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Working Capital limits

Jitender Kumawat (Professional) (42 Points)

30 August 2008

hiiiiiiiiii friends

i have a question that what is the difference fund base woking capital limits and non fund based.

with regards jitender

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3 Replies

S.Srinivasaraghavan (Chief Financial Officer and Co) (11318 Points)
Replied 30 August 2008

Fund based working capital is workedout on the basis of current ration projections. Non-fund based Working capital has many components like performance guarantee, L/C etc., each having its own requirement of justification.

Rakesh Chadha (CA Practice ) (10 Points)
Replied 31 August 2008

Fund based facilities are where cash is directly and immediatly put to availability of the borrower say Cash Credit /Term loans/ Overdrafts etc.

Non Fund based facilities are where cash is not available at disposal of the borrower at the time the borrower avails the facility, but it mitigates his immediate cash requirements, say Bank Guarantee etc.

Krishan Pal Singh (Dy. Manager Accounts) (21 Points)
Replied 28 October 2011

Non Fund Based Products & Services

Non fund based products are as follows :-

Letter of Credit : The Bank offers import as well as domestic Letter of Credit facility to their clients for procurement of goods on DA/DP basis as per their needs.
Bank Guarantee : The Bank offers Bank Guarantee facility to their clients guaranteeing their performance / financial obligations in the domestic as well as international market.
Co-acceptance facilities : Sometimes in business deals on credit basis, buyers are required to offer adequate comforts to the sellers such as bank guarantee or co-acceptance of bills by the bankers. The Bank offers co-acceptance of bills facility to the top rated clients.
Bancassurance : The Bank has tie-up arrangement with Insurance Company, under which we arrange for issuance of general insurance policies to their clients thereby taking away their worries of timely and adequate insurance cover of the assets.
Solvency Certificate : The bank also provide Solvency Certificate to their clients in case it is required for providing to Government authorities, other corporates in business deals / bids etc.
Credit Reports : The Bank provide Credit Reports on their clients to other banks/FIs and we also obtain Credit information required by their clients on their counter parties, through our correspondent relationship.