Common document obtaining Local and Foreign Industrial Credit Facility

Wpfreeware 6:49 AM Common document obtaining Bank Loan

To obtain an industrial loan in Bangladesh, borrowers typically need to provide a comprehensive set of documents to the lending institution. These documents help the lender assess the viability and creditworthiness of the business. While specific requirements may vary slightly between banks and financial institutions, the following are commonly required documents:

Limits on loan type, borrower type, rating grade, industry or economic sectors

It is an essential component of credit risk management to establish limits on concentrations across all possible dimensions of the credit portfolio. The first task in that effort is to establish a sensible disaggregation of the portfolio, along the following lines:

(A) Agriculture, Fishing, and Forestry

(B) Industry

Nature industrial Loan
1. Term loans
2. Working capital loans
Scale-wise distribution of industry portfolio
1. Large Industries
2. Small, Medium, Cottage & Micro Industries
3. Service Industries

(C) Trade & Commerce:

Retail Trading
Wholesale Trading
Export financing
Import Financing
Lease Finance
Others

Secured by eligible securities
Secured by other than eligible securities

(D) Commercial real estate, construction and land development loans

Residential real estate
Commercial real estate
Infrastructure development
Other

Secured by eligible securities
Secured by other than eligible securities

(E) Transport

Road Transport
Water Transport
Air Transport

(F) Consumer Financing

Loans for the purchase of flats or other single-family dwellings
Loans for the purchase of motorized personal transport
Loans for the purchase of durable consumption goods
Credit card loans
Other personal loans

(G) Loans to financial institutions

Loans to NBFIs
Loans to insurance companies
Loans to merchant banks and brokerage houses
Other, including loans to microfinance institutions and NGOs

(H) Miscellaneous

In addition, Category B in the above scheme, "Industrial Loans", can be disaggregated in a different way, focusing on the economic sectors rather than the type of enterprise and type of loan. The following breakdown is preferred:

Textiles and garments industries including spinning industries
Food and allied industries
Pharmaceutical industries
Chemical, fertilizer, etc.
Cement and ceramic industries
Ship building industries
Ship breaking industries
Power and gas
Other manufacturing or extractive industries
Service industries (the total here would be identical to the total from line B3)

The combination of the type of borrower/type of loan breakdown and the sectoral breakdown of industrial loans would provide all the necessary data, plus allow the banks to monitor the all- important category of real estate lending and loans secured by real estate, the emphasis on which by the banks in recent years is a source of concern for financial stability.

General Documents:

In general, required papers and documents to be obtained/maintained irrespective of type of borrower, loan and security are:

Demand Promissory Note
Letter of Authority
Letter of Arrangement
Letter of Disbursement
Letter of Revival
Personal Net Worth statement
Copy of National ID
Credit Approach in Business Pad of the Borrower
Credit Application in prescribed format duly filled in
Photograph of the Borrower
Photograph of the business/inventory
Photograph of the mortgaged property
Up to date CIB Report
Credit report of the Borrower/Supplier
Liability Declaration of the borrower along with an Undertaking that they have no liability with any bank or financial institution except as declared.
Undertaking stating that, they will not avail any credit facility from any other bank or financial institution without prior consent of the bank.
Undertaking stating that customer does not have any relationship as Director or Sponsor with the bank.
Undertaking stating that customer shall not sell or transfer the ownership of the business/factory/shop until all amounts due to the bank bank are fully paid or without NOC of the bank.
Credit Risk Grading Score Sheet (CRGS)
Post-dated cheque covering the credit facility
Acceptance by the Borrower of the Sanction Letter
Proper Stamping

“Documentation” should be viewed as a process of ensuring shield against risk of non-repayment of loan comprehensively in 03 (three) dimensions:

The Type of Borrower
The Type of Loan or credit facilities &
The Type of Security Arrangement

Click to open specific charge documents and paper for 03 (three) dimensions

Banks may also require additional information or documentation based on their internal credit policies and the specifics of the loan application. It's advisable for borrowers to consult with their chosen bank to get a precise list of required documents and ensure all paperwork is in order before submitting their loan application.

Data compilation from the Guidelines on Credit Risk Management (CRM) for Banks, March 08, 2016

Common Documents for Local Industrial Loan

Application in Letterhead Pad
1(one) copy passport size photograph of intending borrower(s) as well as guarantors(s).
Valid Trade License
Permission from BOI (if applicable)
TIN certificate
Bank statement for last 6 (six) months (if any)
Partnership deed (in case of partnership firm)
Memorandum & Articles of Association with certificate of incorporation duly certified by RJSC (in case of limited company
Certified copy of upto date list of directors (Form XII)
Financial statement for last 3 years
Project Feasibility Report for new project as well as BMRE of existing project.
Quotation/ Pro-forma invoice of Machinery
Machinery list with layout plan for installation.
Original title deed
Bia deed , CS, SA, RS & Hal Parcha, Mutation with DCR Upto date rent receipt
Site Map/Municipal tax receipt
Non-encumbrance certificate
Approved plan for construction of building from the competent authority & estimate of cost of construction( in case of land owned by the project)
Survey Report of the fixed assets of the project or other collateral security.
Lease agreement (in case of rented premises)
Form XVIII/IXX for creation of charges with RJSC.
Copy of membership of appropriate association.
CIB report of the borrower

Checklist for common document for SME Loan

Check List For Foreign Borrowing

Copy of Registration (Full set) consistent with your proposal.
Loan /Supply Agreement between the parties
Board’s Resolution.
Application form
Repayment Period along with Repayment schedule in details.
Grace period of the proposal.
Calculation of effective rate of interest.
Feasibility report of the project.
Financial Analysis in Details:
1. Internal Rate of Return (IRR);
2. Break-Even Analysis;
3. payback Period;
4. Sensitivity Analysis;
5. Debt Service Coverage Ratio (DSCR) analysis;
6. Debt- equity ratio of the project.
Memorandum & Articles of Association (Certified copy).
Certificate of Incorporation with Joint Stock Company.
Relevant inquiry forms (CIB-1A, CIB-2A, CIB-3A) and under taking from sponsors Director duly filled in for collection of up-to-date CIB report form Bangladesh Bank.
Proforma Invoice/Price Quotation through international tender for importing of capital machinery.
Bank certificate as to indebtedness and creditworthiness of the borrowing company and its sponsors based on latest CIB report.
Certificate from BRTC, BUET in respect of Quality, Price and Economic life capital machinery to be imported (in case of supplier’s credit only).
Encashment certificate, C-form, & Bangladesh Bank report documents regarding these proposal (to be collect from Authorised Deller bank).
Utilization of the said loan with proper banking documents.
Equity encashment certificate of the project with proper banking documents.
Credential of the Sponsors.
Track record of FDI including foreign borrowing.