Académique Documents
Professionnel Documents
Culture Documents
-up of
Follow-up
Advances
Jyoti Kumar Pandey
Deputy General Manager &
Member of Faculty
College of Agricultural Banking
Reserve Bank of India
Pune
Credit Opportunity
Credit Creation
Credit Completion
Credit Management
Credit Management
Credit Management now includes
Capital adequacy norms
Risk Management including ALM
Exposure Norms
Pricing policy and credit risk rating
IRAC norms
Appraisal, credit-decision making and loan review
mechanism
Post-Sanction control
To ensure proper documentation, follow-up and supervision
Pre-Sanction appraisal
Requirements are:
Post-Sanction appraisal
Depends to large extent upon findings of presanction appraisal
Requirements are:
Management Control
Inadequate Capitalization
High Financial and Operating Leverage
High Sales Growth
Strong Competition
Economic Downturn
Documentation
Basis for legal relationship between bank and borrower
Significant for enforcement of securities charged to the
bank
Spells out responsibilities of the borrowers
Any additional limit sanctioned against same securities
already charged to the bank
Extend charge to such limits also
All concerned may be kept informed
Acknowledge debt / balance conformation
Monitoring
Disbursement
In case of Term Loan
Loan to be disbursed as per the schedule approved by the
bank
Disbursement of installments related to actual progress in
implementation of the project
Site visits periodically
Monitoring (Contd.)
Disbursement
In case of Cash Credit
If sanctioned along with Term Loan - Must be disbursed
only when the unit commences commercial production
Monitoring (Contd.)
Periodical Inspection
Enables bank to keep check on the stocks
charged to the bank
Obtain first hand information about the
functioning of the unit
Monitoring (Contd.)
Periodical Inspection Hypothecation Account
Verify adequacy of stocks
Monitoring (Contd.)
Periodical Inspection Pledge Account
Ensure that godown is well maintained
Goods are stored properly
Entries in the godown register maintained appropriately
If required conduct stock audit
Monitoring (Contd.)
Maintenance of Inspection Register
Bank must maintain register to record comments on findings of
inspection
Inspecting officers signature required
Irregularities / deviation to be brought to the notice of the borrower
To be followed up vigorously
Monitoring (Contd.)
Operations in the account
Monitoring (Contd.)
Insurance
Bank to ensure that securities offered have adequate and proper
insurance cover on continuous basis
Cover to be obtained for full value of security
Value of security should be more than the limit sanctioned and
deterioration in its quality checked
Monitoring (Contd.)
Information System
Seek information at regular intervals for
Monitoring (Contd.)
Information System
Statements called for should enable bank to monitor the
levels achieved vis--vis projected figures of the unit
Stock statement should reveal the quantity of paid and
unpaid stock, their price and movement
Statement on book debt should reveal age-wise breakup
of debtors and creditors
Timely and qualitative information must be obtained
Monitoring (Contd.)
System of annual review of account
To be done by bank
To scrutinise
Balance Sheet, P & L Account, Tax Returns of borrower
Undesirable features to be discussed with the borrower
Thank You