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 Position :  Home >>   Corporate Banking>> Wealth Management>> Entrusted Loan  
 

 

Entrusted Loan

Definition

Entrusted loans are a form of agency business in which the fund capital provided by the trustor”s loaned to the target borrower for specified uses, in specified amounts, over specified maturity periods and at a specified interest rate as instructed by the trustor through BOCOM (the trustee), which helps retrieve the principal sum with interest on the trustor’s behalf. Designated uses for such loans must comply with the relevant state regulations.

Functions and salient features

(1)       Prompt and convenient procedure: Entrusted loans can be arranged immediately after the trustor and borrower has opened their respective accounts at BOCOM.

(2)       Enhances the utility of the customer’s capital funds, providing a leverage for the appreciation of idle fund possessed by customers

(3)       BOCOM pays a current deposit interest for the unreleased loan at an interest rate stipulated by the People’s Bank of China;

(4)       BOCOM does not provide capital top-up as it charges only a service commission. The bank does not assume loan risks in any form.

Application criteria

(1)       Government departments, enterprise, non-profit institutions and individuals can entrust BOCOM with execution of entrusted loans;

(2)       Trustor opens an entrusted loan deposit account at BOCOM and deposits the loan principal in the account in one lump-sum or different installments as agreed;

(3)       Trustor decides on the choice of borrower and a settlement account is opened at BOCOM;

(4)       Based on the trustor’s wishes, the borrower is required, when necessary, to provide a guarantor approved by the trustor.

Application procedure

(1)       Trustor submits a written application to BOCOM for a entrusted loan agreement to be endorsed by both parties. Entrusted loan agreements generally include a master agreement and standalone agreement. The master agreement is signed between the trustor and BOCOM. The standalone agreement is signed by the trustor, the borrower and BOCOM;

(2)       When signing the agreement, the borrower is required, when necessary based on the trustor’s wishes, to provide a letter of guarantee or collaterals approved by the trustee;

(3)       To use the entrusted loan, the borrower is required to complete the procedures as required by the entrusted loan agreement.



 



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