Credit Administration

Credit Administration

General documents
– Demand promissory (DP) note
– Letter of authority
– Letter of arrangement
– Letter of disbursement
– Letter of revival
– Personal net worth statement
– Copy of national identification card
– Credit approach in business pad of the borrower
– Credit application in prescribed format duly filled in
– Photograph of the borrower
– Up to date CIB report
– Credit report of the borrower
 Documentation
General guidelines for proper execution of documents
– Witness, the manager or authorized officer of the bank.
– Full signature not initials on all pages with dates.
– No addition, deletion or alterations without consulting the bank’s legal advisor.
– Documents must be explained by a lawyer if the borrower is illiterate.
– They should not be attested if not required.
– Adequately and correctly stamped.
– The promissory note must be stamped with revenue stamp not postage stamp.
– Documents should be entered in the document register.
– They should be kept in envelopes as punching may deface some important
parts of them.
– They must be arranged according to serial number.
– Maintaining due diary for the expiry dates of the documents.
– No amount should be advanced until the requisite documents of the borrower
and other parties like guarantor have been executed.
 Contd.
General guidelines…
– Liability declaration of the borrower along with an undertaking that the
borrower has no liability with any bank or financial institution excepting as
declared.
– Undertaking stating that the borrower will not avail any credit facility from any
other bank or financial institution without prior consent of the bank.
– Undertaking stating that the borrower does have any relationship as director
or sponsor with the bank.
– Undertaking stating that the borrower shall not sell or transfer the ownership
of the business/factory/shop until the bank dues are fully paid or without NOC
of the bank.
– Credit Risk Grading score Sheet/Internal Credit Risk Rating score sheet.
– Post-dated cheque covering the credit facility.
– Acceptance of the borrower to the sanction letter
– Proper stamping.
Credit Recovery
 Credit Recovery
1. Measures of credit recovery
– Non-legal measures
– Legal measures

1.1 Non-legal measures

– Communication
– Persuasion
– Motivating credit collection staff
– Recovery campaign
– Alternative dispute resolution (ADR)
– Appointment of recovery agent
– Debt restructuring
– Preparation and circulation of the list of defaulters
– Loan rescheduling (interest waiver, termextention, further loan)