Non Fund Based Facilities

Issuance of Bank Guarantee for purchase of machinery or goods on credit

Eligibility

Existing customers of the Bank and whose past dealings have been found satisfactory Normally, this type of guarantee is required by the customers when he desires to purchase machinery or goods on credit. The Deferred payment Guarantee contains an undertaking on the part of the Bank to guarantee due payment of the deferred instalments by the customers on the due date and declare that in the event of default in payment, the bank would make the payment.

Period of Guarantee

For a period up to 5 to years. In exceptional cases it may be extended for a maximum period up to 10 years on merits of each case.

Margin

25% cash margin on the cost of machinery/equipment to be acquired less initial advance paid to the supplier plus interest portion i.e. on the DPG amount.

Rate of commission

Rs.100+0.75% per quarter or part thereof with a minimum of 3% is the normal rate of metropolitan, urban and semi-urban branches.

For rural branches the rate of commission is Rs.80+0.75% per quarter or part thereof with a minimum of 3%.

In respect of DPGs secured by 100% cash margin or by 100% term deposits, only 25% of the applicable rate on issue of such guarantee with a minimum of Rs.28 only, are leviable.

Security

Security provided for the guarantee may be in the form of our own deposits or other acceptable tangible security, such as GP Notes, Insurance Policies having adequate surrender value and easily marketable shares.

Mortgage of immovable property may be accepted as security only in exceptional cases where customers are well known, provided at least 25% of the guarantee amount is covered by cash margin.

In addition to the counter guarantee and collateral security, an indemnity Policy of Insurance company is also insisted upon.

Issuance of Bank Guarantee in Liew of Security Deposit / EMD / Performance Guarantees

  • Guarantees in favour of Government departments, such as Railways, PWD, etc who may require guarantees from their contractors in lieu of tender money or performance of contracts to supply goods, etc.
  • Sales tax/Income tax Authorities in respect of payment of taxes.
  • Companies of repute towards payments in respect of supply of materials
  • Suppliers of machinery and plants on deferred payments basis require bank guarantees in respect of instalments and interest payable by their purchasers.
  • Guarantees in favour of the Coffee Board in connection with renewal of the pool sales permit for participation in the pool sales by dealers.
  • Guarantees are issued to Railway Authorities or Shipping companies to take delivery of relative goods without production of RRs and Bills of lading and undertaking to produce them on receipt.
  • Besides the above, several other commercial transactions involve execution of bank guarantees.

Security

Security provided for the guarantee may be in the form of our own deposits or other acceptable tangible security, such as GP Notes, Insurance Policies having adequate surrender value and easily marketable shares.

Mortgage of immovable property may be accepted as security only in exceptional cases where customers are well known, provided at least 25% of the guarantee amount is covered by cash margin.

Commission

Rs.100/-plus 0.75% or 0.5% per quarter or part thereof towards financial or performance guarantee respectively.

Financial guarantee against collateral securities /cash margin

  • Guarantees on behalf of constituents who are selling agents/lottery tickets/airline tickets in favour of Govt departments, Airlines, and other companies in lieu of cash deposit or earnest money.
  • All mobilisation guarantees issued on behalf of contractors.
  • Guarantees for release of retention money.
  • Guarantees for due payment of moneys for goods supplied, services rendered etc.(Guarantees in favour of oil companies, fertiliser companies, airlines, excise guarantees, etc)
  • Guarantees in lieu of sales tax, income tax, excise duties/Govt demands against 100% cash deposit
  • Guarantees given to courts for release of deposits/in lieu of payment to court
  • Deferred Payment Guarantees.

Security

Security provided for the guarantee may be in the form of our own deposits or other acceptable tangible security, such as GP Notes, Insurance Policies having adequate surrender value and easily marketable shares

Mortgage of immovable property may be accepted as security only in exceptional cases where customers are well known, provided at least 25% of the guarantee amount is covered by cash margin.

Commission

Rs.100/-plus 0.75% per quarter or part thereof.

Issuance/establishing BG/LC on behalf of lottery agents/liquor contractors/liquor shops with 100% cash margin

Guarantees on behalf of constituents who are selling agents/lottery tickets/airline tickets in favour of Govt departments, Airlines, and other companies in lieu of cash deposit or earnest money.

Security: 100% cash margin

Forward Sales ,Forward Purchase contracts

As per the guidelines on manual of foreign exchange and Reserve Bank of India guidelines in force.

Letter of credit with a minimum cash margin of 25% (inland)

Letters of credit should be normally be opened for customers who enjoy credit facilities with us.
Limits for opening letters of credit should be fixed based on the overall consumption of the items, to be procured through letters of credit, separately. The limit may be fixed for a single transaction or as a regular limit.
Letters of credit may be opened under any of the following categories as required by the customers concerned.

  • clean
  • Documentary
  • Revocable
  • Irrevocable
  • With recourse
  • Without recourse
  • Revolving

Where the customers desires to have finance from the bank to clear the bills arising out of the letter of credit, suitable limits by way of key loan or cash credits may be considered along with

The letter of credit.

Inland letters of credit are usually opened for periods ranging between 3 months to 6 months and in case these are to be opened for longer periods, there should be justifiable grounds.

The documentary inland letter of credit established by branches may call for bills of exchange payable at sight or (with prior permission of the sanctioning authority) call for usance bills of exchange on D/A terms. In case the bills are drawn on D/A basis, the payment to the beneficiary should be made only at maturity.

Guarantees/Co-acceptance of usance bills with minimum 25% cash margin

Eligibility

Existing customers enjoying satisfactorily conducted credit limits with the Bank .
It should be ensured that the goods covered by bills co-accepted are actually received in the stock account of the borrowers.

Discounting of Bills co-accepted by other Banks

Existing customers enjoying satisfactorily conducted credit limits with the Bank.

Before discounting bills co-accepted by other Banks , the branch should obtain a written confirmation of the concerned controlling office of the accepting bank and a record of the same should be kept.

Partly secured /unsecured /clean Guarantee/co-acceptances with minimum of 25% cash margin

Mortgage of immovable property may be accepted as security only in exceptional cases where customers are well known provided at least 25% of the guarantee amount is covered by cash margin. However the minimum cash margin to be obtained in the case of partly secured guarantees varies depending upon the quantum of the guarantee and the level of the sanctioning authority as indicated in the discretionary power chart.

Issue of solvency /capability certificates

Solvency certificates should be issued strictly as per the guidelines and the format prescribed in the manual of instructions.

Credit information on customers may be furnished in strict confidence with express or implied consent of the customers only to fellow banks and to public sector financial institutions such as LIC, UTI, ICICI. State Financial corporation, State Industrial Development Corporations etc.

Issue of Solvency certificates

Service charges at the prescribed rates given below should be collected for issue of solvency certificates:

  • Less than Rs.1 lakh  - Rs.562
  • Rs.1 lakh and above  - Rs.113 Per lakh or part thereof(Minimum - Rs.562 and maximum - Rs.16,854)
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