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Processing loan by bank for working capital

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jaimin shah

Finance Manager

108 Points Posted on 03 April 2012

Example:

Processing Charge on working capital by bank :0.40% of limit or maximum 20 lac

Working Limit: 4.5 Crore original

Enhanced Working Limit: 7.5 Crore (Revised)

Query:

My query is that bank should charge processing fees on new working capital limit of 7.5 crore or only on the enhanced limit 3 Crore (7.5 new-4.5 old)??

and if charge on 7.5 then what is logic behind that??? urgent..

Replies (1)

nitin

CA Final student

68 Points Posted on 07 May 2013

Banks generally have a sanctinaed period of 1 year for CC accounts....so Processing Fees charged by Bank are for 1 year.......if the client is enhancing cc limit at the of renewal den Bank wil charge P. fees on full renewal amt incl enhancement.................but if the enhancement is done be4 renewal period den Bank wil charge P. fees nly on enhanced amt................in your case if enhancement is done at the time of renewal of CC a/c den charge on 7.5 crore ...OR

if enhancement is be4 renewal period den charge on 3.5 crore