Credit Facilities Extended By Bank (Iipm)

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  • 1. FORM OF BANK LENDING FUND BASED NON FUND BASED
    • FUND BASED
    • There is immediate outgo of funds
    • Money is paid to borrower Or to
    • someone he wants to be paid
    • Appears on bank’s balance sheet
  • 2.
    • FUND BASED facilities - Examples
    • Term Loans
    • Medium Term (3-7 Years )
    • And Long Term Loans (More Than 7 Years )
    • Term loans are generally granted for acquiring
    • fixed assets And are repayable over a fixed period of time in periodical installments
    • purchase of machinery and plant, equipments
    • purchase of consumer durables
    • Purchase of vehicles like heavy vehicles,
    • trucks, buses, cars
    • Purchase of land and construction of building
    • thereon Or purchase of ready built factory
    • building, house or flat or villa
  • 3.
    • Short Term Loans And Demand Loans For Working
    • Capital
    • Demand Loans Temporary Short Term Needs
    • ( FDR Loan)
    • Cash Credit For financing the purchase or
    • manufacture of Goods
    • against security of goods
    • Cash Credit For financing credit sales
    • against security of
    • Receivables / Book Debts
  • 4.
    • Overdrafts
    • Temporary / Casual drawings
    • Or
    • Regular Limit for other
    • purposes as occasional needs
  • 5.
    • Bills Purchased Demand Bill of Exchange
    • payable on presentation
    • Bills Discounted Time Bills Or Usance Bills
    • of exchange payable
    • after a certain period
    • say 60/90/180 day
  • 6.
    • DEMAND BILL OF EXCHANGE
    • Rs. 1,20,300.00 DATED 20/07/05
    • On demand , pay to State Bank Of India,
    • New Delhi, A Sum Of Rs. One Lakh Twenty Thousand Three Hundred Only
    • for value received.
    • TO :
    • For Bansal Traders
    • M/S Raman Enterprises
    • 2056, M.G. Road, Sd/- (Alok Bansal)
    • Bangalore Partner
    • ( Drawee ) Buyer ( Drawer ) Seller
  • 7.
    • TIME BILL OR U S A N C E BILL OF EXCHANGE
    • Rs. 1,20,300.00 DATED 20/07/05
    • At 90 days from sight , pay to State Bank Of India,
    • New Delhi, a sum Of Rs. One lakh twenty thousand three hundred only for value received.
    • TO :
    • For Bansal Traders
    • M/S Raman Enterprises
    • 2056, M.G. Road, Sd/- (Alok Bansal)
    • Bangalore Partner
    • ( Drawee ) Buyer ( Drawer ) Seller
  • 8.
    • Bill / Bill of exchange
    • Clean Bill
    • Documentary Bill
    • DP Bill DA Bill
    • Documents Documents
    • Against Payment Against Acceptance
  • 9.
    • Trust receipt facility (TR)
    • The trade documents like invoice, packing list, Bill of Lading/ RR/ TR etc. are received under usance bills of exchange with DA terms.
    • Under DA terms the documents are released against acceptance of bill of exchange and payment is made by the borrower on due date of the accepted bill of exchange say, after 90 days .
    • It may also be a case of documents received under Letter of Credit on DA terms.
  • 10.
    • Under TR credit facility, the borrower signs a “trust receipt” (an undertaking to hold the goods being released in trust for the bank)
    • to take delivery of goods covered under documents of title to goods like Bill of Lading/ RR/ TR etc. without making payment under the accepted bill of exchange.
    • The bank pays immediately to the seller of merchandise /drawer of Bill of exchange or beneficiary under the DA Letter of Credit.
    • The borrower makes payment to the bank later on due date of the bill of exchange.
  • 11.
    • Export credit
    • Pre shipment credit
    • Packing Credit Or Packing Loan
    • Post Shipment Credit
    • By Way Of Bills Discounted
  • 12. Non fund based facilities
    • No immediate out go of funds
    • but definite commitment in future
    • Amount committed may
    • become payable/funded
    • Appears as a foot note to sheet
    • balance sheet as a contingent liability
  • 13.
    • Non fund based facilities
    • examples
    • Guarantees
    • Called a letter of bank guarantee, is issued by the bank at the request and on behalf of a borrower customer in favour of a beneficiary (who may be other individuals, companies / firms / govt. departments)
    • committing to pay on demand a specified sum of money. if demanded within a specified period in terms of this guarantee letter, for non discharge of a financial obligation or non performance of a contract as per terms of the contract between the customer and the beneficiary
  • 14.
    • Co- Acceptances
    • Bills of exchange drawn on a bank’s borrower , are accepted by the borrower as well as co-accepted by the bank to supplement the credit worthiness of the borrower to pay the amount of the bill to the drawer if the borrower (drawee) is unable to pay on due date.
    • .
  • 15.
    • Letter Of Credit
    • A definite undertaking on the part of the bank to make payment to the supplier of the goods, (the beneficiary of the letter of credit ) on submission of documents as stipulated and on fulfillment of terms and conditions of the letter of credit .
    • This is a mechanism to settle the payments in trade.
    • The seller controls the ownership of goods till the buyer pays to a bank as agent of the seller.
    • The buyer pays only when he gets proper documents as per his needs as stipulated in the letter of credit
  • 16.
    • FORM OF BANK LENDING
    • FUND BASED NON FUND BASED
    • There is immediate No immediate out outgo of funds outgo of fund
    • but definite commitment
    • Money is paid to borrower Amount committed may Or to someone he wants become payable/funded
    • Appears on bank’s balance Appears as a foot note to Balance sheet sheet