Revolving/Renewable Credit 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 revolving loan facilities are presented in the following manner.
a. Overdraft Facility
An overdraft is a form of credit facility by which a customer may be allowed to draw beyond the deposits of its current accounts for the sole purpose of the day-to-day operational needs of a viable and ongoing business. The outstanding balance of the overdraft is repayable on demand by the Bank. It is financed for a limited duration normally for one year.
b. Temporary Overdraft
Temporary overdraft facility is a short term product that allows a customer to draw a specified amount of fund over and above the current account in order to meet unexpected seasonal cash shortage.
An Overdrawal is a temporary facility that grants a customer the right to withdraw a specified amount of fund over and above the Overdraft limit in order to meet unexpected seasonal cash shortage.
d. Merchandise Loan Facility
A Merchandise Loan is a short-term credit facility provided by the Bank against which the merchandise (a specific product or group of products or goods manufactured or acquired by a trading business for the purpose of sale) or documentary evidence (railway receipt, Warehouse Receipt and Airway Bills) is held as a pledge or collateral for the loan.
The purpose of a Merchandise Loan Facility is to relieve the customer from cash-flow problems arising from money being tied up in the merchandise. The Bank may extend one-time or revolving merchandise loan facilities.
e. Import Letter of Credit Facility
The import letter of credit facility is a credit product that Abay Bank extends to applicants engaged in the import business, or other applicants who import for various purposes on payment of a certain percentage of the value of the document while opening a Letter of Credit. The Bank may extend a one-time and/or revolving Import Letter of Credit facilities.
f. Pre-Shipment Export Credit Facility
Pre-Shipment Export Credit facility is a loan extended for purchase of inputs, raw materials, processing and converting them into finished goods, warehousing, packing and transporting the goods until the time of shipment. The Bank may avail the facility against DBE guarantee or against valid Sales Contract or L/C or Advance.
g. Revolving Export Credit Facility
A Revolving Export Credit Facility is an advance extended to exporters upon presentation of acceptable export documents, except a bill of lading. The facility should be advanced against valid export documents.
h. Advance on Export Bills Facility
Advance on Export Bills Facility is a post-shipment export credit extended to exporters, upon presentation of all relevant export documents, to finance the working capital need between the shipment of goods and the realization of proceeds.