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financing obc education od

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  • financing obc education od
  • Eligibility
    Eligibility

    Trust/ Societies/ Proprietorship/ Partnership firms/ Private / Public Ltd. Cos., engaged in running an educational institution satisfactorily (HUF not eligible).

    • The institute should have been operational at least for 2 years. However, in case where our Bank has sanctioned term loan for construction of educational institution, such borrower shall be eligible to avail OD under the scheme after successful DCCO.
    • New as well as Existing customers of the Bank shall be eligible for this facility subject to satisfactory operation of the institute for past two years.
    • All the transactions of the institute shall be routed through Trust and Retention account opened with the Bank.
    • The borrower shall not be in the list of defaulters/ wilful defaulters circulated by RBI/CIBIL, such reports to be obtained/ generated and before processing the proposal branch to ensure that the same is satisfactory as per Bank guidelines.
  • Finance
    Nature of facility Overdraft
    Amount

    Overdraft facility not to exceed 50% of the realizable value of the property taken as collateral security.

    • In case OD limit to Educational institutions already availing Term loan from our Bank, the primary security (land & building only) and collateral security, already mortgaged with our Bank against Term Loan can be treated as collateral security for OD limit.

    In such cases, the residual realizable value of the immovable property (primary and collateral) after netting of 100% term loan exposure should be reckoned for computing collateral coverage for OD limit.

    Non Fund Certain educational institutions require non-fund based credit
    Based Facility
    • facility such as Medical Colleges require Import LC for import of medicals equipments etc. Also, Educational Institutions on certain occasions require submitting Bank Guarantees in favour of certain regulatory, affiliating authorities etc.
    • In view of the above, it is stipulated wherever non-fund based credit limits is being sought by the borrower, need based requirement be assessed as per extant Bank’s policy norms and the same may be extended by the respective sanctioning authorities within their vested delegated power.
    • All other policy guidelines applicable to such type of non-fund facility shall be as per Bank norms.
  • Security/Margin
    Primary Security/strong>

    All the cash flows shall be routed through Trust and Retention account opened with the Bank.

    • Hypothecation of all movable assets including furniture and fixtures, vehicles, instruments, computers and all other equipments as well as infrastructural requirements required for the institutions, not specifically charged to any other Bank/FIs.
    • Overdraft facility not to exceed 50% of the realizable value of the property taken as collateral security.
    • In case OD limit to Educational institutions already availing Term loan from our Bank, the primary security (land & building only) and collateral security, already mortgaged with our Bank against Term Loan can be treated as collateral security for OD limit.

    In such cases, the residual realizable value of the immovable property (primary and collateral) after netting of 100% term loan exposure should be reckoned for computing collateral coverage for OD limit.

    Coll. Security / Security Coverage

    Equitable/ Registered mortgage of Land & Building (but not agricultural land) of the institute (wherever permissible and not restricted by affiliating/ approval authority of education institution/ local Govt. laws/guidelines) and/or belonging to promoters viz. Trustees/ Members of the Society/Proprietor/Partners /Directors, who shall also stand as guarantor.
    In case of partial constructed property, the realizable value of land is to be considered for collateral coverage. Asset Coverage Ratio of at least 2.0 times to be maintained including Term loan outstanding, if any.

     

    Note:

    • While sanctioning credit facilities to the Educational Institutions, comfort should not be derived from the securities being offered. The viability of the project and cash flows of the Educational Institutions are to be relied upon while considering any credit facilities to the Educational Institutions.
    • No benchmark prescribed for Current Ratio as liquidity of Educational Institution is analyzed in the light of projected cash flows and Current Ratio is not of much significance.
    • Before sanction of any loan, verification of property about its clear, marketable, enforceable title must be undertaken by the Branch Head/ Cluster Head/ Credit-in-charge and kept on record. Extant guidelines about valuation of property, title clearance and inspection by the branch shall be strictly adhered to.
  • Rate of Interest and Repayment
    Repayment Period/ Term

    Upto one year and interest to be serviced as and when due.
    Review/Renewal :
    Annual basis with thorough due diligence of the Educational Institution and its promoters as per Bank’s guidelines on an ongoing basis.

    ROI The Rate of Interest shall be as per the classification of the borrower i.e., MSME (classified under Priority / Non-Priority Sector) as per RBI guidelines and shall be linked to the Internal Credit Risk Rating of the borrower.
    • The Rate of Interest for the borrower that does not fall under the ambit of MSME shall be as per Internal and External Credit Risk Rating of the borrower (Other Conventional Loans Not Specified Elsewhere).
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