Q. What are the interest rate options on SBI project term loans?
The bank offers term loans with both fixed and floating rate options, customized to the risk merits of the project as well as the promoter. Pricing is generally linked to the bank’s medium term prime lending rate (MTLR), the lowest in the industry.
Q. What additional facilities are there on these loans to optimize credit cost?
SBI project finance can be structured as either foreign currency or rupee loans with option of conversion from one type to the other at the end of interest periods. This will help you take advantage of forex fluctuations and global interest rate trends vis-à-vis domestic rates to minimize your debt cost.
Q. What are project term loan tenors like?
Project finance is typically structured as long term loans, with tenors generally from 5 to 10 years. Maturity periods and repayment modes are structured in line with the specific aspects of each project and industry, factoring in a timeframe for the venture to generate a stable revenue stream.
Q. How is the repayment scheduled?
Repayment options are again structured in tune with the specific requirements of each project and its promoter. Repayments can be periodic or bullet, or may come with an initial moratorium during part of the project gestation period. For example, a seven-year loan may have a moratorium on repayments during the first two years and the payment installments may be spaced out during the remaining five years.
Q. What is the SBI deferred payment guarantee?
SBI can extend deferred payment guarantees to industrial projects for obtaining imported equipment. The DPG is a standby credit guaranteeing deferred payments, usually for payments for capital goods, turnkey contracts etc.
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