Credit Card and Loan Assessment

Project Report

Credit Card and Loan Assessment

s

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

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

1

Interest Rate 35

2. Personal Loan 36

Normal Salaried Individual 36

Salaried Professional 37

Salaried Doctor 38

Documentation 39

Interest Grid 39

Serial No. 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

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

2

Agricultural Gold Loan ‘Power Gold’ 60

Power Gold Plus 64

Kisan Power 65

Direct Financing to Farmers for Cattle Loans

through Dairies/ Cooperatives76

Direct Financing to Farmer Under Contract

Farming81

6. Education Loan 86

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)

3

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.

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:

4

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.

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.

5

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.

Early History:

6

Other Nationalized Banks

Other Nationalized Banks

RESERVE BANK OF INDIACentral Bank and supreme monetary

authority

RESERVE BANK OF INDIACentral Bank and supreme monetary

authority

Non Scheduled Banks

Non Scheduled Banks

Foreign Banks

Foreign Banks

Private Sector Private Sector

SBI & Associates

SBI & Associates

Regional Rural Banks

Regional Rural Banks

Urban Cooperatives

Urban Cooperatives

State Cooperatives

State Cooperatives

Scheduled Banks

Scheduled Banks

Cooperative

Cooperative

Public Sector Public Sector

Commercial

Commercial

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.

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

7

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.

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

8

➢ 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 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

9

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

11

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

Registrar and Share Transfer Agent:

M/s. Karvy Computershare Private Limited

Competitors:

12

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

Investments Rs 46,330 crore

Net NPA 0.35%

Capital Adequacy Ratio 13.69% %

Axis Bank has in place a sound technological platform:

13

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.

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:

14

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.

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 to various industries with a view to containing concentration risk and

facilitating portfolio diversification.

15

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%.

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

Easy Credit Card:

What is Easy Credit Card?

A Credit Card that is ...

16

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

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

17

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

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

18

Pricing:

Type Joining Fee Annual FeeAnnual Fee Waiver

for Year 2

Platinum

Premium 5,000 1,000Customer Spends

> Rs.2,00,000 in Year 1

Platinum 1,000 500Customer Spends

> Rs.2,00,000 in Year 1

Gold Nil

100

(Two Years

onwards)

Customer Spends

> Rs. 50,000 in 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

19

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

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


Platinum Preferential Features:

Chip Card for Additional Security

Complimentary Priority Pass Membership

International Concierge Services

Exciting shopping offers

Standard Features:

20





Easy Gold:

Comprehensive Insurance Cover

Fuel savings of 2.5%at ALL Petrol Pumps


Standard Features:





Process Simplified:

21

Step 1

Crédit Card Application Form

NoOnly One Single Application Form

Letter of Lien

Addendum to Credit Card Application

Form

Draft Letter

Step 2

Double KYC No Separate KYC for Easy Credit Card

Step 3

FD retained at the branch

No

FD receipt to remain with the customer

Only photocopy to be attached

Lien marked centrally on Finacle

Step 4

Customer signature on form to be verified

by Branch heads NoCustomer signature to be verified by

Branch head/ BSO/BSM

Step 5

Card dispatched to Branch

No

Sent to customer in Courier serviceable

areas

Sent to branch in Courier non-

serviceable areas

Application Processing- Existing FD Customers:

Application Pickup

22

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

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

23

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

Documentation:

Existing FD Customers:

Easy Card Application Form

24

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)

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

Loan Assessment:

Types of Loan:

Home loan

Personal Loan

Loan Against Property

25

Auto loan

Agriculture Loan

Education Loan

Home Loan:

Criteria Salaried Individual ProfessionalsSelf 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

26

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

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

27

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

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:

28

The property should be located within 50 Km radius of nearest Branch/RAC.

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

Min ~ Max age > 21 & < superannuation at loan termination

Min ~ Max loan amt (Rs.)1.25- 15 lakes (1.25 lakes loan is only available for

customers having salary power relationship)

29

Min ~ Max Tenor (months)12 ~ 60 (For CAT C and D employees maximum tenor is

48 months)

Security/Collateral/Guarantor Optional

Banking relationshipsCat A & B - Last 3 months

Cat C & D - Last 6 months

Phone landline / mobile / WLL mandatory

Processing fee 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

CriteriaSalaried Individual Prof (MBA, Engineer, Architect,

CA, CS, ICWA)

Interest rate as per category As per category grid


Min net income (Rs. p.m.) 15,000

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


Min ~ Max Tenor (months) 12 ~ 60

30


Banking relationships

Cat A & B - Last 3 months

Cat C & D - Last 6 months




Max loan =(Net monthly income - obligations) x

Multiplier. Multiplier varies from 5 to 15 depending upon

tenure.


Degree / Diploma - proof of professional qualification

Criteria Salaried Doctors

Interest rate as per categoryDoctor in Cat B/C/D at a min of MBBS/BDS/ MS/MD =

Cat B rate


Min net income (Rs. p.m.) 15,000 (gross)

Min ~ Max age >24 and <65 at loan termination

Min ~ Max loan amt (Rs.)1.25 - 15 lakhs (1.25 lakh loan is only available for


Min ~ Max Tenor (months) 12 ~ 60

31


Banking relationships Last 6 months




Max loan = (Gross monthly salary - obligations) x

Multiplier. Multiplier varies from 5 to 15 depending upon

tenure.


Proof of Qualification

Degree, Registration with respective state medical

councils Or Dentists Association.

Documentation:

Documents Required

Proof of Identity, Signature & AgePassport/ Voter's Card/ Driving License/ PAN card &

Photograph.

Proof of Telephone BillLatest bill of landline/ mobile/ WLL stating name of

borrower or address of borrower.

Proof of ResidenceRation Card/ Passport/ Latest Electricity Bill/ Latest

Telephone Bill/ Latest Credit Card Bill.

Proof of IncomeLatest salary slip showing all deductions and Last 2 years

Form 16 along with current dated salary certificate

32

Bank Statement / Pass Book where

salary is CreditedCat A & B - Last 3 months, Cat C & D - Last 6 months

Interest Rate Grid:

Interest Rate Grid

Personal Loans ROI (only Fixed)

Salaried - Cat A 15.00%

Salaried - Cat B 17.00%

Salaried - Cat C 19.00%

Salaried - Cat D 21.00%

Loan against Property:

Criteria Salaried Individual

Work Experience (Years)Min 1 Year If Total Exp 2 Or (3 If Current Employment <1

Yr)

Min Net Income (Rs.) 7500 Per Month

Min ~ Max Age (Years) >24 ~ <= Than Superannuation At Loan Termination

33

Min ~ Max Tenor (Months)Residential Property Up To 180 Months,

Commercial Property Up To 120 Months

Maximum LTVResidential 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 RefinanceAllowed

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 (Months)Residential Property Up To 180 Months,

Commercial Property Up To 120 Months

34

Maximum LTV

Residential Property Up To 60%,

Commercial 45%,


Pre Payment Penalty



Penalty.

Processing Fee 1% Of Loan Amt + Service Tas As Applicable



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 (Months) Up To 120 Months Irrespective Of Property Type

35

Maximum LTVResidential Property Up To 60%, Commercial 45%,


Pre Payment Penalty



Penalty.

Processing Fee 1% Of Loan Amt + Service Tax As Applicable



Documents required for Loan against property:

For Salaried Individual:

Proof Of Identity, Signature &

Age

Passport/ Voter's Card/ Driving License/ PAN Card &

Photograph.

Proof Of ResidenceRation Card/ Passport/ Latest Electricity Bill/ Latest


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

36

For Professionals:

Proof Of Identity, Signature &

Age

Passport/ Voter's Card/ Driving License/ PAN Card &

Photograph.



Proof Of IncomeIT Returns, Computation Of Income, Balance Sheet And P/L

A/C For The Last 2 Years Certified By A C.A.


Proof Of Qualification Degree / Diploma - Proof Of Professional Qualification

For Self Employed Individuals:

Proof Of Identity, Signature

& Age

Passport/ Voter's Card/ Driving License/ Pan Card &

Photograph.



Proof Of IncomeIt Returns, Computation Of Income, Balance Sheet And P/L

A/C For The Last 2 Years Certified By A C.A.


Proof Of Qualification N/A

37

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 Rate of Interest

Residential Property 12.75%

Commercial Property 13.75%

38

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

Category C

(Upto 10 lakh)

Swift Dezire, Verna, Esteem, Honda City, Acent, Verna, Fista,

Indigo CS, Optra, Scorpio,Logan

Category D(More Than 10 Lakh)

Safari, Corela, Endeavour, Optiva, Skoda,

39

Criteria Salaried

AgeMin 21 Years At Sanction To Maximum 58 Years At The Time

Of Loan Maturity

Loan Amount Minimum Rs. 100,000

Tenure 1 - 7 Yrs

LTV Up To 85% Of On Road Price*

Income NormsGross Salary Of Rs. 1 Lac P.A. For Cat A/B Cars & Rs 2 Lacs

P.A. For Cat C/D Cars

Work-Experience 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)

40

Eligibility Calculation3 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

AgeMin 21 Years At Sanction To Maximum 65 Years At The Time Of

Loan Maturity


Tenure 1 - 7 Yrs

LTV Up To 85% Of On Road Price*

Income NormsGross Income Of Rs. 60,000 P.A. For Cat A/B Cars & Rs 1 Lac P.A.

For Cat C/D Cars (Gross Income : N.P After Tax & Depreciation)

Work-Experience Minimum 3 Years In Business

Telephone

Landline / WLL Phone At Residence. In Case No Phone At

Residence Postpaid Mobile Connection With Residence Address

Required.


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)

41

Eligibility Calculation6 Times Gross Income P.A. (Gross Income = Net Profit + 50% Of

Depreciation For The Last Financial Year.)

Criteria Partnership Firms

AgeMin 21 Years At Sanction To Maximum 58 Years At The Time Of

Loan Maturity For Loan Executing Partner.


Tenure 1 - 7 Year

LTV Up To 85% Of On Road Price

Income Norms

Gross Income Of Rs. 60,000 P.A. For Cat A/B Cars & 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

Telephone

Landline / WLL Phone At Resident. & Office For Loan Executing

Partner. In Case No Phone At Resident, Post-Paid Mobile

Connection With Resident. Address Is Required


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)

42

Eligibility Calculation

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)

Criteria Private & Public Ltd. Companies

AgeMin 21 years at sanction to Maximum 65 years at the time of loan

maturity for the loan executing director/authorized signatory

Loan amount Minimum Rs. 100,000

Tenure 1 - 5 yrs

LTV Up to 85% of On road price*

Income NormsMin Turnover of Rs. 2 Crore and Minimum Net Profit of Rs 50

Lacs. (No Cash Loss in the last 2 yrs)

Work-experience 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

43

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:

For Salaried:

Proof of IdentityPassport / Voter’s Card / Driving License with Photograph/

PAN card

Proof of Income

Latest salary slip showing all deductions AND Latest Form

16 / Income Tax Return (Form 16 FYE March should be

available June onwards)

Address Proof (of the

residing city)

Ration Card/Latest Electricity Bill/Latest Telephone

Bill/Passport/Latest Credit Card Bill/ Driving License

Signature VerificationPassport copy/ Driving License with Photograph/ Banker’s

Verification

Additional Document NA

For Self-Employed:

Proof of IdentityPassport / Voter’s Card / Driving License with Photograph/

PAN card

44

Proof of Income Latest Income Tax Return and Computation of income


residing city)

Ration Card/Latest Electricity Bill/Latest Telephone

Bill/Passport/Latest Credit Card Bill/ Driving License

Signature VerificationPassport copy/ Driving License with Photograph/ Banker’s

Verification

Additional Document Declaration from Proprietor

For Partnership Firms:

Proof of Identity

Copy of Partnership Deed & the following documents required

for the loan executing partner: Passport / Voter’s Card /

Driving License with Photograph/ PAN card

Proof of IncomeAudited Balance Sheet, Profit & Loss Account for last 2 years

along with the latest 2 Income Tax Returns


residing city)

Telephone Bill/Electricity Bill/ Shop & Establishment Act

Certificate/ SSI Registered Certificate/ Sales Tax Certificate

Signature Verification Banker’s Verification

Additional Documentation Authority letter signed by all partners

For Private & Public Ltd. Companies:

45

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


residing city)

Telephone Bill/Electricity Bill/ Shop & Establishment Act

Certificate/SSI Registered Certificate/ Sales Tax

Certificate/PAN No.

Signature Verification Banker’s Verification

Additional DocumentationList of Directors, Share Holding 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%

46

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%

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:

CWC/SWC Warehouses Private warehouses/Cold storages/Godowns with a minimum storage

capacity of 100 MT

47

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.

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

48

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 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.

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

49

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 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

50

Rating Tool for Farmer/Agriculture:

Score Sheet for Agricultural Loans

(For individuals)

No Parameters Score Scoring

1. Type of land holdingOwn: 5

Leasehold: 3

2.Extent of land under

cultivation

More than 10 acres: 5

More than 5 and Upto 10 acres: 3

5 acres and below: 2

3. Type of crop under cultivationCash crops: 5

Non cash: 3

4. Irrigation

Drip/Sprinkler irrigation: 5

Well/canal: 3

Dry farming: 1

5. Marketing arrangement

Through Co-Operative

Societies/Private corporates: 5

Through Govt. agencies: 3

Direct: 1

6.

Source of income from

activities allied to

agriculture/other source of

income

Yes: 3

No: 0

Bench marking: (Out of 28):

Score above 18 A1

51

15-18 A2

10-14 A3

Score below 10 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:

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

52

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.

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

53

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.

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.

54

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.

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.

55

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.

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

56

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

*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.

57

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-:

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

Collateral: Mortgage/ Charge of land owned by the prospective borrower upto 140% (1.4

times) of the amount of loan as per State laws.

58

Margin:

Investment Loan for creation of assets

and allied activities (except vehicles)25%

Investment Loan for vehicles 30%

Production Credit

Nil. The labour input by the farmer is

considered as the margin. Hence no separate

cash margin is insisted for crop loans.

Consumption LoanNIL

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%

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.

59

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 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

60

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 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:

2% p.a. on overdue amount.

61

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

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.

62

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:

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.

63

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

*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.

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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:

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.

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Rate of interest:

Penal interest:

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:

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

The pricing will be irrespective of the rating:

Loan Amount Rate

Rs. 30,000-2,00,000 BPLR-3%

Above Rs. 2,00,000 BPLR-3.5%

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.

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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.

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

Financial Performance of

Dairy/Union

Positive PAT for past 3 years: 5

Positive PAT for 2 years 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

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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 utilisation of Milk

Processing Plant over past 3 years

Above 60%: 5

Between 60%-45%: 3

Less than 45%: 0

Average daily milk supplied per

farmer member over current

financial year

More than 10 litres: 5

Between 5-10 litres: 3

Less than 5 litres: 0

Collateral Security available from

Union

Guarantee or cash margin: 5

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;

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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 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:

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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.

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

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Collateral Security:

Nil

Insurance:

Wherever available the crop should be insured with standard bank clause.

Processing Fees:

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

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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:

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.

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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

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.

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Penalty for early closure:

Nil

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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

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

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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

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

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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

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

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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

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Credit Card and Loan Assessment

Documents

Transcript of Credit Card and Loan Assessment