Types Of Advances by MCB

1. Fund based Advances

Following are the Fund based Advances:

Running Finance(RF) Cash Finance(CF) Finance against imported goods(FIM) Export Refinance part-I (Pre-shipment) Export Refinance Part-II Finance against purchase collection(FAPC) Finance against foreign bills(FAFB) Foreign bill purchases(FBP) Local Manufacturing Machinery(LMM) Payment Against Document(PAD) Demand Finance(DF) Khud Rozgar Scheme

The detail of above-mentioned items are given below:

a. Running Finance (RF)

The max time of repayment is one year. It is according to will of customer. This type of advances are given to Trade, Commerce and manufacturing general purposes. These finances as evident by the name are given to meet their daily needs. The mark up is charged on daily balances. Normally 0.54 paisa per thousand is charged on daily basis. It is drawn through cheque.

b. Demand Finance (DF)

The duration of DF is more than running or Cash Finance. These are made in Lump sum and are there is a permission to repay the amount in periodic instalment. Upon receipt of documents negotiated by the seller bank, the opening

bank makes sure that documents are according to terms and conditions of the credit. Bank makes the payment to the party against document and upon expire date, bank receives back money with mark up rate.

c. Payment Against Document (PAD)

LMM funds are provided by the SBP. The bank provides the facility to the businessman who wants to buy the local manufactured machinery.

d. Local Manufacturing Machinery (LMM)

It is a long term financing. MCB also gives loan under the head of demand finance to individuals, industrial units and commercial business etc. This is a type of secured loan and demand loan is never allowed without security.

e. Foreign Bills Purchases (FBP)

The exporters, which are under L/C are also provided with the facility of loan. Amount is given to the exporter after the approval of L/C by the issuing bank.

f. Cash Finance (CF)

MCB gives the facility of cash credit to the business. The borrower gives a specific reason for the need of cash. The amount is passed through voucher and credited to partys account. Normally 0.52 paisa per thousand is charged on daily basis to customers.

g. Finance against Imported Goods (FIM)

These types of advances are granted against the pledge of imported goods. These goods are pledged by the bank. Bank pays all the charges to customs and keeps the goods in its control. The bank releases the good on payment from the client to bank.

h. Export Refinance Part-1 (Pre-Shipment)

The government pursues the banks to provide the loanto the exporters to promote the export. The bank provides this type of advance facility to only those exporters who have not enough money to make shipment. Bank provides the loans to the customer at the rate of specific % for period of 150 days.

i. Export Refinance Part-1 (Post Shipment)

This means that the customer has enough amount to make first shipment but not more. So the bank issues a loan to the exporter. This financing is for period of 150 days. Finance is provided by the SBP to the exporters for purchase of raw material, its processing, Packing and shipment. In case, if the party is unable to make the shipment within 150 days of financing. The party has to pay certain amount of finance as asked by the SBP and after 150 days the rate of mark up also goes up @ 51 paisa per thousand per day. So usually exporters try to make the shipment within the fixed period set by the SBP which is usually 150 days.

j. Export Refinance Part-11

In this case the bank after receiving the performance of years in export business of party sets the limit for the period of one year. Here the limit cannot be set by the terms pledged of the permission of the bank.

k. Finance Against Purchase Collection (FAPC)

A bill may be purchased by the bank. If a client is in urgent need of money and he has a bill whose clearance may take a few days then he sells it to bank. Bank pays the amount to the client after deducting its commission.

l. Finance Against Foreign Bills (FAFB)

Bank also provides finance against the foreign bills. This facility is given to the exporter, if he needs an urgent money. He gives bill of exchange to the bank as security and bank sends these bills for collection and gives money to exporter.

m.Khud Rozgar Scheme

Limit for loan The limit of this loan is from Rs 10,000 to Rs 500,000 Security/Pledge

A personal security is required to obtain loan otherwise anyother security will be required. Total business assets will have to be hypothecated.

Mark up & return of loan Mark up will be at the rate of 15 % for timely return of loan otherwise rate of mark up will be 16 % per annum.

The payment of mark up on loan will start after 12 months of payment of principal amount. The age of applicant should not be less than 19 years and he has not applied for any type of loan from any bank. year.

Eligibility of Applicant
1)

2) Applicant has been living in the residence shown as address for atleast one 3) Applicant is not the student nor the employee of any govt organisation.

Eligibility of Guarantor 1) He has been living at the given address atleast for one year.
2) He is not the employee nor the family member of MCB. 3) He is not the officer of any Govt organisation.

Fees for Loan A fee of Rs 100 will have to be submitted which will be non-refundable. Important documents required Two copies of application form (one original & one photocopy).

Original Identity card will have to be shown. Similarly two photo copies of ID card will also be required. Two passport size snaps of both applicant & guarantor.

Original & attested documents of asset of guarantor.

Conditions The application of loan can be rejected in case of incomplete or wrong information. Approved loan can be cancelled. It should be informed that the rejection and acceptance of loan are sole right of bank. If the rent of loan is not paid for more than 3 months then the remaining amount will be required to refund immediately with 16 % mark up.

Agricultural Loan
Bank provides the agriculture advances in order to enhance and support the agriculture sector of the country. Banks Agriculture division deals with the agriculture advances. These advances are of following types:
1)

Farm Credit

2) Non Farm Credit

Farm Credit
These are the credits provided by the MCB or purchases of inputs for development of agriculture sector. Following are two main Sub classes of Farm credit: Production Finance These are short term loans. These laons are provided to farmers for purchases of different types of input, for example seeds, fertiliser, and pesticides. Development Finance These are medium or long term loans. These loans are provided for the development of agricultural sector. Main Purposes of these loans are as under:

To purchase tractors To purchase implements (Trolley, Threshers, Drill etc). For installation of tube wells

For planting of gardens

Non Farm Credit

The second major form of agriculture advance is Non Farm credit. These loans are provided to boost up agriculture sector to provide the sources of earning of foreign exchange as well as to provide employment opportunities to people. These loans are provide against mortgage of land as security or pledge of equipment as collateral security. These are long term or medium term investment depending upon the project. Following are the different types of small industries for which loans are provided to improve the economy of the country.

Fish Farm Cattle Farm Poultry Farm Dairy Farm

1. Non Fund Based Advances

When an applicant for an advance cannot offer any tangible security the banker may rely on personal guarantees, letters of credit to protect himself against loss on advance or loan. There are two type of advances which come under Non Fund Advances.

Guarantees. Letter Of Credit.

Letter Of Credit is explained in Foreign Exchange Department while Guarantees are elaborated below.

Guarantees
Introduction Bank examines customers relation with the bank 7 the nature of the business. Bank also sees his past business with the bank. Sometimes bank issues Guarantee on the behalf of the customer by getting some margin from him. This margin may vary from customer to customer. Requirements for Guarantee Banks issue guarantee on the behalf of customers. Limit proposals covering transactions should be submitted with full detailsfor the approval of appropriate sanctioning authority. Generally Guarantees are issued in favouring of Shipping companies, Govt Departments guaranteeing specific payments at future dates by customer on whose behalf the guarantees are issued. While executing a guarantee, the terms and conditions of the guarantee are closely examined in order to determine the extent of bank obligations and financial liability under the guarantee and the type of guarantee, all condition are contained in the guarantee. Procedure Bank charges a commission on the amount for which guarantee is issued. Normally the validity period of guarantee does not exceed one year. After the guarantee has been issued, a copy of same is issued to the counter guarantee issued to the customer.