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Leased/Rental Property Loan Scheme Details
 

FINANCING AGAINST THE ASSIGNMENT OF RENTALS

(1) Purpose :
To meet liquidity mis-match of the applicants.
(2) Nature of Facility :
Term Loan
(3) Period of repayment :
5 years or the residual lease period, whichever is lower.
(4) Eligibility of Customer:
Owners of residential buildings and commercial properties in Rural/Semi- urban/Metro areas which are to be rented or already rented to MNCs/Banks/ Large & medium size corporate and high networth indivieduals.
For all other type of lessees, the Bank Authorities are vested with the discreation to consider the case.
(5) Assessment of Limits :
After careful examination of lease deed. The amount of the property tax, advance deposit and all other statutory liabilities are to be ascertained and the same be reducded from the total quantum of rent receivable being considered for financing.
(6) Quantum of Finance :
Min. Rs. 1 lac.
Max. Rs. 1 crore for non-corporates and Rs.4 crores for corporates.
(7) Margin :
15%.
(8) Repayment :
EMI -By way of Monthly/Quarterly/half-yearly/yearly rentals.
In cases where advance rent is being received the Equated installment should be for the same frequency at which advance rent is received and the installment should be front ended i.e. should be recovered at the beginining of the period.
(9) Prepayment :
1% of the loan amount prepaid.
(10) Rate of Interest :
At PLR. Or as decided by the Bank from time to time.
(11) Classification of Advance :
If the property is in the name of the individual(s), the advance to be classified as "P" Segrhent Advance - in other cases where the property standing in the name of a firm/company then the advance to be treated as C&I Advance.
(12) Primary Security :
Clean. Assignment of receivables and recording of power attorney with the lessee is a must.
There could be a situtaiton where the applicant is already having borrowing arrangemnts with another bank and current assets are already charged. In such case it will be necessay for his bank to cede exclusive first charge on the rent receivable in favour of the Bank finanacing under this sheme.
(13) Collateral Security :
i) First charge on buildings against the rentals of which the loan would be sanctioned (value of the property should be double the amount of loan) or any other acceptable property of equal value.
ii) In case of partnership firm, personal guarantee of the partners of the building. In case of company personal guarantee of directors to be obtained.
iii) In the case of public limited companies, if the directors are not willing to extend personal guarantee and the collateral security in the form of euitable mortgage is sufficeint, the stipulation of personal guarantee of directors may be waived by the sanctioning authority of the Bank..
In cases where the financing Bank is the tenant and the loan amount does not exceed Rs. 25 lacs, stipulation of equitable mortgage may be waived subject to the condition that the lease deed should not expire during the currency of the loan.
(14) Insurance :
To cover the value of assets charged to the Bank.
(15) Review :
Annual.
(16) Exit Route :
Loan to be recalled if the account remains irregular for three consecutive month.
(17) Applicability :
All Metro/Urban/Semi-urban/Rural centers.
(18) Processing charges & cost of valuation :
1% of loan amount, subject to a maximum amount of Rs. 50,000/- should be recovered upfront as processing charges. The charges for valuation of the property are to be borne by the applicant .
(19) Documentation :
i) Application form for loan.
ii) Arrangement letter.
iii) Agreement-cum-guarantee document. In the case of company, charge to be registered with ROC.
iv) Tripartie agreement between Lessor, lessee of the premises and the Bank. In the case of lessee not being in favour of executing the tripartite agreement, an irrevocable power of attorney from the lessor for collection of rent may be obtained and the same should be registered with the lessee.
v) Equitable mortgage of the building (search report and valuation report from the approved Bank advocate and Bank approved valuer should be kept on record).

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