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 Position :  Home >>   Corporate Banking>> Financing Services>> Account Overdraft  
 

 

Account Overdraft

Definition

A corporate account overdraft is a capital-raising arrangement offered by BOCOM and executed according to an agreement with its customer, to provide an overdraft of a designated amount to the customer, in addition to the balance in the latter’s settlement account, in order to make up for emergency cash shortages in the course of the customer’s normal business operations.

Salient features

(1)   Upon signing an agreement with BOCOM, customers can execute an overdraft anytime and pay back the overdraft amount anytime during the designated period, saving them the constant hassles of credit application and loan repayment.

(2)   Generate savings on corporate financial overheads and facilitate corporate finance management;

(3)   Make up for emergency cash shortages in the course of the company’s normal business activities.

Amount, term, interest rate and interest

(1)   Maximum extent of overdraft period does not exceed 1 year, starting from the day the overdraft agreement takes effect. Overdraft can be made on revolving basis during the effective period;

(2)   Overdraft term is the period during which successive overdrafts are executed by the customer, without making any repayment. Generally, this occurs within ten days and the maximum length of the term cannot exceed 3 months;

(3)   Overdraft interest rate is generally the same as one-year RMB loan interest rate (inclusive of floating rates) executed by the People’s Bank of China;

(4)   Calculation of overdraft interest is based on the daily accumulated amount. Calculation of such amount is based on the maximum amount of overdraft balance registered on the day of calculation.

Application conditions

(1)   Meet the basic criteria for BOCOM’s working capital loan;

(2)   Favourable business, financial and credit standing;

(3)   Preferably a customer accorded with priority support from BOCOM;

(4)   Provides guarantee accepted by BOCOM or fulfills the relevant criteria required by BOCOM;

(5)   Overdraft uses are confined to only make up for emergency cash shortages in the course of the company’s normal business operation and cannot be used for repaying the principal of any loan, loan interest settlement or project investment.

Application procedures

To apply for a corporate account overdraft, the customer is required to complete the following procedures besides providing BOCOM the documents required for working capital loan:

(1)  Submits overdraft application form to BOCOM;

(2) Signs a Corporate Account Overdraft Agreement with BOCOM upon its review and approval of the overdraft application and the completion of the procedures in relation to the provision of relevant guarantee.



 



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