LEASE RENTAL DISCOUNTING (LRD)

TERM LOAN AGAINST RENT RECEIVABLES

Parameters Features
Nature of Facility Term Loan
Purpose To meet borrower’s liquidity mismatch (Proceeds of loan amount not to be used for any speculative purposes, whatsoever, including speculation on real estate and equity shares). A Certificate regarding the end use of funds should be obtained stating that the funds will be utilised for the purposes required in the usual course of business and not utilised for speculative, real estate purposes.
Target Group All MSME Units along with Individuals which are owners of Residential & Commercial Properties let out on Rent
Eligibility Criteria Owners of residential buildings and commercial properties, which are to be rented or already
rented to MNCs / Banks/ Large & Medium size Corporates / Government Offices (both Central and State)/reputed Public bodies such as Municipal Corporations etc.
However, the properties should not be or have been leased to Social Infrastructure projects such as Schools, Colleges, Orphanages, Hospitals, Old age homes, Nursing homes etc.
Quantum of loan (Min/Max) Min: Rs. 10 lacs
Max: Rs. 50 Cr for NBG; 500 Cr for MCG
Scale of Finance i.Lowest of:
a. 95 % of Net Present Value (NPV) of net rent receivables as per 1 yr MCLR
OR
b. 70% of realizable value of the property mortgaged
OR
c. Upto Rs.50 crore: 70% of net rent receivable for the residual lease period including the period covered under one renewal or loan tenor, whichever is less
Above Rs.50 crore:
75% of net rent receivable for the residual lease period including period covered under renewal clause or loan tenor, whichever is less
Pricing Competitive Pricing Linked to MCLR
Collateral Security Equitable Mortgage on building against the rentals of which the loan would be sanctioned or any other acceptable property of similar value. The realizable value of property to be mortgaged should be at least 143% of the loan amount
Repayment Period Repayment of loan should be through EMI. An escrow account should invariably be opened with our Bank for credit of rentals against which the loan is sanctioned.
Processing Fee/Upfront Fee As per extant instructions
Other Conditions
  • The Loan should be disbursed only after:
    i. The execution and registration of Lease Deed.
    ii. Noting of EM is mandatory in States where such provision exists. Where creation of EM is not possible Registered Mortgage should be done.
    iii. The occupation of premises by lessee or after the receipt of first lease rent whichever is later.
    Standing Instructions have to be set up in CBS for transfer of the EMI from the Escrow Account to Term Loan account.