{"id":9604,"date":"2020-08-24T17:34:26","date_gmt":"2020-08-24T12:04:26","guid":{"rendered":"https:\/\/triumphias.com\/blog\/?p=9604"},"modified":"2020-08-24T17:34:26","modified_gmt":"2020-08-24T12:04:26","slug":"subordinated-debts","status":"publish","type":"post","link":"https:\/\/triumphias.com\/blog\/subordinated-debts\/","title":{"rendered":"Subordinated Debts"},"content":{"rendered":"<p><span style=\"color: #0000ff;\"><strong>Relevance: Prelims\/Mains: G.S paper III: Indian Economy<\/strong><\/span><\/p>\n<p><strong>Why in news?<\/strong><\/p>\n<p>The government operationalised the Credit Guarantee Scheme for Subordinate Debt for stressed Micro, Small &amp; Medium Enterprises (MSMEs). It had announced this scheme as part of the Aatma Nirbhar Bharat Package.<\/p>\n<p><span style=\"color: #008080;\"><strong> The scheme provides liquidity to stressed MSMEs without really burdening them with heavy debt obligations and the banks are guaranteed the loan amount so they don&#8217;t have to worry about repayment.<\/strong><\/span><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/i.ytimg.com\/vi\/pqWSELxTavs\/maxresdefault.jpg\" alt=\"\u0905\u092c LOAN \u092e\u093f\u0932\u0947\u0917\u093e NPA MSMEs \u0915\u094b \u092d\u0940 | Subordinate Debt for Stressed MSMEs -  YouTube\" \/><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_68 ez-toc-wrap-center counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >What's Inside this Blog!<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/triumphias.com\/blog\/subordinated-debts\/#What_Is_Subordinated_Debt\" title=\"What Is Subordinated Debt?\">What Is Subordinated Debt?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/triumphias.com\/blog\/subordinated-debts\/#Understanding_Subordinated_Debt\" title=\"Understanding Subordinated Debt\">Understanding Subordinated Debt<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/triumphias.com\/blog\/subordinated-debts\/#Subordinated_Debt_Repayment_Mechanics\" title=\"Subordinated Debt: Repayment Mechanics\">Subordinated Debt: Repayment Mechanics<\/a><\/li><\/ul><\/nav><\/div>\n<h2 id=\"mntl-sc-block_1-0\" class=\"comp mntl-sc-block finance-sc-block-heading mntl-sc-block-heading\"><span class=\"ez-toc-section\" id=\"What_Is_Subordinated_Debt\"><\/span><span class=\"mntl-sc-block-heading__text\" style=\"color: #ff0000;\">What Is Subordinated Debt?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img decoding=\"async\" src=\"https:\/\/ironwoodcap.com\/wp-content\/uploads\/2014\/08\/approach_tools_subordinated-debt.jpg\" alt=\"Subordinated Debt | Ironwood Capital | Avon, CT\" \/><\/p>\n<p id=\"mntl-sc-block_1-0-1\" class=\"comp mntl-sc-block finance-sc-block-html mntl-sc-block-html\">Subordinated debt (also known as a subordinated debenture) is an unsecured loan or bond that ranks below other, more senior loans or securities with respect to claims on assets or earnings. Subordinated debentures are thus also known as junior securities. In the case of borrower default, creditors who own subordinated debt will not be paid out until after senior bondholders are paid in full.<\/p>\n<h3 id=\"mntl-sc-block-callout-heading_1-0\" class=\"comp mntl-sc-block-callout-heading mntl-text-block\"><span style=\"color: #ff0000;\">KEY TAKEAWAYS<\/span><\/h3>\n<div id=\"mntl-sc-block-callout-body_1-0\" class=\"comp mntl-sc-block-callout-body mntl-text-block\">\n<ul>\n<li>Subordinated debt is debt that is repaid after senior debtors are repaid in full.<\/li>\n<li>It is riskier as compared to unsubordinated debt and is listed as a long-term liability after unsubordinated debt on the balance sheet.<\/li>\n<\/ul>\n<h2 id=\"mntl-sc-block_1-0-7\" class=\"comp mntl-sc-block finance-sc-block-heading mntl-sc-block-heading\"><span class=\"ez-toc-section\" id=\"Understanding_Subordinated_Debt\"><\/span><span class=\"mntl-sc-block-heading__text\" style=\"color: #ff0000;\">Understanding Subordinated Debt<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p id=\"mntl-sc-block_1-0-8\" class=\"comp mntl-sc-block finance-sc-block-html mntl-sc-block-html\">Subordinated debt is riskier than unsubordinated debt. Subordinated debt is\u00a0any type of loan that&#8217;s paid after all other corporate debts and loans are repaid, in the case of borrower default. Borrowers of subordinated debt are usually larger corporations or other business entities. Subordinated debt is the exact opposite of unsubordinated debt in that senior debt is prioritized higher in bankruptcy or default situations.<\/p>\n<h2 id=\"mntl-sc-block_1-0-10\" class=\"comp mntl-sc-block finance-sc-block-heading mntl-sc-block-heading\"><span class=\"ez-toc-section\" id=\"Subordinated_Debt_Repayment_Mechanics\"><\/span><span class=\"mntl-sc-block-heading__text\" style=\"color: #ff0000;\">Subordinated Debt: Repayment Mechanics<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p id=\"mntl-sc-block_1-0-11\" class=\"comp mntl-sc-block finance-sc-block-html mntl-sc-block-html\">When a corporation takes out debt, it normally issues two or more\u00a0bond types that are either unsubordinated debt or subordinated debt. If the company defaults and files for bankruptcy, a bankruptcy court will prioritize loan repayments and require that a company repay its outstanding loans with its assets. The debt that is considered lesser in\u00a0priority is the subordinated debt. The higher priority debt is considered unsubordinated debt.<\/p>\n<\/div>\n<p>&nbsp;<\/p>\n<p><span style=\"color: #0000ff;\"><strong>For more such notes, Articles, News &amp; Views Join our Telegram Channel.<\/strong><\/span><\/p>\n<p><a title=\"Telegram Link\" href=\"https:\/\/t.me\/triumphias\" target=\"_blank\"><span style=\"color: #ff0000;\"><strong>https:\/\/t.me\/triumphias<\/strong><\/span><\/a><\/p>\n<p><span style=\"color: #0000ff;\"><strong>Click the link below to see the details about the UPSC \u2013Civils courses offered by Triumph IAS.<\/strong> <\/span><a title=\"Courses available\" href=\"https:\/\/triumphias.com\/pages-all-courses.php\"><span style=\"color: #ff0000;\"><strong>https:\/\/triumphias.com\/pages-all-courses.php<\/strong><\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Relevance: Prelims\/Mains: G.S paper III: Indian Economy Why in news? The government operationalised the Credit Guarantee Scheme for Subordinate Debt<\/p>\n","protected":false},"author":1,"featured_media":6714,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[123,42,43],"tags":[392],"class_list":["post-9604","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs","category-general-studies-iii-technology-economic-development-bio-diversity-environment-security-and-disaster-management","category-indian-economy","tag-union-public-service-commission-upsc"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/9604","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/comments?post=9604"}],"version-history":[{"count":1,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/9604\/revisions"}],"predecessor-version":[{"id":9605,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/9604\/revisions\/9605"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media\/6714"}],"wp:attachment":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media?parent=9604"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/categories?post=9604"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/tags?post=9604"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}