LOAN POLICY

INDEX FOR LOAN POLICY

SI.No. Chapter Page No.
Loan Policy
1 Introduction 3
2 Organization of Business 3 &4

3
3 Exposure Norms and Credit Risk Concentration / Prudential 4&5

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Regulatory guidelines.
Due Diligence, Statutory and other restrictions on Loans and 5 - 6

1
Advances.
a. Customer Due Diligence 5

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4
b. Statutory & Other Restrictions on Loans and Advances 5&6
i. Advances to Priority Sector 5&6

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ii. Udyam registration Certificate 6
Performance / Financial Analysis and Credit Risk 6 to 16
Management 25
I. A. Farm Sector 6&7
I. B Self Help Groups 7
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I. C Joint Liability Groups 8
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II. Non Farm Sector 8&9

05

III. Fair Practices Code for Lenders 9 & 10

IV. Credit Information Companies 10
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V. Appraisal Methods / Review/Renewal/Enhancement 10 -13

5 System
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V.1. Agricultural Sector Advances 10 &11

V.2. Term Loans 11-12
V.2.i. appraisal Method 11
V.2.ii. Review of Loans 11
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V.2.iii. Working Capital 11-12

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V.3. Govt. Sponsored Schemes 12

V.4. Review/Renewal/Enhancement of Limits 12 & 13
02

V.5 Advances to Personal Segment 13

V.6 Purchase of Cheques / Demand Drafts 13
Assessment of Credit Facilities and Sanction of Loans 13 - 16
6.1. Sanctioning Methodology 14 - 15
6 6.2. Granting of Loans and Advances to Staff & Relatives of 15
Staff
6.3. Granting of Loans and Advances to Directors / Relatives 15
of Directors of Our Bank/Other Banks

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 6.4. Time Limit for Grounding of Scheme 16
6.5. Control Returns 16
7 Take Over of Advances 16
8 Credit Rating and Pricing of Loans 16-17
9 Delegation of financial powers 17-19
Security, Insurance, Covenants, documentation and Secured 20-26
Interest.
10.I. Security Norms 20

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10 10.II. Insurance 20-21

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10.III. covenants 21

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10.IV. Documentation 21-22

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11 Follow-up, Supervision and Monitoring of Advances. 22-23
12 Non Fund based business 23

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13 List of reporting formats 23 & 24
14 List of Regulatory guidelines. 25 24
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 LOAN POLICY

1. INTRODUCTION:

Telangana Grameena Bank aims to achieve pre-eminence in banking (particularly in its

area of operation) and financial sectors with commitment to achieve excellence in customer
satisfaction, profit maximization, technological up gradation and with emphasis on
developmental banking through a skilled and committed work force.

3
Towards realizing its mission, the Bank seeks to achieve the following objectives:

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a) To maintain its dominance in its traditional rural areas of operation, and to increase

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penetration in and around Hyderabad district.

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b) To achieve increasing market share and competitive edge in tune with the resources
mobilized in contiguous areas in urban and semi- urban areas.

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c) To accelerate growth in high value and good quality credit.

d) To achieve and maintain satisfactory credit standards in booking new loans, systems and
25
procedures in conducting/supervising and monitoring of loan accounts and management of
NPAs.
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Towards achieving the above objectives, the Bank has put in place the following strategies:
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i) To deal proactively with the emerging economic environment, spotting and utilizing
05

opportunities for safe and profitable loaning which would include new products, services to
suit changing customer needs and preferences.
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ii) To strengthen service expertise and delivery as also quicken the response time.
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ii) To strengthen the management information system for expeditious and effective decision
making towards ensuring asset quality.

iv) To align credit management with overall asset-liability management so as to contain

0

interest rate risks leading to improved spreads.

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v) To update market intelligence for marketing of our loan products to match with customer
requirements.
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2. ORGANISATION OF BUSINESS

The Bank's approach to providing finance would be based on sound marketing principles,
viz. anticipating, identifying and satisfying customer needs. This would imply, that the
loaning must revolve around the long term interests of customers with an onward looking
proactive response to emerging events in the external economic business environment,
recognizing the need to strike a balance between current profits and future viability /
survival and providing the latest technological tools to the customers. The credit decision
would be faster and would comply with the time norms fixed.

Page 3 of 24
 The credit portfolio of the bank would primarily be governed by the directions of the RBI,
GOI & NABARD. In consonance with the existing directives, the credit policy of the Bank is
to finance mainly to farmers, weaker sections and women for agricultural, small business
and self-employment purposes. The bank will also take up high value lending under
Agriculture, Personal Segment and MSME segments with adequate safeguards.

The bank will continue its efforts to achieve the benchmark levels of credit to the priority/tiny
sector, viz. agriculture, small scale industries and small business as prescribed by RBI.

3
The Bank may enter into tie-ups/agreements with organizations active in marketing Agri,

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Personal, and MSME segments to identify prospective customers in the respective areas.

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3. EXPOSURE NORMS AND CREDIT RISK CONCENTRATION / PRUDENTIAL
REGULATORY GUIDELINES:

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As a prudential measure aimed at better risk management and avoidance of concentration
of credit risks, the Reserve Bank of India has advised the banks to fix limits on their

16
exposure to specific industry or sectors and has prescribed regulatory limits on banks‟
exposure to single and group borrowers in India.
25
Exposure shall include credit exposure (funded and non-funded credit limits) and
investment exposure (including underwriting and similar commitments). The sanctioned limit
or outstanding, whichever are higher, shall be reckoned for arriving at the exposure limit.
0
However, in the case of fully drawn term loans, where there is no scope for re-drawl of any
portion of the sanctioned limit, banks may reckon the outstanding as the exposure.
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The exposure ceiling limits would be 15 percent of capital funds in case of a single borrower
05

and 40 percent of capital funds in the case of a borrower group. The capital funds for the
purpose will comprise of Tier I and Tier II capital as defined under capital adequacy
standards.
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The Regional Rural Banks are excluded from the RBI Exposure norms vide RBI Master
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Circular RBI/2015-16/70 DBR NoDir.BC.12/13.03.00/2015-16 dated July 1, 2015 and

hence the Bank has recommended the above exposure norms based on risk matrix.

The Bank shall maintain individual exposure limits as under:

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a) Individuals --Rs. 5.00 Crores

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b) Sole Proprietorship/Partnership Firms/

Associations/Joint Hindu Family -- Rs10.00 Crores
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c) Corporate borrowers --Rs.15.00 Crores

d) Group exposure --Rs.16.00 Crores
e) Govt. Bodies and institutions --Rs.20.00 Crores
f) The non-fund based credit facilities shall be restricted to 100% outstanding of Fund
based advances at any point of time.

g) The Banks exposure to real estate including residential mortgages, commercial real
estate etc will not exceed 20% of the Banks total fund based advances.

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 h) Large Exposure Framework (LEF): (With effect from 01/04/2019) The „Large Exposure‟
is defined as the sum of all exposures values to a single Counterparty or a group of
connected counter parties if it is equal to or above 10 percent of the bank‟s eligible capital
base.

4. DUE DILIGENCE, STATUTORY AND OTHER RESTRICIONS ON LOANS AND

ADVANCES

a) Customer Due Diligence : While sanctioning a loan to a borrower, the sanctioning authority

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should ensure due diligence process which involves satisfying about the identity of the
person, verification of address (Permanent /Present), Occupation and source of income.

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Obtaining recent photograph of the person/s, opening/operating the account as per the KYC
norms issued by RBI.

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Selection of borrowers is essential to maintain asset quality. Hence, scrutiny of past credit
history of all Borrowers/Promoters/Directors/Guarantors needs to be carried out with a view

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to being satisfied about their credentials, and for ensuring compliance with the guidelines
on KYC and AML under Prevention of Money Laundering Act. Due diligence in relation to
promoters and management should also reckon/cover aspects like experience,
professionalism, integrity, vision, track record of meeting commitments to lenders, industry
25
experience, history of strategic initiatives, governance practices and record of adherence to
covenants. Bank's approach in granting credit facilities to companies whose directors are in
the Defaulters' List of RBI / Credit Information Companies etc. is also to be taken care of.
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The due diligence on Corporate Borrowers shall include identification of beneficial owners
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and screening against applicable list of sanctioned entities. Reasons for change in the
accounting year as well as in auditors or change of ECR agency, if any, should be
ascertained.
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b) Statutory& Other Restrictions on Loans and Advances.

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i. ADVANCES TO PRIORITY SECTOR:

According to the benchmarks laid down by the RBI, RRBs should achieve and maintain the
Priority Sector lending targets as defined here under.
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Targets / Sub Targets under Priority Sector Lending.

Category Target
02

Total Priority Sector 75 per cent of ANBC (Adjusted Net Bank Credit) or CEOBE
(Credit Equivalent of Off-Balance Sheet Exposures) whichever is
higher; However, lending to Medium Enterprises, Social
Infrastructure and Renewable Energy shall be reckoned for
priority sector achievement only up to 15 per cent of ANBC.
Agriculture 18 per cent ANBC or CEOBE, whichever is higher; out of which a
target of 10 percent is prescribed for SMFs
Micro Enterprises 7.5 per cent of ANBC or CEOBE
Advances to Weaker 15 per cent of ANBC or CEOBE, whichever is higher
Sections
Page 5 of 24
 As per the recommendations of the Prime Minister‟s Task Force on MSMEs, banks have
been advised to achieve 20 per cent year-on-year growth in credit to micro and small
enterprises under 1st Norm, 10 per cent annual growth in the number of micro enterprise
accounts under 2nd Norm and 60 percent of total lending to MSE sector as on
corresponding quarter of the previous year to Micro enterprises under 3rd Norm.

The Bank will also focus on financing retail traders, small business, professionals & self
employed persons and small road and transport operators falling under priority sector under

3
SBF segment as per the existing scheme and any approved new schemes.

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ii. Udyam Registration Certificate
All enterprises are required to register online and obtain “UdyamRegistration Certificate.

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All the branches therefore obtain “Udyam Registration Certificate” from the entrepreneurs

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before sanction of loan to categorize under MSME segment as per RBI guidelines.

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5. PERFORMANCE /FINANCIAL ANALYSIS AND CREDIT RISK MANAGEMENT.
I. A. Farm Sector : Agriculture being the mainstay of the people in the bank's area of
operation as well as the main focus of credit portfolio of the bank, it will be its endeavor to
25
meet the total genuine credit needs of the agriculturists in the area of operation.
The Bank priorities financing to agricultural sector under the following sub- segments:
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i. Kisan Credit Cards taking into account the scales of finance approved by District Level
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Technical Committee.
ii. Sanctioning adequate production credit to the existing KCC holders and covering all
05

uncovered farmers.
iii. Covering the investment and consumption needs of farmers under the revised KCC
scheme.
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iv. Financing farmers for usage of modern agricultural implements.

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v. Financing farmers for improvement in minor irrigation, development of wastelands, barren

lands, soil conservation methods, etc
vi. Financing to Horticulture farming.
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vii. Financing to farmers against Negotiable warehouse receipts.

viii. Financing to non-conventional energy devices such as solar lighting and water heating
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equipments.
ix. Financing to farmers not only for production investment but also to cover social,
02

consumption needs such as Housing, cattle shed, vehicle loans, consumer durables,
Education loans and personal/family needs.
x. Under agricultural segment collateral security is waived for limits up to Rs1.60 lakh for crop
loan.
xi. Giving working capital for animal husbandry by financing under KCC Scheme.
xii. Financing FPOs where guarantee cover from SFAC/NABSANRAKSHAN is
obtained, No collateral security is to be obtained up to Rs 20.00 lakhs.

Thus, comprehensive coverage of farmers is proposed under revised KCC scheme.

However, norms regarding total worth, repayment capacity, annual income,
landholdings, total liability, total discretionary powers, unit cost, scale of finance,
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 minimum acreage norms, integrity, experience, viability of the scheme, linkages,
manage ability, etc. will be keenly observed and followed while financing.

Financing for allied activities like Commercial dairy/Sheep rearing, Emu farming, poultry,
construction of rural godowns, cold storage units and food processing units will also be
encouraged to support Rural/Agri. based activities.

Under agriculture segment the waiver of collateral security is permitted up to

 a)Rs.1.60lakhs for term loan(ATL&AATL)

3


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b)For KCC(shown in Tabular form)

1
FOR KCC(Including Animal Husbandry and Fisheries)

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Collateral waived,
Rs1.60lakhs Creation of charge in DHARANI portal.

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Above Rs1.60 lakhs to Rs2.00 lakhs a. Third party guarantee or Mortgage of land
b. Creation of charge in Dharani Portal.
25
Above Rs2.00 lakhs Mortgage of farmland.

Amount of disbursement under each item of financing will be worked out taking into account
0
the recoveries during a particular crop season so that desired level of growth is achieved.
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Thrust will be given for financing horticulture, seed production, farm mechanization, minor
irrigation, non- conventional energy devices, i.e., solar lighting and water heating system
05

etc. Recovery budgeting and monitoring will be done to ensure that the stipulated recovery
percentage for the Bank as a whole is achieved.
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I. B. Self Help Groups: There is vast potentiality for forming new Self Help Groups, making
the dormant groups active and financing them. The formulation, nurturing and capacity
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building of the SHGs will be taken up on priority and financing will be extended to these
groups, as per annual plans. The average loan amount will be stepped up at each round of
financing the groups.
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The cash credit system was introduced to finance SHGs to meet all income generation
63

activities, social needs like housing, education, marriages etc., and debt swapping to
provide considerable flexibility to SHGs in meeting their frequent needs as well as help
them in reducing the cost of borrowings. The maximum limit fixed to each group is Rs.20.00
02

lakhs as per eligibility. Bank entered into agreement with CGFMU for providing guarantee
cover to SHG loans sanctioned above 10 lakhs to 20 lakhs.

The services of DRDA,SERP, MEPMA and NGOs shall be taken in the SHG
segment financing. The income generating activities shall be encouraged in the
SHGs particularly in case of senior SHGs. The book keeping methods will also be
improved. The Interest subsidy scheme announced by the State Govt. and NRLM
shall be explained to SHGs and make them to realize the advantages of prompt
repayment.

Page 7 of 24
I. C. Joint Liability Groups: The new concept of financing to JLG was introduced to augment
flow of credit to tenant farmers/oral lessees/share croppers and small farmers who do not
have proper title of their land holding through formation and financing of Joint Liability
Groups consisting of 4-10 individuals.

Banks can extend finance immediately after formation of JLGs without observing gestation
period unlike SHGs. Savings by the JLG members is voluntary. Primarily it is intended to be
a credit group.
In view ofthe increased focus on agricultural lending and introduction of “Loan Eligibility
Cards” (LEC) to tenant farmers finance to JLGs to be encouraged.

3
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II. Non-Farm Sector: The full potential existing in non-farm sector shall be utilized for creating
employment opportunities by financing to Micro, Small & Medium Enterprises (MSME),

1
Business enterprises, Retail trade, Professional and Self employment activities. High value

:3
advances under the segment including „P‟ Segment also will be encouraged with thrust on
safety and profitability.

16
MSME advances to be covered under CGTMSE/CGFMU. Special focus to tap the potential
advances under NRI category i.e., Housing Finance & Mortgage loans.
25
a. Criteria for Financing MSME Units:
The definition of micro, small and medium enterprises engaged in
0
manufacturing/production and rendering of services is being modified and is required to be
-2

implemented by the banks along with other policy matters. The details of investment in
plant and machinery for manufacturing enterprises and investment in equipment for
service enterprises is as follows:
05

Enterprises category Manufacturing and service enterprises

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Micro Investment does not exceed (1) One Crore rupees and turnover does
not exceed (5) Five Crore rupees.
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Small Investment does not exceed (10) Ten Crore rupees and turnover
doesnot exceed (50) Fifty Crore rupees.
0

Medium Investment does not exceed (50) Fifty Crore rupees and turnover
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doesNot exceed (250)Two Hundred Fifty Crore rupees.

02

Banks lending to medium enterprises will not be included for the purpose of reckoning
under the priority sector.

b. Udyam Registration Certificate

All enterprises are required to register online and obtain “Udyam Registration Certificate.
All the branches therefore obtain “Udyam Registration Certificate” from the entrepreneurs
before sanction of loan to categorize under MSME segment as per RBI guidelines.

Page 8 of 24
 The Bank will actively participate in financing to Pradhana Mantri MUDRA Yojana (PMMY)
scheme which consists of non-farm enterprises in manufacturing, trading and services up to
Rs.10.00 lakh.

The Bank will actively participate in financing to Dalit/Tribal/ Women entrepreneur as Start-
up India which consists of enterprises, up to Rs.10.00 lacs. And as Stand-up India which
consists enterprises above Rs.10.00 lacs.

However, while dealing with the proposals pertaining to the non-farm sector, the following
procedure/precautions will be adhered to at the operating level:

3
 The applicant(s) satisfies the KYC norms.

:5
 The antecedents of the promoters, their background, and experience as entrepreneurs,
their market and social standing, integrity, etc. will be enquired into, through various

1
sources and to be recorded.

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 The details of the associate concerns of the promoters will be obtained wherever
applicable, and their financial standing, performance and market standing, etc. be

16
subjected to thorough scrutiny.
 Opinion/credit reports from the bankers of the associate/sister concerns and individual
promoters will be obtained and held on record.
25
 The project status, capacity of the promoters to implement and more importantly the
antecedents of project consultants and their success in implementation of various
0
projects, will be discretely enquired into.

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Copies of the latest income tax and sales tax assessment orders of the promoters will
be obtained. Credit report/opinion reports will be compiled on the strength of the above
information.
05

 Audited balance sheets for past three years for existing projects/units or projected
balance sheets for new project/units, along with audited balance sheet of associate/
6-

sister concerns for past three years will be obtained. Bank may accept provisional
balance sheet also up to six months from the date of closure of the previous financial
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year in respect of existing borrower accounts.

III. FAIR PRACTICES CODE (FPC) FOR LENDERS:

0

The Bank would have in place a transparent and fair practices code, as envisaged by RBI,
in respect of acknowledging loan applications, their quick disposal, clear stipulation of the
63

terms and conditions of sanction, post disbursement supervision, communicating any

changes in terms and conditions already agreed/communicated, recovery process, etc.
02

Release of movable/immovable property documents on repayment/ settlement of

loans :
In terms of the guidelines on Fair Practices Code, RBI has issued instructions to banks
vide Circular No RBI/2023-24/60 DoR.MCS.REC.38/01.01.001/2023-24 dated 13.09.2023
for release of all movable / immovable property documents upon receiving full repayment
and closure of loan account as under.

a) Release all the original movable / immovable property documents and remove charges
registered with any registry within a period of 30 days after full repayment/ settlement of
the loan account.
Page 9 of 24
 b) The borrower shall be given the option of collecting the original movable / immovable
property documents either from the spoke branch where the loan was sourced or the
Hub/RASMECCC where the documents are available, as per her / his preference.
c) The timeline and place of return of original movable / immovable property documents
should be mentioned in the loan sanction letters issued on or after the effective date.
d) In order to address the contingent event of demise of the sole borrower or joint
borrowers, Banks shall have a well laid out procedure for return of original movable/
immovable property documents to the legal heirs. Such procedure shall be displayed on
the website of the Bank along with other similar policies and procedures for customer
information.

3
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Compensation for delay in release of Movable / Immovable Property Documents
e) In case of delay in releasing of original movable / immovable property documents or
failing to file charge satisfaction form with relevant registry beyond 30 days after full

1
repayment/ settlement of loan, the Bank shall communicate to the borrower reasons for

:3
such delay. In case where the delay is attributable to the Bank, it shall compensate the
borrower at the rate of ₹5,000/- for each day of delay.

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f) In case of loss/damage to original movable / immovable property documents, either in
part or in full, the Bank shall assist the borrower in obtaining duplicate/certified copies of
25
the movable / immovable property documents and shall bear the associated costs, in
addition to paying compensation as indicated above. However, in such cases, an
additional time of 30 days will be available to the bank to complete this procedure and the
0
delayed period penalty will be calculated thereafter (i.e., after a total period of 60 days). g)
-2

The compensation provided under these directions shall be without prejudice to the rights
of a borrower to get any other compensation as per any applicable law.
05

IV. CREDIT INFORMATION COMPANIES:

6-

Bank has obtained membership in Credit Information Companies in all the four Credit
Information Companies namely, Credit Information Bureau (India) Limited (CIBIL),Equifax
Credit Information Services Pvt. Ltd., CRIF High Mark Credit Information Services and
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Experian Credit Information Company of India Private Limited., which provide credit
information and other value added products. Bank shall access the credit information of
individuals/firms who approached us for financing, to ascertain the details of loans if any
availed by the applicant from other Financial Institutions its regularity of payment or
0

otherwise, outstanding balance, credit and utilization etc. Basing on this Bank can take a
63

view on the credit worthiness of the applicant.

V. APPRAISAL METHODS /REVIEW /RENEWAL/ENHANCEMENT SYSTEM:

02

V.1. Agricultural Sector Advances :

 Kisan Credit Cards taking into account the scales of finance approved by District Level
Technical Committee.
 For Agricultural / Allied Agricultural Term Loans, Loan should be sanctioned as per the
NABARD Unit Cost.
 Loans against Negotiable Warehouse Receipts maximum of Rs.5 lakh per customer.
 Financing FPO‟s where guarantee cover from SFAC/NABSANRAKSHAN is obtained, No
collateral security is to be obtained up to Rs 20.00 lakhs.

Page 10 of 24
 Comprehensive coverage of farmers is proposed under revised KCC scheme. However,
norms regarding total worth, repayment capacity, annual income, landholdings, total
liability, total discretionary powers, unit cost, scale of finance, minimum acreage norms,
integrity, experience, viability of the scheme, linkages, manage ability, etc. will be keenly
observed and followed while financing.

Financing for allied activities like Commercial dairy/Sheep rearing, Emu farming, poultry,
construction of rural godowns, cold storage units and food processing units will also be
encouraged to support Rural/Agri. based activities.

Under agriculture segment the waiver of collateral security is permitted up to

3
 a)Rs.1.60lakhsfor term loan(ATL&AATL)

:5
 b)For KCC(shown in Tabular form)

1
:3
FOR KCC(Including Animal Husbandry and Fisheries)
Collateral waived, Creation of charge in
Rs1.60lakhs

16
DHARANI portal.

AboveRs1.60 lakhstoRs2.00 c. Third party guarantee or Mortgage of land

d. Creation of charge in Dharani Portal.
lakhs
25
AboveRs2.00 lakhs Mortgage of farmland.
0
V. 2. TERM LOANS:
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i). Appraisal Method: In respect of Term loans, the computation of cost estimates is
05

scrutinized very carefully to ensure that the total project cost arrived at is accurate,
comprehensive, reasonable and realistic. There is no standard project debt: equity ratio that
can be prescribed for any project. It depends on various factors such as nature and size of
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the project location, gestation period, promoter‟s capacity, Government policies etc;
however one of the deciding factors will be the debt servicing capability of the project.
Suitable moratorium period for repayment can be extended based on the income
-1

generation, cash flows, total tenure, DSCR etc.

 For new projects, minimum promoter's contribution of 25% in the total project cost is
generally stipulated.
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63

 The maturity of any term loan shall not normally exceed 9 years including moratorium
period, except housing loans, long term Agricultural loans such as horticultural loans as
approved by NABARD.
02

ii). Review of Loans: Term loans are to be reviewed annually. In case where term loans as
well as working capital limits have been sanctioned to a borrower, review of term loans
should form a part of the review/renewal of working capital. Review of term loans may be
combined with the review of working capital limits, for a comprehensive assessment.

iii). WORKING CAPITAL:

Appraisal Method: - RBI has given freedom to banks to adopt their own appraisal method.

Page 11 of 24
 a) The projected balance sheet method is applicable in respect of working capital limits
beyond Rs.1.00 crore from the banking system.
Under projected balance sheet method, the fund requirement is computed on the basis of
borrowers projected balance sheet, the funds flow planned for the current/following year
and examination of the profitability, financial parameters etc., The projected Bank borrowing
thus arrived at, is termed as Assessed Bank Finance (ABF).

b) The turnover method is applicable to working capital limits up to Rs.1.00 crore from the
banking system. Under the Turnover Method, the working capital requirement is computed
at a minimum 25% output value, of which, at least four- fifth is provided by the Bank and
balance one-fifth represents the borrower‟s contribution towards margin for working capital.

3
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Certain basic parameters, qualitative and quantitative will also be examined as under:

Qualitative Aspects :-

1
a) Our past experience with the Promoters/Borrowers and their track record.

:3
b) In case of Promoters/Borrowers already in business, but not dealing with us, opinion reports
from existing bankers and published data will be called for.

16
Quantitative Aspects :
The financial statements for the past three years of the unit as well as associate/sister
25
concerns along with notes on account will be critically examined to ascertain the financial
strength. The following can be indicative benchmarks:
0
Current Ratio (minimum) 1.33
-2

Debt Equity Ratio (maximum) 2

TOL/TNW Ratio (maximum) 3
05

Interest Coverage Ratio 2

Avg. DSCR(Gross)(minimum) 1.75
6-

Promoter‟s contribution to the project should be minimum 25%of project cost. Sanctioning
-1

authority may, however, permit changes in the above parameters on merits, duly
substantiating the merits of the proposal.

Under term loan financing the following Debt Equity Ratio (DER) norms will be fixed
0

for new projects(Expansion/modernization/replacement/diversification).

63

i) DER for term loans uptoRs.10 lakhs 3 :1

ii) DER for term loans above Rs.10lakhs 2 :1
02

V.3. Govt. Sponsored Schemes: The bank will actively participate in the Govt. sponsored
programs and will achieve the targets allocated to the Bank while ensuring quality.

V.4 Review/Renewal/Enhancement of Limits:

a) Renewal/Enhancement of Limits: The Bank grants working capital facilities for a period of
one year except for working capital limits sanctioned under Laghu Udyami Credit Card
Scheme where the limits up to Rs. 5.00 lacs are valid for a period of 3 years. Thereafter,
they are required to be renewed each year i.e. fresh sanction/enhancement has to be
accorded as per the discretionary powers of the appropriate sanctioning authority.

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 b) Review Of Advances: In cases where renewal is not possible due to non availability of
financial statements, or any other valid reasons, sanction for further continuance will be
obtained in each case, by reviewing the facilities. Continuation of working capital limit
beyond the period of sanction shall not be more than 3 months. Such continuations will be
restricted to 2 (two) times only i.e., up to a maximum period of 6 months.
Adhoc limits can be granted only in exceptional circumstances and for genuine short term
credit requirements arising out of unforeseen contingencies faced by the borrowing unit.

V.5. ADVANCES TO PERSONAL SEGMENT:

3
a) Jewellery Loans: Jewellery loans will be encouraged both under agriculture and "PER"
segment as this is one of the most secured loans and earn higher rate of interest apart from

:5
meeting the urgent needs of clientele.

1
b) Per Segment Loans : To widen our retail loan in urban & semi urban centers more focus

:3
should be made to market our products to bring more clientele under this segment. As there
is huge demand for Housing/Mortgage/Vehicle loans in Tier- II & Tier-III cities. The

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incumbents should draw suitable plan of action to book more business under this segment
to have desired levels of growth & improve the profitability.

c) Per Segment loans to housing loan Borrowers: Personal loans to housing loan borrowers
25
under Housing loan Top-up as per the LTV and EMI/NMI ratios as per circular.
0
d) Loans Against LIC polices/NSC and KVP certificates : The Bank will participate in financing
loans against LIC policies, up to 75% of surrender value and NSC, KVP up to 65% of face
-2

value.
e) The Bank is Primary Lending Institute to channelizing agency HUDCO under Pradhana
05

Mantri Awas Yojana participating CLSS to EWS, LIG.

f) Car loan to existing customers who are having loans with collateral security by way of
6-

mortgage of property other than agricultural property, paying regularly, having good track
record and for the customers with check off facility.
-1

g) Loans to landlords, Salary backed Personnel loans.

Granting of personal loan is restricted to permanent employees of few organizations which

are agreeable to provide check-off facility/having salary accounts with respective branch.
0

V.6. PURCHASE OF CHEQUES/DEMAND DRAFTS:

63

Purchase of cheques and demand drafts will be done on a selective basis to improve our
02

customer service and income earnings. Personal cheques and cheques of Nidhis, NBFCs,
Co-op. Banks, and chit funds should not be purchased.

6. ASSESSMENT OF CREDIT FACILITIES AND SANCTION OF LOANS

Credit analysis is more about identifying risks in situations where the bank observes a
potential for lending. Both quantitative and qualitative assessment forms a part of the
overall appraisal of the clients (company/individual). This generally helps to determine the
entity‟s debt-servicing capacity or its ability to repay.

Page 13 of 24
 Agricultural Sector Advances :
 Kisan Credit Cards taking into account the scales of finance approved by District Level
Technical Committee.
 For Agricultural / Allied Agricultural Term Loans, Loan should be sanctioned as per the
NABARD Unit Cost.

However, while dealing with the proposals pertaining to the non-farm sector, the following
procedure/precautions will be adhered to at the operating level:
a) The applicant(s) satisfies the KYC norms.

3
b) The antecedents of the promoters, their background, and experience as entrepreneurs,
their market and social standing, integrity, etc. will be enquired into, through various

:5
sources and to be recorded.

1
c) The details of the associate concerns of the promoters will be obtained wherever
applicable, and their financial standing, performance and market standing, etc. be subjected

:3
to thorough scrutiny.
d) Opinion/credit reports from the bankers of the associate/sister concerns and individual

16
promoters will be obtained and held on record.
e) The project status, capacity of the promoters to implement and more importantly the
antecedents of project consultants and their success in implementation of various projects,
will be discretely enquired into.
25
f) Copies of the latest income tax and sales tax assessment orders of the promoters will be
0
obtained. Credit report/opinion reports will be compiled on the strength of the above
-2

information.
g) Audited balance sheets for past three years for existing projects/units or projected balance
05

sheets for new project/units, along with audited balance sheet of associate/ sister concerns
for past three years will be obtained. Bank may accept provisional
balance sheet also up to six months from the date of closure of the previous financial year
6-

in respect of existing borrower accounts.

-1

h) Internal Credit rating (score) as per the scheme guidelines.

i) Verifying and determining the credit worthiness of a potential client by looking at their
financial state, credit reports, and business cash flows.
0

j) Bank shall access the credit information of individuals/firms who approached us for
financing, to ascertain the details of loans if any availed by the applicant from other
63

Financial Institutions its regularity of payment or otherwise, outstanding balance, credit and
utilization etc. Basing on this Bank can take a view on the credit worthiness of the applicant.
02

k) Identifying risks in situations where the bank observes a potential for lending.
l) Assessing the entity‟s debt-servicing capacity or its ability to repay.
m) Ascertaining the risks associated with the extension of the credit facility.

6.1 SANCTIONING METHODOLOGY:

The Branch Manager/Field Officer (wherever provided) will verify the credit proposals,
make appraisal of the proposals with due diligence. Proposals falling beyond the
discretionary powers of Branch Managers shall be put up to the Regional Business Office
for sanction.
Page 14 of 24
 Such proposals received from branches shall be put up to the AMH/Regional Business
Office credit committees (ROCC). Proposals falling beyond the discretionary powers of
ROCC shall be put up to Head office credit committee HOCC-II for sanction. Similarly,
proposals falling beyond the discretionary powers of HOCC-II shall be put up to HOCC-I
and proposals falling beyond HOCC-I shall be put up to the Board for sanction. All
proposals from Branch Manager onwards to HOCC level shall be sanctioned by the
respective authorities as per the discretionary powers approved by the Board. All credit
proposals sanctioned by the sanctioning authority as per their discretionary power structure
will be put up to the next higher authority as per the periodicity given, for noting. The
periodicity of such control return to be submitted to the next higher authority is at fortnightly

3
intervals.

:5
Asset Management Hubs and Spoke Branches
1. All the Loan proposals received from Hub Branch and Spoke Branches including Scale-IV

1
Branches should be processed and sanctioned at HUB upto their discretionary powers

:3
2. TheproposalswhichareabovetheHubdiscretionpertainingtospokebranches should be
forwarded to R.O concerned.

16
3. Loans sanctioned under the discretionary powers of Hub and Scale-IV branches to be sent
to R.O. for noting.
4. AMHs will be under the administrative control of the respective Regional Business Office.
25
6.2 GRANTING OF LOANS AND ADVANCES TO STAFF AND RELATIVES OF STAFF:
0
a) No officer shall, exercise delegated powers for sanction of any credit facility, sanction any
loans/advances to staff and staff relatives except those against Bank's term deposits,
-2

NSC's and KVP's.

05

b) ROCCs have been delegated with discretionary powers for sanction of loans to staff and
staff relatives up to the scheme limit approved by Head office.
6-

c) Loans to staff for agriculture purpose should be referred to Head office for first time
sanction irrespective of amount to get administrative approval; ROCC is empowered for all
subsequent renewals/enhancement of these loans.
-1

d) Any firm in which any of the official‟s relatives holds substantial interest, or is interested as a
partner or guarantor; or director, the proposal should be referred to HOCC for administrative
clearance.
0

6.3 GRANTING OF LOANS AND ADVANCES TO DIRECTORS/RELATIVES OF DIRECTORS

63

OF OUR BANK/OTHER BANKS:

No loan/advance except against Bank's own term deposits should be granted to the following
02

persons, without prior approval of the Head Office:

a) Directors of the Bank, (including Chairman) and other Banks (including scheduled Co.op.
Banks, trustees of mutual funds and venture capital funds) and/or any of their relatives
except any loan to an employee/officer of the Bank under any scheme applicable to staff.
b) Any firm in which any of the directors or their relatives as mentioned in(a) above is
interested as a partner or guarantor.
c) Any company in which any of the directors as mentioned in(a)above Hold substantial
interest or is interested as a guarantor.

Page 15 of 24
6.4 TIME LIMIT FOR GROUNDING OF SCHEME:
Any advance proposal sanctioned by Head Office/Regional Business Office should be
grounded within a period of 3 months in respect of working capital facilities and within 6
months in case of term loans from the date of sanction by Head Office/RBO. If the branch
fails to release the loan within the said period, specific approval should be obtained from
Head Office/Competent Authority for the extension of the validation period furnishing valid
reasons.
6.5 CONTROL RETURNS:

All credit proposals including compromises/write offs approved by the sanctioning authority as

3
per the discretionary powers structure, would be put up to the next higher authority at

:5
fortnightly basis for noting, Credit decisions should be noted in online BMDP.

1
7. TAKEOVER OF ADVANCES:

:3
In the liberalized financial environment, it has become important for the Bank to
aggressively market for good quality high value advances. One of the strategies for

16
increasing good quality assets in the bank loan portfolio is to take over advances ( P-
Segment like Housing/ Mortgage/ Personal and MSME loans) from other banks/ financial
Institutions of good quality assets if they fulfill the following norms.
25
a) Borrower account proposed to take over should be a “Standard Asset” in the books of
transferor Bank/FI and no single installment shall be overdue.
b) Term loans of incomplete nature are not eligible for take-over.
0
-2

c) Residual period of loan should be at least one(1)year.

05

d) Collateral security available with existing lender will not be diluted.

e) Borrowers/guarantors/partners should not be defaulters from the site of CIBIL, Equifax,

6-

CRIF, Experian, and RBI either as Borrowers/Guarantors. Account should have prompt
repayment track record without any restructuring/ re-schedulement.
-1

f) A declaration should be obtained from the applicant that he/she/unit does not have any
credit facility in any other Bank/FI.
g) Bank account statements of 6 months to one year old of Borrowers to be persuaded to
0

satisfy that transactions in the account support the recorded/estimated turnovers as also
63

the conduct of account is satisfactory.

h) Credit Information Report (CIR) (in the IBA format) to be obtained from the transfer Bank
with specific comments if any on the account proposed to be taken over.
02

i) The units should have earned net profit in each of preceding 3 years. If it does not have
track record for 3 years, it should have earned profits for at least 2 years. In other words,
units for takeover should have at least two years of full fledged profitable commercial
operations backing their track record.

8. CREDIT RATING AND PRICING OF LOANS:

As per the guidelines of RBI, Base rate system is not applicable to RRBs. The present form
of floating rate system will be read as “Fixed” rate for all advances. Branches to indicate the
word “FIXED” besides interest rate wherever it is indicated for all advances.
As per the directions of the Board we have worked out Internal reference Base Rate.
Page 16 of 24
 However it need not be made as reference rate to any interest rate in the documents.
Credit Rating : The Bank has a well-defined checklist for various tasks in credit sanctioning
process such as due diligence of borrower, creditworthiness, specifics about the financials
of borrower, legal enforceability of collaterals and internal credit rating of the borrower and
minimum credit score to be eligible for sanction of a loan is assessed as per the credit
scoring model designed segment wise under different parameters for different loans like
HL, EL, Mortgage Loan and MSME loans.

The Bank shall adopt competitive approach in pricing with regard to nature of risk, cost of
funds, cost of services/operations and market factors.

3
The pricing for advances, other than fixed interest bearing loans, is done on the basis of

:5
scoring related to credit rating unless otherwise specified in interest rate guidelines of the
Bank.

1
The rating system has been fine tuned in line with RBI guidelines on Credit Risk

:3
Management.

16
Force Majeure Clause: Bank reserves the right to Reset Fixed interest for every 5 years
frequency at the then prevailing Interest Rates. This clause is to be incorporated in all the
sanction advises and Agreements where tenure of the loan is above 5 years.
25
9. DELEGATION OF FINANCIAL POWERS:
0
A carefully formulated scheme of delegation of powers, comprehensively documented and
-2

amended from time to time, is in operation in the bank in respect of financial and
administrative matters for exercise by the various functionaries. This is based on the
05

premise that an executive is required to exercise only those powers, which are related to
the responsibilities, and duties entrusted to him/her.
6-

An appropriate control system is also in operation in tune with this delegation structure. The
powers exercised by the various functionaries are required to be reported to the next higher
-1

authority as laid down in the scheme of delegation of powers.

Formation of Credit Committees

0

In line with the regulatory Guidelines, sanction/approval of credit proposals,

63

compromise/write off proposals shall be through Credit Approval Committees at the

respective offices. Accordingly, Bank has set up the following credit approval committees at
various levels. The scope, composition, powers etc., of these committees shall be as
02

delegated to them by the Board from time to time.

Page 17 of 24
 The Board has approved the constitution of committees and approved the discretionary
powers of different committees as under.
Level Committee Members Quorum Control
Head HOCC-I Chairman Chairman Board
Office & &
All GMs (except Any Two General
vigilance) Managers
Head HOCC-II G.M-I, GM-II & GM-III G.M-I, GM-II & GM-III HOCC-I
Office (Any Two GMs) (Any Two GMs)
& &

3
Any Chief Manager Any Chief Manager

:5
from H.O (Except CM from H.O (Except CM
Vigilance) Vigilance)

1
Convener : CM (Credit)
or CM (Recovery) Any three members.

:3
Regional ROCC Regional Manager Regional Manager HOCC-II

16
Office (Chairman) &
& Any Two members
Senior Manager (Bus)
25
Senior Manager
(Operations)
Local Main Branch
0
Manager.
-2

(Members)
05

DEVIATIONS OF LOAN POLICY:

6-

If any deviations from the guidelines of the Scheme Limit/ credit policy, the HOCC-II shall
be the appropriate authority for approval of following deviations which requires noting by
HOCC-I.
-1

a. The maximum Loan amount that can be financed under the scheme
b. Margin requirements
0

c. Repayment period
63

d. Any other deviation in the scheme.

02

Page 18 of 24
 The discretionary powers to approve the deviations as under.

Sl.No Deviation Approving Noting

authority
1 Deviation approval for Overdue, settled & Write No Deviation approval not
off cases for the period before 5 years under required.
Credit Cards.
2 CIC reports deviation of Overdue, settled & Write
off in Credit Cards
i. Up to Rs.25000/- AMH ROCC
ii. Up to Rs50000/-. ROCC HOCC-II

3
iii. Above Rs.50000/- up to Rs.100000/- HOCC-II HOCC-I

:5
iv. Above Rs. 100000/- HOCC-I Board
3 Deviation approval for Overdue, Write Off and

1
Settled cases in all types of loans other than
Credit Cards in CIC Reports subject to providing

:3
evidences of Closure of loan.

16
i. up to Rs.100000/- HOCC-II HOCC-I.
ii. Above Rs. 100000 and Up to Rs.2.00 lakh HOCC-I Board
iii. Above 2 Lakh No deviation
Permitted.
4
25
Age Relaxation in age of the Building (i.e Max 25
Years) for all types of loans where mortgage of
Property is mandatory.
0
i. Loan Value up to Rs.50.00 lakhs & up to 5 ROCC HOCC-II
Years over and above the max age of the
-2

building.
ii. Loan value up to Rs.50.00 lakhs & above 5 HOCC-II HOCC-I
05

years
iii. Loan Value above Rs. 50.00 lakhs to HOCC-II HOCC-I
Rs.100.00 lakh & up to 5 Years over and above
6-

the max age of the building.

iv. Loan value above Rs.50.00 lakhs and Above 5 HOCC-I Board.
years of age relaxation
-1

(The age of the property based on Stability

Certificate provided by approved valuer)
5 Age relaxation for the entry age of Borrower HOCC-II HOCC-I
(Above the Max Entry age of 65 and Loan
0

closure by 70 years) on case to case basis.

63

6 Deviation for concession of EM & Processing

charges on case to case basis.
i. Up to 50% HOCC-II HOCC-I
02

ii. Above 50% HOCC-I Board

7 Rate of Interest Concession on Case to Case
basis only.
i. Up to 1.00% HOCC-II HOCC-I
ii. Up to 2.00% HOCC-I Board
8 Any other deviations as specified in the scheme
guidelines like a. Un related borrowers b.
Related borrowers but not fit into the Family
definition.

i. Up to Rs.1.00 Cr HOCC-II HOCC-I

ii. Above Rs.1.00 Cr HOCC-I Board
Page 19 of 24
10. SECURITY, INSURANCE, COVENANTS, DOCUMENTATION AND SECURITY INTEREST
10.I. Security Norms :
a).Agricultural segment loans :
Under agriculture segment the waiver of collateral security is permitted up to
 Rs.1.60 lakhs for term loan(ATL&AATL)
 For KCC(shown in Tabular form)

FOR KCC(Including Animal Husbandry and Fisheries)

3
Rs1.60lakhs Collateral waived, Creation of charge in

:5
DHARANI portal.
AboveRs1.60 lakhstoRs2.00 a. Third party guarantee or Mortgage of land

1
lakhs b. Creation of charge in Dharani Portal.

:3
AboveRs2.00 lakhs Mortgage of farmland.

16
b).Collateral Security under Priority Sector: Purpose-wise, amount-wise, person-wise and
total liability-wise security norms as stipulated will be followed in all cases of financing.
Obtaining of collateral security for priority sector loans will be in accordance with the RBI
25
guidelines.
No collateral security is to be obtained for loans up to Rs. 10.00 lacs in case of units of
MSE sector (Micro and small enterprises both manufacturing, service enterprises) which
0
should be covered under credit guarantee scheme of credit guarantee fund trust for Micro
-2

and Small Enterprises (CGTMSE).

Further in case of MSE sector loans, the Credit Guarantee Cover under CGTMSE has been
05

increased from Rs.50.00 lakhs to Rs.2.00 Crs.

Micro and Small Enterprises (MSE) with sound financials and good track record, collateral
6-

security may be dispensed with for loans up to ₹200.00 lakhs, subject to, guarantee cover
under CGTMSE. CGTMSE has introduced “Hybrid Security” product, wherein collateral
-1

security can be obtained for a part of the credit facility whereas remaining part of credit
facility, up to a maximum of ₹200.00 lakhs (manufacturing, services and trade) can be
covered under CGTMSE scheme.
Collateral free loans above Rs.50.00 Lakhs needs HOCC-II approval. FPOs up to Rs 20.00
0

lakhs if covered under SFAC/NABSAMRAKSHAN.

63

c). Collateral security for non priority sector: security norms will be observed as per relative
segments.
02

d) VALUATIONOF SECURITY:
The periodicity for valuation of the properties is once in 3 years for the loans sanctioned
to other than staff. While sanctioning enhancements it shall be ensured that the valuation
of land & buildings/other assets etc., offered as collateral security should be obtained afresh
and this valuation will be done by banks approved valuers.

10.II. Insurance :
 Comprehensive insurance of assets charged (unless specifically waived) to the
Bank against the risks of fire, theft and other hazards.
 The characteristic of the insurance policies provided by insurance companies should

Page 20 of 24
 be in such a manner that it should have a global coverage for the insured business
or individual against loss or damage.
 Stocks/fixed assets under hypothecation/pledge to the Bank must be kept fully
insured to the extent of market value of the security or as specified in the respective
product/ scheme guidelines, unless waiver is approved by the Bank/appropriate
authority.
 The cost of insurance will be borne by the borrower.
 The Insurance policies are required to be obtained in the joint names of the Bank
and the Borrower or in the sole name of the Borrower if the policy contains the
Agreed Bank Clause where under any monies becoming payable under the policy

3
shall be paid to the Bank.

:5
 Further, in terms of the security documents executed by the borrower, it is the
primary responsibility of a borrower to insure the assets and keep the policy alive
and only if the borrowers fail to do so, the Bank shall insure the movables and

1
assets and debit the charges and premium to the account of the Borrower.

:3
The expiry date of the respective insurance policies must be diarized in the daily list in order
that their renewal, when necessary, may not be overlooked.

16
Insurance of mortgaged properties
 The buildings, factories land & building, their fittings and fixtures, and machinery
(which form part and parcel of the mortgaged immovable property) must be kept
25
fully covered by insurance against the risks of fire as well as lightning (instead of fire
alone, as the insurance companies do not admit claims against damage caused to
the buildings by fire due to lightning unless the risk is specifically covered by the
0
policy).
 The mortgaged properties should also be covered against riots, strikes, civil
-2

commotion, cyclone, earthquake, and other natural calamities whenever such risks
are apprehended and insurance cover against them is deemed necessary by the
05

Bank.
 All insurance policies should be taken out in the joint names of the Bank and the
6-

borrower.
 Bank‟s interests may also be protected by instruments such as „key man‟ insurance
-1

policy when the borrowing entity is highly dependent on a few persons.

Arrangements (e.g., assignment) should be made so that the proceeds of insurance
cover, when invoked, would be routed through the Bank.
10.III Covenants : All the Terms and Conditions as per the scheme guidelines should be
0

specified in the Sanction Letters under acknowledgment of the borrower.

63

10.IV. Documentation :
The Bank has well established systems and procedures for documentation in respect of all
credit facilities which would serve as primary evidence in case of any dispute between the
02

Bank and the borrower and for enforcing the Bank's right to recover the loan amount
together with interest thereon, in the event of all other recourses proving to be of not
available, through a court of law as a final resort.
Wherever immovable property is obtained as security to cover the loan, the title deed
clearance in respect of the said property will be obtained from an empanelled advocate of
the bank to establish the free, marketable and clear title of the property proposed to be
taken as security.

Documentation is a continuous and ongoing process covering the entire duration of an

advance.

Page 21 of 24
 The following measures will be taken to see that the accounts do not get barred by limitation
and to protect the securities charged to the bank from being tampered with by any charge
that might have been created by the borrower to secure his other debts, if any:
 Revival letter should be obtained within the stipulated period of 27 months from the date of
execution of documents.
 Making periodical searches at the office of the Sub-Registrar for land registration/Registrar
of Companies and obtaining the search reports and also making search of the register of
charges maintained by companies.
 Comprehensive insurance of assets charged (unless specifically waived) to the Bank
against the risks of fire, theft and other hazards.

3
 EC should be obtained once in a year.

:5
 Periodical valuation of securities charged to the Bank should be obtained once in 3 years.
Fresh valuation to be obtained for taking up enhancements/ additional exposures.

1
 Two title opinion reports from different panel advocates have to be obtained for over and

:3
above Rs 50 lakhs. Special care should be taken for title deeds which involves Power of
Attorney, gift deed as per circular instructions.

16
11. FOLLOW UP, SUPERVISION AND MONITORING OF ADVANCES

Branches have to ensure that the borrowers comply with all the terms of sanction before
25
release of the limits and submit a compliance certificate to the sanctioning authority. To
achieve the above objectives, the bank, has a laid down system for post sanction follow-up,
0
supervision and monitoring. Some of the steps in this direction are:
-2

11.I. Follow-up function:

a) To comply with KYC guidelines in respect of guarantors/sureties also.
05

b) To ensure the end use of funds.

c) To prevent diversion of funds.
6-

d) To relate the out-standings to the assets level on a continuous basis.

-1

e) To detect deviation from terms of sanction.

f) To ensure recovery of the installments and interest as per the scheduled repayment
program.
0

g) To identify early warning signals if any, and initiate remedial measures thereby averting
63

incidence of incipient sickness.

11.II. Supervision & Monitoring function:
02

a) To ensure that effective follow-up of advances is in place and asset quality of good order is
maintained.
b) To look for early warning signals, identify incipient sickness and initiate proactive remedial
measures.
c) Periodical review/timely renewal of accounts.
d) Obtention and scrutiny of the stipulated statements viz. audited balance sheet, monthly
stock statements and quarterly audited results, etc.
e) Periodical inspection of assets charged to the bank as security by the operating staff.
f) Periodical valuation of assets obtained as collateral security, updation of opinion reports on
guarantors/borrowers.

Page 22 of 24
 g) Exchange of information regarding borrowers and guarantors amongst the banks.
h) Monitoring the irregularities and reporting thereof.

Credit audit system was introduced for limits above Rs.40.00 lacs to cover audit of
appraisal, assessments, sanction, post sanction process, compliance etc,(Excluding
Schematic lending). 25% of accounts falling limits between Rs 25.00 lakhs to below Rs
40.00 lakhs will be covered under credit audit. Gold loans, Personal loans, Demand loans
against security of Term deposits / NSCs /KVPs / will not cover under credit audit.

12. NON FUND BASED BUSINESS

3
:5
BANK GUARANTEES/LETTERS OF CREDIT:

1
Non fund based business viz., Bank Guarantees and Letters of Credit, should be
encouraged as per the guidelines formulated by the Board, to improve income and image of

:3
our Bank.
The Bank Guarantees will be issued only for financial guarantees for a period not exceeding

16
18 months at any one instance. If required for longer period, it should be approved by
HOCC II/ I. However, performance guarantees are permitted to be issued only against
100% cash margin while exercising due caution for the above period.
25
BGs originally issued for a period less than 18 months but that have been subsequently
extended crossing in aggregate the 18 months cutoff will also require approval of HOCC.
0
 The Bank Guarantee can be extended up to a further period of 12 months only at the
-2

request of the applicant (not the beneficiary).

 No separate approval is needed for issuing inland BGs up to 36 months with 100% or more
05

cash margin (not for disputed liabilities).

 No Bank Guarantee should normally have a maturity of more than5 years.
6-

 Bank may consider issuing Bank Guarantees beyond maturity of 5 years against 100%
cash margin and with prior approval of the HOCC II/I.
-1

 However complete due diligence and compliance with the Bank‟s general instructions in this
regard should be done before issuing such BGs.
 Margin: Minimum cash margin of 25% in the form of cash/banks own term deposits
0

/demand deposits.
 Security Norms: The uncovered portion of bank guarantee should be secured to the extent
63

of minimum 150% by way of mortgage of immovable properties or other securities such as

NSCs/KVPs/LIC policies etc,
02

 Counter Indemnity from the applicant and counter guarantee from third parties, wherever
stipulated.

13. LIST OF REPORTING FORMATS :

a. Bank has to submit Priority Sector lending data to NABARD on quarterly basis through
ENSURE / DARPAN portals provided by NABARD.
b. Bank has to submit Ground Level Credit report pertaining to Agricultural Credit only
Monthly/yearly basis to NABARD through ENSURE portal.

All the reporting formats from Branches are provided in the respective Master Circulars

Page 23 of 24
 issued on different loans & advances.

14. LIST OF REGULATORY GUIDELINES

a. RBI Exposure norms vide RBI Master Circular RBI/2015-16/70 DBR

NoDir.BC.12/13.03.00/2015-16 dated July 1, 2015.

b. RBI Master Circular on Priority Sector Lending Norms vide RBI/FIDD/2020-21/72 Master
Directions FIDD.CO.Plan.BC.5/04.09.01/2020-21 dated 04.09.2020.

c. RBI/2020-2021/26, FIDD.MSME & NFS.BC.No.4/06.02.31/2020-21 dated August 21,

3
2020 on New Definition of Micro, Small and Medium Enterprises – clarifications.

:5
d. RBI Master Circular on Credit flow to Collateral free Agricultural Loans vide RBI/2018-

1
19/118 FIDD.CO.FSD.BC.No.13/05.05.010/2018-19 dated 07.02.2019.

:3
e. NABARD circular No. NB.MCID / 842 /DAY-NRLM-Policy/ 2022-23 dated 26 August
2022 and Circular No. 15 /MCID-01/2024 dated 08 February 2024 on Master Circular on

16
Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-NRLM) &
Interest Subvention Scheme for Women SHGs under DAY NRLM.
25
f. RBI circular No RBI/2023-24/60, DoR.MCS.REC.38/01.01.001/2023-24 dated
13.09.2023 on Responsible Lending Conduct – Release of Movable /Immovable
Property Documents on Repayment /Settlement of Personal Loans.
0
AMENDMENTS TO THE POLICY:
-2

The authority to make any amendment to this Policy will lies with the board as and when
05

required as per the changes in the Master Directions of RBI and NABARD.

Review of the Policy : The Policy shall be reviewed once in a year or as and when
6-

changes have been suggested and approved by the Top Management as per
NABARD / RBI guidelines issued from time to time.
-1
0

--- END ---

63
02

Page 24 of 24