Bank Financing:

Financial Products &

Services
ORGANIZATIONAL GOAL IS USUALLY MAXIMUM PROFIT
DIFFERENTIAL

PROFIT
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NEW E
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INNOVATION
Challenge in Banking

Banking is an art of striking a

balance between Risk and

Revenue.
[Swiss Banking Corporations Credit Manual]
FAST CHANGING BANKING CULTURE
Customers demand more extensive, competitive and
Innovative Lending Services

Wide-spread use of Computers is Reshaping the

Economy as well as Banking

Though Lending Principles remain unchanged but

techniques, processes and methods have undergone
dramatic changes
Impact of Governments Policies
SBPs Direct and Indirect Controls
Impact of Technology
Financial Statements Analysis
Credit Checks and Monitoring
Funds Disbursement
 TYPES OF DEPOSITS

DEPOSITS CAN TAKE DIFFERENT FORMS,

FOR EXAMPLE
DEMAND DEPOSITS
PLS Saving Account Deposits
Current Deposits
TIME DEPOSITS
Special Notice Time Deposits
PLS Term Deposits
PLS Term Deposits Khas
Call Deposits
 TYPES OF FINANCES
FINANCES CAN TAKE DIFFERENT FORMS, FOR EXAMPLE
FUND BASED FINANCES
NON FUND-BASED FINANCES
TRADE FINANCES
Export finances
Import finances
SECTORAL FINANCES
Agricultural finances
Industrial finances
Housing finances
Transport finances
BRIDGE FINANCES
CONSUMERS FINANCES
CONSORTIUM FINANCES
MAIN CREDIT PRODUCTS
FUND BASED FINANCES
RUNNING FINANCE
DEMAND FINANCE
CASH FINANCE
TRADE FINANCES
EXPORT RE-FINANCE
Preshipment
Post shipment
Part I & Part II classification
FAFB ( Finance Against Foreign Bills)
FAPC ( Finance Against Packing Credit)
IMPORT FINANCES
PAD ( Payment Against Documents)
FATR ( Finance Against Trust Receipt)
FIM ( Finance against Imported Merchandise)
FIXED ASSET FINANCE
LMM ( Locally Manufactured Machinery)
AGRICULTURE FINANCE I) Production ii) Development
MAIN CREDIT PRODUCTS

NON FUND BASED FINANCES:

LCs ( Letters of Credit)

LGs ( Letters of Guarantee)

RUNNING FINANCE:
A SHORT TERM FINANCE FOR A MAX. PERIOD OF
ONE YEAR

USUALLY FOR WORKING CAPITAL NEEDS

ADJUSTABLE ONCE IN 30/60/90/180 DAYS AS PER

TERMS OF THE SANCTION ADVICE;

MARK UP IS CHARGED ON QUARTERLY BASIS AS

PER BANKS TARIFF

TERMS OF FINANCE CAN CHANGE ACCORDING

TO BANKS POLICY AND SBP RETRICTIONS
RUNNING FINANCE:
COLLATERALS
> Hypothecation of Goods
> Bank Deposits with prescribed margin requirements (25%)
> Govt. Securities with prescribed (25%) margin on encashment value.
> Accounts Receivable with prescribed margins
> Approved, Listed Shares with 50% margin or more if so prescribed by
SBP or the HOK
> Legal or Equitable Mortgage of Property after:
> Proper evaluation
> Clearance
> Retaining sufficient margin
> Obtaining Token Mortgage in case it is equitable
> Life Insurance Policy collaterally with other securities with 25% margin
RUNNING FINANCE:
PRECAUTIONS
Ensure Quality of Collaterals and their proper charging .

Obtain CIB Report if amount exceeds Rs.0.5 million

Monitor transactions to ensure proper utilisation of funds

Charge must be got registered with Registrar in case of a Limited

Company

Take necessary precautions according to the nature of security

CASH FINANCE
AN AMOUNT IS SANCTIONED AND BORROWER CAN DRAW AND ADJUST
UPTO THAT CEILING AT HIS OWN WILL

FACILITY IS OF CONTINUOUS NATURE AVAILABLE UNTIL THE LIMIT

EXPIRES

MUST BE ADJUSTED ON EXPIRY

PRIMARY SECURITY IS GOODS / INVENTORY. OTHER SECURITES CAN

ALSO BE CALLED

USUALLY ALLOWED TO MANUFACTURERS / PRODUCERS OF GOODS /

CROPS

MAX. PERIOD IS ONE YEAR

MARK UP ON QUARTERLY BASIS

TIMELY STOCK REPORTS AND PHYSICAL VERIFICATIONS ARE

IMPORTANT
 Operation in Running Finance / Cash Finance

EOL
Credit Line (Limit) of Rs. 5m.
Amount

Adjustment
Period of time
DEMAND FINANCE
USED TO CATER TO VARIOUS REQUIREMENTS OF THE
BORROWERS
USUALLY FOR ONE YEAR EXTENDABLE
REPAYMENT IN INSTALMENTS OR IN LUMP SUM AS PER
TERMS
ONE TIME FACILITY DISBURSED IN FULL
MARK UP IS CHARGED ON OUTSTANDING BALANCES AS PER
BANKS TARIFF
CIB REPORT WILL BE NEEDED IF AMOUNT EXCEEDS RS.0.5
MILLION
TAKE NECESSARY PRECAUTIONS ACCORDING TO THE
NATURE OF THE SECURITIES AND NATURE OF THE BORROWER
 Operation in a Term / Demand Finance

Amount of DF Disbursed in Lump Sum

Period of Loan Adjustment

FIXED ASSETS FINANCE(FAF)
USUALLY A MEDIUM OR LONG TERM FINANCE
FOR PURCHASE OF FIXED ASSETS
OR BMR
ASSET BEING FINANCED IS CHARGED ALONG OTHER
COLLATERALS
REPAYMENT USUALLY SPREAD OVER THE LIFE-SPAN
OF THE ASSET
FINANCING USUALLY FOR A NEW ITEM AND PROPER
VALUATION IS ENSURED
PAYMENT IS MADE BY THE BANK DIRECTLY TO THE
SUPPLIER
LONG TERM FINANCE REQUIRES MORE STRINGENT
MONITORING
 LOCALLY MANUFACTURED MACHINERY (LMM)
INTRODUCED BY SBP AS AN INCENTIVE TO:
Use locally manufactured machinery
Promote purchase & use of new machinery
To promote local industrial base

BANKS CHARGE CONCESSIONARY MARK UP AND SBP

PROVIDES REFINANCE AT FURTHER REBATED RATE

NO MIN. OR MAX. LIMITS

FOR A MAX. PERIOD OF 12.5 YEARS INCL. GRACE PERIOD

ALLOWED EITHER FOR A NEW INDUSTRIAL VENTURE OR FOR

BMR

A COPY OF REPAYMENT SCHEDULE TO BE SUBMITTED TO SBP.

ANY DEFAULT WILL INVITE PENALTIES.
LOCALLY MANUFACTURED MACHINERY (LMM)
AMOUNT OF FINANCE
100% if totally manufactured locally
100% if value of imported components < 120% of
locally quoted price
Difference of the FOB value of Local Machinery and
CIF value of the imported components if such value is
over 20% but upto 80% of the FOB value of machine.

SELECTION OF MACHINERY THROUGH COMPETITIVE BIDS.

Three quotations if amount is upto 10m
Open Bids through a leading Newspaper if amount exceeds
Rs. 10m

PRIMARY SECURITY IS THE MORTGAGE OF MACHINERY

ITSELF, COLLATERALLY COVERED BY OTHER SECURITIES
ALSO
HOUSING FINANCE
LONG TERM FINANCE ALLOWED TO
INDIVIDUALS:
For Construction of a House
For outright purchase of a House
For Renovations

CLEAN OWNERSHIP OF PLOT OR VALID

LEASEHOLD LAND RIGHTS FOR MIN. 10 YEARS
BUT NOT LESS THAN THE TENURE OF FINANCE

REPAYMENT IN 20 YEARS INCL. 1 YEAR OF

GRACE PERIOD( Allowed in case of construction
only) IN PERIODICAL INSTALMENTS
 Amount of Finance:
Rs. 0.3 mn - Rs.15.0 mn (For outright purchase)
Rs. 0.3 mn - Rs 0.5 mn
(Improvement/Renovation)
Rs. 0.3 mn - Rs.15.0 mn (Self Construction-
already owned residential plot)
Tenure:
3 20 yrs. Grace period of 12 months (in case of
Self Construction-already owned residential plot)
NON FUND BASED FACILITIES -LGs
AN IRREVOCABLE UNDERTAKING OF THE ISSUING BANK TO
PAY TO THE BENEFICIARY A CERTAIN SUM OF MONEY IN THE
EVENT A THIRD PARTY ( PRINCIPAL DEBTOR) FAILS OR
REFUSES TO PERFORM A CONTRACTUAL OBLIGATION BY A
SPECIFIC DEADLINE.

USUAL PARTIES ARE THE CREDITOR, THE PRINCIPAL DEBTOR

AND THE SURETY.

ARBITRATION OF DISPUTES ACCORDING TO THE LAWS OF

THE ISSUING BANKS COUNTRY

MUST BE ISSUED TO PARTIES OF SOUND INTEGRITY AND A

CLEAN TRACK RECORD
PRECAUTIONS TO BE TAKEN IN CASE OF LGs
SECURE YOUR POSITION BY:
Getting the formats of guarantee and counter
guarantee cleared by the law cell of the bank.
Obtaining a suitable counter guarantee
Obtaining 100% ( or any suitable) cash margin
Limiting the amount and validity of the LG
Inserting a Exchange Fluctuation Clause in case LG
denominates in FC
Obtain all other securities usual to a finance
Recall the expired / unutilised LGs
 Export Financing

Financing against Foreign Bills (FAFB)

Foreign Bills Discounted (FBD)

Foreign Bills Purchased (FBP)

Packing Credits

Export Financing / Refinancing Scheme

 Financing Against Foreign Bills (FAFB)
Situation: Export documents are drawn (preferably under LC) ,
they are in order and deposited with the bank:
For collecting the proceeds
Or for obtaining the acceptance of the IB
and exporter wants finance for the interim period.

Facility is allowed to trustworthy parties

Collection Bills to be drawn on reputed creditable banks
Past experience tells that the bills are realized in time
Value in rupees in converted at spot rate for sight and forward rate
for DALC
Keep sufficient margin (20-30%)
See if tenure is within banks standard policy
Secure yourself with other collaterals
 Advantage to Exporter under FAFB
In case of FBP and FBD, exporter sells the bill up-front and any
devaluation or revaluation of currency is not going to benefit or
harm him as he has already parted with the bill.

In FAFB the bill remains the exporters property and bill

proceeds are received for exporters account. Exporter gets
proceeds amount minus amount of FAFB and mark-up thus the
benefit of any devaluation or depreciation passes to the exporter
and not to the bank.

Under present situation when rupee is likely to gradually lose

against foreign currencies, the exporters prefer FAFB over FBP
and FDB.
 Foreign Bills Discounted (FBD)
Essentially against drafts accepted by IB
Provided the term of credit is acceptable (tenure).
Provided the IB is good one
Provided your experience :
with the exporter
and with the bank is also good
Provided collaterals, if required, are available.
Provided you have a recourse to the IB and the exporter
Provided country and currency risk are covered
 Packing Credits (FAPC or PCF)

Essentially a pre-shipment finance

Maybe allowed by the IB in the form of :
Red Clause or Green Clause LCs
The NB can also allow Packing Credit Finance
LC is retained by the Financing Bank marked under lien
Finance allows the exporter to buy the goods and prepare
shipment
Amount is adjusted from the negotiation proceed / repatriated
funds.
 FOREIGN BILLS PURCHASED (FBP)

Authorised Dealer branches of various banks

purchase documents drawn under export letters of
credit.
Before purchasing documents following points are
taken into account,
Letter of credit is issued by first class /
trusted bank.
LC is available at your counter.
Exporter is your account holder.
Submitted documents strictly conform LC
terms.
 Exporter is otherwise eligible for the
transaction.
Submitted documents do not violate foreign
exchange regulations.
Various information on documents is in
consistence with that on the E form.
 EXPORT REFINANCE
SALIENT FEATURES
Introduced by SBP in 1973.

To provide concessionary finance to exporters for

promotion of exports of non traditional and
newly emerging commodities.

Subsequently scope of scheme was enlarged to

include all manufactured goods.
In October 1977 the scheme was divided into two
parts, Part I, & Part- II.

Under Part I finance is allowed on case to case

basis.

Under Part II, finance is allowed on revolving

basis, upto 50% of the proceeds realised during
the previous year, and exporter is required to
realise export proceeds equal to 2 times the
finance availed in current year.
In case of exporters failure to realise matching
proceeds, non/short performance fine is imposed
by SBP.

Previously the scheme only provided incentives to

direct exporters and the entities which are
responsible for completion of product actually
meant for export, were ignored.

ERF scheme was later revised to make it available

to indirect exporters, or the entities who supply
exportable items to the direct exporter.
ERF scheme has since been revised to allow small,
medium, emerging, and indirect exporters, to avail
benefit of the scheme.

Government also intends to introduce Preshipment

Export Finance Guarantee (PEFG) scheme to be
administered through a new corporate entity.

Cover obtained under PEFG scheme by the exporters

would provide substitute for collateral requirements of
the banks and thus hedge the financing risk of
commercial banks.
Exporter can avail the facility in both the
parts, provided facility availed under one part
is not in duplication of the facility availed in
the other part.

Indirect exporters can also avail ERF under

both the parts.

Facility is available for all eligible items only.

Aggregate period of financing to both Direct

& Indirect Exporters does not exceed 180
days, under both the parts.
Mark up @7% p.a and paid to SBP @ .5 5%

remaining 1.5 % is retained by the

Authorised Dealer (lending bank) as their
share.

Under part II credit on revolving basis, to

Indirect Exporter, is not allowed.
Under part II finance facility to Indirect
Exporter shall be provided on specific order
basis, and against establishment of Inland
Letter Of Credit / issuance of Standardised
Purchase order.

Under Part II the borrowing entitlement

and performance requirements shall be
applicable in respect of Direct Exporter only.
Operation Of Export Refinance Scheme

Part - I Part - II

Pre Shipment
Post Shipment
ERF, Part I
Pre Shipment,
Finance is available to Direct Exporter
against LC / Firm Export Order received
from overseas buyer.

In case Direct Exporter has financial needs

for inputs, he will advise such needs to his
bank.

DEs bank will open Inland LC in favour of

Indirect Exporter, who is entitled to avail
ERF from his bank against such ILC.
 Indirect exporter provides export inputs to
direct exporter under ILC and ERF obtained
by IDE is adjusted / repaid to SBP on
negotiation of the ILC.

Finance to indirect exporter is also exempt

from per party clean facility restrictions as
defined in Prudential Regulation no.III of
SBP.
Procedure:-
Finance to Direct Exporter,

Direct Exporter receives Export LC or Firm

order from the overseas buyer, and
approaches the branch maintaining his
account.

ERF I (Preshipment) limit is processed/

sanctioned in accordance with credit policy of
the bank.
Branch scrutinizes partys request to see
that,
ERF I (Preshipment) limit is valid, and
cushion for present request exists
Export LC / Firm order is valid.
Item to be exported is eligible for ERF.
Exporter is beneficiary of ELC / Firm
Order.
 Export LC is otherwise eligible for
negotiation.
Export LC is issued by a bank who is our
correspondent.
Sufficient margin, as prescribed in ERF
Sanction advice, is available in the Firm
Order.
No overdue finance on account of the
borrowing exporter is existing.
Branch will disburse finance to exporter Main
Branch will submit application to SBP, along
with prescribed documents obtained from
exporter, for obtaining refinance.

SBP releases the amount of refinance within 48

hours from receipt of application, by crediting
account of main branch.
Repayment by Direct Exporter,

Direct exporter is required to make shipment

and repay the finance within 180 days or on
negotiation / realisation of export bill which
ever is earlier.

In case, exporter fails to ship the goods under

LC / Firm order against which he has obtained
finance under ERF scheme, he is allowed to
substitute such LC / Firm order with another
within the same prescribed period of 180 days.
 Direct exporter is liable to submit proof of
shipment under LC/Firm order against which he
has obtained ERF, within 30 days from last
date of shipment or expiry of finance which
ever is earlier.

In case shipping documents are not received by

SBP within 30 days from expiry of finance, fine
at prescribed rate is recovered from the
exporter.

The fine so recovered is refunded upon

submission of the documents after adjusting
fine, on account of delayed / short shipment,
availing grace period of 30 days
 Following shipping documents are submitted , to
SBP as proof of shipment,
Invoice covering finance amount.
Copy of transport document showing on
board date.
Duplicate copy of E Form carrying
signatures of custom appraisal.
Certificate from exporter , that he has not
availed any refinance other than this against
the shipment under reporting from any other
bank, or in duplication under any part of the
scheme.
After shipment, either exporter presents
documents for negotiation under LC, or submits
export documents for collection.
Within 3 working days from credit of exporters
a/c, either on negotiation or realisation of
collection bill, or from expiry of refinance, the
amount of refinance along with mark up is
repaid to SBP.
Mark up is recovered from exporter @ 7% p.a
and paid to SBP @ 5.5%
Finance to Indirect Exporter,
ERF limit for Indirect Exporter shall be
processed as is done in case of direct exporter.
Subject to cushion available in the valid limit,
IDE shall apply for finance on prescribed form.
Information regarding indirect exporter shall be
tallied with that provided by direct exporter.
Along with, application, IDE shall provide
following documents,
o Inland LC/Standardised Purchase order.
o DP note covering amount of ILC.
o Undertaking on prescribed form.
o Preshipment Export Finance Guarantee Cover
, if any.
o PEFG, is launched on 16th July 2001. Till its
implementation commitment of direct
exporter shall be sufficient for bank to
release finance to IDE.
Main Branch will submit application to SBP, on
prescribed form, along with documents obtained
from exporter as mentioned above, for obtaining
refinance.
SBP releases the amount of refinance within 48
hours from receipt of application, by crediting
account of main branch.
Similar entries as in case of ERF to direct
exporter, shall be passed by the disbursing
branch and the main branch.
The finance allowed to the IDE, along with mark
up thereon, shall be adjusted upon delivery of
inputs, and payment of documents drawn under
ILC / Purchase order or at the expiry of period
of 120 days which ever comes earlier.

The indirect exporter is required to produce to

banker of direct exporter,the following
documents evidencing utilisation of finance,
Invoice in favour of DE.
Evidence of receipt of goods by DE.
ERF, Part 1,
Post Shipment
Finance is available to Direct Exporter
against export documents under which he has
already made shipment, of goods eligible
under the scheme.
Like pre shipment finance, limit for post
shipment finance is also processed /
sanctioned as laid down in credit policy
manual.
Exporter submits export documents, with the
concerned branch, for collection from
importers country.
 Documents may be against firm order or
under export LC.
Documents under LC, fully complying LC
terms, may be sent on collection basis on the
request of exporter.
Branch lodges documents in Foreign
Documentary Bills For Collection.(FDBC)
Exporter requests for Post Shipment finance
against submitted documents.
 Branch scrutinizes partys request to see
that,
ERF I (post shipment) limit is valid, and
cushion for present request exists
Exported item is eligible for ERF.
Export documents have been lodged in
FDBC.
Exporter is beneficiary of export
documents.
 Exporter has not obtained any other finance
against the involved LC / Firm order under
the scheme.
No overdue finance on account of the
borrowing exporter exists in the branch .
Borrowing exporter is not defaulter of any
other bank or branch of our bank.
SBP releases amount of refinance within 48
hours from receipt of complete application
from the AD
Repayment of ERF Post shipment,

Like pre shipment , post shipment finance is also

repaid to SBP within 3 working days from expiry
of the finance or repayment by the exporter,
which ever comes earlier.

Finance is recovered from exporter immediately

from the realisation proceeds of the export bill.

Max. period of finance is 180 days from

shipment,but restricted to receipt of export
proceeds or tenor of the bill which ever is earlier.

Mark up is recovered from exporter @ 13% p.a

and paid to SBP @ 11.5%
Export Refinance Part II
Salient Features,
Finance is allowed for export of eligible goods
only, on revolving basis for 180 days

Direct exporter is entitled to avail finance limit

equivalent to 50 % of his export performance
during the preceding fiscal year (from July
June).

Finance is allowed subject to sanction of finance

limit, on the basis of statement EE-1 , in terms
of banks credit policy.
Finance is also allowed to Indirect Exporter, for
supply of export inputs to direct exporter.

Total amount of finance allowed to direct & indirect

exporters shall not exceed the entitlement of the
direct exporter as stated above.

Direct Exporter availing finance under the scheme

shall be under obligation to repatriate export
proceeds from export of eligible goods equivalent to
2 times of the daily average finance availed by him.
Disbursement shall be in the manner as is done in
ERF Part 1.

Direct exporter who has availed ERF II shall

submit form EF 1 after close of respective
monitoring year, but not later than 31st August,
evidencing that export proceeds equivalent to
double the amount of availed finance,has been
realised.

Respective branch shall forward EF 1 statement

to Foreign Exchange Dept. of SBP, who shall return
after verifying the reported transactions.
Matching the required performance with availed
finance ,remains obligation of the borrowing
exporter, however indirect exporter, remains
obliged to provide inputs, on case to case basis,
for the amount of finance he avails against
inland LC / purchase order.

Indirect exporter can avail the finance for

supply of inputs which are eligible for finance
under the scheme.
 Fines imposed by SBP under ERF:-

Under part I Indirect Exporter fails to supply inputs

as per schedule of delivery to direct exporter or
Direct Exporter fails to ship the goods.
Fine: Paisa 37 per day per/ Rs.1000 or
part thereof.

In case of delay in supply / shipment of goods, fine

shall be charged for period of delay only.

Under part II, Direct Exporter fails to match

required performance with the finance availed.
Fine: Paisa 37 per Rs 1000 or part of the
borrowed products.
 Under part II, Indirect Exporter fails to supply
inputs
Fine: Paisa 37 per day per Rs.1000 or
part thereof on entire finance
amount.

In case of delay in supply / of inputs, fine shall

be charged for period of delay only.

Bank fails to deposit amount of repayment within

3 days.
Fine: Paisa 60 per day per Rs1000 or
part thereof till repayment.
 Excess availment fine, if finance under part II
is allowed in excess of exporters entitlement.
Fine: Paisa 60 per day per Rs.1000 or part
thereof.

Any other default by Direct / Indirect exporter.

Fine: Rs 2000 per day of default.
 AGRICULTURE FINANCE:
CLASSIFICATION OF AGRI FINANCES

A. Purpose-Wise:
1) Agri production finances.
2) Agri development finances.

B. Term-Wise:
1) Short-term Finances: The advance to be adjusted within one
year from the date of advance for all crops except sugarcane
(Rabi) which is repayable within 18 months.
2) Medium-term Finances: The advance to be adjusted within a
period of 3 to 5 years from the date of advance.
3) Long-term Finances: The advance to be adjusted within a
period of 5 to 7 years from the date of advance.
 CLASSIFICATION OF AGRI FINANCES

C. Sector-Wise:

1) Farm credit.
2) Non-farm credit.

D. Season-Wise:

1) Rabi Financing: Allowed for rabi crops from 1st September to

31st January of next year.
2) Kharif Financing: Allowed for kharif crops from 1st February
to 31st August.
 AGRICULTURAL PRODUCTION FINANCE

SALIENT FEATURES

Facilitates for all categories of farmers needing agri production

finances as per their requirement.
A running finance limit is sanctioned for 3 years.
The amount of limit is determined on the basis one year credit
requirements for purchase of inputs for crops grown on the land
cultivated by the borrower.
Usual application forms are used for the running finance facility.
Spot verification report (on prescribed format) of AFO remains the
part and parcel of the limit proposal.
 AGRICULTURAL PRODUCTION FINANCE
Total input requirements of all crops grown during a year are
calculated in consultation with the farmer.
Limits are approved as per powers delegated at RGM/RCE & HOK
level.
Documentation is done once in three years for the total period of
finance.
Finance can be secured primarily by creation of banks charge on
agri-land, through agri-pass book system, on market value/realizable
basis, and or against rural/urban property,DSC, NSCs, Bank deposits,
Bank certificates etc.admissible under Supervised Agricultural Credit
Scheme acceptable to bank.
While financing against rural/urban property/including land shown in
agri.Pass Book a minimum margin of 40% on the average sale value
of last 3 years has to be maintained
While financing against cash collateral a margin 25% of the
encashable value of the cash collateral has to be maintained.
 AGRICULTURE DEVELOPMENT FINANCE
SALIENT FEATURES
Agri development finances are allowed for different agri items as
specified by SBP
No maximum limit has been fixed and it depends upon the genuineness
of requirements and the value of security offered and feasibility of
project.A minimum debt equity ratio of 80:20 has to maintained in all
cases except tractor finance for which this rationo is 90:10.
Finances are allowed as short, medium and long-term credits.
The finances can be made against the following securities:
Creation of banks charge on agri land shown in the applicants pass
book, within revenue authorities.
Registration of tractor under HPA should be done in joint name of the
bank and farmer/customers with the local excise and taxation
department.
Any other collateral acceptable to the bank e.g. mortgage of urban
property and/or tangible and readily encashable security like NIT
units,NSCs DSCs, TDRs, Bank deposits, bank certificatessubject to
prescribed marginal requirements.
 AGRI-DEVELOPMENT FINANCES (B)
Tractor Financing:
Maximum period of finance is 7 years.
The finance is secured against banks charge under agri pass
book/mortgage of rural/urban property or cash collaterals with
tractor registered in joint name of the bank and the party.
Minimum Debt: Equity ratio to be observed is 80:20.However in
case of cash collateral no equity is required.
Repayment is to be made through half yearly or yearly instalments
as the case may be.
The tractor is to be got comprehensively insured.
The tractor is to be booked/registered in joint name of the bank and
the party.
In case of timely adjustment of all installments of tractor finance a
rebate of one percent(1%) shall be available for all paid installment
at the time of final adjustment of finance as prompt payment
incentive
Bank Financing:
Financial Products &
Services

Thank You