Funded Facilities:
Funded Facilities are credit limit involving funds / money of banks /Financial Institutions.
Documents Required for Funded facility:
RF / Cash Finance
FAPC/FAFB FCIF/ FCEF/FIM
TERM FINANCE
FATR
FDBP /LDBP
Non- Funded Facilities:
Non- Funded Facilities are credit limits not involving fund / money of banks / financial institutions. But it can be converted into funded in case of some eventualities e.g., customer fails to fulfil his commitment in time.
Non- Funded Facilities:
Documents for Non-Funded Facilities:
Letter of Credit (Sight)
Letter of Credit (Usance / Acceptance)
Letter of Guarantee
Hypothecation:
Hypothecation is a security for payment of a debt / other obligation that does not pass title of property or any right to its possession to the person to whom it is hypothecated. It includes Hypothecation over Movables & Receivables, Hypothecation over Plant & Machineries etc. The documents to be obtained in this type of Security is Letter of Hypothecation.
Types of Hypothecation charge:
Pledge of Commodities:
Pledge by definition is bailment of goods as security for payment of debt or performance of a promise. The goods securing the debt are in possession of the lender (bank’s nominated Muccadum) which has the right to sell them in case of default by the borrower, but only after giving reasonable notice to the borrower. On request of borrower Pledge of goods released to them against delivery order on proportionate payment of the goods. The document to be obtained in this type of Security is Letter of Pledge.
Lien / Set Off:
Lien is bank’s right to withhold property on which lien is marked, until the claim is paid. The borrower remains the owner of the assets but the lender has actual rights on the assets. The bank has a right to dispose
of the security after giving a reasonable notice to the borrower
The document to be obtained on this type of Security is Letter of Lien,
Letter of Lien & Set off etc.
The securities include: -
Mortgage:
Mortgage is a transfer of interest in specific immovable property as security for the payment of debt. The transferor of the property is called ‘Mortgagor’ and the transferee is called ‘Mortgagee’. The instrument by which the transfer is affected is called Mortgage Deed and Memorandum Deposit of Title Deed.
Types of Mortgages include:-
a) Registered Mortgage – to be acceptable by banks in Pakistan is to be created through Mortgage Deed that must be registered with the Registrar of Property.
b) Equitable Mortgage – to be created through Memorandum of Deposit of Title Deed. In case the owner of the property is a limited company than a charge is also to be registered with the Security & Exchange Commission of Pakistan for lenders to accept it as collateral / security against the financed amount).
c) Constructive Equitable Mortgage – is required by lenders in case the original property documents is held by another financial institution / banks. In addition, following set of documents are required to secure limits by banks not holding the original property papers in their custody:
Personal Guarantee:
Promise made by an individual obligating himself/ herself to repay outstanding bank finance in case the actual borrower defaults in settling the unpaid amount.
Non- Funded Facilities:
Non- Funded Facilities are credit limits not involving fund / money of banks / financial institutions. But it can be converted into funded in case of some eventualities e.g., customer fails to fulfil his commitment in time.
Non- Funded Facilities:
Documents for Non-Funded Facilities
Letter of Credit (Sight)
Letter of Credit (Usance / Acceptance)
Letter of Guarantee
Non- Funded Facilities:
Non- Funded Facilities are credit limits not involving fund / money of banks / financial institutions. But it can be converted into funded in case of some eventualities e.g., customer fails to fulfil his commitment in time.
Non- Funded Facilities:
Documents for Non-Funded Facilities:
Letter of Credit (Sight)
Letter of Credit (Usance / Acceptance)
Letter of Guarantee
Hypothecation:
Hypothecation is a security for payment of a debt / other obligation that does not pass title of property or any right to its possession to the person to whom it is hypothecated. It includes Hypothecation over Movables & Receivables, Hypothecation over Plant & Machineries etc. The documents to be obtained in this type of Security is Letter of Hypothecation.
Types of Hypothecation charge:
Pledge of Commodities:
Pledge by definition is bailment of goods as security for payment of debt or performance of a promise. The goods securing the debt are in possession of the lender (bank’s nominated Muccadum) which has the right to sell them in case of default by the borrower, but only after giving reasonable notice to the borrower. On request of borrower Pledge of goods released to them against delivery order on proportionate payment of the goods. The document to be obtained in this type of Security is Letter of Pledge.
Lien / Set Off:
Lien is bank’s right to withhold property on which lien is marked, until the claim is paid. The borrower remains the owner of the assets but the lender has actual rights on the assets. The bank has a right to dispose of the security after
giving a reasonable notice to the borrower
The document to be obtained on this type of Security is Letter of Lien, Letter of Lien & Set off
etc.
The securities include: -
Mortgage:
Mortgage is a transfer of interest in specific immovable property as security for the payment of debt. The transferor of the property is called ‘Mortgagor’ and the transferee is called ‘Mortgagee’. The instrument by which the transfer is affected is called Mortgage Deed and Memorandum Deposit of Title Deed.
Types of Mortgages include:-
a) Registered Mortgage – to be acceptable by banks in Pakistan is to be created through Mortgage Deed that must be registered with the Registrar of Property.
b) Equitable Mortgage – to be created through Memorandum of Deposit of Title Deed. In case the owner of the property is a limited company than a charge is also to be registered with the Security & Exchange Commission of Pakistan for lenders to accept it as collateral / security against the financed amount).
c) Constructive Equitable Mortgage – is required by lenders in case the original property documents is held by another financial institution / banks. In addition, following set of documents are required to secure limits by banks not holding the original property papers in their custody:
Personal Guarantee:
Promise made by an individual obligating himself/ herself to repay outstanding bank finance in case the actual borrower defaults in settling the unpaid amount.
