In view of the rise in the number of disputes and litigations against banks for engaging recovery agents in the recent past, it is felt that the adverse publicity would result in serious reputational risk for the banking sector as a whole. A need has therefore arisen to review the policy, practice, and procedure involved in the engagement of recovery agents by banks in India. In this backdrop, Reserve Bank issued draft guidelines which were placed on the web-site for comments of all concerned. Based on the feedback received from a wide spectrum of banks / individuals / organizations, the draft guidelines have been suitably revised and the final guidelines are as follows:
Repo is a short-term collateralized loan where one party sells securities to another and agrees to repurchase them later at a higher price. There are three main types: tri-party, deliverable, and held-in-custody. Tri-party repo is most common in the US and involves a third party agent for post-trade processing. Repo provides liquidity to money market funds and dealers and mitigates credit and liquidity risk through the use of high-quality liquid collateral and margining. Key differences between US and European repo include legal structures for collateral ownership and the dominance of tri-party repo in the US market.
1) The document discusses the dissolution of a partnership firm. Dissolution of a partnership means one or more partners leaving the firm, while dissolution of a firm means the complete closure of business and ending of legal relations among all partners.
2) A firm dissolves under circumstances like expiry of a fixed term, completion of a venture, death or insolvency of a partner, or when all partners agree. Upon dissolution, assets are sold and proceeds are used to pay liabilities, return capital to partners, and any remaining surplus is distributed according to profit ratios.
3) A Realization Account is opened to record the closing values of assets and liabilities. Entries are made to close those accounts and
Endorsement refers to signing one's name on the back of a negotiable instrument like a cheque in order to transfer ownership to another person. There are several types of endorsements - blank or general endorsement allows further negotiation by delivery, special or full endorsement specifies the next endorsee, and restrictive, conditional, sans recourse, facultative, and sans frais endorsements modify the endorser's liability. A valid endorsement must be made in ink, on the instrument, by a holder or maker of the instrument through their signature, and completed through delivery. Endorsement allows the transfer of rights, guarantees prior signatures, and makes the endorser liable if the instrument is dishonored.
This document provides an overview of IFRS 2 Share-based Payment. It defines share-based payment transactions as transactions where an entity receives goods or services from a supplier in exchange for equity instruments or a cash-settled transaction based on equity values. Key aspects covered include measurement of equity and cash-settled transactions, treatment of vesting and performance conditions, accounting for modifications, cancellations, and settlements, and disclosure requirements.
Bankers keep their accounts & its various details by maintaining various ledgers & journals . When any claim on the bank needs to be established or proved in court these books need to be produced in court.
The document discusses the disclosure requirements for related party transactions under the Indian accounting standard AS-18. It defines related parties as individuals or entities that have the ability to control or exercise significant influence over the reporting entity. It requires disclosure of the nature and volume of transactions between the reporting entity and its related parties, as well as outstanding balances and any provisions for doubtful debts involving such parties. The disclosures are necessary because related party transactions may not be conducted under normal commercial terms.
In the day to day operations of the business, it is essential to have grip on Tax Deducted at Source (TDS) which acts as a means to collect tax at the inception of the income itself and Tax Collected at Source (TCS) where a seller collects a certain amount of tax from the buyer at the time of sale. In this webinar we will be learning the applicability, non-applicability, prevailing rate of tax and other related provisions of the Income-tax Act with respect to TDS and TCS
Repo is a short-term collateralized loan where one party sells securities to another and agrees to repurchase them later at a higher price. There are three main types: tri-party, deliverable, and held-in-custody. Tri-party repo is most common in the US and involves a third party agent for post-trade processing. Repo provides liquidity to money market funds and dealers and mitigates credit and liquidity risk through the use of high-quality liquid collateral and margining. Key differences between US and European repo include legal structures for collateral ownership and the dominance of tri-party repo in the US market.
1) The document discusses the dissolution of a partnership firm. Dissolution of a partnership means one or more partners leaving the firm, while dissolution of a firm means the complete closure of business and ending of legal relations among all partners.
2) A firm dissolves under circumstances like expiry of a fixed term, completion of a venture, death or insolvency of a partner, or when all partners agree. Upon dissolution, assets are sold and proceeds are used to pay liabilities, return capital to partners, and any remaining surplus is distributed according to profit ratios.
3) A Realization Account is opened to record the closing values of assets and liabilities. Entries are made to close those accounts and
Endorsement refers to signing one's name on the back of a negotiable instrument like a cheque in order to transfer ownership to another person. There are several types of endorsements - blank or general endorsement allows further negotiation by delivery, special or full endorsement specifies the next endorsee, and restrictive, conditional, sans recourse, facultative, and sans frais endorsements modify the endorser's liability. A valid endorsement must be made in ink, on the instrument, by a holder or maker of the instrument through their signature, and completed through delivery. Endorsement allows the transfer of rights, guarantees prior signatures, and makes the endorser liable if the instrument is dishonored.
This document provides an overview of IFRS 2 Share-based Payment. It defines share-based payment transactions as transactions where an entity receives goods or services from a supplier in exchange for equity instruments or a cash-settled transaction based on equity values. Key aspects covered include measurement of equity and cash-settled transactions, treatment of vesting and performance conditions, accounting for modifications, cancellations, and settlements, and disclosure requirements.
Bankers keep their accounts & its various details by maintaining various ledgers & journals . When any claim on the bank needs to be established or proved in court these books need to be produced in court.
The document discusses the disclosure requirements for related party transactions under the Indian accounting standard AS-18. It defines related parties as individuals or entities that have the ability to control or exercise significant influence over the reporting entity. It requires disclosure of the nature and volume of transactions between the reporting entity and its related parties, as well as outstanding balances and any provisions for doubtful debts involving such parties. The disclosures are necessary because related party transactions may not be conducted under normal commercial terms.
In the day to day operations of the business, it is essential to have grip on Tax Deducted at Source (TDS) which acts as a means to collect tax at the inception of the income itself and Tax Collected at Source (TCS) where a seller collects a certain amount of tax from the buyer at the time of sale. In this webinar we will be learning the applicability, non-applicability, prevailing rate of tax and other related provisions of the Income-tax Act with respect to TDS and TCS
This document outlines regulations for agriculture financing in Pakistan. It discusses the importance of agriculture to Pakistan's economy and employment. It then provides definitions for key terms related to agriculture financing. The general regulations section establishes rules for assessing borrower repayment capacity, developing comprehensive agriculture financing policies, using standardized documents, expeditious processing of applications, exposure limits, maximum unsecured financing amounts, repayment schedules and grace periods, ensuring proper loan use, obtaining credit reports, and know-your-customer requirements. Specific regulations are then provided for various types of agriculture loans including inputs, development, machinery/equipment, and livestock. Regulations address loan terms, security, insurance, classification, and provisioning. Finally, regulations for corporate farming loans address linking financial indicators
The proportionate completion method is
appropriate where performance consists of the
execution of more than one act. Revenue is
recognised based on the performance of each act.
2. Completed Service Contract Method
Performance consists of single act or where services
are rendered by indeterminate number of acts over a
specific period of time. Revenue is recognised when
the single act is completed or when the contract is
completed or substantially completed.
The document discusses a demerger, where an existing company splits into two separate companies. Shareholders of the original company receive equivalent stakes in the new companies. Reasons for demerging include allowing each company to focus on its core activities and comply with different regulations. The document then provides further details about Welspun Corp Ltd, an Indian pipe manufacturer, and its planned demerger into Welspun Corp Ltd and Welspun Enterprises Ltd to simplify its business structure and allow each entity to focus on different operations.
This document summarizes the Bankers' Book Evidence Act of 1891 in Bangladesh. The act aims to amend laws related to admitting bankers' books as evidence in legal proceedings. It allows certified copies of entries in bankers' books to be admitted as prima facie evidence. It also prevents bank officers from being compelled to produce bank books or appear as witnesses, unless ordered by the court. The act grants courts power to order parties to inspect and copy bank entries, and banks must prepare certified copies of relevant entries. It gives courts discretion over costs related to applying the act.
The corporate veil separates a company's legal personality from its shareholders, normally protecting shareholders from liability. However, courts may lift the veil in certain circumstances, such as to prevent fraud, protect public interest, or ensure compliance with legal obligations. Some key reasons for lifting the veil include fraud, tax evasion, improper conduct, avoidance of legal obligations, and circumventing welfare legislation. Lifting the veil allows courts to identify individuals behind a company's actions and hold them accountable.
This document summarizes long-term liabilities such as bonds payable and notes payable. It discusses the different types of bonds including term bonds, serial bonds, and convertible bonds. It provides examples of journal entries for issuing bonds at par value, a premium, and a discount. It also discusses accounting for bond interest expense, premium or discount amortization, and bond retirement or refinancing. Notes payable are also discussed including accounting for non-interest bearing and interest bearing notes for both cash and property transactions.
1) There are different order types in stock trading including market orders, limit orders, stop orders, cover orders, margin intraday square off orders, and bracket orders.
2) Margin trading allows investors to buy more stocks than they can afford by borrowing money from brokers. It provides leverage but also increases risk.
3) There are various types of investors that can fund businesses at different stages, including banks, angel investors, peer-to-peer lenders, venture capitalists, and personal investors.
The document discusses endorsement of negotiable instruments. It defines endorsement as the signature of the holder made to transfer the document to another party. There are various types of endorsements including blank endorsement, endorsement in full, restrictive endorsement, partial endorsement, conditional endorsement, and facultative endorsement. The document outlines the essential elements and legal effects of each type of endorsement under Indian law.
Hire purchase is a financing method where goods are leased with an option to purchase. Ownership remains with the leasing company until final installment is paid. A hire purchase agreement under the Hire Purchase Act specifies installments be paid over time, possession is given at signing, and ownership passes after final payment. The Supreme Court has ruled hire purchase involves hiring goods with an option to buy arising after installments are paid, with no obligation to buy and ability to return goods. Hire purchase differs from normal sale in that ownership passes later and interest is paid over installments rather than a lump sum.
NBFCs are non-banking financial institutions that provide services like loans, acquiring shares/bonds, leasing, insurance etc. but cannot accept demand deposits like banks. They must register with the RBI and meet minimum net owned funds and other requirements to operate legally. Regulations specify rules for NBFCs around accepting public deposits, interest rates, disclosures, and regular reporting to the RBI including audited returns and credit ratings.
A Foreign Currency Convertible Bond (FCCB) allows companies to raise funds in foreign currencies from foreign markets. It acts as both a debt instrument by providing regular interest payments and a principal repayment, and an equity instrument by giving bondholders the option to convert the bond into shares of the issuing company. FCCBs provide benefits to both companies and investors. Companies can access more stable foreign capital markets and investors receive safety of guaranteed bond payments while gaining upside potential if the stock appreciates significantly. Taxation of FCCBs is favorable, with interest payments and dividends taxed at 10% and no capital gains tax if the bond is converted to shares or transferred between non-resident investors.
In a bill discounting facility, a business leverages its invoices with a third-party – generally, a financial institution – to avail cash advance at a discounted rate.
Chapter 27:Liability of Parties to Negotiable InstrumentsTara Kissel, M.Ed
This document provides an overview of liability for parties involved in negotiable instruments. It discusses the liability of primary parties like makers and acceptors, as well as secondary parties like drawers and endorsers. Secondary parties have conditional liability that requires conditions like presentment, dishonor, and notice of dishonor to be met. Exceptions, defenses, and ways liability can be discharged are also covered. The learning objectives are to understand the different capacities and liabilities of those involved in negotiable instruments.
This document discusses two important market value ratios: the price-earnings ratio and the market-to-book ratio. The price-earnings ratio compares a company's stock price to its earnings per share, indicating how much investors are willing to pay for $1 of reported profits. A lower price-earnings ratio may suggest undervaluation, but also potential future difficulties. The market-to-book ratio compares a company's stock market value to its book value, or accounting value, with market value often exceeding book value, especially for equity. Both ratios provide insight into how the market evaluates a company's performance and prospects.
This document discusses the objectives and functions of depositories and the depository system in India. It begins by outlining the key objectives of establishing depositories like providing a legal basis for ownership records, facilitating dematerialization of securities, making securities fungible and transferable. It then explains concepts like fungibility, depositories vs bank depositories, and the roles of depository participants and beneficial owners. Overall, the document provides a comprehensive overview of the Indian depository system.
The document discusses various aspects of dividends, including:
1) Types of dividends such as interim, final, special dividends.
2) Sources of dividends including current year's profits, previous years' undistributed profits, and capital profits.
3) Procedures for declaring dividends including recommendation by the board of directors, approval by shareholders, payment within 30 days of declaration.
Amalgamation refers to the merger of two or more companies into one new company. It involves the transfer of two or more companies' businesses to a newly incorporated company. There are two types of amalgamation - amalgamation in the nature of merger and amalgamation in the nature of purchase. Amalgamation can be accounted for using either the pooling of interests method or the purchase method. Disclosures as per Accounting Standard 14 are required in the financial statements following an amalgamation.
The document discusses the purchase return book, which is a subsidiary book used to systematically record returns of goods purchased on credit. It contains details of items returned such as date, supplier name and address, item description, quantity returned, and amount. The total amount of returns is posted periodically from the purchase return book to the purchase return account. The purchase return account is closed by transferring the balance to the sundry creditors account.
The document discusses the concept of corporate personality and lifting the corporate veil. Corporate personality means a company's liabilities are the legal responsibility of the company and members will not be liable for debts. Normally there is a veil between the company and its members. However, in exceptional cases like fraud, improper conduct, or public interest, courts may lift the veil and disregard the separate legal entity to hold individual members responsible. The document outlines some key cases and circumstances under which courts have lifted the veil, including for the benefit of revenue, where the company is being used to avoid legal obligations, or where it is essentially a single economic entity.
know the Importance and Need of Bank Reconciliation Statement.
Understand the Causes for Disagreement between Cash Book and Pass Book Balances.
Prepare Bank Reconciliation Statement.
This document outlines regulations for agriculture financing in Pakistan. It discusses the importance of agriculture to Pakistan's economy and employment. It then provides definitions for key terms related to agriculture financing. The general regulations section establishes rules for assessing borrower repayment capacity, developing comprehensive agriculture financing policies, using standardized documents, expeditious processing of applications, exposure limits, maximum unsecured financing amounts, repayment schedules and grace periods, ensuring proper loan use, obtaining credit reports, and know-your-customer requirements. Specific regulations are then provided for various types of agriculture loans including inputs, development, machinery/equipment, and livestock. Regulations address loan terms, security, insurance, classification, and provisioning. Finally, regulations for corporate farming loans address linking financial indicators
The proportionate completion method is
appropriate where performance consists of the
execution of more than one act. Revenue is
recognised based on the performance of each act.
2. Completed Service Contract Method
Performance consists of single act or where services
are rendered by indeterminate number of acts over a
specific period of time. Revenue is recognised when
the single act is completed or when the contract is
completed or substantially completed.
The document discusses a demerger, where an existing company splits into two separate companies. Shareholders of the original company receive equivalent stakes in the new companies. Reasons for demerging include allowing each company to focus on its core activities and comply with different regulations. The document then provides further details about Welspun Corp Ltd, an Indian pipe manufacturer, and its planned demerger into Welspun Corp Ltd and Welspun Enterprises Ltd to simplify its business structure and allow each entity to focus on different operations.
This document summarizes the Bankers' Book Evidence Act of 1891 in Bangladesh. The act aims to amend laws related to admitting bankers' books as evidence in legal proceedings. It allows certified copies of entries in bankers' books to be admitted as prima facie evidence. It also prevents bank officers from being compelled to produce bank books or appear as witnesses, unless ordered by the court. The act grants courts power to order parties to inspect and copy bank entries, and banks must prepare certified copies of relevant entries. It gives courts discretion over costs related to applying the act.
The corporate veil separates a company's legal personality from its shareholders, normally protecting shareholders from liability. However, courts may lift the veil in certain circumstances, such as to prevent fraud, protect public interest, or ensure compliance with legal obligations. Some key reasons for lifting the veil include fraud, tax evasion, improper conduct, avoidance of legal obligations, and circumventing welfare legislation. Lifting the veil allows courts to identify individuals behind a company's actions and hold them accountable.
This document summarizes long-term liabilities such as bonds payable and notes payable. It discusses the different types of bonds including term bonds, serial bonds, and convertible bonds. It provides examples of journal entries for issuing bonds at par value, a premium, and a discount. It also discusses accounting for bond interest expense, premium or discount amortization, and bond retirement or refinancing. Notes payable are also discussed including accounting for non-interest bearing and interest bearing notes for both cash and property transactions.
1) There are different order types in stock trading including market orders, limit orders, stop orders, cover orders, margin intraday square off orders, and bracket orders.
2) Margin trading allows investors to buy more stocks than they can afford by borrowing money from brokers. It provides leverage but also increases risk.
3) There are various types of investors that can fund businesses at different stages, including banks, angel investors, peer-to-peer lenders, venture capitalists, and personal investors.
The document discusses endorsement of negotiable instruments. It defines endorsement as the signature of the holder made to transfer the document to another party. There are various types of endorsements including blank endorsement, endorsement in full, restrictive endorsement, partial endorsement, conditional endorsement, and facultative endorsement. The document outlines the essential elements and legal effects of each type of endorsement under Indian law.
Hire purchase is a financing method where goods are leased with an option to purchase. Ownership remains with the leasing company until final installment is paid. A hire purchase agreement under the Hire Purchase Act specifies installments be paid over time, possession is given at signing, and ownership passes after final payment. The Supreme Court has ruled hire purchase involves hiring goods with an option to buy arising after installments are paid, with no obligation to buy and ability to return goods. Hire purchase differs from normal sale in that ownership passes later and interest is paid over installments rather than a lump sum.
NBFCs are non-banking financial institutions that provide services like loans, acquiring shares/bonds, leasing, insurance etc. but cannot accept demand deposits like banks. They must register with the RBI and meet minimum net owned funds and other requirements to operate legally. Regulations specify rules for NBFCs around accepting public deposits, interest rates, disclosures, and regular reporting to the RBI including audited returns and credit ratings.
A Foreign Currency Convertible Bond (FCCB) allows companies to raise funds in foreign currencies from foreign markets. It acts as both a debt instrument by providing regular interest payments and a principal repayment, and an equity instrument by giving bondholders the option to convert the bond into shares of the issuing company. FCCBs provide benefits to both companies and investors. Companies can access more stable foreign capital markets and investors receive safety of guaranteed bond payments while gaining upside potential if the stock appreciates significantly. Taxation of FCCBs is favorable, with interest payments and dividends taxed at 10% and no capital gains tax if the bond is converted to shares or transferred between non-resident investors.
In a bill discounting facility, a business leverages its invoices with a third-party – generally, a financial institution – to avail cash advance at a discounted rate.
Chapter 27:Liability of Parties to Negotiable InstrumentsTara Kissel, M.Ed
This document provides an overview of liability for parties involved in negotiable instruments. It discusses the liability of primary parties like makers and acceptors, as well as secondary parties like drawers and endorsers. Secondary parties have conditional liability that requires conditions like presentment, dishonor, and notice of dishonor to be met. Exceptions, defenses, and ways liability can be discharged are also covered. The learning objectives are to understand the different capacities and liabilities of those involved in negotiable instruments.
This document discusses two important market value ratios: the price-earnings ratio and the market-to-book ratio. The price-earnings ratio compares a company's stock price to its earnings per share, indicating how much investors are willing to pay for $1 of reported profits. A lower price-earnings ratio may suggest undervaluation, but also potential future difficulties. The market-to-book ratio compares a company's stock market value to its book value, or accounting value, with market value often exceeding book value, especially for equity. Both ratios provide insight into how the market evaluates a company's performance and prospects.
This document discusses the objectives and functions of depositories and the depository system in India. It begins by outlining the key objectives of establishing depositories like providing a legal basis for ownership records, facilitating dematerialization of securities, making securities fungible and transferable. It then explains concepts like fungibility, depositories vs bank depositories, and the roles of depository participants and beneficial owners. Overall, the document provides a comprehensive overview of the Indian depository system.
The document discusses various aspects of dividends, including:
1) Types of dividends such as interim, final, special dividends.
2) Sources of dividends including current year's profits, previous years' undistributed profits, and capital profits.
3) Procedures for declaring dividends including recommendation by the board of directors, approval by shareholders, payment within 30 days of declaration.
Amalgamation refers to the merger of two or more companies into one new company. It involves the transfer of two or more companies' businesses to a newly incorporated company. There are two types of amalgamation - amalgamation in the nature of merger and amalgamation in the nature of purchase. Amalgamation can be accounted for using either the pooling of interests method or the purchase method. Disclosures as per Accounting Standard 14 are required in the financial statements following an amalgamation.
The document discusses the purchase return book, which is a subsidiary book used to systematically record returns of goods purchased on credit. It contains details of items returned such as date, supplier name and address, item description, quantity returned, and amount. The total amount of returns is posted periodically from the purchase return book to the purchase return account. The purchase return account is closed by transferring the balance to the sundry creditors account.
The document discusses the concept of corporate personality and lifting the corporate veil. Corporate personality means a company's liabilities are the legal responsibility of the company and members will not be liable for debts. Normally there is a veil between the company and its members. However, in exceptional cases like fraud, improper conduct, or public interest, courts may lift the veil and disregard the separate legal entity to hold individual members responsible. The document outlines some key cases and circumstances under which courts have lifted the veil, including for the benefit of revenue, where the company is being used to avoid legal obligations, or where it is essentially a single economic entity.
know the Importance and Need of Bank Reconciliation Statement.
Understand the Causes for Disagreement between Cash Book and Pass Book Balances.
Prepare Bank Reconciliation Statement.
Axis Bank has sanctioned a cash credit limit of Rs. 25 lakhs to Kon Chern India Pvt Ltd to meet their working capital requirements. The loan is secured by a first charge on the company's current assets and carries an interest rate of 12.25% payable monthly. Kon Chern must submit quarterly stock statements and renewal documents at least 45 days before the expiry of the 12-month term, or else penal interest of 2% will apply. The company must also accept additional terms regarding insurance of assets, prior approval for major changes, and information disclosure.
JMFL Home Loans is engaged in the business of providing home loans tailor-made for your every need. Our Goal is to help you acquire your dream home, your own little piece of heaven. We cater even to those home buyers who lack income proofs and also to those who need small home loans. We leverage our superior technological capabilities and our wealth of experience and rich expertise to provide a diverse range of highly customised products and services to home-buyers. https://www.jmfl.com/what-we-do/fund-based-activities/home-loans
The document provides guidelines for mobile financial services in Bangladesh issued by Bangladesh Bank. It aims to expand access to financial services for underserved populations through mobile networks. It allows banks to offer mobile account-based financial services through partnerships with mobile operators and agents. Services may include domestic remittances, bill payments, P2P transfers, and more. Banks must comply with know-your-customer rules, security standards, transaction limits, and oversight requirements when providing these services.
Draft Guidelines for Licensing of “Payments Banks”BFSICM
The Reserve Bank of India has issued draft guidelines for licensing "Payments Banks" to promote financial inclusion. Payments Banks will accept demand deposits and provide payment/remittance services through various channels. They will be restricted to holding customer balances of Rs. 100,000 initially and investing funds in government securities with maturity up to 1 year. Applicants must have a net worth of Rs. 100 crore and maintain capital adequacy of 15%. Licensing will involve an initial screening followed by evaluation from an expert advisory committee and final approval from RBI.
The document discusses non-fund based credit facilities provided by banks, including letters of credit, guarantees, and co-acceptance of bills. It provides details on:
1) How these facilities work and the parties involved, including the applicant, issuing bank, beneficiary, advising/confirming/negotiating banks.
2) Guidelines from the Reserve Bank of India for these facilities, focusing on eligibility criteria for customers and banks' obligations.
3) Specific requirements for letters of credit, guarantees, and co-acceptance of bills.
RBI has issued a master direction for the NBFC P2P lending platform in October, 2017. The initiative by the RBI is a boosting mechanism for fin-tech companies. It also provides an opportunity to individuals to borrow and lend money without the use of an official financial institution as an intermediary. As this kind of platform involves money of common people hence RBI is cautious to save the public money as this may be vulnerable, therefore RBI has prescribed certain Compliances for the NBFC P2P companies. A small presentation extracting compliance from Master Direction is attached here with.
This document discusses universal banking in India. Universal banking combines commercial banking, investment banking, insurance, and other financial activities under one roof. In India, the Narsimham Committee Report and S.H. Khan Committee Report in 1998 advised consolidating the banking industry through mergers and integrating financial activities, suggesting universal banking. Some large domestic financial institutions in India have been permitted to become universal banks, such as ICICI in 2000. Universal banking allows for economies of scale, profitable diversification, better resource utilization, easy marketing using existing brand names, and one-stop shopping convenience for customers. However, it also presents challenges such as different regulatory requirements for banks versus other financial institutions, lack of expertise in long-term lending, and
Legal Remedies Available for Housing finance recoveryVinod Mukunthan
The document discusses non-performing assets (NPAs) in the banking and housing finance industries in India. It provides background on how NPAs impact bank profitability and discusses laws related to dealing with NPAs, including:
1. The Recovery of Debts Due to Banks and Financial Institutions Act (DRT Act) of 1993, which established Debt Recovery Tribunals but still did not allow for fast enough recovery of debts.
2. The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) of 2002, which gave banks more direct powers to take possession of secured assets without court intervention in order to help reduce NPAs.
Presentation on SARFAESI Act_Anurag Ghosh_16PGDMBFS08Anurag Ghosh
The document provides an overview of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) which allows banks to auction residential and commercial properties when borrowers default on loans. It discusses the history and provisions of the act, including giving banks the power to take possession of secured assets without court intervention. It also analyzes the rising level of non-performing assets (NPAs) in Indian banks and how the SARFAESI Act is important for helping banks reduce their NPAs by recovering assets.
RBI GUIDELINES: GUIDELINES FOR COMPROMISE SETTLEMENT OF DUES OF BANKS AND FIN...GK Dutta
As you are aware, the Indian Banks’ Association (IBA) has been issuing guidelines to member institutions for taking up of cases for settlement through Lok Adalats. The position
was reviewed and it was observed that banks have not taken adequate advantage of the Lok Adalats for compromise settlement of their NPAs. There are certain advantages in using the forum of Lok Adalats by banks and financial institutions in compromise settlement of their NPAs. There are no court fees involved when fresh disputes are referred to it. It can take cognizance of any existing suit in the court as well as look into and adjudicate upon fresh disputes. If no settlement is arrived at, the parties can continue with court proceedings. Its decrees have legal status and are binding. It has, therefore, been decided that with a view to making increasing use of the forum of Lok
Adalats to settle banking disputes involving smaller amounts, banks and financial institutions should follow the following guidelines for implementation.
This document outlines draft guidelines for licensing new banks in the private sector in India. Some key points:
1) Only private sector entities owned and controlled by Indian residents will be eligible to promote banks. Promoters must have a successful 10+ year track record running diversified businesses.
2) Promoters will need to set up a Non-Operative Financial Holding Company (NOHC) to hold the bank and other financial entities. The NOHC structure is meant to ringfence banking activities.
3) Initial minimum paid-up capital for new banks is ₹500 crore. The NOHC must hold 40% of the bank's capital for 5 years, reducing to 20
This document outlines India's External Commercial Borrowing (ECB) policy, which allows Indian companies to borrow funds in foreign currency from non-resident lenders with minimum maturities of 3 years. There are two routes for ECB - Automatic and Approval. The Automatic Route allows eligible corporates to borrow up to $500 million annually from recognized lenders at specified all-in-cost ceilings. The Approval Route requires RBI approval and allows additional borrowing or relaxation of certain criteria. Borrowers must report ECB deals to RBI for monitoring and dissemination.
The document provides guidelines for banks on Know Your Customer (KYC) norms, branch licensing for Regional Rural Banks, cash reserve and statutory liquidity requirements for cooperative banks, and reporting fraud and maintaining deposit accounts. It outlines the objectives of KYC procedures, criteria for accepting customers, monitoring transactions, and establishing risk management policies. It also provides thresholds for reporting fraud cases to the police or CBI and relaxing conditions for RRBs to open branches in certain tiers or centers.
Banking Services and Consumers By Rupendra PorwalRupendra Porwal
This presentation will enable the consumers to know their rights as a banking services customers and will also equip them to demand their rights from the bankers. This presentation also highlights the duties and responsibilities of bankers towards customers, so as to deliver services as per policies of RBI and respective bank.
financial intermediation business (1).pptSumit717679
Financial intermediaries collect savings from depositors and use these funds to purchase assets and issue claims against themselves. The key intermediaries are commercial banks, lease financing, hire purchase, venture capital, and securitization. Commercial banks are the largest and fastest growing financial intermediaries in India. They provide various services like bank accounts, loans, money transfers, credit/debit cards, and lockers. Reforms in the banking sector include interest rate deregulation, adoption of prudential norms, reduction in preemptions, and allowing new private banks. Asset liability management (ALM) matches bank assets and liabilities across various maturity periods to manage liquidity risk. Lease financing involves the owner of an asset providing it to a user
financial intermediation business (2).pptSumit717679
1. Financial intermediaries collect savings from others and issue claims against themselves, using the funds raised to purchase ownership or debt claims. Major intermediaries include commercial banks, lease financing, hire purchase, venture capital, and securitization.
2. Commercial banks are the oldest and largest financial intermediaries in India. They provide services like bank accounts, loans, money transfers, credit/debit cards, and lockers.
3. Lease financing and hire purchase are modes of financing that allow for the purchase of assets over time through periodic rental or installment payments, with ownership transferring at the end of the agreement. Both play an important role in providing access to capital.
Vietnam - Banking - Modernizing the System - What must be done: Dr. Oliver Massmann
The document discusses several issues and recommendations regarding Vietnam's banking system. It recommends that the State Bank of Vietnam (SBV):
1. Adopt a legal framework for cash management products to help businesses better manage cash flow and provide liquidity management tools.
2. Further develop regulatory frameworks for risk management of foreign exchange, interest rate, and commodity risks to help companies hedge business risks.
3. Prioritize digitization and develop a relevant financial technology ecosystem in Vietnam by forming policies to facilitate partnerships between startups and banks.
4. Provide banks more time and opportunities for feedback on new regulations to improve regulatory enforcement and compliance.
This document provides details on India's framework for External Commercial Borrowings (ECBs). It outlines the statutory provisions governing ECBs, the three tracks for raising ECB loans, parameters of ECBs including eligible borrowers and lenders, forms of borrowing, available routes, and cost ceilings. Key points covered include that ECBs can be raised under the automatic or approval route, eligible borrowers include companies, NBFCs, and infrastructure entities, and recognized lenders include international banks, capital markets, and foreign equity holders.
Similar to RBI GUIDELINES: RECOVERY AGENTS ENGAGED BY BANKS! (20)
This is Gopika Kanta Dutta ails GK Dutta, Social Worker by Passion and Consultant by Profession. I am delight to present you my “Annual Activity Report-2019”.
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RBI GUIDELINES: RECOVERY AGENTS ENGAGED BY BANKS!
1. RBI/2007-2008/296
DBOD.No.Leg.BC.75 /09.07.005/2007-08
April 24, 2008
All Scheduled Commercial Banks
(Excluding RRBs)
Dear Sir,
Mid-Term Review of the Annual Policy for the year 2007- 08 –
Recovery Agents engaged by banks
Please refer to the paragraph 172 and 173 of the mid-term review of the Annual Policy for the year
2007-08, a copy of which is enclosed. In view of the rise in the number of disputes and litigations
against banks for engaging recovery agents in the recent past, it is felt that the adverse publicity
would result in serious reputational risk for the banking sector as a whole. A need has therefore
arisen to review the policy, practice, and procedure involved in the engagement of recovery agents
by banks in India. In this backdrop, Reserve Bank issued draft guidelines which were placed on the
web-site for comments of all concerned. Based on the feedback received from a wide spectrum of
banks / individuals / organizations, the draft guidelines have been suitably revised and the final
guidelines are as follows:
Engagement of Recovery Agents
2. Banks are advised to take into account the following specific considerations while engaging
recovery agents:
(i) ‘Agent’ in these guidelines would include agencies engaged by the bank and the agents/
employees of the concerned agencies.
(ii) Banks should have a due diligence process in place for engagement of recovery agents, which
should be so structured to cover, among others, individuals involved in the recovery process. The
due diligence process should generally conform to the guidelines issued by RBI on outsourcing of
financial services vide circular DBOD.No.BP.40/ 21.04.158/ 2006-07 dated November 3, 2006.
Further, banks should ensure that the agents engaged by them in the recovery process carry out
verification of the antecedents of their employees, which may include pre-employment police
verification, as a matter of abundant caution. Banks may decide the periodicity at which re-
verification of antecedents should be resorted to.
(iii) To ensure due notice and appropriate authorization, banks should inform the borrower the
details of recovery agency firms / companies while forwarding default cases to the recovery agency.
Further, since in some of the cases, the borrower might not have received the details about the
recovery agency due to refusal / non-availability / avoidance and to ensure identification, it would be
appropriate if the agent also carries a copy of the notice and the authorization letter from the bank
along with the identity card issued to him by the bank or the agency firm / company. Further, where
the recovery agency is changed by the bank during the recovery process, in addition to the bank
notifying the borrower of the change, the new agent should carry the notice and the authorization
letter along with his identity card.
(iv) The notice and the authorization letter should, among other details, also include the telephone
numbers of the relevant recovery agency. Banks should ensure that there is a tape recording of the
content / text of the calls made by recovery agents to the customers, and vice-versa. Banks may
take reasonable precaution such as intimating the customer that the conversation is being
recorded, etc.
(v) The up to date details of the recovery agency firms / companies engaged by banks may also be
posted on the bank’s website.
2. (vi) Where a grievance/ complaint has been lodged, banks should not forward cases to recovery
agencies till they have finally disposed of any grievance / complaint lodged by the concerned
borrower. However, where the bank is convinced, with appropriate proof, that the borrower is
continuously making frivolous / vexatious complaints, it may continue with the recovery proceedings
through the Recovery Agents even if a grievance / complaint is pending with them. In cases where
the subject matter of the borrower’s dues might be sub judice, banks should exercise utmost
caution, as appropriate, in referring the matter to the recovery agencies, depending on the
circumstances.
(vii) Each bank should have a mechanism whereby the borrowers' grievances with regard to the
recovery process can be addressed. The details of the mechanism should also be furnished to the
borrower while advising the details of the recovery agency as at item (iii) above.
Incentives to Recovery Agents
(viii) It is understood that some banks set very stiff recovery targets or offer high incentives to
recovery agents. These have, in turn, induced the recovery agents to use intimidatory and
questionable methods for recovery of dues. Banks are, therefore, advised to ensure that the
contracts with the recovery agents do not induce adoption of uncivilized, unlawful and questionable
behaviour or recovery process.
Methods followed by Recovery Agents
(ix) A reference is invited to (a) Circular DBOD.Leg.No.BC.104/ 09.07.007 /2002-03 dated May 5,
2003 regarding Guidelines on Fair Practices Code for Lenders (b) Circular DBOD.No.BP. 40/
21.04.158/ 2006-07 dated November 3, 2006 regarding outsourcing of financial services and (c)
Master Circular DBOD.FSD.BC.17/ 24.01.011/2007-08 dated July 2, 2007 on Credit Card
Operations. Further, a reference is also invited to paragraph 6 of the "Code of Bank's Commitment
to Customers" (BCSBI Code) pertaining to collection of dues. Banks are advised to strictly adhere
to the guidelines / code mentioned above during the loan recovery process.
Training for Recovery Agents
(x) In terms of Para 5.7.1 of our Circular DBOD.NO.BP. 40/ 21.04.158/ 2006-07 dated November 3,
2006 on guidelines on managing risks and code of conduct in outsourcing of financial services by
banks, banks were advised that they should ensure that, among others, the recovery agents are
properly trained to handle with care and sensitivity, their responsibilities, in particular aspects like
hours of calling, privacy of customer information etc.
(xi) Reserve Bank has requested the Indian Banks’ Association to formulate, in consultation with
Indian Institute of Banking and Finance (IIBF), a certificate course for Direct Recovery Agents with
minimum 100 hours of training. Once the above course is introduced by IIBF, banks should ensure
that over a period of one year all their Recovery Agents undergo the above training and obtain the
certificate from the above institute. Further, the service providers engaged by banks should also
employ only such personnel who have undergone the above training and obtained the certificate
from the IIBF. Keeping in view the fact that a large number of agents throughout the country may
have to be trained, other institutes/ bank’s own training colleges may provide the training to the
recovery agents by having a tie-up arrangement with Indian Institute of Banking and Finance so
that there is uniformity in the standards of training. However, every agent will have to pass the
examination conducted by IIBF all over India.
Taking possession of property mortgaged / hypothecated to banks
(xii) In a recent case which came up before the Honourable Supreme Court, the Honourable Court
observed that we are governed by rule of law in the country and the recovery of loans or seizure of
vehicles could be done only through legal means. In this connection it may be mentioned that the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 (SARFAESI Act) and the Security Interest (Enforcement) Rules, 2002 framed thereunder
have laid down well defined procedures not only for enforcing security interest but also for
auctioning the movable and immovable property after enforcing the security interest. It is, therefore,
desirable that banks rely only on legal remedies available under the relevant statutes while
enforcing security interest without intervention of the Courts.
3. (xiii) Where banks have incorporated a re-possession clause in the contract with the borrower and
rely on such re-possession clause for enforcing their rights, they should ensure that the re-
possession clause is legally valid, complies with the provisions of the Indian Contract Act in letter
and spirit, and ensure that such repossession clause is clearly brought to the notice of the borrower
at the time of execution of the contract. The terms and conditions of the contract should be strictly
in terms of the Recovery Policy and should contain provisions regarding (a) notice period before
taking possession (b) circumstances under which the notice period can be waived (c) the procedure
for taking possession of the security (d) a provision regarding final chance to be given to the
borrower for repayment of loan before the sale / auction of the property (e) the procedure for giving
repossession to the borrower and (f) the procedure for sale / auction of the property.
Use of forum of Lok Adalats
(xiv) The Honourable Supreme Court also observed that loans, personal loans, credit card loans
and housing loans with less than Rs.10 lakh can be referred to Lok Adalats. In this connection,
banks' attention is invited to Circular DBOD.No.Leg.BC.21/09.06.002/2004-05 dated August 3,
2004 wherein they were advised to use the forum of Lok Adalats organized by Civil Courts for
recovery of loans. Banks are encouraged to use the forum of Lok Adalats for recovery of personal
loans, credit card loans or housing loans with less than Rs.10 lakh as suggested by the Honourable
Supreme Court.
Utilisation of credit counsellors
(xv) Banks are encouraged to have in place an appropriate mechanism to utilise the services of the
credit counsellors for providing suitable counselling to the borrowers where it becomes aware that
the case of a particular borrower deserves sympathetic consideration.
Complaints against the bank / its recovery agents
3. Banks, as principals, are responsible for the actions of their agents. Hence, they should ensure
that their agents engaged for recovery of their dues should strictly adhere to the above guidelines
and instructions, including the BCSBI Code, while engaged in the process of recovery of dues.
4. Complaints received by Reserve Bank regarding violation of the above guidelines and adoption
of abusive practices followed by banks’ recovery agents would be viewed seriously. Reserve Bank
may consider imposing a ban on a bank from engaging recovery agents in a particular area, either
jurisdictional or functional, for a limited period. In case of persistent breach of above guidelines,
Reserve Bank may consider extending the period of ban or the area of ban. Similar supervisory
action could be attracted when the High Courts or the Supreme Court pass strictures or impose
penalties against any bank or its Directors/ Officers/ agents with regard to policy, practice and
procedure related to the recovery process.
5. It is expected that banks would, in the normal course ensure that their employees also adhere to
the above guidelines during the loan recovery process.
Periodical Review
6. Banks engaging recovery agents are advised to undertake a periodical review of the mechanism
to learn from experience, to effect improvements, and to bring to the notice of the Reserve Bank of
India suggestions for improvement in the guidelines.
Yours faithfully
(Prashant Saran)
Chief General Manager-in-Charge
4. Extracts of Paragraphs 172 and 173 of the Mid-term
review of the Annual Policy for the year 2007-08
Recovery Agents Engaged by Banks
172. In view of the rise in the number of litigations against banks for engaging recovery agents in
the recent past, it is felt that the adverse publicity could result in serious reputational risk for the
banking sector as a whole. An urgent need has, therefore, arisen to review the policy, practice,
procedure involved in the engagement of recovery agents by banks in India. Accordingly, banks are
urged to follow prescribed specific considerations while engaging recovery agents.
173. Complaints received by the Reserve Bank regarding abusive practices followed by a bank’s
recovery agents would invite serious supervisory disapproval. The Reserve Bank would consider
imposing a temporary ban (or even a permanent ban in case of persistent abusive practices) for
engaging recovery agents on those banks where strictures have been passed/ penalties have been
imposed by a High Court/Supreme Court or against its Directors/Officers with regard to the abusive
practices followed by their recovery agents. An operational circular in this regard would be issued
by November 15, 2007.