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NEO Banking - A Future Digital Banking, Development Scope, Threat and Challenges

What is Neo Banking? NEO banks are the banks which has no physical branches. NEO Banks are digital only financial institutions that operate exclusively online through websites and mobile apps.  The financial services industry has undergone massive transformations from manual to Core Banking and now digital without any physical branch. the evolution of banking has been marked by innovations aimed at making financial services more accessible, convenient, and efficient.   NEO Banks offers services like below: Account Management: Account Opening, Checking, Savings, and Money Transfers Loan Services: Quick and seamless loan approvals Low Fees: Minimal or no fees due to lower operational costs Tech Features: Budget tools, instant payments, and real-time alerts Why Are Neo Banks becoming popular now? Convenience : 24/7 mobile banking—no waiting in lines. Lower Fees : No hidden charges, free international transfers, and zero maintenance fees. User-Friendly Apps : Seamless, f...
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Loan Restructuring & Willful defaulter

Benchmark Parameter for Restructuring 

  • Viability - Within 5 Years
  • Repayment - Within 10 Years
  • Promoter Contribution - 20%  

Classification 

Additional Loan - Remain Standard for One Year
Existing Loan - Upgraded to Standard category after regular repayment for 1 year


Willful Defaulter - RBI Guidelines (Based on Kohli Comittee)
One who has defaulted in loan payment and 
1) he has the the capacity to pay the loan or
2) loan used for different purpose
3) fund used for unrelated to the business (Shiphon-Off)
4) unauthorized sale of loan security
 
Committee headed by ED in a bank declares willful defaulter after giving an opportunity to the borrower and he gets 15 days to respond.

CMD has to review before declare of willful defaulter

If loan amount is greater than or equal to 25 lac,  report has to made to all credit information companies for suit filed. 

If loan amount is less than 25 lac, reporting to Credit Information companies is not required.

Action by Other Bank of Willful Declaration 
1. No Additional Loan
2. No Loan to new project of defaulter for 5 years

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