Credit Process TATA Motors Finance

7/28/2019 Credit Process TATA Motors Finance

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Credit Process


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7c. Resolve Queries4. Log in the

File with CPA

Process Flow (1/2)

DSA/

BDM/

BDE

1. Initial customer interaction

2. Understand customer profile and

requirements3. Run RSPM & collect documents -

Discuss indicative quote for customer

based on the norms he is likely to fit

into

Customer 5. Run De-due, Cibil,FI( if not fired

by Sales Team) RCU

FI agency RCU

RSPM

Credit

6a. 6b

7b.Communicate Queries /

Clarifications

7b.

7a. Communicate

Decision

CPA

6a. Check RSPM

6b. If RSPM has rejected the deal

then send the same to Credit.

6c. If RSPM not applicable, then

prepare CAM and send to Credit


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Customer

DSA/

BDM/

BDE8a. Communicate

Final Approval,

Rejection to Customer8b. Collect Post

Sanction Doc

CPA

9a. Submit

Post Sanct

ion

Doc with CPA

10. Prepare BP,Opportunity, Quote in

SAP

9b. Raise &

Resolve Queries

11. After checking, submit

file to Ops for RO

12. Release RO

& Communicate

to Sales Team

13. Collect

Invoice &

Insurance

12

14. Submit Invoice &

Insurance with Ops

Ops

CRU (Manu Bhai)

16. Resolve

Queries if any

17. File Booked in

System

8a

8b

Process Flow (2/2)


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CPA MIS Monitoring


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CPA MIS Monitoring.

Very effective in monitoring day to day file status and movements.

File status in various stage helps in identifying the channels efficiency

CPA MIS is also useful in retrieving the details for collections purpose.

CPA MIS can be used for tracking stage wise TAT for all activities starting from login to

booking. BM can track logins and plan and drive business accordingly.

Can be used for various analyses on all activities.

Treat it as basic hygiene


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Non Starters

Its the cover page of collection


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Q 1. What is a Non Starter?

A contract in which the customer does not pay three installments in first four months is

termed as Non Starter.

Advance EMI (if any) will not be taken into consideration for the aforesaid calculation

F. A. Q. on NON STARTERS

If the approval date is 1stApr

2010, payment date is 1stMay

2010, Invoice date is 1stJun 2010

and Booking date 1stJuly 2010.

Three EMIs to be collected from

which date??

In the given example the contract start month will be May 2010 and three EMIs have to

be collected on or before 30th Sept 2010. Else the contract will be tagged as a NON

STARTER.

Q 2. What is a Potential Non Starter?

Potential Non Starter is contract which is on the verge of becoming a Non Starter if not

resolved timely.


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2a. List is circulated to AM,

BM, DDSA, DSA, BDM &

BDM

2b. Regular follow up isdone & feed back is taken

How do we monitor Non Starters

HO

CreditSourcing Team

(AM, BM,SH, DDSA,

DSA, BDM,

BDE)

Customer

Br / Collections

1. List of Potential Non Starters

is send on weekly basis from

HO to all Credit Managers

3. Follow up with

customer is made on

regular basis

4. Follow up with customer is also

done by ACM/SCH. If required

Credit /sales managers to visitthe customer and analyse the

reason of delay

5b. Customer pays the

amount to collection

team

6. Amt is punched in

System

5a. Informs collection

team about PTP

Credit ACM / BM

Device Strategy


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Non Starter Reason wise analysis

13

9 86

3 2 2 2 1

11

57

0

10

20

30

40

50

60

Grand Total

Customer does not havemoney

Customer not contactable

Vehicle used by third party

vehicle not delivered

Vehicle met with Accident

Lying in suspense A/c

HNT/VNT

Viability Issue

Wrong commitment on scheme

Other not specified by thecustomer

Grand Total

Region

Customer

does not

have

money

Customer

not

contactab

le

Vehicle

used by

third

party

vehicle

not

delivered

Vehicle

met with

Accident

Lying in

suspense

A/c HNT/VNT

Viability

Issue

Wrong

commitm

ent on

scheme

Other not

specified

by the

customer

Grand

Total

Grand Total 13 9 8 6 3 2 2 2 1 11 57


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Impact of NS on Branch Portfolio

High flow of Non Starters effect branch rating and higher

bucket delinquency.(30% of the NS flow as NPA)

Conscious underwriting approach for every proposal of the

branch.

Considering the high risk factor and strict credit underwriting

diversion of good cases to the competition will be high side.

Low business will impact branch income & profitability in

longer run.


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How to avoid NS funding

Factors for NS:

A) Sourcing profile,

B) Channel,

C) FI,D) Stability,

E) vehicle-profile mismatch,

F) Viability,

G) Immediate change of hand,

H) Intention

I) Due date and EMI amount awareness etc.


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CASE STUDY


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CASE STUDY - 01

Asset Required : Tata LPT 2518

No of Units : Two

LTV : 100%

Tenure : 4 Years

Repayment : Full PDC / ECS

Background

Exp of > 7 years

Fleet of 9 vehicles out of which 3 are free

ETR & PTR Track with seasoning of 9 mths only

No Guarantor but strong positive reference

Questions to be asked?Any past Track record available? Applicant has given track of only 9 months. He has a decent fleet

of 9 vehicles we should insist for track of a longer period.

If aforesaid track is not available then we must check ageing of fleet. Lets assume ageing of fleet is

2010 2009 2008 2007 2006

4 1 1 1 2

Where will the vehicles be deployed?

Why is the applicant expanding so fast?

Does the applicant have confirmed contracts?

What is the reason for Poor Track record?

Get a reference check done from competitors / existing

customers.

Is he ready to give any cross collateral or collateral of a free

vehicle?

Can we rope in guarantor with ETR track?

Fast ExpansionNo Confirmed tracksPoor Track record

Low seasoning of repayment trackNo Guarantor

This could be a risky call, decision hasto be taken judiciously after lookinginto the Questions mentioned


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CASE STUDY - 02

Asset Required : Tata Ace

No of Units : One

LTV : 90%

Tenure : 4 YearsRepayment : Part PDC

Background

Exp of > 4 years

Fleet of 2 vehicles both are financed by other

financiers

GTR and ATR track in both with seasoning of 19 moths

and 7 months

12 and 5 cheque bounces in two contracts but all

cleared in same month

Negative Area, Political Connections

No Guarantor, No Reference taken

Poor Banking

Has good exp,

Owns vehicles,

GTR / ATR Track

Regular Cheque

bouncing, NIL FFR, No

fixed contracts,

negative area, Political

Connections

Lets go ahead!

Better avoid / Lets

ask for more

information

Suggestions:- before pitching the deal pleasecheck the following:Where will the vehicle be deployed? Is there sufficient Market load available?Get some reference check done in that area. Confirm the reason of cheque bounce? (it maybe due to lack of banking habit) Enquire about level of involvement in politics Can we rope in a guarantor with ETR Track?

This will reduce TAT and exchange of mailsb/w Credit and Sales Team


15/27

Applicant : Nimesh V

Location / Branch : Cochin

Assets Funded : Tata Indica DLS

Total exposure : Rs.2.9 lacs

Profile of the Customer :

Customer was working with METLIFE Insurance as sales manager. Worked only for threemonths. But in F.I. it was mentioned he is working with METLIFE since last one year.

FTU Customer.

Salary slip validated; Total Net Salary 30521/-

Banking validated; ACB > 9 times. SBI RTR orally validated by BDM.

Customers residence in Trissur Dist. But case booked at Cochin.

Approved Terms & Conditions:

RSPM Approved 80%.

Additional LTV of 5% Approved.

Collections comfort taken for funding from Cochin to Thrissur.

CASE STUDY - 03


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Reason for Default :

Fraud customer.

F.I. Agency based @ Cochin entrusted to do Field verification @ Thrissur.

F.I. didnt visit the residence/ Office of the Customer. Only did TVR. The route map was found

incorrect. No one from company met with the customer.

As per F.I. Customers residence was his fathers flat but the same was a Rented House.

Submitted Mobile Bills was Post Paid but the no. captured in SAP/ Cardex doesnt belong to thecustomer.

Trichur Collection team is following up the case but deal booked in Cochin branch.

Bank statement was reflecting PL loan but it was ignored.

PL amount was parked in the same bank A/C hence ABB was high & offered additional LTV withlow IRR.

Bank Statement from Axis Bank & HDFC collected. When cross-checked it was identified that thecustomer was drawing salary both from METLIFE as well as Religare Life insurance simultaneouslyfor three months.

During availing the loan the customer has submitted a Land tax Receipt which was forged.

Credit Approval taken for Personal registration but when checked with RTO website, the vehicle is

registered as Taxi.Learning:

Branches should maintain Geo Limit. Always the customer should be residing in the area of branchwhere the case is booked.

FI cross check & Neighborhood/reference check should be done mandatory.

Form 20 must be issued from Branch only with authorized signatory seal & Sign.


17/27

Applicant : Mr.V.Srinivasa Rao

Location / Branch : Guntur

Assets Funded : Tata 3118 Chassis & Body ( 4 Nos): Tata 2515 Chassis & Body (2 Nos)


Profile of the Customer :

Mr.V.Srinivasa rao is a STR client, in the line of Market Load operations & into Cementtransport operations under Sub contract.

Transport Business experience of 10 yrs

Sub Contract from Anjani & My Home cements

Fleet Strength of 11 vehicles with 4 deemed free , at the time of Funding

ETR /GTR track record with us & Competition ; ICICI,Koatk,CITI


Last approval is for Rs.69.08 lacs on 4 No Tata LPT 3118 Chassis & Body (100 % on chassis &58 % on body ), taking Post funding exposure to Rs.104.84 lacs

Cap on further exposure for 12 months

CASE STUDY - 04


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Aggressive expansion in a Short Span

Vehicles run under Sub contract / transport operator ; delay in bills realization

Funds diversion into Real estate

No Free fleet

Dependent on sub contracts

Learning :

Immediate exposure at a Go with higher LTVs to be backed up decent cross collateral

Aggressive exposure to be backed up by Fixed / written viable contract from good principal;else restrict exposure

Contingency plan to be analyzed


19/27

Applicant : Mr.M.Ramesh

Location / Branch : Kurnool

Assets Funded : Ace


Current OD Amount : Rs. 42,500.00

Profile of the Customer:

Mr. M.Ramesh is a First time user.

No experience in the Transport Business Residing in Rented house

Having own agri land of Rs.8 lakhs value

Roped guarantor with property of Rs.16 lacs


Deal Approved through RSPM under the Magic scheme

Roped guarantor with property Property valuation of applicant and Guarantor

CASE STUDY - 05


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Applicant is not having any business experience

No other source of income

He is unable to run the vehicle

Learning:

High funding to FTU customer

Deal based on Guarantor Property , where as we given a property valuation waiver FI confirmed that he is having low income source and low profile, we have to restrict the ltv

for this profiles

Due to low margin applicant is ready to surrender the vehicle


21/27

Jaswinder Kaur/ Indigo XL / Contract No. 5000075946

Profile: SENP, Running Boutique.

Deal approved by : RAAC deal signed off by : SH PC Sales

Deal Inputs at the time of decision:

Self employed non professional profile FI positive confirming: - Applicant running boutique in name ofM/s Patiala Boutique Collection for last 8 yrs

Self owned house for last 4 yrs

Banking : Average monthly credit:5 & Average monthly balance: 10 times of EMI

ITR 2.49 lacs

Current De-dup & CIBIL :

De-dup is showing default with TMF in one contract

CIBIL is showing multiple defaults

Findings :

FI has mentioned to check running tracks of applicant but the same has not been checked. De-dup not attached in file: As confirmed by NAX

Learning:

Two market reference check to be made mandatory (not with references given by applicant in applicationform).

CASE STUDY - 06

CASE STUDY 07


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Bhupender Kumar/ Safari LX/ Contract No. 5000282157/70%/60 months.

Profile: Agriculturist.

Deal : Property base RAAC, Case approved by ACM basis strong sales recommendations with condition ofDealer Comfort Letter and Sales to monitor the repayments of this case.

Concern raised by Credit:

Initially declined by ACM twice even when it was a RAAC, deal re-pitched by account manager after lagof 45 days.

Positive PFI by Sales (Scan copy attached) with positive reference checks done by Account Manager.

Sales commitment to take Dealer Comfort Letter

Agri land holding , valuation worth 68 lacs documented

Strong banking with AMC 20 & AMB 17 times of EMI

Current Status:

CIBIL is negative for same contract with TMF, no other entry

Findings:

Case looks staged, failure in checking correct market reference in FI and sales PFI. We have alreadystopped doing property base deals under Normal channel (except for Lsure).

Credit condition not met - No Dealer comfort letter present in file. Details with whom Account Manager did positive reference checks not disclosed.

Learning:

Two market reference check to be made mandatory (not with references given by applicant in applicationform) for cases of MUV and Special profile not backed by repayment.

CASE STUDY - 07


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Arvind Singh/ Indigo LX/ Contract No. 5000192931

Profile: Cable Business & Property Dealer

Deviations / Concerns

Low stability- Negative FI: Stay less than 4 yr at current rental resi

Profile - Property dealer & Cable connection business

Case approved by ACM basis following recommended mitigates-

Positive PFI by Sales- Confirming well maintained office, Good market reputation, businessstability of > 3 yrs ( 2.5 yrs old cable rent receipt documented)

Local own property base (Parental resi confirmed by FI) - Additional rental income as sameproperty given on rent. over all stability of 15 yrs

Banking: Regular credits & balances Avg Monthly Credits 6.26 times & Avg Monthly Balances17.13 times of EMI

Regular ITRs: 1.03 lacs AY 07-08 & 0.99 lacs AY 06-07

Repayments: PL / 50 K / ICICI / EMI 2644/- / seasoning 17 of 36 months/ Nil bounce /ETR

: PL / 2.00 lacs/ ICICI / EMI 5980/- / seasoning 6 of 48 months / Nil bounce / regular

RCU head approval for re-verification of rental agreement - status positive on re-verificationof docs

CASE STUDY - 08


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Current Status

Customer is contacted over phone (same no. as captured in cardex)

As per customer he had dispute with Dealer ( Joshi Auto Zone) as vehicle papers were notreleased to him

Dealer was asking some late payment penal amount from customer on a/c of (Vehicledelivered in Oct ' 07 while case processed & approved in Nov '07)

As per app, he initiated legal recourse against Dealer and got the papers through courts orderonly and the same aggravated to such situation and mentioned that he is having goodrepayments with other Financer ( Latest CIBIL generated is also positive showing regular

repayments of above mentioned PL till date)

Findings:

This was a case of dealer customer dispute, should have been taken up by sales managerwith dealer principal, customer and TML.

Learning:

Online escalation matrix should be made available to credit and collection for enteringdealer/manufacturer dispute cases. Resolution of the same should be responsibility ofBranch Manger.


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Sales and Credit Conflict

More Numbers,

IncreasedDisbursement,

Higher IRR!!

Quality Business,

Less

Delinquency,

Minimum Non

Starters!!

Reason for Conflict

How to manage Sales and Credit Conflict

Share portfolio behavior and cube cuts which will help team for

increase good sourcing.

Provide minimum TAT in all service area i.e FI, CIBIL,De-dupe,

approvals and file processing.

Weekly meeting / con-call of sales and credit

Managing Inter personnel relationship


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Recap..

Non starter is the cover page of collection

CPA MIS monitoring helps in increasing

efficiency

Conflict management

Adhere to process


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Thank You

Credit Process TATA Motors Finance

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