6.1 Lending as Facilities and Its Repayment

6.1.1 Draw Down and Demand Facilities • Draw-down facility: the borrower takes the loan in installments per an agreed schedule (term loan, project credit). • Demand facility: the bank may call repayment at any time (overdraft, demand loan). Demand facilities suit working capital; draw-down facilities suit capital expenditure. 6.1.2 Obligation to Lend A sanction is not a promise to disburse beyond terms. The bank must honour its facility letter while conditions continue; it may decline draw-downs where conditions precedent are unmet, covenants are broken, or events of default exist. "No obligation to lend" is the general rule before sanction; after sanction, the contract's terms govern. 6.1.3 Repayment and Interest Repayment follows the schedule (EMI, bullet, revolving) with interest at the agreed rate within NRB's directive corridor. Default interest and recall rights follow the agreement. Interest is the price of credit and the bank's core earning: the spread between deposit cost and lending rate.