fund based lending

8/3/2019 Fund Based Lending

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Fund Based LendingFund Based LendingFund Based LendingFund Based Lending

Koustubh JoshiKoustubh JoshiKoustubh JoshiKoustubh Joshi


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Lien

It is a right of creditor (bank) to retain the

properties belonging to the debtor (borrower)until the debt due is repaid.

e e e e e esecurities of the customer in respect of the

general balance due from the customer. The

ownership of such securities is not transferredfrom the customer to the banker.


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Under the negative lien the banker does not get

the right to retain any asset of the borrower.The borrower submits declaration to the

any charge.


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Pledge

A pledge occurs when goods are delivered (in

the possession of) to the bank and the goodspledged will be returned to the borrower on

. ,

as security for the loan.

A borrower is called the bailor or pledger and

the banker is called the bailee or pledgee.


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Goods which are of movable nature are pledged to

the bank. Charge on shares, debentures, fixed deposit

receipts, units of UTI and National SavingCertificates can be created by the bank by way of

a pledge. Transfer of possession, is compulsory in case of

pledge, though ownership continues to remain

w t t e p e gee. If the borrower fails to repay the loan within the

stipulated time, the banker can sell the securitypledged by giving reasonable notice to the pledgeror he may file a suit against the pledger to recoverthe debt and retain the property pledged assecurity.


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Mortgage

Immovable property like land and building,

plant and machinery is offered as security, tocover the advance, the charge should be

.

instrument by which the transfer is effected is

called a mortgage deed.

Ownership and possession of the propertyremains with mortgagor.


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Mortgage can be classified as legal mortgage and

equitable mortgage. In case of legal mortgage, the

mortgager transfers legal title to the mortgaged

property in favour of the mortgagee by a deed.

However, in case of equitable mortgage, the

mortgager transfers the documents of title to

mor gagee or e purpose o crea ng anequitable interest of the mortgage in the property.


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Hypothecation In case of hypothecation a charge over the

movable property is created for an amount where

neither ownership nor possession is passed on tothe bank. A charge over movable properties likeoods, vehicles, raw materials can be created.

There is a high risk of multiple financing by twoor more banks against the same goods. This isovercome by putting up a board to indicate that

the stocks are hypothecated to a specific bank atthe place where the stock is stored.


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It is the transfer of any existing or future right,

property or debt by the borrower to the bank forloan. The person who assigns the property is

called assignor and the person to whom the

property is assigned is called assignee.Normally, assignments are made of actionable

claims, such as book debt, insurance claims, etc.

All assignments except that of an insurance policy

attract ad valoram stamp duty.


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By creating a charge by assignment, the

assignee gets total control over the assigneesclaim and therefore, he is entitled to top

.


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Term Loans

Short and Medium Term Loans

With effect from April, 1997, stipulations for

obligatory formation of consortiums for

e e e .crores were withdrawn. Banks are now free to

provide need-based finance required by

borrowers on their own, subject to observanceof exposure norms or with other banks.


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Bridge Finance

There is always a time gap between the date of

sanctioning and its disbursement by thefinancial institution to the concerned

.

taken by a company from commercial bank,

pending disbursement of term loan from the

financial institution.


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The bridge finance is secured against mortgageof fixed assets or hypothecation of movable

properties of the borrowing companies. The

rate of interest on such a finance is usuallyhigher than that of term loans.


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Loan syndication

Two or more banks agree to finance a

particular project. One of the bank or financial

institution may become a lead institution.

er ypesCash Credit

Overdraft

Bill Discounting


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This power Point Presentation is for

Understanding of Subject

It is Highly recommended that Students

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