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Types or Nature of Advance:  

Types:

The credit facilities granted by the bank are classified under different account heads as under :

  • Loan (Like short / mid / long term in nature)
  • Overdrafts (allowing frequent debit / credit transactions within an agreed limit).
  • Trade related credit facilities (like bills port folio)
  • Short Term Advances (like continuing facilities)
  • Contingent facilities (like Letters of Credit, Letters of Guarantee etc.)
  • Others, if any

 

Generally all facilities, except term loans are repayable on demand. Trade related credit facilities are self-liquidating in nature.   Cash Credit / Overdrafts are reviewed annually or at regular intervals in case a closer monitoring of the accounts is necessary.   Contingent liabilities are also self-liquidating in a broader sense. The credit worthiness of the client on whose behalf the liability is assured is very important.   The different account heads appearing in the Statement of Affairs of the branch, JBL, are categorized as under :

 

Continuing Advances :

Usually the forms of continuing advances are as under :

 

Secured Overdraft (including Collateralized overdraft one)

Cash Credit

Loan Against Trust Receipt (LTR)

Loan Against Imported Merchandise (LIM)

Export Cash Credit (ECC).

 

Loans :

  • Loan General (usually short term in nature)
  • Transport Loan
  • House Building Loan
  • Term Loan (Industrial/ project financing)
  • Bridge Loan/ Underwriting advance
  • others
  •  
  •  Demand Loan :
  • Advance Against Accepted Documentary Bill (Local / foreign)
  • Local / Foreign Documentary Bills Discounted / Purchased.
  • Payments Against Documents (PAD)
  • Inland / Foreign Bill Purchased (Clean)
  •  Continuing facilities :

 

Brief particulars of loans & advances

FacilityDescriptionSecurity Support
Secured / Collateralized Overdraft (SOD / OD)Facility is allowed against easily marketable / Govt. approved instruments (like FDRs, BSPs/ PSPs, Unit certificates etc.) or against security of land/ property acceptable to the bank(a)    Pledge of instruments duly discharged (b)   Equitable/ registered mortgage of land/ property.
Cash CreditFacility is allowed for financing inventory may be either hypothecated or pledged to the bank as primary securityLetter of hypothecation/ pledge of Goods
Loan against Trust ReceiptFacility is allowed to facilities delivery of goods against retirement of documents of Title to Goods. The client is under obligation to pay the outstandings out of the sale proceeds of the goods.A standard form called “Trust Receipt”
Loan against Imported Merchandise (LIM)Facility is allowed against documents received against L/C released to an approved clearing agent at the request of the client. Goods must be stored in a secured area of the godown under effective control if they are kept on the borrower’s premises.Letter of pledge of Goods.
Export Cash Credit (ECC)Facility is allowed to exporters to facilitate purchase of raw materials for the purpose of manufacturing and exporting finished goods.Letter of pledge of goods (under bonded facility)
Loan (secured, mortgages, bonds and shares, other marketable securities)Facility is allowed for various purposes for acquisition of fixed and granted for short, mid or long term purposesEquitable/registered mortgage of tangible fixed assets
Demand LoanLoan which is payable only on demand (like PAD, IBP, Forced Loan, etc.)(a)    Documents of Title to Goods (b)   Accepted documentary bills
Letter of Credit (sight / usuance)Letters of Credit for importation of capital machinery or commodity are called sight L/C as the draft to be drawn at sight. Drafts drawn under usuance are for a tenure specified in the L/C and payable by the client in due dates.Cash Margin
Letter of Credit (Back to Back)This type of Letters of Credit is backed by master export L/C for export of garments to overseas market.Lien over master L/C of 1st class of banks acceptable to JBL
Letters of Guarantee (Bid, PG, APG)Usually guarantees can be classified under two heads (a) Financial Guarantees towards fulfillment of financial commitment on behalf of the client, (b) Performance Guarantee when the bank guarantees the performance of the client as specified in the guarantee.Margin in the form of Cash and / or FDR
Letters of Guarantee (Shipping)Bank issues guarantees in favour of the shipping company to enable the importer to obtain delivery of the goods without producing the Bill of Lading.100% built-in margin

 

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