16.8 Banking Law and Practice (tt) The period of such bridge loan should not exceed four months. (Us) No extension of time for repayment of bridge loan will be allowed. (o} To ensure that bridge loan sanctioned is utilised for the purpose for which the term loan has been sanctioned. im November 1997, Reserve Bank permitted the banks to grant bridge loans to companies {other than non-banking finance companies) against public issue of equity in India or abroad. es for sanction of such loans are to be laid down by each bank and should following aspects : ) Security to be obtained for the loan. "The quantum of outstanding bridge loan (or the limit sanctioned, whichever Is higher) Bnsuring end use of bridge loan. ‘maximum period of the bridge loan to be one year. Composite Loans When a loan is granted both for buying capital assets and for working capital purposes, itis called a composite loan. Such loans are usually granted to small borrowers, such as artisans, {armers, small industries, etc. Pertonal Loans Commercial banks are now increasingly grantiig personal loans to individuals for various ‘purposes as the following table shows Personal Loans Granted by Scheduled Banks in India (is rove) ‘Bowes RB Trend & Progress of Banking tn India, 2008-08. ‘These loans are also called ‘retal loans’ as they are granted toa large number of borrowers. Housing loans, ato loans and educational loans account for a significant portion of personal Toans, Greater flow of eredit to these loans is due to Government and Reserve Bank's policies and also because some of these loans fall within the category of ‘priority sector advances’, ‘@g., housing loans, education loans. fon the security of tangible assets lke goods and commodities, land and bulldings, gold and silver, corporate and government securities, ete. A charge on any stich assets offered as security must be created in favour of the banker. () The market value of such security must not be less than the amount of the loan fat any time til the loan ts repatd. Ifthe former falls below the latter because of ‘means, possessing tangible assets and with sound financial position, but no charge or right fs created on any such assets of the borrower in favour of the banker. In such cases, the ‘such charges, which will be discussed in Chapter 16. FACTORS LIMITING THE LEVEL OF A BANK'S ADVANCES ‘The level of advances sanctioned by a banker depends upon the following T Taw relating to Guarantees le fully discussed in Chapter 28. a