This section provides broad
description about different funding facilities
provided from different banks with a list of Nationalise
and Private Banks. For the specific requirement
details, it is suggested to go to the site of
each bank.
Fund
based Bank Facilities
TERM
LOANS: Term loan is an installment credit
repayable over a period of time in monthly/quarterly/half
yearly/yearly installments. Term loan is generally
granted for creation of fixed assets required
for long-term use by the unit. Term loans are
further classified in three categories depending
upon the period of repayment as under:
Short
term repayable in less than 3 years.
Medium
term loans repayable in a period ranging from
3 years to 7 years.
Long
term loans repayable in a period over 7 years.
CASH
CREDIT FACILITY: a major part of working capital
requirement of any unit would consist of maintenance
of inventory of raw materials, semi finished goods,
finished goods, stores and spares etc. In trading
concern the requirement of funds will be to maintain
adequate stocks in trade. Finance against such
inventories by banks is generally granted in the
shape of cash credit facility where drawings will
be permitted against stocks of goods. It is a
running account facility where deposits and withdrawals
are permitted. Cash credit facility is of two
types (depending upon the type of charge on goods
taken as security by bank.)
(i)
Cash credit - pledge: when the possession of the
goods is with the bank and drawings in the account
are linked with actual movement of goods from/to
the possession of the bank. The physical control
of the goods is exercised by the bank.
(ii)
cash credit- hypothecation: when the possession
of the goods remains with the borrower and a floating
charge over the stocks is created in favour of
the bank. The borrower has complete control over
the goods and the drawings in the account are
permitted on the basis of stock statements submitted
by the borrower
OVERDRAFT
FACILITY: Overdrawing permitted by the bank
in current account is termed as an overdraft facility.
Overdraft may be permitted without any security
as 'clean overdraft' for temporary periods to
enable the borrower to tide over some emergent
financial difficulty. 'Secured overdraft' facility
is against fixed deposits, NSC, and other securities
BILLS FINANCE: This
facility is against bills of sales raised or book
debts.
EXPORT
FINANCE: Banks grant export credit on very
liberal terms to meet all the financial requirements
of exporters. The bank credit for exports can
broadly be divided in two groups as under:
1. Pre
Shipment advances/packing credit advances: Financial
assistance sanctioned to exporters to enable them
to manufacture/procure goods meant for exports
and arrange for their eventual shipment to foreign
countries is termed as pre shipment credit.
2.
Post shipment credit the bills purchase/discount
facility granted to exporters is grouped as post
shipment advance.
Non
- Fund based Bank Facilities
Credit
facilities, which do not involve actual deployment
of funds by banks but help the obligations to
obtain certain facilities from third parties,
are termed as non-fund based facilities. These
facilities include issuance of letter of credit,
issuance of guarantees, which can be performance
guarantee/financial guarantee.
