Oriental Traders Loan Scheme (OTLS)

Oriental Traders Loan Scheme (OTLS) enables hassle free credit to Traders to manage working capital requirements or augment long term margin or financing of fixed assets associated with business activity of the borrower or for expansion of business of the borrower.

Type of Facility

Oriental Traders Loan Scheme can be sanctioned as:

Fund-based working capital
Non-fund working capital
Term or Demand loan for development of shop.

Eligibility Criteria

Proprietorship, Partnership firms, Private Limited Company or One Person Company involved in trading of any commodity or goods can be sanctioned loan under the scheme. However, the business must have been operational for atleast one year. Further, aall businesses sanctioned loan under the scheme must act in accordance with applicable statutory requirements, such as State or Central Sales Tax Registration Certificate, License under Shops and Commercial Establishment Act, Registration with Excise Department, etc.,

Amount of Loan

Maximum limit per borrower based on the area (Rural, Semi Urban, Urban and Metro) where the branch is located will be subject to the maximum lending powers of the permitting authority according to a discretionary power chart whichever is lesser. The aggregate of Working capital and term loan put together should not exceed sanctioning authority limits. Further, working capital limits are subject to renewal every year, while term loan can be sanctioned for a maximum 60 months together with moratorium period of maximum 3 months(depending upon repayment capacity).

Collateral

The assets created out of the loan would be hypothecated to the Bank. Further, in case of loan above Rs.1 crore, m

ortgage (Registered or Equitable) of immovable property and / or any other property will be required. Land and building but not agriculture land or plot of land or partially constructed property belonging to promoters, viz. Proprietor or Partners or Directors or close relatives, (viz. spouse, parent, brother, sister, son, daughter) would be acceptable. In the event property is older than 25 years - the branch would be required to carry out inspection of the property every year at the time of review of facility and guarantee that the property is in good physical condition. In case of term or demand loan, the residual life of the building must be at least 5 years greater that the repayment period of the loan. In case, any defect is observed for the duration of inspection of the security or in architect's report, the Bank will be required to make certain substitution of the security with requisite value immediately or ensure liquidation of the facility at the earliest but not later than 12 months.

Assessment of Limit

The limit to be sanctioned must be assessed based on the value of the property. For working capital finance,

50% of the distress sale value of the property or 25% of the estimated annual sales, whichever is less can be sanctioned. In case of term loan, 75% of the cost of the furniture and fixture to be bought subject to a maximum of 25% of area wise branch limit fixed.

Interest Rate

All accounts would be rated according to the permitted specific internal credit risk rating model for the OTLS scheme. The interest rate would be fixed based on the risk rating of the account. In case of delayed payment, a penalty of 2% on the unpaid amount for the overdue period will be charged.

Talk to an IndiaFilings Business Expert for your business loan requirements.

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Frequently Asked Questions

Common questions about Oriental Traders Loan Scheme.

The Oriental Traders Loan Scheme (OTLS) is a loan scheme designed to provide hassle-free credit to traders to manage their working capital requirements, augment long-term margin, finance fixed assets associated with their business activities, or facilitate business expansion.

OTLS can be sanctioned as a fund-based working capital facility, a non-fund working capital facility, or a term or demand loan for the development of a shop.

Proprietorship firms, partnership firms, private limited companies, or one-person companies involved in trading any commodity or goods can be sanctioned a loan under the OTLS, provided their business has been operational for at least one year and complies with applicable statutory requirements.

The maximum loan amount per borrower is based on the area (rural, semi-urban, urban, or metro) where the branch is located and is subject to the maximum lending powers of the permitting authority according to a discretionary power chart, whichever is lesser.

The assets created out of the loan would be hypothecated to the bank. For loans above Rs. 1 crore, mortgage (registered or equitable) of immovable property and/or any other property belonging to promoters or close relatives is required.

For working capital finance, the limit is assessed based on the value of the property. The limit can be sanctioned as either 50% of the distress sale value of the property or 25% of the estimated annual sales, whichever is less.

For term or demand loans, the limit can be sanctioned up to 75% of the cost of the furniture and fixtures to be bought, subject to a maximum of 25% of the area-wise branch limit fixed.

All accounts are rated according to the specific internal credit risk rating model for the OTLS scheme. The interest rate is fixed based on the risk rating of the account.

In case of delayed payment, a penalty of 2% on the unpaid amount for the overdue period will be charged.

To get assistance with business loan requirements, one can talk to an IndiaFilings Business Expert, as mentioned in the article.