Amitabh Talwar

LAP and WCTL are both EMI based loans for fixed tenor. However both are different in many aspects. LAP which is called Loan against property and WCTL which is called working capital term loan are used by the banks to meet the financing need of the borrower. While the former is broader product and includes WCTL as well but the latter is a need specific/situation specific loan product given by the banks. Through this video, Let us learn the key differences between them #loanagainstproperty #workingcapitaltermloan #propertyloan #mortgageloan #workingcapital #caankushjain #ankushjain #shortsfeed #creditmanager #creditanalyst #retailloans #businessbanking #msme #msmefinance #smeloan #smesector https://lnkd.in/ghnqM2tr

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🔍 RBI’s Scrutiny on 'Netting Off' in Microfinance Loans 🔍 📢 The RBI in it's recent inspections has raised concerns over the widespread use of 'netting off' by banks and NBFCs in the microfinance sector. According to a senior executive, this practice has grown notably since the pandemic, catching the regulator's eye as early as FY22 and leading to formal action by FY23. ⚠️ The prevalence of loan rollovers in FY24 has prompted the RBI to intensify its scrutiny, directing lenders to ensure that borrowers fully repay outstanding loans before new credit facilities are extended. 💡 The RBI’s mandate is clear—rolling over loans without closing existing credit is no longer permissible. Financial institutions confirm this shift, stating it’s aimed at promoting responsible lending and protecting borrowers from accumulating unmanageable debt. 🔗 This move signals a crucial step toward sustainable microfinance practices and financial stability across India’s banking sector. #Microfinance #RBI #NettingOff #LoanRollovers #FinancialStability #ResponsibleLending #BankingRegulations #NBFC #SmallFinanceBank #FinancialInclusion #MicrofinanceIndia #BankingInsights

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Banks are set to revolutionize the lending process for small businesses by tapping into their "digital footprint" for loan eligibility assessments. This innovative approach will consider various factors such as salary payments, utility bills, taxes, and provident fund details to streamline lending to this underserved sector. Following the recent introduction of a new credit assessment model for MSMEs in the Budget, the Finance Ministry is now working on a similar initiative to offer home loans based on individual digital footprints. In Budget 2024-25, Finance Minister Nirmala Sitharaman emphasized that public sector banks will enhance their internal capabilities to evaluate MSMEs for credit, moving away from traditional balance sheet assessments. Under this fresh model, banks will evaluate MSMEs based on their digital footprints, marking a significant shift in the lending landscape. For more details, https://lnkd.in/gKqMhEFi

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Concept of Lease rental Discounting- Loan eligibility on rental income of the borrower. Video link along with eligibility calculator preparation way is in the comment box. Please visit and subscribe to my youtube channel to get access to more than 440 videos on banking finance. Just search through my name on youtube. Concept: When borrower receives regular and confirmed rental income that can be vetted from banking and backed by lease agreement. Then the present value of these rentals can be considered to calculate loan eligibility. Since the eligibility is dependent on rental income paid by tenant therefore tenant should be a strong entity thus this product is not eligible for every type of rentals received. Key rules are as below: 1. Tenant should be strong preferably A rated family as per external rating. Criteria can vary from bank to bank. SMA/CRILC check of tenants should be positive and acceptable. Brief health of tenant financial as available on MCA portal to be checked. 2. Escrow account to be opened mandatorily where the rent received shall first be used to repay our loan EMI and balance rentals shall be given to borrower for his own use. 3. Valid registered/unregistered (Bank's call) lease agreement to be there between borrower and tenant with minimum residual lease period to be equivalent to proposed loan tenor. However if it is less than the proposed tenor then same is bank to bank call for consideration. 4. The property from which rentals are coming to be mortgaged with the lender. 5. Lender shall have first charge over rentals, escrow account and Can also propose DSRA condition. Usually bank give 50-60% of the property value as loan subject to separate eligibility on rentals as well. 6. Not much focus is done on financial health of borrower however his CIBILs should be clean along with good market ref. check. There should not be any doubt on credibility of the borrower. 7. End use of the loan can be for business as well as personal. Loan can be given to individuals as well as entities. 8. Escalation clause in rental agreement can be considered to calculate enhanced eligibility. Same is explained in the videos. Multiple rentals can also be combined as explained in the video. 9. Tenant NOC or vacation clause in rental agreement should be there mentioning that the tenant shall vacate and peaceful possession of the property to the lender in case of default. 10. Maximum loan tenor is usually 10 years subject to point 3 above and term loan/DLOD facility is given. Best regards: CA Ankush Jain

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The Blame Game in Retail Lending: Breaking the Circle of Finger-Pointing In the bustling financial hub of Mumbai, Rajesh sat in his corner office, staring at the latest NPAs report. As the Divisional Head at New Age Bank, he couldn't help but notice a familiar pattern in the monthly review meeting that had just concluded: "The sales team is pushing bad cases!" "Credit underwriting is too lenient!" "The policies are outdated!" "Collections team isn't trying hard enough!" These accusations flew across the conference room like arrows, each department defending its territory. It reminded Rajesh of the old Indian parable about blind men describing an elephant – each touching a different part and arriving at completely different conclusions. The Four Pillars' Perspective: Sales (Amit): Under pressure with ambitious targets Competing in a tough market with aggressive competitors Walking the tightrope between growth and quality Facing pressure from branches to maintain relationships Dealing with customer expectations of instant approvals. Credit (Priya): Processing volumes that have doubled in the last quarter Working with incomplete documentation Balancing risk parameters with business growth Managing escalations from both sales and risk Struggling with legacy systems that slow down decisioning Risk & Policy (Suresh): Analyzing emerging market trends and threats Witnessing new fraud patterns every month Trying to keep policies agile yet robust Balancing regulatory compliance with business needs Fighting for system upgrades in a cost-conscious environment Collections (Maya): Dealing with increasingly resistant customers Managing a young, inexperienced team Competing with other lenders for recoveries Navigating through legal complexities Handling emotional stress daily. customers are not contactable. The problem wasn't with any single department – it was with the silos they had created. The solution? Breaking down these walls. Three months later: Cross-functional teams now sit together weekly Every department spends one day monthly experiencing another's challenges KPIs are aligned across teams A unified digital platform connects all processes Regular town halls encourage open dialogue The results? NPAs down by 18%, employee satisfaction up by 25%, and most importantly – no more finger-pointing in review meetings. Key Learnings: Every function sees only part of the truth Collaboration beats competition in the long run Understanding others' challenges creates empathy Unified goals lead to unified solutions Leadership's role is to build bridges, not walls As Warren Buffett once said, "Risk comes from not knowing what you're doing." In retail lending, it often comes from not knowing what others are doing. Remember: The next time you're tempted to point fingers, try pointing in the same direction instead. #RetailBanking #Leadership #RiskManagement #TeamWork #Banking #FinancialServices #CorporateCulture

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RIP Cross-selling in Pvt. Bank branches⚰️as per my recent experiences. As a seasoned Banker, visiting a Bank as a Customer is a nostalgic experience, seeing it through familiar eyes. I felt good to see relaxed inbound staff on the sales front. Either they were not concerned about sales or there are no sales KRA anymore. I went to different Pvt. Banks (3 visits) for various service requests on different dates. In all instances, cross-selling was absent. No one ❌Asked me to open CA, upon informing that We have opened a preschool. ❌Requested for additional funding in SA or FD. ❌Pitched investment products. I went to 2 PSU Banks, again with service requests. In one of them, the staff asked me to ✅Start transacting. ✅Fund SA & open CA. ✅Informed me about MSME & gold loans. The service approach was excellent & all requests were processed smoothly in all instances, however, the Banker inside me was looking for some sales pitch. Is this a trend reversal, where PSU banks are becoming more sales-oriented? These experiences brought back memories of when sales productivity was the focus for all staff & appraisals emphasized sales results rather than service requests processed. Good for the Inbound Team.👍 #crosssales #banking #sales #productivity #businessdevelopment #branchmanager #banks #salesmanager

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What we understood good practices in Microfinance were respecting JLG and not pushing clients in to taking loans. Loan officers were supposed be managing centre meetings and clients- mainly collect and give loans to those who need it. Follow the process.Last few years Management ( read plural) think loan officers are supposed to do sales and not manage risk. Risk managers and units sprung up in all MFI’s and they have achieved nothing - except make the right noises to tick the boxes.I don’t know of anyone who has really managed the risk as a process in MFI- since they think risk is all about ‘managing the management’ rather than customer.

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Retail lending has been a growth driver for Indian banks, particularly in the personal loan and credit card segments. These segments have expanded at more than 25 per cent annually, fueled by increased consumer demand and competitive lending practice. The rapid growth of unsecured loans has created a double-edged sword: while it has enabled borrowers to access funds easily, it has also led to a buildup of debt among small borrowers, many of whom have multiple loans. This easy access to credit has allowed borrowers to finance consumption, home renovations, and even medical expenses without sufficient collateral. But, as recent data reveals, an increasing number of these individuals are now struggling to repay their obligations, causing a rise in non-performing assets (NPAs) for banks. Read more at: https://lnkd.in/diF5y6Fe

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“With the tightening of bank loan markets, NBFCs across the spectrum are increasingly turning to *alternative funding sources such as domestic bonds, ECBs, and offshore bonds*. The RBI’s decision to raise the risk weightage on bank lending to NBFCs—irrespective of their ratings or ownership structure—has further increased borrowing costs for the sector. Additionally, MCLR-based loans have become more expensive, even though some banks offer market benchmark-linked floating rate loans. Happy to share my comments with Piyush Shukla businessline

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ICICI Bank announced its financial performance for Q4 FY24, here are the key highlights:   Financial Performance for Q4 FY24 - Core operating profit grew by 10.5% Y-o-Y to ₹ 15,320 crore - Net interest income (NII) rises by 8.1% Y-o-Y to ₹ 19,093 crore - Net profit rises by 17.4% Y-o-Y to ₹ 10,708 crore   Financial Performance for FY 2024 - Core operating profit grew by 18.3% Y-o-Y to ₹ 58,122 crore - Net profit rises by 28.2% Y-o-Y to ₹ 40,888 crore   Financial Performance for Q4 FY24: Branch Network - Added 623 branches in FY 2024 - 6,523 branches at March 31, 2024 - 17,190 ATMs and cash recycling machines at March 31, 2024 For more details, click here: https://lnkd.in/d95DfPf5

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Exploring the Good Bank and Bad Bank in the Indian Banking Sector In the dynamic landscape of the Indian banking sector, the concept of Good Bank and Bad Bank has emerged as a strategic approach to address the challenges posed by non-performing assets (NPAs) and strengthen the financial health of banks. Let's delve into the nuances of this model and its implications for the future of banking in India. What is a Good Bank? · A Good Bank represents a financially sound institution with healthy assets and a strong balance sheet ·Focuses on core banking activities such as lending, deposits, and other traditional banking services. .Eg: ICICI, SBI What is a Bad Bank ? ·A Bad Bank is created to segregate toxic assets or non-performing loans from the balance sheet of the Good Bank. ·Manages distressed assets separately to prevent them from impairing the overall financial health of the bank. ·Eg: National Asset Reconstruction Company Limited (NARCL) in India serves as a Bad Bank to address the issue of NPAs in the banking sector. Key Benefits Balance Sheet Cleanup ·Segregating toxic assets into a Bad Bank helps in cleaning up the balance sheet of the Good Bank, enhancing transparency and credibility. ·Enables the Good Bank to focus on its core functions without the burden of distressed assets. Risk Mitigation · Mitigates the risks associated with non-performing loans by isolating them in a separate entity, thereby reducing the impact on the overall banking operations. · Improves the asset quality and creditworthiness of the Good Bank, leading to enhanced investor confidence. The Way Forward for the Indian Banking Sector Strengthening Regulatory Oversight ·Implementing robust regulatory frameworks and governance structures to monitor the operations of Good and Bad Banks effectively. ·Enhancing transparency and accountability in asset management and resolution processes. Promoting Financial Stability ·Leveraging the Good Bank and Bad Bank model to address the challenges of rising NPAs and strengthen the resilience of the banking sector. ·Fostering collaboration between banks, regulators, and government authorities to drive sustainable growth and stability. The Good Bank and Bad Bank model presents a strategic framework for rejuvenating the banking sector in India by addressing asset quality concerns and fostering financial stability. By embracing this model with a forward-looking approach and strong governance mechanisms, banks can pave the way for a healthier and more resilient financial ecosystem in the country. #GoodBank #BadBank #BankingSector #FinancialHealth #NPA #RegulatoryFramework #AssetManagement #IndianEconomy #FinancialStability

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Some valid points....but one can go stepping out of the balance sheet (the transparency issue) to recognise the merits of central bank capital (can it run with negative networth etc.,), profits of central bank (what are they really?) etc.,. These are arguments keeping in mind a generic central bank of a country whose currency is not yet capital account convertible or a free float Thus much depends on (i) the manner in which reserves get accumulated …current/trade account surpluses or capital account flows (ii)whether the profits ‘are generated’ or they 'just happen as a corollary' to some other actions that the CBs are bound to undertake (iii)whether the currency of the country is fully convertible or not….to the extent that countr’y's external liabilities need to be serviced in a hard currency (say US dollar), it cannot be argued that the CB can ward off every commitment attached to payment of external liabilities through its monopoly of printing domestic currency...this is the argument against CBs' running with negative networth (iv) and last but not the least some issues cannot be argued/understood without considering the intergenerational issues ...the long term view; the reason being these are larger public policy issues and not mere balance sheet/profit and loss issues Btw is there a merit in CBs running stress tests....like what if the domestic currency appreciates by a "unit"....like the regulated banks run stress tests to measure their resilience to "black swan" events?

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🚦 Working in NBFCs vs. Traditional Banks 🛞 People often wonder how working in a full-fledged bank differs from a Non-Banking Financial Company (NBFC). The reality is that NBFCs present unique challenges and require a distinct skill set. But first, let's understand how the landscape for NBFCs in India is evolving. With Moody's projecting moderate profitability over the next 12-18 months due to rising funding costs, it’s clear that the sector is facing some headwinds. Key Challenges: ⛔ Higher Borrowing Costs: RBI's increase in risk weights for consumer credit has made borrowing pricier, squeezing margins. ⛔ Regulatory Pressure: Emphasis on secured over unsecured lending could impact net interest margins. Bright Spots: ✅ Strong Credit Demand: Despite higher costs, robust economic growth (projected at 6.6% for fiscal 2025) fuels demand for loans, especially in infrastructure and SME sectors. ✅ Innovative Financing: Larger NBFCs are leveraging diverse funding sources and adopting FinTech solutions to stay competitive. So what does it entail for anyone who is going to start working for an NBFC or plans to? 1️⃣ Focus on Underserved Markets: NBFCs often cater to segments that mainstream banks might not serve, requiring professionals to be adept at risk assessment and innovative lending practices. 2️⃣ Regulatory Adaptation: Professionals must stay updated with regulatory changes and be proactive in adapting strategies to comply with new norms. 3️⃣ Versatility in Funding: Knowledge of various funding mechanisms, including retail deposits and external borrowings, is crucial for managing higher costs and maintaining profitability. 4️⃣ Product Offerings: NBFCs often specialize in certain types of loans such as personal loans, vehicle loans, and microfinance. They may offer more customized and innovative financial products tailored to specific customer needs. 5️⃣ Risk and Compliance: NBFCs typically face higher credit risk due to their focus on higher-risk segments. This necessitates robust risk assessment and management practices. For finance professionals eyeing the NBFC space, it's about embracing these changes and focusing on innovative lending practices, staying abreast of regulatory shifts, understanding the different products they have to offer, assessing the risks involved, and comprehending diverse funding mechanisms. It's a dynamic sector, promising both challenges and exciting opportunities. #NBFCs #Finance #CareerAdvice #RBI #FinTech #Innovation #Banking Feel free to share your thoughts in the comments below!

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Unsecured BIL is sweet Poison for MSME….#SCF is need of the Hour In India Most misfit Working Capital Product is unsecured Business Installment Loan (BIL). It is easily available and unfortunately most of the NBFC are selling it like hot cake. If you Speak to any Credit Manager who underwrite BIL, will always check eligibility on the basis of FOIR (Fixed obligations to income ratio. ' It is the most commonly used parameter by lenders to determine an applicant's loan eligibility. But at the time of business assessment , check whether it is using for Working capital purpose or not. MSME is most capital deprived sector , due to lesser working capital Options, they are forced to take Business Loan to support their working capital needs. If they gets any Business order to support their credit sales they required generally working capital finance, but we all know how fast traditional banker appraise the application. Hence they forced to go for sweet poison , which in first place looks saviour but in long run it jeopardises the all business model. It is easily sold by NBFc and Retail Bankers . Which is in first place only a big mistake , as you cannot take 3 Years loan with fixed EmI to support your 90-120 days working capital gap. Most of the working capital Bankers considers it as a red flag, while assessing CC/ LC Limit. #supplychainfinance (SCF) is ultimate solutions to support these type of working capital requirements. You just check with any emerging corporates or large corporates , they will never takes such BIL as a choice. In India Reverse #Factoring ( Purchase Invoice discounting) is a product which required support from RBI and Lage Banks to formulate properly risk management mechanism to popularise it for MSME. Currently PID products are available to corporates with good Rating or comapny having turn over above 200 Cr. In India there is huge pool of good companies in range of 50-200 Cr range. These are the emerging company , which required more of these kind of structure unsecured product. Gone are those days where banks and NBFC keep insisting for property back loans. In Next 15-20 Years Banking and its products need to revolutionise. ***PID is dirctly given towards purchases of raw material , hence it some extent help in stoping the diversion of debt to non business activities. ***our GK Maple Corporate Consultant GK FINANCE group is very optimistic about Supply chain Finance and see this is one segment where lots of oppertunities are unexplored. #invoicefinance #factoring #tradefinance #vendorfinance #textile #steel #chemical #pharma #engineeringgoods #foodprocessing Anand Chamaria

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From a Near Collapse to 100 Billion Dollar Company! In the late 2000s, three friends had an Eureka moment. Their idea was to rent out air mattresses in their living room and build a business out of it.   However, their dream was all but over as they found themselves facing rejection after rejection. Their idea, Airbnb, was on the brink of failure! Some had already declared it a massive failure in media and on the internet. To add to their woes, they struggled to secure investors, faced skepticism, and nearly ran out of cash. Mind you! This is not a tale of instant success where one moment changes everything. Rather it is a story of unparalleled resilience and belief. Airbnb's journey from these uncertain beginnings to becoming a global phenomenon in the hospitality industry is the prime example of the power of resilience in entrepreneurship. The founders kept working on their idea no matter what they faced on ground. They even sold cereal boxes to fund their project during the financial crisis. Their perseverance eventually paid off, and today, Airbnb stands as 103 Billion US Dollar company. Their growth is an ode to resilience and perseverance. Many founders mistake resilience in entrepreneurship with the skill to bounce back. Sorry to burst your bubble, but resilience stands for a lot more than that. It's about pushing forward with more strength and wisdom each time you are pushed back. This is a lesson for all budding entrepreneurs on how important resilience is. It’s the ability to endure rejection, learn from failure, and keep moving forward. It's the trait that separates the ordinary from the extraordinary! #Resilience #Perseverance

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RBI historical dividend 2013/14 - 0.53L crore 2014/15 - 0.66L crore 2015/16 - 0.66L crore 2016/17 - 0.31L crore 2017/18 - 0.50L crore 2018/19 - 1.76L crore 2019/20 - 0.57L crore 2020/21 - 0.99L crore 2021/22 - 0.30L crore 2022/23 - 0.87L crore 2023/24 - 2.11L crore Its huge positive for bond market .

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