FAQs on Liquirent Loan

1. What is Liquirent Facility?

This scheme is to grant advances against rent receivables to customers who have leased their property to credit worthy establishments like reputed companies/Public Sector Undertakings/ Established Commercial Organizations/ Multinational Companies/ Banks/ other reputed institutions and individuals.

2. Who are eligible to get the Liquirent Loan in IOB?

a) Owners who let out their properties to reputed companies/Public Sector Undertakings/ Established Commercial Organizations/ Reputed Multinational Companies/ Banks/ other reputed Institutions and Individuals. When the tenant is an Individual, branches should extend this facility only to reputed borrowers on selective basis.

b)  Landlords of any of our bank premises.

c) Landlords of residential flats/houses taken by our bank on lease for accommodation of our officers/executives.

In case the rent payable is partly adjusted towards any other earlier loan availed by the landlord and there is surplus to meet the fresh loan against this scheme, then suitable loan amount can be considered by branches.

Loans under Liquirent Scheme are not be considered if the land lord and the tenant (s) are associates/subsidiaries/relatives.

3. What will be the margin requirement for Liquirent loan in IOB?

30% of net rent receivables.

Net Rent Receivables : ( Total rent receivables including service / Maintenance rent which is being paid to the Borrower in respect of unexpired period of lease including the lease period covered under renewal clause with first stage step up rentals) minus total advance deposit , estimated amount of property tax, GST, TDS other statutory dues for the unexpired period of lease ( including the lease period covered under renewal clause with first stage step up rentals) and maintenance expenses which are to be borne by the owner.

4. What will be nature of this facility?

This loan will be availed as Term Loan.

5. What will be the repayment period for this scheme?

In Equated Monthly Instalments towards principal and interest. The Lessee has to pay the rent directly to the bank.

a) For loans up to Rs. 50.00 crore: Maximum 120 months or residual lease period (including lease period under renewal clause) whichever is lower.

However, in case of tenants being large MNCs/ Banks/ PSUs/ Government Department, maximum repayment of 144 months or residual lease period (including lease period under renewal clause) whichever is lower may be considered.

b) For loans above Rs. 50.00 crore: Maximum 144 months or residual lease period (including lease period under renewal clause) whichever is lower.

On a case-to-case basis CAC/MCB may consider repayment up to 180 months or the residual lease period (including lease period under renewal clause) whichever is lower.

6. What is the quantum of loan under Liquirent in IOB?

 If lessee is an Individual, maximum loan is permitted for Rs. 50.00 Lakh only. Otherwise, there is no maximum loan amount.

7. Assessment of loan;

Lowest of the 1, 2 and 3 as under:

i) First Method: Net Rentals/Net rent Receivables less Margin

a) Total rent receivables including service / Maintenance rent which is being paid to the Borrower in respect of unexpired period of lease including the lease period covered under renewal clause with first stage step up rentals minus

b) total advance deposit, estimated amount of property tax, GST, TDS, other statutory dues for the unexpired period of lease (including the lease period covered under renewal clause with first stage step up rentals) and maintenance expenses which are to be borne by the owner.

c) Net Rentals/ Net Rent Receivables: (a-b)

d) Less Margin @30% on net rentals.

ii) Second Method:

Maximum Loan amount based on the discounted value of net rentals/ Net Rent Receivables as mentioned above should be worked out for the lease period i.e., unexpired period of lease (including the lease period covered under renewal clause with first stage step-up rentals) with applicable rate of interest or the tenor of the loan whichever is less.

iii) Third Method:

Maximum Loan amount based on the discounted value of net rentals/ Net Rent Receivables as mentioned above should be worked out for the lease period i.e., unexpired period of lease (including the lease period covered under renewal clause with first stage step-up rentals) with applicable rate of interest + 2%* or the tenor of the loan whichever is less.

8. What will be the security for Liquirent loan in IOB?

Primary: Assignment of Rent Receivables. Registered Power of Attorney with the lessee must be obtained in states where registration is mandatory. In other cases, notarized Power of Attorney to be obtained.

Collateral: For loans up to Rs. 2.00 Lakh, no security other than the Primary Security as stated above.

For loans above Rs. 2.00 Lakh,  equitable/ registered mortgage of the property whose rent is charged to the loan. Minimum value of the security (Fair Market Value of the proposed property to be mortgaged) should be 125% of the loan amount.

In case the borrower is not able to offer the property whose rent is reckoned for liquirent, in such cases any other/ alternate immovable property worth 150% (FMV) of the advance value or Bank Deposit/ NSC/ KVP/ IVP/ Life Insurance policy with face value/ surrender value in case of LIP equivalent or more than the advance value should be obtained as collateral security.

9. Is Guarantee required for Liquirent Loan in IOB?

i. In case of a Partnership Firm, Personal Guarantee of the Partners to be obtained.

ii. In case of Special Purpose Vehicle (SPVs)/ Associates/Subsidiaries Corporate Guarantee of the parent company should be obtained.

In the case of advances to Public Limited Companies, personal guarantee of all the directors except institutional director/Govt. director /Bank nominee and or professionals serving as directors will generally be insisted upon.

10.Is there any other criteria for Liquirent loan in IOB?

DSRA: Minimum 3 months EMI should be kept with the branch as Debt Service Reserve Account (DSRA). In case of consortium/ MBA where ESCROW is maintained with other members, stipulated DSRA to be maintained with us.

11.Is there a requirement for tripartite agreement?

Tripartite agreement to be executed among Lessor, Lessee and Bank for payment of monthly rent.

12.Whether we can top up the loan?

Yes, Based on the fulfilment of following requirements:

a. Original loan has run for minimum of 3 years

b. Eligible loan amount will be determined considering lease rental and lease period covered under renewal clause or tenor of the loan whichever is lower. Assessment of the Top Up loan should be based purely on the basis of the increase in rental income which has not been considered in the original Liquirent Loan.

c. Repayment of the Top up to match with the residual repayment tenor of the original loan.

The original loan should not have been SMA 1/SMA 2 during the past one year.