(FAQ) LEASE FINANCE

Q What is financial lease?

A. A Financial Lease is a means of financing capital equipments. It is a contract between the Bank (Lessor) and the Customer (Lessee) for the hire of a specific asset, selected from a manufacturer / Supplier of lessee's choice and to suit the lessee's requirements. The lessee has possession of the asset and uses the same on payment of specified rentals and other usual charges / fees, while the lessor retains ownership of the asset. All the risks (major or minor) and rewards of ownership are normally transferred to the lessee and the obligations are non-cancellable. The lessee is to bear the costs of insurance, maintenance and other related costs and expenses for the leased equipment. Q. Does Bank provide operating lease? A. The Bank is presently offering financial lease only.

Q. What are the benefits of lease to the borrower ?

A. The benefits of the lease to the borrower are as under;

  • Lease finance may be Cheaper Compared to Term Loans under certain circumstances.

  • 100% Financing - No margin is generally required in leasing whereas term loans generally stipulate a margin of 30% to 50%. * Terms Of Payment Extremely Flexible - Structured as per the cash flow of the lessee

  • Lease is an Off-Balance Sheet financing option which increases capability to raise additional resources for expansion, diversification modernization

  • The lead time for sanction of lease assistance is much less compared to term loans etc.

  • Simple documentation

Q. What are the advantages of availing lease finance from SBI compared to other lessors ?

A. The lessee will generally enjoy the following advantages for availing lease from SBI

  • The cost under lease to the lessee will be very competitive.

  • SBI's ability to write big ticket leases in view of large resources available with the Bank.

  • The lease assistance is provided by the Bank through a dedicated office which is managed by experienced officials in a fully computerised environment thus providing the best services to the customer.