CHAPTER 11 & 12

AXIS BANK

Fund based limit

Fund-based limits refer to the credit facilities provided by Axis Bank, which involve the lending of
actual funds to the borrower.

These include facilities like

 cash credit,
 overdraft,
 term loans, etc.

These facilities provide access to funds that the borrower can use for various purposes, such as
purchasing raw materials, financing working capital needs, or investing in business expansion.

Non-Fund based limit

Non-fund based limits, on the other hand, refer to credit facilities provided by Axis Bank that do not
involve the lending of actual funds.

These include facilities like

 bank guarantees,
 letters of credit, and
 standby letters of credit.

These facilities are designed to provide a guarantee or assurance to the beneficiary (usually a supplier
or vendor), that payment will be made by Axis Bank in case of default by the borrower.

Bank guarantees are issued by Axis Bank to guarantee payments to a third party in case the borrower
fails to meet its obligations. A letter of credit is a promise by Axis Bank to pay the beneficiary a
certain amount of money, subject to certain conditions being met. Standby letters of credit are like
bank guarantees, but they are used primarily for international trade transactions.

Fund-based limits involve the actual lending of funds by Axis Bank, while non-fund-based
limits provide a guarantee or assurance to the beneficiary that payment will be made in case of default
by the borrower. Both types of limits can be useful for businesses that need access to credit to finance
their operations or expand their business.
CREDIT DISBURSAL

Axis Bank is a leading private sector bank in India that offers a wide range of financial products and
services including loans and credit facilities. The bank provides various types of credit disbursal
services to its customers, such as:

Personal Loans: Axis Bank offers personal loans to individuals to meet their various financial needs
such as marriage, travel, education, medical expenses, etc. The bank provides personal loans with
easy documentation, quick disbursal, and attractive interest rates.

Interest rates with tenures of 36 months.

Fixed Rate Loan 1 Year MCLR Spread over 1Year MCLR Effective ROI Reset
Personal Loan 8.90% 4.65%-13.65% 10.49% to 21% No Reset

Home Loans: Axis Bank offers home loans to individuals who want to purchase or construct a house.
The bank provides home loans with flexible repayment options, attractive interest rates, and quick
disbursal.

Interest Rate on Home Loan

For Salaried Individuals

Type Repo Rate + Spread Effective Rate of Interest

Floating Rate Repo Rate + 2.50% to Repo Rate + 2.90% 8.75% - 9.15% p.a.

Fixed Rate All Loan Amounts 14% p.a.

For Self Employed Individuals

Type Repo Rate + Spread Effective Rate of Interest

Floating Rate Repo Rate + 2.60% to Repo Rate + 2.90% 8.85% - 9.15% p.a.

Fixed Rate All Loan Amounts 14% p.a.

Business Loans: Axis Bank offers business loans to small and medium-sized enterprises (SMEs) to
meet their working capital and capital expenditure requirements. The bank provides business loans
with flexible repayment options, competitive interest rates, and quick disbursal.

 zero collateral or security requirements

 The interest rate on a floating rate of interest ranges from 11.05% to 17.75%.

 Fixed interest rates ranging from 14.25% to 20% per year.

Credit Cards: Axis Bank offers a range of credit cards to its customers, which come with various
features and benefits such as cashback, reward points, discounts, etc. The bank provides credit cards
with easy documentation, instant approval, and quick disbursal.

 Interest rates range from 12.60 to 22.20% per annum, with several tenure options available.

To avail of these credit disbursal services from Axis Bank, customers can apply online through the
bank's website or by visiting the nearest branch. The bank will verify the customer's eligibility and
creditworthiness and then disburse the loan or credit facility.

Axis Bank Kisan Credit Card

 Axis Bank's Kisan Credit Card is specifically designed for farmers.

 This service is provided by the bank to assist farmers in staying informed and obtaining
financial assistance for all their crop and maintenance needs.
 Insurance is also provided by the system.
 The Kisan Credit Card (KCC) enables farmers to obtain low-interest loans with simple
processing and sanctions.

Facility Type Mean interest rate Max Interest rate Min interest rate
Production credit 12.70 13.10 8.85
Investment credit 13.30 14.10 8.85
 CENTRAL BANK

Fund and non-fund based limit

Fund-based limits and non-fund-based limits are both types of credit facilities that banks and financial
institutions offer to their customers. These limits are regulated by the central bank of a country, which
sets guidelines and regulations for the lending practices of banks and financial institutions.

Fund-based limits refer to credit facilities where actual funds are disbursed to the borrower. Examples
of fund-based limits include term loans, cash credit facilities, overdrafts, and letter of credit facilities.
These facilities involve the actual transfer of money from the bank to the borrower.

Non-fund-based limits, on the other hand, refer to credit facilities where the bank does not disburse
any funds to the borrower. Instead, the bank issues guarantees, letters of credit, and other types of
instruments that act as a guarantee for the borrower's payment obligations. These facilities do not
involve the actual transfer of money from the bank to the borrower.

The central bank of a country regulates both fund-based and non-fund-based limits by setting
guidelines for the amount of credit that banks can extend to their customers, the interest rates that can
be charged, and the documentation and collateral requirements. These regulations are aimed at
ensuring the stability of the financial system and protecting the interests of both
borrowers and lenders.

CREDIT DISBURSAL

Credit disbursal is the process of lending money to a borrower by a lender or financial institution.
This process involves evaluating the creditworthiness of the borrower and determining the amount of
credit that can be extended to the borrower based on their financial profile, credit history, and other
relevant factors.

The credit disbursal process typically involves the following steps:

Application: The borrower submits to the lender a loan application that includes personal and
financial information as well as the loan's purpose.

Verification: The borrower's identity, income, employment, credit history, and other relevant
information are all verified by the lender.

Creditworthiness assessment: Based on the information provided, the lender evaluates the
borrower's creditworthiness and determines the amount of credit that can be extended.
 Approval: The loan is approved if the borrower meets the lender's credit criteria, and the borrower is
informed of the loan's terms and conditions.

Disbursal: The loan amount is disbursed to the borrower via check or electronic transfer to the
borrower's bank account by the lender.

After the credit disbursal, the borrower is responsible for repaying the loan amount along with any
applicable interest and fees according to the loan agreement.

INTEREST RATES:

HOME LOAN

REPO Rate 8.35%

Loan Amount Up to 90% of the cost of the home

Processing Fees NIL or up to 0.50%

Penal Interest Rate -

Prepayment/Foreclosure Charges NIL for floating rate home loans

Max Tenure 30 Years

Rate Packages Available Floating

PERSONAL LOAN

Interest rate 10.70%-12.30% p.a.

Loan Amount Up to Rs 15 Lakh

Tenure Up to 7 years

Processing Fee Up to 1% of loan amount

 Interest Rate @ 9.85% p.a. - 11 Mar’23

 BUSINESS LOAN

Interest rate 7.80% p.a. onwards

Loan amount Up to Rs 50 crore

Repayment tenure Up to 10 years

CREDIT MONITORING

Credit monitoring by a central bank refers to the process of tracking and evaluating the
creditworthiness and lending practices of banks and financial institutions in a country. This is done to
ensure the safety and stability of the financial system, protect depositors, and prevent financial crises.

Credit monitoring entails collecting and analysing data on banks' and financial institutions' credit
portfolios. This information includes the amount and type of loans and credit facilities extended by
banks, the credit quality of borrowers, the level of non-performing loans, and the adequacy of
collateral held by banks.

The central bank uses this information to assess the overall health of the banking sector and identify
potential risks and vulnerabilities. If the central bank identifies any issues or concerns, it may take
regulatory actions such as increasing capital requirements, setting limits on lending practices, or
requiring banks to improve their risk management practices.

In addition to monitoring the credit portfolios of banks, the central bank may also monitor the
creditworthiness of individual borrowers and companies. This may involve assessing their financial
statements, credit histories, and other relevant information to determine their ability to repay loans
and credit facilities.

Overall, credit monitoring by a central bank is a crucial function that helps to ensure the safety and
stability of the financial system and protect the interests of depositors and borrowers.