Short Term Credit Facilities
Short-term credit facilities will be used to meet identified short-term needs of clients having satisfactory relationship and will be defined as those credit facilities with a tenor or validity of one year or less.
1 Non Interest Cash Finance (NICF)
Under this type of financial accommodation, the borrower is allowed withdrawal in the current account to the extent of the sanctioned limit. The facility is generally provided against pledge or hypothecation of goods or any other tangible security acceptable to the Bank. The customer would be required to adjust the advance periodically or within a specified period.
2 Export Finance (FAPE I,II,G / LAPC)
UBL may provide facility against pre-shipment exports at an agreed rate of return, as per guidelines established by the State Bank of Pakistan or respective Central Banks in the case of the International Division.
3 Foreign Bills Purchased – on account (FBP – A)
This is a post shipment facility, known as Finance against Foreign Bills. It is allowed to exporters against export bills drawn under usance letters of credit, on sight letters of credit and letters of credit not approved by the Financial Institutions Risk Management Unit and/or Export Sales Contracts. This facility remains on customer risk until realization of proceeds from the Bill of Exchange.
4 Foreign Bills Purchased – against L/C (FBP) & FBP (Disc)
Banks may extend financial accommodation through negotiation and/or discounting at the prevailing exchange rate, of a foreign documentary bill accompanied by relevant documents of title to goods. For financing of export bills drawn under a letter of credit it should be ensured that:
The document has been drawn strictly as per the terms of the letter of credit;
All direct bank expenses i.e. foreign correspondent’s charges, claimed by the opening/reimbursing bank, if any, shall be recoverable from the exporters unless it is expressed in the letter of credit that the charges are on the opener’s account;
5 Payment Against Documents – under sight L/C (PADs)
Import documents received under sight letters of credit are lodged in PAD, and are released upon payment from the party. Import documents shall be checked strictly in terms of the letter of credit to ensure that there is no discrepancy. In case of a discrepancy in the documents, the negotiating bank must be immediately advised by telex/cable regarding such discrepancy and dealt with accordingly. In case of import documents received free of discrepancies, the amount of the bill plus charges.
6 Inward Foreign Documentary Bills for Collection under usance (DA) L/C (IFDBCs)
Import documents received under DA letters of credit are lodged in IFDBC and released against:
1. Acceptance of bill of exchange and execution of Trust Receipt.
2. Pledge of imported goods.
3. In case goods are pledged with the Bank, goods will be cleared through Bank’s approved clearing & forwarding agent and delivery orders issued against cash receipts.
4. Collateral security against mortgage of property, pledge of Government Bonds, Postal Deposit Certificates, Bank’s own Deposit Certificates etc. duly assigned in Bank’s favor. For relaxation in obtaining collateral security, approval of Credit Committee will be required prior to opening of DA letter of credit.
7 Finance / Loan against Trust Receipt (FTR / LTR)
Bank may at the request of its customers, at the time of opening of a letter of credit or at a later stage, release import documents of related goods received under the letter of credit or against bills under collection both inland or foreign, to enable the party to obtain delivery of the goods and arrange to retire the documents out of the sale proceeds of goods or from other sources. The documents of title are delivered against the customer’s signature on the prescribed Trust Receipt form or related security documents covering hypothecation of goods.
8 Finance / Loan against Imported Merchandise (FIM/LIM)
Facility for financing imported goods against import letters of credit established through UBL may be made available at a party’s request on the basis of mark-up for a short period not exceeding ninety (90) days. The facility may be repaid within the validity period either in part or in lump sum.
9 FE – 25 Financing
FE 25 financing uses the bank’s foreign currency deposits held under the FE 25 account scheme. This facility is classified as a working capital facility and is allowed to exporters and importers, with a maximum tenor of 180 days (may differ accoring to a countries regulation) from the date of shipment, or as otherwise stipulated by the Central Government.
10 Inland Bills Purchased (Documentary / Clean) - IBP
Inland Bills Purchased facility will be allowed to customers against inland documentary bills. This facility will also be allowed for the purchase of cheques and/or drafts up to the amount stipulated by the Central Bank.
11 Commercial Paper (CP)
This is a short-term facility directly issued by the obligor. It is an unsecured facility with tenor of less than one year.
12 Money Market Line (MML)
This is a short-term facility. It is used when the client desires to fix mark-up for the tenor of the transaction. MML is used by corporations with back-to-back lines booked by Treasury. MML is usually availed as a sub-limit of working capital facilities.