Vedansh Project On Axis Bank 2008-09

Project Report

Credit Card and Loan Assessment

Submitted by

Vedansh Jain Roll No. JGNPGDM0856 PGDM First Batch (2008-2010) Submitted to

1

Jagannath Institute of Management Studies 48/4 Knowledge Park III, Greater Noida,U.P

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.

2

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. 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 No.

Particular

Page No.

1

Candidate Declaration

5

2

Certificate From Organisation

6

3

Executive Summary

7

4

Banking In India: Overview

9

5

Nationalized Bank In India

12

Private Sector bank In India

13

About AXIS Bank

14

Retail Banking

19

3

6

7

Corporate Banking

19

Financial Performance

21

Easy Credit Card Variants

23

Pricing

24

Process

28

Documentation

31

Loan Assessment

32

1. Home Loan

33

Documentation

34

Interest Rate

35

2. Personal Loan

Serial No.

22

36

Normal Salaried Individual

36

Salaried Professional

37

Salaried Doctor

38

Documentation

39

Interest Grid

39

Particular

Page 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

4

Self Employed

48

Partnership

49

Private and public limited company

50

Documentation

51

Interest Rate

53

5. Agriculture Loan

54

Commodity Power(Warehouse Receipt financing)

54

Agricultural Gold Loan ‘Power Gold’

60

Power Gold Plus

64

Kisan Power

65

Direct Financing to Farmers for Cattle Loans through Dairies/ Cooperatives

76

Direct Financing to Farmer Under Contract Farming

81

6. Education Loan 8

Abbreviations (Glossary)

9

Appendix

and

86 Acronyms

88 91

Candidate's Declaration I hereby declare that the project report titled “Credit Card and Loan Assessment” is prepared during 5

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)

Certificate

6

TO WHOMSOEVER IT MAY CONCERN This

MR.

is to certify that the above declaration made by 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.

Executive Summary: 7

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. 8

Primary sources: 

Interaction with the existing employees and deputy manager.



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.

9

 It was a great opportunity to develop persuasion skills and communication skills.

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 10

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 Coopera tive Urban Cooperatives

Non Scheduled Banks

Commer cial

State Cooperatives

Public Sector

Other Nationalized Banks

SBI & Associates

Private Sector

Foreign Banks

Regional Rural Banks

Early History: The

first fully Indian owned bank was the Allahabad

Bank, established in 1865. However, at the end of late18th 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 11

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. 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 12

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.

13

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 India (SBI) ➢ State Bank of Indore Mysore

➢ State Bank of ➢ State Bank of

14

➢ 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: 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 15

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

16

17

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: 18

Mumbai

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: 19

M/s. S. R. Batliboi & Co. Auditors Accountants

Chartered

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: 20

Balance Sheet Size

Rs 1,47,722 crore

Total Deposits

Rs 1,17,374 crore

Net Advances

Rs 81,557 crore

Investments

Rs 46,330 crore

Net NPA

0.35%

Capital Adequacy Ratio

13.69% %

Axis Bank has in technological platform:

place

a

sound

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. 21



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.

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 22

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. 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 23

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 to various

industries

concentration

risk

with

a

and

diversification.

24

view

to

facilitating

containing portfolio

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%.

25

**********************

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 26

 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

27

Easier than Cash    

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: Type

Joining Fee

Annual Fee

28

Annual Fee Waiver for Year 2

Platinum Premium

5,000

1,000

Customer Spends > Rs.2,00,000 in Year 1 Customer

Platinum

Gold

1,000

Nil

500

Spends > Rs.2,00,000

100

in Year 1 Customer

(Two

Spends

Years

> Rs. 50,000 in

onwards) One 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 29

 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  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 30

 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  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. 31

 Credit Limit of Choice  High Cash Withdrawal Limit of 40% of Credit Limit  Balance Transfer Options

Process Simplified: Step 1 Crédit Card Application Form Letter of Lien Addendum to Credit Card Application Form

No Only One Single Application Form

Draft Letter 32

Step 2 Double KYC

Separate KYC for Easy No Credit Card

Step 3 FD receipt to remain with the customer FD retained at the branch Only photocopy to be No attached Lien marked centrally on Finacle Step 4 Customer signature on form to be verified by Branch heads

Customer signature to No be verified by Branch head/ BSO/BSM

Step 5 Card dispatched to Branch

Sent to customer in Courier 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 33

 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

Dispatch  Direct to customer in Courier serviceable areas  To branch in Courier non-serviceable areas

Application Customers:

Processing

34

-New

FD

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  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

35

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)  Most Important Document (MID)

************************

36

Loan Assessment: Types of Loan:  Home loan  Personal Loan  Loan Against Property  Auto loan  Agriculture Loan  Education Loan

37

Home Loan: Criteria

Salaried Individual

Professio nals

Self Employed Individuals

Min. work exp (Years)

2 (3 if current employment <1 year)

3

Min net income (Rs.)

15000pm

1.50 lacs pa

Min ~ Max age (Years)

>24 ~ <= than superannuation at loan termination

>24 ~ <= 65 at loan termination

Min ~ Max Tenor (Months)

Maximum 240

Maximum 240

Maximum 240

Maximum LTV

80%

Clubbing of Income

Allowed for spouse only

Pre payment penalty

NIL

Processing fee

1% of loan amt + 10.30% Service Tax as applicable 38

Other Products / Variants Takeover of existing HL from other financier (Balance Transfer)

Allowed

Refinance Option

Allowed for properties purchased in last 6 months

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.

Proof of Income:  Latest 3 salary slip showing all deductions  IT Returns  Computation of income 39

 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 interest

Applicable rate of

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.  Properties under HUF, Properties inherited under Hindu

succession

act,

40

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: Salaried Individual

Criteria Interest rate as per category Min. work exp (years) Min net income (Rs. p.m.)

Normal As per category grid 2 15,000

41

Min ~ Max age Min ~ Max loan amt (Rs.) Min ~ Max Tenor (months)

> 21 & < superannuation at loan termination 1.25- 15 lakes (1.25 lakes loan is only available for customers having salary power relationship) 12 ~ 60 (For CAT C and D employees maximum tenor is 48 months)

Security/Collateral/Gua Optional rantor Banking relationships Phone Processing fee

Cat A & B - Last 3 months Cat C & D - Last 6 months landline / mobile / WLL mandatory 2% of loan amt

Eligibility calculation

Max loan =(Net monthly income - obligations) x Multiplier. Multiplier varies from 5 to 13 depending upon tenure.

Residence

Present residence => 6 months

Criteria

Salaried Individual Prof (MBA, Engineer, Architect, CA, CS, ICWA)

Interest rate as per category Min. work exp (years) Min net income (Rs. p.m.)

As per category grid 2 15,000

42

Min ~ Max age

> 21 & < superannuation at loan termination

Min ~ Max loan amt (Rs.)

1.25 - 15 lakhs (1.25 lakh loan is only available for customers having salary power relationship)

Min ~ Max Tenor (months)

12 ~ 60

Security/Collateral/Gua Optional rantor Banking relationships Phone Processing fee

Cat A & B - Last 3 months Cat C & D - Last 6 months landline / mandatory

mobile

/

WLL

2% of loan amt

Eligibility calculation

Max loan =(Net monthly income 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

Interest rate as per category

Doctor in Cat B/C/D at a min of MBBS/BDS/ MS/MD = Cat B rate

Min. work exp (years) Min net income (Rs. p.m.)

3 15,000 (gross) 43

Min ~ Max age Min ~ Max loan amt (Rs.) Min ~ Max Tenor (months)

>24 and <65 at loan termination 1.25 - 15 lakhs (1.25 lakh loan is only available for customers having salary power relationship) 12 ~ 60

Security/Collateral/Gua Optional rantor Banking relationships Phone Processing fee

Last 6 months landline / mandatory

mobile

/

WLL

2% of loan amt

Eligibility calculation

Max loan = (Gross monthly salary - obligations) x Multiplier. Multiplier varies from 5 to 15 depending upon tenure.

Residence

Present residence => 6 months

Proof of Qualification

Degree, Registration with respective state medical councils Or Dentists Association.

Documentation:

44

Documents Required

Interest Rate Grid:

Proof of Identity, Passport/ Voter's Card/ Driving Signature & Age License/ PAN card & Photograph. Interest Rate Grid

Personal Loans Proof of Telephone Bill Salaried - Cat A Proof of Residence Salaried - Cat B Salaried - Cat C Proof of Income Salaried - Cat D Bank Statement / Pass Book where salary is Credited

Latest bill of landline/ mobile/ WLL ROI (only Fixed) stating name of borrower or address of borrower. 15.00% Ration Card/ Passport/ Latest Electricity Bill/17.00% Latest Telephone Bill/ Latest Credit Card Bill. Latest salary slip showing all 19.00% deductions and Last 2 years Form 16 along with current dated salary 21.00% certificate Cat A & B - Last 3 months, Cat C & D - Last 6 months

Loan against Property: Criteria Work Experience (Years)

Salaried Individual Min 1 Year If Total Exp 2 Or Current Employment <1 Yr)

(3 If

Min Net Income (Rs.)

7500 Per Month

Min ~ Max Age (Years)

>24 ~ <= Than Superannuation At Loan Termination 45

Min ~ Max Tenor (Months)

Residential Property Up To 180 Months, Commercial Property Up To 120 Months

Maximum LTV

Residential Property Up To 60%, Commercial 50%, Commercial Purchase 80%

Pre Payment Penalty

2% Will Be Charged If The Amount Exceeds 25 % 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 Additional Refinance

Allowed

Criteria Work Exp (Years)

Professionals Min 3 If Doctor Else 4

Min Net Income (Rs.)

1.50 Lacs Per Year

Min ~ Max Age (Years)

>24 ~ <= 65 At Loan Termination

46

Min ~ Max Tenor (Months)

Residential Property Up To 180 Months, Commercial Property Up To 120 Months

Maximum LTV

Residential Property Up To 60%, Commercial 45%, Commercial Purchase 75%

Pre Payment Penalty

2% Will Be Charged If The Amount Exceeds 25 % 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 Additional Refinance

Criteria Work Exp (Years)

Allowed

Self Employed Individuals Min 3

Min Net Income (Rs.)

1.50 Lacs Per Year

Min ~ Max Age (Years)

>24 ~ <= 65 At Loan Termination

47

Min ~ Max Tenor (Months)

Up To 120 Months Irrespective Of Property Type

Maximum LTV

Residential Property Up To 60%, Commercial 45%, Commercial Purchase 70%

Pre Payment Penalty

2% Will Be Charged If The Amount Exceeds 25 % Of The Principle Outstanding During A Quarter, Otherwise No Penalty.

Processing Fee

1% Of Loan Amt + Service Tax As Applicable

Takeover Of Existing Mortgage Allowed With Additional Refinance

Documents required for Loan against property: For Salaried Individual: Proof Of Identity, Signature & Age Proof Of Residence Proof Of Income

Passport/ Voter's Card/ Driving License/ PAN Card & Photograph. Ration Card/ Passport/ Latest Electricity Bill/ Latest Telephone Bill/ Latest Credit Card Bill. Latest 3 Salary Slip Showing All Deductions 48

Bank Statement Proof Of Qualification

Last 6 Months Where Salary/Income Is Credited N/A

For Professionals: 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.

Proof Of Income

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 Professional Qualification

Proof

Of

For Self Employed Individuals: Proof Of Identity, Passport/ Voter's Card/ Driving Signature & Age License/ Pan Card & Photograph. Proof Of Residence

Ration Card/ Passport/ Latest Electricity Bill/ Latest Telephone Bill/ Latest Credit Card Bill.

Proof Of Income

It Returns, Computation Of Income, Balance Sheet And P/L A/C For The Last 2 Years Certified By A C.A. 49

Bank Statement Proof Of Qualification

Last 6 Months Where Salary/Income Is Credited N/A

Other Terms & Conditions:  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 50

Rate of Interest

Residential Property

12.75%

Commercial Property

13.75%

Auto Loan: Category Grid 51

Category A

Maruti 800, Omni Van, Matiz

(Upto 5 lakh) Category B

Alto, Wagner, I10, spark, Swift, Indica Vista, Palio, Getz, a-star, Zen

(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

Age

Min 21 Years At Sanction To Maximum 58 Years At The Time Of Loan Maturity

52

Loan Amount Tenure LTV

Minimum Rs. 100,000 1 - 7 Yrs Up To 85% Of On Road Price*

Income Norms

Gross Salary Of Rs. 1 Lac P.A. For Cat A/B Cars & Rs 2 Lacs P.A. For Cat C/D Cars

WorkExperience

Minimum 2 Years Of Total Employment

Telephone

Landline / WLL Phone At Residence. In Case No Phone At Resident Post-paid Mobile Connection With Resident Address Required.

Foreclosure

4% + Principal Outstanding

Processing Fee

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% Of The Loan Amount At The Discretion Of The Branch Manager)

Eligibility Calculation

3 Times Of Annual Gross Or 30 Times Of Avg Net Salary Of 3 Months. EMI Must Not Exceed 50% Of Net Salary

Criteria

Self-Employed

Age

Min 21 Years At Sanction To Maximum 65 Years At The Time Of Loan Maturity

53

Loan Amount Tenure LTV

Minimum Rs. 100,000 1 - 7 Yrs Up To 85% Of On Road Price*

Gross Income Of Rs. 60,000 P.A. For Cat A/B Cars & Rs 1 Lac P.A. For Cat C/D Cars Income Norms (Gross Income : N.P After Tax & Depreciation) WorkExperience

Minimum 3 Years In Business

Telephone

Landline / WLL Phone At Residence. In Case No Phone At Residence Postpaid Mobile Connection With Residence Address Required.

Foreclosure

4% + Principal Outstanding

Processing Fee

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% Of The Loan Amount At The Discretion Of The Branch Manager)

Eligibility Calculation

6 Times Gross Income P.A. (Gross Income = Net Profit + 50% Of Depreciation For The Last Financial Year.)

Criteria

Partnership Firms

Age

Min 21 Years At Sanction To Maximum 58 Years At The Time Of Loan Maturity For Loan Executing Partner.

54

Loan Amount Tenure LTV

Minimum Rs. 100,000 1 - 7 Year Up To 85% Of On Road Price

Gross Income Of Rs. 60,000 P.A. For Cat A/B Cars & Rs 1 Lac P.A. For Cat C/D Cars Income Norms (Gross Income: N.P After Tax & Depreciation). Min Turnover Of Rs 4.5 Lacs WorkMinimum 3 Years In Business Experience Landline / WLL Phone At Resident. & Office For Loan Executing Partner. In Telephone Case No Phone At Resident, Post-Paid Mobile Connection With Resident. Address Is Required Foreclosure

Processing Fee

Eligibility Calculation

Criteria

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% Of The Loan Amount At The Discretion Of The Branch Manager) 6 Times Gross Income P.A. (Gross Income = Share In Profit + Salary + Interest On Capital + 50% Of Depreciation For The Last Financial Year) (To The Extent Of His Share In Partnership)

Private & Public Ltd. Companies

55

Age

Loan amount Tenure LTV

Min 21 years at sanction to Maximum 65 years at the time of loan maturity for the loan executing director/authorized signatory Minimum Rs. 100,000 1 - 5 yrs Up to 85% of On road price*

Min Turnover of Rs. 2 Crore and Minimum Income Norms Net Profit of Rs 50 Lacs. (No Cash Loss in the last 2 yrs) Workexperience

Minimum 3 years in business

Telephone

Landline / WLL phone at Resident & Office for loan executing director/authorized signatory. In case no phone at Resident, post-paid mobile connection with Resident Address is required

Foreclosure

4% + principal outstanding

Processing Fee

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% of the loan amount at the discretion of the Branch Manager)

Eligibility calculation

6 times Avg. Net Profit of the Last 2 Years

Documents required: 56

For Salaried: Proof of Identity

Passport / Voter’s Card / Driving License with Photograph/ PAN card

Latest salary slip showing all deductions AND Latest Form 16 / Proof of Income Income Tax Return (Form 16 FYE March should be available June onwards) Ration Card/Latest Electricity Address Proof Bill/Latest Telephone (of the residing Bill/Passport/Latest Credit Card Bill/ city) Driving License Signature Verification Additional Document

Passport copy/ Driving License with Photograph/ Banker’s Verification NA

For Self-Employed: Proof of Identity Proof of Income Address Proof (of the residing city) Signature Verification Additional

Passport / Voter’s Card / Driving License with Photograph/ PAN card Latest Income Tax Return and Computation of income Ration Card/Latest Electricity Bill/Latest Telephone Bill/Passport/Latest Credit Card Bill/ Driving License Passport copy/ Driving License with Photograph/ Banker’s Verification Declaration from Proprietor 57

Document For Partnership Firms: Copy of Partnership Deed & the following documents required for the Proof of loan executing partner: Passport / Identity Voter’s Card / Driving License with Photograph/ PAN card Audited Balance Sheet, Profit & Loss Proof of Account for last 2 years along with Income the latest 2 Income Tax Returns Telephone Bill/Electricity Bill/ Shop & Address Proof Establishment Act Certificate/ SSI (of the residing Registered Certificate/ Sales Tax city) Certificate Signature Banker’s Verification Verification Additional Authority letter signed by all partners Documentation

For Private & Public Ltd. Companies:

Proof of Identity

Copy of Memorandum & Articles of Association & the following documents required for the loan 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 Establishment Act Certificate/SSI (of the residing Registered Certificate/ Sales Tax city) Certificate/PAN No. 58

Signature Verification

Banker’s Verification

Additional List of Directors, Share Holding Documentation pattern, Copy of Board Resolution On Road Price = Ex Showroom rate + Insurance + Road Tax + Registration charges

Interest Rate Grid: Interest Rate Grid (Direct Branch Source) Car Category

Upto 35 months

36 - 60 months

60 – 84 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) Car Category

Upto 35 months

36 - 60 months

60 – 84 months

Cat A

14.50%

13.25%

15.50%

Cat B

14.50%

12.50%

15.50%

59

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: 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:

60

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%.

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. 61

 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 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 62

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. 63

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 64

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 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

65

Rating Tool for Farmer/Agriculture: Score Sheet for Agricultural Loans (For individuals)

No

Parameters

1.

Type of land holding

2.

3.

Own: 5 Leasehold: 3 More than 10 acres: 5 Extent of land More than 5 and Upto under cultivation 10 acres: 3 5 acres and below: 2 Type of crop Cash crops: 5 under cultivation Non cash: 3

4.

Irrigation

5.

Marketing arrangement

6.

Score

Drip/Sprinkler irrigation: 5 Well/canal: 3 Dry farming: 1 Through Co-Operative Societies/Private corporates: 5 Through Govt. agencies: 3 Direct: 1

Source of income from activities Yes: 3 allied to No: 0 agriculture/other source of income

Bench marking: (Out of 28): 66

Scori ng

Score above 18 15-18 10-14 Score below 10

A1 A2 A3 A4

Agricultural Gold Loan – ‘Power Gold’: Eligibility: 

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:

67

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 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: 68

 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.  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

information

69

for

disclosure of

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: 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. 70

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:

71

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.

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/-.

72

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.

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 agricultural

farm

productivity

equipments,

land

i.e.

purchase levelling,

of 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

73

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 coborrower is mandatory. The co-borrower should be a family member / relative of the Borrower.

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 74

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 Investment Loan

Min Limit 25001/

Max Limit 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

*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 75

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 For purchase of Two/Three/Four Wheelers used for carrying farm goods or Farm Machinery-: 76

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

activity/purpose in that region by NABARD.

Security: Upto Rs. 50000/77

for

that

Primary: Hypothecation of crops and other assets Collateral : Nil Over Rs. 50000/Primary : Hypothecation of crops and other assets 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

25%

allied activities (except vehicles) Investment

Loan

for

vehicles Production Credit

30% Nil. The labour input by the farmer is 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 78

Loan from Rs 50,000 upto Rs

BPLR 1.50%

2,00,000 Loan from Rs 2,00,001 upto Rs

BPLR 1%

5,00,000 For all other loans -: Amount

Interest Rate

Limit up to Rs. 50,000

BPLR 3.50%

Loan from Rs 50,001 upto Rs

BPLR 3%

2,00,000 Loan from Rs 2,00,001 upto Rs

BPLR 2%

5,00,000

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).

79

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 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 80

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. Cash disbursement may be made for purchase of animals, construction of farm shed etc. and the relative 81

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).

monthly/quarterly/Half

The

instalments

yearly/yearly 82

should

be

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: 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.

83

 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

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 84

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. Shortterm 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: 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 85

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. 86

Direct

Financing

Cattle

Loans

to

Farmers

through

for

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.

87

Amount: Minimum Amount: Rs. 30,000 Maximum Amount: Rs. 2,00,000 *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:

88

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: 

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. 89

Rate of interest: The pricing will be irrespective of the rating:

Penal interest:

Loan Amount

Rate

Rs. 30,000-2,00,000

BPLR-3%

Above Rs. 2,00,000

BPLR-3.5%

2.00% p.a. on the

overdue interest and instalments.

Prepayment Charges: In case of prepayment of loan within one year from the disbursement: 2% of the amount prepaid.

Security: 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:

90

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 notice. In case the Borrower stops supplying milk to the Union the entire loan amount shall be repayable in lump sum/ recalled. 91

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

Financial Performance Dairy/Union

Score Positive PAT for past 3 years: 5 Positive PAT for 2 years of out of 3 years: 3 Negative PAT for for 2 years and above out of past 3 years: 0

Milk Payment cycle

Less than 7 days: 5 More than 7 and Upto 15 days: 3 More than 15 days: 0

Extension Services available through Dairy/ Milk Union: Cattle Feed Veterinary service Artificial Insemination

All three services provided: 5 Two out of three services provided: 3 One service provided: 2 Not provided: 0

Average capacity Above 60%: 5 utilisation of Milk Between 60%-45%: 3 Processing Plant Less than 45%: 0 over past 3 years 92

Scori ng

Average daily milk More than 10 litres: 5 supplied per farmer Between 5-10 litres: 3 member over current Less than 5 litres: 0 financial year Guarantee or cash Collateral Security 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

standards

in

determined

quantities by

the

and

at

purchaser

quality 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:

93

Market provision: The grower and buyer agree to terms and conditions for the future sale and purchase of a crop or livestock product; 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. 94

 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 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:

95

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 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.

96

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: Nil

Disbursement: 97

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. 98

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.

Other Terms: Sponsor will sign M & C agency agreement with the Bank.

Education Loan: 99

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 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 100

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 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

101

instruments.

Penalty for early closure: Nil

**********************

Abbreviations (Glossary):

and

Acronyms

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

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: 102

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

LIBOR

:

London Inter Bank Offered Rate

MIBOR

:

Mumbai Inter Bank Offered Rate

Interest:

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

ECS

:

Electronic Fund Transfer

SWIFT

:

Society

for

Telecommunication MICR

:

World

Wide

Inter

(Network)

Magnetic Ink Character Recognition

103

Bank

Financial

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

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.

General:

Ombudsman

:

To Take Public Complaints against the Public

Authorities TDS

:

Tax Deductible at Source

KYC

:

Know Your Costumer

FATE

:

Financial Action Task Force

FIU-IND

:

Financial Intelligence Unit India

CAR

:

Capital Adequacy Ratio 104

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

GRACE

:

Securities Interest (Act)

Ground Rules and Codes of Ethics

Appendix 

www.axisbank.com

 Journals  Circulars  Annual Report

*********************

105