The trader loan offered by UCO Bank helps in financing the term loan and working capital requirements of wholesale and retail traders.
Eligibility criteria for UCO Bank Trader Loan
Customers who wish to take out a trader loan from UCO Bank must meet the following requirements to gain eligibility:
- Must an existing enterprise that has been in operation for a minimum of two years
- The enterprise must have earned a profit over the past two years
- Must be an individual, limited company, proprietorship, borrowing concern or HUF that is dealing exclusively with UCO Bank only.
Features of UCO Trader Loan
- The minimum amount of money that is granted in this loan is Rs.1 lac and the maximum is Rs.200 lacs.
- The Term loan has a maximum limit of Rs.25 lacs for acquiring fixed assets if it is fund based.
- Inland letter of credit for deferred payments or DA with since period should not be more than 90 days.
- The validity period for inland bank guarantee extends to one year including claim.
- Primary-Hypothecation of fixed assets, book debts and stocks can be used as security if the existing units have been making profit for a minimum of two years.
- Assignment of LIC policy, collateral equitable mortgage of land of building, pledge, lien/assignment of KVP, bank’s own FDR, NSC, RBI/government bonds are also accepted.
Limits (least of the following)
- 60% on immovable property’s realisable market value or
- 90% on FDR in case the limit is in excess of 60% of the value of the project
- 85% on government bonds, NSCs and LIC Policies’ surrender value in case it is sought as extra limit
20% of gross yearly sales in existing units as shown in the last Sales Tax return/Sales Tax Assessment order/Service Tax Assessment Order/VAT Assessment Order or Return or Declaration/Return given by the customer, whichever is lower.
Benefits of UCO Trader Loan
- A margin is not required for cash credit if they are existing units and 20 or 25% for units when calculating drawing power.
- The margin for term loan, letter of credit and bank guarantee is 25%.
- Simple application process.
- No balance sheet required if the maximum limit is Rs.10 lacs.
- Balance sheet not compulsory if the limit is below Rs.50 lacs.
- New trading units and those that have not yet completed two years can be financed to the extent of Rs. 10 lacs.
- By all the directors of the company
- By all the partners of the firm if it is a partnership firm
- By karta and other major coparceners of HUF
- By owners of immovable properties offered as collateral security
Interest Rate of UCO Bank Trader Loan
The interest rate applicable to a trader loan from UCO Bank is the base rate and BPLR. In case of DRI advances, the rate is 4%. In case of agricultural advances, the spread over base rate (SOBR) is 1% and the effective rate is 10.7% if the total funded exposure is under Rs.25 lacs. The SOBR is 2% and the ER is 11.7% if the overall funded exposure is over Rs.25 lacs and less than Rs.1 crore. The SOBR is 1.5% and the ER is 11.2% if it is financed to rice sellers and the overall funded exposure is over Rs.25 lacs and less than Rs.1 crore. For crop loans under Rs.3 lacs where interest subvention is an option, the effective rate is 7%.