BRIDGING LOAN SCHEME FOR FINANCING NANO CAR BOOKINGS
A) Preamble to the Bridging Loan Scheme
I) Based on the “Financier Details” furnished by the branches in the “Car Booking
Application Form” at the time of grant of Booking Loan, Lien in favour of the Bank
would have been noted by Tata Motors. As such, the Bridging Loans now to be
sanctioned afresh (which are against the Security of Lien marked in favour of the
Bank and the Bank’s first right to cancellation) are to be considered by the
concerned branches ONLY for the Booking Loan cases financed by them.
II) Sanctioning of Bridging Loan/Regular Car Loan would depend on the expected
delivery date of the Car from Tata Motors to the customer. Car deliveries are
expected to commence from July’09 onwards and are to be completed in phases
over a period of 18 months. As informed by Tata Motors, the allotment letters would
state the expected delivery period by mentioning the “Quarter” in which the delivery of the Car against the allotment is likely to take place. Subsequently, when the said
Quarter would be approaching, another communication around 2 months in
advance will be sent by the Company mentioning therein the expected “Week” of
delivery in the earlier informed Quarter. Since sanction of a Car Loan requires
Hypothecation of Car as the primary security, regular Car Loan can be considered
only when the physical car would be available for Hypothecation. As such, the
branches based on the expected delivery as mentioned in the allotment letter and
subsequent communication should decide to sanction a Bridge or a Regular Car
Loan. In other words, if the Car is available for Hypothecation, the finance can be
done by way of a regular Car Loan and otherwise a Bridging Loan will have to be
considered and to be repeated and continued till the Car becomes available for
III) Since at any point of time depending on the delivery of the Car, the Bridging Loan
may require to be converted into a Car Loan, the branches must endeavour to
obtain all the documents required for the purposes of sanctioning a Regular Car
Loan at the time of the first Bridging Loan. The branches thus, should obtain all
documents relating to Income, Bank details etc. which are required for the purpose
of sanctioning Car Loan under the Bank’s Scheme and keep on record for enabling
a quick decision at a later stage whenever required for sanctioning a Regular Car
The Bank’s extant guidelines for sanction of Car Loan, conduct of PSVRs, due diligence etc. will not be carried out for sanction of the Bridge Loan. As the Bridging
Loan Principal is secured against the Bank’s right for first cancellation and Interest at every stage of Bridging Loan is to be collected upfront, we do not stipulate any due
diligence for the purpose of sanction of Bridging Loan. Keeping the above in mind,
the Bank shall recover the Interest at every stage, upfront (along with the One-Time
Cancellation Charge of Tata Motors of Rs. 2,999/- that is recoverable only once and
at the first instance of Bridging Loan) for providing a Bridging Loan to the customer.
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IV) However, after receiving all the documents required for the purposes of sanctioning
a Regular Car Loan (at the time of the sanction of the first Bridging Loan) the
Branches must check the prima-facie eligibility of the customer for finance under the
Bank’s Car Loan Scheme. In cases where the Branch finds that the customer is
ineligible for finance under the Bank’s Car Loan Scheme, the fact must immediately
be brought to the notice of the customer so that he/she may make alternate
arrangements to pay off the Bank’s dues. In case of failure on part of the customer,
who was found ineligible for finance under the Bank’s Car Loan Scheme to pay off
the Bank’s Loan, the Branch will have to proceed with the cancellation of the
Booking with Tata Motors at the appropriate time, keeping in mind the period for
which it has collected the interest upfront from the customer, to settle its dues.
V) The customers although would need to be educated about this fact i.e. even if the
Bank has previously sanctioned the Booking Loan and Bridging Loan (which may be
repeated for more than one occasion) the Bank reserves its right to finance under its
regular Car Loan Scheme whenever required by the customer at a future date and
under any circumstances where the customer is found ineligible, the Bank may
decide not to extend finance to such customer. However as stated above, the
branches must check the borrower’s eligibility in the first stage and immediately advise the customer in cases where regular Car Loan cannot be granted under the
Bank’s norms for enabling the customer to make alternate arrangements timely, for settling the Bank’s dues. Also, despite the customers ineligibility for a regular Car Loan
which is duly informed to him, the Bank can continue with the Bridging Loan and if
the customer so desires continue with sanctioning further Bridging Loans, as Bank’s
interest is protected in case of Bridging Loans, where it has the first right to receive
refund directly from Tata Motors which covers the Principal Loan Amount and Interest
at every stage is collected upfront. Bridging Loans are safe income earning
preposition for the Bank, however the branches need to be transparent in informing
the customers on the various facets of the Scheme.
VI) Further, the Bridge Loan would not required to be repaid by the borrower through
EMIs and would essentially be settled by way of conversion into a regular Car Loan, if
sanctioned by the Bank or repayment at a later stage by the borrower through own
sources or a takeover arranged by the borrower or by the Bank exercising its first right
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Bridging Loan Scheme in Detail
SL B) PARAMETER DETAILED PARTICULARS NO
Individuals in Lower Middle to Upper Middle Class Sections of the Society. Bridging Loans can be considered only for 1. Target Group customers who have availed Booking Loan previously from the Bank for Booking the Nano Car.
Any individual who is not minor and is a Citizen of India is eligible to apply, subject to Point No. (1) on Target Group, 2. Age Criteria
Salaried, Self employed, Businessman, Professionals and Others, 3. Income Criteria subject to Point No. (1) on Target Group, above.
i) The KYC documents, one photograph, Permanent Account Number/Form 60/61 as applicable, were obtained earlier from customers at the time of grant of the Booking Loan.
ii) In addition to the above documents, the branch would be Documents to be obtaining all other documents relating to Income, Bank 4. Obtained details etc. which are required for the purposes of
sanctioning a regular Car Loan. An indicative list of such
documents from the different borrower categories is
5. Margin Nil
Up to a maximum of:
i) Rs.95,000/- for Tata Nano Std. (BS2 and BS3) 6. Quantum of Loan ii) Rs.1,20,000/- for Tata Nano CX (BS2 and BS3)
iii) Rs.1,40,000/- for Tata Nano LX (BS3)
At the request of the applicant, if the loan is converted to a Regular Car Loan, the Bridging Loan Amount outstanding would be adjusted by the debit of a Regular Car Loan Account sanctioned to the borrower.
If for any reasons, a Regular Car Loan cannot be sanctioned to
7. Repayment the applicant, the entire outstanding in the Bridging Loan
Account will have to be repaid by the borrower through his own sources or a take over loan by other Bank/Financing Institution to be arranged by the borrower.
In case of failure on part of the borrower to arrange repayment
of the Bridging Loan as explained above, the Bank would
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initiate cancellation for the said Booking with Tata Motors and
receive back the refund amount for settling the Bridging Loan
In such case, where the Bank has to initiate cancellation for the
Booking with Tata Motors for adjusting loan of the borrower, the
necessary steps for cancellation whenever deemed necessary,
would have to be immediately initiated by the branches and
refund to be received and credited to the respective Loan
The branch must complete the entire activity for realising the
refund within the period for which the branch has collected the
Upfront Interest from the borrower.
For Bridging Car Loan @10.50% p.a. till cancellation or 8. Rate of Interest repayment by borrower or conversion to a regular Car Loan.
i) Demand Promissory Note
ii) Waiver of Presentment 9. Documentation
iii) Irrevocable Letter of Authority duly stamped as an
Loan is being advanced against the Bank’s right for first
cancellation and as such no additional security is required to 10. Security
The individual non-interest bearing Bridging Loan Account would be created in the CBS system and disbursement proceeds shall be credited to the Booking Loan Account of the
borrower held by the branch.
Since the disbursement proceeds of Bridging Loan would
match the outstanding in the corresponding Booking Loan Account of the borrower, the Booking Loan after the credit of 11. Disbursement
Bridging Loan proceeds would be automatically settled and
subsequently the Booking Loan Account would be closed.
For continuation of the Bridging Loan for second or subsequent
occasions no fresh disbursement is required and the Bridging
Loan initially opened in the CBS system would be continued
after realising the interest upfront for the subsequent occasions.
A) Interest Charges
i) The Upfront Interest amount for the three variants of Nano, 12. Upfront Charges assuming maximum quantum of booking loan would be as
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Tata Nano Std. Tata Nano CX Tata Nano LX
Rs. 3,280/- Rs. 4,143/- Rs. 4,833/-
ii) The above Interest amount is indicative and is calculated
for the maximum Bridging Loan Amounts for the three Nano
variants @10.50% p.a. for 120 days and is payable upfront
immediately and in any case not later than the expiry of 90
days from the date of grant of the Booking Loan to the
iii) Subsequently, further interest for 120 days @10.50% p.a. is to
be paid upfront by the applicant (till the time the Bridging
Loan is continued by the Bank) and which shall be payable
immediately on the expiry of 90 days from the date of the
first Bridging Loan/subsequent due dates.
iv) In other words, this process of charging of upfront interest
(for 120 days @10.50% p.a. payable immediately on the
expiry of 90 days) from the date of the Bridging Loan would
be repeated and continued till the same is converted to a
regular Car Loan.
B) Cancellation Charges
Since Tata Motors will charge a Cancellation Charge of
Rs. 2,999/- for cancellations received after 30 days of
announcements of allocations, an amount of Rs. 2,999/- will
have to be deposited by the applicant at the time of the first
request for the Bridging Loan.
C) Total Upfront Charges (A)+(B)
Thus, the total Upfront Charges including Interest Charges at
(A) and the One-Time Cancellation Charge at (B) above, for
the three variants of Nano assuming maximum quantum of
Bridging Loan are as under:-
Tata Nano Std. Tata Nano CX Tata Nano LX
Interest: Rs. 3,280/- Rs. 4,143/- Rs. 4,833/-
Cancellation: Rs. 2,999/- Rs. 2,999/- Rs. 2,999/-
Charges ________________________ ________________________ ______________________ Total Upfront: Rs. 6,279/- Rs. 7,142/- Rs. 7,832/- Charges
i) The cancellation charge of Rs. 2,999/- are prescribed by
Tata Motors Ltd. and are one-time only. In other words,
Rs. 2,999/- is to be recovered once only and on the first
occasion of sanction of Bridging Loan by the Bank.
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ii) If the upfront interest amounts are not deposited within the
due dates, the Bank would be at liberty to cancel the
booking and adjust the Bridging Loan with refund received
from Tata Motors. In other words, in case of default by
borrower(s) in making subsequent upfront interest payment,
the Bank would be entitled to cancel the booking and seek
refund from the company. At every stage, the branch has
to track this meticulously and initiate cancellation of
Booking with Tata Motors wherever it deems necessary, so
as to realise refund within the period for which it has
collected interest upfront from the customer.
iii) Stamp Charges would be chargeable extra, at actuals.
The interest on Bridging Loan is to be collected upfront for 120
days on all occasions. Whenever, the Bridge Loan is converted
to a regular Car Loan by the Bank, the Branches may calculate
the actual interest at the applicable rate of 10.50% p.a. for the
actual number of days the Bridge Loan has remained
Refund of Upfront outstanding and refund the excess upfront interest paid by the
13. Interest customer.
The refund of excess interest is to be allowed only in case
where the Bridge Loan is liquidated by the sanction of a regular Car Loan by the Bank. Further, such excess interest is to be
refunded by way of credit to the newly sanctioned Car Loan
account of the customer.
i) Rs. 1000/- whenever the Bridging Loan is prepaid in full by
the borrower irrespective of the remaining period of Loan
and for all amounts.
ii) Prepayment Charges are payable under all circumstances
whenever the prepayment is done at the customer’s
instance and only exception would be when the customer
is required by the Bank to foreclose the loan account due
to his/her being found ineligible to be financed under the Prepayment 14. Bank’s regular Car Loan Scheme. Charges
iii) No refund of interest collected upfront will be made under
any circumstances of foreclosure of the Bridging Loan,
whether such prepayment is at the customer’s instance or
otherwise is done as required by the Bank due to the
customer’s ineligibility for Car Loan.
iv) Prepayment charges shall not apply when the Loan is
converted into a Car Loan by the Bank.
Branch Heads of identified branches in Scale-I and onwards would have full sanctioning powers for the Bridging Loan and Sanctioning 15. the Regular Car Loan under the Scheme. Authority
For the Bridging Loan and Regular Car Loan even in centres
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where the Central Processing Cell (CPC) for Retail Loans is
functioning, the Branch Heads of the identified branches would
be the sanctioning authority.
In other words, where loans are to be converted to Regular Car
Loans at centres where CPC’s are functioning, such cases
would continue to be dealt with by the respective branches
only and thus must not be referred to CPC.
(This is in view of the urgency involved in taking the credit
decision and the relative ease of the branch in these cases to
process and sanction the loan).
Only those branches which were authorised to market this
product earlier would be eligible to participate and consider Participating 16. Bridging Loan requests from customers to whom the Booking Branches
Loans were earlier advanced by them.
i) The above terms and conditions are applicable to the
Scheme for Bridging Loans for Financing Nano Car Bookings.
For loans which are converted into a regular Car Loan, the terms as applicable under the Bank’s Car Loan Scheme
prevailing at the time of conversion shall apply.
ii) Please follow the Operational Guidelines for Financing Nano
Car Bookings circulated vide our letter No. HO/Retail
Banking/2009-10/61 dated 06.04.2009 at the time of Booking Loans for the Nano Car along with updations for related terms and conditions.
iii) The “Preamble to the Bridging Loan Scheme” given as a
prelude to the scheme is to be adhered to as the guiding
principle for Bridging Loans.
iv) After the execution of Loan Documentation for the Bridging Other Terms and
Loan, a Bridging Loan Account (Demand Loan) in the name 17. Conditions
of the customer is to be created in the CBS system by
mentioning Scheme Code LA 744 (Nano Car Bridge Loan).
v) Collection Account for crediting Cancellation Charges
The branches would need to open a Current Account titled
“NANO Scheme – TML Cancellation Charges” for crediting Cancellation Charges of Tata Motors of Rs. 2,999/- collected from all the applicants upfront on the first occasion of
sanction of the Bridging Loan.
vi) A plain paper request is to be obtained from the customer for grant of Bridging Loan under the scheme.
The Head Office, DIT would be circulating the “Job Card for
Nano Car Bridging Loan” containing the guidelines for the
branches for opening the required accounts (as explained in
(iv) and (v) above) in the CBS system.
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