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There are three types of credit facilities
under Bills Finance They are.
1.Bills purchase
2.Bill discount
3.Advance against Bills for collection.
When the bank negotiates bill payable on demand when
clean or documentary, the facility is known as Bills purchase. The face
value of the bill is immediately paid to the holder of the bill. After
purchasing the bill the bank becomes the holder in due course and value
and acquires all rights of ownership over the instrument.
When the bank credits value of the bill (less
discount) which is payable on a future date after acceptance by the
drawee it is said to be bill discount . It should be remembered that
demand bill is purchased and time bill is discounted
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Advance against Bills for collection (ABC) |
When the bank
advances against the bill send for collection the facility is known as
ABC Under this type of facility , a prescribed margin is kept by the
bank.
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Purchase of
clean demand bill: |
1.According to the credit worthiness and volume of
transaction the bank may fix a limit to the borrower (or) it may be
fixed by the Branch manager time to time basis
2.The purchaser (the beneficiary customer) should
sign the required documents.
3.At any point of time the limit sanctioned will not
exceed and if the purchased documents (cheques/Bills) returned for any
reasons the amount should be remitted immediately and the bills
purchased account must be adjusted.
4.The returned instrument will be delivered to the
customer only after payment for that bill.
5.In case of Demand Documentary bill is purchased
these bills must have enclosure of
a) An invoice.
b) A Bill of exchange
c) Document of Title of Goods.
The Drawee can take delivery of the goods after
paying the bill at the bank.
It is a clean bill.
A manufacturer may supply goods continuously to
government department, Govt. undertakings or corporate of repute. The
goods are supplied direct to the dept./ undertaking /corporate. bodies.
The appropriate authority of the buyer, approves the goods received and
issues an acceptance note. For a financing banker this note serves as a
proof of delivery and along with the note , the customer submits copies
of invoices. One copy is sent to the buyer direct on the due date
payment is made to the bank by the buyer, viz. the government body in
corporate of repute.
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Commission for Bills purchased/discounted |
We are charging nominal commission of RS.7 per
thousand for all type of Bills purchased/discounted. If the bill is not
realised with in 7 days of purchase the purchaser also pay the nominal
interest for the rest of days. The commission may change without any
prior information.
For your Business Finance needs and to
purchase/Discount of Bills kindly contact our nearest branch.
To know the details of nearest Branches kindly
Click
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