Question

Prepare an essay about types, legal regulation and trends of state lending in INDIA write NO LESS THAN 1700 WORDS

Answer 1

Prepare an essay about types, legal regulation and trends of state lending in INDIA :

Secured lending is a regulated activity in India . In India , various types of Institution are entitled to engage in lending activities – mainly include :

1) Schedule and Non Scheduled Banks

2) Non banking Financial Companies ( NBFC)

3) Cooperative Bank

4) Microfinance

5) Money lenders

In india as per RBI guideline and regulations require lending agencies to maintain standard relating to capital adequacy ratio ( CAR ), CRR 9 cash reserve ratio) , maintain repo , reverse

repo rate to maintain liquidity and Statutory Liquidity ratio ( SLR) , Credit growth , maintain lower cost of fund and maintain KYC.

A security interest over the assets of the borrower or third party can be created to secure any regulated lending activity.

An Indian Company may borrow funds in compliance with the Companies Act . A public listed company would need approval of 75% of its shareholders if the proposed borrowing m together with the money already borrowed by the company would exceed the aggregate of its paid up capital + Free reserves

There has been an influx of external commercial borrowing (ECB) transactions , where foreign lenders lend to Indian borrowers , as the ECB guideline have been have been liberalized and the Interest rates of foreign lenders are lower compared to the Indian market . We experienced sizeable growth in Peer to peer lending in the Industry – although later RBI has imposed strict limitation on the peer to peer Lending Industry

The RBI regulates the banking sector by issuing various regulations , guideline , notification and policies from time to time.

The lender should conduct due diligence on the assets provided as security to ensure that security provider absolute title over the firm

India is the fastest growing large economy in the world . Banks have experience overall reduction in provisioning against deterioting assets and an increase in credit growth .

Insolvency and Bankruptcy code 2016 ( IBC) – This code provides comprehensive insolvency and bankruptcy procedures for companies , partnership firms , LLP and Individuals

A resolution plan must be submitted by the committee of creditors m which should be approved by majority of the value of both secured and non secured financial creditors .

In march 2016, the RBI issued directions to banks to revise their computation of interest rates and link the same to the marginal cost of funds based lending rates ( MCLR).