Monday, 18 September 2017 11:21

Loans and Advances

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Loans and Advances

Overdraft Facility Allow customers to draw beyond the deposits of their current accounts, for a viable and ongoing business.

Overdrawal

The right to withdraw a specified amount of fund over the Overdraft limit as working capital.

Merchandise Loan Facility

A credit facility provided against merchandise or documentary evidence as a collateral for short term.

Pledge or collateral

  • Negotiable warehouse receipt for goods in warehouse
  • Original Railway Receipts
  • Truck-way bills
  • Airway bills

Import Letter of Credit Facility

A facility provided to importers, on payment of a certain percentage of the value of the document while opening a Letter of Credit.

Pre-Shipment Export Credit Facility

A Facility extended for expenses until the time of shipment:

  • Purchase of raw materials
  • processing
  • Warehousing
  • Packing and transporting and other

Revolving Export Credit Facility

An advance extended to exporters to bridge their temporary working capital requirement upon presentation of all valid and acceptable export documents, except bill of loading.

Letter of Guarantee Facility

A written promises by the bank as compensation to the beneficiary in the event that the obligor fails to honour his/her/its obligations, in accordance with the terms and conditions of the guarantee/agreement/contract.

Types of Letters of Guarantee rendered:

  • Bid Bond
  • Performance Bond
  • Advance payment Guarantee
  • Suppliers’ Credit Guarantee(Trade Credit Guarantee)
  • Retention Payment Guarantee
  • Customs Duty Guarantee

Import Letter of Credit Settlement Loan

A loan rendered by converting the outstanding import letter of credit document’s value either to a merchandise loan facility or a term loan.

Term Loan

Types of Term Loan

  • Short-Term
  • Medium-term and
  • Long-term

Agricultural Term Loan

A loan rendered for purchase of agricultural inputs and Agricultural Investment.

Motor Vehicle Loan

Loan provided for the purchase of new motor vehicles for borrowers in business sectors.

Construction Machinery Loan

A loan delivered for the purchase of new construction machinery.

Equipment/Machinery Lease Financing

Available for either of the parties to the lessee agreement:

  • Equipment/Machinery lease financing for the lessee
  • Equipment/Machinery lease financing for the lessor.

General Eligibility Criteria for Loan

All customers applying for any type of loan/facility at CBO must fulfill the following general eligibility criteria:

  • All persons engaged in lawful trading activities and creditworthy business(es) is/are eligible to borrow business loans. However, other non-trading institutions will be eligible depending on their nature and strategies without violating any active proclamation or directive.
  • The business credit applicant should present renewed trade license for the current fiscal year or investment license and principal registration certificate for new projects.
  • All applicants who are engaged in business must present a tax identification number /TIN/ or tax exemption certificate for all of their income.
  • The applicant and/or any of its shareholders/subsidiaries shall fully settle any previous loss to the Bank, if any. To this effect, internal records shall be thoroughly checked.
  • The applicant must have never been engaged in tax evasion, or in a breach of exchange and control regulations, or in any other illegal/unlawful dealings, if the information is known to the bank/the circulated record is available.
  • The applicant must not have any record of mal-operation of the checking account in the banking system until the rehabilitation period is expired.
  • The applicant shall fulfil at least the required minimum equity contribution.
  • The applicant and/or any of its major shareholders/subsidiaries must not have any non-performing loans in any bank.
  • The applicant has to present all the documents/information demanded by the Bank.
  • The applicant’s business must be financially viable, legally acceptable, socially desirable, technically feasible and environmental friendly.
  • If the applicant is cooperative, it has to provide its legal personality certificate and the last budget years’ audited financial statements, should establish accounting and record keeping systems, employ qualified manpower, and properly drawn business plans to effectively run the business.
  • In addition to these criteria, customer has to fulfil the specific eligibility criteria for each loans and advances indicated in the credit product line.

Read 123 times Last modified on Tuesday, 26 September 2017 21:01
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