National Bank

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ADVANCES DEPARTMENT

It is another major department of the branch.  Bank provides this facility to the people who need advance money to meet their requirements. For getting the advances, the first step is the preparation of credit proposal. Some principles of lending are considered whenever financing being is made. These principles are:

  • Character
  • Capacity
  • Collateral
  • Capital
  • Condition

REQUIRED INFORMATION

  • An assessment of his business abilities
  • Accurate & up-to-date financial statements 
  • Market reports about the borrower
  • Party dealing with other banks
  • Nature and structure of borrower business
  • Names of proprietors, partners or Directors
  • Detail of companies associated with borrower business
  • Financial condition of borrower business

PREPARATION OF CREDIT PROPOSAL
At first, a formal application for credit approval is obtained from the party along with complete group position. The parties credibility report is also obtained from the banks from which the party has been doing the business. The party creditability report is also taken from the head office of Trade information Division.

For obtaining credit, party has to submit the last two years Balance Sheet and Profit & Loss Statement duly attested but authorized auditors. If the party also involve in export or import business then the bank also consider the data of three years about imports and exports.
The Current and Debt equity ratio is also calculated by the bank.
Then recommendations are made the type of data required to prepare the credit proposal is to be gathered from different departments. Some data is obtained from the foreign exchange department. Some data is obtained from current account department and some data is available in Advance Department. The purpose for which the financing is required should be explained very clearly. The securities offered by the party to the bank is also evaluated. In case of pledging of the property in shape of land or building the complete evaluation of the property should also be attached.
 

After all the requirements and necessary documents for applying for advances is fulfilled by the party then, the case is sent to the Chief Manager for approval. If the manager find any discrepancies, he may write on these documents. If the credit limit is in his range, he may approve the party for credit. If the amount is exceeding the Chief Manager send the case is forward to the Circle Office for approval and here the same procedure is repeated and if the credit amount is in the range of GM, he can approve and if the credit amount is very large from Circle Office, the case is then sent to Head Office and if it is a real big then is to be decided by Board of Director. MCB provides advances which are two types. These are two types of advances:

  • Secured Advances
  • Unsecured Advances

In secured advances, the bank takes any security against the loans while in case of unsecured advance no security is taken by the bank.

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