Bank can grant advance against its own Term Deposit in the name of:
- borrower either singly or jointly;
- one of the partners of the firm and the advance is made to the said firm;
- The proprietor of a proprietary concern and the advance is made to such a concern; and
- A ward where guardian is competent to borrow on behalf of the ward and where the advance is made to the guardian of the ward in such capacity and subject to the declaration that the amount will be utilised for the benefit of the ward.
The decision regarding maintenance of margin on any financial accommodation allowed by the bank against the security of term deposit, has been left to the individual bank, subject to their Board of Directors laying down a transparent policy in this regard at present 85% of deposit will be sanctioned as a loan & Advance.
ii) Advances can be sanctioned against a fixed deposit receipt in the name of a third party subject to:
- The nature of relationship between the borrower and the depositor will be disclosed;
- A letter of consent signed by the depositor will also be obtained authorising the bank to hold the receipt as security for the advance and to utilise the amount of deposit on maturity towards liquidation.
- After making the advance, the bank’s lien will be prominently noted on the face of the FDR and duly marked lien in the computer system.