By Bernard Woods,2014-05-18 02:45
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    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

    for cancellation.

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    Bridging Loan Scheme in Detail


    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

    be taken.

    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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