Bankers Notebook by -Anuj Kumar

  What is CRR? CRR means Cash Reserve Ratio. Banks in India are required to hold a certain proportion of their total deposits with RBI in cash form. Right now, CRR is about 4.75% that means if people deposit total Rs.100 in SBI, then SBI would have to deposit Rs.4.75 in RBI. This is CRR or Cash Reserve Ratio. CRR rule  doesnot  apply to  Non Banking Financial Companies (NBFC), Mutual funds or insurance companies. What is Scheduled Commercial Bank? Scheduled banks are those banks which have been included in the second schedule of the Reserve bank of India act of 1934. The banks included in this schedule list should fulfill two conditions. The paid capital and collected funds of bank should  not be less than Rs. 5 lakhs . Any activity of the bank will not adversely affect the interests of depositors [ hahaha, does it mean Non-scheduled banks are allowed to adversely affect the interests of depositors !? ] Examples of Scheduled Commercial Banks Public Sector Privat...

  Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, Suppose, Mr.Paraajay has opened factory with Rs.100 crores. He financed this, via mixture of Debt + equity in following way. Holder Rupees in Cr. Equity (IPO->Shares) Paraajay and his family 20 Juntaa (public) 30 Debt (loans, Bonds) Business loan from SBI 40 Bonds 10 Total 100 Initially the company runs well and good. But then Mr.Paraajay doesn’t revise his MBA books often, so he forgets the business concepts. His company starts making losses. He fails to pay loan EMIs for many months. SBI gives him notice to correct his behavior. Still, he doesn’t start paying money. SBI declares this Rs.40 crores loan NPA (Non-Performing Asset). Once a loan is declared as non-performing asset, SBI can take actions under SARFAESI act, to recover the loan money. Bank have following powers under SARFAESI Act Take possession of Mr.Paraajay’s assets without requiring court order. (Commericial or ...