Types of Advance

Types of Advances

 

Demand Finance

One time disbursement of the whole amount sanctioned, as the limit for the credit allows. Any person, individual, group, company, firm and all others can achieve this mode of financing. The mark-up or interest is calculated on the total amount disbursed and requires to be paid before the date of final adjustment. Regarding the amount, limit and period, it depends on the nature of the case in review.

Cash Finance

In this mode of financing the borrower is allowed to make withdrawals of funds as he requires, but the total amount outstanding cannot exceed the limit sanctioned. The mark-up/interest is calculated on the amount outstanding on his account. The calculation of mark-up/interest is based on the number of days a specific amount is withdrawn. This finance if normally borrowed by small traders or individuals for their petty matters involving cash transactions up to rupees three hundred thousand maximum.

Running Finance

To assist a large-scale business operator to carry on his day to day requirements of liquid funds, this account is opened is made operation in his favor. Running finance is provided where the amount goes beyond rupees three hundred thousand. The mark-up/interest is calculated the same way as in case of cash finance.

Security against running finance is that which is easily convertible in to cash and bank kept 25% margins with it.

In Credit department 1st step is to preparation of credit line proposal for the preparation of credit report. For this following information required by the bank from the party

      Purpose of loan

      Details of all firms or companies associated with business

      Name of proprietor/ partner/directors

      Accurate and up-to-date balance sheet and profit and loss statement of last two years of business

      Market report of the borrower repute

      Report from the bank if borrower has maintain his account with the bank

      CIB report

      Full details of existing limit and actual liability against the business

      Particular about the foreign exchange deposits and bills given by the borrower to the bank

      Memorandum and article of association in case of limited company

      Audited report of balance sheet and income statement of last two years

After checking all the securities, customer verification the manager done the following tasks

1. Preparation of credit proposal

2. Prepare the report about the customer

3. Sanction of loan