Non Fund Based Products

The credit facilities given by the banks where actual bank funds are not involved are termed as 'non fund based facilities'. These facilities are divided in three broad categories as under:

  • Letters of credit
  • Guarantees
  • Co acceptance of bills/deferred payment guarantees.

Units for the above facilities are also simultaneously sanctioned by banks while sanctioning other fund based credit limits.

Facilities for co acceptance of bills/deferred payment guarantees are generally required for acquiring plant and machinery and may, technically be taken as a substitute for term loan which would require detailed appraisal of the bor¬rower's needs and financial position in the same manner as in case of any other term loan proposal. The co acceptance limits may also be sanctioned under IDBI's Bill Rediscounting Scheme which has been discussed in detail in chapter 5.