Lease Rental Discounting (LRD) is one of the loan schemes offered by banks under which an applicant obtains loan against his/her leased property. Under LRD, the borrower pledges the future rental earnings from the leased property to the bank for loan repayment. The agreement is between the borrower and lender and the major term of repayment is the rent is directly deposited with the lender and not with the borrower. LRD is typically offered against commercial properties.
LRD is particularly beneficial for the builders/developers who make a huge investment in raising a commercial property for rent/lease purposes.The investments of the builders are in a way locked as the returns are obtained only in the form of rentals. Thus, they opt for LRD from banks by pledging their future rentals from the property. Banks also ensure that the future rental earnings from the property are secured before offering LRD.
The various factors that a bank keeps in mind while offering LRD are: