Bank Guarantee to Avail Loan by ttx14547

VIEWS: 105 PAGES: 21

Bank Guarantee to Avail Loan document sample

More Info
									UNION BANK OF INDIA




     GOLD LOANS TO
  DOMESTIC JEWELLERY
    MANUFACTURERS
        Agenda
Overview of Union Bank of India


    Products and services



      Bullion business



  Regulations on Metal loan



      Internal Guidelines
  Vision Statement
 “ To   become the Bank of
         first choice in
    our chosen areas
  by building beneficial
and lasting relationships
        with customers
   through a process of
continuous improvement.”
                Overview of Union Bank of India
            •   One of India’s leading commercial banks. 5th in Public Sector banks
            •   Incorporated on November 11, 1919 , Nationalized on July 19,
                1969
Promoter    •   55.43% share holding by Government of India ,19.72 by FII &
& History       NRI, 8.95 by Banks & Mutual Funds as on 31.03.2007
            •   Head Office & Corporate Office : Mumbai
            •   Initial Public Offer in 2002 and Follow-on Public Offer in
                2006

            •   2,202 branches in 25 states and 3 union territories
            •   1021 branches/Offices net worked , 902 ATM’s and 1200
                alliance ATM “ Cash Tree”and with tie up with other banks
Presence
            •   Workforce of 27,536 people
            •   18 mn customers
                      Overview of Union Bank of India

              •   Cash Management Services

    •         •   Depository Services of Shares, Bonds in Electronic form
              •   Distribution of Mutual Funds and Life and Non Life
 Business         Insurance Products
Initiatives   •   Government Tax collection and online payment
              •   Utility Bill Payment Services
              •   Online Equity Trading
              •   Payment gateways to number of utility/Government Tax
                  collection/Ticketing
              •   Credit cards and Debit cards
  (Rs in Crore)                   Overview of Union Bank of India
                               As on         31.03.2006       31.03.07             YOY GROWTH

  Key             •       Total Assets :      89,126              1,02,678            15.20 %
Statistics        •       Total Deposits :    74,094               85,180             14.96 %

                  •       Total Advances : 54,644                  63,658             16.50%
                          As on March 06       March 07              As on March 06          March 07

                  •       NIM: 3.03%               3.05%      •     Cost of Deposit: 4.75%      5.23%
Key Ratios
                  •       RoNW: 16.55%             17.88%     •     EPS: Rs14.58              Rs16.74

                  •       BV/Share: Rs 80.77 Rs93.60          •     Net NPA 1.56%               0.96%

                           As on March 06                   March 07                YOY GROWTH
   Key
Financials            •    Total Income: 6,358               8,069                   26.91%

                      •    Net Profit:       675              845                    25.19%
           Products and services
• Export and Import finance in Foreign Currency as
  well as in Rupees
• Term loans for the new projects, expansion and
  modernisations in Foreign Currency as well as in
  Rupees
• Derivative Products for Hedging the exposures of
  currency and Interest rate risks
• Financing and Services related to Overseas
  Investments in JV and WOS
• Facilitation for buyers credit and External
  commercial borrowings
          Products and services
• Opening ,advising and confirmation of Letters
  of credit
• Standby LC for international trade
• Advisory service on managing the exchange
  and interest risks
• Approval for commodity hedging
• Sale and loan of Bullion(Gold) for Exporters
  and Domestic Jewelers
              Products and services
               Internet banking time basis
View of all operative accounts on real
     •    Packing Credit/Operative accounts
     •   L/C opened
     •   Bill status
     •   Setting up alerts for due dates of bills up to any period at the
         customers choice
  – Opening of Import L/C online
  – Online transfer of funds to any operative account in
    1021 branches of the bank
     Products and services     Treasury
• Offers competitive exchange rate for all major
  currency and Gold
• Active derivative desk for forwards, options and
  swaps
• Handles large value payments of Corporate, PSU
  and Government
• Merchant turnover Rs 72,777 Crore last year and
  Rs18,358 crore for first 3 months
              Bullion business
•  Bank is designated Agency for import of Gold
• DGFT approval to import gold in 11 centres
• Custom Bonded Warehouses in five branches
• Operates in 11 centers and plans to add few more during
  the year
• Bullion Trading Desk in at our Centralised Treasury at
  Mumbai.
• Transactions carried out in Singapore, European and US
  markets
             Bullion business

• DBOD.No.IBD.BC.3323.67.0012005-06 dated 05-
  09-2005 of RBI permits nominated Banks to extend
  Metal Loans to Domestic Jewellery manufacturers.
• Metal Loans Scheme envisages loans in metal(Gold)
  form to eligible domestic jewellers manufacturers
  who are not exporters of jewellery
        Regulations on Metal loan
 The Gold (Metal) Loans provided by banks will be subject to the following
conditions:
i. The tenor of the gold loan for the domestic jewellery manufacturers should
not exceed 180 days.-
ii. Interest charged to the borrowers should be linked to the international gold
interest rate.
iii. The gold borrowings will be subject to normal reserve requirements.
iv. The loan will be subject to capital adequacy and other prudential
requirements.
v. Banks should ensure end-use of gold loans to jewellery manufacturers
and adhere to KYC guidelines.
vi. Any mismatch arising out of the gold borrowings and lending should be
within the prudential risk limits approved by the nominated banks Board.
vii. The banks should carefully assess the overall risks on granting gold
loans and lay down a detailed lending policy with the approval of the Board
         Regulations on Metal loan
  customers of other scheduled commercial banks, can
avail loan by giving stand-by letter of credit or bank
guarantee issued by their bankers in favour of the nominated
banks subject to authorised banks' own norms for lending
and other conditions stipulated by RBI.
   The stand-by LC / BG shall be extended only on behalf of
domestic jewelry manufacturers and shall cover at all times
the full value of the quantity of gold borrowed by these
entities.
   The stand-by LC/BG shall be issued by scheduled
commercial banks in favour of a nominated bank only and
not to any other entity which may otherwise be having
permission to import gold
          Regulations on Metal loan
   The bank issuing the stand-by LC / BG (only inland letter of credit
/ bank guarantee) should do so only after carrying out proper credit
appraisal. The bank should ensure that adequate margin is
available to it at all times consistent with the volatility of the gold
prices.
    The stand-by LC / BG facilities will be denominated in Indian
Rupees and not in foreign currency.
    Stand-by LC / BG issued by the non-nominated banks will be
subject to extant capital adequacy and prudential norms.
   The banks issuing stand-by LC / BG should also carefully assess
the overall risks on granting these facilities and lay down a detailed
lending policy with the approval of their Board.
ADVANTAGES TO JEWELERS
 Currently the exiting stock of Jewelry and in
process are subject to pricing risk
 The jewelers are now able to obtain Gold with out
price risk
 Gold Loan helps jewelers to price the Gold
procured around the time of sale of jewelry and
hence no price risk.
 As the Metal Loan rate is linked to international
lease/LIBOR rates , the cost of carry is also lower.
             Internal Guidelines
ELIGIBLITY
A.   Customers having rating of up to Credit Rating CR 4
     under the Bank’s Credit rating system
B.    Others offering sufficient cash margin / Bank
     Guarantee subject to KYC compliance
       The applicants should have a valid business license as Jeweller
       (Trade or Manufacture)
       Borrowers should have good track record for a minimum period
       of 3 years in gold jewellery
       A.   However this stipulation relaxed if the loan is backed by good
            securities as collateral
       B.    The minimum track record of 3 years won’t be insisted upon
            where the loan is backed by Bank Guarantees / cash Margin.
                   Internal Guidelines
SECURITY
A.    In case of Customers, Metal (Gold) Loans can be sanctioned separately or
      as sub-limit carved out of overall Working Capital limits covered by
      securities as under:
     1.   Cash margin for part value of the notional cost of gold lent
     2.   Hypothecation of Gold purchased from bank or jewellery manufactured as
          primary security
     3.   Adequate tangible collateral security, especially in respect of those borrowers
          for whom “minimum track record” stipulation has been reduced or waived.
     4.   Personal Guarantee of partners / directors as applicable
B.    Where the Loan is sanctioned as a stand alone facility
     1.   Cash margin including lien on fixed deposits to cover the notional cost of
          gold lent OR
     2.    A Bank guarantee acceptable to us for the notional cost of gold lent
         Internal Guidelines
QUANTUM OF LOAN
   Bank has set up per party limits for loans against
  LC/LG exposure apart from limit to the counter party
  banks
  Loan to customers will be as per requirement based on
  the projected sales and other financials
  The minimum quantity for each drawl of loan shall be
  1Kg
  Loan period- Not to exceed 180 days
            Internal Guidelines
REPAYMENT
  Interest recovered monthly, in metal
  Repayment period may be decided depending on the operating
  cycle.
  Borrower to indicate due date for payment , maximum period of
  180 days.
  On maturity the borrower will pay the loan in rupee at the
  prevailing rate on the date of maturity (OR) at the contracted
  rate in case a forward contract is booked.
  Prepayment before due date is permissible with certain
  conditions.
   Pricing of metal at any time during the loan by Gold forward
  Exchange rate can be fixed at any time after GOFO
          Visit us at :


www.unionbankofindia.com


       -Thank you !

								
To top