification shall be undertaken as per the arrangement amongst the member banks to settle the claims.

ECS direct debits / other debits to accounts :

The bank will undertake to carry out direct debit/ECS debit instructions of customers in time. In the event the bank fails to meet such commitments, customer will be compensated to the extent of any financial loss the customer would incur on account of delay in carrying out the instruction/failure to carry out the instructions.

The bank would debit the customer’s account with any applicable service charge as per the schedule of charges notified by the bank. In the event the bank levies any charge in violation of the arrangement, the bank will reverse the charges when pointed out by the customer subject to scrutiny of agreed terms and conditions. Any consequential financial loss to the customer will also be compensated.

Where it is established that the bank had issued and activated a credit card without consent of the recipient, the bank would not only reverse the charges immediately but also pay a penalty without demur to the recipient amounting to twice the value of charges reversed as per regulatory guidelines in this regard.

Read More At :- http://www.bankofindia.co.in/english/CompensationPolicy.aspx