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CODIFICATION OF IRREGULARITIES

ADVANCES
1. CREDIT APPRAISAL
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Appraisal forms not found on record.


Loan application forms not found on record.
The appraisal.
Loan applications are not in prescribed form.
THE bank in certain cases, did not received necessary documents and annexure required with the
application form.
6. Basic documents such as memorandum and articles of association, partnership deed etc. which is prerequisite to determine the status of the borrower was not obtained.
7. Certain adverse features of the borrower were not incorporated in the appraisal note forwarded to the
management for availing credit to the borrower.
8. Industry/group exposure and past experience of the bank is not dealt in the appraisal note sent to the
management for sanction.
9. The projection submitted by the borrower stay far beyond the actual performance.
Further, no explanation for the same is taken from the borrower.
10. The levels for inventory/book-debts/creditors for finding out the working capital are not properly
assessed.
11. Credit report on principal borrowers and confidential report from their banks are not insisted from the
borrowers.
12. The opinion reports of the associates and/ or sister concerns of the borrowers are not
called/updated/satisfactory/ scrutinised.
13. The procedures/instructions regarding preparation of proposal for grant/renewal/enhancement are not
followed.
14. No exposure limits are fixed for forward contracts for foreign exchange sales/purchase transactions.
15. The details of income tax assessment of directors/partners/proprietor are not obtained while doing the
credit appraisal.
16. The branch has not referred the defaulters list of borrower issued by RBI

2. SANCTIONING AND DISBURSEMENT


1. Credit facility was sanctioned beyond the delegated authority.
2. Credit facility sanctioned beyond the delegated authority was not reported/promptly reported to
competent authority.
3. Certain proposals were recommended and approval of competent authority is awaited.
4. AD-HOC limits were granted for which sanction is pending.
5. Facilities were disbursed without compliance with all the terms and conditions of the sanction.
6. Sanction letter was missing at the branch.
7. Required stake of promoters was not invested before disbursement of loan.
8. Sanction is time barred.

3. DOCUMENTATION
1. The security against which the advance was sanctioned was not available/was not on record.
2. Mortgage for the property given as security is not created.
3. Mortgage for the property given as security created, was inadequate, as compared to terms of
sanction.
4. Second charge as required, on assets was not created/ not on record.
5. Document pertaining to the registration of charges with ROC or any other concerned authority
requiring charging of assets is not obtained.
6. Copies evidencing lodgement of the original conveyance/ sale deed with the sub registrar for the
registration were not on record.
7. Authority letter/power of attorney to the bank to collect the original documents from the sub-registrar
was not on record.
8. Documents pertaining to consortium advances are not yet executed/ not available with the bank.
9. Documents were signed by persons who were not duly authorised to sign or who have signed in other
capacity but accepted by the bank.
10. Signatures of the executants were not found on all the pages of the documents.
11. Some of the documents on record were blank, without signature of the branch manager, witnesses or
guarantors etc.
12. Revival letter in respect of documents was not received.
13. In certain cases guarantees/guarantors have expired.
14. Guarantees were not taken/ renewed/ not on record.

15. Net worth of the guarantor was not available.


16. Stamping was not as per stamp act.
17. Documents have been mutilated, soiled, time barred or not obtained.
18. Opinion report by the field officer for the borrower is not found on record.
19. NIL encumbrances certificate or no dues certificate or no lien letter was not obtained.
20. In case of vehicle loan where registration certificate/ transfer certificate/ bill/ receipt etc. are not
obtained.
21. In case of housing loan where work completion certificate/ transfer certificate/ bill/ receipt etc. are not
obtained.
22. The agreement for the hypothecation does not contain details regarding goods hypothecated.
23. In case of term loan where bill/receipt on the basis of which amount was disbursed, is not recorded.
24. Original security papers/ sale deed/ lease deed/ title deed/ agreement of sale are not available on
record.
25. Advance against lien of deposits where lien on deposit has not been marked/ properly marked.
26. TDR/STDR was not discharged/renewed.
27. In case of enhancement of limits, revised document/ document for enhancement not on record.
28. ECGC post shipment insurance cover was not obtained.
29. Common seal of the borrower company was not affixed on documents.
30. Confirmed orders for export credit were not found on record for facilities released.

4. REVIEW/MONITORING/ SUPERVISION
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Balance confirmation/ acknowledgement of debt are not obtained as per laid down procedure.
Periodic review/ renewal of advances are not done as laid down by bank.
Limit was renewed before the receipt of financial statement.
The stock, book debts statements were not received regularly/promptly.
FFI/ financial statements/ audited statements/ FFR 1&2/ other operational data, etc. are not received
regularly/ promptly/ not scrutinized and no suitable action is taken.
6. No penal interest has been charged for delay in submission of various statements as per the terms of
agreement depending upon the type of loan/ credit availed by the borrower.
7. Non-moving/ slow moving stock not deducted to arrive at the drawing power.
8. The age wise breakups of book debts were not found on record. The borrowers were allowed to draw
amount on entire book debt instead of age wise book debts as per sanction letter.
9. Wide discrepancies were observed in the stock statement and stock figures as reported in the annual
audited financial statements.
10. Stock audit reports not obtained.
11. Audited statements of non-corporate borrowers having limit beyond `10 lacs have not been obtained,
as per RBI guidelines.
12. Procedure laid down for physical verification/ inspection of securities charged to bank not followed.
13. Insurance cover for stock/ property is inadequate/ not on record/ not renewed/ not endorsed in favour
of the bank.
14. Advances that are eligible for whole turnover packing guarantee cover of ECGC were not brought
under its cover.
15. Security obtained is inadequate/lower as compared to outstanding/ no collateral security.
16. The account is frequently/ unauthorised overdrawn and the branches has not taken sufficient follow up
steps to regularise the account promptly.
17. Guideline prescribed by bank for security creation/asset inspection/ insurance and accounting in
respect of leasing finance activity not followed.
18. Credit card dues not recovered promptly.
19. IRAC norms prescribed by RBI for identification/classification of advances into standard/sub-standard/
doubtful/loss assets not followed.
20. Suitable changes not incorporated/suggested in MOC for disagreement with advance classification as
per IRAC norms.
21. Legal action for recovery/recall of advance was not taken although authorised by the controlling
authority by the controlling authority.
22. Non performing advance not promptly reported to controlling authority.
23. Claims for DICGC/ECGC not duly lodged and settled.
24. In the case of NPA, valuation report of fixed assets from approved valuer not taker once in three years
or shorter duration, if required.
25. Prescribed recovery policy not followed with respect to compromise/settlement and write off cases.
26. Drawing power limits are not revised as per market value of shares for advances against security of
shares.
27. End use of funds were not ensured/ not known. Funds were utilised for purpose other than for which it
was granted.
28. Major sale proceeds of the borrower were not routed through the bank.

29. Wrong application of rate of interest, processing charges, commission, other charges etc., resulting in
income leakage/ excess booking of income.
30. Export bills/foreign currency sight bills which were overdue, had not been crystallized.
31. In case of import credit, bill of entry evidencing import of goods was not found.
32. Govt. guaranteed accounts, which are irregular since long, the issue of invocation of guarantee, has
not been considered.
33. In case of allocated limits where full terms of sanction, stock statement, inspection report, margin
classification as per IRAC norms etc. are not available at monitoring branches.
34. In case of allocated limits, abnormal delays were noticed in responding to transfer by the allocator
branches.
35. The limit has been allocated while the outstanding balance at the year-end has not been confirmed by
the allocatee branch.
36. Cases where regular meeting were not held with other consortium members to review the
performance of borrower and to assess the current state of affairs/not been held as per the norms.
37. Individual members of consortium are not advised about the periodic operating limits/DP allocated to
each one of them.
38. In certain cases minutes of consortium meeting are not found on record/ meeting not been held as per
the norms.
39. Inspection report from consortium members is not obtained.
40. Capital of the borrower has been eroded/ net worth is negative/decreasing. Hence close monitoring is
required.
41. The borrower has not displayed signboard of bank, where pledged/hypothecated stock is stored.
42. In case of guarantees, opinion report/ financial statement/IT assessment order etc. of the guarantor
are not on record.
43. Pre sanctions and /or post sanction inspection report were not on record.
44. The borrower is absconding or deceased and legal formalities are in complete and there is wilful
default from the borrower. Either establishment was closed or security was disposed off or no action
taken by the branch.
45. Security disposed off/ entity closed by borrower and no action taken by branch.
46. The borrower was dealing with other bank though it was not permitted.

5. BAD & DOUBTFUL ADVANCES


1. In case of NPA account, discontinuance of application of interest not followed although authorised by
the board/controlling authority.
2. Govt. guarantees have expired and fresh guarantees not obtained/ not renewed.
3. Terms of BIFR scheme not complied with.
4. Payments from govt. were not received although the guarantees were unconditional, irrevocable or
payable on demand.
5. Compromise proposal pending at various level where local govt. / outside agency are involved as
guarantor.
6. Copy of search report was not on record/fresh search report is to be obtained.
7. Irregular/ sticky advance was not reported to the controlling authority promptly.
8. Compromise/ OTS proposal is recommended but pending since long. Suit is not filed in court/DRT.
9. Abnormal delay in filing suit in DRT observed.