CONSTRUCTION FINANCE

Project Specific Term Loan:

1) FUND BASED FACILITIES

Project Finance is required for meeting project cost for Residential, Commercial, Retail or other Real Estate development. Under this product, loans are offered to the developers/builders for construction and development of their projects. The purpose is to meet the project specific cost and construction related expenses. Evaluation of the cash flows from the project for which the loan is being granted is of paramount importance. It also necessary to understand the risk related to conceptualization, execution ,completion and saleability of the project The tenure of the loan depends upon the project size and execution tenure,.

It generally ranges between 12 to 60 months. The loan repayment is generally from customer (buyer) related inflows. Ideally, Loan should get repaid once the project is completed / sold out whichever is earlier. Escrow account shall be opened for monitoring & controlling the inflows from the project. The table below provides broad guidance to product parameters. Actual terms shall be as approved by approving authority on a case to case basis:

The table below provides broad guidance on product parameters. Actual terms shall be as approved by approving authority on a case to case basis.

S No Parameters Details:

Type of Property * Residential * Office/Commercial * Retail * Townships Projects
Max Loan amount Peak fund requirement of the project is worked out based on project cash flows. Loan amount shall depend upon the debt suitable for the project applied to Peak fund requirement
Security * Security cover of minimum 2.0 times to be kept at all times * Escrow & Hypothecation of project receivables * Mortgage of the property /project * Undated cheque for repayment of loan liability * Personal Guarantee of promoters/directors * Term Deposit to the extent of 3 month interest to be kept with Bank and lien of Bank thereon
Disbursement * Upfront based on cost incurred as reimbursement of cost /advance against construction /payment of charges for development /payment to vendors * Stage wise as per progress/milestone achieved.
Repayment Combination of below mentioned methods: * Equal Monthly Installments or Bullet repayment with monthly interest payment * Escrow of project receivable & Adjustment of project receivable as per pre defined threshold. * In case, the borrower has partially availed the facility out of total sanctioned, upon approval of Credit Head –CRE, installment amount may be reduced proportionately to the extent of amount availed provided borrower confirms in writing that it shall not avail undrawn /unavailed amount.

2) LEASE RENTAL DISCOUNTING (LRD):

Under this product, loans are offered to developers/customers on the basis of Commercial properties developed by them, which are leased out or are proposed to be leased out. This Product is designed to offer loans by discounting rentals being received/receivable from lessees of such properties. Important factors to be analyzed are demand & supply for leased property in the local market, lock in period of the lease, loan to value etc .

S No Parameters Details:

Max Tenure 120 months.
Eligible Properties Leased commercial property or ready to lease commercial properties
Type of Property * Office/Commercial * Retail
Security * Security cover of minimum 1.5 times of Market value of property. * Escrow of lease rentals * Hypothecation of receivables. * Mortgage of the property /project * Undated cheque for repayment of loan liability.
Disbursement Upfront
Repayment * Equal Monthly Installments, ballooning repayments or Bullet repayment with monthly interest payment

3) LOAN AGAINST PROPERTY (LAP):

S No Parameters Details:

Max Tenure 120 months.
Eligible Properties Ready Properties
Type of Property * Property with plans and permissions for development in place, ready built properties or any other Real Estate assets
Security * Security cover of upto 2.0x to be maintained at all times * Mortgage of the property * Undated cheque for repayment of loan liability * Personal Guarantee of promoters/directors * Escrow of receivables
Disbursement Upfront
Repayment * Equal Monthly Installments or Bullet repayment with monthly interest payment * Adjustment of proceeds out of property mortgaged as per defined threshold

Overdraft:

Overdraft (OD) facility may be provided to selective customer for any of the aforesaid products. It helps customer to manage their cash flows and business effectively. It provides flexibility to customer in terms of disbursement and repayment of money as per their business requirement rather than a fixed schedule. It can also be granted as a part of overall facility arrangement for customers. Two types of Overdraft facility may be provided:

Drop down OD: The limit provided to customers is reduced over the tenure of the overdraft tenure. Such Overdrafts are generally provided for a maximum tenure of 120 months
Regular OD: Such overdrafts are generally provided for a period not exceeding 12 months Overdraft limits will be subject to annual review. Other parameters will be as per the product based on which OD is provided.

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