Components of Credit Management :::

Loan Policy of the Bank

Influenced by market conditions, policies of other banks, own SWOT analysis, RBI guidelines
Exposure limits-single borrower/group
Exposure limits for sectors
Discretionary powers

Credit Appraisal :

Five Cs - Character, Capacity, Capital, Conditions and Collaterals
Credit delivery-documentation, creation of charges
Control and Monitoring
Rehabilitation and Recovery
Risk management-identification,
Measurement & Evaluation
Delivery
Control and Monitoring
Rehabilitation and Recovery
Credit Risk Management
Refinance

RBI Guidelines

End use of funds
Priority sector 40%(agr 18%),weaker sector 10% foreign banks 32%, small enterprises 10%, export credit 12% of ANBC/off balance sheet expo, whichever is higher. Agr, MSE, housing(20 lacs), Education(10 lacs/20 lacs abroad), Export credit, SHG, KVI, Retail
Weaker sec. –small/marginal farmers, artisans, SGSY, SC/ST, DRI, SJSRY, SLRS, SHG
Micro, small and medium enterprises
Mfg sec: Micro upto 25 lacs, Small 25 lacs to 5 crs, Medium 5 crs to 10 crs
Service : Rs 10 lacs, 10-2 crs, 2-5 crs
Credit Exposure Norms –

For individuals/groups : 15/40 of capital funds- addl 5/10 for infra.
NBFC/NBFC-AFC 10/15%- 15/20% on lent infra
Base Rate System

Wef 1/7/2010 replaced BPLR
Banks may determine actual roi
Transparent, applicable to all except DRI, bank’s own employees, against deposits, qtrly review of BR
Existing loans with BPLR to continue, switch over option to be given
Credit Restrictions

Adv against bank’s own shares
Relatives of directors/sr officers
Industries consuming ozone depleting substances
Sensitive commodities
FDRs of other banks/CD
Buy back of shares
Credit Assessment/Delivery

MPBF method
For SME upto 5 crs limits turnover method
Working capital above 10 crs , loan component 80%
For seasonal/cyclical industrial bank may exempt with approval of board.

Fair practices code

Pertains to

Loan application, processing
Appraisal, terms and conditions
Disbursement
Post sanction supervision
Discrimination, harassment in recovery, takeover of accounts