Cash Credit (Hypo) popularly known as CC(Hypo) that requires mainly for financing procurement of raw materials/stock in-trade. Cash Credit account is like a current account with a limit up to which one can withdraw from the bank. Cash credit is normally sanctioned for a period of one year where a regular limit is sanctioned against goods to meet day to day expenses of business.
To meet urgent cash requirement of the business concern in the mode of working capital finance for procuring local raw materials/stock in trade. Time loan is given for a specific period matching with the operating cycle i.e. 30 days for trading and 90 to 180 days for manufacturing concern.
Under this, a regular limit is sanctioned to meet day to day expenses of business. This form of credit is given to the business where maintenance of stock on a regular basis is not possible. Period of SOD(Gen) is usually one year and renewable subject to satisfactory business transaction. The account is adjusted by the sale proceeds or from own source of the customer.
When overdraft is allowed against lien of FDR or other financial instruments, it is termed as Secured Overdraft (SOD). Secured Overdraft (SOD) facility to the borrower may be allowed generally in the following ways:
- Overdraft-against FDR in the name of borrower
- Overdraft- against Scheme in the name of the Borrower
Facility is offered to meet credit requirement for any justifiable purposes that usually require long term installment payment and not directly relate to revenue generation. Sources of repayment will be the sales proceeds of own source of the customer.
Under lease financing we cover equipment/vehicle financing. It is a term financing repayable through lease rental in the form of equal monthly installments (including principal and interest). Ownership of the leased out equipment/vehicle under the lease agreement covering comprehensive risks belongs to the Bank.
This is also given to procure equipment/vehicle. Ownership of the equipment/ vehicle to be purchased under the Hire-Purchase agreement covering comprehensive risks belongs to both the Banker and the customer. Hire-Purchase facility is repayable by depositing equal monthly installments (including principal and interest amount).