CBLO is a money market instrument that allows entities access to borrow and lend funds against securities for short periods of 1 day to 1 year. It involves CCIL acting as an intermediary between the borrower and lender. Capital employed represents the total long-term funds from shareholders and creditors used in a business. It is used to calculate return on capital employed (ROCE). A qualified institutional buyer (QIB) is an institution that can privately purchase securities from listed companies to help companies raise funds within India's domestic market. The statutory liquidity ratio (SLR) is the minimum fraction of deposits that banks must maintain as liquid assets like government securities and cash.
IDENTIFYING THE POSSIBLE LIMITATIONS AND CHALLENGES FACED BY THE NON-BANKING FINANCIAL INSTITUTIONS (NBFI) ON IMPROVING THE DEMAND FOR PERSONAL LOANS
by Nulaim Nuwaiz
August 2015 Edition of BEACON, A Monthly Newsletter by SIMCON.
Inside this issue:
About Us
Our Team
INDUSTRY ANALYSIS : NBFC Industry
COMPANY ANALYSIS : HDFC Bank
BRAND ANALYSIS : Rolex
Concept of the month: Pricing Myopia
Concepts in Banking and Accounting of transactions: Accounting in banks, Electronic Banking, RTGS, ATM, MICR,
OCR, OMR, and DATANET, Petty Cash, Electronic Clearing Service (ECS), National Electronic Funds Transfer (NEFT) System,
Real Time Gross Settlement (RTGS) System, IMPS
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013 or 1956 carrying on the business listed under Section 45 I (c ) of the RBI Act, 1934, i.e.
IDENTIFYING THE POSSIBLE LIMITATIONS AND CHALLENGES FACED BY THE NON-BANKING FINANCIAL INSTITUTIONS (NBFI) ON IMPROVING THE DEMAND FOR PERSONAL LOANS
by Nulaim Nuwaiz
August 2015 Edition of BEACON, A Monthly Newsletter by SIMCON.
Inside this issue:
About Us
Our Team
INDUSTRY ANALYSIS : NBFC Industry
COMPANY ANALYSIS : HDFC Bank
BRAND ANALYSIS : Rolex
Concept of the month: Pricing Myopia
Concepts in Banking and Accounting of transactions: Accounting in banks, Electronic Banking, RTGS, ATM, MICR,
OCR, OMR, and DATANET, Petty Cash, Electronic Clearing Service (ECS), National Electronic Funds Transfer (NEFT) System,
Real Time Gross Settlement (RTGS) System, IMPS
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013 or 1956 carrying on the business listed under Section 45 I (c ) of the RBI Act, 1934, i.e.
NPA in Indian Banking Industry, Analysis of Bankruptcy Code, Resolution mechanism through Asset Reconstruction Company (including Valuation Techniques)
Non-Performing Assets or NPA are like a cancer worm that has been destroying the banking system of India slowly and steadily. NPA are bad loans with banks or other financial institutions whose interests and or principal amounts are overdue for a long time. This time is usually 90 days or more. Like any other business, banks also must run on profits, but NPA eats into that margin for banks.
Substandard Assets : A sub-standard asset was one, which was classified as NPA for a period not exceeding two years. With effect from 31 March 2001, a sub-standard asset is one, which has remained NPA for a period less than or equal to 18 months.Doubtful Assets : A doubtful asset was one, which remained NPA for a period exceeding two years. With effect from 31 March 2001, an asset is to be classified as doubtful, if it has remained NPA for a period exceeding 18 months.Loss Assets : This occurs when the NPA has been recognized as a loss by the bank, or the internal or external auditor or on Reserve Bank of India (RBI) inspection but the loan has not been forgiven completely.
Banks’ lending to persons/corporations etc. who are not creditworthy and taking high risks.
Banks are not diminishing their losses by understanding their bank’s sufficiency on capital and loan loss reserves at a given time;
Promoter of Companies redirecting their funds elsewhere. Banks trying to fund non-viable projects.
In the initial part of the 1990s, Public Sector Banks started experiencing acute capital shortage and losses. The targets set for their operation did not project the utmost need for these corporate goals.
The banks had very little autonomy to price their products; offer products to preferred sectors or spend money for their own profits. For example, Banks were forced to lend to priority sector namely agriculture due to political pressure.
Deficient means to collect and distribute credit information amongst commercial banks;
Banks’ lending to persons/corporations etc. who are not creditworthy and taking high risks.
Banks are not diminishing their losses by understanding their bank’s sufficiency on capital and loan loss reserves at a given time;
Promoter of Companies redirecting their funds elsewhere. Banks trying to fund non-viable projects.
In the initial part of the 1990s, Public Sector Banks started experiencing acute capital shortage and losses. The targets set for their operation did not project the utmost need for these corporate goals.
The banks had very little autonomy to price their products; offer products to preferred sectors or spend money for their own profits. For example, Banks were forced to lend to priority sector namely agriculture due to political pressure.
Deficient means to collect and distribute credit information amongst commercial banks;
Banks must identify early that there is going to be a non-payment and report it to the Central Repository of Information on Large Credits (CRILC).
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
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how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
Resume
• Real GDP growth slowed down due to problems with access to electricity caused by the destruction of manoeuvrable electricity generation by Russian drones and missiles.
• Exports and imports continued growing due to better logistics through the Ukrainian sea corridor and road. Polish farmers and drivers stopped blocking borders at the end of April.
• In April, both the Tax and Customs Services over-executed the revenue plan. Moreover, the NBU transferred twice the planned profit to the budget.
• The European side approved the Ukraine Plan, which the government adopted to determine indicators for the Ukraine Facility. That approval will allow Ukraine to receive a EUR 1.9 bn loan from the EU in May. At the same time, the EU provided Ukraine with a EUR 1.5 bn loan in April, as the government fulfilled five indicators under the Ukraine Plan.
• The USA has finally approved an aid package for Ukraine, which includes USD 7.8 bn of budget support; however, the conditions and timing of the assistance are still unknown.
• As in March, annual consumer inflation amounted to 3.2% yoy in April.
• At the April monetary policy meeting, the NBU again reduced the key policy rate from 14.5% to 13.5% per annum.
• Over the past four weeks, the hryvnia exchange rate has stabilized in the UAH 39-40 per USD range.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
how can I sell my pi coins for cash in a pi APPDOT TECH
You can't sell your pi coins in the pi network app. because it is not listed yet on any exchange.
The only way you can sell is by trading your pi coins with an investor (a person looking forward to hold massive amounts of pi coins before mainnet launch) .
You don't need to meet the investor directly all the trades are done with a pi vendor/merchant (a person that buys the pi coins from miners and resell it to investors)
I Will leave The telegram contact of my personal pi vendor, if you are finding a legitimate one.
@Pi_vendor_247
#pi network
#pi coins
#money
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The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
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Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
1. Priyanka Bhuwania
08BS0002372
Sec- F
Date: 24th Aug, 2009
Submitted to: Dr.K.M.Bhattacharya
Set - 2
Ques 1.Write short notes on-
a) Collateralized Borrowing and Lending Obligation (CBLO):
CBLO is explained as under:
• An obligation by the borrower to return the money borrowed, at a specified future date;
• An authority to the lender to receive money lent, at a specified future date with an option/
privilege to transfer the authority to another person for value received;
• An underlying charge on securities held in custody (with CCIL) for the amount
borrowed.
It is a money market instrument as approved by RBI, is a product developed by CCIL for the
benefit of the entities who have either been phased out from inter bank call money market or
have been given restricted participation in terms of ceiling on call borrowing and lending
transactions and who do not have access to the call money market. CBLO is a discounted
instrument available in electronic book entry form for the maturity period ranging from one day
to ninety Days (can be made available up to one year as per RBI guidelines). In order to enable
the market participants to borrow and lend funds, CCIL provides the Dealing System through:
- Indian Financial Network (INFINET), a closed user group to the Members of the Negotiated
Dealing System(NDS) who maintain current account with RBI.
- Internet gateway for other entities who do not maintain Current Account with RBI.
It is a variant of liquidity adjustment facility permitted by RBI. It is a mechanism to borrow and
lend funds against securities for maturities of 1 day to 1 year. It is a tripartite repo transaction
involving CCIL as 3rd party which functions as intermediary or common counter party to
borrower as well as lender.
Borrower will be able to repay back even before maturity, compared to payment on due date
under the existing Repo system. CBLO is expected to meet the needs of banks, FIs, PDs, MFs,
NBFCs and companies for deploying their surplus funds, which have been phased out of the call
1
2. money market operations. CBLO is issued at a discount to face value. Under CBLO, securities of
borrower will be held in their constituent SGL account opened with CCIL and will not be
transferred to lender.
b) Capital Employed:
Capital employed is basically the long term funds employed in a business. Capital employed of a
business is from the ordinary shareholders and from long term liabilities. Hence, it is the
effective amount of money actually being used in a business, regardless of whether it is from the
owners or creditors or banks. The long term liabilities include the bank borrowings (at least more
than 12 months after balance sheet) or a debenture holder which is of fixed duration and
demands a fixed rate of interest. Capital Employed is also known as NET WORTH.
Formula = Owners’ Equity + Long Term Liabilities.
Since, Net Worth = Total Assets less current liabilities
So, Net Worth = Net Assets.
In general, it represents the capital investment necessary for a business to function. A slightly
different view of capital employed would take into consideration any current assets and current
liabilities. With this formula, both fixed assets as well as current assets are taken into
consideration. Current liabilities, including both short term and long term liabilities, would be
subtracted from the overall value of the assets.
Return on Capital Employed (ROCE) is used in finance as a measure of the returns that a
company is realizing from its capital employed. It is commonly used as a measure for comparing
the performance between businesses and for assessing whether a business generates enough
returns to pay for its cost of capital.
Formula = (EBIT/Capital Employed)* 100%
Here in the denominator we have net assets or capital employed. Capital employed is the value
of the assets that contribute to a company's ability to generate revenues, ie. their liquidity.
c) Qualified Institutional Buyer (QIB):
For additional capital, there are many routes available in the market: overseas issuances through
ADRs/GDRs/FCCBs, preferential issues, follow on public offerings and rights issues. The new
guidelines basically aim at offering an alternative to overseas issuances which have grown
2
3. significantly in past days and thereby adversely impacting the activities in our domestic market.
In the last three fiscal years, Indian companies raised Rs.59, 567 crore from abroad.
QIB is a purchaser of securities under which a listed company don’t issue shares in public but
privately place securities with QIBs in the domestic market.
Following are few advantages of using QIB as route to raise finance:
• Serving as an alternative to overseas issuances and thereby protecting the domestic
market.
• Many companies prefer QIB route to ADRs etc because of the cost advantage – 2%
versus 5%.
• Further it gives an additional benefit of simplifying the offer process.
• Greater disclosures are sought for QIPs compared to those of preferential allotment.
• Another advantage is that such an issue can be made even to investors not registered with
SEBI as QIB.
Many banks are now resorting to this method like recently HDFC has displayed firm trend in an
otherwise weak market on back of its plans to raise Rs.4,000 crore from QIBs.
In terms of clause 2.2.2B (v) of DIP Guidelines, a ‘Qualified Institutional Buyer’ shall mean:
• Public financial institution as defined in section 4A of the Companies Act, 1956;
• Scheduled commercial banks
• Mutual funds
• Foreign institutional investor registered with SEBI
• Multilateral and bilateral development financial institutions
• Venture capital funds registered with SEBI
• Foreign Venture Capital investors registered with SEBI.
• State Industrial Development Corporations
• Insurance Companies registered with the Insurance Regulatory and Development
Authority (IRDA).
• Provident Funds with minimum corpus of Rs.25 crores
• Pension Funds with minimum corpus of Rs. 25 crores
d) Statutory Liquidity Ratio (SLR):
Monetary policy refers to the use of certain official instruments such as the bank rate or open
market operations or the reserve ratio for controlling the cost and volume of credit in the
economy and thereby supply of money. With the help of these techniques the Central Bank can
affect the credit creating capacity of banks in a nation. Besides, it will also protect the depositors
from bank getting liquidated. RBI exercises direct control over liquidity of the banks through the
use of two complementary methods, CRR and SLR.
3
4. Under SLR, a bank is required to maintain a minimum fraction of its total demand and time
liabilities in the form of three types of liquid assets, namely:
• Excess Reserves,
• Unencumbered government and other securities,
• And Current account balances with other banks. In other words,
SLR = Liquid Assets
Total Demand and time liabilities
The RBI has used SLR:
• To control bank credit,
• To increase government securities in the investment portfolio of banks and
• To keep the banks solvent.
The increase in SLR has the effect of diverting funds from loans and advances to liquid assets.
The increase in SLR decreases the profitability of banks because the yield on government
securities is lower than the interest charged on loans and advances. The Narasimham Committee
(1991) recommended that the government should reduce SLR to release more funds with banks
for allocation to productive sectors of the economy. Accordingly the RBI has reduced SLR from
38.5% to 25% and now, 24% on incremental demand and time liabilities.
e) Special Purpose Vehicle (SPV):
According to Financial Dictionary “The SPV is usually a subsidiary company with an asset or
liability structure and legal status that makes its obligations secure even if the parent company
goes bankrupt.”
Special Purpose Vehicle (SPVs) or Special Purpose Entity (SPEs) is basically legally instrument
which companies use to accomplish certain goals in the field of corporate finance. Companies
use SPVs to isolate the firm from financial risk. These are created in many forms such as
subsidiaries, trusts etc. If an SPV is constituted as a charitable trust, the securities program is
structured in way that generates a profit that the SPV distributes as a dividend to the Trust so that
the trustees can use it for charitable activities. This form of SPV is not dependent of its sponsors
or promoters. A company transfers its assets to SPV for management purpose or to finance a
large project. Therefore, the basic purpose of its creation is to ease up companies to minimize
their monetary risks. No SPV can be formed for illegal or unlawful reasons or for reasons that
are against the provisions of Company’s law board or public policy.
Benefits from the creation of SPVs:
• Commonly used to securitize loans
4
5. • To transfer a high risk project/ asset from the parent company to SPV
• Different countries have different tax rates for capital gains and gains from property
sales. SPVs created in different countries thereby help to have tax-gains.
• For regulatory reasons and
• For competitive reasons.
Ques. 2
(a) What is the yield, if the face value of 364 days T. Bill is Rs 100 and if the
purchase price is 90 for T. Bill?
Ans. The rupee income the buyer makes for 364 days investment is Rs.10 per bill and the return
on his investment works out to be:
- 1] *
=
= 11.14% per annum.
2. (b) Ever Grow Bank purchased commercial paper for Rs 19,40,000 with a
face value of Rs 20,00,000. Maturity Period 6 months. Calculate the yield for
the bank.
Ans. Yield for the bank =
=
= 0.06 or 6%.
5