Registration of a loan agreement between the bank and the borrower. Loan processing
In order to receive money in any bank, the correct execution of a loan and a loan agreement is required.
It should contain all its main conditions, it should describe the purpose of lending, its terms, the size of the loan, the rate on it and the mode of payment of interest and principal debt, the types and forms of collateral verification, the amount of necessary information from the borrower, as well as others important conditions.
This agreement is concluded only in writing, if the borrower agrees, he must confirm this and the agreement will become valid.
The bank will form a special credit dossier, where it will monitor the fulfillment of the conditions and the progress of loan repayment, where all the documentation on the loan and information about the borrower are kept.
According to any loan agreement, the bank provides the borrower with the necessary funds, and the borrower is obliged on agreed terms. If the contract is not concluded in writing, it is considered invalid.
- The document must be signed by the proper representatives, these can be authorized bodies of a legal entity, attorneys or commercial representatives.
- If signed by a borrower who does not have such authority, the agreement will be invalidated.
Approval can be expressed in the performance of various actions that can be recognized as approving the transaction, or the usual written consent of the borrower to the transaction. The contract will be concluded if the parties have agreed on all of its main terms.
Loan processing according to all the rules
In the section on the subject of the agreement, the parties to the agreement and the loan amount are recorded.
This value is determined by the needs of the borrower, as well as the capabilities of the lender, it is always an individual indicator.
The amount of the loan, its terms, goals and several other conditions are essential.
The contract must indicate its term, it is within these time limits that the borrower has the right to use the funds received, the date of receipt and return of funds must be clearly stated.
Here 2 cases are possible, the borrower's account can be in the lender's bank or in another bank.
- If the borrower's account is in the bank where he wants to get a loan, it is more convenient for him, since in this case, a loan can be obtained on better terms, and there will be no time delays in crediting funds, which is usually convenient for the borrower.
- If a loan is taken where the client does not have an account, then the conditions may be worse, there may also be various delays in crediting funds, it is better to try to take a loan from your bank, where it is available.
- If the borrower's account is in another bank, then the moment the loan is issued can be determined from the moment when the money is withdrawn from the bank's account or from the moment the money is credited to the client's account, these dates may differ significantly.
The contract always defines the procedure for granting a loan, there is a practical value here when figuring out the date from which interest will be calculated and the terms for using the loan will be calculated.
Most often, the borrower agrees that the agreement contains a condition that the date of the loan is the date of debiting money from the bank account, then the borrower will depend on the receipt of money on his account.
The contract must either stipulate the conditions for extending the refund if they arrive late, or there must be various mechanisms for paying the delay on the part of the bank.
It will be useful for the borrower if, within a few days after the agreement is signed, the bank opens a loan account and credits the entire agreed loan amount to it.
If the loan is given in a foreign currency, there are some peculiarities, the agreement can contain a condition that such a loan will be repaid in rubles or also in foreign currency.
If the ruble is chosen as the payment currency, then the payment is made at the official rate of the loan currency. If other conditions and courses are not prescribed in the contract itself. Very often there is a condition in the agreement that the loan is issued for a specific purpose and the borrower must use the money received in a targeted manner.
Most banks now allow you to register. This is a very convenient system, but in some regions there are difficulties with obtaining such a loan, but this service will be constantly evolving.
The procedure is simple and allows you to quickly get the required amount. For all the attractiveness of obtaining a loan, this issue must be treated very responsibly, since you will have to give your money and at a clearly defined time, violation in this case leads to unpleasant consequences.
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The credit process itself begins from the day of the first loan disbursement. However, up to this moment and after it there is a whole streak of significant work performed by both the bank - the lender and the client - the borrower.
Loan negotiations begin long before a decision is made. Here, however, everything can be different. A loan offer can come from both the bank and the client. For developed market relations, a more typical situation is when a bank is looking for a client, provides him with its product, including loans for certain purposes and conditions. The study of the risk of banking services, the potential of clients, contacting them with proposals for cooperation, visits - this happens before a specific loan offer is considered.
This is the reality of the modern Russian economy, which is experiencing an acute crisis of law and finance. However, a commercial bank is not released in the future from another more difficult stage - the stage of considering a specific project. The instability of the economic situation and inflation require from Russian banks special care and experience in assessing the creditworthiness of the client, the object of lending and the reliability of collateral, the quality of collateral and guarantees. The analytical part of this stage presents an overly demanding task.
In Russian commercial banks, this task is usually entrusted to the credit department. In some banks, special analytical divisions are allocated, the function has become a comprehensive assessment of the credited event. The conclusion about the possibility of crediting is given to the employee in charge of servicing the given client. In this case, all the preparatory work is entrusted to the bank's economist - he conducts preliminary negotiations, examines the documentation submitted to the bank, prepares a written opinion on the possibility and conditions of lending to this project, issues a special order for issuing a loan, collects the necessary authorization signatures on loan documents, etc. etc. generally performs all analytical, technical and organizational work on the relevant loan project.
In small banks, all this work, as a rule, is concentrated in one credit department.
International experience is often different. If it is a small bank, then the analytical and technical work in it on issuing a loan is divided among the employees. One analyzes, prepares a solution, another employee of this department performs the technical work on the technical registration of the loan. The specialization may be different: some of the bank staff only brings the client to the Bank, the rest is done by others. It also happens this way: employees of specially created departments for the sale of banking services not only bring clients to the Bank, but also carry out a preliminary analysis of the loan project, agree on the legal side, make a preliminary risk preselection, and draw up their written opinion. The following opinion is drawn up in the economic management. In this case, the so-called “4-eyes” rule is implemented, when a loan project passes through the filter of 2 people who are not subordinate to each other.
A fairly common form of work at this preliminary stage is making decisions on lending to customers within the limits of a certain competence of bank employees.
Large loans are usually reviewed by the credit committee. By its meeting, all economic and legal issues are being worked out, a final decision is made on the issue considered, specific terms of lending are being worked out.
This is the procedure for this preparatory phase. It will be followed by the stage of registration of credit documentation. Bank employees draw up a loan agreement, write out an order for the bank, on the issuance of a loan, and create a special dossier on the client-borrower.
At the third stage - the stage of using the loan, credit relations are monitored: compliance with the lending limit (credit lines), targeted use of the loan, payment of loan interest, full and timely repayment of loans. At this stage, the work on the operational and traditional analysis of the creditworthiness and financial results of the client's work does not stop, if necessary, meetings, negotiations with the client are held, the conditions and terms of lending are specified.
There is no single repayment model, as well as the issuance of a loan.
Practice generates a variety of loan repayment options, including:
- 1) episodic repayment based on term obligations;
- 2) repayment as the actual accumulation of own funds and decrease in the need for a loan from the current account of the borrower;
- 3) systematic repayment based on pre-financed amounts (planned payments);
- 4) crediting the proceeds, bypassing the current account, to reduce the loan debt;
- 5) deferral of loan repayment;
- 6) transfer of overdue debt to a special account "overdue loans";
- 7) writing off overdue debt at the expense of the bank's reserves, etc.
Occasional repayment of a loan based on urgent commitments is most often used when using offset account balances, when the repayment is in advance timed to a specific date. Upon maturity of the loan specified in the loan agreement or urgent commitment.
An example of a loan repayment as the actual accumulation of own funds and a decrease in the need for borrowed funds can be agricultural enterprises that are in need of a loan due to the seasonal nature of work. As they accumulate their own funds, the receipt of proceeds from the sale, this group of borrowers gets the opportunity to settle with the bank on previously received loans
Systematic loan repayment on the basis of pre-fixed loans takes place when using circulating - payment loan accounts, with a fairly intensive payment turnover. In these cases, in order to return the systematically received loan, funds are written off from the current account to repay the resulting loan debt, also systematically in the form of so-called planned payments. These amounts can be written off from the current account daily, once every 3-5 business days. The more the bank lends to lending objects, the larger the amount should be made and the systematic repayment of the loan in the form of planned payments.
Crediting the proceeds, bypassing the current account, in reducing the loan debt is an alternative to the previous method of repaying the loan. Here, all proceeds from sales go to repayment of outstanding loans. Practical crediting of proceeds to the loan account also takes place when using a check account. In this case, a postponement of the loan repayment is possible. A deferral by the bank can be made for the entire loan amount, or for a part of it, for 1-305 days or more.
The transfer of overdue debts to a special account "overdue loans" occurs if the time is over or it is impossible due to the futility of repaying the loan in the near future. The transfer of "overdue" debt to this account means that from that moment the client is obliged to pay the Bank significantly high interest on loans.
Overdue debts are written off at the expense of the Bank's reserves in the case when the client's debts turned out to be uncollectible, when the Bank does not receive payments for previously provided loans for a long time, and the return itself is not visible at all. In this case, the description of the client's debts is made at the expense of the bank's funds, accumulated in the form of reserves.
The considered options for repayment of outstanding loans allow us to classify this process depending on a number of criteria.
When drawing up a loan agreement, the main criteria are: written form, signed by both parties. In addition, the agreement must specify the essential conditions, otherwise it may be invalidated.
The procedure for drawing up a loan agreement
The following data should be indicated in the contract:
- General information about the parties to the transaction (full name of the bank, license number, information about the borrower).
- Subject of the agreement (type of loan, for how long it is provided for, for what purpose, interest rate, loan amount, procedure for issuing a loan, procedure for repayment, taking into account interest payments, term of the agreement).
- Rules and obligations of both parties (borrower and bank).
- The responsibility of the borrower and the bank.
- Dispute resolution.
- Legal addresses of both parties.
Execution and conclusion of a loan agreement involves the signing of two copies of the document. If the contract is secured by a pledge (mortgage or car on credit), four copies should be drawn up and notarized. When making a contract, remember that the loan amount must be written both in numerical form and in capital letters; everything, names, patronymics and surnames, as well as addresses, must be written without abbreviations.
Please note: if the execution of a loan agreement involves the signing of a real estate pledge agreement, the transaction is subject to mandatory state registration.
The deal is concluded by the bank's representative and the borrower. One sample of the loan agreement remains in the bank and is attached to the credit history, the second is provided to the client. Some banks require an insurance agreement. Therefore, the client must submit the original of the insurance contract to the bank.