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Loan Recovery

Supervisory process

Preventive measures:

Off-site Monitoring

Understand client's business

Periodic reports on the risk sensitive clients/


borrowers

Analyse client's financials


Frequent visits to client

Analysis of financial statement to find out the


weaknesses in the business
Risk grading
On site Monitoring

Ensuring perfection of legal documentation


Investigation on market rumours
Use Credit Bureau checkings

Physical visits to the business venue of the


clients.
Direct interaction/discussion meeting

Supervision and follow-up of advances can be divided into three main control groups:
1. Legal control
2. Physical control
3. Financial control

Legal control:
Proper execution of documents
keeping the documents constantly in force.
Complying with various legal formalities like:
1. Registration of charges
2. Creation of mortgage
3. Complying with the directives of the central bank and internal policy guidelines

Physical control:
l Inspection of the physical securities charged in favor of the bank.
l Verification of books of accounts
l Cross checking with the physical securities
l Inspection of factory and go down sites/premises to ascertain the activity levels and stock levels
respectively

Financial control:
l Evaluating the performance of the company on the basis of periodic financial statements.
l Monitoring the utilization of limits through quarterly information statement and monthly select
operational data.
l The credit inspection and supervision pertaining to the account could be off site or on site.
1. Off site supervision is generally done at bank's desk level.
2. On site supervision is done at the borrower's place of business