all about banking problems and solutions

how to use subsidy amount

2026-06-29T00:39:32.910-07:00

subsidy amount can be utilised as

1. minimizing the installments .

you can ask the bank to regenerate the installments on the basis of the remaining outstanding which will create a smaller installment per term and you can take the profit into the business.

you can continue with the same schedule and your loan will finish early than the schedule time.

2. increase your exposure to the new investments like technical upgradation , requirements of new machinery etc , increase the cash credit part so that you can have a better volume for business.

selection of banking products for various financial needs

2026-06-28T23:43:39.878-07:00

I have observed that many of the units, businesses are gone NPA because of the wrong selection of the banking products for finance.

most important is that when you start a business take a tour to at least five years.

look for both the micro and macro dynamics of the business over this period. this gives an idea what and how much may be required and what financial plan is required for you future plan of business.

make an estimation that is sufficient for the business plan , many businesses suffer due to the short funding. and this starts a vicious circle of additional funding , which is normally a difficult one and you have to negotiate on the cost of fund as well.

running requirement of funds must not create fund crisis. because this generally does not generate income in the same period , so the cost of fund starts increasing making the margins / profits leaner and thinner.

question also arises towards the competitive edge due to this increase.

make sure that the short term loans are only taken on the basis of short term receipts sufficient in the near future and must have a back -up plan .

top-up loans are a lure to immediate satisfaction of the crises needs but if they are not backed by the short term receipts then they will start eating the capital of the business.

hoards of businesses suffered due to credit card mismanagement. this reflected in a bad CIBIL score credit score .

and this remains for quite a some time on your scorecard.

smaller the default/s the greater your insufficiency /crunch to cater to the loans . this is a mistake to overlook just because you think this is just a small default . it reflects very badly on your credit.

never ever take the short term funding , top-ups and credit cards as a usual course of your business funding.

your thorough plan for long term needs must give shelter to the short term funding requirements. the more this plan is thorough and accurate the lesser the requirements of short term funding, top-ups and credit cards .

some people make the housing loan or mortgage loan as a primary use of business loan . this is a mistake you must not use the products in an activity that is not supposed to be for.

the better option is to make a proper and optimum mix of term loans and cc credits.

Although any business has 8%minimum margin and if has 9 to 10 rotations a year it should be sufficient to serve the interest of the fund .

It then require to calculate the capital repayments from the turn over margins left after serving the interest part. Then it must cover the cost of running the business.

default amount in insolvency act

2017-07-24T01:51:00.003-07:00

the default amount to start the insolvency process is only Rs. one lac for all kinds of accounts. there should be a justification for the same. if one account is to the tune of Rs. 200000 the default amount will be 50% of the total and if one account is of Rs, twenty crore , the default amount will be only 0.05%.

this can only be justified when it is made % wise default compared to the loan amount.

revival policy for industrial units in MADHYA PRADESH

2015-09-07T10:05:00.003-07:00

New policy announced by Madhya Pradesh , for industrial units both MSME units that do not come into the periphery of BIFR..
There is seperate policy for MEGA units.

MSME single window registration in the offing

2015-07-12T20:55:00.003-07:00

Now MSME can be registered at one stroke centrally for all different registrations are not required.

DRT - India: Gujarat High Court notice to Centre over NPA defin...

2012-07-24T01:39:00.001-07:00

DRT - India: Gujarat High Court notice to Centre over NPA defin...: BS Reporter / Mumbai/ Ahmedabad Jul 16, 2012, 00:49 IST Gujarat High Court has issued notice to the Union government while hearing ...

Ajay Shah's blog: The two escape routes away from domestic formal-se...

2012-07-24T01:37:00.001-07:00

Ajay Shah's blog: The two escape routes away from domestic formal-se...: Three problems afflict formal-sector finance in India today: capital controls, taxation, and financial policy. The most important financial...

DRT - India: Indian banks and NPAs - III: Debt recovery through...

2012-07-24T01:35:00.001-07:00

DRT - India: Indian banks and NPAs - III: Debt recovery through...: Money life:A Banker :14 july 2012 A staggering Rs2 lakh crore stuck in the Debt Recovery Tribunals reveals the failure of this well-int...

DRT - India: Parsn Medicinal plant (P) ltd and anr V/S Indian B...

2012-07-24T01:34:00.001-07:00

DRT - India: Parsn Medicinal plant (P) ltd and anr V/S Indian B...: R.A(S.A):38/2011 This Appeal impugns order dated 26.2.2009 passed by the Ld. Presiding Officer, DRT-II, Chennai in Review App...

DRT - India: Priya vs The Authorised Officer ,IOB

2012-07-24T01:33:00.001-07:00

DRT - India: Priya vs The Authorised Officer ,IOB: Madras High Court on 3 January, 2012 DATED: 03.01.2012 CORAM THE HONOURABLE MR.JUSTICE P.JYOTHIMANI and THE HONOURABLE MR. JUS...

SPICY IP: Delhi High Court passes restraining orders in a declaratory patent lawsuit after the patent has already been revoked by IPAB!

2012-07-24T01:32:00.001-07:00

SPICY IP: Delhi High Court passes restraining orders in a declaratory patent lawsuit after the patent has already been revoked by IPAB!

DRT - India: Restructured loans will account for 3.5% of total ...

2012-05-06T04:40:00.001-07:00

DRT - India: Restructured loans will account for 3.5% of total ...: BL:MUMBAI, APRIL 24:2012 The total amount of loans that are likely to be restructured by banks over 2011-12 and 2012-13 is estimated...

predeposit condition at DRAT in securitisation appeal

2012-04-03T06:06:00.004-07:00

the madatory condition of predeposit not less than 25% is unconstitutional, as it does not give equity to both the parties . in such cases the borrowers who have already planned to evade the funds will succeed rather than those who are actually the victims of hard call of the situation.

this condition favors those who has kept large funds aside and the person who has applied all the funds in the project will not be able to deposit 25% of the total demand of the bank. in such situation this condition means that either the person has to sell off his assets in the limitation period that is at a distress that too with the permission of the bank or loose the case without any hearing.

is securitisation act in india being misutilized?

2012-04-03T05:55:00.000-07:00

any law is good if it provides balance of equity to all the parties concerned.
this act is giving powers to bank managers so vast and

importance of representation under section 13/3a in securitisation act proceedings

2012-04-03T05:51:00.001-07:00

when the banks take the action in the securitisation act , normally the decision to go in for the securitization act proceedings under section 13 and further are merely accounting based and no financial prudence and judgement is observed by the bank officials . in most cases the only observation is the technical classification of account into NPA(non performing asset).

it becomes quite important to represent and raise issues that are necessary to take decision about the account .

sub section 3a of section 13 of the securitisation act & rules provide this opportunity to the borrowers to put forth their side of situation and convince and prod the bank to consider the financial and other business issues that are pertinent and important to take decisions.

the representation should contain well structured issues related to

technical lacunae in the notice of demand by the bank.(demand notice under 13/2 of the act &rules)
any wrong statements in the notice.
the current business problems in details.
the suggestions for repair of the accounts.
communication details.

this notice is mandatorily to be replied by the bank within seven days of notice . so best utilization of the 60 days is to convince the financer to trail back on the right track.

in case the bank does not consider the representation , the borrower can approach the court for consideration.

Business Line : Industry & Economy News : Expeditious verdict must when oral submissions are made: Apex court

2012-03-10T22:49:00.001-08:00

Business Line : Industry & Economy News : Expeditious verdict must when oral submissions are made: Apex court

Applicability of limitation act in debts recovery tribunal

2012-03-10T22:45:00.001-08:00

Applicability of limitation act in debts recovery tribunal

DRT - India: Contempt of Supreme Court Judgment by Officers of ...

2012-03-10T22:33:00.001-08:00

DRT - India: Contempt of Supreme Court Judgment by Officers of ...: To, 5-3-2012 Hon Chief Justic...

ambiguity in securitisation in India.

2010-01-26T00:17:00.000-08:00

the securitisation requires the transfer of the securities from the banker the originator to the special purpose vehicle or the asset reconstruction companies and to the investor .

according to the nature of the transaction it falls under the transfer of property act . and every transaction has to be registered or a conveyance deed is required, which means it will have to pay the stamp duty which at madhya pradesh is around 13 % . so while transferring this has to be taken care of .

the transaction of securities also fall under the SEBI for both the issuance and the regular trading of these securities but SEBI has not issued any guidelines on it.

there is no taxation guideline for these ARCs . in lack of such seperate guidelines , the transfer has to be treated as the acquirement of the asset and the tax will be levied according to the individual taxation levied on such property transfers.

about the indiakanoon.org

2010-01-08T07:47:00.001-08:00

http://www.indiankanoon.org/

LIMITATION to sue against borrowers is 12 years to banks

2010-01-07T01:04:00.000-08:00

the commonly known criteria of limitation of 3 years is different in case of bank files a suit against a borrower. this also leads dates from declaring an account NPA and the documentation . but the case is different with the mortgaged securities . the limitation for the mortgaged security is for 12 years instead of 3 years. and the bank can sue the borrowers even after 11 years.

NPA misconception in borrower.

2010-01-07T00:55:00.000-08:00

Non Performing Asset comonly called as NPA is a category of accounts that do not perform well for a bank. the bank abided by the RBI (Reserve Bank of India) has to declare accounts that are not paying in time either the repayment of installments in case of term loans and the interests in terms of cash credit accounts. the definition keeps on changing according to RBI notifications.

according to NPA policy issued by the RBI the banks have to stop charging interest on the NPA declared accounts and they can not show such interest income in such accounts .

the common misconception arises due to the above statement. the borrowers think that the bank can not charge interest on their NPA declared accounts. although it is true that the bank can not charge interest on NPA accounts in the their account books , but this is an arrangement to avoid bank showing uncharged interest as incomes into their final accounts books. this does not mean that the bank ceases his right to recover interest and future interest income from the borrowers. the bank has every right to recover the interest from the borrower even after the account has been declared as NPA. it has right to recover interest untill the full repayment . normally banks make a seperate ledger for such calculations of interest called interest suspense.

while demanding from the borrower the bank does include this interest suspense with the NPA declared outstanding. the bank has right to do so.

guarantee and guarnator in India

2010-01-07T00:39:00.000-08:00

the banks normally involves third party guarantee while issuing loan facility in India. if we look at the quantum against the numbers of total loan cases. the middle class loans are the most in numbers that may be summed up below 25 lacs. of loan.

now in such cases the third party guarantee is a phenomenon which is taken casually and the guarnator has very little rights , if the borrower and /or bank does not operate properly.

there are thousands of bad experiences where the guarantors are punished severally in case the borrower does not pay.

this happens worst in cases where only guarantors have mortgaged their properties as security and the borrower does not have. in this case the borrower who has made the mistake does not get any punishment , instead the guarantor looses his property without his fault.

although I agree that the guarantee does mean that the guarantor has to secure the bank in case the borrower defaults, but the point which i want to make is there should be an instant relief against the such borrowers to the guarantor.

there should be a provision in case the guarantors repays the loan by selling his assets or his assets are sold due to his words and there is an instance of borrowers inentional default or there are gross mistakes on the part of the borrower due to which the guarantor has to repay, then there should be provision of an instant decree for repayment back to the guarantor against the borrower from court.

his keeping the good words must be repayed benevolently by the law.

this will increase the quantum of business . making guarantee will not be a big problem as well as a deal for certain loss and will be temperate risk and loss involved at present.

secondly this will also decrease the cases where the borrowers are not serious because their stake will also be involved.

why the claim against bank is not allowed if the bank does not claim in DRT

2010-01-07T00:18:00.000-08:00

its a welcome step that the borrowers can now claim against the bank as counter claim at DEBT RECOVERY TRIBUNALS. but at the same time it is a restricted approval. the borrowers who have already filed a reply when this permission was not granted can not make their counter claims. and also if the banks do not have put up their original application in the DRT , borrowers are not eligible to file their counter claim.

this decision is little perplexed thought.

first of all if the law making bodies think that there should be an opportunity to borrowers to put up their claims against banks then it should be given equally to all the borrowers .

now consider a case in which the bank opts for taking actions agaist the borrower with the help of SRFAESI act and does not go for OA . in such case the borrower can not put up his counter claim. in this case the borrower has the only remedy to seek for SA securitisation appeal / application that is restricted to consider issues related to SRFAESI act only. moreover the remedy starts only at the time of possession not before that.

the only recourse at this stage is to file damage suit at civil court , which does not have recourse against the SRFAESI act. that means that the civil courts do not have the powers to create interim injuntions in case of SRFAESI act.

now suppose another bank in the perfectly similar situation and conditions also files an OA . then that borrower will have remedy to file counter claim and seek interim remedies against the bank.

in other words two same conditions holding persons, the law gives different remedies to them . the remedies depend upon the opponents choice and not on his own.

now consider another situation , the borrower filed a reply in OA which the bank has already filed in DRT.before this amendment has come in force. now again the borrower does not have right to file a counter claim against the bank. in the same conditions case where the borrower did not have replied will be allowed to file a counter claim.

in other words two same conditions facts and law points holding persons, the law gives different remedies to them and the better remedy is available only to lethargy.

case 2securitisation act India

2010-01-02T05:50:00.000-08:00

he was a good entrepreneur and during his visit to switzerland he discovered a demand of some packaged foods . he decided to venture into this .
he researched into this and after six months there he had a project all prepared and PRO done .
he went to a bank for funding the proposal. initially he was given a big welcome and the proposal was given initial approval and was asked to start with his factory starting .
enthused by the initial positive nods , he started investing in making the factory and also marketing set up.
when he completed the work as was asked by the bank officials he went back for disbursement and inspection. till that time the branch manager and the zonal manager had changed and the new manager gave him a list of formalities before going ahead . he said these formaliites were already done . he asked the new manager to go through his case file. the manager asked him to give it all once again.
this process went on for another six months . just paper exchanges. every time he approached the bank , he was given a new list of querries.
his costs were increasing and work contracts were demanding dates.
he was perplexed . he then met the higher officials.
after a month of his several representations to the higher authorities , he got the first disbursement ,