Hinduja Leyland Finance Limited

9th April 2011

Funding norms for Tractor Funding

Customer Selection Criteria

Criteria Norms
Age Minimum age of the applicant should be 21 years and maximum age at
the end of the tenure should be 65
Experience Experience in Tractor operation through agriculture activity for a
minimum of 3 years. To be validated by ownership of agricultural land
of not less than 3 acres.
In case of commercial application, experience proof of 2 years in this
trade validated by Valid Driving Licence for a period of not less than 2
years.
Property Hirer to own agricultural cultivable land of not less than 3 acres. In
Ownership case the land is owned by a member of the family, that person shall be
taken as co-borrower.
For Commercial application, property of Pucca House of at least 500
sq. Ft and above should be owned by the Applicant / co-borrower.
Guarantor Mandatory External and should own minimum of 3 acres of
agricultural cultivable land or pucca house property of not less than
500 sq. ft or own a tractor for a period of not less than 12 months.
Guarantor In case the hirer / co-borrower does not own properties as mentioned
Based Funding above, the proposal can be considered on the strength of the
guarantors provided guarantor satisfies the property ownership norms
stated above. In such cases, two guarantors shall be taken and both of
them shall individually satisfy the norms stated above.
Repayment Borrower, Co-borrower and Guarantor should not have defaulted on
History their loans with any Banks / Co-operative Society. Reference checks
with local banks / Co-operative Society to be made to confirm this.
Residence Should be a resident of that village for at least 5 years
Stability
Product Range All tractors ranging from 34 HP to 60 HP shall be funded under this
programme.
Maximum One Tractor with approved farm implement
Exposure

Grading of Tractors
Grade 1 M &M / TAFE / MF / John Deere
Grade 2 Escorts / Eicher / Swaraj / Punjab Tractors / New Holland / HMT /
Sonalika
LTV for Grade 1 Up to a max of 75% on manufacturers’ Listed Price net of
Products discount
LTV for Grade 2 Up to a max of 65% on manufacturers’ Listed Price net of
Products discount
Maximum Funding
Cap:
For tractors from 34 Rs.3,70,000/-
HP up to 42 HP
For tractors above 42 Rs.4,00,000/-
HP and up to 50 HP
For tractors above 50 Rs.4,40,000/-
HP and up to 60 HP
Funding on Farm To be considered only for tractor mounted Harvesters of the
Implements following manufacturers:
Class / John Deere / Standard / Dashmesh
Funding shall be restricted to a maximum of 60% of the cost of
the farm implement.
Products Not to be Tractors not listed and graded above shall not be funded. Trailers
considered for and other implements shall also not be considered for funding.
funding
Tenor Minimum: 12 Months
Maximum: 42 Months
Frequency of Monthly and Quarterly options to be considered.
instalments In case of seasonal payments, the monthly / quarterly
instalments to be structured in such a way that at least the
interest for the month / quarter is collected as instalments.
PDC / SPDC Mandatory to collect 3 SPDC from the borrower or co-borrower
or guarantor. No third party cheques shall be accepted as PDC /
SPDC. However, cheques from Co-operative Banks / Grameen
Banks shall not be accepted either as PDC or as SPDC. Waivers
for such cases to be obtained from State Heads
Insurance To be mandatorily covered by HLF after collection of premium in
cash and cover note to be issued.
Release of Payment to 80% of the amount financed shall be released to the dealer only
dealer after receipt of Final Invoice, Delivery Challan and Temporary
Registration of the Tractor.
Balance 20% shall be released to the dealer after obtaining the
Original Registration Certificate with endorsement in favour of
HLF.
IRR Minimum: 21% p.a.
Document Charges Rs.500/-
Processing Fee 2% of Amount Financed
Definition of family members:

Family members of the Applicant shall include his Father, Mother, Spouse Brother & Sister-
in-law (in case of joint family), Son & Daughter-in-law only.

Documents to be collected from Borrower and Guarantor:

1. KYC documents—Identity Proof, Age Proof, Address Proof and Signature Proof along
with recent passport size photographs, duly signed across the photograph.
2. In case of thumb impression, the documents where the thumb impression is taken
should be duly notorised
3. Completely Filled and Signed Application Form
4. Property proof—Copy of the Title Deeds of Agricultural Property / House Property
along with copy of Patta Pass Book, Chitta & Adangal, Tax Receipt for house property
/ copy of electricity bill
5. Encumbrance Certificate for the property
6. In case of borrower / guarantor owning a prior tractor, copy of RC of the existing
tractor along with current insurance policy copy
7. Bank account proof—copy of the first page of Bank Pass Book
8. Experience proof—Copy of RC book of existing old tractor if any or Valid Driving
Licence issued not earlier than 2 years from the date of application for the loan.
Used Tractor funding:

For funding used tractors, all the norms mentioned above shall be applicable except that the
maximum funding shall be as per the funding grid below:
(Rs. Lacs)
Year of Mfr 2005 2006 2007 2008 2009 2010
HP capacity
34 to 42 1.80 2.00 2.25 2.50 2.80 3.00
43 to 50 2.00 2.25 2.50 2.75 3.00 3.25
51 to 60 2.20 2.45 2.75 3.10 3.50 3.75

For used tractors, Tenure shall not be more than 30 months

Products to be considered for refinance: Mahindra & Mahindra / TAFE / MF / Swaraj /

Eicher / John Deere

Valuation of the asset to be done by an external valuer—valuation to be submitted along

with asset photographs.

Funding amount shall be lower of the following:

a) 75% of the Valuation Amount or

b) Amount specified in the funding grid above or
c) Equal to the IDV mentioned in the current insurance policy

Whichever is lower.

Payment to be disbursed only after completion of name transfer and endorsement of HLF in
the RC and Insurance Policy.

IRR: Minimum 25% p.a.

Document Charges: Rs.500/-
Processing Fee: 2% of the Amount Financed.
Proposal Rating Sheet – Tractors

Sales Credit Sales Credit

Criteria Factor Points Points Weightage Score Score
Asset Risk Information (A)
Less than 65%
finance on the
vehicle cost (120)
65% to 70% finance
on the vehicle cost
Loan To Value (100)
Finance Amount * 70% to 80% finance
100 / Total Asset Cost on the vehicle cost 10%
taken for this (75)
purpose 80% to 85% finance
on the vehicle cost
(60)
Greater than 85%
finance on the
vehicle cost(30)
Asset Category
G1 (80)
Grading of the asset
based on its market G2 (50) 10%
share and resale
value UG (0)
Total Score Earned (A) 20%
Sales Credit Sales Credit
Criteria Factor Points Points Weightage Score Score
Viability (B)

Income Coverage
Ratio Gross income p.m. =>
Gross income of the 2*EMI (120)
borrower and co-
borrower should be Gross income p.m. is
10%
considered for this between 1.3 to 2 *
ratio; The income EMI (75)
should be supported
by valid documentary
proof Gross income p.m. is
< 1.3* EMI (0)
Income > 1.5 * EMI
Income from other (100)
sources To ensure Income 1 to 1.5 * EMI
repayment when (75) 5%
primary source of Income 0.5 to 1 * EMI
repayment is hit by (50)
accident or recession Income < 0.5 * EMI
(0)
 Period Upto 24
months (120)
Agreement Period
Period 24 to 36
Gross period of the
months (100)
contract should be 5%
considered for this Period 37 to 48
criteria months (75)
Period Above 48
months (40)
Total Score Earned (B) 20%
Sales Credit Sales Credit
Criteria Factor Points Points Weightage Score Score
Customer Profile ( C )
Residing in the same
Domicile place > 5 years (100)
The continuity of the Residing in the same
borrower's domicile place 2 to 5 years 10%
in the same place (75)
shall be considered Residing in the same
place < 2 years (0)

Applicant's
Expreince over 5
Experience in
Years (120)
Agriculture /
Commercial Tractor
Experience of 2 to 5 15%
Operations
years (90)
No. of years of
experience of the
customer is assessed Experience of 1 to 2
years (30)
Market Reputation
of Customers
Overall feedback Positive (100)
about the customer
(considering the 10%
residence and the Negative (-250)
areas where the
customer is
operating) Qualified (50)
Borrowers Track ETR (120)
Record VGTR (80)
Track of similar asset
GTR (60) 5%
/ agri or commercial
loans to be No Track (0)
considered PTR (-100)
Total Score Earned ( C ) 40%
Sales Credit Sales Credit
Criteria Factor Points Points Weightage Score Score
Collateral (D)
Property owned by Property Value > 2*
Borrower / Co- Loan Amt (120)
borrower
Property Value
The property stated
between 1 and 2 *
should be in the
Loan Amt (75) 10%
name of the
borrower / co-
Property Value less
borrower (Minimum
than loan amt (40)
of 3 Acres of
Agricultural land) No property (0)
Property owned by Property Value > 2*
Guarantor Loan Amt (120)
The property stated Property Value
should be in the between 1 and 2 * 5%
name of the Loan Amt (75)
guarantor (Minimum Property Value less
of 3 Acres of than loan amt (40)
Agricultural land)
No property (0)
Guarantor Income >
Guarantor Strength 1.5 * EMI (100)
Should be a local
person and should be Guarantor Income
between 1 and 1.5 * 5%
known to the
customer for a min of EMI (50)
3 years Guarantor Income <
EMI (0)
Total Score Earned (D) 20%

Grand Total Score (A+B+C+D) 100%

WAS WAS Score

Particulars Sales Score Credit Score Above 90 Superior
Asset Risk (A) 81 to 90 Good
Viability (B) 71 to 80 Medium
Barely
Customer Profile © 60 to 70 Acceptable
Collateral (D) Less than 60 Risky Proposal
Weightage 100% 100%
WAS (Total Score / Final
Total Weightage) Recommendation