Essays on rational absurdity of banking
While there are no set parameters on how many credit covenants should be there in a Sanction Letter, one has to keep in mind that ratios tend be inter-linked. One does not become a better banker by stipulating multiple covenants. Two covenants are sufficient to trigger any recourse against the borrower.
Bank Loan agreement had been written ages ago. There are innumerable archaic clauses that may be unjustifiably invoked, without assigning any reasons under the guise of ‘early warning signals’. This creates a trust deficit. Sumit Kakkar recommends the need to relook at these.
In a recent circular RBI has made a high decibel statement about the CRO’s independence and has put a lot of onus on the boards of NBFCs. Importantly, CRO office cannot be subordinated to any other department. But has the regulator stopped a tad short of empowering the position enough? Sumit Kakkar evaluates
Market is rejoicing that credit growth is back. But it was not the doing of the banks. Instead it seems to be lender’s market with long wait for credit approvals and straight jacketed approach followed by banks. But times can change to Borrower’s market very soon. Sumit Kakkar shares his perspectives