bank credit agreement is regulated by the Banking Act. In accordance with Article. 69 of the Banking Law : "By a loan agreement the bank undertakes to make available to the borrower at the time indicated in the contract amount of cash intended for a specific purpose, and the borrower agrees to use it under the conditions in the agreement, refund the amount of credit used, together with interest at the designated maturities and pay commission on the loan. " Lending to the economic entities and individuals is the primary function of banks active. bank loan is the ratio of economic information between the bank and the borrower. Lending operation consists of placing at the disposal of the borrower of funds for a specific purpose, and the borrower undertakes to repay them with interest at the contractual period. determining factor term loan is TRUST. Making legal relations is usually carried out under contract, and therefore combined with confidence in the counterparty. A person who is entitled to receive benefits from the contractor called creditor, or creditor. And it is precisely the element of trust is distinguished from other credit transactions act. In the case of bank credit is confidence in the customer who has the ability to repay the loan and accrued interest during the contractual period and has complied with its obligations previously incurred.
important distinguishing feature of the credit is to define its purpose, which gives the bank the right to control use of the loan and the right to terminate the contract if its usage deviated from the terms of the contract.
General principles of lending are included in banking law, as detailed in the various banks, are included in the rules of credit. The Act also defines the essential elements of the loan agreement writing:
1) parties
2) amount and currency of the loan
3 ) purpose for which the loan was granted
4) terms and loan maturity
5) the interest rate on the loan and its conditions change parties
6) amount and currency of the loan
7) purpose for which the loan was granted
8) terms and loan maturity
9) height borrowing and change conditions
10) way to secure repayment
11) the powers of the bank associated with the use and control repayment
12) terms and manner making available to the borrower's cash
13) the commission, if the contract provides for it
14) conditions for modification and termination.
Breakdown of loans by various types of criteria is made by banking practices, because the law does not distinguish between bank and does not impose any division. In fact, every commercial bank is a divisive their outstanding loans primarily for their own needs.
Applied in practice, credit rating may not always be completely accurate, since often lack explicit references. For example, a specific effort (the loan) can be classified as working capital credit for investments with a short cycle of high profitability, and another to the investment loan because of the long cycle performance.
In the present national banking system so there is a comprehensive, uniform classification and nomenclature of loans granted by banks. General principles loans are included in banking law, and detailed in the various banks, are included in the rules of credit.
division credits may be based on various criteria, among which the most important are:
- crediting period,
- method of granting credit,
- destiny (purpose credit),
- currency loans (in gold or in foreign currency).
Banks, depending on your needs, share the credit, depending on the location and form of the use and repayment, the type of borrower, how to secure, rules rates and formulas repay the loan. Some banks also make a distinction depending on the frequency of use and repayment of the loan or the number of creditor banks. A characteristic feature is its maneuverability loan within a specified period, and the dates of granting and repayment of the loan are subject to negotiation and are determined by a credit agreement. Polish banks differentiate in its regulations:
- short-term loans, granted for a period of one year,
- medium-term loans, the timing repayment from 1 year to 3 years,
- long-term loans, with a maturity over 3 years.
From the standpoint of surgical technique is an important method of lending, which means that loans can be granted:
- overdrafts,
- account credit (loan).
Essence overdraft lies in the fact that debt is in the form of overdraft (negative) current account of the borrower. Bank under the credit agreement entitles the customer to cause the overdraft limit granted to the amount indicated in the contract.
debt incurred through the payment available to the borrower, taking place in the weight that account. However, the current account receipts to reduce debt.
characteristic of the overdraft facility is its renewability, which means that any total or partial repayment of credit used gives the possibility of recurrence, multiple debts to the customer in the credit granted.
Overdraft credit is a solution commonly used in the Polish system of credit is based on running a separate loan accounts ( next to the current account of the borrower).
Loan in the loan account may be used:
1) by przeksięgowania credit on current account,
2) directly debited to the credit payment orders through the implementation of the borrower.
This form of credit requires mostly by the customer, a separate disposition and przeksięgowań the bill credit and the current account of the use (transzowania) and the repayment of loan taken during the contractual period.
Overdraft credit, in practice takes many forms. The most common are:
Target Credit used to finance a specific transaction and can not be renewed.
due credit to the commitment is intended to cover maturing obligations during periods of short-term difficulties paying borrowers.
Cash Loan used to replace temporarily unavailable cash.
seasonal credit occurs when the proceeds from the sale of production or services are significantly shifted in time with respect to operational costs. This may result from specific production.
Line of Credit creates the possibility of successive and repetitive credit in certain transactions, such as the supply of certain raw materials, materials, goods or services.
Depending on the subject (to) loan can be distinguished:
- working capital loans, mostly short-term and
- investment loans. Granted for a longer period in connection with the financing of physical investment projects.
Working capital loans be provided to finance the current needs of business (operational) of the borrower associated with the supply, production and sales and billing process cash.
Working capital loans are granted for different purposes and are traditionally called them, for example seasonal loans (eg, stocks of sugar in sugar factories) loans for the purchase of agricultural products, loans on credit cards, etc.
form the criterion can also highlight, in addition to the overdraft and loan account:
· discount loans,
· acceptance credits,
· credits associated with purchasing invoices,
Discount credit occurs when an institution Kreditanstalt (bank) agrees to accept promissory notes before their maturity date, discounting them from the date of admission to date of payment. The Bank opens a line of discount - credit, in which consent to the adoption of bills. Discount credit is short-term loan and is used mostly to finance activities current.
Seller promissory note and the borrower is usually the supplier, which prolongs the recipient's payment of goods or services, but seeks confirmation of his claims by the bill. Sales of the bank bill is practically a form to obtain have not yet become due, or to obtain financial resources by the provider.
Under the agreement, a credit acceptance bank agrees to accept bills drawn on him by a person authorized to do so. In this case the bank does not put at the disposal of the borrower statement, but accepting a bill of exchange drawn upon himself, becomes the principal debtor liable for the redemption of promissory note to the bill. Credit Acceptance is granted at the time of purchase by the bank bill is not paid by the payer.
Credit Acceptance is used mostly to finance trade in goods. For giving an acceptance bank charges a commission.
credits associated with purchasing invoices rely on discounting invoices. Their essence boils down to buying the claim (their assignment). Sellers claim is not responsible for the solvency of the debtor, unless the contract provides otherwise.
Depending on the content of the agreement the bank (invoices) can fulfill three functions: financing, risk transfer and service.
function funding amounts to be paid by bank deposit to claim possession. The bank pays the purchase price or value of the receivables less the interest and commission.
function assumption of risk means that the bank as the factor assumes the entire risk of insolvency of the debtor ..
The function service boils down to taking over the bank's organizational and technical duties such as invoicing, reminder of debtors, collection charges etc.
Credits related to leasing are in-kind credit .
Leasing is basically a form of alternative to the loan funding approach to provide the limit agreed by the lessor of equipment, facilities, buildings, etc. The lessee undertakes to pay a fee usually spread over the lease installments. The owner is the lessor of the contract, but the parties may provide in the agreement transferring ownership to the lessee, the leasing payments, besides leasing fees also include a part payment for the purchased item. lessor may be a bank, but also a specialized leasing company, a manufacturer whose products will be leased.
From the standpoint of how to secure loans can be divided into:
- Lombard,
Lombard is granted the pledge of securities, goods, valuables, bank deposits and charges (eg insurance). It is granted by commercial banks usually for up to 3 months. A feature of this short-term loan by the bank is holding the collateral, and credit is granted not for its full value. The subject of the lien are some things that the physical storage of the bank poses no difficulty.
Given the subject of a pledge, we can distinguish the following types of Lombard:
· the pledge of securities,
· a lien against the goods under the relevant constituent documents (warrants) or transport ,
· secured notes,
· secured debts.
Lombard is usually granted to 60% of the value of the collateral which is pledged.
Mortgage is defined in the literature in two ways. One definition is based solely on the adjective "mortgage", which refers to a specific form of security for the loan, which is a mortgage, or an entry in the fourth section of the Land Register creditor claim in relation to the owner of the property. The property is described given the land register need not be the subject of credit. Polish banks already provide loans, sometimes in significant amounts, secured by mortgages on real estate and the purpose of the loan can be arbitrary.
Another definition assigns a mortgage referred to, characteristics such as
- long repayment period,
- a mortgage on the property,
- linking object credit to the subject of security,
- relatively low interest rates because of the low level of credit risk,
- opportunity Sales of mortgage-backed debt in the capital market directly or through long-term securities - mortgage bonds.
second definition mortgage captures its essence as an instrument specific to the mortgage bank.
mortgage is a form of guarantee of repayment of the loan, even when the property changes ownership. This follows from the fact that the bank will take precedence over creditors subsequent property owners.
Because of the way of borrowing can be distinguished:
· fixed-rate loan, which maintains a constant interest rate throughout the period the credit agreement,
· floating rate loan where the interest rate varies depending on from changes in interest rates during the contractual period of the loan,
Fixed interest rate is a characteristic of short-term loans, or those in which interest is charged for the entire duration of the use of credit. Variable interest rate applies to loans for longer periods.
Loans can be used:
- once - the entire amount of credit is used at one time agreed in the loan agreement,
- in tranches - the amount of the loan can be used in many areas and at different dates,
- in drawings made - this is a way to use applied for a credit line or overdraft - the borrower himself governs use of the loan amount depending on your needs.
Due to the form of repayment, can be divided into loans repayable:
· once-whole amount of the loan is repaid at a date to be determined by the loan agreement,
· in installments - a loan repaid parts, the number and amount is determined by the loan agreement,
· the proceeds to the account - the credit is granted overdraft or line of credit - the amount and timing of repayments depend only on the borrower, because its debt is reduced if any impact on employment.
methods for the use and repayment of loans are closely associated with certain types of loans.
We can distinguish also credits due to a person's creditworthiness:
· to finance economic activity,
· consumer finance for personal needs of the borrower.
The loan is a loan application, which should define the essential elements of the credit agreement.
generally accepted that the proposal should include:
- characteristics of the applicant, a prospective borrower
- amount and currency of the proposed loan
- purpose of credit with the possible confirmation of contracts concluded
- proposed crediting period , the grace period and repayment terms
- proposed collateral for the loan.
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