DISBURSEMENT, FOLLOWUP AND POST SANCTION MONITORING OF ADVANCES by alt1985

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									                                    INDEX

POLICY SECTIONS   SECTION                                                SECTION
                  NUMBERS               PROCEDURE SECTIONS               NUMBERS
                            DISBURSEMENT, FOLLOW UP AND POST SANCTION
                                     MONITORING OF ADVANCES
                             DISBURSEMENT, FOLLOW UP AND POST SANCTION    810.1
                                 MONITORING OF ADVANCES – GENERAL
                                            PROCEDURES
                             DISBURSEMENT, FOLLOW UP AND POST SANCTION    810.2
                              MONITORING OF ADVANCES – CHECK LIST FOR
                                            MONITORING
                             DISBURSEMENT, FOLLOW UP AND POST SANCTION    810.3
                              MONITORING OF ADVANCES – MONITORING OF
                                            TERM LOANS
                             DISBURSEMENT, FOLLOW UP AND POST SANCTION    810.4
                              MONITORING OF ADVANCES – MONITORING OF
                                    CONSORTIUM LOAN ACCOUNTS
                             DISBURSEMENT, FOLLOW UP AND POST SANCTION    810.5
                              MONITORING OF ADVANCES – MONITORING OF
                                   GOVT. SPONSORED LOAN SCHEMES
                             DISBURSEMENT, FOLLOW UP AND POST SANCTION    810.6
                              MONITORING OF ADVANCES – MONITORING OF
                                            GOLD LOANS
                             DISBURSEMENT, FOLLOW UP AND POST SANCTION    810.7
                              MONITORING OF ADVANCES – GUIDELINES FOR
                              MONITORING OF SMALL LOANS BY BRANCHES
                             DISBURSEMENT, FOLLOW UP AND POST SANCTION    810.8
                            MONITORING OF ADVANCES -REVIEW OF STANDARD
                                             ACCOUNTS
                             DISBURSEMENT, FOLLOW UP AND POST SANCTION    810.9
                             MONITORING OF ADVANCES -REVIEW OF WATCH
                                         AND NPA ACCOUNTS
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.1       PAGE       01
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                  September 11
                                       General
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE
                         Basis of good lending is sound appraisal and assessment of capacity /
                         intention to repay. Past record of good performance and integrity are no
                         guarantee for future performance. Even a loan granted on the basis of
01.a                     sound appraisal may go bad if the borrower did not carry out his
                         promises regarding performance. To realise this fact a proper supervision
                         and follow up of the advance is essential. Pre-sanction appraisal and
                         post-sanction monitoring are two sides of the same coin and both are
                         essential for the timely repayment.
                         Some of the important general procedures to be followed in the
01.b                     monitoring of working capital and Term Loan credit facilities are
                         outlined below:
                         Opening of Loan accounts and Disbursement
                         The terms of sanction have to be thoroughly understood and fully
                         complied. The disbursement should be made only after the completion of
                         documentation and complying with all the terms of the sanction order.
01.c
                         If stage release is stipulated, the time schedule has to be adhered to and
                         no installment should be released before the time in which it is to be
                         made. W.C. limit to be disbursed only at the time of requirement i.e.
                         generally after the construction of the building, installation of the
                         machinery and power connection is obtained.
                         Disbursement of W.C /T.L should be made after ensuring that our
                         disbursements are in tune with :
                                 Borrower’s investment/promoter’s contribution.
01.d                             Disbursement made by Term Lending financial institutions/other
                                 banks.
                                 Raising outside loans/unsecured creditors and subordinating the
                                 same to bank (wherever stipulated).



                         Wherever necessary / stipulated the following should be ensured while
                         disbursing the loan amount itself.
                                 Subordination of unsecured loans/other creditors etc., where
                                 stipulated.
01.e
                                 Raising of promoters contribution.
                                 Availment of State/Central subsidy etc.
                                 Securing power connection, water connection Pollution control
                                 clearance etc.




                                             1
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.1        PAGE       02
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                   September 11
                                       General
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE
                         Wherever refinance is a precondition to the release of the loan, the same
01.f                     should be ensured without fail. Periodical disbursement under the loan is
                         to be reported to Head Office for obtaining refinance.
                         Monitoring/Follow up - Some important points.
                         Monitoring is to start soon after the disbursement and to continue till the
                         advance is liquidated. Monitoring can be broadly divided into legal,
                         financial and physical follow-up.
                         Legal follow-up

                         Documentation :
                              On the correct formats
                              Adequately stamped.
                              Properly executed by right persons
01.g                          Complete in all respects.
                              AOD/renewal documents obtained in time.
                              In the case of equitable mortgage, assure correct title deeds and
                              comprehensive legal opinion and obtain up to date EC and Tax
                              paid receipts.
                              Approval of Legal opinion by RO/HO Legal Officers
                              Registration of letter listing title deeds, wherever necessary and
                              obtention of the Registered deed from the SRO.
                              Verification of documentation by Legal Officers
                              Obtain necessary declaration/s as prescribed.
                              Compliance with all terms and conditions of the sanction order.

                         In company accounts:
                                 Registration of charge with ROC within stipulated time
                                 Board resolution for borrowings
                         Insurance
                                 Risks fully covered
01.h                             Policy with bank clause
                                 Policy renewed in time
                                 ECGC cover - For all eligible export finance accounts
                         Vehicle loans
                                 Registration of Bank’s charge with R.T.A
                                 Obtain blank transfer forms




                                              2
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.1         PAGE           03
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                    September 11
                                       General
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE
                         Financial Follow up:

                         1. Monitoring the end use of funds lent:

                         End use of funds to be ensured and documentary proof to be kept,
                         wherever required without fail and as far as possible in all cases. Some
                         of the situations, pointing out to diversion of the funds are:

                         1. Crediting of term loan disbursements to Current/Cash credit accounts
                            of borrowers, and utilization thereof for day-to-day operations; instead
                            of, for the purpose for which the Term Loan was given.

                         2. Exclusive reliance on Chartered Accountants’ certification both in
                            regard to infusion of promoter’s contribution and deployment of
                            bank’s funds.

                         3. No meaningful scrutiny of periodical progress reports and
01.i                       operating/financial statements of the borrowers. For example, whether
                           there is sufficient stock to cover the drawing in CCOL accounts, is
                           sometimes not scrutinized.

                         4. No regular visits to the assisted units and inspection of securities
                            charged / hypothecated to the bank.

                         5. No periodical scrutiny of books of accounts of borrowers.

                         6. No periodical stock audit as stipulated by the Bank.

                         Maintaining a healthy credit portfolio requires skill and constant
                         monitoring, and in the process, it is necessary that deterrents against
                         misuse of credit by borrowers are also to be put in place. It should be
                         ensured that sufficient checking mechanism is in place, and all the
                         aspects narrated above are taken care of and necessary monitoring
                         mechanism is adopted to ensure that the funds lent are used only for the
                         purpose for which it is sanctioned and that all the terms and conditions
                         are complied with/observed scrupulously, on an on-going basis.




                                              3
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.1        PAGE      04
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                   September 11
                                       General
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE

                         2. Scrutinize
                                 No indiscriminate Adhoc / TOD, as the sanctioning of
                                 TOD/Adhoc points out to inadequate or incorrect assessment of
                                 the working capital needs of the party.
                                 Ledger a/cs, drawing by cheques (to find out diversion, if any).
                                 Liability registers, stock statements.
                                 Compare stock statements with earlier ones: Verify accumulation
                                 Regulate DP as per the value of the stock in the stock statement
                                 as verified during the Monthly stock/unit verification.
                         3. Where applicable
                                 Call for QIS statements.
                                 Fix quarterly operative limits
01.i                             Monitor performance with budgets.
                                 Ensure compliance with inventory norms (where applicable) and
                                 lending norms.
                                 Take note of early warning signals.
                         4. Call for
                                  Financial statements when due and examine them.
                                  Required data to carry out the renewal exercise in time.
                         5. Execute
                                Send the renewal credit reports in time.
                                Take up re-schedulement / nursing proposals (where necessary)
                                before the a/c turns NPA.
                                Send the control returns in time to RO/HO.




                                              4
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.1           PAGE        05
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                      September 11
                                       General
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE
                         PHYSICAL FOLLOWING UP:
                         Qualitative
                                 Be prudent with due care.
                                 Inspect the system of maintenance of books and registers.
                                 Probe the age and quality of goods, sundry creditors and debtors.
                                 See that stocks and machinery are insured.
                                 Verify whether rent and other Govt. dues are paid up-to-date.
                                 See whether our name board is properly placed.
                                 Discuss     with     partners/   directors/about     the    unit’s
                                 progress/problems etc.
01.j                             Probe if frequent change of personnel is there.
                         Quantitative :
                                 Inspect (even by random check) stock/machinery etc.
                                 Compare quantity of goods with stock registers/ statements.
                                 Find out unpaid stock, if any.
                                 Verify turnover/accumulation of stock.
                                 Stocking pattern to be noted.
                                 Verify method of valuation and if necessary compare with
                                 invoices.
                                 If there is a spurt or decline, from the usual activity, probe into it.


                         Unit visits
                         Unit visits and periodical inspection of securities under hypothecation /
                         pledge to the bank play a vital role in effective credit monitoring,
                         especially on the following fronts:
                                 Bank can satisfy that the unit is functioning well.
                                 Bank can satisfy that there is adequate merchandise/inventory to
                                 cover our advance.
                                 Satisfy that the fixed assets for which we have financed the units
                                 are still in the custody of the parties and are in good working
                                 condition.
02.a
                                 Bank can inter-act with the borrowers and find out whether they
                                 are experiencing any difficulties and if so, take remedial steps
                                 like nursing / reschedulement, and ensure that the borrowers’
                                 grievances in conduct of accounts are reduced to the extent
                                 possible.
                                 Satisfy that our bank’s name board continues to be displayed in
                                 the unit premises, and name painted on the machineries/vehicles
                                 and ensure that there is no dual finance in existence.
                                 Collect information about potential deposit/advance customers in
                                 the locality.




                                              5
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.1         PAGE        06
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                    September 11
                                       General
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE

                         The stocks hypothecated must be verified by the Manager before
                         disbursement of the working capital and thereafter periodically by
02.b                     Manager or other officers and record such inspections in the Unit Visit
                         Diary. Periodical stock statements should be obtained and DP arrived at
                         on the basis of stock held and operation to be permitted strictly in terms
                         of the DP arrived.

                         Units of all NPA and border line accounts should be visited by the
                         Manager frequently and followed up. Ways and means for regularisation
02.c
                         or settlement of such accounts are to be discussed and initiated for
                         implementation in consultation and concurrence with the RO and
                         approval of the sanctioning authority.

                         Branches should also identify NPA / Watch accounts with scope for
02.d
                         settlement, by visiting the units along with a senior officer from RO, if
                         required, and pursue the units for settlement.

                         By regular unit visits of the borrowers, signs of sickness of borrowal
02.e                     accounts can be identified in the very beginning itself and bank will be
                         able to initiate corrective steps immediately. Unit visit is the most
                         important monitoring tool to prevent the incidence of NPA.
                         Credit Officers:

                         We are training officers in credit to make sure that assistance of trained
                         Credit Officers are available, at least in large branches. These officers are
                         trained at Bank’s Training College and some officers have also been
03                       given hands-on-training at HO Credit. This process will be continued and
                         in case branches/offices feel that training in credit should be imparted to
                         any Officer, the matter can be taken up immediately with HO Credit
                         Dept/Training College. Credit Officers can be used both in the case of
                         origination of credit and Monitoring of credit at Branches and Regional
                         Offices.

                         Unit Visit by Regional Offices:

04.a                     In order to have effective control and monitoring of advances and those
                         under border-line and NPA categories, officials from Regional Office
                         should involve actively in the credit monitoring, relating to accounts with
                         liability outstanding for more than Rs.1 lac.
                         Officials from RO may visit the units of Watch and NPA accounts
                         along with the Branch Manager/Officer of the concerned Branch and
04.b                     chances for regularization and negotiated settlements to be discussed and
                         followed up. All the units of account having outstanding balance of more
                         than Rs.10 lac should be visited at least once in every half year.


                                              6
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.1      PAGE        07
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                 September 11
                                       General
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE
                         Regional Offices should maintain proper records of Unit visits made by
                         the Officials of RO. Visit reports should be submitted by the Inspecting
04.c                     Officials to the RO head. Copy of the report should be forwarded to the
                         Credit Monitoring Dept. at HO, along with action taken by the R.O and
                         suggestions for settlement/recovery, in the case of accounts with balance
                         outstanding Rs.10 lacs and above.
                         The unit visit of the accounts as stated under 04.c above can be made
04.d                     during the Branch Visit of Chief Managers/Regional Head. All the Loan
                         accounts with fund based exposure of more than Rs.1 Crore should also
                         be visited by the Chief Manager/Regional Head during the Branch visit.




                                             7
             DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.2       PAGE       01
    SIB      Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                     September 11
                                 Check List for Monitoring
    No.   SS CLK AM MGR                            PROCEDURE NARRATIVE

                            For Branch Verification
                               1. Whether proper documents obtained covering all securities?

                                2. Have R.E.Ds in respect of all advances been sent? (RED should
                                   be submitted by branches for all advances, except those
                                   sanctioned under Branch powers)

                                3. Are there any loans which will be getting time barred within 6
                                   Months? (Initiate steps to take ADS/Acknowledgement Of Debt
                                   or to file suit in the account)

                                4. Are there decrees which will be getting time barred within 6
                                   Months? (Initiate steps to file EP immediately)

                                5. Whether stock statements/QIS obtained periodically and
                                   verified?

1                               6. Whether the Consortium Meetings conducted periodically?

                                7. Whether the unit visits/stock verification carried out periodically
                                   as per instructions?

                                8. Whether intimation for payment of installment/interest are sent
                                   to customers as and when it is due?

                                9. Whether the review of all advance accounts are carried out on a
                                   quarterly basis and Tri-monthly statement prepared and
                                   forwarded to R.O. in time.

                                10. Is there regular follow-up of NPA/Suit filed/Border Line
                                    Accounts.

                                11. Is the classification of NPA correct? Is income on such accounts
                                    accounted correctly? (Classification of NPA accounts is
                                    automated)




                                                8
         DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.2        PAGE     02
SIB      Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                  September 11
                             Check List for Monitoring
No.   SS CLK AM MGR                            PROCEDURE NARRATIVE
                            12. Are the control returns submitted in time to R.O/H.O.

                            13. Is there proper verifications at the Branch to avoid any Income
                                Leakage?

                            14. Is there proper follow up of ECGC Claims filed?
1
                            15. Whether RR filed accounts are followed up for action?

                            16. Whether renewal Credit reports being submitted in time, along
                                with the Rating, wherever applicable.

                            17. Whether the annual review on Term loans submitted in time?

                        For R.O. Verification
                           1. Is R.O. ensuring implementation of the matters contained in the
                               Branch Check List.
                           2. Is R.O. obtaining the various Control Returns from branches and
                               verifying them. Are the loan sanctions under B.M.’s discretion
                               reviewed by R.O. every month?
                           3. Is there a proper system at R.O. to identify Border Line/N.P.A.
2                              accounts in time and ensure proper follow up.
                           4. Are the unit visits especially of NPA/Border Line accounts being
                               carried out by R.O.
                           5. Is     R.O.     giving     due     importance     for     Nursing/
                               reschedulement/negotiated settlements.
                           6. Is the Legal Officer at R.O. following up all suit filed accounts
                               and meeting all local advocates of the Branches regularly.
                           7. Is the Credit Monitoring Desk at R.O. submitting the
                               consolidated statements/Returns to H.O. in time.




                                            9
         DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.3          PAGE        01
SIB      Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                    September 11
                             Monitoring of Term Loans
No.   SS CLK AM MGR                            PROCEDURE NARRATIVE

                        During the Project implementation period, decision for releasing the
                        stages has to be taken only after inspecting the site and verifying the
01                      progress of the project. During the visit, it has to be verified and
                        confirmed that the construction is done as per the plan submitted and
                        there is no deviation. Stage release visit report should be prepared with
                        date of visit and the status/progress of the project.
                        The time taken for completion of each stage of the project should be
                        verified and it has to be satisfied that the project is progressing as per the
02                      approved timelines If any delay is observed, the reasons have to be
                        ascertained in a discussion with the borrower and corrective steps should
                        be suggested. Stage release in such cases should be done with the
                        concurrence of the sanctioning authority.

03                      All the necessary stamped receipts/vouchers are to be called for and
                        preserved in the file.

                        A completion certificate should be obtained by the borrower along with
04                      the valuation report from a qualified civil engineer for the entire
                        construction or as stipulated in the sanction order. The same should be
                        scrutinised and its correctness confirmed by the B.M.
                        Necessary insurance should be taken with Bank clause for all the assets
                        created out of the loan proceeds and the assets secured towards the loan
05                      like buildings and existing Plant and machineries. Machinery, vehicles
                        etc. should be insured for the depreciated value and the policy should be
                        lodged with the Bank.
                        In the case of vehicles, the details of the vehicles from the RC book
06                      should be noted and a copy of the first page with hypothecation charge in
                        favour of the Bank should be obtained.
                        Probable dates of trial production and commercial production should be
                        ascertained. Before the unit goes into trial production, it should be
                        verified whether all arrangements for procurement of raw material, men
07                      and other resources has been made. The interval between trial production
                        and commercial production varies from industry to industry. However, it
                        should be ensured that the interval is reasonable with reference to the
                        nature of the industry.




                                             10
     The repayment schedule has to be diarised and followed up. If there is
     delay in implementation of the project due to reasons beyond the control
     of the borrower, rephasement in the repayment of loan may be necessary
08   in which case a proposal is to be put to the R.O. giving the reasons for
     rescheduling. The date of commercial production is very relevant to the
     bank. So if any rephasement is necessary, it should be done before the
     commencement of commercial production.




                        11
         DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.3         PAGE        02
SIB      Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                   September 11
                             Monitoring of Term Loans
No.   SS CLK AM MGR                            PROCEDURE NARRATIVE

                        The unit should be inspected on randomly selected days every Month, or
                        as per the periodicity stipulated in the sanction order. During the
09                      inspection aspects relating to overall performance of the unit should be
                        studied besides inspecting the security. Availability of machinery, its
                        working condition etc., should be studied. The Inspecting officer/s
                        should familiarize themselves with the process of production.

                        During the unit inspection, areas of weakness of the project if any, should
10                      be identified and remedial measures should be initiated with the
                        concurrence of R.O./H.O.

11                      Market of the product and similar products and position of the industry
                        should be studied periodically.
                        It is to be ensured that the borrower has paid property tax/rent, electricity
12                      charges, water tax etc. In the case of leasehold assets, it is to be ensured
                        that lease rental is paid regularly.

13                      Wherever the loan is eligible for refinance it is to be ensured that
                        periodical disbursement is reported to H.O for obtaining refinance.
                        Wherever collateral securities like LIC policies, vehicle, equipment
14                      etc., are obtained besides reporting irregularities, follow up regarding
                        payment of premium, tax, insurance etc., should be made.

15                      Unavailed portion of the limit if any is to be ascertained and got
                        cancelled where it is not required.

                        Any other irregularities/factors which may jeopardise the interest of the
16                      bank should be reported to the sanctioning authority/higher authority
                        immediately.

                        Follow-up regarding payment of statutory dues by the borrower should
17                      be made. This may preferably be done during the review. Necessary
                        steps should be taken to enforce discipline on the part of the borrower.

                        Project implementation progress report should be called for from the
                        borrower every quarter till implementation is complete. Inspection report
18                      of other financial Institutions involved in the Project may also be
                        obtained and studied. It is advisable to synchronize the inspection with
                        that of other financial institutions.




                                             12
         DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.3        PAGE       03
SIB      Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                  September 11
                             Monitoring of Term Loans
No.   SS CLK AM MGR                            PROCEDURE NARRATIVE
                        In the case of Term loan accounts sanctioned with floating Rates of
                        Interest, the EMI towards the loan should be either refixed or the tenor of
19                      the loan should be refixed and intimated to the customer along with the
                        information regarding revision of the Base Rate, by way of a written
                        notice. Branches will have to strictly follow the instructions given by
                        Credit Sanction Department in this regard.
                        In cases where rephasing or rescheduling is essential for various reasons,
20                      such proposals should be taken up sufficiently in advance before the
                        account turns NPA.
                        The bank will not take the task of renewing the insurance policies
                        periodically in respect of Fishing Vessels under overdue accounts unless
                        the borrowers have provided sufficient amount in advance for the
                        insurance premium. The borrowers of the concerned accounts are to be
21                      notified by Regd. Post A/D intimating this fact and stating that insuring
                        the boats during the pendency of the loan is a must and the proper
                        insurance cover should be taken by the boat owners themselves. They
                        may also be advised to obtain insurance cover with bank clause and to
                        lodge the Insurance Policies with the Branch.
                        Regional Offices
22                      Regional Offices should ensure that the Branches are attending to the
                        above duties and submitting the review forms and other control returns in
                        time.




                                            13
         DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.4         PAGE       01
SIB      Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                   September 11
                     Monitoring of Consortium Loan Accounts
No.   SS CLK AM MGR                            PROCEDURE NARRATIVE
                        For a consortium account, a joint documentation is required in the IBA
                        approved format. However, it will be practically difficult to have a joint
01                      documentation before extending the loans. Hence in practice, individual
                        banks execute individual documents and extend the loan if such decision
                        is taken in the consortium meeting.
                        Letter from all member banks in the consortium should be obtained
02                      ceding pari-passu charge over the assets offered as security among other
                        members also, before release of our new limits/enhanced portion.
                        No objection letter from Leader bank to be obtained stating that leader
03                      has no objection in extending our share. However, it should be ensured
                        that we get pari-passu charge over all securities held by the leader on
                        behalf of the consortium.
                        The consortium should ordinarily admit the new member by a resolution
04                      in the consortium meeting. In such case, the limit should be extended
                        only after the consortium meeting.
                        Joint documentation has to be completed in time in the IBA approved
05                      format hosted in the Documentation Manual. If there are changes in the
                        format, approval should be obtained from Legal Department.
                        Creation of first charge/second charge on the fixed assets of the company
06                      also should be completed in consultation with the leader bank. In case
                        First charge is already offered to financial institutions, they should agree
                        to offer the second charge in favour of consortium.
                        Ensure that adequate insurance cover with bank clause is taken and that
07                      our bank’s name is also included in the insurance policy, by obtaining
                        copy of the policy.
                        Communication regarding our share in Drawing Power (DP) to be
08                      obtained from the Leader bank periodically and the DP should be fixed
                        accordingly.
                        Inspection of the Stock, machineries etc. should be done
09                      jointly/individually as per the decision of the consortium periodically or
                        as stipulated in the sanction order.

10                      Ensure that we also get our pro-rata share in Non-Funded and other
                        profitable business of the company financed by the consortium.
                        Ensure that we get pro-rata commission in case we have permitted Lead
11                      bank/other members to open LC/Guarantees on our behalf for
                        operational convenience.




                                            14
         DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.4         PAGE       02
SIB      Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                   September 11
                     Monitoring of Consortium Loan Accounts
No.   SS CLK AM MGR                            PROCEDURE NARRATIVE
                        Ensure that we exchange information regarding conduct of the account
12                      with balance outstanding etc. on a monthly basis to member banks and
                        also we get such data from other members.
                        It should be ensured that consortium meetings are conducted at least
                        once in a quarter without fail. Irregularities in the conduct of account and
13                      other important matters affecting the company or bankers should be
                        discussed in such meetings and important aspects to be recorded in the
                        minutes.
                        Consortium meeting dates along with agenda/details of important issues
14                      should be intimated to RO and HO in advance so as to enable executives
                        to attend the meeting if necessary. Copy of the minutes should be
                        submitted to RO and HO.
                        If the renewal credit report is not obtained within 12 months, copy of the
                        CMA from the company/leader should be collected and our own
15                      appraisal with recommendations should be submitted to the sanctioning
                        authority for continuance of the limits till regular appraisal is submitted
                        by the leader of the consortium.
                        All the procedures to be followed for large accounts should be
16                      scrupulously followed in the case of consortium accounts where the
                        amount of advance will be very high.
                        Though RBI has discontinued mandatory guidelines, RBI wanted
                        individual consortium to have guidelines framed and all members have
                        to abide by the guidelines. Main points to be borne in mind while
                        framing such guidelines are as follows:
                        GROUND RULES FOR CONSORTIUM LENDING :
                        a) Number of participating banks.
17                      b) Minimum share.
                        c) Entry of new member/Exit of existing members.
                        d) Norms for sanction of adhoc/additional limit on emergent situations.
                        e) Lead bank charges.
                        f) Grant of any facility by a non member bank.
                        g) Time frame for disposal of proposal for fresh/enhancement of
                           limits/adhoc limits which is normally 8 weeks.
                        h) Documentation.




                                            15
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.5        PAGE       01
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                   September 11
                            Govt. Sponsored Loan Schemes
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE

                         On a review of Government sponsored schemes it was seen that the
                         extent of irregularity is very much on the high side. It has been observed
01.a                     that in quite a few cases the loans have become irregular even within the
                         first few months. This points to the inadequacy of pre sanction and post
                         sanction scrutiny/monitoring.
                         The feature gains importance as we are granting large number of loans
01.b                     under these schemes and the amount involved is sizeable especially in
                         the case of PMEGP (Prime Minister's Employment Guarantee
                         Programme) and SGSY (Swarna Grama Swarojgar Yojana) loans.
                         Consequent upon our opting out of DICGC (Deposit Insurance and
                         Credit Guarantee Corporation) guarantee scheme, no guarantee cover is
01.c                     available now for small loan accounts. As such, greater care should be
                         exercised while scrutinising applications and for monitoring after the
                         advances are granted.

                         Pre-sanction Scrutiny:
02.a                     In the case of PMEGP loans, Branch Managers should necessarily attend
                         Task Force committee meetings where the applications are screened.

                         It should be ascertained whether the project / scheme is viable and
02.b                     suitable to the locality. If the percentage of irregularity is high for any
                         activity, applications for the same activity should not be entertained.

                         The need based amount, actually required for implementing the project
02.c                     need only be sanctioned. The tendency to fix the loan amount to avail the
                         maximum subsidy amount should not be encouraged.

02.d                     Applications from the service area allotted to the Branch only are to be
                         considered.
                         By verification of Ration card, it will be possible to know whether the
02.e                     applicant or his family members has/have taken loan from any other
                         bank and whether the loan is defaulted.
                         Branches will also note to see that loans are extended only after the
02.f                     terms and conditions of sanction are complied with and the applicants
                         have undergone necessary training. If the premises is taken on rent, copy
                         of the rent agreement should be obtained.




                                              1
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.5         PAGE       02
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                    September 11
                        Government Sponsored Loan Schemes
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE

                         Recording of assets in the name of the borrowers:
                         At the time of extending loans under the Govt. Sponsored schemes,
                         complete details of all movable and immovable assets in the name of the
03.a                     borrower should be recorded. Details of family property in which the
                         applicant has a right should also be obtained. In the case of properties,
                         the Sy. No. of the property owned should also be recorded. These details
                         shall be collected while scrutinizing loan applications during credit
                         camps / Task Force Committee meetings.

03.b                     Details of loan are to be recorded in the Ration Card and copy of the
                         same should be kept with the Branch.
                         Post-Sanction Monitoring
                         It appears that there is a feeling among some Branches that loans under
                         Government sponsored schemes need not be followed up. Branches will
04.a
                         note that the loans are not to be granted and forgotten about. It has been
                         observed that percentage of recovery under these schemes is directly
                         proportional to the follow-up.

                         Branch should ensure proper end use of the loan proceeds by making
04.b                     direct payment to the suppliers as far as possible and by visiting the unit
                         before and after extending the loan.
                         Notices should be sent to defaulters soon after the due dates. If 3
04.c                     installments are in default and if there is no response to ordinary notices
                         Regd. notice should be sent. Lawyer notice recalling the advance is to be
                         issued as soon as the account is classified as NPA.

04.d                     Personal contacts/unit visits go a long way in reducing irregularity. In the
                         case of defaults, Branch Managers should necessarily visit the units.

                         Loan Recovery Camps arranged by the Revenue/Block authorities
04.e                     should be attended by the Branch Managers without fail and the details
                         to be furnished to R.O./Dist. Co-ordinator for further action.

                         Low recovery and misutilisation of loans are to be reported in BLBC
                         (Block Level Bankers' Committe) / DIC (District Industries Centre) /
04.f                     Task Force Committee meetings. The details may also be reported for
                         action by authorities in DLRC (District Level Review Committee) /
                         DCC (District Consultative Committee) / DIC, with a copy to the Lead
                         Bank.




                                              2
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.5          PAGE       03
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                     September 11
                        Government Sponsored Loan Schemes
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE
                         Where necessary, Branches should also take initiative to organise „Credit
                         Recovery Camps‟ exclusively for our Bank at regular intervals in
04.g                     consultation with Revenue/Block authorities/Village Extension Officers
                         as well as Panchayat Members. In such cases, necessary notice clearly
                         mentioning time, date and venue, should be sent to all concerned.
                         Acknowledgement of Debt (AOD):
                         It has been observed that certain Branches are taking AOD/ADS
                         (Acknowledgement of Debt & Security) as a matter of routine, even in
05                       cases where repayments are not forth coming. Branches are advised that
                         in such cases revenue recovery/legal measures should be taken straight
                         away before the time bar of documents. AOD has to be taken only to
                         avoid time bar of documents.
                         Misutilisation Loans:
                         Branch Managers in consultation with the implementation agency and
06.0                     the Lead Bank officials and in concurrence with RO, should approach
                         the Station Head Officers to register criminal complaints, with a copy to
                         the concerned Superintendent of Police and District Collector for follow-
                         up. This should be done where the provision for criminal complaint is
                         made available by the respective state Governments.
                         Revenue Recovery/Filing Suit/Waiver of Legal Action:
06.a                     If there are no chances of the loan getting repaid in the normal course,
                         we have to either initiate Revenue Recovery (RR) proceedings where
                         there is provision therefore, or resort to legal measures.

                         If details of property in the name of borrower are not available at the
                         Branch, discreet enquiries should be made to ascertain the position. In
06.b
                         case there is any property, it will be advisable to file suit for recovery of
                         dues before the documents get time barred. Branches may also make
                         arrangements to move the court for “attachment before judgement”.




                                              3
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.5         PAGE       04
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                    September 11
                        Government Sponsored Loan Schemes
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE

                         If there is no property in the name of the borrower, it is advisable to
                         initiate RR proceedings, in states where there is provision therefor. Steps
                         for RR should be taken as soon as the account becomes NPA if other
                         efforts for recovery are not fruitful. Recalling the advance is a pre-
06.c
                         condition for initiating RR. Branch Managers are authorised to initiate
                         RR if other conditions are satisfied. However, if necessary amount is not
                         recovered through RR, either suit to be filed or sanction for waiving
                         legal action should be obtained from RO before the documents get time
                         barred.

                         Revenue Recovery camps should invariably be attended by all Branch
                         Managers and recovery should be closely followed up. A list of accounts
06.d                     in which RR is initiated should be furnished in duplicate to the
                         authorities and got acknowledged in the copy. For facilitating easy
                         compilation of the details, a register with necessary columns should be
                         maintained at Branches.

                         It has been observed that RR proceedings are very effective in certain
                         areas. Branch Manager will have to make a realistic assessment of the
06.e                     position and if chances of recovery are good, may opt for RR as the first
                         step even in cases where there is property in the name of the borrower.
                         Suit shall be filed later on, if required, before documents get time barred,
                         after withdrawing RR proceedings.

                         In states where there is no provision for RR and legal recourse will be of
06.f
                         no use in the absence of assets, Branches should recommend for waiver
                         of legal action after all measures for recovery are exhausted.

                         In all the cases, recommendations for filing suit/waiver of legal action,
                         should be submitted to RO at least 6 months before time bar of
06.g                     documents and the process should be completed well in time. Subsidy
                         should be adjusted before filing suit. Branches are allowed to adjust
                         subsidy subject to conditions stipulated therefor.




                                              4
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.5       PAGE        05
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                  September 11
                        Government Sponsored Loan Schemes
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE

                         Write off

07.a                     Branches may take up for write off, all loans outstanding for 5 years or
                         more without any signs of recovery. Suit filed accounts where the suit
                         amount is below Rs.25000/- may also be taken up for write off, if there is
                         absolutely no chance of recovery after obtaining the decree.

                         In all eligible accounts, DICGC claims should have submitted, before
07.b                     taking up for write off. The eligible subsidy and the DICGC claim
                         received available towards set off should be reported while submitting
                         the Write off proposals.

                         Write off proposals coming under R.O. powers should be submitted to
07.c                     RO and those under HO powers should be sent to HO through RO.
                         Reasons for recommending write off should be clearly explained.

07.d                     Staff Accountability, if any, in sanction or follow up of the advance
                         should also be reported clearly in the proposal for write off.

                         Branches may maintain a register of accounts written off as a source of
07.e                     reference while considering fresh applications and also to continue to
                         take efforts for recovery of the amount towards the written off accounts.
                         Once the sanction for writing off is received, the account will be written
07.f                     off for the debit of HO under IBT for the amount specified in the
                         sanction, after adjusting the DICGC claim amount and the subsidy
                         amount available etc.

07.g                     Amount, if any, received towards the written off account should be
                         credited in the account “Amount written off since recovered” (452.5)




                                             5
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.6       PAGE        01
 SIB      Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                  September 11
                              Monitoring of Gold Loans
 No.   SS CLK AM MGR                            PROCEDURE NARRATIVE
                         Part - Payments:
01.a                     To facilitate closure of the loan with comparative ease, part payments
                         should be encouraged. The pawners should be informed of this facility,
                         while extending loans.
                         Simple interest for AGL
01.b                     However, for Agricultural Gold Loans (AGL) simple interest will be
                         charged, for which demand will be raised only at the end of the loan
                         period, which is normally 12 Months.
                         If the AGL is sanctioned for a shorter period, interest will be
01.c                     compounded from the due date. In addition, penal interest at 2% can also
                         be charged on AGL above Rs.25,000/- for the overdue period.
                         Issue of Notice
                         Gold loans will be sanctioned for a period of 12 months, except in the
                         case of Gold loan schemes like ‘Gold Max’ in which case gold loans will
                         be extended for a maximum period of 6 Months. If Gold Loans remain
01.d
                         outstanding beyond the sanction period of 6/12 months, notice should be
                         issued by ordinary post immediately, advising the pawner to arrange to
                         redeem the pledge immediately. The matter sending the notice should be
                         recorded in the Pledge form by way of scribbling with initials of the
                         credit officer/Branch head.
                         If there is no response to the ordinary notice, final notice by Registered
                         with Acknowledgement Due post in Form No.73 A (English) or 73
01.e                     (Malayalam) should be issued, as the case may be, recalling the advance.
                         A copy of the RN (Registered Notice) should be preserved stapled with
                         the Pledge form.
                         Disposal of ornaments by Public Auction:
                         If the Pawner is not coming forward to close the loan, in spite of notices
                         including Regd. Notice sent, immediate steps should be initiated for
01.f
                         closure of the loan/disposal of gold ornaments pledged through public
                         auction and the process should invariably be completed within 15
                         months from the date of the advance (7 Months in the case of Gold
                         Max).
                         Branch Managers are empowered to fix the date of auction, for
                         recovering overdue gold advance, without prior permission from
01.g                     Regional Office. However all the formalities of public auction should be
                         complied and the notice of auction should be informed to RO well in
                         advance.




                                             1
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.6         PAGE       02
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                    September 11
                              Monitoring of Gold Loans
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE

                         Auction Formalities:
                         Once the auction date is fixed, notice of auction should be sent to the
02.a
                         pawner by Registered with AD post, in his last known address,
                         intimating the date and time of auction. A copy of the auction notice
                         should be kept stapled with the Pledge form.
                         Though the Branch head is empowered to fix the date of the auction, the
                         date and time of the auction, along with the Gold loan numbers put for
02.b                     auction, amount of the loan, date of the pledge, dues and the approximate
                         value of the ornaments should be informed to the RO, by way of
                         letter/statement.
                         Notice of auction should be published in a Newspaper in circulation in
02.c                     the locality, at least a few days before the date of the auction, mentioning
                         the Gold loan account numbers put for auction and the date and time of
                         auction.
                         For conducting auction in a free and fair manner, independent observer
02.d                     in the cadre of a Branch Manager from nearby Branches or Regional
                         Office may be deputed by the RO, if felt necessary, who should confirm
                         that all auction formalities are complied by the Branch.

02.e                     Employees of the bank should not participate in the auction either
                         directly or indirectly.
                         Wide publicity should be given to the auction, by exhibiting the notice of
02.f                     auction in the notice board of the Branch also by pasting a copy of the
                         notice near the customer interface of the Cashier’s cabin.

02.g                     Auction notice should also be circulated among the nearby traders and
                         other customers.
                         An upset price should be fixed for the pledged items together in an
02.h                     account which should cover the dues to the bank, including the
                         proportionate Newspaper advertisement charges, Notice charges, interest
                         and Principal.

02.i                     Items pledged in different accounts should not be combined together as a
                         single lot for auction.

                         Branch should take steps to avoid the bidders acting as a cartel and
02.j                     trying to keep the bid much lower than the upset price, by pursuing our
                         customer and other genuine persons in this line of business to participate
                         in the auction.




                                              2
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.6        PAGE        03
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                   September 11
                              Monitoring of Gold Loans
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE
                         The entire proceedings of the auction should be recorded in a Register
                         and should be got signed by two or 3 independent witnesses. The
                         overseeing officer deputed by RO, if any, should also sign the register.
                         Note:1

02.k                     A Gold loan Auction Register shall be maintained with columns for the
                         date of auction, name and address of Pawner, full particulars of
                         ornaments put to auction, amount outstanding in the loan account,
                         amount realised at the auction, full name, address and signature of the
                         party who bid the ornaments in the auction etc. Total number of persons
                         who attended the auction should be recorded and their signature obtained
                         in the register.
                         For controlling the crowd and to confirm the genuineness of bidders,
02.l                     Branch may collect a small security deposit from the intending bidders,
                         while registering themselves for participating in the auction.
                         The auction should be conducted in full view of the bidders and other
                         customers present. However, for the purpose of controlling the crowd,
                         entry to the auction hall/place during the auction may be restricted to the
02.m                     registered bidders, who had remitted the prescribed security deposit,
                         before the appointed time. If the auction is conducted during business
                         hours, it may affect normal working and may cause inconvenience to
                         other customers. So it will be advisable to conduct the auction after
                         business hours.
                         The auction amount should be sufficient to cover dues to the bank under
02.n                     the gold loan. In case there are no bidders up to the amount required for
                         any items, auction of that item need not be confirmed. Such cases should
                         be referred to RO for further course of action.
                         The auction amount should be collected immediately after the auction,
02.o                     less security deposit, if any, already collected and the auctioned items
                         should be delivered against acknowledgement in the appropriate place in
                         the pledge form and the ‘Gold loan Auction register’.
                         Applicable sales tax, if any, should also be collected on the auction
02.p                     amount and remitted as prescribed. Details of the tax collected should
                         also be recorded against each items auctioned in the ‘Gold Loan auction
                         Register’.

02.q                     The pawner should be given the facility to close the account by remitting
                         the dues and redeem the pledge, till the moment the auction time.




                                              3
       Facility for redeeming the pledge by allowing to pledge the items as a
       new item should be made available to the pawner, if he is providing
02.r   enough funds to clear the interest and other charges. In such cases,
       branches need not insist that the pawner should bring the entire amount
       towards principal and interest, for clearing the dues and redeeming the
       pledge.




                           4
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.6         PAGE       04
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                    September 11
                              Monitoring of Gold Loans
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE

02.s                     Branch should submit a report of auction to the concerned Regional
                         Office immediately after the auction.
                         Sale of jewels pledged by private negotiation, in case auction being
02.t                     unsuccessful, should be done within 30 days from the date of auction,
                         with RO permission.
                         Disposal of jewels pledged need not be delayed/put off for the reason
                         that the pawner is indebted to the Bank otherwise and the other
                         account(s) has/have become irregular/suit filed. In such cases, jewels
02.u                     shall be disposed off in time, provided the auction is not restrained by the
                         court. Surplus, if any, in the amount received from auction/sale by
                         private negotiation should be kept in Sundries account and may be set off
                         towards the other dues, after obtaining sanction from RO.
                         Branch Managers will be held accountable for loss, if any, to Bank, if the
02.v                     procedure laid down as above, is not followed and the Gold loan remain
                         outstanding beyond the stipulated period.




                                              5
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.7         PAGE       01
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                    September 11
                 Guidelines for Monitoring of Small Loans by branches
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE
                         Monitoring of all loans up to Rs.1 Lac is the sole responsibility of the
01.a                     branches. Monitoring of the advances by the branches should be
                         reviewed by ROs periodically.
                         Branches should spool and take a print of "Sibrep - 23 – Credit
01.b                     Monitoring Reports - 1. Accounts Defaulted Greater Than Given DAYs
                         within the Given LIMITs".
                         Where overdues of one installment and above are there the borrower
                         should be contacted first by a Clerical staff and if there is no response
                         within 3 days, an officer should call the borrower. Further, after four
01.c
                         days if there is no response from the borrower Manager in Charge of the
                         branch should call the party. If this model is followed, it will be an
                         effective follow up and slippage will be reduced to the minimum.

                         In case there is no response after all this process, NPA Recovery team
                         consisting Sub Staff, Clerical, Officer /Manager should visit the
                         borrower at his office as well as residence.
                         Note:1
                         All branches should form an NPA recovery team consisting of
                         representatives from all cadres of staff. All ROs should also have an NPA
                         recovery team consisting desk officers as the members and one of the
01.d
                         Chief Manager as the team leader. As members of the NPA recovery
                         team, desk officers will be reviewing the NPA and watch accounts at
                         Clusters of Branches, as entrusted to the desk officers as per the work
                         allotment at RO, and will be reporting to the Chief Manager, who is the
                         NPA recovery team leader. Chief Manager, in consultation with the RO
                         head may also arrange for the NPA recovery team members visiting the
                         branches under them, for personally meeting the NPA and watch
                         customers.
                         Other methods for monitoring the advances by the branches are:
02.a
                         Periodical unit visits and study of the health of the units financed by us.
02.b                     Revival of failed units may also be considered if they are viable.
                         Borrowers may be enlisted for reminder of payment of EMI on time by
02.c
                         SMS.
02.d                     Never allow to accumulate the default more than one installment.
                         In spite of our genuine efforts, if the account turns NPA, we have to start
02.e
                         recovery steps immediately.

                         Branches have to revive the loan documents with AOD or renewal
02.f
                         documents. AOD should be taken 6 months before the time bar of
                         documents.




                                              1
          DEPARTMENTAL PROCEDURES MANUAL                    SECTION:P.810.7        PAGE       02
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances –
                                                                                   September 11
                 Guidelines for Monitoring of Small Loans by branches
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE
                         In case there is any property in the name of the borrower or co-obligants,
                         we can file suit and attach the property before judgment (ABJ). On filing
                         suit, constant contact with the advocate is required to assess the progress
                         and also to confirm that our advocate appears in the court during all
02.g
                         occasions. Property details of borrower/guarantor can be collected from
                         Village office. And further we can take certified copy of the documents
                         from SRO (Sub-Registrar Office) and can be used for filing attachment
                         petitions before court.
                         In case there are no assets for attachment, branch has to proceed for
                         revenue recovery and remind revenue officials periodically. Branch
02.h
                         should liaison with Village Officer for recovering the RR initiated
                         accounts.
                         Once RR is issued, we may wait for 3 years for recovery. Getting a
02.i
                         recovery after 3 years will be bleak.
                         After 3 years of Suit or RR, it is time for trying an OTS (One-Time
                         Settlement). RR has to be initiated in the case of all priority sector NPA
02.j                     accounts. In case RR is also initiated and completed 3 years and the
                         accounts are still outstanding, branches may contact the customers and
                         try for an OTS with whatever they offer.
                         In the case of a suit filed account, branches need to wait up to Decree
                         and then execute the decree in case there is any asset to be attached.
02.k                     Bank accounts of the borrower and Salary if any also can be attached. If
                         the party is male having sufficient means as stated and not clearing the
                         decree dues, EP (Execution Petition) for arrest can be filed.
                         The last resort is to write off the dues that are unable to be recovered by
02.l
                         suit or Revenue recovery.
                         While submitting proposal for write off, Branch have to submit the staff
02.m                     accountability, Copy of INW Statement and a report of personal visit of
                         Borrower/Guarantor by Branch Manager.
                         Branches should keep record of borrowers whose accounts are closed by
                         allowing OTS involving sacrifice. Branches have to maintain a
                         permanent record of such accounts/ names for reference on a later date.
02.n                     Branches shall verify such a register before sanctioning or proposing
                         fresh loans and except Board, branch managers or other executives
                         have no powers to sanction fresh loans to accounts/ persons whose
                         accounts are closed through OTS.




                                              2
          DEPARTMENTAL PROCEDURES MANUAL                   SECTION:P.810.8       PAGE       01
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances -
                                                                                 September 11
                             Review of Standard Accounts
No.    SS CLK AM MGR                           PROCEDURE NARRATIVE

                         Tri-monthly Reviews:
                         Print out of Tri-monthly statements should be obtained from the Finacle
01.a                     application (invoking menu “sibrep- 4- press F4 – 14 – Press F4”) as on
                         30th April, 31st July, 31st October and 31st January, in the case of all
                         loans and advances with sanctioned limits =>Rs.10 Lac. Review should
                         be submitted for Standard watch accounts also.
                         The dates of the unit visit/stock inspection should be marked in the
01.b                     relevant columns, along with the Value of the stock and DP, as per the
                         record in the “Unit visit Diary.”

                         Tri-monthly statements should be submitted for review to the
                         sanctioning authority. If RO is the sanctioning authority, the review
                         should be submitted to RO.
01.c
                         In the general comments of tri-monthly report, Branch should note a
                         brief report on general working of the unit especially where adverse
                         features are noted like reduced credit turnover, continuous overdrawing,
                         overdue credit report of over two months etc.
                         If HO is the sanctioning authority, the review should be submitted to
                         HO, through RO for review. In such cases, Branches should submit the
01.d                     Review to RO in duplicate and RO in turn will submit the Review to
                         HO, after filling up the relevant columns and adding the comments of
                         Regional Head.
                         The review is intended to identify the signs of sickness, if any, at an
                         early stage and to take remedial measures. Delayed submission of
01.e                     Review forms will serve no purpose and hence review of all accounts
                         should be completed by the Branches/ R.Os within the stipulated time
                         from the end of each quarter.
                         The Review forms is applicable to both fund based and non fund based
01.f
                         credit facilities with sanctioned limits =>Rs.10 Lac.
                         The Trimonthly reviews will be reviewed by the sanctioning authority
                         regarding utilization of the limit, repayment, DP vis-à-vis the balance
02
                         outstanding, operations and turnover in the account, income etc. and the
                         Reviewing official will record is comments in the Review format.
                         Comments/Observation of the sanctioning/Reviewing authority should
03                       be communicated to the Branch and RO (in cases where review is by HO
                         functionary).
                         Report of loan sanctions under Branch/R.O. discretion
04.a                     Loan sanctions under Branch Managers discretion should be reported to
                         the concerned Regional Office in the prescribed format, along with
                         copies of the process notes.




                                             1
          DEPARTMENTAL PROCEDURES MANUAL                   SECTION:P.810.8        PAGE        02
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances -
                                                                                  September 11
                             Review of Standard Accounts
No.    SS CLK AM MGR                           PROCEDURE NARRATIVE

                         Sanctions under R.O. discretion should be reported to HO, every month,
04.b                     in the prescribed form, along with the copies of the process notes, within
                         15 days from the close of the month.
                         If the details of loans sanctioned for the previous month is not submitted
04.c                     to the reviewing authority in time, delegated powers should not be
                         exercised, till the same is submitted.
                         The reviewing authority will verify the sanctions for any
04.d                     violations/deviations of the guidelines – both regulatory and internal-
                         and will confirm that the sanctions are within the delegated powers.
                         In case of deficiencies, violations and deviations in the sanctions, the
04.e                     same should be handled and followed up on a case to basis till
                         ratified/condoned/regularized, as decided by the Reviewing authority.
                         Renewal credit reports

05.a                     Working Capital:
                         Working capital credit facilities are allowed generally for a period of 12
                         months. Hence, it has to be got renewed before the completion of 12
                         months from the date of Sanction.
                         Those working capital limits falling within the powers of MD &
05.b                     above having less than BBB risk rating are to be
                         reviewed/renewed once in six months.
                         Term Loan.
06.a                     All Term loans shall be periodically reviewed.
                          (Format is attached as Annexure)
                         Large accounts with limit/balance outstanding more than Rs.10 lacs shall
                         be reviewed as under:
06.b
                         All sanctions coming under RO/Br. Discretions are to be reviewed by the
                         respective ROs on an annual basis.

                         In the case of HO sanctions, where the outstanding is within the
06.c                     sanctioned limit of ROs, such term loans can also be reviewed at RO
                         level.




                                             2
          DEPARTMENTAL PROCEDURES MANUAL                   SECTION:P.810.8       PAGE       03
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances -
                                                                                 September 11
                             Review of Standard Accounts
No.    SS CLK AM MGR                           PROCEDURE NARRATIVE
                         All sanctions above RO discretionary level (where balance outstanding
                         is also more than RO discretionary limit) are to be reviewed at HO, as
                         per details given below:

                                 All Term Loans where balance outstanding is within the
06.d                             sanctioned limit of DGM,GM,CGM, ED and MD, shall be
                                 reviewed by the respective authority (under whose discretionary
                                 power the balance falls)

                                 All Term Loans sanctioned under the power of MCB, may be
                                 reviewed by MD & CEO.




                                             3
          DEPARTMENTAL PROCEDURES MANUAL                   SECTION:P.810.9        PAGE       01
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances -
                                                                                  September 11
                  Review and Monitoring of Watch and NPA accounts
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE
                         All loan/advance accounts will have to be followed up scrupulously to
01                       avert accounts slipping into Non performing accounts (NPA) category.

                         In the present economic scenario there is possibility of delayed cash
                         realization for business enterprises impacting prompt repayment of loans
02                       and servicing of interest. Hence, ideally, the follow up of loans and
                         advances must start from the date of disbursal.

                         The initial signals for concern start after an overdue position of 30 days
03
                         in an account.
                         Watch category accounts is a prelude to NPA. Loan/Limit accounts are
04.a                     classified as “Standard Watch accounts” where either principal or interest
                         is overdue for 30 days or more.
                         The following accounts are to be classified as Standard Watch accounts.
                                 Accounts where installment defaulted by 30 days or more after
                                 the due date.
                                 Accounts which have become overdue for closure.
                                 Accounts in which interest is not remitted within 30 days, from
                                 date of charging.
                                 Sight Bills purchased outstanding beyond 30 days or retention
                                 period whichever is later.
                                 Cheques discounted outstanding beyond 30 days.
                                 DPG/Bills co-accepted in which one installment is defaulted.
                                 Invoked guarantee/Devolved LCs (Advance Bill a/c) which have
04.b                             not been honoured by our party within one week.
                                 Key loans outstanding beyond the storage period allowed or 6
                                 months where storage period not specified.
                                 Temporary overdraft accounts outstanding beyond the stipulated
                                 period.
                                 Accounts in which there is no operation for 30 days.
                                 Accounts where serious irregularities (i.e. shortage of stock,
                                 closing down of business, mis-utilisation / diversion of funds,
                                 etc.) are observed.
                                 Usance bills discounted and not realised within 30 days after the
                                 due dates.
                                 Gold loans outstanding beyond 13 months. (Conditional to the
                                 point that Gold loans are sanctioned for 12 months)



                                             1
          DEPARTMENTAL PROCEDURES MANUAL                   SECTION:P.810.9         PAGE       02
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances -
                                                                                   September 11
                  Review and Monitoring of Watch and NPA accounts
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE

04.c                     Advances which have already classified as NPA should not be reported
                         as Standard watch accounts.
                         Close Monitoring of the advances - whether they are small or big - at the
05.a                     very beginning itself will enable the Branches to ensure that their
                         advance accounts are maintained satisfactorily.

                         Fresh advances extended can be avoided from slippage, by close
05.b                     monitoring from the initial stage itself. Monitoring efforts should be
                         intensified when the account turn standard watch.
                         There may be some cases where accounts become sticky at the initial
                         stage due to delay in project implementation, delay in getting power
                         connection, cost escalation and other unforeseen circumstances. Such
05.c                     cases should be carefully studied by the Branch officials and suggest
                         remedial measures / reschedulement /nursing well in advance and at
                         appropriate time supported by reasons justifying the same.

                         As the interest rate is now linked to Base Rate and Spread and subject to
                         fluctuations, there is every chance that installments are not sufficient to
05.d                     liquidate the loans. In case where re-phasing or rescheduling is essential
                         for various reasons, such proposals should be taken up sufficiently in
                         advance before the account turns NPA.
                         Standard watch accounts and NPA accounts with balance outstanding
06.a                     =<Rs.1 lac should be reviewed and followed up at the Branch level and
                         reviewed periodically.
                         A certificate for having reviewed all the NPA and standard watch
                         accounts with balance =<Rs.1 lac along with the number and total
06.b                     amount outstanding under such accounts should be submitted to the
                         Regional Office every quarter, immediately after the close of the quarter.

                         Standard watch accounts and NPA accounts with                      balance
07.a
                         outstanding<=Rs.10 lac should be followed up at the RO level.
                         The review of Standard watch accounts and NPA accounts with balance
                         outstanding >= Rs.10 lac should be done by the Recovery-cum-
07.b
                         Monitoring Cell at RO, face to face with the Branch Manager, during
                         the Quarterly business review meetings.

                         All Regional Offices should form an NPA Recovery-cum-Monitoring
08.a
                         Cell under the supervision of one Chief Manager, one or more of the
                         credit officers and the Legal Officer.




                                              2
          DEPARTMENTAL PROCEDURES MANUAL                   SECTION:P.810.9         PAGE       03
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances -
                                                                                   September 11
                  Review and Monitoring of Watch and NPA accounts
No.    SS CLK AM MGR                            PROCEDURE NARRATIVE
                         Decision and directions for follow up of the account should be recorded
08.b                     in the duly filled up ‘Format for reviewing NPA/Watch account’,
                         submitted by the Branch.
                         Implementation of the earlier decisions and directions for follow up
08.c                     should be verified and fresh directions and decisions should be taken for
                         Follow up and closure/regularization of the NPA/Watch accounts.

                         Such decisions and directions for follow up should recorded in the
08.d                     ‘Format for reviewing NPA/Watch account’ and should also be
                         communicated By means of a separate letter/mail to the Branch.

                         Such communication from RO should be filed in the personal file of the
08.e                     borrower for verification by the Internal/concurrent auditors for
                         compliance.
                         All Branches should form an NPA Recovery-cum-Monitoring Cell
09.a
                         under the supervision of one Officer, preferably the Credit Officer.
                         If there is no second officer at the branch, Branch Manager will himself
09.b
                         monitor the Watch and NPA accounts.
                         The name of the Credit Officer may be reported to HO / RO for
10
                         information and direct contact for effective follow up by these offices.
                         The Recovery-cum-Monitoring Cell will be responsible for closely
11                       monitoring payment of installment / servicing of interest on due dates,
                         contacting the borrowers and reminding them well in advance.
                         A diary shall be maintained by the credit officer for diarizing the due
12                       dates of instalments / other dues / response from the parties. The defaults
                         to be brought to the notice of borrowers immediately.
                         Details of remittances made to the NPA accounts shall also be recorded
13.a                     in the Diary, so that when a call is received from HO/RO, the branch will
                         be in a position to give feedback instantaneously.
                         Reports containing this data may be spooled by branches from the system
13.b
                         itself and filed properly or recorded in the diary itself.
                         Recovery-cum-Monitoring Cell will take all possible steps from
                         preventing the watch accounts turning into NPA and getting remittances
14
                         to the loan accounts which have already become NPAs and ensure
                         prompt repayment, servicing of interest in other accounts as well.
                         The credit officers at branches shall inform the concerned officers at HO-
                         Credit Monitoring Department regarding progress made in the recovery /
15
                         up gradation / further slippage of accounts with all relevant details on an
                         ongoing basis.
                         Credit Monitoring Department
16                       Standard watch accounts and NPA accounts with balance outstanding
                         =>Rs.10 lac will be followed up at the HO level also.




                                              3
          DEPARTMENTAL PROCEDURES MANUAL                   SECTION:P.810.9       PAGE        04
SIB       Disbursement, Follow up and Post Sanction Monitoring of Advances -
                                                                                 September 11
                  Review and Monitoring of Watch and NPA accounts
No.    SS CLK AM MGR                           PROCEDURE NARRATIVE
                         Standard watch accounts and NPA accounts with balance outstanding
                         =>Rs.50 lac will be reviewed by a „Committee of Executives‟ at the HO
17.a
                         level, and decisions for follow up and recovery will be taken and will be
                         communicated to the Branch and RO for compliance.
                         Decision and directions for follow up of the account should be recorded
17.b                     in the duly filled up „Format for reviewing NPA/Watch account‟,
                         submitted by the RO.
                         Implementation of the earlier decisions and directions for follow up
17.c                     should be verified and fresh directions and decisions should be taken for
                         Follow up and closure/regularization of the NPA/Watch accounts.
                         Such decisions and directions for follow up should recorded in the
17.d                     „format for reviewing NPA/Watch account‟ and should also be
                         communicated by means of a separate letter/mail to the Branch and RO.
                         Such communication from RO should be filed in the personal file of the
17.e                     borrower for verification by the Internal/concurrent auditors for
                         compliance.
                         HO – Credit Monitoring Dept. will be constantly contacting the
18                       branches, preferably the Credit Officer for assessing the progress made
                         in the case of recovery.




                                             4

								
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