Also Read - Risks of leaving your bank account dormant

Are you also in habit of leaving your bank accounts unattended for long? Then, it's time to be alert. You may be deprived of entire money in your accounts by fraudsters. Howsoever rich you may be, but you won't want your single rupee to be taken away by fraud. In a latest development, Delhi Police Cyber Crime Cell has arrested 12 persons including 3 HDFC Bank employees for fraudulently attempting to siphon money out of a dormant account belonging to an NRI. The modus operandi adopted by t...

Also Read - Drawing power vs. Security in CC limit- open the knot

Today I am covering a very important provision in bank credit (working capital limit) which almost 100% of the people (even CAs and senior bankers) treat wrongly.   Generally banks will compute drawing power (DP) in a cash credit/overdraft account by taking into consideration book debts outstanding upto 90 days. I think this concept is clear to everyone.   But, almost everyone does a mess with the concept of security viz-a-viz the computation of DP. You are all aware that banks stipula...

Also Read - RBI Guidelines- Opening of Current Accounts of Borrowers by Banks

Fund diversion has always been a major problem in our banking system. It has been observed in all major cases of wilful default or fraud that the funds borrowed from banks have been diverted elsewhere and the banks had no control on utilization of funds. This situation is caused due to the fact that there is no discipline in our banking system on opening and running of current and CC/OD accounts. Borrowers have simultaneous current and CC/OD accounts with many banks.   To check this loophol...

Also Read - Framework for resolution of stressed loans on account of Covid-19

The RBI has, vide notification dated 06.08.2020, issued a new framework for resolution of stressed loans caused by Covid-19. I am discussing the relevant portion of this notification in my own words in simple and clear language in three parts.   Part-I (General overview of the framework)   Existing frameworks for restructuring of loans before issue of this latest notification: a) Guidelines for restructuring of MSME loans vide circular dated 11.02.2020 (for MSME borrowers with exp...

Also Read - Revised Guidelines on Classification of MSMEs and Registration under Udyam

The Central Govt. has notified revised method of classification of micro, small and medium enterprises w.e.f. 1st July 2020. Those who could not find time to read entire notification or could not get any point clearly, may go through the following gist with examples for simple but clear understanding.   1. The classification of entities based on investment in plant & machinery or equipment and/or aggregate turnover is proposed as follows: Micro units- investment in plant & machinery...

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