Asset Financing

Asset FinancingAsset Financing

Background and Introduction Background and Introduction

Asset Asset FinanceFinance

DISCUSSION POINTSDISCUSSION POINTS

• BackgroundBackground• What is Asset Finance?What is Asset Finance?• Type of Assets FinancedType of Assets Financed• Terms of FinanceTerms of Finance• Application RequirementsApplication Requirements• Sequence of eventsSequence of events

Asset Asset FinanceFinance

• Brief History on NIC BankBrief History on NIC Bank

• Incorporated in 1959Incorporated in 1959

Providing Hire Purchase Facilities since then.Providing Hire Purchase Facilities since then.

• In 1997 became a Bank offering not only Hire Purchase facilities but In 1997 became a Bank offering not only Hire Purchase facilities but

also a wide variety of other banking products:also a wide variety of other banking products:

• Asset FinanceAsset Finance

• Commercial Banking (Corporate, Personal Banking, Institutional Banking, Commercial Banking (Corporate, Personal Banking, Institutional Banking,

Custodial, Credit Cards)Custodial, Credit Cards)

• Offering insurance services through NIC Insurance AgencyOffering insurance services through NIC Insurance Agency

• Regional presence in Tanzania (NIC Bank Tanzania) & Uganda (NC Regional presence in Tanzania (NIC Bank Tanzania) & Uganda (NC

Bank Uganda)Bank Uganda)

Asset Asset FinanceFinance

• Asset finance is a product that assists clients to Asset finance is a product that assists clients to acquire Motor vehicles, machinery and acquire Motor vehicles, machinery and equipmentequipment

• Products includeProducts include• Hire Purchase (HP)Hire Purchase (HP)• Insurance Premium Finance (IPF)Insurance Premium Finance (IPF)• Operating LeasesOperating Leases

• Current set up includes Current set up includes • Head OfficeHead Office• BranchesBranches

Types of Assets FinancedTypes of Assets Financed

• Moveable & Identifiable assetsMoveable & Identifiable assets• Motor Vehicles (e.g. (i) commercial units like P/ups, Motor Vehicles (e.g. (i) commercial units like P/ups,

vans, trucks & prime movers. (ii) All personal units, vans, trucks & prime movers. (ii) All personal units, (iii) P.S.V vehicles(iii) P.S.V vehicles

• Plant & Machinery (installed at factories)Plant & Machinery (installed at factories)• Construction Equipment (bull dozers, cranes, Construction Equipment (bull dozers, cranes,

excavators)excavators)• Agricultural EquipmentAgricultural Equipment• IT Equipment (only hardware)IT Equipment (only hardware)• Other Specialized Equipment (medical, telecoms)Other Specialized Equipment (medical, telecoms)

Motor Motor VehiclesVehicles

Specialized Specialized EquipmentEquipment

Terms of financeTerms of finance

New VehiclesNew Vehicles

1)1)Finance up to 90% of cost subject to usual Finance up to 90% of cost subject to usual credit appraisalcredit appraisal

2)2)Maximum tenor of 5 years, PSV up to 4 Maximum tenor of 5 years, PSV up to 4 years maximumyears maximum

3)3) Interest rate at base-1%p.a.Interest rate at base-1%p.a.

4)4)Insurance can be arranged together with Insurance can be arranged together with Insurance Premium FinanceInsurance Premium Finance

Terms of FinanceTerms of Finance USED VEHICLES:USED VEHICLES:

1. Personal units;1. Personal units; Age- up to 8 years oldAge- up to 8 years old 80% finance80% finance Five years repayment periodFive years repayment period Insurance can be arranged together with IPFInsurance can be arranged together with IPF

2. Vehicles for car hire;2. Vehicles for car hire; Age- up to 6 years oldAge- up to 6 years old 70% finance70% finance Three years repayment periodThree years repayment period Insurance can be arrangedInsurance can be arranged

Key NotesKey Notes

• Documentation/SecuritiesDocumentation/Securities

- Minimum amount of finance Kshs. 300,000/=Minimum amount of finance Kshs. 300,000/=- Securities required by the bank are:Securities required by the bank are:

Hire Purchase Agreement (provided by the Hire Purchase Agreement (provided by the bank)bank)

Joint Registration (NIC Bank & Buyer)Joint Registration (NIC Bank & Buyer)

Insurance (available at the bank)Insurance (available at the bank)

Application Application RequirementsRequirements

• Requirements at application stage:Requirements at application stage:• Application form completed & signed by the legal borrowerApplication form completed & signed by the legal borrower• Original bank statements or their certified true copies for the Original bank statements or their certified true copies for the

latest 6 months latest 6 months • Identification or registration documents (including KRA PIN) Identification or registration documents (including KRA PIN)

for new borrowersfor new borrowers• Proforma invoices confirming the cost of unit to be Proforma invoices confirming the cost of unit to be

purchasedpurchased• AA Valuation or valuation report from the Franchise holder AA Valuation or valuation report from the Franchise holder

(e.g. Toyota Kenya for Toyota units) in case of used vehicles(e.g. Toyota Kenya for Toyota units) in case of used vehicles• For Limited entities- Memos and articles of association, Co. For Limited entities- Memos and articles of association, Co.

Pin & Incorporation certificate, IDs/Pins copies of all the Pin & Incorporation certificate, IDs/Pins copies of all the directorsdirectors

Sequence of EventsSequence of Events

• Application Processing (24 hours TAT)- on provision of Application Processing (24 hours TAT)- on provision of all pre-requisite application documentsall pre-requisite application documents

• Offer LetterOffer Letter• Documentation (insurance, joint registration, etc)Documentation (insurance, joint registration, etc)• Release or letter of undertaking- client takes possession Release or letter of undertaking- client takes possession

of the unit followed by payment to dealerof the unit followed by payment to dealer• Re-payment – standing order/Post dated chequesRe-payment – standing order/Post dated cheques