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Vedansh Project

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how bank are senctioning loan and issue credit card

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  • Very Nice Information on the SBI part. I am a huge fan of SBI.

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    Vedansh Project Vedansh Project Document Transcript

    • Project Report Credit Card and Loan Assessment Submitted by Vedansh Jain Roll No. JGNPGDM0856 PGDM First Batch (2008-2010) Submitted to Jagannath Institute of Management Studies 48/4 Knowledge Park III, Greater Noida,U.P 1
    • Acknowledgement: “For any successful work, it owes its thanks to many” Summer training is one of the most vital and active part of the curriculum of management students. I did the work as a management trainee at AXIS Bank. Hard work, knowledge, dedication & positive attitude all are necessary to do any task successfully but one ingredient which is also very important than others and at times more important than others is cooperation & guidance of experts and experienced person. Firstly I would like to extend my heartfelt gratitude to Mr. Navneet Ralli the Branch Manager, for his guidance throughout the project. Without his support and cooperation I would have failed in my endeavours and targets in the summer training. I emphatically express the regards and gratitude towards my speculative guide Mr. Shakti Singh Rathore (BSM), Mr. Kapil Singh Shekhwat and Mr. Om Thanvi For his expert and invaluable guidance, constant encouragement, and constructive criticism to accomplish such laborious and exhaustive work timely and perfectly. I avail the opportunity to thanks Mr. Lokesh Agarwal, Mr. Vishal Sharma and Mr. Hasmukh who helped to ease my burden of works and extended their helping hands during my training. 2
    • I would also like to thank all the Staff of Axis Bank, Jaipur for their invaluable suggestion and cooperation to complete my project successfully. CONTENTS Serial Particular Page No. No. 1 Candidate Declaration 5 2 Certificate From Organisation 6 3 Executive Summary 7 4 Banking In India: Overview 9 Nationalized Bank In India 12 Private Sector bank In India 13 5 About AXIS Bank 14 Retail Banking 19 Corporate Banking 19 Financial Performance 21 6 Easy Credit Card 22 Variants 23 Pricing 24 Process 28 Documentation 31 7 Loan Assessment 32 1. Home Loan 33 Documentation 34 Interest Rate 35 2. Personal Loan 36 Normal Salaried Individual 36 Salaried Professional 37 Salaried Doctor 38 3
    • Documentation 39 Interest Grid 39 Serial Particular Page No. No. 3. Loan Against Property 40 Salaried Individual 40 Professional 41 Self Employed Individual 42 Documentation 43 Interest Grid 45 4. Auto Loan 46 Category Grid 46 Salaried Employee 47 Self Employed 48 Partnership 49 Private and public limited company 50 Documentation 51 Interest Rate 53 5. Agriculture Loan 54 Commodity Power-(Warehouse 54 Receipt financing) Agricultural Gold Loan ‘Power Gold’ 60 Power Gold Plus 64 Kisan Power 65 Direct Financing to Farmers for Cattle 76 Loans through Dairies/ Cooperatives Direct Financing to Farmer Under 81 Contract Farming 6. Education Loan 86 4
    • 8 Abbreviations and Acronyms (Glossary) 88 9 Appendix 91 Candidate's Declaration I hereby declare that the project report titled “Credit Card and Loan Assessment” is prepared during completion of training of 45 days on 30th June, 2009 and it is an authentic record of my work carried out under the guidance of Mr. Shakti Singh Rathore, Axis Bank Jaipur. VEDANSH JAIN Date: June 30, 2009 Roll No. JGNPGDM0856 Place: Jaipur PGDM First Batch (2008-2010) 5
    • Certificate TO WHOMSOEVER IT MAY CONCERN This is to certify that the above declaration made by MR. VEDANSH JAIN , PGDM (Finance)-First Batch, Jagannath Institute of Management Studies, Greater Noida, U.P., for the successful completion of 45 days summer training at AXIS Bank, Jaipur, and preparation of project report titled “Credit Card and Loan Assessment” is true and fair to the best of my knowledge and belief. Mr. Shakti Singh Rathore Date: June 30, 2009 Authorised Signatory Place: Jaipur Axis Bank Jaipur. 6
    • Executive Summary: Introduction: I have done my training from Axis Bank, Jaipur Branch. I learned there working and functioning of the bank. Axis bank is one of the fastest growing banks in India and has extremely competitive and profitable banking franchise. Axis bank is the first new generation private sector bank to be established in India under the overall reform programme initiated by Government of India in 1991.Axis bank started its operation from 1994. Objective: The main objective of undergoing training of 6 weeks (15th May, 2009 to 30 june, 2009) is to:  Understand how banking activities actually takes place.  To gain an insight and in depth knowledge about banking products.  To know how the other services provided by bank to its customer.  To learn about corporate banking culture in India. Research Methodology: The method adopted to carry out this report was based on both the primary and secondary sources. Primary sources:  Interaction with the existing employees and deputy manager. 7
    •  Personal interaction with the customers visiting to the bank. Secondary sources:  Manuals of the bank.  Websites  Journals  Circulars  Annual Report Learning and Conclusions:  It was a great opportunity to gain an insight about various activities that takes place in the bank.  I came to know what banking is all about.  About AXIS Bank.  The kind of products and services are provided by AXIS Bank.  This training increased my confidence level and it was a great opportunity to learn about corporate culture and etiquettes.  It was a great opportunity to develop persuasion skills and communication skills. 8
    • Banking In India: Overview: Banking in India originated in the first decade of 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, both of which are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the "The Bank of Bengal" in Calcutta in June 1806. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras. The presidency banks were established under charters from the British East India Company. They merged in 1925 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India. For many years the Presidency banks acted as quasi-central banks, as did their successors. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers. RESERVE BANK OF INDIA Central Bank and supreme monetary authority Scheduled Banks Non Scheduled Banks Cooperative Commercial Urban State Public Private Foreign Cooperatives Cooperatives Sector Sector Banks Other Nationalized SBI & Regional Rural Banks Associates Banks 9
    • Early History: The first fully Indian owned bank was the Allahabad Bank, established in 1865. However, at the end of late-18th century, there were hardly any banks in India in the modern sense of the term. The American Civil War stopped the supply of cotton to Lancashire from the Confederate States. Promoters opened banks to finance trading in Indian cotton. With large exposure to speculative ventures, most of the banks opened in India during that period failed. The depositors lost money and lost interest in keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century. Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and Pondichery, then a French colony, followed. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking centre. The Bank of Bengal, which later became the State Bank of India. Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities. 10
    • The presidency banks dominated banking in India. There were also some exchange banks and a number of Indian joint stock banks. All these banks operated in different segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock banks were generally under capitalized and lacked the experience and maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon to observe, "In respect of banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments." By the 1900s, the market expanded with the establishment of banks such as Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded under private ownership. Punjab National Bank is the first Swadeshi Bank founded by the leaders like Lala Lajpat Rai, Sardar Dyal Singh Majithia. The Swadeshi movement in particular inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India. 11
    • Nationalized Banks in India: Banking System in India is dominated by nationalized banks. The nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the then prime minister. The major objective behind nationalization was to spread banking infrastructure in rural areas and make available cheap finance to Indian farmers. Fourteen banks were nationalized in 1969. Before 1969, State Bank of India (SBI) was the only public sector bank in India. SBI was nationalized in 1955 under the SBI Act of 1955. The second phase of nationalization of Indian banks took place in the year 1980. Seven more banks were nationalized with deposits over 200 crores. List of Public Sector Banks in India is as follows: ➢ Allahabad Bank ➢ State Bank of India (SBI) ➢ State Bank of Indore ➢ State Bank of Mysore ➢ State Bank of Patiala ➢ State Bank of Saurashtra ➢ State Bank of Travancore ➢ Syndicate Bank ➢ UCO Bank ➢ Union Bank of India ➢ United Bank of India s ➢ Vijaya Bank ➢ Andhra Bank ➢ Bank of Baroda ➢ Bank of India ➢ Bank of Maharashtra ➢ Canara Bank ➢ Central Bank of India ➢ Corporation Bank ➢ Dena Bank ➢ Indian Bank ➢ Indian Overseas Bank ➢ Oriental Bank of Commerce ➢ Punjab and Sind Bank ➢ Punjab National Bank ➢ State Bank of Bikaner & Jaipur ➢ State Bank of Hyderabad Private Banks in India: 12
    • All the banks in India were earlier private banks. They were founded in the pre-independence era to cater to the banking needs of the people. But after nationalization of banks in 1969 public sector banks came to occupy dominant role in the banking structure. Private sector banking in India received a fillip in 1994 when Reserve Bank of India encouraged setting up of private banks as part of its policy of liberalization of the Indian Banking Industry. Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. Private Banks have played a major role in the development of Indian banking industry. They have made banking more efficient and customer friendly. In the process they have jolted public sector banks out of complacency and forced them to become more competitive. List of Private Sector Banks in India is as follows:  Bank of Rajasthan ➢Bharat Overseas Bank  Axis Bank ➢Catholic Syrian Bank  Centurion Bank of Punjab ➢Dhanalakshmi Bank  Federal Bank ➢HDFC Bank  ICICI Bank ➢IDBI Bank  IndusInd Bank ➢ING Vysya Bank  Jammu & Kashmir Bank ➢Karnataka Bank  Karur Vysya Bank ➢Kotak Mahindra Bank  SBI Commercial and International Bank ➢South Indian Bank  United Western Bank ➢ YES Bank 13
    • 14
    • About AXIS: Start on 1994 On July 2007 UTI Bank rebrand as Axis Bank Promoters: Unit Trust Of India (UTI) Life Insurance Corporation (LIC) General Insurance Corporation (GIC) National Insurance Company Limited New India Assurance Company Limited The Oriented Insurance Company Limited United India Insurance Company Limited Capitalization: 359 crore Public Holding = 57.60% Registered Office: Ahemdabad Central Office: Mumbai 15
    • Total Branches: 827 ATM: 3595 Bank Strengths: Retail Banking Corporate Banking Directors: Shri N.C. Singhal Director Shri J.R. Varma Director Dr. R.H. Patil Director Smt. Rama Bijapurkar Director Shri R.B.L. Vaish Director Shri M.V. Subbiah Director Shri Ramesh Ramanathan Director Shri K. N. Prithviraj Director Auditors: M/s. S. R. Batliboi & Co. Auditors Chartered Accountants 16
    • Registrar and Share Transfer Agent: M/s. Karvy Computershare Private Limited Competitors: Private Sector competitors: HDFC ICICI Public Sector competitors: SBI PNB Profile: Axis Bank is one of the fastest growing banks in the country and has an extremely competitive and profitable banking franchise evidenced by: Comprehensive portfolio of banking services include Corporate Credit, Retail Banking, Business Banking, Capital Markets, Treasury and International Banking. The Position as on 31st March 2009 was as under: - Balance Sheet Size Rs 1,47,722 crore Total Deposits Rs 1,17,374 crore Net Advances Rs 81,557 crore 17
    • Investments Rs 46,330 crore Net NPA 0.35% Capital Adequacy Ratio 13.69% % Axis Bank has in place a sound technological platform: Sound technological platform with centralized database and operations enabling 24*7*365 ‘Anywhere Banking’, in order to render the best customer service to its 5.5 million customer base. Mission and Values:  Customer Service and Product Innovation tuned to diverse needs of individual and corporate clientele.  Continuous technology up gradation while maintaining human values.  Progressive globalization and achieving international standards.  Efficiency and effectiveness built on ethical practices.  Customer Satisfaction through providing quality service effectively and efficiently.  "Smile, it enhances your face value" is a service quality stressed on Periodic Customer Service Audits.  Maximization of Stakeholder value.  Success through Teamwork, Integrity and People. 18
    • Retail Banking: The Bank continued with its thrust on customer segmentation in the retail liabilities business to spearhead growth during the financial year 2008-09. Savings Bank deposits grew to Rs. 25,822 crores on 31st March 2009 from Rs. 19,982 crores as on 31st March 2008 showing a year on year growth of 29%. Corporate Banking: The Business Banking Department (Erstwhile Institutional Business Department) was set up in the year 2000, with the objective of having a special cell to serve the institutional and corporate clientele of the Bank. Business Banking initiatives revolve around transaction banking services to garner Business Current Accounts, Cash Management Service mandates, Government Business - Collection & Payment Services. As a natural corollary, scope of the business was extended this year to Business loans for Small Businesses so that all product and services to small business enterprises are comprehensively made available. 19
    • The Department presently focuses on the four broad areas through the respective Business Groups, as under: Business Current Accounts Business Assets Cash Management Services Government Business Corporate Credit: Current Account deposits grew by 24% yoy, from Rs. 20,045 crores as at end March’08 to Rs. 24,822 crores as at end March’09. The daily average Current Account balances over the year grew by 24% yoy. The Corporate Credit portfolio of the Bank comprising advances to large and midcorporates grew by 68.33% to Rs. 29,026 crores from Rs. 17,244 crores a year ago. This includes advances at overseas branches amounting to Rs. 5,381 crores (equivalent to USD 134 million) comprising in main the portfolio of Indian corporates and their subsidiaries, as also trade finance. Credit exposures are taken based on risk analyses and mitigation measures, with proposals being subjected to critical scrutiny by the Bank's Risk Department. Efforts are made to constantly upgrade the skills required for faster turnaround of credit proposals and structuring of financial products. In addition to working capital loans, the Bank also takes long-term exposures to infrastructure and manufacturing projects set up by reputed industry groups. Relationship groups in the Bank are organised with an industry sector focus for better evaluation of specified risks. The credit policy of the Bank has also put in place ceilings on exposures 20
    • to various industries with a view to containing concentration risk and facilitating portfolio diversification. Financial Performance:  Profit after tax up 69% to Rs.1,815.36 crores.  Net Interest Income up 43% to Rs.3686.21 crores.  Other Income up 61% to Rs.2,896.88 crores.  Fee Income up 64% to Rs.2,447.35 crores  Deposits up 34% to Rs.1,17,374 crores.  Demand Deposits up 37% to Rs.50644 Crores.  Advances up 61.79% to Rs.81,557 crores .  Retail Assets up 18% to Rs.16,052 crores.  Network of branches and extension counters increased from 827.  Total number of ATMs 3595.  Net NPA ratio as a percentage of net customer assets down to 0.35% 0.36% from 0.36 %.  Earning per share (Basic) increased from Rs.31.31 to Rs50.27.  Proposed Dividend up from 45% to 60%.  Capital Adequacy Ratio stood at 13.69% as against the minimum regulatory norm of 9.26%. 21
    • ********************** Easy Credit Card: What is Easy Credit Card? A Credit Card that is ... Easy for customers to get! Easy for us to sell! Why is it “Easy” for the Customer?  Flexible Credit Limit (Up to 80% of the FD amount)  High Cash Withdrawal Facility  Minimum Documentation (No Income Proof/KYC required)  Fast Delivery of the Card  Substantially Lower Interest Rate of 1.95% p.m.  Guaranteed Approval  Free Credit Period of 20-50 days  Comprehensive Insurance  Attractive Reward Points 22
    •  Other benefits of a regular credit card Easier than Other Modes of Payment: Easier than Other Credit Cards  Guaranteed Approval  No Income Proof required  Lower interest rate  Credit Limit of choice  Higher Cash withdrawal facility Easier than Debit Cards  Interest free credit period of up to 50 days  Higher Insurance Package  Ease of Online & MOTO transactions Easier than O/D against FD  Interest free credit period of up to 50 days  Reward Points  Complimentary Insurance  Record of transactions Easier than Cash 23
    •  Convenience of Plastic  Complimentary Insurance  Reward Points  Record of transactions Variants: Available in three variants:  Easy Platinum Premium (In sourcing locations only)  Easy Platinum  Easy Gold Pricing: Annual Fee Joining Type Annual Fee Waiver Fee for Year 2 Platinum Premium 5,000 1,000 Customer Spends > Rs.2,00,000 in Year 1 24
    • Customer Spends Platinum 1,000 500 > Rs.2,00,000 in Year 1 100 Customer Spends Gold Nil (Two Years > Rs. 50,000 in One onwards) Year * Annual Fee can be adjusted against Reward Points Easy Platinum Premium :  Platinum Comprehensive Insurance Cover  Fuel savings of 2.5% at All Petrol Pumps  Attractive Rewards Program  Free Espirit watch worth Rs.6,000Attractive Platinum Preferential Features  Chip Card for Additional Security  Complimentary Priority Pass Membership  International Concierge Services  Exciting shopping offers Platinum Standard Features  Low Interest Rate of 1.95% p.m.  Credit Limit of Choice 25
    •  High Cash Withdrawal Limit of 40% of Credit Limit  Balance Transfer Options Easy Platinum:  Comprehensive Insurance Cover  Fuel savings of 2.5%at ALL Petrol Pumps  Attractive Rewards Program Platinum Preferential Features:  Chip Card for Additional Security  Complimentary Priority Pass Membership  International Concierge Services  Exciting shopping offers Standard Features:  Low Interest Rate of 1.95% p.m.  Credit Limit of Choice  High Cash Withdrawal Limit of 40% of Credit Limit 26
    •  Balance Transfer Options Easy Gold:  Comprehensive Insurance Cover  Fuel savings of 2.5%at ALL Petrol Pumps  Attractive Rewards Program Standard Features:  Low Interest Rate of 1.95% p.m.  Credit Limit of Choice  High Cash Withdrawal Limit of 40% of Credit Limit  Balance Transfer Options 27
    • Process Simplified: Step 1 Crédit Card Application Form Letter of Lien Only One Single Application Addendum to Credit Card No Form Application Form Draft Letter Step 2 Separate KYC for Easy Credit Double KYC No Card Step 3 FD receipt to remain with the customer FD retained at the branch No Only photocopy to be attached Lien marked centrally on Finacle 28
    • Step 4 Customer signature on form to be Customer signature to be verified verified by Branch heads No by Branch head/ BSO/BSM Step 5 Sent to customer in Courier Card dispatched to Branch serviceable areas No Sent to branch in Courier non- serviceable areas Application Processing- Existing FD Customers: Application Pickup  Easy Credit Card App Form filled  Copy of FD receipt attached  No Additional Documents At Branch  Application Signed-off by Branch head/ BSO / BSM  Lien Stamp on FD by any Branch official–Original returned to customer CC-APU  Centralized Lien marking  Data Entry , Card & Limit Setup  No CIBIL, No FV, No TV 29
    • Dispatch  Direct to customer in Courier serviceable areas  To branch in Courier non-serviceable areas Application Processing -New FD Customers: Application Pickup  Easy Credit Card App Form filled  FD Form filled with KYC & PAN only by BDE/Any Branch Staff At Branch  Sign-off by Branch head/ BSO/ BSM CPU-Mumbai  FD Data Entry  FD Account No. entered on Easy Card Application Form CC-APU 30
    •  Centralized Lien marking  Data Entry , Card & Limit Setup  No CIBIL, No FV, No TV Dispatch  FD & Card dispatched together  Direct to customer in Courier serviceable areas  To branch in Courier non-serviceable areas Documentation: Existing FD Customers:  Easy Card Application Form  Photocopy of FD Certificate with Notification of Lien as follows: “Lien marked for Issuance of Easy Credit Card” To be written, signed & stamped by any Branch Official on the front side of the FD receipt  FD Certificate with notification returned to customer  Most Important Document (MID) New FD Customers:  Easy Card Application Form  Duly Completed FD Application Form (ONLY by BDE/Any Branch Staff) 31
    •  Most Important Document (MID) ************************ Loan Assessment: Types of Loan:  Home loan  Personal Loan  Loan Against Property  Auto loan  Agriculture Loan  Education Loan 32
    • Home Loan: Professional Self Employed Criteria Salaried Individual s Individuals Min. work exp 2 (3 if current 3 (Years) employment <1 year) Min net income 15000pm 1.50 lacs pa (Rs.) >24 ~ <= than Min ~ Max age superannuation at loan >24 ~ <= 65 at loan termination (Years) termination Min ~ Max Maximum 240 Maximum 240 Maximum 240 Tenor (Months) Maximum LTV 80% 33
    • Clubbing of Allowed for spouse only Income Pre payment NIL penalty Processing fee 1% of loan amt + 10.30% Service Tax as applicable Other Products / Variants Takeover of existing HL from other Allowed financier (Balance Transfer) Refinance Allowed for properties purchased in last 6 months Option Documents required for Home Loan: Proof of Identity, Signature & Age:  Passport  Voter's Card  Driving License  PAN card  Photograph Proof of Residence:  Ration Card  Passport  Latest Electricity Bill  Latest Telephone Bill  Latest Credit Card Bill. 34
    • Proof of Income:  Latest 3 salary slip showing all deductions  IT Returns  Computation of income  Balance Sheet and P/L A/c for the last 2 years certified by a C.A. Bank Statement:  Last 6 months where salary/income is credited Proof of Qualification:  Degree / Diploma - proof of professional qualification Interest Rate: Home loan amount Applicable rate of interest Up to Rs. 30 Lacks 9.00% p.a Above Rs. 30 Lacks 9.50% p.a. Other terms & conditions:  The property should be located within 50 Km radius of nearest Branch/RAC. 35
    •  Properties under HUF, Properties inherited under Hindu succession act, Godowns, Factories & Hospitals, Cinema Halls, Restaurants, Banquet Halls, and Schools will not be financed under the scheme.  For Purchase of Residential Plots within Municipal / Government approved layouts only. Agricultural land, commercial plots, properties under HUF, properties inherited under Hindu succession act, plots under litigation and acquisition by Public authorities will not be financed under plot loan scheme.  Loan against property (LAP) will be offered only against fully constructed properties. Personal Loan: For Salaried Individual: Criteria Salaried Individual Normal Interest rate as per category As per category grid Min. work exp (years) 2 Min net income (Rs. p.m.) 15,000 > 21 & < superannuation at loan Min ~ Max age termination 36
    • 1.25- 15 lakes (1.25 lakes loan is only Min ~ Max loan amt (Rs.) available for customers having salary power relationship) 12 ~ 60 (For CAT C and D employees Min ~ Max Tenor (months) maximum tenor is 48 months) Security/Collateral/Guarant Optional or Cat A & B - Last 3 months Banking relationships Cat C & D - Last 6 months Phone landline / mobile / WLL mandatory Processing fee 2% of loan amt Max loan =(Net monthly income - Eligibility calculation obligations) x Multiplier. Multiplier varies from 5 to 13 depending upon tenure. Residence Present residence => 6 months Salaried Individual Prof (MBA, Criteria Engineer, Architect, CA, CS, ICWA) Interest rate as per category As per category grid Min. work exp (years) 2 Min net income (Rs. p.m.) 15,000 > 21 & < superannuation at loan Min ~ Max age termination 37
    • 1.25 - 15 lakhs (1.25 lakh loan is only Min ~ Max loan amt (Rs.) available for customers having salary power relationship) Min ~ Max Tenor (months) 12 ~ 60 Security/Collateral/Guarant Optional or Cat A & B - Last 3 months Banking relationships Cat C & D - Last 6 months Phone landline / mobile / WLL mandatory Processing fee 2% of loan amt Max loan =(Net monthly income - Eligibility calculation obligations) x Multiplier. Multiplier varies from 5 to 15 depending upon tenure. Residence Present residence => 6 months Degree / Diploma - proof of professional qualification Criteria Salaried Doctors Doctor in Cat B/C/D at a min of Interest rate as per category MBBS/BDS/ MS/MD = Cat B rate Min. work exp (years) 3 Min net income (Rs. p.m.) 15,000 (gross) Min ~ Max age >24 and <65 at loan termination 38
    • 1.25 - 15 lakhs (1.25 lakh loan is only Min ~ Max loan amt (Rs.) available for customers having salary power relationship) Min ~ Max Tenor (months) 12 ~ 60 Security/Collateral/Guarant Optional or Banking relationships Last 6 months Phone landline / mobile / WLL mandatory Processing fee 2% of loan amt Max loan = (Gross monthly salary - Eligibility calculation obligations) x Multiplier. Multiplier varies from 5 to 15 depending upon tenure. Residence Present residence => 6 months Degree, Registration with respective state Proof of Qualification medical councils Or Dentists Association. Documentation: 39
    • Documents Required Interest Rate Grid: Proof of Identity, Passport/ Voter's Card/ Driving License/ PAN Signature & Age Interest&Rate Grid card Photograph. Personal Loans ROI (only Fixed) Latest bill of landline/ mobile/ WLL stating Proof of Telephone Bill name of borrower or address of borrower. Salaried - Cat A 15.00% Ration Card/ Passport/ Latest Electricity Bill/ Proof of Residence Salaried - Cat B Latest Telephone Bill/ Latest Credit Card Bill. 17.00% Latest salary slip showing all deductions and Last Proof of - Cat C Salaried Income 19.00% 2 years Form 16 along with current dated salary certificate Salaried - Cat D 21.00% Bank Statement / Pass Cat A & B - Last 3 months, Cat C & D - Last 6 Book where salary is months Credited Loan against Property: Criteria Salaried Individual Min 1 Year If Total Exp 2 Or (3 If Current Work Experience (Years) Employment <1 Yr) Min Net Income (Rs.) 7500 Per Month >24 ~ <= Than Superannuation At Loan Min ~ Max Age (Years) Termination 40
    • Min ~ Max Tenor Residential Property Up To 180 Months, (Months) Commercial Property Up To 120 Months Residential Property Up To 60%, Commercial Maximum LTV 50%, Commercial Purchase 80% 2% Will Be Charged If The Amount Exceeds 25 % Pre Payment Penalty Of The Principle Outstanding During A Quarter, Otherwise No Penalty. Processing Fee 1% Of Loan Amt + Service Tax As Applicable Takeover Of Existing Mortgage With Allowed Additional Refinance Criteria Professionals Work Exp (Years) Min 3 If Doctor Else 4 Min Net Income (Rs.) 1.50 Lacs Per Year Min ~ Max Age (Years) >24 ~ <= 65 At Loan Termination Min ~ Max Tenor Residential Property Up To 180 Months, (Months) Commercial Property Up To 120 Months 41
    • Residential Property Up To 60%, Maximum LTV Commercial 45%, Commercial Purchase 75% 2% Will Be Charged If The Amount Exceeds 25 Pre Payment Penalty % Of The Principle Outstanding During A Quarter, Otherwise No Penalty. Processing Fee 1% Of Loan Amt + Service Tas As Applicable Takeover Of Existing Mortgage With Allowed Additional Refinance Criteria Self Employed Individuals Work Exp (Years) Min 3 Min Net Income (Rs.) 1.50 Lacs Per Year Min ~ Max Age (Years) >24 ~ <= 65 At Loan Termination Min ~ Max Tenor Up To 120 Months Irrespective Of Property Type (Months) 42
    • Residential Property Up To 60%, Commercial Maximum LTV 45%, Commercial Purchase 70% 2% Will Be Charged If The Amount Exceeds 25 % Pre Payment Penalty Of The Principle Outstanding During A Quarter, Otherwise No Penalty. Processing Fee 1% Of Loan Amt + Service Tax As Applicable Takeover Of Existing Mortgage With Allowed Additional Refinance Documents required for Loan against property: For Salaried Individual: Proof Of Identity, Passport/ Voter's Card/ Driving License/ PAN Signature & Age Card & Photograph. Ration Card/ Passport/ Latest Electricity Bill/ Proof Of Residence Latest Telephone Bill/ Latest Credit Card Bill. Proof Of Income Latest 3 Salary Slip Showing All Deductions Bank Statement Last 6 Months Where Salary/Income Is Credited Proof Of Qualification N/A 43
    • For Professionals: Proof Of Identity, Passport/ Voter's Card/ Driving License/ PAN Signature & Age Card & Photograph. Ration Card/ Passport/ Latest Electricity Bill/ Proof Of Residence Latest Telephone Bill/ Latest Credit Card Bill. IT Returns, Computation Of Income, Balance Proof Of Income Sheet And P/L A/C For The Last 2 Years Certified By A C.A. Bank Statement Last 6 Months Where Salary/Income Is Credited Degree / Diploma - Proof Of Professional Proof Of Qualification Qualification For Self Employed Individuals: Proof Of Identity, Passport/ Voter's Card/ Driving License/ Pan Signature & Age Card & Photograph. Ration Card/ Passport/ Latest Electricity Bill/ Proof Of Residence Latest Telephone Bill/ Latest Credit Card Bill. It Returns, Computation Of Income, Balance Sheet Proof Of Income And P/L A/C For The Last 2 Years Certified By A C.A. Bank Statement Last 6 Months Where Salary/Income Is Credited Proof Of N/A Qualification Other Terms & Conditions: 44
    •  The property should be located within 50 km radius of nearest branch.  Properties under HUF, Properties inherited under Hindu Succession Act, Godowns, Factories & Hospitals, Cinema Halls, Restaurants, Banquet Halls, and Schools will not be financed under the scheme.  For Purchase of Residential Plots within Municipal / Government Approved Layouts only Agricultural Land, Commercial Plots, Properties Under HUF, Properties Inherited Under Hindu Succession Act, Plots Under Litigation and Acquisition by Public Authorities will not be financed under plot loan scheme.  Loan against property (lap) will be offered only against fully constructed properties.  No lap will be offered against plot of land Interest Rate Grid: Personal Loan Interest Rate of Interest Residential Property 12.75% Commercial Property 13.75% 45
    • Auto Loan: Category Grid Category A Maruti 800, Omni Van, Matiz Category B (Upto 5 lakh) Alto, Wagner, I10, spark, Swift, Indica Vista, Palio, Getz, a-star, Zen 46
    • (Upto 10 lakh) Category C Swift Dezire, Verna, Esteem, Honda City, Acent, Verna, Fista, Indigo CS, Optra, Scorpio,Logan (More Than 10 Lakh) Category D Safari, Corela, Endeavour, Optiva, Skoda, Criteria Salaried Min 21 Years At Sanction To Maximum 58 Years At Age The Time Of Loan Maturity Loan Amount Minimum Rs. 100,000 Tenure 1 - 7 Yrs LTV Up To 85% Of On Road Price* 47
    • Gross Salary Of Rs. 1 Lac P.A. For Cat A/B Cars & Income Norms Rs 2 Lacs P.A. For Cat C/D Cars Work-Experience Minimum 2 Years Of Total Employment Landline / WLL Phone At Residence. In Case No Telephone Phone At Resident Post-paid Mobile Connection With Resident Address Required. Foreclosure 4% + Principal Outstanding Minimum Of Rs 2500 For Cat A Cars, Rs. 3000 For Cat B & C Cars And Rs 3500 For Cat D Cars (Plus Processing Fee Upto 1% Of The Loan Amount At The Discretion Of The Branch Manager) 3 Times Of Annual Gross Or 30 Times Of Avg Net Eligibility Salary Of 3 Months. EMI Must Not Exceed 50% Of Calculation Net Salary Criteria Self-Employed Min 21 Years At Sanction To Maximum 65 Years At The Age Time Of Loan Maturity Loan Amount Minimum Rs. 100,000 Tenure 1 - 7 Yrs LTV Up To 85% Of On Road Price* 48
    • Gross Income Of Rs. 60,000 P.A. For Cat A/B Cars & Income Norms Rs 1 Lac P.A. For Cat C/D Cars (Gross Income : N.P After Tax & Depreciation) Work-Experience Minimum 3 Years In Business Landline / WLL Phone At Residence. In Case No Phone Telephone At Residence Postpaid Mobile Connection With Residence Address Required. Foreclosure 4% + Principal Outstanding Minimum Of Rs 2500 For Cat A Cars, Rs. 3000 For Cat B & C Cars And Rs 3500 For Cat D Cars (Plus Upto 1% Processing Fee Of The Loan Amount At The Discretion Of The Branch Manager) Eligibility 6 Times Gross Income P.A. (Gross Income = Net Profit Calculation + 50% Of Depreciation For The Last Financial Year.) Criteria Partnership Firms Min 21 Years At Sanction To Maximum 58 Years At The Age Time Of Loan Maturity For Loan Executing Partner. Loan Amount Minimum Rs. 100,000 Tenure 1 - 7 Year LTV Up To 85% Of On Road Price 49
    • Gross Income Of Rs. 60,000 P.A. For Cat A/B Cars & Income Norms Rs 1 Lac P.A. For Cat C/D Cars (Gross Income: N.P After Tax & Depreciation). Min Turnover Of Rs 4.5 Lacs Work-Experience Minimum 3 Years In Business Landline / WLL Phone At Resident. & Office For Loan Executing Partner. In Case No Phone At Resident, Post- Telephone Paid Mobile Connection With Resident. Address Is Required Foreclosure 4% + Principal Outstanding Minimum Of Rs 2500 For Cat A Cars, Rs. 3000 For Cat B & C Cars And Rs 3500 For Cat D Cars (Plus Upto 1% Processing Fee Of The Loan Amount At The Discretion Of The Branch Manager) 6 Times Gross Income P.A. (Gross Income = Share In Eligibility Profit + Salary + Interest On Capital + 50% Of Calculation Depreciation For The Last Financial Year) (To The Extent Of His Share In Partnership) Criteria Private & Public Ltd. Companies Min 21 years at sanction to Maximum 65 years at the Age time of loan maturity for the loan executing director/authorized signatory Loan amount Minimum Rs. 100,000 Tenure 1 - 5 yrs 50
    • LTV Up to 85% of On road price* Min Turnover of Rs. 2 Crore and Minimum Net Profit of Income Norms Rs 50 Lacs. (No Cash Loss in the last 2 yrs) Work-experience Minimum 3 years in business Landline / WLL phone at Resident & Office for loan executing director/authorized signatory. In case no Telephone phone at Resident, post-paid mobile connection with Resident Address is required Foreclosure 4% + principal outstanding Minimum of Rs 2500 for CAT A cars, Rs. 3000 for Cat B Processing Fee & C Cars and Rs 3500 for Cat D cars (plus upto 1% of the loan amount at the discretion of the Branch Manager) Eligibility 6 times Avg. Net Profit of the Last 2 Years calculation Documents required: For Salaried: Passport / Voter’s Card / Driving License with Proof of Identity Photograph/ PAN card Latest salary slip showing all deductions AND Proof of Income Latest Form 16 / Income Tax Return (Form 16 FYE March should be available June onwards) 51
    • Ration Card/Latest Electricity Bill/Latest Address Proof (of Telephone Bill/Passport/Latest Credit Card the residing city) Bill/ Driving License Signature Passport copy/ Driving License with Verification Photograph/ Banker’s Verification Additional Document NA For Self-Employed: Passport / Voter’s Card / Driving License with Proof of Identity Photograph/ PAN card Latest Income Tax Return and Computation of Proof of Income income Ration Card/Latest Electricity Bill/Latest Address Proof (of Telephone Bill/Passport/Latest Credit Card the residing city) Bill/ Driving License Signature Passport copy/ Driving License with Verification Photograph/ Banker’s Verification Additional Document Declaration from Proprietor For Partnership Firms: Copy of Partnership Deed & the following documents required for the loan executing partner: Proof of Identity Passport / Voter’s Card / Driving License with Photograph/ PAN card Audited Balance Sheet, Profit & Loss Account for Proof of Income last 2 years along with the latest 2 Income Tax Returns 52
    • Telephone Bill/Electricity Bill/ Shop & Address Proof (of Establishment Act Certificate/ SSI Registered the residing city) Certificate/ Sales Tax Certificate Signature Banker’s Verification Verification Additional Authority letter signed by all partners Documentation For Private & Public Ltd. Companies: Copy of Memorandum & Articles of Association & the following documents required for the loan Proof of Identity executing director/authorized signatory. Passport / Voter’s Card / Driving License with Photograph/ PAN card Proof of Income Last 2 Years Audited Financials Telephone Bill/Electricity Bill/ Shop & Address Proof (of Establishment Act Certificate/SSI Registered the residing city) Certificate/ Sales Tax Certificate/PAN No. Signature Banker’s Verification Verification Additional List of Directors, Share Holding pattern, Copy of Documentation Board Resolution On Road Price = Ex Showroom rate + Insurance + Road Tax + Registration charges Interest Rate Grid: Interest Rate Grid (Direct Branch Source) 53
    • 60 – 84 Car Category Upto 35 months 36 - 60 months months Cat A 13.00% 12.00% 13.50% Cat B 13.00% 11.50% 13.50% Cat C 13.00% 11.50% 13.50% Cat D 13.00% 11.00% 13.50% Interest Rate Grid (Dealer/DSA sourcing) 60 – 84 Car Category Upto 35 months 36 - 60 months months Cat A 14.50% 13.25% 15.50% Cat B 14.50% 12.50% 15.50% Cat C 14.50% 12.00% 15.50% CAT D 14.50% 11.75% 15.50% Agricultural Loan: Financing farmers against pledge of warehouse or cold storage receipts: 54
    • Facility Limit: Ceiling of Rs. 5.0 lac per farmer Nature of Facility: Loan against the pledge of warehouse and/ or cold storage receipts Eligibility for Farmers:  Original depositors of the receipts.  The borrower to undertake that he is a farmer and also to provide a declaration to the effect that he/she is not defaulter to any Bank/Financial Institution Designated Warehouse: CWC/SWC Warehouses Private warehouses/Cold storages/Godowns with a minimum storage capacity of 100 MT Value of Loan: Value of the loan = Value of commodity minus commodity specific margin amount Rate of Interest: BPLR- 4.75%; at present 15.25 % p.a. payable with the principal repayment. Margin: Min 40%. 55
    • Tenure of the Loan: The maximum tenure of each loan shall be 12 months. Valuation: The value of the commodity as security shall be the lower of the following:  Value of goods as reflected in the warehouse receipt.  Value of the goods based on the average price prevailing in the nearest mandi on the day previous to the date of disbursement.  Price provided by the Commodity Business Group, Central Office from time to time for various commodities Insurance: The stocks pledged to the Bank should be insured adequately with Bank clause. Security Upto Rs. 200,000: Primary-: Pledge of warehouse receipts duly endorsed in Bank’s favour Security over Rs. 200,000: Primary-: Pledge of warehouse receipts duly endorsed in Bank’s favour, Collateral-: Third party Guarantee Disbursement: The individual borrower availing this facility will have to open an account at the concerned local branch (the account can be opened under ‘SBSPL’ category wherein the average balance requirement is Rs. 1000/-). The 56
    • amount will disbursed by crediting the account of the borrower, at the concerned branch. Selection of the Warehouse/Cold Storage: The warehouse/cold storage has to have adequate facilities (like aeration, pest control, loading and unloading facilities, electricity, security, etc.) to allow for the storage of the produce with minimum loss in quality and quantity. It is suggested that branches may give preference to the warehouses accredited by National Commodity and Derivative Exchange, India (NCDEX) who provide warehouse receipts to the farmers in dematerialized form. Security from Warehouse Owner/Manager: Have to sign M&C agreement with Bank to buy or arrange for the sale of the stock in case of default of farmer Letter of guarantee/comfort letter is to be obtain (in absence of the letter of guarantee). Monitoring & M&C Agent Charges: M&C agent has to monitor the security. The quality and quantity report has to be sent to the branch on a monthly basis. Normally 1% of the loan amount. However, branches can pay maximum 1.5% of the loan amount wherever required. Other Conditions: Post dated cheques to be collected from borrowers Repayment: Bullet repayment along with interest on due date. 57
    • Penal Interest: 2% p.a. on overdue loan/unpaid interest Pre-payment Charges: 2% (if loan is repaid within one month. Otherwise nil) Processing Fee: .40% of the loan sanctioned Documents to be executed by the Borrower:  DP Note  DP delivery letter  Letter of waiver  Pledge Agreement  Warehouse receipt Documents to be executed by the M&C Agent: Management and Collection Agreement: To be finalized in consultation with the Law Department Event of Default: In the event of default of a borrower, M&C agent should arrange for buyers/buy back of the stock. The Bank shall be entitled to sell the pledged goods either through the M&C agent/ public auction/private sale/through any commodity exchange and adjust the sale proceeds against the amount 58
    • outstanding from the borrower. The price at which the pledged commodity is sold by the Bank is final and binding on the borrower. However, in case the proceeds from such a sale are not sufficient to satisfy the amount outstanding in full, the Bank will be entitled to recover the shortfall from borrower. Registers to be maintained: Registers to be maintained by the branch: Loan application cum disposal register Price, Stock and Margin recovery register Insurance due date register Branches would keep the above mentioned registers in physical form or in a excel sheet in the system. The records should be updated at the stipulated time and hard copies be preserved in a separate file. Registers to be filled in by M&C agent: Stock and margin register Rating Tool for Farmer/Agriculture: Score Sheet for Agricultural Loans (For individuals) No Parameters Score Scoring 59
    • Own: 5 1. Type of land holding Leasehold: 3 More than 10 acres: 5 Extent of land under 2. More than 5 and Upto 10 acres: 3 cultivation 5 acres and below: 2 Type of crop under Cash crops: 5 3. cultivation Non cash: 3 Drip/Sprinkler irrigation: 5 4. Irrigation Well/canal: 3 Dry farming: 1 Through Co-Operative Marketing Societies/Private corporates: 5 5. arrangement Through Govt. agencies: 3 Direct: 1 Source of income from activities allied Yes: 3 6. to agriculture/other No: 0 source of income Bench marking: (Out of 28): Score above 18 A1 15-18 A2 10-14 A3 Score below 10 A4 Agricultural Gold Loan – ‘Power Gold’: Eligibility: 60
    •  Any individual who has completed 18 years of age and is involved in agriculture/allied activities.  In case one spouse is availing of the loan against gold ornaments owned by the other, the borrowing should be in the joint names.  Gold bullion will not be accepted as security.  Only original owner of the Jewellery.  Jewellery below 20 carat should be avoided. Limit : Minimum - Rs.15,000 Maximum - Rs.10,00,000 Loan Amount and Margin: Loan Amount = (Net weight. of ornament in terms of 22 carat) * (Advance rate)Net weight of ornament in terms of 22 carat = (Net weight of ornaments * Purity)/ 22  Advance rate at present: Rs.740/- per gram  BH can selectively increase advance rate by Rs.10/- Margin Call: During the tenure of the loan, if the margin of the loan, based on the market value of the gold, falls below 20%, the borrower would be called upon to 61
    • deposit the shortfall. If the borrower fails to pay the shortfall within 15 days, the Bank will have the right to dispose off the gold ornaments. Security:  Primary - Nil  Collateral - Pledge of gold ornaments Custody Charges:  If gold value > 5 times loan amount  Rs. 1000 + ST per year Pricing:  For limit up to Rs. 1.00 Lakh: BPLR-4.25%  For limit above Rs. 1.00 lacs: BPLR-4.75%  Interest application is Annual and to be paid along with principal Penal interest: 2% per year on overdue amount. Disbursement:  Up to Rs.50,000/- in Cash.  Above Rs.50,000/- by Pay Order. Documentation: Following documents should be obtained from borrower. 62
    •  Application form  D.P.Note  D.P.Note delivery cum waiver letter  Letter of Pledge  Proof of agricultural activity (copy of land records, land revenue tax receipts etc.)  Declaration of ownership of the ornaments pledged  Authorisation from the borrower for disclosure of information The following document should be obtained from the appraiser Certificate of valuation Processing & Appraiser fees:  0.25%+ST subject to maximum of Rs. 500+ST  BH has discretion to waive/ reduce if RoI is increased by 0.30%  No fee up to Rs.25,000/- loan  0.25% subject to maximum of Rs.500/- Insurance: Gold ornaments pledged to the Bank will be covered under the Master policy of theft and burglary. Bank’s indemnity policy will be obtained by the Bank centrally. Sanctioning Authority: 63
    • The sanctioning authority would be the Branch Head in the category of Manager/AVP/VP. The branches should send the Control Returns on monthly basis to the Zonal Office for noting and review. The VP (Credit & Forex) will be the reviewing authority at the Zonal Office. Repayment: Repayment period not exceed 18 months. The facility will be renewable at the request of the borrower after 18 months. The repayment schedule should be aligned with the crop harvest cycle. Release of the gold ornaments on repayment by borrower The branch should release the security only if the full amount of interest, other charges and principal has been repaid. The borrower should present the signed receipt issued to him/her by the Bank while taking delivery of the ornaments. The borrower(s) needs to sign the receipt acknowledging that the gold ornaments have been received by him/her in good order and condition. The signed receipts should be arranged as per the date of closure of loan account and shown to the inspecting authority at the time of the inspection. Guidelines for the release of the pledged jewellery on liquidation of the loan on death of the borrower will be issued later in consultation with the Law Department. Right of Disposal of Security: In case of default, Bank has the right to dispose the gold ornaments for satisfaction of the loan by way of public auction or private treaty and proceed against the borrower. 64
    • Power Gold Plus: Difference from Power Gold:  Minimum Rs. 2.00 lacs to Rs. 10.00 lacs.  Monthly interest application.  Drawing Power: 80% of value of the ornament.  Field inspection report to confirm the activity is to be undertaken.  Maximum 6 redemptions and pledges can be permitted in a year, Rs.250/- plus ST will be charged per redemption/pledge.  Custodian charges of Rs.3,000/- plus ST, will be charged per year if the value of the security is more than 5 times the loan amount. Pricing:  Direct Agriculture: BPLR–3.75%.  Indirect Agriculture: BPLR-3.25%.  Fee: 0.25% subject to maximum of Rs.1,000/-.  Appraiser Fee: 0.25% subject to maximum Rs.1,000/-. Product Features:  CC facility against gold (CCAPG) Target Group:  For allied agricultural activities like poultry, dairy, fisheries etc- Direct Agriculture.  Financing agriculture input dealers, Arthias/ Commission agents etc – Indirect Agriculture. Crop cultivation should not be financed. 65
    • Kisan Power Scheme: Purpose: Production Credit i.e. for meeting cost of crop cultivation/allied agricultural activities. Investment Loan for meeting any investment need, other than production expenses, that can improve borrower’s farm productivity i.e. purchase of agricultural equipments, land levelling, land development, vehicles etc. Consumption Loan for meeting consumption needs Financing of all allied agricultural activities except the following is eligible under Kisan Power-No tractor /trailer shall be financed under the Kisan Power Scheme. Poultry shall not be financed under Kisan Power Scheme Eligibility: Any individual who is a major Owner Cultivators Tenant Cultivators and Share Croppers may be financed selectively. Minimum landholding should be two acres of cultivable land. Landholding has to be supported by land documents like 7/12 extract, Patta, chitta, Adangal (confirming ownership, crop pattern) etc. Joint holding (single or multiple locations) up to five persons are permitted. In case the borrower is more than 60 years of age, a co-borrower is mandatory. The co-borrower should be a family member / relative of the Borrower. 66
    • Radius of Operation: Radius of operation restricted to 50 km from the Branch. However, VPAF may allow financing select cases under the scheme beyond 50 kms and upto 75 kms, provided the distance will not come in the way of effective follow up and recovery. Nature of Facility: Term loan – Consumption Loan and Investment Loan Cash credit – Production Credit Sanctioning authority should ensure that a cash credit facility is extended in all cases without exception Amount of Loan: Overall Limit: Minimum: Rs. 25001/- Maximum: Rs. 25,00,000/- Individual Components: Facility Min Limit Max Limit Investment Loan 25001/ 24,74,999/- Production Credit* 25,001/ 25,00,000/- Consumption Loan 50,000/ 5,00,000/- For States of Punjab, Rajasthan & Haryana and 3,00,000/- For all other states 67
    • *Production Credit is Mandatory Assessment/Fixation of Limit: Overall Limit The overall loan amount/ credit limit will be fixed on the basis of 5 times annual farm income or 70% of the value of collateral security whichever is less subject to maximum of Rs. 25,00,000/- Production Credit For any Kisan Power account, Production Credit is a must. While calculating Production Credit Limit, scale of finance should be the basis of assessment, which is decided every year by District level Technical committee (DLTC). The Production Credit Limit can be maximum upto 150% of the amount of Scale of Finance advised by DLTC. Crop insurance premium may be debited to production credit, but the outstanding should be within limit. In other words the disbursement needs to be net of crop insurance premium. Production Credit Limit may be extended for leased land also, subject to the terms and conditions on security/guarantee etc. Consumption Loan The Consumption Loan amount should not be more than 3 times of annual farm income, and subject to the security criteria, within the upper cap of Rs. 5 lacs/3 lacs as the case may be. The assessment of consumption requirement is to be based on the written declaration of the applicant, and 100% of the declared amount would be allowed subject to maximum limits specified. Investment Loan 68
    • For purchase of Two/Three/Four Wheelers used for carrying farm goods or Farm Machinery-: In such cases, the branches shall ensure that the price of the two/three/four wheelers or machinery should be equal to or less than the MRP (maximum ex showroom price, which includes all the state level taxes, but excludes the registration fee, road tax and insurance) published by the manufacturer. The actual cost of registration, road tax and insurance can be financed. In case of vehicles, the Bank’s interest is to be noted in the RC book and the vehicles are to be insured under a comprehensive insurance policy. Along with invoice receipt, RC book copy, a photograph of the vehicle and the Borrower standing nearby is to be obtained and kept on record. This may be obtained within 45 days of disbursement. Our charge on the vehicle should be explicitly mentioned on the vehicle. In respect of development works like deepening/drilling of wells, construction of pump house/sheds/cattle sheds etc, the estimates made by the farmers themselves can be accepted, provided the cost does not exceed more than 20% of the unit cost approved for that activity/purpose in that region by NABARD. Security: Upto Rs. 50000/- Primary: Hypothecation of crops and other assets Collateral : Nil Over Rs. 50000/- Primary : Hypothecation of crops and other assets 69
    • Collateral: Mortgage/ Charge of land owned by the prospective borrower upto 140% (1.4 times) of the amount of loan as per State laws. Margin: Investment Loan for creation of assets and allied activities (except 25% vehicles) Investment Loan for vehicles 30% Nil. The labour input by the farmer is Production Credit considered as the margin. Hence no separate cash margin is insisted for crop loans. Consumption Loan NIL Rate of Interest: For consumption loans: Amount Interest Rate Loan from Rs 50,000 upto Rs 2,00,000 BPLR 1.50% Loan from Rs 2,00,001 upto Rs 5,00,000 BPLR 1% For all other loans -: Amount Interest Rate Limit up to Rs. 50,000 BPLR 3.50% Loan from Rs 50,001 upto Rs 2,00,000 BPLR 3% 70
    • Loan from Rs 2,00,001 upto Rs 5,00,000 BPLR 2% Processing Fee: Fee @ 0.50% for production credit and 1.00% for Investment Loan and Consumption Loan. Subject to a minimum of Rs.500/-. Service tax is to be recovered at the applicable rate. Sanctioning Authority may at their discretion allow reduction/waiver are free to recover a higher processing fees on selective basis. Crop Insurance : The production credit is to be covered under National Agricultural Insurance Scheme (NAIS) provided by the Agriculture Insurance Company of India Ltd (AICIL). Zonal Offices/Advances cells are authorised to waive this requirement. Branches to debit actual crop insurance premium from production credit account (CCAGR). However, no overdrawing should be allowed. It is to be ensured that the disbursement is made after keeping sufficient balance for debit of all future insurance premiums. Accident Insurance: All KCC holders shall be covered under Personal Accident Insurance upto Rs.50, 000/- as per the extant guidelines of Kisan Credit card scheme. This is done under a master policy with Bajaj Alliance General Insurance Co Ltd by Central Office and the premium amount of Rs. 15 will be incurred by the Bank. Also, in case of a claim (due to accidental death, partial disability or 71
    • total disability), branches should take up the matter with Bank Assurance Cell in Retail Banking department at CO for an early claim settlement. The proceeds of insurance are to be credited to CCAGR account of the borrower. Insurance of Assets: All the securities (Building, equipment and Vehicles) created out of the loan or otherwise are to be insured for full value. Branches may take the help of our insurance advisers for this purpose. Disbursement: Wherever cash disbursement is to be made (in case of Production credit/Investment Loan or Consumption Loan), the funds should be credited to the operative (SB/CC) account of the borrower and should be withdrawn through cheque leaf. Investment Loan Investment loan is to be disbursed in one or more instalments depending upon the progress of work. In case of Investment loan for purchase of implements/ equipments/vehicles, the borrower should be asked to deposit the margin money with the Bank, and the disbursement is given to the dealer/manufacturer/supplier directly by DD/ Pay order along with margin. In case the implement/ equipment is already purchased by the Borrower, disbursement is permitted after inspection by the Bank’s official and after getting the stamped receipt and invoice. These purchases should not be older than 75 days. 72
    • Cash disbursement may be made for purchase of animals, construction of farm shed etc. and the relative receipt is to be obtained within 45 days of disbursement. The labour component in Investment loan can be released in cash after getting written request cum declaration from the Borrower. Repayment: Production Credit Annual review and renewal in every three years. Branches should encourage Borrowers to bring the sale proceeds of their agricultural produce to their CCAGR a/c . Consumption Loan and Investment Loan All the investment loans (except horticulture projects) and consumption loan should be repayable within a maximum period of 5 years. Repayment period up to 7 years is permitted in case of horticultural projects which is inclusive of moratorium period upto maximum of 3 years. Sanctioning authorities to ensure that projects having sufficient cash generation in the residual loan period (I.e. total period minus moratorium period) to ensure repayments only are considered. A suitable moratorium may be allowed upto maximum of 2 years in case of Investment Loan (except horticulture projects and vehicle loans). The instalments should be monthly/quarterly/Half yearly/yearly depending on harvesting of crop and other income sources like dairy, salary, other employment etc. depending on the income stream the repayment of vehicle loans is to be fixed at monthly/quarterly or half yearly intervals and the maximum moratorium for vehicle loan is to be restricted to 6 months. Penal Interest: 73
    • 2% p.a. on overdue amount. Documentation: Borrower:  Demand Promissory Note for Production Credit  Letter of waiver cum DP Note delivery letter for Production Credit  Loan cum hypothecation Document – ACD 1.  Simple (Registered) Mortgage - ACD 2 / Equitable Mortgage (ACD-4A & 4B).  Duly signed PDCs along with covering letter  Duplicate copy of the sanction letter duly signed by the borrower/s and guarantor/s.  A letter addressed to the Village Revenue Officer advising him to record the charge of the Bank for the amount of the loan on the land records with him. Guarantor:  Deed of Guarantee - ACD 3.  Additional Documentation for Vehicles  Power of Attorney for registering the vehicle in favour of one of the joint accountholders in case there are more than one borrowers  A letter of authority to the Bank for effecting disbursement of the loan directly to the dealer.  RTO forms no.26, 29,30,34,35 74
    • MIS and Monitoring : Monthly Control Returns to be submitted by the branches/Cluster Heads to Advances Cell/Zonal Office for reporting advances. Appraisal and Sanction: Application for Kisan Power should be obtained from the proposed borrowers and also the guarantor in the prescribed format. Branches need to offer comments in the proposal on the value of the main security, collateral security, i.e. value of the land being mortgaged to the bank and the basis of calculation of limit to the farmer. The agriculture officers/branch staffs identified to deal with the scheme is to travel to each of the individual centres to meet the applicants, verify the details and put up the proposal for sanction to the Branch Head/Cluster Head. The recommending and the sanctioning authority should sign the proposal. Pre sanction Visit: The focus of visit should be on an evaluation of the income stream of the borrower, and a comprehensive assessment of credit needs taking into account track record, credibility, capability, as well as technical viability of the existing and proposed activities. Short-term credit needs of the farmer should include all requirements directly and indirectly related to production, post harvest and household expenses. Repayment capacity should be assessed on the basis of aggregate household income from all sources including crop production and ancillary activities. The following details should be observed during farm inspection: 75
    • Necessity of the development/s proposed to be undertaken. The crops cultivated and suitability of the crops proposed after the development Past experience in the activity In case of Investment Loan, it should be ensured that the land on which the developments are proposed is available as security. Additional guidelines for Vehicles: Margin payment should be made to the Bank and under no circumstances, the Borrower should be allowed to pay directly to the dealer and produce a receipt. Registration of vehicles and Stamped receipt from dealers for the cost of the vehicle financed by us should be obtained. Our charge on the vehicle should be explicitly mentioned. Registers to be maintained:  Loan Application Receipt cum Disposal Register  Mortgage Register  Document Execution Register Recovery: Sanctioning authority to designate an officer (In the cluster HQ/ Stand alone branch) for recoveries. He should monitor the accounts regularly and initiate action, whenever required. Branches may seek help of outsourced agencies for recovery. The appointment of outsourced agency shall be sanctioned by VPAF after doing a cost benefit analysis. 76
    • Direct Financing to Farmers for Cattle Loans through Dairies/ Cooperatives: Facility: Term Loan Purpose:  Purchasing Milch animal  Construction of shed for keeping cattle. Extent of Finance: The extent of finance shall be 85% of the cost of animals/ shed constructed. The borrower’s own contribution shall be to the extent of minimum 15% of the total cost of cattle purchased/shed constructed. The minimum indicative costs can be found out from the State Level Unit Cost Committee of NABARD. Amount: Minimum Amount: Rs. 30,000 Maximum Amount: Rs. 2,00,000 77
    • *The cost per cattle is assumed to be around Rs. 18,000-19,000. As per the eligibility criteria borrower has to purchase a minimum of two milch cattle from loan amount hence, the minimum availment should be around Rs. 30,000 keeping a margin of 15 % by farmer. Age: Any major individual pursuing dairy farming activity. Eligibility Criteria: Farmer should have a record of supplying minimum 10 litres of milk per day on an average for at least one year with the Village Dairy Cooperative Society. Margin: 15 % of value of cattle to be purchased and/or shed to be constructed. Rating: The score sheet for agricultural advances may be used for the purpose. The farmer with a rating of A1 and A2 may be considered for the loan. Tenor: Maximum period of Four Years from the first transaction of disbursement to borrower with a maximum moratorium period of 3 months before start of principal repayment. M&C Commission: The Dairy will be paid 0.5% of the loan amount as commission for acting as an M&C agent for the Bank. Documentation: 78
    •  Hypothecation cum Term Loan Agreement. Guarantee from Village Dairy Cooperative Society format is being finalized in consultation with Law Dept. Personal Guarantee from member of dairy coop society or third party.  Letter addressed by Borrower to Sponsor and Sponsor to Bank.  Letter of comfort/Guarantee from Dairy/Milk Union  M&C Agency agreement between the Dairy and the Bank. Repayment: The repayment will be made through escrow mechanism with a maximum moratorium of 3 months. Thereafter, the loan is to be repaid in maximum 4 years in monthly instalments. Rate of interest: The pricing will be irrespective of the rating: Loan Amount Rate Penal interest: Rs. 30,000-2,00,000 BPLR-3% 2.00% p.a. on the overdue interest and instalments. Above Rs. 2,00,000 BPLR-3.5% Prepayment Charges: In case of prepayment of loan within one year from the disbursement: 2% of the amount prepaid. Security: 79
    • Primary: Hypothecation of cattle financed by the Bank and other movable assets. Collateral: Letter of Comfort/Guarantee by the Union against the loan Guarantee from Village Dairy Cooperative Society/Personal Guarantee. In case the loan amount exceeds Rs. 1 lakh the same would be further secured by noting of the Bank’s charge on the land records of the borrower or create a mortgage of land in favour of the Bank. Insurance: Cattle/Shed will be comprehensively Insured with the beneficiary clause as UTI Bank Ltd. The premium payable is added in the cost of the project. Processing Fee: 0.5% of the total loan amount Other Terms and Conditions: In case guarantee is not available from Village Dairy cooperative, a guarantee from a person within the group or a guarantee from a third person acceptable to the Bank should be obtained. The personal guarantee has to be obtained from a guarantor should own his/her own tractor/own at least 2 acres of irrigated land/4 acres of dry land employed in government, semi government employment in the category of Scale III and above or working with any reputed private sector undertakings at a respectable positions Running own business and having assets with a market value equal to the amount of the loan. The Branch will reserve the right to reject any loan application based on its own appraisal, having right to conduct inspections without any prior 80
    • notice. In case the Borrower stops supplying milk to the Union the entire loan amount shall be repayable in lump sum/ recalled. Bench marking: (Out of 30) Score of 26 and above A1 25-21 A2 16-20 A3 <16 A4 Score Sheet for Dairy/Milk Union: Parameters Score Scoring Positive PAT for past 3 years: 5 Positive PAT for 2 years out of 3 Financial Performance of years: 3 Dairy/Union Negative PAT for for 2 years and above out of past 3 years: 0 Less than 7 days: 5 Milk Payment cycle More than 7 and Upto 15 days: 3 More than 15 days: 0 Extension Services All three services provided: 5 available through Dairy/ Two out of three services Milk Union: provided: 3 Cattle Feed One service provided: 2 Veterinary service Not provided: 0 Artificial Insemination 81
    • Average capacity utilisation Above 60%: 5 of Milk Processing Plant Between 60%-45%: 3 over past 3 years Less than 45%: 0 Average daily milk supplied More than 10 litres: 5 per farmer member over Between 5-10 litres: 3 current financial year Less than 5 litres: 0 Collateral Security Guarantee or cash margin: 5 available from Union Letter of Comfort: 3 Direct Financing to Farmers under Contract Farming: Contract farming can be defined as an agreement between farmers and processing and/or marketing firms for the production and supply of agricultural products under forward agreements, frequently at predetermined prices. The arrangement also invariably involves the purchaser in providing a degree of production support through. The basis of such arrangements is a commitment on the part of the farmer to provide a specific commodity in quantities and at quality standards determined by the purchaser and a commitment on the part of the company to support the farmer’s production and to purchase the commodity. The intensity of the contractual arrangement varies according to the depth and complexity of the provisions in each of the following three areas: Market provision: The grower and buyer agree to terms and conditions for the future sale and purchase of a crop or livestock product; 82
    • Resource provision: In conjunction with the marketing arrangements the buyer agrees to supply selected inputs, including the inputs required for land preparation and technical advice; Management specifications: The grower agrees to follow recommended production methods, inputs regimes and cultivation and harvesting specifications. Parties to the contract farming financing:  Farmer  Bank  Sponsor Sponsor can act as management and Collection agent to undertake the following functions:  Identification and screening of borrowers.  Completing application form and other formalities like getting extracts of land records, no due certificate etc. of the proposed borrowers.  Recommending the Bank for loan.  Getting security documents executed by the borrower after sanction from the Bank and forwarding the same to the Bank.  Paying the amount to the farmer disbursed by the Bank.  Getting stamped receipt from the borrowers in token of having received the amount of loan and p0ass on to the Bank.  After the supply is over, sending to the Bank the entire proceeds payable to the farmer. In case amount payable to farmer by the sponsor is less than 83
    • loan outstanding, to recover the balance amount from the farmer and remit to the Bank against the loan out standings.  Submitting the monthly MIS. Eligibility Criteria: Cultivable fertile land of 3 acre and above. It has to be supported by land documents like Patta, chitta, adangal, 7/12, 8/A extract (confirming ownership, crop pattern etc) etc. Rating: The individual account will not be rated in view of the structure of the scheme and comfort available from Sponsor. Sanctioning and Disbursement of Loan: Bank and the sponsor based upon the scale of finance as decided by the DLCC of the lead Bank or a mutually agreed upon scale will be arrived upon by the Bank and the sponsor. The disbursement of loans will be effected to the credit of current a/c to be opened by the sponsor with our Bank exclusively for the said purpose. In order to make the disbursement to the farmers who are located at different centres, the sponsor will open a current account with any other local bank, again exclusively for making disbursement of loans to the farmers. The sponsor will also arrange to obtain a stamped receipt from the farmer borrowers in token of having received the amount of loan. The agriculture extension officers of sponsor will identify the individual farmers and complete all the documentation formalities as prescribed by the 84
    • Bank. After the satisfaction of our branch personnel about the completion of documentation formalities, our branch will issue a consolidated cheque favouring the sponsor’s dedicated current account with our bank. Sponsor will arrange to provide us the transactions details of the loan disbursement account on a monthly basis certified by a Charted Accountant. Amount: Depending on scale of finance as decided by the DLCC of the lead Bank per acre of land; or what is mutually agreed upon by the Bank and the sponsor, as the case may be. Rate of Interest: 7.00%-12.00% per year. Payable half yearly depending on case to case basis. Tenor: Duration of the crop plus two months Security:  Hypothecation of crop.  Letter of Guarantee / Comfort letter (in absence of the letter of guarantee) from the sponsor Collateral Security: Nil Insurance: Wherever available the crop should be insured with standard bank clause. Processing Fees: 85
    • Nil Disbursement: The agriculture extension officers of sponsor will identify the individual farmers and complete all the documentation formalities as prescribed by the Bank. Sponsor will forward our branch, the individual applications for the loan along with the required documents as detailed in the scheme. After the satisfaction of our branch personnel about the completion of documentation formalities, our branch will issue a consolidated cheque favouring the sponsor’s dedicated current account with our bank. The sponsor will arrange to obtain a stamped receipt from the farmer borrower in token of having received the amount of loan and pass on to the Bank. Sponsor will arrange to provide us the transactions details of the loan disbursement account on a monthly basis certified by a Charted Accountant. Repayment: After the supply is over, sponsor shall send to the Bank the entire proceeds payable to the farmer. The bank will make balance payment to the farmer after deducting their crop loan dues. In case amount payable to farmer by the sponsor is less than loan outstanding, sponsor will recover the balance amount from the farmer and remit to the Bank against the loan out standings. Our branch would conduct inspection on a half-yearly basis or as decided by the Bank to verify the crop. Our branch would also verify the books of accounts of the sponsor at half yearly interval to verify the disbursal of loan as per the scheme. Also, if required an external auditor would be appointed to audit the accounts. 86
    • Other Terms: Sponsor will sign M & C agency agreement with the Bank. Education Loan: Axis Bank's Study Power aims to provide financial support to deserving students for pursuing higher professional or technical education in India and abroad. The loan would be provided to students who have obtained admission to career-oriented courses eg, medicine, engineering, management etc., either at the graduate or post-graduate level. Quantum of loan: The quantum of finance under the scheme is capped at Rs.10 lacs for studies in 87
    • India and RS 20 Lacs for studies abroad, which cover tuition fees, hostel charges (if any), cost of books, etc. The minimum amount of loan would be RS 50000. Margin: No margin for loans upto Rs 4 lacs. For loans above Rs 4 lacs, 5% margin for studies within India and 15% for higher studies overseas. Rate of interest: Interest rates linked to PLR. Role of the Guardian: The parent(s) or guardian of the student would be treated as a co-applicant of the loan. His or her role would be, necessarily, like the primary debtor. Security: Third party guarantee and/or collateral security may be asked for in appropriate cases. Additional Security: Assignment of LIC Policy in favour of the Bank for the sum assured being at least 100% of the loan amount. The policy is kept alive during the currency of the loan. To ensure this, the annual premium may be include in the computation of the loan requirement, along with the tuition fees and other recurring charges. Further, the future income of the student needs to be 88
    • assigned in favour of the Bank for meeting the instalment obligations. Disbursement: The loan will be disbursed in full or in suitable instalments taking into account the requirement of funds and/or fee schedule as assessed by the Bank directly to the educational institution or vendor of books or equipment or instruments. Penalty for early closure: Nil ********************** Abbreviations and Acronyms (Glossary): Bank: RBI : Reserve Bank of India BIS : Bank of International Settlement BCBS : Basel committee on Banking Supervisory Practices NABARD : National Bank of Agriculture and Rural Development DICGC : Deposit Insurance and Credit Guarantee Corporation ECGC : Export Credit Guarantee Corporation Delivery Channels: SOL : Service Out-let ATM : Automatic Teller Machine 89
    • PIN : Personal Identification Number POS : Point of Sale VbV : Verified by Visa (Secured Internet Payment System) WWW : World Wide Web SMS : Short Messaging Service Overseas Investor: FII : Foreign Institutional Investor NRI : Non Resident Indians PIO : Persons of Indian Origin FDI : Foreign Direct Investor OCB : Overseas Corporate Body Fixed Deposit: STD : Short Term Deposit MIC : Monthly Income Certificate QIC : Quarterly Income Certificate RIC : Re-Investment Certificate Interest: LIBOR : London Inter Bank Offered Rate MIBOR : Mumbai Inter Bank Offered Rate Payment and Settlement System : IDRBT : Institute for Development and Research in Banking Technology INFINET : Indian Financial Network SFMS : Structured Financial messaging Solution RTGS : Real Time Gross Settlement (System) NEFT : National Electronic Fund Transfer (System) IFSC : Indian Financial System Code SEFT : Special Electronic Fund Transfer 90
    • ECS : Electronic Fund Transfer SWIFT : Society for World Wide Inter Bank Financial Telecommunication (Network) MICR : Magnetic Ink Character Recognition Regulators: AMFI : The Association of Mutual Funds in India IRDA : Insurance Regulatory and Development Authority SEBI : Security and Exchange Board of India CBIL : Credit Information bureau (India) Ltd. Investment: CRR : Cash Reserve Ratio SLR : Statutory Liquidity Ratio ALM : Assets liability Management ALCO : Assets Liability Committee REPO : Reverse Purchase Order GDR : Global Depository Receipt ADR : American Depository Receipt General: BPLR : Benchmark Prime landing Rate FCNR : Foreign Currency Non Resident NRE : Non Resident External NRO : Non Resident Ordinary FEMA : Foreign Exchange Management Act, 1999 FERA : Foreign Exchange Regulation Act, 1973 FEDAI : Foreign Exchange Dealers Association of India HUF : Hindu Undivided Family COPRA : Consumer Protection Act. Ombudsman : To Take Public Complaints against the Public Authorities TDS : Tax Deductible at Source KYC : Know Your Costumer 91
    • FATE : Financial Action Task Force FIU-IND : Financial Intelligence Unit India CAR : Capital Adequacy Ratio CRAR : Capital to Risk-Weighted Assets Ratio GAAP : Generally Accepted Accounting Principles NPA : Non Performing Assets SARFAESI : Securitisation and Reconstruction of Financial Assets and enforcement of Securities Interest (Act) GRACE : Ground Rules and Codes of Ethics Appendix  www.axisbank.com  Journals  Circulars  Annual Report ********************* 92