essay on basketball 500 words

Basketball Essay for Students and Children

500+ essay on basketball.

The game of basketball has truly become global in the last few years. The game is currently popular in the United States. Also, it is described by many as an American game because of the fun and competitive element in it. Also, this is one of the games which is played indoors and still caters to billions of fans around the world. This game was Dr. James Naismith from Canada. Initially, he invented the game by using a rectangular pitch which was 6 feet wide and 4 feet high. Additionally, the court includes a free throw line which is 12 feet long. In basketball essay, students will get to know about the different components that make the game of basketball special.

It is a team game that has gained immense popularity. Also, the game is played with the help of a ball and the ball is shot into the basket that is positioned horizontally. So, the objective in the game is to shoot the ball and score the maximum points. This game is played by 2 teams that constitute a total of 5 players each. Also, the game is played on a marked rectangular floor that has a basket on both the ends.

Originally, basketball was played using a soccer ball. Also, it was James Naismith that used a peach basket which ha ad a nonhollow bottom. So, this basket was nailed at a height of 10 ft. above the ground and on an elevated track. If you consider the manual removal of the ball from the basket a drawback then the bottom was removed to and it took the shape of modern-day baskets. Also, dribbling was not part of the game initially. Eventually, it evolved till 1950 by which the balls got better shape due to manufacturing.

Additionally, the orange ball was evolved from the brown ball. The brown ball was used in the beginning as it was thought that the ball is more visible. By 1996, the peach baskets used were replaced by metal hoops on the backboard.

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Basketball Game

At the start of the game, a referee tosses the ball at the center of the court between two players. One player from either team try to get their hands on the ball and the ball is passed on to the teammates. For scoring a point, a team needs to shoot the ball through the basket. If a shot is scored from a distance that is closer to the basket than the 3 point line than it fetches 2 points. Also, if the ball is shot from the distance behind 3 point line, it fetches 3 points. So, the team that has a maximum number of points is declared the winner.

In case of a draw, there may be additional time allotted to both the teams. In the game, a player is cannot move if he is holding the ball. The player needs to dribble, otherwise, it is considered as a foul. Likewise, when there is a physical contact that affects the other team then it counted as a physical foul.

Basketball is game played with a maintained and carefully marked court. It is a team sport that is commonly found in many different areas.

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Essay on Basketball for Students in English | 500 Words Essay

January 2, 2021 by Sandeep

Essay on Basketball: It is an American sport drawing millions of fans across the world. Dr. James Naismith from Canada first invented the game. It is played by two well-equipped teams consisting of 5 players each. A rectangular floor area with a basket at both the ends marks the field for the game. The team that shoots the maximum number of balls through the basket is declared the winner. A referee carefully monitors the game.

Essay on Basketball 500 Words in English

Below we have provided Basketball Essay in English, suitable for class 5, 6, 7, 8, 9 & 10.

“The strength of the team is each individual member. The strength of each member is the team.” – Phil Jackson

Basketball is a team sport that is played between 2 teams, each consisting of 5 players. The objective of a team is to shoot a basketball through the hoop of the other side, while at the same time, preventing the other team from shooting into theirs. It is played on a rectangular court. Every successful shot earns a team 2 points. If a player is fouled by the other team’s player, then he or she is given one or two free throws. At the completion of the playtime, the team with the highest points on the board wins. If there is a tie, then some overtime is also given.

This game was invented by an American gym teacher and was first played in December, in the year 1891. It originated in Massachusetts, United States. Dr James Naismith created the sport to keep his physical education class active on a very gloomy, dull and rainy day. He initially tied a peach basket to a 10-foot pole and made his class play with a football. It is mostly played in an indoor court, but the usage of outdoor courts is also quite popular now. It is a sport that is also played in the Olympics, the summer Olympics and the Paralympics.

Players generally move the ball by either passing it or dribbling it. There are a number of shots that are presumed in the offensive position including the jump shot, the lay-up shot and the dunk shot. While assuming the defensive position, players can either try to steal the ball from the other team or jump and block their shots. The tallest player generally assumes the centre most playing position. The highest association that governs basketball is FIBA (International Basketball Federation). The NBA (National Basketball Association) is the most significant professional basketball league with respect to salaries, popularity, the talent of players and the level of competitiveness.

Variations of Basketball Game

People have created different types of ways in which they play basketball with alterations in rules and environments.

Recreational Basketball – It is played in schools, colleges and other educational institutions. The focus here is not on winning a game but enjoying oneself and having fun. The students are taught basic skills of basketball, including dribbling, passing, shooting, rebounding, etc. and are also trained in endurance exercises to stay fit and healthy.

Disabled Basketball – This is played by people who do not qualify to play in the able-bodied sport. It is played by persons who are either deaf or crippled. In deaf basketball, sign language is used to communicate whistle blows for fouls, successful shots, etc. and for communicating with other players. Wheelchair basketball is played by people who have lost the ability to walk and run due to paralysis, amputation, birth defects, or any other cause.

Prison Basketball – It is mostly played in prison and penitentiary institutions in the United States. These prisons have their own leagues, and a lot of betting also takes place. It helps the prisoners to spend their time and remain fit and active. Prison basketball is quite a popular sport among the inmates, and they enjoy being a part of it. Playing the game is equally thrilling as being an audience to it.

Show Basketball – It is played by professional teams that add drama, comedy and athleticism in it and is pre-prepared. It is performed for entertainment like theatre in front of an audience. Celebrities also play in show basketball often for charity events. Midgets or people of smaller stature also become a part of it for entertainment purposes.

Benefits of Playing Basketball

One of my favourite sports to play in school and college was basketball. I enjoyed playing it for several reasons. Basketball helps improve blood circulation in the body and is a fantastic exercise. It helps us to keep fit and also betters oxygen circulation throughout the body.

Essays About Basketball: Top 5 Examples and 7 Prompts

Among the many essays about basketball out there, how can you make yours stand out? See this article for examples and prompts that will aid you in writing.

Basketball is a famous sport that has been around for 131 years. It was invented by a Canadian physical education instructor named James Naismith with two objectives: to keep athletes playing indoors during winters and to have a safer sport compared to football.

Over the years, basketball has grown to be a loved sport worldwide. It’s why it’s not surprising that it’s a great subject to talk about in your essay.

Below are examples to learn more about the game and how you can effectively write essays about basketball:

1. What Basketball Taught Me by Josh of San Diego, California

2. essay on basketball – a sport of agility and endurance by randhir singh, 3. national basketball association and the woman national basketball association by lewis rios, 4. basketball: then vs. now by jaime moss, 5. essay on the last shot by darcy frey by mamie olson, 1. the most important skills for basketball, 2. what i learned through basketball, 3. why do i like basketball, 4. my unforgettable basketball experience, 5. my life as a basketball player, 6. basketball book or movie review, 7. the negative side of basketball.

“I believe basketball has taught me many valuable life lessons, and perhaps more importantly, played a significant role in developing me into the successful student and employee I am today.”

The author talks about how he fell in love with the basketball game – from watching it on television to participating in competitive basketball. He took the game with him as he grew.

Through this sport, he learned many lessons, including commitment, responsibility, and teamwork. He expounds on how these values helped him through life through his essay. Finally, he ends his piece by encouraging others to try basketball or any sport to have motivation in life. For more, see these articles about basketball .

“Basketball is a sport of agility and endurance that develops by hand and eye co-ordination… Basketball even overtakes baseball as the unofficial American pastime.”

Singh reviews basketball rules and how they changed over time but with the same principles. He discusses the main rules and scenarios straightforwardly, making his essay short but informative. You may also be interested in these articles about baseball .

“Some of the differences between NBA basketball and WNBA basketball appear to be related to the differences in size or physical capacity of men and women… I think we can all come to the conclusion that no matter what the gender is or what the rules are, that both of them are out on the basketball court to just WIN.”

Rios’ essay focuses on the differences between the National Basketball Association (NBA) and the Women’s NBA. Some of the things he mentions are ESPN and their basketball video game, where fewer people spend time on WNBA. Additionally, owners of WNBA significantly make less from their teams, thus having less to invest in or pay their players.

He also talks about some similarities between NBA and WNBA, including their popularity among fans. At the end of his essay, Rios hopes he has shared enough information with his readers about basketball.

“Other changes such as uniform colors, dunking rules, regulation on backboards… some over and over again until they became what they are today… Basketball is a great American sport, and perhaps one that requires the most skill along with a great mental game.”

Moss’ essay consists of James Naismith’s original 13 basketball rules and how these rules evolved. These modifications were done to make the game more efficient and fun. Some significant changes include dribbling, boundary lines, and pointing systems.

He also mentions the controversy surrounding the three-pointer and how it affected the other game rules. In the future, basketball’s rules will continue to develop.

“I do think basketball is a valid option for most students to escape poverty… Basketball may open a few doors but there’s still no guarantee.”

The author recounts what The Last Shot by Darcy Frey is all about, retelling the story of Russel, Tchaka, Stephon, and Cory, who lived in a dangerous neighborhood and found escape in basketball. She then relays her input of basketball, helping these characters stay out of trouble, but it still isn’t enough to prepare them for the lives they’ll have to endure.

She further expounds on the events in the book, centering on the direct relation between academics and basketball in the story. You might also be interested in these essays about volleyball .

7 Prompts on Essays About Basketball

After understanding more about the different subtopics of basketball, here are prompts that you can get inspiration from for your essay:

You don’t have to be a basketball player to know what skills are in demand for the game. You can simply be a fan or a casual spectator who knows how the game works. Tell your readers what you are so they can appreciate your essay from your point of view.

Essays About Basketball: What I learned through basketball

Dedication, commitment, and consistency are only some of the things you develop when you love a sport. If you’re not a player yourself, but a close relative is, you can relay what they told you about basketball.

For example, you can relate to what your father tells you when you watch basketball gameplays with him. He may say he loves a particular team because of their teamwork. He may also say it shows in their gameplay. Then, you can delve into what “teamwork” means.

Like the other prompts in this list, this particular prompt doesn’t need you to be a player. Instead, to give you an idea, you can share your experience with the game, such as watching gameplay and liking how the people cheer for the players.

You can also narrate how great the game was, not because the players are professionals but because they never give up.

If you’re a basketball player yourself, feel free to recount a scene that played out in one of your games that you will never forget. Describe how you got to that point and why. Include what it made you feel like then and what it makes you feel now.

If you expect non-players to read your piece, write in a way that non-players will understand by avoiding basketball jargon. Or you can briefly explain what those related terms mean, so every reader will understand why it’s a memory you hold dear.

If no one thing stands out for you during your time as a basketball player, you can still write about it in the general term. For instance, you can share how a day in your life went when you were a player.

There are many books, movies, and literary pieces that you can check out and write an essay about. If you have a favorite piece about basketball, briefly summarize it and list why you’re so fond of it. You can also persuade your readers to check out the book themselves through these prompts.

Are you new to persuasive writing? For help with this topic, read our guide explaining what is persuasive writing ?

You can write about the problems connected to the game to give your essay a different atmosphere, such as the potential injuries for players, bullying within a team, or how few only make it to professional basketball. You can talk about something you want to give attention to and let your readers know your thoughts on it.

On the other hand, you can also share a bad experience related to basketball, like your father preferring to watch basketball on television than play with you and your siblings.

Here’s a great tip: If writing an essay sounds like a lot of work, simplify it. Write a simple 5 paragraph essay instead.

Maria Caballero is a freelance writer who has been writing since high school. She believes that to be a writer doesn't only refer to excellent syntax and semantics but also knowing how to weave words together to communicate to any reader effectively.

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Basketball - Essay Examples And Topic Ideas For Free

Basketball is a widely popular sport involving two teams of five players each, striving to shoot a ball through the opponent’s hoop to score points. Essays on basketball could delve into its history, the influence it has on communities, the lessons it teaches in teamwork and perseverance, or even the economic aspects concerning professional leagues. The topic also lends itself to discussions about notable players, their contributions to social issues off the court, and how the sport acts as a unifying factor across different cultures and communities. A vast selection of complimentary essay illustrations pertaining to Basketball you can find in Papersowl database. You can use our samples for inspiration to write your own essay, research paper, or just to explore a new topic for yourself.

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Assignment Ex-Basketball Player

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Basketball Diaries

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Michael Jordan – Greatest Superstar

Many people have heard of Michael Jordan, he is known to be one of basketball's greatest superstars. Even those who don't follow professional basketball still know who he is. Lots of basketball players made an impact on the lives of others. One of the most famous players is Michael Jordan. His legacy and many great accomplishments will be remembered forever. Michael was born on February 17, 1963 in Brooklyn, New York. He was the third son in a family of […]

Exploring the Mathematics of a 3-points Shot in Basketball

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Eddie Griffin’s Path to Modern Basketball

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Success is Achieved by Hard Work not Just Talent

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Basketball – Leading the Team to Glory

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Duke Basketball

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The Effects of Self-Talk on a Basketball Player’s Performance

Two different professional basketball players step up to the free-throw line in a tied game with a few seconds left during the fourth quarter. The anxiety caused by the context of the situation stimulates the nervous system; therefore, the brain must be able to process the stimulation and allow these players to evaluate the situation. Athlete one, who consulted with a sports psychologist, was able to handle the pressure and help their team win the game. Athlete two, who did […]

The Basketball Calculator

A jock filled world of basketball players who make million dollars off nothing they learned from a classroom may ironically be evolved by the classroom. It has longed been known that a players past success rate when shooting a basketball can be measured in percentages. However, the use of math to predict the future success of bank shots is an untapped market that may show enough promise to reshape the preparation of a pro basketball player in the future. This […]

Physiological and Nutritional Factors Affecting the Results of Basketball Players

Abstract These studies included relevant information on physiological responses such as adenosine triphosphate, phosphocreatine (PCr), and anaerobic glycolysis which all three are included in the anaerobic pathway (Glaister, 2005). Moreover, with respect to physiological responses, heart rate and lactate threshold were also referred in this review as essential variables for basketball performance (Godwin et al., 2007; Paul and Garg, 2012). On the other hand, there are also nutritional demands for the human body and most specifically for the basketball players […]

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Technology in Modern Basketball

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College and African American Male: Basketball Athletes

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Essay on Basketball

Basketball is a widely popular and loved sport that is played all around the world. An essay on basketball would be incomplete without the mention of its smart moves and team-building benefits. Basketball is believed to have originated in Canada and the United States of America in the 19th century. There are several health benefits of playing basketball and it is an extremely fun physical activity. In this informative essay about basketball, the various benefits of playing basketball are discussed.

An Essay on Basketball and its Benefits

While penning down the short paragraph about basketball this needs to be mentioned that when basketball is played, it is meant to be a source of joy and pleasure among its players. The aim of the play is to pass the ball through the basket which is hung on some height. Basketball can be a game between two individuals or, in the case of professional games, it is played between two opposing teams consisting of five players in each team. The score is determined by hitting the basket of each other’s teams.

Due to the demand for heavy physicality from its players, basketball is highly favored. In this essay on basketball, the several health benefits of playing this sport are discussed:

Basketball is essential in promoting cardiovascular health among its players. It is immensely helpful for one’s heart health. Due to the game’s constant locomotion, the heart rate shows an increase. Thus, basketball lowers the risk of stroke and other heart diseases.

Basketball is supremely effective in burning calories. Due to its constant, quick movements of running and jumping, basketball acts as a great way of working out and can drastically burn calories.

Basketball strengthens the bones of its players. Due to the game’s primary dependence on physical energy, basketball results in bone strength among its players. The players’ muscles and bones get strengthened because of the game’s constant action of working muscles against the bones.

One of the key health benefits which come from playing basketball is boosted immunity and reduced stress. Due to the busy nature of the game, the levels of stress among the players get reduced quite significantly. And with this decreased level of stress, the immune system gets boosted.

The dedicated practice of basketball develops better coordination among its players and improves their motor skills. The nature of basketball demands its players for excellent hand-eye and full-body coordination. Due to continuous training, the players develop their full-body coordination as well as their hand-eye coordination through the practises of dribbling and rebound shots.

Therefore, the health benefits of playing basketball are evident in the physical and mental fitness of the player. Apart from improving one’s overall health and height, the sport also develops fast-thinking abilities, reflex, and team spirit in youngsters.

Basketball Experience Essay: Tournaments and Players

Now coming to the top basketball tournaments, an essay on basketball is simply incomplete without the mention of these names:

Basketball World Cup

Basketball at the Olympics

American tournaments like NBA, Argentine League LNB

Italian League

Spanish ACB league

To get a full-on understanding of the game and write down a basketball experience essay, one must watch these tournaments. The pace of the tournaments is such that one will automatically grow an addiction towards them. Then, if he is asked to write a basketball descriptive essay he will be able to write it easily.

Basketball essay writing becomes a cakewalk for someone who has grown up watching legends like Kobe Bryant playing the game with elan. The American sportsman spent his entire career playing for Los Angeles Lakers in the National Basketball Association. He breathed his last on 26th January 2020. He took the popularity of the sport to a different level and will be remembered for generations to come.

Finally, if any of the important basketball essay topics are often left out then it has to be- ‘The Famous Indian Basketball Players.’ This basketball essay in English doesn’t do that. It humbly acknowledges the contribution of the famous Indian basketball players like Sat Prasad Yadav, Akilan Pari, and Prashanti Singh. They have made it really big over the years and continue to inspire millions of basketball players from all across the country.

An Essay on My Favourite Game - Basketball

Basketball is a widely popular game that is played by several people all across the globe. In this section of basketball essay topics, the topics which will be discussed are the benefits of basketball in a person’s physical and mental health. There are several ways a person can benefit from playing basketball and those benefits are discussed in this basketball introduction essay.

The Basketball Essay in Short

Numerous physical and mental benefits result from playing basketball. Basketball is highly effective in promoting the cardiovascular health of its players. A healthy heart diminishes risks of heart diseases later in one’s life. Basketball’s high physical demand is crucial in burning calories and reducing body fat in its players.

Basketball also strengthens the bones due to the constant friction of muscles against them. It improves the immune system of the body and is effective in increasing players’ self-esteem.

Therefore, this is a complete essay on basketball in English which throws light on the game’s health benefits as well as how it helps to shape the entire personality of a player.

FAQs on Basketball Essay

1. What is the Highest Governing Body in Basketball?

FIBA ( International Basketball Federation) is the highest governing body in basketball.

2. Name Some of the Famous Basketball Players in the World.

Michael Jordan, Lebron James, and Late Kobe Bryant are some of the famous basketball players of all time.

3. Which Court is Considered as the Main Court in Basketball- The Outdoor Court or the Indoor Court?

In basketball, the indoor court is considered as the main court while the game played on the outdoor court is often called street ball.

4. What are the health benefits of playing basketball?

Playing basketball results in countless health benefits from burning calories to improving heart health by lowering the risk of getting a stroke. But a great cardiovascular health isn’t the only amazing health benefit playing this sport provides. It also strengthens one’s bones as well as muscles. It also leads to boosting of one’s immune system. And like engaging in almost any other sport or exercise, playing basketball has also shown to reduce the stress levels of its players quite conspicuously. This way, playing basketball also has a positive effect on not only one’s physical health, but their mental health as well.

5. Who are some of the most famous basketball players? How does this sport shape the personality of its players?

Some of the most famous and highly respected basketball players include LeBron James, Kobe Bryant, Michael Jordan, Stephen Curry, Kevin Durant, Chris Paul, Russell Westbrook, Oscar Robertson, Magic Johnson, Satnam Singh, Amritpal Singh, and Prashanti Singh to name a few.

Basketball tends to mould and shape the personality of the players just as much as it improves their physical and mental health. There are a lot of values, ethical beliefs, and other such aspects from the game that one can even apply to their everyday life like sportsmanship, teamwork, confidence, etc.

6. What are some interesting facts about basketball?

Initially, as the sport started, dribbling was not allowed at all and if a player got the - ball at a point and they compulsorily had to throw it to another player and continue the game like that.

A physical education teacher, James Naismith, is the one who invented this sport and also wrote down the very first, the official rulebook of basketball.

Michael Jordan wore his signature Air Jordans, his favorite shoes, by paying a fine as these shoes went against the guidelines of the NBA dress code.

At the very beginning of it all, basketball was actually played with a soccer ball and a peach basket.

7. What are some important rules of basketball?

Some basic yet key rules of the game are:

Each team is supposed to have 5 players present on the court at all times during the game.

In order to win, a team has to score more field goals than the opponent team.

A player is not allowed to run with the ball; a player is only supposed to advance the ball by dribbling or passing and if a player stops dribbling, they have to either pass it or shoot it, not resume dribbling.

There are quite a lot of fouls in the game and elbowing, blocking, tripping or knocking someone off, are some of the most common ones.

To inbound the ball, the offense only has 5 seconds.

Defenders are not allowed to interfere with a shot that is on a downward trajectory. In fact, this is considered to be illegal and is known as goaltending as it grants an automatic field goal to the offence then.

Both the ball handler as well as the ball have to remain within the boundaries of the court at all times.

The defending team is legally allowed to block or steal the ball from the offending team and they can even use defensive tactics to prevent the latter from shooting and/or scoring.

Each team has only a limited period of time during a given possession to shoot the ball. While in the NBA, this time limit is 24 seconds, in the NCCA, it is about 30 seconds.

8. How does Vedantu encourage students to study?

One of the most popular and modern features of Vedantu is its one-on-one live interaction amongst the teacher and their students. As it is known, learning and studying by yourself with the help of the internet, and doing that in the presence of a teaching expert are two majorly different things with the latter being way more effective. This live interaction lets students communicate their thoughts and ideas more smoothly and also helps with the doubt-solving more easily. This social structure within Vedantu is one of the main ways through which it pushes students to study and speak their minds out loud. This is why Vedantu is a highly recommended portal for students to brighten their future.

The Basketball Game Essay

A basketball is a well designed sphere-shaped ball. In addition, the ball contains an inner rubber bladder that varies in shape in accordance with the size of the ball.

The ball’s inner material is always inflated to ease its usage. A basketball is a vital component in the game of basketball at the playing field, commonly referred to as a court and the basket (Dean 24). A basketball is dribbled on the surface and therefore design addresses its state in terms of handling and durability.

The interest of the basketball game solely rests on the handling of the ball. Spinning and rolling the basketball in different styles before making a basket varies with the size of the ball. The lighter the basketball, the easier it is to roll the ball in the court.

Basketball is a game that is dominating the world. It is among the most viewed sports in the entire universe. The popularity of this sport is mainly in the west; organization of leagues in the western states has grown the fun base rapidly.

It has drawn the interest of the young and old in an equal measure. A basketball is designed uniquely to suit its usage; there are those used in-doors and those meant for outdoor usage (Dean 25). Material for making the ball varies according to the aforementioned variation in usage.

The evolution of a basketball started in the 19 th century. Initially soccer ball played the role of this ball before its invention (James 11).

The soccer ball texture was not satisfactory to the game as the ball’s specifications disadvantaged the hands, leading to many injuries. Legal suits from the soccer firms necessitated the development of a ball unique to basketball. The mother design composed of leather and a rubber bladder in the inside. To distinguish it from the soccer ball, the inventors wrapped it with a cloth lining.

Different environments called for unique balls, this called for additional innovations in the material and designs of basketball. In the 20 th century, various trials were done and composite materials were unanimously accepted in the different leagues for use in the manufacturing of balls (James 17).

Leather and rubber are the preferred material for making indoor and all-surface balls respectively. Leather basketballs are more expensive than rubber balls because of the durability in use and cost of acquiring them. Outdoors environment are harsh and therefore necessitates the use of a material that is fully adapted to the surrounding. The balls surfaces vary in texture but have one thing in common, they have a small air opening in its surface to aid in inflating and deflating.

In addition, the surface of the ball is recessed to different manufacturer’s designs and variety of colors used to make it attractive. Moreover, the surface contains the logo of the traditional manufacturer or the individual logo presented during its development (Forrest 134).

A basketball comes in different weights and circumferences. These unique specifications vary in different leagues. According to basketball certifying body, International Basketball Federation, men’s competition basketball is termed as size 7 while female’s balls are size 6.

The amount of pressure is another factor that is looked into by a certifying body before the basketball is used in a given league. For a basketball to be certified, manufacturer’s name and a unique serial number need to be incorporated in the surface of the ball. Professionalism is highly valued by the International Basketball Federation, therefore the material used in the manufacturing of a basketball needs to meet the requirements postulated.

Basketball associations formulate the measures to be taken into consideration when designing a basketball (Forrest 57). The strictness of these measures varies from one association to another. National Basketball Association (NBA) for example allows the use of basketballs from a single manufacturer. The association, from 2006, has been using synthetic balls that replaced the initial leather balls.

The adoption of different basketball changes with the requirements of the sport. Spalding, the parent company that supplies the balls to NBA, has always designed balls that meet both the federation’s and player’s requirements (Randall 142). The color of this association is orange and therefore most of the basketballs produced by Spalding are orange, though they produce a mixture of orange and white for Women National Basketball Association.

A basketball from the aforementioned description is unique in different aspects. However, the name of the game is the same. Basketball attributes vary in relation to the requirements of a given league. The rankings of these leagues are also determined by the specifications of the basketball used in their practice and games (Forrest 146).

A basketball that incorporates the requirements of most of these corporations needs to be moderated for the competition to operate in the same platform. A basketball’s size and texture needs to cope with the play requirements and be conducive to the players by using appropriate materials. To be arrived at, different federations need to harmonize their requirements with the establishment of a product with international features in their minds.

Works Cited

Dean Oliver. Basketball on paper: rules and tools for performance analysis . New York: Potomac Books, Inc., 2004

Forrest, Allen C. Basketball . Delhi: Sterling Publishers, 2003.

James Naismith. Basketball: its origin and development . Springfield: Nebraska Press, 1941.

Randall Parr. Basketball fundamentals with a twist. New York: AuthorHouse, 2011

Chicago (A-D)
Chicago (N-B)

IvyPanda. (2019, May 7). The Basketball Game. https://ivypanda.com/essays/a-basketball/

"The Basketball Game." IvyPanda , 7 May 2019, ivypanda.com/essays/a-basketball/.

IvyPanda . (2019) 'The Basketball Game'. 7 May.

IvyPanda . 2019. "The Basketball Game." May 7, 2019. https://ivypanda.com/essays/a-basketball/.

1. IvyPanda . "The Basketball Game." May 7, 2019. https://ivypanda.com/essays/a-basketball/.

Bibliography

IvyPanda . "The Basketball Game." May 7, 2019. https://ivypanda.com/essays/a-basketball/.

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assignment rbi circular

India: RBI'S Framework For Transfer Of Loan Assets

As an anticipated measure for the banking and financial sector, the Reserve Bank of India (RBI) has, towards the close of past week, issued the comprehensive framework for the sale or transfer of loan assets. Taking immediate effect from the date of its issuance, the framework titled ' Master Directions - Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 ' issued vide circular DOR.STR.REC.52/21.04.048/2021-22 dated September 24, 2021 (the ' Master Directions ') is being seen as a pivotal move by the Regulator towards introducing an efficient secondary market for loans and ensuring proper credit-risk pricing, besides improving transparency in the identification of embryonic stress in the banking system as well as resolution of stressed loan exposures.

The Master Directions owes its genesis to the ' Draft Framework for Sale of Loan Exposures ' which was released by RBI in course of the first COVID-19 induced lockdown in the Country. The draft had taken into consideration the recommendations of the ' Task Force on Development of Secondary Market for Corporate Loans ' constituted by RBI under the chairmanship of Mr. T.N. Manoharan in May, 2019 and comments from the stakeholders were invited. One of the key components of the Task Force's recommendation was to separate the regulatory guidelines for direct assignment transactions from the securitisation guidelines and treat it as a sale of loan exposure. The RBI had, accordingly, reviewed the recommendations and thought it prudent to comprehensively revisit the guidelines for sale of loan exposures, both standard as well as stressed, which were earlier spread across various circulars. The erstwhile guidelines or circulars on sale of loan exposures were particular to the asset classification of the loan exposure being transferred and / or the nature of the entity to which such loan exposure is transferred as well as the mode of transfer of the loan exposures. The need for a review also stemmed from the necessity to dovetail the guidelines on sale of loan exposures with the Insolvency and Bankruptcy Code, 2016 (' IBC ') and the Prudential Framework for Resolution of Stressed Assets dated June 7, 2019 (" Prudential Framework "), which has witnessed substantial traction and developments towards building a robust resolution paradigm in India in the recent past.

The consolidation by RBI of a self-contained, comprehensive, and independent set of regulatory guidelines on transfer/sale of loan exposures is being seen as a laudable step in the direction of putting together a ' robust secondary market in loans which can be an important mechanism for management of credit exposures by lending institutions and also create additional avenues for raising liquidity '. This write-up attempts to briefly summarize some key components of the Master Directions.

The Master Directions whilst superseding a host of existing circulars/directions (or a portion thereof) in relation of transfer of loan exposures (Chapter VI), has put forth a unified and singular framework for the sale of loan exposures by banks and other financial institutions. The exhaustive breadth of the framework is quite evident from the Chapters under the Master Directions which not only provide for ' General Conditions applicable to all Loan transfers ' (Chapter II), but also cater specifically to transfer of loan exposures of standard assets (Chapter III) as well as stressed loan exposures (Chapter IV), including their respective and intrinsic modalities. The framework concludes with the imperative of ' Disclosures and Reporting ' (Chapter V) and stipulates the mechanism for the stakeholders in that regard.

Applicability

On expected lines, nearly all constituents of the Financial sector regulated by RBI are mandated to ensure compliance to the Master Directions, both as a transferor as well as transferee of the loan exposures – Scheduled Commercial Banks, all NBFCs (including HFCs), Regional Rural Banks, Co-operative Banks, All India Financial Institutions and Small Finance Banks. In addition, the Master Directions also permits asset reconstruction companies (ARCs) 1 and companies 2 (save a financial service provider 3 ) to be 'transferees' of the loan exposures only if the same is pursuant to the resolution plan under the Prudential Framework and if they are permitted to take on loan exposures in terms of a statutory provision or under the regulations issued by a financial sector regulator.

It would be pertinent to take note that though all lenders permitted to acquire loans are required to ensure compliance to the extant Master Directions; yet, the acquisition of loans pursuant to securitisation are required to be independently dealt under the provisions of RBI's ' Master Directions – RBI (Securitisation of Standard Assets) Directions, 2021 ' dated September 24, 2021 (the 'Securitisation Guidelines'). The coverage of the Master Directions includes transfer of loan exposures through novation, assignment, or risk participation. In cases of loan transfers other than loan participation, legal ownership of the loan shall be mandatorily transferred to the Transferee to the extent of economic interest transferred under the loan exposures.

For the Transferees which are financial sector entities (not falling under clause 3 of the Master Directions) and the ARCs, the prudential norms (asset classification, provisioning norms etc) of their respective sectoral regulators (SEBI, IRDA, PFRDA etc) shall be applicable post-acquisition of loan exposure under the Master Directions.

Basic Ingredients

Before venturing into the other nuances, it is an imperative that one accounts for the understanding of some key 'constructs' which cut across the Master Directions:

Transfer : Quite apparently, the expression denotes the process of transfer of the economic interest in a loan exposure by the transferor and acquisition of the same by the transferee. The subject matter of transfer being the ' economic interest ' of the transferor in the loan exposure, it is important that the risks and rewards associated with loans are clearly demarcated and separated in favour of the transferee; especially when some portion of the economic interest in the loan exposure is retained by the transferor.

It is significant to take note that the transfer of the said economic interest can be with or without the transfer of underlying contract. Essentially, even loan participation transaction have also been recognised under the Master Directions (for transfer of standard loans) wherein the transferor transfers all or part of its economic interest in a loan exposure to transferee without the actual transfer of the loan contract, and the transferee(s) fund the transferor to the extent of the economic interest transferred which may be equal to the principal, interest, fees and other payments, if any, under the transfer agreement.

Transferor : Often referred as 'assignor' (in assignment transactions) or 'grantor' (for risk participation), transferor under the Master Directions would include Clause 3 entities which transfer their economic interest in the loan exposures.
Transferees : These refer to entities in whose favour the economic interest in the loans are transferred and would include Clause 3 entities as well as the ARCs/companies to the extent permitted under the Master Directions. It is clarified that the transferee should neither be a person disqualified under the IBC 4 nor, in cases of loan exposures where frauds have been identified, belong to an existing promoter group 5 of the borrower or its subsidiary / associate / related party 6 (domestic as well as overseas).
Minimum Holding Period (MHP) : As the expression suggests, the MHP refers to a threshold period for which the transferor should hold the loan exposures, along with its risks and rewards, before the economic interest in respect thereto is transferred. The intent of having a MHP is to ensure that the loan has been seasoned in the books of the originator (or the transferor) for a certain specified time period. The MHP for loans with tenor upto 2 years and more than 2 years, as per the Master Directions, have been capped at 3 months and 6 months, respectively.

The holding period for the Transferor, in case of secured exposures, is to be computed from the date of registration of the underlying security interests; unless, of course, the loan is unsecured in which case the MHP runs from the date of first repayment under such unsecured exposure. However, in case of project loans, the foregoing months of MHP is required to be calculated from the date of commencement of commercial operations of the project being financed. Besides, the loans acquired by the Transferor itself are required to have a MHP of atleast 6 months from the date of acquisition of the loan on the books of the Transferor, irrespective of the tenor of the loan exposures.

It would be of significance to note that the MHP criteria prescribed under the Master Directions do not apply for loans transferred by an arranging bank under a syndication arrangement.

Permitted Transferees : These include (i) Scheduled Commercial Banks, (ii) NBFCs (including HFCs), (iii) All India Financial Institutions and (iv) Small Finance Banks. The significance of carving out the foregoing financial sector entities from Clause 3 of the Master Directions lies in the fact that the transferor is permitted to transfer its loans (which are not in default) to permitted transferees only through novation, assignment, or loan participation. For the stressed exposures, the transfer is mandated only to such permitted transferees and ARCs and singularly through assignment or novation of such loan exposures.

Underlying Elements

The finer nuances of the Master Directions would certainly surface once the provisions have been widely given effect to by the stakeholders; however, as it stands, the framework undoubtedly promises to streamline the procedures and requirements for the stakeholders considering transfer of their loan exposures – standard as well as stressed. Some fundamental provisions of the Master Directions have been summarized as below:

Overarching Transfer conditions : Quite categorically, the Master Directions stresses on the necessity of delineation of Transferor's 'risks and rewards' associated with the loan exposures to the extent of the transfer. In fact, it is stated that not only should the transferee have the unrestrained and unconditional entitlement to transfer or dispose of the loans to the extent of economic interest acquired by it, but also in the event of any economic interest in the loan exposure is retained by the transferor, the loan transfer agreement should demarcate the distribution of the principal and interest income from the transferred loan between the transferor and the transferee. The Master Directions also caution against any modification of terms of the underlying financing agreement and require that any change, in course of such transfer, should withstand the test of not being categorised as 'Restructuring' under the Prudential Framework. It would be significant to take note that the transfer of loan exposures under the Master Directions not only should be without recourse to the Transferor, but also the transferor or transferee should not be constrained to obtain consent from the transferee/ transferor, as the case may be, in the event of resolution or recovery in respect of the beneficial economic interest retained by or transferred to the respective entity. In addition to the foregoing, the Master Directions also prescribe for the enumerated conditions applicable to all transfers of loan exposures:
The Transferor shall have no obligation to re-acquire or fund the re-payment of the loans or any part of it or substitute loans held by the Transferee or provide additional loans at any time;
If the security interest is held by the Transferor in trust with the Transferee as the beneficiaries, the Transferee shall ensure that a mutually agreed and binding mechanism for timely invocation of such security interest is put in place;
Any rescheduling, restructuring or re-negotiation of the terms of the underlying agreement attempted by Permitted Transferee, after the transfer of assets to the transferee, shall be as per the Prudential Framework;
The Clause 3 entities, regardless of whether they are transferors or otherwise, should not offer credit enhancements or liquidity facilities in any form in the case of loan transfers.

In case the transfer of loan exposures which are not compliant with the requirements mentioned in the Master Directions, the onus is on the Transferee to maintain capital charge equal to the actual exposure acquired and the Transferor is required to treat the transferred loan in its entirety, as if it was not transferred at all in the first place, and the consideration received by it shall be recognised as an advance.

Board-approved Policy : The Transferors are mandated to put in place a comprehensive Board-approved policy for transfer and acquisition of loan exposures under the Master Directions. These guidelines must, inter alia , lay down the minimum quantitative and qualitative standards relating to due diligence, valuation, requisite IT systems for capture, storage and management of data, risk management, periodic Board level oversight, etc. Further, the policy must also ensure the independence of functioning and reporting responsibilities of the units and personnel involved in the transfer/acquisition of loans from that of personnel involved in originating the loans.
Transfer of Standard Assets : The transfer of loan exposures classified as 'standard' can be undertaken through the mechanisms of assignment or novation or a loan participation. The transfer of such loan exposures should be only on a cash basis to be received at the time of transfer of loans; besides, the requirement of the transfer consideration being arrived at in a transparent manner on an arm's length basis. The Master Directions require the Transferees to monitor, on an ongoing basis and in a timely manner, the performance information on the loans acquired, including through conducting periodic stress tests and sensitivity analyses, and take appropriate action required, if any. Further, the Transferor's retention of economic interest, if any, in the loans transferred should be supported by legally valid documentation supported by a legal opinion.

The requirements of Chapter III of the Master Directions are, however, not applicable to certain identified loan transfers, as below:

transfer of loan accounts of borrowers by a lender to other lenders, at the request/instance of borrower;
inter-bank participations as per the RBI's circulars;
sale of entire portfolio of loans consequent upon a decision to exit the line of business completely;
sale of stressed loans; and
any other arrangement/transactions, specifically exempted by the RBI.
Minimum Risk Retention : The Master Directions are explicit in their requirement of the requisite due diligence in respect of the loans exposures and mention that the said exercise cannot be outsourced or delegated by the Transferee. In order to ensure a systemic departure from the conventional practice of placing solitary reliance on the due diligence of the originator (or the Transferor), the Master Directions mandate the Transferee to undertake the due diligence of the loan exposures through its own staff, at the level of each loan, and as per the same policies as would have been done had the Transferee been the originator of the loan. In case the due diligence of entire portfolio is undertaken by the Transferee, the requirement of a minimum retention requirement (MRR) of the Transferor can be dispensed with.

However, in case of loans proposed to be acquired as a portfolio, if a transferee is unable to perform due diligence at the individual loan level for the entire portfolio, the Transferor shall retain at least 10% of economic interest in the transferred loans as MRR. In such a case as well, the Transferee is required to undertake due diligence at the individual loan level for not less than one-third (1/3 rd ) of the portfolio by value and number of loans in the portfolio. As per the Master Directions, in case of multiple Transferees, the MRR would still be on the entire amount of transferred loan, even if any one of the transferee is unable to perform the due diligence at an individual level.

Transfer of Stressed Assets : Chapter IV of the Master Directions deals specifically with the transfer of stressed loan exposures to ARCs and other Permitted Transferees. It is specifically stated that the mechanism for transfer of such stressed accounts can be consummated only through assignment or novation. Besides the requirement of a Board-approved policy for transfer as well as acquisition of stressed loan exposures and the parameters thereof, the Master Directions mandate such transfers to ARCs and other Permitted Transferees only. Importantly, the Transferor is necessarily required to undertake an auction through a ' Swiss Challenge method ' both in cases where (i) the aggregate loan exposure to be transferred is Rs. 100 crore or more after bilateral negotiations; and even under (ii) a transfer pursuant to the Resolution Plan approved in terms of the Prudential Framework (irrespective of the monetary threshold).

The transfer of such stressed loan exposures, as per the Master Directions, should be bereft of any operational, legal or any other type of risks relating to the transferred loans including additional funding or commitments to the borrower / transferee. In fact, it is specifically required for the transferor to ensure that no transfer of a stressed loan is made at a contingent price whereby in the event of shortfall in the realization of the agreed price, the Transferor would have to bear a part of the shortfall.

In addition, the Transferor is required transfer the stressed loans to transferee(s) other than ARCs only on cash basis and the entire transfer consideration should be received not later than at the time of transfer of loans. The stressed exposure can be taken out of the books of the Transferor only on receipt of the entire transfer consideration.

Quite significantly, the Master Directions prescribed that if the Transferee of such stressed loan exposure (except ARCs) have no existing exposure to the borrower whose stressed loan account is acquired, the acquired stressed loan shall be classified as "Standard" by the transferee. However, in case the Transferee has an existing exposure to such borrower, the asset classification of the acquired exposure shall be the same as the existing asset classification of the borrower with the Transferee, irrespective of whether such acquisition is pursuant to the transferee being a successful resolution applicant under the IBC.

Further, the Master Directions require the Transferee to hold the acquired stressed loans in their books for a period of at least 6 months before transferring to other lenders; however, such holding period is not applicable in case the transfer of stressed loan exposure is to an ARC or is pursuant to a resolution plan approved in terms of the Prudential Framework.

As regards the mandate of undertaking the 'Swiss Challenge method' is concerned, the Master Directions require the lenders put in place a Board-approved policy which should, interalia , specify the minimum mark-up over the base-bid required for the challenger bid to be considered by the lender(s), which in any case, shall not be less than 5% and shall not be more than 15%. However, for transfer of stressed exposure under the Prudential Framework, the minimum mark-up over the base-bid required for the challenger bid is to be decided with the approval of signatories to the ICA representing 75% by value of total outstanding credit facilities and 60% of signatories by number.

Additionally, the Master Directions provide for sharing of surplus between the ARC and the Transferor, in case of specific stressed loans; though, the clarity in respect of such specific stressed loans is not mentioned. The repurchase of stressed loan exposures is also stipulated from the ARCs in cases where the resolution plan has been successfully implemented

Accounting : In the event the transfer of loan exposures results in loss or profit, which is realised, the same should be accounted for and, accordingly, reflected in the P&L account of the Transferor for the accounting period during which the Transfer is consummated. However, the unrealised profits (if any) arising out of such Transfers, shall be deducted from the Common Equity Tier 1 (CET 1) capital or net owned funds of the Transferor for meeting regulatory capital adequacy requirements till the maturity of such transferred exposures. The Master Directions prescribe maintenance of borrower-specific accounts both by the Transferor as well as the Transferee of the retained and transferred loan exposures, respectively. It has been further clarified that the extant requirements of RBI for 'income recognition, asset classification, and provisioning' shall, accordingly, be ensured by the transferor and the transferee with respect to their respective shares of holding in the underlying loan exposures.

Though it would be quite nascent to present an analysis of the Master Directions even before it has been actually implemented, yet there are indeed some crucial aspects which underline the significance of the Master Directions issued by RBI which can be summarized as follows:

Identification and Resolution of Stressed Exposures : Though quite a premature assessment, yet it is felt that the framework under Master Directions could facilitate the development of a robust distressed asset ecosystem and speed-up the resolution of various stressed exposures, which could be driven by the ensuing characteristics of the Master Directions:
Early Identification and Resolution of Stressed Exposures : The framework has expanded the definition of stressed exposures ('stressed loans') to include both non-performing assets (NPAs) and special mention accounts (SMAs). Also, the deregulation of the price discovery process will enable faster and more efficient pricing of exposures – especially when coupled with a wider range of eligible investors.
Enhanced Viability of Stressed Asset Takeover Structures :More importantly, the Master Directions allow investors in stressed assets to classify the exposure as standard, although subject to any other exposure to the same entity on the investor's books not being sub-standard on the date of the acquisition of the asset. This could significantly lower capital charge and provisioning requirements for the acquirer/investor of the stressed assets. Given that most stressed assets are restructured as well – often including a complete management overhaul, the rationalisation of the capital charge and provisions could make such assets more attractive to prospective acquirers.
Impetus to Long-Term Funding structures : The Indian credit markets have for long been bereft of avenues for mobilising capital through long-term debt instruments. As a result, liability structures for corporate borrowers in sectors such as power generation and roads front load cash outflows during the project life. This, at least in part, reflects the non-availability of long-dated liabilities for the financial sector. Therefore, an ecosystem which allows lenders to off-load long-dated exposures after a certain time period with reasonable foresightedness could enable borrowers to raise long-term debt instruments from the financial system in a cost-efficient manner.
Independent Credit Evaluations Could Prove Critical : The Master Directions mentions that transferees may have the loan pools rated before acquisition so as to have a third-party view of their credit quality in addition to their own due diligence; though, the latter is a mandatory requirement and cannot substitute for the due diligence that the transferee(s) are required to perform. Also, in case of transfer of stressed assets, it becomes critical to ensure that the valuation of the exposure and associated risk capital allocation are based on an assessment of the asset to meet its contractual debt obligations. Even restructured accounts have subsequently come under stress in some cases due to fundamental weaknesses in the business profile, heightened management risk/weak governance structures and unsustainable debt levels even after restructuring. Though not prescribed as a mandatory requirement under the Master Directions, yet a third-party evaluation by a credit rating agency could provide an added layer of assessment and valuations for such exposures along with subsequent capital charge and provisioning norms could be linked to the outcome of such evaluation.

1. Registered with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

2. Sub-section (20) of Section 2 of the Companies Act, 2013

3. Sub-section (17) of Section 3 of the Insolvency and Bankruptcy Code, 2016

4. Section 29A of the Insolvency and Bankruptcy Code, 2016

5. As defined under SEBI (ICDR) Regulations, 2018

6. As defined under the Insolvency and Bankruptcy Code, 2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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RBI increases responsibilities of loan transfer parties

T he Reserve Bank of India (RBI) issued the Transfer of Loan Exposures Directions, 2021 (directions) in September 2021, which prescribe a comprehensive and robust framework to facilitate the sale, transfer and acquisition of loan assets, both standard and stressed, in the secondary market by lenders. These directions are applicable to all forms of loan transfers, including novation, assignment and loan participation.

Based on the recommendation of the Task Force on the Development of Secondary Market for Corporate Loans, the Committee on Development of Housing Finance Securitisation Market in India and the public responses received, it was decided to separate the regulatory guidelines for direct assignment transactions from the securitisation guidelines, and to revisit the guidelines for the sale of both standard and stressed exposures, which currently are contained in a number of circulars.

The directions make existing guidelines consistent with the changed resolution paradigm in the form of the Insolvency and Bankruptcy Code, 2016 (IBC) and the Prudential Framework for Resolution of Stressed Assets issued by way of the circular of 7 June 2019 (prudential framework). The directions are specific to the asset classification of the loan exposure being transferred; the nature of the entity, and the mode of transfer.

Other important provisions of the directions include situations where, in loan participation transactions, the legal ownership remains entirely with the transferor even after the beneficial interest has been transferred to the transferee. In such cases, the roles and responsibilities of the transferor and transferee shall be clearly delineated contractually. Loan transfers should result in the transfer of economic interest with no change in the loan contract. If there are any modifications, such as take-out financing, they shall be evaluated against the definition of restructuring contained in the prudential framework.

A loan transfer should result in the immediate removal of the transferor from the risks and rewards associated with loans to the extent that the economic interest has been transferred. In the case of any retained economic interest, the loan transfer agreement should clearly specify the distribution of the principal and interest income. The transferee should have the unfettered right to transfer or otherwise dispose of the loans free of any restraining conditions, including any consent requirement when it comes to resolution or recovery, to the extent of the economic interest transferred to them.

Lenders, regardless of whether they are transferors or otherwise, should not offer credit enhancements or liquidity facilities in any form in the case of loan transfers. A transferor cannot re-acquire a loan exposure, either fully or partially, that has been transferred by the entity previously, except under the prudential framework or the IBC.

In domestic transactions, the transferee should ensure that the transferor has strictly adhered to the minimum holding period requirements (MHP), which are three months for loans up to two years, and six months for loans of longer periods. For project loans, the period is calculated from the date of commencement of commercial operations of the project being financed. MHP is not applicable to the transfer of syndicated loans.

A transferor may transfer a single loan or a portfolio of loans that are not in default to permitted transferees through assignment or novation, or a loan participation contract. The transfer shall be for cash, received no later than at the time of transfer, transparently on an arm’s length basis. Where transfers result in a change of lender of record under a loan agreement, the transferor and transferee should ensure that the existing loan agreement provides for consent by the borrower to such transactions.

The transfer of stressed loans must be through assignment or novation only, not through loan participation. Lenders shall transfer stressed loans, including by way of bilateral sales or e-auction platforms, only to permitted transferees and asset reconstruction companies. The transferor must not assume any operational, legal or any other type of risks relating to the transferred loans, including additional funding or commitments to the borrower or transferee that relate to the loan transferred.

Aditya Vikram Dua is an associate partner and Parvathi Menon is an associate at SNG & Partners .

SNG & Partners One Bazaar Lane, Bengali Market New Delhi – 110001 India

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Contact details Tel: +91 11 4358 2000 Email: [email protected]

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Accounting for Direct Assignment under Indian Accounting Standards (Ind AS)

By Team IFRS & Valuation Services ( [email protected] ) ( [email protected] )

Introduction

Direct assignment (DA) is a very popular way of achieving liquidity needs of an entity. With the motives of achieving off- balance sheet treatment accompanied by low cost of raising funds, financial sector entities enter into securitisation and direct assignment transactions involving sale of their loan portfolios. DA in the context of Indian securitisation practices involves sale of loan portfolios without the involvement of a special purpose vehicle, unlike securitisation, where setting up of an SPV is an imperative.

The term DA is unique to India, that is, only in Indian context we use the term DA for assignment of loan or lease portfolios to another entity like bank. Whereas, on a global level, a similar arrangements are known by various other names like loan sale, whole-loan sales or loan portfolio sale.

In India, the regulatory framework governing Das and securitisation transactions are laid down by the Reserve Bank of India (RBI). The guidelines for governing securitisation structures, often referred to as pass-through certificates route (PTCs) were issued for the first time in 2006, where the focus of the Guidelines was restricted to securitisation transactions only and direct assignments were nowhere in the picture. The RBI Guidelines were revised in 2012 to include provisions relating to direct assignment transactions.

Until the introduction of Indian Accounting Standards (Ind AS), there was no specific guidance regarding the accounting of direct assignment transactions, therefore, a large part of the accounting was done is accordance with the RBI Guidelines. The introduction of Ind ASes have opened up several new challenges for the financial entities.

Following issues are relevant:

Whether DA would lead to de-recogntion?
Whether there will be a gain on sale upon such de-recognition?
Whether DA should be be treated as a partial transfer of asset or transfer of the whole asset?
Continuing valuation of retained interest?

In this article, we intend to discuss those issues and suggest potential solutions for those as well.

Prior to addressing the above issues, the following is a comparison between DA and securitisation for a better understanding:

De recognition in case of Direct Assignment

Ind AS 109, provides a clear guidance as to the de recognition principles to be followed. Para 3.2.2 says that:

“3.2.2 Before evaluating whether, and to what extent, derecognition is appropriate under paragraphs 3.2.3–3.2.9, an entity determines whether those paragraphs should be applied to a part of a financial asset (or a part of a group of similar financial assets) or a financial asset (or a group of similar financial assets) in its entirety, as follows.

(a) Paragraphs 3.2.3–3.2.9 are applied to a part of a financial asset (or a part of a group of similar financial assets) if, and only if, the part being considered for derecognition meets one of the following three conditions.

(i) The part comprises only specifically identified cash flows from a financial asset (or a group of similar financial assets). For example, when an entity enters into an interest rate strip whereby the counterparty obtains the right to the interest cash flows, but not the principal cash flows from a debt instrument, paragraphs 3.2.3–3.2.9 are applied to the interest cash flows.

(ii) The part comprises only a fully proportionate (pro rata) share of the cash flows from a financial asset (or a group of similar financial assets). For example, when an entity enters into an arrangement whereby the counterparty obtains the rights to a 90 per cent share of all cash flows of a debt instrument, paragraphs 3.2.3–3.2.9 are applied to 90 per cent of those cash flows. If there is more than one counterparty, each counterparty is not required to have a proportionate share of the cash flows provided that the transferring entity has a fully proportionate share.

(iii) The part comprises only a fully proportionate (pro rata) share of specifically identified cash flows from a financial asset (or a group of similar financial assets). For example, when an entity enters into an arrangement whereby the counterparty obtains the rights to a 90 per cent share of interest cash flows from a financial asset, paragraphs 3.2.3–3.2.9 are applied to 90 per cent of those interest cash flows. If there is more than one counterparty, each counterparty is not required to have a proportionate share of the specifically identified cash flows provided that the transferring entity has a fully proportionate share.

(b) In all other cases, paragraphs 3.2.3–3.2.9 are applied to the financial asset in its entirety (or to the group of similar financial assets in their entirety). For example, when an entity transfers (i) the rights to the first or the last 90 per cent of cash collections from a financial asset (or a group of financial assets), or (ii) the rights to 90 per cent of the cash flows from a group of receivables, but provides a guarantee to compensate the buyer for any credit losses up to 8 per cent of the principal amount of the receivables, paragraphs 3.2.3–3.2.9 are applied to the financial asset (or a group of similar financial assets) in its entirety.”

If the de recognition criteria is not met in entirety, then all the conditions mentioned in para 3.2.2(a) has to be satisfied, which talks about fully proportionate share of total cash flows from the financial asset and fully proportionate share of specifically identified cash flows of the financial asset. If these conditions are met, then partial de recognition is possible. The part that is still recognized, is not connected with de recognition and further accounting related to de recognition. However, for actually de recognizing the asset, the de recognition criteria in para 3.2.3 and para 3.2.6 has to be looked at.

Para 3.2.3 goes as follows:

“3.2.3 An entity shall derecognise a financial asset when, and only when:

(a) the contractual rights to the cash flows from the financial asset expire, or

(b) it transfers the financial asset as set out in paragraphs 3.2.4 and 3.2.5 and the transfer qualifies for derecognition in accordance with paragraph 3.2.6.”

Thus, if the contractual rights to the cashflows expire, then the asset can be de-recognized. If the condition is not met, then it has to be seen that whether the asset is transferred as per para 3.2.5 and the transfer meets the de recognition conditions set out para 3.2.6.

Para 3.2.6 states that:

“3.2.6 When an entity transfers a financial asset (see paragraph 3.2.4), it shall evaluate the extent to which it retains the risks and rewards of ownership of the financial asset. In this case:

(a) if the entity transfers substantially all the risks and rewards of ownership of the financial asset, the entity shall derecognise the financial asset and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer.

(b) if the entity retains substantially all the risks and rewards of ownership of the financial asset, the entity shall continue to recognise the financial asset.

(c) if the entity neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, the entity shall determine whether it has retained control of the financial asset. In this case:

(i) if the entity has not retained control, it shall derecognise the financial asset and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer.

(ii) if the entity has retained control, it shall continue to recognise the financial asset to the extent of its continuing involvement in the financial asset (see paragraph 3.2.16).”

Para 3.2.6 brings out that, if all the risks and rewards of ownership of financial asset is transferred, then the asset shall be de recognized. If the risks and rewards incidental to ownership of financial asset is not transferred, then obviously the asset cannot be de recognized. However, if there is a partial transfer of risks and rewards of ownership, then the surrender of control has to be evaluated. If there is surrender of control, then the asset can be de recognized. If not, there shall be partial de-recognition, that is, the asset shall be recognized in the books of the seller only to the extent of continuing involvement.

Computation of Gain on Sale

It is a general notion that a sale results in a gain or loss, be it arbitrary or anticipated, the same is required to be accounted for. In case of a direct assignment, there is a sale of the loan portfolios, however, the same completely depends upon whether the assigned loan portfolio is getting derecognised from the books of the assignor or not. If it is not derecognised from the books of the assignor, then the question of recognising a gain or loss on sale does not arise. However, if the sale qualifies for de-recognition, then the seller must book gain or loss on sale in the year of sale.

Upon reading of Ind AS 109 and study of example stated in application guidance in para B3.2.17, the way of computing the same can be derived as follows:

Gain on sale = Sale consideration – Carrying value of asset*Fair value of transferred portion/(Fair value of transferred portion + Fair value of retained portion)

This can be explained with the help of the following example:

The gain or loss on sale does not depend on the sale consideration completely. There may be cases where the carrying value of the transaction and sale consideration are same, i.e. at par transactions. As per Ind AS 109, the computation of gain on sale remains same in cases of at-par or premium structured transactions, however, even at-par transactions could lead to a gain or loss on sale..

The reason for same is that the computation of gain on sale takes into account the retained interest by the Assignor comprising of the difference between the interest on the loan portfolio and the applicable rate at which the direct assignment is entered into with the assignee, also known as the right of excess interest spread (EIS) sweep.

The above settles for the computation of the gain/loss, however, the bigger change seen in the present regime is on the part of recognition of such a gain in the books of the Assignor.

In the present scenario, Ind AS 109 prescribes that the gain on sale or de recognition be recorded upfront in the profit and loss statement.

For reference, para 3.2.12 states that:

“ 3.2.12 On derecognition of a financial asset in its entirety, the difference between:

(a) the carrying amount (measured at the date of derecognition) and

(b) the consideration received (including any new asset obtained less any new liability assumed) shall be recognised in profit or loss.”

Further in case of de recognition of a part of financial asset, para 3.2.13 states that:

“3.2.13 If the transferred asset is part of a larger financial asset (eg when an entity transfers interest cash flows that are part of a debt instrument, see paragraph 3.2.2(a)) and the part transferred qualifies for derecognition in its entirety, the previous carrying amount of the larger financial asset shall be allocated between the part that continues to be recognised and the part that is derecognised, on the basis of the relative fair values of those parts on the date of the transfer. For this purpose, a retained servicing asset shall be treated as a part that continues to be recognised. The difference between:

(a) the carrying amount (measured at the date of derecognition) allocated to the part derecognised and

(b) the consideration received for the part derecognised (including any new asset obtained less any new liability assumed) shall be recognised in profit or loss.”

Hence, it is clear that the gain on de recognition should be recorded in the profit and loss statement.

From a practical standpoint, the above recognition is seen as a demotivation for entering into a direct assignment transaction, since the same would result in a volatility or irregularity in the profit or loss statement of the NBFCs.

This approach is in stark contrast to what has been prescribed in the RBI Guidelines on Securitisation, which requires gain on sale to be amortised over the life of the transaction. As per the RBI Guidelines provide the following:

As per para 20.1 of RBI Guidelines on Securitisation of Standard Assets issued in 2006:

“In terms of these guidelines banks can sell assets to SPV only on cash basis and the sale consideration should be received not later than the transfer of the asset to the SPV. Hence, any loss arising on account of the sale should be accounted accordingly and reflected in the Profit & Loss account for the period during which the sale is effected and any profit/premium arising on account of sale should be amortised over the life of the securities issued or to be issued by the SPV. ”

Also, as per para 1.4.1. of RBI Guidelines on Securitisation of Standard Assets issued in 2012:

“The amount of profit in cash on direct sale of loans may be held under an accounting head styled as “Cash Profit on Loan Transfer Transactions Pending Recognition” maintained on individual transaction basis and amortised over the life of the transaction .”

As the accounting treatment offered by Ind AS defaces the profit and loss statement by distorting the income recognition pattern of the NBFCs, NBFCs are not in favour of recording this gain upfront. The concern is aggravated due to the liquidity crunch currently faced by the NBFCs caused by recent downfall of IL&FS. The default on payment obligations of loans and deposits amounting to approximately Rs. 90,000 crore, by India’s leading infrastructure finance company, shook the confidence of the lenders and triggered a panic sentiment amongst the market lenders including NBFCs. As a result of the panic, banks are unwilling to lend to the NBFCs and their cost of funds are going up. However, the banks are showing interest in acquiring their loan portfolios instead. Therefore, the NBFCs are somewhat being forced to accept this distortion in their profit or loss statement.

Another question that arises is- whether de-recognition in books of assignor affects recognition in the books of the assignee.

As per para 3.1.1 of Ind AS 109, an entity shall recognise a financial asset or a financial liability in its balance sheet when, and only when, the entity becomes party to the contractual provisions of the instrument. Therefore, the transferee should recognise the financial asset or financial liability in its balance sheet only when he becomes a party to the contractual provisions of the instrument.

Para B3.2.15 of the same standard, provides that if a transfer of a financial asset does not qualify for de-recognition, the transferee does not recognise the transferred asset as its asset. In such a case the transferee is required to derecognise the cash or other consideration paid and recognises a receivable from the transferor. The transferee may measure the receivable at amortised cost (if it meets the criteria in paragraph 4.1.2) if the transferor has both a right and an obligation to reacquire control of the entire transferred asset for a fixed amount (such as under a repurchase agreement).

Therefore, de-recognition from the books of the seller is clearly a determinant for recognition in the books of the buyer.

Impact on GST on the gain on sale

In the last couple of years, if there is anything that has bothered the financial entities in India, other than IndAS, then it has to be GST. Therefore, it becomes pertinent to take a look at whether GST will become applicable in any manner whatsoever.

Under GST regime, assignment of loans are treated as dealing in securities and are therefore exempted from GST. Link to our detailed writeup in this regard has been provided in the footnote [1] .

Reporting of Retained Interests

A partial de-recognition is where the transferor transfers only a part of the asset and retains a part of it.

Currently, as per the RBI Guidelines, NBFCs are required to comply with the minimum retention requirement of 10%, that is, they should have a continuing interest of 10% on the loans that it intends to transfer. Therefore, if an NBFC is intending to sell of a portfolio of Rs. 100 crores, it has to retain at least 10% of the said portfolio and can sell of only Rs. 90 crores representing the remaining part.

Therefore, this becomes a classic case of partial de-recognition.

The value of retained interest should be accounted for as per the original accounting criteria as and when it was originated. For instance, if the pool recognised under FVOCI method, the retained interst must continue to be valued at FVOCI.

The manner of recognition or valuation of the retained interest will not change when a part of the pool is sold off.

Before the introduction of Indian Accounting Standards, RBI guidelines were followed for de recognizing the asset and recording the gain on sale after de recognition. There was no accounting guidance for financial instruments and their de recognition. In the absence of it, RBI guidelines were followed which talked about true sale. In case, the conditions of true sale were satisfied, then the asset was de recognized and the gain was regularised over the period by amortising the gain on de recognition.

While a well-documented piece of legislation is welcomed, however, every new thing has some shortcomings. In this case, the irregularities in the profit and loss and the complexities surrounding the de-recognition test comes as shortcomings. However, it is expected, with the passage of time, these shortcomings will also be settled.

[1] http://vinodkothari.com/2018/06/gst-on-assignment-of-receivables-wrong-path-to-the-right-destination/

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Essay Writing Guide

500 Word Essay

Last updated on: Nov 20, 2023

Writing a 500 Word Essay - Easy Guide

By: Nova A.

Reviewed By: Chris H.

Published on: Jan 8, 2019

Are you staring at a blank page, trying to write a 500-word essay? Don't worry, you're not alone!

Many students face this challenge when tasked with writing a concise yet impactful piece. A 500-word essay is a common task often assigned to high school and college students.

Writing a 500-word essay can be quite difficult as you have to cover all the important points in a few words. However, this is where you can show all your potential.

Read on to learn how to write a perfect 500-word essay with this step by step guide. You will also get to read some good example essays to help you out.

Let’s dive into it!

On this Page

500 Word Essay Definition

A 500-word essay is a short length academic essay. It provides a writer’s perspective on a particular topic. It is usually assigned to high school and college students to teach them necessary essay writing skills.

Every type of essay can follow the 500-word essay format, including:

Persuasive essay
Descriptive essay
Argumentative essay
Expository essay
Narrative essay

This means that you can write any type of essay in the 500-word format.

How to Write a 500 Word Essay

A 500-word essay is an opportunity to show and improve your writing skills. Here are the steps you need to follow to write your essay:

Make an Essay Outline

An outline is a roadmap that guides you through the different sections of your essay. It is important to make an outline before you start writing. This ensures a well-structured and coherent piece.

A 500-word essay is usually composed of five paragraphs. Here’s what you need to create an outline:

The main topic of the essay
The central thesis statement
The main point or topic sentence for each body paragraph
Supporting points for body paragraphs

This is what your outline will look like:

Write a Good Introduction

An introduction plays an important role in making an impression on the reader’s mind. The readers decide on the basis of the introduction, whether they want to read the rest of the essay or not.

Here is how you can compose the introduction paragraph:

It should start with a strong hook that grabs the reader’s attention immediately.
Provide a little background information that helps the reader understand the topic
Conclude the intro with a compelling thesis statement that you will support in the body.

Here is an example:

Compose the Body Paragraphs

The body section is intended to provide a detailed description of the topic. It gives complete information about the essay topic and presents the writer’s point of view in detail. Following are the elements of the body section:.

Topic sentence

The first sentence of the body paragraph. It presents the main point that will be discussed in the paragraph.

Supporting evidence

It could be any points or evidence that support your main thesis.

Transition statement

This statement relates the body paragraph back to the thesis, and also connects it with the subsequent paragraph.

Draft a Compelling Conclusion

The conclusion paragraph summarizes the whole essay and presents the final thoughts on the topic. It is as important as the introduction paragraph. Below are the things you include in the conclusion paragraphs:

Restate the thesis statement
Summarize the essay
Provide final thoughts or a call to action

Want to become a master at writing essays? Check out our essay writing guide to become an excellent writer who can craft all types of essays!

Paper Due? Why Suffer? That's our Job!

500 Word Essay Format

Here is how you format a 500 word essay in general:

A common font style like Calibri, Arial, or Times New Roman
1” margins on both sides
Line spacing: double-spaced
Alignment: Left

Remember, these are general guidelines. Always follow the specific page formatting guidelines provided by your instructor.

Frequently Asked Questions about Writing a 500 Word Essay

Many things come up in your mind when you get to write a 500-word essay. You might want to know the length, outline, time required to write the essay, and many more things.

Below are some common questions that you may ask yourself while writing a short essay.

How Long is a 500 Word Essay?

“How many pages is a 500-word essay?”

An essay length of a 500-word essay is usually 1 to 2 pages. If it is single-spaced, it covers just 1-page. When double-spaced, it covers 2 pages.

When it comes to spacing, stick to the instructions given by your professor.

How Many Paragraphs is a 500 Word Essay?

The standard 500-word essay template has 5 paragraphs. It has one introduction, three body paragraphs, and one conclusion paragraph.

The word count is divided into 5 paragraphs evenly. The introduction and conclusion are 100 words long each. While the body paragraphs need to be 300 words long.

How Long Does it Take to Write a 500 Word Essay?

It would take no more than an hour or two to write a complete 500-word essay. Especially if you have enough information about the topic, you can easily write your essay within an hour.

What is the difference between 500 words essay vs 250 words essay

The word count of an essay plays a significant role in shaping its structure, content, and depth of analysis. A 500-word essay is a bit more detailed and longer than a 250-word essay. A 250-word essay is composed of three paragraphs maximum. Meanwhile a 500-word essay should contain at least five paragraphs.

What is the difference between 500 words essay vs 1000 words essay

Here is a major difference between 500-word essay and a 1000-word essay:

With a 500-word essay, you have a limited word count, which necessitates a concise and focused approach. You must carefully select your arguments, provide succinct evidence, and present a coherent analysis.

On the other hand, a 1000-word essay allows for a more extensive exploration of the topic. It provides the opportunity to delve into multiple subtopics and offer more supporting evidence.

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500 Word Essay Topics

Below are some interesting topics to help you get started on your essay.

Should gun ownership be restricted
My Favorite Place
Should healthcare be free?
The benefits of volunteering in the local community
Is hunting for food moral?
The importance of personal responsibility
How I spent my summer vacation
Describe an ideal personality
What is Climate Change?
The importance of sports for teenagers

Need more ideas? We’ve got you covered! Check out 100+ amazing essay topics to help you out!

500 Word Essay Example

Now you have a guide for writing a 500-word essay, have a look at the following example to have a more clear understanding.

500 WORD ESSAY ON COVID-19 (PDF)

500 WORD ESSAY ON WHY I WANT TO BE A NURSE (PDF)

500 Words Essay on Why I Deserve a Scholarship

500 WORD ESSAY ON PUNCTUALITY (PDF)

500 WORD ESSAY ON LEADERSHIP (PDF)

500 WORD ESSAY ON HONESTY (PDF)

FREE 500 WORD ESSAY ON RESPONSIBILITY (PDF)

500 WORD ESSAY EXAMPLE FOR COLLEGE (PDF)

With the help of this step by step guide and essay examples, you can easily craft a perfect essay. However, if you need more help, you can contact us anytime.

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As a Digital Content Strategist, Nova Allison has eight years of experience in writing both technical and scientific content. With a focus on developing online content plans that engage audiences, Nova strives to write pieces that are not only informative but captivating as well.

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Essay on My Favourite Game Basketball

Students are often asked to write an essay on My Favourite Game Basketball in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on My Favourite Game Basketball

Introduction to basketball.

Basketball is my most loved game. It’s a sport where two teams play against each other, trying to score by throwing a ball into a high hoop. It’s fun and keeps you fit.

Playing the Game

To play, you need a ball and a hoop. You dribble, pass to teammates, and shoot to score points. The game is fast and exciting, with lots of running and jumping.

Why I Love It

I enjoy basketball because it’s thrilling and requires skill. It’s also a great way to make friends and learn about teamwork. Plus, watching professional games is really cool!

In short, basketball is my favourite game. It’s full of action and helps me stay active. I love every moment on the court.

250 Words Essay on My Favourite Game Basketball

Basketball is my favorite game. It’s a sport played with a round ball that bounces and two high hoops on either end of a court. This game is fun and full of energy. It’s not just about throwing the ball into the basket, but also about teamwork, quick thinking, and being active.

The Fun of Playing

When I play basketball, I forget all my worries. Running up and down the court, passing the ball to teammates, and shooting hoops make me happy. It’s exciting when the ball swishes through the net. I love playing with my friends after school. We cheer for each other and learn to play better together.

Rules and Teamwork

In basketball, there are simple rules. You can’t run holding the ball without dribbling, and you have to shoot within a certain time. These rules make the game fair and fun. Playing on a team teaches me to work with others and helps me make new friends.

Health and Fitness

This game is also great for health. It makes me run a lot, which is good exercise. I have become stronger and faster since I started playing basketball. It’s also a good way to stay fit and healthy.

Basketball is a wonderful game that brings people together and keeps them healthy. It’s my favorite because it’s not just a game, it’s a way to learn, stay fit, and have fun with friends. Every time I play, I feel excited and full of life. That’s why basketball is the best game for me.

500 Words Essay on My Favourite Game Basketball

Introduction to my favourite game.

Basketball is my favourite game. It is a fun sport that keeps you active and healthy. It is played with a ball and two hoops on a large court. Two teams try to score points by throwing the ball into the opposing team’s hoop. I love basketball because it is exciting and it helps me make new friends.

The Basics of Basketball

The game has simple rules. Each team has five players. The main aim is to score more points than the other team. You score points by shooting the ball through the hoop. If you shoot from close, you get two points, but if you shoot from far, behind a line on the court, you get three points. When a player is fouled while shooting, they get free throws, which are worth one point each.

Why I Love Playing Basketball

Playing basketball is great for many reasons. It makes me run, jump, and stay active, which is good for my health. I also learn to work with my team, pass the ball, and support each other. It teaches me to be quick and smart on the court. When I play basketball, I feel happy and free.

Learning Life Skills

Basketball is not just about playing with the ball. It teaches important life skills. For example, I learn to be patient and to wait for the right moment to act. I also learn to be strong when I lose and happy when I win, but not too proud. These skills help me in school and at home too.

Basketball Heroes

I admire basketball players who are famous for their skills. They inspire me to get better at the game. Players like Michael Jordan, LeBron James, and Kobe Bryant show that with hard work and dedication, you can achieve great things. They are not just good players; they are also good people who help others.

The Joy of Watching Basketball

Watching basketball games is as fun as playing. I cheer for my favourite teams and feel the excitement of the game. It is thrilling to see the players make amazing moves and score points. Sometimes, games are close and every second counts, which makes it even more exciting.

Basketball is a wonderful game that brings people together. It is my favourite because it is fun, helps me stay healthy, and teaches me about teamwork and life. Whether I play or watch, basketball always gives me joy. I hope to keep playing and enjoying this game for a long time.

That’s it! I hope the essay helped you.

If you’re looking for more, here are essays on other interesting topics:

Essay on My Favourite Game Badminton
Essay on My Favourite Fruit
Essay on Favourite Dish

Apart from these, you can look at all the essays by clicking here .

Happy studying!