Insurance Premium Finance (IPF)

For payment of premium to insurance companies for covering insurance of machineries and other assets

The following are the features of the Insurance Premium Finance Product:

1.	Eligibility	Individuals, limited companies, engaged in manufacturing / trading and other activities not prohibited by law. In case of Traders, the business should have been established preferably for more than –1- year.
2.	Purpose	For payment of premium to insurance companies on behalf of borrowers for covering insurance of machineries and other assets or other insurance covers. The insurance companies (life and non-life) must be bank approved as well as IRA approved insurance companies. The Bank considers top 10 insurance companies as rated IRA. The list will be provided on quarterly basis. Insurance company not in the top 10 list may be considered by the Managing Director on case-to-case basis.
3.	Limit	100% of annual insurance premium payable
4.	Rate of interest	Flat Rate on principal as per Schedule attached
5.	Method of Calculation of Interest	At the Flat Rate on Principal.
6.	Repayment	Loan to be repaid in equal monthly installments within a maximum period of –10- monthly Installments. Post dated Cheques to be provided by borrower for 10 installments (assuming loan is taken for maximum period) with one upfront payment made before at the time of disbursement of facility.
7.	Security/ Documents	Loan application duly filled. 9 postdated cheques (or cheques equivalent to no of proposed installments including one current cheque) plus one current cheque for the upfront installment. Tripartite Agreement amongst the Bank, the borrower and the Insurance Company dully executed.

–10- cheques of which one current cheque for upfront installment and -9- postdated cheques are to be obtained for the number of monthly installments at the beginning
First cheque is to be collected upfront before disbursement of the loan.
Entire amount of loan is to be disbursed after the first cheque is collected and deposited and cleared in the loan account.
The loan is to be disbursed and the proceeds are to be remitted to the Insurance Company directly and communicated by means of a forwarding letter detailing the terms of sanction / repayment / agreement.
Interest is to be charged in the account at the flat rate on the principal amount of loan sanctioned for the period for which the loan is sanctioned.
IPF installment cheques to be invariably deposited on the due date.
Monitor all cheques and confirm that they are cleared as a daily exercise
In case any of the cheques bounce back due to insufficient fund in the account following steps are to be immediately taken;
- The matter is to be immediately referred to the borrower and the Insurance Company and the contract of insurance automatically gets cancelled with immediate effect.
- The Insurance Company is to be advised to refund the amount of unutilized insurance premium for the unexpired period of insurance and cancellation of the contract.

In this case, the amount refund is to be calculated as per following formula:

AIP x UPIC (no of days)

Refund= ----------------------------------------

365

Where;

AIP= Annual Insurance Premium

UPIC= Unexpired period of the Insurance Cover (No. of days)

After the refund is received from the Insurance Company the loan account is to be closed after adjustment of the refund money into the loan account.
Normally there should be no outstanding after adjustment of the refund money from the Insurance Company. But in case there is any outstanding balance then follow up is to be made with borrower to get the account adjusted immediately.