J&K Grameen Bank Loans against Future Rent Receivables (Discounting of Rentals)


The scheme has been developed considering the growth potential in the real estate sector in the area of operation of the bank, where many commercial properties are being developed and the owners approach banks for loans against future rent receivables from such properties. Loan under the scheme can be considered for different purposes, i.e. for all lawful economic activities as also for personal needs of the lessors. However, the facility should not be extended to any speculative purposes. Purpose for which loan is availed must be shown in the application


a) Individuals/ partnership firms/ corporates/ Trusts/ HUFs owning commercial buildings, who have let out or propose to let out their premises to Reputed Companies/ Institutions/ Public Sector Undertakings/ Established Commercial Organizations/ Reputed Private Hospitals, Nursing Homes and Schools/ Colleges, Commercial Banks/ the Bank are eligible for financing under the scheme. Landlords of the premises occupied by Branches/ Offices of the Bank shall also be eligible for finance under the scheme.
b) The property leased/ proposed to be leased should be owned by the borrower with a clear legal title.
c) The property leased/ proposed to be leased should be unencumbered with up to date payment of local and other statutory dues/ taxes.
d) The construction of commercial property leased / proposed to be leased should have been completed fully and “Occupation Certificate”, wherever required, issued by the concerned Local Authority. In case, it is established that the borrower shall complete the required formalities before seeking disbursement of the loan, the facility may be sanctioned but prescribed to be released after completion of these formalities.
e) The Borrower must have entered into firm lease agreement/s with the lessee/s. In case of existing lease agreements, the unexpired period of lease agreement/s should be minimum 3 years.
f) Information on background and financial position of the lessees shall be obtained for ascertaining their repayment capacity towards monthly rentals.

Maximum Permissible Finance under the scheme

Gross Rent Receivable (A) As per the lease agreement/s for the lease period or for the period for which the loan is sought or for 9 years, whichever is lower.
TDS (B) As per income tax rates applicable to the category of the borrower
Advance Rent (C) As mentioned in the lease agreement/s
Net Rent Receivable (D) (A-B-C)
Net Present Value (E) Net Present Value (NPV) shall be worked out after applying the discount factor (being interest rate applicable for the facility) for the period of the loan.
Margin (F)
Remaining period of the lease Margin as a % of NPV
Above 3 years and up to 5 Years 10%
Above 5 years and up to 9 years 15%
a) The lease agreement/s shall be carefully examined for ascertaining the liability of lessor or lessee towards payment of local municipal/ property taxes during the currency of the facility. If such expenses are agreed to be paid by the lessor, the total amount of such dues during the tenor of the facility, worked out on the basis of current rate of such taxes, shall be deducted from Gross Rent Receivable.
b) In case of loans to landlords against rentals on premises occupied by Branches/ Offices of our Bank, a flat margin of 5%, irrespective of the remaining lease period and tenor of the facility shall be deducted from NPV


Loans under the scheme shall be repaid from the rental income for the period, which is taken into consideration for determining MPBF, and as per the available cash flows of Net Rental Income..


Assignment of future rent receivables and Mortgage of commercial property owned by the borrower and proposed to be leased. The borrower shall execute Irrevocable Power of Attorney, duly acknowledged by the lessee/s authorizing the Bank to receive monthly rent directly from the lessee/s during the currency of the loan.

Loan Processing Charges

0.50% of the loan amount.

* Conditions Apply