Table of Contents

Introduction ................................................................................................................................................. 3
Departments of RBS .................................................................................................................................. 4
Marketing Department of RBS: ............................................................................................................. 4
Credit Risk Management department of RBS: ...................................................................................... 5
Credit Administration Department RBS: ............................................................................................... 5
Secured loans ............................................................................................................................................ 8
Conventional Mortgages:...................................................................................................................... 8
CHARGES: .................................................................................................................................................. 8
N cash facility (Business Finance): ......................................................................................................... 10
WHEELS ................................................................................................................................................... 11
Charges: .............................................................................................................................................. 11
Cash near Cash ........................................................................................................................................ 12
Loan against Shares ................................................................................................................................ 12
Personal Loans ........................................................................................................................................ 13
Credit Cards Facility ................................................................................................................................ 14
CREDIT POLICY:
GENERAL DEFINITION: ............................................................................................................................ 16
OBJECTIVES: ............................................................................................................................................ 16
SBPS REQUIREMENT: ............................................................................................................................. 16
Credit Standards Followed By RBS: ......................................................................................................... 17
CENTRALIZED AUTHORITY: ..................................................................................................................... 18
FUNDED AND NONFUNDED FACILITIES .................................................................................................. 18
SECTORAL BASED LENDING..................................................................................................................... 18
NICHE MARKETING ................................................................................................................................. 19
UNAPPROVED SEGMENTS....................................................................................................................... 19
TIME REQUIRED FOR APPROVAL OF LOAN ............................................................................................. 19
PATTERN OF INSTALLMENTS................................................................................................................... 19

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

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NPL Ratio ................................................................................................................................................. 19

CREDIT CARD ........................................................................................................................................... 19

REVISION OF CREDIT POLICY ................................................................................................................... 19

INCOME REQUIREMENT.......................................................................................................................... 20
TIME PERIOD FOR FINANACING .............................................................................................................. 20
LC FACILITY .............................................................................................................................................. 20
Collateral Based Lending: ........................................................................................................................ 20
CDR (Credit deposit Ratio) position of RBS: ............................................................................................ 21
SAFTY MARGIN:....................................................................................................................................... 21
CREDIT POLICY FOR RENEWALS & ENHANCEMENT ................................................................................ 21
SPREAD:................................................................................................................................................... 21
PAYMENT INCENTIVES: ........................................................................................................................... 21
Documentation Required By RBS for Facilitating a LOAN: ..................................................................... 22
Sole Proprietor: ....................................................................................................................................... 22
Partnership:............................................................................................................................................. 22
Company: ................................................................................................................................................ 22
Security Based: ........................................................................................................................................ 23
Property: ............................................................................................................................................. 23
Other Legal Documents: ..................................................................................................................... 23
SUGGESTIONS ......................................................................................................................................... 24

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CONCLUSION........................................................................................................................................... 25

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

INTRODUCTION
The Royal Bank of Scotland Group has grown from small beginnings nearly 300 years ago to
become the second largest financial services group by profit, in the world. With an AA credit
rating, RBS group has more than 40 million customers worldwide, operating profit in 2007
10.3 billion, and total assets, as at 31 December 2007, of GBP 1,900.5 billion. Today the
situation is different. Due to worldwide recession bank had a massive loss. According to
unaudited quarter report i.e30th June 2009 bank had a net loss of RS.584, 090,0001, compare
to net loss of RS.59, 703,0002 on 30th June 2008.now MCB Bank has bought the Pakistan
operations of the Royal Bank of Scotland (RBS), paying a price of PRs7.2 billion ($87.4 million)
for a 99.37% stake in RBS Pakistan3. RBS brands operate around the globe and down the street
to provide banking services for individuals, businesses and institutions.

VALUE PROPOSITION
Royal Preferred Banking offers its clients an unmatched blend of personalized banking and
wealth maximization opportunities.

PRODUCTS
Alongside a comprehensive range of premium banking products and services, RBS offers
fully integrated financial planning and investment advisory capabilities.

PRIVILEGES
From luxurious lounges to personalized attention, Royal Preferred Banking delivers its clients
exclusive services.

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

Page

Unaudited half year income statement 2009

Source: www.rbs.com.pk
2
Unaudited half year income statement 2009
Source: www.rbs.com.pk
3
Source:financeasia.com

Departments of RBS
RBS has a centralized banking system. Facilitating a loan is a continuous process here which linked up
THREE major departments namely;

MARKETING
CREDIT RISK MANGEMENT
CAD

Marketing Department

Credit Risk
Management
Department

Credit Administration
Department

ALL the departments work together to make the system more efficient and to satisfy the customers
properly.
Marketing Department of RBS:
Following are the duties of this department:

It initiate the proposal

Direct the customer relationship with RBS
It collects all the required documents
It analyzes the financial statements of the bank
From initial analysis of the customer and his needs to the preparation of the proposal,
marketing department performed all duties to assist the Credit Risk Management Department.

Page

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

Credit Risk Management department of RBS:

The information provided by the marketing department is analyzed by this department to manage the
probability of being default of the customer. It has to manage in this way that profitability of RBS
increased and defaulters have been decreased. It checks out the purpose of this facility, track out the
record, ancillary business, margin or mark up.
The team of marketing department of RBs provide all documents and a track to reach the customer
after it the credit risk management department of RBS performed the further duties to check the credit
worthiness of the customer.
Credit Administration Department RBS:
It performed the following duties:

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Perfection of the securities

Completion and last stamp on the authenticity of the documents
Acceptance and rejection of the proposal based on the decision of this department

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

OVERVIEW OF PRODUCTS
TRADED SERVICES AND SUPPLY
CHAIN

INTEGRATED CASH
MANAGEMENT SERVICES
Product/
Services
Cash
Management

PAYMENTS

COLLECTIONS

Cash
Withdrawl

Cash Deposit

Bankdraft

BankDraft

Cheque

Product/
Services

IMPORT

Documentry Credit

Issuance and
amendments of LC

LC Confirmation

Documentry
Collections

Special credit

Advising and
Negotiation of LC

Documents against
Acceptance &
Payments

Re-Imbursement
Undertaking

EXPORT

Cheque

Direct Debit

Documents against
Acceptance &
Payments

TREASURY / FINANCIAL
MARKETS:

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

Page

The figures above give a brief overview of products and services provided by a bank.

Foreign Spot and

Currency Forward
Deposits Exchange

Page

OVERVIEW OF RBS LOAN PRODUCTS

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

Secured loans
Conventional Mortgages:
Following are the different mark-up rates for mortgages.
MARKUP:
Slabs

Benchmark

KIBOR

Spread

Total

Up to 4,999,999

1 year KIBOR+4.25%

12.93%

4.25%

17.18%

Between 5,000.000 & 9,999,999

1 year KIBOR+3.75%

12.93%

3.75%

16.68%

Between 10,000,000 & 19,999,999

1 year KIBOR+3.5%

12.93%

3.50%

16.43%

More than 20,000,000

1 year KIBOR+3.25%

12.93%

3.25%

16.18%

CHARGES:

Actual

Legal Charges

3500

Late payment charges

Rs. 1,000/- or 10% of installment which

ever is higher

Pre-payment penalty, Full pay-off

& Partial pre payment

10% for all BTF cases.

Processing Fee

Rs. 5,000/-

Enhancement Fee

Rs. 5,000/-

Installment Collection Charges

Rs. 400/- per visit

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Documentation, Stamp
Duty & Government Levies

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

N Cash Facility (RUNNING FINANCE):

This facility is provided for

Loan Enhancement Facility

Choice between Running Finance or Installment Based financing

Empower the customers with financing to fulfill their business needs.

With Running Finance customer can fulfill his working capital/cash flow needs.
Markup of N cash facility (Running Finance)
Slabs

Benchmark

KIBOR

Spread

Total

Up to 4,999,999

3 Month KIBOR+4.00%

12.60%

4.00%

16.60%

Between 5,000.000 & 14,999,999

3 Month KIBOR+3.75%

12.60%

3.75%

16.35%

More than 15,000,000

3 Month KIBOR+3.50%

12.60%

3.50%

16.10%

Charges

up to Rs. 5,000/- upfront

BTF case processing fee

up to Rs. 5,000/- upfront

Enhancement case
processing fee

up to Rs. 5,000/- upfront

Late payment charges

Rs. 100/- per day

Installment collection charges

Rs. 400 per visit

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Fresh case processing

fee

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

N cash facility (Business Finance): with the Business Loan customer can invest in
project financing, capital investment, business expansion or balance transfer from a running
finance facility to a term loan.

Mark up of N cash facility (Business Finance)

Slabs

Benchmark

KIBOR

Spread

Total

Up to 4,999,999

1 year KIBOR+4.00%

12.93%

4.00%

16.93%

Between 5,000.000 & 14,999,999

1 year KIBOR+3.75%

12.93%

3.75%

16.68%

More than 15,000,000

1 year KIBOR+3.50%

12.93%

3.50%

16.43%

Charges:

Up to Rs. 5,000/- upfront

BTF case processing fee

Up to Rs. 5,000/- upfront

Enhancement case
processing fee

Up to Rs. 5,000/- upfront

Late payment charges

Rs. 1,000/- or 10% of installment

which ever or higher

Installment collection charges

Rs. 400 per visit

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10

Fresh case processing

fee

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

WHEELS
RBS cherishes the relationship with its customers; they will be accommodated with assistance from
Relationship Managers who will facilitate them through the procedure until they find exactly what they
want.
Markup of Wheels
Slabs

Benchmark

KIBOR

Spread

Total

Less than 600 K

1 year KIBOR+4.50%

12.93%

4.50%

17.43%

More than 600 K

1 year KIBOR+4.00%

12.93%

4.00%

16.93%

Existing AAB Customers

0.5% discount on above

Charges:

Processing Fee

Up to Rs. 5,000/-

Re-issuance of purchase order

Up to Rs. 1,000/-

Late payment charges

Rs. 600/- per month

Installment collection charges

Rs. 400/- per visit

Full prepayment of Cars with

registration:
During first 6 months

10% (on outstanding amount)

During 7th month to 12 months

8% (on outstanding amount)

During 2nd year

6% (on outstanding amount)

During 3rd year

4% (on outstanding amount)

4th year onward

2% (on outstanding amount)

Partial Prepayment :
5% (on amount being prepaid)

During 2nd year

4% (on amount being prepaid)

During 3rd year

3% (on amount being prepaid)

After 3rd year

2% (on amount being prepaid)

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11

Upto 1st year

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

Cash near Cash

Help the customers to meet their sudden cash flow needs.

Acquire funds against your existing deposits or near cash instruments without liquidating
them.
Earn income from your pledged deposit or near cash instrument without it being
disturbed.

Markup for Cash near Cash

Slabs
Branch/Preferred Customers
RBS Staff

Minimum Bench mark

3 month KIBOR*+0.75%
3 month KIBOR*+0.25%

Charges
Balance Confirmation Certificates

Rs. 300/- per certificate

Balance Confirmation Certificates

to auditors

Rs. 1,500/- per certificate

Mark up Settlement

Up to Rs. 7,000/- if mark up is not paid

within specified period

Loan against Shares

Loan against Shares (LAS) facility enables customers to take a loan against the shares invested in
companies listed on the KSE-100 index and release the initial investment at its current market value.
Their slogan is
Get more than just dividends - get the competitive edge with Loan against
Shares .

Charges:

Rs. 1,000/- per charge requested

2) Forced Facility Liquidation Fees

Rs. 5,000/- Plus applicable brokerage charges

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1) Pledged Share Scrips

12

Financing against shares

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

BTF (Balance Transfer Facility)

BTF is the most convenient, flexible, economical and easy-to-use loan facility designed to suit
customer needs and gives them the power to control their finances. It offers a variety of features
that provide the spending convenience a customer actually craves for.
Markup of BTF
Slabs

Benchmark

Salaried & SEP

26.0%

Self Employed Business Segment

29.9%

Schedule of Charges

Mark up Rate may vary for

different customer segments

Mark up Rate Up to 35% per annum

Late Payment Fee

Rs. 500/- or 10% of the minimum

amount whichever is higher

Enhancement Fee

Up to Rs. 1,500/-

Cash Withdrawal over the counter

from BTF accounts

Up to Rs. 150/-

Cancellation of BTF Pay Orders

over the counter

Up to Rs. 200/- per pay order

Personal Loans
Whether a customer want s to reorganise their finances, pay for a major purchase such as a car or
home improvements or simply give themselves more financial flexibility, RBS offer a range of
affordable loan options.

Benchmark

Salaried A&B

22.0%

Salaried C

25.0%

Self Employed Persons

22.0%

Self Employed Business Persons

29.99%

Unapproved Segment

28.0%

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Slabs

13

Markup of Personal Loans

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

Schedule of Charges:

Mark up Rate may vary for different

customer segments/loan tenure

Mark up Rate 35% per annum

Processing fee*

Up to Rs. 2,000/- or 1% of the loan

amount whichever is higher

Late Payment Fee

Rs. 500/- or 10% of the installment

amount whichever is higher

Credit Cards Facility

Platinum Credit Card: It provides luxurious facilities to the customers and they can enjoy a
selection of the finest privileges complementing their superior preferences and lifestyle.
Air blue Credit Card: We can take credit to spend on Fuel Groceries, Restaurants, utilities,
entertainment, and anywhere else. Its a master card of RBS.
Gold Credit Card: Our Gold Credit Card charges a fixed rate on transferred balances, until they
are repaid. It could help to shrink your balance. This offer is available exclusively to existing RBS
current account customers and only available online.

Markup of Credit Cards

Benchmark

Airblue Credit card

39.0%

Gold Credit Card

39.0%

Platinum Credit Card

18.0%

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14

Slabs

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

Schedule of Charges:
Annual Fees
Primary Cards

Blue / Standard - up to Rs. 2,000/Gold - up to Rs. 4,000/Platinum - up to Rs. 15,000/-

Supplementary Cards

Blue / Standard /Gold - up to 1,000/Platinum - up to Rs. 2,000/-

Joining Fees*
Primary Cards

Blue / Standard - NIL

Gold - NIL
Platinum - NIL

Supplementary Cards

Service fee (%)

30.23%
31.72%
31.76%
31.46%
31.04%
30.59%
30.14%
29.70%
29.28%
28.88%

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15

Tenure in months
6
12
18
24
30
36
42
48
54
60

Up to Rs. 500/- (First 2 supplementary cards free)

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

CREDIT POLICY
GENERAL DEFINITION:
Credit Policy is the clear, written guidelines that set the following basic things:
(1) The terms and conditions for supplying goods on credit
(2) Customer qualification criteria
(3) Procedure for making collections
(4) Steps to be taken in case of customer delinquency.
It is also called collection policy4.

OBJECTIVES:
SBP regulations and economic conditions are kept in mind while designing the techniques and
objectives for credit management strategy. Following are some of the objectives of SPCBs credit
policy:
o Enable the bank to develop long-term business plans.
o Equip the bank to face the ever changing competitive scenario more effectively and act proactively
rather than reactively.
o To be a source of confidence to the lending officers and enable them to operate more effectively
within the framework of approved delegated authority.
o Provide a framework of reference and standards and to enable the bank to provide uniform
treatment to the borrowing customers.
o Provide guidance for what to do, not how to do.
o Properly serve the credit needs of current customers by satisfying them and establish long-term
relationship with them.
o Provide a framework in which to conduct business.

SBPS REQUIREMENT: It is SBPs requirement that every

Source:businessdictionary.com

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

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16

bank should keep 2% of its total capital as reserves with the State
Net Assets of RBS as on June
Bank. SBP approves every loan and provides comprehensive
30, 2009 are Rs.
9,346,762,000.
directions to every bank in the prudential regulations. These
instructions are same for every bank but banks could make certain
changes in the level of deposits, advancement ratio and their loan portfolio. Total amount of loan
advancement is totally dependent on SPCBs credibility situation.

CREDIT POLICY OF RBS

Credit Standards Followed By RBS:
The RBS credit standards are as follows:

DIVERSIFICATION:
RBS being a clever financial institution doesnt invest in just one sector. It follows the basic rule
i.e.

DONT PULL ALL YOUR EGGS IN ONE BASKET!!!

LIMIT OF LOANS
50 million
50-350million
Above 350 million

Agriculture
financing is just 12% because SBP
makes it essential
for the bank.

SAFETY:
RBS follow the SAFETY-FIRST principle i.e. Money given as loan
must be used properly. The credit risk management department handles this principle.
The following five elements(Cs) help a banker in
arriving at the conclusion regarding safety.
Character: Borrowers intention to repay the
RBS focuses on 3cs:
advance, since his honesty and integrity is of
CHARACTER,
CAPITAL.CAPACITY
significance.
Capacity: Mixture of academics and experience in
the relative field and ability to repay. And How well
do we understand and know the relevant customer.
Capital: it means how much you are willing to invest your money.SBP restricts the
misuse of banks money.
Conditions: Bank should analyze the economic, business and socioeconomic
conditions to secure the loan.
Cash-flows: Cash flow statement of the customer should be analyzed to secure the
loan. We analyze the inflow and outflow of cash.

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

17

SECTORS
Small Medium Enterprise (SME)
Commercial Sector
Global banking and Markets

Page

Their focus is on the following sectors:

LIQUIDITY: bank should analyze the liquidity condition of its and its
customer.
PROFITIBILITY: Profits are as important to RBS as are to the other
organizations as they also have different types of expenses. The
main source of income for RBS is the amount it charges from its
customers as mark up. Therefore, the RBS may prefer a customer
with low risk and reasonable markup to ensure an optimal profit.

Liquidity condition
means tendency of
convertibility of
assets into cash.

DESIRABILITY: RBS focuses that money should be used for agreed purposes.

CREDIT RISK AND RETURN: The Credit risk management focuses risks associated with
the loans and their repayments.RBS focuses on short term loans to avoid defaults.

CENTRALIZED AUTHORITY:
The decision making power regarding credit policy and any loan approvals is centralized in RBS. They are
moving toward the hub concept. This has a negative impact on potential or prospective customers
because any person wanting to acquire a small loan in a few days time has to wait a lot and as a result a
number of applicants cannot be satisfied. RBS credit policy hinders such activity because having no
power and setup to verify credentials etc, the process at the head office takes minimum 15days. But this
step is also going to show the confidential output by bank.

FUNDED AND NONFUNDED FACILITIES

Both funded and non-funded facilities are provided by RBS but the preference is to provide non funded
facilities as it involves lower risk.

SECTORAL BASED LENDING

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18

RBS extends loan to almost all the sectors except for certain unapproved segments. However, RBS
focuses on consumer, commercial, corporate, agriculture, construction, engineering, automobiles and
fertilizers sector. No loans are available for textile sector this time because of the bad conditions of this
sector. RBS is moved the directions of its credit policy toward the recovery of its loans.

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

NICHE MARKETING
Their marketing objectives and techniques are based on niche marketing. They target on salaried class
which they have named as Category A. This is because salaried class is more conscious about making the
payments on time and it is easier to recover loan from them as compared to any other class. In current
economic conditions of Pakistan and worldwide recession, its the basic pillar of RBS which is not only
secured but also profitable but because of rapidly unemployment, RBS not advancing loans to this sector
but again we will say that they are not destroying their customers of this sector even at the time of
recovery. They are providing their non funded facility mostly to salaried based sector after all they are
golden pillars of RBS.

UNAPPROVED SEGMENTS
Unapproved segments are the segments to which bank does not extend loan due to some reasons.
These include lawyers, journalists, farmers, money changers, politicians.

TIME REQUIRED FOR APPROVAL OF LOAN

As RBS is a multinational bank it takes a long time of 15 days for any loan to get approved from the head
office because it does not give decision power to each branch. It has centralized system. The
preparation of documents also required a lot of time because of manual working system. Due to this
reason RBS is also losing a great number of its customers.

PATTERN OF INSTALLMENTS
RBS prefers quarterly payments as part of their selling terms set with the customers in advancement of
the loan. However, such terms may vary from customer to customer and situation to situation.

CREDIT CARD
Client can withdraw cash up to 75% of the available shared credit limit (if he is holding more than one
RBS Credit Card). For example, if your shared credit limit is PKR 300,000 and your cash withdrawal limit
is 75%, you can withdraw up to PKR 225,000.

NPL Ratio
RBS NPL ratio is comparatively good if we consider the financial crisis and current position of the bank.
Reason behind this is that they dont accrue their revenues .Instead they are recorded when actually
incurred. Thats why their books show the good position.

REVISION OF CREDIT POLICY

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

Page

Their policy also changed according to risks and opportunities in the market like payment incentives
54(flat rate, computed rate) and low risk credit policies (advance payment & LC). So according to this
policy, now a day RBS is working with flat rate

19

The credit policy is revised at least quarterly to incorporate the economic and financial changes in the
country. Similarly, any change in the prudential regulations by the State Bank of Pakistan and socioeconomical factors can prompt the bank to revise its policy in the given scenario accordingly.

INCOME REQUIREMENT
Minimum Income of Salaried, SEB, SEP, NTI & Branch Banking Segment are:
Segments
A,B,C, Unapproved & Contractual
SEP
SEB/ NTI *
Branch Banking

Net Income (PKR)

40,000
50,000
50,000
50,000

Where;

SEB stands for Self-Employed Businessman

SEP stands for Self-Employed Professional.
NTI stands for New to the industry.

The customer having between 1-6

months credit history reflecting in e-CIB
will be considered as NTI's.

A includes bankers and clients with a good pay back history. They are given credit up to 4times
of their salary.
B includes all the employees related to the textile sector. They are given credit up to 3times of
their salary.
C includes the government employees. They are given credit up to 2times of their salary.
Unapproved are given credit up to2 times of their salary.

TIME PERIOD FOR FINANACING

Running finance: its short term loan
Demand finance: 1 to 5 years maximum time period for this loan because it fulfilled the specific need of
the customer like construction.
Term finance: 5 to 10 years maximum time period but in this loan the installment is involved.

LC FACILITY
RBS focused on hypothecate based facility.

Page

Bank focuses on financing backed up by a security. Because there is no proper documentation system
and Corruption rate is high!!

20

Collateral Based Lending:

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

CDR (Credit deposit Ratio) position of RBS:

RBS has to reserve 30% in form of reserves in SBP (State Bank of Pakistan). This 30% can be reserved in
different forms as cash, T Bonds, T Bills and anything which can be easily convertible into cash.

RBS cash reserve ratio is 5 to 7 percent

SAFTY MARGIN:

For funded based facilities: 10 to 25 percent is the average safety margin rate. It varies
customer to customer. Its also varies by securities and liquidity position of the customers.0%
safety margin can also be for those customers who are most reliable customers.
For non- funded based facilities: on average the 15% to 35% safety margin is taken.

If government has to stop the imports of anything to support the local production, SBP ordered to
increase this safety margin. For critical items like perishable items this safety margin can be 100%.

CREDIT POLICY FOR RENEWALS & ENHANCEMENT

Following are the requirements for renewals:

Actual last year business progress

Clean up condition for one year
Basic Borrowers fact sheet report
Credit Information Report
Auditing Report of their business
Bank Reference
Personal Reference
Customer has also to provide the action plan that the money which has been enhanced where
to use. The reason for which request of renewal is given.

SPREAD:
RBS is stated to be charging around 2%-4% spread to its customers with negotiations or bargains with
customers even though they might not always be providing ancillary business to RBS. This depends on
the customers track record and his credibility.
RBS invests extensively in mortgages and as fewer mortgage investments are present, RBS has the
opportunity to charge high mark ups. The high charges cover the costs incurred on those who have
defaulted.

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RBS deals with flat rate because flat rate does not consider TIME VALUE CONSTRAINT. Being customer
friendly it helps the customer to forecast his budget .this is rate is not affected by economic conditions.

21

PAYMENT INCENTIVES:

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

Documentation Required By RBS for Facilitating a LOAN:

Sole Proprietor:

Call report
Id card.
Address and other business related information.
BBFS (Borrower Basic Fact Sheet).
E-CIB report.(Electronic Credit Information Bureau Report)
Credit Worthiness Report
Bankers Report

Partnership:

Call report
Id card.
Address and other business related information.
BBFS (Borrower Basic Fact Sheet).
E-CIB report.(Electronic Credit Information Bureau Report)
Partnership deed.
Credit Worthiness Report
Bankers Report

Company:

22

Call report
Basic Information Report
Companys e-CIB report.
Id cards of Directors.
Financial Statements.
Directors search and Assets Charges search report.
BBFS (Borrower Basic Fact Sheet).
Credit Worthiness Report
Bankers report

Page

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY

Security Based:
Based on different securities, bank requires the following documents:

Cash deposit: Letter of Lien on cash deposit with the signature of borrower.
Govt. securities: Letter of Lien on Govt. securities e.g.; T-Bills etc.
Shares: Letter of Lien obtained by bank with the help of ID assigned by SECP.

Property:
Title document:
o Sale deed
o Lease deed
o Transfer letter
Memorandum of deposit of title deed.
Personal guarantee by third party.
Letter of Lien on property.
Approved map of the location where the property is located.
General Power of Attorney (GPA).
PT-1 form is required for old cities, which had been settled by Settlement Commission during
partition.
Mortgage Deed (except DHA).
Faard and Letter of Lien are required from registrar in case of agriculture land.

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23

Other Legal Documents:

Pro-note: It is a promissory note in which the customer promises to pay principal and markup.
Markup agreement: It contains all the terms and conditions related to markup e.g.; calculation
of markup at flat or computed rate etc.
Letter of Continuity (LOC).

INSTITUTE OF BUSINESS ADMINISTRATION, PUNJAB UNIVERSITY