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STAR CHANNEL CREDIT

DEALER FINANCE

 

Objective

 

Providing finance to dealers of sponsor corporates

 

Sponsor Corporates

 
  • Existing corporate borrowers of our Bank availing credit limits with us. The Credit Rating of our existing borrowers should not be below Investment Grade
  • Other Corporates, who are not our existing borrowers but with minimum external credit rating of A & above.

The sponsor corporates should be manufacturers/service providers of branded goods/products.

 

Purpose

 

To meet working capital requirement of dealers for purchase goods/spares/inventory purchase etc from the corporate sponsor.

 

Target client

 

Selected Dealers identified by the sponsor corporate.
Facility would be extended based on the referral letter/recommendations of the corporate.

 

Nature of Facility

 

Invoice discounting — tenor of bill as per the arrangement between the dealer and the sponsor corporate, however not to exceed 90 days from the date of invoice. Advance granted on FIFO basis in running account (CC/OD).

 

Tenor of Loan

Maximum 90 Days

 

Extent of Finance

 

Limit for each dealer is to be fixed need based and in consultation with the sponsor corporate, and within the maximum MPBF allowed based on the Actual/Projected Turnover.

Aggregate exposure on the sponsoring corporate is to be capped at maximum 30% of previous year’s total sales as per the corporate’s financial statement.

 

Margin

5% per invoice. (Maximum funding will be to the extent of 95% of the invoice value).

However Sanctioning authority may waive the Margin Stipulation on case to case basis.

 

Security

  • Referral letter from the sponsor corporate, agreeing to stop making further supply to the dealer and to provide assistance to the Bank for recovery of dues, if there is any default in payment by the dealer, or/otherwise repossess the goods and liquidate bank’s dues;
  • Hypothecation charge to be created on the stock/inventory financed by the Bank.
  • Additionally branch may explore obtention of comfort letter from the corporate that overdues of the dealer may be cleared by appropriation of security deposit/or by invoking Bank Guarantee submitted by the dealer to their principals
  • Collateral coverage :
    • a) Minimum 20% wherein the sponsor corporates are the borrowers of the Bank and the dealers are having more than 05 years of experience.
    • b) Minimum 25% wherein the sponsor corporates are the borrowers of the Bank and the dealers are having less than 05 years of experience.
    • c) Minimum 25% in all other cases with dealers having more than 05 years of experience
    • d) Minimum 30% in all other cases with dealers having less than 05 years of experience.
    • e) CGTMSE Coverage: CGTMSE Coverage can be obtained for limits upto Rs 200 lakhs only and if the borrower is under Micro & Small category and if we are the sole bankers.
  • Personal Guarantee of all the promoters/partners/directors of the borrowal dealer company as the case may be.
  • Debit mandate (in case the borrower is maintaining account with us), PDC/ECS mandate, in the cases wherein the dealer is maintaining account with some other Bank.
  • Corporate guarantee of sponsor corporate is to be explored.
 

MOU with sponsor corporate

MOU with sponsor corporate is mandatory

 

Rate of Interest

ROI should not be lower than the rate charged to the sponsor corporate.

RBLR+BSS (0.0%)+CRP(0.30%) i.e. effectively 7.15% at present

 

Principal Repayment

The Repayment will be done by Dealer on or before due date.

Each Credit in the account will be appropriated on FIFO basis as per the due date.

 

Interest Repayment

The Interest could be recovered, upfront (i.e. at the time of disbursement) or at the back end (on the due date of Bills), on the basis as agreed by the sponsor corporate.

 

Default

In case the dealer defaults in payment, the same should be immediately intimated to the sponsoring corporate and the branch should follow up with the sponsoring corporate to discontinue supplies to the dealer till the dues are recovered by the Bank.

 

SUPPLIER FINANCE

 

Objective

 

Providing finance to dealers of sponsor corporates

 

Sponsor Corporates

 
  • Existing corporate borrowers of our Bank availing credit limits with us. The Credit Rating of our existing borrowers should not be below Investment Grade
  • Other Corporates, who are not our existing borrowers but with minimum external credit rating of A & above.

The sponsor corporates should be manufacturers/service providers of branded goods/products.

 

Purpose

 

To meet working capital requirement of dealers for purchase goods/spares/inventory purchase etc from the corporate sponsor.

 

Target client

 

Selected Dealers identified by the sponsor corporate.
Facility would be extended based on the referral letter/recommendations of the corporate.

 

Nature of Facility

 

Drawee Bill/Invoice Finance — tenor of bill as per the arrangement between the supplier/vendor and the sponsor corporate; however not to exceed 90 days from the date of invoice. If the due date falls on Sunday or holiday the bill becomes due for payment the following working day and No penal interest to be charged.

 

Tenor of Loan

Maximum 90 Days

 

Extent of Finance

 

Vendor /Supplier wise limit to be fixed in consultation with Corporate and the maximum limit is to be capped at 20% of the estimated annual supplies to the corporate.(Total supplies as per last financial year)

Aggregate exposure on the sponsoring corporate is to be capped at maximum 50% of previous year’s total sales as per the corporate’s financial statement.

 

Margin

Nil

 

Security

  • To be extended as Clean facility to the supplier.
  • Copy of invoice duly accepted by the sponsor corporate.
  • Referral letter from the sponsor corporate
  • MOU/Comfort Letter with Sponsor Corporate. It should specifically mention the mode of Repayment of Principal/Interest :
    • a) Interest To be collected upfront/back ended, to be paid by vendor.
    • b) Principal is to be repaid by Sponsor Corporate.

Since the payment obligation of the invoice discounted always lies with the sponsor corporate, as it has been accepted by them and they are the recipient of goods supplied, principal is to be repaid by sponsor corporate.

 

MOU with sponsor corporate

MOU with sponsor corporate to be executed

 

Rate of Interest

RBLR+BSS (0.0%)+CRP(0.30%) i.e. effectively 7.15% at present

 

Principal Repayment

Principal should be repaid by the sponsor corporate on due date. Cash Credit/Current Account of the corporate, as the case may be debited on the due date and credit should be made to the account of vendor.

Opening of current account of sponsor corporate should be explored.

 

Interest Repayment

The Interest could be recovered, upfront (i.e. at the time of disbursement) or at the back end (on the due date of Bills), on the basis as agreed by the sponsor corporate.

a) In case the Interest payment is upfront, the notional interest may be deducted from the actual Bill amount discounted and the proceeds after recovering the interest may be credited to the Vendors account.

b) In case the Interest Payment is back ended, the same will be borne by the vendor and to be paid on the due date. However insistence should be made by the branches for collecting the interest upfront at the first place