Cash credit may be by way of pledge or hypothecation or financing of export pre-shipment by way of packing credit.

Book Debts arise out of sale of goods and services by the borrower.Loans / Advances against hypothecation of Book Debts are granted on the following basis.

• 25 to 50 % of the approved Book Debts outstanding for not more than 3 months. This may be extended up to maximum of 6 months in special circumstances. For example debts due from Government / Semi-Government Bodies provided they agree to pay the amount directly to the Bank. Thus, norms may be relaxed in deserving cases according to the discretion of H.O. with reference to the nature of business, security offered, turnover, profit ability, collateral Security, operation of the account with the Bank etc. The borrower should submit monthly statement showing outstanding book-debts. The statement received should be verified with reference to the age of book debts and drawing power reviewed and revised if necessary.
• a schedule of goods returned every month.
• a declaration that the debtor has no counter claim against the assignor and there is no breach of term of contract between the assignor and his debtor.

Cash Credit Facility Against Hypothecation Of Stock

Cash Credit facility is granted for the purpose of working capital requirements against the hypothecation of stock of raw materials, semi and finished goods, stock-in-trade. The relevance and acceptance of the type of security is subject to the sole satisfaction and discretion of the Bank.

Normally Cash Credit facility is valid for a period of one year and is renewed on proper application being made by the borrower well in time for a further period of one year at the discretion of the Bank. The expiry date is the last day of the month in which the sanction facility becomes due for repayment or such other date as is specified. The borrower should operate the account regularly and route all his transactions through account maintained with the Bank. The operations should be through cheques. Cash withdrawals should be limited to meet payments of wages\ salary and other day to day operational expenses. The borrower should submit statement of Current Assets and Current Liabilities on monthly basis regularly and promptly.

If the borrower fails to submit statements on monthly basis, the Bank should be free to exercise the right to recall, freeze and \or take such other steps as is considered proper and reasonable to recover the dues of the Bank. Loan \ advances against hypothecation of stock-in-trade, raw materials, finished goods, imported and indigenous and other tangible assets are granted on the following basis. Traders, Business firms or Professional concerns are not permitted to operate S. B. Accounts for their trade, business or professional purpose.

Over Drafts :

Overdrafts may be secured overdrafts or temporary overdraft or withdrawal against effect.

Clean overdraft :

Under this facility, Bank extends clean overdraft facility to borrowers to help them tide over their temporary difficulties.
This should be allowed with the consent of H.O.

Traders, Business firms or Professional concerns are not permitted to operate S. B. Accounts for their trade, business or professional purpose.

Term Loan is a single transaction loan where the loan amount is disbursed either in lumsum or in stages to the extent of limit sanctioned and the loan amount is repaid in installments along with interest. In case of any enhancement in the loan amount, it is to be treated as second loan and liability controlled accordingly. Unlike other operative account like cash credit / overdraft, the facility of reinstating the limit to the extent of repayment is not permitted and hence not available. Loan amount stands reduced to the extent of repayment as and when it is made. This is mainly on account of the fact that the loan has been granted for a specific project/purpose. Hence, it cannot be used again for other purposes.

Term Loan has been defined as a loan repayable in stipulated installments ranging between three to five years linked to profit accruals. A suitable moratorium period is granted for the commencement of repayment depending upon the grace period necessary for the first batch of products to reach the market. Term Loan is made available both for industrial and non-industrial borrowers. Generally, Term Loan is granted for acquiring Land, Building, Plant and Machinery etc. However, nowadays Term Loan is granted even for purchase of vehicle, Consumer Durable and dwelling places.