PRE-SANCTION APPARISAL

GROUP 5
 CREDIT APPRAISAL

Banks use credit appraisal for themselves before providing loan to a borrower.
This is based on careful analysis of various facts and data provided by the borrower
to the bank.
Banks then take decision to fund or reject the proposal.
This in depth analytical study is called pre-sanction appraisal of credit.
 GENERAL GUIDELINES
Register for receipt of Credit Proposals(PNB 587).
Online Credit Proposal Tracking System.
Loan Application should accompany loan proposal to be sent to higher authority for
review and confirmation (LA 99/2011).
Latest Audited balance sheets.
Credit Risk Rating On ABS
Proper Discussion with Borrowers.
 GENERAL GUIDELINES CONTD..

Proper verification of Documents.

BH can exceed their vested loaning powers by telephonic/oral sanctions obtained
from the higher authority as per L&A Circular No. 51 dated 16.07.2016.
Cases of diversion of funds, if any, could be brought to light at the earliest
opportunity for taking corrective action.
Working Capital limits upto Rs.5 crores in case of MSME borrowers and Rs.2 crores in
case of other borrowers be assessed as per Simplified Turnover Method.
 GENERAL GUIDELINES CONTD..

Borrowers not eligible to be provided fund-based working capital limits under

Simplified Turnover Method is to be done as per MPBF system (Second Method of
Lending), except in case of Tea & Sugar industries etc.
In case of project finance, the promoter/borrower may bring in his upfront
contribution (other than funds to be provided through internal generation) and the
branches should commence its disbursement after the stipulated funds are brought
in by the promoter/borrower.
 GENERAL GUIDELINES CONTD..

At the time of considering proposals of Subsidiaries of Foreign Companies, the

possibility of obtaining Foreign Bank Guarantee/Corporate Guarantee be explored.
While extending credit to Multi-National Companies (MNCs) or where NRIs are
promoters/guarantors, efforts be made to obtain collaterals situated in India and/or
guarantee of parent Company to guard against situations like non-availability of non
residents for recovery of bank dues.
Exercising due diligence in takeover accounts.-FRMD-36/2011
Assessment of credit worthiness of borrowers. FRMD-36/2011
COMPLIANCE OF LAID DOWN SYSTEMS AND
PREVENTIVE MEASURES
Penetrative discussion & discreet enquiries regarding credentials
Independent spot verification of the property
NO Laxity in obtaining/ establishing chain of title deeds.
Scrutiny of title deeds, obtaining NEC & valuation reports and certified copy of title
deed from Sub-Registrar for ensuring genuineness of the title deed held in bank
records.
Verification of salary/ income certificate.
FRMD-36/2011
 GENERAL GUIDELINES CONTD..
Vetting of Loan documents of independent branches headed by officers upto scale III,
in case of Retail Loans (Housing, OD Housing, Education, Vehicle, Loan against
Property, Personal Loan to Public/ Pensioner Schemes) accounts prior to disbursement
be got done as per RAD Cir No. 54/2017 dated 27.07.2017 with the help of e-VEDA
portal.
Guidelines contained in LA Cir 58/2017 dated 13.07.2017 on pre sanction appraisal to
be complied with.
Search be made in CERSAI Portal on the lines of CIR. LA-60/2017 dt 19.07.2017.
Branches to ensure that CIN/LLPIN is mandatorily filled in field Registration No. in #
detail of CUMM in all new as well as existing Cust IDs of Companies/LLPs. (LA
81/2017 dated 25.09.2017)