Thursday 9 January 2020

Lendings-8 , Banking Fundamentals to Know for Students.

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In States, where one of the minority communities notified is, in fact, in the majority, item (12) will cover only the other notified minorities. These States/ Union Territories are --
Jammu & Kashmir, Punjab, Meghalaya, Mizoram, Nagaland and Lakshadweep. 

Investments by banks in securitised assets :
(i) Investments by banks in securitised assets, representing loans to various categories of priority sector, except 'others' category, are eligible for classification under respective categories of priority sector depending on the underlying assets provided: 
(a) the securitised assets are originated by banks and financial institutions and are eligible to be classified as priority sector advances prior to securitisation and fulfil the Reserve Bank of India guidelines on securitisation. 
(b) the all-inclusive interest charged to the ultimate borrower by the originating entity should not exceed the Base Rate of the investing bank plus 8 per cent per annum. 
The investments in securitised assets originated by MFIs are exempted from interest cap as there are separate caps on margin and interest rate. 

(ii) Investments made by banks in securitised assets originated by NBFCs, where the underlying assets are loans against gold jewellery, are not eligible for priority sector status. 

(iii) Transfer of Assets through Direct Assignment /Outright purchases 

(iv) Assignments/Outright purchases of the pool of assets by banks representing loans under various categories of priority sector, except the 'others' category, will be eligible for classification under respective categories of priority sector provided: 
(a) the assets are originated by banks and financial institutions which are eligible to be classified as priority sector advances prior to the purchase and fulfil the Reserve Bank of India guidelines on outright purchase/assignment. 
(b) the eligible loan assets so purchased should not be disposed of other than by way of repayment. 
(c) the all inclusive interest charged to the ultimate borrower by the originating entity should not exceed the Base Rate of the purchasing bank plus 8 per cent per annum. 

The Assignments/Outright purchases of eligible priority sector loans from MFIs are exempted from this interest rate cap as there are separate caps on margin and interest rate. 

(v) When the banks undertake the outright purchase of loan assets from banks/ financial institutions to be classified under priority sector, they must report the nominal amount actually disbursed to end priority sector borrowers and not the premium embedded amount paid to the sellers. 

(vi) Purchase/ assignment/investment transactions undertaken by banks with NBFCs, where the underlying assets are loans against gold jewellery, are not eligible for priority sector status. 

(vii) Inter Bank Participation Certificates Inter Bank Participation Certificates (IBPCs) bought by banks, on a risk-sharing basis, are eligible for classification under respective categories of priority sector, provided the underlying assets are eligible to be categorized under the respective categories of priority sector and the banks fulfil the Reserve Bank of India guidelines on IBPCs. 

(viii) Priority Sector Lending Certificates The outstanding priority sector lending certificates (after the guidelines are issued in this regard by the Reserve Bank of India) bought by the banks will be eligible for classification under respective categories of priority sector provided the assets are originated by banks and are eligible to be classified as priority sector advances and fulfil the Reserve Bank of India guidelines on priority sector lending certificates. 

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Lendings-8 , Banking Fundamentals to Know for Students.

Blog on  Banking Technology for Common Customer  --  Click Here In States, where one of the minority communities notified is, in fact,...