How can contractors get Overdraft/Earnest Money Financing scheme from the bank?

To participate in the tender through online-based e-GP, Contractors/suppliers need to get temporary financial accommodation from banks in the form of Overdraft/Earnest Money Financing Scheme, Performance Bond, Advance Payment Guarantee and Loan etc. Usually, to increase the probability of getting a work order or tender the contractors are drops more than one bid. In that case, the contractors require Payment Order and Bank Drafts as Earnest Money.

Earnest Money Financing is a lucrative loan product for banks. In our country, till now 61 scheduled banks operated but still now Pubali Bank Limited, One Bank Limited, Southeast Bank Limited, Bank Asia Limited, Modhumoti Bank Limited, Mid Land Bank Limited, Jamuna Bank Limited and some other banks are providing contractors Overdraft (Earnest Money Financing) to participate in tenders announced by different Government/ Semi-Government Agencies and Autonomous bodies.

Purpose of Overdraft/Earnest Money Financing:

a) Provide temporary financial support to the contractors to participate in tenders announced by different Government/ Semi-Government Agencies and Autonomous bodies.

Who Can Apply?

Any Bangladeshi Nationalist contractor can apply for an Overdraft (Earnest Money Financing); 
a) SME Entrepreneur’s age limit: 21 to 55 years.
b) Local Business entities who have valid contractor licenses or enlistment with Concerned Department.
c) Must have an account in the name of the borrower’s firm or name as mentioned in the contractor license having satisfactory transactions related to his contractor business also satisfactory experience as a contractor.
d) For the existing borrowers who is enjoying other facilities from the same bank like Cash Credit or other credit facilities by eligible securities such as landed properties and cash or cash equivalent securities.

Documents to be submitted for Overdraft (Earnest Money Financing):
01. Customer application in a bank prescribed format mentioning particulars of Payment Order issued for taking part in the tender.
02. Valid Contractor License or enlistment with Concerned Department.
03. Copy of Tender Document/Notice.
04. Financial Statement of the borrower’s firm.
05. Clean CIB report.

Loan Limit:

Loan limit calculated by banks up to 05 Crore.

Overdraft/Earnest Money Financing Scheme Margin:

Overdraft (Earnest Money Financing) margin may be fixed on the basis of banker-customer relation but must not be less than 5% (Five Percent) in cash of the entire Payment Order amount and shall be deposited in the respective Overdraft (Earnest Money Financing).
Tenure of the loan:

The maximum period of the Overdraft (Earnest Money Financing) will be for 120 days for each drawing.
Loan Repayment:

Loan repayments are collected from the customer quarterly basis at a fixed interest rate which is decided by the banks.
Interest, Fees and Charges:

Interest rate fixed by the respective bank which is controlled by Bangladesh Bank. The present rate of interest fixed by the BB is not more than 09.00%.
Fees and Charges imposed by the Bank in the form of;

1) CIB Inquiry fee.

2) Loan Application Fee.

3) Loan Processing Fee.

4) Contact Point Verification fee.

5) Charges Document Fee.

6) Legal Opinion Fee.

7) Other as banks discretion.

For more details, one can go through the details about the bank’s policies from their respective bank’s official websites. And one can contact the respective bank official for loan details. All banks are offering almost the same feature for Overdraft (Earnest Money Financing) just which you prefer or suitable for you.

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