Trade Finance & Credit Facilities

Brief Introduction

Azizi Bank’s Credit Department has started its activities as an important section since the establishment of the bank. This department covers both fund based & non fund based facilities and extends various types of business and non-business loans to entrepreneurs and individuals to fulfill their credit requirements. For further details,

please visit the Credit Department, located at the main branch of Azizi Bank or call our 24 hours call center services @ 1515 or +93 70 780 1515 or email at cco@azizibank.af / dy.cco@azizibank.af


Types of Azizi Bank Credit Facilities

Azizi Bank delivers two types of credit facilities: Fund-based and non-fund based facilities. Each of these facilities has its own advantages and our esteemed customers could be granted any of these facilities according to their needs.

Through fund-based facilities/cash loans, Azizi Bank commits the physical outflow of funds at a competitive cost and funds are disbursed once customer completes the necessary formalities required for loan process. These type of loans i.e.(i) working capital loans and (ii) term loans are sanctioned to those who carry out day to day business and are also engaged in procurement of assets for business use.

Azizi Bank provides all kinds of non-fund based credit facilities i.e. letters of credit and Bank Guarantees as, Bid Bond Guarantee, Performance Guarantees, Advance payment Guarantees and Counter guarantee) and it is dedicated to businesses, investments, and import/export.


First Part: Azizi Bank Fund-Based Facilities

Azizi Bank fund-based facilities/cash loans are dedicated to all the eligible individuals and businesses who have requirements for money for conducting of business. After an individual is referred to the Credit Department of Azizi Bank, he/she will be briefed about the various types of loans, its advantages, and specifications and related documents and conditions. Subsequently the individual can pick the specific type of fund-based facilities and customize it accordingly. Azizi Bank Fund-based facilities includes: Overdraft Loans (ODs), Term loans (long-term/medium term short-term) and Individual/ personal Loans.


Overdraft

Azizi Bank Overdraft (O/D) facility is designed for allowing monetary and financial facilities to institutions and organizations which helps in managing their day to day working requirements. Accordingly, the bank has estimated a credit limit and allows the client to borrow a certain amount from the bank. The customer can utilize the limit sanctioned on the OD account and can either credit the sale proceeds on the same day without incurring any interest costs or on subsequent days. Interest is charged on the daily basis on the overdrawn amount only while it’s deducted from the borrower’s account at the end of the month.


Characteristics of Overdraft Loans

  • It is short-term (usually up to 12 months) credit facility which is usually renewable on a yearly basis
  • The designated amount for Overdraft loans is up to USD 8,000,000
  • The interest rate starts from 10% - 15% per year
  • The interest will be charged on the overdrawn amount only
  • This type of loan pertains to those who are usually doing business in manufacturing/ trading or engaged in import/export businesses etc and requires fund for working capital
  • It is allowed against hypothecation of stocks/ assignment of receivables and other secondary collaterals.


Overdraft Loans required documents

In case of settlement over the use of this facility, the consumer should hand over the following documents to Azizi Bank Credit Department:

  • Loan Application
  • Valid Business License
  • Article of Association (Assas Naama)
  • 3 years Business plan
  • 3 years Financial Reports
  • Tax Payment Documents
  • Customs Documents Available sales/purchase Contracts
  • Legal Documents of property in the name of the borrower (which will be submitted with the bank as a guarantee).


How to get an Overdraft

Customers who wishes to avail the OD facility may either contact our 24 hours call center @ 1515 or +93 70 780 1515 or visit any of our branches or may direct visit the credit department located in Azizi Bank HO, Zanbaq Square, Kabul, Afghanistan. After the specified documents are received, the verification department scrutinizes all the papers, make the KYC verifications and a decision is taken through the committee depending on the size and nature of the facility.


Term Loans

A Term Loan is a loan from the bank following an agreement for a specific amount of facility which has a specified repayment schedule and a fixed or floating margin rate. Obtaining a long term loan provides a business entity with requisite capital that can be used for purchase of assets, inventory or equipment/s which can then be used to create additional income for the business.


Long Term Loans

Such loan facilities are considered for more than one year. Long term loan facility is suitable for those who intend to invest capital for a long term in order to generate long term facilities. Long term loans are suggested to purchase fixed assets, construction of commercial buildings, construction of manufacturing factories, purchase of vehicles, stocks, raw material etc. As mentioned, such loans are repayable in a fixed term. The repayment tenure is between 12 to 36 months, but if the loan is expected to finance large projects, it can be extended up to 60 months also. The tenure and the amount of repayment of the loan are fixed according to the margin rate and income coverage ratio on fixed debt.


Characteristics of long-term Loans

  • Tenure ranges from 1 year to 3 years to a max of 5 years and is not further extendable
  • The loan amount is up to 8,000,000 USD
  • The interest rate varies from 10% to 15% per year
  • The repayment of this loan with margin usually takes place on a monthly/ quarterly basis from the date of loan execution to its expiry
  • The assets created are hypothecated/ mortgaged to the bank along with other collaterals as secondary security.


Documents required for long term loans

In case of settlement over the use of this facility, the consumer should provide the following documents to the Credit Department of Azizi Bank:

  • Valid Business License
  • Article of Association (Assas Naama)
  • 3 years Business Plan
  • 3 years Financial reports
  • Tax payment documents
  • Customs documents
  • Available Sales/purchase Contracts
  • Legal Documents of Property in the name of the borrower (which will be submitted with the bank as a guarantee).


How to get a long term loan?

Customers who wishes to avail the long term loan facility may either contact our 24 hours call center @ 1515 or +93 70 780 1515 or visit any of our branches or may direct visit the credit department located in Azizi Bank HO, Zanbaq Square, Kabul, Afghanistan. After the stipulated documents are received, the verification department scrutinizes all the papers, make the KYC verifications and a decision is taken through the committee depending on the size of the facility.


Azizi Bank Mid-Term Loans

Contrary to long term loan, mid-term loan is for a shorter duration and lesser amount as compared to long term and is recommended for mid-term investments.

  • Characteristics of short-term loan
  • It is an average term usually from 6 months up to 12 months
  • The loan amount is up to 8,000,000 USD *
  • The interest rate varies from 10% to 15% per year
  • The repayment of this loan, with margin, usually takes place on a monthly basis from the date of loan execution to its expiry
  • The assets created are hypothecated/ mortgaged to the bank along with other collaterals as secondary security.


Documents required for mid-term loans

  • In case of settlement over the use of this facility, the consumer should hand over the following documents to Azizi Bank Credit Department: Loan Application
  • Valid Business License
  • Article of Association (Assas Naama)
  • 3 years Business Plan
  • 3 Years Financial reports
  • Tax Payment Documents
  • Customs Documents Available sales/purchase Contracts
  • Legal Documents of Property in the name of the borrower (which will be submitted with the bank as a guarantee).


Azizi Bank Public (General) Loan

Public loans are designed for all the eligible individuals. Margin for such loans is less and the debtor is obligated to repay the amount on a specified repayment schedule at a fixed or floating margin rate. Public loans are recommended for construction of personal properties, small business and other personal needs


Characteristics of Public loans

  • Tenure up to 36 months & not renewable
  • The loan amount is up to 8,000,000 USD
  • Amount of loan ranges from 50,000 AFN to 5 Million AFN
  • The margin rate is fixed from 10% to 12% per year
  • The repayment of this loan, with margin, usually takes place on a monthly basis from the date of loan execution to its expiry.


Required documents for Public loans

In case of settlement, the consumer should provide following documents to the Credit Department of Azizi Bank:

  • Loan Application
  • Tazkira/passport (KYC Documents)
  • 2 passport sized photos
  • Proof of Income Documents
  • Sharia Guarantee Letter from employer confirming employment of the borrower


Second Part: Azizi Bank Non-Fund Based Facilities

Non fund based facilities includes the bank guarantees (BGs) of various types and letter of credit (LCs). The types and its procedural norms are explained below in detail.


Azizi Bank Guarantee Letters and their types

A bank guarantee is a promise from a bank or other lending or financial institution that if a particular borrower defaults on a loan/project, the bank will cover the loss. A bank guarantee enables the customer or debtor to acquire goods, buy equipment/s, participate in auction parties, bidding parties or draw loans, and thereby expand business activity. In general, there are four types of bank guarantees: Bid Guarantee, Performance Guarantee, Advance Payment Guarantee, and Counter Guarantee.


Bid Guarantee

A bid bond is a debt secured by a bidder for a project for e.g. construction job, logistics or similar type of bid –based selection process for the purpose of providing a guarantee to the project owner that the bidder will take up the job, if selected. The existence of a bid bond provides the owner with assurance that the bidder has the financial means & security to accept the job for the price quoted in the bid.

Bid bonds help the selection process of a job contract run smoothly. Without it, project owners would have apprehensions in the way of assurance that the bidder they select for a job would be able to properly complete the job without running into cash flow problems along the way. By providing bid bonds for their respective bids, each bidder for the projects is able to provide sufficient assurance to the owner that the project is within its means.


How to get Bid Guarantee?

  • Board Resolution (Consent) for opening Bid bond Guarantee
  • Valid Business License
  • Article of Association (Assas Naama)
  • Tazkira/Passport of President, V-President and shareholders of the company
  • Project specifications
  • Bid Form


Performance Guarantee

A Performance Guarantee is issued by Azizi Bank to a contractor to guarantee the full and due performance of the contract according to the plans and specifications. A project requiring a payment & performance bond will usually require a bid bond in order to qualify to bid for the project. A payment and performance bond will then be required of the winning bidder as a security to guarantee job completion. In case the contractor fails to perform their contractual obligation according to the specifications laid out by the contract, the client is guaranteed compensation for any monetary losses up to the amount of the performance bond.


How to get a Performance Guarantee?

Documents required are:

  • Valid Business License
  • Board Resolution (Consent) for opening of Performance bond
  • Article of Association (Assas Naama)
  • Tazkira/Passport of President, V-President and shareholders of the company
  • Project specifications etc. along with copy of confirmed contract awarded to the beneficiary


Advance Payment Guarantee

A written document issued by Azizi Bank at the request of the customer to the owner of a contracted project or the buyer of a sales deal that guarantees that the applicant will fulfill the contractual obligations after the owner or the buyer makes advance payment. Through advance payment guarantee, advance payments will be returned if the party that receives such payments does not perform its part of the contract.


Counter Guarantee

Counter Guarantee is a technical word to indicate the guarantee given by a bank to another bank issuing a guarantee. It happens when in accordance with the legal provisions a foreign bank is not authorized to issue guarantee in favor of resident in a specific Country but only allowed to instruct a local bank to issue a bank guarantee on their behalf. Azizi Bank can also issue Counter Guarantee to other Banks in other countries for specific projects.


How Azizi bank can issue a bank guarantee on the back of counter guarantee?

Documents required are:

  • Receipt of authenticated swift Message from counter bank requesting Azizi bank for issuance of a bank guarantee on behalf of their customers
  • Valid Business License of the company
  • Memorandum/Article of Association of the company
  • Passport of President, V-President and shareholders of the company
  • Last 3 years audited financial statements of the company
  • In case of advance payment and performance guarantee, copy of contract award is needed


Azizi Bank Letters of Credit (LCs)

A Letter of Credit is a letter from Azizi Bank that guarantees a buyer's payment to a seller on time and for the specified amount after delivery of the goods within the due date and as per proper specifications. In the event that the buyer is unable to make payment on the purchased commodity, the L/C issuing bank will be required to cover the full or remaining amount of the purchase value. Due to the nature of international dealings, including factors such as distance, different laws in each country and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade. They are issued through SWIFT (Society for World Wide interbank Financial Telecommunication) system.


Why use a letter of credit

Letters of credit are most commonly used when a buyer in one country purchases goods from a seller in another country. The seller may ask the buyer to provide a letter of credit to guarantee payment for the goods. The main advantage of using a letter of credit is that it can give security to both the seller and the buyer that it will honor their side of the deal and provide documentary proof of the same.


How to get Letter of Credit?

Documents required are:

  • Board Resolution (Consent) for opening of letter of credit
  • Valid Business License
  • Article of Association (Assas Naama)
  • Tazkira/Passport of President, V-President and shareholders of the company
  • Proforma Invoice
  • Sales/purchase contracts


Advance Payment Guarantee How to get Advance Payment Guarantee?

Documents required are:

  • Board Resolution (Consent) for opening of Advance payment Guarantee
  • Valid Business License
  • Article of Association (Assas Naama)
  • Tazkira/Passport of President, V-President and shareholders of the company
  • Project specifications
  • Documents confirming the awarding of the project and upon the advance payment money guarantee being received by the Bank, depositing of the guaranteed money or immovable Guarantee, and a bank account with Azizi Bank (which is compulsory).

Contact

Contact our department for any help


Email
customerservice@azizibank.af

Phone
+93 (0) 701 80 15 15 (International)
15 15 (Domestic)