LPD 2022 Adv 278

INDIAN OVERSEAS BANK REF NO; ADV /278/2021-22
CENTRAL OFFICE DATE: 27.01.2022

763, ANNA SALAI ISSUING DEPT: CREDIT SUPPORT
CHENNAI - 600 002 SERVICES {CSSD)
CIRCULAR TO ALL BRANCHES /OTHER OFFICES
Loan Policy Document 2022 & Operational Guidelines on Lending
Preamble:
The Loan Policy Document covers various aspects of our Bank's policies and the
policies of Reserve Bank of India (RBI) & Government of India (Gol) forming basis
for credit decision and credit administration of advances Portfolio. The document
enables and helps the Bank and its official to have firsthand knowledge on the
various guidelines which shall help them in better Credit Administration.
The last Loan Policy Document (LPD) was published vide our circular no. ADV I 55/
2020-21 dated 22.07.2020. The Loan Policy Document has since been revised and
approved by the Board on 05.01.2022. This Loan Policy Document to be read
along with our Delegated Financial Powers on Lending advised vide CSSD circular
ADV/ I 2021-22. The major modifications in the Loan Policy Document 2022 are
discussed in operational instructions of this circular.
If there is any ambiguity between guidelines of this policy and Book of Instructions,
guidelines of this policy will prevail.
Operational Instructions:
The Loan Policy Document 2022 & Operational Guidelines on Lending shall be
operational with immediate effect. The policy has the following Annexure
attached:
a) Annexure 1 - Check Listfor Advances
b) Annexure 2- Rigorous Due Diligence and Appraisal Measures for project
funding above Rs. 50.00 Crores.
c) Annexure 3 - Methodology for verification of end use of funds.
A copy of this circular enclosing the Loan Policy and Operational Guidelines on
Lending shall be produced wherever required, by RBI inspectors, Statutory
Auditors, CO/ RO Inspectors etc. r -~-~~~-~ .,--. l
Loan Policy Document 2022 & Operational Guidelines on Lending Pag[i··
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Some of the important changes in the LPD are enumerated below:
1) Regulatory Changes: All the changes suggested by the regulatory authority

(Reserve Bank of India) are incorporated.
2) Definition of Group: Public Sector Undertakings, State or Central

Government Companies have been exempted from the group concept.
3) Single Borrower limit (For Infrastructure projects): Changes have been

incorporated for maximum limit with approval of bodrd in case of single
borrower limit for infra projects pertaining to NBFCs predominantly
engaged in lending against gold.
4) Exposure limit for lnvlls: For Infrastructure Investment Trusts (lnviTs), the single
borrower exposure ceiling shall be Rs. 400.00 crore.
5) Geographical Boundaries: Clarification has been incorporated for scope

of geographical boundaries concept.
6) Advances to Bank's Directors/ Officers of Bonk: Clarifications have been

given for loans & advances to officers/ relatives/ other staff of the bank.
7) New Business Committee: In case of accounts repaid fully in the past 6

months and have approached for a fresh facility, the same may be
considered on merits without prior placing to NBC. Similar exemption may
be permitted for accounts recently taken over within past 6 months.
}
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8) LG on behalf of JV of our existing customer: LG can be issued on behalf of
JV of our existing customer subject to proper KYC and Due-Diligence. Ring
Fencing of the cash flow to be positively explored.
9) Advances to Self-Financing Colleges and Schools: Clearance from HLCC

(GM) is not required for fresh/ additional/ enhancement sanction for
":;. --~~--,.--..l schools/ colleges/ institutes in whose campus, our branches are situated.
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--~·- i<J~~J?JPolicy Document 2022 & Operational Guidelines on Lending Page 2 of 3
Bank's charge should be there on cash flow of the institutions (i.e. Escrow
account) exclusively where we are sole banker. In case of consortium
finance/ multiple banking, proportionate share should be there on the
Escrow account and if our bank is leader or our share is highest in the
consortium/ multiple banking arrangement, Escrow account should be
maintained with us.
10)Credit Report cum Opinion Sheet (CRCO): In view of availability of Credit

Information Reports (Transunion CIBIL, CRIF etc.) and CRILC (for borrowers
with exposure of Rs. 5.00 crore and above), changes have been made in
obtaining CRCO.
11 )Margin for NBFC/ HFC: As per present policy for NBFC/ HFC Asset Coverage
ratio of minimum 1.25 to be maintained. Further, Asset Coverage Ratio of
1. 10 up to below 1.25 can be permitted by sanctioning authority on merits.
Asset Coverage Ratio below 1.10 to be considered by HLCC (GM} and
above with proper justification.
12) Commitment Charges: Exemption to commitment charges has been

aligned as per bank's book of instructions.
13) A new chapter on Autonomous bodies promoted by Central Government I

State Government, Profit making PSUS/ PSUS guaranteed by Central/ State
governments has been introduced.
In the event of any changes consequent upon revision in guidelines/ notifications
issued from Reserve Bank of India or Central Government, the same shall be
advised from time to time which shall form part of the Loan Policy Document 2022
and Operational Guidelines on Lending.
Conclusion:
Branches and other Offices are advised to ensure strict compliance of the above
I guidelines.
~
R Suresh
General Manager
Annexure: Loan Policy Document 2022 & Operational Guidelines on Lending
Loan Policy Document 2022 & Operational Guidelines on Lending P()ge 3 c:>f 3
·INDIAN OVERSEAS BANK
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LOAN POLICY DOCUMENT

2022
Credit Support Services Department

Centred Office, Chennai - 600 002
INDEX
LOAN POLICY DOCUMENT 2022
Chapter Para PARTICULARS Page No.

1 OBJECTIVES & COVERAGE
1.1 PREAMBLE 1
1.2 OBJECTIVE OF THE POLICY 1
1.3 COVERAGE OF THE POLICY 1
1.-4 GENERAL GUIDELINES ON LENDING 2
I 1.5 COMPLIANCE 2
'2 DEPLOYMENT OF CREDIT I THRUST AREAS
2.1 PRIORITY SECTOR CREDIT 4
2.2 CATEGORIES OF PRIORITY SECTOR 4
2.3 TARGETS AND SUB TARGETS 4
2.4 WEAKER SECTIONS. 5
2.5 THRUST AREAS 6
3 RISK MANAGEMENT & PRUDENTIAL NORMS
3.1 GENERAL 16
3.2 PRUDENTIAL NORMS 16
3.3 DEFINITION OF GROUP 16
3.4 EXPLANATION FOR CREDIT EXPOSURE 17
3.5 EXPOSURE LIMITS 19
3.6 CEILING FOR SINGLE/ GROUP BORROWER LIMIT/ LEF 20
3.7 GUIDELINES ON ENHANCING CREDIT SUPPLY FOR 24
LARGE BORROWERS THROUGH MARKET MECHANISM
3.8 PRUDENTIAL MEASURES 24.
3.9 CEILING NORMS FOR INDUSTRIAL ADVANCE . 26
3.10 CEILING NORMS FOR OTHER INDUSTRIES 28
3.11 EXPOSURE CEILING FOR OTHER SEGMENTI CATEGORIES 29
3.12 . CEILING FOR GOLD (METAL)'LOAN -REGULATORY LIMIT 31.
3.13 CEILING TO INDIAN JOINT VENTURES BY BRANCHES IN. 31
INDIA
3.14 LOAN AGAINST NRE RUPEE DEPOSITS AND FCNR(B) 32
DEPOSITS
3.15 OTHER CEILING/EXPOSURE NORMS 33
3.16 UNHEDGED FOREGIN CURRENCY EXPOSURE 34
3.17 REGION/SECTOR SPECIFIC EXPOSURE 35
4 RESTRICTIONS FOR FINANCING
4.1 STATUTORY RESTRICTIONS 37
4.2 REGULATORY RESTRICTIONS 37
5 . TAKE OVER OF BORROWAL ACCOIINtt -...._
5.1 EXPLANATION h~1l~ 611qY.rff~ ~
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5.2 NORMS/CRITERIA FOR TAKE OVER 44
5.3 TAKE OVER WITH ENHANCEMENT /FRESH/ ADDITIONAL 45
FACILITIES
5.4 OTHER CRITERIA 46
I 5.5 INTEREST RATE AND OTHER CONCESSIONS 48
5.6 REPORTING I MONITORING 49
I
6 ADVANCES TO BANKS' DIRECTORS I OFFICERS OF BANK
I 6.1 ADVANCES TO BANK'S DIRECTORS 50
I
6.2 REGULATORY RESTRICTIONS 51
7 EXIT POLICY 56
8 MISCELLANEOUS
8.1 RECOVERY POLICY 58
8.2 FINANCING OF BRAND ACQUISITION 58
8.3 QUOTE CUM SANCTION 58
8.4 LINE OF CREDIT 58
8.5 FINANCING TO CHIT COMPANIES 58
8.6 SHORT TERM LOANS 59
8.7 RISKY VENTRUES 59
..
8.8 BANKING CODES AND STANDARDS 59 .,
.....
8.9 OTHER ISSUES 59 ,_
8.10 LENDING TO lnviTs 60 -;·l
8.11 PARTIAL CREDIT GUARANTEE SCHEME_(PCGSJ . 65 _,..·~:-
8.12 POLICY ON TRADE RECEIVABLES DISCOUNTING SYSTEM 65

8.13. CONCLUSION 65
OPERATIONAL GUIDELINES ON LENDING
9 GENERAL LENDING GUIDELINES
9.1 NEW BUSINESS COMMITTEE 67
9.2 DELEGATION OF POWERS 68
9.3 WORK FLOW FOR CREDIT SANCTIONS 71
9.4 VETTING OF DOCUMENTS & RELEASE OF LIMITS 72
I 9.5
9.6
PRECLUSION FROM DISBURSEMENT BY FIELD LEVEL
FUNCTIONARIES
ADHOC LIMITS/GRANTING OF EXCESS IN BORROWAL
. 72
72
I 9.7
ACCOUNTS
DOCUMENTATION STANDARDS 73
9.8 ACCEPTING LIFE POLICIES ISSUED BY PRIVATE 73
INSURANCE COMPANIESLICENSED BY IRDA
9.9 FINANCING TO SECOND HAND MACHINERY 73
9.10 ADVANCES THROUGH SPECIAL PURPOSE VEHICLES 74
9.11 CONSORTIUM /..,.~fq\>~ 75
9.12 MULTIPLE BANKING ARRAN~,~~wTtirsea.~ 91~'\_ ...---• ...... . - ... u,1·.·~·~~,. 17
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Chapter Para . PARTICULARS Page No.

EXCHANGE OF INFORMATION UNDER CONSORTIUM/
9.13 MULTIPLE BANKING ARRANGEMENTS 78
9.14 CAPITAL RESTRUCTURING 78
LENDING BY INTER BANK PARTICIPATION (IBP) WITH RISK
9.15 SHARING 79
9.16 ELECTRONIC PAYMENTS 81 1
9.17 LOAN SYSTEM FOR DELIVERY OF BANK CREDIT 81 I
9.18 DIGITISATION OF TRADE PROCESS 81

10 TYPES OF FACILITIES
10 TYPE OF LOAN 83
10.1 MISCELLANEOUS CASH CREDIT 83
10.2 BILLS FINANCING 83
10.3 PROJECT FINANCING I TE.RM LOAN 86
10.4 GOLD (METAL) LOANS 87
10.5 LOAN AGAINST GOLD DEPOSITS 89
10.6 GOLD LOAN /ADVANCES AGAINST GOLD JEWELLERY 89
10.7 FOREIGN CURRENCY LOANS 89
FOREIGN CURRENCY LOANS AGAINST FCNR (B)
10.8 DEPOSITS 91
10.9 NON FUND BASED FACILITIES 91
10.10 STANDBY LETTER OF CREDIT 95
10.11 EXPORT GOLD CARD 95
11 GUIDELINES ON SANCTION OF SHORT TERM LOAN
SHORT TERM LOANS(OTHER THAN THOSE CARVED OUT
11.1 OF WORKING CAPITAL LIMITES) 97
SHORT TERM LOANS CARVED OUT OF WORKING
11.2 CAPITAL LIMITES 99
12 FINANCE TO VARIOUS SEGMENTS
12.1 MICRO SMALL AND MEDfUM ENTERPRISES 100
12.2 FINANCE TO INDUSTRIES 100
FINANCE TO HOUSING & COMMERCIAL REAL ESTATE
12.3 PROJECTS 103
12.4 UQUIRENT ADVANCES 106
12.5 CAPITAL MARKET EXPOSURE 107
12.6 ADVANCES AGAINST UNITS OF MUTUAL FUNDS 109
f---
12.7 GUIDELINES FOR SANCTIONING.BRIDGE LOANS 109
ADVANCES TO SELF FINANCING COLLEGES. AND 110
12.8 SCHOOLS
12.9 ADVANCES TO NBFCS 111
12.10 TELECOM INDUSTRY 112
12.11 SUGAR INDUSTRY.. "'~~
113
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Chapter Para PARTICULARS Poge No.
CO-LENDING OF LOANS BY BANKS UNDER NBFCS FOR
12.12 LENDING TO PRIORITY SECTOR 113
FINANCIAL INCLUSION TOO .fOR BASIC SB I SMALL 113
12.13 ACCOUNT HOLDERS
12.14 PRADHAN MANTRI MUDRA YOJNA 114
I 12.15 MUDRA 114
12.16 STANDUPINDIA 114
LOAN . TO STAFF/EX-STAFF AGAINST DEPOSITS
l 12:17 STANDING IN THEIR NAMES 114
13 CREDIT APPRAISAL
MARKET INFORMATION I CREDIT REPORTS I PRE- 115
13.1 SANCTION VISIT
13.2 APPRAISAL 116 I
13.3 WORK! NG CAPITAL 118
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13.4 TERM LOAN I PROJECT FINANCE 120
I 13.5 PROJECT FINANCE PORTFOLIO OF BANKS 123
13.6 APPRAISAL OF INFRASTRUCTURE PROJECTS 124
13.7 FINANCING PROMOTER'S EQUITY 125
13.8 APPRAISAL OF PROPOSALS RELATING TO IT 126
13.9 TOBACCO IN.DUSTRY . 7· 127
13.10 SUGAR INDUSTRY .· 127
13.11 CONSTRUCTION INDUSTRY ?' 127
13.12 DISCOUNTING OF BILLS UNDER LC ~c 128
13.13 COLLATERALS 128
13.14 GUARANTEES 132
13.15 ALLOCATION OF SUBLIMITS TO OTHER BRANCHES 133
ACCEPTING NON-LIFE POLICIES ISSUED BY PRIVATE
13.16 SECTOR INSURANCE COMPANIES LICENSED BY IRDA 133
14 TERMS OF FINANCE
14.1 PRICING 134
14.2 MARGIN 136
14.3 OTHER CHARGES I FEES 138
14.4 COLLATERAL SECURITY 140
15 CREDIT MONITORING
15.1 MONITORING SYSTEMS 142
REVIEW OF LOAN SANCTIONS MADE BY EACH
15.2 AUTHORITY 142
15.3 LOAN REVIEW MECHANISM 143
15.4 UNIT I GODOWN INSPECTION] 143
15.5 STOCK STATEMENT'/ DEBTORS~.:&fi~~ ---

CALCULATION OF DRAWING POWER BASED ON THE
143
15.6 SUBMISSION OF QIS I CMA/~-s o"ersea.~ ~~"' . ~.:~ .. "::": ·- ·} 145
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15.7 SUBMISSION OF AUDITOR'S CERTIFICATE 145
15.8 STOCK AUDIT 146
15.9 REVIEW/RENEWAL OF BORROWAL ACCOUNTS 146
15.10 RENEWAL OF STANDALONE TERM LOAN LIMITS 147
EXTENSION OF EXPIRED LIMIT I SHORT REVIEW &
15.11 RENEWAL PROPOSAL (SRRP) 147
15.12 REVALIDATION OF SANCTION 148
15,13 MID TERM REVIEW OF LARGE BORROWAL ACCOUNTS 148
15.14 COMPULSORY AUDIT OF BORROWAL ACCOUNTS 148
15.15 VALUATION OF SECURITIES 149
GUIDELINES FOR OPERATIONS IN NPA ACCOUNT
15.16 WHICH SHOWS SIGNS OF REVIVAL 149
15.17 QUICK MORTALITY 150 I
REVITALISING DISTRESSED ASSETS- JOINT LENDERS'
15.18 FORUM AND CORRECTIVE ACTION PLAN ' 150
REHABILITATION AND RESTRUCTURING OF BORROWAL
16 ACCOUNTS
16.1 PROVISION AVAILABLE FOR FINANCING WEAK UNITS 152
16.2 RESTRUCTURING 152
16.3 REHABILITATION OF SICK I WEAK INDUSTRIAL UNITS 152
GRANTING OF ADVANCES TO AN ACCOUNT THAT WAS
16.4 NPA OR SEITLED UNDER OTS WITH SACRIFICE 153
GRANTING OF ADVANCES TO AN ASSOCIATE IN A
GROUP WHERE ONE OF THE ASSOCIATES IS NPA OR
16.5 GRANTED OTS WITH SACRIFICE 153
RELIEF MEASURES TO BORROWERS IN AREAS AFFECTED
16.6 BY NATURAL CALAMITY 153
17 GUIDELINES FOR LENDING TO
1) .PROFIT MAKiNG PSUs
2) PROFIT MAKING AUTONOMOUS BODIES PROMOTED
BY CENTRAL GOVERNMENT or STATE GOVERNMENT
3) PSUs GUARANTEED BY CENTRAL or STATE
GOVERNMENTS
4) AUTONOMOUS BODIES PROMOTED . BY ·CENTRAL
GOVERNMENT or STATE GOVERNMENT and
GUARANTEED BY CENTRAL or STATE GOVERNMENT 156
REFERENCE CIRCULARS 157
0 5 JAN 1011
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Indian Overseas Bank LOAN POLICY DOCUMENT 2022
Chapter- 1
OBJECTIVES & COVERAGE
1. 1. PREAMBLE:
Loan Policy Document is an embodiment of various aspects of Bank's loan policies
forming the basis for various credit decisions. This document enables and helps the
Bank and its offi.cials to have firsthand knowledge of credit policies and to focus
credit administration efforts in line with broad policy guidelines.. The Credit Risk
Management Policy, Collateral Management and Credit Risk Mitigation' Policy of
the Bank dovetails the Loan Policy Document. Reserve Bank of India guidelines
have been taken into consideration in this policy, wherever applicable. The
guidelines shall be subject to review for any subsequent changes/modifications
brought out by RBI. Specific operational guidelines relating to credit are
documented separately. The functionaries at various levels in the Bank should
follow both the policies and various operational guidelines issued for day to day
operations.
1.2. OBJECTIVE OF THE POLICY: The objective of the Loan Policy is fo
a) Comply with Government guidelines /RBI regulations on Capital Adequacy,·

Prudential · Norms, Asset Classification guidelines, Risk Management
guidelines, Exposure norms, Large Exposures Framework etc.·
b) To ensure growth under Priority Sector advances including Exports, Housing :::
.,,,·
etc.
c) Provide smooth and timely flow of credit within the. ambit of prudential
IJ·· guidelines.
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II d) Deploy funds in a prudential and profitable manner.
e) Have a div.ersified loan portfolio.
f) Facilitate objective decisions in extending credit.
g) Have effective post- disbursement follow up.
h) Revitalize distressed assets. .
1.3. COVERAGE OF THE POLICY: This policy document covers the following
aspects.
a) Deployment of Credit /Thrust areas/Exposure Norms

b) Risk Management and Prudential norms
c) Restrictions for financing
d) Take Over of Borrowal Accounts
e) Advance to Bank's Directors I Officers of Ba
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g) Miscellaneous matters
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1.4. GENERAL GUIDELINES ON LENDING:
1.4.1 The sanctioning powers are vested with Brq~~h Managers under individual. . '
capaCity and with respective Credit Committees at Regional Offices ~md
Central Office depending on the amount of loan, rating, type of borrower ·.. •· ··
etc. ·
1.4.2 The details of financial powers vested with each of the above layers have
,in
been spelt out the Bank's discretionary powers booklet. The delegated
powers for sanctioning credit facilities below hurdle rate have also. been
presc'ribed. The guidelines an.d the authorities vested with powers for
granting excess and Adhoc facilities to a borrower account for business
purposes have be.en laid down.
1.4.3 Norms for. takeover of borrower accounts from other banks, financial
institutions/ agencies have been laid down. Delegation has been
accorded selectively for .deviations.
1.4.4 Policy on lending to, Bank's directors, Directors and their relatives· on ·
reciprocal basis, loans and advances to officers of the Bank and their
relatives have been laid down.
1.4.5 Credit Information reports from RBI approved agencies shall be qrawn. I~
case of adverse. credit informatjon reports or low. scores then such
proposals should be· avoided. Similarly, borrowers 1guarantors whose name
figure in the Defaulters I CQution list of RBI I ECGC should be avoided. '·'.
· 1.4.6 Detailed g:uidelines are in place for· appraisal of. need .based working
capital facilities . and term loan . and other credit requirements · as
enumerated in the Operational Guidelines .and the Bank's book of · '·
instructions with due weightage on the prevailing scope, market conditions
of the industry/sector/ category of the borrower who has sought the credit
. limits. . ..
1.4.7 The credit appraisal shall be on the basis of the market information l credit
reports and findings of the pre-sqnctiori visits to the Unit .and offic.e· of the
applicant.
1.4.8 Detailed framework is, in place on the terms of finance such as mqrgin,.
security, pricing, etc.
1.4.9 Discretions have been provided selectively for deviations or concessions.
......
.
1.5. COMPLIANCE:
. All the functionaries shall comply with the guidelines contained in this policy
d~cument. Th~ gui~elines contained. in the various m~r-..c.~lars of RBI shall . ,,
. also be complied with: In case of any doubt about)~~~~~ilt. of any of the.·
· policy guidelines, clarifications/ approval should bf o~~ined fr'bi3S) ~t tral Of.Ftr1e/ .>-. ;
...........•............................•.............. , ......................................•................................ ,=•· · · · · · '· · · · · · · ~· "· ·~· · ·J'>N 1.~~~-·"*· ·.~.'~f.::.:~,;;i:~~:·~,\ .·
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GM (CSSD)/Head of the Department- CSSD is empowered to give clarifications

in respect of the Loan Policy Document guidelines to the applicability. This
document deals with policy guidelines. Operating Guidelines will be followed as
per Banks' various circulars and Book of Instructions issued from time to time.
Further, if there is any ambiguity between guidelines of this policy and Book of
·lnstructfons; guidelines of this policy will prevail.
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DEPLOYMENT OF CREDIT I THRUST AREAS
Il .2.1. PRIORITY SECTOR CREDIT:
I Bank shall strive to achieve the priority sector targets and sub-targets as stipulated
by Reserve Bank of India.
Definition otPriority.Sector Adyances and related targets h.ave been givenas,per
the revised and latest· guidelines in the latest RBI Master Direction -Priority Sector
Lending-Targets and Classification.! {For details refer ARID circular Master 4/ 2020-
21 dated 28.09.2020) .
Further guidelines of RBI on Co-o~igination of loans by Banks and NBFCs for lending
to priority sector to.be followed ..
2.2. CATEGORIES OF PRIORITY SECTOR:
The categories under priority sector are as follows:

a) Agriculture
b) Micro, Small and Medium Enterprises
c) Export Credit
.d) Education
e) Housing
f) Social Infrastructure
g) Renewable Energy
h) Others
2.3. TARGETS AND SUB TARGETS:

The targets and sub-targets as stipulated by Reserve Bank of India as mentioned
below.
For Domestic Commercial Banks
·40 per cent of Adjusted Net Bank Credit (ANBC)* or credit
Total Priority
Sector equivalent amount of Off-Balance Sheet Exposure. whichever is
Advances higher.
18 per cent of ANBC* or credit equivalent amount of Off-
Balance Sheet Exposure, whichever is· higher.
1_. Within the 18 percent target for· agriculture, a target of 10
~j
percent# of ANBC* or Credit Equivalent Amount of Off- Balance
Total
J Agricultural Sheet Exposure, whichever is higher is prescribed for Small and
Advances Marginal Farmers
Micro 7.5 percent of ANBC* or Credit
Enterprises Balance Sheet Exposure.
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Advances to
Weaker 12 percent# of ANBC* or credit equivalent amount of Off-
Sections Balance Sheet ·Exposure, whichever is hLgher.
ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposures, whichever Is

higher, as at the corresponding date of the preceding year as per extant ~BI
guidelines.
The computation of priority sector ·targets/sub-targets achievement for the year
will be based on the quarterly average achievement of the corresponding year.
#Target for lending to Small & Marginal Farmers has been increased from 8% to 10% and Weaker
Section from 10% to 12% in phased manner in 3 FYs as below: ·
Financial Target- Lending to Small & Marginal Target- lending to Weaker Section
Year Farmers {%of ANBC or CEOBE (%of ANBC or CEOBE whichever is
whichever Is higher) higher)
2020-21 8.00% 10.00%
2021-22 9.00% 11.00%
2022-23 9.50% 11.50%
2023-24 10.00% - -
12.00%
2.3.1. Additionally, Bank shpll ensure that the overall lending to non-corporate
Farmers does not fall below the system-wide average of the last three years'
achievement notified by RBI every year which is 12.73 percent of ANBC or CEOBE
whichever is higher for 2021-22. All efforts s.hould be made to reach the level of .
13.5 percent of ANBC (erstwhile target for direct lending to agriculture sector).
2.3.2 All efforts shall be maintained to reach the level of 13.5 percent direct lending
to the beneficiaries who earlier constituted the direct agriculture sector.
- 2.4 .. WEAKER SECTIONS:

PrioritY sector loans to the following borrowers will be considered under Weaker
Sections category: -
a) Small and Marginal Farmers
b) Artisans, village and cottage industries where individual credit limits do not
exceed Rs. 1 lakh.
c) Beneficiaries under Government Sponsored Schemes such as National Rural
Livelihood Mission (NRLM), National Urban Livelihood Mission (NULM) and Self
Employment Scheme for Rehabilitation of Manual Scavengers (SRMS).
d) Scheduled Castes and Scheduled Tribes . .- _ . _ .,_
· e) Beneficiaries of Differential Rate of Interest (DRI) sc :t\"'~
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f) Self Help Groups ~--e, overse?flf!t ~- tr.~~r/t2Pttit~.
g) Distressed Farmers indebted to non-institution 11~-&"'ers .,~ ~ ~ : ,;: ( t;~;:;:i::•::,· <_.) ')
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h) Distressed persons other than Farmers, with loan amount not exceeding Rs.
1 lakh per borrower to prepay their debt to non-institutional lenders
i) Individual women beneficiaries up to Rs .. 1 lakh per borrower
j) Persons with disabilities.
k) Overdrafts upto Rs 10,0001- under Pradhari Mantri Jan-DhanYojana (PMJDY)
accounts, provided the borrower's household annual inc:ome does not
exceed Rs. 1,00,0001- for rural areas and Rs. 1,60,0001- for non-rural areas
I) Minority communities as may be notified by Government of India from time
to time.
2.5. THRUST AREAS:

The Government I RBI's' guidelines in respect of lending to priority sector &
· Exports will receive focused attention.
2.5.1 AGRICULTURE:
2.5.1.1. The lending to agriculture sector has been defined to include (i) Farm
Credit (ii) Agriculture Infrastructure and (iii) Ancillary Activities. Bank shall finance
eligible a'ctivities under. the three sub-categories listed out in the RBI Master
Directionsl dated 07.07.2016 and last updated on 01.08.2018 & 04.12.2018 & ·
04.09.2020 as given in ANNEXURE- ADVANCES ELIGIBLE TO BE CLASSFIED UNDER
AGRICULTURE.
a) Thrust will bt3 given for achieving National norms and compliance with sub-
. sector allocations by intensifying credit flow.
b) Efforts will be taken to accelerate the issuance of KisanCredit.cards to all
eligible Farmers, both existing and new.
c) Fillip ahd thrust will be given for promoting and eventual credit linkage of
. more number of Self Help Groups.
d) Loans for investment credit and allied activities shall be extended keeping
in tune with the Government guidelines.
e) lbB Krishi~Samridhi, new scheme launched; to meet several investment
credit need of the farming community will be effectively marketed. This
scheme is a hassle free security based investment credit scheme that allows
t •. .
Farmers to have flexibility and choice in regard to the amount, us~ of

finance and insurance of Prime Security. ·
f) More focus will be given to finance Food & Agro Processing units, rural
. godowns, cold storage units and advances against Ware House 1 Cold
storage rt?ceipts. ~~ . ;. ,'·.:': . /: ~
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·Indian Overseas Bank LOAN POLICY DOCUMENT 2022
g) P(eference will be given for self-liquidating nature of advances wherein

.,"!
repayment will be forthcoming from Procuring 1 Marketing Agencies like
iI
Sugar Mills, Milk Societies, Collateral Management Services, Corpordtes etc.
hj Thrust will be given for financing Farmers for purchase of Farm equipment
II underthe-MOU signed with reputed Farm Equipment Manufacturers Cluster
i
approach will be explored for Food & Agro Processing units and Allied
Activities.
Farm Credit -Individual Borrowers

Loans to individual farmers [including Self Help Groups ·(SHGs) or Joint Liability
Groups (JLGs) i.e. groups . of individual farmers, provided banks maintain
disa'ggregated data of such loans] and Proprietorship firms of farmers, directly
engaged in Agriculture and Allied Activities, viz. dairy, fishery, animal husb~ndry,
poultry, bee-keeping and sericulture. This will include:
a) Crop loans including loans for traditional/non-traditional plantations,
horticulture and allied activities.
b) Medium and long-term loans for agriculture and allied activities (e.g.
purchase of agricultural implements and mpchinery and developmental
loans for allied activities).
c) Loans for pre and post-harvest activities viz. spraying, harvesting, grading
a,nd transporting of their own farm produce. . .,;
d) Loans to distressed farmers indebted to non-institutional lenders. ··
e) Loans Under the Kisan Credit Card Scheme. · ·
f) Locms to small and marginal. farmers for purchase of land for agricultural
purposes.
g) Loans against pledge/hypothecation of agricultural produce (including
warehouse receipts) for a period not exceeding 12 months subject to a limit
up to ~ 75 lakh against NWRs/ eNWRs and up to l50 lakh against warehouse
receipts other than Negotiable Warehouse Receipt/ electronic Negotiable
Warehouse Receipt (NWRs/eNWRs).
h) ·Loans to farmers for installation of stand-alone Solar Agriculture pumps and
for solarisation of grid connected Agriculture Pumps. ·
i) Loans to farmers for installation of solar power plants on barren/fallow land
or in stilt fashion on agriculture land owned by .farmer.
Farm Credit - Corporate farmers, Farmer Producer Organisations .(FPOs)/(FPC)

·Companies of lndiyiduai Farmers, Partnership firms. and Co-operatives of farmers
. engaged In Agriculture and Allied Activities
a) Loans for the following activities will be subject to an aggregate limit of ~ 2
crores per borrowing entity: _
i. Crop loans to farmers which will include~~ -trqditionpl .
plantations and horticulture and loans fofa~~ S(!fNJ#S{i _' / :C·.·:~· ·;. /. ~I~
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ii. Medium and long-term loans for agriculture and allied activities (e.g.
I purchase of agricultural implements and machinery and
developmental loans for allied activities).
I ili. Loans for pre and post-harvest activities viz. 'spraying, harvesting,
I grading and transporting of their own farm produce.
I b) Loans up to~ 751akh against pledge/hypothecation of agricultural produce
(including warehouse receipts) for a· period not exceeding 12 months
against NWRs/eN.WRs and up to ~50 lakh against warehouse receipts other
'than NWRs/eNWRs.
c)· Loans up to~ 5 crore per borrowing entity to FPOs/FPCs undertaking farming
wi,th assure.d marketing of their produce at a pre-determined pric.e.
Agriculture Infrastructure:
Loans for agriculture infrastructure will be subject to an aggregate sanctioned limit
of ~ 100 crore per borrower from the banking system.
Ancillary Services:
Following loans under ancillary servic~s will be subject to limits prescribed as under:
a) Loans up to ~ 5 crore to co-operative societies of farmers f.or purchase of the
produce of members .
b) Loans up to~ 50 crore to Start-ups, as per definition of Ministry of Commerce · ·
and Industry, Govt. of India that are engaged in agricultUre and allied
· services.
c) Loans for Food and Agro-processing up to an aggregate sanctioned limit of ·
~ 100 crore per borrower from the banking system.
2.5.1.2. Small and Marginal Farmers:.

For the purpose of computation of achievement of the sub-target, Small and
Marginal FarmE3rs ~ill include the following: - . . .
a) Farmers vvith landholding of up to 1 hectare (Marginal Farmers). Farmers with
a landholding of more than -1 hectare and up to 2 hectares (Small Farmers).
b) Landless agricultural labourers, tenant Farmers, oral· lessees. and share-
croppers,whose share of landholding is within the limits prescribed for small
and marginal Farmers
c) Loans to Self Help Groups (SHGs) or Joint Liability Groups (JLGs), i.e. groups·
of individual Smal.l .and Marginal Farmers directly engaged in Agriculture
and Allied Activities, provided banks maintain·disaggregated data of such
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e) Loans to Farmers' producer companies of individual Farmers, and co-

. operatives of Farmers directly engaged in Agriculture and Allied Activities,
where the membership of Small and Marginal Farmers is not less than 75
per cent by number and whose land-holding share is also not less than '75
per cent of the total land-holding.
2.5.2 MICROCREDIT:
a) Micro Credit is the emerging segment of Rural Credit which will. receive
Bank's focused attention and greater thrust will be given for credit linking
· SHGs, preferably through 'Direct Bank-SHG Linkage Model'.
b) Bank will lay special emphasis for credit linking Group Specific SHGs Viz.
Women SHGs, Youth SHGs, SHGs of Ex-Servicemen, SHGs comprising of
physically handi~apped I visually impaired etc.
2.5.3 MSME FINANCE:
Bank will strictly adhere to the RBI guidelines listed out in RBI Circular2 .
Limits for investment in plant and machinery/ equipment: The limits for investment
in plant and machinery/equipment for manufacturing I service enterprise, as
notified by Government of India vide their gazette notificatiqn dated 26.06.2020
are as under: -
Category of Enterprise Criteria for Classification

Micro Enterprises ·Where the investment in plant a11d machinery or
equipment does not exceed One Crore rupees ·
and Turnover does not exceed Five Crore
rupees.
Small Enterprises Where the investment in plant and machinery or
equipment does not exceed Ten Crore rupees
and Turnover does not exceed Fifty Crore
rupees.
Medium Enterprises Where the investment in plant and machinery or
equipment does not exceed Fifty Crore rupees
and Turnover does not exceed Two Hundred
and Fifty Crore rupees.
*
2.5.3.1. .Bank loans to Micro, Small and Medium Enterprises, for both
manufacturing and service sectors are eligible to be classified under the priority
sector as per the following norms:
2.5.3.2. Manufacturing Enterprises
The Micro, Small and Medium Enterprises engaged in the monufacture or

production of goods to any Industry specified in the first schedule to the Industries
(Development and.Regulation) Act, 1951 and as notified by the Government
from time to time. The Manufacturing Enterprises are defined in terms of
investment in plant and machinery.
2.5.3.3. Service Enterprises
All MSME loans, irrespective of loan limit will be classified as priority sector
advances under Micro, Small and Medium enterprises.
2.5.3.4. Khadi and VIllage Industries Sector (KVi)
All loans to units in the KVI sector will be eligible for classification under the sub-
target of 7.5 percent prescribed for Micro Enterprises under priority sector.
2.5.3.5. Other Finance to MSMEs
i. Loans up to Rs. 50.00 crores to Start-ups, as per definition of. Ministry of

Commerce and Industry, Govt. of India that confirm to the definition of
MSME.
ii. Loans to entities involved in assisting the decentralized sector in the supply
of inputs to and marketing of outputs of artisans; village. and cottage
industries.
iii. Loans to co-operatives of producers in the decentralized sector viz.
artisans, village and cottage industries.
iv. Loans sanctioned by banks to NBFC-MFis and other MFis for on-lending to
MSME sector as per the conditions specified in the RBI Master Directions.
v. Loans to registered NBFCs (other than MFis) for on-lending to Micro & Small
Enterprises as per latest RBI Master Directions. . .·. . ·
vi. Credit outstanding under General Credit Cards (includihg Artisan Credit
Card, Laghu Udyami Card, Swarojgar Credit Card, and Weaver's Card etc.
in existence and catering to the non-farm entrepreneurial credit needs of
individuals}. -
age
· vii. Overdrafts extended by banks after September 17, 2018 up to Rs 10,000/-

under Pradhan M_antri Jan Dhan Yojana (PMJDY) accounts provided the
borrower's household annual income does not exceed Rs 100,000/- for rural
· areas and Rs 1,60,000/- for non-rural areas. These overdrafts will qualify as
·. achiev~ment of the target for lending to Micro Enterprises.
viii. Outstanding deposits with SIDBI and MUDRA Ltd. on account of priority
· sector shortfall.
ix.. Lo·ans under "Stdnd Up India" and "MUDRA" scheme ..
2.5.3.6.1n tune with the national priorities, financing MSME sector would b~ thrust a
area for the Bank. by
a) Encouraging coverage of MSME loans under CGTMSE scheme wfthin the
overall permissible limits
· b) Finance.-
.
to Micro
.
units of Retail trade sector sanctioned
. .
under MUDRA
scheme; coverage from CGFMU is available on a portfolio basis ..
c) Adopting cluster based financing to bring in more number of units under our
financing.
d) The Bank has separate policy for MSME.
2.5.3.7..Factoring Transactions:
a) 'With Recourse' Factoring transactions which carry out the business of
factoring departmentally wherever the 'assignor' is a Micro, Small or
Medium Enterprise would be eligible for classification under MSME category
on the reporting dates. . .
·b) The borrower's bank shall obtain from the borrower, periodical certificates
regarding factored receivables to avoid double financing/ counting.
Further, the 'factors' must intimate the limits sanctioned to the borrower and
details of debts factored to the banks concerned, taking responsibility to
avoid double financing.
c)' Factoring transactions pertaining to MSMEs taking place through the Trade
Receivables Discounting System (TReDS) shall also be eligible · for
classificatbn under priority sector.
2.5.4 EXPORT CREDIT: Export credit under agriculture and MSME sectors are allowed
to be clas-sified as Priority Sector Loan (PSL) in the respective categories viz.
agriculture and.MSME.
2.5.4.1. Export Credit (qther than in agriculture and MSME) will be classified as
priority sector as per the following: ~'11<\ 31f<f"?'#J .
lncrem;ental export credit over corresponding date f~~f31'~~~~~ar, upto 2
percent ot Adjusted Net Bank Credit (ANBCj or C :dw;~uivalenf'tm ~ntof 5Jff ..
.IAN 2022 * , ,v ... ~
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Balance Sheet Exposure (CEOBE), whichever is higher, subject to a sanctioned limit

of up to Rs 40. 00 crores per borrower with no ceiling on turnover .. Export credit:
iilclude·s pre-shipment and post shipment export credit (excluding· off:..balance
sheet items).
· 2.5.4.2. Bank will endeavor to provide timely and adequate credit and also render
essential customer services/guidance in regard to procedural formalities and
. export opportunities to exporter custom~rs
·2.5.4.3. Bank will issu.e Gold cards to eligible export borrowers with line of credit for
3 years to exporters with satisfactory track record as per laid down procedure
which will encourage export finance. At present issuance of physical Gold Cards
is not in vogue. ·
(* Adjusted Net Bank Credit)
2.5.5 .. EDUCATION; HOUSING; SOCIAL INFRASTRUCTURE; RENEWABLE ENERGY AND ·

OTHERS:
Bank shall endeavour to increase exposure to the.

following sectors coming under
.
Priority Sector in terms of National Goals and Socio-economic objectives ..·
2.5.5.1.EDUCATION:
Loqns to individuals foreducational purposes, including vocational courses, not

· exceeding Rs. 20.00 Lakh will be considered as eligible ·for ·priority sector
classification. Loans ·currently classified under priority sector will. continue till
maturity ..
2.5,5.2. HOUSING:
a) Loans to individuals up to Rs. 35.00 Lakh in metrop9litan centres (with

population of ten lakhs a~d above) and loan~ up toRs. 2p.OO Lakh in other
centres for purchase/construction of a dwelling unit per family provided the
I overall cost of the dwelling unit in the metropolitan centre and at other
j centres· should not .exceed Rs. 45.00 Lakh and Rs. 30.00 Lakh, respectively ..
.The housing loans to Bank's own employees will be exclud~d ..Since, housing
loans which are backed by long term bonds are exempted from ANBC, the
same shall not be classified under priority sector.
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b) Loans for repairs to damaged dwelling units of families up to Rs. 10.00 Lakh
in metropolitan centres and up to Rs. 6.00 Lakh in other centres conforming
to over<::lll cost of the dwelling unit as per point a above.
c) Bank loans to any governmental agency for construction of dwelling units
or for slum clearance and rehabilitation of slum dwellers subject to dwelling
units with carpet area not more than 60 sq. m.
d) Bank loans for affordable housing projects using at least 50% of Floor Area
Ratio (FAR)/ Floor Space Index (FSI) for dwelling units with carpet area of not
more than 60 sq. m•.
.e) Bank loans to Housing Finance Companies (HFCs), approved by NHB for
their refinance, for .· on~! ending for the purpose of ·
purchase/construction/reconstruction of individual dwelling units.or for slum
clearance and rehabilitation of slum dwellers, subject to an aggregate loan
limit of Rs~ 20 lakhs per borrower.
f) The eligibility under priority sector loans to HFCs· is restricted to five percent
of the Bank's total priority sector lending, on an ongoing basis. The maturity
of Bank loans should be co-terminus with average maturity of loans
j
I extended by ~FCs. Bank shall maintain necessary borrower-wise details of
the underlying p~rtfolio.
I
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f 2.5.5.3. SOCIAL INFRASTRUCTURE:
2.5.5.~.1. Bank loans up to a limit of Rs. 5.00 Crore per borrower for setting up
schools,· drinking wdter facilities and sanitation facilities including construction/
refurbishment of household toilets and water improvements at household toilets
and water improvements at household leveL· etc. and loans up to a limit of Rs.
10.00 Crore per borrower for building health care facilities including under
"Ayushman Bharat" in Tier II to Tier VI centres.
2.5.5.3.2. Bank credit to Micro Finance Institutions (MFis} extended for on-lending
to individuals and also to members of SH.Gs/ JLGs for water and sanitation faCilities
will be eligible for categorization as priority sector under 'Social Infrastructure',
subject to the criteria laid down in the aforesaid RBI Master Directions.
2.5.5.4. RENEWABLE ENERGY:
Bank loans up to a limit of Rs. 30.00 crore to borrowers for purposes like solar based
power generators, biomass based power generato~ 'lis, micro-hyde!
plants and for non-conventional energy based pupi(~'b4-ffiJk.~"~~. eet lighting
systems, and remote village electrification. For indi'fdu~~ouseh~r~~tH loan limit :
or- . L .
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· Indian Overseas Bank LOAN POLICY DOCUMENT 2022
will be Rs. 10 lakhs per borrower. Term Loan to staff (for individuals) under lOB
SURY A (SCHEME A) to be treated as priority sector advance.
2.5.5.5. -OTHERS~
a) Loans not exceeding Rs. 1,00,000/- per borrower provided directly by· banks
to ·individuals and their SHG/JLG, provided the individual borrower's
household annual income in rural areas does not exceed Rs. 1,00,000/-and
for non-rural ·areas it does not exceed Rs. 1,60~000/-, and loans. not ·
exceeding Rs. 2.00 Lakh provided directly by banks to SHG/ JLG for activities
other than agriculture or MSME, viz. loans for meeting social needs,
construction or repair of house,
.
construction of toil~ts or any vioble common
.
activity started by SHGs.

b) Loans to distressed persons other than Farmers not exceeding Rs. 1,00,000/-
per borrower to prepay their debt to non-institutional lenders
c) Loans sanctioned to State Sponsored Organizations for Scheduled Castes/
Scheduled Tribes for the specific purpose of purchase and supply of inputs
and/or the marketing ·of the outputs of the beneficiaries of these
organizations.
d) Loans up to Rs. 50.00 crore to Start-ups, as per definition of Ministry of
Commerce and Industry, Govt. of India that are engaged in activities other
than Agricultu~e or MSME. · . · . · · ·
·e) Lending by . banks to NBFCs/ HFCs for on-lending (RBI circular
FIDD.CO.Pian.BC]/04.09 .01/2019-20 dated 13.08.2019)
Bank Credit to NBFC::s (other than MFis) for on-lending will be eligible for
classification as priority sector under respective c·ategories subject to the
following .conditions:
L Agriculture: On-lending by NBFCs for "Term Lending" component
! under agriculture will be allowed up to Rs. 10.00 Lacs per borrower. ·
I
!
ii. Micro & Small Enterprises: On-lending by NBFC will be allowed up to
Rs. 20.00 Lacs per borrower.
. iii. Housing: Bank credit to Housing Finance Companies _(HFCs),
approved by NHB for their refinance, for on-lending for the purpo~e
of purchase/construction/ reconstruction of individual dwelling-units
or for slum clearance and rehabilitation of slurh dwellers, subject to
an aggregate loan limit.of '{' 20.00 lakh per borrower. ;.
Bank credit to NBFCs (including HFCs) for on-lending as applicable in para above,·
will be allowed up to an overall limit of five percent of individual bank's total priority
sector lending. Banks shall compute the eligible portf llo.~der on-lend. ing
mechanism by averaging across four quarters, to d if¥~"~-- ence to th,e
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Indian Overseas Bank . LOAN POLICY DOCUMENT 2022
2.5.6. SPECIALCREDIT SCHI;MES:
Bank has various credit schem.es to cater to the diffe.rent ·sectors of the economy
which are as under:
a) Housing . loans for individuals, both· residents . and NRis . for
purchase/construction of new/old house;
b) Repair/renovation of existing houses,
c) Vidyajyothi/ Vidyasuraksha educational loan scheme,
d) lOB Scholdr education& loan scheme,
e) Vidya Shrest for liT/ liM aspirants,
f) Pushpaka scheme for purchase of new as well as used cars/two-wheelers
g) Sahayika Loan to meet expenditure on social/financial commitments such
as marridge etc., to individuals in employment, business, professionals and
self-employed with regular income,
h) Pensioners' Loan scheme to all pensioners re'ceiving pension through our
branches except Malaysian Government pensioners,
i) Sanjeevini scheme for' registered medical practitioners for the purpose of
construction of nursing home, hospitals, purchase of equipment, vehicle
and ambul.ance etc.
j) Clean loan/ Clean Loan- CC to salaried employees and LIC Agents .
.k) Loon Against Property for individuals.
l I) lOB Royal for high net-worth individuals.
I 2.5. 7. OTHER THRUST AREAS:
a) Bank will increase its exposure towards working capital finance with more .
!i fc>cus on self~liquidating biiHinance I short term loqns.
I b) Trade· credit advances which yield good interest income shall be given
more thrust.
c) Arrangement with NBFC-ND-Sis to co-originate loans for the creation of
priority sector assets.
to
d) Loans NBFC under Partial Credit Guarantee Scheme.
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Chapter- 3
RISK MANAGEMENT & PRUDENTIAL NORMS

ll 3.1 -GENERA~:
! Risks are inher~nt in any financial intermediation and hence the bank is exposed
to certain risks that arise from its business and the environment within which it
operates. Bank has laid down separate policy for Credit Risk Management, which
shall be adhered to while lending.
3.2 PRUDENTIAL NORMS

Bank will adhere tb the prudential ceiling norms prescribed by the:Reserve Bank of
India on Single and Group Borrowe( exposures as per their Master circular on
Exposure Norms 4 and RBI guidelines on Large Exposures Fram·ework.S. Besides
Single/Group Borrower limits, Bank shall adhere to -.the exposure ceilings .fixed
internally for the following Categories of exposures.
3.3 DEFINITION OF GROUP:

a) As per RBI guidelines, the concept of "Group" and the task of identification
of the borrowers belonging to specific industrial group is left to the .·.
perception of banks I financial institutions. Banks and finan~ial institutions
are, generally aware of the basic constitution of their clientele. The group
to which a particular borrowing unit belongs should therefore, be decided
by them on the. basis· of relevant information available with them~ the
·guiding principle in this regard being commonality of manqgement and
effective control.
b) A group is defined by invoking associate/sister concern concept.
c) Where a proprietor or partner of a firm/director of one company is proprietor
or partner of another firm/director of anothercompany, they are called as
associates falling within the purview of group concept.
d) Where a proprietor or partner of a firm /a director of one company/ a
company is .the guarantor of another partnership firm/(mot~_er company
where the guarantor has no financial stake (or has no commonality of
management and effective control), then they are not to be treated as
,_ .... __ associqtes falling within t~e pyrview_ of.Q_r,qup c.C?_hcept. ..
j_
e) Where common director /partners are employees/ institutional nominees/
lI or have no financial stake, the group concept will not apply.

f) · In case of common guarantors if they have substantial interest i.e., 51% or
more stake in one or any of the common concero~e account will
I be treated as aSSOCiate
. • concern. /.~~
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g) Even after complying with the above directions, if a sanctioning authority' is

· of the opinion that the borrower should be considered as an associate
concern, then the provisions of associate shall be applicable (such as very
closely connected family members, say, wife, son, daughter etc. under one
family umbrella). .
Note: In case of Public Sector Undertakings, State or Central Government

Companies, group concept shall hot be invoked for arriving at exposure i.e., Each
Government entity to be treated as separate unit_ even if two government entities
are coming under group as per the aforementioned rules. However, Public Sector
Undertakings shall continue to be governed by Large Exposures Framework.
3.4 EXPLANATION FOR CREDIT EXPOSURE: .
a) Exposure will include credit exposure (funded and non~funded credit limits)
·and investment exposure (including underwriting and similar commitments}.
b) The sanctioned limits or outstanding, whichever are higher, will be reckoned
. for arriving at the exposure limit. .
c) However, in the case of fully drawn term loans, where there is no scope for
re-drawal of any portion of the sanctioned limit, Bonk will reckon the
I outstanding as the exposure.ln case of partly drawn term loans where there
I is no scope of further draw a I, outstanding shall be considered as exposure
I (projects stalled, borrower not interested to draw furtherrelease etc.) '·i:·
d) The Bank will compute credit exposure arising on account of interest rate &
I
! foreign ·exchange . derivative transactions and gold using the 'Current
Exposure Method' as prescribed by RBI and also Credit Conversion Factor
for Forward Contract. · ·
e) In general, the guidelines of RBI on exposure norms other than· LEF will be
complied with. .
·f) Large Exposures Framework (LEF)S:
Under the LEF, a bank's exposure to all its counterparties and groups of connected
counterparties, excluding the <;::ertain exempted exposures as mentioned in the
RBI circular, is considered for· exposure limits.
The sum of all exposure values of a bank measured as specified in the RBI
guidelines, to a counterparty or a group of connected counterparties is defined
as a "Large Exposure (LE) "if it .is equal to or above 10 percent of the bank's eligible
capital base.
The eligible capital base for this purpose is the effective of Tier 1 capital
fulfilling the criteria defined I~ Ba~el Ill guid~lines a ~~g~fe~ ast au._~ited _
balance sheet. However, the tnfuston o~ capttal u er~a:~r 1 aft~f~e 'PL!J:?.!t~.0):ld i
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Indian Overseas Bank LOAN POLICY·DOCUMENT 2022
!
balance sheet date can also be taken into account for the purpose of LE
I · Framework subject to Bank obtaining an external auditor's certification.·of the
l augmentation of: capital and submitting the same to RBI for its approval before
r
reckoning the addition to capital funds ..
1. Single Counterparty: The sum of all the exposure values of a bank to single
counterparty must not be higher than 20% of the bank's available eligible
·capital base at all times. In exceptional cases, if a single counterparty
·breaches the 20% of the bank~s available eligible capital base at any time,
Board is empowered to allow an additional exposure up to 5% of the bank's.
available capital .base. on merits. The respective credit verticals to take up
for ~ledrance/ permission from the Board for sanction(ng of such limits ..
2. Groups of Connected Counterparties: -The sum of 611 the exposure values of

a bank to a group of conneded counterparties must not be higher than
• 25% of the bank's available eligible capital base at all times. ·
Tw~ or more natural or legal persons shall be deemed to be a group of

connected counterparties If any one of the following criteria Is satisfied:
... a) Control Relationship .
b) Economic Interdependence
3. Exposures to NBFCs: · . . . ·. . ·
to
a) Bank-'s exp(;>sures a. single NBFC (excluding gold loa!l companies) will
·..-be restricted to 20% of Bank's available eligible capital base at all times.
b) Bank's exposures to a group of connected NBFCs or groups of
connected counterparties having NBFCs in the group will be restricted to
. 25% of Bank's avciilable eligible capital base at all times. .
c). Bank finance to NBFCs predominantly engaged in lending against gold

will continue 'to be. governed· by limits prescribed in RBI circular
DBOD.BP.B~.No.106/21.04.172/2011-12 dated May 18, 2012.
4. Interbank Exposures: The Interbank exposures, except intra~day interbank

exposures, will· be subject to the Large E·xposure Limit of 25% of bank's
available eligible .capital base; In stressed circumstances, RBI may accept
J- a breach of an interbank limit ex post, in order to help ensure stability in the
1
r. ·interbank market.
5. Exposure to · Collective Investment

vehicles and'other structures~adoptlon of "
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There are cas~s when a structure lies between the bank and its exposures,
that is, the bank invests in structures through an entity which itself has ·
exposures to assets underlying the structures. The bank's. exposure amount
to the underlying assets that are below 0.25% of the bank's eligible capital
I base may be assigned to the structure itself (i.e. partial lqok-through is
I
permitted).
I
I The total amount of a bank's such exposures to a structure should not
I exceed 0.25% of bank's available eligible capital base cit all times.
i
. 6. Exposures to Central Counterpartles: Bank's exposures to Qualified Central
Counterparties (QCCPs). related to clearing activities are exempted from
the LE framework. However, these exposures will be subject to the regulatory
.reporting requirements.· ·
In the calculation of an exposure, sanctioning authorities must recognize an

eligible Credit Risk Mitigation (CRM) te~hnique as it has used this technique to
I calculate the risk-based capital requirements, provided it meets the conditions
I
I for rec.ognition under the LEF.

I
All the above aspects of the LE Framework are applicable in full with effect
I
I from April 1, 2019. Existing exposure norms applicable to single/group of
i
connected counterparties and NBFCs are no longer applicable .. All other
existing norms shall continue to prevail.
However, guidelines with reference to non-centrally cleared derivative~

.exposures are applicable from September 30, 2021 ..
, Accordingly, all the sanctioning authorities are advised to maintain the

exposures to comply with the LE limit with respect to the Bank's eligible capital
base from the date of implementation.
3.5 EXPOSURE LIMITS:
a) Exposure limit for all other exposures will be calculated based on Capital
Funds as per RBI guidelines as on 31 51 March qf preceding year. Capital funds
for the purpose yvill comprise Tier I and Tier II capit91 as defined under capital
adequacy standards and as per the published accounts as on March 31 of
the preceding year. Other accretions to capital funds by way of quarterly
profits etc. would not be eligible to be rec~ termining the
ex~o:ure. ceili~~· ·B~nk shall ~ot take exposyfe~~~c~-ti'~ e. C..~il~,ng in ,
ant c patJon of 1nfus1on of capital at a future/~at~.
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I b) Aggregate exposure ceiling for each industry/sector/segment· shalL be
calculated on the gross domestic exposure as .at the end of the previous
I quarter.
3.6 CEILING FOR SINGLE/ GROUP BORROWER LIMIT (Other than LEF):
3.6.1(Q) SINGLE BORROWER LIMIT: (OTHER THAN INFRASTRUCTURE PROJECTS :
CQtegory of borrower MQxlmum Limit MQxlmum
..
limit.wlth
QpprOVQI
of Board
Individual/Proprietary Concerns/ Rs.l oo Crore .5%of
Trust/Society Capital
Partnership firms Rs.400 Crore Funds**
Ship Breaking Industry Rs.400 Crore
Film Industry Rs. 50 Crore ·
Aviation Industry 'Rs.500 Crore
NBFCs having. gold loans to the extent of External Ceiling 7.5% of ·
50% or more of its:total financial assets. rating Capital.
AAA 7% of capital funds or Funds**
Rs. 1000 Crwhichever
I is lower.·
AA 6% of capital funds or
I
Rs. 800 Cr whichever
is lower.
A 4% of capital funds or
I Rs. 500 Cr whichever
islower.
Others 2% of capital funds or
Rs. 300 Cr whichever
is lower.
**not to exceed 10% ·of Tier !_capital. -
,..
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OjPage
3.6.1 (b) SINGLE BORROWER LIMIT:.(FOR INFRASTRUCTURE PROJECTS)
Category of borrc:>wer Maximum Limit Maximum.limit with

approval of Board
Individual · /Proprietary Rs.1 00 Crore 5% of Capital Funds**
Conce.rns/Trust /Society
Partnership firms Rs. 400 Crore
External Ceiling
NBFCs having gold loans Rating
to . the· extent ol 50% or
more of its total financial
AAA 7% of capital
assets. funds or Rs. 1000
Cr whichever is I
lower.
AA 6% of capital.
funds or Rs. 800 12.50% of the
Cr whichever is capital funds**
..
lower.
A 4% of . capital
funds or Rs. 500
Cr whichever is
_ lower.
Oth.ers . 2% of capital
funds or Rs. 300
Cr whichever is
lower.
**not to exceed 10% of Tier I capital.
Generally, the ceiling fixed for the single borrower mentioned .above ·shall not be
exceeded. However, in deserving cases, and depending on the risk appetite of
the Bank,. Management Committee of the Board is empowered to consider higher
limits ...subject
. .
.tO,. single borrower exposure not exceeding
' .
the. ceiling fixed by RBI
under the .Prudential norms.
3.6.1 (c) SINGLE BORROWER LIMIT FOR OIL COMPANIES:

Single borfOWEH Limit for Oil Maximum Limit Maximum limit with I
companies·· approval of Board 1
For Oil Companies who have been

12.5% of 17.5% of
i issued Oil Bonds (which do not
~ Capital Funds ·Capital Funds
have SLR status) b'L Govt. of India '
I ---·------
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:'ill Page
3.6.2 CEILING FOR SINGLE/ GROUP/NBFC BORROWER LIMIT UNDER. LARGE EXPOSURE
FRAMEWORK
I
I S.l . Exposure to . Limit
j ..
'No.
I Large Exposure Is 10% of Tier I capital as on 31st of
I
I
1. Single Counterparty should not exceed*
previous year
20% of.Tier I Capital as on·3Js'·of
i previous year
2 Group Borrower should not exceed 25% of Tier I Capital as on 31_st of
. .previous year
3 NBFC 20% ofTier I Capital as on 3Js' of
previous year
4. Group of connected· NBFCs or groups of 25% of Tier I Capital as· on 3 i st of
connected counterparties having NBFCs previous year
I
in the group ·
~ Exposure to Collective . Investment sho.uld not exceed 0.25% of
Undertakings (CIUs), securitization vehicles bank's Tier I capital as on 31st of
and oth~r structures-adoption of "Look previous year
Thr.ough Approach"(LTA): ,.
,, ~ Board is empo'ijered to allow an additional exposure up to 5% of the bank's eligible

capital base on merits. ·
3.6.3 (a) EXEM~TIONS FOR CEILING ON SINGLE/GR9UP EXPOSURE LIMITS:

The above ceilings on single/group exposure limits do not apply If the credit faCilities
proposed fall under the following categories: · ..
a) Existing/additional credit facilities (including funding of interest and
irregularities) granted to weak/sick il}dustrial units under rehabilitation.
b) Borrowers, to whom .limits are allocated ·directly by the Reserve Bank of India,
for food credit.
c) Principal and lriterest fully guaranteed. by the Govt. of India.
\_. d) Loans and advances granted against the security of Bank's own term deposits.
e) Exposure to NABARD.
l
l 3.6.3 (b) EXEMPTIONS UNDER LEF:
The exposures that are exerilpted from the LEF are listed below:
j 1. Exposures to the. Government of India and State Governments which are

~eligible for zero percent Risk Weight under the Basel Ill - Capital Regulation
I framework of the Reserve Bank of India; · _ · ·
2. Exposures to Reserve Bank of India; ~rcrv:?f)~~.
%:-- "' averse~ ?A
. . ·.··.>.>\~:/ ·M.::··~,
. :r·:. ;· .. ,. · . . ·.· ·. ·
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3. Exposures where the principal and interest are fully guaranteed by the
Government of India;
4. Exposures secured by financial instruments issued by the Government of
India, to the extent that the eligibility criteria for recognition of the credit risk
mitigation (CRM) are met as described subsequently in this circular;
5. Intra-day interbank exposures;
6. Intra-group exposures;
7. Borrowers, to 'v'{hom limits are authorized for food credit;
8. Banks' clearing activities related ex.posures to Qual.ifying Central
Counterparties (QCCPs), as detailed subsequently in this circular;
9. Deposits maintained with NABARD on account of shortfall in achievement of
targets for priority sector lending. ·
10. Exposures to foreign sovereigns or their central banks that are:
i) subject to a 0% risk weight as per table below.
ii) denominated in the domestic currency ofthot sovereign and met out
of resources of the same currency.
Table : Claims on Foreign Sovereigns/Central Banks - Risk Weights

S&P*/Fitch / AAA to I A I BBB I BB to B I Below B Unrated
Ratings AA
Moody's ) Aaa.to I A I Baa I Ba to B I Below B Uma,ted
ratlnas Aa
Risk Weight I 0 . I 20 . I 50 I 100 . I 150 100.
(%)
*Standard & Poor's
3.6.4 EXCESS OVER LEF NORMS:

a) Reserve Bank of India has discontinued the practice of case to case basis
approval for exceeding the Single I Group borrower risk exposure ceiling.
However, with the approvcll of the Board, Banks have been permitted to
consider enhancement up to a maximum of further 5 percent of Tier I Capital
(Eligible Capital base) in exceptional circumstances in case of Single
Counterparty only, subject to disclosure in Annual Reports with the consent of
the borrower.
b) The Bank will make appropriate disclosures in the 'Notes on Accounts' to the
annual financial statements in respect of such exposures where the Bank had
exceeded the prudential exposure limits during the y_ecu:,
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3.7. GUIDELINES ON ENHANCING CREDIT SUPPLY FOR LARGE BORROWERS THROUGH

MARKET MECHANISM:
3.7.1. While considering sanction of credit limits to large borrowers, the Bank shall give
due consideration to the guidelines enumerated in RBI Circular on Guidelines on
Enhancing Credit Supply for Large Borrowers through Market Mechanism6.
3.7.2. These guidelines will be· applicable on all single counterparties of the Bank,
· except other Scheduled Commercial Banks, Non:-Banking Financial Companies
registered with RBI,:AIIIndia Financial Institutions (National Housing Bank, SIDBI, EXIM
Bank and NABARD), Housing Finance Companies registered with NHB and food credit
limits extended to State Governments/ Union Territories and Food Corporation of India.
. .
3.7.3. Bank shall apply proper due-diligence while deciding the NPLL (Normally
Permitted Lending Limit) as given below for a single borrower in order that borrowers
do not _circumvent the cut-off ASCL (Aggregate Sanctioned Credit Limit as given
below) criteria by borrowing through dummy/fictitious group companies.
3.7.4. These guidelines will come into effect from the financial year 2017-18 onwards.
3.7.5. Bank shall ordinarily keep its fut\.Jre incremental exposures to the specified
borrowers within the NPLL to avoid additional provisioning and higher risk weight
which are as given below.
3.8. PRUDENTIAL MEASURES:
From 2017-18 onwards, incremental exposure of the banking system to a specified

borrower beyond NPLL shall be deemed to carry higher risk Which shall be recognised
by way of additional provisioning .and higher risk weights as under:
i. Additional provisions of 3 percentage points over and above the applicable

provision on the incremental exposure of the banking system in excess of NPLL,
which shall be distributed in proportion to each bank's funded exposure to the.
specified borrower. ·
ii. ·Additional Risk weight of 75 percentage points over and above the applicable
risk weight for the exposure to the specified borrower. The resultant additional
risk weighted exposure, in terms of risk weighted assets (RWA), shall be
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24]Jt~_g'::e ..
Indian Overseas Bank LOAN POLICY DOCUMENT2022
1
distributed in proportion to. each bank's funded exposure to the specified
borrower ..
3.8.1. DEFINITIONS:
For the purpose of this Framework, the following terms shall have the meaning
assigned to them herein below:
i. Aggregate Sanctioned Credit Limit (ASCL) means the aggregate of the fund
based credit limits sanctioned or outstanding~ ·whichever is· higher, to a
· borrower by the banking system. ASCL would also. include unlisted privately
placed debt. with the banking system .
.· ii. 'Specified borrower', means a borrower having an AS~L of more than
· a) Rs. 25,000 crores at any time during FY 2017-18;
b) Rs. 15,000 crores at any time during FY 20 18-19;
c) Rs. 10,000 crores at any time from April 1, 2019 onwards;
iii. 'Reference date', means the date on which a borrower becomes a 'specified
borrower'.
iv. Normally permitted lending limit (NPlL), means 50percent of the incremental .
funds raised by the specified borrower over and above its ASCL as on the
reference dot~, in the financial years (FYs) succeeding the FY in which the
!
reference date falls. For this purpose, any funds raised by way ofequity shall be.
i
deemed to be part of incremental funds raised by the specified borrower (from
I outside the banking system) ·in the given year; Provided that where a specified
I borrower has already raised funds by way· of market instruments and the
·amount outstanding in respect of such instruments as on the reference date is
15 p~r cent or more of ASCL on that date, theNPLL will rnean 60 percent of the
I incremental funds raised by the specified borrower over and above its ASCL as
on the reference date, in the financial years (FYs) succeeding the FY in which
the reference date falls.
v. Banking system, means all banks in India including RRBs and co-operative
banks and branches of Indian banks abroad.
vi. Market instruments, shall include bonds, debentures, redeemable preference
;shares arid any other non-credit liability, other than equity.
3.8.2 For the purpose of determining exposure beyond NPLL, subscription by the
banking system to market instruments shall be· included except any. subscription
.· .t1::;.;,~ .
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made by the banking system to the market instruments issued by a specified borrower·
. in 2017-18 and held within the permissible prudential limits by a bank.
3.8.3 Banks shall at its disc~etion, subscribe to bonds issued by th~ specifie9 borrowers
(over and qbove NPLL) in the first year of this framework taking effed, i.e., 2017-18 ·
subject to extant investment guidelines and these being divested in the subsequent
three years_as per the following milestones:
i). Not l.ess than 30 percent by March 31, 2019 ·
ii) Not less than 60 percent by March 31, 2020 '
iii) Not less than 100 percent by March 31, 2021. .
All holdings by the Bank of market instruments issued by a 'specified borrower' after
· the 'reference date' shall be held in the AFS/H.FT category an·d marked to market as
applicable thereto. However, banks shall, at·its discretion, value its holdings of market
instruments issued by the specified borrowers in 2017-18 at book value.
3.9 CEILING NORMS FOR INDUSTRIAL ADVANCES:

a) The Bank shall have. a well-diversified credit portfolio under different sectors I
Industries. Bank shall periodically carry out analysis on various industries based ·
on the reports/data published by different rating. agencies like CRISIL, ICRA etc .
. and ploce the same to the Board. The findings in the·study along wl.th inte~nal
guidelines relating to the ceilings for specific industries shall be examined
periodically, and identify the promising sector where fresh/additional exposure-.
can be. consid~red
. .and
. .
also industries/sectors that are not doing well and.
where cautious approach is to be adopted.
b) The bank shall endeavour to restrict gross exposure (Fund Based + Non 'Fund
based + Investments) to a particular domestic manufacturing industry to a
·.. maximum of certain perc(?ntage of the Ban,k's gros~ domestic. exposure as
under su.bject to single borrower exposure not- exc~eding the ceiling fixed
under prudential norms.
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!Maximum Cap fixed

{% OF GROSS DOMESTIC FB. and
NFB EXPOSU~E as at the end of
Industry !Previous quarter)
InfrastruCture 25%
Sub-
(Classification as per the RBI definition) limit
· Energy: . 14%
Of which
Electricity Generation &
Transmission: {10%)
Electricity Distribution: {3%)
Non-conventional energy: { 1%)
Transport: 5%
Water & Sanitation: 1%
Communication : 3% ..
I
Social & Commercial Infrastructure 2%
Interchangeability is permiHed by ..... •.~!,·
'
MD& CEO
Basic Metal &Metal Products 15%
OTHER -INDUSTRIES·:
Maximum Cap fixed (%OF GROSS
DOME~TlC FB and NFB EXPOSURE
Industry .,
as at the end of previous auarter)
1. Mining &Quarryina 4%
All engineering incl. Electronics
2. computer etc. 5%
3. Textiles(Cotton, Jute) 6%
Food processing(Sugar +Edible oil
4. &Veg oil) 4%.
5. Beverage & Tobacco products. . 1%
6. Paper &Paper products. 2%
7. Rubber &plastics and their products. 2%
· 8. -Leather &Leather products. 2%
9.\ Chemicals and Chemical products. 5%
10. Cement. & cement products. 2%
11. Construction -2.%
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Indian Overseas Bank LOAN POLICY DOCUMENT 2022.
12. Petroleum, coal products and

Nuclear Fuels. 2%
13. Vehicles, Vehicle parts & Transport
Equipment · 4%
-
14. Gems & Jewellery 2%
15. Glass & Glass ware. 1%
r 16. Wood & Wood products.
"
2%
I 17. Other lrJdustries 2% --~
--
r
. c) In a particular industry where Bank's exposure ha~ exceeded the ceiling fixed,
''! MD&CEO is authorized to permit exceeding overall exposure for each industry
by 10% depending upon the risk appetite of the Bank.
d) Bank shall .endeavour . to restrict gross exposures (Fund Bas·ed+Non-Fund
Based+lnvestment) to a particular manufacturing Industry at Bank's Overseas
Branches as decided in the centre specific lending policies. Since Industrial
adivities are different from the domestic Industry classifications, Overseas
Centers Industry Exposures ;shall be monitored by respective centers and
concerned department at Central Office.
3.10 CEILING NORMS F.OR OTHER INDUSTRIES:
3.10.1 SHIP-BREAKING INDUSTRY:

The aggregate exposure to Ship.;breaking Industry shall not exceed. 2% of gross
domestic exposure as at the end of previous quarter subject to single borrower
exposure .not exceeding
. .
Rs. 400
. .
Crore. MD & CEO is authorized to permit exceeding·.
overall exposure by 10% (i.e. up to 2.2% of gross domestic exposure). The exposure
limits shall be updated as per Bank's Ship Breaking Policy. ·
3.10.2. FILM INDUSTRY:

The aggregate exposure to Film industry shall not exceed 1% of gross domestic
exposure. as at the end of previous quarter subject to single borrower exposure not
exceeding Rs. 50 Crore. MD & CEO is authorized to permit exceeding overall exposure
. c:>f gross domestic exposure).
by 10% (i.e. up to 1.1% .
3.10.3 AVIATION INDUSTRY:

i
I The aggregate exposure to aviation industry shall not exceed 3% of gross domestic
I expo sur~ as at the end of previous quarter subject to sinQie borrower e~posure not
exceeding Rs. 500. Crore. MD & CEO is authorized to permit exceeding overall
exposure by i 0% (i.e. up to 3.3% of gross domestic exposure).
~04/?DM~~~~
?~<>7~
Note: In cases. mentioned above in 3.10.1, 3.10.2 & 3.10.3; the maximum exposure
cari be up to single borrower limit under Large Exposures Framework norms with the
approval of the board;.
3.11 . EXPOSURE CEILING FOR OTHER SEGMENTS I CATEGORIES:
3.11.1 REAL ESTATE ADVANCES:
As per RBI's guidelines, Real Estate Sector includes Housing Loans also. Our exposure
ceiling to Real Estate Sector has been fixed at 30% of gross domestic exposure as at··
the end of previol)s quarter. The real estate sector loans consist of
Sub-sector under Real Estate Advances Sub-ceiling
Commercial Real Estate excluding liquirent CRE: - Len dings .

secured by mortgages· on commercial real estates (office
buildings, retail space, multipurpose commercial premises,
multifamily residential buildings, multi-tenanted commercial 4%
premises, industrial or warehouse space, land acquisition,
devebpment and construction etc.) (excluding liquirent .
CRE).
of which CRE ~Residential Housing (CRE-RH) (3%)
to builders & developers)
Liquirent CRE . 1%
Commercial Real Estate (Total) 5%
Uquirent- Non..:CRE . 3%
Hotels, Hospitals and investment in Mortgaged Backed
Securities. (MBS) 3%
c:ind other securitised exposures
Housing direct ·(includes total of residential mortgages- 15%
except indirect housing loans)
Housing Indirect 4%.
Non-Commercial Reel Estate (Total) 25%
Real Estate- CRE & Non CRE (Total) 30%
3.11.2 EXPOSURE LIMIT FOR TRUST/SOCIETY:
The aggregate exposure to Trust and Society put together shall not exceed 3% of gross
domestic exposure as at the end of previous quarter ·fcr . to single borrower
exposure not exceeding Rs. 100 Crore. For lnfrastruc~ ~~t~~~ usts (l~v~Ts):, the
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single borrower exposure ceiling shall be Rs. 400.00 crore. Existing accounts with
exposure more than this ceiling shall continue. MD&CEO is authorized to permit
exceeding overall exposure by 10% (i.e. up to 3.3% of gross domestic exposure).
. .
II The ceiling of Rs. 100 crore fixed for Single Trust/Society and 3% fixed for aggregate ....
Trust/Society accounts are not applicable in the following cases.
I
I
!
i. • In the case of exposure to Trusts/S<:>cieties constituted ~Y State I Central
. Governments including Port Trust(s) or under Spedal Statutes for specific
r purposeslike infrastructure development etc., and
ii. To accounts.specifically exempted by the Board.
In cases mentioned under i & ii above, the exposure can be up to single borrower limit
under Large Exposures Framework norms.
3.11.3 EXPOSURE LIMIT FOR NBFCs:

a) The ·exposure to NBFCs will be governed by· .LEF norms except NBFCs
predominantly engaged in lending against Gold.
b) The exposure to NBFCs (engaged in lending against Gold) shall not exceed 10% .
of gross domestic exposure as at the end of previous quarter subject to single
borrower exposure not exceeding 2% of capital funds or Rs. 300 Cr whichever is
'lower for accounts rated below A'. The exposure ceiling js
I rioof capital funds ..
or Rs. 1000 Cr whichever is lower, 6% of capital funds orRs. 800 Cr whichever is
lower & 4% of capital funds or Rs. 500 Cr whichever is lower -respectively for
'AAA', 'AA', and 'A.' rated borrowers. Existing acco)Jnts with exposure more
than this ceiling shall continue.
c). Sub ceiling for all NBFCs.predominantly engaged in lending against gold: Within
the above ceiling a sub ceiling of 1% of gross domestic exposure for all such
NBFCs, having gold loans to the extent of 50% or more of its total financial assets,
taken· together ..
3.11.4 CAPITAL MARKET EXPOSURE:

. .
Bank will adopt the following norms relating to exposure to Capital Market.
'-·
i
3.11 A.( a)- .LOAN AGAINST SHARES: . , .. ..
J Fresh Loans against shares shall not be considered. However,· Existing Loans can be ·
J renewed/ reviewed under RLCC and above Powers.
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* 0 5 JAN ZOZZ ' ', ~ _· . .1:;,~~;/ ~
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h1dian Overseas Bank LOAN POLICY DOCUMENT 2022
3.11.4 (b)·· LOANS TOSHARE AND STOCK BROKERS AND MARKET MAKERS:
Fresh Loans to share and stock brokers and market makers shall not be.considered.
However... Existing Loons can be renewed/ reviewed under RLCC and above Powers.
_3.11.4. (c)REGULATORY LIMIT:

The Bank shall adhere to the following regulatory limits stipulated by RBI.
·a) The agg~egate exposure of the Bank to.the capital markets in all forms (both
fund based and non-fund based) shallnot exceed 40 per cent of its net worth,
as on March 31S 1of the previous year.
b) Within this overall ceiling, the Bank's direct investment in sharE?s, convertible
bonds/ debentures, units of. equity-oriented mutual funds and all exposures to
Venture Capital Funds (YCFs) [both registered and unregistered] shall not
exceed 20 per cent of its net worth.
3.11.4. (d) INTERNAL LIMIT:
The Ceiling for Aggregate advances against shares including Advances to share
brok_ers and market makers, and issuance of guarantees on behalf of brokers, will be
as mentioned above under Regulatory Limit.
Further, aggregate advances to share brokers and. market makers and issucinc~ of
guarantee~ on behalf of brokers, shall not exceed 10% of the net worth of the Bank.
3.1·1.4. (e) FINANCE for PROMOTER'S CONTRIBUTION,
Bank will restriCt its aggregate exposure at Rs. 200 Crore under the category -
acquisition of equity in overseas joint ventures/wholly owned subsidiaries or in other
overseas companies.
3.12 CEILING FOR GOLD (METAL) LOAN -REGULATORY LIMIT:
The aggregate of gold loan borrowing I other non-:funded commitments for the
purpose of providing gold loans to domestic jewellery manufacturers and exporters
shall not exceed 25% of Tier-1 capital of the Bank.
3.13 CREDIT FACILITIES GRANTED TO INDIAN JOINT VENTURES I. WHOLLY OWNED

SUBSIDIARIES ABROAD AND OVERSEAS STEP DOWN SUBSIDIARIES OF INDIAN
CORPORAlES- BY BRANCHES IN INDIA:
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31 I Page
Maximum Limit that I

Particulars can be sanctioned
by the Bank
Aggregate exposure [credit ·and non-:credit
facilities· (viz: le,tters of credit and guarantees) of the 20% of Bonk's
Bank to Iridian Joint Ventures where the· holding by unimpaired capital
the Indian Company is more than 51% Wholly Fun~s (Tier I and Tier II
Owned Subsidiaries abroad Capital)·
3.14. LOAN AGAINST NRE RUPEE+.DEPOSITS and FCNR (B) DEPOSITS (FB & NFB):
Please refer RBI Master Circular of Instructions Rel.ating to Deposits held in FCNR(B)
Accounts7.
a) Rupee loans may be allowed to depositor /third party vvithout any ceiling
subject to usual margin requirements .
. b)· Fo'reign Currency loans may be allowed to depositor/third party without any
. ceiling subject to usual margin requirements.
c) In case of FCNR deposits, the margin requirement shall be notionally calculated
on· the rupee equ.ivalent of the deposits.
d)· Further, the· facility of premature withdrawal of NRE/FCNR deposits shall not be
' . avaiLable where loans against such dep·osits. are to be availed of. This
requirement may specifically be brought to the notice of the deposit holder at
the. time of sanction ot' the loan. . . .
The existing loans which are not in co·nformity with the above instructions shall .
continue fortheirexisting te~m and shall not be roll.ed over/renewed. .
e).Credit Sanctioning authorities shall take the cost of foreign currency funds from
treasury and shall add appropriate premia and margin based on the tenor and
risk rating of' the .client before ~inalizing the lending rates. Basis for fixing the
Interest rate for Rupee loan against Foreign Currency D,eposits:
(i) .The prevalent cost of swapping the Foreign Currency to Rupees for. the
. corresponding maturity period of the Rupee Loan is added with the
. · interest cost of the FCNR deposit and the applicable spread or ·
(ii) The cost of a domestic deposit for the corresponding period as on the
date of opening of the FCNR .deposit i~ added with the applicable
~pread. .. . . . . ,- . . .. . . _. . . . .
. (iii): The ·high·er~t"(ij and .. (ii(is'the 'rate applicable for Rupek Lo.an against
Foreign Currency Deposits.
-(iv) This interest rote is not linked to MCLR.
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32 I P age
. f) Foreign Currency Loans sanctioned cannot be repatriated outside India and

con be used in India only for the· purposes specified in the regulations.
g) ln.case of loans sanctioned to a third party, there should be no direct or indirect
foreign exchange consideration for the non-resident depositor agreeing to
pledge his deposits to enable .the resident individual/ firm/ company to obtain
such facilities.
h) In case of the loan sanctioned to the account
' .
holder, it can be repaid either
by adjusting the deposits or through inward remittances from outside India
through ban.king channels or out of balances held in the NRO account of the
account holder.
3.15 OTHER CEILING I EXPOSURE NORMS
3.15.1 UNSECURED EXPOSURES:.
a) Bank will limit its commitments by way of global unsecured exposures in such a
manner that Bank's outstanding unsecured guarantees, plus total outstanding ·
.unsecured advances shall not exceed 30% of its total out~tanding global
advances cis at the end of previous quarter.
b) Unsecured exposure is defined as an exposure where the realizable value of
security, as ClSSessed by the. Bank/ Approved valuers/Reserve Bank_'s inspecting
officers is not more than 10 per cent, ab-initio, of the outstanding exposure.
c) Exposure ·.shall ·include all funded and non-funded exposures including
underwriting and similar commitments.
d) Security will mean tangible security, properly charged to the Bank and will not
include intangible securities like guarantees, comfort letters etc.
e) The above definition is for the purpose of arriving at' the exposures in such
unsecured category os per ·RBI guideline. For the purpose of exercising the
discretionary powers the sanctioning authorities shall be guided by the
definition given· in the discretionary power booklet with regard to unsecured
advances.
3.15.2 LOANS WITH RESIDUAL MATURITY OF OVER 3 YEARS:

In order to monitor loans having longer maturity period effectively, a ceiling is fixed for
j· Bank's exposure to loans with residual maturity of over 3·years to 35% of gross domestic
advances outstanding as at the end of previous quarter.
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3.15.3 SUBSTANTIAL EXPOSURE LIMIT:
Bank will ensure that the substantial exposure limit i.e. sum total of exposures assumed
in respect of those single borrowers enjoying credit facilities in excess of a threshold
limit, say 10% of capital funds, does not exceed 500% of the Bank's capital funds or
~5% of total adv-ances outstanding whichever is lower. . . ·
3.15.4. GUARANTEES IN FAVOUR OF BANKS:
a) In tune with liberalisation and deregulation of the banking sector, and in view
. of the adoption of risk management systems in bank, RBI has allowed Bonks to
issue guarantees favouring other banks/Fis/other lending agencies for the loans
extendeq by the latter.
b) A cap of 10% on Bank's Tier 1 capital is fixed for the bank as a whole for issuing
i! '
such guarqntees. Of this, guarantees favouring sin~le bank/FI will not exceed
1% of Tier 1- cqpital. CAC is empowered to sanction up to the ceiling of 20% of
Tier 1 Capital for the bank as a whole and 2% of Tier 1 Capital for single Bank/Fl.
Sanction of this facility is restricted to HLCC (GM) and upwards:
c) RBI Guidelines in this regard as contained in RBI Master Circular- Loans and
Advances- Statutory and Other RestrictionsB shall be strictly adhered to.
3.16 UNHEDGED FOREGIN CURRENCY EXPOSURE:
3.16.1. The Bank will recognize and take in to account the risks arising out of foreign
exchange exposure of its clients.
Foreign currency loans

.
above USD 10 million, (or such lower limits as may. be deemed
appropriate from time to time vis-a-vis the Bank's portfolios of sue~ exposures), will be
extended by the Bank only on the basis of appropriate hedging of such foreign
currency loans, excluding the following. ·
a) Where forex loans are extended to finance exports, Bank will not insist on ..
hedging but will assure itself that such customers have uncovered receivables
to cover the loan amount.
:~. ·.
b) Where the forex loans or~ E3Xten_9.ed. f9,r meeting forex expenditure. For arriving
_,'
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at' the aggregate unhedged foreign exchange' exposure of cli'ents, .their
I exposure from all sources including foreign currency borrowings and External
~-
Commercial Borrowings should be taken into account.
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c) The review of unhedged exposure for SMEs shall be done oh a monthly basis. In
all other cases! Bank shall monitor and review such position on a quarterly basis.
d) In the case of consortium/multiple banking ·arrangements, the lead role in
monitoring unhedged foreign exchange exposure of clien.ts, as indicated
above, would have to be assumed by the consortium leader/bank having the
largest exposure.
3.16;2 Bank will also adhere to the instructions relating to information sharing among
Banks as indicated in RBI circular on 'Lending under Consortium Arrangement I
Mwltiple Banking Arrangements'9 and on Non-Performing Assets and Restructuring of
Advanceslo,
3.16.3 Bank shall evaluate the risks arising out of unhedged foreign currency exposure
of corporates dnd price them in the credit risk premium
·' .·
'
while
.
extending fund based
and non:-fund based credit facilitiE?s to corporates. Bank may also consider stipulating
: .. · 1 a limit on unhedged position of corporate.
:
3.16.4: Bank will also adhere to the instruction relating to Government of India
guidelines on PSB reforms agenda aimed at Enhanced Access and Service
ExceUence (EASE).
3.1 i .. REGION/SECTOR SPECIFIC EXPOSURE:

1.
a) In regard to credit exposure in the various States/ Regions of the country, n6
.. quantum ceiling is fixed. However, in view of the need to be a catalyst in the
development of under developed areas of the country, the Bank would, as a.
conscious policy, prefer additional credit deployment in those States/ Regions
where the credit deposit ratio of the Bank· is low; this would, of course, be
contingent upon viable, acceptable credit prO"posals forthcoming from those
underdeveloped States/Regions. In other words, if many acceptable viable
. credit propo.sals. were available, preference will be given to' . proposals
·emanating from regions where our Credit Depos.it Ratio is low.
b) District Credit Plans are .formulated and placed before SLBC to facilitate ·
achievement of district I region specific targets. For advances to different
sectors based on the geographical region, target is fixed taking into account
the potential available in the region. ·
· c) Geographical Boundaries: It is· prudent to . extend finance· within proper
boundaries,
. .
which are easy to monitor. The below
.
mentioned guidelines
.
should
be adhered to while extending credit to a borrower:
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Sanctioning : <''
Sl No I Authori!'i_ Guidelines
a) The Borrower's Residence ./ Registered Office/
Corporate Office/Factory either· one of them
should be locqted within the same metro c;ity or
district of the branch premises.
b) In other cases, (i.e., where the borrower's
residence/ registered office/ factory is situated in
adjoining/ nearby ·district), t.he Borrower's
Residence 1 Registered . Office/ Corporate
Office/Factory either one of them should be
locat(3d within 25 kms of the branch premises.
Deviation, if any, in above cases (a) ·and (b), to be

. 1 · I Branch permHted by Regional Level Credit Committee.
2' I RLCC. a) The Borrower's Residence I Registered Office/
Corporate Office/Factory either one of them
should. be located within the ~ame metro city or
district of the branch premises.
b) In other cases, (i.e., where the borrower's
· residence/ registered office/ factory is situated in
adjoining/ nearby district), the Borrower's ·'
Residence . I Registered Office/ Corporate ·
Office/Factory e.ither• ohe ·.of th·em should .be.·
located within 50 kms of the branch premises.
Deviation, if any, in above cases (a) and (b), to be

permitted by HLCC(GM). . . .
The . san-ctionin·g · authority to . decide on the·
.acceptability of serving branch vis-a-vis the location of
3 Central Office the borrower based on merits:
The qbove guidelines shall be.·applicable fo(corpo_rate borrower accounts (Business

Loans), excluding all retail loans.
3.18: A bank's exposures to its counterparties may result in concentrati9n of its assets.
to a single counterparty or a group of connected counterpartie·s·. As a first step to
address the concentration risk, the Reserve Bank, in March 1989, fixed limits on bank
exposures to an individual business concern and· to business concerns of a group.
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lndian.Overseas Bani< LOAN POLICY DOCUMENT 2022
Chapter-4
RESTR]CTIONS FOR FINANCING
Banks will strictly adhere to various statutory and other restrictions listed out in RBI
Circulars.
4.1 STATUTORY RESTRICTIONS:

4.1.1 Advances Against Bank's own shares:
a) In terms of Section 20(1) of the Banking Regulation Act, 1949, Bank shall not
grant any loans and advdl"'Ces on the security of its own shares.
b) Bank shall not extend advances to employees I Employees' Trusts set up by
them for the purpose of purchasing Bank's shares under ESOPs /IPOs or from
the secondary market. This prohibition will apply irrespective of whether the
advances are secured or unsecured.
4.1.2 Holding Shares in Companies:

a) ·In .terms of Section 19(2) of the Banking Regulation Act, 1949, banks should
not hold shares in any company except as provided in sub~section (1)
. whether as pledgee, mortgagee or absolute owner, of an amount -~_,,
exceeding 30 percent of the paid-up share capital of that company or 30
percent of its own paid-up share capital and reserves, whichever is less.
b) Further, in terms of Section 19(3) of the Banking Regulation Act 1949, the
banks should not hold shares Whether as pledgee, mortgagee or absolute
owner, in any company in the management o.f which. any managing
director or manager of the bank is in any manner concerned or interested .
. c) Accordingly, while. granting loans and advances against shares,_statutory
provisions contained in Secti.ons 19(2) and 19 (3) will be strictly observed ..
4.1.3 Credit to Companies for Buy-Back of their Shares/Securities:

Bank will not provide loans to companies for buy-back of shares/securities except
buy back of FCCB as per extant RBI guidelines. . ,.,.~
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4.2 REGULATORY RESTRICTIONS:
· 4.2.1. Commodities coVered under Selective Credit Control:
With a view to preventing speculative holding of essential co modifies with·the

help of bank credit and the resultant rise in their pric ~-in' ~~~ of powers
conferred by Section 21 & 35A of the Banking-Regul io~,~8re~~~~~ Reserve
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0 5 .IAN ZOZZ
Indian Overseas Bank LOAN POLICY· DOCUMENT 2022
Bank of India, being satisfied that it is necessary and expedient in the public
I
interest to do so, issues, from time to time, directives to all commercial banks,
stipulating specific restrictions on ·bank advances against specified sensitive
commodities. The commodities, generally treated as sensitive commodities are
I
I
the following:
a) food grains i.e. cereals and pulses,

I b) selected major oil seeds indigenously grown,. viz. groundnut,
l
i rapeseed/mustard, cottonseed, linseed and castor seed, oils thereof,
'·
vanaspati and all imported oils and vegetable oils,
c) raw cotton and kapas,
d) su-gar/gur/khandsari,
e) Cott'on textiles which include cotton yarn, man-made fibres and- yarn and
fabrics made out of man-made fibres and partly out of cotton yarn and
partly out of man-made fibres.
Sanctioning authorities cue free to fix prudential margins ·on advances against
these sensitive commodities. However, ln case of ~dvance against levy Sugar, a
minimum margin of 10% will apply.
Valuation of sugar stocks:

a) The unreleased stocks of the levy sugar charged to the Bank as securit-y by
the sugar mills sholl be valued at levy price fixed by Government.
b) The unreleased stocks of free sale sugar including buffer stocks of sugar
charged to the Bank as security by sugar mills, shall be valued at the
average of the price realised in the preceding three· months (moving
overa.ge) or the current market price, whichever i.s lower; the prices for this.
purpose shall be exclusive of excise duty.
4.2.2. Loans and advances against shares, debentures and bonds:

Bank shall not grant any fresh/ additional loan against shares. Renewal of existing
loans to be done by RLCC and above upto their powers.
Bank shall strictly observe regulatory restrictions on grant of loans and advances
· ag.ainst shares, debentures and bonds. The restrictions, inter alia, on loans and
i advances against shares and debentures, are .. .
r ·~ No ioans to be granted against partly ·paid shares.
l ~ No lpans to be granted to partnership/proprietorship concerns against the

primory security of shares and debentures.
Bqnk will comply with the
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The valuation of shares/debentures lodged as security for arriving at the eligible

i'
._loan amount should be made at the average of market prices for the past 12 ·
[ months or current market prices whichever is lower.
!. Looking at the volatility of share market the valuation ofthe shares should be done
i
on monthly basis and if any shc;xtfall in the margin is observed, the same to be
i recovered from the borrower immediately.
J
,;
4.2.3. Advances against fixed deposit receipts issl)ed by other banks:
Advances against FDRs, or other term deposits of other Banks will not be granted.
4.2.4: Advances to ·Agents/Intermediaries based on Consideration of Deposit

Mobilisation:
Bank will desist from being party to unethical practices of raising of resources
through agents/intermediaries to meet the credit needs of the
· existing/prospective borrowers or from granting loans to intermediaries; based on
the consideration of deposit mobilisation, who may not tequire the funds for their
genuine business requirements .
. 4.2.5. Loans against Certificate of Deposits (CDS) and Finance for and Loans/
Advanc'es against Indian Depository Receipts (IDRs): · ·
Bank will not grant loans against Certificate of Deposits.
Bank will not grant any loan I advance for subscription to Indian Depository
Receipts (I DRs). Further, bank will not grant any loan I advance against security I
collateral of IDRs issued in India. ·
4.2.6. Non Fund Based Facility to Non Constituent Borrowers of the Bank:
RBI vide their circular oh Non-Fund Based Facility to Non-con~tituent Borrowers of
Bankll have permitted Scheduled Commercial Banks to sanction n~:m-fund based
facilities including Partial Credit Enhancem.ent (PCE) to those customers, who do
not avail any fund based facility from any bank in India, subject to the following .
conditions and based on a comprehensive Boar~ approved loan policy for grant
of non-fund based facility to such borrowers The modality is included here.
a) Bank shall consider·sanctioningn6n-fund based facilities to non-constituents
i who require Non-Fund bas,ed facilities like Letter of Credits (LCs), Bank
J Guarantees, but' do not avail of any Fund based facility from any bank.
j' b) Verification of Customer credentials

Bank shall ensure that the borrower has not availed any fund based facility
from any bank operating in India. However, at th~~ i!t t~ng non-fund
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based facilities, Ban..k shall obtain declaration from the customer about the
non- fund based credit facilities already enjoyed by them from other banks.
c) Credit Appraisal and due-diligence
Bank· shall undertake the same level of credit appraisal as has been laid·
down for fund base.d facilities.
d) Compliance with Know Your Customer (KYC) Norms I Anti-Money
Laundering (AML) Standards 1 Combating of Financing of Terrorism (CFT) I
Obligation of banks under PMLA, 2002 .
The instructions/ guidelines on KYC/ AML/ CFT applicable to banks, issued by
· RBI from time to time, shall be adhered to in respect of all such credit facility.
e) Submission of Credit Information to CICs ·
Credit informa'tion reiating to grant of such facility shall mandatorily be
furnished to the Credit Information Companies (specifically authorized by
RBI). Such reporting shall be subject to fhe guidelines under Credi.t
Information Companies (Regulation) Act, 2005. ·
f) Exposure Norms
Bank shall adhere to the exposure norms as prescribed by RBI from time to
time.
As per the RBI restriction, Bank will not negotiate unrestricted LCs of non-
constituents in terms RBI Master Circular
.
on Loans ·and Advances::.statutory
' ,•
ari.d Other Restrictionss.

In cases where negotiation of bills drawn under LC is restricted to our Bank
·and the beneficiary of the LC is not a constituent of. our Bank; the Bank shall
have the option to negotiate such LCs, subject. to the condi.tion that the
proceeds will be remitted to the regular banker of the beneficiary.
4.2.7~ Finance against banned article:

No finance will be made for dealing in/against security of any banned article
including articles possession/production of which are banned under Wild Life
Protection Act, 1972.
4.2.8. Advances against bullion I primary gold:

a)' Bank will not grant any advance against bullion/primary gold except gold
coins purchased frorn banks .
. b) Bank shall.ensure that the weight of.the coin(s) doesnot exceed 50 grams
· per customer and .the amount of loan to·· any cu~tomer against gold.
ornaments, gold jewellery and gold coins (weighing up to 50 grams) should
be within .the Board approved limit.
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0 5 JAN 2012 *I /~:;::i::::~''
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c) Restriction on grant of loan against 'gold bullion' stipulated as per extant

instructions will also be applicable to grant of advance against units of gold
ETFsand units of golq Mutual Funds.
d) Bank will not grant advances to the silver bullion dealers which are likely to
be utilized for speculative purposes.
e) However, finance may be provided for genuine working capital
requirements of jewelers The scheme of Gold (Metal) Joan advised by
Precious Metal Section as amended from time to time shall continue to be
in force.
4.2.9. Bridge Loans to NBFCs

.Bridge loans of any nature, or interim finance against capital /.debenture issues
and l or iri the form of loans of a bridging nature will not be granted pending .
raising of long-term funds from the market by way of capital, deposits, etc. to any
category of Non-Banking Financial Companies and also Residuary Non- Banking
Company.
4.2.1 0. NBFCS in Partnership Firm: .

Bank will .riot grant any advance to partnership
. firms In which NBFC is a partner..
4.2.11. Indian· Depository Receipts (I DR): .<

Bank shall not grant any loan/advances for ~ubscription to IDR's Bank also shall
not grant any advance against security (either as prime or collateral) of IDRs
issued in India.
4:2.12 Granting of loans for acquisition of Klsan Vikas Petras ( KVPs ):

As per RBI Guidelines given in Master Circular on-Loans and Advances- Statutory
and ·other Restrlctionsa, Banks should ensure that no loans are sanctioned for
acquisition of/investing in Small Savings Instruments. including Kisan Vikas
.
Patras.
It may be not~d that this guide.line does not prohibit sanctioning loans against ·
small saving instruments already acquired and held by individuals out of their own
funds.
It is clarified that loans can be granted to individuals against small savmgs

instruments acquired by them out of their own funds and held by them.
Appropriote margin norms depending upon nature of small saving instrument shall
be maintained ...
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' 4.2.13 Financing HUF: ·
i. No fresh/ additional advance can be considered to HUF. Renewal at
I existing ·level can be done by RLCC and above upto their delegated .
powers.
· ii. ··No fresh I additional advance can be considered to firms having HUF as a
I partner. However, in an existing partnership firm in which HUF is a partner
that is already financed by the Bank, the renewal of the credit limits at the
existing level may be done by RLCC and above under their powers.
iii. The. property/securities in the name of HUF shall be accepted only for the
respective HUF and shall not be accepted for any other borrowers -whether
a member of thE? HUF or other category of borrowers- either as coilateral or
otherwise.
4.2.14 Finance for purchase of Gold:

No advances shall be granted by the Bank for purchase of gold in any form,
including primary gold, gold bullion, gold jewellery, gold coins, units. of gold
Exchange Traded Funds (ETF) and units of gold Mutual Funds. However, finance
may be provided for genuine working capital requirements of jewelers The
scheme of Gold. (Metal) :Loan advised by Precious Metal Section as amended
from time to time shall continue to be in force.
4.2.15 Policy for Stressed Sectors: . .

As advised by RBI, Bank· has put in place a policy for;'Stressed Sectors" with the
approval of Board. The policy require's a review of the performance of. various
sectors of the. econQmY to which the bank has an exposure to evaluate the
present and emerging risks and stress therein. The review may include qua'ntitative
ar)d qualitative 9spects like debt-equity ratio, interest coverage ratio, profit
margins, ratings upgrade to downgrade ratio, sectoral. non-performing
assets/stressed assets; indqstry performance and outlook, legal/ regulatory issues
faced by the sector,.etc. The reviews may also include sector specific parameters.
Accordingly, Bank has a policy on Stressed sectors and Lending to these identified
Stressed sectors should be Qs per the Policy.
j f"
l 4.2.16 Restrictions .on Grant of Financial Assistance to Industries .Producing/

J · Consuming Ozone Depleting Substances (ODS):
Banks shall not extend finance for setting up of new units consuming/producing
.\
the Ozone Depleting Substances (ODS). No financial assistance shall ~e extended
.I
to small/medium scale units engaged in the manufact~-1. ~~1~ ~·osol units u~tn:~<:: ·.:,·;.I,
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chlorofluorocarbons (CFC) and no refinance would be extended to any project

assisted in this sector.
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Chapter-5
TAKE OVER OF BORROWAL ACCOUNTS:
5.1 Explanation:
a) If the borrower account with the existing banker(s) is liquidated out of
advances extended by us, it is to be treated as takeover.
b) All other cases will_not be treated as take over.
c) In the cases of working capital finance through consortium or multiple
Banking,_ increasing our share as well as taking over of the share of other
Bank or induction of our bank by taking over of the share of other bank shall
not be reckoned as takeover of the advances from other:Banks.
d) When a bank does Down Selling of part amount of the loan of a borrower,
and o"ur bdnk takes the exposure, the same shall not be construed as "tdke
over", subject to that bank maintains a hold position till maturity of the loan
e) Accounts Closed Within 3 Months: If the applicant approaches the Bank
within 3 months after closing the accourit with the other Bank, though it is
' . '
not treated as takeover, credit report should be obtained from that Bank in
the format prescribed by RBI and to be processed as regular proposal. (Take
. over norms are not applicable).
Before taking: over .an account, credit information from the transferor Bank
shall be obtained as per the prescribed format. However, for retail
advances like housing loans, Pushpaka, Sahayaka~ Home Improvement
Scheme etc., credit report may be obtained with only relevant columns
pertaining to.Retailloans.
f) In case of. takeover of housing loans from reputed Banks and Housing
Finance Companies, where the credit opinion. is not forthcoming/or not
submitted in the standard format of RBI, sanctioning authorities from the
level of RLCCs a~d above and branches with prior approval of Regional
Of.fice may accept such· credit opinion/waive obtention of credit opinion
after satisfying themselves about the asset quality and account status by
cross verifying with the statement of account and sanction letter issued. by
the financing institution. This may be resorted to only in exceptional cases.
5.. 2 Norms I Criteria for takeover of Borrowal accounts:

'f'.
.a).: Banks rri'ay ta_ke·. over borrowal accounts ' from Banks,. Financial
j Institutions/Agencies.
b) Only borrowal accounts which are standard and performing during the past
one year shall be taken over. No NPA account sha taken over. Even
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. SMA-2 account should not be taken over. Such accounts can be taken over
in exceptional-circumstances only with the prior approval of MCB.
c) Takeover of account should not be below BBB (if externally rated).
d) No borrowal accounts (except for loans upto Rs .. s:oo ·crores per proposal
under all Retail loan schemes including Housing Loan and MSME loans as
mentioned below) shall be taken over from any bank where any of our EDs
-or MD & CEO had worked earlier. In case, any such case arises to be taken
over, the proposals need to be put up to the Boord with sp~cific reasons
justifying the need for taking over the accounts. However, loans upto Rs. 5.00
crores per proposal under all Retail loan schemes Including Housing loan
andMSME loans from any Bank/ Financial Institutions wherein our EDs or MD
& C.EO had worked earlier; can be taken over without placing the same to
the board f~>r approval subject to the following. .
~ Sl)ch sanctions can be considered by HLCC (GM) and above up to
their'powers after complying with all the takeover norms.
> Retail Banking Division
.'
& MSME. Department to collect information
.
on
such Takeover accounts and place a note on such sanctions on a
quarterly basis to the Board for information.
e) Account should have recorded cash generation I profit for the preceding
two years out of three years unless the account is not in operation for three
years· and business conditions shouid indicate improvement in profitability. · ;,~.
f) Companies that are established recently, all precautions that are being
i taken, while e.xtending credit facilities to ·a new borrower will be taken for
[ takeover. The project should not be in the implementation phase at the time .
I of takeover of the loan. In other words, it should have commenced
commercial production and surpassed the breakeven .level and the
moratorium period. for repayment of the loan ·should be over. The
I
1
.repayment of the loan proposed to be taken over should not have been
rephased by the existing Fl I Bank after commencement ·of commercial
production. However,· accounts restructured under RBI Resolution
Framework. for Covid related stress may be considered for takeover on
merits upon complying with other takeover norms. ·
5.3. Take Over with enhancement I fresh or addttlonal factttties:

a) RlCC and abOve are vested with powers· to take over borrower accounts
rI from ·other lenders within their single/ group borrower .limits without any
·clearance from next layer of authority.
1 b) Takeover of the account can be considered with ·need based
enhancement in working capital (fund and n~n- ni"'t:-hrt d) upto 30% of
1\~ ~ tcf\''5:
the existing limit with other lender. Example: . ~~~r~tGl~<lN ing working .,
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capital limit of Rs. 1.00 crore with other bank can be sanctioned working
capital upto Rs. 1,30 crore based on the assessment I need during takeover.
Discretion to consider takeover with enha_ncement in Working Capital limit and/or ·

additional term loan:
Enhancement in working capital (fund and non-fund based) and/or additional
term loan c:;ah be considered in eligible cases by the following authorities:
MSME Accounts RLCC upto its powers for IOB-1 toiOB-5 accounts.
HLCC (GM) and above up to· its powers for any
· rated accounts.
For other accounts H~CC (GM) and above up to its powers
(Other than ·MSME)
Any takeover with enhancement beyond 30% of existing working capitallin:its to
be considered by next layer of authority i.e., HLCC (GM) and above.··
·Note:
a) Additionally, Sanctioning· Authority from RLCC onwards :can also consider
~eed based fresh. term loan facility the time oftakeov'er. . at
b) Reduction . in . collateral coverage atter . considering need ..· based
. enhancement in working capital/ fresh term loan shall not be cor)strued as
dilution.
5.4. Oth~r Criteria:

a) Proper due diligence including pre-Inspection visit· to the premises of the
customer shall b.e conducted before the account is considered for taken
over. ·•·
. b)' The financiOI benchmarks stipulated for sanctioning credit fOdlities, in the
. ·. normal circum.stances, will. be: adhered to &. deviations in exc~ptional cases.
will be justified in the note put up for san<;::tion.
c) Before taking over an account, credit information from the transferor Bank
shall be obtained as per the prescribed format. No waiver is permitted
(except for retail advances as mentioned abov'e). As per ·RBI notification,
QBR.No.Dir;BC.10/13.03.00/2015-16 dated 01.07.2015 .credit. information in
the;~pecified format is to be obtained. Howev~r, ifthe <.::;redit information is
not forthcoming, waiver may be sought from HLCC (GM) (For accounts
upto RLCC powers). HLCC (GM) and above may waive requirement of ·
credit information report for accounts falling_ up~~ tive P,~N{ers.
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The waiver to be permitted after satisfying about the asset quality and
account status by cross verifying with the statement of account and
sanction letter issued by the financing institution. This may be resorted to
only in exceptional cases.
d) The reasons for shifting over to our bank will be mentioned in the appraisal
note.
e) Independent market enquiries, oral /written, will be made and recorded in
the appraisal note. ·
' ' .
f) Satisfactory credit report on the borrower /promoters from any credit rating
agency or any credit information provider like CIBIL.
.g) Statement' of accounts of the erstwhile bank, generated from Internet
· Banking in the presence of Credit Officer /Branch Manager can also be
accepted. Such statement of accounts, at least for the last 6 months, shall
be studieq and commented upon in the appraisal riote.
h) The genuineness of statement of account, credit sanction, credit reports
given by the existing Bank shall be verified by personal visit to the existing
Bank by the Branch Head himself. However, in AGM/DGM headed
branches, genuineness of statement of account, the verification shall be ,
done by Officers not below the rank of Scale IV. In the abset)ce of Scale IV
officer in the Branch, it has to be necessarily verified by the Branch Head '·'
only.· Such verification shall be recorded on such statem~nts / sanctions I
reports under full signature of the Branch Head arid the Officer who has
verified the same with his authority.
if The financial discipline of the borrower shall in no way be compromised at
the time of take over and their credit requirements are to be independently
assessed.
j) Bank shall takE? over accounts without any dilution in securities/margin
offered to the other Bank.
Clarification:
For MSME Accounts:
Prime (Primary) Security: To be obtained in full as available with the existing

' '
lender.
Collateral Security: For any deviation in collateral security, permission to be

sought as per the following:
Authority vested with the
1 power of takeover as above 1 / ~<:>=>(\ overse~.; ~~"\ .;' · {':' / ., . _
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* 0 5 JAN ZOZ2 *
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l RLCC HLCC (GM)
I
I. HLCC (GM) and above HLCC .(GM) and above i.e., same
I authority.
I
Margin: Any'concession sought in margin . (Working. Capital and Term Loan)

to be placed to the authority delegated for considering such concession.
Such reduction to be backed by sound reasoning. (Pieose refer latest CSSD
circular on Delegated Powers dated 21.06.2021, as amended from time to
time) .
. Other Terms & Conditions and Concessions including· Rate of Interest: To be

placed to the. authority delegated for considering such conces.sion. (Please
refer latest CSSD circular on Delegated Powers .dated 21.06.2021, as
amended from time to time).
For other than MSME ace ounts:

II
Bank shall take over accounts wi,thout any dilution in securities, margin
I offered to the other Barik. ·
I'
k) Powers are delegated to select authorities for financing additionol facilities
in the. case of take over accounts .
. I) While taking over of the account the remaining repayment period shall not
.. be extended. No waiver shall be permitted at any level for this ..
mf The formalities such as fresh documentation, transfer of securities etc. are to
be expeditiously completed.
5.5. Interest Rate & Other: Concession:
a) The .concessionary facilities like interest rate and other charges can be
extended only in extremely deserving cases with specific reasons recorded
in writing by the appropriate authorities. Branches/ROs should refer to the
latest Financial Discretionary Power circular (or any other latest issued
circular) for the parameters to be complied for Interest concession.
b) In th~ <;:ase of taken-over accounts where sancti,aning authorities have
already considered concession in pricing /Charges etc. at. the time of
takeover, generally no further concession can be considered till completion
of one year from the date of sanction. However, the t immediate higher
authority can co~sider any furt~er concession i ~~~ 1~~ ~· t/char~es o~ ..
case-to-case bas1s and on ments. 4i.-s-~~ <~&~~ ~ ::.::·'::·J:f::. :;.· ;/
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I 5.6. Reporting/Monitoring:
I
r a) Whenever borrowal accounts are taken. over, the details of the taken over
I
accounts s_hall be grouped and highlighted, in the report submitted to the
1 higher authorities under relative CAF returns.
II b) Regional.. Office/Central.
. Office shall. call for the details of .accounts taken
over at quarterly intervals in the prescribed format anq shallreview the
I accounts for a period of two years from the date of take over.
I
I c) All taken over borrowal accounts with total exposure of Rs. 5 Crore and
1\
! above sanctioned by a"ny authority are subject to Credit Compliance Audit
i
as per Credit Risk Management policy.
d). When the takeover account becomes· a quick mortality (accounts that
become NPA Within 'a year of its sanction is treated as quick·mortaiity), the
staff accountability shall be examined thoroughly. ·
l e) Credit Verticals at CO shall place a review note Or) all taken over accounts
sanctioned by RLCC and above, to MCB half yearly. The review should
cover all taken over accounts during the past 3 years with cutoff date 3 P1
March.
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Indian Overseas Bank· LOAN POLICY DOCUMENT 2022
Chapter- 6.
ADVANCES TO BANK'S DIRECTORS I OFFICERS OF BANK
Bank shall follow RBI guidelines in this regard. vide· RBI/2015-16 /95 DBR.No.
Dir.BC.l0/13.03.00/2015-16 July 1, 2015 and DOR.C~E.REC.No.33/13.03.00/2021-22
dated 23.07.2021.
6.1 Advance to Bank is Directors: ·
Section 20( 1) of the Banking Regulation Act, 1949 lays down the restrictions on
loans and advances to the directors and the firms in which they hold substantial
interest. Purchase of-or discount of bills from directors and their concerns,-which is
in the nature of clean accommodation, is reckoned as 'loans and advances' for
the purpose of Section 20 of the Banking Regulation Act, .1949.
Bank shall not enter. into any commitment for granting any loans or advances to
or on behalf of any of ··
a) Any of its directors, or
b) any firm in which ·any of its directors is interested as partner, manager,
employee or guarantor, or
c) any company [not· being a subsidiary of the banking company or a
· company registered under Section 8 of the Companies Act, 2013, or a
Gov.ernment company] ofwhich, or the subsidiar\/or the holding company
a
of which any of the directors of the .bank is director, managing agent,
manager, employee.or guarantor or in which he holds substantial interest,
or ·
d) any individual in respect of whom any of its directors is. a partner or
· · guarantor. · · ·
However, the term "Loans and Advances" m~ntioned above shall not include the
following:
a) loans or advances against Government securities, life insura~ce policies or

fixed deposit; ·
b) loons or advances to the Agricultural Finance Corporation Ltd;
c) such loans or qdvances as can be made by a banking company to any of
its directors (who immediately prior to becoming a director, was dn
employee of the banking company) in his capacity as an employee of .that
. banking company and .on the same terms and. conditions .as would have .
been applicable to him as an employee of that banking company, if he'
had not become a director of the ·banking company. The banking
company includes every bank to which the provisions of Section 20 of the
Banking Regulation Act, 1949 apply; · .~ . ·
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Indian .Overseas Bank LOAN POLICY DOCUMENT 2022
d) such loans or advances as are granted by the banking company to its

Chairman and Chief Executive Officer, who. was not an employee of the
banking company immediately prior to his appointment as Chairman/
Managing Director/CEO, for the purpose of purchasing a car, personal
computer, furniture or constructing/ acquiring a house for his pe·rsonal use
and festival advance, with the prior approval of the RBI and on such terms
and conditions as may be stipulated by if; ·
e) such loans or advan~es as are granted by a banking company to its whole-·
time director for the purpose of purchasing furniture, car, ·Personal
Computer or constructing/acquiring house for personal use, festival
· advance with the prior approval of RBI and on such terms & conditions as
may be stipulated by it;
f) call loans made by banking companies to one another;
g) facilities like bills purchased/discounted (whether documentary or clean
and sight or usance and whether on DI A basis or D/P basis), purchase of
cheques, other non-fund based ·facilities like acceptance/co-acceptance
of bills, opening of L/Cs and issue of guarantees, purchase of debentures
from third parties, etc.;
h) line of credit/overdraft facility extended by settlement bankers to National
Securities Clearing Corporation Ltd.(NSCCL) I Clearing Corporation of India
. Ltd. (CCIL) to facilitate smooth settlement; an(j
).
i) a credit limit granted under credit card facility provided by a bank to its
directors to the extent the credit limit so granted is determined by the bank
I
I by applying the same criteria as applied by it in the normal conduct of the ·
'l credit card business.
I For obtaining the prior approval of the Reserve Bank as stipulated in clauses (d)
and (e). above, bank to submit an application to the Department of Banking
Regulation; Central Office, Mumbai.
6.2 Regulatory Restrictions:
6.2.1 Granting loans and advances to relatives of Directors
· The following loans should be granted only with prior approval/ knowledge of the
board:
a) Loans and advances to relatives of the bank's Chairman/Managing Director

or other Directors,
b) Directors (including Chairman/Managing Director) of other banks and their
relatives,
c) Directors of Scheduled Co-operative 8anks and their relatives,·
d) Directors of Subsidiaries[Trustees of Mutual Funds/Venture Capital Funds set
up by the financing banks or other banks. ~ . , ,\·./~;,;~,~~ !
(:_·~: ~ _(\:~;~_i'.: ·~ \~.r: ) ):j

0 5 .JAN ZOZZ c :·,~··.(.: .· .. ·
51 1 P a g e
6.2.1.1 Lending to directors and their relatives on reciprocal basis. Bank shall follow
the guidelines indicated belo.w in regard to grant of loans and advances and
award of contracts ·to the relatives of their directors and directors of other banks
and their relatives:
I. Uriless sanctioned by the Board of Directors/Management Committee,

banks should not grant loans and advances aggregating Rupees five crore
and above to - . . ·
.· a) directors (including the Chairman/Managing Director) of other banks
*·
'
b) any firm in which any of the directors of other banks* is interested as
· a partner or guarant()r: and
c)ariy'company in which any ofthe directors of other banks* holds
substantial interest or is interested as a director or as a guarantor.
II. The restrictions as contained in Section 20 of the Banking Regulation Act,

1949 would apply to grant of loans and advances to spouse and minor I
·dependent children of the Directors of banks. .
Ill. However, bank may grant loan or advance to or on behalf of spouse's of its
Directors in cases where the spouse has his I her own independent source
of income arising ·out of his I her employment or profession and the facility
so granted is based on standard·procedt:Jres ahd norms for assessing the
·. credftwor.thiness of the borrower. Such facility should be extended on
commercial terrns. All credit proposals for Rupees twenty-five lakhs and
above should be sanctioned by the bank's Management Committee of the
Board. The proposals for less than Rupees twenty-five lakhs may be
sanctioned by the appropriate authority as per the Delegated Powers and
shall be reported to the board.
IV. Unless· sanctioned by the Board of Directors/Management Committee,
bank shall al.so not grant loans and advances aggregating Rupees fiv~
crore and above to-
a) any relative other than spouse and minor 1 dependent children .of its
own Chairmen/Managing Directors or other Directors;
;
;· b) any relative other than spouse and.minor I dependent children of the

Chairman/Managing Director or other directors of other banks *;
cf any firm in which any of the relatives other th.an spouse and minor /.
dependent children as mentioned in, (a) & (b) above is interested as
a partner or guarantor; and ·
·d) any company in which any of the relatives other· than spouse and
minor I dependent children .<:ls- l"(lentioned in (a) & (b) above. is
interested as a major shareholder ds a director or as a guarantor or is
~in control. ·
Provided that a relative of a director shall also be deemed to be
interested in a company, if he/ she is a ~~~older or is in
control of the respective holding or subsi~~~~~fn;;·. ] ._
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e) Review/ Renewal of such facilities also has to be reported to the •

board.
* including directors of · Scheduled Co-operative Banks, directors of
subsidiaries/trustees of mutual funds/venture capital funds.
V. The proposals for credit facilities of an amount less than Rupees twenty-five
lakh or Rs. Five Crore (as the case may be) to the borrowers mentioned in
point I to IV above may be sanctioned by the appropriate authority as per
delegated powers, but the matter should be reported to the Board.
VI. The Chairman/Managing Director or other director who is directly or
indirectly concerned or interested in any proposal should disclose the nature
of his/her interest to the Board when any such proposal is discussed. He/she
should not be present in the meeting unless his/her presence is required by
the other directors for the purpose of eliciting information and the director
so required to be present shall not vote on any such proposal. 1
VII. The above norms relating to grant of loans and advances will equally apply
to awarding of contracts.
VIII. Scope of the term 'relative' will be as under:
a) Spouse
b) Father
c) Mother (including step-mother)
d) Son (including step-son)
e) Son's wife
f) Daughter (including step-daughter)
g) Daughter's Husband
h) Brother (including step-brother)
i) Brother's wife
j) Sister (including step-sister)
k) Sister's husband
I) Brother (including step-brother) of the spouse
m) Sister (including step-sister) of the spouse
IX. The term 'loans and advances' will not include loans and advances against-
a) Government Securities
b) Life Insurance Policies
c) Fixed or other deposits
d) Stocks and shares
e) Temporary overdrafts for small amounts, i.e., upto Rupees Twenty-Five
Thousand
f) Casual purchase of cheques upto Rupees Five Thousand at a time
g) Housing loans, car advances, etc. granted to an employee of the
bank under any scheme applicable generally to employees.
Clarifications:
i. The term "Personal Loan" shall have the meaning as follows:

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53 I Page
~"-•-- ••-•o-f
Personal loans refer to loans given to individuals and consist of (a) consumer
credit, (b) education loan, (c) loans given for creation/ enhancement of
immovable assets (e.g., housing, etc.), and (d) loans given for investment in
financial assets (shares, debentures, etc.}.
ii. The term "major shareholder" shall mean a person holding 10% or more of
the paid-up share capital or five crore rupees in paid-up shares, whichever
is less. ,
iii. The term "control" shall include the right to appoint majority of the directors
or to control the management or policy decisions exercisable by a person
or persons acting individually or in concert, directly or indirectly, including
by virtue of their shareholding or management rights or shareholder's
agreements or voting agreements or in another manner.
6.2.2 Restrictions on Grant of Loans & Advances to Officers and Relatives of Senior
Officers of Banks:
I. Loans and advances to officers of the bank:

No officer or any committee comprising, inter alia, an officer as member,
shall, while exercising powers of sanction of any credit facility, sanction any
credit facility to his/ her relative. Such facility shall ordinarily be sanctioned
only by the next higher sanctioning authority.
Credit facilities sanctioned to senior officers of the bank should be reported
to the Board. The term "Senior Officer" will refer to any officer in Senior
Management Grade IV and above in the bank.
II. Loans and advances and award of contracts to relatives of senior officers of
the bank:.
Proposals for credit facilities to the relatives of senior officers of the bank
sanctioned by the appropriate authority should be reported to the Board.
Further, when a credit facility is sanctioned by an authority, other than the
board to the following shall be reported to the Board within 15 days of
sanction:
a) any firm in which any of the relatives of any senior officer of the bank
holds substantial interest, or is interested as a partner or guarantor; or
b) any company in which any of the relatives of any senior officer of the
bank holds substantial interest, .or is interested as a director or as a
guarantor, such transaction should also be reported to the Board.
Ill. The above norms relating to grant of credit facility will equally apply to the
awarding of contracts.
IV. In the case of consortium arrangements, the above norms relating to grant
of credit facilities to relatives of senior officers of the bank will apply to the
relatives of senior officers of all the participating banks.
V. The scope of term "relative" is same as mentioned in Para VIII of 6.2.1.1.
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VI. The term "credit facility" will not include loans or advances against:
.a) Government Securities
b) Life Insurance policies, Fixed or other deposits
c) Temporary overdrafts for small amount i.e., upto Rupees Twenty-Five
Thousand, and
· d). Cdsual Purchase of cheques upto Rupees Five Thousand at a time.
e) Credit facility will also not include loans and advances such as
housing loans, car advances, consumption loans, etc. granted to an
officer of the bank under any scheme applicable generally to officers; .
f) ·The term 'substantia\ interest' shall have the same meaning assigned
to it in Section 5(ne) of the Banking Regulation Act, 1949.
Clarification: No.officer shall sanction a loan,

a) in his/ her own name,
b) in the name of the any .employee (including award dnd other staff) of the
bank (except Festival Advance and other loans as per Delegated Power
· circular i.e., loan against deposits, LIC etc.),
c) hi~ther relative atlld
d) relative of other employees of the bank.
i Such loans :and advances. to be sanctioned by the· next higher layer of

I
authority.
t.
I No crediffacility should be granted to spouse/ close relatives of employees for
!
any trade or business by the sanctioning· authority. Such sanctions shall be
· considered only by the next higher layer of authority. Example: Any business 'loan ·
of falling under branch powers to be considered by RLCC and any business loan
falling under power qf RLCC to be considered at Central Office.
However, the following may be considered: Close Relatives of an employee

(officer and other staff) may be sanctioned schematic retail loans viz., Housing
Loan, Pushpakdloari, Education Loan etc. from any branch other than where the
concerned employee is posted. Jewel Loans, Loan against Deposits/ LIC/ KVP NSC
to relatives pf employees may be considered at any branch including the branch
i. where the concerned employee is posted.
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* 0 5 JAN 2012 *
55 1 Page
Chapter -7
EXIT POLICY
I
.·!
?.EXIT POLICY:
7.1 Diversion of funds: Whenever it is f6'und that funds of the b'ank are diverted for
the activity not (lSSociated with the activity of thebo,rrower, efforts shall be made
to liquidate the outstanding in borrowal accounts. Exit Clqusesli~e signs of sic~ness
of
shall.be incorpor.ated as part· Sanction ietter.. .. .
7.1.1 For Accounts with External Rating 'C' and 'D', an. individual letter should be
sent to such C and D rated customers stating that 'in view of the poor external
rating, Bank may n<;:>t be in a position to support .their credit requirement and that
!·
they may induct new banks or switch over to other banks. It may be further stated
that in view of capital cost involved in financing such low rated companies our
bank will be constrained .to charge additional interest rate over and above the
applicable interest rate.
7.1.2 Signs of sickness: ·Advances granted shall be· reviewed/ renewed every year·
(9 months for below hurdle rated ac.counts). At the time of renewal, if the following ·
·irregularities are noticed then bank
.
shall. treat thes~ signals
.
ds ·warning signals and
examine the nee.dto exit from the exposure to these accounts.
a) Cash Credit ·account remaining stagnant without operations or with
. negligible operations for a peri()d. of 6 months. preceding the date ofrE)view.
b) Continuous irregularities in cash credit acc6vrits such as drawings frequently
exceeding sanctioned limits, · periodical interest d~bited remaining
unrealised.· ··. ·
c) Non~submlssion or undue delay in submission of ·stock .. statements or
submission of incorrect stock statements and other financial statements
d) Rating grade slipping .to lOB 9 and below
·e) Recurring overdue (continuous for 3 quarters) and frequent overdue (most
part of the yeor) ·
f) Failure to make timely payment of installments of principal and interest on
term loans
. g) Strictures I penalties on the company by authorities like SEBL Enforcement . ·
· Oir~dorate, Income· tax etc~·· · · ·
h) .Non-payment of statutory dues, viz. PF dues, dues to suppliers of ·raw
materials, water, power, etc.
i) · Diversion of sale proceeds.
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j) Downward trend in credit summations in the account I poor turn-over.

k) Frequent return of cheques 1 bills
I) Steep decline in production
m) Downward trends in sales and fall in profits and other adverse features
noticed in the financial statements.
n) Any other serious irregularities noticed by the various field level
functionaries/ Inspectors etc., jeopardising the safety of advance,
The above list is only illustrative and not exhaustive. Credit Monitoring Department
has also implemented system generated Early Warning Signals (EWS) which can
also be treated as sign of sickness.
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* 0 5 JAN 2022
*
57 1 Page
"j•
Chapter-8
MISCELLANEOUS ·
8.1. RECOVE.RY POLICY:

The Bank is aiming to reduce the level of NPA tq the barest minimum and
taking all out efforts for recovery of NPA by vari9us methods. Bank has
Recovery Policy approved by the Board. for recovery of Non-Performing
Assets issued by Stressed Assets Management Department.
8.2. FINANCING OF BRAND ACQUISITION:

In the scenario of economic llberalization, where mergers and acquisitions
are the order of the day, many companies may go in for acquiring and .
taking over popular brand names. Bank will consider financing for
acquisition of reputed brand names.
8.3. QUOTE FOR LARGE BORROWER ACCOUNTS:

a) In case of some of the large borrowal accounts, Bank has to offer its quote
for tciking large limits falling under MCB powers within a short period of_ time.
In such cases, it may not be possible to submit full-fledged proposal to
obtain sanction before we. submit our quote; MD&CEO is authorized ·to
quote· and the. proposal will be placed. to MCB for confirmation.
b) Companies with LTl to LT 3or equal. rating enjoying credit limits with us with ·
unblemished track record for . minimum five · years,_ Public Sector
Undertakings and well reputed corporate$ will be offered this facility.
c) In case of new connections where the external rating of the borrower is of
investment grade and above the Bank will offer this facility.
d) In case of accounts . with state government guarantee ·I central
government guarantee, the bank will offer this facility .
.e) Such quote shall be treated as quote cum sanction .and shall be placed for
ratification to the appropriate committee, if not placed to the appropriate
committee.
8.4. LINE OF CREDIT:

The Bank shall consider Line of Credit .for speedy delivery of credit· to
j reputed corporate/Public sector: undertakings.
t 8.5. FINANCING TO CHIT COMPANIES:

There is no ban on financing Chit Fund Compo~~ . it should be
I ensured that the chit company, to whom fina;(~Js-ffi'a'd~~~ en~.a9ed
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in schemes which attract the provisions of the prize chits and money
circulation schemes (Banning) Act 1978. The Memorandum and Articles of
Association of the compdny have to be studied thoroughly and necessary
declaration has to be obtained from the. company.
Further credit facilities could be considered by the bank purely on individual .

merit of appli<:;ants and be guided by commercial judgment.
8.6. SHORT TERM. LOANS:

Short Term Loans are extended to Corporates for general corporate
purposes .for which detailed guidelines are in place. {Refer. Chapter 11 for
de~ailed guidelines).·
8.7.. RISKY VENTURES (VENTURE CAPITAL):

a) Venture Capital ls·normally defined as: an equity investment in a high risk
i project related to some innovations or new technological developments
contemplated by a company. The main purpose of venture capital funding
I is thus to exploit new and untried or advanced technologies and turn them
l into commercially viable propositions naturally with an expectation: of high
I. returns later.
· b) Risky venture refers to venturing into· activities which are not tested, ·which "
r.
are relativ.ely unknown, and which are new. Proposals involving new,
I innovative or relatively untried technology being risky will not normally be
entertained in as much as Venture Capital Funds exist to provide financial
assistance to such enterprises. '
8.8. BANKING CODE~ AND STANDARDS:-(BCSBI has l;>een dissolve~ In August

2020 by RBI) ..
8.9. OTHER ISSUES:

a) The maturity profile of loan book is taken care of by the Asset Liability
Management System {ALM) which is being placed to ALCO. Once in a
month report is submitted to RBI.
b) The Investment Committee decides the investments to. be made by the
Bank ..Bank has separate policy for Investment. ·· ·
c) In respect of forex forward contracts, guidelines framed by Treasury Dept.,
C.O. will be in operation.
0 5 JAN ZOZZ
d) Counter party exposure· limits, including exposure against LC. Bills, and
country" exposure limits on global basis, will _ be reviewed whenever felt
nece.ssary and Treasury Department wilt fix the limits.···
8.10 LENDING TO INFRASTRUCTURE INVESTMENT TRUSTS ('lnviJs): Hitherto, Banks were

allowed to invest in Units of lnVITs, subject to guidelines as specified in RBI qircular
OBR.No.FSD.BC.62/24_.01.040/2016-17 dated Aprii 18,2017.
RBI vide its circular No.2019-f0/83 DBR.No.BP.BC.20/08.12.014/2019-20, dated

14.10.2019 has decided that Banks' are permitted to lenqto lnVlTs and advised to
put in place a Board approved Policy on exposure to lhVITs by covering appraisal
mechanism, sanctioning conditions, jnterna.llimits,_r.nonitoring mechanism etc.!
Definition of lnViTs:
lnviTs are collective investment vehicles that e·nable· developers of infrastructure
assets to monetize' their assets by pooling multiple assets under a singl~ entity (trust
structure). lnviTs are governed by SEBI . (lnfrastruc:ture· Investment Trusts)
(Amendment) Regulations, 2016. The key features of lnVITs are: . ·.
a) lnVITs have to adhere to the mandatory distribution ·.of ·90%. of. Net
distributable cash flows(NDCF= PAT+ Depredatio-n +loss/gain ~n sale d
infrastructure-assets- Repayment of external debt (pdncipal)/_redeemable .
preference shares/debentures etc.,) to the unit investors. . .
b) They should have levera-ge cap of 49% ()n _the net asset value, and cap a
on exposure to assets under construction (for publicly placed lnviTsY,
. c) The sponsor of t~e lnvrr is responsible for setting up the lnviT and appointing
the trustee. . .
d) The sponsor should hold a minimum 15% of the units issued by'the lnviT with
a lock-in period of three years from the date of_issuonce.
e) Credit rating is mandatory for lnviTs if the aggregate consolfdated
borrowings and deferred payments of the lnviT net of cash and cash
equivalents exceed 25% of the value of the lnviT assets.
t· .I. · .::l7o~~ ~t~:~~olders and typical lnviT structure can· be .~~-p~es~nte~ by t~e
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Roles anct Responsibilities:

1. The SponsC?r·sets up the lnviT, appoints the trustee and should hold a minimum
15% of the units issued by the lnviT with a lock-in-period of tt}ree· years from the
date of issuance.
2. 90% of Net Distributable Cash Flows (ND~F) is distributed to the unit holders,
once in six months in case of public lnviTs and once in a year for privately
placed lnviTs.
3. The investment manager is responsible for investment decisions and oversees
activities of the project manager who is responsible for the operations of the
underlying assets of lnviT.
4. The trustee is responsible for ensuring compliance of lnviT activities as per
provisions of the trust deed and cannot invest in units of lnviT in which he/she is ·
d.esignated as trustee.
Eligible lnviTs:
1.. Credit facilities may be extended to public lnviTs as well as privately placed
lnviTs.
2. All the infrastructure projects undertaken/proposed fo be undertaken by
_lnviTs should be "completed" and should be "revenue generating projects".
3. Project assets may be housed at the SPV level/lnviT level.
4. At the time of funding the ·1nviT, none of the underlying SPVs, which have
existing bank loans should be under "financial difficulty" as per the extant
guidelines.
Appraisal mechanism:
1. The credit appraisal should involve assessment of critical parameters like
sufficiency of cash flows at lnviT level to ensure timely servicing. .
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Indian Overseas Bank LOAN POLICY DOCUMENl2022
2. As. lnviT being a· Trust, Trust deed should be scrutinized and Trust provisions
I
I
I
· regarding .express borrowing powers and vesting of the trust properties in the
trustees and other relevant clauses for operation of Trust account and giving
of securities should be examined. The trust deed should have express powers
1' to oorrow and to furnish security. The Trust deed should permit them to avail
loan from Banks. ·
3~ The provisions under sec 20 (1) of. SEBI regulations deals with borrowings and ·
. .
deferred payments of lnviTs should be . taken into considerat!on while
·processing loans to lnviTs. · · ·
4. It should be ensured that there is .no liquidity mis-match because of financing
to such projects. While appraising it should be ensured that identification of
various project risks, evaluation of risk mitigation, tail end risk analysis, credit
worthiness of the underlying SPVs and their ability to fulfill contractual
obligations.
· 5. We should lend to on·ly those lnviTs where none of the underlying SPVs, which
have existing bank loans, is facing 'financial difficulty' as defined in para 2 of.
Annex-1 to the circular DBR.No.BP.BC.45/21 .04.048/2018-19 dated June 07,
2019.
6. Bank finance to lnviTs for acquiring equity of other entities shall be subject to
the conditions given in para 2.3.7.4 (iv) of the Master Circular on Loans & ·.
Advances- Statutory & Other Restrictions dated July 1, 2015.
7. Consolidated Financials at the lnvlT level should be assessed separately to
determine the overall strength, debt serviceability and co'verage metrics at
the.lnviT level.
8. The desirable Debt Equity Ratio (TOL/TNW) will generally be in the ratio of 3.5-
4: 1 at lnviT level. Likewise, while the desirable and ideal DSCR ratio would be
above 2:1; an average DSCR of 2.0 with a minimum of 1.50 in any year can
be accepted. Deviations if any have to be justified in the appraisal note.
9. Projected DSCR should be more than or equal to 1.05 times at the SPV level
considering the notional component of third party debt (i.e excluding the
debt component in the SPV level which is funded through equity at the lnviT
level). ,
10. If the financial covenants at any of the SPV level/lnviT level are not met, the ·
bank should have a right to set aside a portion of the .cash flows which will
. ·: ,.:· · ·~·J~dl!CG. the. distributable cash flows to the .. unit"holders: the·setoside portion
i{ of cash flows shall be dealt in a manner agreeable to the bank and the
borrower.
11. Connected lending ,guidelines should be check :_r ~~el as well as
SPV level for deciding the sanctioning authorit . ~'!::>~ overse<t? o/1~ ~ · . ;· . •.......
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12. End use of funds should be explicitly indicated in the credit appraisal Note.
13. None of the promoters/directors . of lnviT/SPVs should be in willful
defaulter/caution list of RB.I/ CIBIL/ CFR.
Sanctioning Conditions: .
1. The security charged to the Banks sho.uld be marketable.
2. All other sanctioning conditions as applicable to projects finanGe to be
.verified while appraising the lnviT proposals.
3. Based on the nature of credit appraisal and mode of the. lending the
security types acceptable to be decided. In generql, the following type of
securities are enforceable while considering debt to lnviTs: .
Mortgage b) Hypothecation c) Pledge d) Assignment
4. ·All other guideline$ as per the provisions of Securities. and Exchange Board.
of India (.Infrastructure Investment Trusts) Regulations, 2014 are strictly·
adhered. · ..
5. All other conditions as advised in RBI circular No. RBI/2019~20/08.12.014/2019-
20 dated 14.10.2019 should be strictly adhered.
Other Sanctioning Conditions:

l. lhviT to . comply with the applicable regulatory guidelines including
.compliance to the ceiling of maximum permissible debt.·.· . .
2. In case·of breach of regulatory guidelines, the bank should have a right to
· restrict the net distributable cash flows to the unit holders.
3. Following should be with prior approval of the Bank:
a) Any additional borrowing at lnviT level or SPV level
b)' Change of Sponsor, Project Manager or Investment Manager
c) Change in holding of sponsor in lnviT.
d) Any new debt funded project proposed to· be undertaken by
lnviT/selling of any project of .SPV.
4. In case of invocation of pledge by the lenders and change of
management is envisaged the bank should have a right to restrict the NDCF
to the unit holders.
Exposure Limits:
1. The exp 0 wre norm~ as applicable to Single/Group Borrower under Large
Exposure Framework as advised in our Bank Loan Policy Document should
be strictly adhered.
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2. · Though the lnviTs are classified as Trusts, the nature of activity requires huge
fur1ding; hence, we can treat the exposure as Single/Group Borrower under
LEF. .
Security Aspects:
The Bank should have an exclusive/pari-passu charge on the following:
1. lnviT Escrow Account and Escrow account of each of the Project SPY.
2. Assignment of Loans and the rights therein given by lnviT to each of SP.V's;
3. Rights/Interests/Benefits/Claims etc. in project contract, project agreement,
insuranc~ contracts, policies etc. (with NOC from respectiv·e.. project
authority).
4. Immoveable Assets, Moveable Assets and receivable of !tWIT including but
. not limited to
i. Interest and principal repayments of the loans advanced by lnviT
to its project' SPY . · . .
ii. Dividends to be paid by the Project SPY's to lnviT.
5. Pledge of 51% shares of the borrower in each project SPY subject to
compliance of·SecHon 19 (2) of Banking Regulations Act.
Delegated Powers:
Funding to lnviTs is similar to ·Project Finance and Infrastructure ·lending, and
involves huge outlay of funds. The delegated powers for sanctioning of such loans
to lnviTs is vested with CAC and above up to their delegated powers. ·
Monitoring Mechanism:
1. The performance of underlying SPYs should be monitored on an ongoing
basis as the ability of the lnviTs to meet their debt obligation iargely depends
on the performance of these SPYs.
2. Corporate Credit Department shall place a note or\ compliance of RBI
·guidelines on various sanctions made on half-yearly basis to Audit
Committee of the Board for information.:
3. Valuation Reports to be obtained as per the frequency stipulated in the
policy guidelines for lnviT assets.
i
r
4. SuffiCiency of cash flow should be individually assesseq .at the SPY level as
j well as the lnviT level and to be decided if the distribution to unit holders
I needs to the restricted.
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641 Page
8.11 PARTIAL CREDIT GUARANTEE SCHEME (PCGS) OF GOVERNMENT OF INDIA
The scheme expired on 31 .03.2021
8.12 POLICY ON TRADE RECEIVABLES DISCOUNTING SYSTEM (TREDS)

Trade ·Receivables Discounting System (TReDS) platform is an institutional
mechanism set up for financing of trade receivables of MSME suppliers from
corporates and other buyers· including Government· Departments and Public
Sector ·Undertakings (PSUs) through multiple financiers. Under this arrangement
both the sellers and buyers of the bank will be benefitted by discounting the trade
receivables. The MSME seller will have quicker realization of their receivQbles at a··
competitive interest rate to. ease out their liquidity problems. For the buyer too, the
. advantages would be compliance with MSMED Act 2006, stable supplier base and
better terms with MSME vendors. For further details, MSME circular ADV I 2261 2018- .
19 dated 30.04.2018 on TReDS policy and any subsequent amendments to be
. referred:·
8.13 CONCLUSION:
0) Based on this loan policy document and taking into account the extant
guidelines of RBI l Government of India from time to time, the Bank will
issue detailed operational instructions to Branches I Regional Offices .·
periodically.
b) As and when modifications are made and a change in Loan Policy is
announced by RBI /Government of India, the respective changes will form
part of this policy. GM(eSSD) I HOD is empoWered tq make changes in
policy based on changes in regulatory guidelines from time to time. Apart
from the above GM (eSSD)IHOD is empowered to make changes in the
Policy based on obser.vationslrecommendations of any advisory agencies
like IBA, eve etc., with the approval of Top Management.
c) The revised Loan Policy Document is valid for 3 years from. the date of
approval by Board and can be extended by another six months by
MD&eEO.
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Credit Support Services
Department
Central Office, Chennai " 600 002
OPERATIONAL
GUIDELINES
FOR
LENDING
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Chapter- 9
GENERAL LENDING GUIDELINES .
9.1. NEW BUSINESS COMMITTEE -
It has been ~ecided that all fresh proposals for sanction of credit limits o·f Rs. 10.00
crore and above (both fuhd based and non-fund b~sed) should be referred to
the new business group at Central Office to gel in principle approval for taking up
the proposal. This, approval is required even if the group/ associate concerns are
banking with us. However, It the group/associate concerns cire.doing the same
activity or upstream or .downstream activities, the approval· of NBC is not ·
necessary. If the group/associate concerns are diversifying ahd entering an
entirely new busi'ness ac::;tivity, then the approval of NBC Is required. If any account
has been repaid fully in past 6 months and has approached for a fresh credit
facility of Rs. 10.00 crore and above, the same need not be routed through NBC
subject to the conditions that the account was not SMA 2 in the past 12 months of
its closure and the same entity has approached for the fresh. facility. It is clarified
that the account should have been paid in normal course and not settled under
. CJTS/ OCS. Similarly, accm:nts closed on account of takeover by other banks/ Fls
can be brought back to our bank within 6 months of· their closure subject to
compliance of takeover norms without routing through NBC.
Permission accorded by NBC is only an "expression of interest" to take up the

proposal for consideration on merits and should not be construed ~s "In Principle
· Sanction". Further, NBC may stipulate indicative Rate of Interest in NBC. However,
the same shall be finally sanctioned by respective sanctioning authority as per
Board Approved manual on Delegated Powers ·(Financial) and upon complying
with parameters stipulated for such concession.
The proposal seeking expression of interest should .have the concurrence or

recommendation by Branch and Regional Managers and respective credit
vertic.als in case the sanction vests with Central Office·. Expression of Interest
accorded by NBC· is valid for 3 months. However, submission of full-fledged
proposal should be expedited and it is c;:le.sirable to submit the full-fledged
proposal within 30 days of Expression of Interest (Eol) by NBC. FUrther, after expiry
of 3 months, the Expression of Interest by NBC cannot be revalidated and has to
be submitted afresh. . ...·.. ·.-, . . . · ... 1
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Wherever quote cum sanction is given by our bank for reputed PSUs/Government
undertakings/ well-reputed corporates, it is exempted from routing through NBC.
For new proposal on NBFC of Rs. 10.00 Crore and above, expression of interest by
NBC only is required. All new proposals below Rs. 10.00 Crore and enhancements
to the existing accounts require clearance from HLCC (ED) before sanction of
loans However, Prior Clearance is not required for Sanctioning authorities HLCC
(ED) and above. ·
· 9.2. DELEGATION OF POWERS:

a) With the approval of the Board, the Bank has delegated financial and
administrative powers to the various layers of .authority. As per the
communication from Ministry_ of Finance, Govt. of India, various Committees
at Central Office {viz. CAC, HLCC (ED) and HLCC (GM)} and Regional Office
(viz.· RLCC) are constituted for taking decision on the. . credit. and
· compromise/write off proposals. .
b) There is no individual delegated power above the Branch Manager level.
Bank will ensure that these powers are exercised judiciously and in
accordance with the conditions prescribed for exercising such delegated
powers frequent deviations will be closelY motiit.ored and remedial action
will be take'n wherever necessary. · · · ·· . · .. · · · .
c) ln. case of deviations frorn the loan policy guidelines, acc.ount specific
actions to be put up to the MCB for approval/ratification provided such
deviations are not in violation of RBI guidelines. In case of. modification of
norms, the same is to be placed to the Board for approval. .
d) Delegated powers are restricted to select authorities for sanction of facilities
to accounts rated below the hurdle rate (10B7for Priority Sector advances
and IOB6 .for Non-Priority Advances as, per internal rating RAM) and/or
externally rated BB and below.
II. SME/Traders/ Agri accounts would be priced o·n the basis of internal rating
only.
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Role Functions of various committees
I Following are vcnlous credltsanctlonlng authorities/committees at various layers,

I viz. Central Office, Regional Offices and Branches:
I
I
I. MANAGEMENT COMMITTEE OF THE BOARD {MCB):
I.
MCB is constituted in the Bank as .per the provisions of· the Nationalized Banks
!
I
(Management and Miscellaneous Provisions) Scheme, i 970. The functions and
I duties of the MCB are as under:
•:• Sanctioning of qedit proposals (funded· and non-funded) as per the

quantum fixed by the Board.
•:• Loan and Interest Compromise 1 Writ~ off proposals -:as per quantum fixed
I
by the Board
•:•"' Proposals for approval of capital and revenue expenditure
I •:• Proposals relating to acquisition and hiring of premises, including deviation
from norms for acquisition and hiring of premises
I •!• Filing of suits I appeals,· defending them etc.
I •:• Investments in Government and other approved securities, shares and
debentures of c:;ompanies, including underwriting Donations
t
•!• Any other matter referred to the Management Committee by the Board.
Next to MCB, as directed by Ministry of Finance (MoF), Government of India (GOI).

Bank has· constituted following committees with the approval of the Board to take
decision on the credit and compromise/write off proposal.
· ·Functions and Scope of the various committees at Head Office/Regional" Level

forms as p~r MoF, Gbl guidelines as approved by our b~ard on 30tti May 2012:
a) To sanction credit proposals under their power and to consider

compromise/ write off proposals as per the recovery policy of the Bank and
powers delegated to them.
b) To ensure compliance of all lending norms/ .policy guideHnes issued by the
Bank including regulatory guidelines and other instructions.
·.c)' The decision of these committees shall be unanimou~;
d) The committees shall also review the. pending credit proposals under their
powers to expedite action and ensure that the proposals are disposed
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e) Minutes of the meetings of various committees at RO and CO shall be duly

recorded and signed by the Head and other members of the respective
· committees. ·
II. ' Committees at Head Office level:

1. Credit ApprovaiCommittee (CAC)
2.· Head Office Level Credit Approval Committee~Executive
Director~- (HLCC-ED)
3. Head Office Level Credit Approval Committee - General
Manager- (HLCC-GM)
Ill. Committee at Regional Office:
Regional Level Credit Committee~ (RLCC)
In our Barik there is no individual delegated power above the Branch Manager
level. Bank will· ensure that these powers are exercised judiCiously and in
accordance with the conditions prescribed tot exercising
. . such delegated
~ .
powers.
Based on busir1ess segment. our bank is ha~ing f<?IJovving d~J?artments at Central·

Office. only: · . · · · · · ··
a) Corporate Credit ·· 1
b) MSME
c) Agriculture and Rural Initiatives
d) Retail
Apart from the above credit committees, there are fs>llowing two committees
· which are formed for clearance offresh proposals:
a) New Business Committee (NBC): It is a Ce~tral Office level committee~ All

fresh proposals of Rs. 10.00 crore and above are r~ferred to this committee
which in turn communicate whether Bank can evince interest in the
proposal or not.
b) IT Screening Committee: Proposals for financing· development of softw9re
shall be cleared by Screening .Committee in Central Office .
..
For MCB sanctions specific permission may be taken for sanctioning of concessions
by CAC at the .time of sanction by MCB. Information note to be put up to MCB.
Other than the above exceptional cases, CAC is not e ..., ~~ Etto drlegp;te···. · ··"
powers to grant concessions in case of MCB sanction .~-1>1).. 0 vers~q iJT ~·r~"'-~ /:;~;~~\(,·~:...
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9.3. WORK FLOW FOR CREDIT SANCTIONS:

The work flow for credit sanctions by other sanctioning authorities is detailed here
below (The work flow for Large Corporate branches and those identified as
"Large Corporate" will be as given in circular ADV/ 116/2017-18 dated
28.06.2017):
Sanctionlll9_Authority: MCB/CAC/ HLCC CEO)

Type I
of All branches ·other than Specialized Large Corporate and
Branch other Notified branches
Work Flow I Proposed and recommended by Credit Dept at Branch ?
Recommended ·by Branch Head ? Recommended by
Regional Heads along with submission of full-fledged
proposal ? Proposal vetted by Credit Dept. at CO 01id
recommended by Vertical GM ? put up to ED/MD&CEO .?
'Qigced to MCB/CAC/HL<:;C (EQl. . .
Sanctioning_ Authority: JiLCC CGM)
Type I
of All branches other than Specialized Large· Corporate and
Work Flow ·1 Proposed and recommended by Credit Dept at Branch ?
Recommended by Branch Head ? Recommended by,
Regional Heads along with submission of full-'fledged
proposal ? Proposal vetted by Credit Dept. at CO and
recommended by Vertical GM ? _Qiaced to HLCC (GM)
Sanctlonl1'!9_Authority: RLCC
Type I
of All branches other than Specialized Large Corporate and
Work Flow I Proposed and recommended by Credit Dept at Branch ~
Recommended by Branch Head ? Proposal vetted by
Credit Department at Regional Office and Recommended
by Regional Head ? Regional .Head accords permission to
place in RLCC with his observations ? Qlaced to RLCC
Sanctioning Authority: Branch Head

Type of Branch All Branches
Work flow Proposed and recommended by Credit .Department at
Branch~ Sanctioned by Branch Head
-
j Notes:
I a) In VieW of intr.oduction of.New Business Committee (NBC) the system of
l advising Customer Acceptability stands withdrawn

b) Whenever the Chief Regional Manager (CR.M) is not in station for more
than one week, proceeding on leave or on duty, ~~~~oo chaired by
the 2nd line functionary in Scale V at the RO af(d$l~m#m:tq~~ owers of. ,
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indian Overseas Bank LOAN POLICY DOCUMENT 2022
RLCC (CRM) shall be exercised. Similarly, in ROs headed by Senior Regional

Manager (SRM), if the SRM leaves the station for more than one week,
RLCC shall be chaired by the 2nd line functionary and the financial powers
of RLCC (SRM) shall be exercised. However, this power can be exercised
by minimum scale IV officer. The sanctions made in such meetings should
be placed for ratification in the subsequent RLCC headed by CRM/ SRM.
c) Standard ·. Operating Procedure: SOP for processing of loan from
procurement of applications: namely (i) Preliminary assessment of
customer; (ii)Acceptlng of proposal; (iii) Processing of proposal; and (iv)
Post sanction/disbursement formalities are given in Annexure 2.
9.4. VETTING OF DOCUMENTS'& RELEASE OF LIMITS:

No advance shall be released without first obtaining proper documents
complete in all respects. The· second in command of_ the Branch shall give a
certificate Jo the Branch Head before disbursement .of advances that all the ·
relevant do-cuments for releasing the facility(ies) have been executed properly ..
The Branches manned by only one officer (i.e. Branch Head), the Manager shall
send the certificate to the Regional Head.
Co-mplete ·vetting of documents to be done by Bank's panel lawyers before

release of funds·under sanctions at various levels aggregating Rs. 1.00 crore and
1
I
above.
·'
I
For credit sanctions aggregating Rs. 10 Crore and up toRs. 50.00 Crore, permission
I for release of the limits shall be obtained from Regional Manager upon receipt of .
the Certificate by second in command of the Branch and ensuring the vetting of
I . documents by the Bank's panel lawyers. For credit sanctions above Rs. 50.00 Crore,
permission for release of the limits shall be obtained from respective Head/ GM of
·the credit verticals.
9.5. PRECLUSION FROM DISBURSEMENT BY FIELD LEVEL FUNCTIONARIES WITHOUT

. COMPLIANCE OF PRE-RELEASE TERMS OF SANCTION:
Branches and other offices shall ensure that the disbursement of the sanctioned...
limit shall not be made without compliance of significant pre-release terms and
conditions stipulated by the respective sanctioning authority. . ..
. 9.6. ADHOC LIMITS/GRANTING OF EXCESS IN BORROWAL ACCOUNTS:

Branch Heads* do not have powers to sanction Adhoc ~~-_and above
shall sanction Adhoc limll up to 20% of the limit in wor~~~..\~~f~::~-~~·~t~~-~.s·_: , ._ .
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sanctioned by any layer of authority including MCB or 20% of their respective

delegated authority (per borrower limit), w,hichever is lower. In case of
Miscellar)eous Cash Credit and Easy Trade Finance accounts, Ad hoc shall not be
· permitted· if the maximum amount of limit based on the Forced Sale Value of the
prime .security is sanctioned. However, in cases where there is surplus available in
the FSV of the security offered after deducting the margin stipulated under the
Scheme of finance, including the Adhoc limit sought, .Adhoc limit shall be
permitted up to 20%. of thE;? limit or the surplus OP available, whichever is lower, by
HLCC (GM) and above within their delegated authority ..
*The discretionary powers

. for Branch Managers for. sanctioning
. adhoc credit
facilities for MSME borrowers shall be as per Kapoor Committee recommendations.
Detailed guidelines are in place for extending temporary·. ex·cess in borrower

accounts with discretionary powers vested with various layers of authorities. (Refer
Revision in D~legated Financial Powers 2021, for detaile.d guidelines) .·
Excess and adhoc cannot

. be allowed simuitaneously .in the same facility.
9.7. DOCUMENTATION STANDARDS:

Bank has a documentation man_ual prescribing the documents to be ·taken for
various types of advances. The documentation manual is being updated
periodically. In addition, circulars are issued from time to time for any addition or
modification to the documentation manual. Bank will ensure that the branches
obtain the documents prescribed and that the documents are enforceable.
9.8. ACCEPTING LIFE POLICIES ISSUED BY PRIVATE INSURANCE COMPANIES LICENSED

BY IRDA:
Life policies issued by the new private insurance companies licensee! by IRDA can
be accepted as prime securities once. they acquire ·surrender value and as
collateral securities for the credit facilities extended to.industrial, non~industridl and
personal borrowers.
However, loans should not be sanctioned against market linked insurance policies
where the surrender value fluctuates based on market vaiue of. securities and life ·
policies with lock in period for liquidation.
9. 9. FINANCING TO SECOND HAND MACHINERY:

a) Financing for the purchase of second harid machinery (both indigenous as
well as imported) will be considered subje~t to th~~~~~ o.nditions./ . " . ,
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i. The value, working condition and residual life of the existing asset
/machinery should be valued /assessed by our approved valuer, or a
rE)puted valuer.
ii. The margin should oe sufficient to cover the value that is decided
·based .on wear and tear, depreciation,·market value etc. of the
machinery/asset to be financed against.
iii. The repayment of the term loan should be re?tricted to a maximum
period of 5 years or the residual life period. of machineiy/asset
whichever is lower.
b) Detailed guidelines are in place with regard to financing to NBFCs, again?t
the security of second hand assets /second hand machinerv /second hand
vehicles finan~ed by NBFCs. In excepticmal cases longer repayment pe.riod
can be permitted by HLCC (GM) and above.
i•.
9. 9.1. Term Loan for·Relmbursement of the· cost of already purchased machinery:

Term Loans are usually sanctioned for acquiring capitOl assets and generally
disbursed directly to the suppliers of machinery and other assets for which term
loan is sought ..
In a few .instances, the. ~orrowers, themselves purch()se the .machinery and

equipment. directly,
.
to take odvantage.
of the lower price prevailing in the market
\
in anticipation of our sanction and seeks reimbursement by way of term loan.
Under SljCh circumstances, depending upon the custom and genuineness of the
request, term loans can be sanctioned for reimbursement of the cost of machineiy
or other equipment (should not be more than one year from the date of purchase) ·
after verificatkm ·of invoices and bills and inspection of the assets for which term
.loan is being sanctioned.
·Appropriate margin shall be stipulated.
A certificate from the statutory auditor of the borrower should also be obtained in
this regard. Such discretionary powers to sanction term loans on reimbursement
basis may be exercised by RLCC and above or~ly.
9.-10. AI)VANCES THROUGH SPECIAL PURPOSE VEHICLES (SPV):

.. : ....~a); The Special Purpose Vehicle :should: preferably. be a company registered
. under Indian Companies Act.
I
~ b). Credentials of the sponsor should be ascert9ined.
I C) All the norms for financing Limited companies 11~~-~_..,.,....·~. · to SPVs also. ~-1> . ~· . .
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d) The Sponsor of the SPY should also be a Limited Company registered under
Indian Companies Act ..
e) The shareholding of the Sponsor should be maintained at least at original
level till the closure of the loon.
f) It shall be ensured that the advance is utilized for the principal business
activities of the SPY and Bank shall explore the possibility of getting the
guarantee of the sponsor.
g) For group exposure, the exposure of both the sponsor and the .SPY should
be taken into account.
9.11. CONSORTIUM:
a) In case of consortium lending, independent appraisal and due diligence
shall be done notwithstanding the leader bank's appraisal ~ate/report.
Where the bank is a member of consortium the assessment shall be in line
with the leader bank dnd if the leader bank has not framed guidelines then
the bank will apply its existing norms under con.sortium, for determining its
share of lending.
b) In respect of the terms and conditions for consortium advances, Bank will
fall in line with consortium and other Banks.
c) Due Diligence Report shall be obtained from agencies/firms such as Dun &
Bradstreet, CRISIL, Experian Services P Ltd., etc. on suppliers of
machineries/equipment nofwithstanding th~ procedure followed by the
leader bank. If the machineries/~quipment are .large in number to be
·purchased/installed, exemption of Due Diligence shaH be made for.
machineries/equipment with value of below Rs. 50 lakh or 5% of total cost
of machineries, whichever is less. If leader bank or any other member bank
has .obtained due diligence report on suppliers
\ .
of machineries I equipment,
a copy of the same shall be obtained and kept on record. Wherever TEY
Study is obtained, a certificate from the TEV Consultant shall be obtained
on the antecedents of suppliers of equipment technology, capacity, its
maintenance, life of equipment.
d) Wherever credit appraisal reports prepared by outside consultants
(including a subsidiary of any bank) or in~house consultants of the borrower,
i
a certificate shall be obtained from the consultant stating that they have
i verified the .technical and financial aspects of the project and based on
their assessment, the project is technically viable and economically feasible.
r e) The parent bank of the consultant subsidiary which has appraised the
project s~all take a share in the project funding. Dev~~l)lJ~iA--lhis reg(lr~.~.9n . . i
I 11
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be permitted by HLCC(ED) and above.
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f). Standard Operating Procedure (SOP) for coordination among participating.·

Banks/Institutions under Consortium Lending should be followed for
consortium loans. Standard Operating Procedures (SOP) for Consortium
Lending covering inter alia -
)> Timelines of disbursement,
)> Enhancement 1 reduction of limit,

)> Valuation matters - synchronization of date, periodicity, sharing of
report, etc.
)> Resolution in cases of stress,
)> Manda.te for recovery action
)> Decision regarding forensic audit and timely decision on such audit
reports.
Standard Operating Procedures for Consortium lending to be followed as

p·er guidelines issued12,
g) Agencies for Specialized Monitoring (ASM)
);> For all new Multiple/Consortium credit. exposures of Rs. 250.00 crore and
above from the Banking System, Agencies for Specialized Monitoring (ASM)
are to be appointed.
);> In case of new accounts solely banking with us and with an exposure of Rs.
100.00 crore and above, ASM may be. appointed based on the requirement
and complexity of the project on a case-to~case basis.
· )> In case of existing Borrower accounts (Sole/Multiple/Consortium) having
working capital Large Credit Exposures of Rs. 250.00 crore and above from
the Banking System, ASM may be appointed as and Vv'hen required.
)> Wherever, our Bank is leader in consortium or .the borrower is solely banking
with us, the respective sanctioning authority has to appoint ASM.
);> In case
.
of Multiple Banking, the Bank which is having
. the highest share of
exposure should generally appoint. ASM, and in case 'of. Consortium where·
our Bank is member, ASM is. to be appointed by the· Leader Bank or as
discussed in the consortium .
. );> For new projects, ASM may be appointed at the time of sanction of limits by
the respective sanctioning authority to monitor the progress of project from
the initial stages itself.
Separate guidelines for Scope.of work of ASMs are already in place'3 .
.·. h) Large Credit Exposure - Engagement of ·oo'~·aln Experts in Selective Sectors
Henceforth, all ·Fresh exposures of more than Rs. 250.00 crore under Sole and
Consortlum.whe're·our Bank is leader are to be~ned-wi.th the services of
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76 I i>"J'g''~\ ·T?
Indian Overseas Bonk LOAN POLICY DOCUMENT 2022
1) Infrastructure (Roads & Ports);

2) Telecom,
3) Power (Generation & Distribution),
4) Basic Metals (Iron & Steel, other Metals)
.. 5) Textiles (Cotton, Jute)
6) Chemicals & Chemical Products, Fertilizers
I
· 7) Automobiles
t
i
I
8) Any other sector as required from time to time
i) Regarding exposure in consortiu·m loans following guidelines to be ·adhered
to:
•:• For all . new connections, minimum threshold of 10% exposure to be
. adhered for participating in consortium lending~
.
•!• For existing accounts where our exposure is less than 10% of Consortium
lending and the ratin9 is non-investment grade, Option of exit.route to be
explored.
•!• However, for existing account wherein our exposure Is Less than 10% of
consortium lending with· Investment grade rating having good track
record & satisfactory past performance, we may explore option to
. . our share up. to. minimum of 1O%; subject
increase .
to compliance of laid
... down norms and achievement of key ratios and excluding stressed
sectors as'decided by the bank from time to time. ··
•!• In the above . process, it is to be ensured that single/group borrower ..· ·•
exposure ceiling as prescribed in our Board approved Loan Policy
Document is not breac~ed.
9.12. MULTIPLE BANKING ARRANGEMENTS:

In case of multiple banking arrangements, independent apprqisal shall be made
and it shall be .ensure.d that of security/charge is availabl~ including personal
I
I guarantee· of promoters'/ stake holders, wherever feasible. The .guidelines
II. mentioned in 9.11 (d) and (e) are applicable for MBA also. The following are the
I guidelines for lending under MBA.
i!
i. Where we are the sole Bankers and the borrower desires to avail credit
facilities from other Banks without a formal consortium arrangement, the
reasons for the borrower to approach another Bank for their credit
requirements shquld be .ascertairwd qnd recorded.
ii. The. borrowers may be permi.tted to borrow from other Banks provided they.
agree to furnish from time to time the details of the various facilities availed
from other Banks and also provided that the t~.nrm~~~ ca~~tai,:Jin,Ji!~ .
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availed by the borrowers are within 10% tolerance of the working capital
limits assessed by us.
iii. Apprais-al of credit limits to be done independentiy .·.
iv. Documents will be taken independently. However, charge on assets is to be.
created on pari-passu basis.
v. Stock statements should contain the outstanding with other banks.
vi. Independent inspection to be conducted as per norms. Joint inspection at
.· least once in a year shall be ensured
vii. Adverse features shall be shared among Banks.
viii. Normally Interest and commission to be charged as per rating of individual
Banks. However. on-merits of the cases, the Bank will fall in line with the
interest rates and charges stipulated by majority of the Banks/Banks having
major share.
ix. Details ·of collateral securities offered to other banks and credit limits
enjoyed with other banks duly certified by the auditors are to be obtained.
x. RLCC and above will have the discretion to sanction facilities outside
consortium within their per borrower limit.
9.13. EXCHANGE OF ·INFORMATION UNDER CONSORTIUM/MULTIPLE. BANKING

ARRANGEMENTS:
; ...... ·
RBI has issued guidelines on lending under Consortium arrangement/Multiple
Banking·. Arrangements .... ·These guidelines
.
are· with· . an intention ·to
share/disseminate the information among the Banks about the status of the
borrowers enjoying credit facilities from more than one BaQk. These guidelines shall
be followed without deviation.
Bank will also adhere to the instructions relating to infQrmation sharing among
Banks as indicated In RBI circular on 'Lending under Con'sortium Arrangement 1
Multiple Banking Arrangements' 14 and on Non-Performing Assets and Restructuring
of Advances1 5 .
9.14. CAPITAL RESTRUCTURING:

The following cases shall be treated as Capital Restructuring:
a) Any change in share capital of the company either by issue of shares to
I
I
I existing shareholders and or to public byway of equity or preference share
r .and debt instruments. ' '· .
l b) Any reduction of share capital by cancelling shares or reducing the face

value of shares or buy back of shares.
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c) Capital restructuring also takes place among. group companies by transfer

of share capital from one to the etheL while retaining the promoters' stake
at the same leyel.
d) In all the above cases, the borrower company is required to obtain "No
Objection" from the Bank.
9.14.1. GUIDELINES FO~ ISSUE.OF NOC FOR CAPITAL RESTRUCTURING:

·a) lfthe borrower is a Company, then NOC can be permitted by the Branch
Manager irrespective of the Sanctioning Authority for Capital Restructuring
(other than debt-restructuring, merger and acquisition and reduction in
share capital) .
b) If the capital restructuring takes place among group companies by transfer
of share capital, from one to the other, while retaining the promoters' stake
I at the same level duly protecting-the undertakings and commitments given
I.
I.
. earlier, then NOC can be per.mitted by' Branch Head.
c) In other cases, only the sanctioning authorities ·from RLCC and above can
I permit issuance of NOC.
d) The format of NOC should be vetted by our approved panel lawyer.
9.15. LENDING BY INTER BANK PARTICIPATION CERTIFICATE (IBPC): . i:•,
The Bank may issue IBPCs with Risk sharing with Scheduled Commercial Bcinks with
the approval of MCB to decrease 1 realign the credit portfolio as and when
required as per the_guideliries for the scheme outlined by RBI from time to time;
For purchase transaction, bank may participate with/ without risk sharing.
Further, if bank gets suitable opportunity, Bank may sell advances by way of
securitization/Collateralized Loan Obligation (CLO) as per the guidelines for the
scheme outlined by RBI. MCB shall be the approval authority for undertaking such
transactions.
The major guidelines at present are as under:

a) The interest rate shall be . mutually agreed between the issuing and
participant banks.
·b) The IBPCs are not transferable·and the tenor shall be minimum 91 days and
'maximum of 180 days.
cj The underlying advances shall be Standard ~~;:)?,~s,e.t\;;:;, ,
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79 1 Page
d) The aggregate amount of such participation in any account shall not

exceed 40% of the outstanding in the account at the time of issue and it
·. shall be maintained during the currency 6f participation.
e) In case where there is default in the underlying advances, the issuing bank
will take necessary action, in consultation with the participating bank and
share the recoveries proportionately.
f) The accounting, repayment and documentation etc. shall be as per the.
guidelines prescribed by RBI from time to time.
Policy on Transaction involving transfer of assets through direct assignment of cash

flows and underlying securities. ·
a) Securitisation involves pooling of homogeneous assets and the subsequentsale

of the ca~h flows from these asset pools to investors. The securitisation market is ·. ·
primarily intended to redistribute the credit risk a'«ay from the originators to a
. wide spec::;tru.m of investors who can bear the ·risk, thus aiding financial stability
and provide additional source of funding.
b) Assets Eligible for Securitisation: Under these guidelines, our bank can transfer a
single standard asset or· a part of such asset or portfolio of such assets to
financial entities through an assignment deed. (ln. a single securitisation
transa~tion, the underlying assets should represent th~ debt obliga.tions of a
homogeneous pool of obligors) Subject to this condition, all on-balance sheet
I
standard assets, except the following, will be eligible for securitisation by the
I originators; '· · ·
I · (i) Revolving credit facilities (e.g. Cash Credit accounts, . Credit Card
receivables .etc.)
I (ii) .Assets. purchased
.
from other entities
I· (iii) Securitisation.exposures (e.g. Mortgage-backed/asset-backed securities)
I (iv) Loans with bullet repayment of both principal and interest.
l
I
c) Detailed policy on Transaction involving transfer of assets through direct
!
assignment of cash flows and underlying securities approved by the board is in
place: ...
Priority Sector Lending Certificates
The outstanding priority sector lending certificates bought by banks will be eligible
·for classification under respective categories of priority sector provided the assets
originated by banks; are eligible to be classified as priority sector advances and
fulfi! the Reserve Bank of India guidelines 16 on Priority Se~tor Lending Certificates.·
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9.16. ELECTRONIC PAYMENTS:

I As per the Government _(MoF) guidelines, all institutions; corporate or otherwise
which avail. any loans shall make payments to staff, vendors and. clients
I· electronically except for office petty cash requirement. They should also receive
all paym·ents ~lectronically except when cheque~ are drawn on banks which are
Ii not on NEFT /RTGS. Further in the Agreement, appropriate condition/clause will be
j provided for this purpose and also for getting such borrowing ef}tities inspected for
compliance of these.·guidelines of the Govt. Any defau.lt of this will be treated as
I major default as notified. by the Department of Financial Services, Ministry of
Finance.
9.17 Loan System for. Delivery of Bank Credit: With a view to enhance· credit
discipline among the larger borrowers (borrowers having aggregate fund based
working capital limit of Rs. 150.00 crore and above from the banking system),
Reserve Bank of India (RBI) has issued guidelines on loan system for delivery of bank
credit. Operational lnstructions17 are also issued by our bank on the same. The
guidelines stipulate a minimum level of 'loan component' in fund based working
capital finance and a mandatory Credit Conversion Factor (CCF) for the undrawn
portion of cash credit/ overdraft limits availed by large borrowers. Accordingly, for
such borrowers, the outstanding 'loan component' (Working Capital Loan) must
be equal to at least 60 percent of the sanctioned fund based working capital limit, :~·
Including ad-hoc limits and TODs: Effective from April 1, 2019, the undrawn portion
of cash credit/ overdraft limits sanctioned to the aforesaid large borrowers,
irrespective of whether unconditionally cancellable or not, shall attract a. credit
conversion factor of 20 percent.
e-
9~ 18 Digltisation of Trade Process- use of Way bill" as ~n additional document
e-Way Bill is an"Eiectronic Way bill" for movement o(goods to be generated on
the e-Way Bill Portal. A GST registered person cannot transport goods in a vehicle
over and above a specified value as defined by the state (Single
Invoice/bill/delivery challan) without an e-way bill. Alternatively, e-way bill can
also be generated· or cancelled through SMS, Android App ~nd by site-to-site
integration through API. When an e-way bill is generated, a unique e-way Bill
Number (EBN) is allocated and is· available to the supplier, recipient, and the
I transporter.
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Developments relating to e-Way bill system can be leveraged in trade finance

since e-way bill represents movement of goods and may be used as an additional
document to test genuineness of trade transaction.·
Therefore; all. the customers (suppliers/ sellers/ intermediaries) should be

mandatorily asked to provide copies of e-Way bills along with supporting trade
documents, when they are given . for collection/ negotiation/ discounting to
ensure the genuineness of trade documents. This will be applicable in all cases
where Road Transport Receipts are furnished and e-Way bills an:do be mandatorily
generated for transport of goods related to the transaction. Where the value of·
goods transported do not warrant generation of e-Way bills, the same should not
be insisted from the customers.
Further, the customers should authorize the bank to have unfettered access to the.
details of e-Way bills related to them, as and when required, from the GSTN or any
other portal where the data of e-Way bills are stored. A written undertaking/ letter
from the customer(s)/ borrower(s) must be obtained in this regard. .
Wherever e-wdy bill is there, it should be submitted compulsorily. In case e-way bill
is not there, IBA approved transport bill can be accepted.
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Chapter-10
I TYPES OF FACILITIES
I!
,. · 10. TYPES Of LOANS:
I
Loans are generally granted in the form of Working Capital, Term Loan and Non
I
j .. Fund Based facilities. Working Capital facilities are granted by way of Demand
j
I loan, Cash Credit, ahd Bill Purchase. Term loans are sanctioned for creating or
I.
acquisition of fixed assets. Since RBI has given Banks the flexibility to fix the loan
and Cash Credit component, sanctioning authorities shall 'fix Working Capital.
Demand Loan and Cash Credit in any proportion/ratio on case to case basis. (For
borrowers having aggregate fund based working capital limit of Rs. 150.00 crore
and above from the banking systemt guidelines on Loan System Delivery of Bank
Creditll to be followed)
10.1. MISCELLANEOUS CASH CREDIT:

a) To encourage trade·credit to those who cannot submit financial statements
and to those, who find it difficult to submit stock statement or where
monitoring/inspecting of current assets are difficult ori an ongoing basis,
Bank is extending credit against immovable properties to the extent of 50%
of the forced sale value of the property.
b) Bank may at its· discretion delegate authority to prescribe lower margin.
c) MCC limit can also be extended to Jobbers/Service oriented
units/Manufacturers MCC shall also be extended to contractors in real
estate business.
d) Sanction of MCC limit is to be originated from RLCC and above.
10.2. BILLS FINANCING

10.2.1 BILLS PURCHASED AND DISCOUNTED (INLAND)
In DA bills not backed by LC,

up to. 90 days· lit can be considered by the branch head (Scale Ill
and above) within 50% of their per borrower limit for
unsecured exposure. Beyond this, the same can be
considered by RLCC.
Up to :180 days I RLCC and above can .consider. Within their. per
borrower limit for unsecured exposure with proper
justification.
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Indian Overseas Bank LOAN POLICY DOCUMENl2022
a) Detailed guidelines viz., sanction of credit limits, precautions to be taken,

scrutiny of bills handling of documents, follow·up etc are in place.
b) Bills financing facilities will be treated as a part ofworking capital finance
and accordingly; the bills limit. shall be assessed and appraised within the
overall working capital limits sanctioned to the .borrower.
c) Bank will ensure that appropriate credit limits are fixed for pa'rties who
require Bills purchased/discounted facilities by following the procedure
prescribed for appraisal of a credit proposition and fixing of credit limits.
d) Bank will allo\V pur~hase/discount of bills repres~nting genuine trade
transactions, under Branch discretion, . where regular . limits are not
· sanctioned to parties, whenever such facility is required occasionally by the .
Bank's good customers, strictly adhering to norms laid down for bills
purchqse /discount. .(Refer latest discretionary power)
e) In a<;:ldition to the _above the following guidelines will be adhered to with .
re-gard to discounting I rediscounting.of bills.
f) While discounting/purchasing bills drawn by front (finance) companies set·
up by lOrge industrial groups, on other group companies, branches will be
.circumspect and take utmost care to ensure that there is no kite flying and
bills are nofof accommodation nature. ·
g) .Bank. will rediscount only usance bills(::lisGQunted by other banks. Bank will .
'not. rediscount the bills already discounted by r\on-banki'ng financial
companies (NBFCs) except in respect of bills arising from sale of light
commerciql vehicles and two/three .wheelers.
h) While purchasing/discounting such bills in respect of "ser~vices", Bank will
exercise their commercial judgment and will ensure that actual services are
. rendered and · no scope will be given to purchase/discount
·accommodation bills.
i). The Bills purchased/ discounted in respect o.f 'services" will be .treated as
unsecured advances .for the· purpose of exercise of discretionary powers
However, wherever such facilities are supported by collateral securitie_s, they
will -be construed as ses;ured advances only for b~lance _-sheet /audit
pu~poses.
j) Bank will discount bills under LC as it attracts lesser risk weight /lesser counter ·
party risks, counter party being LC opening Ba~k.
k), ,Bank;WJII_ ope_n .letters. of credit (LC) and- pur.chqse(discoUQt/negotiate bills
under LCs only in respect of genuine commercial and trade tr.ansactions of
the Bank's borrower' constituents, who have been sanctionep reg-ular credit
facilities.
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/
I) Generally, no finance will be extended for in house bills (inland bills drawn
on . associates/sister. concerns etc.) nor for receivables due from
associates/sister concerns.
m) However, in .cases of backward/forward integration where new companies
are formed to whom goods and services are supplied, inland bills drawn on
/domestic receivables from those companies will be financed;·
n) In all other cases, where there is no backward /forward integration, house
.bills on a single drawee will be restricted to 10% of the bills limit and total of
such bills to associates will not exceed 25% of the bills limit. Relaxations in the
.above ceiling of 10% 125% may be permitted by the next higher sanctioning
authority on merits.
o) In addition to bills drawn covering supply of goods, the bills drawn by/on
Electricity Boards covering transmission/distribution of electricity to .
trade/industrial consumers and bills drawn by IT Software Companies are
permitted to be discounted/purchased. This provision will cover bills raised
by private power producers .also.
10.2.2. NEGOTIATION OF BILLS DRAWN UNDER LC RESTRICTED TO A PARTICULAR

BANK:
a) Bank generally does not extend fund based (including bills financing) or
non-fund based facilities like opening of LCs, providing guarantees and
·acceptances to non-constituent borrowers a·nd non-constituent member of
a consortium /multiple banking arrangement. However, guidelines as
·enumerated in para 4.2.6 may also be referred for extending NFB ·facilities
to a non-constituent borrower not having any FB facility from the banking
system and negotiation of bills under LCs restricted to our Bank.
b) Bill purchase I discounting facility may be extended to beneficiary of an LC
even though the beneficiary is not our constituent, provided the negotiation
of the bills under such LCs is restricted to our Bank.
c) In such cases the following guidelines will be followed.
i. Where negotiation of bills drawn under LC is restricted to our Bank and
the beneficiary of the LC is not a constituent of our Bank, the Bank shall
have the option to negotiate such LCs, subject to the condition that the
proceeds will be remitted to the regular banker of the beneficiary.
' ·ii. While purchasing/discounting bills under sl)ch LCs restricted to our Bank
the aggregate amount of. the bills purchased in a year will be in
commensurate with average turnover of las for the existing
. ~ ~
company and average of last 3 years turn fr;. overse?f}f!t
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iii. An introductory 1 consent letter identifying the beneficiary from the

existing Banker of the beneficiary will be obtained clearly mentioning the
account number and name of the benefiCiary.
iv. Credit report on the beneficiary will also be obtained.
v. The beneficiary will clearly be made known about the applicable
commission, postages, interest and also that the proceeds will be directly
remitted to his account with the existing Banker after netting these
charges. A suitable undertaking letter to this effect will be obtained from
the beneficiary. . .
vi. All other general guidelines as applicable for negotioting bills under LC.
vii. If the negotiation under LC is not restricted to our Bank, then no bills
discounting facility under LC will be extended to Non- constituents.
10.2.3 DISCOUNTING OF BILLS UNDER LC with 'WITHOUT RECOURSE 'CLAUSE.
Bank shall discount bills under LC having "without recourse" clause provided the
following guidelines are adhered to.
a) Bills under LC With iwithout recourse' clause may be permitted. where
.counter party limits are available on the LC issuing Bank.
b) Credit reports on the applicant (buyer) should be satisfactory. .
c.) All other general guidelines for negotiating bills under LC will
be scrupulously'
complied with.
d) Bills, not drawn under LC, but with restrictive clause 'without recourse' will
not be purchased /discounted.
HLCC (GM) andabove· are empowered for considering the above.
10.3 PROJECT FINANCING I TERM LOAN
a) · The onset of financial reforms has opened up a competing arena. for the
banks as well as other financial institutions. There is a change in the concept
that commercial banks extend only working capital I short term loans.
'· Loans granted with repayment period (including ho.liday period) of 12
months and below are classified as Short Term Loans.
b) · Loans granted with repayment period (including holiday period) of more
i
[..
\..
than·l2 months are classified as Term Loans. ..
For project funding above Rs. 50.00 Crore, rigorous du~ diligence and appraisal
measures are given as Annexure 2 of this LPD.
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Tail Risk In Project Finance:

The cost overrun is generally considered to be one of the greatest risk faced in ·
Infrastructure Project Finance; Knowing the probability of their occurrence and
impact on financials of the Project is the key importance in project planning and
execution. ·
Significant and unique financial risks may occur in the final years of a project arising
from the ·project coming to the end of its life (such as reduced productivity or
decommissioning), contractual obligations (such as handover), or .renewal of
licenses, leases, or concessions. Decreased revenue or increased capital
expenditure may occur with an associated rise in default risk.
In case of default, in a given Project Finance, generally the benefits of "tail" period
(remaining asset life after Loan Maturity) can be used for f.ull debt repayment. The
tail period in the context of the, impact in estimation of such financiai risks, for
which Bank is exposed and to understand what are the determinants of tall risk
are helpful in Project Funding. Detailed tail risk analysis should be discussed in the
appraisal note.
10.4. GOLD (ME_TAL) LOANS

a) ·Our Bank is a nominated Bank by RBI to extend Gold (Metal) loans. Tenure
of the lodn should be equal to th.e Working Capital Cycle of the unit subject · :-.
to maximum of 180. days for domestic manufacturers. and 270 days for
. exporters ..Such facility can be sanctioned.
by HLCC
. (Gty\) and a_bove up to
. ·their dt;:llegated powers.
b) Gold(MetGI) Loan will be extended after proper credit appraisal. The Bank
will assess the overall ri.sks on granting of such facilities and mitigate the
same by complying with the guidelines which are in place, like sel.ection of
customers having good credentials and standing in . the· market,
compliance of KYC norms; eligibility, purpose of the fqcility, quantum of
limit, source of repayment, follow up and monitoring with regard to end use
of funds etc. While assessing the credit requirement of the borrower the
bank will also take into account the track record of the borrower, trade
cycle of the manufacturing activity, credit worthiness of the borrower,
! collateral security offered, etc.
! ··C) The .Bank will ensure that adequate margin is available to it at all. times
I
1 . consistent with the volatility of the gold ..prices. . . ·'··
. d) Gold · (metal) loan will also be extended to domestic ·jewellery

manufacturers who are customers of other s~ commercial Banks
against their Standby lC (SBLC) I Bank Guf(~3i.TD,t ~ ly aft~ri'Jf.~in? , i
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counter party clearance from Tr-easury Dept., C.O. The funds shall be
arranged by the borrower by opening .a current account with our bank with.
the consent of the SBLC 1 BG issuing bank, for servicing of monthly interest ·
·and repayment of loan on due. date.
e) In such cases. mentioned in (d) independent credit appraisal ·of t~e
borrower shall be done without relying solely on SBLC I BG issued by other
banks .
.f) In the case of Gold Metal Loan against revolving stand.;by LC I BG where
the original loan limit is restored. after repayment of previous loan,
confirmation of the SBLC/BG issuing bank shall be sought to monitor the
borrowing arrangement and verifying the genuineness of the SBLC I LG.
. . . :
10.4.1 ISSUE OF SBLC/BG FOR AVAILING GOLD (METAL) LOAN:

a) When the :Bank is not able to extend the Gold (Metal) loan,,Standby LC /
Bank Gudrantee will be issued on behalf of the eligible domestic jewellery
manufacturers for their availing Gold· (Metal) Loan with other nominated
Bqrik, after proper credit appraisal as mentioned above. Sanction of such
facility win be by HLCC (GM) and above ..
b) The credit appraisal of SBLC limit shall be cqrried out rigorously qt,par with.
the fund based lim.it.
c) The. validity of the Bank ·guarantee/stand by LC shall not exceed 180 days
as the maximum tenor of the Gold Metal Loan permitted is 180 days.
d) The validity period of the standby LC I Guarantee may be extended
suitably if the borrower wishes to avail the loan .again after obtaining a
confirmation from the lending Bank that the gold (metal) loan for which the
SBLC I BG has been issued has been adjusted in full within the stipulated .
period of 180 days.
e) Margin as appliG::able to financial guarantees will be prescrib'ed.
f) All other guidelines with regard to issue of guara11tees including the
standard limitation clause will be followed.
g) The stand-by LC I BG shall cover. at all times the full value of the qudntity of
gold borrowed by these entities.
j
h) The stand-by· LC I BG shall be in favour of another Bank nominated by RBI
I
.only and not to any other entity which may otherwis.eb~ haviqg permission
I to import gold. . . ·. · · ·. .. ·
i) The skmd-by LC I BG facility· extended to domestic jewellery manufacturers
1
will be denominated in Indian Rupees and not jD.Jor@.i.gn currency.
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j) Stand-by LC I BG issued, will attract appropriate risk weight as per extant.

guidelines.
10.5. LOAN AGAINST GOLD DEPOSITS:

Rupee loans will be granted against security of gold deposits under the Gold
Deposit Scheme introduced by Govt. of India for mobilizing gold at select
branches to the Resident Indian Public. Detailed guidelines are in place.
· Gold Monetization Scheme

A new scheme for monetization of gold was introduced for mobilizing the gold
held by households and institutions in the country ·.and putting this gold into
productive use. This will replace the existing Gold Deposit Scheme 1999. The new
. Gold Monetization Scheme comprises of 'Revamped Gold Deposit Scheme (R-
GDS)' and Revamped Gold Metal Loan (R-GML) ".linked together. ·
Rupee Loans will be granted to Resident Indian public against security of gold
deposits mobilized under the Gold Monetization Scheme ..:.. Short Term Bahk
Deposits (GMS-STBD). Operating Guidelines are available on Gold Monetization
Scheme's. .
10.6. GOLD LOAN/ ADVANCES. AGAINST GOLD JEWELLERY:
10.6.1 .AGRICULTURAL JEWEL LOAN I JEWEL LOAN (OTHERS)

Gold loan can be granted against jewellery only. No gold loan can· be granted
against bullion I primary gold. However, gold loan is permitted against gold coins
purchased from Banks. However, gold loan is permitted against gold coins
purchased from banks for coins up to 50 grams only.
10.6.2 COMMERCIAL
:
CASH
:
CREDIT AGAINST JEWELLERY UNDER SPECIAL CRED.IT
SCHEME.
Detailed Guidelines are in place for the above Loans.
10.7. FOREIGN CURRENCY LOANS:

WORKING CAPITAL LOAN IN FOREIGN CURRENCY (WCFC)/ FOREIGN CURRENCY
TERM LOAN· (FCTL):
a) Bank shall extend Foreign Currency Loans subject to availability of foreign

currency funds as under: -----
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i. Working Capital Loan in Foreign currency (WCFC) to meet the working

capital needs of the borrowers towards cost of raw materials acquired
locally.or imported from abroad
ii. ·Foreign Currenc;y Term Loans (FCTL) for capital expenditure.
· iii. Packing Credit I Bills purchase and discounting in Foreign Currency
towards export credit as working capital
b) While WCFC Loan and FCTL are granted out ·of the resources of FCNR(B)
funds, PCFC and Bills in FC facilities qre sanctioned out of (i) funds sourced
from FCNR (B), (ii) Borrowing in Foreign Currency and (iii) Swapping Indian
Rupee subje.ct to prevalent regulatory guidelines .
. c) Foreign currency loan shall originally be. sanctioned in Indian Rupees and
shall be converted to foreign currency at Notional Rate fixed by Treasury
·.Dept.
d) The. rollover of foreign currency loans (recalculation·of rupee liability) may
be done half yearly to ensure that the rupee: liability of the borrower is
marked to market.
e) The reset clause (spread reset) for pricing can be done every roll over /at
.·the time of renewal of limits.
f) If at. the time of roll over, foreign currency is not available then pricing for
the loans in lndianRI,Jpees will be bqsed on the rate applicable for rupee.
facility, if any I based on rating. . . . . ·· .
g) The excess over DP in Indian rupee liability at Notional-Rate due to upward
revision in NR need not .be treated· as an irregularity/overdue till the
forthcoming roll over ··of FCTL. Also, for· WCFC carved out of. CC, if. the
outstanding in WCFCis more than the Rupee liability due to upward revision
: of NR, the same need nqt be recovered from CC or reduced from the DP of
c;c, till next roll over, in case the facility· is continued .
. h) At the time of each roll over only the Foreign currency eligible for the limit or
drawing power (whichever is less) at the prevailing Notional rate shall be
extended as loan. The excess_ due to NR variation ,if any, shall be recovered
to ensure that the FCL rupee equivalent at NR is within the limit/DP as. per
the terms of sanction denominated in INR .
.Downward Revision of NR- Release of margin
If the notional value of bank guarantees in INR decreases due to decline in
E)XchangE;) rate, then the ·excess money held in form· of. mqrgin ._may be
released to t)le borrower subject to availability of ·hedging un~er the
following condition: ·
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Indian Overseas Bonk LOAN POLICY DOCUMENT 2022
"The difference between the actual morgln held by the bra1:1ch ond margin
requirement os on date due to decrease in Notional Rate works out to be
5% or more and the difference is minimum of Rs. 1.00 Crore".
).> · If the above condition is fulfilled, the branch after getting a confirmation
from respective ROs (irrespective of the sanctioning authority) may release
the difference amount to the borrower's account.
).> The margin to be· released only upon specific written request of the
borrower. In such cases the borrower/depositor must be informed about
pre-closure penalty, if any ond a written request must be obtained from ·
them to close the deposit prematurely to release .excess margin.
i) WCFC/FCTL: Credit Sanctioning authorities shall take the cost of foreign

currency funds .from treasury and shall add appropriate premiq anc:i margin
ba~ed on the tenor and risk rating of the client before finalizing the lending
rates.
10.8. FOREIGN CURRENCY LOANS AGAINST FCNR(B) DEPOSITS:

. Bank shall extend Foreign Currency Loan against FCNR (B) deposits with 10%
margin Or) face value of deposits. Such loans shall be given to the deposit holders
or third parties. The rate of interest shall be decided byTreasury Dept., C.O. based ··<
on RBI directives from time to time. Credit Sanctioning authorities shall take the ·
cost of foreign currency funds from treasury and shall add appropriqtepremia and·
margin ~asec(on the tenor and risk rating of the client before: fi~alizing the lending
rates.
·10.9. NON FUND BASED FACILITIES:

·a) Bank ,shall provide NFB facilities to its customers based on the past
performance and evaluation of the future need for the same as per
borrower's business plan. Non Fund Based facilities are sanctioned by way
of Letters of Guarantee, Letters of Credit, Standby· Letters of Credit for
imports and domestic procurements, Trade. Credits etc. Letters of
Undertaking (LoUs) and Letters of Comfort {LoCs) for Trade Credits are
discontinued by RBI2o,
b) ~ank will follow the same precautions as·are normally follow_ed in ,the case
of FB facilities, including analysis of financial data, production cycle, ability ·
· of the borrower to meet commitments, performance of the industry, market
trends etc.
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10.9.1. LETTER OF CREDIT:·.
a) Letter of Credit is established on behalf of the customers fo(working capital

needs such as procurement ·of indigenous and imported raw materials, etc.
LCs are also established for capital expenditure of the .constituents. The LCs
are issued on Document against Payment (DP) or Document against
Acceptance (DA) terms based on the requirements of the borrowers .
.b) While issuing Letter of Credit, the Bank shqll ensure that the applicant has
adequate resources to meet the commitments under the LC on the
respective due date and ·wherever necessary, amortization schedule is ·
stipulated. Detailed operational guideline·s are in place. No Post Import
Finance I funding should be extended as a matter of routine, without
proper assessment. Genuir:1eness of the trade trans·action shall be ensured.
c) Normally Inland LC under DA Terms shall be restricted to 20% of the assessed
working capital limit. This ceiling shall not be applicable to the following·
beneficiaries (i)Central Government, (ii) State Government, (iii) Public
Sector undertakings, (iv) Listed Companies dealing with the particular
commodities. For other borrow,ers the cap of 20% may be waived by HLCC
(GM) and above. LC underDA limit should be within the arrived or assessed
maximum permissible bank finance or estimated/projected l~vel of sundry
creditors whichever is less.
d) There may be occasions where the nature of industry or the trade practice
or the. specific need of the borrower may be for a higher ln.land LC limit.
I RLCC and above may sanction such limits under their delegated powers.
I Such instances by sanctioning up to branch shall be referred to RLCC for
clearance.
I e) Inland Revolving Letter of Credit:

While establishing I opening Inland Revolving Letters of Credit, care should
be taken that the Letter of Credit contains reinstatement clause. positively.
! This means that th~ Letter of Credit amount would gef reinstated only on
payment of the earlier drawings under the Letter of Credit. In other words,
such l/Cs has to be non-automatic revolving L/Cs.
Import LeHers of Credit - Certificate Issued by Societe Generale De
Surveillance (SGS):
Till now Regional
. Managers
.
h.ave the ppwers to permit branch.es, to waive.
SGS clause for pre-shipment inspection, report on vessel and age of vessel,
while establishing Foreign Letter of Credit, on behalf of their importer
customers, on a case to case basis and o~efits-::...Jn those borrower .
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accounts sanctioned by branches under their control and also by their

offices.
Now powers are vested with the following for one~time sanction of SGS
clause waiver (valid for 1 year) for pre-shipment inspection, report on vessel
and age of. vessel, while establishing Foreign Letter of Credit, on behalf of
their importer customers -
a) AGM heading a branch may permit waiver for limits sanctioned under
his/ her branch discretion .
. b) Regional Managers have the discretion to permit waiver for branch ·
sanctions (other than point "a" above), RLCC sanctions and. CO
committees sanctions.
The above waiver sanction will be valid for one year and for specific.
suppliers submitted/ declared by the importer customer at the time of
sanction and will be subject to following-
i. Past track record on the importer in honoring documents is good. ·
ii. The beneficiary of credit is internationally well reputed and satisfactory
current credit report on the beneficiary is held by the branch which is
not more than 1-year-old.
I
iii. The import is being done on a regular basis_ from a known supplier over
a period of time .
I . iv. An undertaking from the importer customer to be obtained with a
i. douse that Bank will not be liable for any .loss arising out of the said
waiv,er of Pre-Shipment Inspection Clause. ·
I Notwithstanding the above, it should be borne in mind that the need for
insisting on submission of Pre-Shipment Inspection Certificate by a
renowned International Agenc"y is obviously to ensure the quality and true
value 1 price of merchandise or item imported and thereby safeguard the
importer's as well.as Bank's interests. In other words, the authority, who
I permits waiver of pre-Shipment inspection certificate, should give
importance to the above aspect and should be selective while permitting
such waiver after weighing the balancing considerations involved. In this
connection, the guidelines issued/ restrictions imposed by other statutory
bodies from time to time on the quality of goods to be imported which
needs pre-inspection certificate (as in the case of metal scrap), have also
to be kept in mind, _while examining requests for such waiver. ·
f) In view of the large number of maritime frauds, branches should not issue
LCs accepting charter party bills of lading. Hence ~P.R!!_cdtions with such
clauses should not be entertained by branche~~-n~ ~1cr"i'1)~
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Similarly; caution should be exercised for deletion/modification of certain

mandatory clauses in the LC application like Transport documents
indicatin~ as the consignor of the goods a party other than the beneficiary
of the credit are acceptable·, Charted party Bill of lading acceptable,
document dated prior to the date of LC etc.
Any waiver In this connection, should be with the prior approval of RLCC.
· 10.9 .2. LETTER OF GUARANTEE

a) Guarantees shall be issued by the Bank on behalf of customers only. Various
Guarantees issued by the Bank depend upon the purpose (such as·
Performance, Bid Bond, Security deposit Advance Payment Shipping
Guarantee etc.),
b) Guarantees·. are . iss.ued on behalf .of the customers, in
' .
favour- of
.
the
beneficiary .for fulfillment of commitments or for due performance of a
contract or for due payment of monetary obligations by the customer.
c) While issuing the guarantees, the Bank will ensure that ·
i. Customer ha.s the necessary experience, capacity and means to
perform the obligations under the contraCt.
ii. Customer is in a position to reimburse the guaranteed amount in case
_·· of invocation. by the beneficiary. ·.·. ·
·.. d) In c:::ase of g·uarantees issued in favour o( private companies (other than
State/Central Govt. department/listed companies), credit reports on
benefiCiaries to be obtained before issuance of the guarantee.
e) No bank guarantee will normally have duration· of more than 10 years.
f) Issuance of such guarantees with duration more than 10 years is permitted
in exceptional cases subject to the following conditions:
1. The sanctioning authority is satisfied about the requirement, purpose,
custom and credibility of the applicant. . .
2. Such guarantees are issued in favour of Central I State Governmemfs
Departments/ Organizations or other reputed institutions .
. 3. Sanctioning_authorities up to RLCC shall obtain prior permission from
HLCC(GM) for issuing such· guarantees.
g) LG can be issued on behalf of JY of our existing customer subject to proper
KYC and Due-Diligence. Ring Fencing of the cash flow to· be positively
explored.
· h) Detailed operational guidelines are in place for issue of guarantees and
projects related performance guarantees ..
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. Indian Overseas Bank LOAN POLICY DOCUMENT 2022
Guidelines for Expired Guarantees
It is mandatory to eli!llinate the expired guarantees from the books. as well as the
system. Standard Operating Procedure19 to be followed torExpired Guarantees.
10.10. STANDBY LETTER OF CREDIT(SBLC)

a) Standby Letters of Credit shall be issued in connection with payment of margin
money in respect of approved commodity hedging transaction subject to terms
and conditions as stipulated t?ythe Reserve Bank of India from time to time.
b) Standby letters of credit favouring overseas lenders for purpose of such as

raising buyer's credit/ to facilitate wholly owned subsidiaries I Joint Venture· (JV)
abroad owned by our customers shall be issued as per RBI guidelines issued from
time to time. SBLC shall not be issued for purposes which are prohibited by RBI
guidelines. ·
Letters of Undertaking (LoUs) and Letters of Comfort (LoCs) for Trade Credits are
dlscontin.ued by RBJ2o.
Bank guarantees may be given (Refer Treasury Department c;::ircular FX/ 26/ 2017-.
18 dated 13.03.20 18j by the ADs; on behalf of the importer, in favour of·overseas
lender of Trade Credits (TC), not exceeding· the amount of TC. Period of such
guarantee cannot be beyond the maximum permissible period for TC. TC may. ·.
also be secured by overseas guarantee issued by foreign banks I overseas
branches of Indian· banks. Issuance of such guarantees i.e. guarantees iss.ued by
Indian banks and their branches/subsidiaries located outside India will be. subject
to compliance with the provisions contained in RBI. Department of Banking
Regulation Mastef Circular No.DBR.No.Dir.BC.ll/13.03.00/2015-16 dated Julv l,
2015 on "Guarantees and Co-acceptances", ·as amended fro(n time to time.
However; LoU/ LoC remains to be discontinued for Trade Credits (buyer/suppliers
credit).
10.11. EXPORT GOLD CARD:
Bank will issue Gold cards to eligible export borrowers with line of credit for 3 years
to exporters with satisfactory track record. The rating assigned to such exporter
shall be lOB 5 and above, wherever the account is rated under CRISIL RAM. For
lower rated accounts-HLCC (ED) & CAC are empowered to sanction Gold card
on merits under their respective per borrower limits.·
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Type of Credit facilities as regards Retail Credits, Agricultural Credit & Allied
Activities, Priority Credit, .Government Sponsored Schemes shall be as per
guidelines issued separately for each of the above categories from time to· time.
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Chapter· 11
GUIDELINES ON SANCTION OF SHORT TERM LOAN .
11.1. SHORT TERM LOANS (other than those carved out of Working Capital Limits}:
Corporates shall be looking for loans from Banks and Fihancial Institutions for .
general corporate purposes. In order to meet .their short term requirements short
term ·loans are granted by the Bariks. The guidelines to be adhered to while
granting short term loans to Corporates are enumerated herein below.
I
a} Eligibility:
I} Constitution:
·Listed companies, Societies, Government Departments, Institutions, ·
Statutory Corporations, Unlisted Corporates with a record of growth in sales
and profit for the last 3 years.
II) Rating:
Rating should be atleast not less than lOBS (Internal rating) or BBB (External
rating) ..
. iii} Asset Status:

The account should not have been classified as NPA during last three years
b) Purpose:
. 1) To meet short term requirements of Corp()rat.es .
2) To meet Working Capital requirements.
3) For project related expenses.
4) To repay/swap high cost debts.
5) To meet on~.going capital expenditure.
6) . For acquisition of commercial assets.
7) Short term cash flow mismatches.
. 8) Any other business related purposes .
9). Other general corporate purposes.
10) Not for investment in capital marke.ts.
11) Not for any speculative purposes.
12) Not for any diversion of funds .for any unapprs>Ved purposes.
13) Not for investing in unrelated real·estate.
14). . Not for investment in Associate firms.
15). Not for any purpose restricted by RBI/Go~-§trirl~s ..
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Indian Overseas Bc;mk LOAN POLICY DOCUMENT 2022
c) Assessment:
Apart from regular appraisal, the assessment includes the following.
i. Financial strength of the company, repayment capacity should be
looked into.
iL The requirement of the company shall be assessed based on the cash
flow statement.
d) Margin:
10 ~ 15%.
e) Interest Rate:
Interest rate applicable for Working Capital limits s_hall be charged. Finer .
interest rate may be considered on case to case b·asis as per the delegated
powers and guidelines in force .. ·
f) Processing Charges:
As applicable for Working Capital limits
g) Commitment Charges: As per· guidelines ·in force . ~ :·
h) Repayment period:
i. . For fully secured advar1ces, the repayment period shall be maximum 12
months.
ii. For partially secured or not fully secured short term loans, the repayment
period shall be maximum six months; however, if collateral security has
been creC:ited within this period the loan may be extended for another
six months.
b)Renewal:
Bank at its discretion can renew the facilities for a period not exceeding similar
period after the existing short term loan is fully recovered.
c) Security:
i
i
i. Prime I Collateral- Equivalent to the loan amount.
I ii. MCB only can sanction without odequate prime/collate·ral security.
I
I
d) Delegated Powers:
HLCC (ED)
. and above has powers to sanction Short Term
- Loan.
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11.2. SHORT TERM LOANS CARVED OUT OF WORKING CAPITAL LIMITS:

HLCC (GM) and above are empowered to sanction Secured Short Term loans up
to 180 days by carving out the same out of unavailed portion of cash credit limits
already sanctioned to borrowers by them. However, CAC is empowered to
sanction such facility for accounts sanctioned by MCB. Such sanctions should be
reported to MCB for information.
' \
11.2.1. EXTENSION OF TENOR OF SHORT TERM LOANS CARVED OUT OF WORKING

CAPtrAL LIMITS:
The tenor of existing short term loans, carved out of working capital limits shall
be extended any number of times by the respective sanctioning authority
subject to
i. Availability of adequate drawing power
ii. The account being regular in all aspects and renewal of working capital
limits as per extant guidelines.
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99 1 Page
Indian Overseas Bank LOAN .POLICY DOCUMENT 2022
Chapter -12
FINANCE TO VARIOUS SEGMENTS
12.1. MICRO SMALL AND MEDIUM ENTERPRISES·:
Micro, Small and Medium Enterprises are the main growth contributors of the
Indian economy due to their ability to create jobs, foster entrepreneurship and
provide depth to the industrial base of the economy.·
12.1.1 MICRO .AND SMALL ENTERPRISES:
A separ<;~te Board approved l.oan policy for MSE sector framed by the Bank is i_n ·
place. .
Definitions; details regarding classifications/ sub~classificatio~s and targets I sub-
targets have been detailed out in Chapter-2 Para 2.5.3.
All MSME loans, irrespective of loan limit will be classified as priority sector
advances under Micro, Small and Medium enterprises21,
In terms of the recommendatbns of the Prime Minister's Task Force on MS.MEs,
Ii banks are advised to ochieve:
I.
i: '20 per cent year.:on-year growth in credit to micro and small enterpris~s;,
ii. 10 per cent annual growth in the number of micro enterprise accounts and.
iii. 60% of total lending to MSE s~ctor as on preceding March 31st to Micro .
enterprises.
iv. 7.5% of ANBC (Adjusted Net Bank Credit) or CEOBE (Credit equivalent amount
of off-balance sheet exposure) whichever is higher for bank lending to micro
enterprises.
12.1.2 LARGE INDUSTRIES:

Industries other than MSME are classified under Large Industries.
12.2. FINANCE TO INDUSTRIES:

12.2.1 General guidelines:
a) Generally, the Bank will confine itself to Industry ,wise .expost:Jre of credit as
mentioned under prudential norms {Chdpter-3). The exposure limits to
various sectors I industries shall be reviewed at the time of review of Loan
Policy document and also from time to time~~ · on National and
. 't' ~~-a
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b) The Bank shall review each industry where. the exposure of the bank is
beyond a cut off limit as prescribed in the Credit Risk Management Policy .
.The same shall be placed to the Board.
c) While financing industrial sector, industries rated below LT 6 (as per CRISIL
R.AM rating model) shall be made only with strict due diligence with proper
justifications which should be duly recorded in the proposal. Financing low
rated industries shall be considered only after being fully satisfied about the
viability .and the track record of the promoters of individual projects/units.
12.2.2 Finance to Film Industry:

a) There is no ceiling with regard to cost of production of film. Sanctioning
authorities can stipulate adequate collaterd security based on merits of the
· case and the reputation of the promoters.
b)The period of loan should be fixed based on the assessment of cash
generation of the project However, the repayment will be fixed not
exceeding 18 months for all movies.
c) Film Exhibition is mainly confined to the acquisition I construction of a new
cinema theatre or. cinema complex or for ·renovation I expansion I
modernization of an existing theatre complex. Bank finc:ince to this segment
will continue. to be on conventional
. ·· . .·
lines in their usual course of
.·.
business. In ... ~
specific cases, working capital requirements may be considered subject to

taking usual precautions.
d) The discretionary powers for sanctioning loans for film produCtion and film
distribution will not be applicable for financing to ·film exhibition. The
discretionary powers to grant general secured or unsecured advances will
be exercised for these advances.
12.2.3 Financing of Television Channel (telecasting) will be classified under Film

industries, However, Bank finance to this segment will continue. to be on
conventional lines iri their usual course of business. The discretionary powers
for sanctioning loans for Film Industry will not be applicable for financing to
television channel. The discretionary powers to grant general secured or
unsecured adva(lces will be exercised for these advances .
. 12.2.4' Ship Breaking Industry:

c:i) The advances under this category. are generally extended in Branches
attached · to Kolkata, Mumbai and Ahmedabad Regions. Regional
Managers in these c~nters are authorised to !;{ ~ d based limits
according to the discretionary powers veste Wl!~~'@f'ril&~;:.Jll~ ,. :- . ·•·, .,. ·: .·1
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b) Facilities for Ship Breaking industry in generally extended by way of Letter of

Credit and Cash Credit. Cash credit facility is to take care of the payment
of Customs Duty, GST and Beaching charges. Cash credit. will be made
available dgainst goods (Scrap) and book debts.
c) Detailed lending policy for Ship Breaking Industry approved by the Board is
in place.
12.2.5 Advances to Real Estate sector:

a) Real Estate Sector offers an attractive avenue for deployment of funds, ·
especially in the present environment of active marketing of Housing
Finance by Commercial Banks and other Housing Finance Companies.
b) While the development of real estate is welcome, there is a n~ed for the
Bank to .curb the excessively risky lending by exercising selectivity and
strengthening the loan approval process ..
Some of the important guidelines are as follows:

i. While appraising lqan proposals involving real estate, bank will ensure
that the borrowers have obtained prior permission from government
/local governments/other statutory authorities for the project, wherever
'-7:
required. RERA approval must be in place wherever applicable. in
order that the loan approval process is not hampered on account of.
this, while the proposals could be sanctioned in normal.course, th·e
disbursements will be made only after the borrower has obtained
· requisite clearances from the government authorities. · ·
ii. The norms like previous experience, maximum repayment period etc.,
laid· down for Advances to Real estate may not be made applicable
for the loans given to parties for construction of Community h·all, hoteL
hospitals, shopping complex, warehous·e etc. and such loans can be
appraised as normal project loans and sanctioned by appropriate
authority, without applying norms applicable to real estate s.ector.
However, these loans will be treated as real estate loans for the .
purposes of classification and reporting. The repayment period for such
loans will not exceed 10 years based on the cash flows.
'
' iii. While financing Real Estate Projects and Developers grading. of the
i
i Project/Developer has to .be obtained from Credit Rating Companies
i approved by the Bdnk while ·considering fresh·· and renewal r
enhancement ofcredit facilities (FB+NFB) aggregating Rs. 5 crores and.
1 above. .,
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12.3. Financing to Housing & Commercial Real Estate Projects (other than
Individual housing loans)
12.3.1 Eligibility:
i
\ a) The builders or their associates should have developed at least one project
of value equal to one third value of the present project for which the credit
rI facility is sought. This eligibility criterion may be relaxed by HLCC (ED) I CAC
I
for existing I new customers who have no prior experience in <]evelopment
I
of real estate.
b) The credit limit will be based on project cost, reputation and capacity of
the buildersto execute the project and other appraisal.aspects without any
ceiling on turnover.
c) Entry·level rating equivalent to lOBS shall be accepted for lending to real
estate sector.
i 12.3.2 System of lending:

I Advance may be extended either in the form of cash credit, MCCor term loans.
I However, advances in the form of Cash Credit I MCC can be considered only by
I
I HLCC (ED) I CAC I MCB within their powers.
12.3.3 Purpose:
I
I
I.
. a) Term Loans for acquisition and development of land (provided it is part of
I the complete project) can be extended to Public agencies only and not to
· Private builders.
b) Under no circumstances, credit facilities shall be extended to private
builders
i. For acquisition of land.
ii. For meeting the cost of acquisition of development rights fro01 any
existing holder of such rights.
iii. . For meeting the tenancy settlement cost.
c) Where the purpose of facility is for meeting the cost of the development like
issue of Letter of guarantees I Letter of credit (NFB facility) in lieu of external
I internal development charges payable to Government, then there is no
objection for issue of such guarantees I LCs on behalf of private builders
provided the land has been acquired by them from their own resources.
i d) Credit fadlities can be extended to private builders on commercial terms
l by way of loans linked to each spedfic project where the land is acquired
and developed by State Housing Boards and other lie agencies. It will
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be ensured by close monitoring that no part of such funds is used for any
speculation in land.
e) Purchase of ready built commercial property is permitted subject to
minimum margin of 50%. Age of the. building should not be more than 25
. years.· All other norms as per the construction 9f ·commercial prop·erty
prevails.
12.3.4 Margin:
Margin of 40% on cost of land (for· public agencies only) .30% on cost of ·
construction. or arnehities
·.
in case of layout etc. are
.
prescribed.
Margin may be reduced in deserving cases by sanctioning authorities as follows:
Particul.ars Prescribed Margin Margin that. can be

stipulated by
Sanctioning Authorities
Cost of land·· 40%. 20%
Cost of construction . 30% 20%
12.3.5 Security:
a) The security will be in the form of land & building in the name· of the
borrower. In addition, collateral securities in the form of any other land and
building, NSCs, term deposits may be obtained. ··
b) The total securities including collateral securities shall.not be below 1·50% of
. the loan amount. Sanctioning authorities can consider the limits with
security coVerage of below .150% on a case-to-case basis but not less than
125% of the loan amount with clear justifications thereof.
12.3:6 Repayment:
The repayment will be based on cash flow & size of the project. As far as
possible, repayment will not be beyond 36 months (including holiday
period). However, HLCC (GM) and above con sanction with repayment
period beyond 36 months, if so warranted.
12.3. 7 Other important QUidellnes:
a) Regarding obtaining of permission/approvals from Government I local
Governments I other statutory authorities for the real estate .projects,
' guidelines are i,IJ place. T~ough, the above requirement should not hamper
~ \'·~the' 'proces's o(appraisal of the proposal~ the disbursements'·of th'e . credit .
r facilities will be made only after the borrower has obtained requisite
clearances from Government authorities/ Agencies 1 local bodies.
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b) Bureau of-Indian Standards (BIS) has formulated a comprehensive building

Code, namely National Building Code (NBC) of India 2005, providing
guidelines for regulating the building construction activities across the
country: The code contains all the important aspects relevant to safe and
orderly building development such as administrative regulations,
development control rules and general building requirements; fire safety
requirements; stipulations regarding materials, structural design and
construction (including safety); and building and plumbing services.
c) No ·finance will be granted for construction of buildings meant purely for
· Government I Semi-Government offices, including Municipal & Panchayat
offices. Banks may however grant loans for activities, which will be
refinanced by institutions like NABARD.
d) Projects undertaken by Public sector entities which are not corporate
bodies (i.e. Public sector undertakings yvhich are not registered under .
companies Act· or which are not corporations established u.nder the
relevant statute) will not be normally financed by Bank.
e) However, where the project is run on commercial lines (the repayment is
not through budgetary allocations of the . Government) and the
. Government is interested in promoting the project either for the benefit of
. weaker sections of the society or otherwise and part of the project cost is
met by Government through subsidies or by contributions to" the capital of
the institutions taking up the project, bank finance may be made available
to the extert of untied up portion of the project ..·
f) In order to reduce disaster risk, the guidelines formulated by the National
Disaster Management Authority (NOMA), Government of India ensuring
disaster resilient construction of buildings ahd infrastructure shall be
adopted by the Bank. Detailed guidelines are in place.
g)· RERA act [Real Estate (Regulation Qnd Development) Act, 2016]: The Real
· Estate Act makes it mandatory for all commercial and residential real estate
projects where the land is over 500 square metres, or eight apartments, to
register with the Real Estate Regulatory Authority (RERA) for launching a
project, in order to provide greater transparency in project-marketing and
execution. State Governments shall make · rules for carrying out the
provisions of the Act. The said rules are notified by some of 'the State
Government. For commercial real estate odvances RERA approval rnust be
in pl,ace wherever applicable.
1 12.3.8 Procedure for reg.tstratlon of .document~ a~~~ ation by the Bank .. .

that registration w1th appropnate authontys~g~ beeQ~~~ :· . / ·;~;~\-/_: .·~-. _l .
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a) The Bank's lawyer on the approved pane.l scrutinizes the document of title
to the property and certifies its title as clear and marketable. It will be
ensured that lawyer personally makes a search in the Registrar office and ·
verifies the entries and a certificate is duly incorporated in his opinion on
the title deeds Branches have also been advised to apply for the certified
copy of title deeds from the Sub-Registrar Office and compare the same
iI · With the documents proposed to be deposited with the Bank, so that the
genuineness-of the documents is verified.
b) Various precautions to be observed in verification of the title deeds and
creation of mortgage to avoid frauds and mitigate the attendant risks
involved are in place.
12.3. 9 Finance to specific Housing/Development Projects and Commercial Real.

Estate Projects;
a) While grantin.g finance to specific housing 1 development projects and
Commerciol Real Estate projects, the Bank will stipulate the following terms
and conditions.
i. The builder I developer I company would disclose in the Pamphlets I
Brochures etc., the name(s) .of the bank(s) to which the property is
mortgaged.·
ii. The .builder I developer .I· companY would append the information
relating to mortgage in favour of the Bank while publishing ·advertisement
of a particular scheme in newspapers I magazines etc.
iii. The builder I developer I company would indicate in their pamphlets I
brochures, that they would provide No Objection Certificate (NOC) 1
permission of the mortgagee bank for sale of flats 1 property, if required.
b) The Loan funds . shall not be released unless the builder/ developer/
company fulfil the above requirements.
12.4. Llqulrent Advances:

Liquirent Loans are granted to Lessor(s) against the rent receivables (Securitisation
of Rent receivables of on the building property let out on lease by way of term
loans only. Liquirent Advances are classified under CRE and Non CRE based on
;
the type of lease agreement. Wherever the following two conditions·qre· .fwlfilled
~ the same is cor:1sidered as Non CRE. .
1 a) The lease rental agreement between the lessor and lessee has a lock-in
period which isno.t shorter than the tenor o.f ~";0\qjfux erever a clause
I for termination of lease ~it her by lessor or ~i~ r§Ji4erefifi:t~~ cified n,otice .· .: . .. .
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i
I applicable and such lease shall be classified as CRE) ·
I b) Lease deed does not contain any clause which allows a downward revision
I in the rentals during the period.
1 ' Advances under Liquirent Scheme shall not be considered if the land lord and the
tenant are associates/subsidiaries/relatives. Any deviation has to be placed to the
MCB for consideration and approval.
The detailed guidelines on the scheme such as eligibility,· loan amount, margin;
security, repayment period etc. are in place. MD&CEO is empowered to extend
the maximum repayment period up to 180 months.
12.5. CAPITAL MARKET EXPOSURE:

12.5.1 General Guidelines:
a) Fresh Loans again-st Shares/ Debentures should not be sanctioned. Existing
loans can be renewed/ reviewed under RLCC Powers.
b) Besides the above, granting advances against primary security of shares
I and debentures including promoters' shares to industrial, corporate or other
! borrowers shall not be normally entertained. However, such securities shall
II be accepted qs collateral for secured loans granted as working capital or
[. for other productive purposes from borrowers other than NBFCs.
c) Advqnces granted for any other purpose - to the extent secured by the
I
collateral security· of shares or convertible bonds or convertible debentures
r
or units of equity oriented mutual funds i.e. where the primary security other
I than sh9res/convertible debentures/units of equity oriented mutual funds
· does not fully cover the advance will be treated as exposure. to capital
market.
d) Shares and debentures in the dematerialized form that are approved by
the Bank only shall be accepted-as security for granting advance.
e) Bank does not extend finance against IPO.
f) No advance against partly paid shares will be granted.
g) No advances against shares in non-dematerialized form. ·
h) Where the sec-urities are held in dematerialized form, the requirement
· relating to transfer of shares in bank's name will not apply. Instead, lien will
be marked against such shares in DP.
I
,.i) Banks will avail of the facility provided in the depository system for pledging
I . ofshares. .- . ··
1j j) At present a uniform minimum margin of 50% shall be maintained on all
advances against shares and loans & issue~~s for share brokers.
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k)·· Within the total margin of 50%, Cash Margin of not less than 25% will be
maintained on the . guarantees issued on behalf of Stock.
brokers/commodity brokers. in favour of stock exchanges/commodity
exchanges for capital market operations. Remaining 25% may be in the
form ot"cash/term deposits or near cash securities/liquid securities like NSCs,
LIC Policies with adequate surrender value, and Relief Bonds that can be
pledged.
e) Statutory limit on shareholding in companies:
In terms of Section 19(2) of the Banking Regulation Act, 1949, no banking
company shall hold shares in any company, whether as pledgee,
mortgagee or absolute owner, of an amount exceeding 30 percent of the
paict.:.up share capital of that company or 30 percent of its own paid-up
shcire capital and· reserves, whichever is less, except as provided in sub-
section (1) of Section 19 of the Ad. Shares held in de mat form should also
be incll)ded for the purpose of determining the exposure limit This is an
aggregate holding limit for each company. While granting any advance
against shares, underwriting any issue of shares, or acquiring any shares on
investment account or even in lieu of debt of any company, these statutory
provisions will be strictly observed.
12.5.2 .Bank. Finance for PSU Disinvestmerits.of Government of India·

.
Finance can· be extended to the successful bidders for acquisition of' shares of
those PSUs vnder the Government of India disinvestment programme, subject to
RBI guidelines. ,
12.5.3 Bank Finance for meeting promoter's contribution: .

a) The promoters' contribution towards the equity capital of a company should
come from their own resources and Bank shall not normally grant adv.ances
to tak~ up shares of other companies. Howev~r, lo~rishall be granted to
Corporates against the security of shares in dematerfalised form held by
them to'meet the promoters' contribution to the equity of new companies in
anticipation of raising resources.
b) Financial assis.tance·will be extended to Indian companies for acquisition
I
I.
of equity in overseas joint ventures/wholly owned subsidiaries or in other ..
o~er.seas companies, new or existing, as .strategic irivestmerit.· Such .
l . acquisition(s) should be beneficial to the Company and the country.

c) Underthe refinance scheme of Export-lmpo~· t B ~1~~ term loans shall .
be sanctioned. on merits to eligible India ~~~ar~ TbP.:... cquisition .of
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equity in overseas joint ventures/wholly owned subsidiaries provided the

term loans have been approved by the EXIM Bank· for refinance.
d) Activities related to such acquisitions like payment of non-compete fee etc.
shall also be fin·anced.
e) Eligibility:
(i) Only Corporates are eligible for these advances.
(ii) The Corporate should have been in the business for more than 3 years,
earning profit every year in the last three consecutive years.
(iii) The rating assigned shall be LT1 to LT4, SME 1&2. TR 1&2 and P1 only.
CAC is empowered to approve any deviations in (ii) & (iii);
12.5.4 Guarantees favouring Commodity Exchange:

Bank will :also consider issuing guarantees on behalf of commodity brok~rs in
favour of the national level commodity exchanges, viz., National Commodity &
Derivatives Exchange (NCDEX), Multi Commodity Exchange of India Limited (MCX) ·
and National MultiCommodity Exchange of India Limited (NMCEIL).
12.5.5 ~oans to Stock Brokers & Market Makers:

. . .
Fresh Loans against shares shall not be considered. However, Existing Loans can
be renewed/ reviewed under RLCC Powers. '~-~
12.6 ADVANCES AGAINST UNITS OF MUTUAL FUNDS: ..

As per RBI guidelines, advances may be granted against the pledge of .,
securities/units of various Mutual Funds under their various schemes like Unit Trust of .
India, other mutual fund schemes of certain Commercial Banks, Public Sector
Undertakings like Life Insurance Corporation, General Insurance Corporation, etc .
. However, branches shall advance against the securities/units of Mutual Funds like
LIC/GIC, Mutual funds promoted by Public Sector Banks, Private Banks/Companies
etc., only after getting prior clearance from Central Office.
12.7 GUIDELINES FOR SANCTIONING BRIDGE LOANS:

a) Bank will sanction bridge loans t6 companies (other than Non-Banking
Financial Companies and Residuary Non-Banking Financial Companies) for
b period not exceeding one year against expected equity flows/issues: Such
loans will be included within the ceiling of 40 per~ent of the banks' net worth
as on March 31 of the previous year prescribed for total exposure, including
both fund-based .and non-fund based exposure_!? capital market in all.
forms.
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b) Bank will also extend bridge loans against the expected proceeds of Non-
I Convertible Debentures, External Commercial Borrowings, Global

Depository Receipts and/or funds in the nature of Foreign Direct ·
Investments, provided· the borrowing company has already made firm
arrangemen'ts for raising the aforesaid resources/funds.
c) The existing borrower companies as well as other companies (other than
non - banking financial companies) whose shares are quoted in at least two
major Stock Exchanges are eligible for the loan.
d) The purpose of the bridge loan and the need shall be clearly spelt out by
the company.
e) The public issue should have the approval of SEBI, etc., and a copy of the
. approval letter should accompany the application for the bridge loan
against equity.
f) The extent of such bridge loan may not exceed 50% of the expected equity ·
flows I issues.
g) The assets of the company in the form of fixed I block assets should be
available as security to cover the bridge loan. In addition to it, the personal
guarantee of Promoter Directors shall be obtained. The sanction will be with
the approval of the members of the consortium I financing bank as the case
may be.
h) No lien letter should be obtained from bank branches handling the
allotment money account.
i) Our Bank should have ·a role in the Public Issue either as Lead Manager or
Advisor I Bankers to the issue.
j) The individual I .group exposure norms should be complied with. The
maximum period of bridge loan will be one year.
k) However, only MCB can sanction such ·Bridge loans.
12:8 ADVANCES TO SELF fiNANCING COLLEGES & SCHOOLS:

a) While finanCing Educational Institutions, the provisions of law in force in
various states governing the setting up of educational institutions, creating
charge over assets of such Institutions etc., shall be looked into. Sanctioning
authority shall ensure that the mortgaged ·property of educational
Institutions is free .from any defect and are enforceable.
b) While financThg to MBA and Engineering Coll~ges grading oHhe institution
has to be obtained from Credit Rating Companies approved by th·e Bank
while considering fresh/enhancement of cre~cilities (FB+NFB)
aggregating Rs. 5 crores and above. ~'rcr~?f/i!t .
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Indian Overseas Bank LOAN POLICY DOCUMENT 2022 .
c) In :respect of advances to self-financing schools .and colleges, for all new

proposals of Rs. 10.00 Crores and above; expression of interest only is
required fr.om New Business Committee before saric:;tion of loans. All new
proposals below Rs. 10.00 Crores and enhancements to the existing
. accounts require clearance from HLCC. (GM) before sanction of loans.
However prior clearance is not required for Sanctioning authorities HLCC
(GMJ ·and above. Exemption: Clearance from .HLCC (GM) is not required
for fresh/ additional/ enhancement sanction for schools/ colleges/ institutes
in whose campus, our branches are situated •.
d) Bonk's charge should be there on cash flow of the institutions (Le. Escrow
account} exclusively where we are sole banker. In case of consortium
finance/ multiple banking, proportionate share should be there on the
Escrow account. and if our bank is leader or our share.
is highest in the
consortium/ multiple banking arrangement, Escrow account should be
maintained with us.
e) Personal properties of the trustees/ promoters .to be explored wherever it is
feasible.
f) Powers are delegated to select authorities for financing Self Financing
Colleges and Schools.
12.·9 ADVANCES tO NON BANKING FINANCIAL COMPANIES:

a) While financing NBFC, Bank shall ensure that the said NBFC has not
· contributed to ·the capital of any partnership firm or is not a par~ner of such
firm: Suitable undertaking from the NBFC shall be obtained for this.
b) NBFCs, registered with RBI are eligible: for Bank Financ'E~ and the guidelines
are as follows:
· i. Need based working capital facilities as well as term loans will be extended
to all NBFCs registered with RBI and engaged in equipment leasing, hire-
purchase, loan and investment activities.
ii. However, finance to Residuary Non-Banking Companies (RNBCs} would be
restricted to the extent of their Net Owned Fund (NOF). .
iii. Finance cdn be. extended to NBFCs agdnst second hand assets financed
by them.
iv. Advances to NBFCs, against second hand assets /.second hand machinery
/second hand vehicles should be extended only to NBFCs registered with
·RBI·& which have a good track record. Guidelines I Terms and conditions in
this connection are in place for compliance. .----31'rn
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v. Non Corporate entities engaged in Non-Banking Financial activities can be

granted MCC limits against immovable properly as per norms applicable to
MCC advances to others;
vi. Advances to NBFCs exempted from the requirement of registration by RBI
will be considered as per Bank's general guidelines for financing to other
sectors.
vii. The powers for sanctioning credit facilities to NBFCs are delegated to select
authorities.
viii. Bridge loans of. any nature, or interim finance against capital I debenture
issues and I or in the form of loans of a bridging nature will not be granted
pending raising of long-term funds from the market by Way of capital,
deposits, etc. to any category of Non-Banking Financial Companies and
also Residuary Non- Banking Company.
ix. Funds flow statements in respect of Bank's exposure to investment
companies and large NBFCs including MFis shall be obtained and ensure
that funds are not used for activities which are _not permitted by the RBI..
x. ·Bank shall strictly follow the guidelines contained in RBI Master Circular22 on
Bank Finance to NoncBanking Financial Companies (NBFCs).
12.10 TELECOM INDUSTRY:

a) Financing of Tel~com Industry will be taken up ;n selective basis ..
b) The telecom Industry is capital intensive af1d therefore it. incurs losses in the
initial fevy years The breakeven depends on subscriber base and various
other factors On account of the higher capacity build up in tlie iQitial years
to provide adequate geographical coverage to its subscribers the capital
cost and the operating costs will be higher in the initial years Going forward,
as the subscriber base increases the Cor(lpany starts generating enough ·
revenues to sustain its operating expenses. In this background, the
promoters will normally enter into inter conne,ction agreements with other
players for sharing the resources·.
· c) Also, the Telecom Industry usually operates on negative working capital. The
negative working capital is on account of higher credit availability. and .
advances received from Pre paid subscribers.
d) The borrower should obtain the requisite licenses I permits 1 rights from the
,, . ·. appropriate auth,ariJies. :... ; . : .· .: : .:.··, . . "' . . ..·.
J ~) The Bank guarantee shall be. normally for the purpose of extendi~g· Ffnancial
1 Performance Bank Guarantees in the normal course of business in favour
J
of Department of Telecom (DOT) or any other ~dy prescribed by
Government of India..
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f) TEV study on the project will normally be obtained.
12.11 SUGAR INDUSTRY:

a) The Bank shall prefer'to lend to Integrated sugar mills (mills which produce
not only sugar but also ethanol and industrial alcohol from molasses and
power from bagasse) ·as they are likely to be more successful than
standalone sug~r companies in terms of revenue and profitability. By opting
·for such a model, Sugar Mills can partly protect themselves from the cyclical
downturns in the core sugar business.
b) The key provisions of the order issued from time to time by Ministry of
Consumer Affairs,· Food & Public Distribution, and Department of Food &
Public Distribution Government of India like the command area to be
allotted to each Sugar Industry shall be looked into.
~) The capacity of the Sugar Mill shall not be below the operational level of
2500 TCD (Tonnes of sugarcane Crushed per Day) and that adequate
sugarcane is available in the command area of the proposed unit. ·
d) As the viability of sugar Industry depends on the vagaries of monsoon and
the Government's policy on .procurement price and price of levy sugar, the ~
estimates on the amount of sugarcane available for crushing, the crushing·

capacity of the mill, the actual amount of sugarcane crushed in a day and
the duration of the crushing season shall be ascertained.
e) The level of Sugar recovery shall, preferably, be at a minimum of 9%.
f) Availability of soft loan from Sugar Development Furid at a lower interest
rate shall be looked into, as the low interest cost component will have a
positive impact on the viability of the project as also the cash flows.
12.12 Co-Lending of loans by Banks and NBFCs for lending to priority sector:
Bank shall enter into co-lending with NBFCs as per the RBI circular23. Detailed
guidelines are already in place.
12.13 FINANCIAL INCLUSION: TEMPORARY OVERDRAFT FOR BASIC SAVINGS BANK

DEPOSIT {BSBD) ACCOUNT HOLDERS:
a) As directed by RBI, Bank had introduced Basic Savings Bank Deposit
accounts with very low minimum balance with the objective of making
banking accessible to a vast section of population.
b) In order to meet financial commitments of BSBD account holders, Branch
M~~a~ers .are vested with discretionary ~ow~~i'l) nt overdraft. a~.• ~~r: ·.
gu1del1nes In force. ~-1. 1
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12.14. Pradhan Mantri Mudra Yojana (PMMY)- The scheme has been introduced
by Government of India, detailed circulars are in place. Common Loan
application' form has been devised and approved by IBA which is to be adopted
by all branches for considering credit facilities under PMMY.
12.15. Micro Units and Development Agency Ltd. (MUDRA):

Detailed guidelines are in place for sanction of loans under this scheme devised
,, by Government of India. There is a separate GL Cqde for MUDRA loans.
i
12.16. Stand up India:
SME Advance Scheme introduced by Govt. of India to give impetus to promote
entrepreneurial culture among the marginalized sections of the society- petailed
guidelines are in place.,· Common application form approved by IBA to be
adopted by all Branches.
12.17. Loans to Staff/Ex-staff against Deposits ·standing in their name:

Loans can be sanctioned at concessional interest rates·and margins (0.5% above
the applicable interest rate and margin of 5% at present for deposits up to .
. aggregate amount of Rs. 1.00 Crore) .
to staff. and ex- staff (ex-staff members shall
not inclu9e employees who had resigned or were removed from bank's service)
against Deposits standing in their name either singly or jointly with members of
their family (the first name shall be the name of the staff mem!Jer) or the spouse
of a person who was formerly a member of staff or an association or a fund, all
members of which are members of the bank's staff as per the guidelines in force.
Branch must obtain a declaration from the staff member(s) concerned that the
moneys deposited .or which may from time to time be. deposited into such
accounts shall be the moneys belonging to him/her. This declaration should be a
part of the deposit account opening form and the branch shall ensure that this
declaration is duly signed by the staff member.
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Chapter -13
·. CREDIT. APPRAISAL .
13.1 MARKET INFORMATION I CREDIT REPORTS I PRE SANCTION VISITjFINANCIAL:

STATEMENT/VALUATION REPORT:
a) Opinion about the applicant I associates should be ascertained by making

· market enquiries from people in similar line of business I buyers I suppliers ·
etc.· Even in the case of existing accounts Bank shall obtain periodic market
information. CRCO in banks prescribed format must be obtained at the tkne
of fresh sanction· as well as renewal of.the business loans for loans up to Rs.
5.00 Lakh. For Loans above Rs. 5.00 Lakh to below Rs. 5.00 crore, Credit report
from Credit Information Companies viz. CIBIL,·CRIF HIGH Mark'to be drawn
and analysed. For credit facilities of Rs. 5.00 crore and above, CRILC report
to be compulsorily drawn and analysed.
Note: Credit Information Report to be compulsorily drawn ·in all the cases as
per the guidelines in place. For accounts of Rs. 5.00 crore and above and
not covered under CRILC, Credit Information report from CICs to be drawn
and analysed.
For all accounts mentioned above, if Credit Score· under CIBIL, CRIF-
. HIGH MARK is -1, CRCO to be obtaine.d in banks format.
For project funding above Rs. 50.00 Cror~, rigorous due diligence and
· appraisal measures as per Annexure 2 to be done. · _
'b) In the case of small borrowers, it should be ensured that the individual resides ·
or undertakes activity within the command area of the branch. ·
c) Bank shall obtain confidential opinion from.the existing Banker and collect
information on the credit facilities sanctioned,: conduct of the account,
examine the statement .of acco'unt of the existing Banker for ascertaining.
satisfactory dealings and operation and shall ensure that all such reports are
obtained and held on record before disbursement of. the advance.
d) Pre-sanction visit to the applicant's place shall be undertaken to ascertain
the existence of the unit as well as assets offered as prime I collateral
secudty a·nd coiled useful information on the business I trade practic.es. ·· .
e) In the case of Trade Credit advances,
i. Balance sheet shall not be insisted for credit limits up to Rs 10.00 Lakh ..
This .shall be applicable for Proprietorshi~ hip firms onty;/ .
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ii. Credit limits maybe sanctioned based on unaudited balance sheet

for limits up to Rs. 25 lacs.
iii. Valuation Report from the Bank's Approved Valuer· shall not be
insisted on collateral securities offered for securing limits up to Rs. 1
lakh.
iv. For valuation of properties, valuation policy of the bank to be
referred.
13.2 · APPRAISAL:
13.2.1 DRAWING OF CREDIT INFORMATION REPORTS:
a) RBI has approved 4 Credit lnf6rmation Companies viz. ( 1) The Credit
Information Bureau (India) Ltd (CIBIL), (2) Experian Credit Information Co~ of
India P: Ltd., (3) Equifax Credit Information Services P. Ltd. and (4) CRIF
· Highmark Credit Information Services P. Ltd. These are. composite bureau
established to service a closed user group of member .credit grantors
(Commercial banks I notified financial institutions and State Financial
Corporations· regulated by RBI), who submit data to them and their
members in turn will be entitled to receive credit reports from their respective
centralised database. Our Bank is a member in all the four credit informatior}
companies. It is compulsory todraw Credit Information Reports (CIR) from
Credit Information Company in respect of advances for Consumer as well
as Commercial segment irrespective of the loan amount- for fresh sanction/
enhancement 1renewal. CIRs.of all the borrowers/guarantors/ass.ociates to
be obtained. CIR of Proprietor in Proprietorship· firm, Partners in case of
partnership firms, directors in case of Company account _to be obtained.
The credit information report obtained from the CIC(s) should be analysed
· and discussed in the note/board note.
Following schemes are exempted from obtention of CIRs-

i. Loan against Deposits I ii. Pensioners Loan Scheme
iii. Loans to Individuals against NSCs, iv. Loans to insurance policies I
IVP & KVP approved by IRDA
v. Jewel Loans I vi. Agriculture Jewel Loans
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j· • • ..• · 1- vii.:· loan against Govl Bends'etc:L :.:. : Staff Consumer Loan viii. •
ix. DPN Loan/ Cash Credit Facility to x. Term Loan: (Wedding) to
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xi. Staff Vehicle Loan xii. Festival Advance to staff

xiii. All schemes of Staff Housing Loan xiv. Education loan to wards of
(including Subhgruha housing loan staff members
I for staff if it is linked with SHL)
j xv. Winter Loan to staff xvi. Drought/Flood Loan to staff
I Any other exclusive ·scheme for staff under welfare schemes which is not
I available to general public.
b) As of now Branches and other Offices are given access to .draw the reports
from CIBIL & CRIF HIGH MARK. Reports shall be drawn from other Companies
as per operational guidelines issued from time to time.
c) The credit information report obtained from the CIC(s) should be analysed
and discussed in thE? note/board note.
13.2.2 GUIDELINES REGARDING BORROWERS FEATURING IN THE WILFUL DEFAULTERS

i
I CAUTION LIST OF RBI I SPECIFiC APPROVAL LIST OF ECGC:
I
I
Bank shall adhe.re to the guidelines stipulated in RBI master circular on Willful
I Defaulters24.
I CIBIL willful defaulter also to be verified before sanctioning/renewing any credit
I facility.
I· . Advances to Exporters whose names appear under SAL (Specific Approval List) of
ECGC:
I In resp~ct of advances to exporters whose names appear under "Specific

. Approval List" by ECGC, prior clearance from HLCC (GM) should bE? obtained for
proposals· falling up to the powers of RLCCs. After such prior clearance, RLCCs can
sanction/renew credit facilities to such exporter's up to their powers.
13.2.3 REPORT FROM CRILC DATA BASE:

a) For all credit limits of Rs 5 Crore and above (Fund Based+ Non-Fund Based),
a Report from CRILC data base shall be drawri and it will show the status ·
(NPA or SMA etc.) of the account with all the lenders.
b) Login Ids and Passwords are shared with credit verticals at CO, and select
Regional Offices and in case of any clarification with regard to CRILC, Credit
Support Services Department at Central Office will clarify to Branches/ROs.
c)· For all credit limits of R~~ 5;00 Crmes ·and above, CRILC report should be
compulsorily discussed in the Board Note.
d) Other than that current accounts with other banks also to be checked and
to be discussed in board note. For closure o ~·~ ith other _than:: . ·
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financing banks, necessary steps to be taken with the account holding bank
for its closure. · .
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l 13.2.4 VERIFICATION IN MCA WEBSITE:
l
I
With regard to c;ompanies registered under the Indian Companies act 1956, the
authenticity of the audited financial statements, the· name of the auditors I firm
and the index of charges created shall be verified in the Ministry of .Corporate
I Affairs (MCA) website. Directors/ Authorised signatory details and the details of
companies in which they are interested also can be verified through the MCA21
Website.
13.2.5Verification from Central Froud Registry and Information Service Companies

i.e., Probe 42, etc, to be done before sanctioning/renewing any credit f~cility .
.13.2.6 UDIN (Unique Document Identification Number): It is mandatory to obtain

UDIN by all practicing Char~ered Accountants for all certificates issued by them
where the Financial Information/ related content is certified as True and Fair/ True
and Correct. Th€1refore, verification/ cross checking of the authenticity of the
documents issuec:l by practicing CA to be done from the portal at
https://udin.icai.org/ This should be discussed in the boaro/ app(aisal note.
Further, ICAl has now made UDIN mandatory in the following phases:
a) All GST & Tax Audit Reports w.e.f. 151April, 2019 ...
\
b) All other attest functions ~.'e.f. 1st July, 2019. .
I-
I 13.3 · WORKING CAPITAL: . .

a) . Banks have been given freedom in evolving their own . method of lending
I \.
. and .the Bank has evolved its own lending policy. A separate· policy for
·lending to Micro and Small Enterprises (MSE) is in place.
i b) In respect of other category of borrowers with working ~apitallimits up toRs ..
i
!
.2 crores (Except for MSME borrowers with limits up toRs 7.50 Crores) will be
assessed as per Nayak Committee recommendatiqns i.e. turnover method.
Borrowers enjoying working capital limits of above Rs 2 crores qnd up to Rs.
10 Crores (above Rs 7.50 Crores and up toRs 10 Crores for MSME borrowers)
will be assessed as per the existing traditional method of arriving at
. . ., .·· ..Maximum Permissible Bank Finance.(MPBF).calling for. the CMA data and fqr,
borrowers enj~ying working ca~ital limits of above Rs-1 0 Ctores, op.tion .will
be given to the borrower to be assessed as per the Cash Budget method or
as per MPBF method. For industries like sugar andJeetiYh. ein the pattern of
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financing the peak cash deficit(s) is followed all along, the existing system
of assessment under the cash budget method will be followed.
c) Branches/ROs to adopt simplified procedures for sanction of Working
Capital Limits to MSEs i.e. 25% of the projected and accepted annual
turnover could be extended as Working Capital limit to MSE units requiring
aggregate fund based working capital limits up to Rs 7.5 Crores. In such
cases where 25% of th~ accepted Turn Over is extended as working capital.
the borrower has to bring in .6.25% of the accepted turnover as margin for
the proposed working capital limit. Current Ratio of 1.25 to be maintained~
Working Capital Assessm~nt for Digital Portion: For those units .enjoying
working capital limits up to Rs 7.50 Crores, Branch/ROs would consider
. extending working capital up to 30% of. the digital portion of the turnover
projected. The borrower has to bring in 7.50% of the accepted digital
turnover as margin.
d) Cash Flow: Cash Flow method is another method of assessing the working
capital requirements of the borrower and it provides information that
enable .us to evaluate the changes in net assets of an entity, its financial
structure (including its liquidity and solvency)· and its ability to affect the
amounts and timing of cash . flows in order to adapt to c;ha_nQing
circumstances and opportunities. Cash· flow information is useful in assessing
the ability of the entity to generate cash and cash equivalents
. and enable
.
us to assess and compare the present volue of future cash flows of different
entities. H_istorical cash flow inf<?rmation is often used as an indicator of the
amount, timing and certainty of future cash flows. It is also useful in checking
the accuracy of past assessments of future cash flows and in examinin,g the
relationship between profitability and net cash flow and the impact of
changing prices. Under .this method,_ bank finance is just equal to cash
deficit which arises when cash receipts fall short of cash payments.
13.3.1 CURRENT RATIO:

While it is desirable for a current ratio of 1.33:1 ( 1.25:1 for MSE) · as a
benchmark, lower current ratio can be considered acceptable on a case-
to-case basis depending upon the components and quality of current
assets .and current liabilities. Funds. flow analysis shall be done in these cases,
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13.3.2 BOOK DEBTS:·

LOAN POLICY DOCUMENT 2022
In respect of advances against book debts, the age of book debts shall not
be.more than 120 days. In justifiable cases, advance against book debts of ·
age above 120 days and not exceeding 180 days shall be sanctioned on
case to case basis for which powers are delegated to select authorities.
Once in a quarter, a certificate from the statutory auditor of the Company,
who has audited and certified the books of account of the company or
a·uditor approved by Lead Bank in case consortium or by our RO, should pe
· obtained vyith age-wise details of the book debts.·
13.4. TERM LOAN/PROJECT FINANACING:

a) Term loans are extended for acquisition of fixed assets like land, building,
plant and machinery, vehicles, furniture and fixtures.
b) While appraising the Term· loan requirements, Bank will endeavour to.
appraise both term loan and Working capital requirements at the time of·
initial stage of appr6islng the proposal.
c) The appraisal of term loan is a one-time exercise, but more detailed, rigorous
i and complicated as the repayment ranges over a bnger period ..
I d) The following four critical factors will be loo~ed into in depth. ·
I
1. Managerial Competence, 2. Technical Feasibility, ·
I!'.
3. Commercial Viability and 4. Financial Feasibility
I
I e) For the project loans of these industries, Bank shall consider longer tenor
amortization up to 25 years (within the useful life/concession period of the
project) and sanction the loan offering the Initial Debt Facility for a medium
term, say 5 to 7 years with periodic refinancing (Refinancing Debt Facility)
of balance debt. the tenor of which could be fixed at the time of each
refinancing, within the overall amortization period.
f) Banks are providing now-a-days more term loans with longer duration. As
consortium has become optionaL banks may even take care of the project
funding without any ceiling subject to compliance with the prudential
norms. Hence the bank would involve in funding the term loan requirements.
g) Term Loan I Deferred ·Payment Guarantee (DPG) will normally be
considered with a maturity not exceeding 10 years including moratorium I
holiday period and, under specific circumstances, extended for longer
·pe'riods up to 15 years in respect of housing loans and infrastructure projects,
the repayments may however be extended beyond 180 months. In such
cases endeavour should be made for tie-up of take out finance.
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Indian Overseas Bank LOAN POLICY.DOCUMENT 2022
h) It is not practicable to fix uniform gestation/holiday period as it varies from

project to project.
i) Gestation/Holiday period for various project loans will vary from 3 months to
36 months. However, on any account the gestation period should not go
above 36 months. GM Corporate Credit is empowered for sanctioning
exceptions.
j) In case of Consortium lending, the holiday period as decided by the leader
Bank /instituti.ori may be considered for acceptance.
k) In case of Multiple Banking, the holiday period; as permitted by the
Bank/Institution, with m(ljor share, may. be accepted.
I) In term:loan appraisal, besides other factors, Debt Service Coverage ·Ratio
(DSCR) and Debt Equity Ratio will be given more importance.
13.4.1 DEBTSERVICECOVERAGE RATIO (DSCR):

This ratio is· to be computed only after thoroughly scrutinizing various
projected financial statements.
DSCR =
Net Profit after Tax+ Depreciation + Interest on Term Loan
and other long term debts ·.
Installments onerm Loan &·other longterm debts.+ Interest on
Term Loan c:ind other long term debts :·
While the desirable ratio would be above 2:1, average DSCR of 1.5: 1 with
minimum DSCR of 1.2: 1 can be accepted on merits. ForMSME unit's located
:s
in backward areas an average DSCR of 1 with a minimum of 1.2 in any ..
year can be accepted.
13.4.2 OT:HER BENCH MARK RATIOS:

a) ltis very difficult to evolve indu~try-wise bench marks for debt-equity ratios
and profitability ratios or any other specific ratios. However, ·in general, debt
equity ratio of less than 2: J·and Total Outside Liabilities to Tangible Net Worth
(TOL/TNW) ratio of less than 4:1 will be considered as reasonable ·
requirements for any credit proposal. For NBFCs hqving investment grade
rating, TOL/ TNW less than 10:1. will be considered reasonabfe. These bench
marks will generally be observed for new connections.
j b) Relaxation in the bench mark ratios may, however, be considered by
respective sanctioning authorities on merits of the case. .
l c) Financial .Benchmark Ratios for select CorporatEZ_ Industries (Loans with
exposure ;i: ~50 crores): ~m~ · ·
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0 5 JAN 2022
1211 Page
Corporate/ Current TO.l/TNW Debt/Equity DSCR

Industries Ratio Avg. Min
lnfrci-'Power .
2:1 1.5:1
11.33:1 2:1 I
Infra-Road . 1.33:1
I ::: , I
2:1 2:1 1.5:1 I
Other Infra
· (including I'L33:ll 3:1 2:1. 2:1 1.5:1 I ·I I
Telecom)
Iron & Steel I 1.33:1 I
4:1. 2:1 2:1 .I 1.5:1 I I'
d) The . above ratios are indicative/desirable
. to the.
Corporate
. loans
. with
exposure of more than or equal to Rs. 50 crores for the above identifie.d
industries; However, the respective sanctioning authorities are permitted to
relax.the above Benchmark indicative finondal ratios on merits of the case.
e) The existing indicative/desirable financial benchmarks will continu'e to be
applied for all other Industries irrespective of exposure classified under
Corporate Segment and for loans below Rs. 50.00 crores for the above
identified industries under Corporate Segment.
f) Financial Benchmark Ratios for select MSME Industries (loans with exposure
'·. · 2: if 5 crores): · ·
I
MSME/ \ Current · 1· TOL/TNW 1 Debt/Equity \' · · D~CR

Industries Ratio Avg Min
Infra-Power 1..25:1 4:1 . 2:1 2:1 L2:1

Infra-Road 1.25:1 4:1 2:1 2:1 1.2:1
Other Infra
(Including .1.25:1 4:1 '2:1 2:) 1.2:1
Telecom)
Iron & Steel 1.25:1 4:1 2:1 2:1 j 1.2:1
Textiles 1.25:1 4:1 2:1 · 2:1 I 1.2:1
-
~. Gems&
1;50:1 3:1 2:1 I 2:1 I ·(2:1
Jewellery
Food
.1-
'·I: ·.: rroce,sslng 1.25:1 I' 4:1 ._I ...... · ?:1 . ;.• ~-:1 1.2:1
J
. g) The above ratios ar~ indicative/desirable to the MSME loans with exposure
.of more than or equal to Rs. 5 crores for the above identified industries.
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However, the respective sanctioning authorities are permitted to relax the .

above Benchmark indicative financial ratios on merits of the case.
h) The existing indicative/desirable financial benchmarks will continue to be
, applied for all other Industries irrespective of the exposure classified under
MSME portfolio and for loans below Rs. 5.00 c::rores for the above identified
industries Linder MSME.
13.4.3 TECHNO-ECONOMIC VIABILITY(TEV) STUDY:

TEV study facilitates the sanctioning authority ih arriving at an informed judgment
as to the viability/acceptability of the Project before. lending.· Bank has ext'ant
guidelines in place on identification of the projects for which TEV Study isrequired.
The TEV policy is detailed in Bank's Valuation Policy. The consultants would be
engaged for TEV study for new (Green Field) projects of Rs. 25.00 Crores and
above. In respect of expansion of existing (forward/backward integration)
projects, TEV Study is to be done if such cost of expansion undertaken is equal to
(100%) or more than the cost of original project. In case of consortium/multiple
baking advances, where the total cost is Rs. 50.00 Crore and above, Bank shall
insist on TEV Study. However, if any member Bank of the consortium/multiple
banking had already conducted TEV Study, Bank shall accept the same instead
for fresh one._ When the TEV Study is made by customer directly through our panel .•.
consultant, branch should get it confirmed .by the same consultant.
Notwithstanding the above, the sanctioning authority if convinced and desires
may waive "TEV Study" on case to case basis.
13.5 PROJECT'FINANCE PORTFOLIO OF BANKS

a) While extending credit facilities under project financing, it should be ensured
that the promoters' fund I equity is brought in to the .project as agreed upon
at the time of appraising. the proposal.
b) While determining .the level of promoters' equity, Bank may accept any one
of the following methodologies.
i. Promoters bring their entire contribution up front before the Bank starts
disbursing its commitment.
ii. Promoters bring certain percentage of their equity (40%-50%) upfront
and balance is brought in stages.
i iii. _,Promoters agree ab-initio that they ·will bring in equity .funds
proportionately as and when the Bank releases the loan in stages.
1 c) In view of the greater equity funding risk associated with the last method, at
the time o( appraising the project, the source~~~(s contrib~tion
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should be called for and the funding sequence as to how and when the.
same will be infused into the project should be ascertained.
d) It should be ensured that stipulated level of DER is maintained at all times for
the project for which finance is sanctioned.
e.) In this connection the following procedure will be adopted.
i. That the method of bringing in equity bn pro-rata, can be accepted on
case-to-case basis in respect of top borrowers whose capability to raise
the equity at the appropriate time is indisputable.
ii. A certificate· from the Auditor who will audit I be appointed (by the
borrower). to audit the books of accounts of the concern/firm/ company
should be called for, to ensure that the stipulated DER is maintained at
any point ot time, whenever
. pro-rata infusion of promoter's
. equity in the
project is acceptable to us at the time of appraisal of the project.
13.6 APPRAISAL OF INFRASTRUCTURE PROJECTS:

a') While appraising infrastructure projects, in addi.tion to assessing industry
scenario, experience, past performance of the promoters, itwill be ensured
that the projects financed by the Bank have income generation capacity
sufficient to repay the loan·together with interest. It Will also be ensured that
project financed is. run on commercial lines: involving commercial
considerations such as identifiable activity, cash flow considerations etc.
b) It will also. be ensured that there is no liquidity mis-match because of
financing to such projects. Identification of various project risks, evaluation
of risk mitigation through .appraisal of project contracts and evall!ation of
credit worthiness of the ·contracting entities and their ability to fulfill
contractual obligations will be an integral part of appraisal exercise ..
c) While· appraising infrastructure proje:cts, long·er repayment and lon_ger
holiday period will be ·c·onsidered. Special repayment mechanisms like
l;scrow and Trust and Retention a/c and reserves may be insisted. Take out
financing will be considered depending on liquidity position.
Implementation and follow up of Industrial projects involving term loans and·
Deferred Payment Guarantees (DPGs) with limits ofRs. 2.00 crore and above
from the Bank are to be monitored through a progress report.
d) The desirable Debt Equity Ratio (TOL/TNW) will generally be in the ratio of
.·. · : 3:;5,4:-land:relaxation
. .. . can be given on case-to:~oase-.basis:-.-:Like.wise;
. while
1 the .desirable and ideal DSCR·ratio would be above 2:1, an average DSCR
of 2.0 with a minimum of 1.50 in any year can be accepted. Deviations if
~
I any have to be justified in the appraisal note. -
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0 5 JAN 1012 =~: • ,,.,',:sz

'124l·p·~ ·re·
· 13.7 FINANCING PROMOTER'S EQUITY:

The promoter's coritribtJtion towards the equity capital ·of a company
·should come from their own resources and the Bank will not normally grant
advances to take up shares of other companies. In view of the importance
attached to the infrastructure sector, under certain circumstances,
financing the acquisition of the promoter's shares in an existing company,
which is engaged in implementing or operating an infrastructure project in
India will be considered subject to the following conditions:
L The Bank finance would be only for acquisition of shares of existing
companies providing infrastructure facilities as defined by RBI from time
to time. Further, acquisition of such shares should be in respect of
companies yvhere.the existin~ foreign promoters (and/ or domestic joint
promoters) voluntarily . propose. to disinvest their majority shares · in ·
compliancewith SEBI guidelines, where applicable.
ii. The companies to which loans are extended should, inter alia, have a.
satisfactory net worth., as per sanction terms.
iii. The company financed and the promoters/ directors of such cqmpanies
should not be' a defaulter to banks/ Fls.
iv. ln. order to. ensure Jhat the borrower. has a substantial stake in the ;
infrastructure company, Bank finance will be restricted •to 50% of the
· finance requited for acquiring the promoter's stake in the company being
acquired.
v. Finance extended will be against the security .of the assets of the
borrowing company or the assets of the company acquired and not
against the shares of that company or the company being acquired. The
shares of the borrower company I company being acquired may be
accepted as additional security and not as primary security. The security
charged ·to the Bank should be marketable.
vi. Bank will el)sure maintenance of stipulated margins at all times.
vii. The tenor of the loans will not be longer than seven years However, the
Board can make an exception in specific cases, where necessary, for
financial viability of the project.
viii. This financing would be subject to compliance with the statutory
-:requirements underSecti<;>n 19(2) of the Bonkin.g:Regulation Act, 1949.
ix. Such financing for acquisition of equity shares by promoters will be
treated as capital market exposure and·be restricted within the regulatory
ceiling fixed to .capital market exposure: /'::--;;i;~ ( _ ; .: ...
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x. The proposal for bank flhance should have the approval· of the Board.
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13;8. APPRAISAL OF PROPOSALS RELATING TO INFORMATI.ON TECHNOLOGY:
I
a) While .. assessing working capital limits . for borrowers engaged in
Information Technology, limits vp to Rs. 2.00 crore (Forworking capital
I limits up to Rs. 7.50 crore for Micro & Small Enterprises, it is to be assessed
as per method given in point 13.3-c' of this LPD) may be assessed on the
basis of 20% of projected turnover or at the· option of the borrower, the
limits can be considered as per monthly cash budget. For working capital
facilities above Rs. 2.00 crore in respect of Non-MSE borrowers and for
credit limitsof above Rs: 7.50 crore to MSE borrow·ers, the assessment is to
be made uniformly as per cash budget method and credit would be .
made available on the basis of deficits.
b) As regards IT projects and other projects, where financing of intangible
assets is inv61ved, Bank will insist on production of actual cash flow
statements for the past performance 'if any, for the units already in
existence.
13.8.1 Screening Committee:

Proposals for ··financing development of software· shall be cl~ared ·by
Screening Committee in Central Office: The screening ·committee. shall
comprise of GM/DGM (ITO),. GM/DGM(TBD), GM/DGM(RMD) and
GM/DGM(MSME). While lTD and TBD will give inputs regarding the technlcal·
aspects ofthe proposaL MSME shall give the inputs rei'ated to the'finandal
. aspect and RMD shall study the. overall risk of the proposaL The quorum of
the committee shall be 3 and presence of GM('ITD) or· GM(TBD) is
compulsory. After Clearance such ·proposals will be sanctioned by the
respective san~tioning authorities. The proposals once cleared by
Screening Committee, need not be referred again at the time of renewal,
ifthe enhancement does not exceed 50% of the limits· and if there is no
change in the activi1y of the borrower.
Financing other activities of IT Units ahd proposals of ITES shall be appraised

by the respective sanctioning authority within their per borrower'limits for
· whithcle'drant·~'·'Of·Sdeehing Committee is ·not re·~uk~di'' · · ,., ''. "
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0 5 JAN 1011
126 I Page
L
13.9. TOBACCO INDUSTRY:

In respect of advances to tobacco industry, in view of peculiar nature of
trading thereof, the Bank will continue with the present system of ·
procurement method based on indication letters/ export orders received
by the clients.
13.10 SUGAR INDUSTRY:

a) Sugar is working capital intensive industry. Sugar is mainly produced
between November and May, but is sold throughout the year. Cash credit
limits for working capital purpose shall be fixed on the basis of anticipated
valuation, realistic peak level stocks likely to be rea~hed by a factory during
the relevant crushing season and valued on the basis of levy price fixed by
Government of India for !evy sugar and atoverage price realized in the
preceding three months (moving average) or the current market price
whichever is lower, for free sale sugar (including buffer stocks).
b) For prescribing lower margih for cash credit against free sale sugar, powers
have been delegated to various layers of authorities.
c) The company's requirements of soft loan from Sugar development fund for
on lending to cane grovyers in the command area, Basal Dose loan to. cane
growers (by way of advanc.e p'ayment) and Harvest and Transportation·
(H&T) loan to contractors (generally towards freight charges) shall also be
taken into account while assessing the WC requirement.
d) Wherever ·consortium arrangement is proposed, the requirement of the
compqny by way of Basal Dose loan and Harvest and Transportation (H&T)
loan shall be shared among the consortium members.
Financing soft· loan for onward lending to cane growers/harvest and
transport loan to contractors shall be made to well established companies
since such loans· are generally unsecured and are given against the
company's undertaking.
13.11 CONSTRUCTiON INDUSTRY:

In case of construction industries, the extant RBI guidelines based on
Accounting Standard (AS.7) issued by Institute of Chartered Accountants
of India (I CAl) will be followed to arrive at the permissible bank finance for
-borrowers with fund based working capital limits beyondRs. 2 crores.· ..
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* 0 5 JAN 1011
*I ~{;;;~:<:;;:;;~~;;
127 I Page
13.12 DISCOUNTING OF BILLS UNDER LC:

Limits for Bill purchase/discounting facility will be fixed keeping in mind the
sales turnover of the last three years for the existing units and the expected
·tum over (which is realistic of achievement) for the nE?Xt three years for the .
new units. Discounting of Bills under LC after acceptance by· LC opening
bank can be extended over and above per borrower limit by sanctioning
authorities to the extent of two times of the discretionary powers.
13.13 COLLATERALS:
General:
a) Repayment capaCity of the borrower shall be the prime consideration while
evaluating credit proposals. Collateral security and guarantee offered shall
. .
be considered as secondary source of repayment.
b) Assets acquired out of Bank finance shall normally be taken as primary
security for the entire exposure.
c) Bank will not reject any proposals just becduse no tangible security is
available if the proposal satisfy all parameters and deserve sanction.
d) Based ori risk perception,· the Bank will endeavor· to obtain sufficient and
suitable tangible collateral securities wherever possible.
e) Second chdrge on fixed assets, if available, will be insisted upon for working
capital advances. Where the Bank has financed both for fixed assets and
current ·assets, the .residual value of fixed assets will be charged as
· continuing collateral security for the working capital advances and vice •
versa. .
f) Collateral Management: Branch to update various securities/ CERSAI/
ROC/~G-LC margin/ Valuation/ Insurance details in the account master as
per guidelines33, •
13.13.1 · ·. Collateral security for Agricultural Advances:
Collateral security tor Agricultural Advances shall be governed by RBI guidelines

issued from time to time. However, the present stipulation of Collateral security for
Agricultural Advances is as follows ..
I.· All .Agriculture. advances "'UP' to Rs. 1.60 ·Lakh · Will be·· granted . without.
j collateral security and margin.
0 5 JAN 2022
I
II. For short term production credit, collateral security may not be- insisted up
to aggregate loan limit of Rs. 3.00 Lakh for the existing agriculture borrowers
with satisfactory track record of 2 years in our Bank.
I Ill. Collateral security may not be insisted up to aggregate limit of Rs S.OO.Iakhs

under Agri-transport loans for the existing agriculture borrowers of our Bank.
) _IV. In case of Farm cr.edit & Agriculture Infrastructure loans where the loan limit ·
I.
is above Rs. 3.00 Lakh in Short Term Production Credit (as per II), above Rs.
I
., 5.00 Lakh in Agri-transport loans (as per Ill) and above Rs. 1.60 Lakh in all
II other cases of Agriculture Loans, the post credit/post development value of
'
I
prime & collateral securities
. should be a minimum
. of 200% of the limits
sanctioned except poultry and. aquaculture where no .insurance cover of
birds/pisces (prime security) is available.
V. For Poultry and aquaculture, the collaterol security cover .should be
minimum 100% of the loan amount excluding_ the Risk Mortality Fund.
VI. For tie up for recovery loans, no collateral.security should be. insisted up to a
limit of Rs. 3.00 Lakh·in short term production credit as well as for term loans .
separately (both for new. and existing customers). Hence the total limit
including short term production credit and term loan should not exceed Rs
6 Lakhs per borrower under th~ tie up arrangement.
VII. For all advances under Agriculture, authorities abov.e sc<;~le IV can sanction
credit facilities with less than the above stipulated value of prime and
collateral security to the best of their judgment and risk perception with due
justification.
· VIII. For. Food & Agro processing units under Ancillary services, the collateral
coverage will be as applicable to MSME advances. Similarly, the CGTMSE
coverage, rating and other industrial guidelines will be same as that of
.· lndustriai/MSME accounts as the food &Agro Processing units-basically carry
·out industrial activities only, though classified under Agriculture as per
revised RBI· guidelines~ Interest Rate will be in accordance with the Interest
Rate Circular updated every .month under . the head "Food'. & Agro
Processing Units Classified under Agriculture''
IX. . However, Collateral security should be obtained for Special Agriculture
Credit .Schemes, Government Sponsored Schemes or other Ancillary
services as per the provisions of respective schemes only ..
· .. No Agricultu~e proposal should be rejected for. want of tangible collaterql
security alone. If otherwise the Bank is satisfied with regard to the viability of
the project and track record of the Farmers/promoters, such proposals moy
'·
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* 0 5 JAN 20ZZ ..:(!:': :.;'~:':; ':.~: :;:) . \)
*
=""···'·'"··"-'-· ·:···/
129 I P: a: g -~ ·
be referred to the concerned sanctioning authorities on· whom the

discretion for relaxation in security coverage is vested with.
13.13.2 Collateral security .for'Micro, Small and Medium Enterprises (MSME):

a) All MSE . advances 'up to Rs. 10.00 Lakh will be granted . without collateral
security and third party guarantee as per RBI guidelines. These advances will
be brought under CGTMSE guarantee cover, Wherever possible.
b) All MSE credit up toRs. 2.00 crore will also be grante~ without any collateral
security and third party guarantee where CGTMSE guarantee is available.
Collateral can be taken only if CGTMSE cover is not available for the unit.
Bank will cover all eligible advances under CGTMSE. When an MSE borrower
prefers collateral security to CGTMSE Cover for loans above Rs. 10 Lac and
up to Rs. 200 lakhs, Bank will accede to the borrower's request. Such
preference of the borrower and Bank's acceptance of the collateral
security will be recorded.
c) For all Medium Enterprises (ME) advances and Micro and Small Enterprises
'
(MSE) advances of above Rs. 200.00 Lakh, suitable collateral security and/or
I third party guarantee may be taken based on risk perception dnd judgment
of sanctioning authority.
I d) No MSME proposals, ·however, should be rejected for warit of tangible
I
I
collateral security alone; if otherwise the Bank is satisfied with regard to
viability of the project end track record of the promoters.
i
. e) In case of rejection of MSME proposals for any reason, the rejection should
· be conveyed to the .applicant, only with the consent of the next higher
authority.
CGTMSE Cover: The CGTMSE Guarantee Cover is applicable to MSE units (Micro &
Small Enterprises as per MSMED Act, 2006) with lo_an amoUnt up to Rs. 2.00 Crore
(both Fund/ Non-Fund based). Guarantee cover is erihanced from Rs. 1.00 Crore
to Rs. 2.00 Crore.; w.e.f.r 01.01.2017 and is applicable to proposals sanctioned/.
enhanced on' or after 01.01.2017 under Manufacturing and Services activities
(Excluding Educational/ Training Institutions and SHGs).
Annual Guarantee Fee (AGF) would now be charged on the outstanding·loan

I
~
-amount instead of guarcmteed amounHor=credit facilities sanctioned/ renewed
to MSEs on or after 01.04.201825.
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* 0 5 JAN 1021
130 1 Page
Indian Overseas Bank LOAN POLICY. DOCUMENT 2022
The extent· of guarantee coverage is increased from 50% to 75% for credit facilities
of· Rs. 50.00 Lakh. and above with an increase in the AGF on the outstanding
amount on or after 01.04.201826,
MSE Retail Trade (Micro and Small Enterprises) has been included os ·an eligible
activity under Credit Guarantee Scheme of CGTMSE to fresh credit facilities
sanctioned by Mlls on or after 01.04.2018. Exposure limit for credit facility of retail
· trade segment will be upto Rs. 100.00 Lakh per MSE 'borrower. Extent of guarantee
coverage to such credit facility would be 50% irrespective of the category of the
borrower27.
CGTMSE has now introduced a new "Hybrid Security" product, allowing

guarantee cover for the portion of credit facility not covered by collateral security.
In the partial collateral security model, the Mlis will be allowed to obtain collateral
security for a part of the credit facility, whereas the remaining part of the credit
facility, Up to a maximum of Rs. 200.00 Lacs, can be covered under Credit
Guarantee Scheme of CGTMSE. CGTMSE will however, have notional second
charge on the primary security as well as on the collateral security provided by the
borrower for the credit facility2a.
·lnitidtion of legal proceeding as a pre--condition for irwoking of guarantees ·is'''

waived in respect of those credit facilities covered under CGS where the
aggregate
.
outstanding amount considered eligible for cldim
' . . settlement by
CGTMSE does not exceed Rs. 1.00 Lakh P€lr claim29.
The timeline for lodgment of claim has been increased from 2 years to 3 years from
NPA date or expiry of lock in period whichev~r is later, keeping all the other criteria
same. It will be applicable for cases which have turned NPA on or after. the date
of issu~ of the circular by CGTMSE3o.
Udyog Aadhaar Number (UAN) is now mandatory for guarantee coverage31,
Guidelines to be followed for refund of annual fee as per CGTMSE notification32,
· ·EiigibJe.retail trade .advances up . to Rs .. 10.00 .Lakh sanctioned under MUDRA should. •.
be covered Under Credit Guarantee Fund for Micro Units (CGFMU).
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0 5 JAN ZOZZ ":: (:: .• •. ',·,1 ~;(;;:;?;
To facilitate collateral free and third party guarantee free loans under Stand Up
India Scheme, the National· Credit .Guarantee Trustee Company(NCGTC) . has
tome up with Credit Guarantee Scheme called 'Credit Guarantee Scheme for
Stand Up lndia(CGSSI) '. All loans above Rs. 10.00 Lakh ·& up to Rs. 100.00 Lakh
sanctioned under Stand Up ·India scheme sanctioned without .:any collateral
security and 1 or third party guarantees should be covered under CGSSI.
Detailed operational guidelines for CGFMU and CGSSI are in place.
13.13.3 Collateral security for schematic tending & Special Credit Schemes:
Collateral-security should be qbtained for Special Credit Scheme as per provisions ..
.of the respective schemes. Status quo will continue for special schemes where
collateral seourity has been waived as per scheme .
. 13.13.4COLLATERALSECURITY FORlARGE INDUSTRIES/TRADE CREDIT ADVANCES:

a) Branch Managers up to the level of Scale IV . while exercising their
discretionary powers should stipulate collateral securities to a minim.um
extent of 50% of the advances san9tioned for large industries (Other than
. residual current assets and mac;:hinery) and for trading sector the value of
collateral securities should be a minimum of 60% of the limits sanctioned.
b). For all advances (i.e~ Ll, Trade etc.) authorities above
.
scale IV can sanction
credit facilities with less than 50%/60% (as the case may be) of colloteral
security (oth~r than residual current assets and machinery). Such sanctions
should be supported by sound reasoning. ·
c) While the securities that are easily marketable and less volatile can be
. taken as c~llateral security, agricultural land property shall not be taken as
collateral security while extending industrial & trading advonces ..
d) Forced sale value of the immovable property should be taken .as the value
of the property for appraisal purposes.
13. i 4 GUARANTEES:
a) In addition to the securities - both prime and collateral - the Bank will
continue to insist for personal guarantees of partners/directors. In the case
of advanc¢s to Private Ltd Companies- personal guc:~rant~e of all promoter
directors will be insisted upon. .
b) I.n the case ·of advances to Public Limited Companies, personal guarantee
of all the directors except Institutional Director/Gov.ernment Director /Bank
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Nominee and or Professionals/Employees serving as directors will generally

be insisted upon.
c) In case the guarantee of promoter directors of the Private Ltd. Company
and guarantee of directors of Public Ltd Co. mentioned above are not·
.forthcoming, powers are- delegated to select. authoritie_s for waiver on a
case to case basis.
d) In the case of sick units, which are under rehabilitation where the
performance is not satisfactory, the Bank would endeavour to get the shares
of the. company held by the promoter directors pledged to the Bank,
subject to the provisions of Section 19(2) of the Banking Regulation Act,
1949.
13.15 ALLOCATION OF SUB-LIMITS TO OTHER BRANCHES:.

With the convenience of operating the accounts anywhere under CBS
package, allocating sub limits at other branches shal.l be discouraged.
Wherever sub-limits are allocated to other branches,· the parent branches
shall advise the purpose for allocating the limit besides the permissible debits
and shall monitor the operations through Continuous Surveillance Statement .•
received from the branch maintaining the sublimit. Further, the parent branch
shall enter the net limit in the system (after excluding the sublimit) instead of ~.
reducing the drawing power.
13.16 ACCEPTING NON-LIFE POLICIES ISSUED BY PRIVATE SECTOR INSURANCE

.COMPANIES LICENSED BY IRDA:
Policies issued by Private Sector lnsur.ance Companies licensed by IRDA like
Universal Sompo General Insurance Co. Ltd.,.Reliance General Insurance Co.
Ltd., IFFCO Tokyo General Insurance Co. Ltd., ICICI Lombard General
Insurance Co. Ltd., Chola Mandalam General Insurance Co. Ltd. and HDFC
Chubb General Insurance Co~ ltd. etc., can be accepted covering securities
hypothecated/pledged/ mortgaged to the Bank by borrowers / guarantors
for securing the advances granted.
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Chapter-14
TERMS OF FINANCE
14.1 PRICING:
In terms of the guidance note on Credit Risk Management issued by Reserve Bank
of India, all borrowal accounts are to be internally rated for an effective credit risk
management and the advances are accordingly priced which is dealt in the
Credit Risk Management Policy.
14.1.1. Rating of Accounts

Guidelines34 for Internal Rating of Borrowal Accounts to be followed as advised
from time to time.
Concept of Dyndmic 'rating to be followed as per extant guidelines3s.
14.1.2. External Rating for Borrowal accounts:

a) As per the Basel Ill· Guidelines issued by RBI, the risk weights for a few segments
are based on External Rating. The External Rating will be applicable only to
Corporates,. Public Sector Entities, HFCs, NBFC- AFC & IFC Accounts. To be
eligible for risk weighting purposes, the rating.should be iri force and confirmed
from the monthly bulletin of the conc:erned .
roting
. .
agency. The rati11g agency.
'•.
· should have reviewed the rating at least once during the previous 15 months.
As per present guidelines from RBI, unrated exposures having aggregate credit
limit of more than Rs. 200.00 Crore from the Banking system will attract 150% risk
weights, bank shall restrict toking such exposures. .
b) •All the borrowal accounts (other than MSME and Special·schemes) having
aggregate exposure of Rs. 25.00 crores and above are to be compulsorily
"e.xtern611y rated". .
c) MSME accounts and all special schemes having an exposure of Rs; 25.00 crore ·
and up to Rs. 100.00 crore are exempted from compulsory External. Rating.
14.1.3. Finer Interest rates:

Discretion to consider finer interest rates in respect o.f borrowal accounts for
business considerations are delegated to HLCC (GM) and above for
advances linked to·BPLR I Base Rate I MCLRI RLLR (except Pushpaka Loans
wherein RLCC is vestedwith.discretion). However, interest rates linked to Base
Rate 1 MCLR/ RLLR shall be subject to minimum of Base Rate 1 MCLR/ RLLR ...
(excluding cases permitted by RBI).
Following are the Parameters for considering Rate/

1
Commission/ Charges and LC/LG Margin:
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Indian Overseas Bank .LOAN POLICY DOCUMENT 2022
For existing customers:

i. Return on capital
ii. ~ollaterql Coverage
iii. Return on Assets. (From Cost Benefit Analysis)
iv. Payment track record of the borrower.
v. Turnover in the ·account.
vi. Average Limit utilization.
vii. Adhoc/Excess taken over last 12 months.. .
viii. . Number of LC devolved/LG invoked over last 12 months.
ix. Length of relationship including group relationship.
x. _ Salary/Business Account/CASA ·
xi. Other Para Banking
xii.. Consistency in Financial Statements/ Accounting Quality.
xiii. Financial Covenants
xiv. Compliance ofTerms and Conditions.
The firsttwo parameters bear 20% weightage each and the rest parameters bears
5% weightage eacl).
For New Borrowers:
a) Return on Capital (Weightage 30%)

. ·t~:
.. b) Return on Assets (Weightage 5%}
c) Collateral Coverage (Weightage 30%)
.d) Manufacturing Unit (Weightage 15%}
e.} Benchmark Ratio: Current Ratio (Weightage 10%)
f} Benchmark Ratio- TOL/TNW (Weightage .1 0%)
Petalled Operationai.Guldellnes_36 on above parameters are in place.
14.1.4. Additional Interest rate:

The Bank will be charging additional interest in the fOllowing cases from the
borrowers:
a) The Bank will be charging additional interest as per the interest rate policy37 of
'the bank:
..b). Additional interest of 2% shall be ch?rged in case of accounts where SRRP has
i
~ .. been done on account of non-submission of information in t\me for regular
j review 1 renewal of limits. SRRP charges shall not be applicable for Central
1
I
Government & State Government entities/ PSUs.
---
c) Wherever ad hoc facilities are allowed addition~ll\l'feMsff;& 1% over and
above the rate charged for the respective credif ~~iW~rle_m:~~ ollect~~.:;'-1 . -~~-~·~--..
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14.1.5 New Scoring Model for MSME:

New Scoring Model for MSME is designed to assess and filter the entry level MSME
applicants. (Credit Limits from Rs. 2 Lacs and above up to Rs. 200 Lacs) The
applicant is eligible for bank finance, provided the marks scored by him/her are
60% and above. B~fore processing the new MSME proposals, (lodn amount of Rs.
2 Lacs and above up to Rs. 200 Lacs), they must be rated under the New Scoring
_Model, to arrive at a decision whether to cons.ider the proposal or not. In addition
. to the above, Branches/Regions to continue to do rqting under CRRM/RAM rating
as applicable for the proposals qualified under the New Scoring Model.
14.2 MARGIN:
a) . Bank recogniz~s margin as the borrower's share in the assets o.r security and
theretore the sank will endeavo'ur to prescribe ci suitable margin in most
cases of lending by taking into account variOL.!$ factors. For NBFC/ HFC there
is no minimun1 margin requirement. However, Asset. Co.verage ratio of
minimum 1.25 to be maintained.
Discretion to consider lower Asset Coverage Ratio:
Asset Coverage ratio Considered by
1. 10 - below 1.25 Sanctioning authority on merits
Below 1.10 with justification . . HLCC GM and above
b) The margin r1orms stipulated in the table below does not. cover the following
advances. These advances- are. covered in the respective· schemes/policy·
elaborately.
o Loan against Deposits.
o Priority Credit. ·
o MSE advances.
o Special Credit Schemes.
c) Loan against NSC can be sanctioned by respectiye sanctioning authority
by keeping 20% margin on Face Value/ Accrued Interest. .
d) The margin stipulated below is minimum margin only arid subject to RBI .
guidelines. . .
e) Sanctioning authorities can prescribe higher margin depending upon the
'
t · mqrket conditions, nature of industry/·internal :& :external rating and security .· ·
coverage etc.
1
I Sl. Type of advances
Generally for all advances (Term loan
g:e·.; ·.,'.:.··.·.
Indian Overseas·Bank LOAN POLICY DOCUMENT 2022
1
and Cash Credit)
2 CA~ITAL MARKET EXPOSURE
a. Advances against shares 50% (RBI guidelines)
b. Advances against G-Sec/Treasury Bills 20%
50%0ut of which
Cash margin not less than -
Loans to Stock brokers & Market
c. Makers 25%Cash/near cash securities
like NSC, LIC- 25%
(RBI _guidelines)
Loans to Stdck prokers & Market
d. Makers- against G-Sec/Treasury Bills ~0%
REAL ESTATE
3 Housing & CRE Projects( other than
individual housing loans)
a. Cost of land (for public agencies only) 40%
b. Cost of construction or amenities in . 30%
case of layout etc.
50% of the value of the

·4 Misc. Cash Credit (MCC) Qroperty as loan l•
5 Book Debts (age up to 120 days) 25%
6 lnstafund 10%
7 Non Fund Based Limits
a LC DP Cash/Deposit -1 0%.
LC DA
b LG Performance Cash/Deposit - 10%
c LG Findncial Cash/Deposit - 25%
14.2.1 Discretion for. prescribing lower.morgin:

Bank. may, at its discretion prescribe lower margin on a case to case basis based
on merits. The discretion for prescribing lower margin is vested with various layers
of authorities' subject to compliance of certain~l"rTP.i-AA: as described in
j\~ ·3lm~iii ·
csso, c.o. circular ADV !279/20 18-19 dated 26.02. -$;,go•"•·~~" ..._;;-V··:<,,, ~
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14.3 OTHER'CHARGES/FEES:
. 14.3, 1 Processing Charges:
Bank shall continue .to collect processing fees according to the schedule
provided from time to time.
14.3.2 Upfront fee for Term Loans:

For Term Loans (for standalone Term Loan as well as Term Loan sanctioned with
other facilities) upfront fee shall be collected at the time of initial sanction as per
schedule fixed from time to time.
14.3.3 Charges for

.
Modification of sanction & Revalidation
.
of sanction:
Bank shall collect processing fee on modification of certain terms of sanction
already acc~pted by the borrower and also charges on revali~ation of sanction
expired I about to expire as per the schedule fixed from time to time.
· 14.3.4 Commitment Charges:
a) Commitment charges·shall be levied for all the working capital Fund Based,
Non Fund Based limits and Term loan above Rs 50 lakh from our .Bank.
b) Such levy shall be on the.unutilized portion of the working C(lpital FB and.NFB ·
.. limits .subject to tolerance level of 20% of each limit. .
· c) With regard to Term Loans, wherever the drawal is not made· as perthe draW
down schedule by the borrowers, commitment charges shall be levied on
the undrawn amount, if the undrawn amount is more thon 20% of the amount
committed ·for drawal at each stage.
· d) Charges are recovered as per utilization level of. the limit.
The following limits will be. exempt from the levy commitment charge:
a) Working. capital limits sanctioned to sick/weak units.

b) Limhs sanctioned for. export credits as ·well as · against export
incentives.
c) Credit limits granted to commercial banks, financial institutions and
cooperative banks inclu.ding land development banks. .
d) Commitment charge need not be levied in case of reduction of working
capital limit for the purpose of issuing commercial papers by the borrower
·and · taken up under investment portfolio of the Bank. However, if
l
1
,,\ :· :commercial paper is taken up'by':others,: c(>mmitment charge should be
levied.
i Waiver/Reduction of commitment charges vests with ~~~~

per latest discretionary powers circular.
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14.3.5 Pre-payment Charges:·

. a) Pre-payment charges on the pre-paid amount shall be-·levied in the case of
term loans and other loans (with exemptions of certain loans) irrespective of
amount of loan a_nd Irrespective of residual period .of loan 'where the
prepayment period of the loan exceeds one year.
b) No prepayment penalty will be applicable on all floating rate term loans
sanctioned to Individual borrowers However, for commercial loans availed
in individual names the prepayment charges shall be applicable if the .
repayment is not out of own source.
c) In respect of term loans of other borro~ers, prepayment penalty will not be
applicable even if the repayment is out of own. resources.
d) Prepayment charges are also not applicable f.or workingcapitallimits.
~
I·
14.3.6 Mortgage Charges: .
Mortgage charges shaH be collected cis per·· guidelines.
I
I 14.3.7 Consortium Fee:
Bank shall· ch(:lrge a management fee in respect of consortium advances, where.
the Bank is the leader for the various services rendered as leader. The fee will be
I borne
.
by 'the borrower . . and is in addition
.
to the. pro-rata
.
processing charges
.
ot.. -~
! member banks.
14.3.8 NOC Charges:

· NOC .charges to be cOllected for issue of no-objection certifi.cate [f;r take-over
of loans] other than Housing LOans and Term Loans with floating rate of interest in
the name of individuals.
14.3.8 Waiver of charges/fees:

Bank may at its discretion consider waiver or allow concession in Processing
charges, Upfront fee and commitment charges, pre~payment charges, LG/LC
commission, Mortgage charges and penal interest, on a case to case basis based
on merits. The discretion is vested with various layers of authority ..
In case devolvement of LCs has taken place consecutively for 2 times,· all
concessions allowed shall be withdrawn and applicable chc:uges as per the rating
'
· and circulars in force shall· ~e charged for ·the .LC limit, u_nder report to the
sanctioning authority.
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14.4 COLLATERAL SECURITY .

14.4.1 Norms on Collateral security coverage:
a) Agricultural Advances: . .
. The Collateral Security norms for Agricultural Advances will be governed by
RBI guidelines issued from time to time.
b) Large Industries/ Trade Credit advances:
Branch Managers up to the level of Scale IV while exercising their delegated
powers should stipulate collateral securities to a minimum extent of 50% of
the advances sanctioned for large industries (Other than residual current
ossets and machinery) and for trading sector the value of collateral securities
· should be Q minimum of 60% of the limits sanctioned.
For all advances (i.e. Large Industries, Trade etc.), authorities above scale IV
can sanction credit facilities with less than 50%/60% (as the case may be) of
collaterol security (Other than residual current assets and machinery). Suc'h
sanctions should be supported by sound reaso_ning.
For Manufacturing under MSME and Services under Trading we may consider
FMV for collateral security.
. . . .
c) Special
.
Credit Scheme/Other schematic advances: .
Coll_ateral sec:urity sh~uld be obtained _f_or Special Credit Scheme as. per .
provisions of the respective schemes. Status quo will continue for special
schemes where collateral security has been waived as per scheme.
14,4..2 Chang~ in collateral security:

Sanctioning authority concerned (RLCC and above) may permit change in
collateral security subject to the value of the collateral being as per norms and
delegated powers of thesanctioning authority. Refer latest circular qn Delegated
Po.wer (Financial).
!:
I
I
14.4.3 Acceptance of properties owned by third parties as Collateral Security: · ·
·Branches do not have powers to sanction loans against-the collateral security of
mortgage of properties owned by third parties who are_ not partners /directors or
very close relatives of the borrower. In such cases, Branch should obtain prior
specific clearance from Regional Head for accepting the mortgage by third
parties unrelated to the borrower.
While accepting such properties as collateral securities, Branches are advised to

be extra cautious and follow the laid down dures for verifying the
genuineness of the documents submitted ~-il;f\&f<B~ . ers independently
· overse · ~ , . ·
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A certificate should be obtained from the advocate certifying that the title to the
property being original and not duplicate or fake and that the title is dear,
marketable and free· from encumbrances.
Furthermore; as a fraud prevention method, Banks may take the following

measures:
1. They may insist on opening of Bank accounts wJth full KYC details and
photographs by third party owners of the properties.
2. They should communkate with the owners of the property · through
registered letter to confirm proof of residence and their willingness to offer
the security as collateral. (Format will be advised by Law Department).
The guarantee of the property owners should be obtained in all cases. Wherever
the guarantee is restricted to fair market value of the property, sanctioh should
be obtained as per discretionary powers in force.
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Indian .Overseas Bank LOAN POLICY DOCUMENT 2022
Chapter -15
CREDIT MONITORING
Bank has a well-defin~d system to identify accounts in Standard Assets showing

· overdues more than one month which are classified as "Special Mention
Accounts". The accounts Will be monitored on a monthly basis to ensure that
viable accounts are put to "Resolution'; as per RBI guidelines at the earliest signs
of distress and also to ensu.re that accounts are properly Classified. End Use of
Funds to be ensured as guided by Credit Monitoring Department from time to time.
Some of the salient features are given as per Annexure 3.
15.1 MONITORING-SYSTEMS:
The Bank will also continue with the existing monitoring and follow up systems as
follows:
a) E R I Statements.
b) , Regular submission ofContinuous Surveillance Statement (CSS).
c) Regular submission of stock statements.
d) Ensure 100% renewal/ review of borrowal accounts with cred!t limit of Rs 1
Lakh and above.
, e)· Verific6ti6n of s~~urities pledged/ mortgaged t.o the Bank.
f) Conducting regular inspedion of borrowing units.
g) follow the system of internal inspection of branches.
h) Taking immediate action on concurrent audit reports and RBI inspection
reports etc;
I) Conducting Stock Audit /Credit Audit.
j) Monitoring under Special Mention Account norms ..
k) Monitoring of Stv\A-2 accounts and uploading of CRILC SMA return to RBI.
15.2 REVIEW OF LOAN SANCTIONS MADE BY EACH AUTHORITY:

Credit sanctions made by each sanctioning authority shall be placed before the
next higher authority for review as per guidelines in force. All credit sanctions
made by RLCC are to be reported in the following month to Credit Monitoring
Depadment; Central Office in CAF 1A along with office notes as per guidelines in
force-; A cons61idateq detail of sanctions made by RLCC shall be sent to CSSD
J during 1st week of the following month.
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0 5 JAN 1021 ..
*
142 I Page I
15.3 REVAMPING OF LOAN REVIEW MECHANISM AND CREDIT AUDIT:

a) Loan Review Mechanism an "off-site" audit process and Credit Audit and ·
"on-site" audit process was introduced ·in our Bank in tune with the
· "Guidance Note on Risk Management" by Reserve Bank of India.
b) These two systems were revamped and merged together as CALRM. ·
c) Further, the above CALRM Audit was renamed as CREDIT COMPLIANCE
. AUDIT38.
15.4 UNIT I GODOWN INSPECTION:

a) One of the main aspects of monitoring and control is regular
inspection of godowns of the borrowers by the Branches/ Regional Offices
to ensure that the Bank's advances .are sufficiently secured by
prime/collateral securities and also to ensure that the unit is functioning well
and there is active movement of stocks.
b) The inspection of godown/unit should be carried out meticulously as per
terms of sanction for both fund based and non-fund based facilities.
Normally for all advances unit inspection will be conducted on monthly
basis.
c) In deserving cases, sanctioning authorities can take a view on the
periodicity of the inspection, depending upon the nature of the activit){,, .
and can relax periodicity of the unit inspection after duly documenting the
reasons.
d) In the case of consortium, where our Bank is leader, the periodicity of unit
visit can be fixed as per the above guidelines. In ~ases where our Bank is
not the leader, the Bank will fall in line with the leader of the consortium.
e) Revised operational guidelines39 for Godown inspection to be followed.
15.5 CALCULATION OF ·DRAWING POWER BASED ON THE STOCK STATEMENT/

DEBTORS STATEMENT:
a) While arriving at drawing power based on stock statement, unpaid stocks
should be excluded. The stocks submitted in the stock statement to be
verified/ cross checked.
b) Working Capital Limits are sanctioned in three ways as mentioned herein
below:
i .. i. Cash Credit against hypothecation of Stocks alone.
I
1 ii. Cash Credit against hypothecation of Book Debts.
~ iii. Cash Credit against hypothecation of Stocks & Book Debts.
c) The guidelines for calculation of Drawing . P~ on the stock
statement are in place. . ~"b'~J'~~~r~·~;l!t ~~
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143-'F~· age
d) The Drawing Power shall be arrived at based on the stock statements and
on statements of Book Debts (to be verified and cross checked) submitted
by the borrowers as detailed below.. ·
(A) Calculation of DP for the Cash credit against hypothecation of Stocks alone:
f) 1. Value of Stocks Less Unpaid Stocks Rs

a) Trade Creditors (excluding liability under LC) · Rs
(Advance payment to suppliers may be netted off
againsttrade creditors)
b) Liability under LC (A&El Rs
·c) Goods Purchased under Guarantee Rs
.·
Value of Paid Stocks [1 " ( a+b+c )] Rs
Less Marqin stipulated in the terms of sanction Rs
Drawing Power· Rs
(B) Calculation of DP for Cash Credit against hypothecation of Book Debts:
Drawing Power (DP) =Value of eligible Book Debts - (minus) Margin stipulated as
per the terms of sanction
(C) Calculation of DP for Cash ·Credit against hypothecation of St~cks & Bo.ok
Debts (combined):
g) 1. Value of Stocks Less Unpaid Stocks Rs

a) Trade Creditors (excluding liability under LC) Rs
(Advance payment to suppliers tnay be netted off
against trade creditors)
b) Liability under LC (A&E) Rs
c) Goods Purchased under Guarantee Rs
Value of Paid Stocks n·" (a+b+c)] Rs
.
Less. Marqin stipulated in the terms of sanction Rs -
[-'\] Drawing Power for Stock · Rs
2. Value of eliqible Book Debts Rs.
Less Marqin stipulated in the terms of sanction. Rs
[B] Drawing Power for Book Debts Rs ·
Drawing Power for combined CC I.e. DP for Stock plus Rs
!
DP
.
for Book' Debts
.. (A + B)
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144 I Page
e) Value of stocks/Book Debts particularly their age, should be taken into

account as per: the guidelines stipulated in the Book of Instructions/ terms of
sanction.
f) In the case of consortium advances, the bank shall follow the method of
computation of the DP followed by the leader of the consortium.
g) In the case of Multiple Banking, the Bank shall follow the method of
computation of DP followed by major shareholder of working capital limits.
In the absence of such information from the Bank having major share in
working capi.tal, Bank's prevailing method. qf calculation of DP shall be
followed. ·
·15.6 SUBMISSION OF QIS /CMA: .

Submission .of QIS forms I, II· & Ill is. discontinued. In all cases where working capital
limits areRs. 2.00 crore and above CMA data will be called for, along with audited
balance sheets.
15.7 SUBMISSION OF AUDITOR'S CERTIFICATE:

a) Whehever
.
the borrower .is advised to produce auditor's certificate by the
. .
Bank, during the course of dealing Jwith the •borrower.
in respect of finance·•
made to them, such auditor's certificates should be obtained from the

Auditor who has originally audited and certified the books of accounts of
. the concern/firm/ company.
Deviations can be allowed as under
Sanctioning authority Authorltv to oermlt deviation
. Up to RLCC HLCC (GM) .
HLCC (GM) HLCC .(ED)
HLCC (ED), CAC & MCB CAC
b) There are legislations like The Employees Provident Funds and

· Miscellaneous Provisions Act 1952 (EPFO Act) which declares priority to the
dues under those enactments over others, sometimes including those of
. secured creditors The realization of such dues by respective authorities by.
' proceeding against the assets of the borrower companies cannot be ruled
··:·out. This might1 in turn, adversely affect the financial position of the
j borrower firm or result in reduction or loss of security given to the bank, in
case the authorities choose to move against such securities. . · ·..\\ / ·.
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0 5 JAN 2022 •k
Hence, to ensure that the borrowing firms are mdking payments of their statutory
dues in time, strictly in compliance of the provisions of the relevant statutes, the
following guidelines of RBI shall be followed.
"A certificate shall be obtained from the borrower's auditors on an annual basis
stating that all statutory dues, including EPF. dues have been paid by the
borrower".
No waiver for obtention of auditor's certificate is allowed at any leveL

15.8 STOCK AUDIT:
Stock ·Audit is conducted tor borrowcil accounts as per the guidelines laid
down in the Policy Document for Internal Inspection/Audit. The reasons and
circumstances under which stock audit can be waived are also enumerated
in the said policy_ which is approved by the B?ard.
15.9 REVIEW/RENEWAL OF BORROWER ACCOUNTS:

a) Review/Renewal of borrowal accounts sanctioned will be ensured within 3
months from due date.
b) The Line of Credit for 3 years assures exporters that they will get enhanced
credit limits, if the export performance is satisfactory. The limits are to be
reviewed by stepping up or stepping down the quantum offacilities based ·
on performance by calling for minimum but vital requirements like,
achievement of projected export turnover, projected profitability, operations
in the account etc. Such reviews will be done by the sanctioning authority of
the limits within one year from the date of sanction/last review.
c) The Bank shall review the progress of review /renewal of borrowal accounts
on quarterly basis. All the credit limits are renewed/reviewed at least once in
a year.
i.. In ·case of borrower accounts where the credit rating is below hurdle
rate (i.e., lower Credit Rating) as per the table below, review/ renewal
of such borrower accounts shall be done in 9 months. After expiry of 9
months; the branches can either do a full-fledged .renewal or SRRP for
6 months.
' For Priority Sector accounts For· non-Priority Sector accounts
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Indian Overseas Bank LOAN POLIGY DOCUMENT 2022
JOB 10
ii. For all other eligible borrower accounts, review/ renewal shall be done
once in 12 months as hitherto ..
iii. Under _unavoidable circumstances when there is a delay in submiss·ion
of renewal proposal due to genuine reasons, Short Review Renewal
Proposal (SRRP) can be done for a period of 6 months ·as per existing
guidelines covering (i) and (ii) above
d) Secured term loans/Demand Loans granted for approved purposes, against
various securities such as gold ornaments, NSC/LIC policies/ Resurgent ln<;:lia
Bonds/ IMDs etc. are allowed to run off and once sanctioned by the
authority, they are not subject to renewal/review.
However, if cash credit facility is sanctioned· ..against the above security,
renewal of the limit has to be done once in a year.
e) Term loan accounts are to be reviewed periodically by the authority under
whose powers the drawing power amount falls at· the time of review.
However, the review should be made at least once in a year. All Retail Term
.Loans up to Rs. 25.00 Lacs are exemp_ted from Annual Review. ·
f) . All. mortgaged property shall be physically inspected before review /renewal
of limits and encumbrance certificate to be obtained once in three years.
g) All existing and new housing loans with sanctioned limits of Rs. 25.00 lacs and
above, including NPA accounts to be reviewed once in 3 years.
h) Staff Loans are exempted from Review /Renewal.
15.10 REVIEW Of STANDALONE TERM LOAN LIMlTS:
a) The review of standalone term loans sanctioned by various .authorities

·.(including MCB) shall be placed only to the concerned authority under
whose. powers the drawing power falls, as on the date of review. .
b) The review on standalone term loans for term loan limits of above Rs 5 lakhs
.and Rs 5 lakhs & below shall be made in the respective prescribed formats.
'
15.11.EXTEN·SION OF EXPIRED LIMIT/SHORT REVIEW &RENEWALPROPOSAL (SRRP):

a) Whenever there is delay in submitting renewal proposal due to genuine
reasons, system of short review is in place for a period of six months from
the date of expiry of the previous sanction. Su 't\~\' .. WS shall be put .
. . ~~ . ~ . ,. ' . '
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ln_dian Overseas Bank LOAN POLICY DOCUMENT 2022
up .to the sanctioning authorities concerned and will be resorted to only

once between two reguldr sanctions.
b) If a sanctioning authority extends the limit for~ period of 6 months only on
a full-fledged proposal due to certain adverse features, then such review
will be treated as a renewal and not as a review.
c) If the Brdr\ch submits a complete renewal proposal before expiry of the
existing limits ·or .before the expiry of the extended period of the limits,
branch will be in order in continuing the existing facilities till a decision is
taken by the sanctioning_ authority. The action of the branch concerned in
having continued the expired limits shall be deemed to have been
approved till q decision is taken by the sanctioning authority. Sanctioning
authorities shall ensure renewal Of the facilities expeditiously.
15.12 REVALIDATION OF SANCTION:
Credit Sanctions (including term loans) are valid for six months from the date
of sanction. Unless availed within this period, they require revalidation by
sanctioning authority. Sanctions by MCB can be considered for revalidation
by c·Ac ·and for others by the respective authority that· has· sanctioned the
loan.
Revalidation of limit per se will not change the due date for next renewal.
However, i-f the revalidation is done with proper re-appraisal of the credit
proposal that was originally sanctioned, the due date for next renewal may
be arrived at based on such revalidation.
15.i3 MID TERM REVIEW OF LARGE BORROWAL ACCOUNTS:.

The Continuous Surveillance Statement (CSS) is to be collected every month
from Branches in respect of borrowal accounts with fund based working
capital iimits of Rs 1 crore and above. This helps to monitor the account a't
Central Office/ Regional Office. The statement is thoroughly scrutinized and
adverse features noticed are communicated to Branches for rect.lfication.
15.14 COMPULSORY AUDIT OF BORROWAL ACCOUNTS:
~·
in respect of compulsory audit of borrowal accounts, it has been dec]ded

that all borrowers with credit limits of above Rs 25 lakhs from the banking
system should get themselves audited compulsorily by Chartered
Accountants.
b). for. individual agricultural borrowers whose borrowings from the Bank are Rs
50 lakhs and dbove, the Bank should insist for submission of their Financial
. Statements. In other words, submission of financial Statements by individual
agricultural borrower for availing agricultural advance(s) for less than Rs 50
lakhs are waived.
15.15 VALUATION OF SECURITIES:
a) The recovery of the. advances is directly related to the quality of the
securities in the event of enforcement. The value of the security has also a
bearing in capital provisioning. Hence the bank has a policy in place for
valuation of immovable. properties and plant and machineries offered as
security for the advances granted by .the Bank.
b) The frequ~ncy of the valuation and category of advances to be valued,
etc. are spelt out in the Policy Document on Valuation ·of Properties.
15.16GUIDELINES FOR OPERATIONS IN NPA ACCOUNT. SHOWING ~IGNS OF

REVIVAL:
Due to some genuine and unforeseen circumstances which are beyond their .
control, borrowers may suffer losses. This will lead to their accounts becoming
NPA. In those cases, where borrowers are willing to revive the business activities,
Bank will allow operations in the NPA account, not only to
help them.to revive their business but also to reduce their dues in NPA accounts.
The guidelines to be followed are as follows:
i. · The holding on operations will be a temporary affair.
ii. . In order to speed up the qecision making process. with regard to allowing
holding on operations in NPA accounts, Branch Managers are permitted to
allow operations in NP A accounts (irrespective sanctioning authorities of
these loan occounts) under report to Regional Office and Sanctioning
Authority.
iii. Branch to discuss with the borrower in d~tail and ascertain the status of
their firms.
iv. Unit should be a going concern.
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v. While allowing holding on operations in NP A accounts, the exposure in s0eh

accounts will not be allowed to go above the level of outst;anding as on
the date of alrowing such holding on operations. ···
vi. Branch to explore the possibility of deducting a cut back of 10% from each
credit coming into. the account for recovering the- overdue/installments I .
interest' in the 'NPA· account. This will be entirely. 'depending.· on. the ·.
circumstanceh of each case. Re.covery of interest arready charged and not ·
serviced will be considered in phases. Besides, installment
. payment
. will also ·
be sche<:Juled gradually within say, next month or so: Jhough, in NP A.
accounts, interest is not applied, branch will take into account the.~otional
interest to be charged qnd discuss with the borrower about recove~y ·
thereof in phased manner. . · · . ' · . ..
vii. Withiri a period of three months of clllowing operations,,g viewis to be taken: ..
· in its entirety about future course of action and the mann.er in which further , ·
recoveries have to be effected, by way of rehabilitation/restruct~ring or by
filing suit I action under SARFAESI Act 2002, .
viii.· Sucli decision to allow operation should be reported to Regional Office
and Sanctioning -Authority. .,
15.17 QUICK MORTALITY:

The Bank will classify accounts that become NPA within a YE?Qr of its-sanction as
quick mortality.
15.18 REVITALIZING DISTRESSED ASSTES- JOINT LENDERS' FORUM AND CORRECTIVE

ACTION PLAN:
RBI have announc~d
. revised frame work on resolution
. . of stressed
. assets4o, in view
of the enactment of the Insolvency. and Bankruptcy Code, 2016 (IBCl:· Further,
guidelines on· Prudential Framework for Resolution of Stressed Assets as per RBI
circular RBI/ 2018~ 19/203 DBR.No.BP.B.C.45/21.04.048/2018:. i"9 dated-_07.06.2019 to
be followed. ··
The extant instructions on resolution of stressed assets such· as Framework of
Revitalizing Distressed Assets, Corporate Debt R~structuring Sch.em~ (CDR),
Flexible· Str~~turing .· ~f . Existing· Long Term Project Lo~ns~ Stra.tegic · ··Deb.t
Restructuring Scheme, (SDR), Change in Ownership outside SDR and Scheme for·
Sustainable Structuring of Stressed Assets (S4Aj_j..t.g.ojs withdrawn. Accordingly,
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Indian Overseas Bank LOAN POLICY DOCUMENT 2022 .
the Joint Lenders' Forum (JLF) as an institutional mechanism for resolution of

stressed accounts also stands discontinued.
However, the revised frame work is not applicable for the following-
~ The revival and rehabilitation of MSMEs as defined under 'The Micro, Small
and Medium Enterprises Development Act, 2006 shall continue to be
guided by the instructions contained in RBI circulars41 as amended from
time to time.
~ Restructuring of roans in the event of natural calamity shall continue to be
I as per the directions contained in the RBI Master Directions42, as amended
I from time to time.
\ . . .
Our Bank is having board approved separate ·policy on Resolu,tion of Stressed
I Assets.:... Revised Framework43.
I
Bank has signed Inter-Creditor Agreement for resolution of stressed assets with
Indian B.anks' Association which· is at present applicable for borrowal accounts
having aggregate exposure of more than Rs. 50.00 Crores and is o legal
document and enlorceable in any court of law. With reference to any borrower,
those relevant lenders whose share in the aggregate exposure to the said
borrower is at least 75% (by value J of total outstanding credit facilities (fund based
as well as non-fund based) and 60 percent of lenders by numb~r shall be binding
upon all the lenders. Resolution pla·n that is approved by the Majority Lenders shall
be final and binding on all the Relevant Lenders and bound by the approved
Resolution Plan. The Lead Bank shall have the right (but not the obligation) to
arrange for buy-out of the facilities of the Dissenting Lenders at a value th.at is not
less than 85% of the lower of Liquidatio~ Value or Resolution Value. Once the
resolution process is commenced in terms of this Agreement for any particular
Borrower, it can be terminated if approved by the Majority Lenders or the
Resolution Plan is not approved by the Majority lenders within 180 days from the
Reference Date. The objective of the Inter-Creditor Agreement is to set out the
overall framework, ih respect of accounts classified as SMA or NP A by all or some
of the relevant lenders for revival and rehabilitation of . the borrowers. and
effectuating the implementation of a debt resolution plan in respect of the
facilities provided by the relevant lenders with a view to optimize and preserve
the recovery.
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0 5 JAN ZOZZ
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Chapter -16
REHABILITATION AND RESTRUCTURING OF BORROWAL ACCOUNTS
16.1. PROVISION AVAILABLE FOR FINANCING WEAK UNITS:

Rehabilitation efforts will be taken up ~tthe incipient stage itself to arrest slippage
of account into substandard /doubtful/ loss category under NPA classification
and to aid up gradation of assets. While financing weak/sick units, RBI guidelines
will be kept in view.
16.2. RESTRUCTURING:
a) Need base.d additional loans will be considered by Bank while restructuring
borrowal accounts.
b) The restructuring of accounts and treatment of restructured accounts as
per RBI guidelines are followed.
c) Discretionary powers are in place for expeditious restructuring of viable
accounts.
16.3. REHABILITATION OF SICK /WEAK INDUSTRIAL UNiTS:

a) Extension of fresh credit facilities in accounts after compromise settlement
/OTS/write off under rehabilitation package will be considered on case-to-
case basis based on some /any of the following parameters;
L . When the company belongs to any group in which air the other
accounts with us are standard. assets and earning profit qnd if the
· corporate guarantee of the performing. company of the group is
available.
ii. If the comp_any is owned by State /Central Government and prefe~ably
with the Government Guarantee for the existing anq ·or proposed
addi.tionollimits.
iii. When the company is taken over by a new management who is
cqmpetent to run the unit profitably.
iv. When the company could enter into a new line of activfty /diversify
activity which could enable the company to ·come out of sickness.
~ v. After compromise settlement, if there is sizeable positive tangible net-
j worth which could improve further due to sacrifice made by the Banks
/Fis/statutory authorities. ~'11.-... ~'r<H?!Ji!l ; .
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·vi. The borrower was not a willful defaulter and should not have made
external diversion of funds.
vii. Compcmy /promoter undertakes to make good the sacrifice iwrite off
suffered by the Bank on account of OTS in full or part.
b) The sanctioning authority in such cases shall be one layer higher than the
sanctfoning ·authority under' whose discretionary power the limit falls or that
has approved the edrlier OTS (whichever is higher).
c) -The Bank has separate policy for rehabilitation of MSME accounts.
16.4. GRANTING OF ADVANC~S TO AN ACCOUNT THAT WAS NPA OR SETTLED

UNDER OTS WITH SACRIFICE:
The guidelines enumerated in Para 16.3 shall be applicable for NPAs and OTS
settled· accounts of other categories also. (For delegation. of powers, refer
Circular on Delegated Powers (Financials)- 2021.)
16.5. GRANTING OF ADVANCES-TO AN ASSOCIATE IN A GROUP WHERE ONE OF -

THE ASSOCIATES IS NPA OR GRANTED OTS WITH SACRIFICE: ·
Fresh
'
I enhancement
. .
of credit lirDits to a standard performing account in a group
_can be considered even thoughany of their associate(s) is/are a non performing
asset, or was granted OTS with sacrifice, qr a suit filed account. Suitable powers
are delegated to the authorities to consider such fresh limits or enhancement and
for renewal.· (For delegation of powers, refer Circular on Delegated Powers
(Financials)..:. 202L)
16.6. Relief Measures to borrowers in areas affected by Natural Calamity:
The relief measures to borrowers in areas affected by Natural Calamity are to be
extended as per the RBI master Circular from time to time. The latest guidelines
are as per RBI Master Direction FIDD No.FSD.BC.2/05.1 0.001/2016-17 dated July l,
2016. However, in general the following guidelines · on relief measures to
agriculture borrowers in areas affected by natural calamity_ are to be. adhered to.
(i) Declaration of Natural Calamity:

The type ofriatural calamity, declaration of natural calamity, the extent of
crop loss, and assessment of the crop loss will be in accordance ·with the
directives of RBI from time to time for extending reli ~~to the eligible
.
b orrowers.
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{ii) Relief Measure.s:

a) ~estructurlng/Reschedultng of Existing Loans:
As the repaying capacity of the people affected by natural calamities
gets severely impaired due to the damage to the economic pursuits and
loss of economic assets, relief _in repayment of loans becomes necessary
· in- areas affected by natural calamity and hence, restructuring of the
existing loans will be done in accordance with the extant guidelines of RBI.
Other priority sector loans may also be· restructured/rescheduled as per
.·the RBI guideline if a view is taken by SLBC/DCC depending upon the
severity of the ·nqtural calamity.
blSanctlonl.ng of fresh Loans ·
Fresh crop loans may be granted to the affected Farmers which will be
based on the scale of finance for the particular crop and the cultivation
area, as per the extant guidelines.
The bank assistance In relation to agriculture and allied activities {poultry,
fishery, animal husbandry, etc.) would also be extended for long term
loans for a variety of purposes such as repair of existing economic assets
and/or acquisition of new assets.
Consumption loans and other priority sector loans mdy also be sanctioned
in line with RB.I guidelines.
c) Other relief measures:
1.. Guarantee: Credit should not be denied for want of p-ersonal
guarantees.
2. Security: For restructured /rescheduled agriculture loans on account
of natura\ calamities no collateral security should be insisted. However,
the existing collateral security, if any should be continued as security for
such converted loans. The restructured /rescheduled loans should not
be included while considering the collateral security coverage. for
fresh/additional credit. ·
3. Margin: Margin requirements may be waived or the grants/ subsidy
given by the concerned State GovMnment may be considered as
margin.
4. Rate of Interest: Concession in interest rafe mai be extended i.f the .
SLBC/ DCC take ci view on the interest rate concession to have
uniformity in approach among banks in roviding relief which can be
maximum up to 1 year MCLR of th if<ltnff$~ect of current dues in
. ~ 0'-'erse& · 9'~'\
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· Indian Oversees Bank LOAN POLICY DOCUMENT 2022
default, no penal interest will be charged. For converted/rescheduled

loans waiving of penal interest, already charged may be considered.
5. Other measures: All charges debited or due from the farmer's loan
account other than the normal interest may be waived on merits
. considering the hardship caused to Farmers
(iii) Discretion: .
The discretion for extending relief measure except fresh · credit to the
borrowers in the areas affected by natural calamities vests with the next layer
of sanctioning authority. Fresh credit may be considered on merits by the
respective sanctioning authority including branches as per the discretiOnary
power of overall per borrower limit .
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CHAPTER 17
GUIDELINES FOR LENDING TO

1) PROFIT MAKING PSUs
2) PROFIT MAKING AUTONOMOUS BODIES PROMOTED BY CENTRAL
GOVERNMENT or STATE GOVERNMENT
3) .PSUs GUARANTEED BY CENTRAL or STATE GOVERNMENTS
4) AUTONOMOUS BODIES PROMOTED BY CENTRAL GOVERNMENT or STATE
GOVERNMENT and GUARANTEED BY CENTRAL or STATE GOVERNMENTS·
Parameters Guidelines
Large Exposure Framework Entities connected with the sovereign are
exempted from the definition of group of
connected Counterparties.
Audited Fin.ancials In respect of exposures to unlisted PSUs/

Government undertakings review I renewal of
!knits can be carried out based on the Financial
statements certified by Internal Auditors and
there is no need to wait for the completion of
Comptroller & Auditor General Audit, wherever
applicable.
However, non obtention of Audited financials
should be discussed as a part of the assessment
with proper justification along with the .timeline
for its obtention. · No specific approval from
competent Authorijyjs_e_e_guired to. be obtained.
The following need not be Insisted:
a) Dynamic Review df Rating

b) Penal Provisions like non-renewal, SRRP etc.
c) ASM requirement
d) Mandatory/ minimurn collateral security norms
e) Minimum financial ratio requirements. i.e., Current Ratio, TOL/ TNW etc.
i .
i!
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Reference Circulars:
·1. RBI Circular No. RBI/FIDD/2016-17/33-Master Direction
FIDD.CO.Pian.1 /04.09.01/2016-17 dated July 7, 2016 gnd last updated on
01.08.2018. RBI circular Master Directions FIDD.CO. Plan.BC. 5/04.09.01/
2020·.21 dated 04.09.202Q.
2. RBI_ Circular no FIDD/2016-17/37 Master Direction . _FIDD.MSME & .·
NFS.3/06.02.31/2016-17 July 21,2016 on MSME Finance.& RBI/ 2020-2021/
10, FIDD.MSME & NFS.B.C. No. 3/06.02.31/2020~21 dated 02.07.2020.
3. Ministry o'f Small Scale l~dustries3 vide its notification No.S.O. 1722(E). ddted
October 5, 2006.
4. Latest RBI Circular Ref: RBI/2015-16/70/DBR.No. Dir.BC.12/l3.03.00/20 15-16
July 1, 2015on Exposure Norms.
i
5. RBI/2016-17 /167 DBR.No.BP.BC.43/21.01.003/2016-17 December 01, 2016,
I
! RBI/2018-19/ 196 DBR.NO.BP.BC.43/21.01.003/201.8-19 dated 03.06.2019 and
! RBI/2019-20/60 DBR.No.BP.BC.18/21.01.003/2019-20 dated 12.09.2019 on
i Large Exposures Framework. CSSD .Circular ADY I 434/2019-20 dated
11.12.2019 on Large Exposures Framework .
. 6. RBI Circular No. RBf/2016-17 /50-DBR.BP.BC.No.8/21.01.003/20l6-17 dated ·
I .August 25, 2016 on Guidelines on Enhancing Credit Supply for Large
I
·Borrowers throl!gh Market Mechanism.·· ·
I 7. RBI circular 2014-15/62 DBOD.No.Dir:BC.14/l3.03.00/2014-15 dated July 1.
2014 on Master Circular of Instructions Relating to Deposits held in FCNR(B)
Accounts.
8. RBI Master Circular- No. RBI/2015-16 /95/DBR.No.Oir.BC.l0/13.03.00/2015-16- ·
dated July 1, 2015 on Loans and Advances - Statutory ond Other
·Restrictions.
9. RBI circular DBOD.No.BP .BC.94/08.12.001/2008-09 dated December 8, 2008
.on 'Lending under Consortium Arrangement / Multiple Banking
Arrangements. · · ·
10.RBI circular DBOD.BP.BC.No.62/2i.04.103/2012-13 dated ·November 21,
2012 on Non-Performing Assets and Restructuring of Advances.
11. RBI circular No.RBI/20 l 5-1 6/281 /DBR.Dir.BC.No.70/ 13.03.00/2015-16 dated
January 07, 2016 on Non-Fund Based Facility to Non-constituent Borrowers
of Bank. ·
12.CSSD circular ADV/3)6/2018-19 dated 28.12.2018 on SOP for Consortium
Lending.
L
I. · J3. CSSD.circ:;ular ADV/338/2018.:19 dated '18.02.2019 on Appointing. of ASM for.
Large Credit Exposure.
14. RBI circular OBOO.No.BP .BC. 94/08.12.001/2008-09 dated December 8, 2008
on 'Lending under Consortium Arrange~-·~~--.Mult_iple Banking
Arrangemen t s
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15.RBI circular DBOD.BP.BC.No.62121.04,10312012~13 dated November 21,

2012 on Non-Performing Assets and Restructuring of Advances:
16. RBI Circ:ular FIDD.CO.Pian.BC.23104.09 .01/2015-16 dated April 7, 2016 on
Priority Sector Lending Certificates. ·
·17.CSSD circular ADV/30812018-19 dated 14.12.2018 on Guidelines onloan
System for Delivery of Bank Credit.
18. Treasury Department: circulars· . FXI08120 15-16 dated 02.11.2015,
FX/109/2015:16 dated ·07.11.2015, FXI12212016-17 dated 09.05.2016 and
FXI47120 18-19 dated 14.0 1.2019 on Gold Monetization .Scheme.
19.Chapter 18,.Volume 2 of Book of Instructions- 20l8 .. ·
20. RBI circular 2017-18/139 A.P. (DIR Series) Circular No. 20 dated 13.03.2018 on
· discontinuation of LOUILOC. ·
21. MSME Department circular adv 120412017-18 dated 05.03.2018on MSME.
22. RBI Master Circular No. RBI/20 15 -16136 IDBR .BP .BC.No.5121.04.17212015-16
dated July 1, 2015 on Master Circular - Bank Finance to Non-Banking ·
Financial Compdnies (NBFCs), ·
23.RBI circu.lar 2018-19149 FIDD.CO.Pian.BC.08104.09.0l/ 2018-19 dated
21.09.2018 on Co-origination of loans by Banks and NBFCs for lending to
·priority sector and FIDD.CO.Pian.BC.No · 8104.09.0112020-21 dated
05.11.2020 on Co-lending by Banks and NBFCs to Priority Sector. ...
. 24. RBI Circular No.RBI/2015-16/100- DBR.No.CID.BC.22120.16.00312015-16
. dated July 1, 2015 on Willfl,JI Defaulters. .
25.CGTMSE (Notification No. 6455144) Circular No. 13912017-18 dated
28.02.2018. .
26.CGTMSE (Notification· No. 6456144) Circular No. 14012017-18 dated
28.02.2018.
27.CGTMSE {Notification No.· 6457/44) ·Circular No. ·14112017-18 dated
28.02.2018 and MSME Department Circular ADY 1 3581 2019-20 dated
16.04.2019;
28.CGTMSE (Notification No. 6458144) Circular No. 14212017-18 dated
, 28.02.2018 and MSME Department Circular ADY 1 3S8I 2019-20 dated
16.04.2019.
29. CGTMSE (Notification No. 44175) Circular No. 18612021-22 dated 08.10.2021.
30. CGTMSE . (Notification No. 6554144) Circular No. 14512017-18 dated
15.03.2018.
31. CGTMSE (Notification No. .6572144) Circular No. 14612017-18 dated
. 21.03.2Q18.
'32.CGTMSE (Notification No. 6579144) Circular No. 14812017-18 dated
22.03.2018 ..
33. CSSD circulars Adv 120612017-18 dated 07.03.2018, and ADY 125912018-19
.dated 12.07.2018 on Collateral Managemen(b~ 3'1'r<t~~i?/ . .. ·. . ....,
. ~•'/>~ oversea'$ ~~~I .\'·
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34.RMD circular.MISC/370/2018-19 dated 22.06.2018 and MISC/530/ 2018-19

dated 13.03.2019 have to be followed on Internal Rating of Accounts -
RAM.
35. RMD circular no. MISC/423/2018-19 dated 20.09.2018 on Dynamic Rating. ·
36.CSSD circular no. ADV/279/ 2018-19 dated 26.09.2018 on Parameters for
considering concessions in Interest Rate/ Commission/ Charges and LC/LG
Margin.
37. CSSD circular no. Adv/229/2018-19 dated 13.04.2018 on Interest Rate Policy
on Advances.
38. Loan Review Mechanism Department CO circular Master/ 018/ 2018-19
dated 05.05.2018.
39.CrMD Circular Adv/269/2018-19 dated 05.09.2018 on Godown Inspection.
40.RBI circulars No. DBRNo. BP.BC. 101/21.04.048/ 2017-18·, dated 12.02.2018
on Revised frame work on resolution of stressed assets and RBI/ 2018-19/203
dated 07.06.2019 on 'Resolution of Stressed, Assets under Prudential
Framework'.
4l.RBI circulars No. FIDD. MSME & NFS.BC.No. 21/06.02.31/ 2015-16, dated
17.03.2016, DBR.No.BP.BC.18/21.04.048/201.8-19 dated 01.01.2019 and.
DOR.No.BP.BC.34/21.04.048/2019-20 dated 11.02.2020.
42.RBI circular no. FIDD.CO. FSD.BC.No. 8/05.10.001/2017-18 on restructuring
of loans in event of natural calamity. ..
43. SAMD circulars Master /024/2018-19 dated 05.11.2018 on R~solution of
Stressed Assets and MasterI 47 I 2019-20 dated 09.10.2019 ..
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ANNEXURE- 1
CHECK LIST FOR ADVANCES
(INCLUDING TAKE OVER FROM OTHER BANKS)
For the convenience of branches, a Standard Operating Procedure (SOP) has

been prepared to ensure the quality of loan processing. It covers the various
stages from sourcing to disbursement.
Source Generation
•!• Generate own leads, Leads given by Controlling Office, Customers, others
sources etc.,
•:• Ideally those accounts/Units which are in commercial operations for the last
two years (one year in case of Infra projects). No major Greenfield I brown
field projects, which are in implementation stage, should be targeted. The
unit should have been earning profits for at least two preceding years (For
Infra, it is 1 year from Cod). This is applicable only for take over loans.
Market Reputation
•!• Due diligence of the market reports, standing of borrower. entity by

enquiring related persons; .
•t• Customers with adequate experience/background are to be enquired.
Customer Contact (Phone)
•t• · Initiate a contact over phone to have meeting with Promoters, Directors,
Partners, Proprietors, etc., ·
Customer Meeting
•!• Meet the customer on the date of appointment.
•!• Explain the sanction process.
•t• Give a check list of documents to be submitted by the customer ·at each
stage of processing the-proposal.
•!• Make a presentation on Bank's products, services offered by the Bank to suit·
customers' needs.
STEP 1: Documents to be obtained by the Branch from Customer
Applicqtlon Form
•!• Obtain Application form/request letter from Cust?mer, if not taken already.
Indian Overseas Bank ----

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KYC Documents I Due diligence
•!• Obtain KYC documents like certified copies of PAN, Passport, Voter ID,
Aadhar etc. of all Partners, Promoters, Directors, and Guarantors.
•:• Certified copy of Residential proof (i.e. Passport, Voter ID, Telephone bill,
Electricity bill etc.,) of all Partners, Directors, and Guarantors.
•!• Full Address of the Firm/Company's office, Factory, Plant, Project sites.
•!• Full Partnership Firms; obtain certified true copy of partnership deed and
Registration certificate of the Firm.
•!• For companies, certified copy of MOA/ AOA/Certificate of Incorporation.
•!• Contact details of Promoters, Top management, Other Key persons of the
)
firm/ company, with details of Phone· no, Fax, Mobile Nos.
\ •!• Latest list of Directors with their role/Capacity, certified by the Company
l
i secretary.
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I
Present Banking arrangements
•!• Obtain present banking arrangements with account details, Details of limits
enjoyed if any, Sanction letters if any, Present bank details, Contact no. of
present bank Manager, Statement of account for last 12 months of the unit,
of all facilities, from existing bankers to determine conduct of the account.
Securities, Sale deed copies

•!• Take details of securtties offered.
•!• For immovable properties, take Sale deed copies, Last EC for last 13 years.
•!• A confirmation/assl)rance from the unit that the securities made/will be
made available to other banks will be made available to our bank also and
that they will abide by our bank's take over norms.
(Only for take over accounts)
Other aspects:
•!• Obtain external rating letter, if any, from CRISIL/CARE/CRA/Fitch/SMERA.

•!• Obtain latest sanction letters of other banks to know the terms/conditions,
Details of Prime & Collateral security given. (For consortium/MBA/take over
accounts).
The applicant should be advised that the application will be processed further,
and If found prim facie In line with the bank's loan policy/guidelines /norms, a
decision will be communicated to Applicant verbally.
Indian Overseas Bank 1 Standard Operating P.

Activities to be done by branch:
Scrutiny of the application
•!• Scrutiny of the application with all details, enter in Loan Application register
and Disposal register, Allot Reference number and enter the same on
Application.
Verification of KYC documents & Due diligence
•!• Verify the KYC documents of all entities (PAN, Passport, Aadhar of
Promoters/Guarantors, documents for the borrower · entity and other
documents submitted) with originals.
•:• Cross Check their genuineness (for e.g. PAN from NSE site, Passport from GOI .
site, CIN/DIN of company from MOC site etc.,)
•!• Verify Address, location and existence of the company/firm/unit, Promoters,
Guarantors as per the documents submitted.
•!• Cross verify the Partnership deed registration with related approval agency.
•!• For companies, cross check with MCA portal on Company name, CIN, ROC
ds:tta, capital details, Balance sheets, ·
•!• Verify GST, IT, IEC Code Nos., Pollution Certifi.cate, and other approvals/
Clearances with respective agencies and see that these are in force. ·,
Verification with Present ~ankers
•!• Cross check the account details, statements, other details given by the
customer with the banker,
•!• In case of Consortium/MBA, verify the Asset status and latest position.
Credit Information Re.ports (CIRs)
•!• Obtain CIRs of the Company, all the Partners, Promoters, Directors,
Guarantors, and the Group companies and verify for adverse features if any.
Verification of Statements
•!• Cross check/Verify the Bank statements of accounts with respective Bank for
genuineness.
Cross Check with rating agencies
•:• For genuineness a·nd to know the conduct, adverse findings if any, on the
account.
Indian Overseas
Verification of Defaulters List
•!• Verify ClBIL, CIBIL willful defaulter List, CRILC, ECGC Caution list, Caution lists of
Govt Agencies, Banned list of promoters of SEBI, ROC site (for financials and
details of existing charges}, RBI defaulters list, Central .Fraud Registry etc.
Market reports
•!• Enquire with suppliers and customers of Borrower

•!• Prepare the CRCO reports
Verification in MCA site (For Ltd Companies)
•!• Cross check data, CIN, Company name from MCA site.
•!• Verify the charges registered already.
•!• For companies, obtain ROC search report for charges registered~
On the basis of above documents, conduct a Preliminary assessment of the

proposal; take a view, whether the proposal is as per Bank's Loan Policy
guidelines/norms/other guidelines and circular instructions issued from time to
time. If found acceptable, move to STEP - 2, otherwise advise suitably the
customer and concerned authorities orally on our inability to consider the
application, within 7 working days of meeting with customer.
STEP 2: BRANCH TO OBTAIN. FOLLOWING DOCUMENTS FROM CUSTOMER

Profile of the Unit
•!• Brief write up on management, key persons, industry, Present banking

arrangements, etc.
Flnanclals
•!• Full set of Audited financials for the last 3 years, Provisional balance sheet for .
current year, Orders on hand to justify the Projected Sales, CMA data (for WC)
duly signed by the promoters I directors, partners, proprietor, etc., For TL,
Projected Statements for DSCR analysis. ·
Details of Associates/Group Companies
•!• Obtain details of associates, Group companies, their Financial and Banking
arrangements with Bank statement of accounts, copies. of sanction letters of
Associates/Group Companies.
•!• Contact details of bank Branches, Manager's Name 1 Phone Number.
Indian Overseas Bank I Standard 0~.~~~~(~-

Assets & Liability statements
•!• Obtain Assets& Liability statement of the Individuals, Proprietor, Partners and
guarantors as per bank's instructions. ·
IT returns
•!• IT returns for the last 2 yeqrs.
GST returns
•!• GST return for the last year.

Statutory approvals
•:• MSME registration, license if any under · Shops & Establishment Act,
License/approval from regulatory authority, Pollution control Certificate, GST
registration, and other relevant approvals if any;
•!• Verify that all the above certificates are valid in force.
•!• Confirmation from the customer that statutory dues are regularly paid.
";•.
Processing fees '.,\}
•:• Obtain processing fees as advances as per Bank guidelines.

Capital Structure declaration
•!• Details shareholding pattern., certified by the company secretary.

Declaration from borrower
•!• A declaration from the. pr9spective borrower about the existing banking/
borrowing arrangements, if any.
•!• Declaration on pending court cases as per RBI circular dated 23.10.1999.
•!• Whether unit is Owned or Leased and whether lease is in force.
•!• Whether any of the associate/ group company is sick or suiffiled, if so details.
Rental Premises
•!• Copy of Lease arrangement(s) in force, with validity date, NOL from Property
for free access to bank to enter.
';I
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Relevant documents, If Term Loan Is required.
•!• Project report, sources of promoters' contribution with. supporting documents,

evidencing of investments made· so far, project implementation schedule
project profitability statement~ for DSCR, Details of Suppliers, etc.
Activities to be done by branch:
Verification of Flnancials
I · •!• Obtain independent confirmation of audited financials fro'm the company's

auditors.
\ •!• Verify from MCA site on the genuineness of balance sheet submitted to us.
\ •:• Verify payment of statutory dues pending if any and see auditors report.
i
I! Verification of approvals
•:• For companies, obtain ROC search report for charges registered.
•!• Verify GST, Sales Tax Registration, IT, IEC code nos, Pollution Certificdte, and
other approvals/ Clearances with respective agencies and see that these .are
in force. ·
.Verification of Credit Information Reports
•!• Obtain CIR from existing bankers as per IBA format on the borrowing entity &
its associates, if applicable.
Inspection
•!• Do inspection of the unit, manufacturing activities/ showroom, godowns,

collaterals, etc.,
•!• Make discreet enquiries with local persons to ascertain the ownership of. the
property (ies).
•!• Prepare road map and Local map.
•:• Take photographs of the unit with Owners/ Promoters
•:• Prepare a unit Inspection report.
, Pricing
l •!• Negotiate the pricing, other concession, etc. with the customer.
Discreet enquiries (only for take over loans)
1
~ •!• Discreet enquiries should be made for cross checking the reasons given by
the borrower for moving the account.
Indian Overseas Bank 1Standard
<$'a ~
· 1<lfiD ME~"'\~
Credit rating
•!• Do the Internal Credit Risk rating/CRISIL RAM rating.

•!• Also take CRISIL industry ratings report from CRISIL RAM.
On the basis of documents received so far, CRA, interest rate, securities offered,
Bank Loan Polley, CRMD norms, etc., if the proposal is found to be acceptable
and a board agreement has been r~ached on pricing & other terms & conditions
with the borrower, move to step- 3; otherwise advise the customer of our inability
to consider the proposal.
Step: 3 Documents to be obtained from Customer
Documents of .title
•!• Obtain original title deeds/ cert,ificate copies (in case of takeover of limits),
prior deeds, Land tax receipt, Building tax receipt, procession ·certificate,
Location sketch and other relevant papers for the properties.
Details of Tls/other loans with other banks/Fis
· •:• If the term loan has been .tied up with any Fl or other lender(s), obtain the
. necessary proof.
Other documents .t
•!• Obtain letter of allocation of power supply, certificate of utilities available, any
other documents required to process the proposal, other clearances from
Govt Departments, etc. ·
Activities to be done by branch: 0
Valuation of Securities
•!• Obtain valuation report of'the properties from Bank's Approved valuer as per
·bank norms.
Legal Opinion
•!• Arrange Legal opinion of the immovable properties as per bank's extant
norms., Verify Lawyer's Certificate for genuineness of title deeds andsearch
report from Sub Registrar Office (as per clause 24 and 25 of Legal opinion
format), EC for the last 13 years.
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Inspection of the properties
•!• Prepare report in F 337, Road map and Location map of the property, Take
Photographs along with Owner.
Verlftcatlon of TL/ other loan details
•!• Verify the details given, statements, Assets status from the respective bankers.
TEV study
•!• Arrange of TEY study & cost verification, in case of term loan as per the extant
instructions 1 requirements.
I Suppliers
•!• Take a list of suppliers, and the items to be procured
I •!• .Copies of the quotation and contact details of suppliers.

•!• For suppliers on machinery, obtain opinion report from their bankers; obtain
original copies of invoices, quotations, arrangements of after sales services
etc.
•!• Have reports from D & B/ any other accredited agency of repute on the
suppliers.
Tl requirement
•!• Assessment based on th~ DSCR, Margin norms, security coverage and
Economic/ Marketing/ other viability studies.
On the basis of above documents, prepare appraisal note within l 0-12 days and
put up to sanctioning authority. If the Proposal is sanctioned in step - 3, then
proceed to step- 4
Step: 4: Post sanction formalities and disbursement to be done by branch:
Sanction LeHer
Advise the sanction to the unit incorporating all the terms & conditions and
observations of the sanctioning authority, if any. The sanction letter would be
handed over, in duplicate, to 'the customer and customer will return one signed
copy. Discuss with the customer regarding documentation formalities/
requirements, fulfilments of terms & ~onditions stipulated· in the sanction letter and
likely time for completion of the formalities.
Indian Overseas Bank 1 Standard Operating trocedui

~· .......
·./
Documentation
•!• Obtain the Accepted Sanction Letter from Borrower & Guarantors
•!• Obtain the satisfactory credit reports from existing Bankers, if not done
already. ·
•!• . Complete the execution 1 obtention of documents as per sanction, Manual
of documentation, Bank guidelines.
•!• Completion of security creation/mortgage, hypothecation, lien, etc. as per
sanction.
•!• Registered memorandum of title deeds as applicable.
•:• Collection of processing charges, Mortgage charges if any,
•!• Compliance of sanction terms.
•!• Vetting from Panel Lawyer on documents executed.
•!• II Line Manager's Certificate.
Disbursement
•!• Obtain Pre-release clearance from RO/CO

•!• Do Pre- Sanction Inspection of the unit/ project implementation.
•!• Confirm on collection of processing charges, Mortgage charges and other
charges. .
•!• Note to Manager for release of limits after Pre-release. clearance and on
compliance of terms of sanction.
Charge Creation
•!• Branch will be responsible for creation of all charges viz. ROC, CERSAI,
Registered memorandum with sub Registrar Office, etc. for all securitized
loans within stipulated time. The copies of the receipts/ proof of charge
creation are to · be kept with documents. These activities to go
simultaneously.
•!• lnsur.ance formalities on Prime/ collateral securities.
•!• Obtain and Scrutinise the ROC charge ID, Date of creation, Amount of
charge,
•!• Obtain and file CERSAI Reoistration ID.
Illustrative check-list of documents to be obtained·from the customer:
Documents to be obtained from customer

• Application Form
• KYC documents i.e., Identity/ Address proof documents, PAN, Passport,
Voter ID, Aadhar of Proprietor, Partners, Directors, Guarantors.
• Own~rship d. ocuments like Certifi~.d cow-etPGrt_ners~ip deed, Registration
Certificate, MOA, AOA, dnd Certlflc~®--fllf\~~tlon.
Indian Overseas
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• List and contact details of Promoters, Top Management, Key Persons; with
their role, capacity.
• Details of present Banking arrangements, Bank and account details, limits
enjoyed, sanction letter copies, Bank contact details with Manager
contact nos.
• Existing rating letters from CRISIL/CARE/ICRA/SMERA. If any.
• Brief write up of the· unit, Management, Key Persons, Present banking
arrangements, Location sketch.
• ABS for the last three years, Provisional BS for Current year, Order on hand,
• CMA data for WC advance
• For Tls, Project report, Project profitability statements for DSCR, Details of
• Suppliers, copies of quotations, Contact nos. of suppliers, details/ sources of
promoters' contribution, evidence of investments made so far, project
implementation schedule.
• Details of Associates 1 Group companies, Brief profile, their ABS, banking
arrangements, Limits enjoyed by them, Bankers details, Contact nos, Their
Asset status.
• Asset Liability statements of promoters, Partners, Directors, Guarantors
• IT Returns of the members concerned and the unit/GST returns/Sales Tax
assessment orders Copies of all statutory approvals held, clearances from
Govt. Departments, GST · registrations, MSME Registration, Pollution
Clearances, Licences and Permissions held.
• Details of Share holding pattern, certified by company secretary
• Various Declarations from the borrower.
• Details of the security offered, copies of title deeds, ECs, Tax receipts
\
• Lease agreements, NOC from Landlord
• Letter of allocation of power supply, Certificates of Utilities available and
other clearances.
\ • A confirmation that the statutory dues are regularly paid
• If some portion of expenditure has already been incurred, obtain the
. necessary proof.
• Any other documents as required by the bank.
• The above list Is only Illustrative. Branch may request additional documents,
If felt necessary, as per the Bank norms, nature of activity/ business model
of the unit.
Indian Overseas Bank 1 Standard Operating Procedure
0 5 JAN 2022
. ANNEXURE- 2
Rigorous Due Diligence and Appraisal Measures for project funding above Rs.
50,00 Crores.
a} Regulatory clearances/approvals for the projects.

b} Group Balance sheet to be obtained and analysed.
c} Cash flow to be ascertained.
d} .RBI defaulter list to be verified.
e) CIBIL willful defaulter to be verified.
f}· Credit information from CIC to be obtained. Rating agency reports to be
analysed.
g} The account Is to be verified from CRILC database.
h} Equity Research/ Industry Analyst report to be analysed.
i} Litigation listing for the borrpwer by 3rd party sources to be done.
The account is to be .verified from Central Fraud Registry and Information Service
Companies i.e. probe 42.
·1'
Annexure 3
Methodology for verification o·f end use of funds is clearly defined In our Bank's
Credit Monitoring Polley.
Some of the salient features as per the Credit Monitoring PoiJcy are as follows:
1. Physical:
» Godown Inspection, verification of Purchase Orders, Sales Invoices,
il
1
debtors'/creditors' register, excise/sales tax registers, sales tax returns,
whether the premises rent is paid regularly In case of leased premises,
I payment of electricity, water and other utility bills, payment to the labour,
I Upkeep of the factory premises, whetherthe godown is having more than
one entrance etc.
II. » In case of term loan sanctioned for construction of a project, whether the
physical construction is commensurate with the estimates and with the
I
I
funds released and time schedule. .
)> Regular unit visits should be conducted even· in case of availing only non
I fund limits to ensure that the company is conducting its business and the
company will be able to meet the contractual obligations under the
Guarantee.
» The insurance policy on stocks should be kept in force, which should cover
the entire value of the materials held at any point of time. .
» Name Board of the company and the Hypothecation Board are to be
displayed at the premises.
» At random the inspection should be conducted without giving any prior
intimation to the borrower.
2. Financial:
» Monthly stock statements, monitoring statements as stipulated in the
sanction, Quarterly/Half y,early Information system reports,
Provisional/Audited Balance sheets should be called for to analyze and
ensure that the progress in business, commensurate with the estimates.
3. Operational:
» The operations in the Current/Cash Credit" accounts should be verrtied at
regular intervals to ascertain whether the sales proceeds are routed
through us or not and payments are being made for genuine business
purposes or whether any diversion is taking place.
» If bills limit is sanctioned, it should be ensured that the bills are routed
through us.
)> In case of consortium adv~~l<~i1m~~~~d be ensured that the
proportionate sales or busine~~~·~~~\us under ~II ~~e facilities.
·S' ~F
0 5 JAN 1022 11Page

);> If the borrower is importing goods, the import bills should be routed through
us.
);> Even where only non-fund limits have been sanctioned, branches should
ensure that the sales proceeds are routed through us, which will ensure that
the company is performing its obligations and it will give a scope to us to
counter the claims if any submitted under the guarantees issued by us in
future.
);> Branches should also ensure that the bills are submitted to us only where
the pre-sale limits were sanctioned by our bank.
);> Calling f6r information about the associates/sister concerns will help us to
ensure that the funds are not diverted to the associate/sister concerns.
);> Similarly, it is also possible that short term working capital funds are utilized
to meet the margin on term loan or for meeting the project expenses. It
should also be ensured that the business of the borrower is also as diversified
as possible in respect of buyers of his product else it may result
concentration risk and nonpayment of dues by such buyers will result in
heavy loss to the borrower, which in turn result in loss to the bank also. In
such cases, the account becoming NP A is fdster than In a case where the
business is diversified.
· );> In case of non-fund limits, the request for opening of LC should be verified
to ensure that the LC sought, commensurate with the estimated sales level
of the borrower and is within the operating cycle.
);> If Cash Credit limit is not available to meet the bill received under LC,
branch should ensure that there is sufficient plan for meeting the bill on the
due date and branch should ensure that all the credits are being received
through the account. In case of need, the branch may slowly build up the
margin out of the credits received to ensure that the bill is paid on the due
date.
4. Important monitoring procedures that branches are expected to follow

strictly. The following factors /guidelines /procedures are to be borne in
mind by the branches for efficient and effective monitoring of loans and
advances.
);> The end use of funds should be verified and should be ensured that there is
no diversion of funds. Inter group transactions are to be watched, enquired
and monitored.
);> Regular & monthly submission of stock statements should be insisted and
periodical unit /godown inspection should be conducted regularly at
I
irregular intervals. . ·
j );> Monthly submission of book debts statement in case of CC against book
debts should be insisted and once in three months the statement certified
1 by Chartered Accountants should be insisted~ The stdtement should be
verified and checked with borrower's books and invoi~~s at random. Age~-u~:e'lx..~~ ~·
· · ·- ·- · · -· -·-· - ·- · -· . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ._- : : -:~,,7. "r~~-- ,. ,................I ···r-- -~'S-'1>~
• 1 ,fr.\·,................. 2 Pa e :c:-
;,\' ~'1.-;
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. ~\.. 'I "·
ts 1 sll}"'ll"~"~rt ~ ~~ *
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of debtors should not be more than the period of debtors. sanctioned

based on realization cycle.
);> Assets charged to us should be insured for the full value with bank clause.
);> Excess drawings in borrowal must be discouraged and excess given in case
of emergencies should be promptly reported.
>- Whenever LCs are issued it should be ensured that borrower has the
capacity to meet the LC commitments in due time Branch to ensure that
adequate funds are built in the account to meet the bills drawn under LCs.
);> The operations. in the accounts, especially those accounts where
operations are disproportionate to their known source of income I nature
of business should be monitored.
);> It should be verified whether the parties with whom our borrower is dealing
is connected with the business.
>- Market conditions should be studied and market information to be
updated to ensure that the vall}e of assets offered as securities does not
erode. In case of erosion in value, the borrower should be advised to. being
in more margin or DP to be reduced.
);> Periodical reviews of the account should be undertaken.
>- The movement of ratings both internal & external' (wherever applicable)
should be watched and necessary precautionary steps should be taken .in
case of ratings downgraded. :'
:J;> Information on · borrowal accounts with other banks in case of
Consortium/Multiple banking Arrangement should be shared .. :
:J;> Undue reliance should not be placed on the certificates given by the
Chartered Accountants /valuers without co~relating therrt with other
relevant procedures.
);> In case of projects under implementation monitoring 'the progress of
construction should be ensured through site visits and progress should not
solely be relied on the certificates by Lender's Engineer/Chartered
Accountants. ·
);> The important ·terms and conditions like tie up of funds, bringing of
promoter's contribution etc. should be complied with as these have
bearing on the~afety of the advances.
);> It should be ensured that promoter's contribution has genuinely been
made by verifying the transactions in the account in addition to obtaining
Statutory Auditor's certificate and also verifying the same in Balance sheet
when received.
);> Branches should obtain a certificate from the borrower's auditor on an
annual basis stating that all statutory dues including EPF dues have been
paid by the t;>orrower as nonpayment of the same may lead to erosion in
the value of security. ~~
a,"').?., 31)<F( ?fit;r ~ ' ' . ..
..~ 'I>~ O"ersei?~ (¥.
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5. Cash credit against hypothecation of stocks:
~ Cash credit should be extended only against fully paid stocks. The value of
cost of raw materials as shown in Stock statement should be cross verified
with ·the suppliers who. deal in the same line. Sales cost should not be
financed.
~ While arriving at DP, obsolete, unmoving stocks, sundry creditors and A & E
should be excluded from total stocks. During inspection of the unit, the
stocks should be verified with the stocks in the unit and also with the stock
register maintained by the borrower.
~ · Random checking of value of stocks should be done by calling the invoice
/purchase bills.
~ To ensure that the stocks are not overpriced, a cross verification may be
made with the other suppliers or persons who are on the same line of
activity. ·
~ End use of funds to be verified and debits in Cash credit account should be
checked to ensure that only business related transactions are-carried out.
~ Branches shovld verify whether the payments from account are in favour
i of the suppliers of goods/manufacturers/dealers with which the borrowers
i
normally have business ·dealings.
\
~ Payments from · the account to associates 1 finance companies /for
I'
purchasing fixed assets should be enquired and if · found suspicious,
\ immediate action has to be taken. ·
~ Similarly, the receipts in the accounts should represent genuine sale
\ transactions and branches should ensure that all the sale proceeds are
l routed through these accounts.
~ There should not be any variation between the value of stocks as per stock
statement submitted to the branch as at the year end and the closing
stocks position declared in the financial statements. If any discrepancy is
observed, branch should take up with the borrower for clarification and
should be satisfied about the reasons for variance. The details should be
held on record so as to explain to the inspecting officials of the Bank.
~ The stocks should be insured for the full value with bank clause.
~ Allowing excess drawings in the accounts should be discouraged. If
permitted in emerg~ncy situations, it should be reported immediately to
sanctioning authority and the excess should be regularized within the
prescribed period. The outstanding in CC account including excess
amount should be sufficiently covered by stocks.
~ Continuous excess over DP /Limit for 90 days will make the account as non
performing and branches should ensure that the account does not exceed
DP.
~ The branch where main limit is sanctioned should al~o go through th Tc!
transactions in sub limit to ensure that transactions in sub limit are of gz ~'<\ rY:rfj'f ,.,.
31
. . ~ o'~e se<J 'Y~
business transaction. _.. . ""·~.. . -;y'~>~ s
•'',; ~.-&\___./..... ~ ·~...l ( '\; '. I ~-:).,:
~?-~-s~,;;~~~~~~0':1'\; ·--- -~ ·rr-~ i~

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---·-··--···--............. · ---- --- ...... -- .. ----- --- ---- · .. · .. -- - -- .... --- -: 5 JAN 201
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,,
6. Cash credit against hypothecation of Book debts/receivables:

) Advances against book debts in one form of financing against receivables
for meeting working capitarrequiremenfs of the borrower.
) While arriving DP, based on book debts statement submitted by the
borrower, the debts beyond stipulated period as per sanction terms, debts·
due from associates, groups and family members of borrower· (unless
permitted in sanction) and debts in respect of which bill finance was
extended, should be excluded from total book outstanding.
) The book debts statement certified by statutory auditor of the company
who has audited and certified the books of the account of the company
once in a quarter with age wise details of the book debts should be
obtained. The auditor's certificate inter-alia should mention about the
inspection of books of account maintained by the borrower.
) A quarterly debt confirmation to be obtained from fop 10 - 20 debtors or
80% of the debtors of the borrower whichever is higher. This confirmation to
be· preferably obtained from debtors directly and not from Chartered
acco·untant.
) Book debts financed should represent genuine trade transactions.
) Borrower's books /records such as sales invoice, delivery challans should be
inspected periodically to verify the genuineness of the book d~bts furnished
in the statement.
) The book debts statement submitted by the borrower should be scrutinized
thoroughly to the age of book debts, concentration of receivable amounts
etc. The debtor may also be contacted by correspondence or by personal
contact, in case of doubt about the authenticity of sales and invoice. The
repetition of same amount from the same debtor for months, round amount
etc. need to be enquired.
) Branch should make a test check of. outstanding indicated in the Book
debts staterrtent and sundry debtors outstanding as indicated in the
balance sheet wherever possible."
The above list Is Illustrative only and not exhaustive. Branch to follow all latest
guidelines on end use of funds as Issued by Credit Monitoring Department from
time to time.
.... ·
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~.,/~:_;,: i_:;;ii'( ;;;;.-::· t.,;·' .

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INDIAN OVERSEAS BANK REF NO; ADV /278/2021-22

CENTRAL OFFICE DATE: 27.01.2022

CIRCULAR TO ALL BRANCHES /OTHER OFFICES

Loan Policy Document 2022 & Operational Guidelines on Lending

1) Regulatory Changes: All the changes suggested by the regulatory authority

2) Definition of Group: Public Sector Undertakings, State or Central

3) Single Borrower limit (For Infrastructure projects): Changes have been

5) Geographical Boundaries: Clarification has been incorporated for scope

6) Advances to Bank's Directors/ Officers of Bonk: Clarifications have been

7) New Business Committee: In case of accounts repaid fully in the past 6

9) Advances to Self-Financing Colleges and Schools: Clearance from HLCC

10)Credit Report cum Opinion Sheet (CRCO): In view of availability of Credit

12) Commitment Charges: Exemption to commitment charges has been

13) A new chapter on Autonomous bodies promoted by Central Government I

LOAN POLICY DOCUMENT

Credit Support Services Department

LOAN POLICY DOCUMENT 2022

Chapter Para PARTICULARS Page No.

8.10 LENDING TO lnviTs 60 -;·l

8.11 PARTIAL CREDIT GUARANTEE SCHEME_(PCGSJ . 65 _,..·~:-

8.12 POLICY ON TRADE RECEIVABLES DISCOUNTING SYSTEM 65

Chapter Para . PARTICULARS Page No.

9.17 LOAN SYSTEM FOR DELIVERY OF BANK CREDIT 81 I

9.18 DIGITISATION OF TRADE PROCESS 81

15.5 STOCK STATEMENT'/ DEBTORS~.:&fi~~ ---

REFERENCE CIRCULARS 157

1.2. OBJECTIVE OF THE POLICY: The objective of the Loan Policy is fo

a) Comply with Government guidelines /RBI regulations on Capital Adequacy,·

a) Deployment of Credit /Thrust areas/Exposure Norms

1.4. GENERAL GUIDELINES ON LENDING:

GM (CSSD)/Head of the Department- CSSD is empowered to give clarifications

Il .2.1. PRIORITY SECTOR CREDIT:

2.2. CATEGORIES OF PRIORITY SECTOR:

The categories under priority sector are as follows:

2.3. TARGETS AND SUB TARGETS:

ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposures, whichever Is

- 2.4 .. WEAKER SECTIONS:

0 5 JAN ZOZZ ·---.•:-: _,., . : ..

2.5. THRUST AREAS:

Farmers to have flexibility and choice in regard to the amount, us~ of

···--··----·······-········· ·········-·+· ··''"''"·'·'''···· -~· j_5:~i>~i;•

·Indian Overseas Bank LOAN POLICY DOCUMENT 2022

g) P(eference will be given for self-liquidating nature of advances wherein

Farm Credit -Individual Borrowers

Farm Credit - Corporate farmers, Farmer Producer Organisations .(FPOs)/(FPC)

2.5.1.2. Small and Marginal Farmers:.

e) Loans to Farmers' producer companies of individual Farmers, and co-

2.5.3 MSME FINANCE:

Category of Enterprise Criteria for Classification

2.5.3.2. Manufacturing Enterprises

The Micro, Small and Medium Enterprises engaged in the monufacture or

2.5.3.3. Service Enterprises

2.5.3.4. Khadi and VIllage Industries Sector (KVi)

2.5.3.5. Other Finance to MSMEs

i. Loans up to Rs. 50.00 crores to Start-ups, as per definition of. Ministry of

· vii. Overdrafts extended by banks after September 17, 2018 up to Rs 10,000/-

. i.' I .::·:~ :...

Balance Sheet Exposure (CEOBE), whichever is higher, subject to a sanctioned limit

(* Adjusted Net Bank Credit)

2.5.5 .. EDUCATION; HOUSING; SOCIAL INFRASTRUCTURE; RENEWABLE ENERGY AND ·

Bank shall endeavour to increase exposure to the.

Loqns to individuals foreducational purposes, including vocational courses, not

a) Loans to individuals up to Rs. 35.00 Lakh in metrop9litan centres (with

.. _ --- .. ,__ ... n. ~ Jl<.N 7.017 _~~~ •. :: _\.J_ .:n,:·._;(?:~.