Overdraft Account Overdraft-financial obligations Overdraft-Work Order Overdraft-Others Overdraft-Shares SOD-DPS SOD-FDR Fig 3.9: Classification of Overdraft 21
Advances against life insurance policies: In case of advances against life insurance policies, the standing of the issuing company shall be taken into consideration and be satisfied with. 22.214.171.124 Overdraft-Shares : This category is a variation of overdrafts against financial obligations. These are the overdrafts secured by shares and debentures of publicly traded companies listed with both or either of DSE(Dhaka Stock Exchage) and CSE(Chitogong Stock Exchange). No advance shall be made against shares and debentures issued by DBL. The security is valued at lower of cost or 6 (six) months average of market. However, in this type of advances the standing of the company as well as the track record in declaring dividend etc. shall be of important consideration. Only shares without any trading restriction shall be accepted. Margin may be determined as per banker - customer relationship and the same shall not be lower than 20% of the estimated value of the security. 126.96.36.199 Overdraft-Others: These facilities are usually extended to meet client’s various financial requirements of continuous nature and granted against personal guarantee, charge on assets of the company etc. Stock in trade, inventory or plant and machineries may also secure these facilities but usually no margin is fixed on those and as such drawing power always equals the limit of the facility. 188.8.131.52 Overdraft -Work Order : This credit facility is same as Overdraft-others but granted against particular work order. It means that the Bank will ensure on behalf of the company that it would perform the task properly which has been given by another company/institution. On contrary of the company not doing the work, the bank will repay the money back to company that has been given the work order. In providing finance to execute work order (s) following points should be considered: i) The work order must be issued by Government Authority, Semi-Government, Autonomous bodies, reputed Multinational companies as well as reputed local private organizations. ii) Past experience and list of works since completed are evaluated to assess capacity of the client 22
iii) Original work order is retained by the Branch and confirmation from the Department / Organization concerned as regards genuineness of work order is obtained iv) borrower’s management experience, ability, structural facilities etc. in respect of nature of the work should be taken into account v) all the terms and conditions of work order as well as details of work schedule should be carefully examined to evaluate the merit of the proposal vi) the provision of running bills should be carefully noted and be taken into consideration in setting repayment terms of the facility vii) Obtaining of collateral security is of particular importance in this type of advance viii) In case of work order for construction work finance may be made up to 30% to 35% of work order value.
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