Banking and Insurance

Topic – Loans and Advances

Presented By – Simran (317)

Vaishali (321)
SECURITISATION OF STANDARD ASSETS

• Securitisation is the process of acquisition large non performing assets loan or portfolio of
loans such as housing from a bank.

• This process provides the banks and financial institution for recovery of their secured dues.

• SPV issues the consideration of transfer price to the originator bank in the form of cash or
debenture as mutually agreed.

• Accordingly, the Securitisation ane-Reconstruction of Financial Assets and

Enforcement of Security Interest-(ESI) Act were enacted on June 21 , 2002
to provide legal framework-for securitisation of assets.
ANTI MONEY LAUNDERING GUIDELINES

• Money laundering is a process whereby the funds generated by illegal means (drug
trafficking, gun smuggling, corruption, etc,) is concealed. In involves illegally
gaining capital as well as assets inserting them into economic circulation, showing
to have been derived from a legitimate source

• Money laundering activities expose bank to different risks such as operational

risks , reputational risks , compliance risks and legal risks .

• In order to save the banks from money laundering , the Reserve Bank has issued
KYC guidelines .
What are the Objectives of prevention of money
laundering ???
 To prevent criminal elements from using the banking channels for money
laundering activities.
 To enable the bank to understand the customers and their financial dealing better .
This would help the banks to manage risks prudently.
 To initiate controls for detection and reporting of suspicious activities in
accordance with laws.
 To comply with law and regulatory guidelines.
 To take steps to ensure the staff is adequately trained in know your client (kyc)/
anti – money laundering procedures.
STAGES OF MONEY LAUNDERING
 WHY CREDIT INFORMATION IS
REQUIRED????
 COMPREHENSIVE CREDIT INFORMATION PROVIDES DETAILS PERTAINING TO CREDIT
FACILITIES AVAILED BY BORROWERS AND THEIR REPAYMENT TRACK RECORD.
 IT IS IMPORTANT FOR SMOOTH OPERATIONS OF THE CREDIT MARKET .
 IN THE ABSENCE OF CREDIT HISTORY , THE PERCEIVED CREDIT RISK IS WILL BE HIGHER
DUE TO ADVERSE SELECTION AND MORAL HAZARD. CONSEQUENTLY , THERE WILL BE
CREDIT FLOW TO RELATIVELY LESS CREDIT WORTHY BORROWERS .
 THAT IS WHY , A SCHEME FOR DISCLOSURE OF INFORMATION IN RESPECT OF DEFAULTY
BORROWERS OF BANKS AND FINANCIAL INSTITUTIONS WAS INTRODUCED IN 1994.
CREDIT INFORMATION
BUREAU OF INDIA
LIMITED
# CREDIT INFORMATION COMPANIES
(REGULATION) ACT WAS ENACTED
IN 2005 TO FACILITATE THE SETTING
UP OF CREDIT INFORMATION
COMPANIES.
CIBIL WAS SET UP IN 2000 TO SHARE Information relating to
credit matters.
it was INDIA’S FIRST CREDIT INFORMATION BUREAU ,
established by sbi and hdfc.
Shareholding in cibil before December 31 , 2006
sbi and hdfc – 40% EACH
DUM &bradstreet information services limited
And trans union international inc. – 10% each
Rbi in its ‘ monetary and credit policy ‘ during 2004-05 called for
diversified ownership.
shareholding as on 31 December , 2006
Hdfc, sbi, icicibank, d&b and tu – 10% each
Citi crop finance (india) ltd, standard chartered bank , hsbc, Pnb, bank of
india, central bank of india, bank of baroda and Indian overseas bank –
5% each
Ge strategic investment ltd and sundaran finance – 2.5 % each
1. CIBIL IS A COMPOSITE CREDIT BUREAU , WHICH CATERS TO BOTH COMMERCIAL AND
CONSUMER SEGMENTS.
2. THE CONSUMER CREDIT BUREAU COVERS CREDIT AVAILED BY INDIVIDUAL, WHILE THE
COMMERCIAL CREDIT BUREAU COVERS PARTNERSHIP FIRMS , PROPRIETORY CONCERNS ,
PRIVATE AND PUBLIC LIMITED COMPANIS ETC.

FUNCTIONS OF CIBIL
 CIBIL AIMS TO MINIMISE THE INSTANCES OF CONCURRENT AND SERIAL DEFAULTS OF FACILITATING CREDIT INFORMATION,
PERTAINING TO NON- INDIVIDUAL BORROWERS SUCH AS PUBLIC LIMITED COMPANIES , PRIVATE LIM ITED COMPANIES ,
PARTENERSHIP FIRMS, PROPRIETORSHIP, ETC.
 CIBIL MAINTAINS A CENTRAL DATA BASE OF INFORMATION AS RECEIVED FROM ITS MEMBERS. THIS INFORMATIION IS DISSEMINATED
ON DEMAND TO THE MEMBERS IN THE FORM OF COMMERCIAL CREDIT INFORMATION REPORTS (CCIR) TO ASSIT THEM IN THEIR LOAN
APPRAISEL PROCESS.