Term Loans
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What is a term loan's primary purpose and typical tenure?
Finance fixed asset acquisition (factories, machinery, infrastructure) repaid over 3–25 years via fixed EMI schedule.
What is the minimum DSCR benchmark for industrial term loans?
Debt Service Coverage Ratio ≥ 1.5 ensures borrower's cash flow comfortably covers interest and principal.
How does working-capital loan differ from term loan?
Working-capital funds day-to-day operations (short-term, revolving), term loan funds fixed assets (long-term, amortised).
What is a Working Capital Term Loan (WCTL)?
Term-loan structure financing permanent/quasi-permanent current-asset build-up, common in seasonal industries, 3–5 year tenure.
Define Deferred Payment Guarantee (DPG) and its nature.
Non-fund guarantee assuring supplier of installment-based asset payment; becomes fund-based if buyer defaults.
What capital charge applies to DPG under capital adequacy?
DPG attracts 100% credit-conversion factor, treated as non-fund credit substitute in capital calculations.
Name the three pillars of project appraisal.
Promoter viability, technical feasibility, economic/financial sustainability tested via IRR, DSCR, revenue projections.
What is the minimum DSCR for RBI-eligible infrastructure projects?
Minimum DSCR ≥ 1.20–1.25; some lenders insist ≥ 1.30 for infrastructure exposures.
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