Road Transport Operators
Advances to SMALL
ROAD & WATER TRANSPORT OPERATORS (SRWTO)
Eligibility under PRISEC Advance
Advances to small road and water
transport operators owning a fleet of vehicles not exceeding ten vehicles, including the
one proposed to be financed.
Advances to NBFCs for on-lending to truck
operators and SRWTOs satisfying the eligibility criteria. Also, portfolio purchases
(purchases of hire purchase receivables) from NBFCs made after 31 July, 1998 would qualify
for inclusion under priority sector lending, provided the portfolio purchases relate to
SRWTOs satisfying priority sector norms.
Ordinarily the borrower should have
knowledge of driving a vehicle and be experienced in handling business in the transport
line. Knowledge of driving and/or experience may be dispensed with where the applicant
shows inclination to engage in transport business as a whole time occupation with
experienced personnel associated with or employed by him. Educated unemployed with little
or no background of experience come under the latter category.
Vehicle for the purpose of loan includes all
types of road and water transport vehicles such as truck, bus, minibus, taxi,
auto-rickshaw, rickshaw, cart, boat, barge, launch and all others.
Loan amount
Requirements of funds for purchase of
vehicles shall be assessed under various heads as per need. The probable heads are :-
Cost of Chassis,
Body Building expenses,
Cost of spares and one additional tyre,
Taxes, insurance and registration fees
payable initially at the time of purchase,
Repairing and renovating costs,
Working Capital.
2.1 Restriction: No advance against
second-hand motor vehicles shall be made without prior approval of Regional Office.
Only transport vehicles used as "Public
Carrier" or for "Contract Carriage" are eligible for finance.
The Bank’s application form (copy
enclosed) shall be required to be completed by the applicant and to be submitted to the
Branch. Processing shall be made at the branch level under the joint signatures of the
Manager and Dy. Manager. Where the amount of advance is in excess of the discretionary
power of the Branch Manager, the proposal shall be sent to the Regional Office with
relevant papers and an opinion sheet of the borrower/guarantor where, such guarantees are
offered by the applicant.
The advance shall be sanctioned only after
satisfying that route permit has been issued by R.T.O. or any other competent authority to
operate the vehicle.
Rate of Interest : As per H.O.
guidelines issued from time to time.
Processing fees/ Service charges, etc.: As
per H.O. guidelines.
Security: Primary and Additional: The
vehicle to be acquired out of Bank finance shall be hypothecated to the Bank as primary
security. Additional securities whether in the form of available property or personal
assets of the borrower or a suitable third party guarantee acceptable to the Bank shall be
required to be obtained. In case of small borrowers group guarantee or chain guarantee may
be obtained.
Margin:Generally a minimum margin of
20% to be obtained on advances to transport operators unless reduced in specific cases in
pursuance to the Government Policy, such as proposals sponsored by Government Departments
for re-settlement of ex-army-personnel. In the case of small loans against taxis,
auto-rickshaws, rickshaws etc. margin may be relaxed at the discretion of the Bank.
Repayment: Repayment of the Term
Loan may be made by a maximum of 42 consecutive monthly instalments, the first instalment
being payable not exceeding 60 days from the date of disbursement. Repayment schedule has
to be drawn up according to the repayment capacity of the borrowers assessed on a
realistic basis taking the lean months, if any, into consideration. Repayment capacity
shall be assessed on the basis of income and expenditure account projected for the
following year as shown in annexure.
As per example, :- Estimated total receipt:
Less : Costs of fuel
Maintenance cost of the vehicle
Establishment expenses including drawings of
the proprietor/partners at a
reasonable level
Other liabilities such as Insurance, taxes,
etc.
Insurance: Comprehensive insurance
policy shall be obtained for the full value of the vehicle covering all risks in the joint
names of the Bank and the borrower with Bankers Clause attached or assigned by the
borrower in favour of the Bank. The vehicle under finance shall remain adequately insured
at all times and it must be ensured that the policy is renewed in time without any break.
Disbursement:
The borrower must, thereafter, deposit
the stipulated margin for purchase of the body building. Where a part or whole of the
margin is sanctioned in the shape of seed money by the State Government, it is to be
ensured that the amount is released before any disbursement is made.
No payment should be made without production
of proforma invoices issued by the registered dealers/sub-dealers duly approved by the
manufacturers. Proforma invoices issued by registered dealers/sub-dealers outside the
State to which the branch is situated shall not be eligible for advance.
Disbursement of payment shall be made by Pay
Order/Draft direct to registered dealer for supply of the chassis against proforma invoice
with a request to forward to the Bank directly:
A stamped receipt
Sale letter addressed to R.T.O. by the
dealer
Form E & F duly completed and signed by
the borrower as owner with bank’s name as hypothecatee, and
Duplicate ignition key.
Payment for body building shall be made
direct to the manufacturer by a Pay Order against his invoice and a receipt on completion
of the work.
When the body is complete the Bank’s
name shall be displayed at two prominent places of the vehicle as follows :
Inside the vehicle ‘Hypothecated to
United Bank of India
…………………………….
Branch’.
On the rear ‘Financed by’ or
"Bank with" United Bank of India
………………………………….Branch.
Supervision:
10.1 On completion of
the vehicle, the borrower shall present it before the Bank. At that time an application
from the borrower addressed to the R.T.O. requesting him to register the bank’s
charge on the vehicle as hypothecated in the Blue Book (registration certificate) shall be
obtained. The letter along with the Sales Letter and Form E & F obtained earlier
should be delivered to R.T.O. through a bank employee against proper receipt.
10.2 A certified Copy
of the Blue Book shall be collected from the Office of the Regional Transport Authority/
or from the borrower in due course and to be retained in the borrower’s file.
10.3 The Blue Book or
original registration certificate shall be inspected every quarter.
A Guideline for financing small road
transport operators has been annexed.
Annexure
Guidelines for financing of small road
transport operators
It should be ensured that the vehicle is
used as ‘Public Transport Carrier.’
The financial institution may scrutinise
the requirements of funds by the borrower under various heads, such as (a) cost of chassis
(make and capacity), (b) body building expenses, (c) initial taxes and insurance, (d)
working capital.
The borrower should possess experience in
the transport line (as a driver, small fleet owner, employee in transport firm, transport
agent etc.) or alternatively, he should employ/ associate experienced personnel.
Generally, a margin of 25% may be obtained
on advance to transport operators.
Repayment of the loan should be in monthly
instalments, excluding the monsoon months, when the transport business is slack. The loan
should be repayable within a period exceeding 3 years and up to 3½ years.
The vehicle should be comprehensively
insured for the full value covering all risks and the policy may either be in the joint
names of the borrower and the financial institution, or assigned in favour of the latter.
It may be ensured that the vehicle is adequately insured at all times; any break in the
insurance cover by late payment or non-payment of insurance premia should be scrupulously
avoided.
The charge of the financial institution on
the vehicle, say in the form of hypothecation, should be registered with the Regional
Transport Authority.
Disbursement of the loans may be made to
the supplier of the chassis instead of the borrower, to ensure proper utilisation of the
loan.
The vehicle should be inspected
periodically, say, once a quarter/half-year, to ensure that it is maintained in a
satisfactory running condition.
The loan should be sanctioned only after
satisfying that the concerned R.T.O. has issued the necessary permit to the concern to
operate the vehicle.
As transport vehicles are subject to heavy
wear and tear, loans should be restricted to the acquisition of new vehicles.
Loans granted for acquisition of passenger
vehicles to be run on ‘contract carriage’ basis are outside the scope of the
scheme.
Loans granted for acquisition of vehicles
by merchants, warehouses, stevedores, building contractors, etc., in connection with their
own business, will not be eligible.
EXPECTED OPERATIONAL RESULT OF
RUNNING………………….
Expenditure (Daily/Monthly) Income (Daily/Monthly)
Cost of Diesel ….Rs. Sales of Tickets/Freight
Mobile Oil, Gear Oil Charges …. Rs.
And Break Oil ….Rs.
Driver’s Remuneration
(including Khoraki) ….Rs.
Conductor’s Remuneration
(including Khoraki) .…Rs.
Cleaner’s Remuneration
(including Khoraki) ….Rs.
Repairs ….Rs.
Loading & Unloading ….Rs.
Insurance ….Rs.
Road Tax & Permit Fees .…Rs.
Association Fees .…Rs.
Depreciation ….Rs.
Terminal Fees in
case of Truck ….Rs.
Bank Interest .…Rs.
Weighment charge .…Rs.
Garage Rent ….Rs.
Tyre Purchasing ….Rs.
Servicing ….Rs.
Booking Fees (in case of
Truck booked through
Brokers ) ….Rs.
Printing & Stationery ….Rs.
Misc. Expenditure ….Rs.
Daily/Monthly Surplus ….Rs._____________ _______________
Monthly surplus on ....Rs.
Days’ working
Annual Surplus ….Rs.
Less: Taxation ….Rs.______________
Net Profit (Post Tax) ….Rs.______________
Fund Generation (Annual)
Post-tax Profit ….Rs
Add: Depreciation ….Rs._____________
Rs._____________
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