Payday Loans For Livet Sat, 18 Sep 2021 09:40:55 +0000 en-US hourly 1 Payday Loans For Livet 32 32 Pag-IBIG extends the terms of payment of the cash loan to 3 years Sat, 18 Sep 2021 06:43:00 +0000


MANILA, Philippines – The state-owned real estate development pool or Pag-IBIG has eased its cash lending by extending its payment term to three years, senior officials said last week.

In a statement Thursday, Pag-IBIG said it continues to improve its programs to meet the needs of its members.

“This year, we are extending the term of our cash loans from two to three years to give borrowers more time to repay their loans, and more importantly, to reduce their monthly payments,” said Secretary Eduardo del Rosario, President of the Department of Human Settlements and Urban Development (DHSUD) and the Board of Directors of the Pag-IBIG Fund composed of 11 members.

The Pag-IBIG Fund’s cash loans are in the form of a multipurpose loan (MPL) and a disaster loan (CL) for disaster areas. Also known as Short Term Loans (STLs), MPL and CL are affordable and easily accessible sources of funds for its members.

According to the agency, qualified members can borrow up to 80 percent of their total Pag-IBIG regular savings, which consists of their monthly savings, matching contributions from their employer and dividends earned annually.

The proceeds can then be used to pay for school fees, medical bills, minor home improvements, as capital for small businesses, or as an emergency disaster fund.

“Pag-IBIG cash loans are paid over 24 months. And now our members have the option to extend the term to 36 months. By choosing a longer payout period, members can benefit from significantly lower monthly payouts, ”Pag-IBIG Fund CEO Acmad Rizaldy Moti said.

He noted that they have reduced the monthly payments by almost a third with the lengthening of the payment period. With an average cash loan of 20,000 pesos, members pay 1,016.52 pesos per month for a multipurpose loan and 897.23 pesos per month for a disaster loan with a two-year payment term. .

However, with the new three-year payment term option, the amount of each monthly payment will be reduced to just P 734.57 per month for a versatile loan and P 615.72 per month for a disaster loan.

Pag-IBIG said that with payments spread over a longer period, monthly payments have been reduced by 28% for a multipurpose loan and 31% for a disaster loan.

“We recognize that these are difficult times and we are doing everything possible to help our members as the health emergency continues. From January to July alone, we released 25.42 billion pesos in cash loans to help over 1.1 million members, ”Moti said.

“We are ready to help more members in the months to come, now that the extended payment deadline has made our cash loans even more affordable. We have also made the loan application process safer and more convenient by accepting loan applications online through the virtual Pag-IBIG, ”he added.


Pag-IBIG collects over $ 25 billion in savings in 2021

The Pag-IBIG fund marks milestones despite the pandemic


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financial situation, try to get one that will help you, currently there really is a quantity Sat, 18 Sep 2021 02:51:50 +0000 financial situation, try to get one that will help you, currently there really is a quantity

Let me be clear on Payday Advances and Zero Funding Assessments

Cyberspace unsecured debt financing is considered to be the fast growing loan options that women and men using accounts definitely need to come up with. Despite the use of people who are many, the country drops in individual bankruptcies and foreclosures of home investment real estate assets, the payday loan continues to be ideal below just to help. For this reason, whenever we introduce security into a global financial situation, you should find one that will help you, as there really are a lot of possibilities for your needs.

Most people find it hard to see this economy without a credit score. You will find what can be posted to make your overall credit score work, but no credit rating rating is provided by other people, make sure these people are willing to give. The main advantage is that you are likely to have little money from what the credit gets.

To know what improvement money is experienced, you get the rate which will definitely be generally useful, you have to know how fast you profit from the money. Normally you will afford to get. At other times, you might have to shell out increasing levels of fascination, but only get the cash you might need within a time frame that might be limited.

The home or home mortgage loan displays the latest debts and credit score to determine how much money this will indicate if someone is helping with financing advancement without a credit reliability assessment. The interest expense is just not the issue which is only the expense concern, in fact certainly one of those in particular. You can make you have to think about wanting to bring unsecured financing to a business, it will not check your credit rating if you yourself have a good credit score but demand the money afterwards.

You need to look for creditors who can return money without checking your credit score or providing a mark that is certainly destructive. But, you need to know what a financial payday company intends to do before trying to find this type of financing. It will allow you to identify whether or not it is recommended to take these funds from the company’s store.

The purpose of the salary needs men and women available, which happens to be dollars, it’s quick.

The goal of payday is to give men and women easy finances. Really it is considered to be in short term emergency income needs as well as dabei which turn out to be really repeating you resources that you appreciate within one. Generally legal advance payday loans while the basis of beds for those functional a lack of verification of obtaining financing is really because you will be using dollars that you will get exactly the same to you, despite this the interest is enough. big.

You will be charged from two hundred dollars to two thousand dollars, depending on the monthly interest if you want to get a payday loan without a credit check. Since salary funding requires someone to prove that you might find yourself in a high demand for money, you need to prove that you are done and that you are generally used up. Since these bonds are usually required for lending companies, you will need to get a home loan from everyone first.

There are many other productions among these loans looking for someone to express proof function and start receiving credit referrals, but payday debt without asset valuation is quick and easy. It is important to provide your own subject, the amount of cultural shields, the concept in your, a check or purchase stub as well as bank accounts so that a person needs the specific number of jingling coins. If it is filled out by someone and sends it to the loan company, it goes to mobile and validates the top destinations provided and finds the money placed for you personally.

These transfer bills certainly can’t think of getting any approaches to the money given to you. Visitors find that the loan options have a very reasonable desire since they actually could. Never the money you will need, you have to know what you are really doing if you want the finances to end up getting the real way which is the best to get the money.

We recognize that payday advances are not the answer once you have a credit rating that is undoubtedly affordable after that. Try to stop the capital of exactly what with an economic commitment for a while as they might cause a person to get an adverse credit report and get yours. It is better that they are sure than regrettable.

The most practical method to make sure that you are likely to get the maximum benefits contract which is a successful salary without consumer credit score assessment is to go online to review numerous services. that will help an individual. You may receive a significantly better deal and will almost certainly be quickly wandered off without having to focus on the need to reap the profits.

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Exclusive: US shale oil company Pioneer Natural launches land sale Fri, 17 Sep 2021 17:35:02 +0000

By Arathy S Nair, David French and Shariq Khan

(Reuters) – Major U.S. shale oil producer Pioneer Natural Resources Co has put its assets in the Delaware Basin in Texas on the block, with the aim of securing more than $ 2 billion for the properties, said Friday to Reuters two sources familiar with the matter. A sharp rebound in crude oil prices following last year’s pandemic crash triggered a wave of shale consolidation and opened a window for producers to offload unwanted properties. Pioneer wants to streamline operations and reduce debt after two big acquisitions this year. In March, she sold an oil services company for an undisclosed amount.

There was no guarantee that Pioneer would end up making a deal. The company did not immediately respond to a request for comment.

A sale would leave Pioneer to focus on the Midland part of the Permian, its traditional base. The assets currently for sale were acquired with the purchase of Parsley Energy for $ 4.5 billion, the sources said. Parsley has about 350 wells in four counties in the Delaware Basin. Pioneer chief executive Scott Sheffield told investors last week that the company would likely cede some of its less productive acreage in the Delaware and Midland basins in Texas. Pioneer made two multi-billion dollar buyouts this year. After closing its deal with Parsley in January, Pioneer paid $ 6.2 billion for Midland Basin rival DoublePoint Energy. The deals brought Pioneer’s total debt to $ 6.9 billion at the end of June, from $ 3.1 billion six months earlier, according to regulatory documents. As part of the industry’s broader goal of improving investor sentiment after years of substandard returns relative to other economic sectors, U.S. shale companies have increased buyouts and dividends. Last month, Pioneer announced plans to start paying a variable quarterly dividend until September, starting in the first quarter of 2022.

(Reporting by Arathy S Nair and Shariq Khan in Bengaluru and David French in New York; editing by David Evans)

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Banks beware, Amazon and Walmart crack the finance code Fri, 17 Sep 2021 14:11:00 +0000
  • Investments in integrated finance jump in 2021, data shows
  • Buy now, pay later, offers take center stage
  • Fintech market valuations overtake banks

LONDON, September 17 (Reuters) – Anyone can be a banker these days, all you need is the right code.

Global brands from Mercedes and Amazon (AMZN.O) to IKEA and Walmart (WMT.N) are cutting out the traditional financial middleman and plugging in software from tech startups to deliver everything from banking to credit to customers. assurance.

For established financial institutions, the warning signs are flashing.

So-called integrated financing – a fancy term for companies integrating software to offer financial services – means that Amazon can allow customers to “buy now and pay later” when they upgrade. checkout and Mercedes drivers can charge their cars for their fuel.

While banks are still at the origin of most transactions, investors and analysts say the risk for traditional lenders is that they are far from the beginning of the financial chain.

And that means they’ll be further removed from the mountains of data others are collecting about their customers’ preferences and behaviors – data that could be crucial in giving them an edge over banks in financial services.

“Integrated financial services take the concept of cross-selling to new heights. They are built on an ongoing, software-based data relationship with the consumer and the business, ”said Matt Harris, partner of investor Bain Capital Ventures.

“This is why this revolution is so important,” he said. “This means that all the good risks will go to these integrated companies who know so much about their customers and what is left will go to the banks and insurance companies.”


For now, many areas of integrated finance are barely shaking the dominance of banks and although some new entrants are licensed to offer regulated services such as lending, they lack the scale and funds to build on. deep financing from the biggest banks.

But if fintech firms, or fintechs, can match their success by grabbing a portion of banks’ digital payments – and upping their ratings in the process – lenders may have to respond, analysts say.

Stripe, for example, the payment platform behind many sites with customers including Amazon and Alphabet (GOOGL.O) Google, was valued at $ 95 billion in March. Read more

Accenture estimated in 2019 that new entrants to the payments market had amassed 8% of global revenue – and that share has grown in the past year as the pandemic has boosted digital payments and impacted traditional payments, said Alan McIntyre, senior director of banking at Accenture, said.

Now the focus is on loans, as well as off-the-shelf digital lenders with a variety of products that businesses can choose from and integrate into their processes.

“The vast majority of consumer-centric businesses will be able to launch financial products that will significantly improve their customer experience,” said Luca Bocchio, partner at venture capital firm Accel.

“This is why we are so excited about this space.”

So far this year, investors have invested $ 4.25 billion in integrated finance startups, nearly three times the amount in 2020, according to data provided to Reuters by PitchBook.

Swedish buying company Now Pay Later (BNPL) Klarna, which has raised $ 1.9 billion, is leading the way.

DriveWealth, which sells technology that allows companies to offer fractional stock exchanges, has attracted $ 459 million while investors have invested $ 229 million in Solarisbank, a licensed German digital bank that offers a range of software banking services.

Shares of Affirm (AFRM.O), meanwhile, surged last month when it partnered with Amazon to offer BNPL products, while US rival Fintech Square (SQ.N) announced the Last month it bought Australian company BNPL Afterpay (APT.AX) for $ 29 billion.

Square is now worth $ 113 billion, more than Europe’s most valued bank, HSBC (HSBA.L), at $ 105 billion.

“Big banks and insurers will lose out if they don’t act quickly and figure out where to play in this market,” said Simon Torrance, founder of Embedded Finance & Super App Strategies.

Reuters Charts


Several other retailers have announced their intention this year to expand their financial services.

Walmart launched a fintech startup with investment firm Ribbit Capital in January to develop financial products for its employees and customers, while IKEA took a minority stake in BNPL Jifiti last month.

Automakers such as Volkswagen’s Audi (VOWG_p.DE) and Tata’s Jaguar Land Rover (TAMO.NS) have experimented with integrating payment technology into their vehicles to make payment easier, in addition to the Mercedes by Daimler (DAIGn.DE).

“Customers expect services, including financial services, to be directly integrated at the point of consumption and to be convenient, digital and immediately accessible,” said Roland Folz, Managing Director of Solarisbank, which provides banking services to more than 50 companies, including Samsung. .

It’s not just end consumers who are targeted by integrated finance startups. Businesses themselves are strained as their digital data is processed by fintechs such as Shopify of Canada (SHOP.TO).

It provides software to merchants and its Shopify Capital division also offers cash advances, based on analysis of over 70 million data points on its platform.

“No merchant comes to us and tells us I would like a loan. We go to the merchants and tell them, we think it’s time to finance you,” said Kaz Nejatian, vice president, merchant products and services. at Shopify.

“We don’t ask for business plans, we don’t ask for tax returns, we don’t ask for tax returns, and we don’t ask for personal guarantees. Not because we are benevolent but because we believe those “These are bad signals about the chances of success on the Internet,” he said.

A Shopify spokesperson said the funding ranged from $ 200 million to $ 2 million. It provided $ 2.3 billion in cumulative capital advances and is valued at $ 184 billion, well above the Royal Bank of Canada (RY.TO), the country’s largest traditional lender.


Shopify’s lending business is still overshadowed by the big banks, however. JPMorgan Chase & Co (JPM.N), for example, had a portfolio of consumer and community loans worth $ 435 billion at the end of June.

Major advances in financing businesses in other sectors could also be constrained by regulators.

Officials at the Bank for International Settlements, a consortium of central banks and financial regulators, warned watchdogs last month to tackle the growing influence of tech companies in finance. Read more

Bain’s Harris said financial regulators take the approach that because they don’t know how to regulate tech companies, they insist there is a bank behind every transaction – but that doesn’t mean banks would prevent fintechs from encroaching.

“They are right that banks will always have a role but it is not a very rewarding role and it involves very little customer ownership,” he said.

Forrester analyst Jacob Morgan said banks need to decide where they want to be in the financial chain.

“Can they afford to fight for the primacy of the customer, or do they actually see a more profitable path to the market to become the rails that other people run on?” ” he said. “Some banks will choose to do both.”

And some are already fighting.

Citigroup (CN) has partnered with Google on bank accounts, Goldman Sachs (GS.N) provides credit cards to Apple (AAPL.O) and JPMorgan purchases 75% of Volkswagen’s payments business and plans to expand to other sectors. read more 06:00:00

“Connectivity between different systems is the future,” said Shahrokh Moinian, wholesale payments manager, EMEA, at JPMorgan. “We want to be the leader.”

Reporting by Anna Irrera and Iain Withers; Editing by Rachel Armstrong and David Clarke

Our Standards: Thomson Reuters Trust Principles.

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Coalition launches to fight predatory lending Fri, 17 Sep 2021 13:12:56 +0000
Montgomery, USA – April 21, 2018: Easymoney Payday Loan Financial Institution with Cashed Payable Checks Window Panel, Fast and Easy Title Loan in Alabama Capital City

(Indiana News Service) A new coalition is forming to fend off predatory lending and urge state lawmakers to take action to protect consumers.

Indiana has 286 payday loan stores, where people go to take out small loans with high interest rates, and borrowers are often low-income residents who cannot repay the loans and are caught in a cycle. debt.

Natalie James, one of the leaders of the Hoosiers for Responsible Lending coalition, said predatory lending has been a smoldering problem for years, and she noted that the pandemic has made many people more financially precarious.

“We aim to send a message to our federal and state lawmakers that a pandemic is not the time to allow lenders to take advantage of Hoosiers’ financial distress,” said James.

82% of payday borrowers take out another loan within 30 days of paying off the previous one. James noted that some states have reasonable caps on the Annual Percentage Rate (APR), the overall cost of funding these loans, including fees, but Indiana is not one of them.

Andy Nielsen, another leader of the coalition, said he supports legislation to cap the APR for payday loans at 36%. In Indiana, the current cap is 391%.

Nielsen explained, “36% APR is a long-standing rate that preserves a borrower’s ability to repay and allows lenders to always make a profit. “

Nielsen added that payday loans drain $ 60 million a year in fees for consumers in Indiana, and with a cap of 36% of the APR, they could save millions of dollars.

Sixteen states plus DC have already implemented similar limits, and a study in North Carolina shows that the absence of payday lenders did not impact the availability of credit for low- and moderate-income families. .

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Webber is the leader Santa Fe needs | My opinion Fri, 17 Sep 2021 12:59:00 +0000

Over the past year and a half, New Mexicans have come together like never before. As the pandemic raged before us, we took masking, testing and vaccination seriously. In the legislature, we worked hard to pass COVID-19 relief measures that would help everyday New Mexicans, including small businesses and low-income people. I have sponsored legislation that has had an impact on our infrastructure, our schools and our working families. I am proud to be part of a legislative body that has fought for the needs of communities in New Mexico.

Leadership at this time is essential. While we worked at State House, leaders like Mayor Alan Webber worked in cities to protect the health and safety of their residents. Webber championed a municipal mask mandate from the start, distributed millions of dollars to those in need, and protected the homeless by creating an emergency shelter and securing the purchase of Santa Fe Suites to serve as a solution. in the longer term to housing insecurity. For these reasons and many more, I support Mayor Alan Webber for his re-election.

It is not easy to go through a pandemic. I know it firsthand. While the pandemic has brought new challenges, it has also exacerbated existing struggles such as food insecurity, internet access and homelessness. Many have found themselves in dire financial straits. In the toughest times, people struggle to make ends meet. At state and city level, we are implementing programs such as rental assistance, eviction moratoria and hotlines for tenants. We have allocated money to food security programs.

Yet there are expenses that families face that cannot be covered by these large programs. Maybe a car breaks down and someone can’t get to work, resulting in a cascade of consequences – job loss leads to income loss and that same lack of transportation makes it impossible to get there. looking for a new job. Some found themselves caring for family members – sick seniors, children at home in a distant school – and unable to work as expenses increased.

In these situations, people often turn to predatory lenders and payday loans for quick cash to avoid crises. And unfortunately, these loans often lead to a vicious cycle, driving a family more and more into debt, unable to escape skyrocketing interest rates as expenses continue to pile up. I have devoted countless time and effort to reforming this system, and Webber has joined in the fight.

Under Webber, the city of Santa Fe signed a major program called TrueConnect, which helps people who find themselves with an unexpected expense access the money they need without the devastating consequences of predatory lenders. TrueConnect allows city employees to take out a short-term loan with much lower interest rates that they can repay through payroll deduction over the course of a year. This saves the individual money and in many cases saves his job. They can still get to work. They can still access the Internet from home when they need to work remotely. They can pay for child care so they can get to work on time. TrueConnect works for both employees and employers.

I am grateful to have been able to work with Webber and I am proud to support him for a second term. We need strong leadership during this difficult time, and Webber is the person to provide it. I hope you will join me in supporting Mayor Alan Webber for his re-election.

State Representative Susan K. Herrera serves District 41, which includes parts of Santa Fe, Taos and Rio Arriba counties.

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Beijing bypasses Biden’s nuclear submarines Fri, 17 Sep 2021 10:46:23 +0000


(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

HONG KONG (Reuters Breakingviews) – China formally asked to join the Comprehensive and Progressive Agreement on Trans-Pacific Partnership, shortly after the United States and the United Kingdom decided to arm Australia with sub- nuclear sailors to challenge Beijing’s assertiveness. It is insolent for President Xi Jinping to try to strike a trade pact specially crafted by frustrated US trade negotiators to contain Chinese state-owned enterprises. The leader may not even be willing to make the concessions that would persuade skeptical trading partners like Japan to admit it. But that might not be the point.

President Joe Biden has not relaunched negotiations to join the CPTPP, already signed by 11 countries with a combined economic output of around $ 14 trillion, thanks to national opposition. China’s candidacy only strengthens its argument that it is a bigger supporter of free trade than the White House. And it shows that Beijing does not want to compartmentalize negotiations with Washington or Canberra. Military measures can be countered with economic measures, while climate cooperation will require US concessions elsewhere. Who contains who? (By Pete Sweeney)

On Twitter

Capital Calls – More Concise Information About Global Finance:

Refrigerator deal foreshadows camping peak

The flavor boom will lead to more transactions

Biden channels Trump on China

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(Edited by Robyn Mak and Karen Kwok)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Central bank liquidity and its impact on banks and global economies Fri, 17 Sep 2021 05:00:42 +0000

Through Abhik Agrawal, Senior Senior Product Manager, Oracle Financial Services

The Covid-19 pandemic has affected all economies, large and small, across the world. Central banks everywhere have handled the situation proactively and have succeeded in injecting a large amount of liquidity into the banks through various means. However, due to the widespread uncertainty caused by the pandemic, banks are reluctant to lend and consumers are reluctant to resort to credit. This article highlights the negative impact that excess liquidity can have on banks and economies if adequate demand is not created.


WAs the entire world grappled with the pandemic, central banks around the world were better prepared to tackle the economic impact it caused. The experience and lessons learned from previous crises have served to inform central banks’ response to the pandemic. They pushed out a huge amount of liquidity to keep the banks afloat and help the economy as a whole during this time of magnanimous stress.

Here are some common actions central banks take to inject liquidity into banking institutions:

  • Rate cut: Several rounds of rate cuts have been applied by central banks around the world for short-term loans to banking institutions, resulting in excess liquidity between banks. A few central banks even cut rates to zero and below zero levels. The US Federal Reserve cut its key rates for short-term loans from 1% and 1.25% to 0% and 0.25%. Some European banks lowered the rate to negative.
  • Quantitative Easing (QE): Quantitative Easing, a brainchild of the Bank of Japan, is a way of injecting liquidity into the markets through banks. It is now widely used by central banks around the world. QE is part of monetary policy and is effective when short-term rates are close to zero. As part of quantitative easing programs, central banks buy long-term government bonds and other securities and increase the money supply. For example, in response to COVID-19, the U.S. Federal Reserve announced a more than $ 700 billion quantitative easing plan and then bolstered it with a commitment to buy at least $ 80 billion and $ 40 billion. dollars per month in government securities and mortgages respectively. securities.
  • Relaxation of regulatory requirements: In view of the crisis, central banks have relaxed some regulatory requirements in terms of capital and liquidity. The Reserve Bank of India has postponed the NSFR’s continuation directive for six months, from April 1, 2020 to October 1, 2020. The liquidity coverage maintenance ratio has also been reduced from 100% to 80% for a few months.
  • Discount window: A discount window is used by central banks for short-term loans, mainly overnight. Banks have reduced the rate on loans through the discount window and have also increased the term of loans to ensure adequate liquidity with banking institutions. For example, the US Federal Reserve lowered the rate it charges banks for loans at its discount window by 2 percentage points, from 2.25% to 0.25%.
  • International exchange line: The US Fed opened international swap lines, which are essentially an emergency money pipeline, to many central banks, which needed US dollars, and it also cut the rate on existing lines.

There are many other measures taken by central banks targeting direct lending to consumer or securities markets, such as increasing the three-month moratorium period, direct lending to businesses, such as the Consumer Credit Facility, primary market companies of the US Fed, the Money Market Mutual Fund. Ease (MMMFF), etc. (But for this article, I’ll focus on the measures that resulted in direct central bank lending to other banks.)

Actions by central banks to keep banks sufficiently liquidated through the stimulus packages were well on time and much needed, but the surge in liquidity alone is not enough to cope with the situation. It is important that the excess funds with the banks pass into the hands of creditworthy borrowers and that economic activities gradually recover until the pre-pandemic era.

But for several reasons, the liquidity that was pumped into the banking system did not result in proportionate lending:

  • Refusal of banks to lend: Due to the potential negative impact of the pandemic on jobs and businesses, the credit rating of borrowers and the value of collateral against which the bank lends may decline. This makes banks skeptical about lending.
  • Provision for potential losses: Banks set aside more funds for potential losses on existing loans due to the possibility that borrowers’ credit quality will decline due to lower economic activities. A study published in the March 2021 BRI quarterly review shows that the provision for the first half of 2020 was three times compared to the second half of 2019.
  • Less credit request: Many businesses, especially small businesses, have suffered greatly from foreclosure restrictions. The unemployment rate has also increased. This has resulted in uncertain income streams for individuals and businesses, resulting in lower demand for credit.
  • Operational issues: Banks in many European countries and countries like India, which are facing the second or third wave of the pandemic, are not adequately staffed due to restrictions imposed by local authorities or absenteeism for fear of the pandemic. For many banks, the focus is on ensuring the safety of their staff and carrying out the most essential tasks rather than growing the business.

Banks are sitting on a lot of cash. Although this current level will not be maintained for long, the banks will soon start pumping this money into the economy. However, if this happens without creating adequate demand, it can prove counterproductive for banking institutions and economies in the following ways:

  • Inflation: The push of money supply to banks and the economy in general is likely to increase inflation. If this is not followed by an increase in the growth of supply and demand for credit, the situation may worsen and the economy may sink into stagflation. Stagflation is a condition where inflation rises, but economic growth stagnates.
  • High risk loans: With the accumulation of liquidity and low interest rates, banks may be drawn into high risk loans. This can result in overfunding for existing customers or funding for new customers with poor credit quality. This will have a long-term impact on the overall credit quality of the bank.
  • Postcode battery: In addition to new loans, existing accounts can also switch to non-performing assets (NPA) due to high unemployment rates and losses suffered by businesses due to low economic activity.
  • Currency devaluation: Measures such as quantitative easing to boost liquidity can lead to currency devaluation. As bond yields decline due to quantitative easing, a devaluation of the currency occurs. It may help the country’s exporters as their products would be cheaper in the world market, but it will make the import products more expensive. This happened during the global financial crisis of 2007-2008 with the USD index, which fell more than 5% after the first round of quantitative easing.
  • Liquidity trap: A liquidity trap is a situation where interest rates are very low but the consumer continues to accumulate money in savings and other accounts and does not wish to invest in any other instrument. This happens when the client anticipates a negative event in the economy and does not want to invest in low yielding bonds, which will result in a loss for him when interest rates in the market rise. A similar situation applies when banks prefer to hold cash rather than lend to customers, as keeping reserves with the central bank gives a higher return.
  • Overheating stock markets: During the pandemic, markets around the world collapsed for the first few weeks, but then hit an all-time high in 4 to 6 months since the start of the pandemic. Many experts claim that this unprecedented run in the stock markets is due to the huge liquidity stimulus injected by central banks around the world. Several experts also cite this as the main reason for the race north of the security markets.
  • Lower net interest margins: The excess liquidity of many banks is placed in low yield accounts. This will have an impact on the banks’ net interest margin (NIM).

There is no doubt that central banks around the world have learned from past crises and provided enough stimulus this time around to keep bank liquidity in a healthy position. However, they should be aware that excess liquidity can cause damage to the overall economy. They must either start absorbing liquidity through tactics such as rate hikes or open market operations at an appropriate time, or continue to push banks to lend using their inflated coffers.

Recently, the situation in a few countries like the United States and the United Kingdom has improved and economic activities are returning to normal. This could indicate that the central banks of some countries will take the necessary steps to suck liquidity from the markets. However, this is unlikely to happen before the first quarter of 2022. Nonetheless, the battle could be longer as financial uncertainty continues to be a major factor in many countries.

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Explained: What’s good about a “bad bank” Fri, 17 Sep 2021 01:35:59 +0000 Following one of her key budget announcements, Finance Minister Nirmala Sitharaman announced the formation of India’s very first “Bad Bank”. She stated that the “National Asset Reconstruction Company Limited” (NARCL) has already been incorporated under the Companies Act. He will acquire stressed assets worth around Rs 2 lakh crore from various commercial banks during different phases. Another entity, India Debt Resolution Company Ltd (IDRCL), which has also been formed, will then attempt to sell the stressed assets in the market. The NARCL-IDRCL structure is the new bad bank. For this to work, the government allowed the use of Rs 30,600 crore as collateral.

What is a bad bank? Why was this necessary?

In each country, commercial banks accept deposits and grant loans. Deposits are the “responsibility” of a bank because it is the money it has taken from an ordinary man, and it will have to return that money when the depositor asks for it. In addition, in the meantime, it must pay the depositor an interest rate on these deposits.

In contrast, the loans that banks give are their “assets” because this is where the banks earn interest and it is money that the borrower has to return to the bank.

The whole business model is based on the idea that a bank will make more money making loans to borrowers than it should pay depositors back.

Imagine then a scenario where a bank finds that a huge loan is not repaid because, say, the company that took out the loan has gone bankrupt and is unable to repay the interest or the amount of the loan. main.

Every bank can take some such hits. But what if these “bad debts” (or loans that will not be repaid) increase alarmingly? In such a case, the bank could sink.

Now imagine a scenario where several banks in an economy are facing high levels of bad debt and all at the same time. This will threaten the stability of the entire economy.

In normal operation, as the proportion of bad debts – they are usually calculated as a percentage of total advances (loans) – increases, two things happen. First, the affected bank becomes less profitable because it has to use part of its profits from other loans to offset the loss on bad debts. Second, it becomes more risk averse. In other words, its officials are reluctant to give loans to business ventures that may seem remotely risky for fear of aggravating an already high level of non-performing assets (or NPAs).

Figures 1 and 2

In India, as Figures 1 and 2 show, the level of NPAs has increased alarmingly since 2016. This is largely due to the fact that the RBI has forced banks to clearly recognize bad debts on their books. . The fact is that several banks have witnessed a gradual deterioration in their loan portfolios since the 2008-09 global financial crisis.

From a taxpayer’s perspective, the most worrying fact was that an overwhelming proportion of NPAs were with public sector banks, which were owned by the government and therefore owned by the Indian public. To keep these PSOs in operation, the government was forced to recapitalize them, i.e. to use taxpayer money to improve the financial health of PSOs so that they could continue their lending and funding activity. financing of economic activity.

But with each passing year, NPAs have continued to rise – not helped by the fact that the economy itself has started to lose its growth momentum since the start of 2017.

Many argued that the government should create a bad bank, that is, an entity where all bad loans from all banks can be parked, thereby relieving commercial banks of their “stressed assets” and allowing them to concentrate on resuming normal banking operations, in particular credit.

As commercial banks start lending again, the so-called bad bank, or bad debt bank, would try to sell these “assets” in the market.

bad bank, what is a bad bank, bad bank explained, nirmala sitharaman bad bank, india bad bank, nirmala sitharaman press conference, Indian Express Source: Kotak Institutional Equities Research

How will the NARCL-IDRCL work?

NARCL will first buy bad loans from banks. He will pay 15% of the agreed price in cash and the remaining 85% will be in the form of “security receipts”. When the assets are sold, with the help of the IDRCL, the commercial banks will be reimbursed for the remainder.

If the bad bank is unable to sell the bad loan or has to sell it at a loss, the state guarantee will be invoked and the difference between what the commercial bank was supposed to get and what the bad bank was able to. raise will be paid from the Rs 30,600 crore which has been provided by the government.

Will a bad bank solve the problems?

From the perspective of a commercial bank struggling with high APN levels, this will help. This is because such a bank will get rid of all its toxic assets, which were eating away at its profits, in one fell swoop. When the recovery money is paid back, it will further improve the bank’s position. In the meantime, he can start lending again.

From the point of view of the government and the taxpayer, the situation is a little more confused. After all, whether it’s recapitalizing bad debt PSBs or giving collateral for collateral receipts, the money is coming out of the pockets of taxpayers. Although recapitalization and such guarantees are often referred to as “reforms”, they are band-aid at best. The only lasting solution is to improve the loan operation in the PSBs.

Finally, the commercial bank bailout plan will collapse if the bad bank is unable to sell these impaired assets in the market. If that happens, guess who will have to bail out the bad bank itself? Indeed, the taxpayer.

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Split 9th Circ. Axes Ruling, forces the certified class to arbitrate Fri, 17 Sep 2021 01:35:00 +0000
By Diamond Naga Siu (September 16, 2021, 9:35 p.m. EDT) – The Ninth Circuit, in a split opinion released Thursday, overturned a California federal judge’s ruling that tribal-linked lenders were wrongly denied their request for arbitration of borrowers’ claims and that an arbitrator should decide whether arbitration clauses are enforceable.

Kimetra Brice led a consumer class suing now-defunct online lender Think Finance and associated parties Plain Green and Great Plains Lending for issuing interest rates above California’s legal limits and getting away with it. doing business with tribal entities and declaring tribal sovereign immunity.

The decision of the three-judge panel now creates a division of the circuit, as the second, third and …

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