Commodity finance
This is a financing technique where by the commodity/good are placed at the custody and control of a Collateral Manager.
Product Features
Transaction denominated in local or foreign currency
Minimum transaction amount of not less than USD 10,000 or equivalent in UShs
Monitoring, Control and movement of goods is done by banks approved collateral managers
Works best with non-Funded facilities like LCs and guarantees whose fees and commissions will be as per tariff
Pre-identified off takers in place
Benefits
Minimal security requirements
The commodity purchased becomes security and is only released to off taker on instruction from the bank
Each request is tailor made to customers’ needs
Requirements
Completed loan application form
Cash contribution by Applicant equivalent of 20% to 30% of applied facility amount
Commodity under custody of Collateral Manager becomes security
Financial card
Formal off taker contracts preferable backed by letters of credit