Loan against trust receipts loan (LATR)is a facility that bank gives to its client, usually an importer of the goods or assets. It is basically a short term loan against Trust Receipt that allows the importer to make the payment to the seller. The bank retains the ownership of the goods. A buyer can get back the ownership after repaying the loan amount. Though LATR facility is for short-term usually for 90 days, it may extend to a year under special circumstances.
Last Updated Date: May 16, 2022
Prime Commercial Bank was founded in September 2007 as the 21st commercial bank in Nepal. It has been classified as an 'A' class financial institution under Nepal's Banks and Financial Institutions Act. The primary motto of this Bank is 'Banking Service to All,' with the 389 total promoters holding 70 percent of the bank's stock. The bank has developed itself at the highest level of financial competitiveness, focusing on offering outstanding service to its customers. The bank has emerged as an emerging player in the financial sector, maintaining excellent relationships with respected clients through an emphasis on excellence in customer service.
Document Required for Loan against trust receipts loan (LATR)
Loan against trust receipts or LATR is a facility that bank gives to its client, usually an importer of the goods or assets. It is basically a short term loan against Trust Receipt that allows the importer to make the payment to the seller. The bank retains the ownership of the goods. A buyer can get back the ownership after repaying the loan amount. Though LATR facility is for short-term usually for 90 days, it may extend to a year under special circumstances. Trust Receipt or TR is a document that comes into play when a buyer has a loan or any other arrangement, such as Letter of Credit (LC), from a bank to buy an asset or goods. Basically, it is a document saying the business has physical possession of the goods or an asset, but the bank retains the ownership of the asset or goods. The borrower gets the title back once he or she makes the payment to the bank. The bank has the right to sell the asset if the buyer fails to pay back the funds under the earlier arrangement.
Buyers resort to TR when they don’t have sufficient cash to pay the seller. In such a scenario, the buyer gets the funds from the bank via TR and then pays the seller. For the bank, Trust Receipt basically acts as a promissory note, indicating that the buyer will pay them after the sale of goods. The bank, in this case, gives the fund to the borrower or issue a letter of credit to the seller or seller’s bank guaranteeing the payment. In the case of TR, the buyer needs to keep the goods safe and separate from other inventory. In fact, the buyer acts as a trustee for the bank for storing and selling the goods. Even though the title or possession of the good stays with the bank, the buyer has possession. The buyer can do anything with the goods or assets as long as he (or she) does not breach the terms of the contract with the bank.
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