W.E.F.

1st July, 2017

YES, We Did It !!!

TAFI JBGA 2016-17
Was A Grand Success
& Overheads To The
Tune Of 4 – 5 Crores
Were Saved.

Joint Bank Guarantee Arrangement (JBGA)

Proposed By TAFI – Travel Agents Federation of India
A Scheme that only spells – PROSPERITY IN BUSINESS
 CONTENTS

• Brief Note on the JBG Arrangement 2017-18

• Current Performance
• Comparison Charts
• JBGA Benefits
• Deposit Contribution Chart
• JBGA Risk Factors
• Default Scenarios And Contribution Chart
• Proper Understanding on JBGA
• Enrollment Procedure
• JBGA Exit Procedure.
• Legal Section.
• Gist of the Whole Scheme
• Thank You Note.
 BRIEF NOTE ON THE JBG ARRANGEMENT 2017-18

JBGA – Working For A Better Future

• Opportunity to the small and medium enterprises to grow further and the
big ones to become still BIGGER.

• It firmly believes in unity by treating all its members as one family leaving
no scope for petty groupism.

• Relief from Cut-throat competition resulting in very thin margins

• Protection from Insurance companies refusing to give cover to the agents

without proper reasoning.
• Allowing for top up even in the middle of the year

• Relief from the ensuing threat of increase in the extent of BG from 20% to
50% along with 100% insurance cover.

In the face of such scenario, TAFI has brought back the JBG Arrangement
once again in order to help its members by reducing their financial burden.
GOOD NEWS FOR JBGA MEMBERS

INR 33,333
Per Person
on Twin
Share Basis.

INR 23,000
Per Person on
Twin Share
Basis.

INR 33,000
Per Person
on Single
NATIONAL SECRETARIAT, 710/711, “The Avenue” Share Basis.
International Airport Road, Opp Hotel Leela,
Andheri (East),Mumbai -400 059.
Ph. No. 022 - 28391111/ 28392222
E-Mail:- info@tafi.org.in URL: www.tafionline.com
 Past & Current Performance

 It is witnessed that Joint Bank Guarantee Arrangement is

proved to be a success program in the past and present
where the Airlines/Participating Agents did not incur any
losses and the agents were accorded a fair chance to
increase their respective business to new heights.

 The complete deposits given by the agents were/is safely

kept by TAFI in the shape of a consolidated fixed deposit and
interest is accrued on the same, the benefit of which is
being credited to the agents depending on their individual
deposits. However, after deducting all the expenses incurred
for the JBG Arrangement from the interest accrued, the
balance gets distributed among TAFI and agent members in
equal proportion.

 Further, any default, if happened during the JBGA period,

the maximum money was recovered through legal channels.
 COMPARISON CHARTS
Bank Guarantee vs JBG Arrangement
Bank Guarantee (BG)
1. BG covers productivity less credit card sale.
2. BG attracts 2.50% - 3% charges on its total
value + applicable service tax and coverage
has to be given for 15 months.
3. Banks normally take 25% margin deposits.
4. To cover the remaining 75% BG amount, banks
require collaterals ranging between 125% -
150%.
5. Agent has to incur 0.50% of the BG value as
stamp duty cost in the individual scenario.
6. Exorbitant charges are attached with BG.
7. Agents are suppressed to grow their business
with a fear of increasing BGs & associated costs.
JBG Arrangement (JBGA)
1. JBGA covers turnover less credit card sale.
2. Except nominal administrative charges, agent
has to contribute his share towards the joint BG
given to IATA in proportion to its selected sale
slab which is also very nominal.
3. Under JBGA, agent has to give deposit as per its
chosen sale slab & percentage … up to a
maximum of 10%.
4. No collaterals required. Good Financials & good track
record needed.
5. Under JBGA, agent will bear the combined
stamp duty cost which is quite nominal.
6. Such charges are minimized under JBGA & a
handsome saving is there in the agent’s hand.
7. No such worries under JBGA. Agents can take
their business to new heights.
 COMPARISON CHARTS

Insurance Cover vs JBG Arrangement

Insurance Cover (IC) JBG Arrangement (JBGA)

1. IC covers productivity less credit card sale. 1. JBGA covers turnover less credit card sale.
2. Insurance companies charge anywhere 2. No such charges.
between 1.70% to 2.70% of the applicable
productivity + applicable service tax.
3. For agencies doing greater than INR 3 crores 3. No such disparity is there under JBGA and agent
turnover, if agent is under insurance cover he can opt for higher sale slabs by giving
has to further give 20% as BG to IATA with incremental contribution.
charges for 15 months coverage to respective
bank.
4. Majority of the insurance companies are 4. No such worries exist under JBG Arrangement.
excluded by IATA from the existing program
and only one company is left to cater the needs
of the agents. This way agents are left with no
choice and the insurance company has its
own limitations.
5. No option to increase cover under Insurance. 5. Can do under JBGA
 JBGA BENEFITS

 JBGA covers opted slab for the future turnover for smooth operation of
business instead of considering the average productivity of the last year,
however a slab cannot be opted for less than previous year 20 days average
turnover or financial coverage required by IATA.
 Nominal and attractive deposit rates depending on the size of travel agents
business.
 No collaterals required and the same can be used for the future growth of
the business.
 BG charges and Insurance premium which are expensed out in the present
scenario can be avoided under JBGA.
 No worry of exorbitant additional overheads when your business is under
growth strategy. Agents can choose the higher slabs as per their sales
budget.
 Smaller and medium sized agents will not face difficulties in getting the
ticket stock. However, the interest of big sized agencies has also kept in
mind.
 Agents will be treated as one family and can avail the support under one
roof.
 And most important among all is your self recognition in the industry.
 DEPOSIT CONTRIBUTION CHART

PROJECTED SALE PROPOSED DEPOSIT CONTRIBUTION TO TAFI

SLABS DEPOSIT RATE (Per Agent)

2,500,000 3.00% 75,000

5,000,000 3.00% 150,000

10,000,000 3.00% 300,000

20,000,000 5.00% 1,000,000

30,000,000 7.00% 2,100,000

40,000,000 7.00% 2,800,000

50,000,000 8.00% 4,000,000

60,000,000 9.00% 5,400,000

80,000,000 9.00% 7,200,000

100,000,000 10.00% 10,000,000

120,000,000 10.00% 12,000,000

Please note that these are tentative figures based on our estimates and it may
vary depending on the participation of members in JBG Arrangement.
 JBGA RISK FACTORS

If there are no ups & downs in life

… it means
“we are no more”
 JBGA carries only ups but to remain alive, the only down it
carries is the DEFAULT by any of our member agent and this
is the risk factor but that also has been considered while
framing JBGA and efforts are made to turn down its impact
on the participants by reducing the burden.

 So, in case of any DEFAULT, all the participating members of

JBGA are liable to contribute in set proportions.

 Member participants contribute funds in proportion to

their selected slabs.

 You may refer the separate section on Defaults and the

contribution chart for a better understanding on this.
 DEFAULT SCENARIOS AND CONTRIBUTION CHART STAND UP MY DEAR
THERE IS A GOOD
NEWS FOR YOU.

Sale Contribution % on Default Contribution % on Default Contribution % on Default Contribution % on Default During JBGA 2016-17
we had witnessed
Default of Contribution Default of Contribution Default of Contribution Default of Contribution NO DEFAULTS &
Slab
NO LOSSES
Category 120000000 Slab-Wise 60000000 Slab-Wise 30000000 Slab-Wise 10000000 Slab-Wise BUT
ONLY GAINS.
Per Agent Per Agent Per Agent Per Agent

2,500,000 2.79% 69,750 1.40% 35,000 0.70% 17,500 0.23% 5,750

5,000,000 2.79% 139,500 1.40% 70,000 0.70% 35,000 0.23% 11,500

10,000,000 2.79% 279,000 1.40% 140,000 0.70% 70,000 0.23% 23,000

20,000,000 2.79% 558,000 1.40% 280,000 0.70% 140,000 0.23% 46,000

30,000,000 2.79% 837,000 1.40% 420,000 0.70% 210,000 0.23% 69,000

40,000,000 2.79% 1,116,000 1.40% 560,000 0.70% 280,000 0.23% 92,000

50,000,000 2.79% 1,395,000 1.40% 700,000 0.70% 350,000 0.23% 115,000

60,000,000 2.79% 1,674,000 1.40% 840,000 0.70% 420,000 0.23% 138,000

80,000,000 2.79% 2,232,000 1.40% 1,120,000 0.70% 560,000 0.23% 184,000

100,000,000 2.79% 2,790,000 1.40% 1,400,000 0.70% 700,000 0.23% 230,000

120,000,000 2.79% 3,348,000 1.40% 1,680,000 0.70% 840,000 0.23% 276,000

Please note that these are tentative figures based on our estimates and it may vary depending on the participation of members in JBGA 2017-18.
 PROPER UNDERSTANDING ON JBGA

 Agent has to choose among the available sale slabs considering their business
turnover.
 TAFI will collect a nominal percentage of the Agent’s chosen slab based on the
category and will create a “Collection”.
 TAFI will convert the “Collection” into a Fixed Deposit with bank in its name
after negotiating the best available ROI.
 For the agents coverage under the JBGA, TAFI will give a joint bank guarantee to
IATA.
 The interest accrued on the FDR will be credited to TAFI.
 After deducting all the expenses incurred for the JBG Arrangement from the
interest accrued, the balance will be distributed among TAFI and agent
members in equal proportion.
 The money retained by TAFI will only be used for the welfare and benefits of
the members.
 TAFI will share the details of the opted slab by the agent with Airlines/BSP in
order to have a better control on trading thus avoiding over-trading.
 No agent should face any difficulty in getting proper ticket stock in order to
grow their business.
 PROPER UNDERSTANDING ON JBGA

 No member agent is permitted to do business more than the slab they

have opted for without giving information and additional deposit to
TAFI. The agent cannot opt for slab beyond the highest limit sanctioned
by TAFI, For eg., INR 12 crores as shown in the chart.
 Although, TAFI may give joint bank guarantee to IATA more than the top
slab fixed but there will always a ceiling on the member to restrict the
turnover up to the top slab.
 In case agent wishes to do business in addition to its existing top
slab…For eg., INR 12 crores, then TAFI will re-assess the case afresh and
can accommodate the agent by taking extra deposit from such an agent.
 Agent members are allowed to increase their limits/turnover slabs
within the set limits of the JBGA twice in a year until and unless it’s an
emergency case. TAFI Managing Committee will take the decision on
case to case basis.
 IATA may ask for a quarterly review for the agents performance from
TAFI. During the review if it is found that any agent has crossed its opted
slab, then an additional deposit will be required by TAFI or TAFI may
remove the JBGA facility from the respective agent.
 PROPER UNDERSTANDING ON JBGA

 Agents who overtrade beyond their opted slabs without informing to

TAFI will be immediately excluded from the JBGA and the JBG facility will
be withdrawn from them
 In order to enjoy the TAFI JBG Arrangement benefits please confine to
your set limits.
 Success of JBG Arrangement will undoubtedly depend on the
enthusiastic participation of the members
 The present set percentages of deposit may increase or decrease at the
beginning or during midway of the arrangement.
 Focus is to give additional benefits to the members instead of putting
burden on them.
 JBGA is drafted keeping in mind the current scenarios and competitive
market approach
 Our Experts have considered all these threats while setting the offered
sale slabs and deposit percentages.

Gear up and participate wholeheartedly in JBGA.

 ENROLLMENT PROCEDURE
 Agencies having status as Public Ltd Companies, Private Ltd
Companies, Partnership Firms, Sole-Proprietorship Concerns can
enroll themselves under the JBG Arrangement.

 Security cheques will be furnished by all the participants. However,

Sole-Proprietors have to furnish two guarantors from their family
along with their cheques or we can decide to take more steps for
better safeguard.

 Agent should be an IATA approved agent at least for the last 2 years
and TAFI member at least for the past 1 year as on 30th June, 2017
and there should not be any outstanding against the membership
fees towards both the bodies. However, TAFI Managing Committee
reserves the right to give the leverage in the IATA & TAFI
membership period on case to case basis.

 Agent should carry a clean track record of payment history with BSP
India for the Domestic and International ticketing.

 2 blank copies of TAFI-Member Agreement-one to be franked INR

500/- and another INR 500/- stamp paper. JBGA Application Form
required on INR 500/- stamp paper. Notarized deed of continuing
guarantee on INR 500/- stamp paper (stamp duty charges may
change)
 ENROLLMENT PROCEDURE

 Authority Letter from Member to IATA to disclose productivity and irregularities on Member’s
Letterhead.

 Bank signature verification card to be returned to TAFI after Bank’s Verification. Confidential
report from the bank required.

 Copy of the Memorandum of Association and Articles of Association in case of a Limited

Company … copy of the partnership deed in case of a Partnership Firm or LLP and copy of the
registration under Shops & Establishment Act for the Sole Proprietorship concerns.

 Last three years Balance Sheet and Profit and Loss Account. In the event that a company /
partnership / LLP is incorporated less than 3 years, then minimum 2 years financial papers are
required from member.

 In case of a Limited Company and LLP, copy of resolution on the letterhead of the Company or
LLP.

 Bill of Exchange on demand.

 TAFI will be asking for the PAN/DIN/Certificate of Incorporation/Resident Proofs, etc, etc.
 JBGA EXIT PROCEDURE

 TAFI reserves the right to accept or reject the benefits under

the JBGA any time by merely returning the adjusted deposit
amount to the participating member, however, after 90 days
of termination and after participating member furnishing
“No Dues Certificate” from IATA.

 Participating member may request TAFI to return the

deposit amount or part thereof if he is not enjoying the full
benefits of the JBGA, and TAFI may return the deposit after
verifying the facts.

 TAFI shall terminate the aforesaid JBGA entirely without

giving any reason and the only right a participating member
shall have is that of proportionate refund of deposit amount
after deducting all losses, charges, expenses and any other
charges as determined payable by TAFI, and as and when
amounts so received by TAFI and upon TAFI’s sole discretion.
 LEGAL SECTION

 TAFI Managing Committee will appoint Attorneys on

retainer-ship basis. These attorneys shall be;

a) responsible for formulating watertight agreements for

members to the TAFI JBGA.
b) engaged on legal matters pertaining to TAFI JBGA.
c) engaged for the recovery procedure from the defaulting
agent/s.

 All the disputes/cases will be handled by Arbitration as per

Arbitration and Conciliation Act, 1996 or thereafter had to
be under jurisdiction at Mumbai Courts only.

 To have a better control a Sub-Committee will be formed

within the TAFI Joint Bank Guarantee members.
GIST OF JBG ARRANGEMENT
 DISCLAIMER

1. The Joint Bank Guarantee Arrangement, (JBGA), which is partially explained in this presentation, is
subject to financial and other risks related to line of credit that is given to the participants in this
arrangement.
2. JBGA is not a subject matter of solicitation and participants in the arrangement have and/or will be
part of this arrangement voluntarily, and without any coercion or cajole from any source,
whatsoever, and after having fully understood and after having accepted the financial risks involved
therewith.
3. JBGA is neither an insurance scheme, nor a collective investment scheme.
4. The terms and conditions, if any, set out in this presentation, are not final and binding upon TAFI
and/or its Managing Committee/Employees and/or other persons/entities, who are associated with
formulating and executing the JBGA.
5. For the purpose of interpretation, any other agreement/s, document/s, writings et cetera, shall
supersede whatever is stated herein, in this presentation. This presentation is made without
prejudice.