Project Finance Explained #4 - Ongoing Monitoring of Funds and Promoter's Margin

In this series of Project Finance Explained we discuss techniques to determine the progress of an ongoing project. Also, how to keep track that the promoters have actually brought their promised margin during the course of the disbursements. Follow these and you will not be fooled by promoters.
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Ongoing monitoring of term loans in project finance during the phase-wise release of term loans is very important for a banker. This tutorial is to determine how much money the promoter has actually brought as margin in the term loan he has taken from the bank. Here we show you a sample format of an End Utilisation Certificate from a CA and compare it with the Lender's Independent Engineer's Report.
An End Utilisation Certificate tells us the financial progress of a project in project finance by bank
Lender's Independent Engineer's Report shows the physical work progress of a project for which you have given the project finance
By using these two tools we can determine if the promised margin is brought by the promoter in the term loan.
We discuss in short what is an escrow account in case of monitoring expenses of a project which took term loan from your bank. We also discuss what are the alternatives for End Utilisation Certificate from a CA in case of small MSME term loans.

Check out our other tutorials in this series -
Project Finance Explained #1 - Correct Calculation of Term loan Margin -
   • Project Finance Explained #1 - Correct Cal...  
Project Finance Explained #2 - Analysis of Sources of Funds of Promoters (Case Studies)-    • Project Finance Explained #2 - Analysis of...  
Project Finance Explained #3 - Assessing Promoter's Financial Capability (Case study) -    • Project Finance Explained #3 - Assessing P...  

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