Parshad Barot’s Post

U.S. #CMBS loan defaults climbed higher in 2023 as sustained higher interest rates, credit contraction from bank sector stresses, and deteriorating macroeconomic conditions pressured the #CRE sector, weakening performance fundamentals, lowering property valuations, slowing transaction and financing activity and challenging loan refinancing conditions. Learn More: https://ow.ly/gzX050SxXn0 #FitchRatings #StructuredFinance

Resilient loan segments make some NBFCs a good pick amid downturn https://lnkd.in/er4Dh5G3 All the guardrails for inclusive finance (micro finance have failed) by all the stakeholders who are supposed to keep watch.

Many have wondered how Banks decide on pricing of loans and advances. Almost all Banks have their own pricing model and is known by many names such as Base rate, Prime lending rate, Advance rate, Marginal cost of lending, External Benchmark based rate. But few things are common among all Banks and financial institutions when they decide on final loan pricing. Some of the things which decides rate of interest are cost of deposit, tenor of loan, type of borrower, facility type ( Term loan, Cash Credit or Non fund based), Risk Adjusted Return on Capital (RAROC), Collateral offered and probability of default. Loan Interest rate is generally= Risk free rate + Compensation for expected losses i.e (PDxLGD) + Spread. where PD is probability of default LGD is Loss given default and Spread is Bank's income or profit on that loan Though loan pricing is not just a simple formula but little more complicated but the basics more or less remain same for every Bank. #banking #finance #financeindustry #loan #rateofinterest #roi #terminology #loanpricing #simplifybanking #bankingindustry

Debt-Service-Coverage Ratio: Many banks will lend on either Loan-to-Value (LTV) or Debt Service Coverage Ratio (DSCR) when it comes to commercial real estate or "asset based lending." In this scenario banks will want to see a 1.25 DSCR ratio which means there is $1.25 in Net-Income per $1.00 of annual Debt-Payments. The chart below is a great picture of WHAT amount of down-payment you will need in comparison to Cap Rates and Interest rates. For review, right now we are seeing interest rates at about 7% around #DSM for #multifamily apartments AND we are seeing Cap rates at about 7.05% per my 2nd Quarter 2024 report! This means, for local #Iowa investors we should be expecting to see 35% down-payments on most deals for banks to finance and feel comfortable lending! This is a VERY useful chart for anyone looking to invest in commercial real estate and quickly decipher the amount of equity/down-payment they will need to raise or bring to a deal!

Big change for NBFCs! Co-lending for personal loans might dip. RBI's risk weight tweak makes personal loans seem riskier.  This means more capital for NBFCs to cover defaults. New options?  Small NBFCs could turn to co-lending for: -SME loans: Fuel small businesses with banks' help. -Mortgage loans: Tap into the housing market without huge capital. -Green loans: Finance eco-friendly projects, be part of the solution! -Co-lending could benefit everyone. ✅ NBFCs manage risk, reach new markets. Banks gain NBFCs' expertise. What's your take? Will co-lending become the new normal? Let's chat in the comments!

09 March 2024 LAST DAYS OF FED NEW DISCOUNTED LOANS : HURRY UP As the Bank Term Funding Program (BTFP) ends, on March 11, "the interest rate applicable to new BTFP loans has been adjusted such that the rate on new loans extended from now through program expiration will be no lower than the interest rate on reserve balances in effect on the day the loan is made." #economy #markets #fed #federalreserve #btfp #treasury #loans #liquidity #banks #bankingsystem #rates #interestrates

Making the RBA Cash Rate Target dates easy to stay ahead of, That's #AUSTRALIANFINANCEBROKERAGE

RBI recently issued a guideline "Key Facts Statement (KFS) for Loans & Advances" which aims to enhance transparency and reduce information asymmetry on financial products being offered by different regulated entities, thereby empowering borrowers for making an informed financial decision.   Starting October 1st 2024, all lenders are mandatorily required to:   1) Provide a Key Facts Statement (KFS) to prospective borrowers in a defined format. This will help them take an informed view before executing the loan contract. 2) The KFS must be presented in a language understood by the borrowers(Multi-lingual). 3) Lenders need to provide a min of 3 days for >7 days tenured loan and min of 1 day for <7 days tenured loans.  4) The KFS shall also include a computation sheet of annual percentage rate (APR), taking into account ALL charges like processing fees, insurance charges, legal charges, etc. and the amortization schedule of the loan over the loan tenor. 5) The silver lining is that any fees, charges, etc. which are not mentioned in the KFS, cannot be charged by the lenders at any stage during the term of the loan. 6) The loan agreement should also show the KFS as a summary box. 7) Repayments to be done in Equated Periodic Instalments (EPI), where a fixed instalment amount, including principal and interest component should be paid on the instalment due date.   View the full document here: https://bit.ly/3xI8425   These guidelines, when followed, will give a lot of confidence to the borrowers and enhance transparency and standardization across the lending eco-system. #craftsilicon #craftsiliconasia #rbicircular #RBI #KFS #loans #financialinstitutions #keyfactsstatement

Current coupon more than offset softer loan prices in June as demand for loans slowed on the back of lower inflation and cooling economic data, which together pulled forward rate cut expectations. The busy refinancing wave is also pricing risk lower, which was reflected in lower prices this month. Still the investment thesis is intact - A generally supportive economic backdrop, borrowers managing interest expense, a favorable technical environment, and a yield advantage to other fixed income alternatives. Indeed, a loan Yield-to-maturity (YTM) of 9.8% is more than double the 4.2% YTM in December 2021 (pre rate hikes). Loans arguably could remain relatively attractive even in a scenario of two cuts this year. #credit #bankloans #assetallocation #leveragedfinance #assetmanagement #CLO

Outstanding loans have seen remarkable growth across various categories from 2022 to 2023! 📈 According to RBI data, housing loans continue to lead the charge, followed by personal and auto loans. Credit card debt and loans against FDs are also on the rise. In your opinion, which loan category will experience the highest growth in the coming year? Let us know in the comments! 💬 #LoanTrends #FinancialGrowth #HousingLoans #PersonalLoans #AutoLoans #CreditCardDebt #Investment #RBI #FinanceInsights #InvestKraft