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Loan Syndication
By Mahak Dhakar
B.TECH CSE BFSI
SAP 500048604
ROLL.NO 063
mahakdhakar15@stu.upes.ac.in
1 Mr.Mahak dhakar
Loan Syndication
Loan syndication is a lending process in
which a group of lenders
borrower.
provide funds to
a single
2 Mr Mahak Dhakar
How it works
When a project is unusually large or complex, it
may
lender.
exceed the capacity of a
of
single
the loanFor example, the amount
may be too large, the risks too high, the
thecollateral may be in different locations, or
uses of capital may require special expertise to
understand and manage it. In these cases, a
financial institution may bring
the deal
other lenders into
4 mahak dhakar
How it works
Loan syndications involve a large amount of
coordination
syndications
institution,
and negotiation. Typically, loan
involve a lead
agent,
financial
whichor syndicate
administersorganizes
including
and the transaction,
repayments, fees, reporting and
compliance, and loan monitoring.
5 mahak dhakar
Loan Syndication Process
Merchant
assessment
promoters,
projections
bankers should
projects
have
,
correct
products,of the
project cost
sales
and profitability
based on forecasts. In this
thedirection
following
the merchant baker has to take
steps:
6 mahak dhkar
1.Initial discussions with Promoters
The initial discussion should be
know the following aspects :-
devoted to
background of the promoters
promoters contribution to the
in detail
project
details about the project report and
progress of the project.
7 mahak dhakar
2.Assessment of Project
An estimate of the capital cost of the project
should be worked out to find out its long term
feasibility and whether the merchant
should actually go in for the project.
bankers
8 mahak dhakar
3. Locating sources of funds
The choice for sources of
upon the following :-
i) Nature of the project
funds will depend
ii) Quantum of the
Sources of funds can
project costs
be divide into three categories :
Short Term
Medium Term
Long Term
i.
ii.
iii.
9 mahak dhakar
Required Fund
Short term finance where the funds are required upto a period of 1
year. Such finance is require to meet the working capital requirements
or special seasonal needs.
i)
ii) Medium term finance where the funds are needed for a period of 1-5
years. Such finance is needed to provide funds for permanent working
capital , expansion or replacement of assets etc. These are available
from SFCs , commercial banks and All India Financial Institutions through
special schemes.
iii) Long term finance where the funds are needed for a period of more
than 5 years.
10 mahak dhakar
4. Preliminary discussions with the
lenders
The merchant bankers should have clarifications
from lenders on the following questions whether
the particular industry is in a priority framework
of the development finance institutions.
11 mahak dhakar
5. Preparation of the loan application
and follow-up
Before filing the loan application the merchant bankers
must ensure that the client company has complied with
the following formalities so that appraisal of the
application is not delayed. In the case of consortium
approach or joint financing of the project , the
application will be filed with one development finance
institution and the company or the merchant banker will
deal with only one
The project will be
‘single window’
institution termed as ‘lead institution’ .
appraised and sanctioned under
12 mahak dhakar
6. Rendering assistance in
appraisal
project
The project is appraise from different angles
,viz. technical, financial, managerial
economical and social.
13 mahak dhakar
7. Obtaining letter of intent from the
lending institution or bank
The appraising institution takes the matter to its board of
directors
proposal
authority
financial
or the appraising office may put up the
with full appraisal note before the sanctioning
for according necessary sanction. Then the
ofinstitution informs the applicant borrower
such sanction along with the detailed terms and
conditional and arrangements of any with other lending
FI s in case of consortium financing. The sanction letter
mainly covers the following :
14 mahak dhakar
Conti..
Amount of loan
Interest
Commitment charge
Security for
Repayment
the loan
of loan
15 mahak dhakar
Mahak Dhakar
THANK YOU…
16

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Loan@syndications@mahak_dhakar

  • 1. Loan Syndication By Mahak Dhakar B.TECH CSE BFSI SAP 500048604 ROLL.NO 063 mahakdhakar15@stu.upes.ac.in 1 Mr.Mahak dhakar
  • 2. Loan Syndication Loan syndication is a lending process in which a group of lenders borrower. provide funds to a single 2 Mr Mahak Dhakar
  • 3. How it works When a project is unusually large or complex, it may lender. exceed the capacity of a of single the loanFor example, the amount may be too large, the risks too high, the thecollateral may be in different locations, or uses of capital may require special expertise to understand and manage it. In these cases, a financial institution may bring the deal other lenders into 4 mahak dhakar
  • 4. How it works Loan syndications involve a large amount of coordination syndications institution, and negotiation. Typically, loan involve a lead agent, financial whichor syndicate administersorganizes including and the transaction, repayments, fees, reporting and compliance, and loan monitoring. 5 mahak dhakar
  • 5. Loan Syndication Process Merchant assessment promoters, projections bankers should projects have , correct products,of the project cost sales and profitability based on forecasts. In this thedirection following the merchant baker has to take steps: 6 mahak dhkar
  • 6. 1.Initial discussions with Promoters The initial discussion should be know the following aspects :- devoted to background of the promoters promoters contribution to the in detail project details about the project report and progress of the project. 7 mahak dhakar
  • 7. 2.Assessment of Project An estimate of the capital cost of the project should be worked out to find out its long term feasibility and whether the merchant should actually go in for the project. bankers 8 mahak dhakar
  • 8. 3. Locating sources of funds The choice for sources of upon the following :- i) Nature of the project funds will depend ii) Quantum of the Sources of funds can project costs be divide into three categories : Short Term Medium Term Long Term i. ii. iii. 9 mahak dhakar
  • 9. Required Fund Short term finance where the funds are required upto a period of 1 year. Such finance is require to meet the working capital requirements or special seasonal needs. i) ii) Medium term finance where the funds are needed for a period of 1-5 years. Such finance is needed to provide funds for permanent working capital , expansion or replacement of assets etc. These are available from SFCs , commercial banks and All India Financial Institutions through special schemes. iii) Long term finance where the funds are needed for a period of more than 5 years. 10 mahak dhakar
  • 10. 4. Preliminary discussions with the lenders The merchant bankers should have clarifications from lenders on the following questions whether the particular industry is in a priority framework of the development finance institutions. 11 mahak dhakar
  • 11. 5. Preparation of the loan application and follow-up Before filing the loan application the merchant bankers must ensure that the client company has complied with the following formalities so that appraisal of the application is not delayed. In the case of consortium approach or joint financing of the project , the application will be filed with one development finance institution and the company or the merchant banker will deal with only one The project will be ‘single window’ institution termed as ‘lead institution’ . appraised and sanctioned under 12 mahak dhakar
  • 12. 6. Rendering assistance in appraisal project The project is appraise from different angles ,viz. technical, financial, managerial economical and social. 13 mahak dhakar
  • 13. 7. Obtaining letter of intent from the lending institution or bank The appraising institution takes the matter to its board of directors proposal authority financial or the appraising office may put up the with full appraisal note before the sanctioning for according necessary sanction. Then the ofinstitution informs the applicant borrower such sanction along with the detailed terms and conditional and arrangements of any with other lending FI s in case of consortium financing. The sanction letter mainly covers the following : 14 mahak dhakar
  • 14. Conti.. Amount of loan Interest Commitment charge Security for Repayment the loan of loan 15 mahak dhakar