CANARA BANK : STAFF TRAINING COLLEGE : BANGALORE-560 004

CASE STUDY ON NON-FUND BASED LIMITS

One of your valued customers has approached you for availing non-fund based limits
and has furnished the following information.
PARTICULARS

FLC
TOTAL ANNUAL PURCHASES OF THE COMPANY
Important content
Inland purchases
Imports on DA basis
Imports on DP basis
Transit period for imports
Usance period for imports
Import duty clement
ILC
Inland purchases
Cash purchases per month
(Balance on the strength of LCs)
Purchase on DA basis
Purchase on DP basis
Transit period for Inland purchases
Usance period for inland purchases
GUARANTEES
Projected contracts for the ensuing year
Average period of the bid
EMD for participating in the bid

AMOUNT
(Rs. in lakhs)

1600
60%
40%
60%
40%
1 Month
3 months
20%
40% of total annual
purchases
10% of inland purchases
2/3rd of LC purchases
1/3rd of LC purchases
0.5 months
1.5 months

Annual mobilisation advance required

1200
3 months
10% of average monthly
bids
10%
of
contracts
awarded
20% of contracts

Average retention period of mobilisation advance

Requirement of performance guarantee
Average period of performance guarantee
Requirement of retention money bank guarantee per month
Average period of retention
Requirement of Bank Guarantee / month for duty exemption
Average period for duty exemption

9 months
20% of contracts
12 months
10% of contracts
15 months
2% of contracts
9 months

Security Deposit

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2
3
4
5
6
7
8
9
10
11
12
13
14

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

COMPUTATION OF IMPORT L C REQUIREMENTS

DETAILS
BASIS FOR WORKING
RS. LAKHS
Annual Purchases of the Co.
Assumed figure
Import content
60% of (1)
Average monthly import purchases
(2) / 12
Import duty element
20% of (3)
Net import value per month
Imports minus duty (3) (4)
Imports on DA basis
Say 60% of (5)
Imports on DP basis
Say 40% of (5)
Transit period for imports
In months
Usance period for imports
In months
Total lead time for DALCs
In months (8) + (9)
Total lead time for DPLCs
In months (8)
LC requirement for DALCs
Import / month x lead time in
months (6) x (10)
LC requirement for DPLCs
Imports / month x lead time in
months (7) x (11)
Total FLC requirement
DALCs + DPLCs (12) + (13)

COMPUTATION OF INLAND L C REQUIREMENTS

DETAILS
BASIS FOR WORKING
RS. LAKHS
Annual Inland Purchases of the Co.
Assumed figure
Average monthly import purchases
(1) / 12
Cash purchases per month
10% of (2)
Credit purchases per month
(2) minus (3)
Purchases on DA basis
2/3rd of (4)
Purchases on DP basis
(4) minus (5)
Transit period for inland purchases
In months
Usance period for inland purchases
In months
Total lead time for DALCs
In months
Inland LC requirement for DALCs
Lead time x months purchases
(9( x (5)
Inland LC requirement for DPLCs
Transit time x months purchases
(7) x (6)
Total inland LC requirement
DALC + DPLC (10) + (11)