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Table of Contents Introduction ................................................................................................................................................. 3
Departments of RBS .................................................................................................................................. 4
Marketing Department of RBS: ............................................................................................................. 4
Credit Risk Management department of RBS: ...................................................................................... 5
Credit Administration Department RBS: ............................................................................................... 5
Secured loans ............................................................................................................................................ 8
Conventional Mortgages: ...................................................................................................................... 8
CHARGES: .................................................................................................................................................. 8
N cash facility (Business Finance): ......................................................................................................... 10
WHEELS ................................................................................................................................................... 11
Charges: .............................................................................................................................................. 11
Cash near Cash ........................................................................................................................................ 12
Loan against Shares ................................................................................................................................ 12
Personal Loans ........................................................................................................................................ 13
Credit Cards Facility ................................................................................................................................ 14
CREDIT POLICY:
GENERAL DEFINITION: ............................................................................................................................ 16
OBJECTIVES: ............................................................................................................................................ 16
SBPS REQUIREMENT: ............................................................................................................................. 16
Credit Standards Followed By RBS: ......................................................................................................... 17
CENTRALIZED AUTHORITY: ..................................................................................................................... 18
FUNDED AND NONFUNDED FACILITIES .................................................................................................. 18
SECTORAL BASED LENDING ..................................................................................................................... 18
NICHE MARKETING ................................................................................................................................. 19
UNAPPROVED SEGMENTS....................................................................................................................... 19
TIME REQUIRED FOR APPROVAL OF LOAN ............................................................................................. 19
PATTERN OF INSTALLMENTS................................................................................................................... 19
CREDIT CARD ........................................................................................................................................... 19
NPL Ratio ................................................................................................................................................. 19
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REVISION OF CREDIT POLICY ................................................................................................................... 19
INCOME REQUIREMENT.......................................................................................................................... 20
TIME PERIOD FOR FINANACING .............................................................................................................. 20
LC FACILITY .............................................................................................................................................. 20
Collateral Based Lending: ........................................................................................................................ 20
CDR (Credit deposit Ratio) position of RBS: ............................................................................................ 21
SAFTY MARGIN: ....................................................................................................................................... 21
CREDIT POLICY FOR RENEWALS & ENHANCEMENT ................................................................................ 21
SPREAD: ................................................................................................................................................... 21
PAYMENT INCENTIVES: ........................................................................................................................... 21
Documentation Required By RBS for Facilitating a LOAN: ..................................................................... 22
Sole Proprietor: ....................................................................................................................................... 22
Partnership: ............................................................................................................................................. 22
Company: ................................................................................................................................................ 22
Security Based: ........................................................................................................................................ 23
Property: ............................................................................................................................................. 23
Other Legal Documents: ..................................................................................................................... 23
SUGGESTIONS ......................................................................................................................................... 24
CONCLUSION ........................................................................................................................................... 25
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INTRODUCTION
The Royal Bank of Scotland Group has grown from small beginnings nearly 300 years ago to become the second largest financial services group by profit, in the world. With an AA credit rating, RBS group has more than 40 million customers worldwide, operating profit in 2007 10.3 billion, and total assets, as at 31 December 2007, of GBP 1,900.5 billion. Today the situation is different. Due to worldwide recession bank had a massive loss. According to
unaudited quarter report i.e30th June 2009 bank had a net loss of RS.584, 090,0001, compare to net loss of RS.59, 703,0002 on 30th June 2008.now MCB Bank has bought the Pakistan
operations of the Royal Bank of Scotland (RBS), paying a price of PRs7.2 billion ($87.4 million) for a 99.37% stake in RBS Pakistan3. RBS brands operate around the globe and down the street
to provide banking services for individuals, businesses and institutions.
VALUE PROPOSITION
Royal Preferred Banking offers its clients an unmatched blend of personalized banking and
wealth maximization opportunities.
PRODUCTS Alongside a comprehensive range of premium banking products and services, RBS offers
fully integrated financial planning and investment advisory capabilities.
PRIVILEGES From luxurious lounges to personalized attention, Royal Preferred Banking delivers its clients
exclusive services.
1 Unaudited half year income statement 2009
Source: www.rbs.com.pk 2 Unaudited half year income statement 2009
Source: www.rbs.com.pk 3 Source:financeasia.com
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Marketing Department Credit Risk
Management Department
Credit Administration Department
Departments of RBS
RBS has a centralized banking system. Facilitating a loan is a continuous process here which linked up
THREE major departments namely;
MARKETING
CREDIT RISK MANGEMENT
CAD
ALL the departments work together to make the system more efficient and to satisfy the customers
properly.
Marketing Department of RBS:
Following are the duties of this department:
It initiate the proposal
Direct the customer relationship with RBS
It collects all the required documents
It analyzes the financial statements of the bank
From initial analysis of the customer and his needs to the preparation of the proposal,
marketing department performed all duties to assist the Credit Risk Management Department.
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Credit Risk Management department of RBS:
The information provided by the marketing department is analyzed by this department to manage the
probability of being default of the customer. It has to manage in this way that profitability of RBS
increased and defaulters have been decreased. It checks out the purpose of this facility, track out the
record, ancillary business, margin or mark up.
The team of marketing department of RBs provide all documents and a track to reach the customer
after it the credit risk management department of RBS performed the further duties to check the credit
worthiness of the customer.
Credit Administration Department RBS:
It performed the following duties:
Perfection of the securities
Completion and last stamp on the authenticity of the documents
Acceptance and rejection of the proposal based on the decision of this department
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TREASURY / FINANCIAL MARKETS:
Foreign Currency Deposits
Spot and Forward
Exchange
OVERVIEW OF PRODUCTS
The figures above give a brief overview of products and services provided by a bank.
INTEGRATED CASH MANAGEMENT SERVICES
Product/ Services
Cash Management
PAYMENTS
Cash Withdrawl
Bankdraft
Cheque
COLLECTIONS
Cash Deposit
BankDraft
Cheque
Direct Debit
TRADED SERVICES AND SUPPLY CHAIN
Product/ Services
Documentry Credit
Documentry Collections
IMPORT
Issuance and amendments of LC
Special credit
Documents against Acceptance &
Payments
EXPORT
LC Confirmation
Advising and Negotiation of LC
Re-Imbursement Undertaking
Documents against Acceptance &
Payments
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OVERVIEW OF RBS LOAN PRODUCTS
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Secured loans
Conventional Mortgages:
Following are the different mark-up rates for mortgages.
MARKUP:
Slabs Benchmark KIBOR Spread Total
Up to 4,999,999 1 year KIBOR+4.25% 12.93% 4.25% 17.18%
Between 5,000.000 & 9,999,999 1 year KIBOR+3.75% 12.93% 3.75% 16.68%
Between 10,000,000 & 19,999,999 1 year KIBOR+3.5% 12.93% 3.50% 16.43%
More than 20,000,000 1 year KIBOR+3.25% 12.93% 3.25% 16.18%
CHARGES:
Documentation, Stamp Duty & Government Levies
Actual
Legal Charges
3500
Late payment charges
Rs. 1,000/- or 10% of installment which ever is higher
Pre-payment penalty, Full pay-off & Partial pre payment
10% for all BTF cases.
Processing Fee
Rs. 5,000/-
Enhancement Fee
Rs. 5,000/-
Installment Collection Charges
Rs. 400/- per visit
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N Cash Facility (RUNNING FINANCE):
This facility is provided for
Empower the customers with financing to fulfill their business needs.
With Running Finance customer can fulfill his working capital/cash flow needs.
Markup of N cash facility (Running Finance)
Slabs Benchmark KIBOR Spread Total
Up to 4,999,999 3 Month KIBOR+4.00% 12.60% 4.00% 16.60%
Between 5,000.000 & 14,999,999 3 Month KIBOR+3.75% 12.60% 3.75% 16.35%
More than 15,000,000 3 Month KIBOR+3.50% 12.60% 3.50% 16.10%
Charges
Fresh case processing fee
up to Rs. 5,000/- upfront
BTF case processing fee
up to Rs. 5,000/- upfront
Enhancement case processing fee
up to Rs. 5,000/- upfront
Late payment charges
Rs. 100/- per day
Installment collection charges
Rs. 400 per visit
Loan Enhancement Facility
Choice between Running Finance or Installment Based financing
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N cash facility (Business Finance): with the Business Loan customer can invest in project financing, capital investment, business expansion or balance transfer from a running finance facility to a term loan.
Mark up of N cash facility (Business Finance)
Slabs Benchmark KIBOR Spread Total
Up to 4,999,999 1 year KIBOR+4.00% 12.93% 4.00% 16.93%
Between 5,000.000 & 14,999,999 1 year KIBOR+3.75% 12.93% 3.75% 16.68%
More than 15,000,000 1 year KIBOR+3.50% 12.93% 3.50% 16.43%
Charges:
Fresh case processing
fee
Up to Rs. 5,000/- upfront
BTF case processing fee
Up to Rs. 5,000/- upfront
Enhancement case processing fee
Up to Rs. 5,000/- upfront
Late payment charges
Rs. 1,000/- or 10% of installment
which ever or higher
Installment collection charges
Rs. 400 per visit
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WHEELS
RBS cherishes the relationship with its customers; they will be accommodated with assistance from Relationship Managers who will facilitate them through the procedure until they find exactly what they want.
Markup of Wheels
Slabs Benchmark KIBOR Spread Total
Less than 600 K 1 year KIBOR+4.50% 12.93% 4.50% 17.43%
More than 600 K 1 year KIBOR+4.00% 12.93% 4.00% 16.93%
Existing AAB Customers 0.5% discount on above
Charges:
Processing Fee
Up to Rs. 5,000/-
Re-issuance of purchase order
Up to Rs. 1,000/-
Late payment charges
Rs. 600/- per month
Installment collection charges
Rs. 400/- per visit
Full prepayment of Cars with registration:
During first 6 months
10% (on outstanding amount)
During 7th month to 12 months
8% (on outstanding amount)
During 2nd year
6% (on outstanding amount)
During 3rd year
4% (on outstanding amount)
4th year onward
2% (on outstanding amount)
Partial Prepayment :
Upto 1st year
5% (on amount being prepaid)
During 2nd year
4% (on amount being prepaid)
During 3rd year
3% (on amount being prepaid)
After 3rd year
2% (on amount being prepaid)
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Cash near Cash
Help the customers to meet their sudden cash flow needs.
Acquire funds against your existing deposits or near cash instruments without liquidating
them.
Earn income from your pledged deposit or near cash instrument without it being
disturbed.
Markup for Cash near Cash
Slabs Minimum Bench mark
Branch/Preferred Customers 3 month KIBOR*+0.75% RBS Staff 3 month KIBOR*+0.25%
Charges
Loan against Shares
Loan against Shares (LAS) facility enables customers to take a loan against the shares invested in companies listed on the KSE-100 index and release the initial investment at its current market value. Their slogan is
Get more than just dividends - get the competitive edge with Loan against
Shares .
Charges:
Financing against shares
1) Pledged Share Scrips
Rs. 1,000/- per charge requested
2) Forced Facility Liquidation Fees
Rs. 5,000/- Plus applicable brokerage charges
Balance Confirmation Certificates
Rs. 300/- per certificate
Balance Confirmation Certificates to auditors
Rs. 1,500/- per certificate
Mark up Settlement
Up to Rs. 7,000/- if mark up is not paid within specified period
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BTF (Balance Transfer Facility)
BTF is the most convenient, flexible, economical and easy-to-use loan facility designed to suit
customer needs and gives them the power to control their finances. It offers a variety of features
that provide the spending convenience a customer actually craves for.
Markup of BTF
Slabs Benchmark
Salaried & SEP 26.0%
Self Employed Business Segment 29.9%
Schedule of Charges
Mark up Rate may vary for different customer segments
Mark up Rate Up to 35% per annum
Late Payment Fee
Rs. 500/- or 10% of the minimum amount whichever is higher
Enhancement Fee
Up to Rs. 1,500/-
Cash Withdrawal over the counter from BTF accounts
Up to Rs. 150/-
Cancellation of BTF Pay Orders over the counter
Up to Rs. 200/- per pay order
Personal Loans Whether a customer want s to reorganise their finances, pay for a major purchase such as a car or
home improvements or simply give themselves more financial flexibility, RBS offer a range of
affordable loan options.
Markup of Personal Loans
Slabs Benchmark
Salaried A&B 22.0%
Salaried C 25.0%
Self Employed Persons 22.0%
Self Employed Business Persons 29.99%
Unapproved Segment 28.0%
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Schedule of Charges:
Mark up Rate may vary for different
customer segments/loan tenure
Mark up Rate 35% per annum
Processing fee*
Up to Rs. 2,000/- or 1% of the loan
amount whichever is higher
Late Payment Fee
Rs. 500/- or 10% of the installment amount whichever is higher
Credit Cards Facility
Platinum Credit Card: It provides luxurious facilities to the customers and they can enjoy a
selection of the finest privileges complementing their superior preferences and lifestyle.
Air blue Credit Card: We can take credit to spend on Fuel Groceries, Restaurants, utilities, entertainment, and anywhere else. Its a master card of RBS.
Gold Credit Card: Our Gold Credit Card charges a fixed rate on transferred balances, until they
are repaid. It could help to shrink your balance. This offer is available exclusively to existing RBS
current account customers and only available online.
Markup of Credit Cards
Slabs Benchmark
Airblue Credit card 39.0%
Gold Credit Card 39.0%
Platinum Credit Card 18.0%
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Schedule of Charges:
Annual Fees
Primary Cards
Blue / Standard - up to Rs. 2,000/-
Gold - up to Rs. 4,000/-
Platinum - up to Rs. 15,000/-
Supplementary Cards
Blue / Standard /Gold - up to 1,000/-
Platinum - up to Rs. 2,000/-
Joining Fees*
Primary Cards
Blue / Standard - NIL
Gold - NIL
Platinum - NIL
Supplementary Cards
Up to Rs. 500/- (First 2 supplementary cards free)
Tenure in months Service fee (%)
6 30.23%
12 31.72%
18 31.76%
24 31.46%
30 31.04%
36 30.59%
42 30.14%
48 29.70%
54 29.28%
60 28.88%
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Net Assets of RBS as on June
30, 2009 are Rs. 9,346,762,000.
CREDIT POLICY
GENERAL DEFINITION: Credit Policy is the clear, written guidelines that set the following basic things:
(1) The terms and conditions for supplying goods on credit
(2) Customer qualification criteria
(3) Procedure for making collections
(4) Steps to be taken in case of customer delinquency.
It is also called collection policy4.
OBJECTIVES:
SBP regulations and economic conditions are kept in mind while designing the techniques and
objectives for credit management strategy. Following are some of the objectives of SPCBs credit
policy:
o Enable the bank to develop long-term business plans. o Equip the bank to face the ever changing competitive scenario more effectively and act proactively
rather than reactively. o To be a source of confidence to the lending officers and enable them to operate more effectively
within the framework of approved delegated authority. o Provide a framework of reference and standards and to enable the bank to provide uniform
treatment to the borrowing customers. o Provide guidance for what to do, not how to do. o Properly serve the credit needs of current customers by satisfying them and establish long-term
relationship with them. o Provide a framework in which to conduct business.
SBPS REQUIREMENT: It is SBPs requirement that every bank should keep 2% of its total capital as reserves with the State
Bank. SBP approves every loan and provides comprehensive
directions to every bank in the prudential regulations. These
instructions are same for every bank but banks could make certain
changes in the level of deposits, advancement ratio and their loan portfolio. Total amount of loan
advancement is totally dependent on SPCBs credibility situation.
4 Source:businessdictionary.com
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CREDIT POLICY OF RBS
Credit Standards Followed By RBS:
The RBS credit standards are as follows:
DIVERSIFICATION:
RBS being a clever financial institution doesnt invest in just one sector. It follows the basic rule
i.e.
DONT PULL ALL YOUR EGGS IN ONE BASKET!!!
Their focus is on the following sectors:
SECTORS LIMIT OF LOANS
Small Medium Enterprise (SME) 50 million Commercial Sector 50-350million Global banking and Markets Above 350 million
SAFETY:
RBS follow the SAFETY-FIRST principle i.e. Money given as loan
must be used properly. The credit risk management department handles this principle.
The following five elements(Cs) help a banker in
arriving at the conclusion regarding safety.
Character: Borrowers intention to repay the
advance, since his honesty and integrity is of
significance.
Capacity: Mixture of academics and experience in
the relative field and ability to repay. And How well
do we understand and know the relevant customer.
Capital: it means how much you are willing to invest your money.SBP restricts the
misuse of banks money.
Conditions: Bank should analyze the economic, business and socioeconomic
conditions to secure the loan.
Cash-flows: Cash flow statement of the customer should be analyzed to secure the
loan. We analyze the inflow and outflow of cash.
Agriculture
financing is just 1-
2% because SBP
makes it essential
for the bank.
RBS focuses on 3cs: CHARACTER,
CAPITAL.CAPACITY
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Liquidity condition
means tendency of
convertibility of
assets into cash.
LIQUIDITY: bank should analyze the liquidity condition of its and its
customer.
PROFITIBILITY: Profits are as important to RBS as are to the other
organizations as they also have different types of expenses. The
main source of income for RBS is the amount it charges from its
customers as mark up. Therefore, the RBS may prefer a customer
with low risk and reasonable markup to ensure an optimal profit.
DESIRABILITY: RBS focuses that money should be used for agreed purposes.
CREDIT RISK AND RETURN: The Credit risk management focuses risks associated with
the loans and their repayments.RBS focuses on short term loans to avoid defaults.
CENTRALIZED AUTHORITY: The decision making power regarding credit policy and any loan approvals is centralized in RBS. They are
moving toward the hub concept. This has a negative impact on potential or prospective customers
because any person wanting to acquire a small loan in a few days time has to wait a lot and as a result a
number of applicants cannot be satisfied. RBS credit policy hinders such activity because having no
power and setup to verify credentials etc, the process at the head office takes minimum 15days. But this
step is also going to show the confidential output by bank.
FUNDED AND NONFUNDED FACILITIES Both funded and non-funded facilities are provided by RBS but the preference is to provide non funded
facilities as it involves lower risk.
SECTORAL BASED LENDING RBS extends loan to almost all the sectors except for certain unapproved segments. However, RBS
focuses on consumer, commercial, corporate, agriculture, construction, engineering, automobiles and
fertilizers sector. No loans are available for textile sector this time because of the bad conditions of this
sector. RBS is moved the directions of its credit policy toward the recovery of its loans.
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NICHE MARKETING Their marketing objectives and techniques are based on niche marketing. They target on salaried class
which they have named as Category A. This is because salaried class is more conscious about making the
payments on time and it is easier to recover loan from them as compared to any other class. In current
economic conditions of Pakistan and worldwide recession, its the basic pillar of RBS which is not only
secured but also profitable but because of rapidly unemployment, RBS not advancing loans to this sector
but again we will say that they are not destroying their customers of this sector even at the time of
recovery. They are providing their non funded facility mostly to salaried based sector after all they are
golden pillars of RBS.
UNAPPROVED SEGMENTS Unapproved segments are the segments to which bank does not extend loan due to some reasons.
These include lawyers, journalists, farmers, money changers, politicians.
TIME REQUIRED FOR APPROVAL OF LOAN As RBS is a multinational bank it takes a long time of 15 days for any loan to get approved from the head
office because it does not give decision power to each branch. It has centralized system. The
preparation of documents also required a lot of time because of manual working system. Due to this
reason RBS is also losing a great number of its customers.
PATTERN OF INSTALLMENTS RBS prefers quarterly payments as part of their selling terms set with the customers in advancement of
the loan. However, such terms may vary from customer to customer and situation to situation.
CREDIT CARD Client can withdraw cash up to 75% of the available shared credit limit (if he is holding more than one
RBS Credit Card). For example, if your shared credit limit is PKR 300,000 and your cash withdrawal limit
is 75%, you can withdraw up to PKR 225,000.
NPL Ratio RBS NPL ratio is comparatively good if we consider the financial crisis and current position of the bank.
Reason behind this is that they dont accrue their revenues .Instead they are recorded when actually
incurred. Thats why their books show the good position.
REVISION OF CREDIT POLICY The credit policy is revised at least quarterly to incorporate the economic and financial changes in the
country. Similarly, any change in the prudential regulations by the State Bank of Pakistan and socio-
economical factors can prompt the bank to revise its policy in the given scenario accordingly.
Their policy also changed according to risks and opportunities in the market like payment incentives
54(flat rate, computed rate) and low risk credit policies (advance payment & LC). So according to this
policy, now a day RBS is working with flat rate
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The customer having between 1-6
months credit history reflecting in e-CIB
will be considered as NTI's.
INCOME REQUIREMENT
Minimum Income of Salaried, SEB, SEP, NTI & Branch Banking Segment are:
Segments Net Income (PKR)
A,B,C, Unapproved & Contractual 40,000 SEP 50,000 SEB/ NTI * 50,000
Branch Banking 50,000
Where;
SEB stands for Self-Employed Businessman
SEP stands for Self-Employed Professional.
NTI stands for New to the industry.
A includes bankers and clients with a good pay back history. They are given credit up to 4times of their salary.
B includes all the employees related to the textile sector. They are given credit up to 3times of their salary.
C includes the government employees. They are given credit up to 2times of their salary. Unapproved are given credit up to2 times of their salary.
TIME PERIOD FOR FINANACING
Running finance: its short term loan
Demand finance: 1 to 5 years maximum time period for this loan because it fulfilled the specific need of
the customer like construction.
Term finance: 5 to 10 years maximum time period but in this loan the installment is involved.
LC FACILITY
RBS focused on hypothecate based facility.
Collateral Based Lending: Bank focuses on financing backed up by a security. Because there is no proper documentation system
and Corruption rate is high!!
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CDR (Credit deposit Ratio) position of RBS: RBS has to reserve 30% in form of reserves in SBP (State Bank of Pakistan). This 30% can be reserved in
different forms as cash, T Bonds, T Bills and anything which can be easily convertible into cash.
RBS cash reserve ratio is 5 to 7 percent
SAFTY MARGIN:
For funded based facilities: 10 to 25 percent is the average safety margin rate. It varies
customer to customer. Its also varies by securities and liquidity position of the customers.0%
safety margin can also be for those customers who are most reliable customers.
For non- funded based facilities: on average the 15% to 35% safety margin is taken.
If government has to stop the imports of anything to support the local production, SBP ordered to
increase this safety margin. For critical items like perishable items this safety margin can be 100%.
CREDIT POLICY FOR RENEWALS & ENHANCEMENT Following are the requirements for renewals:
Actual last year business progress Clean up condition for one year Basic Borrowers fact sheet report Credit Information Report Auditing Report of their business Bank Reference Personal Reference Customer has also to provide the action plan that the money which has been enhanced where
to use. The reason for which request of renewal is given.
SPREAD: RBS is stated to be charging around 2%-4% spread to its customers with negotiations or bargains with
customers even though they might not always be providing ancillary business to RBS. This depends on
the customers track record and his credibility.
RBS invests extensively in mortgages and as fewer mortgage investments are present, RBS has the
opportunity to charge high mark ups. The high charges cover the costs incurred on those who have
defaulted.
PAYMENT INCENTIVES: RBS deals with flat rate because flat rate does not consider TIME VALUE CONSTRAINT. Being customer
friendly it helps the customer to forecast his budget .this is rate is not affected by economic conditions.
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Documentation Required By RBS for Facilitating a LOAN:
Sole Proprietor: Call report
Id card.
Address and other business related information.
BBFS (Borrower Basic Fact Sheet).
E-CIB report.(Electronic Credit Information Bureau Report)
Credit Worthiness Report
Bankers Report
Partnership: Call report
Id card.
Address and other business related information.
BBFS (Borrower Basic Fact Sheet).
E-CIB report.(Electronic Credit Information Bureau Report)
Partnership deed.
Credit Worthiness Report
Bankers Report
Company: Call report
Basic Information Report
Companys e-CIB report.
Id cards of Directors.
Financial Statements.
Directors search and Assets Charges search report.
BBFS (Borrower Basic Fact Sheet).
Credit Worthiness Report
Bankers report
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Security Based: Based on different securities, bank requires the following documents:
Cash deposit: Letter of Lien on cash deposit with the signature of borrower.
Govt. securities: Letter of Lien on Govt. securities e.g.; T-Bills etc.
Shares: Letter of Lien obtained by bank with the help of ID assigned by SECP.
Property:
Title document:
o Sale deed
o Lease deed
o Transfer letter
Memorandum of deposit of title deed.
Personal guarantee by third party.
Letter of Lien on property.
Approved map of the location where the property is located.
General Power of Attorney (GPA).
PT-1 form is required for old cities, which had been settled by Settlement Commission during
partition.
Mortgage Deed (except DHA).
Faard and Letter of Lien are required from registrar in case of agriculture land.
Other Legal Documents:
Pro-note: It is a promissory note in which the customer promises to pay principal and markup.
Markup agreement: It contains all the terms and conditions related to markup e.g.; calculation
of markup at flat or computed rate etc.
Letter of Continuity (LOC).