Nature of facility is Overdraft facility. A running account(similar to current account) is opened in the name of the borrower. Overdraft(i.e., withdrawal over and above the credit balance, if any, in the account) is allowed in the account upto the sanctioned limit. Deposits and withdrawals are allowed in the account subject to the condition that the debit balance in the account should not exceed the sanctioned limit at any point of time.The aim of this facility is to finance the working capital requirements of the small traders and manufacturers .
Minimum: Af 100,000/- or equivalent (One hundred thousand Afghani)
Maximum: Af 2,000,000/- or equivalent (Two million Afghani).
Individuals or limited companies carrying out trading business or manufacturing activities or rendering services for not less than two years in Afghanistan.The limit to be sanctioned should be the lower of the following:
- 20% of the projected sales during the next one year. (The reasonableness of the projection should be judged on the basis of the certified financial statements pertaining to the previous two years)
- 50% of the market value of the collateral security. (The valuation of the property should be done by government approved engineers / architects)
- Hypothecation of eligible accounts receivable should be on the basis of monthly Accounts Receivable statements, along with the ageing schedule of the receivables.
Suitable rating module should be devised. The loan should be granted to such applicants who get eligible rating.
Fixed rate; Compounding at monthly rest; Tentatively 10% p.a. Interest should be debited at the end of every month. There should be credit in the account in the subsequent month atleast to the extent of interest charged in the previous month.
The interest rate can be changed , at the Bank’s discretion, subject to a 15 days’ notice to the borrower.
The collateral security as well as the place of trading and godown should be inspected by a bank official before sanctioning of the facility. The request for the facility should be considered only on satisfactory inspection report. After sanctioning of the facility, stock inspection should be carried out by bank officials not less than once in three months. Inspection of collateral security should be carried out by the bank officials at least once in a year.
Stock inspections should include identification numbers of stock items, date of purchase, cost price and market price.
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- Hypothecation of the goods held by the borrower in the trading / manufacturing business.
- Mortgage of the property. In case of building the age of the property should not be older than 15 years and the remaining life of the property should not be less than 15 years.
The facility should be sanctioned for a period of 12 months. The O/D facility should come into credit or zero balance at least 4 times a year. If the conduct of the account is satisfactory, the facility may be reviewed by the competent authorities for one more year before the expiry of the loan period. However, this is not to be treated as an “ever green”
facility ; a definite repayment plan must be stipulated and adhered to.
The repayment of loan (principal as well as interest) should be personally guaranteed by minimum two persons having a satisfactory networth. In case the borrower fails to repay, the bank can ask the guarantors to pay on behalf of the borrower.
The transactions in the account should be monitored by the bank officials continuously. It should be ensured that the withdrawals in the account are for the borrower’s business purpose only.