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#1
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How mark-up is calculated on fund base advances?
AOA
How mark-up is calculated on fund base advances? names of any four fund base advances. tomorrow i am going for viva voce plz pray for me |
#2
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although i am not Raz bhai but still wanted to reply you as its an urgent matter for you.
As an example All Consumer Financing products of different banks fall under the category of Fund Based Advances. Any advance to customer where the Financial Institution has to part with money immediately is a fund based facility. Names of 4 fund based advances include: Running Finance Home Loans Car Loans Personal Loans cash finance etc. however all these advances are definitely fully or partially secured according to product characteristics, consumer history, banks own margin requirements and SBP requirements. Non fund based advances include Letter of Credits, Bank Guarantees, etc. These facilities don't represent any immediate outflow of money for bank and are contingent in nature. These get converted into fund based facilities when called upon/default. As far as the mark-up is considered the calculation will depend on the product characteristics. like for car loans a single compound annual rate maybe used while the calculation will be more complex in case of running finance etc. I hope this helps you dear. |
#3
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Quote:
In fund based facilities mark up is calculated on daily basis . Generally, (KIBOR + agreed spread) is the mechanism to calculate mark up. Fixed mark up or floating mark up is again dependent upon the nature of facility approved. Decision about KIBOR like one month, three months etc. and spread like 1.5 or 2 or 2.5 varies from product to product and borrower to borrower depending upon: Risk involved: High, Medium, Low (for the Facility + for the borrower) Financial Capacity, financial soundness, cash flows, repaying capacity Repayment behavior, customer's intensions and his track record Strength or weakness of collateral / security Business relations, group companies relations, future business opportunities, level of business Sector involved like energy, food, fertilizer, Textile, manufacturing, telecom etc. Level of comfort of bank's management over the borrower Bank's liquidity position SBP Discount rate indication Market competition, Peer Banks' benchmarks Overall economic conditions Formula: Varies from case to case due to above mentioned factors Generally: = KIBOR(one month, 3 months etc.) + Agreed spread (0.5% or 1.00% or 1.5% or 2% p.a.) Or = KIBOR + Specific Margin Or KIBOR + Bank spread + Margin ~ KIBOR = Karachi Inter Bank Offered Rate >Consumer products attract fixed mark up. >Non fund facilities are subject to Commission. Every facility which appears on the balance sheet of bank is fund based facility. Some examples are as follows: Fund Based RF CF ERF–II FATR FAPC/ ERF-I (Pre) FAFEB/ ERF-I (Post) FADD FBP FIM Non Fund Based Guarantees Letters of Credit - Usance Letters of Credit – Sight Wish you good luck for tomorrow Regards
__________________
"Tumhary nafs ki qeemat Janat hay isy Janat say kam qeemat pey na bechna." "Jiyo to istarh ky log tum sy milny ko tarsy; maro to istrah k log tumharee mot par royain" Last edited by Andrew Dufresne; Monday, March 14, 2011 at 11:10 PM. |
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hailian_boy (Tuesday, March 15, 2011) |
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