Monday, February 9, 2026

BTL 868 - Interest Subvention for Export Credit 2026

 

The Banking Tutor’s Lessons

BTL 868                                                                               09-02-2026

Interest Subvention for Export Credit 2026

Under the Niryat Protsahan (Financial Enablers) sub-scheme of the Export Promotion Mission (EPM), the Government of India provides specific interest support to reduce credit costs for exporters. This initiative was launched in early January 2026 to replace and refine the previous Interest Equalisation Scheme.

Interest Subvention Rates

Base Rate: A standard interest subvention of 2.75% per annum is available for both pre-shipment and post-shipment rupee export credit.

Additional Incentive: There is a provision for extra incentives for exports directed toward notified under-represented or emerging markets, though these are subject to operational readiness.

Key Features & Eligibility

Target Group: The benefit is exclusively for MSME manufacturer exporters and merchant exporters.

Annual Cap: Each exporter (per Importer-Exporter Code - IEC) is subject to an annual benefit cap of 50 lakh for FY 202526.

Coverage: Support is restricted to a "Positive List" of approximately 4,139 tariff lines (at the HS 6-digit level), which covers about 75% of India's total tariff lines where MSME participation is high.

Validity: The scheme is part of a broader six-year mission spanning from FY 2025–26 to FY 2030–31.

Exclusions: Prohibited/restricted items, waste, scrap, and products already covered under other incentive schemes (like PLI or RoDTEP) are excluded.

Application Process

To access this benefit, eligible exporters must first file an "Intent to Avail" on the DGFT Portal to generate a Unique Identification Number (UIN). This UIN is then used to approach banks, which pass the interest benefit upfront and later claim reimbursement through the Reserve Bank of India.

Key aspects of this intervention include:

Coverage: Applies to both pre-shipment (packing credit) and post-shipment rupee export credit.

Support Level: A base rate of 2.75% is provided, with additional incentives for exports to specific emerging or under-represented markets.

Eligibility: Targeted at MSME exporters, covering a defined positive list of tariff lines, which constitutes approximately 75% of India's total tariff lines.

Implementation: The benefit is passed on upfront by lending institutions, which are then reimbursed by the RBI.

Goal: To reduce the cost of export finance, making Indian MSME products more competitive in international markets.

The Niryat Protsahan scheme also includes a collateral guarantee component, supporting up to 85% for Micro and Small enterprises and 65% for Medium enterprises, with a maximum guarantee of 10 crore per exporter.

Sekhar Pariti

+91 9440641014

DBC 2340 - Horizontal Acquisition

 

The Banking Tutor 

Daily Banking Concept -  2340 

Horizontal Acquisition 

A horizontal acquisition occurs when one company acquires  another company in the same industry and works at the same production stage. The new entity may be well positioned because of its increased market share or scalability than the standalone companies combined to form it. Horizontal acquisitions expand the capacity of the acquirer, but the basic business operations remain the same,  unlike an acquisition that creates a wholly different company.

Sunday, February 8, 2026

DBC 2339 - Berkshire Hathaway

 

The Banking Tutor 

Daily Banking Concept -  2339 

Berkshire Hathaway 

Berkshire Hathaway is a multinational holding company led by Warren Buffett that owns a diverse array of businesses and investments.

 

Saturday, February 7, 2026

DBC 2338 - Book Value

 

The Banking Tutor 

Daily Banking Concept -  2338 

Book Value 

A company’s book value equals the value of its assets remaining after accounting for its outstanding debts and other obligations.

Friday, February 6, 2026

BTL 867 - Urban Agglomerations (UA)

 

The Banking Tutor’s Lessons

BTL 867                                                                                06-02-2026

Urban Agglomerations (UA)

In India, an Urban Agglomeration (UA) is defined as a continuous urban spread consisting of a main town and its adjoining "outgrowths" (like university campuses or railway colonies), or two or more physically contiguous towns.

As of 2026, the primary classification and data remain based on the 2011 Census, which identified 475 urban agglomerations in India.

An Urban Agglomeration (UA) refers to a continuous urban spread consisting of a core city (or towns) together with its adjoining outgrowths or physically contiguous towns that have developed around it. It represents a large and integrated urban area formed due to the natural expansion of cities and the merging of nearby settlements as a result of population growth, industrialisation, and infrastructural development.

These regions are the primary drivers of India's economic growth and represent the largest concentrations of the urban population.

The Census further clarifies that:

An Urban Agglomeration must comprise at least one statutory town.

The total population of all the constituents (towns and outgrowths) should not be less than 20,000 as per the previous census.

Thus, an Urban Agglomeration is essentially a cluster of urban settlements that are physically and functionally integrated. 

Key Classifications

Urban Agglomerations are further grouped based on their population size:

Metropolitan Urban Agglomerations: (Mega Cities): UAs with a population of 10 million or more (Mumbai, Delhi, and Kolkata).

Class I Urban Agglomerations (Million Plus UAs): Areas with 1 million or more people; there were 53 such UAs as of the last census.

Medium and Small Urban Agglomerations (Class I UAs) : Areas with at least 100,000 residents.

Major Components

Core Town (Statutory Town) : A municipality, corporation, cantonment board, or notified town area with its own urban governance structure. It serves as the nucleus around which urban expansion occurs.

Outgrowth (OG): A viable urban unit that has developed outside the formal limits of a town but is physically contiguous with it, such as a military camp or industrial estate. Areas adjoining the main city or town that exhibit urban characteristics, such as- Developed residential colonies, Industrial estates, Railway colonies, Educational or institutional campuses.

These are located outside the statutory limits but are contiguous and dependent on the core city.

Census Town: A settlement that satisfies urban criteria (minimum 5,000 population, 75% male workforce in non-agriculture, and 400 persons/sq. km) but lacks a formal municipal government.

Contiguous Towns: Smaller towns that have grown physically close to the main city and merged into a single urban spread due to expansion.

Urban Agglomerations are important for urban planning and governance, as they highlight the spatial extent of urbanisation and the interconnected nature of modern cities and their surrounding areas.

Characteristics of Urban Agglomerations

Spatial Continuity: Consists of physically connected urban areas without rural gaps.

Functional Integration: The towns and outgrowths are linked through economic, social, and transport networks.

Population Density: High density due to concentration of industries, services, and housing.

Economic Centrality: The core city functions as a commercial, industrial, and administrative hub.

Infrastructural Linkages: Shared utilities like roads, water supply, waste management, and transport systems.

Administrative Overlaps: Multiple local bodies or authorities may govern different parts of the same agglomeration.

Importance of Urban Agglomerations

Economic Growth Engines:

Serve as centres of commerce, industry, and innovation.

Generate a significant share of national income and employment.

Urbanisation Indicators:

Reflect the intensity and spatial spread of urbanisation.

Integrated Infrastructure Planning:

Enable coordinated urban planning for housing, transportation, and public utilities.

Labour Market Expansion:

Attract large-scale migration and promote diversified employment opportunities.

Cultural and Educational Centres:

Host major educational institutions, cultural hubs, and service industries.

Challenges Associated with Urban Agglomerations

Urban Sprawl:

Unplanned expansion leads to environmental degradation and encroachment of agricultural land.

Inadequate Infrastructure:

Pressure on roads, housing, water supply, sanitation, and waste management systems.

Traffic Congestion and Pollution:

Increased vehicle use results in air pollution and mobility issues.

Informal Settlements:

Proliferation of slums and inadequate housing due to rapid migration.

Administrative Fragmentation:

Overlapping jurisdictions among multiple local bodies hinder coordinated governance.

Resource Inequality:

Economic disparities between the core city and peripheral areas.

Environmental Concerns:

Depletion of green spaces, rising waste levels, and water contamination.

Urban Planning and Policy Framework

To manage the growth of Urban Agglomerations, the Government of India has introduced several urban development initiatives:

Smart Cities Mission: Promotes sustainable and technology-driven urban infrastructure.

Atal Mission for Rejuvenation and Urban Transformation (AMRUT): Focuses on water supply, sewerage, and green spaces.

National Urban Policy Framework (NUPF): Provides guidelines for integrated regional urban planning.

Metropolitan Planning Committees (MPCs): Established under the 74th Constitutional Amendment Act for coordinated development of large agglomerations.

Master Plans and Regional Plans: Prepare long-term frameworks for land use, transport, and environmental management.

Significance in India’s Urbanisation

Urban Agglomerations are a key indicator of India’s urban transition, reflecting how cities expand beyond their administrative boundaries to form complex metropolitan regions. They play a pivotal role in:

Enhancing productivity through agglomeration economies.

Facilitating regional development and innovation clusters.

Strengthening national and global economic competitiveness.

However, sustainable management of these agglomerations requires integrated governance, inclusive urban policies, and investment in resilient infrastructure.

Sekhar Pariti

+91 9440641014

DBC 2337 - Equation of Exchange

 

The Banking Tutor 

Daily Banking Concept -  2337 

Equation of Exchange 

The equation of exchange is an economic identity that shows the relationship between the money supply, the velocity of money, the price level, and an index of expenditures. 

It says that the total amount of money that changes hands in the economy will always equal the total money value of the goods and services that change hands in the economy.

Thursday, February 5, 2026

DBC 2336 - Weak Sister

 

The Banking Tutor 

Daily Banking Concept -  2336 

Weak Sister 

A "weak sister" describes the least dependable component in a process or group that can undermine the whole. The term is often used in finance to describe an underperforming investment, business, or even an economy that creates problems for stakeholders.