3.5.2 Classification on characteristics of financing:

  Funded                                                                          Non-funded
       
 Overdraft                                                               * Letter of Credit
 Loan                                                                      * Bank Guarantee  
 Consumer Credit
 LTR
 PAD
 Cash Credit (Pledge & Hypo)
 Staff Loan
 Term Loan
 Packing Credit

The varieties used by DBL are briefly described below with the common terms and condition. Banks generally offer different kinds of credit facilities to the customers.

The credit facilities of DBL may be broadly classified into five categories. They are as follows:

 Loans
 Cash Credit
 Overdraft
 Bills purchased and discounted
 Consumer Credit/ personal loan

They are discussed below accordingly.

3.5.2.1 Loan

In case of loan the banker advances a lump sum for a certain period at an agreed rate of interest. The entire amount is paid on an occasion either in cash or by crediting in his current account, which he can draw at any time. The interest is charged for the full amount sanctioned whether he withdraws the money from his account or not. The loan may be repaid in installments or at expiry of a certain period. Loan may be demand loan or a term loan.

Eligibility: loans are normally allowed to those parties who have either fixed source of income or who desire to pay it in lum sum.
Interest Rate: 12%-15% per annum (Quarterly paid).

3.5.2.2 Cash Credit

In Cash credit, banker specifies a limit called the cash credit limit, for each customer, up to which the customer is permitted to borrow against the security of tangible assets or guarantees.  Cash credit is given through the cash credit account. The purpose of cash credit is to meet working capital need of traders, farmers and industrialists.
Cash credit in true sense is against pledge of goods. Cash credit is also allowed against hypothecation of goods. In case of hypothecation the ownership and possession of the goods remain with the borrower. By virtue of the hypothecation agreement bank can take possession of the goods hypothecated, if the borrower defaults.

Rate of Interest: 12%-14%.
Renew System: it is renewed in periodic basis (yearly).

3.5.2.3 Overdraft

Overdraft are those drawings which are allowed by the banker in excess of the balance in the current account up to a specified amount for definite period as arranged for. These advances are secured The loan holder can freely draw money from this account up to the limit and can deposit money in the account off course, this loan has an expiry date after which renewal or enhancement is necessary for enjoying such facility.  Any deposit in the OD account is treated as repayment of loan. Interest is charged as balance outstanding on quarterly basis. Overdraft facilities are generally granted to businessmen for expansion of their business, against the securities of stock-in-trade, shares, debenture, Government promissory notes, fixed deposit, life insurance policies etc.

3.5.2.4 Bills purchased and discounted

Banks grant advances to their customers by discounting bill of exchange or pro-note.


3.5.2.5 Personal Loan (Consumer Credit Scheme)

Objectives :

The objectives of this loan are to provide essential household durable to the fixed income group (Service Holders) and other eligible borrowers. Car loan, loan for house renovation, vacation loan, marriage loan and loan for household equipment well as entertainment products are governed by personal loan program. The Total amount of loans along with the duration in which these loans taken, need to be repaid is given below:

Type of Product

Loan Amount (Tk) Lac

Tenure

1. Vehicle

Up to 7.00

 4 to 5 years

2. Household items

for Businessman

1.00

2 years

3.Household items

for Service holders

Up to 3.00

2 to 3 years

4. Others

Special Considerations

Special Considerations


Personal loan is given under personal guarantee of the borrower and another third parson known to the borrower. As this loan is collateral free the rate of interest is little bit high such as 15% to 18%. There is also a processing fee of 1.5% taken at the time of disbursement of the loan.