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Short Title : The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002. Long Title : An Act to regulate securitisation and reconstruction of financial assets and enforcement of security interest and to provide for a Central database of security interests created on property rights and for matters connected therewith or incidental thereto. SARFAESI Act is an Indian law. It extended to the whole of India . The Act was enacted by Parliament of India on 17 th Dec, 2002. The act was amended by "Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016, passed by Lok Sabha. Before this Act took effect, financial institutions had to take recourse to civil suits in the courts to recover their dues, which is a lengthy and time-consuming process. As per the SARFAESI Act, if a borrower defaults on a loan financed by a bank against collateral, then the bank gets sweeping...

Nostro vs. Vostro Accounts Nostro comes from the Latin word for "ours," as in "our money that is on deposit at your bank." Vostro comes from the Latin word for "yours," as in "your money that is on deposit at our bank." Nostro and Vostro are terms used to describe the same bank account; the terms are used when one bank has another bank's money on deposit. Nostro and Vostro are used to differentiate between the two sets of accounting records kept by each bank. (Key takeaways from investopedia)   Nostro Accounts   The Nostro account is a way of keeping track of how much of the bank’s money is being held by the other bank. This is similar to an individual keeping a detailed record of every payment in and out of his or her bank account so that she/he knows the balance at any point in time. Example : State Bank of India opens an account with bank of America in New York. It will be ref...

Debit Cards A debit card also known as a bank card, plastic card or check card) is a plastic payment card that can be used instead of cash when making purchases. A debit card is issued by the bank where the individual has a saving account. Debit cards are also issued to corporate entity, which linked to their respective current account. Difference between Debit Cards and ATM Cards :- A debit card gives you more flexibility. It’s backed by a credit card network like Visa or MasterCard and can be used at most merchants. A debit card can be processed in two different ways. The first way is to verify with your PIN number and have the transaction sent directly to your bank. The transaction can also be run through the credit card network and verified with a signature. An ATM card can only be used at an ATM machine and must be verified by your PIN number. This type of transaction always goes directly to your bank. Types of Debit Cards :- 1.      Visa D...

Non-Banking Financial Company (NBFC) :- NBFC are entities or institutions that offer various banking services but do not have a banking license. Example of NBFCs includes investment banks, mortgage lenders, money market funds, insurance companies, etc. As per RBI, a NBFC is a company registered under The Companies Act, and is engaged in the business of: a)      Loans & Advances b)     Acquisition of Shares/ Stock/ Bonds/ Debentures/ Securities issued by government or local authority or other marketable securities of a like nature c)      Leasing d)     Hire Purchase e)     Insurance Business f)       Chit Business NBFCs v/s Banks :- NBFCs function like that of banks. However there are few differences listed below: a)      A NBFC cannot accept Demand Deposits. b)     It cannot issue cheques to its custom...

Non-Performing Assets (NPA) :- Generally, Assets / Advances for which principal or interest payment remained overdue* for more than 90 days, of term loan, bills purchased / discounted, etc or the account remain Out of Order** in case of overdraft/ cash credit are known as non-performing assets. * (Any amount due to bank under any credit facility is ‘overdue’ if it is not paid on the due date fixed by the bank) ** (An account should be treated as ‘out of order’ if the outstanding balance remains continuously in excess of the sanctioned limit / drawing power. And in case if O/s balance in the principal operating account is less than the sanctioned limit / drawing power, but there is no credits continuously for 90 days as on the date of balance sheet or credits are not enough to cover the interest debited during, these accounts are treated as ‘out of order’) For example : Assume a company with 100000 rupees loan with interest payments of 5000 rupees per month fails to make ...

Regional Rural Banks (RRBs) :- RRBs are incorporated with a view to developing the rural economy. RRBs are covered under the type of Scheduled Commercial Banks (Government Banks). RRBs are regulated under the Regional Rural Banks Act, 1976. All the RRBs are covered under Deposit Insurance and Credit Guarantee Corporation  (DICGC) scheme and they also required observing the RBI stipulations for Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). In respect of scheduled commercial banks, the interest rates are presently in range of 7.65% to 8.10%. Presently there are 43 RRBs in India (as on 1-4-2020). Kerala Gramin Bank is the biggest RRB in India by business. It was formed in 2013 by merging of north Malabar bank and south Malabar bank. Functions of Regional Rural Bank : ·         Banking facilities to rural and semi-urban areas. ·         Carrying out government operations like...

Meaning of Commercial Banks As I described in my previous article, commercial banks are regulated under the Banking Regulations Act, 1949. For detailed answer refer my article on commercial bank. Click here Meaning of Co-operative Banks Co-operate banks in India are registered under the  Co-operative Societies Act, 1965 . The Co-operative banks are also regulated by the Reserve Bank of India (RBI) and governed by the Banking Regulations Act, 1949. Co-operative Banks are owned and controlled by the members, who also elect a Board of Directors for it, on the basis of principle of One Member = One Vote. Co-operative banks only serve to its members. Thus, members of these kind of bank are both owner as well as its customers. Some of the co-operative banks in India are:- Saraswat Bank Cosmos Bank SVC Bank Punjab and Maharashtra Cooperative Bank Abhyudaya Cooperative Bank TJSB Sahakari Bank Bharat Cooperative Bank Janata Sahakari Bank NKGSB Cooperative Ban...