PRE-SANCTION CREDIT PROCESS

R VENKATESHCHIEF MANAGER & FACULTY

STATE BANK ACADEMYGURGAON

CREDIT PROCESS AT BRANCHA] PRE-SANCTION – NEW ACCOUNTS

Marketing for new business – Budgetary responsibility will rest with the Branch.

Completion of KYC formalities and obtaining required information on new customers.

Obtain Loan Application from new connections on completion of KYC formalities.

Forwarding Loan Application to CPC / SECC alongwith CMA data within 24 hours from the receipt of the proposal.

CREDIT PROCESS AT BRANCHA] PRE-SANCTION – EXISTING ACCOUNTS

To obtain request letter from the Unit.

To compile Feedback Report, various I & A Reports and Branch comments as per and comments on Corporate Governance in case of Corporate accounts.

CREDIT PROCESS AT BRANCHA] PRE-SANCTION – EXISTING ACCOUNTS

To submit the value of accounts, viz., Interest, Exchange, Commission, Forex Sales and Purchases, utilisation percentage, comments on pro-rata share (for both current and previous year), credit & debit summations, number of LCs issued / devolved, number of BGs issued / invoked, etc. in the Feedback Report.

Forward Unit’s request letter alongwith the Feedback Report, I & A Report comments, CMA Data and last 3 years Audited Financials to CPC / SECC within 3 days.

CREDIT PROCESS AT BRANCHB] POST-SANCTION

Documentation, Creation of mortgages, Registration of Charges with RoC, Creation of II Charge with other Institutions / banks & Compliance with other T & C of sanction.

Collection and analysis of periodical information.

Day-to-day monitoring of conduct of accounts.

Unit visit / Inspection & Convening and / or attending Consortium Meetings.

Submission of Irregularity Reports.

Submission of calling-up / compromise proposals.

AREAS OF RESPONSIBILITY AT BRANCH Customer identification, completion of KYC

formalities in respect of new customers.

Compilation of Opinion Reports (on the Borrower as well as on the Guarantors).

Obtaining Opinion Reports from other banks / FIs in respect of new customers and Associate Concerns of the Unit.

Compilation of Group Profile.

Inspection of the collateral and assessment of value thereof.

AREAS OF RESPONSIBILITY AT BRANCH Completion of post-sanction formalities,

Creation of Charges, Submission of Irregularity Reports, Attending to Audit irregularities, Periodical inspection of the Units, Convening of Consortium Meetings at periodical intervals and attending to all other areas of Post-Sanction Credit Process.

AREAS OF RESPONSIBILITY AT CPC / SECC Appraisal, Assessment and Recommendations

in respect of proposals coming under their purview.

Presentation of proposal to CCC-II and above / ZCC for sanction / approval.

Advising of sanction / approval to the Branch and the Unit.

Submission of Control Reports in respect of sanctions obtained by CPC / SECC.

In case of proposals not considered acceptable, the CPC / SECC will advise the Branch / Unit accordingly after obtaining approval from the competent authority.

PRE-SANCTION CREDIT PROCESS (PCP) The pre-sanction credit process can be

broadly classified into 3 stages:

• Appraisal and recommendation• Assessment• Sanction

FUNCTIONAL RESPONSIBILITIES Wherever two functionaries are assigned the

functions relating to a single stage (e.g., appraisal), they will carry out all the functions relating to this stage either individually or jointly.

The senior functionary will decide the requirement in this regard.

Each of them will carry the responsibility for discharging the functions with due diligence.

FUNCTIONAL RESPONSIBILITIES Wherever a functionary or an Officer at a

Controlling Office is assigned the task of ‘additional assessment’, such functionary / Officer will carry out all the functions required for assessment, either individually or jointly with the functionaries at the Branch as required.

The functionary / Officer at the Controlling Office will decide the requirement in this regard.

The additional assessment functions will not ordinarily require for each case a pre-sanction visit and / or interaction with the Appraiser / Borrower.

However, if they are considered necessary, they will also be performed as part of additional assessment.

FUNCTIONAL RESPONSIBILITIES At the appraisal stage, the Appraiser will prepare

a proposal (including background papers) in full form, i.e., complete in all respects as a draft.

The Assessor will then review the proposal and if he finds that additional information / comments or modified comments are to be furnished, he will arrange with the Appraiser for such addition / modification to be incorporated in the draft proposal.

An integrated final proposal will thereafter be submitted.

In cases where material changes in a proposal / report are made by the Assessor, the Appraiser may, if he so desires, place on record a copy of the draft proposal / report for a later reference.

FUNCTIONAL RESPONSIBILITIES When an official who is to carry out additional

assessment finds that the proposal received is to be re-drafted, the official will prepare a fresh proposal and submit it to the next authority. The proposal received from the Assessor will be held only as part of the record.

In respect of proposals which require sanction separately of different facilities (e.g., FB & NFB) by authorities at different levels, the highest level authority in the sanction trail will sanction all the facilities recommended in the proposal or as advised from time to time in the ‘Scheme of Delegation of Financial Powers’.

The 3 stages involved in PCP will generally be handled by 3 different functionaries.

ADMINISTRATIVE CLEARANCE (AC) While exercising financial powers vested in

them, the Bank’s officials may have to seek prior AC from higher authorities as laid down by CPPD from time to time.

The system of AC affords an opportunity for prioritisation of the banking business from a macro perspective.

However, a credit decision on any proposal has to be viewed from the overall merits of each case and not merely on the basis of the AC.

ADMINISTRATIVE CLEARANCE (AC) The AC accorded by CCC / COCC will be valid

for a period of 8 weeks. If the credit proposal is not submitted to the appropriate Sanctioning Authority within this period, a fresh AC will have to be obtained.

Usually, credit facilities should be released only after the relative facilities are sanctioned by the appropriate authority.

However, in cases where there is an urgent need for release of credit facilities in anticipation of sanction, prior clearance to the release of credit facilities may be accorded by the CCC in respect of advances that fall within its sanctioning powers.

ADMINISTRATIVE CLEARANCE (AC) If release of credit facilities in anticipation of

sanction is sought in respect of advances requiring sanction by ECCB, the proposal has to be accorded prior AC by the Chairman.

Regular credit proposals and rehabilitation proposals for sanction by / recommendations of the CCC should be prepared in conformity with the terms of AC given for the proposal and submitted within the validity of the AC.

Any deviation in the proposal should be clearly highlighted.

Where there is no deviation, a certificate to this effect should be incorporated in the proposal.

CONCURRENT BORROWING Before sanctioning any credit limit, the Branch

should ensure that the applicant is not enjoying similar or other credit facilities with other banks.

Normally, multiple borrowing / multiple facilities to the same Borrower from two or more banks should not be allowed.

If the applicant is found to be having any credit facility from any other bank or FI, detailed information should be called from the concerned bank / FI.

The applicant should submit along with the loan application a declaration regarding the existing credit arrangements.

CONCURRENT BORROWING He should also furnish an undertaking that

stocks will not be hypothecated to any other bank without the prior approval of the Bank.

Such multiple borrowings by persons, without the Bank’s written consent, should be viewed as financial indiscipline.

The advances will be recalled forthwith in case it was subsequently found that the Borrower had made a false statement in this regard.

As far as possible, parties should be advised to restrict their borrowings to one bank only.

CONCURRENT BORROWING Applicants seeking credit facilities of Rs. 25

lacs and over, should furnish in the loan application information about all pending litigations, which have been initiated by another financier including banks against applicants, their partners, directors, etc., for recovery of dues.

Similarly, in the loan proposals, this information should also be furnished in the appraisal submitted for sanction of credit limits of Rs. 25 lacs and above under ‘Other Details’, along with information on RBI Defaulters List / ECGC Caution List.

SANCTION WITHIN FINANCIAL POWERS Sanctioning Authority should ensure that the

sanction is within the powers delegated to him and that the sanction is reported to a higher authority as required in the ‘Scheme of Delegation of Financial Powers’.

The Controlling Offices should diligently scrutinise the Control Returns. If they notice any unusual feature, they should initiate suitable follow-up action to rectify the position with a view to protecting the Bank’s interest.

Non-submission of Control Returns in time should be viewed seriously. Necessary steps should be initiated to obtain the pending returns and ensure regular submission of such returns in future.

PRESCRIPTION OF TERMS & CONDITIONS As a measure of effective follow-up, the Bank

stipulates a number of compulsory covenants and optional covenants in respect of all advances.

The covenants, inter alia, relate to:

i. The right of examination of Borrower’s books and inspection of factories either by the Bank’s officers or by experts / management consultants of the Bank’s choice.

ii. The restriction with regard to change in capital structure, scheme of amalgamation / reconstruction, scheme of expansion or addition to FA, investment by way of share capital / loans / advances / deposits in other concerns, borrowing arrangements with other banks and FIs, guarantee obligations and declaration of dividends.

PRESCRIPTION OF TERMS & CONDITIONSiii. The restriction with regard to (a) Repayment of

deposits from friends and relatives of promoters / directors without Bank’s prior permission, and (b) Payment of interest on those deposits.

iv. The restriction with regard to transfer of controlling interest in the Company or drastic change in the Company’s management set-up without Bank’s prior permission.

v. Borrower’s consent permitting banks / FIs to share or publish information about the Borrower’s accounts in case of default.

PRESCRIPTION OF TERMS & CONDITIONS The optional covenants relate to nomination of

the Bank’s representatives on the Company’s Board, ceiling in regard to dividend declaration, withdrawal of money by principal shareholders / Directors, minimum NWC, insurance cover for standing charges and loss of profit arising from stoppage of production, informing the Bank of the happening of any significant event likely to have an effect on the working of the Company or its subsidiaries.

Standard Covenants

Letter from promoters

Credit facilities to Companies whose Directors figure in RBI’s List of Defaulters

PRESCRIPTION OF TERMS & CONDITIONS Apart from the usual Terms and Conditions of

sanction of credit as contained in the standard covenants of the Bank’s loan documents, depending on the degree of financial discipline required to be imposed in respect of individual cases, reasonable additional conditions as are considered desirable may be prescribed.

However, officials are required to ensure that while recommending or sanctioning a loan, onerous Terms & Conditions which are difficult for the Borrower to fulfil are not stipulated in the first place.

PRESCRIPTION OF TERMS & CONDITIONS The question of stipulating special covenants

in any particular case should be fully discussed with the concerned Borrower, explaining the implications thereof so as to avoid the necessity for modifying them subsequently.

All such special covenants to be stipulated in individual cases should be indicated in the Appraisal Memorandum highlighting the rationale behind their stipulation.

If the risk element is high, the creditworthiness of the proposal may be reviewed afresh.

PRESCRIPTION OF TERMS & CONDITIONS In order to enable the Bank’s operating

functionaries ensure meticulous and timely compliance of all the Terms & Conditions governing loans / advances, such T & C should be clearly spelt out as indicated below:

i. The standard T & C pertaining to the limit of the loan / advance (e.g., security, margin, interest, insurance, etc.) should be mentioned in one particular section of the proposal. Whenever some of the conditions are proposed to be fulfilled after disbursement of a facility, this should be so spelt out. (e.g., EM of immovable property by way of collateral after release of limits).

PRESCRIPTION OF TERMS & CONDITIONSii. Other proposal specific T & C stipulated by the

Appraising / Assessing officials should be recapitulated and listed separately at the end of the proposal segregating the pre-and post-disbursement conditions clearly.

iii. Any additional T & C stipulated by the Controllers or the sanctioning Authority should be specified in the sanction Letter to the Branch as pre- or post-disbursement conditions in clear terms.

iv. Other observations, not specified as conditions, recorded by the Controllers / SA will be advised to the Branch in the letter as guidelines to the Branch on the conduct of the advance sanctioned.

v. While conveying sanction of loans / advances to Borrowers, Branches should write in detail all the T & C in clear terms by segregating the pre-disbursement conditions from the post-disbursement conditions and the time stipulations, if any, for compliance for the same.

MONITORING DISPOSAL OF CREDIT PROPOSALS For monitoring disposal of credit proposals

within the time frame stipulated by the Bank, Branches should adopt the following procedure:

i. Loan applications received from Units should be acknowledged by Branches immediately on receipt of the application and entered in the ‘Loan Applications Received & Disposal Register’, with care being taken to ensure that a segment-wise serial number is generated.

ii. After receipt of the loan application, an indicative check-list of data / papers, etc. to be furnished to the Bank may be given to the applicants.

iii. The credit appraisal officers may ask, as far as possible, all relevant information in one instalment and avoid piecemeal queries at various stages.

MONITORING DISPOSAL OF CREDIT PROPOSALS

iv. Every meeting / interface with the applicants should be used to emphasise the need for submission of complete particulars / data to facilitate quick and timely disposal of loan proposals.

v. The BM / MoD should verify this register at periodic intervals.

vi. Date and status of disposal of applications by way of sanction / rejection (if rejected, reasons therefor) should be recorded in the register.

vii. Controllers should scrutinise this register during their visits to the Branches.

viii. Each Branch will submit to its Controllers a monthly status report on pending loan applications, indicating the reasons for the delay.

Statement of pending proposals at LHO

MONITORING DISPOSAL OF CREDIT PROPOSALS

ix. Branches should not indulge in any act such as verbal promise or issue of any consent letter to sanction loans pending formal sanction, etc., which may give false hopes to the prospective borrowers.

x. A date chart must accompany every proposal. It should be the responsibility of the SA to ensure that this chart is completed at all levels.

xi. If credit facilities applied for are wholly or partially rejected, the reasons therefor should be briefly mentioned in the ‘Loan Applications Received & Disposal Register’.

xii. In order to ensure that there is no delay in the disbursement of sanctioned facilities and also to avoid any need to change the collateral security after obtaining sanction, a preliminary scrutiny of the documents relating to the property should be carried out at the Branch to ensure that the title is clear.

STAGE 1

APPRAISAL

APPRAISALOVERVIEW

• Preliminary Appraisal• Detailed Appraisal• Present relationship with the Bank• Credit Risk Rating • Opinion Reports• Existing charges on assets of the Unit• Structure of facilities and Terms of sanction• Review of the proposal• Proposal for sanction• Assistance to Assessment

2

A] PRELIMINARY APPRAISAL – PRIMA FACIE ACCEPTABILITY

In order to establish the prima facie acceptability of the proposal, the Branch should examine the following aspects in the light of instructions in force:

Bank’s lending policy and other relevant / RBI guidelines

Prudential Exposure Norms

Industry Exposure restrictions

Group Exposure restrictions

Industry related risk factors

Credit Risk Rating

Profile of the promoters / senior management personnel

RBI’s List of Defaulters

A] PRELIMINARY APPRAISAL – PRIMA FACIE ACCEPTABILITY

Caution Lists

Acceptability of the promoters

Compliance regarding transfer of Borrower accounts from one bank to another, if applicable

Government regulations / legislation impacting on the industry

Applicant’s status vis-à-vis other units in the industry

Financial status in broad terms and whether it is acceptable

MA and AA of the Company

A] PRELIMINARY APPRAISAL – PRIMA FACIE ACCEPTABILITY

Further, if the proposal is for Project Finance, Branches should additionally examine the following:

Whether project cost is prima facie acceptable

Debt / equity gearing proposed and whether acceptable

Promoters’ ability to access capital market for D/E support

Whether critical aspects of the project – Demand, CoPn, Profitability, etc., are prima facie in order

A] PRELIMINARY APPRAISAL After undertaking the above preliminary

examination of the proposal, the Branch will arrive at a decision as to whether to support the request or not.

If the Branch finds the proposal acceptable, it will call for from the applicant(s), a fully comprehensive application in the prescribed proforma, along with a copy of the proposal / project report, covering specific credit requirement of the Company and other essential data / information, which should include the following:

A] PRELIMINARY APPRAISAL Organisational set-up with a list of Board of Directors

Demand & Supply projections along with a copy of the market survey report

Current practices for the particular product / service

Estimates of sales, CoPn and profitability

Projected P & L Account and Balance Sheet for the operating years during the currency of the Bank assistance

If request includes project financing, Branch should obtain additionally (i) Appraisal report from FIs in case appraisal has been done by them, (ii) NOC from term lenders if already financed by them, and (iii) Report from Merchant Bankers in case capital market is being accessed, wherever necessary.

A] PRELIMINARY APPRAISAL In respect of existing concerns, in addition to

the above, particulars regarding the history of the concern, its past performance, present financial position, etc., should also be called for. This data / information should be supplemented by the following supporting statements:

Audited P & L Account and Balance Sheet for the past 3 years

Details of existing borrowing arrangements, if any

Credit information reports from the existing bankers on the applicant company

Financial statements and borrowing relationship of Associate / Group companies

B] DETAILED APPRAISAL After a pre-sanction inspection of the project site

or factory in the case of existing units, the Branch may take up the detailed appraisal exercise using the appropriate format.

The viability of a project should be examined to ascertain that the company would have the ability to service its loan and interest obligations out of cash accruals from the business.

While appraising a project or a loan proposal, nothing should be taken for granted.

All the data / information should be checked and, wherever possible, counter checked through inter-firm and inter-industry comparisons.

B] DETAILED APPRAISAL Summarise the conclusions of the financial

analysis carried out on the basis of the Company’s Audited Financials for the last 3 years.

The other aspects to be examined and commented upon under this are the following:

The method of depreciation followed by the Company – SLM, WDV Method or any other method and whether the Company has changed the method of depreciation in the past and, if so, the reason therefor

Whether the Company has revalued any of its FA any time in the past and the present status of the Revaluation Reserve, if any created for the purpose

Record of major defaults, if any, in repayment in the past and history of past sickness, if any

B] DETAILED APPRAISAL The position regarding the Company’s tax assessment –

Whether the provisions made in the Balance Sheets are adequate to take care of the Company’s tax liabilities

The nature and purpose of Contingent Liabilities, together with comments thereon

Pending suits by or against the Company and their financial implications

Qualified / adverse remarks, if any, made by the Statutory Auditors on the Company’s accounts

Dividend policy

Apart from financial ratios, other ratios relevant to the project

Trends in sales and profitability, past deviations in sales and profit projections, and estimates / projections of sales values

B] DETAILED APPRAISAL Production capacity and use, past and projected

Estimated Working Capital Gap with reference to acceptable build-up of Inventory / Receivables / Other Current Assets

Projected levels – Whether acceptable

Compliance with lending norms and other mandatory guidelines as applicable

Assess ABF / MPBF and determine FB facilities required

Assess requirements of NFB (Off-B/S) credit facilities

B] DETAILED APPRAISAL – PROJECT FINANCING If the proposal involves Project Financing,

examine the commercial, economic and financial viability and other aspects as indicate below:

Statutory clearances from various Govt. Depts./ Agencies

Licenses / permits / approvals / clearances / NOCs / Collaboration Agreements, as applicable

Details of sourcing of energy requirements, power, fuel, etc.

Pollution control clearance

Cost of Project and Means of Finance

Build-up of FA (requirement of funds for investment in FA to be critically examined with regard to production factors, improvement in quality of products, economies of scale, etc.)

Arrangements proposed for raising Debt and Equity

B] DETAILED APPRAISAL – PROJECT FINANCING Capital structure (Position of Authorised, Issued / Paid-

up Capital, Redeemable Preference Shares, etc.)

Debt component, i.e., Debentures, Term Loans, DPGs, Unsecured Loans / deposits, etc.

It should always be borne in mind that all Unsecured Loans / Deposits raised by the Company for financing a project should always be subordinate to the Term Loans of the Bank / FIs and should be permitted to be repaid only with the prior approval of all the banks / FIs concerned.

Where Central or State Sales Tax loan or developmental loan is taken as source of financing the project, furnish details of the T & C governing the loan like the rate of interest (if applicable), the manner of repayment, etc.

Feasibility of arrangements to access capital market

B] DETAILED APPRAISAL – PROJECT FINANCING Feasibility of the projections / estimates of sales,

CoPn and profits covering the period of repayment

BEP in terms of sales value and percentage of installed capacity under a normal production year

Cash flows and Fund flows

Proposed amortisation schedule, if applicable

Whether profitability is adequate to meet stipulated repayments with reference to DSCR, ROI

Industry profile and prospects

Critical factors of the industry and whether the assessment of these and management plans in this regard are acceptable

Technical feasibility with reference to report of technical consultants, if available

B] DETAILED APPRAISAL – PROJECT FINANCING Management quality, competence, track record

Company’s structure and systems

Applicant’s strength on inter-firm comparisons

B] DETAILED APPRAISAL – INTER-FIRM COMPARISON

For the purpose of inter-firm comparison and other information, where necessary, source data from Stock Exchange Directory, financial journals / publications, professional entities like CRIS-INFAC, CMIE, etc. with emphasis on the following aspects:

Market share of the units under comparison

Unique features

Profitability factors

Financing pattern of the business

Inventory / Receivable levels

Capacity utilisation

Production efficiency and costs

B] DETAILED APPRAISAL – INTER-FIRM COMPARISON

Bank borrowing patterns

Financial ratios and other relevant ratios

Capital Market perceptions Current price

52 week high and low of the share price

P/E Ratio or P/E Multiple

Yield (%) – Half-yearly and Yearly

Also, examine and comment on the status of approvals from other Term Lenders, market view (if anything adverse), and project implementation schedule.

C] PRESENT RELATIONSHIP WITH THE BANK Compile for existing customers profile of

present exposures: Credit facilities now granted

Conduct of the existing account

Utilisation of limits – FB and NFB

Occurrence of irregularities, if any

Frequency of irregularity, i.e., number of times and total number of days the account was irregular during the last 12 months

Repayment of term commitments

Compliance with requirements regarding submission of Stock Statements, FFR Reports, renewal data, etc.

Stock turnover, realisation of book debts

C] PRESENT RELATIONSHIP WITH THE BANK Value of account with break-up of income earned

Pro-rata share of non-fund and forex business

Concessions extended and value thereof

Compliance with other T & C

Action taken on comments / observations contained in RBI Inspection Report(s)

Statutory Audit Report(s)

Credit Audit Report(s)

Corporate Centre Inspection & Audit Report(s)

Circle Audit Report(s)

Concurrent Audit Report(s)

Stock Audit Report(s)

Spot Audit Report(s)

D] CREDIT RISK RATING Draw up rating for Working Capital

Term Finance

E] OPINION REPORTS Compile Opinion Reports on the Company

Partners / Promoters

Proposed Guarantors

F] EXISTING CHARGES ON THE ASSETS OF THE UNIT

If a Company, report on search of charges with RoC.

G] STRUCTURE OF FACILITIES AND T & C OF SANCTION

Fix T & C for exposures proposed – facility wise and overall:

Limit for each facility / sub-limits

Security – Primary & Collateral, Guarantee

Margins – For each facility as applicable

Rate of interest

Rate of Commission / Exchange / Other fees

Concessional facilities and value thereof

Repayment terms, where applicable

ECGC cover where applicable

Other standard covenants

H] REVIEW OF THE PROPOSAL Review of the proposal should be done

covering: Strengths and Weaknesses of the exposure proposed

Risk factors and steps proposed to mitigate them

Deviations proposed from usual norms of the Bank and the reasons therefor

I] PROPOSAL FOR SANCTION Prepare a draft proposal in prescribed format

with required back-up details and with recommendation for sanction.

J] ASSISTANCE TO ASSESSMENT Interact with the Assessor, provide additional

inputs arising from the assessment, incorporate these and required modifications in the draft proposal and generate an integrated final proposal for sanction.

STAGE 2

ASSESSMENT

ASSESSMENT - INDICATIVE LIST OF ACTIVITIES Review the draft proposal together with the back-up

details / notes, and the Borrower’s application, financial statements and other reports / documents examined by the Appraiser.

Interact with the Borrower and the Appraiser.

Carry out the pre-sanction visit to the applicant company and their project / factory site.

Peruse the financial analysis (Balance Sheet / Operating Statement / Ratio Analysis / Funds Flow Statement / Working Capital Assessment / Project Cost & Sources / Break Even Analysis / Debt Service / Security Cover, etc.) to see if this is prima facie in order. If any deficiencies are seen, arrange with the Appraiser for the analysis on the correct lines.

ASSESSMENT - INDICATIVE LIST OF ACTIVITIES Examine critically the following aspects of the

proposed exposure: Bank’s Lending Policy and other guidelines issued by the

Bank

RBI Guidelines

Background of promoters / senior management

Inter-firm comparison

Technology in use in the Company

Market conditions

Projected performance of the Borrower vis-à-vis past estimates and performance

Viability of the project

Strengths and Weaknesses of the borrower entity

Proposed structure of facilities

Adequacy / correctness of limits / sub-limits, margins, moratorium and repayment schedule

ASSESSMENT - INDICATIVE LIST OF ACTIVITIES Adequacy of proposed security cover

Credit Risk Rating

Pricing and other charges and concessions, if any, proposed for the facilities

Risk factors of the proposal and steps proposed to mitigate the risk

Deviations proposed from the norms of the Bank and justifications therefor

To the extent the inputs / comments are inadequate or require modification, arrange for additional inputs / modifications to be incorporated in the proposal, with any required modification to the initial recommendations by the Appraiser

Arrange with the Appraiser to draw up the proposal in the final form

ASSESSMENT - INDICATIVE LIST OF ACTIVITIES Recommendation for sanction:

Recapitulate briefly the conclusions of the appraisal and state whether the proposal is economically viable

Recount briefly the value of the Company’s / Group’s connections

State whether, all considered, the proposal is a FAIR BANKING RISK

Finally, give recommendations for grant of the requisite FB and NFB credit facilities

STAGE 3

SANCTION

SANCTION - INDICATIVE LIST OF ACTIVITIES Peruse the proposal to see if the report prima facie

presents the proposal in a comprehensive manner as required.

If any critical information is not provided in the proposal, remit it back to the Assessor for supply of the required data / clarifications.

Examine critically the following aspects of the proposed exposure in the light of the corresponding instructions in force:

Bank’s Lending Policy and other relevant guidelines

RBI Guidelines

Borrower’s status in the industry

Industry prospects

Experience of the Bank with other units in similar industry

Overall strength of the Borrower

SANCTION - INDICATIVE LIST OF ACTIVITIES Projected level of operations

Risk factors critical to the exposure and adequacy of safeguards proposed thereagainst

Value of the existing connection with the Borrower

Credit Risk Rating

Security, Pricing, charges and concessions proposed for the exposure and covenants stipulated vis-à-vis the risk perception

SANCTION Accord sanction of the proposal on the terms

proposed or by stipulating modified or additional conditions / safeguards, or

Defer decision on the proposal and return it for additional data / clarifications, or

Reject the proposal, if it is not acceptable, setting out the reasons therefor

THANK YOU