Consumer Banking

Project on
Types of loans offered by the
banks

Group Members
UMBRIN

SHAHID
SAMIA MEHMOOD

AQSA AKBAR

OMER

ATIQUE

BANKING SECTOR

Introduction
A

Bank is a financial institute. It deals in

others people money. It borrows
money from one person and lends it to
other person. Banks play very positive
and important role in the overall
economic development of the country.
They are the pipe lines through which
the economy is in or out of the country.
In a country like Pakistan which is still
in the initial stages of the development,
a well organized banking system is
needed and Banks are playing a great
role in the development of country.

Definitions of Banking
1.

Banking means the accepting

for the purpose of lending or
investing of deposits of money
from the public repayable in
demand
or
otherwise
and
withdraw able by cheque, draft
order or otherwise- (Banking
Companies Ordinance 1962)

Bank Loan
Introduction

As we know that the banks

accepts deposits from different
people. They dont keep this
money with themselves. A major
portion of these deposits is led by
banks to different people and
from that money they earn profit.

Borrower
Borrower

means a person on
whom a bank/DFI has taken any
exposure during the course of
business.

Types of customers
Public

Limited Company
Private Limited Company
Partnership Firm
Sole Properietorship
Individual
Government owned entity

Procedure of taking loan

Customer

comes to bank & meets the

Relationship Manager.
Customer & RM discuss the business of the
borrower, credit requirements of the
customer and security that the customer will
provide against credit facilities.
Customer gives the written request for
obtaining loan to RM.
RM calls the CIB report to check the credit
history of the borrower.
RM prepares the credit proposal if he satisfied
with the credit history of the borrower

Procedure of taking loan

RM

asks the customer to provide all the pre

approval documents. All the pre approval
documents are discussed below in detail.
RM gives proposal to Credit Administration
Department (CAD) for routing the proposal to
credit committee along with all the pre approval
documents.
CAD after checking the proposal and all the pre
approval documents routes the proposal to
Credit Risk Management (CRM)
CRM analysis the proposal, financials, cash
flows etc and gives their decision on proposal
i.e. Approved or Rejected.

Procedure of taking loan

Business

after receipt of approval prepares the

Offer Letter and issue Offer Letter to customer.
After acceptance of Offer Letter, RM will ask
the CAD to prepare the borrowing documents
for execution from customer.
After execution of documents RM will provide
all the required documents as per CAD
checklist and security collateral with legal
opinion to CAD.
CAD will check all the documents and if found
in order CAD will issue Disbursement
Authorization Certificate (DAC).

CREDIT FACILITIES

Credit Facilities (Short Term/For

Exporters/For Importers/Non Funded
Facilities)
1.
2.
3.
4.
5.
6.
7.
8.
9.

Cash Finance/ Running Finance/ Overdraft

Export Refinance Finance Part - I (ERF-I)
Export Refinance Finance Part - II (ERF-II)
Finance/Loan Against Packing Credit
(FAPC/LAPC)
Foreign Bills Purchased (FBP A)/ FAFB
Foreign Bills Purchased against L/C
(FBP) & FBP (Disc)
FE 25 ($ Financing) for Exporters
Letter of Guarantee
Letter of Credit- Sight

Credit Facilities (Short Term/For

Exporters/For Importers/Non Funded
Facilities)
10. Letter

of Credit- Usance
11. Inland Letter of Credit- Sight
12. Inland Letter of Credit- Usance
13. Finance / Loan against Trust
Receipt (FATR / LATR)
14. Finance / Loan against Imported
Merchandise (FIM/LIM)
15. FE

25
($Financing)
for
Importers

Long Term Credit Facilities

All

Credit facilities
tenors greater than
a fixed repayment
defined as long
facilities.

approved for
one year with
schedule are
term credit

1. Demand Finance / Term Finance

SECURITIES

Securities held by the banks

against credit facilities
1.
2.
3.
4.
5.
6.
7.
8.

Mortgage Property
Hypothecation of stocks
Pledge of stocks
Charge on current assets of the
company
Charge on fixed assets of the
company
Pledge of DSC/ SSC/RIC
Pledge of TDR/FDR
Account under lien

Securities held by the banks

against credit facilities
9. Shares
(cont)
10.Cash

margin
11.EE Statement
12.Import document under lien
13.Lien on export
documents/contracts/Firm orders
14.Trust Receipt
15.Personal Guarantee

LOAN
DOCUMENTATION

Standard Documents
Required Before Sanction of
Individual Customer
Loan

Customer Request
CIB
BBFS
Appropriate utilization of loan
CNIC of Individual
NTN of Individual

Standard Documents
Required Before Sanction of
Sole Proprietor
Loan

Sole Proprietorship Undertaking

Customer Request
CIB
BBFS
Appropriate Utilization of Loan
Financials
CNIC
of Proprietor
NTN of Company

Standard Documents
Required Before Sanction of
Partnership Firm
Loan
Partnership Deed

Partnership Mandate
Form-C
Customer Request
CIB of Partners
CIB of Company
BBFS
Appropriate Utilization of Loan
Financials
CNIC of Partners
NTN of Company and Partners

Standard Documents
Required Before Sanction of
Private Limited Company
Loan

Board Resolution
Memorandum and Articles of Association
Certificate of Incorporation
Customer request
CIB of company
BBFS
Appropriate Utilization of Loan
Financials
CNIC of directors
NTN of Company

Standard Documents
Required Before Sanction of
Public Limited Company
Loan
Board Resolution

Memorandum and Articles of Association

Certificate of Incorporation
Certificate of Commencement of Business
Customer request
CIB of company
BBFS
Appropriate Utilization of Loan
Financials
CNIC of sponsoring directors
NTN of Company

CONCLUSION

Conclusion
Pakistan is basically an agro based
economy.
In
the
beginning
the
circumstances were very unfavorable. But
with passage of time the country made
rapid advancements. Banking sector
developed very rapidly and helped all
other
sectors
in
the
process
of
development and growth by providing
necessary
finance
and
economic
assistance. Banks played an important role
in the development of industry, trade,
commerce and other sectors of the
economy.

THANK YOU