What is Fund based Limits and Non-Fund based Limits in terms of bank ?
Please reply fast its verry verry argent .
Thanks
Dhirendra Singh
What is Fund based Limits and Non-Fund based Limits in terms of bank ?
Please reply fast its verry verry argent .
Thanks
Dhirendra Singh
NON FUND BASED LIMITS
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The terms Fund based limits and Non fund based limits are used in connection with working capital requirements of a Company. Fund based limits include those where actual funds are proposed to be given. Eg Cash Credit Limits. In case of Non Fund based limits funds are not required directly. Eg Bank Guarantee given by a bank in favour of a Company. Another example is Letter of Credit opened by banks.
In addition to these corporates also enjoy Stand By Line of Credit.
| Originally posted by :Davinder Singh | ||
| " | NON FUND BASED LIMITS Deferred Payment Guarantees For acquisition of capital goods (Plant/Machinery including generators) and where there is provision for suppliers credit by the Manufacturer/Supplier. Term Of Payment In tune with credit extended by the manufacturer/supplier. Security 1st Charge on fixed assets financed by us. Collateral Security and Personal/Third Party guarantee shall be insisted wherever required. Bank Guarantee Bank guarantees in lieu of Earnest Money Deposit, Security Deposit, Bid Bonds, Advance Payment, Performance, Retention Money etc., shall be issued depending on the nature of business, requirement, Margin, security, commission, period of guarantee shall be as per Bank's norms. Letters Of Credit DA/DP Terms Letters of Credit for purchase of raw materials/inputs and capital goods shall be opened as per the terms of supplier of such goods/services. Margin, security, commission shall be as per Bank's norms. Wherever necessary, Letters of Credit of Revolving type also shall be opened. |
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Hello friends,
Whether Prov of Section 372 A wrt Corporate Guarantee would be attacted or not for the Company -Bank has sanctioned Fund Base limit to one of the sistern Concern of the Company and Company has given Corporate Guarantee to Bank to secure the fund based limits. Pl clarify
Thanks in advance
Regards
Preety
Dear Sir,
What does 100% fund based limits refer to While calculating the capital gearing ratio.
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