B ap 3itn aster Bank of Baroda BCCIMSME/107/A s~2 29.04.2015 ‘The General Manager Bank of Baroda South Gujarat Zone Baroda Dear Sir, Re: Discontinuation of Credit Centralization Project launched on Pilot Basis at ‘SMELF, Baroda. We refer to your note dated 08.12.2014, recommending for discontinuation of Credit Centralization Project launched on Pilot Basis at SMELF, Baroda In this regard we now inform you that a note was put up before the competent authorities and accordingly it has been decided to discontinue the Credit Centralization Project launched on Pilot Basis at SMELF, Baroda. We enclose a copy of note approved in this regard, We request you to advise the concerned suitably and ensure that the decision is implemented smoothly and immediately. Henceforth SMELF, Baroda would also function as per administrative / operational guidelines applicable for SMELF as per our letter no BCC:MSME:107:2651 dated 29.10.2014. Yours Faithfully, pridharan) General Manager MSME Banking & agtar ane Sex, oh 26, st ain, ars gat ahead, af 400 051, aR. Baroda Corporate Centre, C-26, G-Block, Bandra Kurla Complex, Mumbai 400 051, India. iH / Phone : 91 22 6698 5000 + tha / Fax : 91 22 2652 3514 + aa / Web. ; www.bankofbaao 3ifm ater Bank of Baroda Strat emis 1 APR 2ot | erase ans 1 ./eD NO BPR DEPARTMENT, BST MUMBAI Ref BCC:BPR:107; “1 Date 17" April,2015 To General Manager (MSME Banking) From | General Manager (CLO & BPR) Re Proposal for discontinuation of Credit Centralization Project on pilot basis at SMELF Baorda Sir This has reference to the note no. BCC:SME:207/511 dated 02.03.2015 on the captioned matter. The matter was referred to our Managing Director and Chief Executive Officer. We enclose the copy of approval note for your reference Lua S.GNANAVEL GENERAL MANAGER (CLO & BPR) Business Process & Re-engineering Baroda Corporate Centre, BST, BKC, Mumba ~ 400 O51co B aa 3iim aster Bank of Baroda OBSERVATIONS / REMARKS OF EXECUTIVE DIRECTOR [BBJ] MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER we aly I ETO MAI IG DIRECTOR & CHIEF E: | \ \ {\ ‘Through: Shri B. B, Joshi, Executive Dirgctor Sir, Issue for consideration: To consider the proposal for discontinuation of credit centralization project launched on pilot basis at SMELF, Baroda under Project Navnirmaan. Background: Vide Board Resolution No. 35 dated 26.05.2009, the Board had authorized the Bank to engage M/s Mckinsey and Company to provide consultancy services to the Bank in the areas of Business Process Re-engineering and Organizational restructuring. The Bank entered into an Agreement With M/s Mc Kinsey & Co on 23.06.2009, outlining the terms of reference, assignment scope and specific deliverables of the Project Navnirmaan which was formally launched on 22.06.2009. Out of -18- initiatives of Project Navnirmaan, the initiative of centralization of credit functions(Retail and SME) had also been approved. The developments were discussed in the Steering committee meetings regularly. In the meeting held with steering committee on 05.10.2011, it was decided to launch pilot for centralization of credit to secure the following benefits: i) Increase in efficiency by ensuring the specialization of activity and thus releasing of manpower at various branches carrying the same activity. il) Non customer facing credit activities to be taken out of branch to enable them to focus on sales and service, ill) In the backdrop of retirement of work force in large numbers, centralization will address the manpower deployment challenges of the Bank. ‘Baroda Corporate Centre, BST, BKC, Mumbal ~400 O5t fz Res aig & Dept Oeprient =4 B aa@ 3ifm7 aster Bank of Baroda iv) Centralization is expected to improve risk management of the loan accounts since the Branches are expected to act as sales outfits. Under centralization approval and monitoring functions are expected to be at Loan factory level itself and thus asset quality is expected to be improved. ACTIVITIES OF LOAN FACTORY Under Centralization, the Loan factory is expected to carry out the following activities: 1. Sanction 2, Documentation 3. Review 4. Maintenance and Monitoring 5. Asset Inspection 6.Attending to ZIC reports 7. Soft and Hard Recovery 8, Customer Requests. The total loan process is proposed to be sub divided into 6 segments: i) Sales and Customer queries by closing the lead generated by Branches and obtaining il) Documents for processing of credit request. ill) Sanctioning and Documentation by processing of loan application,obtaining sanctions from iv) Competent authorities and arranging for execution of documents. v) Maintenance and monitoring by way of updation of repayment/PDC encashment, Asset Insurance and inspection and attending to ZIC and other inspection and audit requirements. vi) Review and Asset inspection for Post sanction inspection, repayment position inspection schedule, security document review, KYC by way of defauilters list etc., vii) To carry out soft recovery until the asset is in pre NPA status and Hard recovery upon the asset becoming NPA. vill)To ensure MIS reporting by way of PSR reporting, ASCROM updation and other statistical information. Implementation Status Accordingly, credit centralization pilot for SME and Retail Loan was started at baroda on 06.08.2012. Out of -40- branches of Baroda Centre, it was decided to start with - 20- branches in first phase and Remaining branches in second phase. First phase began with -21- activities out of identified -33- activities for these -20- branches by executing end to end activities. Number of SME accounts at -20- branches of Phase I are -656- and SME LF has received all the -656- Files of these SME accounts. At present SME LF is also engaged in the following work under credit Centralization (in addition to sanction of fresh/review with increase proposals and other work as per Operational guidelines for all other SMELFs) 1) Review of all the SME accounts of -20- branches of first phase(including fresh and review with Increase proposals irrespective of amount). ii) Godown inspection of all SME accounts of -20- branches of first phase. ill) Account Opening in Finacle for all the -40- branches of Baroda centre i.e. both the phases. iv) Modification in any of the parameters related to SME account in FINACLE for all the -40- branches of Baroda Centre, Research, Training & Development Department ‘Baroda Corporate Centre, BST, BKC, Mumbal ~400 051B aa 3ifm aster Bank of Baroda V) Follow up letters to branches as well as to borrowers for want cover dues. of information/paper for. timely Review of accounts as well as for stock statement and recovery of vi) Follow-up for insurance with borrowers/branches and insurance companies. vil) Follow-up with Govt. departments for subsidy eigble under Govt. schernes. Number of staff members estimated for Credit Centralization process vis~a —vis actual strength as Under: Category Eclimated for Credit | Actual strength as on | Actual strength as Centralization for both 15.08.2014 on 13.11.2014 the phases Assistant oO OL nil General Manager Officers: 25 09 o7* Clerks 20 06, 06 Sub-staff 06, 04 03 TOTAL 52 20 16 © Chief Manager -2-, Manager -5- “The SME LF has performed following work related to Credit Centralization: [Nature of activity | During 2013-2014 __| Apri-Jan 2015 Review of advance accounts [Biz 280 Godown Inspection carried out ~A/cs (355 156 [Accounts opened in finacle [sii 361 ‘SME LF Baroda Performance Is as under: ‘Sanctions 2010- 2011- | 2012- | 2013- Apr- Target 11 12 13 14 Jan March 2015 15 Fund based Regulatory (347.60 | 409.63 [289.64 | 152.70 | 83.66 | 250.00 Fund based-Non Tieg4 111423 | 11930 | 174.46 | 109.86 | 250.00 Regulatory NowFund bed mis | 24635 [95.86 [9182 [91.62 [3251 _| 125.00 TOTAL 710.29 | 707.72 | 500.86 [398.78 | 226.03 _| 625.00 Sanctions Wilt | 21-12 | 2012-13 ] 2013-14 | Apr-Jan 2015 Fresh accounts sanctioned | 88 9 79 55 30 RWI proposals 154 199 129 iB 7 TOTAL 242 268 208 178 102 esearch, Training & Development Department Taroda Corporate centre, TET. BKC, Mombar ~ 400 054B aa 3iim astgr Bank of Baroda Present request Centralization project was launched on Pilot basis at Baroda to enable the branches to function as Sales outfits to augment the business of loan factories. However the said purpose is not achieved during the Pilot run and the marketing function of SMELF has Elso been affected. General Manager (South Gujarat Zone) has recommended for discontinuation of the centralization project in view of the following: The Performance of the factory has declined to a great extent after credit centralization. (October 2014 ranking of SMELF is 31 out of 53 loan factories) = Sufficient bankable leads have not been generated by the branches «No Separate marketing team available in SME Loan factory = Lack of Ownership = Overlapping of work Submission Jn view of the above, we endorse the recommendations of General Manager (South Gujarat Zone) and’ General Manager (MSME) for discontinuation of Credit Centralization process at Baroda SME Loan factory. Submitted for your kind consideration and approval please x Guare 'S. GNANAVEL GENERAL MANAGER: (CLO & BPR) BPR Dept. BCC, Mumbai BCC: GM (CLO) 107/ Date: 13" April, 2015 Research, Training & Development Department Daroda Corporate Centre, BST, OKG, Mamnbal ~ 400 O5t