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we solve all your financing
problem WHILE YOU THINK OF YOUR
FUTURE BUSINESS PLANS
Term loans can be sanctioned for project loan (green field or brown field) or non-project loan. Project loans are sanctioned for setting up a new unit or for expansion of existing units whereas Term Loans (Non-project) are extended for the purpose of acquisition of fixed assets. Viz., Building, Plant and Machinery etc. Term loan can be both in INR and foreign currencies for greenfield projects as well as for expansion, diversification and modernization. Interest rate on rupee term loan is fixed or floating based on lenders base rate (or any other benchmark rate) plus a fixed spread, as per creditworthiness of borrower, rating, risk perception, tenure of loan and other relevant factors. Interest Rate on Foreign Currency Loan is normally floating rate based on LIBOR plus a fixed spread according to creditworthiness of borrower, rating, risk perception, tenure of loan and other relevant factors.
Short Term Loans (STL) is generally borrowed for meeting short-term cash flow mismatches or as bridge finance against financial closure, the take out is envisaged from the RTL, to be sanctioned, at times, by a lender.
Working Capital facility is taken by borrwer to finance day-to-day requirement. The working capital funds are generally required for purchase of raw materials, stores, fuel, for payment of labour, power charges, for storing finished goods till they are sold out & for financing the sales by way of sundry debtors / receivables.
Cash Credit (CC) facility is granted to the customers to bridge working capital gap. CC is granted against hypothecation of stock such as raw materials, work-in-process, finished goods and stock-in-trade, including stores and spares. CC is granted by way of a running account, drawings to be regulated within the drawing limit permissible which is arrived at on the basis of composition of current assets and current liability based on the declaration in the stock statement in the prescribed format submitted by the borrower.
Packing credit to exporters is intended to make short-term working capital finance available to borrowers (engaged in exporting goods & services) at internationally comparable interest rates (available cheaper than domestic INR interest rates).
Types of Export Credit -
Pre-shipment / Packing Credit also known as 'Packing credit' is a loan/ advance granted to an exporter for financing the purchase, processing, manufacturing or packing of goods prior to shipment. Packing credit can also be extended as working capital assistance to meet expenses such as wages, utility payments, travel expenses etc; to companies engaged in export or services. Packing credit is sanctioned/granted on the basis of letter of credit or a confirmed and irrevocable order for the export of goods / services from India or any other evidence of an order for export from India.
Post-shipment Credit means any loan or advance granted or any other credit provided by a lender to an exporter of goods / services from India from the date of extending credit after shipment of goods / rendering of services to the date of realisation of export proceeds as per the period of realization prescribed by Reserve Bank of India (RBI) and includes any loan or advance granted to an exporter, in consideration of, or on the security of any duty drawback allowed by the Government from time to time. As per extant guidelines of RBI, the period prescribed for realisation of export proceeds is 12 months from the date of shipment.
Receivable Buyout with recourse aims to provide working capital finance by converting domestic receivables into cash, thus, helping borrowers to tide over constraints of cash flow and working capital. Under Receivable Buyout, lender only providing advances to suppliers (with large pool of receivables) against domestic trade receivable (age of receivables should not exceed 90 days) and other services such as debt collection and administration of sales ledger etc. shall be taken by the borrower.
Supplier/Borrower shall draw bills of exchange/invoice for goods supplied and the purchaser shall accept the same. After acceptance of bills of exchange/invoice, Bank shall advance discounted value of the receivable for the tenor of the receivable. If purchaser fails to pay the due amount on due dates, the supplier shall make payment. Borrower/Supplier Company shall submit list of receivables confirming that the documentary proof are with the company. An agreement would be entered into with supplier for assignment of the debts before providing advance. Supplier/Borrower should also enter into agency agreement for collection of debts with the Bank.
This is meant to provide finance to borrowers (dealers) towards the invoices raised by corporate on dealers, lenders provide Channel Finance to the dealers of corporate for inventory funding facility for Authorised Dealers (ADs) of well established corporates. The amount of Line of Credit (LOC) for the corporate is generally fixed with reference to annual turnover of the corporate. Sub limits to dealers is allocated as recommended by the corporate and would be linked to turnover of dealers with the corporate.
Lenders offer both Purchase and Sale Bill Discounting and also Invoice Discounting for OEM /vendors to large Corporates. Under this type of lending, lender takes the bill drawn by borrower on his (borrower's) customer and pay him immediately deducting some amount as discount/commission. The Bank then presents the Bill to the borrower's customer on the due date of the Bill and collects the total amount. If the bill is delayed, the borrower or his customer pays the Bank a pre-determined interest depending upon the terms of transaction.
Bills are classified into four categories as LCBD (Bill Discounting backed with LC), CBD (Clean Bill Discounting), DBD (Drawee bill discounting) and IBD (Invoice bills discounting). Bill Finance constitutes a vital part of the working capital finance and is a major Trade Finance activity.
Lending to Commercial Real Estate Sector can be bifurcated into following categories:
Bank Guarantee is an instrument issued by the Bank in which the Bank agrees to stand guarantee against the non-performance of some action/performance of a party. The quantum of guarantee is called the 'guarantee amount'. The guarantee is issued upon receipt of a request from 'applicant' for some purpose/transaction in favour of a 'Beneficiary'. The 'issuing bank' will pay the guarantee amount to the 'beneficiary' of the guarantee upon receipt of the 'claim' from the beneficiary. This results in 'invocation' of the Guarantee. Some Bank Guarantees are as follows:
Letter of credit is a documentary credit from a bank guaranteeing that a seller payments under compliance of agreed terms and conditions. In the event of default by buyer to make payment on the purchase even after the compliance from seller, the bank would make the payments.
Often used international transactions to ensure that payments are received wherein buyer and seller may not know each other and are operating at different locations. Letters of credit are important aspect of international trade as they are governed by rules promulgated by the International Chamber of Commerce known as Uniform Customs and Practice for Documentary Credits.