This document outlines the presanction appraisal process for loans including: 1) Conducting due diligence on the customer such as identity verification, employment checks, and income verification. 2) Conducting a pre-sanction visit to the customer's business or property. 3) Drawing credit information reports and ensuring the genuineness of financial documents. 4) Non-legal options for loan recovery include restructuring or upgrading loans, and selling financial assets. 5) Legal documentation procedures must follow proper forms, stamping, registration, and witnessing requirements.

2. Presanction Appraisal
1. Due Diligence
1. Identity Proof, residence proof and PAN
Number etc
2. Physical verification of the credentials from
the employer and residence of the customer;
3. Stability of employment and period of stay at
the place of residence;
4. Strict checks on the verification of income &
other documents submitted by the customer;
5. Physical verification of collateral offered

3. 2. Pre-sanction Visit By The Officials at borrower’s
unit/factory/business premises/
residence/guarantors residence.
3. Drawing of CIRs .
4. Ensuring genuineness of balance sheet
1. Verification of balance sheet..Web site of ROC.
2. Status of charges, Balance Sheet etc
..www.mca.gov.in
3. Membership & adress of CA..http://icai.org
5. Credit risk rating
6. Proper valuation of plant & machinery.
7. Genuineness & investigation of of title deed.

4. Essential points before Documentation
 The document should be executed in
proper form prescribed by the
institution.
 It must be properly stamped if required
by law.

5. Essential points before Documentation
 It must be registered, if required by law.
 It must be witnessed, if required by law.
 The executor of the documents must have
proper/legal authority to execute the
document.
 Vetting of documents before
documentation and after documentation
but before disbursement.

6. Non legal options
1. Up gradation
1. Recovery
2. Restructuring
2. Sale of Financial Assets

7. 3. Other actions
1. Write Off
2. Compromise

8. Recovery
Phone Calls –
1. Contact the borrowers / guarantors over phone as
prescribed by them.
2. Avoid Phone Calls
1. At a particular time or at a particular
place, as requested by
borrowers/gurantors.
2. At inappropriate occasions such as
bereavement in the family or such other
calamitous occasions.
Non Legal

9. Personal Visits –
If the borrowers / guarantors are not
responding/not reachable over
telephone, make personal visits to the
customer's residence/business
place/workplace during reasonable
hours of the day i.e. Normally 7 AM
to 7 PM.
Regular demand notice
Non Legal

10. Restructuring
When to resturcture?
When defaulted due to any legal action and
or some economic situation which is beyond
the control of the borrower
What is restructuring ?
Providing some incentives, which we do not
provide in ordinary course of business to
those borrowers.
Non Legal

11. Other Actions
Compromise
Every bank must have policy on negotiated/
compromise settelement of recovery of
NPAs & it must contain formula for
ascertaining the compromise dues.

12. Few terms used in recovery policy
Total dues
= Ledger Outstanding+ Accrued interest+ Penal Intt.+
Misc. Charges.
Recoverable Dues
= Ledger Outstanding+ Interest++ Misc. Charges.
Compromise Amount
Sacrifice Amount

13. Other Actions
Write Off
The excercise of write off has to be taken only
after after exhausting all the avenues of
recovery through normal course/legal
means/comromise.
It is techenical write off

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