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TRADE FINANCE |
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FCNRB Loans |
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Q. Who is eligible
for FCNR(B) loan?
A. FCNR(B) loans may be sanctioned for meeting working capital and term
loan requirements of existing borrowers (manufacturing and trading units) of the
bank rated as SBBJ 4 and above.
End-use of funds may need to be restricted for
productive purposes with high priority to be given to exporters, manufacturers
and infrastructure projects. |
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Q. Is this
facility available at all the branches of SBBJ?
A.
SBBJ gives this facility only at identified branches. Other branches can
make available this facility to their customers through the identified branches. |
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Q. Can this
facility for working capital be availed of as CC and for what amount and for
what period?
A. This facility for working capital is given by way of FCNRB (Demand
Loan). FCNR(B) Demand Loans can be for a maximum period of 11 months. |
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Q. Can the
disbursements and repayment in the case of FCNRB(DL) be made in parts?
A. No, it has to be disbursed in one lump sum and repaid in one lump sum
on the due date. |
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Q. Are there any
minimum stipulated loan amount and any restriction as to the currency in which
the loan can be availed?
A. The minimum loan amount for both demand loan and term loan is $100,000 or
its equivalent in other currencies. Loan can be made available in US Dollars,
GBP, EURO and YEN. |
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Q. What is the
major advantage and major disadvantage for the borrower in this scheme?
A. The major advantage is that Corporate gets the loan at a cheaper cost as
the interest is linked to LIBOR / EURIBOR.
The disadvantage is that Corporates have to bear the exchange fluctuation risk.
This scheme will be attractive to those who have regular forex earnings. Those
who do not have any forex earnings should understand this risk and arrange for
hedging the exchange risk. |
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Q. Can this be
used for conversion of existing rupee loans?
A. Existing rupee term loan can be converted in to FCNRB (TL) after fresh
sanction/ documentation.
Prepayment of existing rupee loans/ foreign currency loans taken by our
customers from other sources is also permitted subject to compliance with take
over norms and clearance from GOI/RBI, wherever necessary.
FCNRB loans may also be offered to business units not banking with us, as a
marketing effort.
The proceeds of FCNRB (DL) may also be permitted to be used for prepayment of
WCDL subject to the condition that the total period of WCDL and the FCNRB (DL)
is the same as that of WCDL fixed in the beginning. |
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Q. How interest
rates are quoted in FCNRB loans?
A. The base rate for FCNRB (DL) in USD, GBP and YEN is LIBOR.
The base rate for FCNRB (DL) in EURO is EURIBOR.
The base rate for FCNRB (TL) is 6 month LIBOR/EURIBOR.
The differential over the base rate will be as per the credit rating of the
borrower. The current
rates w.e.f 1 st July,2004 are as under:
FCNR(B) – DL |
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CREDIT RATING |
CURRENT PRICING |
REVISED PRICING |
| PRIME |
LIBOR+2.00 |
LIBOR+2.50 |
| SB-1 |
LIBOR+2.25 |
LIBOR+2.75 |
| SB-2 |
LIBOR+2.75 |
LIBOR+3.25 |
| SB-3 |
LIBOR+3.00 |
LIBOR+3.50 |
| SB-4 |
LIBOR+3.25 |
LIBOR+4.25 |
| SB-5 |
LIBOR+3.50 |
LIBOR+4.50 |
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FCNR(B) – TL |
| PERIOD
OF LOAN |
CREDIT
RATING |
CURRENT PRICING |
REVISED PRICING |
| 12 to 36
Months |
PRIME |
LIBOR+
2.25 |
LIBOR+
3.00 |
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SBTL-1 |
LIBOR+
2.50 |
LIBOR+
3.25 |
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SBTL-2 |
LIBOR+
3.00 |
LIBOR+
3.75 |
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SBTL-3 |
LIBOR+
3.25 |
LIBOR+
4.00 |
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SBTL-4 |
LIBOR+
3.50 |
LIBOR+
4.50 |
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SBTL-5 |
LIBOR+
3.75 |
LIBOR+
4.75 |
| 37 to 60
Months |
PRIME |
LIBOR+
2.50 |
LIBOR+
3.50 |
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SBTL-1 |
LIBOR+
2.75 |
LIBOR+
3.75 |
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SBTL-2 |
LIBOR+
3.25 |
LIBOR+
4.25 |
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SBTL-3 |
LIBOR+
3.50 |
LIBOR+
4.50 |
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SBTL-4 |
LIBOR+
3.75 |
LIBOR+
5.00 |
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SBTL-5 |
LIBOR+
4.00 |
LIBOR+
5.25 |
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Q. In addition to
interest, what are the other costs involved?
A. Processing fee, as applicable for rupee loans.
Transaction fee Rs20,000/- for each Demand Loan and Rs 30,000/- for each Term
Loan, to be recovered up-front.
Commitment fee of 1% per annum after 15 days from the date of funds allocation.
Fund Angle Clearance (FAC) given by IBD will lapse if the disbursement is not
availed with in 3 months from the date of FAC. |
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Q. After availing the loan, if the
borrower wants to prepay the same, is it permitted? |
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A.
Yes, subject to recovery of penalty
at 1.5% of the amount prepaid for the un-expired period of the
loan. |
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Q. What is
crystalisation of FCNRB loan?
A. Conversion of Foreign Currency Loan in to Rupee Loan on the happening
of the under noted events:
An FCNRB (DL) will be crystalised when
(a) It is not repaid on the due date.
(b) The interest is not paid for 3 months
(c) The loan becomes NPA on account of any other loan of the borrower becoming
an NPA.
An FCNRB (TL) will be crystalised when
(a) the interest is not paid for 3 months
(b) installments are not paid for 3 months
(c) the loan becomes NPA on account of any other loan of the borrower becoming
an NPA.
In all such cases of crystalisation, penalty as in the case of early repayment
of loan will be recovered from the borrower. In addition to the above
situations, crystalisation of the loan, can also be made at the option of the
bank, should circumstances so warrant, but in such cases no penalty will be
charged to the borrower. |
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Q. Can we waive
booking of Forward cover?
A. Forward cover can be waived by Credit sanctioning authority not below
the CCC-I, if the corporate have natural hedge by way of sufficient uncovered
export receivables / Pass Through Hedge or a well laid out corporate hedging
policy of their Boards with regard to hedging of foreign currency loans.
Wherever waivers are permitted, the Bank reserve the right to insist on hedging
the exposure at any time during the currency of the loan based on periodic
reviews undertaken or whenever major adverse movements in exchange rate take
place, which, in Bank’s view, would be likely to expose the borrower to
unacceptable levels of risks. |
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