Bank Lending Business

The most important asset business of commercial banks.
Credit lending, which refers to lending on the creditworthiness of the borrower alone without any collateral, is a form of capital lending.

Ordinary Borrowing Limit
An informal agreement between a business and a bank to establish a loan within which the business can be supported by the bank at any time, with the limit generally being valid for no more than 90 days. Loans within the ordinary borrowing limit have a variable interest rate, linked to the bank's preferential rate.

Overdraft Lending
Banks provide loans to customers by allowing them to overdraw on their accounts. The provision of this facility is considered to be an "additional obligation" that the bank owes to the customer outside of the contract.

Standby Loan Commitment
A standby loan commitment is a more formal and legally binding agreement. The bank enters into a formal contract with the business in which it undertakes to lend to the business for a specified period and within a specified limit, with the business providing a fee for the bank's commitment.

Consumer lending
Consumer lending is lending to consumer individuals for the purchase of consumer durables or the payment of other expenses, and commercial banks provide such loans to their customers subject to various checks.

Bill Discounting Lending
Discounted bill lending is where the customer submits an outstanding bill to the bank and the bank obtains a cash payment by deducting interest from the date of discounting to the date of maturity.

Types of Loans
(1) Inventory Loans. An inventory loan, also known as a commodity loan, is a short-term loan that uses a company's inventory or merchandise as collateral.
(2) Customer account loans. The short-term loans granted by banks with accounts receivable as collateral are called "customer loans". This type of loan is generally an ongoing credit agreement.
(3) Securities loans. The bank issued by the enterprise loans, in addition to receivables and inventory as collateral, there are also a number of securities, especially the company issued by the shares and bonds for the security. This type of loan is called "securities loans".
(4) Real estate mortgage loans. Usually refers to loans secured by real estate or business equipment.

Guaranteed lending
A loan secured by a bond is a loan guaranteed by a third party. A guarantee is a contractual document between the bank and the borrower guaranteeing the loan, which sets out the rights and obligations of the bank and the guarantor.

The bank can release the loan to the borrower by obtaining a standard form of guarantee drawn up by the bank and signed by the guarantor. The guarantee is therefore the simplest form of security acceptable to the bank.

Securitization of Loans
Loan securitization is the process by which a commercial bank converts a loan into a securities issue through a certain process of prime capitalization. The process involves commercial banks combining their illiquid loan holdings into a number of asset pools and selling them to special purpose corporations, which then issue asset-backed securities secured by these pools. These asset-backed securities can also be offered to investors through the securities issuance market or private placement. The funds recovered from the sale of the securities can then be used as a new source of funding for the commercial bank to make other loans.