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