comm. & institutional, s.m.e. advances - sbioa bhopal
TRANSCRIPT
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H. SULAIMAN (SBIOA)
COMM. & INSTITUTIONAL,
S.M.E. ADVANCES
Lending to State Govt. PSUs : Basic requirements that proposals received from such entities
are required to comply with, in order to be considered eligible for Bank finance : e-Cir/96/2011-12.
Corporate Loan : Review : The earlier policy relating to the corporate loan has been reviewed
and the modifications detailed in CCFO/ADV/CL/241/2006-07 have been made in the product.
Purpose : In all cases of Corporate Loans sanctioned, it should be ensured that the funds are not
diverted for purchase of land or ‘shares on a speculative basis’ : CCFO/ADV/CL/87/2007-08.
Corporate Loan : Modification in Repayment Period : Earlier Loans : e-Cir/992/2010-11.
For new borrowers, the maximum tenure continues to be 3 years.
Where Corporate Loan is for shoring up NWC, the loan amount should come down commensurate
with the building up of NWC, within the permitted period.
Corporate Loan : Modifications : e-Cir/763/2012-13 :
a) CRA threshold is relaxed from SB7 to SB10.
b) External Credit Rating (ECR) is mandatory for exposures of Rs. 10 Crore and above, and
entities with ECR of ‘D’ and below are not eligible.
c) Fixed Asset Coverage Ratio (FACR) should be minimum of 125%.
When the Corporate Loan is meant for shoring up of Net Working Capital (NWC), the loan amount
should come down commensurate with the building up of NWC. It is also to be ensured that the
funds are not diverted for other unproductive and speculation purposes.
Corporate Loan : Revised Guidelines : Clarifications : e-Cir/1279/2012-13.
Trade & Services Sector : Clean CC & Clean TL : The Bank has recently decided to withdraw
sanction of Clean Cash Credit & Clean Term loan henceforth except as laid down in para (i) and (ii)
below. Activity such as liquidity mismatches arising due to payment of scholarship, etc. may be
sanctioned under Corporate Loan Scheme : e-Cir/560/2013-14 :
i) Clean Cash Credit limits to Contractors may be sanctioned against 100% Collateral Security
only.
ii) Loans sanctioned as Clean Cash Credit under e-VFS scheme, continue to be operative and
out of the scope of the present proposal. Similarly, facilities sanctioned as Clean Cash Credit &
Clean Term Loan as part of Restructuring & Rehabilitation mechanism have also been kept outside
the scope of the present proposal.
Open Term Loans : Modifications : Earlier, the Bank had two versions of Open Term Loan, one
for manufacturing sector and other for services sector. Both these products are more or less
similar in nature with certain differences in features. Both these products have been recently
merged into a single product called SME Open Term Loan (SME-OTL), now applicable to both
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manufacturing and service sector. The updated instructions with detailed features of the revised
product ‘SME Open Term Loan’ are furnished in e-Cir/65/2011-12.
SME-CFL : SME Collateral-Free Loan Scheme : The scheme is applicable only to Micro and
Small Enterprises. Therefore, no account has to be opened under C&I Segment : e-Cir/26/
2011-12.
Scheme for Financing of ATM Vendors : The new scheme has been approved on the terms
and conditions detailed in e-Cir/201/2012-13 for financing the ATM vendors for installing ATMs.
Scheme for Financing of ATM Vendors : Format of Tripartite Agreement between the Bank,
the vendor and the Bank(s) sponsoring the ATMs : Enclosed to e-Cir/699/2012-13.
SME Easy Loan Against Property (SEL) : New Scheme : e-Cir/065/2013-14.
All new accounts under SME Easy Loan Against Property have to be opened in the new product
codes only : e-Cir/158/2013-14.
POS-Linked Overdraft : Point of Sales : A new facility has been devised for merchants using the
Bank’s our POS terminals and for prospective customers for POS linkage. The details and
assessment parameters for the facility are furnished in Annexure-A. This facility is not to be
extended to the Bank’s existing cash credit customers with POS linkage : e-Cir/072/2013-14.
Adv Against Book-Debts/Receivables : Review : No drawing power should be allowed against
book-debts/receivables without verification of invoices/challans : The genuineness of the transaction
entered between the buyer and the seller should be ascertained/verified while allocating Drawing
Power in the account : e-Cir/559/2013-14.
a) Where outstandings of individual debtor are below Rs. 50 Lac : extant instruction continue.
b) Where outstandings of individual debtor are Rs. 50 Lac & above but below Rs. 5 Crore :
extant instructions continue. In addition to these instructions :
i) A certificate from the Stock & Receivables Auditor about verification/genuineness of receivables
to be obtained at yearly intervals.
ii) ECR of the Debtor to be obtained. However, if the ECR is not available, opinion report of the
debtor should be obtained from their banker at least at yearly interval. Based on satisfactory
report, decision on continuation of allocating DP against the debtor should be taken.
c) For limits Rs. 5 Crore and above : As per e-Cir/559/2013-14.
SME Easy Loan : Against Property : New Scheme : A new scheme called ‘SBI Asset-Backed
Loan’ (ABL) has been developed which offers, instead of WCDL, an overdraft facility with Monthly
Limit Reduction Programme and with a limit valid for a period from 12 months to 96 months. With
the comfort of adequate margin on realizable value of property offered as collateral, the product
has been structured with liberalized terms and easy assessment : e-Cir/873/2013-14.
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Modified scheme details : Furnished in e-Cir/873/2013-14.
Though structured inspection is stipulated at half-yearly intervals, Branch operatives should ensure
that each borrower under the scheme is contracted/visited regularly and in particular, immediately
on notice of delay in repayment of interest/instalment.
SBI Asset-backed Loan Scheme : Amendments : e-Cir/1163/2013-14 :
a) This scheme can also be offered to the self-employed and professional individuals who are,
in any case, included under all business units under MSME Act, 2006, which is the present
definition.
b) Branches can either follow the Nayak Committee recommendations or Assessed Bank
Finance based on realistic estimates of working capital cycle.
c) The Bank has decided to leverage of our existing Home Loan Counselors (HLCs) who are
engaged by the Bank to source Home Loan Proposals across the country for sourcing SBI ABL
proposals.
d) The product can be driven through identified SME intensive branches across the Circles.
These identified Branches are mentioned in e-Cir/1163/2013-14.
SBI Fleet Finance Scheme : New Scheme : Details furnished in e-Cir/1031/2013-14.
The Bank has introduced this scheme only at identified centres. The scheme aims to finance the
fleets in the Medium Fleet Operator (MFOs) and Large Fleet Operator (LFOs) segment. The new
scheme has been designed with competitive interest rate and other attractive features.
Credit guarantee cover under CGTMSE is not applicable to any of the loans eligible under new
‘SBI Fleet Finance’ scheme even when the loan amount is below Rs. 1 Crore.
Other modifications in the Scheme : Detailed in e-Cir/1181/2013-14.
SME Adv. : Schemes Discontinued Recently : List of 22 schemes/products discontinued recently :
Enclosed to e-Cir/557/2013-14.
Some of these schemes are :
Swarojgar Credit Card
Cyber Plus Scheme
Auto Clean Scheme
SBI Shoppee Plus
SBI Paryatan Plus Scheme
SME Petro Credit
SBI Dental Equipment Plus Scheme
Branches should stop opening any new loan accounts under these schemes/products.
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C. & I. ADVANCES - I
Short-Term Loans : C&I Segment : Broad guidelines for appraisal and sanction : CCFO/ADV/
CL/361/2005-06.
The Bank has recently withdrawn this product. The borrowers, who have already availed the
product, should be advised that no renewal of the loan would be considered after completion of
the contracted period : CCFO/ADV/CL/256/2006-07.
School Plus : Arrangement with Intel for Financing of Schools / Education Service Providers for
Education through Technology : Terms and conditions : CCFO/ADV/CL/120/2005-06.
This scheme is a tie-up with certain modifications detailed in CCFO/ADV/CL/188/2005-06.
Additional Points : CCFO/ADV/CL/434/2006-07.
School Plus : Repayment : Modifications : The DSCR should not be below 2 (earlier, DSCR was
not to exceed 2) : e-Circular/353/2009-10.
Complete details of the Scheme are furnished in e-Circular/353/2009-10.
Financing of Restaurants : National Rollout : Details furnished in CCFO/ADV/CL/158/2005-06.
Financing of Hotel Industry : Clarifications : Regarding 'No-construction Zone' which should be
kept in view while financing Hotel Industry : CCFO/ADV/CL/122/2005-06.
The Bank has laid down the guidelines detailed in CCFO/ADV/CL/7/2007-08 for financing hotel
projects.
Financing Rural Tourism : Concept Note on 'Home-based Rural Tourism' : enclosed to CCFO/
ADV/CL/253/2005-06.
All activities forming part of the Rural Tourism and Agri Tourism (as per annexure-II) are eligible
for refinance assistance for NABARD under non-farm sector up to ARF Limit : CCFO/ADV/CL/
253/2005-06.
Ship Breaking Units : Detailed guidelines for financing : e-Circular/253/2009-10.
The Revised Guidelines for financing to ship-breaking units, duly approved by the appropriate
authority, are enclosed to e-Cir/770/2012-13.
SME A/cs : M.C.C. : Multi-city Cheques : Branches should either renew accounts in time or
obtain approval for continuation of limits at least on a post-facto basis and not to reduce DP to nil
as a matter of course upon expiry of the period of validity of the sanction : CCFO/ADV/CL/429/
2006-07.
New Concept of SME Advances : An SME has been defined by S.B.I. as a business with
an annual turnover of less than Rs. 50 Crore (originally, Rs. 25 Crore) and also includes
SSIs, SBFs and Corporates within this turnover : CCFO/ADV/CL/204/2005-06 (updated).
Objectives of setting up SME Business Unit are detailed in CCFO/ADV/CL/204/2005-06.
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SME Advances : Change in Process Flow : In respect of SME loan proposals under the financial
powers of ZOCC and CCC-I/CCC-II and Irregularity Reports : e-Cir/327/2013-14.
All proposals to be put up by the Relationship Manager (ME) as well as Branches, this process
flow for sanction/confirmation/approvals has to be adopted with immediate effect.
SME High-value Advances : Prevention of Frauds : Suggestive Measures : Detailed in e-Cir/
789/2012-13.
Mid-Corporate Units : Modified Definition : A Mid-Corporate unit may be defined as a unit with an
annual turnover between Rs. 50 Crore and Rs. 500 Crore or aggregate Working Capital Limits
(Fund-Based and Non-Fund-Based) of Rs. 10 Crore or more : CCFO/ADV/CL/285/2006-07; CIRDO/
OP&SP/CL/12/2007-08 (as amended in April 2008).
The revised definition is applicable only prospectively.
R.M.M.E. : Inspection of Units : RMMEs should conduct inspection of Units as per the stipulated
periodicity : e-Cir/1164/2013-14.
The RMME may be assisted in Inspection of Units by the Credit Support Officer (CSO). The
RMME-CSO team may conduct the inspections jointly or severally, but the maintenance of
periodicity as well as taking further actions, if necessary, should the inspections of units reveal
anything adverse, is primarily the responsibility of the RMMEs.
SME Credit : Depending on the unit's meeting the eligibility criterion laid down in the schemes
[SME Smart Score, SME Credit Card, SBI (exporters) Gold Card and Mortgage Loans Scheme],
credit limits are to be assessed as per that scheme. However, in a case where the unit can be
covered in more than one scheme, the branch may sanction higher of the two limits : CIRCO/
ADV/CL/179/2004-05.
Infrastructure Financing : The RBI have expanded the scope of definition of 'Infrastructure
lending' to include the projects detailed in CIRCO/ADV/CL/71/2004-05.
Further details and the RBI guidelines as per CIRCO/ADV/CL/71/2004-05.
RBI Guidelines : Extant instructions reiterated : e-Cir/285/2008-09.
Revised Definition : Reserve Bank of India have recently revised the definition of infrastructure
lending as detailed in e-Cir/862/2012-13.
Infrastructure Lending : Updated List of Sub-sector : Issued by the Govt. of India : Enclosed to
e-Cir/367/2013-14.
Project Finance : Approach : Project Finance Cells at Chennai and Delhi became operational
from 02.07.2007 : CCFO/ADV/CL/81/2007-08.
Adv. to Infrastructure Sector : PPP : RBI has now decided that in case of public-private partnership
projects, the debts due to the lenders may be considered as secured to the extent assured by the
project authority in terms of the Concession Agreement, subject to the conditions detailed in e-
Cir/106/2013-14.
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SME Business : Leveraging the Bank’s network, customer base and various initiatives : CCFO/
ADV/CL/140/2007-08.
SME business is a key pillar in the Bank’s overall business strategy.
Rating Agency for SMEs : SMERA : The first exclusive SME Rating Agency (SMERA) was
launched on 05-09-2005.
The new entity has been promoted by Sidbi, Dun & Bradstreet and a host of PSU and private
banks.
Rating Agency for SBI's Borrowers : The SBI and CRISIL have recently signed a MoU, under
which the latter assigns rating to small-scale industries (SSIs) that are borrowers of SBI.
Rated SSIs find it easier to obtain funds from SBI at appropriate terms.
Subway Systems India Pvt. Ltd. : Financing Arrangement for Franchisees of SSIPL : Terms &
Conditions: CCFO/ADV/CL/159/2005-06.
Textile Industry : The Bank has accepted the Scheme suggested by the Ministry of Finance for
restructuring of debts to textile units in the organised sector facing high cost of servicing
capital loans. Details of the Scheme, approved by the Bank for integrated textile mills, are
furnished in CIRCO/ADV/CL/43/2004-05.
Clarifications : CIRCO/ADV/CL/43/2004-05.
TUFS : Technology Upgradation Fund Scheme for Textile Industry : SBI now performs all the
functions of nodal agency for this scheme : CCFO/ADV/CL/178/2005-06.
Modifications : The Govt. has decided to continue the Technology Upgradation Fund Scheme
(TUFS) for the textile & Jute industries with effect from 01.11.2007 up to 31.03.2012 : CCFO/ADV/
CL/308/2007-08.
The revised financial and operational parameters of the Scheme in respect of loans sanctioned
with effect from 01.11.2007 are furnished in CCFO/ADV/CL/308/2007-08.
TUFS : Modified Instructions : Regarding Registration Certificate : CCFO/ADV/CL/319/2007-08.
Subsidy Scheme for Technology Upgradation : Salient points of three subsidy schemes
that are in force are furnished in CIRCO/ADV/CL/323/2004-05.
TUFS : Nodal Branch : The Bank’s Commercial Branch, Mumbai is the Nodal Branch for handling
TUFS for State Bank Group.
Recent instructions received from Joint Textile Commissioner (JTC) Mumbai : regarding format,
new loans, etc. : Detailed in e-Cir/225/2010-11.
TUFS : Action Points : Reiterated : e-Cir/863/2010-11.
TUFS : The scheme has now been restructured and being implemented with effect from
28.04.2011 and will be in force up to 31.03.2012 : e-Cir/157/2011-12.
Carbon Credit Finance : Empanelment of CDM (Clean Development Mechanism) Consultants :
CCFO/ADV/CL/166/2007-08.
Bank’s Credit Exposure to Capital Markets : Bank’s Revised Guidelines : CCFO/ADV/CL/167/
2007-08.
Auto Component & Auto Anci. Units : Scoring Model : Clarifications : CCFO/ADV/CL/365/
2006-07.
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SME Adv. : Commercial Vehicle Financing : The Bank has introduced the following features in the
product & process of financing Commercial Vehicles under the above-mentioned earlier schemes :
e-Cir/1033/2012-13 :
a) Incentives to Dealers
b) Sourcing through ‘DSEs’ (Dealers’ Sales Executives)
c) Sanctioning Aspect (Simplified).
Trade & Services Sector : Assessment of Limits up to Rs. 5 Crore : If a Trade and Services unit
approaches the Bank for sanction of limits up to Rs. 5 Crore, without fulfilling the criteria laid
down, the credit limits may be assessed on case-to-case basis under the Projected Balance
Sheet method. However, while assessing the limits, it has to be ensured that the basic quantitative
parameters underpinning the Bank’s credit appraisal are followed meticulously : e-Cir/273/
2012-13.
Lending to NBFCs : The Bank has since modified its policy for financing NBFCs as detailed in
CCFO/ADV/CL/149/2007-08.
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C. & I. ADVANCES - II
SME/C&I Adv. : Restructuring : A scheme for restructuring of advances/SME and C&I Segments
with outstanding above Rs. 10 Crore has been designed as per e-Circular/704/2008-09.
SME Business : Relief and concessions to SME units affected by economic slowdown : e-Cir/34/
2009-10.
The Bank at present offers interest rate reduction to all new SME customers falling under specific
categories, as mentioned in e-Cir/34/2009-10.
Food Processing Industry : Capital Subsidy Scheme : Decentralisation of Plan Scheme for
Setting up / Technology Upgradation / Modernisation : Amended Guidelines : CCFO/ADV/CL/
313/2007-08.
Adv. to Sugar Industry : Scheme for extending Financial Assistance to Sugar Undertakings,
2007 : e-Circular/361/2008-09.
In case a Sugar Mill’s account becomes irregular due to delay in the receipt of claim of interest
subsidy from the Dept of Food and Public Distribution, Government of India, the banks can continue
to treat the account as a Standard Asset. However, it would be necessary to reverse the interest
income recognised by the bank if the receipt of interest subsidy from the Government of India is
delayed beyond 90 days.
Treatment of accounts on account of delayed receipt of interest subsidy from the Government :
Clarification : e-Circular/111/2009-10.
Revised format for submission of claims : e-Circular/670/2008-09.
Revised Formats in which the claims are to be submitted by the operating units to our Nodal
Branch : e-Circular/708/2008-09.
Treatment of accounts on account of delayed receipt of Interest subsidy from the Government :
e-Circular/709/2008-09.
Cotton Ginning Plus : SME Advances : The Bank has extended the provisions of Rice Mills
Plus Scheme to ginning mills also but with a few modifications/conditions n view of the higher risk
perception (cash transactions, speculative stocking of material, fluctuating raw material availability
and prices) associated with cotton ginning industry : CCFO/ADV/CL/291/2007-08.
The details of the Scheme and scoring model are enclosed to CCFO/ADV/CL/291/2007-08.
Arthias Plus : Modifications : Maximum limit raised (from the earlier Rs. 25 Lac) to Rs. 50 Lac :
e-Cir/537/2008-09.
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H. SULAIMAN (SBIOA)
ADVANCES AGAINST
WAREHOUSE RECEIPTS*
Ref. : C&I/16/1986; DM/AGR/7/1989; DM/AGR/1/1990.
Codified Instructions : CCO/CPP/CL/CODI/129/1997-98.
General : Advances against WHRs on the one hand directly assist the farmers to secure
better rates, and on the other hand these are fully secured for the branch/bank : DM/AGR/1/
1990.
Eligibility : Such advances are granted to agriculturists and non-agriculturists both.
However, advances should not be granted to illiterate persons in C&I Segment. No such
restriction in AGL segment.
Where a farmer is not disposing of his produce for genuine reasons before 30th June, the
Bank may consider granting of advance warehouse receipt, by way of pledge/hypothecation
in deserving cases.
Valuation : The produce should be valued at the procurement price or support price, whichever
is lower.
Opinion Reports : These should invariably be compiled on the C&I borrowers. These are,
however, not necessary in the case of borrowers availing of credit facilities below
Rs. 5,000/-.
For advances up to Rs. 10,000/- in AGL Segment, opinion reports are not necessary; for
AGL advances above Rs. 10,000/- but below Rs. 50,000/-, only a brief opinion report is
compiled.
Commodities : Practically, all agricultural produce can be stored in the warehouses and
pledged to the Bank.
Documents : The advance is granted by way of demand loan (in AGL and C&I market
segments).
The following security documents are obtained :
i) D.P. Note;
ii) D.P. Note Delivery Letter;
iii) W.H.R. properly endorsed† by the borrower in the Bank’s favour : “Please deliver to
State Bank of India ......... Branch or order.†
iv) Notice of Bank’s Lien (in the prescribed format) : If should be sent to the
warehouseman and his acknowledgment obtained on the duplicate thereof
* As per the N.I. Act, a W.H.R. is not a negotiable instrument. Therefore, the lending banker (transferee)
cannot get a better title than that of the borrower (transferor).
Therefore, the advance should be made only to the original depositor. The pledgee bank's title should be
free from legal flaws.
A WHR is a document of title to goods : Sec. 2 (4) of Indian Sale of Goods Act, 1930.
† Possession of a duly endorsed WHR amounts to constructive/symbolic/equitable possession of the goods
represented by it. (Judicial possession of goods differs from the mere custody of goods).
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(attornment : The warehouseman holds the goods/produce on the financing bank’s
behalf, i.e., in the capacity of bailee/pledgee).
v) Certificate of Insurance‡ issued by Warehouseman : It should be ensured that the
goods are not left uninsured at any time during the currency of the Bank’s advance.
vi) Letter/Undertaking : Letter from the borrower that he is the lawful owner of the
goods covered by the warehouse receipt, and undertakes to pay periodical rent,insurance premia and other sundry/incidental charges, etc. and not to obtain delivery
of the goods [against indemnity] so long as the receipt is pledged to the Bank.
S.C.C. Directives# : The stipulations in regard to margins, rates of interest and maximumpermissible finance, made by the R.B.I. from time to time in future (under Selective Credit
Control Directives : detailed in ‘Advances : General Information’) should be carefully followed.
An undertaking to this effect by way of simple letter should be obtained from the borrower.
Such advances should never be granted for speculative purposes : AGR/21/1989.
Margins, Interest Rates : Advances up to Rs. 5,000/- granted to farmers against WHRs for
a period not exceeding 3 months, where the farmers were given crop loans for raising the
produce, are now classified as direct finance. Margins and rate of interest @ short-term
loans for agricultural purposes : AGR/21/1989.
The stipulations of minimum rate of interest, margin and level of credit have been completely
waived for advances directly granted to farmers against foodgrains : DM/AGR/1/1990.
All other advances against WHRs (including those to marginal/small farmers and other farmers)
are now treated as C&I advances for the purpose of margins/interest rates : AGR/21/1989.
Expiry Dates : The expiry dates of all the receipts should be properly diarised.
In case of extension of period, a simple letter should be obtained from the warehouseman.
Repayments : The advance should be liquidated in full before the next crop is harvested/
marketed.
The WHR is released on liquidation of the advances in full. The borrower’s acknowledgement
is obtained in form COS-49.
Part-Delivery : A letter (delivery order) for effecting delivery should be sent to the
warehouseman, along with the relative receipt through a responsible employee of the Bank.
It should be ensured that the goods released are in strict proportion to the advance repaid.
The borrower’s acknowledgement for having received the goods should be obtained on the
reverse of the delivery order prepared for the purpose and kept on branch record. The
particulars of the goods delivered are recorded by the warehouseman on the reverse of the
warehouse receipt and the receipt returned to the bank’s employee.
Deterioration : On receipt of the “notice of deterioration” of stocks stored in the warehouse,
the borrower should be asked to liquidate the advance immediately.
This is extremely important to safeguard the Bank’s interests : DM/AGR/7/1989.
‡ The goods are insured by the warehouseman either under an open policy or under some self-indemnification
scheme.
# For advances up to the S.C.C. ceiling, margin is retained at the discretion of financing bank. At present,
there is no restriction on amount of advance per farmer-borrower.
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Format of “Certificate of Extension of Storage Period” issued by the warehouseman : encl.
to Cir. letter.
Adv. against W.H.Rs. : Fin. Powers : Current powers to be exercised.
Pvt. Warehouses : The government has allowed private companies to have warehouses for
supplying imported duty-free materials to actual users. So far, this facility was available only
to public sector undertakings like the S.T.C. and MMTC.
Exposure Cap The exposure caps for Circles have been revised in view of rise in MSP (minimum
support price) and market price of various commodities stored in such private warehouses/Cold
storages. However, no exposure cap is applicable for financing against Warehouses/Cold Storage
receipt issued by Central Warehousing Corporation (CWCs) and State Warehousing Corporations
(SWCs) as per extent instructions : e-Cir/842/2009-10.
Collateral Management of Commodities : financed against Warehouse Receipts : National
Collateral Management Services Limited (NCMSL) : Fees/Service Charges Being Paid to NCMSL :
e-Cir/405/2011-12.
Loans against WHRs : To non-borrowers : Modifications in margin norms : CCFO/ADV/CL/
244/2005-06.
Modifications in the existing products : CCFO/ADV/CL/244/2005-06.
Adequate Coverage : More concentrative efforts are needed to boost such advances : DM/
AGR/7/1989.
Precautions : The branch officials should carry out pre-sanction inspection to verify whether
the loan-seekers are farmers, the commodity against which they seek loan is actually stored in
the cold storages, cold storage receipts/bonds are actually issued by authorized person, etc. :
CCO/ADV/CL/268/2003-04.
Branch Manager should ensure pre-sanction and post-sanction inspection and proper identification
of borrowers before sanctioning such loans.
Frauds : Branches should take cautious approach while dealing with Management and Collection
agents in this area : CCFO/ADV/CL/444/2006-07.
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Adv - 336
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AGL ADV. AGAINST PRIVATE COLD STORAGE RECEIPTS
Codified Instructions : CCO/CPP/CL/CODI/129/1997-98.
Purpose : The main purpose of financing against hypothecation/pledge of agricultural produce,
including cold storage/warehouse receipts, is to provide a sort of protective umbrella to the
needy farmer-borrowers so that they need not undertake distress sale of produce immediately
after the harvest at the prevailing low price) : AGM/AGR/15/1995-96.
Guidelines : If no cold storage facilities, other than privately-owned cold storage unit, is
available in the area and farmer desires to keep the agricultural produce in cold storage for
longer shelf-life, then the Bank may finance farmers even against pledge of receipts of cold
storage units run by private entrepreneurs, subject to satisfaction of the extant guidelines of
the Bank pertaining to advances against pledge of warehouse/cold storage receipts.
Discretion : The Branches should use their judicious discretion in this regard. They may
grant advances to farmers with good track record against pledge of receipts of cold storage
units of repute in providing excellent services.
Co-operation : The management of concerned cold storage units co-operate with the Bank
in protecting its interests as the pledge of the products.
Amount, Period : The branches can extend finance to their borrower-farmers up to against
pledge of private cold storage receipts for a suitable period not exceeding 6 months : CCO/
CPP/ABD/CL/144/1996-97.
National Alliance with Cargill India Pvt. Ltd. : CCFO/ADV/CL/133/2006-07.
Benefits : Such advances help the branches to appropriate the proceeds, in case of need,
to regularise the crop loans which were given to the farmers for raising the same agricultural
produce. This helps in improving the Bank’s recovery % to a good extent.
PRIVATE COLD STORAGES, PRIVATE WAREHOUSES
Private Cold Storages / Private Warehouses : Scheme for Financing Private Cold Storages /
Private Warehouses for on-lending to Farmers : Details : CIRCO/ADV/CL/250/2004-05.
If the cold strorage is registered as SSI unit, the loans granted to such units may be classified
under advances to SSI, subject to their fullfiling the eligibility norms : CIRCO/ADV/CL/250/
2004-05.
Specimens of documents : CIRCO/ADV/CL/286/2004-05.
Maximum finance, CMC’s discretion : detailed in CCFO/ADV/CL/91/2005-06.
Private Warehouse/Private Cold Storage : Financing for On-Lending to farmers : New cold
storage can also be considered for finance under the scheme, subject to the controlling authority
being satisfied about the promoter’s integrity and the project’s viability : CCFO/ADV/CL/76/
2006-07.
Documents form C-9, Form C-10 and AB2 amended : enclosed to CCFO/ADV/CL/76/2006-07.
Loans against W.H.Rs. : Revised Norms for Pvt. Warehouses : CCFO/ADV/CL/395/2006-07.
Extension of scheme to all segments, subject to due diligence measures detailed in CCFO/ADV/
CL/395/2006-07.
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Adv - 337
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COMMODITY-BACKED WAREHOUSE RECEIPT FINANCING :
CASH CREDIT FACILITY
Ref. : CCFO/ADV/178/2007-08 :
TERMS AND CONDITIONS OF FINANCE :
Purpose : To finance traders/ owners of goods/ manufacturers for own processing against
warehouse receipts of warehouses managed by MCX/NBHC, NCDEX (NSMSL) and CWC/
SWC by way of working capital demand loan : e-Cir/103/2010-11.
Eligibility : Anyone dealing in commodities.
CC facility is only offered for limits of Rs. 1 crore and above.
Eligible Amount of Finance : Demand Loan : 75 % of the value of the warehouse receipt, valued
at the market value, OR
80% of the minimum support price declared by State/Central Government, whichever is lower.
Cash Credit : 70 % of the value of the warehouse receipt, valued at the market value, OR
75% of the minimum support price declared by State/Central Government, whichever is lower.
Relaxation : For Wheat Gram, Masur, Maize and Soyabean, eligible amount of finance is 75% of
the value of commodities at existing market prices : CCFO/ADV/CL/339/2007-08.
Interest Rates : In addition to the prescribed interest rates, the ZCC has powers to reduce the
interest rates on ‘demand loans in the Rs. 10 Lac and up to Rs. 25 Lac category’ by 25 bps, and
‘demand loans in the above 25 Lacs category’ and ‘cash credit facility’ by 50 bps, based on
competition and strength of proposal.
Assessment : Assessment of limit for manufacturing units under Commodity-backed WHR
should be assessed under Assessed Bank Finance (ABF) and inter-change of limit in between
CC Hypothecation & WCDL against Warehouse receipt may be permitted. It should also be
ensured that the projected stock level within the ABF does not exceed the quota of storage
fixed by the respective Central/ State Government, if any, for the unit under finance : e-Cir/
103/2010-11.
Processing Charges : Cash Credit : Rs. 300/- per lac for the facility sanctioned.
Demand Loan: Nil where loan is sanctioned and disbursed; Rs. 300 per Lac in case the loan is
sanctioned but the borrower does not avail.
Margin : Demand Loan : 25% (minimum) of the value of the warehouse receipt, valued at the
market value, OR
20% (minimum) of the minimum support price declared by State/Central Government, whichever
is higher.
Margin : Cash Credit : 30% of the value of the warehouse receipt, valued at the market price, OR
25% of the minimum support price (MSP) declared by State/Central Government, whichever is
higher : e-Cir/103/2010-11.
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Adv - 338
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Insurance : Comprehensive Insurance. Insurance cost to be borne by the warehouse receipt
owner.
Security : e-Cir/103/2010-11 :
a) Primary : Charge over warehouse receipt (resulting in charge over underlying goods), with
lien marked in favour of the Bank.
b) Collateral : Personal guarantee of partners/directors, as the case may be.
Repayment :
Demand Loan : The loan should be liquidated as and when the produce is sold during the interim
period not exceeding 12 months.
Cash Credit : Repayable on demand. To be brought to credit balance and DP made Nil/reduced
when the quality certificate expires.
Tie-up : Collateral Management Services :
a) The Bank recently entered into an agreement with National Collateral Management Services
Limited (NCMSL) : e-Cir/500/2009-10.
b) All-India Tie-up with Star Agriwarehousing and Collateral Management Ltd. (SACML) : Overall
Exposure Cap : e-Cir/292/2013-14.
c) Tie-up with National Spot Exchange Limited : Detailed in e-Cir/267/2013-14.
Other Terms and Conditions :
a) The warehouse receipt should be duly marked lien in favour of the Bank.
b) The Branch should verify the authenticity of the warehouse receipt and get its lien noted
with the warehouse before disbursal of the demand loan/CC facility.
c) For individual warehouse receipts of value over Rs. 50 Lac and for limits over Rs. 1 crore, the
Branch should inspect the underlying commodity every three months at irregular intervals,
within the validity of the quality certification.
For smaller limits, periodical inspection of the commodity is waived.
If, however, the conduct of the account is not satisfactory, such accounts require inspection
by branch staff at monthly/quarterly intervals, as specified for similar advances.
d) The margin should be topped up on a fortnightly basis. However, it should be topped up
immediately in case the price of commodity moves by more than 10%, in opposite direction
since last top up.
e) CC Limits and operating account should be different for different commodities handled by
the same trader/customer. Inter-changeability in limits can be offered, if required.
339
Adv - 339
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PRODUCE MARKETING LOANS
P.M.L. : Master Circular : Updated up to 31.05.2013 : Enclosed to e-Cir/389/2013-14.
P.M.L. : Revised Limit : e-Cir/119, 267/2013-14 :
i) Produce Marketing Loans sanctioned to farmers, group of farmers, including SHGs and
JLGs against pledge/hypothecation of agricultural produce (including warehouse receipts) for a
period not exceeding 12 months were classified as direct-agri advances up to Rs. 25 Lac. This
limit has now been enhanced to Rs. 50 Lac with effect from 01.04.2013 and qualifies under Direct-
Agri-Loans.
ii) Loans to corporates, partnership firms and institutions engaged in agriculture against pledge/
hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding
12 months have also been increased from Rs. 25 Lac to Rs. 50 Lac for being classified as
Indirect-Agri-Advances.
P.M.L. : Advances Against Warehouse/Rural Godown/Cold Storage Receipts : CollateralSecurity : To align the security norms for farmers and traders, the Bank has waived the collateral
security in respect of advances granted to farmers against the receipts of warehouses/rural
godowns/cold storages (produce marketing loans) : CCFO/ADV/CL/306/2005-06.
The due diligence (as prescribed in CCFO/ADV/CL/91/2005-06) should be done before taking
exposure for financing receipts issued by private warehouses/rural godowns/cold storages.
It should be ensured that the facilities in warehouses and cold storages (especially, stand-by
power for maintaining the required temperature, humidity, etc.) are adequate for safeguarding the
quality of goods stored.
P.M.L. : Clarifications : Regarding appraisal, assessment, sanction and follow-up of P.M. Loans :
The instructions and guidelines cotained e-Cir/1190/2013-14 are supplemental to the instructions
contained in the Master Circular and should be read along with the same for guidance.
PML : Fixing Exposure Ceiling : for loans against pledge of warehouse receipts issued by
Private Warehouses : e-Circular/110/2009-10.
Procedural Lapses : Branch Managers should ensure pre-sanction and post-sanction inspection
and proper identification of borrowers before sanctioning loans against cold storage receipts /
bonds issued by the cold storage owners : CIRCO/ADV/CL/268/2003-04.
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Adv - 340
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CHECK-LIST FOR FINANCING AGAINST
WAREHOUSE RECEIPTS
We are witnessing a number of frauds in financing against warehouse receipts. It is essentially
non-adherence to Bank’s laid down systems and procedure which is the cause of most of the
frauds. A check-list is being furnished below for the benefit of the operating staff and meticulous
compliance.
• Loans should generally be sanctioned against warehouse receipts of accredited warehouse /
cold storages by CWC/SWC/MCX/NCDEX or any other accredited agency authorized by
Warehouse Development & Regulatory Authority under WDRA Act 2007.
• Cap limit should have been sanctioned by Circle Management Committee (in case of private
warehouses) and which is not expired and still in force.
• Discreet enquiries about market reputation and integrity of warehouse owner should be
made.
• Ensure that warehouse maintains proper records of the goods stored and stacking / tagging
is such that pledged commodity is easily identifiable.
• KYC of borrowers / co-borrowers / witnesses / guarantors must be done.
• Valuation of produce stored should be lowest amongst the a, b and c given below :
a) Minimum support price, wherever declared.
b) Price generally obtaining at the time of harvesting of the commodity in the current year,
and
c) Current market price.
• Keep sufficient margins as stipulated.
• In case of wide fluctuations in price of the commodity pledged, instructions contained in
Master Circular No. e-412/2011-12 must be followed.
• Ensure proper documentation (including tripartite agreement between borrower, warehouse
and the Branch) and registration of our charge with Registrar of Assurances / Tehsildar,
wherever applicable.
• Pre and Post sanction survey must be done.
• Ensure that reported baggage size tallies with physical baggage size.
• Wherever receipt is issued by authorized person against underlying stock.
• Ensure that quantity of commodity being pledged is in accordance with the commodity
produced by the farmer / land-holdings, etc.
• Ensure that licence, fitness certificate and insurance policy of warehouse is valid and is inforce.
• Ensure that warehouse has adequate insurance cover for all possible risks and threats, and
has mentioned the policy number in the Commodities Acceptance Report, certifying that
Commodities Acceptance Report for pledge are adequately covered for the risk in the policy.
341
Adv - 341
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• Submit control returns invariably.
• Inspections to be done as per the extant guidelines.
• A declaration should be obtained from the owner of the warehouse / godown / cold storage
that the commodity pledged to the Bank will not be delivered without written authorizatrion of
the bank.
• Daily list must be maintained to ensure closure of accounts by due date (6/12 months).
• Branch must maintain back-up register for recording loan sanctioned against cap limit to
ensure that Branch exposure do not exceed it at any point of time.
• Ensure meticulous compliance of the stipulations/instructions given in the cap limit sanction/
renewal letter which is generally Branch specific and is valid for one year only, unless
renewed.
Obtain a certificate from the warehouse owner at monthly intervals regarding quality and
quantity of the goods pledged to the Bank.
• Joint Inspection at irregular intervals if exposure cap limit is sanctioned to more than one
Bank / Branch.
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Adv - 342
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ADVANCES AGAINST SUPPLY BILLS
Supply Bills : Supply Bills are not the bills of exchange. These are not-negotiable
instruments.
Therefore, the provisions of the N.I. Act are not applicable to them.
Advances against supply bills are treated as clean advances as no document of title to
goods accompanies the bill. The supplies of the goods/products is made directly to the
purchasing department by sending the R.R./M.T.R., etc. direct to the dept. (and not through
the financing branch).
Power of Attorney :
• An irrevocable power of attorney (duly stamped as a power of attorney : stamp duty
detailed in ‘Documentation’) is executed by the borrower (authorised to bind the firm),
in the Banks’ favour for realisation of proceeds of relative bills directly from the
Government departments, corporations, etc. (purchasers).
• It is obtained on the Bank’s power of attorney form ‘G’ (suitably amended in the case
of partnership/ proprietary concerns) with the undernoted clause appended to it at the
end of page 1 thereof :
“and I/we declare that the power of attorney will not be revoked without the prior written
consent of the Bank”*.
• A standard format of the P.A. for the purpose has been prescribed for the S.S.I. units.
• By executing the power of attorney, the borrower appoints and constitutes the financing
bank as his true and lawful attorney†.
• The execution of the power should be duly authenticated and attested by either a
Notary or a Magistrate (to procure and independent proof of its execution : Sec. 85 of
Indian Evidence Act).
• The power of attorney is got registered in the books of the concerned Govt.
departments/corporations, etc. purchasing the items (from the borrowers)/awarding
the contracts : SIB/CL/26/1991.
P.A. Form : The Bank’s standard form covers not only future contracts but also
contracts already entered into.
Generally, the power of attorney executed by the borrowers is accepted/registered by
the purchasing department with the condition “acceptance of power of attorney does
not affect the ....... (dept.’s) rights and interests in recovering its dues from the bills,
etc.; moreover, the P.A. does not create any liability on the administration”.
The power of attorney executed by the borrower is irrevocable.
* If cannot be revoked or terminated by the borrower or by his death or insanity/insolvency or by other
reasons, unless the liability under the P.A. is cleared : S.L.K. Sethiya v/s Ivan John & Others, AIR
1969 S.C. 73. Also Sec. 202 of Indian Contract Act (dealing with agency coupled with interest).
† The P.A. constitutes an equitable assignment in the lending bank's favour : Bharat Nidhi Ltd. v/s
Takhatmal : 1969, SCR 595; AIR (1962) SC 313.
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Adv - 343
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Neither the drawer has power to cancel the power of attorney not the drawee (purchasing
dept.) has power to pay the amount of such bills directly to the drawer (borrower).
If any of them acts otherwise, the Bank can lawfully enforce recovery from both of
them in view of various high court judgements and provisions of Sec. 202 of Contract
Act. (Sec. 202 of the Contract Act expressly provides that where an attorney has
himself an interest in the property which is subject matter of his power of attorney,
such power of attorney cannot be terminated to prejudice the interest of attorney).
Inspection Note : Also known as Acceptance Note or Test/Passing Certificate‡. It should
invariably accompany the supply bill.
In some cases, the Govt. dept., issues an inspection challan/receipted delivery challan# (or
material/consignment receipt certificate or store receipt voucher), stating that the goods
covered by the bill have been actually received by them, and are in order.
The genuineness of signature of examining authority on the inspection certificate should be
ascertained beyond doubt.
Payments : The bill should be accompanied by (RR/MTR), invoices and inspection notes.
In the case of excisable goods, the excise gate pass should also be clubbed with the bill.
The borrower should be asked to submit his bills to the department/corporation through the
Bank.
It should be made clear in the forwarding letter (by affixing a suitably worded rubber stamp)that the Bank has advanced against the bills, and therefore, has financial interest in them.
The payment of the bills is made by these departments/corporations by way of A/c PayeeCheques favouring “State Bank of India,......Branch a/c the borrower” : SIB/CL/26/1991.
Drawing Power : The expiry dates of bills should be properly diarised. In the case of
usance bills, the retention period is the unexpired period of usance.
Drawing power on the cash credit account is computed on the basis of the statement of
outstanding bills, duly certified by the concerned Govt. department, to be submitted by the
borrowers at the fortnightly/monthly intervals, as the case may be. If any bill remains
outstanding for more than this stipulated cover period, it is excluded for computing the drawing
power (i.e., excluded from the cover of the advance).
These statements should be subjected to critical scrutiny.
Insurance : All consignments sent by lorry should be fully insured (either under usual
policy or open policy) against transit risks.
Unpaid Bills : Unpaid bills, if any, should not be returned to the borrowers unless the
amount advanced thereagainst is recovered and satisfactory explanation offered for the
return of bills. If any drawee concern fails to meet its commitment on due date, no further
bills drawn on the same party should be accepted under the arrangement. Such bills should,
however, be taken on collection basis in future.
‡ The inspection note is issued to the contractors/suppliers by an authorised representative of the
concerned Govt. dept. For example, the officials of the Field Testing Station of the Ministry of Industries
(G.O.I.)
# The delivery challan (despatch advice note) is prepared by the supplier of the goods at the time of
removal of the goods from factory/godown.
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Adv - 344
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Direct Payments : Except with the specific approval of the Bank, the borrower is not
allowed to accept and use direct payment of bills/invoices lodged with the Bank for collection.
Any breach of this condition is construed as a criminal breach of trust and the borrower
renders himself liable for criminal action u/s 405 of the Indian Penal Code.
Service Charges : @ applicable to bills for collection.
Precautions :
i) Extension of Facility : Financing of book-debts (actionable claims as per Sec. 3 of
T.O.P. Act) should be done with circumspection. It should be extended to parties of
sound integrity and means, against book-debts due from first class parties only.
ii) Cover Periods : Book-debts outstanding for more than 90 to 120 days should not be
financed.
iii) Collateral Security : Wherever book-debts are financed, acceptable collateral
security should be obtained: C&I/1/1985.
iv) Genuine Bills : The bills tendered under the arrangement should represent genuine
movement of the company’s/firm’s own finished products on outright sale basis.
345
Adv - 345
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SUPPLY CHAIN FINANCING : E.V.D.S., ETC.
Supply Chain Financing : Financing Vendors of Reputed Industry Majors (IMs) : The Bank has
recently launched the following two new products (CIRCO/ADV/CL/267/2004-05) :
- Express Vendor Discount Scheme (EVDS) : Financing against Receivables of the vendor.
- Pre-shipment Express Vendor Scheme (PEVS) : Financing vendors against the Purchase
Orders of IMs (restricted to vendors covered under EVDS).
The products have been launched initially from CAG, on a pilot basis.
Sanction of credit limit to the vendors of IMs is centralised at CAG (Corporate Accounts Group).
Supply Chain Financing : Electronic Vendor Finance Scheme (e-VFS) : Financing Vendors of
reputed Industry Majors (IMs) : e-Circular/238/2009-10.
A comparative process chart, detailing the existing system and revised system, is placed in
Annexure-I of e-Circular/238/2009-10.
eVFS/eVDS : Electronic Vendor Financing Solutions (eVFS), which was earlier known as Express
Vendor Discounting Scheme (EVDS), has been developed by the Bank for financing receivables
of vendors of reputed Industry Majors (IMs) : e-Circular/714/2008-09.
Scale of processing fee : Detailed in e-Circular/714/2008-09 (to be charged from new connections
only).
The scheme centralizes the process of discounting Hundis/bills/invoices generated by the vendors
of selected Industry Majors (IMs) : e-Circular/715/2008-09.
Application form for eVFS facility : enclosed to e-Circular/715/2008-09.
EVDS : Express Vendor Discount Scheme : Financing Vendors of reputed Industry Majors (IMs) :
The Bank has recently rolled out the EVDS to IMs as identified by CAG and MCG and would
cover the vendors falling under CAG, MCG or SME. Further, the EVDS has been decentralised.
As the scope of the scheme is being enlarged, the roles and activities to be carried out by
individual Business Units are set out in the annexure of CCFO/ADV/CL/106/2007-08.
Channel Financing : Dealers of Reputed Companies : The Scheme has been introduced to
enable the top class borrowers of the Bank for removing the commercial receivables representing
the goods invoiced on their dealers from their books and substituting the same by way of self-liquidating short-term advances by the Bank to their dealers on a centralized platform : CIRCO/
ADV/72/2003-04.
Supply Chain Finance : e-DFS : Electronic Dealer Financing Scheme : The Bank has formed
two verticals, namely Supply Chain Finance Unit (SCFU) under SME BU, Corporate Centre, and
Transaction Banking Unit (TBU) under Corporate Banking Group, Corporate Centre, to focus on
financing the supply chain of the Corporates : e-Cir/679/2010-11.
e-DFS : Introduction of Auto Debit Module in e-DFS account : e-Cir/830/2011-12.
346
Adv - 346
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Supply Chain Finance : Electronic Dealer Finance Scheme (e-DFS) : Revised Rate of Interest :
Detailed in e-Cir/908/2012-13.
The revised rate of interest has been extended to existing and new dealers of all the tie-ups
(present and future) under e-DFS.
Supply Chain Finance : m-DFS : Mortgage Dealer Finance Scheme : The Major will not introduce
the dealer through comfort letter and will not stop supply of goods to the dealer in case of non-
payment of invoice on due date : e-Cir/1075/2012-13.
Supply Chain Finance : Mortgage Dealer Finance Scheme (m-DFS) : Modifications : e-Cir/874/
2013-14.
e-DFS : Electronic Dealer Financing Scheme : Dropline Overdraft Facility for Dealers Covered
Under e-DFS & m-DFS : To cater to the needs of the dealers under e-DFS & m-DFS as also to
increase customer stickiness, a new product named drop line overdraft to the tune of 25% of the
existing e-DFS/m-DFS limit, subject to a maximum of Rs. 5 Cr, repayable in a maximum of 36
months has been launched.
Salient features : Detailed in e-Cir/878/2013-14.
e-VFS : Electronic Vendor Financing Scheme : Financing Vendors/Suppliers Against Receivables
of Reputed Industry Majors : The product e-VFS was launched to beat the competition and
ensure quicker delivery of credit through the e-VFS platform.
Steps recently taken by the Bank to improve the TAT (Turn Around Time) : Detailed in e-Cir/47/
2010-11.
eVFS : Sharing of processing fee and notional double counting of business/income figures :
e-Circular/488/2009-10.
e-DFS : Electronic Dealer Finance Scheme : As on March 2012, the Bank has 46 Industry
Majors on the platform. The upgradations and modifications are detailed in e-Cir/23/2012-13.
e-DFS : Graded Pricing : The Bank has introduced concessionary pricing for new and existing
large- value dealers, with a credit limit of Rs. 5 Crore and above as detailed in e-Cir/67/2012-13.
In order to bring in more business by leveraging the graded pricing for large-value dealers, the
condition that the minimum average utilisation of credit must be 75% or more has been withdrawn
along with the review mechanism.
e-DFS : Take-over Norms : The Bank has recently revised take-over norms for loan proposals
under e-DFS : Detailed in e-Cir/1166/2012-13.
347
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FINANCING OF PRIVATE BUILDERS
Comm. Real Estate : Financing to Large Pvt. Builders : Exposure to Real Estate Sector is
broadly classified into four categories as under : e-Cir/406/2013-14 :
a) Infrastructure-Related CRE (ICRE),
b) Other Commercial Real Estate (OCRE),
c) Mortgage Loans (mainly consisting of Home Loans),
d) Other-Indirect advances viz. Housing Finance Companies.
To mitigate the risks associated with financing to CRE, the position has been reviewed as detailed
in e-Cir/406/2013-14.
Lending to Real Estate Sector : Modifications : Detailed in CCFO/ADV/CL/265/2006-07.
Fin. of Private Builders : For Construction of Residential Flats : Detailed in Bank's Book of
Instructions Volume-III, Part-II.
Relaxations in respect of certain eligibility norms : these may be considered on a case-to-case
basis as per CCO/ADV/CL/79/2004-05.
Collateral Security : Financing of Private Builders is an activity under the scheme for financing
housing and construction activities : CCFO/ADV/CL/115/2005-06.
In such cases, tangible collateral security to the extent feasible should be explored and ob-
tained from the borrower / guarantor. As per guidelines, there is no requirement of minimum
collateral security and hence no need of any approval for deviation.
Large Pvt. Builders : Financing for Residential Complexes and Commercial Real Estate : Tak-
ing into consideration the profile of the top builders in the country and with a view to garnering an
increased market share of such builders, a liberalized scheme to meet their requirements has
been put in place now.
The details of the scheme are furnished in CCFO/ADV/CL/352/2005-06.
Fin. of Pvt. Builders : For Commercial Real Estates : The operating units may now hire the
services of retired municipal officials / advocates to ascertain and ensure that the various clearances
obtained by the builders are genuine, current, without qualifications/constraining clauses, if any,
and the impact thereof. Retired municipal officials, who have previous experience of handling jobs
related to issue of layout/building clearances or who are familiar with the requirements therefor,
could be identified and used, wherever considered necessary : CCFO/ADV/CL/49/2006-07.
Physical verification of the work completed with reference to the monthly progress report
submitted by the borrower should also be got done through a civil engineer in the Bank’s approved
list and stage disbursements should be made taking into consideration the Engineer’s certification
in this regard.
The due diligence by the Bank officials should be carried out without any dilution and these
measures are proposed only to supplement and strengthen such efforts.
The cost incurred by the Bank in utilizing the services of advocates/retired municipal officials/civil
engineers is borne by the borrower.
348
Adv - 348
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LENDING TO REAL ESTATE SECTOR :
MODIFICATIONS
Ref. : CCFO/ADV/CL/265/2006-07 :
As per extant guidelines on lending to real estate sector, a ceiling of 20% of the Bank’s total
advances has been prescribed for taking exposure under this sector. Within this overall ceiling, it
has also been stipulated that exposure to the commercial real estate segment should not exceed
2% of the Bank’s total advances.
Detailed operative guidelines on lending to this sector (other than individual housing loans schemes)
are contained in Volume-III (Manual on Loans & Advances). The modifications detailed in CCFO/
ADV/CL/265/2006-07 built into the policy subsequently.
A separate scheme was also launched for financing of large private builders for residential complexes
and commercial real estate (Circular Letter No. CCFO/ADV/352/2005-06).
Recent Modifications :
A. Exposure Ceiling :
Taking into consideration the present level of exposure to various sub-segments of real estate
sector and the need to give thrust to select activities where considerable potential for growth
is emerging, the Bank has decided as under :
• The overall ceiling of 20% for real estate exposure remains unchanged.
• Projects relating to the activities listed Annexure-I of CCFO/ADV/CL/265/2006-07 are
to classified as infrastructure relating to commercial real estate (ICRE). A maximum
exposure of 2% of the Bank’s total advances, within overall ceiling of 20%, is permitted
for lending to such projects.
• In respect of other commercial real estate projects, i.e., non-infrastructure (OCRE), a
separate ceiling of 2% of the Bank’s total advances, also within the overall ceiling of
20% is permitted for !ending to such projects.
B. Prescription of Lending Norms : Commercial Real Estate :
ICRE projects are characterized by large capital costs, long gestation period and high leverage
ratios. Accordingly, the Bank has decided that henceforth these projects will need to comply
within the credit appraisal standard set out in the Loan Policy. Deviation from these, if any,
may be permitted by sanctioning authority selectively, as provided for in the Loan Policy
guidelines
In respect of OCRE projects, the extant guidelines as contained in Manual on Loans &
Advances will continue to be applicable. Deviations, if any, will be permitted selectively by
COCC-1. (COCC-I is now known as Corporate Centre Credit Committee - CCCC)
C. Others :
• The various sub-segments of real estate exposure, as per the prescription of RBI, made
349
Adv - 349
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for reporting purposes, are detailed in Annexure-II of CCFO/ADV/CL/265/2006-07. The
guiding principle is that when the credit facility extended is used for acquisition /
development of land and l or construction of building spaces, the exposure is to be
treated as a real estate exposure.
Generally, lendings made under Mortgage Loan and Rent Plus scheme are not real
estate exposures. However, if the purpose stated by the borrower, is for acquisition /
development of land and for construction of building spaces, then such lendings are
treated as part of real estate exposure.
• The extant scheme for financing large builder will continue. In case if an ICRE project is
to be financed under this Scheme, the guidelines set out above should be made
applicable.
Commercial Real Estate : Lending : the Corporate Centre has decided the points detailed in
CCFO/ADV/CL/85/2007-08 by way of refinement / amplification in respect of certain issues relating
to financing the commercial real estate (CRE) sector.
Commercial Real Estate Exposure : The RBI has clarified that Banks are not permitted to
finance Private Builders for acquisition of land : e-Cir/821/2012-13.
Real Estate Sector : Lending : As long as the Owners/Sponsors of the project are distinct and
separate from the Service Provider/Construction Contractor, the exposure taken against the latter
does not form part of the real estate exposure. Any exposure taken against the Owner/Sponsor
of the project qualifies as real estate exposure : CCFO/ADV/CL/184/2007-08.
CRE : RBI Guidelines for CRE Exposure : Detailed in e-Cir/601/2009-10.
Home Loans detailed in e-Cir/601/2009-10 are classified as CRE Home Loans.
Review of Policy/Exposure : By the Bank as per the regulatory prescriptions outlined in the
RBI Master Circulars (2010) : e-Cir/827/2010-11.
350
Adv - 350
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FINANCING OF TRADE & SERVICES SECTOR (T&S) :
COLLATERAL SECURITY : MODIFICATIONS
CCFO/ADV/CL/264/2006-07 :
The Bank has recently modified, as under, the earlier policy of mandatory requirement of minimum
collateral cover of 25% for all loans to the Trade & Service sector.
• The earlier requirement for a minimum collateral cover of 25% remains for all advances
sanctioned to the services sector irrespective of the amount of the loan.
• The earlier requirement for a minimum collateral cover of 25% remains for all trade advances
sanctioned by and up to the level of ZCC / SMECC.
• Even among advances to the trade sub-segment, relaxation from mandatory requirement
for a minimum collateral requirement of 25% may be restricted to cases of advances rated
SB-1/ SB-2/SB-3.
• Subject to the above provisions, a minimum of 10% collateral should be obtained in respect
of advances to the trade sub-segment sanctioned by CCC-II. Reduction in collateral below
10% may be coinsidered only in respect of trade advances sanctioned by CCC-I/MCCC and
above, in deserving cases.
• The discretionary power structure to permit collateral security cover of below 25% is detailed
in CCFO/ADV/CL/264/2006-07.
• The reduced level of collateral security may be extended to selected customers only. For
this purpose, the operating office should make an endeavour to identify units / promoters who
are well known to the Bank or are well known established groups and / or who have a
satisfactory track record of profitable operations.
• Where the units are promoted by individuals or closely-held corporate entities, personal /
corporate guarantees should be insisted upon.
• In deserving cases, deviation from any of the above requirements may be permitted by
COCC-I only.
• In cases, where eligible units are proposed to be financed by way of a term loan for acquistion
of fixed assets, a lower than 25% collateral cover, may be considered by the sanctioning
authority, vide (v) above, in cases where primary security by way of fixed assets coverage
stands at 150% or above (yielding a debt equity ratio of 2:1. For term loans sanctioned up to
the level of ZCC/SMECC, the prescribed minimum collateral cover of 25% continues).
The above-mentioned relaxation applies to Bank’s general loan schemes partaining to T&S sector.
T&S Sector : Collateral Security : Modifications : The relaxation detailed in CCFO/ADV/CL/264/
2006-07 is not applicable to Bank Credit under scheme containing specific stipulations regarding
collateral security (e.g. Scheme for Clean Advances) and Mortgage Loan for Trade & Services.
Modifications : CCFO/ADV/CL/266/2006-07.
351
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The collateral security should not necessary be in the form of immovable property, and that the
cash or cash equivalent collateral may be accepted to fulfill the requirement of collateral cover,
subject to the conditions detailed in CCFO/ADV/CL/266/2006-07.
Take-over : The norms for take-over of advances, which are hitherto applicable for manufacturing
units under C&I/SSI segments, have now been extended to cover the units under T&S sector
also : CCFO/ADV/CL/165/2007-08.
Trade Sector Adv. : Revised Collateral Security Norms : Linked to ECR/CRA : Detailed in e-Cir/
424/2013-14.
352
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TRADERS EASY LOAN :
(MORTGAGE LOAN FOR TRADERS) :
TRADE & SERVICE SECTOR
(C&I/SBF SEGMENT)
Introduction : The Bank recently launched a new product “Mortgage Loan for Traders” - since
renamed as “Traders Easy Loan” - under C&I and SBF segment. Details of the product are as
under (CCFO/ADV/35/2005-06).
Updated Version of Scheme : enclosed to CCFO/ADV/246/2005-06.
Purpose : To provide hassle-free finance to borrowers in Trade and Services Sector who are
willing to furnish Mortgage of Property of adequate value.
Nature of Facility : Term Loan/Cash Credit/overdraft : CCFO/ADV/246/2005-06.
Now demand loans also : e-Cir/388/2008-09.
(Originally, only term loan was to be sanctioned.
The Bank later on extended the scheme for Cash Credit facility and overdrafts also : CCFO/ADV/
CL/67, 246/2005-06).
The mortgage loan may also be considered for non-fund-based requirements of the traders in
addition to fund-based requirements : CCFO/ADV/CL/68/2005-06.
Eligibility :
i) Existing customers.
ii) New connections, including take-overs.
iii) First generation entrepreneurs as well as promoters of existing units for the purpose of
setting up new unit.
The following categories of borrowers are covered :
a) Small business enterprises.
b) Retail traders/wholesale traders.
c) Professionals and Self-Employed.
d) Commission Agents ( CCFO/ADV/CL/124, 246/2005-06).
Quantum of Loan :
Minimum : Rs. 25,000/-.
Maximum : Rs. 5 crore : CCFO/ADV/CL/246/2005-06.
Mort. Loan on Property Already Mortgaged : For an existing borrower, who has been sanctioned
other limits, Mortgage loan can be extended against the residual value of the same property,
subject to the stipulation that (CCFO/ADV/246/ 2005-06) :
i) The existing loan account is conducted satisfactorily for over 3 years.
ii) The eligible amount, i.e., outstandings under the loan already availed and the proposed loan,
should be within 65% of the realizable value of the property.
Margin : 35% of the realizable value of the property : CCFO/ADV/246/2005-06.
353
Adv - 353
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Assessment of Limits :
i) For Traders and Business Enterprises (C&I and SBF Segment) : Business Enterprises :
Individuals and firms engaged in providing any service other than professional service, including
high-volume retail/wholesale trading, super markets, malls, etc.
Retail Traders : Any retail outlet/trading activity, including dealers of groceries, consumer
durables, co-operative stores, etc.
ii) Professionals and Self-employed (C&I and SBF Segment) : (Persons technically qualified or
skilled in the field in which he is employed, which includes Medical Practitioners, Chartered
Accountants, Cost Accountants, Practising Company Secretaries, Lawyers, Engineers,
Architects, Surveyors, Construction Contractors, Management Consultants, etc.
65% of the realizable value of the property.
(Realizable value of the property should be decided on the basis of the valuation report, which is
not more than three months old, of an approved valuer).
(The realizable value of the property is the value of property in case of distress sale. As such the
factors like location of the property, possibility of alternative use of the property should be considered,
while arriving at the realizable value of the property. The valuer of the property, while arriving at the
valuation, should also verify the approved map of the property and should specifically comment
whether there is any encroachment/deviation in construction from the approved map).
Review/Renewal : Term loan review, Cash Credit/Overdraft review/renewal on prescribed basis,
on the basis of the level of activity, credit summations in the account (in the case credit accounts),
the interest serviced up to the previous quarter-end, and the instalments paid - detailed separately.
Interest Rate : Since the modified product is liberal, interest is charged from all the borrowers as
per the details furnished in CCFO/ADV/35/2005-06.
Zonal Credit Committee has been delegated powers to reduce the interest rate in deserving
cases. While extending the concessions, ZCC must consider the following aspects : CCFO/
ADV/246/2005-06 :
i) Availability of margin on the security,
ii) Value of connections,
iii) Level of competition.
Processing Charges : @ current rates.
Discretion to provide concession : Detailed in CCFO/ADV/246/2005-06.
The revised rate of processing/upfront fee under TEL is 50% of the prescribed card rate : e-Cir/
572/2011-12.
Repayment : For Term loans, Maximum Repayment Period is 60 months. However, sanctioning
authority may fix a shorter repayment period in consultation with the borrower, in case cash
generation is more.
Sanctioning authority may fix the repayment schedule in the case of Term Loans, on monthly/
quarterly/half-yearly basis, depending upon the cash flows.
Security : Primary : Hypothecation of stocks and receivables, and/or assets acquried out of the
Bank finance.
354
Adv - 354
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Collateral : Tangible security of minimum of 150% of the loan amount in the form of Equitable
Mortgage of Land and Building.
Note : Since this relies mainly on Mortgage, the documentation has to be proper and the legal
clearance of title should be done systematically. The search report should be obtained from a
lawyer of repute who is actually conducting searches. The lawyer should give a report, which
takes care of all aspects related to title. The report should clearly and unambiguously state that
the title is free from all encumbrances and is assignable. Moreover, an encumbrance certificate
(E.C.) should be obtained every 12 months, and valuation once every 3 years.
After receipt of the valuation report and search report, the Branch Manager/F.O. at the branch/
CPC official should visit the spot and satisfy himself about the report by making discreet enquiries
from the neighbours of the property and accordingly record it on the report.
The property to be mortgaged should be business/trading premises, residential property. Agricultural
property or open sites outside the urban limits should not be accepted.
Care should be taken to ensure that the property is not located in a zone earmarked for demolition
by town planning/city development authority or road widening, etc. The property in the name of
the proprietor/partner/director/or their family members, say spouse, son, daughter, father, mother,
brother, unmarried sister, etc., can be accepted as collateral security for the mortgage loan. The
owner of the property should also offer his/her personal guarantee for the loan. Moreover, the
implication of offering the property as security should be clearly explained to the guarantor.
Stock-statements & Inspection : Periodic Stock-statements have been dispensed with. However,
stock statement is obtained only once at the time of execution of documents and as at the end
of each calender quarter, to evidence the Bank’s hypothecation charge against the current assets
of the borrower.
All immovable properties offered should be inspected by the field staff, once before sanction and
at the prescribed periodicity after disbursal.
For Sub-Standard Asset : The account to be reviewed immediately and the inspection to be done
at quarterly intervals.
With the first sign of the asset turning into Special Mention Asset (SMA), i.e., non-payment of
interest/instalment, swift action should be taken to recover the Bank’s dues without any loss of
time.
Insurance : Insurance for the full market value of the property to be mortgaged with the BankClause incorporated should be obtained. Comprehensive insurance for market value of assets
acquired out of loan should be taken.
Documentation : Hypothecation Agreement and/or Term Loan Agreement as applicable to
advances under trade and services; Arrangement letter.
Application Form : Enclosed to CCFO/ADV/CL/68/2005-06, suitably modified as per CCFO/ADV/
CL/359/2006-07.
Powers : As per extant Delegation of Financial Powers.
Queries and clarifications thereto : CCFO/ADV/CL/68/2005-06.
355
Adv - 355
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TRADERS EASY LOAN (T.E.L.) :
MODIFICATIONS / CLARIFICATIONS, ETC.
• Renaming :
T.E.L. to Trade & Services : The scheme has been renamed as Traders Easy Loan :
CCFO/ADV/CL/270/2006-07.
• Eligible Activities :
T.E.L. to Mills : The Bank has recently extended the Scheme of Mortgage Loan for Traders
to Rice Mills, Cotton Ginning Mills and Oil Mills with a few modifications detailed in CCFO/
ADV/CL/85/2006-07.
T.E.L. to Rice Millers : from earlier Maximum Limit of Rs. 1 Crore to Rs. 5 Crore : e-Cir/307/
2008-09.
T.E.L. To Cotton Ginning Mills : Mortgage Loan to deserving Cotton Ginning Mills may be
extended up to Rs. 5 Crore : CCFO/ADV/CL/175/2006-07.
T.E.L. to Cold Storage Activity : The Bank has now extended this facility to Cold Storage
units also, with a maximum limit of Rs. 1 Crore, subject to the condition that all other terms
and conditions of the Mortgage Loan Scheme are adhered to : CCFO/ADV/CL/243/
2006-07.
T.E.L. to Seed Processing Units : The Bank has recently extended the mortgage loan
scheme for traders to seed processing units also with the modifications detailed in CCFO/
ADV/CL/267/2006-07.
This activity falls under the agriculture seed.
• Securities :
The documentation has to be proper and the legal clearance of title should be done
systematically. The lawyer should give a report, which takes care of all aspects related to
title. Moreover, an Encumbrance Certificate (E.C.) should be obtained every 12 months, and
valuation once every 3 years : CCFO/ADV/CL/113/2007-08.
• Nature of Property taken as Security :Residential or Commercial property in the name of the unit proprietor/partner/directors
or their close relatives as well as industrial property in the name of the SME unit may be
accepted from city/urban/municipal limits : CCFO/ADV/CL/359/2006-07.
Open plots may be accepted as security if the same is owned by the borrowing unit or
its proprietor, partner or directors and not a third-party security : CCFO/ADV/CL/359/
2006-07.
• Assessment of Eligible Bank Finance :
The loan is available for acquiring fixed assets needed for business purposes and/or for build-
up of inventory / current assets. The credit needs of the business are assessed accordingly.
The loan component should not exceed 90% of the total requirement as worked out, or 65%of the value of the collateral security offered, whichever is less : CCFO/ADV/CL/270/2006-07.
TEL granted as Cash Credit limit may be fixed at 20% of projected turnover of the borrower :
e-Circular/388/2008-09.
When TEL is permitted to meet capital expenses of a business, the TL/DL limit may be
fixed at 75% of the costs to be incurred for business, like expansion, purchase of equipment
or business promotions : e-Circular/388/2008-09.
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Adv - 356
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Under no circumstances should the loan value be increased by increasing the valuation of
the mortgaged property even if property values have gone up in the interim : CCFO/ADV/CL/
270/2006-07.
(Considering that the ‘Mortgage Loan’ was introduced as a hassle-free product to cater to the
credit demand from traditional Trade and Services business, where disclosed turnover is
normally understated but sufficient collateral is available,) it is felt that being too prescriptive
about assessment may be counter-productive. Credit requirement may be arrived at based
on assessment of projected turnover, business practices in the particular trade, etc. subject
to limit of 65% of realizable value of property, which will also be the drawing power : CCFO/
ADV/CL/359/2006-07.
• Stock Statement & Inspection :
In case of loan for inventory or current assets, statement of stock and receivables should be
obtained at quarterly intervals - as at the end of February, May, August and November
each year and kept on record : CCFO/ADV/CL/270/2006-07.
Frequency of Inspection of units : quarterly by Field Officer/AVO/Br. Manager (instead of
half-yearly) should be half-yearly : e-Cir/307/2008-09.
Transaction monitoring (daily debits/credits) should continue to be the main instrument of
monitoring end-use of funds. If unhealthy trends, like credits drying up or diversion of funds to
non-business uses is noticed, prompt corrective actions should be taken. Where the loan is
availed as Term Loan or Demand Loan, the inspection frequency should also be half-yearly :
CCFO/ADV/CL/270/2006-07.
The purpose of quarterly statement of stocks and receivables is essentially to keep track of
the current asset levels in the business, though tracking transactions in the account is the
key monitoring tool. Sanctioned limit may be treated as the drawing power, provided stocks
and receivables are sufficient to cover the drawings : CCFO/ADV/CL/359/2006-07.
For loans availed as Demand Loan or Term Loan, quarterly stock statement is waived :
e-Circular/388/2008-09.
• Operation of the Account, Cr. Summ. :
Where the borrower is availing the facility as a Cash Credit or Overdraft, the (credit
summations) turnover in the account should at least be 50% of the sales turnover declared
by the borrower for his business : CCFO/ADV/CL/270/2006-07.
In case of Cash Credit account, the borrower should have an annual credit summation of at
least 200% of the CC limit in the account : e-Circular/388/2008-09.
The basis for the stipulation of minimum credit summations at 50% of the declared
turnover is to ensure that the borrowers under this Scheme use our Bank’s account for
all their needs and not divert their transactions to other banks : CCFO/ADV/CL/359/
2006-07.
Alternatively, the Traders Easy Loan may be availed as a Term Loan or Demand Loan with
monthly repayment option : CCFO/ADV/CL/270/2006-07.
Working Capital limit may be availed partly as CC and partly as Demand loan - as per the
convenience of the borrower. But the total limit should be arrived at on the basis of projected
annual turnover (i.e., 20% of PAT of the borrower) : e-Circular/388/2008-09.
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• Review/Renewal :
Where the borrower has availed the facility as a Cash Credit or Overdraft, the validity of
sanction is for the prescribed period, whereafter the account needs to be renewed : CCFO/
ADV/CL/270/2006-07.
Working Capital credit facilities sanctioned under TEL Scheme are now valid for a period of 2years. Renewal of the limits will be due every 2 years. The account is subject to annualreview. The review is based mainly on conduct of account. As this is a short review - based
on conduct of account - and not a fresh sanction/renewal, the Branch Manager is the reviewing
authority : e-Cir/866/2009-10.
A format devised for the review is enclosed to e-Cir/866/2009-10.
At the time of renewal/annual review of the account, if the limits are assessed to be less than
the existing limits, and the borrower is not in a position to repay the excess amount in 90
days, the excess amount should be carved out as a demand loan, and may be allowed to
be repaid within a maximum of 24 monthly instalments : e-Cir/866/2009-10.
During this time, if on later renewal, the borrower is eligible for higher limits, the repayable
amount and the repayment period should be reduced accordingly : e-Cir/866/2009-10.
• Renewal of Accounts Sanctioned Earlier :(as Mortgage Loan at 75% of value of the security)
CCFO/ADV/CL/359/2006-07 :
In Traders Easy Loan Scheme, margin has been increased (from 25%) to 35% of the value
of the property. Loans sanctioned as Term Loans are not affected.
In respect of Mortgage Loans sanctioned as Cash Credit, borrowers may be given 90 days
time from date of renewal to bring down the outstandings to newly sanctioned/renewed limits.
Where borrowers express their inability to bring down the outstandings within 90 days, in
such cases, the excess amount may be carved out as a demand loan with the prescribed
repayment period and interest at the applicable rate for “Traders Easy Loan” should be
charged for such demand loan. Available security should be extended to cover the demand
loan also.
However, where loss of business is anticipated, the Circle CGM has the full discretion to
defer the reduction/conversion of the Cash Credit Limit till the time of next renewal/
re-assessment of the limits for borrowers sanctioned limits before the modifications.
Where the loan is availed with repayment option, a simple annual review of the conduct of
the account should be done by SMECCC or the Branch concerned. If there is a request for
restoration of limit for an account with repayment option, it may be considered after expiry of
at least 6 months and satisfactory conduct of the account, subject to approval by the
sanctioning authority concerned.
Demand Loans are to be repaid in 36 monthly instalments : e-Circular/388/2008-09.
• Frequency of Valuation :Property values fluctuate. Revaluation of property should not be done within 3 ‘years of
sanction. At the time of renewal, if the borrower is eligible for higher quantum based on
projected turnover, such enhancements should be granted without revaluation of the property
taken as security, within the ceiling of 65% prescribed : CCFO/ADV/CL/359/2006-07.
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• Application-cum-Interview Form :Application-cum-Interview Form currently in use may be continued with modifications needed
for assessment of credit limits on projected turnover : CCFO/ADV/CL/359/2006-07.
• Mortgage Loans, Rent Plus : Undertaking : The Branches should obtain an undertaking
from those borrowers seeking loans against Mortgage of Immovable Property Scheme
amounting to Rs. 25 Lac and above : e-Cir/569/2008-09 :
The proceeds of the loans will be utilized for marriage/medical treatment/education/foreign
travel (purpose to be specified) and proceeds of loans will not be used for any speculative
purpose whatever including speculation on real estate and equity shares.
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RENT PLUS LOAN SCHEME (MODIFIED) : 2013
(FOR SME CUSTOMERS)
Ref. : e-Cir/1036/2012-13.
Name of Scheme : Rent Plus.
Quantum of Loan : Minimum : Rs. 50,000/-.
Maximum : Rs. 10 crore.
Margin : 25% (reduced from the earlier level of 40 %).
Nature of Facility : Term Loan.
Period of Loan : 10 years or the residual lease period, whichever is less.
Rate of Interest : Linked with Base Rate.
Discretion to sanction better pricing : as per extant instructions for
competitive pricing.
Purpose : To meet borrower's liquidity mismatch
(Proceeds of loan amount not to be used for any speculative purpose,
whatever, including speculation on real estate and equity shares).
Eligible Customer : Owners of residential buildings and commercial properties, which
are to be rented or already rented to MNCs/Banks/Large & Medium
size Corporates. The stipulation of External Credit Rating (ECRA)
for Borrowers under Rent Plus Scheme (up to Rs. 10.00 crore) and
other loans under Rent Securitisation route (more than Rs.10.00
crore) has been dispensed with and the loan product is available to
all categories of borrowers.
Location of Property : Properties located in Metro/Urban/Semi-Urban/Rural areas.
Administrative clearance in respect of properties located in rural
areas is dispensed with. However, Plan approval and other related
permissions for the property from appropriate authority need to be
in place.
Scale of Finance : Lowest of :
i) 75% of realizable value of the property mortgaged (as per latest
valuation report of the Bank's approved valuer).
ii) Maximum permissible under the Scheme.
iii) 75% of [total rent receivable for the residual lease period or loan
period, whichever is lower, minus total of advance deposit,
estimated amount of property tax, service tax, TDS and other
statutory dues for the period].
Primary Security : Assignment of rent receivables. Power of Attorney with the lessee
to be obtained.
In case the applicant has borrowing arrangements with other Banks
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and current assets are already charged, an exclusive first charge
on the rent receivable to be obtained in the Bank’s favour.
Collateral Security : a) Equitable Mortgage on building against the rentals of which the
Ioan would be sanctioned or any other acceptable property of similar
value. The realizable value of property to be mortgaged should be at
least 135% of the amount of loan.
b) In case of partnership firm/company, personal guarantee of the
partners/directors to be obtained.
c) In case of public limited companies, if the directors are not
willing to extend personal guarantee and the collateral security in
the form of equitable mortgage is sufficient (i.e., 135% of the amount
of loan), the sanctioning authority may waive the stipulation of
personal guarantee of directors.
d) In cases where our Bank is the tenant and the loan amount
does not exceed Rs. 25 Lac, the stipulation of equitable mortgage
may be waived, subject to the condition that the lease deed should
not expire during the currency of the loan.
e) The waiver of equitable mortgage may be allowed only in select
deserving cases by the sanctioning authority not below the level of
CCC-I in cases :
• Where lessee is a reputed corporate acceptable to the Bank
(e.g. Bank/PSU) and maintaining consistency in profitability for at
least three years and is agreeable to execute the tripartite
agreement,
AND
• Where lessor's credit worthiness and integrity is beyond doubt
and personal guarantee of all owners in case of individuals and
partners / owned by firm/ company is available.
Sanctioning Authority : As per ‘scheme of delegation of financial powers' for term loans.
Prior administrative clearance should be obtained by the branches
headed by officers up to MMGS-III from the concerned AGM (Region)
before sanctioning the loan under the Scheme.
Repayment : Equated Monthly Instalment(EMI) : In cases where advance rent is
being received, the Equated instalment should be for the same
frequency at which advance rent is received and instalment should
be front-ended, i.e., should be recovered at the beginning of the
period.
Pre-payment Charges : 1% loan amount prepaid.
Inspection : Half-yearly.
Insurance : To cover the value of assets charged to the Bank.
Review : Annual.
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Exit Route : Loan to be recalled if the account remains irregular for three
consecutive months.
Applicability : All Branches.
Processing Charges : As per extant instructions. The charges for valuation of the property
& Cost of Valuation are to be borne by the applicant and should be recovered immediately.
Appraisal & : As per extant instructions. The lease-deed to be carefully examined
Assessment to ensure that no onerous clause is present.
Documentation : Detailed below.
Deviations : Any deviation in the scheme to be approved by a Committee not
lower than CCC-I.
Miscellaneous :
Rent Plus, Mortgage Loans : Undertaking : The Branches should obtain an undertaking from
those borrowers seeking loans against Mortgage of Immovable Property Scheme amounting to
Rs. 25 Lac and above : e-Cir/569/2008-09 :
“The proceeds of the loans will be utilized for marriage/medical treatment/education/foreign travel
(purpose to be specified) and proceeds of loans will not be used for any speculative purpose
whatever, including speculation on real estate and equity shares.”
Documentation :
• Application for loan.
• Arrangement letter.
• Tripartite agreement for payment of monthly rent between lessor, lessee and the Bank.
• Agreement of loan and power of attorney. In the case of a company, charge to be registered
with ROC.
• Deed of guarantee document, where applicable
• In the case of lessee not being in favour of executing the tripartite agreement, an irrevocable
power of attorney from the lessor for collection of rent may be obtained, and the same should
be registered with the lessee. The power of attorney may be suitably modified as per
requirement in each particular case. The procedure for registration of Power of Attorney as
applicable to jurisdiction of respective State/ Union Territory is required to be followed.
• Recital of equitable mortgage of the building.
Search report and valuation report from the approved Bank advocate and the Bank approved
valuer should be kept on record.
Rent Plus Scheme : Under Per Segment : Penal interest to be recovered until the terms of
sanction are fully complied with and security is created and no waivers to be considered in such
cases : e-Cir/1076/2013-14.
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CAR LOAN TO SME UNITS (NEW VEHICLES)
Ref. : e-Cir/673/2008-09.
Purpose : To provide term loan to the promoter/partner of the SME units having borrowing
arrangements with the Bank or their family members either in their own name or in the unit’s
name for purchase of passenger cars, jeeps, multi-utility vehicles (MUVs) and sports utility vehicles
(SUVs), etc.
Target Group : The loan can be extended to as many promoters/partners and even their family
members* either on their own name or unit’s name based on their individual net worth and repayment
capabilities.
The promoter/partner acts as a joint applicant whenever the loan is taken in the name of unit and
promoter will also be liable to repay the loan amount.
Availing of car loan in the promoter’s name or firm’s name is left to the choice of the customer.
*Family for this purpose is spouse and children.
Nature of Facility : This facility is extended as Term loan.
Eligibility : Modifications : e-Circular/250/2009-10 :
SME units having borrowing arrangements with the Bank, or their family members either in their
own names or in the unit’s name.
&
SME CA holders of the Bank or their family members either in their own names or in the unit’s
name, and other SME clients, subject to obtaining an NOC from the Bank where they might have
a loan account. MCG units of the Bank are also eligible for the product.
For purchase of passenger cars, jeeps, multi-utility vehicles, and sports utility vehicles.
Income : Originally, the joint applicant must had to have a net annual income of Rs.1 Lac and
above for the last year as per Income-Tax return.
SME Car Loans : Minimum Income Criterion : e-Cir/631/2013-14 :
a) An individual must have a Gross annual income of Rs. 6,00,000/- and above for the last year
as per income tax return.
b) The joint applicant must have a Gross annual income of Rs. 6,00,000/- and above for the last
year as per income tax return.
Authorised Branches : All branches catering to SME clients can extend the schemes to
SME clients.
Security :
• Only hypothecation of the vehicle(s) purchased is taken as a security.
• This hypothecation charge must be mentioned in the books of the RTO.
• No additional security, including the charge on the existing collateral, should be asked
from SME clients.
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Assessment : Assessments of loan amount is entirely based upon the personal net worth and
repayment capabilities of the individual or the joint applicant when the loan is in unit’s name.
Powers : Officers not below the rank of the AGM were initially authorized to release SME Car
Loan for units which have credit limits classified as Standard Assets (not below SB-3 : old rating;
new rating SB-6, SB-7 or SBTL-3) and where the Car Loan amount does not exceed Rs 30 Lac or
10% of the fund-based exposure of the unit, whichever is lower, and seek post-facto approval of
the appropriate authority.
The Bank has recently delegated powers to SMGS-IV to release SME Car Loans, subject to the
conditions detailed in e-Cir/699/2010-11.
Loan Amount : The maximum loan amount is 2.5 times the net annual income (i.e., income as
per latest income-tax return filed less taxes payable).
Regular income from all sources can be considered provided the sanctioning authority is satisfied
with the proof of income.
The income of spouse can be included provided the spouse guarantees the loan.
For new vehicles, there is no ceiling on loan amount. In any case, the EMI/NMI* percentage
should not exceed 50%.
The A.G.M. Region/Branch or the sanctioning authority, where such sanctioning authority is
higher in rank than A.G.M, has the discretion to grant a higher loan, subject to EMI/NMI* percentage
not exceeding 60% in deserving cases or owing to strategic reasons.
*(EMI - Equated Monthly Installment)
(NMI - Net Monthly Income)
Margin : Uniform margin on all loans at 15% of the ‘on road price’ of the vehicle.
The sanctioning authority has discretion to reduce the margin by 5%. A further reduction of 5%
can be given by an authority of the rank of AGM based on the factors like relationship, business
expected, competition, etc. In any case, the total reduction in margin should not be more than
10%.
Rate of Interest : Floating Rates only : New Vehicles.
• While generally the Equated Monthly Installment (EMI) need not be changed with every
change in the interest rate, should the borrower seek an EMI reduction consequent to a rate
reduction, the same may be permitted if the account is a Standard Asset and the loan
amount outstanding is at least Rs. 5 lakh and the interest rate reduction is of 1 % or more.
• The above facility is permitted only once during the currency of the loan.
• The Bank also reserves the right to increase the EMI in case of interest rate rise.
Penl Interest : Since the applicants under this facility are our SME borrowers, it should be
possible to monitor closely and prevent the accounts from becoming irregular. However, should
some accounts become irregular, due care should be taken to make them regular within 60 days.
In case the account remains irregular beyond a period of 30 days, a penal rate of 1% p.m. over
and above the applicable rate can be charged.
Processing Fee : Processing fee should be recovered upfront as detailed in e-Cir/673/2008-09.
Repayment :
a) The loan should repaid in monthly/quarterly instalments acceptable to the customer in such
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a manner that the loan is liquidated within a period of 7 years. The customer has option for
payment in shorter duration.
b) The Equated Instalment is determined on the basis of the current rate of interest.
c) Post dated cheques should be obtained from the borrower.
Since we are dealing with the promoter/partner of the SME units in their individual capacity and
not as employees of the unit, check-off facility may not be applicable under this facility. Suitable
standing instructions on their accounts to recover instalments and interest may be taken.
Security Documentation : As applicable to “P” Segment Car Loan.
Insurance :
• The vehicle purchased is to be kept comprehensively insured in the name of the borrowerfor the market value or at least 10% above the loan amount outstanding, whichever is higher.
The Bank’s interest as a hypothecatee should be noted in the certificate of insurance and
insurance policy. A copy of this is to be retained with the loan documents.
• Insurance register is to be maintained.
Mode of Disbursement : Amount should be remitted direct to the supplier/dealer by means
of a crossed ‘Account Payee’ demand draft / banker’s cheque which should be forwarded
under cover of a letter as per Annexure Car-IV.
The beneficiary’s Bank name and if possible, Bank account number should be ascertained
from the beneficiary and mentioned in the draft/banker’s cheque. No charges should be
levied for issuance of banker’s cheque/demand draft.
The Bank has recently waived the requirement of NOC in case of customers of other banks : e-
Cir/498/2010-11.
However, the Branches/CPCs have to advise their bankers of the sanction of the loan. KYC
obtention, CIBIL reports would have to the done meticulously to establish borrower’s antecedents
apart from ensuring that the borrower’s account is classified as standard with the Bank.
Pre-payment Penalty : Pre-payment fee of 2% of the amount of the loan pre-paid was
being levied initially.
Pre-payment Penalty since waived : e-Cir/146/2011-12.
Inspection :
a) For Standard Asset accounts, periodical inspections are waived after the initial inspection.
However, if there is a default of 2 monthly instalments, inspection is required. In case of
NPA accounts, inspections should be made twice a year.
b) Inspection register is to be maintained properly.
Discretionary Powers : To be exercised as per the Delegation of Powers advised by the
LHO.
Papers to be Submitted : The following papers to be submitted along with loan application :
• Annexure-Car I.
• 2 passport size photographs of borrower/guarantor(s).
• A copy of passport/voters ID card/PAN card.
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• Proof of residence.
• Copy of Income-Tax Return for last two financial years, duly acknowledged by ITO.
Applicants Restricted Under this Facility : This facility should not be extended in cases
where :
• The SME units are weak or have turned NPAs or likely to become NPAs.
• The relations between branches and promoter(s) are soured.
• Wherever it is proposed to initiate legal action against the unit/promoters.
Payment of Service Charges : To Car Dealers : Introduced Recently : @ as applicable for
PBBU Car Loan Scheme : e-Cir/748/2011-12.
CAR LOAN TO SME UNITS (USED VEHICLES)
Purpose : To provide term loan to the promoter/partner of the SME unit or their family
members either in their own name or in the unit’s name for purchase of passenger cars,
jeeps, Multi-Utility Vehicles (MUVs) and SUVs not more than five years old.
However, financing of old vehicles on the basis of duplicate Registration Books should notbe entertained.
Loan Amount : Subject to a maximum of Rs. 15 Lakh.
(All other details under this head are same as that of Car Loan to SME Units.)
Valuation :
• Certificate of fitness/valuation from a reputed garage is required which should be retained
with the loan documents. The garage should be authorised by the Liaison Officer in the LHO/
ZO in big cities. No valuation certificate is required if the car is sold under the Maruti True
Value scheme or Automartindia.
• Branches should ensure that the fitness and valuation is appropriate to the past ownership
pattern. Care should be taken to avoid models, which have a low second/third hand
demand like Fiat, Uno, Daewoo, Matiz, etc.
Take-Over of Loans :
i) Take-over of car loans may be considered selectively where :
a) The vehicle is not more than 2 years old,
b) It is a single ownership vehicle,
c) No insurance claim has been availed, and
d) The account of the borrower with the other bank is a Standard Asset, i.e., all
repayments have been made as per terms of sanction of the original financier.
ii) The loan should be repaid within 7 years from the date of the original purchase of the
vehicle.
iii) Reimbursement of costs of unencumbered vehicles can also be given under the above take-
over norms and other terms of financing old vehicles up to 2 years of age.
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Repayment :
• For old vehicles, recovery should be such that the loan gets repaid within 7 years from the
date of original sale.
• Maximum repayment period to be fixed as per age of the vehicle. Repayment schedule
should be fixed while ensuring that the loan gets repaid within 7 years of life of the vehicle
e.g. a five-year old vehicle should be financed with a repayment period of 2 years only.
(All other details under this head are same as that of Car Loan for New Vehicles.)
Rate of Interest : Floating Rate Only : All Centres.
Important : All the other features for Car Loan for Used Vehicles are same as the Car Loan for
New Vehicles.
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TRANSPORT PLUS SCHEME :
(SME BUSINESS) -
SINCE WITHDRAWN
Ref. : CCFO/ADV/CL/424/2006-07 :
The Bank recently merged ‘Fleet Operators Scheme’ with Transport Plus Scheme, and brought
in some modifications. The detailed revised Scheme is as under.
Name : Transport Plus.
Segment : C&I.
Target : Surface Transport operators owning more than 10 well-
maintained
Group and roadworthy vehicles (including the proposed) and complying
with the general eligibility criteria detailed below.
Purpose : To finance new four-wheelers viz. trucks/ tankers/ trailers/ tippers/
luxury buses, Car, etc. (Take-over from other banks/Fls not
allowed).
Eligible : Cost on Road, i.e., Billing price of the vehicle + Cost of body
Amount of Finance building + Road Tax & Insurance; i.e., all costs to be included.
Types of Facilities : (i) Term loan, and (ii) Cash Credit limit to finance receivabfes
Rate of Interest : Term Loan : linked with SBAR.
Cash Credit : linked with SBAR.
Rate of interest may be reduced by the sanctioning authority up to 25 bps if collaterals by way of
at least 25% of the loan amount are available in form of Equitable Mortgage of property/Cash
Margin.
Processing Fee : 1%. (The Sanctioning authority may approve charging
commission in the range of 1.00% to 0.25% based on value of
connection, available security and tie-ups, etc.)
Pre-payment Fee : 1% p.a. of the residual period.
Margin : Term Loan : 20% (can be reduced to 10% if 100% tie-up is in
place).
Cash Credit : 20%.
Loan Amount : Term loan and CC combined: Minimum Rs.10 Lac and Maximum
Rs.10 Crore for corporates, and Rs. 7.50 Crore for non-
corporates.
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Repayment of : Maximum in 5 years from disbursement. EMIs to start after three
Term Loan months of the first disbursement. PDCs to be obtained for entire
repayment period at the time of disbursement. CC to be repayable
on demand/ renewable at every year at the Bank’s discretion.
Primary : For TL : Hypothecation of the vehicles financed.
Security For CC : Hypothecation of Receivables and Spare parts.
(CC facility to be allowed by us only if not already being availed
by the transporter from elsewhere).
Collateral : Unencumbered vehicles/ immovable properties for a value not
Security less than 25% of the loan amount. However, the collaterals can
be waived (only if the borrower does not have any unencumbered
vehicles/ property to offer) provided he can arrange a letter of
authority from its reputed clients/Govt Departments, etc.
authorizing the Bank to receive payment directly from them, or
some escrow mechanism can be put into place.
Inspection : Once in a year. However, in case the account shows symptoms
of being sticky, frequency of inspection to be increased suitably.
Foreclosure : Loan to be immediately recalled and legal actions initiated if
three months instalments are in default.
General Eligibility Criteria : Please refer to Para ‘target group’ above.
• Reputed Transport Operator having experience of 3 years or more in the line.
• Surface Transport operators owning more than 10 well-maintained and roadworthy vehicles
(including the proposed).
• The firm/ promoters should have National/state permits.
• In case of Trucks, the firm should be the IBA approved.
• Chief promoters to be I.-T. Assessee who have filed I.-T. return for the last year.
• Satisfactory record of dealings with present bank/Fls/NBFCs (at least, 2 years).
• Having the financials as below on the close of previous year :
Sales/Turnover : Increasing trend in the last two years.
Profit : The firm should be earning profits in the last two years with
rising trend. The profit of the firm in the past two years should at
least be Rs. 3 Lac.
Average DSCR : Minimum 2 (Gross DSCR).
Current Ratio : 1.33 minimum.
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TOL/TNW : Maximum 2.75. (The Sanctioning authority may consider long-
term liabilities from Friends and Relatives as part of TNW).
Above norms for Current Ratio, TOL/TNW and DSCR may be brought at par with the level of the
Bank’s Loan Policy Guidelines on the sanctioning authority’s discretion, if 100% tie-up
arrangements are in place
Receivable Levels : Not more than 4 months of average income, i.e., if the annual
income in the previous year was Rs. 9 Cr, Receivables should
not be more than Rs. 3 Cr.
Orders in Hand : 30% of the targeted annual income, i.e., for a turnover of Rs. 9
Cr., Orders in hand/contracts entered into should cover at least
Rs. 2.70 Cr.
20 Centres where Fleet Operator Plus was operative : detailed in CCFO/ADV/CL/424/2006-07.
Blocking : Booking of the business under existing Transport Plus Scheme is blocked so that no
further accounts are opened therein. However, the existing outstanding under Transport Plus
Scheme will continue till the end of the present tenure : e-Cir/1031/2013-14.
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Adv - 370
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MODIFIED CONSTRUCTION
EQUIPMENT LOAN (CEL) SCHEME : RENAMED AS
SME CONSTRUCTION EQUIPMENT LOAN (SCEL)
Ref. : e-Cir/697/2009-10.
Name of the Product : SME Construction Equipment Loan (SCEL) : w.e.f. 01.01.2010.
Nature/Purpose : Line of Credit for financing New Machinery/ Equipment/ Vehicles for construction
activities.
Eligibility : Firms/ Companies (including Contractors) engaged in construction activity with a
minimum rating of SB-8 (new).
The borrowers engaged in mining activities can also be financed now under the Scheme, subject
to compliance of all other terms and conditions of the Scheme : e-Cir/76/2010-11.
Thus, the borrowers engaged in mining activities can now be financed under the Banks’s other
company specific construction equipment loan schemes viz. Tie-up with JCB, Telecon, Volvo,
Escorts, etc.
Amount : Minimum Rs 25.00 Lac, Maximum Rs 25.00 Cr. (In Delhi, Kolkata, Chennai, Mumbai,
Hyderabad and Bangalore, the maximum limit is Rs 50.00 Cr.
Tenure : 2 to 3 years from first disbursement (including moratorium period of maximum 3 months).
Tenure can be extended up to 4 years on merits of the case.
Repayment : In EMIs.
Variable repayment programme based on cash flow of the company can also be considered if the
borrower so desires.
Margin : 15% - 20% in case of SB-1 to SB-5 borrowers; 20% - 25% in case of others.
Interest : Linked with SBAR/Base Rate.
Primary Security : (i) Hypothecation of the Equipment financed from the Bank Loan. In case of
Vehicles, registration of charge with RTO is to be ensured.
(ii) Pre-dated cheques for principal amount fvg, “SBI a/c SCEL................. (Borrower’s name).
Collateral Securities : Hypothecation of other unencumbered equipment or mortgage of property
to the extent of at least 25% of the loan amount.
Assessment : As applicable to Term Loans.
Documents : Revised SME documents.
Disbursement : The loan may be disbursed in several tranches within a period of maximum one
year from the date of Sanction, depending on requirement of the borrower for purchase of equipment/
machinery/vehicles within one year. One tranche should not be less than 10% of the amount of
loan. Payment to be made direct to suppliers.
Processing Charges/Upfront Fee : 50% concession in the prescribed charges.
Documentation Charges : 50% of the prescribed charges.
Pre-payment Charges : 2% of the pre-paid amount.
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Penal Interest : For SB 1 to SB-5 borrowers : @ 1.00% per month for the default amount.
For other borrowers : @ 2.00% per month for the default amount. On business considerations,
sanctioning authority may approve concession up to 50%.
Insurance : Comprehensive Insurance policy with endorsement in favour of SBI on the policy as
“loss payee”.
Inspection : Half-yearly. Sanctioning Authority may waive it in suitable cases, based on the
customer credentials as also when the equipment is/are spread over various construction sites.
Review : Annually.
Applicability : The scheme is available to all Branches for financing SIB/C&I customers which
are not being catered to by MCG/ CAG.
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Adv - 372
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SME CARE - NEW PRODUCT
(SME BUSINESS)
Ref. : e-Cir/534/2008-09.
Introduction : In view of the current downturn and the consequential impact by way of a slowdown
in a few sectors, SME units are facing the constraints of piling up of inventories of raw materials,
finished goods as also delayed payments from their buyers. As such to tide over the present
crisis, “SME Care” has been formulated in order to ease the liquidity position of the SME units
and also help them in warding off crises till the economy takes a turn for the better. The details of
the Scheme are furnished below.
SME Care : Validity period of the scheme extended up to 31.12.2009 : e-Circular/449/2009-10.
Further extended up to 31.03.2010 : e-Cir733/2009-10.
WCDL : Although the Scheme provides for WCDL facility of a maximum of 20% of the existing
fund-based Working capital limits, the actual credit requirements under the facility should be
need-based and assessed on a case-to-case basis. The proposed WCDL can also be disbursed
in instalments as per the requirement of the customer.
The WCDL is formulated to ease the liquidity position of the units effected by the slowdown by
increasing the carry period of receivables and for holding the higher inventory levels. The WCDL
facility should be covered by the Primary Security and as such the DP should be available against
the existing and proposed increase in the level of stocks/receivables; at no point of time, it should
be clean advance : e-Cir/562/2008-09.
SME CARE
Facility : Working Capital Demand Loan (WCDL).
Limit : 20% of the existing fund based working capital limits.
Purpose : For holding higher inventory/increased carry period of receivables up to 6 months,
necessitated on account of slump in the market during the current year.
Eligibility : All accounts satisfactorily conducted having fund based limits up to Rs.10 crore,
subject to :
i) The unit has earned profits for the last 3 years,
ii) It has submitted financial statements/stock-statements, etc. regularly,
iii) The credit limit has been renewed timely,
iv) The debit/credit summations in the loan a/c, by and large, are satisfactory.
Period of Loan : 1 year.
Appraisal : On the basis of realistic projection of cash flow for a period of one year.
Margin : As applicable to the existing credit facility.
Repayment : Moratorium for the first 6 months during which only interest is to be serviced. The
entire outstandings of WCDL to be liquidated in the next 6 months by monthly/quarterly instalments.
Security : Existing security of all credit facility (both fund-based and non-fund-based to be extended.
373
Adv - 373
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Rate of Interest : As applicable to the existing credit limit.
The Bank now offers concessionary rate of interest at 8% p.a. for loans under SME CARE, the
tenure of which is one year, including the period of moratorium. This concessionary interest rate
is extended retrospectively from the date of launch of the Scheme : e-Circular/672/2008-09.
Miscellaneous :
a) This facility is to be extended on merits on case-to-case basis.
b) The sanction of such loan under the Scheme :
i) Loans up to Rs. 2 crore by the AGM of the Branch/RBO/CPC
ii) Loans up to Rs. 1 crore by the Chief Manager of the Branch/RBO/CPC.
However, as per the total indebtedness condition under the existing Scheme of Delegation of
Financial Powers, these sanctions, wherever applicable, should be put up to the appropriate
authority within 15 days of sanction for necessary validation.
SME Care and SME Help : Concessionary Interest Rate for a period of 1 year from the date of
documentation and Product Code : e-Circular/717/2008-09.
SME Care, SME Help : The unit which are not coming under the ambit of SME CARE/SME
HELP may be covered under the Bank’s existing instructions with special reference to the prescribed
reliefs and concessions : e-Circular/777/2008-09.
Various facilities which are extended to such units are detailed in e-Circular/777/2008-09.
SME Care & SME Help : Extension of Validity Period : The Bank extended the validity of SME
Care (fresh sanction and first disbursal) for a period of 3 more months, i.e., up to 31.03.2010 :
e-Cir/733/2009-10.
In case it is assessed that the unit does not require additional working capital funds but sudden
withdrawal of SME CARE will affect the unit’s recovery prospects, the repayment period of loan
granted under SME CARE may be extended for a further period of 6 months, i.e., up to 18 months
from the date of disbursement. The rate of interest for this extended period of 6 months will be as
per the rate applicable to the regular credit facilities granted to the unit.
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SME HELP - NEW PRODUCT
(SME BUSINESS)
Please refer to ‘SME Care’ also.
Ref. : e-Circular/645/2008-09.
The Bank has introduced several relief and concessionary measures to be extended to the SME
units which are facing the constraints in the current slowdown to help them in warding off crises
till the economy takes a turn for the better.
Now, a need is felt that SMEs require additional Term loan facility on liberal terms to purchase
fixed assets in the present scenario. Accordingly, a new product SME HELP has been formulated.
The actual credit requirements under the facility should be need-based and assessed on a case-
to-case basis.
The Scheme should be implemented in true spirit to help the SME units in distress.
The related particulars should be advised to LHO on a fortnightly basis in the prescribed format.
Validity period of the scheme extended up to 31.12.2009 : e-Circular/449/2009-10.
Further extended up to 31.03.2010 : e-Cir/733/2009-10.
SME HELP
Facility : TERM LOAN.
Purpose : Funding urgent/additional requirements of machines/tools/Gen sets and
other fixed assets, if any.
Eligibility : All accounts satisfactorily conducted having fund-based limits up to Rs.10
Crore, subject to :
i) the unit has earned profits for last 3 years,
ii) It has submitted financial statements/ stock-statements, etc. regularly,
iii) The credit limit has been renewed timely,
iv) The debit/credit summations in the loan a/c are, by and large,
satisfactory.
Period of Loan : Up to 5 years.
Margin : 15%.
Repayment : Moratorium for the first six months during which only interest is to be
serviced.
Security i) All existing/new fixed assets of the unit;
ii) Collateral, if available.
Rate of Interest : Concessional rate (furnished in the Circular ) for one year and thereafter
normal rates as applicable from time to time.
Insurance : All assets acquired to be covered under insurance.
Miscellaneous : a) This facility to be extended on merits on case-to-case basis.
b) The sanction of such loans should be as per the discretionary powers
vested with various authorities.
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SCHEME FOR FINANCING JCB MACHINES
(EXTENDED UP TO 31.03.2012)
Ref. : e-Cir/1077/2010-11.
The Scheme was extended for a further period up to 31.03.2012 on the existing terms and conditions
detailed below. The only change in the terms was that loans up to Rs 25 lac (eligible accounts)
were to be covered under CGTMSE mandatorily.
Name of the Product : Construction Equipment Loan (CEL) - JCB India
Nature / Purpose : Term loan for purchase of construction equipment viz. loaders, excavators,
cranes, etc. manufactured by JCB
Eligibility : Individuals/Firms/Companies engaged in construction work
Amount : Minimum Rs 15 Lac
Maximum Rs 100 lac
Tenure : Up to 4 years (including moratorium of up to 3 months)
Margin : 25% in case of borrowers who are new to this line, i.e., buying their first loader/ machinery,
etc.
15% in case of buyers having up to 9 machines
5% in case of buyers already having more than 9 machines
Interest : Advance under the Scheme is subject to the Bank’s instructions regarding credit rating
in general advances. The interest is linked to rating
Advance is not to be sanctioned where rating is below SB 9
Primary Security :
• Hypothecation of the Equipment financed from the Bank Loan. In case of Vehicles, registration
of charge with RTO is to be ensured
• Standing instructions to debit the borrower’s SB/Current account with the loan instalments
in case of account being with us. In case of account being with other bank, post-dated
Cheques/ECS authority for 24 monthly instalments
• In both the cases, at least 3 undated Cheques should be obtained and held on record with
loan documents till the account is closed.
Collateral Securities :
1. Loans up to Rs 25 Lac to be mandatorily covered under CGTMSE Scheme (eligible accounts)
2. Loans more than Rs 25 Lac may also be considered without collaterals and under CGTMSE
Scheme
3. In case an advance is not being covered under CGTMSE, hypothecation of other
unencumbered equipment or mortgage of property to the extent of at least 25% of the loan
amount is to be obtained.
Assessment : As applicable to Term Loans
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Disbursement : Payment to be made direct to suppliers/ dealers
Repayment : In EMIs
Penal Interest : 2% for the amount and period in default
Inspection : Half-yearly. However, in case of account giving warning signals, the frequency should
be increased as may be warranted
Insurance : Comprehensive Insurance policy with endorsement in favour of SBI on the policy as
“loss payee”
Processing, pre-payment, inspection, etc. and all other charges : At card rates
All other terms and conditions regarding assessment, conduct, supervision, etc. would are
applicable like in other advances.