Eligible customer Owners of residential buildings and commercial properties in rural/ semi-urban/ urban/ metro areas which are to be rented or already rented to MNCs/ Banks/ Large and medium size corporates. Period of repayment 7 years or the residual lease period, whichever is lower.

0.85 x {Monthly rent x (12 x 7 or residual lease period, whichever is less)} – (annual property tax x repayment period in years)} or 50% of the market value, as valued by the Bank’s approved valuer, of the property mortgaged, whichever is less, subject to maximum applicable.

Loan amount

Net rent (Less TDS) receivable for the lease period less our margin Minimum Rs.1 lakh, Maximum Rs.2 crore for non-corporates and Rs.5 crores for Corporates (restricted to a maximum of 50% of the value of the property mortgaged).

Margin

15%

Repayment

EMI equivalent to number of months of unexpired lease, maximum 84 months.

In cases where advance rent is being received, the EMI should be for the same frequency at which advance rent is received and the instalment should be front ended i.e. should be recovered at the beginning of the period.

Rate of interest

Competitive rates based on credit rating of proposal

Processing charges and cost of valuation

As per bank’s norms

Primary security

• Clean assignment of receivables and recording of power of attorney with the lessee is a must
• There could be a situation where the applicant is already having borrowing arrangements with another bank and current assets are already charged.  In such case it will be necessary for his bank to cede exclusive first charge on the rent receivable in new bank’s favour.

Collateral Security

1. First charge on buildings against the rentals of which the loan would be sanctioned (value of property should be double the amount of the loan)or any other acceptable property of equal value.
2. In case of partnership firm, personal guarantee of the partners of the firm. In case of companies, personal guarantee of promoter directors.
3. In the case of public limited companies, if the directors are not willing to extend personal guarantee and the collateral security in the form of equitable mortgage is sufficient, the stipulation of personal guarantee of directors may be waived on highly selective basis.

In cases where our Bank is the tenant and the loan amount does not exceed Rs. 25 lacs, stipulation of equitable mortgage may be waived subject to the condition that the lease deed should not expire during the currency of the loan.

Documentation

1. Application form
2. Arrangement letter
3. Agreement document. Charge to be registered with ROC.
4. Guarantee deed
5. Tripartite agreement between lessor, lessee of the premises and the Bank. In the case lessee not being in favour of executing the tripartite agreement, an irrevocable power of attorney from the lesser for collection of rent may be obtained and the same should be registered with the lessee.
6. Equitable mortgage of the building (Search report and valuation report from the Bank’s approved advocate and bank’s approved valuer should be kept on record).

An irrevocable letter is to be submitted by the borrower, addressed to the tenant, instructing that the rent be paid by cheque/ draft payable to Bank’s A/c……….. (landlord).