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Banking > Basics > Loan Accounts > Commercial Lending > Corporate Loans


Corporate Loans

These loans are meant for corporate bodies (and bigger ones among other entities like proprietorships, partnerships and HUFs) engaged in any legal activity with the object of making profit. Banks lend to such entities on the strength of their balance sheet, the length of cash cycle and depending upon the products available with individual banks.

Lending on the strength of balance sheet
Banks analyse the audited balance sheets of the prospective borrowers to appraise their needs as also the capacity to absorb credit. Prospective borrowers are required to furnish their financial details in the form of CMA data to the bankers and file an application for the loan. This application is processed and a line of credit (limit) allowed to the borrower. The overall limit (line of credit) is structured into various type of facilities or accounts - each with its own limit within the overall line of credit - depending upon the needs of the customer. The borrower is then asked to execute Bank's standard documents, surrender the security or title to the security to the Bank and open suitable accounts (mostly Cash Credit accounts with different underlying securities) with the Bank. Thereafter the borrower can operate these accounts within the limit (line of credit).

There are many type of loan products available for corporate clients in India. The loans are structured depending upon the need of the client and the product available with the lending Bank

 

 

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