Scope of Project
Loan Amount The minimum loan amount is SR25,000 and the maximum SR6,000,000 to any one project. A loan of more than SR 6.0million can be granted subject to the approval of the Principal Secretary of the Department of Finance. Interest The bank charges a fixed interest rate of 7.5% and 9% per annum, on projects, irrespective of their sector. An interest rate of 7.5% per annum is charged on all loans up to SR250,000 and 9% on loans above SR 250,000. Interest is payable during disbursement following the first disbursement of the loan. Interest is capitalized during grace period/moratorium.The penal interest rate is presently 10% p.a on accumulated arrears and is revised as permitted by the Central Bank. Personal Contribution Personal Contribution is the amount to be invested in the project by the promoter. It indicates the promoter's commitment and seriousness towards the project. The minimum personal contribution requested by the Bank varies between 25% to 40% of total project cost irrespective of sector/project. Personal contribution could only go down from 40% to 25% subject to the following: • An increased value in security being offered with security cover in excess of 1.5 times the loan amount. • Promoter's good repayment history with the bank. • Promoter's good experience in the activity of the project. • The bank's absolute confidence in the project. However, for loan amount above SR250,000/-,personal contribution can be negotiated and must not to be less than 25% of the project cost. Land as Personal Contribution The land value of where the project is being implemented can be considered as part of the personal contribution up to only 1/3 of its value. The land must be a freehold property. No value will be attached to a leasehold property. Expenses Incurred by the Promoter prior to Loan Approval Expenses incurred by promoter relating to the project prior to the loan approval can be taken as personal contribution as long as the time lag does not exceed one year. These must be evaluated by an independent qualified person accepted by the bank, should receipts not be available. Paying the Personal Contribution Proof of personal contribution must be seen before the loan is approved. This can be paid to the supplier and receipts submitted to DBS or the cash amount can be submitted to DBS. All project 's personal contribution has to be injected in the project first. In special circumstances the Bank can consider allowing the personal contribution to be injected in the project on a prorata basis to the loan. Duration of loan The loan repayment duration should, as a rule, not exceed 10 years excluding the grace period. However for projects above SR250,000/-, repayment period can be negotiable for up to a maximum of 15 years. The grace period as a rule should not exceed one year as maximum but again for projects above SR250,000/- grace period is negotiable up to a maximum of 24 months. Each project repayment duration is assessed on a case by case basis. The factors that are used as guidelines in deciding the duration of repayment and grace period are:- • Repayment capacity of the project. • Economic life expectancy of the assets involved in the project .e.g.vehicles: repayment over 4 to 5 years and 1 to 3 months grace. • New Hotels: 15 years and 2 year grace Securities Assets financed by the bank are always taken as the principal security of the loan either by way of pledge, mortgage, floating charge with their comprehensive insurance assigned to us. Bank guarantee can also be taken as security. In the case of loan given to individuals additional securities can be in the form of salaried individual standing as guarantor and reducing term life assurance. Whereas for companies additional securities include Directors/shareholders personal guarantee. The security cover should not be less than 1.5 times the loan amount. Working Capital Working capital can be considered as a component of the project cost for an initial/new project. The amount should not exceed 20% of the project cost. Processing fees The Board of Directors in its meeting of January 1997 approved the introduction of processing fee which is non-refundable at the rate of 0.5% of the loan amount. The ceiling is SR5,000. Legal fees All clients are required to make their own contributions towards payment for registration and preparation of legal documents such as mortgages, floating charges, pledges, etc. In addition expenses incurred by the Bank for services rendered for legal counsel, court fees and lawyers fees in connection with recovery of outstanding debts needs to be refunded by the client. Other fees With effect from January 2005 the bank has implemened a number of additional fees payable by the client. These are: • Unclear standing Order SR 50/- per transaction. • Rescheduling of Loans - 0.05% of rescheduled amount. • Transfer of Liabilities - 0.05% of amount transfered. • Capitalization of Interest - SR 100 • Extention of grace period - SR 100. Insurances It is a policy of the Bank that upon issuing a loan to a client any insurance taken on the property/asset is assigned to the Bank. Types of insurances assigned to the Bank includes, Vechilce Insurance, Marine Hull and Engine Insurance, Boat and Engine Insurance, Equipment and Household Insurance, and Mortgage Protection Insurance
Scope of Project
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Appraisal Criteria
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Application Procedure
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Application Checklist
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Loan Approval
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How to Apply
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