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FUNDING OPTIONS
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.
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.
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.
- National Level Financial
Institutions
- State Financial
Corporations Offering Specialised SSI Schemes
- Venture Capital
Organisations
- Other Banks Offering
Financial Assistance
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