Other Loan Facilities
The Bank offers a wide-range of credit products supposed to fit the existing or future demands of the economy and its customers’ requests. The general type and nature of the other facilities are presented in the following manner.
a. Partial Financing
Partial Financing is a financing scheme whereby the Bank covers a portion of the auction price of foreclosed and/or acquired properties presented for sale by the Bank. These properties include buildings, vehicles, machinery and business establishments that are either held as collateral or acquired by the Bank.
b. Syndicate Loan
A Syndicate Loan is a form of term loan that is provided by and shared between Abay Bank and other Financers due to the volume of the fund and the magnitude of the risk involved. The term of the loan is often medium to long in nature. The purpose of the loan is to finance medium or long-term investment ventures that demand a large amount of funding together with other financers, diversify risk and reduce liquidity problems.
c. Urban Utilities Financing
Urban Utilities Financing is a type of term loan granted to municipalities and private persons for supplying urban utilities such as dry and liquid waste management, abattoirs, public ambulance services, firefighting, street lighting, road asphalt and pavement works, sanitation, roadside public latrine service, aesthetic works, development of public recreation centers, development and preservation of historical sites and memorials (monuments, obelisks, castles, antiques, etc) public libraries, etc.
d. Consulting Firm Financing
Consulting Firm Financing is a form of term loan extended for the purpose of working capital financing to business professionals engaged in rendering professional services such as Engineering, ICT, Law, Accountancy, Management, Architecture, Art, etc.
e. Idea/Innovation Financing
Idea/Innovation Financing is a term loan that is extended to individuals/groups for the purpose of implementing scientific studies, which has got recognition in invention and innovation by the concerned government organ and/or well-known international organization. The loan can be granted for commercial/mass production and marketing of the creative idea that have obtained recognition from the Intellectual Property Right Protection Office and/or well-known international organization.
f. Equipment/Machinery Leasing Financing
Equipment lease financing is a term loan provided to lessee who wants to obtain movable assets for use in business operation through lease/rent. The movable assets include earthmoving machines, construction vehicles, combined harvesters, and tractors etc that are considered as essential to conduct business in any sector of the economy.
g. Import Letter of Credit Settlement Loan
Import Letter of Credit Settlement Loan is a form of loan extended to a borrower by converting the outstanding import letter of credit document’s value to term loan or merchandise loan when a customer is unable to clear the letter of credit document due to shortage of working capital.
h. Loan Buyout
Loan Buyout is a type of arrangement wherein the bank buys loans from other banks. The Bank involves in this activity if it believes that buying of the loan is beneficial.
i. Receivables Discounting/Invoice Financing
This is a Loan granted to business persons who have receivables or payments expected from other organization or business people justified by approved payment certificates pending for payment from the buyer due to cash shortage of the buyer/employer or goods sold on credit basis for some time.
j. In addition to the above credit services, the Bank also avails the following loan facilities:
- Warehouse Receipt Financing
- Diaspora Mortgagee Loan
- NGO Consumer Loans
- Prominent Organizations Employees Consumer Loans
- External Employee and Business Owners consumer Loans
Guarantee Loan Facilities
This is a written promise/irrevocable obligations by the Bank to compensate (pay a sum of money) to the beneficiary in the event that the obligor (Applicant) fails to honor his/her/its obligations in accordance with the terms and conditions of the guarantee/agreement/contract. The Bank may extend a one-time or renewable Letter of Guarantee Facilities. The Bank provides guarantee services to both local and foreign customers.
Types of Letters of Guarantee includes the following:
a. Bid Bond Guarantee
Guarantees issued by the Bank in favors of a designated beneficiary upon the request of the bidder, representing the commitment of the Bank to meet the claims that may be made by the beneficiary in the event that the bidder who purchased the guarantee from the Bank withdraws from the bid during the bid period or fails to accept the award when he/she/it becomes the winner.
b. Performance Bond Guarantee
A type of guarantee that the Bank issues in favor of a bid organizer (beneficiary) at the request of the bid winner to meet any claims to be made by the beneficiary, in case the bid winner fails to deliver the goods or to perform the services in accordance with the terms and conditions of the contract.
c. Advance Payment Guarantee
A guarantee issued in favor of the beneficiary/buyer who makes the advance, up on the requests of the seller/contractor who received the advance, representing a commitment on the part of the bank to repay the sum, in case the seller or contractor fails to supply the good or service to the beneficiary according to the contractual conditions, and refuses to return the money to the beneficiary.
d. Suppliers’ Credit Guarantee
A Guarantee issued by the Bank to provide security to a local or foreign supplier/beneficiary on behalf of a local customer (debtor), representing a commitment on the part of the Bank to meet any claims to be made by the beneficiary, in case the debtor (local buyer) fails to repay in accordance with the terms and conditions of the contract.
e. Retention Bond Guarantee
A Guarantee issued by the Bank in favor of the party accepting to release the retention (beneficiary), upon the request of a seller or contractor, to provide security to a beneficiary, in the event that the seller or the contractor fails to perform his/her/its obligation as per the terms and conditions of the contract.
f. Customs Duty Guarantee
A Guarantee issued by the Bank in favor of the Customs authority (the beneficiary) to meet the requests of the beneficiary in respect of customs duties in circumstances where the goods imported without payment of customs duties are not re-exported and the respective customs duties have not been paid.