• SBI Loan against Debentures

    State Bank of India provides a specialised loan that aims to cash in on the value of debentures owned by any apologies. This loan from State Bank of India allows individuals and non-individuals to utilise the power of their investments without having to lock out of or liquidate them. These loans can help out in business or personal financial needs.

    Usage of State Bank of India (SBI) Loan against Debentures

    This loan is provided to individuals or non-individuals for any purpose that is not explicitly speculative, for inter-corporate investments or for acquiring controlling interest in any company or set of companies. Banking on the power of the debentures owned by the applicant, this loan is a powerful aid in financial terms.

    Eligibility Criteria

    An unsecured loan as this is, so it has a few eligibility criteria to be met in order for the bank to be able to sanction the loan. The eligibility requirements can be mentioned as follows –

    1. Applicants can be individuals, professionals, sole proprietorships, partnership firms and private limited companies (including closely-held public limited companies) and customers of State Bank of India
    2. Applicants should be at least 18 years of age when the loan is sanctioned
    3. Margin amount of 50% of the prevailing market prices of the non-convertible debentures are to be provided

    Types of Financing under State Bank of India Loan against Debentures

    Loan against Debentures from SBI is a specific demand loan with optional overdraft facility.

    Maximum Loan Amount

    Based on the credit-worthiness of the applicant, validity of documents and the debentures offered a security, State Bank of India can provide loans based on its discretion. The maximum limit of loans to be offered is INR 20 lakhs.

    The scheme is offered currently at 50 centres of the bank.

    Interest Rate

    Interest rates for a Loan against Debentures could depend on the base lending rate and is based on the discretion of State Bank of India. As of November 2015, the applicable rate of interest is Base Rate + 6.5% per annum. Further changes to the rates could be done by State Bank of India as and when required.

    Interest is charged only on the amount that is actually utilised as a loan in case of overdraft facility, irrespective of the overdraft limit that is allowed. Overdrafts are annually renewable, while demand loans are to be repaid within 30 months.

    Documentation required

    The standard list of required documents for applying for this loan are mentioned as follows –

    1. Photographs of individual applicant and/or co-applicant, directors and promoters, in case of a company & trusts, partners in case of a partnership firm or authorized person as applicable in case of societies
    2. IT Returns, audited profit and loss account statement and balance sheet for the last 2 years, six months bank statement of the primary current account and business proof
    3. Know Your Customer (KYC) documents
    4. Partnership deed, Memorandum of Association (MOA) and Articles of Association (AOA) or License issued under the Shops and Establishments Act of the respective states for business proof in case of non-individuals

    The above set of documents comprise the minimum required list. To aid in credit approval, State Bank of India might ask for extra documents if necessary.

    Features of State Bank of India Loan against Debentures

    The Loan against Debentures from State Bank of India is a good financing option for urgent financial needs on business or personal grounds.

    Some key features of this specialised loan are as follows –

    1. Loan tenure or repayment period is annual and renewable per year
    2. Minimal documentation and faster approval
    3. No security or collateral required (pledged debentures act as security)
    4. Loan amounts are variable as per the performance of the shares

    How to Apply?

    The loan can be applied for through State Bank of India’s website, as well as forms can be downloaded, filled and submitted along with relevant documents at a local branch. Additionally, one could call or mail State Bank of India requesting an executive assistance for application process.

    One can also apply for State Bank of India Loan against Debentures through BankBazaar, wherein eligibility charts, EMI calculators and infographics can guide one through the application process.

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