LOAN POLICY

Compiled by Ghanshyam Das

Ahirwar
Faculty Member,
SPBTC,Mumbai
 LOAN POLICY
• Credit Deployment:
• a) Directed Credit
• b) Thrust Areas
• c) Other Areas.
• Categorization of Borrowers:
• a) Corporate Borrowers (both Public and Private
Limited companies and PSUs)
• b) Non-Corporate Borrowers
• c) Individuals
 LOAN POLICY
• Classification of Corporate accounts-
S No Category Criteria

1 Large Individual /Group exposure of >=Rs

Corporate (LC) 100.00Crorefrom Banking Industry

2 Mid Corporate Individual / Group exposure of > Rs 10 Crore

(MC) and < Rs 100.00 Crore from Banking Industry

3 Others All other Individual / Group exposure of up to

Rs 10 Crore
 LOAN POLICY
• Sanctioning Authority-
• a) Individual Executives / Officials
• b) Regional Office Level Credit Approval Committee-
RLCC
• c) Zonal Office Level Credit Approval Committee-ZLCC
• d) Head Office Level Central Credit Approval
Committee-HLCC-1
• e) Head Office Level Central Credit Approval Committee
– HLCC-2
• f) Credit Approval Committee of the Board (CACB)
• g) Management Committee of the Board (MCB)
• h) Board of Directors
 LOAN POLICY
Lending Powers Delegated
by the Board to various
Authorities(Individuals)
ONLY FOR , RETAIL
AGRICULTURE AND MSME
(RAM)
 LOAN POLICY (Rs. in crore)
Nature of GM / FGM DGM AGM CM SM BM BM
facility ED (ZO) Scale Scale Scale
III II I

Total lending NIL NIL 3.00 2.00 1.00 0.75 0.50 0.10
powers
(Funded &
Non-Funded)
Group NIL NIL 5.00 4.00 2.00 1.00 0.50 0.10
Accounts

Advance against NSC/KVP/LIP* & Govt. Approved securities on which

assignment in favour of Bank can be recorded in the instrument by the issuers.

NIL 0.40 0.20 0.10 0.06 0.03 0.02

 LOAN POLICY(Rs. in crore)
Nature of GM / FGM DGM AGM CM SM BM BM
facility ED (ZO) Scale Scale Scale
III II I

Advance Deleted
Against
cheques in
clearing
Advance Deleted
against
DDs/BCs in
clearing or on
collection.
Advances - NIL 1.80 1.20 0.60 0.45 NIL NIL
against
Book Debts. #
 LOAN POLICY(Rs. in crore)
Nature of facility GM / FGM DGM AGM CM SM BM BM
ED (ZO) Scale Scale Scale
III II I

Advances against Shares in De-mat form to

Individuals - NIL 0.20 0.10 0.10 0.05 0.02 NIL

To Other Eligible - NIL 0.40 0.20 0.20 0.15 0.05 NIL

Categories
 Powers to sanction Ad-hoc Limits(INDIVIDUALS)
Delegatee Powers
•

NIL NIL
 @Powers to sanction Ad-hoc Limits:
Delegatee Powers
Credit Approval Committees viz. Maximum 15% of the regular sanctioned
•
RLCC/ZLCC/HLCC-1 will scrutinize the adhoc facility or 15% of lending powers of the
requests duly recommended by branches, and respective committees, whichever is lower.
will sanction the same only in extreme and
genuine cases supported by proper
justification.

RLCC/ZLCC/HLCC- 1, Maximum 15% of the regular sanctioned

in the borrowal accounts which were facility or 15% of lending powers of the
sanctioned by higher committee respective committee allowing such adhoc,
(As a special case, depending upon urgency & whichever is lower.
necessity)

Sanctioning of the adhoc limits in the borrowal accounts stands vested in delegated powers
not less than RLCC headed by AGM or DGM
 RLCC & ZLCC Level Credit Approval
Committees
SANCTIONING RLCC ZLCC
POWERS

RM RM ZM(DGM) ZM (FGM)
(AGM) (DGM)

FB + NFB Above Above Above Above

Rs.3 cr. & Rs.3 cr. & Rs.6 cr. & Rs.6 cr. &
Up to Up to Rs. Up to Rs.12 cr. Up to Rs.25
Rs.6 cr. 12 cr. cr.
Cap for various categories of Borrowers
Corporate >Rs.3 cr. >Rs.3 cr. >Rs.6 cr. >Rs.6 cr.&
& = Rs.6 & = Rs.12 & = Rs.12 cr. UptoRs.25 cr.
cr. cr
Non Corporate >Rs.3 cr. >Rs 3 cr. >Rs.5 cr. >Rs.5 cr.
& = Rs.5 & = Rs 8 & = Rs.8 cr. & = Rs.17 cr.
cr. cr.
 RLCC & ZLCC Level Credit Approval
Committees
SANCTIONING RLCC ZLCC
POWERS

RM RM ZM(DGM) ZM (FGM)
(AGM) (DGM)

Individual >Rs.3 cr. >Rs.3 cr. >Rs.5 cr. >Rs.5 cr.

Borrowers & = Rs.5 & = Rs.6 &= Rs. 6 cr. & = Rs.12 cr.
cr. cr.
Group Exposure 9.00 cr. 18.00 cr. 18.00 cr. UptoRs.50 Cr.
 RLCC & ZLCC Level Credit Approval
Committees
SANCTIONING RLCC ZLCC
POWERS
RM (AGM) RM (DGM) ZM(DGM) ZM (FGM)
Composition The Committee shall consist of 5 The Committee shall consist of 5
of the Credit delegatees as under: Chairman: RM delegatees as under:Chairman: ZM
Committee. Members: Members:
i. AGM i. AGM/ DGM, Zonal Office.
ii. CM/ SM (Other than Credit Dept. in ii. CM/ AGM (Risk Management),
RO) ZO
iii. Two Branch Incumbents in the iii. RM of local RO.
Scale of V/IV/III of local Branches. iv. Local BMs in the Scale of IV and
above.
Note: If the ZM is DGM and local
RM is also in DGM Scale, then
AGM of local RO or Branch may be
taken as members of ZLCC (DGM)
instead of local RM(DGM).
Quorum for Minimum 3 (Inclusive of Chairman with Minimum 3 (Inclusive of Chairman
Committee at least one member from Branch) with at least one member, outside
 RLCC & ZLCC Level Credit Approval
Committees
SANCTIONING RLCC ZLCC
POWERS
RM (AGM) RM (DGM) ZM(DGM) ZM (FGM)
Convener of CM/ SM (Credit) of Regional Office shall AGM/ CM (Credit) of Zonal Office
the Committee be the Convener. shall be the Convener.
Outside the 1. Credit facilities against Bank’s own TDR.
purview 2. Any other credit facilities as may be decided by the Board from
of the Credit time to time.
Committee Note:
Other than above exemptions, any credit sanctions at Regional/
Zonal Levels, including Retail Lending, beyond Rs. 5Cr. shall be
through Credit Committee only.
 RLCC & ZLCC Level Credit Approval
Committees
SANCTIONING RLCC ZLCC
POWERS
RM (AGM) RM (DGM) ZM(DGM) ZM (FGM)
Governing 1. No Veto Power shall be exercisable.
Rules of 2. Any dissent from any of the members should be deliberated and
the Committee addressed to arrive at consensus.
3. Sanction should be unanimous.
4. In case of decline of any proposal, the reasons for such
rejections should be recorded in variably.
5. A proposal rejected by the Committee may be re-admitted by
the Chairman for review of decision by the Committee once
reasons for rejection have been addressed within a period of 3
months.
6. The decision of the Committee shall be reported by the Credit
Department concerned, to the next higher committee/authority
for review by way of control return on specified format within
10 days from the date of the meeting.
 Head Office Level Credit Approval Committees (HLCC-1 &
HLCC-2)
Sanctioning
Powers
HLCC-1 HLCC-2
FB + NFB Above Rs.12 cr. & Up to Rs.40 cr. Single Borrower
Above Rs.40 cr. and up to Rs.100 cr.
Group Borrower
Above Rs.60 cr. and up to Rs.200 cr.
Caps for various categories of Borrowers
Corporate >Rs.12 cr. & UptoRs.40 cr. >Rs.40 cr. Up to Rs.100 cr.
Non Corporate >Rs.8 cr.& = Rs.25 cr. >Rs.25 cr. & = Rs.50 cr.
Individual >Rs.6 cr.& = Rs.15 cr. >Rs.15 cr.& = Rs.25 cr.
Borrowers
Group Exposure Up to Rs.80 cr. Up to Rs. 200 cr.
 Head Office Level Credit Approval Committees (HLCC-1 &
HLCC-2)
Sanctioning
Powers
HLCC-1 HLCC-2
Composition of The HLCC-I Committee shall The HLCC-II Committee shall
the Credit consists of Executives as under: consists of Executives as under:
Committee. GM (Credit) Chairman: ED
GM (Treasury) Members:
GM (HRD) Other EDs.
GM(Cr Mon) GM (Credit)
GM (Retail) GM(Treasury/ ID)
GM (Pri. Sector) GM(RMD)
Note: GM (Pri. Sec.)
Senior most GM will be the GM (Accounts/ In-charge, Finance)
Chairman of the Committee and
next in seniority in his absence
Quorum Minimum 3 Minimum 3
Committee {inclusive of Chairman} {inclusive of Chairman, GM (Cr)}
Meeting
 Head Office Level Credit Approval Committees (HLCC-1 &
HLCC-2)
Sanctioning
Powers
HLCC-1 HLCC-2
Outside the 1. Credit facilities against Bank’s own TDR.
purview of the 2. Any other credit facilities as may be decided by the Board from
Credit Committee time to time.

Governing Rules 1. No Veto Power shall be exercisable.

of the Committee 2. Any dissent from any of the member should be deliberated and
addressed to arrive at consensus.
3. Sanction should be unanimous.
4. In case of decline of any proposal, the reasons for such rejections
should be recorded in variably.
5. A proposal rejected by the Committee may be re-admitted by the
Chairman for review of decision by the Committee, once reasons
for rejections have been addressed, within a period of 3 months.
 Head Office Level Credit Approval Committees (HLCC-1 &
HLCC-2)
Sanctioning
Powers
HLCC-1 HLCC-2
Convener of the DGM (CR) / AGM (Cr) at Secretary to the Board shall be
committee Central Office shall be Convener and has to place the
Convener and has to place the minutes before the higher committee
minutes before the higher i.e. CACB soon as may be after the
committee i.e. HLCC-2 soon end of the meeting.
as may be after the end of the
meeting.
 Credit Approval Committee of the Board (CACB)
Sanctioning CACB
Powers
FB + NFB Above Rs.100 cr. and Up to Rs.400 cr.

Caps for various categories of Borrowers

Corporate >Rs.100 cr. and uptoRs.400 cr.

Non Corporate >Rs.50 cr. and uptoRs.400 cr.

Individual >Rs.25 cr. and uptoRs.400cr.

Borrowers

Group Exposure Rs.800 crore

 Credit Approval Committee of the Board (CACB)
Sanctioning CACB
Powers
Composition of the The Committee shall consists of 7 Executives as under: Chairman: CMD
Credit Committee Members:
i. All EDs.
ii. GM (Cr.) iii. GM (Cr Monitoring)
iv. GM(RMD)
v. GM (Accounts/ In-charge Finance)
Quorum Committee Minimum 3
Meeting (inclusive of Chairman, at least 1ED )

Outside the purview 1. Credit facilities against Bank’s own TDR.

of the Credit 2. Any other credit facilities as may be decided by the Board from
Committee time to time.
Governing Rules of
the Committee
 Credit Approval Committee of the Board (CACB)
Sanctioning CACB
Powers
Governing Rules of 1. No Veto Power shall be exercisable.
the Committee 2. Any dissent from any of the member should be deliberated and
addressed to arrive at consensus.
3. Sanction should be unanimous.
4. In case of decline of any proposal, the reasons for such
rejections should be recorded in variably.
5. A proposal rejected by the Committee may be re-admitted by
the Chairman for review of decision by the Committee once
reasons for rejections have been addressed within a period of 3
months.
Convener of the Secretary to the Board shall be Convener of this committee and he
committee shall place the minutes before the Board soon as may be after the
end of the meeting
 LOAN POLICY
• Loans to Relatives of Staff Members- All proposals
for credit facilities to the relatives of the staff
members shall be referred for sanction to the
appropriate delegatee under whose powers the
proposal fall but not below the rank of Regional
Manager / Chief Manager and that such delegatee
is at least one scale above in rank over the
concerned staff member whose relative has applied
for loan.
 LOAN POLICY
Appraisal (Appraisal Standards)-
Ratio Benchmark
Current Ratio 1.33
Current Ratio (Trading) 1.20
Current Ratio (Seasonal Industry) 1.00
Current Ratio (NBFC-MFI) 1.11
TOL/TNW 5:1
TOL/ATNW(Adjusted TNW) 4:1
TOL/TNW (Trading) 6:1
TOL/TNW (NBFC/MFI) 8:1
TOL/TNW (Infrastructure Projects) 7:1
Debt-Equity TL (other than Infra) 3:1
Debt-Equity TL (Infra, SEZ & SPVs created for Infra ) 5:1
Bank Borrowing/TNW 4:1
DSCR (Avg.) 1.5
 LOAN POLICY
Appraisal (Appraisal Standards)-
Ratio Benchmark

Interest Coverage Ratio 2.1

Asset Coverage Ratio (ACR) 1.5:1
Fixed Assets Coverage Ratio (FACR) 1.5:1
• For Term Loans, if Current Ratio is less than 1.33,
TOL/ TNW + Quasi Equity 4:1 this
(Quasi Equity= Unsecured Loans equal to 100% of TNW)
will not be construed as
• TOL/ATNW (Adjusted TNW = TNW + Unsecured loans
eligible to be treated as Quasi Equity minus
investments as per Loan Policy
• For Term Loans, if Current Ratio is less than 1.33, this
will not be construed as deviation. However, Cash Flow
is to be duly analyzed & considered for repayment of
TL.
 LOAN POLICY
Powers to issue Solvency Certificate-
• 1.Bank can issue Solvency Certificate on behalf of their
customers who intend to undertake Government Contracts,
etc.
• 2. Before issue of Solvency Certificate, a regular Financial
report should first be obtained on standard form.
• 3. The certificate can be issued in respect of a party who has
been maintaining at least a satisfactorily operated current
account with our bank for a minimum period of 6 months.
• 4. Amount of the solvency certificate may be equivalent to
two and half time the actual worth of the party concerned.
• 5. At the end of every certificate a ‘Disclaimer Clause’ should
be added.
 LOAN POLICY
• Loan Advisory Committee-All proposals falling
within the powers of HLCC-1 and above at C.O will
be approved / recommended by Loan Advisory
Committee.
• The Loan Advisory Committees at Central Office for
the credit proposals which are falling under powers
of HLCC-1, HLCC-2, CACB & MCB are as under:
 Indicative Exposure Limits Industry/Activity-Wise.
Industry Cap as % to total
exposure (FB & NFB)
Mining and Quarrying (a + b) 0.40
a. Coal 0.25
b. Others 0.15
Food Processing 4.55
a. Sugar 1.50
b. Edible Oils and Vanaspati 1.25
c. Tea 0.20
d. Coffee
e. Others 1.60

Rubber, Plastic and their Products 0.30

Glass & Glassware 0.10
Cement and Cement Products 1.00
Paper and Paper Products 0.50
 Indicative Exposure Limits Industry/Activity-Wise.
Industry Cap as % to total
exposure (FB & NFB)
Vehicles, Vehicle Parts and Transport 1.50
Equipment
Gems and Jewelry 1.50
Construction 4.00
Film Industry 0.50
Housing Loan Direct 8.00
Housing Loan Indirect 7.00
Commercial Real Estate 10%
f. CRE-RH 6%
g. CRE 4%
 LOAN POLICY
Exposure Norms-
a. Single Group Entity Exposure-
i. 5% of Paid-up Capital and Reserves in case of non-
financial companies and unregulated financial services
companies;
• ii. 10% of Paid-up Capital and Reserves in case of
regulated financial services companies.
• b. Aggregate Group Exposure-i. 10% of Paid-up Capital
and Reserves in case of all non-financial companies
and unregulated financial services companies taken
together;
• ii. 20% of Paid-up Capital and Reserves in case of the
group i.e. all group entities (financial and non-
financial) taken together.
 LOAN POLICY
• Borrower-wise Exposure-The bank’s exposure to
various types of borrowers will also relate to the net
worth of the borrowers. The ratio for the net worth
to the bank credit of the borrower shall not
normally exceed 1:4 except in consortium accounts
where the norms will be as decided by consortium.
 Borrower-wise Exposure (Rs. in crore)
Category of Borrower Exposure (FB & Exposure in (FB &
NFB) at entry level NFB) existing Accounts
(New Accounts)
a)Corporates No limit No limit
Private Limited & Limited
Companies, PSUs
LLC, 50 100
LLP, 30 50
SPVs 100 200
& One Person Company 30 50
b) Non Corporates 50.00 100.00
Registered
Partnership/Unregistered
Partnership, Registered Trusts
viz. Educational/
Medical/other institutions
& Association of Persons
(AOP) etc.
 LOAN POLICY
• Thrust Area-
• Priority Sector, with emphasis on High Tech
Agriculture and Micro &Small Enterprises under
SME (Medium Enterprises will not come under
Priority Sector).
• Housing Loans to individuals
• Education Loans to individuals
• Bank loans to Housing Finance Companies (HFCs)
approved by NHB for their refinance, subject to an
aggregate loan limit of Rs.10 lacs per borrower
• Information Technology
• Food Processing Industries
 LOAN POLICY
• Watch List Areas-
• 1. N.B.F.C/ MFI
• 2. Commercial Real Estate (CRE).
• 3. Gems, Jewellery & Diamond.
• 4. Capital Market.
• 5. Iron & Steel(Manufacturing)
• 6. Thermal Power
• 7. Telecommunication
• 8. Road Sector (under Infra Sector)
• No authorities below the rank of FGMs/ ZMs/ SRMs/
RMs & RLCC/ ZLCC shall consider the accounts falling
under Watch List Area.
 LOAN POLICY
• Low Priority Areas-
• a) Manufacturing of Cigarettes
• b) Financing of State Electricity Board
(SEB)s,/Distribution companies of PSUs.
• c) Airline Services
• d) Film Production
• e) Asset Reconstruction Companies (ARCs). The
Bank will not extend finance to ARC for buying its
own NPAs.
 LOAN POLICY
• Parameters for inclusion of borrowers in Negative List-
• Borrowers whose line of activity is included in the
Negative List by the Government of India / RBI / IBA.
• No additional facilities should be granted to the
borrowers whose name appears in the list of Willful
Defaulters being circulated by Reserve Bank of India. In
addition, the entrepreneurs/ promoters of companies
where banks have identified siphoning / diversion of
funds, misrepresentation, falsification of accounts and
fraudulent transactions, should not be granted any
finance at any level for floating new ventures for a
period of 5 years from the date the name of the willful
defaulter is published in the list of willful defaulters by
RBI.
 LOAN POLICY
• But Fresh loans can be sanctioned to the agricultural
borrowers who had earlier settled their dues under
One Time Settlement / Compromise settlement scheme
by the Branch Managers within their delegated lending
powers. However, the Branch Managers who had
earlier recommended or sanctioned the compromise
proposal should seek administrative clearance from
their Regional Office for consideration of fresh limits.
• In the case of Group accounts where one of the
accounts is a Non-Performing account, then the
facilities for other Standard accounts in the Group can
be reviewed / revised by the next higher authority
 LOAN POLICY
• Restrictions on Lending-
• No loans/advances shall be granted against the security of Bank’s
own shares.
• No loans/advances shall be granted against gold/silver bullions.
• No loans/advances shall be granted to companies for buy-back of
their own securities.
• No loans/advances shall be granted against Certificate of
Deposits.
• No loans/advances shall be granted against the security of partly
paid shares.
• No loans/advances shall be granted:-
• 1 To partnership firms/Sole proprietor concerns against the
primary security of shares/debentures.
• 2 For financing badla transactions.
• 3 Against FDRs / term deposits of other banks
 Methods for Assessment of Working Capital
Requirements
• TONDAN COMMITTEE-1ST Method – The Borrower
is Required to bring minimum Net working Capital
to the extent of the 25 % of Working Capital Gap .
The Balance which is Maximum 75 % of the
Working Capital Gap will be the MPBF(Maximum
Permissible Bank Finance) .
• 2nd Method – Traditional Method (Over 5 Crore) –
The Borrower to Bring Minimum Net working
Capital to the extent of 25 % of the total Current
Assets & the Balance will be MPBF(Maximum
Permissible Bank Finance) .
 NAYAK COMMITTEE
• NAYAK COMMITTEE – Turnover Method (Up to Rs 5
Cr) –Working Capital Assessment of village
Industries tiny Industries and other SSI units having
aggregate fund based limits up to Rs 500 Lac.
• Method of Assessment- Minimum of 20% of their
annual Turnover for new as well as existing units.
• Borrower’s Margin- 5% of their annual Turnover or
Margin Money
 LOAN POLICY
• Techno Economic Viability study:- For proposals up
to Rs.5.00 crore TEV report from an outside agency
may not be insisted upon. However, sanctioning
authority should ensure viability of the proposal
and proper recording to be made in the process
note to that effect.
• In case of proposals over Rs.5.00 crore TEV report
from Bank’s empanelled TEV Consultant shall be
insisted and the same should be studied
independently before making any commitment.
 LOAN POLICY
• Line of Credit- Line of credit is a facility to offer flexibility to
highly rated corporate clients so that unexpected working
capital and business requirements can be taken care of. This will
facilitate in meeting the immediate requirements and also
reduce the response time in meeting demands of the
customers. It will also enhance the operational flexibility.
• While providing such facility, following factors are to be taken
into account:
• 1. Credit rating of the corporate customer (minimum rating
must be CBI-5).
• 2. It should only be for working capital facility and business
requirement for period less than one year.
• 3. It is subject to overall caps fixed for respective delegates.
• 4. Reporting to be done in respective control return
 LOAN POLICY
• Loan Syndication-Loan Syndication is an arrangement
between 2 or more lending institutions to provide
credit facility. We may consider such financing
arrangements. We would allow such syndication
wherever the finance limit is Rs.5 crore or more.
• Delegatees in the rank of Deputy General Manager and
above thro’ Credit Approval Committees only shall
allow ‘Loan Syndication’ facility. While sanctioning such
proposals, Bank will not rely solely on the Information
Memorandum (IM) submitted by the syndicator. Bank
will carry out its own due diligence and independent
assessment of the project. All usual precautions to be
taken while sanctioning / disbursing the credit facilities.
 LOAN POLICY
• Multiple Banking-It is an arrangement in which
borrower avails working capital facilities from more
than one Bank without a formal consortium
arrangement. Whenever a customer desires to have
multiple banking we may agree for the same subject to
conditions as under:
• Bank may normally agree for multiple banking only in
case where the facilities enjoyed by the borrower are
Rs.25 Cr. or more.
• The account should qualify for a credit rating of at
least ‘CBI-5’.
• Delegatees in the rank of Deputy General Manager
and above thro’ Credit Approval Committees only shall
allow ‘Multiple Banking’ facility.
 LOAN POLICY
• Consortium Arrangement-The Bank while entering
the Consortium, a minimum threshold for
participating in Consortium loans will be 10%. The
Bank, as far as possible, may accept assessment
method adopted by the Lead Bank in assessment
of credit needs of the borrower and also shall
stipulate terms and conditions on par with those
stipulated by the lead bank. The Bank shall
endeavor to secure pro-rata share in both fund
based and nonfund based business from the
borrower / Lead Bank.
 LOAN POLICY
• Joint Lending Arrangement (JLA)-The scheme shall
be applicable to all lending arrangements, with a
single borrower with aggregate credit limits (both
fund based and non-fund based) of Rs.150 crore
and above involving more than one Public Sector
Bank.
 LOAN POLICY
Recommended Margin: -
Approved Securities Minimum Margin (%)

i) Fixed Deposits held in the name of the borrower 10

ii) Fixed deposits in the name of the third party 25

iii) Gilt edged securities viz., bonds / stocks issued 25
by Central / State Government / Statutory / quasi-
Government Corporation or Body repayment of
which is guaranteed by the Central / State
Government (including Post office)
iv) National Saving Certificates with accrued value 20

v)Kisan Vikas Patra (KVP) with accrued value 25

vi) Surrender value of LIC Policies 10

vii) Shares and debentures (on Bank’s approved 50

list):In Dematerialized form
 LOAN POLICY
Recommended Margin: -
Approved Securities Minimum Margin (%)

vii) Stocks of tradable commodities / goods 25

having realizable value (RM, SIP, FG)

viii) Book Debts.

- For Book debts Up to 90days 25
- For Book debts beyond 90 days and up to 180
days # 35

ix) Plant and Machinery (New) 25

x) Plant and Machinery (Secondhand) 40 **

 LOAN POLICY
Recommended Margin: -
Approved Securities Minimum Margin (%)

xi) Bills of Exchange with Documents / Nil

acceptances

xii) Gold Ornaments 40

xiii) Vehicles 25

xiv) Furniture / Fixtures 25

xv) Consumer durables 25

xvi) Live Stocks 25

 LOAN POLICY
Recommended Margin: -
Approved Securities Minimum Margin (%)

xvii) Land and Buildings / Free Hold Plots 25

Xviii) Land & building forming part of project 25

xix) Commodities falling under Selective As directed by RBI from time to time
Credit Control.

xx) Any other Securities so approved by Margin will be notified by Central Office
Central Office.
 LOAN POLICY
• Vetting of Documents:-Legal vetting of security
documents for accounts with limit of Rs.1.00 crore and
above up to Rs.5.00 crore should be done by panel
advocates if bank’s law officers are not in a position to
do the same. In other cases of higher limits above
Rs.5.00 crore, the legal vetting of security documents
should necessarily be got done through bank’s law
officers only including documents pertaining to
consortium, in which our bank is leader of consortium
arrangement. In case of Consortium where we are
members, Lead Bank will take care of documentation
formalities. However, Lead Bank’s Certificate to the
effect that they are holding the valid and enforceable
documents and title deeds, if any, on behalf of the
Consortium should be held on record.
 LOAN POLICY
• Revalidation of Sanction Limits-Sanctions in respect of working
capital and term loan facilities shall be valid for 6 months from the
date of sanction or three months from the date of documentation
(provided documentation takes place within the validity period of
6 months from the date of sanction), whichever is later. Facilities
not availed within the above period should be treated as lapsed
and borrower be advised accordingly. Unless a lapsed sanction is
revalidated by the competent authority within a maximum period
of 12 months from the date of sanction, no facility should be
released. In case of lapsed sanctions falling under the power of
officials up to the level of ZLCC (GM)/HLCC-1, the same shall be
revalidated by the sanctioning authority and in respect of
sanctions under the power of HLCC-2/CACB and MC revalidation of
lapsed sanctions can be considered by HLCC-2/CACB/MC.
However, to safeguard bank’s interest, while permitting
revalidation, the competent authority shall obtain and study the
latest financials of the borrowers /units and also ensure that the
projections submitted at the time of original sanction continue to
hold good.
 LOAN POLICY
• Loan system for Delivery of Bank Credit-As directed by RBI,
all borrowal accounts enjoying working capital (Fund based)
limits of Rs.10 crore and above will be brought under Loan
System for delivery of bank credit, i.e. Working Capital Limits
will be disbursed by way of Working Capital Demand Loan to
the extent of 80% of sanctioned limit and remaining 20% by
way of cash credit (running account)
• Credit Administration-As per RBI instructions all loan
applications up to Rs.25,000/- should be disposed within two
weeks of receipt of application complete in all respect.
• Similarly, application in respect of loans above Rs.25, 000/-
and up to Rs.5 lacs should be disposed off within a period of 4
weeks of receipt of application complete in all respects.
 LOAN POLICY
• All applications in respect of loans above Rs.5 lacs
should be disposed off as per the time frame given
hereunder:
• i. Branch Office Level: Credit proposals received at
branch shall be disposed of/ recommended to the
higher authority by the Branch Manager within 15 days
maximum from the date of receipt of proposals
complete in all respects.
• ii. Regional Office Level: Credit proposals received at
ROs shall be disposed of by Regional Manager or RLCC/
recommended to next higher authority by the Regional
Manager within 15 days maximum from the receipt of
proposal at Regional Office.
 LOAN POLICY
• Zonal Office Level: Credit proposals received at Zonal Office
shall be disposed of by Zonal Manager or ZLCC/recommended
to next higher authority by the Zonal Manager within 15 days
from the receipt of proposal at Zonal Office.
• Central Office Level: Proposals received at CO and falling within
the powers of MC/CACB/HLCC-2/HLCC-1

Committee Time Norms

CACB/ 30 days from the receipt of recommendation

HLCC-2/HLCC-1 of Zonal manager(depending upon the
• However advances where credit rating is not
schedule of meetings)
MC 45 days from receipt of recommendation
from
Zonal Manager (depending upon the
schedule
of M.C. meetings)
THANK

YOU