Definition of Credit A contractual agreement in which a borrower receives something of value now and agrees to repay the lender

r at some later date.

Types of Customers
Personal SME Corporate(s)

Definition of Corporate
Corporations are the most common form of business organization, and one which is chartered by a state and given many legal rights as an entity separate from its owners. This form of business is characterized by the limited liability of its owners, the issuance of shares of easily transferable stock, and existence as a going concern.

Process of Loan Approval

Steps involved in loan approval process are as follows:
Standard loan application form Documentation required BBFS Evaluation Credit proposal and approval Offer letter Financing agreement
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Process of Loan Approval

Steps involved in loan approval process are as follows:
Demand promissory note Personal guarantees MODTD letter of hypothecation Mortgage agreement Documents to CAD
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Process of Loan Approval

Steps involved in loan approval process are as follows:
CAD issues letters Directors of business concern endorse the letters Letters forwarded to RM RM put forwards letters to CAD Review by CAD Letter of disbursement

Standard loan application form

If a Customer requires a loan he takes this initial form, from the bank and fills it. Generally, this form contains the following information: Personal information List of directors List of associated concerns
(continued)

Standard loan application form

List of authorized signatories with specimen signatures Existing bankers Types of facility Amount of facility applied for Tenor of facility Purpose for which facility is required
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Standard loan application form

Security offered
Current market value Units

Source of repayment Authorized signatory with company stamp

Documents required
Copies of last 3 years audited accounts & projected financial statements of next year Copy of memorandum and articles of association Company / group profile Board of directors resolution List of personal assets of directors
(continued)

Documents required
Registration certificate of company Form 29 Copies of ID cards of directors Collateral documents

Borrower's Basic Fact Sheet

All of the information regarding the borrower is written in this document like:
Personal information (Name, NIC, etc) Details of directors/ owners Management Corporate status (proprietor/ partnership/ public or private ltd.) Nature of business (industrial / commercial, etc)
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Borrower's Basic Fact Sheet

Details of collateral offered Share prices Details of property owned by business (optional) etc

Evaluation
The evaluation is of four types. Industrial evaluation CIB report Character evaluation Collateral evaluation

Industrial evaluation
The bank evaluates the industry to which its customer belongs. It analyzes whether the industry is worth investing or not.
If the industry is on decline or not Number of competitors. Analysis of the profitability Cash flows of business Force sale value , etc

CIB Report
It is a report generated by SBP 's credit information bureau division. This tells the bank:
Outstanding loans of the client Amount of loans Delays in repayments Defaults and NPLs

Character Evaluation
Cross bank references: These are taken from other banks in order to verify the conduct and authenticity of the client. It also is helpful to capture the clients who start the lending process simultaneously from different banks against the same collateral.

Character Evaluation
Political affiliation: Some clients take loans from the bank and do not repay, and even they are not afraid of being subjected to law pursuits because of being politically backed up. Criminal record: is also checked for the clients and the directors, before hand and loans are not most likely to be forwarded to known criminals.

Collateral Evaluation
Type of security offering (residential ,
industrial, agriculture commercial, etc)

The collateral provided as a security to the bank is evaluated if it can pay back the amount in case of default or not. This is done by 3rd party agent/property evaluators.

Collateral Evaluation
The lawyers check the legal status of the collateral if any lien as already marked against it or not. It is also checked that if there is any disputed in ownership and retention of the security. Disputed collaterals are rejected.

Credit proposal and approval

All the documents and queries after proper verification are then given to the concerned RM (relations manager) and he prepares the credit proposal and approval documents, in which details of the whole case is summarized. RM gives his comments and recommendations. This document is then approved by the authorized bank officials.

Credit proposal and approval

Different officials have different authorization for different amount of lending
More than500 M 300 M to 500 M 50 M to 300 M

Up to 50M

Offer letter
After the approval of the concerned person and authorization, RM prepares an offer letter on the behalf of the bank, addressing to the applicant of the loan it should essentially cover the following four points:
Level of funding Cost of the facility The security and hypothecation requirements Termination conditions

Financing Agreement
After the offer letter dispatched to the applicant, the applicant (if agrees to the conditions) signs a financing agreement with the bank, which is the legal form of all the terms and conditions, agreed between both the parties.

Demand promissory note

A written, signed, unconditional promise to pay a certain amount of money on demand at a specified time. A written promise to pay money that is often used as a means to borrow funds or take out a loan

Personal Guarantees
These are the legal documents for the risk management support of the bank, in which the directors of the corporate disclose their personal guarantees to the bank, so in case of default they can be held responsible. (this is in case if the bank does not want to offer limited liability to the client)

MODTD
Memorandum of Deposit of Title Deeds is a type of document executed by the Mortgagor while depositing the Title Deeds to an estate with the Mortgagee. It contains the description of the property and the list of related documents deposited with the Mortgagee.

Letter of Hypothecation
This document is signed by the client, so that bank is made in charge of a certain percentage of the current assets of the company and those assets can be liquidated in case of default.

Mortgage Agreement
In this document the lender agrees that the selling right of the collateral belongs to the bank, after a certain date or determinable period of time. This also describes that the security offered is on the registered mortgaged basis or equitable mortgaged basis

Documents to CAD
All the original documents prepared until this process are submitted to Central Audit Division, which after rechecking the whole documents issue: Charge forms IB forms (from SBP) FAL (facility acceptance letter)

Endorsement; review and letter of disbursement

These letters are then signed and endorsed by the directors of the business concern and then forwarded to the RM which gives them to CAD for reviewing. After that letter of disbursement is issued and the credit limit is boarded to the clients account.

Repayments
After the credit limit is boarded, a relationship is developed with the client and this is maintained by the visiting teams sent by the bank to their business concerns which tells the bank about the financial position of the company.

Lending process summarized

Thank You Your questions and queries are most appreciated.