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Asset Financing

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The Asset Finance Presentation made during the NIC Entrepreneur Workshop held on the 28th of May 2014

Published in: Business, Economy & Finance
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Asset Financing

  1. 1. Asset FinancingAsset Financing Background and IntroductionBackground and Introduction
  2. 2. Asset FinanceAsset Finance DISCUSSION POINTSDISCUSSION POINTS • BackgroundBackground • What is Asset Finance?What is Asset Finance? • Type of Assets FinancedType of Assets Financed • Terms of FinanceTerms of Finance • Application RequirementsApplication Requirements • Sequence of eventsSequence of events
  3. 3. Asset FinanceAsset Finance • Brief History on NIC BankBrief History on NIC Bank • Incorporated in 1959Incorporated in 1959 Providing Hire Purchase Facilities since then.Providing Hire Purchase Facilities since then. • In 1997 became a Bank offering not only Hire Purchase facilities butIn 1997 became a Bank offering not only Hire Purchase facilities but also a wide variety of other banking products:also a wide variety of other banking products: • Asset FinanceAsset Finance • Commercial Banking (Corporate, Personal Banking, Institutional Banking,Commercial Banking (Corporate, Personal Banking, Institutional Banking, Custodial, Credit Cards)Custodial, Credit Cards) • Offering insurance services through NIC Insurance AgencyOffering insurance services through NIC Insurance Agency • Regional presence in Tanzania (NIC Bank Tanzania) & Uganda (NCRegional presence in Tanzania (NIC Bank Tanzania) & Uganda (NC Bank Uganda)Bank Uganda)
  4. 4. Asset FinanceAsset Finance • Asset finance is a product that assists clients toAsset finance is a product that assists clients to acquire Motor vehicles, machinery andacquire Motor vehicles, machinery and equipmentequipment • Products includeProducts include • Hire Purchase (HP)Hire Purchase (HP) • Insurance Premium Finance (IPF)Insurance Premium Finance (IPF) • Operating LeasesOperating Leases • Current set up includesCurrent set up includes • Head OfficeHead Office • BranchesBranches
  5. 5. Types of Assets FinancedTypes of Assets Financed • Moveable & Identifiable assetsMoveable & Identifiable assets • Motor Vehicles (e.g. (i) commercial units like P/ups,Motor Vehicles (e.g. (i) commercial units like P/ups, vans, trucks & prime movers. (ii) All personal units,vans, trucks & prime movers. (ii) All personal units, (iii) P.S.V vehicles(iii) P.S.V vehicles • Plant & Machinery (installed at factories)Plant & Machinery (installed at factories) • Construction Equipment (bull dozers, cranes,Construction Equipment (bull dozers, cranes, excavators)excavators) • Agricultural EquipmentAgricultural Equipment • IT Equipment (only hardware)IT Equipment (only hardware) • Other Specialized Equipment (medical, telecoms)Other Specialized Equipment (medical, telecoms)
  6. 6. Motor VehiclesMotor Vehicles
  7. 7. Specialized EquipmentSpecialized Equipment
  8. 8. Terms of financeTerms of finance New VehiclesNew Vehicles 1)1)Finance up to 90% of cost subject to usualFinance up to 90% of cost subject to usual credit appraisalcredit appraisal 2)2)Maximum tenor of 5 years, PSV up to 4Maximum tenor of 5 years, PSV up to 4 years maximumyears maximum 3)3) Interest rate at base-1%p.a.Interest rate at base-1%p.a. 4)4)Insurance can be arranged together withInsurance can be arranged together with Insurance Premium FinanceInsurance Premium Finance
  9. 9. Terms of FinanceTerms of Finance  USED VEHICLES:USED VEHICLES: 1. Personal units;1. Personal units;  Age- up to 8 years oldAge- up to 8 years old  80% finance80% finance  Five years repayment periodFive years repayment period  Insurance can be arranged together with IPFInsurance can be arranged together with IPF 2. Vehicles for car hire;2. Vehicles for car hire;  Age- up to 6 years oldAge- up to 6 years old  70% finance70% finance  Three years repayment periodThree years repayment period  Insurance can be arrangedInsurance can be arranged
  10. 10. Key NotesKey Notes • Documentation/SecuritiesDocumentation/Securities - Minimum amount of finance Kshs. 300,000/=Minimum amount of finance Kshs. 300,000/= - Securities required by the bank are:Securities required by the bank are: Hire Purchase Agreement (provided by theHire Purchase Agreement (provided by the bank)bank) Joint Registration (NIC Bank & Buyer)Joint Registration (NIC Bank & Buyer) Insurance (available at the bank)Insurance (available at the bank)
  11. 11. Application RequirementsApplication Requirements • Requirements at application stage:Requirements at application stage: • Application form completed & signed by the legal borrowerApplication form completed & signed by the legal borrower • Original bank statements or their certified true copies for theOriginal bank statements or their certified true copies for the latest 6 monthslatest 6 months • Identification or registration documents (including KRA PIN)Identification or registration documents (including KRA PIN) for new borrowersfor new borrowers • Proforma invoices confirming the cost of unit to be purchasedProforma invoices confirming the cost of unit to be purchased • AA Valuation or valuation report from the Franchise holderAA Valuation or valuation report from the Franchise holder (e.g. Toyota Kenya for Toyota units) in case of used vehicles(e.g. Toyota Kenya for Toyota units) in case of used vehicles • For Limited entities- Memos and articles of association, Co.For Limited entities- Memos and articles of association, Co. Pin & Incorporation certificate, IDs/Pins copies of all thePin & Incorporation certificate, IDs/Pins copies of all the directorsdirectors
  12. 12. Sequence of EventsSequence of Events • Application Processing (24 hours TAT)- on provision ofApplication Processing (24 hours TAT)- on provision of all pre-requisite application documentsall pre-requisite application documents • Offer LetterOffer Letter • Documentation (insurance, joint registration, etc)Documentation (insurance, joint registration, etc) • Release or letter of undertaking- client takes possessionRelease or letter of undertaking- client takes possession of the unit followed by payment to dealerof the unit followed by payment to dealer • Re-payment – standing order/Post dated chequesRe-payment – standing order/Post dated cheques

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