Loan and Advances
Temporary Overdraft Facility
Temporary Overdraft Facility
The Bank may extend the Temporary Overdraft Facility to selected and creditworthy customers of the bank for a repayment period not exceeding three months to relieve their temporary working capital constraints. Prior to the extension, the customer should settle the accrued interest for the first extension and shall pay 25% of the principal amount for the second extension. The facility must be backed by acceptable collateral. However, the bank may avail the facility for creditworthy customers on a clean basis.
In addition to the General Eligibility Criteria, the customer shall fulfill the following specific requirements.
- The facility shall be extended only to those customers facing a severe working capital shortage
- The facility shall not be extended for existing clean base Overdraft borrowers.
- The facility shall be availed to Credit Risk Grade 1, 2, or 3 customers.
Overdrawal Facility
Overdrawal Facility
An Overdrawal is a temporary facility that gives a customer the right to withdraw a specified amount of funds over and above the Overdraft Facility limit in order to meet the unexpected seasonal working capital shortage. Overdrawal may be allowed for a maximum period of Thirty days and may be approved only twice in a twelve-month period.
Single Overdrawal amount should not exceed 20% of the existing Overdraft Facility limit or Birr ten million whichever is lower. The overdrawal is availed based on credit risk grade.
Overdraft Facility
Overdraft Facility
Overdraft is a form of credit facility whereby customers are allowed to draw above deposits in their current accounts to meet their business needs. Interest is charged on the overdrawn amount outstanding on a daily basis. This facility is usually approved to sizable business activities and well-established customers as supplement of working capital. A fresh overdraft facility shall be extended to an applicant who has established at least a one-year banking relationship with the Bank as a borrower or depositor. However, depending on the nature and type of the business, the Bank may entertain customers with less than one-year relationship. Due to the indefinite nature of the facility– that is renewed periodically, overdraft facility shall be secured against immovable property.
To enjoy overdraft facilities, customers shall fulfill the following specific requirements, in addition to the general eligibility criteria as indicated in the procedure.
- The applicant must not be in blacklist record with CoopBank or other banks.
- Present audited financial statements and audited financial statements are specifically required for a request of Birr Five Million and above.
- In case of cooperatives or unions, the general assembly or board committee shall assign a delegated person who shall request loans on their behalf, conclude loan and/or mortgage contract with the bank and give authority to the chairperson or to the appointed general manager to sign personal guarantee. The same shall be communicated to the bank in writing.
- In case of Share Company or Private Limited Company, major shareholders should sign personal guarantee.
- The Bank may provide overdraft facility on clean basis or against other collaterals for its prominent customers.
- In order to entertain clean base overdraft facility, the customer’s Risk Grade shall be 1, 2, or 3.
- The outstanding balance of the overdraft facility must be within the approved limit at the time of the processing of the renewal request.