The following are the features of the Insurance Premium Finance Product:
Individuals, limited companies, engaged in manufacturing/trading activities not prohibited by law.
In case of Traders, the business should have been established preferably for more than –1- year.
For payment of premium to insurance companies for covering insurance of machineries and other assets
100% of annual insurance premium payable
Rate of interest
Flat Rate as per Schedule attached
Method of Calculation of Interest
At the Flat Rate on Principal
Loan to be repaid in equal monthly installments within a maximum period of –10- months.
Tripartite Agreement amongst the Bank, the borrower and the Insurance Company.
- –10- post dated cheques are to be obtained for the amount of monthly instalments 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 in the loan account.
- The loan is to be disbursed and the proceeds are to be remitted to the Insurance Company directly by means of a forwarding letter detailing the terms of sanction.
- Interest is to be charged in the account at the flat rate on the principal amount of loan sanctioned for the period the loan is sanctioned.
- In case any of the cheques bounce back due to insufficient fund in the account following steps are to be taken
- The matter is to be referred to the borrower and the Insurance Company and the contract of insurance is automatically gets cancelled.
- The Insurance Company is to be advised to refund the amount of insurance premium for the unexpired period of insurance and cancellation of the contract. The amount refund is to be calculated as per following formula :
AIP x UPIC (no of days)
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.
- Normally there should be no outstanding after adjustment of the refund money from the Insurance Company. But in case there is any outstanding follow up is to be made with borrower to get the account adjusted immediately.