Loan Against Future Rent Receivables

Loan against Future Rent Receivables has been developed considering the growth potential in the real estate in various metros and urban centers, where many commercial properties/shopping malls are being developed and the owners approach banks for loans against securitisation of future rent receivables from such properties.

• The scope for the new product has been kept wide to cover the target groups, viz. owners of immoveable properties (lessor) belonging to all types of the constitution.
• The minimum and maximum loan limits are fixed at Rs. 25 lakhs and Rs. 200 crores respectively.
• The lessees can be of any category/constitution, except individuals. Properties involving lessees, who are reputed corporations/institutions/PSUs/Banks/MNCs, may be preferred.
• Loan under the scheme can be considered for different purposes, i.e. for all lawful economic activities as also for personal needs of the lessors. However, the facility should not be extended to any speculative purposes.
• The scheme provides for flexibility in respect of entering into tripartite agreement among the Bank, borrower and the tenant, by providing an alternative of obtaining a suitable letter of authority and commitment to pay rent direct to the Bank from the owner of the property and the tenant respectively, at the discretion of the sanctioning authority.

• Loan application.
• Certified Copy of Lease deed.
• Proof of income for applicant and lessee.
• Copy of IT Return.
• Certified copies of title deeds of the properties leased out and mortgaged, along with latest tax receipts.
• Copy of approved building plan.
• Tripartite agreement amongst the Bank, the borrower and the tenant/lessee providing for payment of the rent directly to the Bank OR letter from borrower for collecting rent direct and letter of undertaking from tenant/lessee to pay rent direct to Bank, whenever tripartite agreement is not feasible.

• Owners who have let out or propose to let out their premises to reputed companies/institutions, public sector undertakings/established commercial organizations/multinationals/banks.
• Landlords of Bank of Baroda Branch/office premises.
• Landlords of residential flats/houses leased out to Bank of Baroda for officers/executives quarters.

Note

The facility should be made available only to resident customers and not to NRIs.

Purpose

For meeting the expenses of renovation/alteration/addition to the premises rented, and other business/personal needs but not for speculative purposes.

Limit

55% of rent (in case of commercial real estate advances, 60% of rent (in case of non-commercial real estate advances) (net of TDS, advance rent, security deposit), due and receivable, for the unexpired certain period of lease.

Loan, which can be recovered/repaid through monthly rent (net of TDS, advance rent, security deposit), due and receivable, as an equated monthly instalment (EMI) for the unexpired period of lease.

Whichever is low

• Minimum: Rs. 25 lakhs
• Maximum: Rs. 200 crores

Suitable higher margin of 5% to 10% may be stipulated where a higher risk is perceived.

Security

• For loans up to Rs. 5 lakhs: Assignment of future rent receivables and third party guarantee acceptable to the Bank. Such loans should be classified as 'unsecured' and sanction should be as per discretionary lending powers for unsecured advances.
• For loans above Rs. 5 lakhs: In addition to assignment of future rent receivables, mortgage of the leased properties or any other immovable properties and/or pledge of NSC, KVP, IVP etc., the aggregate value of which should be at least 1.10 times the loan amount for commercial real estate (CRE) advances and 1 time of the loan amount of non-CRE advances. This requirement may be reduced to 1.25 times in deserving cases at corporate office level.
• Tripartite agreement amongst the Bank, the borrower and the tenant/lessee providing for payment of the rent directly to the Bank. Wherever tripartite agreement is not feasible such as in the case of Government departments/public sector units/multinational companies, sanctioning authority should stipulate that suitable letter from borrower for collecting rent direct to be obtained and lodged with tenant/lessee and undertaking from tenant/lessee to pay such rent direct to Bank should be obtained.

Processing Charges:

Escrow Charges :

Repayment Period

Loan to be repaid in equated monthly instalments (EMI) with a maximum period of 10 years or unexpired period of lease, whichever is less. Repayment to commence one month after disbursement.

Insurance

Insurance for full market value of properties in the name of borrower(s) to be mortgaged to Bank with Bank clause. Insurance to cover risks such as fire, riot, earthquake, etc.

Note

Certified copies of lease deed, tripartite agreement, letter of authority and letter of undertaking from tenant/lessee are to be got vetted by legal department/Bank's Legal Adviser, besides scrutiny of title to property by Bank's Legal Adviser.