ANDHRA PRAGATHI GRAMEENA BANK HEAD OFFICE :: KADAPA Circular No. 213 2011 BC CD 18.08.2011 Date: INTRODUCTION OF NEW LOAN SCHEME PRAGATHI RENT PLUS The Bank has been implementing various retail credit schemes viz., Housing loans, Education loans, Personal Banking Loans, Jewel Loans and finance to Small and Medium Enterprises except advances against rent receivables. Representations have been received from various quarters regarding introduction of a loan product against Rent Receivables, to cater to the needs of clientele who are having the definite source of income through rents on Commercial/Residential properties. Hence a need is felt to introduce a new retail credit scheme against the rent receivables to deliver the credit to such categories of clientele. Accordingly the Bank has prepared Pragathi Rent Plus loan scheme and placed before the Board for approval. The Board of Directors in the meeting held on 27.07.2011 have approved the scheme. The detailed guidelines of the scheme are furnished in the Annexure. All Branches are advised to take advantage of the scheme and improve lending under the scheme substantially by giving wide publicity. Clarifications required, if any, on this Circular may be sought from the Credit Department, Head Office, as per the extant guidelines.
(K.PREETAM LAL) CHAIRMAN ANNEXURE 01. Classification: OSL - Non-Priority Sector. 02. Name of the Loan Product: Pragathi Rent Plus - CBS Code - 6250-1401 03. Purpose: Any genuine business/personal credit requirement excluding for speculative / prohibited purposes as per the credit policy guidelines in force. 04. Eligibility 1) Preference to existing customers with satisfactory dealings. 2) Non-customers who are credit worthy and have good market standing as per branch verification report may also be entertained under the scheme. 3) Bonafide owners of commercial or residential property which is free from encumbrances standing in their own names. 4) Flats and houses let out to our Bank and not covered by the premises loan scheme may also be considered for this purpose. 5) It should be legally let out on lease/rental agreement with tenant/lessee who may be Govt. undertaking/dept/institution or company with sound financial and satisfactory payment record. 6) Rent receivables of any kind subject to availability of Power of Attorney(PA) /minimum-maximum lease period criteria, provided proof of rent payable by means of a legally enforceable lease agreement and undertaking letter to remit the rent directly to Bank is deposited by the borrower. 7) Expression Rent includes payments towards maintenance of amenities etc., provided they are payable regularly as per lease agreements, along with rent. 05. Quantum of loan and margin Maximum 75% of rent receivable by the owner on the whole or part of lease period not exceeding 60 months.
This 75% amount is to be arrived at after subtracting the applicable tax deducted at source on rentals/lease income and advance rent already received by the owners if any. 06. Minimum / Maximum period of lease Minimum period of lease shall be 36 months and maximum period of rent receivable to be financed shall not exceed 60 months. 07.Rate of Interest Irrespective of loan amount : 15.00% p.a. Penal interest of 2.25% p.a. on the overdue amount shall be charged. Interest on the loan shall be charged on the monthly basis. 08.Process Fee: 1% of the loan amount + Service Tax. 9. Guarantee/Surety: One or two good credit worthy customers surety/ies/guarantors. should join as 10. Release Schedule: a) Loan amount shall be released through SB a/c in 2 instalments irrespective of quantum of loan i.e., upto 75% of loan as 1 st instalment and remaining 25% of loan as 2 nd instalment. b) 2 nd instalment shall be released only after receiving letter confirming taken-note from RO/HO as the case may be. 11.Repayment In EMIs not exceeding the unexpired period of lease subject to maximum of 60 months. 12. Security i. Up to Rs.1.00 lakh - No Collateral Security.
ii. Above Rs.1.00 lakh Collateral security as under. 1) Mortgage of property being let out whose realistic realizable value shall not be less than 120% of the loan amount sanctioned OR 2) Liquid securities in the form of NSC/KVP/IVP or bank s own deposits equivalent to 110% of loan amount. OR 3) Mortgage of alternate property acceptable to the Bank (Urban/Semi urban) whose realizable value is not less than 150% of loan amount sanctioned in case of legal problems in mortgaging let out property. iii) In case of premises/residences occupied by our Bank, security can be waived provided the EMI on the loan is less than or equal to the monthly rent payable and the unexpired lease period is not less than 1.25 times the repayment period of the loan. 13. Sanctioning Authority : As applicable to Pragathi Multipurpose Mortgage Loan Scheme. At present the sanctioning powers are as under. a) Branch Head (Scale-I) : Rs. 2.00 lakhs b) Branch Head (Scale-II) : Rs. 3.00 lakhs c) Branch Head (Scale-III) : Rs. 5.00 lakhs d) Chief Manager (Scale-IV) : Rs. 10.00 lakhs e) Regional Manager/CM credit at HO : Rs. 15.00 lakhs f) General Manager : Rs. 25.00 lakhs g) Chairman : Rs.100.00 lakhs 14. Inspection Charges : As applicable to Non-Priority Sector Advances 15.Inspection Property shall be inspected once in a year and AF-27 shall be placed on record. 16. INSURANCE :
The property being mortgaged should be insured against the risk of Fire, Riots, Earthquakes, Lightening, Floods, etc., in the joint names of the borrower/s and the Bank for the full market value of the property. Insurance charges should be paid by the borrower/s. A copy of the policy is to be retained with the branch. Branches should ensure renewal of the policy without fail by entering the policy particulars/due date in the Insurance Policies Register. In case of borrower/s not cooperating for renewal, branch should ensure to get the Policy renewed by debiting the insurance charges to loan a/c and recover from the borrower. 17. OTHER CONDITIONS: Lease agreement in original shall be obtained and held on record. In cases where property obtained as security is different from one being leased out due to legal hurdles etc., the available documents confirming the ownership shall be deposited with the bank. 18. PAPERS/DOCUMENTS TO BE OBTAINED: a) Application form (AF- 48) along with additional particulars as per format furnished in Annexure-I b) Copy of Income Tax/ Wealth Tax / Commercial Tax Assessment order (wherever applicable). c) Income proof. d) AF-62 (Assets & Liabilities particulars) of borrower and sureties/guarantor/s e) AF-27 (Branch Manager s valuation report of immovable property and recommendations) f) Approved valuer s report on valuation of the building property to be mortgaged. g) Title Deeds and link documents. h) Encumbrance Certificate (E.C) for 25 years. i) House Tax /Property Tax paid receipts. j) Notarised Affidavit as per Cir No.90-2007-BC-CD, Dt. 17.05.2007.
k) Certified copies of the title deeds along with genuineness certificate from the advocate as per Cir.No.69-2010-BC-CD dt.31.03.2010. l) Legal Opinion accompanied by Search Report. m) 3 Photos depicting front, side, back view of building property, duly signed by the borrower/s and the Manager. n) Mortgage Annexures as per Cir No.90-2007-BC-CD, Dt. 17.05.2007. o) Process Note. p) ADN-10 (Loan Agreement with requisite stamp duty {presently Rs.100/-}) q) ADN-11 (Guarantor Agreement with requisite stamp duty {presently Rs. 100/-}) r) ADN-4 (Stamped receipt to be obtained from the borrower for each release) s) Tripartite agreement as per proforma furnished in Annexure 2. However, sanctioning authority may waive this subject to availability of legally enforceable lease agreement between the parties, which should be deposited with the Bank. t) Irrevocable power of attorney in favour of the bank shall be executed in favour of the bank as per profarma furnished in Annexure-3 to collect the rentals directly from the tenants/lessee. The power of attorney shall be registered with the lessee and his acknowledgement thereof obtained, before release of the loan. Where execution and registration of power of attorney are not possible, letter of undertaking may be obtained from the tenant/lessee to remit the rent directly to the Bank, subject to availability of legally enforceable lease agreement between the parties. In such a case, the lease agreement shall be deposited with the Bank. u) Consent shall be obtained from lessee/tenant to the effect that the bank shall be informed two months (2 months) in advance in case of premature termination of lease. *****