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Running Finance

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All you need to know about

Overview

Running Finance is another type of loan product offered by Banks. This can be used as an alternative to a Term Loan. Running Finance Facility is a more flexible and cost effective product, where you do not need to commit to a long tenured loan or monthly payments.

With Running Finance Facility the bank approves a specific cash limit for you to utilize. This limit can be up to 2 million rupees, without any security or collateral. Running Finance Facility is based on “Pay as you Utilize” principal. When you use any amount from your Running Finance Facility you will be required to pay back the amount utilized plus mark-up / interest.  You can utilize your Running Finance Facility through a check book or debit card issued by the bank.

Banks typically charge an annual fee on Running Finance Facility, however policies on how this can be waived varies from bank to bank.

For instance you received a running finance of Rs. 500,000, and you took out only Rs. 150,000 for a period of 15 days. You will be charged interest on the Rs. 150,000 for 15 days only. At the end of the month your bank will send you a statement informing you of the mark-up / interest you are required to pay.

As illustrated above you should use Running Finance Facility for your immediate short term cash needs. You can use Running Finance Facility to pay your Credit Card bills, utility bills, unforeseen expenses such as car repairs, emergency medical treatments etc.

2 Things You Should Know About
  • Mark up rate / Interest rate: Percentage interest charged on the amount you utilize from your Running Finance Facility.
  • Calculation: Mark up / Interest is calculated on a daily basis on the amount of money that has been utilized by you.
Eligibility & Documentation
Eligibility

Eligibility for Running Finance varies from one bank to the other. However a basic framework of eligibility is as follows:

Pakistani National Identity Card Holder

  • You should be aged  20 and 60 years of age
  • You should have income from any of the following sources:
    • Employment (Permanent/Contractual)
    • Business (Partnership/Proprietorship)
Documentation

Every bank has their own set of internal policies which govern what documentation is required for running finance, below are a few items common to all banks:

  • Copy Of National Identity Card
  • General income documents such as:
    • Income Statement
    • Salary slip
    • Bank statements

Why use CompareBanks

Comparebanks.com provides a simple, quick and reliable way to compare offerings of multiple banks for your Running Finance needs. Quickly identify which banks are offering the best rates; easily compare different service fees and terms and conditions.

Comparebank.com Pro Tip
  • Annual fee: Make sure you talk to the bank representative and know exactly how much the annual fee is and under what conditions can you get this fee waived.
  • Pay Fast: whenever you utilize any amount from your Running Finance Facility make sure you pay back the amount as soon as you have it to decrease the mark-up you pay.
Beware!
  • Annual Fee:  Banks charge an annual fee for this facility that you will be required to pay.
  • Processing Fee: Banks charge this fee for processing your application for Running Finance Facility.

Late payments: banks will charge you a fee for making late payments.

FAQS
What is the maximum amount that I can get?

You can get any amount ranging from Rs. 50,000 to Rs. 2 million depending on the bank’s assessment of your income level and financial capacity.

Is there any pre-payment penalty?

Yes, if you want to terminate this facility your bank will charge you a fee.

How can I repay the amount I use?

You can make repayments using;

  1. Interbank Funds Transfer (IBFT)
  2. Cheque
  3. Cash
  4. Drop Box placed in branches
What is the tenure of this facility?

Running Finance Facility is typically offered for one year; it is reviewed and renewed at the end of the year.

How many days does it typically take to process my case?

Your case will typically be processed in 10 days time from the date all documents have been submitted.  

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