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1 guidelines for_concurrent_auditors

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  • 1. CONCURRENT AUDITORS TO PLEASE GO THROUGH THE ENCLOSED GUIDELINESTHROUGHLY.MOST IMPORTANT : ON THE MONTH ENDING MARCH / JUNE / SEPTEMBER& DECEMBER , ONLY QUARTERLY REPORT IS TO BE SUBMITTED. NOMONTHLY REPORT IS TO BE PREPARED FOR THE MONTH ENDING MARCH /JUNE / SEPTEMBER / DECEMBERIndex PAGE No 1. Objective & scope of concurrent audit 2-3 2. Audit check list and other general guidelines 3-6 3. Details of Reporting format of Monthly / quarterly report 6-9 And guidelines for Flash / Special report & confidential report - MONTHLY / QUARTERLY REPOTING FORMATS ARE BEING GIVEN IN THIS CD SEPARATELY (PLEASE NOTE FLASH REPORT IS TO BE SUBMITTED EVERY MONTH EVEN IF IT IS NIL) 4. Format of forwarding letter of concurrent audit report for the month /quarter ended 10 5. Format of Completion report 11 6. Attendance certificate 12(CERTIFICATE AS PER ANNEXURE- X, Y & Z IS NECESSARILY TO BEATTACHED WITH THE BILL FOR PROFESSIONAL FEE BEING SUBMITTED TORESPECTIVE ZONAL INSPECTORATES DULY SIGNED BY CCA & BRANCHMANAGER ALONGWITH FRC OF PREVIOUS MONTH) 7. Guidance list of Serious irregularities – Relating to General routine 13-32 and house keeping 8. Guidance list of Serious irregularities—relating to credit management 33- 59 9. Group Heading of serious irregularities- Relating to General routine 60-61 and house keeping 10. Group Heading of serious irregularities -- relating to credit management 62-63 11. Instructions for revenue audit 64-65 12. Role of CCA in prevention and detection of frauds 66-67 13. Addresses of Zonal Offices and Zonal Inspectorates 68 1
  • 2. CHAPTER 1Objectives and Scope of CONCURRENT AUDIT BACKGROUNDRBI directed all the banks to introduce system of concurrent audit for the first time in 1993 basedon the recommendations of Ghosh committee on frauds and malpractices in Banks.Subsequently, a working group headed by Mr. Jilani, CMD of Punjab National Bank,recommended some improvements in the system of concurrent audit in the Banks. Thereafter,RBI issued fresh guidelines vide its circular dated 14th August 1996 to make the system ofconcurrent audit in the Banks more effective .RBI issued another circular on 12th August 1997 inconnection with enlargement of scope of concurrent audit to cover FOREX transactions.OBJECTIVES OF CONCURRENT AUDIT1.With a view to bringing about an ongoing improvement in the standard of internal HouseKeeping and identifying areas of weakness and deficiency and with a view to energizing theprocess of rectification, this system of audit has been introduced at selected branches. The objectis to carry out certain audit tasks on an on going basis. The Concurrent Auditor has beenprovided as a special resource to the Branch Manager/Officers Incharge of different department.2. To shorten the interval between transaction and its examination by an independent person notinvolved in its documentation. Improve functioning of the branch leading to improvement in itsperformance and prevention of frauds. Concurrent audit is essentially a management processintegral to the establishment of sound internal accounting functions and effective controls andsetting the tone for a vigilant internal audit.Concurrent audit is an examination, which is contemporary to the occurrence of transaction or iscarried out as near to it as possible. Thus concurrent audit is a regular process that has to becarried out round the year at a branch on an on going basis. Concurrent audit is an independentappraisal activity conceived as a systematic examination of all financial transactions at a branchto ensure accuracy and compliance of internal systems and procedures as laid down by the bank.It aims at minimizing the incidence of serious errors and fraudulent manipulations.3. To supplement the efforts of the bank in carrying out simultaneous internal checks of thetransactions and compliance with the laid down system and procedure of the bank. Performsubstantive checking in key areas and on the spot rectification of deficiencies to preclude theincidence of serious errors and fraudulent manipulations.SCOPE OF CONCURRENT AUDITConcurrent auditor is required to check that:Transactions are properly recorded documented and vouched. Spot rectification of the irregularities and implementation of system and procedure of the bank.To perform this job effectively and efficiently he must be aware of the latest guidelines issued bythe bank as well as RBI. He should also be well versed with the functioning of different deptts atthe branch. 2
  • 3. A concurrent auditor should not sit on judgment /decision taken by the Branch Manager or anauthorized official of the branch. As concurrent auditors are not meant to interfere or block theday-to-day working of the branch. The purpose of their presence is to provide a second look onthe operations. The concurrent auditors will have to essentially see whether the transactions ordecisions are within the policy parameters of the bank and RBI. And that they are within thedelegated authority and in compliance with the terms and conditions for exercise of such anauthority. He has also to see in case of sanctions received from higher authorities that terms andconditions of such sanctions are duly complied with.In very large branches having different sections dealing with specific activities concurrentauditor is a means to the incharge of the branch to ensure that the different sections do functionwithin laid down parameters and procedures on an ongoing basis.Whenever serious irregularities are observed these have to be immediately reported to H.O.Inspection Deptt. as well as concerned Zonal Office. Irregularities having vigilance angle haveto be reported to H.O. Vigilance Department.In case of observation of i) Acts of corruption and bribery on the part of branch officials ii)frauds /misappropriation iii) abuse of power to get pecuniary benefits at the expense of the bankiv) any other malpractices, the concurrent auditor shall not include these incident in his regularreport but, after discussion with the Branch Manager, shall report such facts by way of a specialconfidential report to H.O. Inspection Deptt./ HO Vigilance Deptt. PROCEDURAL ASPECTS OF CONCURRENT AUDITOur bank, based on the guidelines from RBI, has framed a policy for concurrent audit of theselected branches of the bank. Administrative control over Concurrent auditors is to be exercisedby respective Zonal Inspectorates.Areas required to be covered under concurrent auditConcurrent Auditors are required to check the entire working of the branch covering 100%transactions. An illustrative list of the areas covered under concurrent audit is as under;a) CashDaily cash transactions with particular reference to any abnormal receipts and payments.Proper accounting of inward and outward cash remittances.Proper accounting of Currency Chest transactions, its prompt reporting to the RBI.Expenses incurrent by cash payment involving sizeable amount.b) DepositsCheck the transactions about deposits received and paid.Conduct percentage check of interest paid on deposits including calculation of interest on largedeposits.Check new accounts opened particularly current accounts. Verify operations in new current/SBaccounts in the initial periods to see whether there are any unusual operations.c) Advances:Verify that loans and advances have been sanctioned as per standing guidelines of the bank. (i.e.after due scrutiny and at the appropriate level),Verify whether the sanctions are in accordance with delegated authority.Verify that securities and documents have been received and properly charged/ registered. 3
  • 4. Verify that post disbursement supervision and follow up is proper such as receipt of stockstatements, instalments, renewal of limits etc.Verify whether there is any misutilisation of the loans and whether there are instances indicativeof diversion of funds.Check whether the letters of credit issued by the branch are within the delegated power andensure that they are for genuine trade transactions.Check the bank guarantees issued, whether they have been properly worded and recorded in theregister of the bank and that whether they have been promptly renewed on the due dates.Verify proper follow up of overdue bills of exchange.Verify whether the submission of claims to DICGC and ECGC is in time.Verify that instances of exceeding discretionary powers have been promptly reported tocontrolling/Head Office by the branch and have been got confirmed or ratified at the requiredlevel.Verify the frequency and genuiness of such exercise of authority beyond the discretionarypowers by the concerned officials.Verify the CREDIT RATING done by the branch & ensure interest rates charged are as per theCredit Rating allotted to the account.d) Foreign Exchange TransactionsCheck foreign bills negotiated under letters of credit.Check FCNR and the other non resident accounts whether the debits and credits are permissibleunder the rules.Check whether inward/outward remittance have been properly accounted for.Examine extension and cancellation of forward contracts for purchase and sale of foreigncurrency. Ensure that they are duly authorized and necessary charges have been recovered.Check that balances in Nostro accounts in different foreign currencies are within the limits asprescribed by Head office.Check that the overbought/oversold position maintained in different currencies is reasonabletaking into account the foreign exchange operations.Check adherence to the guidelines issued by RBI/Ho about dealing room operations.Check verification/reconciliation of Nostro and Vostro account transactions/balances.100% checking of Form A1 & A2 & also of the documents evidencing export – Certificate tothat effect to be given every month by the Concurrent Auditor.e) Housing Keeping:Check that the maintenance and balancing of accounts ledgers and registers including clean cashis proper.Check reconciliation of entries outstanding in the inter branch suspense account (IBSA) and interbank accounts, Suspense account Sundry Creditors Account, DPWA account, Payment made onaccount of other branches (POAB) account etc. Ensure early adjustment of large value entries.Carry out a percentage check of calculations of interest, discount, commission and exchange.Check whether debits in income account have been permitted by the competent authorities.Check the transactions of staff accounts.In case of difference in clearing there is a tendency to book it in an intermediary suspenseaccount (DNR A/C) instead of locating the difference. Examine the day book to verify as to howthe differences in clearing have been adjusted. Such instances should be reported to Head Officein case the difference persists.Detection and prevention of revenue leakages through close examination of income andexpenditure heads. 4
  • 5. Check cheques returned/bills returned register and look into reasons for return of thoseinstruments.Checking of inward and outward remittances (DDs,MTs and TTs).(f)Know Your Customer (KYC) norms AND anti money laundering (ALM) norms.(for guidelines please refer to various circulars issued from HO P&D & HO Inspection, latestbeing Circular No.246 dated 26.07.2008)(g) NPA management.Check that the early warning signals in the account are being picked up and immediate remedialactions including marking the account as SMA is being done.Check the follow up being carried out by the branch towards recovery.Check that proper record of Technical write Off accounts is maintained.(h)Contingent Liabilities.Check Bank Guarantee / Letter of Credit portfolio of the branch and report.(i) Environmental audit of computerised branches.Submit report on the format given.(j)Revenue AuditCheck and report as per format.k) Other items:In case of the branch has been entrusted with Government business, ensure that the transactionsare done in accordance with the instructions issued by Government, RBI and HO.Ensure that the branch gives proper compliance to the internal inspection/other reports.Ensure that customers complaints are dealt with promptly.Verification of settlements HO returns, statutory returns and control returns submitted to ZO/HO.The detailed functions of the Concurrent Audit as laid down above can be expanded further bythe Inspection Department (where necessary), depending upon the needs of the individualBranch/Departments. The Branch Manager should impress upon the Officers Incharge ofdifferent Departments the importance concurrent audit and the need for them to instruct/train thestaff under their control in laid down systems and procedures, wherever deficiencies are pointedout by the Concurrent Auditor; in order to prevent recurrence of such irregularities.Branches which are given special support of Concurrent Audit are expected to perform wellalways from the audit stand point and the Branch Manager should ensure prompt compliance ofobservations made by the Concurrent Auditor. If the Concurrent Auditor finds that theobservations are not complied with for any reason, he may record and submit to the BranchManager formal audit notes for rectification.The services of the Concurrent Auditor (where he is the staff member of our bank) should not beutilized for the following purposes;a) Removal of deficiencies and rectification thereof which are the direct and distinctresponsibility of the concerned department heads. 5
  • 6. b) Relief duties/officiating assignment at the branch, even for brief periods.c) Assisting/replacing the functions of any Officer/Manager at the branch.Disposal of Audit notes submitted by the Concurrent Auditors.Ordinarily the audit notes of the Concurrent Auditor should be effectively disposed of within amaxium period of seven days by the concerned officer incharge. If an audit note is not disposedof within this period, the Branch Manager should review the position and initiate appropriateaction. A review of the action initiated on pending audit notes should be taken by the BranchManager once in a week with a view to removing deficiencies pointed out.The Branch Manager should make efficient and effective use of the services of the ConcurrentAudit provided to him as an additional resource for identifying the weakness in the various vitalareas of Branch working with a view to initiating proper remedial action. Unsatisfactoryperformance by a branch having the benefit of the resource of Concurrent Auditor should beviewed with great disfavour by the H.O. because such branches constitute the backbone of thebank’s Business structure.To enable Head Office to have a feed back on the effectiveness and the manner in whichConcurrent Audit is being carried out, the Concurrent Auditor should submit monthly andquarterly reports as per the reporting formats given in Chapter 3 to the Branch Manager with acopy to Zonal Manager and Head Office Inspection Department New Delhi indicating thedeficiencies noticed and the extent to which the position stands rectified especially the effectivedisposal of audit notes within the prescribed time limits. Based on the monthly/quarterly reportssubmitted by the Concurrent Auditors, Zonal Offices should examine the deficiencies noticed, inorder to take prompt remedial measures. The Zonal Office should issue suitable directions/timebound programmes in the matter. Zonal Office should advise Head Office InspectionDepartment every quarter, various steps being taken for making the system of Concurrent Auditeffective.During regular inspection of a branch where Concurrent Auditor has been posted, the Inspectorwill comment on the manner in which concurrent audit functions are being carried out at thebranch.Concurrent Auditors should full familarise themselves with the provisions of the InspectionalManual and the Systems and Procedures, Audit checklists and the scope of audit scrutiny underthe Inspection Report Format for broadening their audit perspective and skills. REPORTING FORMATSDuring the course of Audit of Branches the Concurrent Auditors are likely to make observationsof varied nature. Some of the observations may be of the nature of ordinary short-comings ordeficiencies in observance of systems and procedures. Some may be of the nature of generalcomments for the guidance of branches. But there may be some findings observed by theConcurrent Auditors during the course of inspection which may require a different kind ofreporting in view of their seriousness, and to enable the controlling offices to act upon suchfindings at the earliest available opportunity to set right the deficiencies. Guidelines forfurnishing such reports are given here below: 6
  • 7. 1) Daily Report:Discrepancies observed in the adherence of systems of procedures on daily basis have to begiven to the Branch Manager/Officers Incharge of different Departments on daily basis. Thisreport is to be prepared in duplicate. One copy of the report shall be returned by the Branch afterthe rectification of irregularities.Monthly Report:We have devised guidance lists of serious irregularities relating to:i) General Routine and House Keeping andii) Credit Management.(These lists are illustrative and not exhaustive. Please seek chapter 4 for these guidance lists).Serious irregularities enumerated in these guidance lists have to be covered in the MonthlyReports / Quarterly Reports. With a view to bringing uniformity in the classification andreporting of these serious irregularities, we have also given group Headings of Seriousirregularities (Please see Chapter 5). All serious irregularities (as per the Guidance Lists) shouldbe grouped as per Group Headings of Serious irregularities (GHSI). Monthly / Quarterly reportsshould be grouped as per Group Headings of Serious Irregularities (GHSI). Monthly / Quarterlyreports should be notes of discussions and hence the subjects of these reports should bethoroughly discussed with the Branch Manager and steps already taken, if any, should invariablybe incorporated in these reports.Monthly reports of Concurrent Audit will consist of the following:(i)Certificate of discussion with the BMii)Confirmation of receipt of the concurrent audit report by the BM(iii) Flash Report/ Special Report(iv) Executive Summary (including Development Report)(v) Monthly Reporting formats – Ann M I to Ann M XIV, which includes(a)Report on Compliance of KYC /AML guidelines - Ann.M VII(b)Income Tax / Service Tax deducted at source- Auditor Certificate- Ann. M VIIILegal Compliance Certificate M IX© Compliance Certificate - Ann.M Xd) Report on Foreign Exchange business ( applicable only for branches authorizedto transact foreign exchange business) - Ann. M XI (A) To MXI (D)(e) Environmental review of ALPM Branches/ EDP Audit of TBA branches) - M XII(f) Report on Leakage of Revenue – Ann M XIII (A) to MXIII (E)(g) FRC of last Monthly Concurrent Audit Report M XIVMonthly reports should not be sketchy, but should be factual, clear, exhaustive in details andwherever necessary, should indicate the action initiated by the branch. It should also containspecific views/opinion of the Auditor based on his findings. Apart from incorporating theirregularities pertaining to a particular advance reviewed, these reports should invariably covertherein other limits enjoyed by the party, liabilities thereof and the irregular features there under,if any. 7
  • 8. Special/Confidential Report:Matters of grave nature such as shortage in cash or huge shortage in securities pledged orhypothecated to the Bank which is likely to cause loss to the bank, large scale deviation fromsanction terms, short collection of interest and other income for sizeable amount in respect ofwhich immediate action is called for on the part of the Branch/Zonal/Head Office and alsoobservations pertaining to submission of claims under DICGC/ECGC have to be informedimmediately by way of Special/Confidential Reports (for detailed guidelines please see pages 17to 19) to H.O. Inspection Department with a copy to Zonal Manager.Quarterly Reports:Quarterly reports will cover:(i)Certificate of discussion with the BM Page no.1(ii)Confirmation of receipt of the concurrent audit report by the BM Page no.2(iii) Flash Report/ Special Report Page No.3-5(iv) Executive Summary (including Development Report) Page no.6-9(v) Quarterly Reporting formats – Ann.Q I to Ann Q XXXVII, which includesReport on Foreign Exchange business ( applicable only for branches authorized to transactforeign exchange business) - Ann.QIII & Ann QIV (Page No.14 to17) Report on Leakage of Revenue – Ann QXV (page no.32 to 38) Report on Compliance of KYC /AML guidelines - Ann.Q XXXIII (Page 60- 62) Compliance Certificate - Ann.QXXXIV (page 63-65) Income Tax / Service Tax deducted at source- Auditor Certificate- Ann.QXXXV (page 66-67) Inspection of Units / Visit Reports of Accounts- Ann.QXXXVI & QXXXVII (Page no.68 to74)Report on Implementation of Fair Practice Code – Ann. QXXXVIII (Page no.75 to 78)(vi) Environmental review of ALPM Branches/ EDP Audit of TBA branches) (Page No.79-85)(vii) Report on Security arrangement at the Branch (page No.86 to 87)(viii) FRC of last quarterly Concurrent Audit Report (page No.88)ix) Report on Implementation of Official Language Policyx) Half Yearly ReviewWherever the Auditors feel that the adherence to a particular system and procedure is of a criticalnature, non-compliance of the same can be covered as a serious irregularity and accordinglycovered in the monthly report. As system and procedures constitute the back bone of anyorganization in general and banking industry in particular, due importance and adequateemphasis has to be laid by the Auditors in their coverage in monthly/quarterly reports. Brief comments should be given at the end of each Annexure with regard to steps taken by the Branch for the rectification of irregularities and the suggestions by the Auditors to prevent recurrence thereof ..Confidential Reports:There are certain special reports of Confidential nature where the copies should not be given tothe Branch. Such reports should be sent only to the Inspection Department with a copy to 8
  • 9. respective Zonal Office. Before drawing up the report, the Concurrent Auditor should have athorough discussion with the Branch Manager to ascertain all relevant points/facts on the subjectto be covered in the confidential report. The Concurrent Auditor should invariably furnishtherein his views/opinion/conclusions based on his findings.The following are to be reported by way of confidential report:a) Violation of IBA Ground Rules/Code of Ethics/Unethical practices resorted to in the matter of deposit mobilization.b) Observations, if any, from the angle of Limitation Act.c) Observations, if any, regarding under stamping/non-stamping of Demand promissory notes and the security documents.General Guidelines regarding Special/Confidential Reports:a) The concurrent auditor should not wait until the audit is concluded to submit Special/Confidential reports. They should be sent as and when the irregularities are observed.b) Where the grave irregularities are already brought to the notice of and controllingauthorities are seized of the matter, Concurrent Auditors may record their observations in theMonthly report itself alongwith the observations on the action taken by the branch regardinginstructions received from ZO/HO Inspection Department.c) All Special reports submitted should be referred to in the Quarterly audit report underrelevant head and also in covering letter of the Quarterly audit report specimen of which ismarked as Annexure X in the guidelines to be adhered to by the Concurrent Auditor.d) In case of observations acts of (i) bribery/corruption on the part of the branch officials (ii)frauds/mis-appropriations (iii) abuse of power to get pecuniary benefit at the expense of the bank(iv) improper use of discretionary powers (v) undue favouritism and nepotism (vi) any otherinstances of malpractices, the auditors shall not report the same in their audit report, but shalldiscuss the same with official concerned and shall report such facts by way of confidential letteraddressed to the Dy. General Manager (I), New Delhi.e) If there are any matters of confidential nature involving the working of the personnel ofthe branch, such matters also need not be reported in the audit report, but the same shall bediscussed with and the fact of such discussion be reported by way of a Confidential letteraddressed to DGM Inspection. 9
  • 10. ANNEXURE- X FORMAT OF FORWARDING LETTER OF CONCURRENT AUDIT REPORT FOR THE MONTH /QUARTER ENDEDFrom To The Deputy General Manager (I)--------------------------- H.O. Inspection Department New Delhi.---------------------------Dear Sir,Sub: Concurrent Audit Report of _____________ Branch ___________ covering the Period from ______________ to ______________.I/We submit herewith the quarterly concurrent audit report in original in respect of captionedbranch. After discussion of the findings with the branch Manager, duplicate copy of the reporthas been handed over to him for taking expeditious steps to set right the irregularities mentionedin the report.We confirm having mailed the copy of the report to Z.O. & Zonal Inspectorate / HO Inspection(in case of quarterly report)We also confirm of having strictly adhered to the instructions given in the guidelines regardingcoverage, norms, coverage area and also as per the printed report formats and the AuditChecklist provided to us for the purpose of Concurrent Audit.Yours faithfully,Chartered Accountants/Concurrent Inspector. 10
  • 11. ANNEXURE – Y FORMAT OF COMPLETION REPORTFrom To The Deputy General Manager (I)--------------------------- H.O. Inspection Department New Delhi.---------------------------Dear Sir,Sub: Quarterly Concurrent Audit Report of _____________ Branch for the Quarter ending__________.The subject audit was taken in hand on ____________ and completed on __________. Weconfirm that the important major functions of the audit like scrutiny of loan papers, review ofaccounts etc. are being seen by Sh. ______________ who is/are practicing chartered accountantsand have utilized the services of our Assistants who are not practicing Chartered Accountantsonly for the purpose of our assistance to carryout minor functioning like totaling, verification ofbalancing etc.Name of the Auditors who Period covering the report fromAre conducting audit work12345Names of assistants with qualifications and status who accompanied auditors for auditing work1.2.3.4.Yours faithfully,AuditorsDate:We certify that he above information furnished by the auditors is correct.BRANCH MANAGER 11
  • 12. ANNEXURE- ZATTENDANCE CERTIFICATE( THIS CERTIFICATE IS TO ACCOMPANY THE PROFESSIONAL FEE BILL TO BE SENTTO RESPECTIVE ZONAL INSPECTORATE)1. B.O. __________________________2. Month _________________3. CA’s Firm Name ____________________________4. Number of working days in the above month _____________5. No.of days of visit of the assistant(s) ______________6. Date(s) when the Assistant(s) visited the branch _____________ _______________________________________________________________7. Name of the Assistant(s) who visited the branch _________________________8. Name of the Partner/Prop.(CA) who visited the branch: __________________________________________________9. Date(s) when the Partner/Prop.(CA) visited the branch ________________BRANCH MANAGER CONCURRENT AUDITORBO NAMEDATE DATE 12
  • 13. CHAPPER IIGeneral routine and House keepingAudit Check List - A – I Cash (1100)110001. Have you physically verified cash in hand ?110002 Whether it tallies with detail book ?110003. Have you verified cash scrolls for receipts, token books for payments ?110004. Have you verified that no paid cheques/debit vouchers held alongwith the cashpurporting to represent payments made but not yet brought into account.110005. Have you verified that cash and other valuables are being checked by ZonalOffice? (Dates of last two checkings be given as per annexure-I).110006. Whether late receipts/payments are regular features at the branch.110007. Whether entire cash is being checked by the Manager at regular intervals atleast once in a month and whether a record of such verification is being maintained?110008. Whether soiled notes held are within reasonable limit and these are exchanged at the RBI/Currency Chest at regular intervals ?110009. Are you satisfied that cash bundles are stitched with prescribed cash slips and signed in full by the cashier/officer concerned ?110010. Whether proper record is maintained for recording instances of shortage or excess cash found with proper explanation and wherever necessary reported to ZO/HO ?110011. Whether cash brought over to the counter normally does not exceed the usual requirements ?110012. Whether cash is held under joint custody of Manager and Cashier/Officer ?110013. Whether all the terms and conditions in regard to insurance of cash in safe and in transit are being complied ? 13
  • 14. 110014. Whether duplicate set of keys of strong room and cash safe etc. were withdrawn during inspection.110015. Whether the same were brought in use and exchanged in your presence ?110016. Whether replaced set of keys is lodged back ?110017. Whether effective follow up of the entries outstanding under Cash Remittance is being done for their immediate adjustment.110018. Have you verified that the slips on bundles consisting of notes of denomination ofRs.500/-, Rs.100/-, and Rs.50/- are duly signed by the cashier and countersigned by theManager/Branch Incharge ? TOKENS110019. Whether the branch is following the systems of tokens and tokens not in use are kept in the safe ?110020. Whether all the tokens in use are kept under lock and key of the authorized officials at the close of business?110021. Whether branch is maintaining pass book for recording issue of tokens to ledger keepers and cashiers against their initials ?110022. Whether proper entries are made for tokens received back at the close of businessfrom the cashiers, ledger keepers and departmental incharge against initials ?110023. Whether proper recording is done regarding lost tokens ?110024. Whether adequate efforts have been made to recover lost tokens ?110025. Whether ZO/HO have been informed regarding lost/missing tokens for circulation to other branches ? 14
  • 15. CASH MANAGEMENT (1101)110101. Have you satisfied that correct assessment of daily cash requirements is made by the BM ?110102. Have you verified that minimum cash balance is maintained by the branch fordaily transactions?110103. Have you satisfied that proper utilization of cashier manpower including payingcashiers is made for sorting and bundling of notes denomination-wise ?110104. Are you satisfied that the cashier staff has full day’s job and that hey attend and leave the office according to scheduled working hours ?110105. Are you satisfied that the branch is depositing surplus cash (if not otherwisedisposed of) with the nearest branch/currency chest/RBI/SBI etc. (Inspectors should furnishfigures of average cash holding on fortnightly basis as against the Retention Limit fixed for thebranch since the date of last inspection as per Annexure VIII)?110106. Have you verified that entries relating to remittance in transit are reversed withinthe prescribed period ? List of entries outstanding for more than 10 days should be furnished asper Annexure 1 (e)110107. Whether adequate escort is provided for transit cash remittances in accordancewith HO Security Department Circular No.1/93 dated 16.03.1993?110108. Does the branch furnish weekly statement to ZO in respect of cash movement as per HO Accounts Deptt. Circulatory letter No. 15/93 dt. 09.06.1993 ?110109. Whether cash remittance and cash drawn registers maintained ?110110. Miscellaneous 15
  • 16. PETTY CASH, POSTAGE, TELEGRAM, STAMPS IN (1102) HAND/EMBOSSED STAMPS ETC.110201. Whether balances in petty cash, postage and stamps in hand as on the date of inspection tally with GL.?110202. Have you physically counted the adhesive stamps and stamp papers/forms and tallied with balances in GL ?110203. Have you verified that the branch maintains adequate stock of stamp forms?110204. Whether proper register is maintained by the branch in this regard ?110205. Have you physically verified all the unused/unissued cheque books/draft books,MC books, FDR Books and other security forms with the record and found that no security formis missing (in case of any shortage, inspecting officer must inform ZO/HO(I) with the followingdetails). Have you further verified that all security items are kept under the joint custody of BMand second man and are also released jointly to prevent fraud? Form No./Cheque No. Nature of security form 16
  • 17. BALANCING OF BOOKS (1103)110301 Whether the branch has a satisfactory procedure of balancing of the books at prescribed periodical intervals?110302 Whether office orders are issued invariably on or before the last Friday of every month for the tallying of balances and the same are got noted from the concerned clerks/officers?110303 Whether branch maintains a proper record of the periodical balancing of booksand the balance books are duly signed by the clerks, officers and Manager ?110304 Whether all the balances are tallied upto date (if not attach a list of untalliedbalances as per Annexure II) mentioning clearly GL/PL Balances and the difference as on thelatest date/month for which balances have been taken down and tallied ?110305 Whether progress made in clearing arrears in balancing satisfactory ?110306 Whether pending balances being tallied with common difference ?110307 Whether books are generally balanced by persons other than those handling them?110308 Whether folio numbers and names of the account holders are being written inbalance books and totals/cuttings/alterations etc. are duly authenticated ?110309 Whether subsidiary books are maintained and tallied with GL every month (for Saving Bank & Current Accounts) ? 17
  • 18. DEPOSIT ACCOUNTS (1104)110401 Whether minimum required balance is maintained in the a/cs as per P&D Circular No. 1567 dated 01.06.93 ?110402 Whether summations of debit and credit entries are made on the red lines as wellas at the end of each page of individual account sheets in the ledgers and the same are checkedand authenticated ?110403 Whether cross checking of entries in ledgers with long books is done daily ?110404 Whether ledger entries/balances are properly initialed, ledger heads duly signed intoken of having checked the correctness of names, addresses, brought forward balances, mode ofoperation, cheque book numbers, stop payment instructions, date of birth of minors etc. ?110405 Whether operations in dormat/inoperative ledgers allowed under authentication of the Manager in terms of P&D Cir.No.1536 dated 18.12.92 ?110406 Whether ledger keepers are rotated periodically and the same employee is notallowed to work on the same ledgers for an unduly long time (office orders issued for theallocation of duties issued since the date of last inspection should be seen in this regard ?110407 Whether counter foils of deposit receipts issued are checked by the Incharge ofthe Branch in the evening with the relative books/vouchers/cash books etc. to ensure thegenuineness of the transaction?110408 Whether diary of due dates of terms deposits maintained and deposits not paid or renewed on due dates transferred to overdue deposit account?110409 Whether renewal notices being sent to fixed deposit holders?110410 Whether the facility of automatic renewal of FDRs is provided to the customers interms of P&D Cir.No.1511 dt. 17.9.92 and P&D Cir.No.1430 dt.10.8.91?110411 Whether account opening forms are properly filled in, duly signed by all the depositors and introductions obtained in approved manner? (Irregularities observed in AOFs be given as per Annexure III) (Please refer P&D Cir.No.1535 dt. 17.12.92 giving detailed guidelines about the introduction aspect).110412 Whether penal interest for late payment of instalments in R.D. Accounts as wellas charging of penalty for premature closure of FDs being done as per HO guidelines? 18
  • 19. 110413 Have you ensured that branch is not charging penalty in respect of prematureclosure of FDRs when the same are renewed on account of hike in the rate of interest?110414 Have you ensured that branch is offering the facility of renewal of FDR from back date to any future date, which is not less than 46 days from the date the FDR is offered for renewal.110415 Whether overdraft limits are entered correctly in the Current Account ledgers under full signatures of the Manager/Officer Incharge ?110416 Whether interest on term deposits is regularly calculated, checked and posted in the ledgers on prescribed periodicity?110417 Whether test checks of interest calculations and rate of interest allowed have been made in a few accounts and found to be in order (discrepancies in this regard be given as per Annexure IX)?110418 Has the branch resorted to window dressing during the period under review. If yes, modus operandi adopted be given in detail?110419. Account opening and closing register.110420 Index Register110421 Cheque Book Issue Register.110422 Cheque Returning Register110423 Pass Book Issue Register110424 Stopped Cheque Register110425 Whether Inoperative Savings Bank accounts which remain inoperative for onecalendar year having a balance of below Rs.20/- are being transferred and credited to miscellaneous Income and customers being intimated about the closing of the account?110426 Have you verified that the amount of deposit is being mentioned in the AOFs for FDRs in each case? I.B.S., D.P.W.A., P.O.B. ACCOUNTS (1105)110501 Whether all the entries are genuinely authorized in terms of HO Circulatory letter NO.1/90 dated 04.01.90?110502 Whether entries older than 15 days are being persued with the defaulting branches/concerned Zonal Offices. 19
  • 20. 110503 Whether IBS,DPWA,POB A/C Statements are being submitted to ZO/HO Reconciliation department on due dates?110504 Whether necessary precautions are taken by the branch while making payment of drafts without advice ?110505 When the amount involved is large whether the issuing branch is immediately contacted to enquire as to the authenticity of the draft?110506 Whether the branch is promptly pursuing the non-receipt of advice with thedrawing branch and entries are not allowed to remain outstanding beyond a fortnight?110507 Whether the branch is maintaining the IBR Receipt Register in terms of HO Reconciliation department Cir. No. 6/93 dated 01.01.93. - Comparative position of entries outstanding in these heads(age-wise) should be given as per Annexure V. - Correspondence file of the branch should be gone through to assess the follow up measures/efforts made by the branch. - Branch may be advised to prepare zone-wise lists of outstanding entries and submit these to respective ZMs under the cover of a D.O. letter with a copy endorsed to H.O. Reconciliation Department (IBS Special Cell).110508 Whether the branch is passing POB entries through T.T.Payable? BANKERS A/C RECONCILIATION/IMPREST CLEARING (1106)110601 Whether branch is maintaining any current account with other banks?110602 Whether account(s) with some banks are in-operative and whether you aresatisfied bank with the Branch Managers comments for not closing such account(s) ?110603 Whether the counterfoils of cheques issued bear initials of authorized bank officials?110604 Whether idle bank balances are promptly transferred to H.O. Accounts Deptt.? (Inspecting official should attach figures of bank balance on fortnightly basis since the date of last inspection as per Annexure VIII).110605 Whether branch is getting statement of account regularly?110606 Whether outstanding in imprest clearing a/c adjusted/reversed on each Friday and SCRA/IBR received from main branch responded promptly?110607 Whether Bankers’ Reconciliation is done periodically (Balance confirmation certificate for the balance should be obtained as on the date of inspection)?110608 Whether unreconciled entries are followed up effectively (details of outstanding 20
  • 21. entries should be furnished as per Annexure IV (d)).110609 Whether limits fixed with other banks (TT Discounting Limit) are reasonable? If no, views of the BM be taken in this regard.110610 Whether surplus cash is being remitted every Friday through TT/Remittance? IMPREST CLEARING (1107)110701 Whether clearing account is adjusted every wek ?110702 Whether there are long outstanding entries under this Head pendingreconciliation; if yes, whether differences located and satisfactory efforts being made toreconcile the imprest clearing a/c? (Details of outstanding entries be given as per Annexure IV (a) ) DNR/DNP ACCOUNT (1108)110801 Whether all the entries in the DNR/DNP A/Cs represent genuine debits/credits?110802 Whether there are any long outstanding entries under DNR. If yes, whetherdetailed particulars noted in cheque returning register (details of outstanding entries be given asper Annexure IV(b) and IV (c) ) ?110803 Whether in case of DNR. Branch is resorting to the practice of keeping thecheques in DNR A/C and releasing the same next day by deposit of cash and adjusting the entryby transfer entry instead of reversing the clearing? DAY BOOK/GL/GLB (1109)110901 Whether Day Book is written daily and properly authenticated?110902 Whether day book is checked with vouchers/long books/transfer scrolls etc. by Officers in routine?110903 Whether each and every entry initialed and necessary checking certificate being given in the day book?110904 Whether GL/GLB slip is being written daily and there is no pendency?110905 Whether GL/GLB slip is being checked by Branch Manager daily? 21
  • 22. 110906 Whether GL/GLB slip is duly signed and necessary checking certificate being given in the day book?110907 Whether various subsidiary books and registers are properly maintained and their summations are tallied up to date with the GL?110908 Whether the transfer scroll is properly maintained and totals tallied with GLB transfer head? SUNDRY CREDITORS AND SUNDRY DEBTORS (1110)111001 Whether proper books are maintained to record all individual items and no unauthorized transactions have been put through Sundry Debtors account?111002 Whether all debits in Sundry Debtors a/c are approved by the Manager?111003 Whether there are any long outstanding entries (Agewise details & comparative position of entries are to be given as per Annexure V(d) and V (g)?111004 Whether statements of Sundry Creditors and Sundry Debtors are submitted in terms of H.O. instructions? EXPENDITURE (1111)111101 Whether all debits to various expenditure heads since the date of last inspection are in order & relative vouchers are being signed by the Branch Manager?111102 Whether all items of Charges General, Stationery consumed etc. are within the discretionary power of the Branch Manager?111103 Under proper authority.111104 Whether powers for charges general are being used judiciously by the BM ?111105 Whether proper control is being exercised in identing inventory and use ofStationery? (Details of expenditure incurred by the branch beyond the powers vested/without appropriate sanction by the Competent Authority and details of expenses where no supporting bills/cash memo are held be given.)111106 Whether branch is maintaining telephone register?111107 Whether all trunk calls are entered in the register?111108 Whether calls made on behalf of customers are being debited to their accounts? 22
  • 23. 111109 Whether telephone bills paid by the branch are in order and routed through Sundry Dr.A/C pending receipt of approval from ZO.111110 Whether personal calls are debited to the S.B.Accounts of concerned staff members?111111 Whether the branch is maintaining General Charges Register as per HO guidelines? PERSONNEL MATTERS (1112)111201 Whether the attendance register is properly maintained and the same is signed by the Branch Manager after opening time of the branch?111202 Whether salary register is properly checked and signed by the BM?111203 Whether Income Tax/PF and other deductions are deposited with the concerned authorities and proper receipts obtained thereof and kept on record?111204 Whether IBRs advising the PF deduction of staff are being dispatched regularly?111205 Whether instalments of staff loans are being deducted every month regularly from the salary and IBR dispatched soon thereafter?111206 Whether advances outstanding against the staff are proportionate to the bills submitted, whether bills are submitted in time, proper follow up of these entries is made and got adjusted within 30 days?111207 Whether leaves to the staff members are being sanctioned according to the stipulated norms and leave applications are being tendered by them before proceeding on leave and whether leave record is being properly maintained at the branch?111208 Whether Festival advance, TA and LFC leave encashment, medical, salary andovertime etc. are being paid in accordance with the laid down instructions and the requisiteregisters properly maintained.111209 Whether the staff members are trained properly to perform their dutieseffectively?111210 Whether duties of staff are rotated periodically?111211 Whether supervisory staff at various levels exercising their powers judiciously?111212 Whether industrial relations at the branch are cordial?111213 Whether sub staff wear uniform? 23
  • 24. 111214 Whether existing staff strength is commensurate with the approved manpower?111215 Whether staff is motivated to clear the pendency of work and update housekeeping?111216 Whether staff movement register is maintained properly and entries beingauthenticated by the BM?111217 Whether leased accommodation rent/HRA is being paid as per sanction/OSR/settlement and whether 6% of Basic Pay at initial stage/standard rent is being deducted at sourceregularly where leased accommodation is provided to the officer staff?111218 Whether officiating allowance is being paid as per Staff Circulars/HO guidelines?111219 Whether key result areas determined and confidential reports of staff for thecurrent year submitted?111220 Whether all the pending transfer orders of the staff have been implemented?111221 Whether in case of car loans to staff members, insurance amount is borne by thestaff members from their own sources and is not being debited to the loan account? SECURITY ASPECTS (1113)111301 Has the security classification of the branch been done and advised by the ZO/HOSecurity Department?111302 Whether two guards are posted and two guns have been provided for high risk branches?111303 Whether one guard is posted and one gun has been provided for normal riskbranches?111304 Whether the Gun License is valid?111305 Whether ammunition is older than three years?111306 Whether cash safe is embedded if the branch is not having strong room/whether iron cage has been provided?111307 Is Electronic Alarm System in order?111308 Whether main entrance collapsible gate is chained and locked (with sufficientopening to allow entry of one man only at a time) during banking hours?111309 Whether window service provided in rural branches in Punjab & adjoiningdistricts and whether restricted entry system introduced if window service is impossible in ruralbranches? 24
  • 25. 111310 Whether collapsible gate at main entrance kept closed after banking hours andentry of outsiders properly controlled and scanned?111311 Whether grill gate of strong room kept locked during the day?111312 Whether cashier’s cabin kept locked?111313 Whether the branch is maintaining gun movement register and guns are beingtested at periodical intervals?111314 Whether locker room is kept clean and dressing table is in order & curtains areclean? FRAUDS/FOREGERY (1114)111401 Whether any fraud/forgery committed after the last inspection? If yes, complete details be furnished as per annexure (Y).111402 Whether the same has been properly looked into and reported and esired action taken without delay? In case of already reported frauds whether proper follow up is being done in Respect of:111403 Recovery111404 Police/CBI action, if any111405 Civil Suit, if any111406 F.I.R. lodged ? MISCELLANEOUS (1115) STOPPED CHEQUES111501 Have you verified that stopped cheques are promptly recorded in the stoppayment register and proper caution is recorded in the respective ledger account and instructionssuitably posted therein in all cases. Have you also verified that entries in respect of stale chequesare regularly marked off in the stop payment register? CORRESPONDENCE (1116)111601 Are you satisfied about the arrangements made for bringing dak from the PostOffice?111602 Whether proper supervision is being exercised by the BM over inward mail?111603 Whether outward letters and instruments are dispatched on the day of originating?111604 Whether Dak Receipt & Dak Despatch Registers have been properly maintained?111605 Whether correspondence is methodically filed and disposed of in a reasonabletime? 25
  • 26. STATEMENT REGISTER (1117)111701 Whether statement register is properly maintained and all periodical returnsprescribed by HO are correctly compiled and promptly dispatched to HO/ZO within theprescribed time schedule? (details of control returns not submitted for a long time should begiven as per Annexure XXI of Appendix B). DEPOSIT VAULT/LOCKERS (1118)111801 Whether working of the safe deposit vault is in accordance with the prescribedprocedure?111802 Whether locks of surrendered lockers are inter-changed before leasing them again?111803 Whether proper safeguards are observed in respect of control of vault and the main keys?111804 Whether keys of vacant lockers tally with the chart provided for this purpose. If not, give details?111805 Whether nomination facility being provided and relevant forms obtained and keptproperly in record? Details of locker rent in arrears be furnished as per Annexure V(f)111806 Whether safe custody facility provided to customers for keeping articles envelopes, documents etc.?111807 Whether safe custody register maintained properly? H.O. EXTRACTS (1119)111901 Have you verified that H.O. extracts are being sent to H.O. ReconciliationDepartment/Z.O. respective regularly as per instructions, whether they are submitted complete inall respects i.e. branch codes (credit/debit), full digit of IBRs issued/responded and amounts arelegibly recorded, self branch code and date of extracts being recorded neatly in the boxesprovided, summary of H.O. Account position is being filled properly, opening and closingbalances tally with that of GL, totals of credits and debits are actuals as per transactionsrecorded and whether the entries recorded in H.O. extracts are being authenticated by theconcerned officer. Have you looked into pending correspondence also from H.O. ReconciliationDepartment? (Refer H.O. Reconciliation Deptt. Cir.No.9/92 dt.1.08.92 in this regard). 26
  • 27. POSTAGE (1120)112001 Whether postal receipts of Registered/insured letters dispatched are recorded dailyin the dispatch register and relative postal receipts are crossed under date in token of theirchecking, whether dispatch register is checked daily and summary of stamps used, details ofunused stamps and cash in hand is prepared daily ?112002 Whether the branch is maintaining inward and outward register for telegrams and telex and whether all telegrams/telex messages sent on behalf of customers are debited to their respective accounts. MARGIN MONEY (1121)112101 Whether reversal of entries from margin money a/c is properly accounted for? BILLS FOR COLLECTION (IBC & OBC) (1122)112201 Whether outward bills (irrespective of amount) are sent under Regd.post/ IBA approved couriers ?112202 Whether instructions regarding the custody of parcels/bills and accompanying documents are being carried out ?112203 Whether usance bills in hand are properly accepted, adequately stamped and their due dates correctly worked out?112204 Whether bills in hand are tallied with GL and verified documents of title of goods in each case?112205 Whether contra vouchers are passed on daily/weekly basis?112206 Whether all bills in hand are properly presented and intimations thereof sent todrawees promptly? (List of overdue bills lying with the branch may be given as per Annexure V( c) ). 27
  • 28. MANAGER CHEQUES (1123)112301 Whether effective follow up measures are being taken for the adjustment of old entries. (comparative position of outstanding entries may be furnished as per Annexure V (a) ) . DRAFTS PAYABLE, M.T.S. & T.T.S PAYABLE (1124)112401 In case where a Sr.No. allotted to the draft is found missing or a different numberis received, have you ensured that the drawee branch has taken up the matter with the drawingbranch for seeking confirmation and there is no unusual delay?112402 Whether all entries of stale drafts and MCs have been transferred to unclaimeddrafts payable account?112403 Whether all T.T.s are being serially numbered branchwise and recorded in theT.T.s sent and received registers accordingly. Further, whether all procedural instructions arebeing strictly followed?112404 Whether T.T. Codes 1 and 2 are kept separately and code No. 1 and 2 are notbeing used by the same person? SHARES AND SECURITIES IN SAFE CUSTODY (1125)112501 Whether instructions laid down in respect of acceptance of shares and securities insafe custody are duly observed?112502 Whether half yearly confirmations are obtained from customers in respect ofshares/securities held and their signatures duly verified?112503 Whether balances of securities and shares in the ledger are tallied with the balancein the register periodically? And interest and/or dividends are realized in accordance with thecustomer’s mandate?112504 Whether branch is maintaining securities in and out register on prescribed linesfor recording the movement of securities and shares?112505 Whether recovery of safe custody fee/handling charges are in order? RECORDS AND VOUCHERS (1126) 28
  • 29. 112601 Whether old record requiring destruction has been properly dealt with inaccordance with the prescribed procedure? (Ref.P&D Cir.No.732 dt.13.3.84).112602 Whether branch records are properly kept and recorded in Record Register?112603 Whether vouchers are properly numbered, stitched and recorded in the voucher register and checked by the Manager/Second Man?112604 Whether voucher movement register and old record register are properlymaintained? MISCELLANEOUS/OTHERS (1127)112701 Whether signature books of authorized officers of RBI are kept in the personalcustody of the branch incharge and the same is kept uptodate?112702 Whether bank’s books of authorized specimen signatures are properly kept and prompt action is taken on correction list?112703 Whether code book and check symbol duly corrected uptodate are properly keptand do they at all times remain in the custody of and are only handled by an authorized official?112704 Whether the security registers of DD/FD/MT/MC issued being tallied and areduly signed by Branch Incharge and second man daily and checked with security items whiletaking them to strong room ? STATIONERY (1128)112801 Whether items of stationery are properly recorded and tallied with Balance ofStock of Stationery?112802 Whether security forms in use remain during office hours in the custoy ofauthorized persons as per laid down norms and kept in safe in the strong room after closinghours?112803 Whether details of surplus/obsolete stationery items including MICR/NON-MICR cheque books etc. been given to ZO/HO Stationery Deptt. seeking instructions for disposal?112804 Whether any SCRA relating to Stationery supplied is pending with the branch? FURNITURE & FIXTURES (FF) (1129)112901 Whether furniture items are numbered? 29
  • 30. 112902 Whether they tally with furniture and fixtures register maintained for the purpose?112903 Whether F.F. Balances tally with G.L.?112904 Whether the sign board is properly displayed ?112905 Whether lease deed of bank premises executed or not?112906 Whether lease deed of the bank premises is in force ?112907 Whether rent is being paid regulary?112908 Whether appropriate steps taken to renew the lease. If it has already expired orgoing to expire shortly?112909 Whether payment of taxes and ground rent is being made in time? (This is applicable for bank owned premises or in case of rented premises where payment of taxes is the liability of the work).112910 Whether communication with regard to insurance of furniture and fixture itemshas been received from H.O. Accounts Department and kept on record?112911 Whether details of obsolete and broken furniture and other items given to ZO seeking instructions for disposal?112912 Whether vehicles allotted to branch are insured?112913 Whether cost of all the vehicles is duly recorded in books? DISBURSEMENT OF PENSIONS (1130) Pension Payment Orders (PPO) certificates, pension payment accounts.113001 Whether the branch maintains the PPO’s (Disburser’s Portion) in good condition i.e. without mutilation?113002 Whether the Pensioner’s Portion of PPO’s has been given to the pensioners?113003 Whether the undertaking regarding the refund of excess payment prescribed in the scheme being obtained from the pensioners?113004 Whether the PPO’s kept under the custody of a responsible officer in the branch?113005 Whether certificates required under the scheme are being obtained on due date? 30
  • 31. 113006 Whether the payments noted simultaneously in the Pension Payment AccountRegister when the amount of pension is credited to the pensioner’s accounts? PAYMENTS OF PENSIONS113007 Whether the amount of pension credited to the pensioners accounts on the duedate?113008 Whether the accounts to which pensions are credited are single accounts in the individual names of the concerned pensioners?113009 Are there operational instructions to indicate that operations in the accounts arepermissible by the pensioners themselves and not by their attorneys or authorized agents?113010 Whether the amount of relief in pension has been paid to the pensioners at correctrates?113011 Whether the recovery of Income Tax has been made as required under the schem?113012 Whether the pension has been reduced only from the date of payment ofcommuted value of pension as laid down in the scheme?113013 Whether in case of death, pension has been drawn for the day of the pensioner’s death irrespective of the time of death?113014 Whether a prominent note of the date from which family pension at the normal(lower) rate to commence kept in red ink in the Pension Ledger Accounts of the familypensioner?113015 Whether the family pension has been reduced/paid at the lower normal rate?113016 Whether the payments made to the pensioners have been noted in the Disburser’sportion of the PPO ? SCROLLS113017 Whether the payment scrolls submitted to the link branch by the 10th of themonth?113018 Whether the pension payment scrolls are being prepared correctly according to different payment schemes? IN THE LINK BRANCH113019 Whether Index Register of pension payments authorized under the scheme is being maintained? 31
  • 32. 113020 Whether an impression of the special seal of the treasury officer together with the specimen of his signature maintained?113021 Whether the specimen signature referred to at (113020) above countersigned, wherever necessary, by the Manager Reserve Bank of India or Agent, State Bank of India or its subsidiary conducting Govt.’s business at the center?113022 Whether the payment scrolls submitted to the office of RBI of State bank ofIndia or its subsidiary conducting Govt. business at the center by the 15th of month? RESTORATION OF COMMUTED PORTION OF PENSION AFTER 15 YEARS113023 Whether commuted portion of pension has been restored to such pensioners who had commuted a portion of their pension on due date?113024 Whether action taken as at (113023) above on receipt of applications from the eligible pensioners in the prescribed form?113025 Whether full particulars of each pension case along with the amount of pension restored have been intimated to the accounts officer which had issued PPO’s for verifying the correctness? CLEARING (1131)113101 The branch is forwarding cheques/instruments regularly to Clearing House within the time stipulated.113102 Proper check and control is exercised over cheques/instruments presented/ received through Clearing House.113103 Unpaid instruments are debited to constituents’ accounts promptly.113104 Unpaid instruments are properly recorded.113105 Unpaid instruments are returned to lodgers promptly.113106 Clearing differences, if any, are promptly and effectively pursued. 32
  • 33. CREDIT MANAGE MENT (OTHER THAN PRIORITY SECTORS)Audit Check List – B 1ADVANCES AGAINST IMMOVABLE PROPERTIES (2200)220001 Whether the branch is in possession of the relative original title deeds or the Mortgage Deed duly registered?220002 Whether the branch is holding the memorandum of deposit of title deeds (On Form No.84-A or 84 AA) duly signed by the owners?220003 Whether the branch is in possession of the legal opinion, search report, latest Index Inspection and valuation reports?220004 Whether requirements pointed out in legal opinions, particularly those relating toobtaining mortgage permission from competent authority in case of leased properties, permissionunder Urban Land and Ceiling Regulation Act 1976, mutation, latest property tax receipts,previous chains of title deeds etc. are complied with?220005 Whether entry relating to equitable mortgage is properly entered in the Title Deed Register?220006 Whether Certificate of Registration of charge with the Registrar of Companies in the case of Limited Companies is held by the branch?220007 Whether the title deeds once deposited are not delivered to the customer. Where,however, the same are required for perusal by any authority, have the same been presentedbefore such authority through a Bank Official Bank Counsel.220008 Whether legal opinion states clearly that the owner of the property has a clear andmarketable title to the property and that the property can be validly mortgaged to the Bank byway of Equitable Mortgage/Registered Mortgage. 33
  • 34. CONSUMER LOANS (2201)220101 Whether the quantum of loan sanctioned, the amount of instalments, totalrepayment period, and margin etc. are within the limits prescribed by the Head Office?220102 Whether the loans have been granted only to persons with regular monthly salaryor proper repaying capacity?220103 Whether letter of undertaking is obtained, wherever possible from the employer ofthe borrower agreeing to deduct the amount of instalments from the borrowers salary and remit itto the Bank directly?220104 Whether the consumer loans are granted for purchase of new consumer articles ofstandard companies which generally carry a performance warranty for a minimum period of sixto twelve months?220105 Whether the disbursement of the loan is by means of cross pay order issued infavour of the dealer and original invoice and receipt (and copy of Registration Certificate in caseof Vehicles) are obtained and kept on bank record?220106 Whether the consumer goods purchased are insured against fire and other riskswherever necessary?220107 Whether it is verified from time to time that the consumer goods purchased are inworking condition?220108 Whether in cases, wherever default occurs, prompt action is taken for recovery ofthe bank’s dues? ADVANCES AGAINST GOVT. SECURITIES/SHARES (2202)220201 Whether all Govt. securities have been duly endorsed in favour of the bank and endorsements got registered wherever necessary? 34
  • 35. 220202 Whether a diary relating to due date of interest on securities is maintained and the interest is collected regularly and promptly?220203 Whether shares held are got transferred in the name of the bank in case ofadvances of over Rs.3.00 lacs against shares?220204 Whether debentures held as security are got transferred in the bank’s name?220205 Whether there are sufficient blank columns for further endorsement?220206 Whether proper record of securities held and their movement is maintained in security in and out register?220207 Whether the shares/debentures stand in the name of the borrower?220208 Whether shares of Private Limited Companies/Partly paid shares and unquotedshares are not accepted as security and advance is granted against the shares/debentures of onlythose companies which are approved by H.O. from time to time (Please refer ID CircularNo.1408 dated 28.01.94 in this regard).220209 Whether the shares held are accompanied by adequate No.of blank transfer deeds?220210 Whether the bank has accepted securities are mutilated or damaged and the chain of endorsements appearing thereon is broken?220211 Whether any advance against shares/securities standing in the name of minors has been allowed?220212 Whether stipulated margin is maintained in all cases?220213 Whether the drawing power is revised on the basis of latest valuation reports of stock exchange? ADVANCES AGAINST BANK DEPOSITS (2203)220301 Whether Fixed Deposit Receipts/recurring deposit pass books, against which advances are allowed, are held by the branch duly discharged in favour of the bank by all the joint account holders?220302 Whether lien is marked on the deposit receipt as well as on the respective ledger folios under full signatures of the authorized officer with date?220303 Whether letter of undertaking for utilizing loan amount for minor’s benefit andindemnity bond are obtained from guardian while advancing against minor’s deposit?220304 Whether RBI Directives in regard to margin, rate of interest etc. are strictly complied with and in case of premature encashment of deposit or adjustment of advance rate of interest charged on the advance is also reduced accordingly? 35
  • 36. 220305 Whether advances are allowed to continue after the date of maturity by renewal of the relative deposits?220306 Whether advances against non-resident (external) fixed deposit and FCNR adjusted with local credits in India Rupees?220307 Whether in case of advance against deposit of other offices, an acknowledge- ment of having noted the lien on the FD by the issuing branch has been obtained and kept with the security documents? ADVANCES AGAINST LIFE INSURANCE POLICIES (2204)220401 Whether the assignments in favour of the bank are duly registered with the LIC and original policies with such endorsement held on bank record?220402 Whether latest surrender value has been obtained and the advance is within the stipulated margin?220403 Whether latest premium receipts have been taken.220404 Whether mandate authorizing the bank to make payment of the premium by debit to the borrowers account is held?220405 Whether the age of the assured has in all cases been admitted and the policies are in full force and have been recorded in the documents register?220406 Whether undated surrender letters have been held for each policy. LOANS TO STAFF MEMBERS (2205)220501 Whether sanction from competent authority is invariably held on record before disbursing any loan to staff members?220502 Whether loan in any case has been disbursed from sundry debtors account pending receipt of sanction?220503 Whether all the stipulations of the sanction regarding margin, rate of interest amount of instalments, direct payment to dealer etc. are complied with?220504 Whether end use is ensured and all the requisite documents/papers viz. invoice/receipt/insurance/copy of Registration Certificate etc. are obtained and kept on bank record.220505 Whether in case of housing loan to staff, equitable mortgage has been 36
  • 37. properly created, loan is disbursed in stages and the bills showing the cost incurred are held on record?220506 Whether the property is got insured against various risks stipulated in the sanction/HO instructions?220507 Whether the instalments in all staff loan accounts are invariably deducted from salary in terms of H.O. Staff Cir.letter No. 490 dated 21.08.89? HYPOTHECATION/PLEDGE OF GOODS (2206)220601 Whether the stock statements relating to Hypothecated goods are obtained periodically from the borrowers at stipulated intervals on Form No.190? If not, whether penal interest is being charged?220602 Is the gap between the date of the statement and the date of receipt at branch reasonable and properly explainable to your satisfaction?220603 Whether all the columns of statement are properly filled in by the party and duly signed?220604 Whether the stock statements are scrutinized by the branch and drawing power arrived at after maintaining the margin and noted in the drawing power register/ledger?220605 Whether proper and upto date stock register is maintained by the borrower andstock statement submitted tally with the register.220606 Whether the stocks pledged/hypothecated are periodically checked by the branchmanager/officers surprisingly without informing the borrower?220607 Whether godown inspection reports are being sent at Zonal Office regularly?220608 Whether the branch is holding original/certified invoices on the basis of whichstocks have been evaluated and no advance is being allowed against unpaid stocks?220609 Whether the valuation of stocks pledged/hypothecated has been made on the basisof cost price or market price, whichever is lower?220610 Whether the branch is maintaining the following registers properly?220611 Limit Register220612 Drawing Power Register220613 Insurance Register.220614 Godown Register220615 Godown visit register220616 Key Movement register 37
  • 38. 220617 Title Deed Register220618 Whether the Daily CC balances are taken down promptly and tallied with General Ledger?220619 Whether the godowns storing pledged goods are independently accessible? Non-independently accessible godowns have been accepted after obtaining Proper sanctions and Non-Objections?220620 Whether all doors to godowns having stocks under pledge are secured by Bank’s padlocks which bear the name of the Bank engraved in full and that Bank’s name plates are prominently displayed both outside and inside all such godowns?220621 Whether the keys of the godowns are promptly kept after use in safe custody inthe strong room under the dual control of the Manager and the Officer Incharge LoansDepartment?220622 Whether the duplicate keys of godowns are sealed by the godown-keeper in a boxand placed in Safe custody under dual control of the Manager and the Officer Incharge LoansDepartment?220623 Whether all windows, ventilators and doors other than the main door are securely grilled from inside, the walls are built upto the roof and godowns are free from dampness etc.?220624 Whether the borrowers are submitting all financial statements including income tax and wealth tax returns for timely reviewal of limits?220625 Whether stocks are adequately insured against fire, burglary risks etc. and policies with bank clause, are held on record?220626 Whether charge has been got registered with the Registrar of Companies in case of hypothecation advances to limited companies, and charge certificate held alongwith documents?220627 Whether the stocks pledged/hypothecated are well within the norms as suggested by Tandon/Chore Committee? (wherever applicable).220628 Whether the sale proceeds are routed through the CC account and are comparable to the party’s sales turnover?220629 Whether the operations in the account reveal any undesirable features? Inspectors are to ensure further220630 That clean loan/overdrats facilities are not allowed to borrowers to enable them to maintain the prescribed margins?220631 That the borrower is not having CC facility with other bank/non hypothecated the same stocks to another bank?220632 That the godown does not contain goods which are not pledged to the bank 38
  • 39. (unless specifically permitted and adequately insured)?220633 That the stocks hypothecated to the bank are separately stored, if kept with otherstocks, and that all other stocks are also covered by Insurance?220634 That there is no variation in the stocks as per Balance sheet and the stocks hypothecated/pledged as on the date of Balance Sheet?220635 That in case of consortium advances there is proper arrangement for inspection ofstocks, exchange of information between the banks as regards conduct of the account and thatother formalities such as obtaining of resolution, registration of charge etc. are complied with?220636 That Health Code wise classification of advances has been done correctly and the same has been confirmed by the Zonal Office? INLAND BILLS PURCHASED AND DISCOUNTED (2207)220701 Whether the advance against bills is allowed against sanctioned limit and Branchmanager does not allow such facility to a party who is enjoying other facilities under sanctionfrom ZO/HO without their specific approval?220702 Whether the bills drawn on sister/allied concerns are not purchased/discounted?220703 Whether DA/DP Bills Limits are kept segregated and are not intermingledwithout the approval of sanctioning authority?220704 Whether bills are not overdetained and where overdetained, action is taken to enquire fate of the bills and its early realization?220705 Whether the bills in respect of goods in which the borrower does not deal are not purchased/discounted?220706 Whether bills returned unpaid are not repurchased?220707 Whether overdue interest is charged on exscess drawings and delayed payments?220708 Whether DA Bills are drawn as per the tenure approved in the sanction letter?220709 Whether credit reports are maintained & periodically reviewed in respect of thedrawees, particularly those on whom bills for larger amounts are frequently drawn?220710 Whether when bills drawn on a particular drawee are received back unpaid or generally not paid in time, due precautions are taken before accepting fresh bills on such drawees?220711 Whether the party-wise bill purchased register is well maintained and all theentries of bills purchased/realized/returned unpaid being duly routed through it?220712 Whether the branch is prompt in dispatch of purchased/discounted bills? 39
  • 40. 220713 Whether Bank’s lien/interest is promptly notified to Railways/Transport Carriers wherever applicable?220714 Whether the branch is accepting the Transport Receipts of approved TransportCompanies issued in IBA approved format only and that bills accompanied by only thoseTransport Receipts/Railway Receipts have been purchased/discounted, where the consignee isBank?220715 Whether the overdue bills against which advance is outstanding, are deleted fromthe DP/transferred to bills for collection?220716 Whether the irrevocable Power of Attorney executed in Bank’s favour are dulyregistered with Govt. Departments in case of advance against Govt. Supply Bills?220717 Whether only the genuine bills/cheques arising out of normal trade transactions are purchased/discounted?220718 Whether the non-payment/non-acceptance advices are duly recorded and propersteps taken?220719 Whether the bills returned unpaid and not reimbursed immediately are transferred to the “Past due and Dishonoured Bills” account and notices of dishonour are promptly issued to all the parties liable on the dishonoured bills?220720 Whether the bills returned unpaid are reported to the Zonal Office?220721 Whether due date diaries in respect of usance bills are maintained properly?220722 Whether it is ensured that the goods in transit are adequately ensured for TPND (Theft, Pilferage, non-delivery) flood, and against riots and civil Commotions etc. LETTERS OF CREDIT (2208)220801 Whether it is verified that all the LC’s issued are backed by relative sanction andare properly recorded in LC issued register?220802 Whether applications for opening LC are obtained on bank’s prescribed proforma and the same are duly signed and stamped with stamp duly in force?220803 Whether it is ensured that LCs are not issued in favour of sister/allied concerns of the buyer/customer?220804 Whether the branch has obtained underlying sale contract between the buyer and the seller/supplier?220805 Whether LC’s are issued for trade related transactions only?220806 Whether balances under “Party-wise Register” extracted and tallied with the outstanding as per “LC Issued Register” as well as the general ledger? 40
  • 41. 220807 Whether Contra Vouchers are passed promptly?220808 Whether appropriate commission is charged and stipulated margin money is held in Margin Money account or in the shape of duly discharged deposit receipts?220809 Whether I.Cs are issued under the joint signatures of Branch Incharge and senior most officer/officers incharge loans department of the branch?220810 Whether the LCs are examined carefully at the designated branch to ensure that these have been issued by the opening branch authorisedly?220811 Whether negotiating branch has received a copy of the sanction letter?220812 Whether bills negotiated under the LCs are promptly paid and where not paid on presentation, the branch charges the over due interest besides observing other safeguards?220813 Whether counter guarantee of the party on whose behalf the LC has been issued and also of the guarantees specified in the sanction have been obtained? GUARANTEES (2209)220901 Whether it is verified that all the guarantees issued are backed by relative sanction and are properly recorded in guarantee issued register?220902 Whether balances under “Party-wise Guarantee Register” extracted and tallied with the outstanding as per “Gurantee Issued Register” as well as the general ledger?220903 Whether Contra Vouchers are passed promptly?220904 Whether appropriate commission is charged and stipulated margin money is held in Margin Money account or in the shape of duly discharged deposit receipts?220905 Whether counter-gurantees have been obtained from the constituents and in case of counter guarantees obtained from limited companies the same are backed by appropriate board resolutions?220906 Whether guarantees are issued under the joint signatures of branch incharge and senior most officer/officers incharge loans department of the branch?220907 Whether the counter guarantees obtained are adequately stamped and signedby duly authorized persons and additional securities/guarantees have been properly documented?220908 Whether bank guarantees are issued along with a covering letter as per the proforma prescribed vide H.O. Advances Deptt. Cir.Letter No.89/93 dated 06.12.93. 41
  • 42. 220909 Whether in case of Deferred Payment Guarantee, charge by way of hypothe-cation of machinery is obtained and the same is also registered with the Registrar of Companies,where such a facility is allowed to a Ltd. Co.?220910 Whether instalments under deferred payment guarantee are paid in time on duedate?220911 Whether due date diary has been properly maintained for deferred paymentguarantee?220912 Whether BM visits the borrowers periodically to assess the working position of securities(in respect of which deferred payment guarantees have been issued)?SUITS FILED/DECREED/RBI COMMENTED ACCOUNTS (2210)221001 Whether is verified that the recovery of bank’s dues in the advances cover under the above heads is being properly followed up?221002 Whether the securities held in these advances are clear marketable, properly insured and latest market valuation held on record?221003 Whether primary/collateral securities are inspected periodically and found intact?221004 Whether any efforts are being made for amicable settlement of dues to avoid litigation?221005 Whether expenses incurred in these accounts subsequent to filing of suit arecharged to “Litigation Suspense” or “Law” charges account with the approval of H.O. Law &Recovery Department.221006 Whether in suit filed cases, copies of the suit plaint are kept on record andwhether the case is being pursued actively by the branch and the lawyer?221007 Whether in decreed cases, certified copies of decrees have been obtained and execution proceedings are properly taken well before the decree gets time barred?221008 Whether the suit register and the decree register are properly maintained and checked and are always kept uptodate? ADVANCES AGAINST BOOK DEBTS (2211)221101 Whether the statement of Book Debts with age of each book debt is obtained every month and the debts beyond stipulated period i.e. more than 6 months old are excluded while calculating drawing power?221102 Whether complete address of the debtors are held by the Branch? 42
  • 43. 221103 Whether the amount of book-debts as on date of Balance Sheet tallies with the Balance Sheet?221104 Whether the branch obtains the power of attorney in favour of the bank duly executed on stamped paper and registered, wherever required?221105 Whether the Branch is verifying book debts with borrowers’ books of accounts and original orders to verify that the book debts have arisen out of genuine trade transactions?221106 Whether bank’s charge stands registered with the Registrar of Companies in case of advances to limited companies? CLEAN ADVANCES/CLEAN OVERDRAFTS (2212)221201 Whether in clean loan accounts the repayments as stipulated are received regularly and in the case of overdrafts, the accounts are operated satisfactorily and show healthy fluctuations?221202 Whether the loan is utilized for speculative purposes, overtrading or for providing margin in some other secured advances or in violation of the spirit of Selective Credit Control & other directives issued by RBI?221203 Whether the temporary unsecured overdrafts allowed by the BM are within his discretionary powers and are granted only in such cases which conform to the guidelines issued by H.O. from time to time?221204 In case answer is in negative to 221203 above whether such cases were reported to the competent authority and action got confirmed?221205 Whether granting of temporary overdrafts to the parties is a regular feature at the branch?221206 Whether valid security documents are held on record and financial papers of such parties kept on record and credit reports prepared?221207 Whether outstanding under clean overdrafts are taken down daily and tallied with the General Ledger?221208 Whether enhancement, variations in terms of facilities as well as renewal of overdrafts/clean loans are made after obtaining the consent of the guarantors and copies of all communications in this regard are sent to them?221209 Whether same parties or their sister/allied concerns are frequently allowed such facility? 43
  • 44. ADVANCES AGAINST GOLD JEWELLERY/BULLIONS (2213)221301 Whether the advances are made only to persons properly introduced to the Bank?221302 Whether branch is maintaining a complete record of all the Ornaments & Bullions held as security regarding the description, gross and net weight fineness etc?221303 Whether the shroof, approved Govt. valuer’s certificate about net gold content along with valuation thereon is held by the branch in all cases?221304 Whether the jewellery/bullion is held under the joint custody of bank officials?221305 Whether provisions of Gold Control Act, relating to lending against gold/ bullion are observed? PROTESTED/PAST DUE & DISHONOURED BILLS (2214)221401 Whether proper action is being taken in consultation with the ZO/HO bank’s retainer counsel?221402 Whether valid documents held/limitation available to the bank?221403 Whether goods under the dishonoured bills protected?221404 Whether security/additional security available to the Bank?221405 Whether notices of dishonour issued to all the parties liable on the bills?221406 Whether dishonoured bills have been got noted/protested through Notary Public?221407 Whether chances of recovery are good? 44
  • 45. 221408 Whether dishonoured bills were accommodation bills in nature?221409 Whether outstanding in the past due and dishonoured bills ledger tallied with theGeneral Ledger? SICK UNITS (2215)221501 Whether all industrial accounts, both SSI (including tiny and decentralized sector)and medium and large have been reviewed and whether any such account is showing signs ofsickness (indicative list given in ID Cir.No.1289) and if yes, whether corrective steps have beentaken to ensure that the unit does not become sick?221502 Whether all industrial accounts both SSI (including tiny and decentralized sector)and medium and large have been reviewed so as to ensure that no such account has become sickin terms of definitions as laid down by RBI and/or Sick Industrial Companies (Specialprovisions) Act 1985 (SICA) and as conveyed by H.O. Circulars from time to time (refer I.D.Cir.No. 1289 and Circulatory letter No.84/93 dated 17.11.93). If any such account has become sickas per the definitions whether the same has been identified as sick unit in terms of I.D.Cir.No.1289 dated 29.12.89?221503 If there are sick units identified as per (221502) above whether viability study forthe same has been conducted within 21 days of the date of identification in terms of RBIguidelines?221504 Whether in respect of potentially viable sick units, the rehabilitation package has been drawn and the same has been got approved from the appropriate authority within 3 months from the date of identification as sick unit?221505 Whether sanctioned packages have been properly implemented?221506 Whether in respect of all non-viable sick units steps are being taken by the branch for recovery of the balance outstanding including one time settlements and filing suits etc.221507 Whether the branch is quarterly reporting the position of all the sick units on theprescribed proforma in terms of ID Cir.No.1384 dated 04.05.93 to the controlling offices asspecified in this circular? 45
  • 46. 221508 Whether separate reporting on Form C as per I.D.Cir.No.1289 in respect of thoseSSI Sick Units (including Tiny and Decentralised sector) where the borrower is either non-traceable or the assets have not been created is being done?221509 Whether DICGC claims in respect of non-viable sick SSI units have been lodged?221510 Whether in respect of all the sick industrial companies as defined by SICA (IDCir.1289) the branch has sent necessary papers to H.O. for making reference to BIFR ? PRE-SHIPMENT ADVANCES (3300)330001 Whether the borrowers are holding exporter’s code no. allotted by the RBI?330002 Whether the packing credit advances are granted against lodgement of irrevocable letters of credit or firm export orders with definite expiry dates and are within discretionary powers or sanctioned limits?330003 Whether packing credit contract-wise register and party-wise register maintainedand separate accounts in respect of each borrower maintained properly?330004 Whether the disbursement of packing credit are linked to actual purchases of raw material and goods?330005 Whether the periodical inspections of goods and inventory carried out and stock statements are received in time and regularly?330006 Whether the interest is charged for periods and at rates laid down by the RBI?330007 Whether the packing credit advances are adjusted within the prescribed periods?330008 In case where extension of time is granted, whether party’s request for extension of time is held on record & permission from RBI obtained wherever necessary?330009 Whether packing credits are adjusted by negotiation of relative export bills only?330010 Whether adequate insurance is held for raw materials and goods?330011 Whether all packing credit advances are covered under whole Turnover Packing Credit Guarantee by the bank and guarantee fee sent every month regularly?330012 Whether ECGC policy is obtained by borrowers for individual buyers for theirwhole turnovers? 46
  • 47. 330013 Whether in cases where the exporter fails to effect shipment, normal rate ofinterest as well as penal interest charged for the entire period of advance and interest subsidy, if any claimed, is refunded to RBI?330014 In case of Packing Credit remains outstanding beyond due date, is the branch transferring it to overdue head promptly and charging overdue interest?330015 Is the branch taking following precautions with regard to ECGC cover?330016 Reporting of limit within 30 days330017 Payment of premium by 15th of following month330018 Reporting of overdues within 30 days of due date330019 Reporting of default within 4 months of due date or one month of recall330020 Lodgement of claim Within 6 months from default.330021 Is the branch endorsing order/LC against which Packing Credit is being permitted. (Further branches are to keep the ORIGINAL order/or LC in their record. In case original order/LC is to be released to party for some reasons branch must retain photocopy of confirmed order/LC indicating the endorsement of bank granting Packing Credit against such confirmed order/LC in bank’s record. In case runningaccount facility is permitted the order/LC is to be submitted in due course). Is the branchpursuing and receiving from the party the order/LC in stipulated time.330022 In the accounts not falling under Health Code-1, whether branch office is takingpermission of ECGC for accommodating parties beyond discretionary limit fixed by ECGCunder WTPCG. (The limit under WTPCG at present is Rs.20.00 lacs).POST SHIPMENT ADVANCES/EXPORT BILLS PURCHASED NEGOTIATED (3301)330101 Whether the export bills purchased/negotiated are within discretionary powers ofthe Branch Manager or sanctioned limits?330102 Whether the export bills purchased are covered under Whole Turnover Post Ship Guarantee as well as the ECGC Policy obtained by the exporter?330103 Whether the export documents are submitted to the bank for negotiation withinthe stipulated period of 21 days from date of shipment?330104 Whether the export documents are thoroughly scrutinized before negotiation to ensure that they strictly conform to the terms of letter of Credit/firm order?330105 Whether the documents are dispatched promptly and rate of exchange is correctly applied?330106 Whether Packing Credit allowed against the oder/LC is adjusted first out of 47
  • 48. purchase/negotiation of bills submitted thereunder and the balance amount is credited to exporter’s account?330107 Whether the bills, including those negotiated under reserve are realized without undue delay and within six months from the date of shipment?330108 Whether in the cases where bills remain unrealized beyond the prescribed period, the matter is promptly taken up with the exporter and if he fails to arrange to remittanceof proceeds, the matter is reported to RBI with reasons for delay?330109 Whether proper steps are taken in case of dishonoured bills viz protecting thegoods by keeping in warehouse after obtaining margin to cover charges to be incurred by theforeign bank, noting/protesting of the bills obtaining concurrence of ECGC guarantee invoked,and systematically following up the matter of payment with the exporter, RBI and Foreign Banktill the bill is paid or disposed of as permitted by RBI?330110 Is branch office taking permission of ECGC for accommodating parties beyonddiscretionary limit fixed by ECGC under Whole Turnover Postshipment Guarantee. (The limitunder WTPSG at present is Rs.40.00 lacs. However, in case of account with Health Code “1” nosuch prior approval is required?330111 Whether the interest charged on export bills purchased/negotiated exceeds the ratestipulated by the RBI?330112 Whether the interest subsidy is claimed regularly and relevant records maintainedproperly?330113 In case bills remain outstanding beyond due date, is the branch transferring it toOverdue Head promptly and getting the bills protested and charging overdue interest thereof?330114 Is the branch taking following precautions with regard to ECGC cover.330115 Reporting of limit Within 30 days330116 Payment of premium by 15th of following month330117 Reporting of overdues Within 30 days of due date330118 Reporting of default within 4 months of due date of one month of recall.330119 Lodgement of claim Within six months of reporting default.330120 Is the branch covering post-shipment advances under WTPSC or ECGC andensuring that party also covers the bills under ECGC Policy unless specific exemption has beenobtained from the appropriate authority? Is the branch accommodating the party within the limitset by ECGC on each buyer?330121 Is the branch levying buyer charges on bills as per FEDAI rules? 48
  • 49. 330122 Is the branch charging interest on quarterly basis on all overdue bills by debitingcurrent account of the party and the same are recovered promptly?330123 Is the branch following exchange control regulations with regard to payment of agency commission, reduction of invoice etc?330124 Is the branch maintaining record of Forward Contracts booked/used and charges applicable wherever are charged?330125 Is the branch maintaining bill-wise/party-wise register?330126 Is the branch crystallizing all bills remaining outstanding beyond due dates?EXPORT BILLS NEGOTIATED UNDER LETTER OF CREDIT (ABLC) (3302)330201 Whether it is ensured that documents pertaining to the title of goods i.e. bills oflading/airway bills are with full set of documents received under import letter and documents arethoroughly examined?330202 Whether proper entries are made in the prescribed register and usuance billspresented to the drawee/importers with the requisite foreign non-judicial import letter of creditand documents are thoroughly examined.330203 Whether physical inspection of the goods imported under LC carried out and ensured that these are lying at port or stored in bonded warehouse?330204 Whether it is ensured that adequate insurance cover is available and kept in forcetill the bill is retired?330205 Whether due date or the fact of Non-acceptance, as the case may be, is promptly advised to the negotiating bank in case of usance bills?330206 Whether it is verified that the importers concurrence or rejection is obtained inwriting without delay in cases where negotiation by foreign bank is under “Reserve” or“Guarantee”?330207 Whether it is ensured that where documents are in order, the drawee is notpermitted to refuse the documents?330208 Whether it is ensured that all the import bills are retired to the debit of importer’s account with the branch?330209 Whether it is verified that letter of credit liability is reversed on retirement of the bill?330210 Whether the balances of outstanding are tallied atleast once a month? 49
  • 50. 330211 Whether the outstanding bills in hand under import LC are checked by the Branch Manager personally once a week?330212 Is the branch levying charges as per FEDAI Rules?330213 Is the branch following rules relating to forward contracts strictly?330214 In case the bill is not paid, is the branch crystallizing the bill amount on the 10th day of receipt of the bill? ADVANCES AGAINST DUTY DRAWBACK (3303)330301 Whether advance is granted to exporters against their duty drawback entitlements,as provisionally certified by Customs Authorities pending final sanction & payment?330302 Whether any interest is charged, if advance is adjusted within a period of 90 days?330303 Whether 100% refinance at NIL rate of interest is obtained from RBI?330304 Whether normal commercial rate of interest is charged for the overdue period beyond 90 days?330305 In case the advance remains outstanding beyond due date, is the branch transferring it to overdue head promptly ?330306 Is the branch taking following precautions with regard to ECGC Cover.330306 Reporting of limit Within 30 days330307 Payment of premium by 15th of following month330308 Reporting of overdues Within 30 days of due date330309 Reporting of default within 4 months of due date of one month of recall.330310 Lodgement of claim Within six months of reporting default. 50
  • 51. IMPORTS (3304)a) Import Letter of Credit330401 Whether application of Form Imp. 1/1 duly signed and stamped obtained from importer in each case?330402 Whether proper records and registers like LC Register F.Imp.9/9 and liability register F.Imp.8/8 maintained?330403 Whether the amount of LC issued plus previous outstanding of the party is within the discretionary powers/sanctioned limits?330404 Whether the letter of credit issued are supported by valid import license or are under O.G.L.?330405 Whether the stipulated margin and commission are recovered prior to opening of credit?330406 Whether any back dated letters of credit are established subsequent to change in the import policies?330407 Whether the contra entries for controlling the letters of credit are passed promptly?330408 Whether the outstanding LC are balanced atleast once a month? Advances against Shares & Debentures Bonds (3305) Hire Purchase/leasing activities (3306) 51
  • 52. AnnexureCREDIT MANAGEMENT (PRIORITY SECTORS) AUDIT CHECK LIST – C IAGRICULTURAL ADVANCES (4400)440001 Whether area of opoeration of the borrowers is within the controllable distance form the Branch concerned (to be verified from the record and not by actual visit to the said area)?440002 Whether in case of term loans, a certificate from the field officer or Branch Manager regarding economic viability and Technical feasibility of the project Financed is held?440003 Whether in case of crop loans, the amount of loan disbursed is in accordance with the approved scale of finance? In case of live stock loans:440004 Whether veterinary doctor’s certificate in regard to age, health, etc of the animals are held on record?440005 Whether animals have been insured against risk of mortality and are tatttoed/branded with bank’s name?440006 Whether no dues certificates have been obtained from other financial agenciesconcerned or a certificate from our own field staff, on the basis of local enquiries, affidavits fromthe borrowers in respect of state of their indebtedness are held by the branch?440007 Whether disbursement of loan in cash or kind is evidenced by the borrowers’receipt for cash and/or for the goods purchased within the amount of loan as well as by thesellers invoice, wherever possible? 52
  • 53. 440008 Whether loan documents are in order and have been kept alive by obtaining half yearly balance confirmation slips?440009 Whether all the securities relating to agricultural advances viz Tractors, pump-set, implements etc. are fully insured against various risks with usual bank clause as prescribed?440010 Whether pre and post disbursement inspections were properly conducted? Are securities periodically inspected as prescribed? In case where payments is not forthcoming:440011 Whether the default in payments is due to crop failure on account of naturalreasons over which the borrowers had no control or it is due to some other reasons consideredequally good as evidenced by record?440012 Whether in case of default for good reasons, rescheduling or repaymentprogramme has been appropriately made or in case of crop loan, the loan has been converted intoterm loan repayable over a suitable period?440013 Whether in case of willful default, notice has been served on the borrower and the guarantor, if any?Whether in case where the default, has been persistent and ordinary methods of recovery havefailed to produce results, the provisions of Agricultural Recovery Act have been invoked? (inthe states where such Acts are in force).440014 Whether in case of term loans which are highly irregular, the facts of the casehave been reported to the Zonal Manager and his permission to transfer the accounts to ProtestedAdvances and to file a claim with the Deposit Insurance and Credit Guarantee Corporation,sought?440015 Whether in cases considered fit by the Zonal Manager for transfer to Protested Advances Account and filing claims with Deposit Insurance and Credit Guarantee Corporation, claim actually has been lodged?440016 Whether proper follow up measures have been taken by the branch to expedite recoveries? Is due date diary maintained to ensure effective and prompt action:440017 For recovery of instalments in term loans.440018 In relation to proceedings initiated under the Agricultural Recovery Act or other summary enactments.440019 In respect of Protested Advances Accounts.440020 In pursuing claims with Deposit Insurance & Credit Guarantee Corpn.440021 In suit filed or decreed accounts. 53
  • 54. 440022 Have periodical balance confirmations as prescribed been secured from borrowers regularly on prescribed forms?440023 If any loan has become time barred or its limitation period is to expire within 6 months, has the Branch Manager taken appropriate measures to get the loan adjusted or to extend the limitation period?440024 Has the branch been invariably taking appropriate, prompt and effective steps(by regularly issuing reminders and notices to and making personal recovery of over dues? If so,what has been the cause of accumulation of arrears (whether willful default or mis-utilisation ofloans or unsatisfactory/poor repayment capacity of borrowers? ADVANCES TO PRIMARY AGRICULTURAL CREDIT/FARMER (4401) SERVICE SOCIETIES440101 Whether loans to the societies have been allowed with the approval of higher authorities?440102 Whether the resolution passed by the Managing Committee of the Society for borrowing from the bank is obtained?440103 Whether it is ensured that the amount of loan was within the borrowing limits of the Society as specified in its bye-laws?440104 Whether proper loan security documents as prescribed by H.O. obtained,including the deeds of assignment in favour of the bank of all rights the society has over the assets of its members through charge/mortgage of land?440105 Whether the accounts of the societies are audited and the copy of the audited balance sheets held on record?440106 Whether the bank’s field staff supervise the working of the societies at regular intervals of time and ensure that there is a proper system to follow up the dues? EDUCATIONAL LOANS (4402)440201 Whether advances have been extended to only deserving students whose parents/ guardians cannot afford such higher education without the bank assistance?440202 Whether the borrowers are students of India Nationality with good academic record and have secured admission in Govt. recognized school/college/ educational establishment? 54
  • 55. 440203 Whether the amount of advance has covered all necessary items of expenses andrepayment schedule provides sufficient gestation period to allow the students to settle down inlife by securing suitable employment or by starting independent vocation/profession?440204 Whether the requisite undertaking, as prescribed under the scheme has beenobtained from the borrower viz.440205 That he would not participate in any unlawful activity?440206 That he would follow all the rules and regulations laid down by the educational institution.440207 That he would not change the course of studies or the place of study or the institution or take up employment during the course, without the bank’s prior permission in writing?440208 That he would strive to secure a suitable employment immediately after the completion of the course and440209 That he will confine all his borrowings to this bank.440210 Whether all the eligible advances have been overed under DICGC Scheme and correct particulars along with the guarantee fee are being sent regularly in time ? ADVANCES AGAINST VEHICLES (4403)A) Direct Finance:440301 Whether all vehicles financed stand registered and insured in the joint names of the bank and the borrower and copies of Registration Certificate and Insurance held on record?440302 Whether payment is released directly to the dealer and the invoice and payment receipts are held with the Bank in each case?440303 Whether bank’s name is exhibited on the vehicles?440304 Whether periodical physical inspection of the vehicles is conducted and record maintained in the security Inspection Register?440305 Whether all eligible accounts covered under DICGC Schemes?440306 Whether refinance obtained in all eligible cases?440307 Whether the borrower holds a valid route permit to ply the vehicle?440308 Whether the borrower holds valid driving license in case of owner driven 55
  • 56. vehicle?440309 Whether in case of default, Regional Transport Authority is being informed not to renew route permit without bank’s consent? In case of advances against second hand vehicles:440310 Whether valuation report from reputed automobile engineer is obtained?440311 Whether comprehensive Insurance Policy is available?440312 Whether amount of advance does not exceed 50% of the value of the vehicle?440313 Whether permission of competent authority is obtained?440314 Whether bank’s charge has been registered with the Registrar of Companies in case of Limited Companies?440315 Whether undated letters from borrower, addressed to registration authority for transfer of vehicle in Bank’s name are held?INDIRECT FINANCE (AGAINST HIRE-PURCHASE AGREEMENT) (4404)440401 a) Whether the Demand Promissory Notes and Hire Purchase Agreements duly endorsed in bank’s favour are held by the bank?440402 b) Whether Hire purchase agreements specially drafted by the bank for such type of business are held?440403 a) Whether comprehensive insurance policy assigned in favour of the bank is held?440404 b) Whether indemnity policy issued by an Insurance Company, wherever required in terms of sanction are held?440405 Whether dealer’s invoice, certified copy of Registration Certificate, duplicate keys of the vehicles, certificate of Registration of Charge (in case of Limited Companies) are held?440406 a) Whether periodical statement of hirers with amount due from them giving the amount of arrears is obtained regularly from the finance company?440407 b) Whether drawing power is revised according to latest statement?440408 c) Whether Hire Purchase Agreements where default is continuous are excluded from security?440409 Whether a notice of Bank’s interest in the vehicles is sent to the hirers/ guarantors? ADVANCES TO RETAILERS-SMALL BUSINESS (4405) 56
  • 57. 440501 Whether the advances to retailers/small traders made after assessing properly that the borrower comes under the purview of the definition?440502 Whether the repayment programme is fixed keeping in view the expected generation of income from the business?440503 Whether all eligible accounts are covered under DICGC Scheme and Guarantee fee sent in time?440504 Whether the instalments in loan accounts are regular?440505 Whether the branch has satisfied itself that the shop is owned by the borrower or is rented/leased in his own name?440506 Whether the sale proceeds are being routed through the account?440507 Whether the Branch Manager/Officials visit the borrower’s premises periodically by surprise for verification of the goods charged to the Bank?ADVANCES TO PROFESSIONAL & SELF EMPLOYED PERSONS (4406)440601 Whether the borrower is holding a recognized degree and diploma or other- wise trained/professionally competent and satisfies the eligibility criteria in all respects?440602 Whether the amount of credit facility sanctioned is adequate to take care of all the legitimate requirements?440603 Whether repayment schedule has been fixed on a realistic basis keeping in view the gestation period required to establish the business/practice?440604 Whether the income form professional service or from any other source regularly brought in the accounts?440605 Whether the instalments of the loan accounts are regular?440606 Whether the follow up and supervision of the branch is satisfactory vis-a-viz ?440607 To know the progress of the borrower’s business as also his practical problems with a view to helping him in tiding over his temporary difficulties and440608 To effect recovery of the advance according to repayment schedule?440609 Whether all eligible accounts are covered under DICGC scheme and guaranteefee being sent regularly in time? ADVANCES TO SMALL SCALE INDUSTRIES (4407) 57
  • 58. 440701 Whether it is satisfied that the borrower is a small scale industrial unit as defined(including village/cottage industrial unit/artisan, tiny sector, small scale ancilliary unit) andcertificate issued is held on record?440602 Whether the entrepreneur has the necessary technical or professional experience?440603 Whether the loan applications are disposed of within the stipulated period andthere is no undue delay in decision making?440604 Has the Branch obtained prescribed loan application forms for term loan and working capital facilities?440605 Have you verified/scrutinized carefully that assessment of working capital assessment of working capital requirements done properly/correctly and the projections submitted by the party are realistic?440606 Whether permissible limits against raw materials, stock in process, finished goods and receivables worked out correctly and whether the branch has satisfied about the borrower’s capability to meet permissible limits. (if any).440607 Whether pre-sanction/post sanction inspection of unit done and branch maintains close and continuous contact with the unit to ensure that the funds are used for the purpose for which they are lent?440608 Whether the problems, if any, faced by SSI units are immediately attended to by the Branch Manager?440609 Whether all eligible accounts are overed under DICGC Scheme and requisite guarantee fee is being sent regularly?440610 Whether in respect of units where refinance/rediscount facilities from IDBI have been availed relative terms and conditions are being strictly adhered to?440611 Whether instalments are regular in term loan to SSI units?440612 Where working capital limits have been sanctioned to SSI units againsthypothecation of stocks, whether all check points as mentioned under hypothecation accountshave been observed?D.R. LOANS (4408)440801 Whether the loans under DRI Scheme have been allowed to eligible borrowers only, who satisfy eligibility criteria in all respects?440802 Whether it is verified that margin money is not insisted upon?440803 Whether only simple interest is being charged on current dues? 58
  • 59. 440804 Whether the assets purchased with the loan are hypothecated to the bank and in appropriate cases of loans to homogenous group of borrowers, group guarantees are obtained?440805 Whether all the DRI advances are covered under DICGC and Guarantee fee etc. is charged to the Bank’s account?440806 Whether branch is filing claims under DICGC/State Recovery Act promptly in cases where all other recovery have been exhausted? 59
  • 60. CHAPTER 4 (a) Guidance List of Serious IrregularitiesGENERAL ROUTINE AND HOUSING KEEPING1. Shortage/Excess Cash2. Missing Telegraphic Transfer (TT) Code Books.3. Loss of securities/security forms (Draft books, MC Books, FD Books, Cheque Books etc. /Important keys.4. Large arrears in the balancing of various accounts/ledgers.5. Frauds/forgeries which have taken place since the previous inspection.6. Irregularities in staff accounts (cheques Purchased and Deposits of large amounts).7. Inordinate delay in submission of periodical returns/statements etc.8. Large accumulation of pending HO extracts.9. Inordinate delay/large arrears in the dispatch of IBRs/responding of IBRs.10. Entries outstanding for more than 6 months in OD suspense account. DPWA, IBSA. Imprest clearing and DN R accounts.11. Excess stocking of stationery.12. Late payment of Income Tax Deptt. In respect of income deducted at source from salary.13. Non disposal of the previous Inspection Report.14. Irregularities brought out in previous Inspection Reports which are pending despite theBranch Manager having certified in the relative remarks sent to Zonal Office that they have beenrectified.15. Any conspicuous instances of wastage of avoidable expenditure.16. Widows dressing of deposits of advances.17. A large number of instructions/recommendations in regard to Customer Service not beingimplemented.18. Irregularities in the calculation and recovery of income/recovery due to the bank.19. Complaints from customers.20. Interest test checks of FDRs etc. not carried out.21. Suit filed against the Bank. 60
  • 61. Guidance List of Serious IrregularitiesGENERAL HEADINGS OF SERIOUS IRREGULARITIES (GHSI)GENERAL ROUTINE AND HOUSING KEEPING1 Cash2 Security arrangements.3 Branch documents.4 Branch Keys5 Securities held in Safe Custody.6 Customer service.7 Staff supervisory.8 Staff Award.9 Performance Budgeting.10 General Ledger Balance (GLB) Slip11 Deposit accounts.12 Staff accounts.13 DPWA,IBSA & POAB Accounts.14 Imprest clearing DNR and DNP accounts.15 TTs issued/paid/purchased.16 Safe Deposit Lockers.17 Balancing of Books.18 House keeping – Maintenance of Registers/Ledgers and other records.19 Correspondence 9Inwards and Outwards).20 Returns/Statements.21 Security forms.22. Despatch of Daily HO Extracts.23. OD Suspense and Sundry Creditors accounts.24. Charges General account.25. Establishment including Bonus and Officiating Allowance.26. Income leakage.27. Clearing28. Stationery29. Records and vouchers.30. Implementation of Official Language Policy31. Previous Inspection and audit reports.32. Frauds33. Suits filed against the bank. 61
  • 62. CHAPTER 4 (b) Guidance List of Serious IrregularitiesCREDIT MANAGEMENT1. All outstandings in Past due and dishonoured bills (PDDB), Protested Advances andrecalled debts.2. All clean overdrafts which are outstanding for more than six months.3. All advances which are irregular/overdue/sticky.(Accounts which are irregular only due to the application of interest need not be reported unlessthere are other unsatisfactory features attached to them).4. Missing/Time Barred documents relating to advances.5. Large scale arrears in renewal of credit facilities/revision of credit reports and nonsubmission of renewal loans proposals.6. Non submission of control returns to controlling offices and non factual reporting.7. Irregularities in Bills purchased business such as frequent Purchase of Cheques/Billswithout sanctioned limits, large scale returns of Bills purchased, delays in the dispatch ofinstruments.8. Lapses in periodical inspection of Discounted/securities of borrowers.9. Serious irregularities in the follow up of advances resulting in mounting of overdues.10. Serious lapses noticed in regard to appraisal, sanction, disbursal of loans and conduct ofaccounts, documentation, insurance etc. to the detriment of Bank’s interests. 11. Serious irregularities in the handling of bills business like kite flying etc.12. Violation of bank’s instructions in regard to non-funded business.13. Violation of exchange control regulation/FEDAI Rules.14. Serious lapses in the opening of letters of credit like opening L/C after the validity periodof import license, without valid import license etc. 62
  • 63. Group Headings for Serious Irregularities (GHSI) CREDIT MANAGEMENT201 General202. Protested Bills Account (Past Due and Dishonoured Bills)203 Protested Advances (Others) and Recalled debts204. Suits filed by the Bank205. Particulars of irregularities in loan accounts (Priority Sector)206. Particulars of irregularities in loan accounts (other than Priority Sector).207. Particulars of Irregularities in Cash Credit Accounts.208. Particulars of Irregularities in Foreign Exchange Accounts.209. Govt. Sponsored Schemes.210. Staff Accounts.211. Inland Letter of Credit.212. Bank Guarantees.213. Deferred Payment Guarantees214. Bills Purchased (cheques)215. Bills Purchased (Others)216. Bills Discounted217. Import Letters of Credits.218. Import Bills under Letter of Credit.219. Bills of Entry Forms220. Preshipment Advances221. Post shipment advances.222. Non Resident Accounts. 63
  • 64. INSTRUCTIONS FOR REVENUE AUDIT1. You will have to check and certify correctness of cent percent interest earning ofborrowal accounts, dicount, commission earned on bills, cheques purchased, letter of credit,letter of guarantees and all other incomes on account of service charges in terms of variouscirculars issued from time to time on the subject (copies of circular in the booklet).2. You will also have to check 100% accounts in respect of interest paid on all deposits, soas to ensure that interest paid on deposits or accrued thereon has been vouched correctly.3. The fee payable is inclusive of all expenses, no separate claim for TA/DA or any liabilityis admissible. The bills for payment may be sent directly to the concerned Zonal Inspectoratelongwith copy/copies of the Revenue Audit Reports.4. Five copies of the Audit Reports (strictly as per enclosed format) have to be prepared andsubmitted as under: i) Original to be sent to H.O. Inspection Department. ii) Second copy to the concerned Zonal Inspectorate. iii) Third copy to the concerned Zonal Office. iv) Fourth copy to be handed over to the Branch Incharge. v) Fifth copy to be retained by the Auditors for their own record.5. You have to ensure that the discrepancies observed in the branch(es) are discussed withthe Branch manager on day to day basis. The observations made in a day may be handed over tothe Branch Incharge so that the recoveries are effected expeditiously.6. This offer is subject to the condition that you are entitled to practice as a firm ofChartered Accountants and that your firm as well as sister/associate concerned, if any, are notentrusted with any Statutory Audit of this bank during the year 2002-2003.7. You are not subject to any disqualification under Section 226 of the Companies Act,1956, you will keep secrecy of the bank affairs that come to your notice during the course ofaudit.8. A letter of authority addressed to Branch manager for taking up the assignment isenclosed herewith. 64
  • 65. 9. Please note that if the check list/guidelines are not followed and/or the report is notcompiled as per the check list, the same is likely to be rejected and no remuneration shall bepaid.10. A separate report shall be submitted, if any mala-fide intention of the staff is detected inunder charging the interest revenue leakage with full details and name of the erring officials.11. The discrepancies observed shall be discussed with the Branch Manager and where thereis any point of disagreement on your observation, the same shall be reported in the remarkscolumn of the report or in a separate report alongwith the Branch Manager’s views.12. Please identify reasons for leakages of revenue and also suggest corrective measuresthereof.13. In cases, where no/negligible recovery is detected under some heads, the details thereofbe furnished in the format as per annexure.14. Auditors are advised to thoroughly check:i) Not only the calculation of products and arithmetical accuracy of interest bu the accuracy ofrate of interest applied by branches.ii) Application of interest on drawings allowed against uncleared effects, cheques returnedunpaid, adhoc limits allowed, protested/NPA accounts etc.iii) Penal rate of interest on account of non-submission of stock statements/QIS/Delay inrenewal of limits.iv) Revenue leakage on DDs/Bills purchased which is one of the major areas of revenueleakage.v) Recovery of processing/up-front fees and commission on LCs/Guarantees.vi) Inspection charges and Incidental Charges in CC/Current Accounts.vii) Interest/Commission and remuneration in lieu of foreign exchange business.viii) Payment of one time interest on deposit accounts particularly on term deposits. Those termdeposits which have been paid before maturity must invariably be checked thoroughly.ix) Provisions for interest made by branches.x) Recovery of telephone/telex/telegram/postage expenses for customers/employees and widevariations on account of expenses on telephone, postage and telegrams.xi) Salary paid to staff on a test check basis with emphasis on increments, LFC/ Medicalreimbursement and Officiating allowances.15. We have tried to include all major relevant circulars in the booklet provided. However,these may have to be supplemented with other circulars/guidelines issued by the bank which areavailable at the branches. In case of any problems please feel free to contact concerned ZonalOffice/Zonal Inspectorate/HO Inspection Department. 65
  • 66. ROLE OF CCAs IN PREVENTION AND DETECTION OF FRAUDSThe system of concurrent Audit is designed to serve as Administrative support to branches towork within the prescribed System & Procedure and to ensure prevention and timely detection oflapses and irregularities including fraud and malpractices. Infact, the Chartered accountants areeyes and ears of any organization as their effectiveness in conduct of audit can help preventionand detection of fraud. Generally, the main role of C.A.s while conducting concurrent audit is tosupplement the efforts of the bank in carrying out simultaneous internal check of the transactionsand other verifications and compliance with the procedure laid down but in particular it is theexamination of the transactions as to whether these have properly being recorded/documentedand vouched and have been carried out in conformity with the laid down procedure, regulationand legislations applicable and this examination, if proper and thorough, can result in prevention/detection of frauds. As we see that most of the frauds take place due to the failure of System &Procedure and if there is a proper/timely check up and/or examination of the various activitieswith a view that these are being carried out within the prescribed system and procedure can resultin prevention and/or detection of the frauds to a large extent.As per the recommendations of Narang Committee Report for prevention and detection offrauds, the modus operandi adopted for perpetrating bank frauds continued to be (a) opening ofnew fictitious deposits accounts by persons not properly identified by the bank followed bydeposit of fake/stolen/forged instruments in such accounts and then immediate withdrawls of theproceeds, (b) submission of false stock/financial statements to avail of finance, (c) clandestineremoval of goods hypothecated and siphoning of sale proceeds, (d) acceptance of deposits bothResidents and Non-residents (from persons not properly identified by the bank) throughmiddlemen and thereafter allowing/availing of overdrafts against fraudulent discharge of thesedeposit receipts by forging power of attorney and loan documents to third parties who were alsonot properly identified, (e) raising of accommodations bills, (f) kite flying, (g) manipulation inoutward/inward clearing, (h) raising unauthorized debits on nominal heads of account, (i)manipulation and tampering with books of accounts by passing unauthorized entries, (j) sanctionof one time adhoc credit facilities to non-clients, (k) issue of letter of credit, bank guaranteeswithout recording in branch books, (l) issue of payorders/demand drafts without consideration,(m) fake documentation etc.In order to obiviate possibility of occurance of frauds and prevention and detection of frauds, theChartered Accountants are, therefore, expected:1. To get implemented the guidelines in respect of the sensitive areas as non-compliancewith such guidelines may result in fraud/financial loss to the bank/financial institution.2. To plug the short-cuts evolved by the different branch functionaries in carrying out day today transactions.3. To examine whether the account opening forms are complete in all respects and theaccounts are properly introduced. This is a major fraud prone area.4. To examine whether there are any cases of exceeding discretionary powers and if sowhether those have duly being reported to the competent authority for action confirmation. 66
  • 67. 5. To examine whether any fictitious accounts are operating wherein the cheque purchasefacilities have been allowed and loans have been granted with a view to concealing thefraudulent transactions.6. To examine impersonal accounts with a view to check whether any fraudulenttransactions have been routed through such accounts and the cheque returned unpaid weredebited to impersonal account to conceal the fraud and to see whether there is proper follow upfor reconciliation of large outstanding entries in these accounts since there have been instances ofpassing unauthorized entries in impersonal accounts for balancing of bank’s books.7. To check/examine any unauthorized opening of LCs and issue of DD/PO withoutconsideration.8. That there is no continuance of staff at the same work seat.9. That handling of critical areas of the branch functioning are not single handed since itfacilitates the manipulation of bank’s books of accounts and concealment of fraudulenttransactions.10. To examine large debit/credit entries in newly open accounts and it should arousesuspicion and alert to verify the genuineness of the transactions with respect to business/profession of the account holder.11. To examine whether heavy cash transactions are being allowed in newly openedaccounts.12. To examine movement of bank’s critical stationery, its stock on hand, indent, custody,issue, movement loss etc. are proper.13. To examine whether adequate safeguard such as fixing of cello tapes and placing ofreverse carbon are adhere to while handling the remittances.14. To examine the varicity of exercise of delegated authority of the functionary.15. Physical verification of colletral securities charge to the bank during currency of audit.Further, it would not be out of place to mention here that for the growing tendency in frauds, theC.A.s are to some extent also responsible sometimes as they certify false stock and financialstatements submitted by the borrowers to the bank and also indulge in wrong reporting about theaffairs of the borrowing company/borrowers, about stock statement, mortgage/pledged to thebank and diversion of funds to their sister concern on cash and fund flow statements. 67
  • 68. ADDRESSES OF ZONAL OFFICES 1. AMRITSAR (URBAN) - Hall Bazar, AMRITSAR-143001. 2. AMRITSAR (RURAL) - Opp. Dharam Market, Chowk Fountain , AMRITSAR-143001. 3. BAREILLY - Gagandeep Complex, Civil Lines, BAREILLY-243001. 4. BATHINDA - Civil Station, BHATINDA-151001. 5. BHOPAL - M.P.Nagar, Zone II, BHOPAL-462016. 6. CHANDIGARH-I - Bank Square, Sector 17-B, CHANDIGARH- 160017. 7. CHANDIGARH-II - Bank Square, Sector 17-B, CHANDIGARH- 160017. 8. CHENNAI - 770-A, Spencer Tower, Anna Salai, Ist Floor, CHENNAI-600002. 9. DEHRADUN - Amrit Kaur Road, DEHRADUN. 10. FARIDKOT - Red Cross Bhawan , Sadiq Chowk, FARIDKOT-151203. 11. GURDASPUR - 435/7, Civil Lines, GURDASPUR-143521. 12. GUWAHATI - 42, M.G.Road, River Side , Uzan Bazar, GUWHATI-781001. 13. HARYANA - Bank Square, Sector 17-B, CHANDIGARH-160017. 14. HOSHIAR PUR - Near Bajwa Petrol Pump,Tanda Bye Pass Road, Hoshiar Pur. 15. JALANDHAR - MODEL TOWN,JALANDHAR -144003. 16. KOLKATA - 14/15, Old Court House Street, KOLKATA-700001. 17. LUCKNOW - Jawala Devi Building, LAL BAGH, LUCKNOW-226001. 18. LUDHIANA - Bhai Wala Chowk, Ferozepur Road, LUDHIANA. 19. MUMBAI - LBS Marg, Fitwell House,Vikhroli (W), MUMBAI-400018. 20. NEW DELHI-I - Ashram Chowk, Sidharatha Enclave, NEW DELHI-110014. 21. NEW DELHI-II - B/38-39, Phase-I, Industrial Area,Naraina,New Delhi-110028. 22. NEW DELHI-III - 91, Bhandari House, Nehru Place, NEW DELHI-110019. 23. PATIALA - Passi Road, Opp. Gurudwara Dukh Nivaran Sahib, Patiala-147001. ADDRESSES OF ZONAL INSPECTORATESS.No. Name of Zonal Inspectorate Address Telephone Number1. DELHI D-1, Industrial Area, Phase-II 011-28117530 Mayapuri, New Delhi-110064 011-281175312. MUMBAI 78,Girgaum Road, Opera House 022-23638682 Mumbai.- 4000043. CHANDIGARH Bank Square, Sector 17-B, 0172-2722595 Chandigarh- 160017 0172-50897844. KOLKATA 8, Old Court House Street 033-22435281 Kolkata- 700001.5. LUCKNOW Jawala Devi Building 0522-2625626 Lal Bagh, Lucknow-226001. 68