Professional Documents
Culture Documents
for
Promotion Exercise
(Updated upto 26.02.2014)
(For Promotion from JMG I to MMG II & MMG II to MMG III)
A Compilation
By
Training Centre, Bareilly
(Under the guidance of Baroda Academy, Ahmedabad)
FACULTY
Mr. P. K. Singh
Mr. Sudhir Kumar
Mr. Somnath Singh
Chief Manager
Sr. Manager
Sr. Manager
INDEX
Sl.No.
Subject
Page No.
15
18
26
35
RURAL/AGRI. BANKING
51
SME BANKING
76
WHOLESALE BANKING
97
132
10
RISK MANAGEMENT
158
11
166
12
180
13
185
Disclaimer: Though all efforts have been made to incorporate latest and correct
information of the related topics but in case of any doubt please refer book of
instructions, reference books and circulars of the bank. This booklet is focusing
mainly the written promotion exam. within the bank looking the previous trends and
should not be considered as instruction manual.
2
Bank of Baroda is having a long, eventful and glorious history of more than 105
years. HH Sir, Maharaj Sayajirao-III founded the Bank on 20th July 1908 with
paid up capital of Rs. 10 Lac
In 1919, the Bank crossed the state frontiers and set up Mumbai Main Office
In the year 1935, Bank became a scheduled Bank
The first safe deposit lockers were provided at Baroda in 1939
At the time of independence in 1947, Bank of Baroda was a regional bank with 48
branches
Bank of Baroda was nationalized by Govt. of India on 19th July 1969 along with other 13
Banks (Total 14 Banks were nationalized in 1969)
As many as 10 banks have been merged with Bank of Baroda during its journey so far:
1.
2.
3.
4.
5.
6.
7.
8.
Shri S.S.Mundra
I) Shri P. Srinivas
II) Shri Ranjan Dhawan
III) Shri Bhuvanchandra
B. Joshi
Dr. K.P. Krishnan
Shri Sudarshan Sen
Shri Maulin Vaishnav
Shri Vinil Kumar Saxena
Shri S. S. Bhandari
Shri Rajib Sekhar Sahoo
:
:
:
:
:
:
:
:
:
:
Mission Statement :
To be a top ranking National Bank of International Standards
committed to
augmenting stake holders' value through concern, care and competence.
Logo Baroda Sun :
Bank introduced the existing logo Baroda Sun w.e.f 6th June, 2005.
It comprises double B letter forms that hold the rays of the rising Sun, we call
this as Baroda Sun. The sun is a representation of what our bank stands for. It
is a symbol of dynamism and optimism.
The sun is the single most powerful source of light and energy. Its far reaching
rays dispel darkness to illuminate everything they touch.
The single colour, compelling vermillion palette indicates hope and energy and
indicates that at Bank of Baroda, we seek to be the source that will help all our
stakeholders realise their goals.
To our customer, we seek to be a one stop, reliable partner who will help them to
address different financial needs. To our employees, we offer rewarding careers
and to our investors and business partners, maximum return on their investment.
Branch Head
Relationship
Manager
Customer
Service
Representative
Operation Head
Branch Host
Universal Teller
Credit Head
Forex Head
Branch Back
Office Personnel
Project Navnirmaan has altogether -18- initiatives covering both Business Process
Re-engineering and Organization Re-structuring, aimed at transforming the Banks
branches into a sales and service centers through sustained Centralization to make
possible Sales growth, superior customer experience and alternate channel
migration.
The most important initiatives are:Conversion of all metro and urban branches into Baroda Next
Creation of automated and lean Back Offices like:
A. City Back Office (CBO): The CBOs deal with centralized upload of clearing
transactions both inward and outward as well as government collections and ECS
transactions.
[Automated cheque processing introduced at Mumbai, Surat and Ahmedabad]
B. Regional Back Office (RBO): The RBO deals with centralized processing of
account opening forms (AOF) and centralized processing of issuance of
Personalized Cheque Books (PCB), issuance of Debit Card and Baroda Connect to
our customers. Total no. of RBO as on 31-12-2013 was 12
C. Urban Retail Loan Factory [URLF]: Centralized Retail Loan Processing centre
with specialized sales and processing officers. It works on assembly line principle.
As on 31-12-2013 Bank had 45 RLFs
D. SMELF: Centralized SME (Small and Medium Enterprise) Loan Processing centre
with specialized sales and processing officers. It works on assembly line principle.
As on 31-12-2013 Bank had 52 SMELFs
E. City Sales Office (CSO): CSO has been created at every Regions to extend sales
support to city Branches and exploring the new business in the market. The sales
officer attached with CSO works as Relationship Managers for our existing and
potential customers like, Institutional, Govt. Offices, Hospitals, Corporate etc.
Some Other Important Initiative Under NAVNIRMAAN:
Branch Front end Automation: The Queue Management System (QMS) &
Cheque Deposit Machine (CDS) machines are being installed at identified
branches
Credit centralization pilot (RLF/SMELF): The Retail and SME credit
centralization pilot is under progress at the Loan Factories in Baroda
Mid Corporate Vertical: Separate Mid-corporate vertical has been created
and 15 Mid-corporate branches have been opened
Roll out of enterprise-wide Sales Accountability Model Sales Operating
Model
e-Lobbies were launched in 30 locations. These lobbies operate 24X7 providing
facilities for cash withdrawal, cash deposit, cheque deposit, pass book printing and
phone banking. This facility is known as Non Stop Banking
Bank's present BPLR 14.50 % (wef. 09.02.2013)
Base Rate : 10.25 % (wef. 09.02.2013)
6
Online application for SME Loan enabled along-with Housing Loan, Education and Auto
Loan. Online tracking of those applications has also been enabled.
Bank has built a State-of-the-Art Data Centre conforming to Uptime Institute Tier-3
standard & a Disaster Recovery Site in different seismic zones to ensure uninterrupted
banking services delivery to customers.
Launching of Baroda Gift Card
Introduced Visa Platinum Premium Debit Card
Launched Maestro Debit card
HR Shared Services (HRCPC)
Launching of Career Portal of the bank
Account Number Portability of SB, CA & TD account started within the bank
Online Recurring Deposit Account opening with Standing Instruction enabled through EBanking i.e. Baroda Connect
Bunch Note Acceptor (BNA) implementation for account based
Non Personalized Debit Card has been launched
Introduction of EMV based two high end Debit Cards i.e. Rupay Platinum & Visa Platinum
Branch Network:
Domestic Branches as on 17th Feb, 2014
Metro
Urban
Semi-Urban
Rural
Total
964
826
1240
1691
Total ATMs
Subsidiaries (Domestic):
Nainital Bank Ltd., BOBCARDS Ltd.,
Associates (Domestic):
Baroda Pioneer Asset Management Company Ltd
IndiaFirst Life Insurance Company Limited
Baroda Uttar Pradesh Gramin Bank, Head Office - Raebareli
Baroda Rajasthan Khetriya Gramin Bank, Head Office - Ajmer
Baroda Gujarat Gramin Bank, Head Office - Bharuch
Subsidiaries (Overseas):
Bank of Baroda (Botswana) Ltd.
Bank of Baroda (Kenya) Ltd.
Bank of Baroda (Uganda) Ltd.
Bank of Baroda (Guyana) Ltd.
Bank of Baroda (UK) Ltd.
Bank of Baroda (Tanzania) Ltd
Bank of Baroda (Trinidad & Tobago) Ltd.
Bank of Baroda (Ghana) Ltd.
Representative Offices (Overseas)
Bank of Baroda (Thailand)
Associate (Overseas)
Indo-Zambia Bank Ltd.(Lusaka)
Composite Loan factories
Bank has moved towards a further innovative step to establish a Composite Loan
Factory at Mangalore, where a prospective as well as our existing borrower can avail
SME and/or Retail loan under one umbrella.
Gen-Next Branches
To respond to the needs of the changing demographic profile of the country, the
bank has been endeavoring to customize delivery channels especially for youth
segment. As a part of these efforts, the bank has set up innovative Gen- Next
branches dedicated to youth and young IT professionals at certain places.
The branch will have youth specific products and will function as a model for fusion
of Hi-tech and High-touch Banking.
The Branch is offering following liabilities and assets products to the customers:
PRODUCT NAME
Facility Type
Amount
Remark
OD Facility
(This is special saving
Deposit product
having an in built
feature of overdraft
Recurring Deposit
General
Products
Unit Linked Insurance Plan
Term Insurance Plan
Endowment Plan
Group Insurance Plan etc.
Credit Life Plan
Baroda
Health
co-branded
Insurance
Mutual Fund
medi-insurance
products
for
hospitalization expenses
Insurance covered for assets
such as vehicle, business &
industries, live stock etc. from
various risks.
Growth/Equity Scheme
Income / Debt Scheme
Balance Fund
Money Market or Liquid
Fund
Gilt Fund
Index Fund
Tax Saving Scheme
Fixed Maturity Plan
11
6. The name fetched from the NSDL for particular PAN with challan entered by
the maker should be verified at the time of verification by the supervisor.
Advantages to Customer: Hassle free Tax Remittance for customers and non - customers
No formalities-Registration , login ID,PW etc
Online check of PAN / TAN / Assessee code
Confirm immediate Tax payment Challan
Instant cyber receipt/counter foil with CIN, Payt. details , Name of the branch
Counter foil can be regenerated
Tax payment for any commissionerate available
On line Tax payment by branch on behalf of any individual , corporate etc
No limit on amount
Free of cost
Advantages to Bank / Branch: Rs. 12/- per challan revenue
Opportunity to canvass new business from Non customer
Contact Centre Facility:
Bank has introduced a new delivery channel the Contact Centre(call centre) for delivery
of banking services through TOLL FREE PHONE. The numbers are 1800 22 33 44 or
1800 102 44 55. Now, Banks customers and members of general public can call the
Banks Contact Centre and seek information on their accounts, request for banking
services, enquire on banks products, interest rates, etc.
Following services can be availed
Issuance of a cheque book
Enquiry about products and services
Account Enquiry Balance, Transaction, Statement of A/c, Amount in Clearing etc.
Hot-listing of ATM cards
Stop payment marking / un-marking
Request for issuance of debit card
Request for re-generation of debit card PIN
Support for e-banking users like Re-generation of Baroda Connect Passwords
Re-generation of mobile banking password
On-line (paperless) TPIN generation facility
Benefits to the Customers/:
Most convenient delivery channel
Services are available from 8 am to 8 pm
365 days a year, (excluding Independence Day and Republic Day)
12
31.03.2013
8,02,069
4,73,883
3,28,186
4,480.72
2.40
1.28
0.90
13.30
2.66
13
(Rs. in Crore)
31.12.2013
8,56,218
5,03,772
3,52,446
1,048
3.32
1.88
0.80
12.01
2.37
14
grievance redressal mechanism prevalent in banks, its structure and efficacy and
recommend measures for expeditious resolution of complaints.
The Reserve Bank of India (RBI) has accepted 88 out of the 230 recommendations made
by the Damodaran committee on customer services. Sources say that the 88
recommendations, where bankers had consensus, include recommendations such as banks
should sell standalone financial products and not bundle it with any other product, have
been accepted by the RBI. Some pending recommendations such as not imposing prepenalty on foreclosure of home loan and suggestions made on mobile and internet banking,
RBI will have a discussion with IBA.
Transaction through other Banks ATM
As per the guidelines of RBI, the customer maintaining Saving Bank A/c may withdraw the
money from any Banks ATM, 5 times with ceiling of Rs.10000 per transaction during any
calendar month without any charge. Now, even balance enquiry also considered as a
transaction (towards max.5 free transaction). But for such transactions certain charge
has been prescribed by RBI which is to be paid by the Customers Bank to the Bank whose
ATM is being used. Also, this facility is available free of cost to only Saving bank a/c
holders and other a/c holders may enjoy this facility @Rs20 per transaction.
Dealing with Dishonoured Cheque:
As part of Customer Service guidelines, RBI has framed following Rules to be followed by
banks, in case of dishonour of cheques:
Returning of dishonoured cheques- These instruments should be dispatched to the
customer promptly without delay, in any case within 24 hours.
Procedure for return/ dispatch of dishonoured cheques
(i) The paying bank should return such cheques presented through clearing houses strictly
as per the return discipline prescribed for respective clearing house in terms of
Uniform Regulations and Rules for Bankers Clearing Houses.
(ii) In relation to cheques presented direct to the paying bank for settlement of
transaction by way of transfer between two accounts with that bank, it should return
such dishonoured cheques to payees/ holders immediately.
(iii) Cheques dishonoured for want of funds in respect of all accounts should be returned
along with a memo indicating therein the reason for dishonour as insufficient funds.
16
17
18
Must ensure that explicit guidelines are in place on the following aspects of customer
relationship in the bank:
No account is opened in anonymous or fictitious/benami name
Customer are cotegorised as low, medium and high risk based on clearly defined parameters
Required documents and other information must be collected relating to different types of
customers in line with the perceived risk.
Necessary checks before opening a new account profile for each new customer based on
risk categorisation
(1) Customer Identification Banks to obtain all necessary information to establish the
identity of each new customer based on disclosures by customers themselves. The
easy means would be documents such as passport, driving license, Armed Forces ID
cards, Income Tax PAN card, Aadhaar Card, ID card issued by Government of India,
State Government accompanied by signature verification and photographs would help
to establish the identity of the person opening the account. Towards this, the
following additional details need to be collected while opening the account.
Employment details such as job specifications, name and address of the employer,
length of service etc.
Provide details about source of income and annual income.
Details of assets owned such as house, vehicle etc.
(2) For identification of an individual / corporate - The identification to be through an
introductory reference from the existing account holder / a person known to the bank
or on the basis of documents provided by the customer. Board of Directors to put in
place adequate policies to establish procedure to verify bonafide identification.
(3) Ceiling and Monitoring of Cash Transactions Banks are required to issue TCs/ DDs/
MTs and TTs for Rs.50000 and above only by debit to the customers account or
against cheques and not against cash. Further the applicants are required to furnish
PAN on application for Rs.50000 and above. A close-watch to be kept on cash
withdrawal and deposits for Rs.10 lacs and above in deposit, cash credit or overdraft
accounts and keep record of details of these large cash transactions in a separate
register.
19
Finance ministry has recognized the Aadhar number issued by UIDAI as an officially
valid document to satisfy the KYC norms for opening of accounts. Recently, bank has also
issued a circular that at the time of opening of accounts the requirement of introduction
may be waived.
Bank has introduced a new menu option FINDCUST for identification of multiple customer
IDs for elimination and merger to single customer ID(UCIC)
Acceptance of e-KYC as a Valid Process for KYC Verification.
Bank has decided to accept e-KYC service launched by UIDAI as a valid process for
KYC verification in consultation with Unique Identification Authority of India (UIDAI). The
information authenticated and transferred by UIDAI containing demographic details and
photograph as a result of e-KYC process shall be treated as sufficient proof of Identify and
Address of the client.
Anti Money Laundering
It is conversion of money, which is illegally obtained, so as to make it appear to
originate from a legitimate source. The main objective of the Act is:
1. To prevent, combat and control money laundering.
2. To confiscate and seize the property obtained from the laundered money.
3. To deal with any other issue connected with money laundering in India.
There are three independent steps or stages in Money Laundering -- Placement,
Layering and Integration
A) Placement - physical disposal of bulk cash proceeds derived from illegal activity
B) Layering - process of separation of illicit proceeds from their source by creating
complex layers of financial transactions it conceals the audit trail.
C) Integration re-injection of laundered proceeds back to the economy
Punishment: Whoever commits the offence of money laundering shall be punished with
the rigorous punishment for a term not less than 3 years but which may
extend to 7 yrs and shall also liable to fine, which may extend to Rs.5
lacs.
Citizens Charter
Citizen Charter gives the customers right as well as their demands on service from
the bank. Citizens charter covers the following:
20
5. The appeal against the Award can be filed within 30 days to the Appellate
Authority (DGM RBI).
Bank can file the reply of objection raised by borrower within 15 days instead of 7
days.
24
25
Retail Loan Campaign from 01.02.2014 to 31.03.2014 for Baroda Home Loan,
Baroda Auto Loan & Baroda Traders Loan.
Our bank has launched the campaign for Baroda Home Loan, Baroda Auto Loan & Baroda
Traders Loan from 01.02.2014 to 31.03.2014 with 100% waiver of Unified processing
charges on Baroda Home loans (including Home Improvement Loan & AAA) and Car Loans &
50% waiver of processing charges on Baroda Traders Loans (Applicable to all loans
sanctioned till 31.03.14 and disbursed upto 10.04.14 under) 50% waiver of processing
charges on Baroda Traders Loan is also applicable to accounts reviewing with
enhancement,but for enhanced portion only.
Staff Motivations
PPF CAMPAIGN
ln order to promote the opening of large number of PPF Accounts this year our Chairman &
Managing Director has again approved a new and improved Cash incentive linked Campaign
26
for opening of PPF Accounts in the authorized branches Pan lndia during the period
starting from 1st January, 2014 to 31st March, 2014.
Each staff member, whether from an authorized/ un-authorised branch or administrative
office, shall be eligible to receive a cash incentive of Rs. 25/- per account, in case he/she
has canvassed a minimum 5 new PPF accounts. The incentive will increase to Rs. 30/- per
PPF account if staff member canvasses 15 or more PPF accounts during the campaign
period.
Retail Lending Continuation of various Incentive Schemes.
Bank has introduced the following incentive schemes for driving growth in Retail Lending.
1. Payment of incentives to staff members against the Home Loan leads directed by
them and converted into real business.
Incentive will be paid for Home Loan application above Rs.10 Lac &upto Rs.50 Lac at the
rate of Rs.2500/- per application and Rs.5000/- per Home Loan for Home Loan application
above Rs.50 Lac against the leads directed by the staff members and where Home Loan is
sanctioned and disbursed by the Bank.
2. Payment of service charges to Approved Builders against the Home Loan leads
directed by them and converted into real business.
Builders will be paid service charges, which should not exceed 0.25% of the Home loan
amount for every case directed to the Bank or Rs.25000/- whichever is lower subject to
sanction and disbursement of Home Loan by the Bank.
3. Payment of pay out / service charges to all Car Dealers & their Sales Executives.
-
Payment of pay out to all Car Dealers at the rate of 1% of Car Loan amount
disbursed against the leads directed by them and converted in to real business.
Payment of service charges of Rs.1000/- per Car Loan, to the Sales Executives of
Car Dealers against the leads directed by them and converted in to real business.
The Schemes are initially launched upto 30.09.2013. However, now it has been
decided to continue the incentive schemes as under.
Payment of incentives to staff members against the Home Loan leads directed by
them and converted into real business - will continue upto 31.03.2014
Payment of service charges to Approved Builders against the Home Loan leads
directed by them and converted into real business will continue on ongoing basis
till further instructions.
27
Payment of pay out / service charges to all Car Dealers & their Sales Executives will continue on ongoing basis till further instructions.
3. Under the Agreement, Bank of Baroda will offer the entire Birla MF's products across
the Bank's selected branches.
4. In its drive towards providing greater customer convenience, the Bank will continue to
enlarge its basket of products - both its own as also third party, leveraging its vast
branch infrastructure."
Baroda First Wealth Pack:
Benefit Proposition Baroda First Wealth Pack:
Particulars Benefits
Baroda First Savings
Bank Account (with
inbuilt
feature
of
availability of group
Insurance cover)
To Customer
Availability of many add-on
facilities in the form of
freebees. Added Unique in
built facility of coverage
under
group
Insurance
Scheme on nominal Insu.
Premium
Baroda First Regular Investment in High Yielding
Deposit Account
Rec. Deposit.
( annual Installment
No risk of Interest rate
for 10 years)
fluctuations
No TDS deducted at source
as per present rules.
India First Smart
Insurance Coverage as
save Plan (ULIP)
per ULIP plan.
Market
based
Wealth
creation
Benefits to Bank
Broaden Customer Base.
Possibility of cross sell, up sell.
Increase in Low cost deposits
base.
Baroda First
Wealth PackSilver
Rs.25000
Baroda First
Wealth
Pack- Gold
Rs.50000
Annual
Installment of
Rs. 10,000/-
Rs. 2250/
Annual
Installment
of
Rs. 20,000/Rs. 4,900/-
Baroda First
Wealth
PackPlatinum
Rs.100000
Annual
Installment
of Rs.
50,000/Rs. 8,100/
29
Insurance cover)
India First Smart save Plan (ULIP)*
Payment of Group Term Insu. premium
(incl. of Service Tax)
Sum Insured under Group Term
Insurance (Age group 18 to 55 Years)
*Sum assured under IndiaFirst Smart
Save
Plan (age group 18-50 yrs)
*Sum assured under IndiaFirst Smart
Save
Plan (age group 51-55 yrs)
Total Insurance Cover (ULIP+ Group Term
Insurance ) for 18-50 yrs aged Customer
Total Insurance Cover (ULIP+ Group Term
Insurance ) for 51-55 yrs aged Customer
Rs. 12,000/
Rs. 750/
Rs. 24,000/Rs1,100/-
Rs. 40,000/
Rs. 1,900/
2 lacs
3 lacs
5 lacs
2 lacs
3 lacs
5 lacs
2 lacs
2.64 lacs
4.40 lacs
4 lacs
6 lacs
10 lacs
4 lacs
5.64 lacs
9.40 lacs
30
8. Cost of Health check up is allowed @ 1% of sum insured after completion of 3rd year
continuous claim free years of Policy.
Baroda Bachat Mitra
Min. FDR amount Rs. 10000/- & in multiple of Rs. 1000/- for 12 to 120 Months.
OD- 80 % of FD amount with Min. Rs. 8000/- & Max. Rs. 100000/-
Processing/Documentation-NIL
ROI- 1.00% above FDR rate with Min. Rs.25/- per month.
Auto sweep amount will be in multiple of Rs.5000/- in excess of threshold limit of Rs.
10000/- [default setting, looking to customer needs, liberty to fix higher than Rs.
5000/-, in multiple of Rs. 1000/-]
Reverse sweep in multiple of Rs.5000/- liberty to fix higher amount than Rs.5000/-, in
multiple of 5000/-
Free collection of outstation chqs but postage charges will be recovered, Free Debit
Card, Free Cheque Book facility, Free Standing Instruction & welcome Kit.
Free internet Banking, on line payment of Excise duty & Service Tax, Bank Statement
by E-mail, Free personal accidental insurance with credit card , Free Credit Card ( For
First Year ) Maximum to 2 Partners or 2 Directors, Balance Certificate, Signature
verification, Auto payroll & Unlimited no. of cheque leaves.
50% concession in remittances & collection of out station cheques. Waiver in case Car
Loans are in the name of Proprietor, Firm and Company, Also NIL folio charges.
Immediate credit of out station cheques o/s max Rs.50000/- at any time.
20% on locker rent if locker rent is paid in advance for three years and above in lump
sum.
31
Free remittances & collection of out station cheques, internet Banking, on line payment
of Excise duty & Service Tax, Bank Statement by E-mail, Free personal accidental
insurance with credit card, Free Credit Card (For First Year) Maximum to 2 Partners
or 2 Directors, Balance Certificate, Signature verification, Auto payroll & Unlimited no.
of cheque leaves. Waiver in case Car Loans are in the name of Proprietor, Firm and
Company, NO folio charges.
Immediate credit of out station cheques o/s max Rs.150000/- at any time.
Min. Rs. 1000/-, Min. balance Rs. 1000 on daily basis. Minimum balance charges
Rs.100+ST per quarter
Adm. Charge @10% of prem. amt collected shall be reimbursed by IFLI to our bank.
Life Insurance covers from India First Life Insurance co. Ltd. Up to an amount of Rs.5
lac (Min. Rs.1 lac & thereafter in multiples of 1 lac) on payment of premium at cost of
customer.
Free Debit card/internet banking & BOB Card Silver for first year with accident
insurance cover of Rs.1 lac(BOBCD ltd)
A/c opening by Min- Rs.5/-, Min. Balance Rs. 3000/- on daily basis, if not Min, balance
charge Rs. 100 + ST per quarter
Auto sweep beyond Rs.3000 to Short deposit of 180 days in multiples of Rs. 1000,
Reverse sweep in multiples of Rs.1000/- on LIFO pattern.
Free transfer of funds through DD/BC up to max. of Rs. 1.00 lac per month.
32
A Term Deposit Product wherein Depositor gets more than double of his initial deposit
amount, after a period of 7 Years 8 Months and 18 Days for Residents & Non- Residents
and 7 Years 3 Months and 24 Days for Senior Citizen
Minimum deposit amount -Rs 5,000/- (and further in multiple of Rs. 1000/-)
Maximum deposit amount -Less than Rs. 1.00 Crore
Maturity Value -On Due date Rs. 1000/- shall accumulate into Rs. 2001/ offers a very attractive interest rate of 9.10% p.a. which is one of the best offering as
on date .
33
34
Visa
Classic
Maestro
RuPay
Combi Gold
Platinum
Income
Eligibilit
y
All
customers
who are
eligible to
operate
the
account
individuall
All
customers
who are
eligible to
operate
the
account
individuall
All
customers
who are
eligible to
operate
the
account
individuall
LOGO
VISA
MAESTRO RUPAY
ATM
Withdra
wal limit
(Daily)
Rs.25000
Rs.25000
Rs.25000
MASTER
Rs.50000
VISA
Rs.100000
Rs. 200000
35
Annual
Fee
NIL
NIL
NIL
NIL
No of
4
withdra
wals
per
day in
ATM
10
Rs. 150
(Waived after
reaching a
threshold
spending of
Rs.12,000/- in
POS/ ecommerce in a
calendar year)
10
Card
Renewa
l
After 10
years
After 10
years
After 10 years
After 3 years
After 10
years
Cash withdrawal limit is up to Rs 1,00,000/- per day from an ATM with maximum
limit of Rs 15,000/- per transaction on our ATM & Rs 10,000/- per transaction on
other Banks ATM and purchase limit of Rs 2,00,000/- per day at POS.
The customer will be able to withdraw Cash from an ATM in Foreign currency up
to the equivalent of Rs 1,00,000/- per day. Similarly, the maximum per day
purchase limit at POS in Foreign Currency will be equivalent of Rs 2,00,000/-.
Maximum number of cash withdrawals allowed per day from an ATM is TEN and
there is no limit for number of POS/e-commerce transaction up to Rs 2,00,000/per day.
Can be used for e-Commerce transactions wherever RuPay and VISA Cards are
accepted. Both variants have PIN and CVV value. CVV is an important feature for
Debit Card transactions on the internet. CVV stands for Card Verification Value.
It is the last three digits printed separately after the card number in the
signature band on the back of the card.
Validity period of these debit cards is five years from month of issue.
Baroda Connect
Baroda Connect, an internet banking product of our Bank, is the very important
alternate delivery channel (ADC). This also facilitates the customers to enjoy various
banking services from their door step (home / shop/ company) or anywhere having
internet connectivity, hence, in limited sense, we may call it as Mini Extension Counter
of the Bank. In todays buyers market, where Customer is the King and each and every
service industry including banking, are hovering around the centre point CUSTOMERS,
such a unique service is extremely desired by the customers at large, especially by GenNext customers and it also proves the concept of internet as www (win-win-win
situation for the Customers, Bank & Employees). Considering the same of prime
importance, our Bank has come out with a mega project Navnirmaan, which is going to
be beneficial to all the three, in one way or, other.
Benefit to the Customers:
1. 27x7x365 access (even no effect of Sundays, Holidays & Strikes)
2. Time Saving
3. Substitute of Q-culture
4. Transparency & Trust
5. Available in other territories
6. Remittances to/from other Banks
7. Transfer of funds within Bank at no cost (without Inter-SOL Charges)
8. Various ancillary services viz. e-pay, e-ticketing, utility bills payment
9. Various other facilities at free of cost
10. Special limit for Transfer of funds within Bank may be considered
37
Awareness message on Home Page from phishing, vishing, mishing etc. attacks.
Awareness creation by the branches to their users through various methods.
Provision of Virtual Keyboard for entering Sign-on password.
Provision of two different passwords - for Sign-on & for Transaction.
Additional safety measure by disabling Transaction Password if not used for 90 days,
so that chances of misuse due to unvigilant actions of customers could be eliminated.
Sending SMS about transactions, on registered mobile phone to facilitate the users
for early access of genuineness of transactions.
Daily / Weekly ceiling on transaction amount so that any unauthorized person cannot
make big damage to our users at once and subsequently, genuineness of transaction
can be established by the user, through receiving SMS and if it is unauthorized,
necessary steps may be taken at the earliest.
Third party / Inter-bank fund transfer only after Registration by the user.
Fraud Management Services (FMS) has been implemented as additional safety
measure.
OTP Facility is providing additional safety.
38
39
Per transaction
Daily limit
Weekly limit
Monthly limit
Yearly limit
Unlimited
Unlimited
Unlimited
Unlimited
50,000
100,000
4,00,000
10,00,000
Unlimited
60,00,000
5,00,000
10,00,000
40,00,000
1,00,00,00
0
6,00,00,00
0
50,000
1,00,000
4,00,000
10,00,000
60,00,000
40
BarodaRemitXpress
In keeping with the Banks goal of emerging as a true international bank of India, the
Bank has launched an Online International Money Transfer Service
BarodaRemitXpress. This product is a unique and robust online remittance solution
from USA, UK and Eurozone. This online service is bank-neutral, thus not requiring the
senders and the recipients to have a bank account with us.
This product is unique as it provides
Desktop-to-Doorstep Solution
Convenience customer can use any bank in the U.S., U.K. and EURO ZONE
Cheaper than an International Wire Transfer
Significantly cheaper than a money-transfer agent
Quicker than an international check
24x7 Customer Service
Global Security Standards - 128-bit encryption
Online Funds Tracker
Free Personalized Message
Minimum 50 USD, GBP & EURO and Maximum 5000 USD, GBP & EURO
language. The key features of biometric ATM are use of finger impression in place of
PIN, voice output for people who cannot read, colour codes available for different
amounts, fixed amount facility, no keyboard etc.
Our banks first biometric ATM was installed at Gandevi, Gujarat.
Cheque Truncation
A working group under the chairmanship of Shri D Burman had recommended the
concept of Cheque truncation to replace the physical movement of cheque by the image
of the cheque. Truncation is the process of stopping the flow of the physical cheque
issued by a drawer to the drawee branch. The physical instrument will be truncated at
some point en-route to the drawee branch and an electronic image of the cheque would
be sent to the drawee branch along with the relevant information like the MICR fields,
date of presentation, presenting banks etc. Thus with the implementation of cheque
truncation, the need to move the physical instruments across branches would not be
required, except in exceptional circumstances. This would effectively reduce the time
required for payment of cheques, the associated cost of transit and delay in
processing, etc., thus speeding up the process of collection or realization of the
cheques.
Benefits
Faster clearing cycle
Better reconciliation / verification process
Better Customer Service & Enhanced Customer Window
T+ 0 for Local Clearing and T + 1 for inter-city clearing.
Elimination of Float. Incentive to shift to Credit Push payments.
The jurisdiction of Clearing House can be extended to the entire country. No
Geographical Dependence
Operational Efficiency will benefit the bottom lines of banks. Local Clearing activity
is a high cost no revenue activity.
Minimizes Transaction Costs.
Reduces operational risk by securing the transmission route.
IFS Code
Indian Financial System Code (IFSC) is an alpha numeric code designed to uniquely
identify the bank-branches in India. This is 11 digit code with first 4 characters
representing the banks code, the next character reserved as control character
(Presently 0 (ZER0)appears in the fifth position) and remaining 6 characters to identify
the branch. IFSC No. for branches of our Bank is BARB0XXXXXX where XXXXXX is
for Branch Alpha. But if the alpha code is less than 6 characters, it should be padded by
X after the alpha i.e. if the branch alpha of our Mount Abu branch is ABU then the
IFSC code of this branch will be BARB0ABUXXX.
42
NEFT
National Electronic Funds Transfer (NEFT) system is a nationwide funds transfer
system to facilitate transfer of funds from any bank branch to any other bank branch.
The system uses the concept of Centralised accounting system and the bank's account,
which is sending or receiving the funds transfer instructions, gets operated at one
centre, viz. Mumbai only.
There is no value limit for individual transactions. NEFT is settled in 12 batches with
first batch starting at 0800 on weekdays and in five batches with first batch starting
at 0800 on Saturdays
How it is different from RTGS?
1) NEFT is a domestic electronic payment system (except Nepal) whereas RTGS allows
remittance from abroad also.
2) Minimum Amount in RTGS is Rs. 2 lac whereas in NEFT starts from Rs.1/- .
3) NEFT transactions are processed in a batch (12 in a normal day and 6 on Saturday)
whereas RTGS transactions are processed on Real Time basis.
4) NEFT transaction can be done by cash also whereas RTGS can be done account to
account.
5) In NEFT if there is incorrect a/c no. amount gets bounce back to remitting branch
whereas in RTGS it remains with the receiving branch.
6) NEFT transaction can be done by cash (i.e. non customers can also avail the benefit
of NEFT by depositing cash up to Rs.50000/-) whereas RTGS can be done account to
account only.
Real Time Gross Settlement (RTGS)
The acronym RTGS stands for Real Time Gross Settlement. An RTGS Payment
system is one in which payments instructions between banks are processed and
settled individually and continuously throughout the day .
This is in contrast to the net settlements, where payment instructions are processed
throughout the day but inter-bank settlements takes place only afterwards. Payment
instructions processed on a continuous or REAL TIME basis and settled on a GROSS
or individual basis without netting the debits against credits.
Settlement in REAL TIME means payment transaction is not subjected to any
waiting period. GROSS Settlement means the transaction is settled on one to one
basis without bunching with any other transaction.
Payment so effected are final and irrevocable
Settlement is done in the books of the RBI
Minimum amount for RTGS transaction is Rs.2 lac and there is no maximum limit for
transaction.
RTGS can be used for Inter Bank as well as Intra Bank transfers.
43
IFSC code is required for RTGS transaction and now, it has been mandatory to remit
the amount of Rs.10 Lac and above through RTGS/NEFT.
Timings Monday to Friday
Customer Transactions R41: 0900 hrs to 1630 hrs
Inter Bank Transactions R42: 0900 hrs to 1800 hrs
Timings Saturday
Customer Transactions R41: 0900 hrs to 1330 hrs
Inter Bank Transactions R42: 0900 hrs to 1500 hrs
ASCROM
ASCROM stands for Asset Classification and Credit Monitoring.
ASCROM is user-friendly software for creating Comprehensive Data Base of
Advance accounts at all levels.
It enables Recording details to implement BASEL-II (Standardised Approach) as well
as facility of data submission to CIBIL.
Features of ASCROM system
Early Warning Reports The system identifies Potential NPAs 3- months in advance
along with the Critical Amount Due (CADU)
Critical Amount Default (CAD) The system identifies the Critical Amount in Default
(CAD) in NPAs which must be recovered to upgrade the account to standard
category.
Automatic Asset Classification and computations of provisions as per RBI norms.
Reports like DSB, BSR (1A & 1B), Lead Bank Returns; Priority Sector returns can be
generated.
Asset Classification Reports in several combinations can be generated.
NPA Movement Reports for region, state, industry, sector, and activity or in its
combination is available.
Provides strong base for risk mgt. and data warehousing initiative of the Bank.
Once the account is upgraded in ASCROM, the same can be upgraded in FINACLE
through BOBMEAC .
Baroda Rapid Funds2India:
1.The product is introduced to provide easy and hassle-free money transfer service to
Individuals-NRIs/PIOs & Corporates (for remitting salary payments to their
employees) to remit the fund in India from UK, UAE and Oman Mauritius, Seychelles,
Botswana, HongKong, Fiji, Ghana, Kenya, Guyana, South Africa, Tanzania, Uganda and
Trinidad & Tobago.
44
2. Where the accounts of the beneficiaries of remittances are maintained with other
banks' branches in India, which are RTGS/NEFT-linked, the credits are effected
within 24 hours.
3. Instant credit to the beneficiary's account with Bank of Baroda branches in India
under the CBS network.
4. Trade related payments are not allowed.
5. No minimum/maximum amount for money transfer.
6. Using RTGS platform if beneficiary has account with other bank.
7. Free remittance if both the remitter & beneficiary are maintaining a/c with us.
Digital signature:
The digital signature is an encryption and decryption process allowing both the
positive identification of the author of an electronic message (Who wrote the
message?) and verification of integrity of the message (Has the message been
tampered with during transmission?).
Encryption is the transformation of information from readable form into some
readable form.
Decryption is the reverse of encryption; it's the transformation of encrypted data
back into some intelligible form.
Electronic banking Channels
ATMs
Debit transfers (utility payments)
Credit transfers (corporate payouts)
Electronic Clearing System
Point of Sales
Home Banking/ PC banking
Internet banking/ Anywhere banking
Tele-banking/ Mobile banking
Baroda Cash Management Services
Information Technology Act 2000:
An Act to provide legal recognition for transactions carried out by means of electronic
data interchange and other means of electronic communication, commonly referred to
as "electronic commerce", which involve the use of alternatives to paper-based
methods of communication and storage of information. The Information Technology
(IT) Act 2000 aims to provide a legal and regulatory framework for Promotion of eCommerce and e-Governance. IT Act 2000 was enacted on 7th June 2000 and was
notified in the official gazette on 17th October 2000. The Act is applicable to whole
India.
45
46
d. Other services
Baroda M-Connect IMPS funds transfer using Account Number & IFSC
Bank has started extending fund transfer facility using Immediate Mobile Payment
Service (IMPS) using Account No. and IFSC as well through using MMID(Mobile money
Identifier 7 digit No.)and mobile no.
Baroda M Coneect customers can avail basic mobile banking services through
USSD(Unstructured Supplementary Services Data)
Transaction limit: Banks are now permitted by RBI to offer this online service to their
customers with the ceiling decided by individual bank but through SMS it is only upto
Rs.5000.
Technology and Security Standard: Transactions up to Rs.1000/- can be facilitated by
banks without end-to-end encryption. The risk aspects involved in such transactions
may be addressed by the banks through adequate security measures. Some banks have
developed their own software for providing mobile banking facility but for providing
safer facility, a mobile handset should be enabled with any established support system
like, Jawa, Windows, Blackberry, I phone, Brew etc.
Baroda e-payment Gateway
Internet Payment Gateway (IPG) is payment and settlement infrastructure which a
merchant uses to collect payment from their customer for online sale of products or
services. IPG shields the business unit from complex technical infrastructure required
for e-commerce business. It provides necessary access to payment system including
Interchange agencies like Master/Visa, card issuing bank, settlement bank etc.
It is essential for retailers who have an online presence and are interested in selling
their products over Internet. IPG is sate & ensures encryption of sensitive card
information during secured transmission between customer, merchant and payment
processors.
How it works?
Operations team is setup to enroll suitable merchants, provide assistance in
configuring secured access, arrange for day-to-day processing & settlement with
Master Card/Visa and carry out associated reconciliation
Software installed at merchant site, will enable them to track transactions and
generate reports at their end
Merchant will get payment on the next working day in their designated account
Facilitate our merchants to securely accept payment, for their online/web based sale,
using Credit/Debit cards
Accept Master Card/Visa credit/debit card issued by any institution
Merchant instantly gets confirmation of the receipt of payment. Based on that,
goods/services can be delivered to consumer
48
Implemented latest industry standard security features viz. Verified by Visa, Master
Card Secure Code, two factor authentication, 128 bit SSL, continuous monitoring of
server for vulnerability etc.
Benefits of Baroda e-Gateway for customers
Merchant is shielded from installing and maintaining complex payment gateway
technology and interacting with payment systems.
Payment is received on the next working day in merchant designated account.
Merchant can view/print their transactions.
Simple interface with banks system. If needed, support would be provided to
configure the access.
Consumer is assured of safety of their card details/usage. In addition, they get
convenience of purchasing goods/services from the comfort of their home/office.
Round the clock, hassle free service. Create a tech savvy image for merchant.
Opportunities
Fast and emerging market in India, so branches should generate max. leads.
Few numbers of entrants in the payment gateway sector.
Flexible price structure that can be improved on the basis of transaction volume and
business association.
Ability to move into new market segments that offer better profits.
Baroda Cash Management System (BCMS)
Cash Management Services is a software application (Cash@Will) that facilitates
management of customer funds, particularly, of corporate customers. Corporate
customers with large volumes of transactions are the target group for BCMS. Baroda
Cash Management Services also facilitates Internet Based Transactions.
Operational Model of BCMS is consisting of 3 tiers as listed below:1. Data Centre
2. Central Operational Hub (COH)
3. Identified BCMS Branches / City Back Office / Service Branches
BCMS has three fund management modules, viz., Collection, Payment & Liquidity
Management and a front-end interface available to the customer through the Internet.
Collection Module The Collection Module handles all inflow of funds in customers
accounts, which can be by way of Cash Deposit
Proceeds of local cheques
Proceeds of outstation Cheques
Payment Module This module handles the outflow of funds by way of Direct Debit Instructions (DDI)
49
ECS ECS-debit
ECS ECS credit
Issuance of DD / BC
Payment through RTGS / NEFT
Issuance of DW
Liquidity Management Module This module facilitates sweeping of funds from various
accounts of the customers and pooling them in a single account called Concentration
Account. The funds available in this account help the customers in online decision
making. The Liquidity Management Module also facilitates funding of various accounts
as per the requirement of the customers out of the balance available in the
Concentration account. The Liquidity Management Module facilitates both sweep-in and
sweep-out from the Concentration account.
Post dated Cheque Collection
Invoice management
Green Initiative
Government of india has advised the banks to maximise the use of online/ADCs platform
under green initiative.
50
RURAL/AGRI. BANKING
As per our banks business segmentation, Rural / Agri. Business segment will
constitute the following:
Direct agriculture & Indirect agriculture, irrespective of area categorisation
Micro finance (SHGs etc.), irrespective of area categorisation
RRBs sponsored by our bank, irrespective of area categorisation
All other banking business (Asset & Liability) i.e. SME & Retail segment business at
semi urban & rural branches.
attached, officer of link branch will visit once in a week to the USB just like earlier
concept of Satellite Branch.
Launch of BoB- Kiosks under financial inclusion initiative
Presently we are covering financial inclusion villages through three models such as
Smart Card based BC model, Mobile Van model and Brick & Mortar branch model. All
these models have unique features and own merits. As a part of continual development in
financial inclusion, our bank has introduced one more model Kiosk Banking which is web
based application that can be accessed through desktop or laptop. This is card less
solution so that time period required for printing and distribution of smart card can be
eliminated and customer can start operating the account immediately from date of
opening of account. Transactions processing is based on centralized biometric
authentication on real time basis. This model is very useful to increase our reach into
the villages as well as implementation of Urban Financial Inclusion at urban and semiurban locations.
Bank has already entered into an agreement with the CSC e-Governance India Services
Ltd., which is SPV for the purpose launched by Department of Information and Tech.,
Government of India to appoint their Common Services Centers (CSCs) as Business
Correspondents.
Linking of customerss Aadhaar number with their bank account
The government of India has decided to transfer direct payments to the bank
accounts of the beneficiaries under various government programmes such as
MGNREGA wages, fertilizer subsidy, scholarship, LPG subsidy etc through Electronic
Benefit Transfer (EBT). In addition to the other platforms like NEFT, RTGS etc. , the
govt. of India has given emphasis to roll out subsidies/direct cash transfers also on
the basis of Aadhar /UID number of the resident.
The Aadhar number of the customer can be linked in existing account as well as for the
new accounts through menu option APBSLN.
Launch of new product Baroda Swabhimaan Suraksha a Micro-Insurance product
under financial inclusion
It is a group life insurance policy issued by IndiaFirst Life insurance Company made
available to the FI deposit customers and also to those who avail credit facility including
inbuilt overdraft facility in SB Account. Sum Assured under the policy will range from `
5000 to 50,000 for a minimum of 5 years. The customer would pay one time premium
for a period of 5 years at the rate of Rs. 20.99 per 1000 for a period of 5 years .
Nomination facility allowed on insurance policy issued under this scheme.
NPS Lite can be used as a pension product under financial inclusion drive and bank has
launched an Incentive Scheme for registering new subscribers for Swavalamban
53
Scheme under NPS Lite.The Cash incentive will be payable to Business Correspondents,
Business Facilitators, SHGs/NGOs/Associations etc. and staff members.
54
3. Baroda Kisan Credit Card will consist of Production Line of Credit as well as
Investment Line of Credit. Under the production line of credit requirements of
farmers in terms of production loan for various crops, maintenance of
tractor/farm implements, allied activities like dairy, poultry, annual repairs, fuel,
cost of feed, etc., consumption needs, Working capital requirement for allied
activities, non farm sector activities and finance against storage
receipts/produce marketing loans are taken into account in the following manner:
Sr.
NO.
01.
02.
03.
04.
05.
06.
Requirement
Quantum/Remark
*Various categories:
BKCC Green: New & existing agril. Borrowers dealing with us since last 3 years
BKCC Silver:Agril. Borrowers having satisfactory conducted borrowal
relationship with us for more than 3 years and upto 5 years
account
BKCC Gold: Regular agril. Borrowers dealing and maintaining satisfactory account with us
for the period exceeding5 years having excellent repayment record
Under Investment line of credit, credit facilities for agriculture activities
(Investment related) , farm development ,allied activities , loans for off farm
activities/needs of farmer like personal loans including purchase of consumer durables,
housing subject to maximum of Rs. 1.00 lac as well as loans for redemption of loan
availed from Non Institutional lenders are considered.
55
However, quantum of loan under investment LOC is restricted to 6 times of net annual
income or 3 times of total annual farm receipt /crop value plus other annual income (3
times of annual net income) from allied activities, Non Farm Activities, salary, rent, etc.
or, 75% of value of land plus 100 % of face value of securities like, Banks FDR, NSC,
KVP, LIC policies, whichever is lower.
1)
preparation of fresh proposals etc. This is ultimately adversely affecting the increased
off take and thereby the growth in outstanding level of crop loans. This also ends up in
providing inadequate crop loan to farmers.
To overcome this problem, bank has decided to provide the facility of the Line of Credit
/ Notional limit wherein the farmers actual requirement worked out on the basis of
cropping pattern and land area, can be increased by maximum 50% at the time of
sanction of the facility. Though this limit will be valid for a 5 years period, the drawing
power/eligible limit for each year shall be arrived based on the area of cultivation and
scale of finance for the proposed cropping pattern for that year.
This shall obviate the need for fresh sanction and documentation for 5 years thereby
helping the farmer to avail increased credit as per the prevailing scale of finance and
also in reducing the workload at the branches. This in turn will also expected to
encourage the farmer to undertake improved cultivation practices and bring more
farmers into our fold due to the inbuilt advantage of hassle-free facility of
enhancement of the limits.
Rashtriya Krishi Bima Yojna
1. The scheme has been formulated by GIC and administered in all the states including
union territories.
2. All the farmers irrespective of their land holding are covered under the scheme.
3. The scheme is compulsory for farmers availing crop loans. However, it is optional for non
loanee farmers.
4. There is no restriction on total sum insured.
5. All the crops including coarse crops, pulses, oil seeds and cash crops, sugarcane, potato
and cotton are covered under the scheme.
6. Premium rate varies form 1.5% to 3.5% depending upon the types of crops.
7. Small and marginal farmers will be provided with subsidy in premium amount.
8. Claim will be on the basis of threshold yield in particular area.
Baroda Kisan RuPay Card
Our Bank has introduced Baroda Kisan RuPay Card in pursuit to offer better banking
facilities to farmers who avail production credit under Baroda Kisan Credit Card
from our Bank. The card meets the requirements of BKCC customers to use
alternate delivery channels like ATMs for cash withdrawal and also POS at
merchant outlets for purchase of Agriculture Inputs such as seeds, fertilizers
and pesticides etc.
57
58
2.
3.
4.
5.
6.
7.
59
(ii) 40 percent of total advances to micro and small enterprises sector should go to
Micro (manufacturing) enterprises having investment in plant and machinery up to 10
lakh and micro (service) enterprises having investment in equipment up to Rs 4 lakh;
(ii) 20 percent of total advances to micro and small enterprises sector should go to
Micro (manufacturing) enterprises with investment in plant and machinery above Rs 10
lakh and up to Rs 25 lakh, and micro (service) enterprises with investment in equipment
above Rs 4 lakh and up to Rs 10 lakh
Particulars
Micro
Enterprises
Small
Enterprises
Above Rs.10
Rs.200 lacs
lacs
and
upto
Loans for food and agro processing will be classified under Micro and Small
Enterprises, provided the units satisfy investments criteria prescribed for Micro
and Small Enterprises, as provided in MSMED Act, 2006.
Education Loan Study in India up to Rs.10 lacs and Study abroad up to Rs.20
lacs
Housing Loans - Upto Rs.25 lac in Metro and Rs.15 lac in other centres, for
constructions of houses. For EWS, Rs.5 lac per dwelling unit (irrespective of area
) will qualify for P.S. classification. Loans for repair and renovations up to Rs. 2
lac in Rural and Semi Urban Area and upto Rs. 5 lacs in Urban Areas.
Export Credit : Export Credit extended by foreign banks with less than 20
branches will be reckoned for priority sector target achievement.
As regards the domestic banks and foreign banks with 20 and above branches,
export credit is not a separate category under priority sector.
Others :
Loans, not exceeding Rs 50,000 per borrower provided directly by banks to
individuals and their SHG/JLG, Overdrafts, up to Rs 50,000 (per account),
granted against 'no-frills' / basic banking / savings accounts provided the
borrowers household annual income in rural areas does not exceed Rs
60,000/- and for non-rural areas it should not exceed Rs 1,20,000/-.
Loans to distressed persons not exceeding Rs 50,000 per borrower to prepay
their debt to non-institutional lenders.
Loans outstanding under loans for general purposes under General Credit
Cards (GCC). If the loans under GCC are sanctioned to Micro and Small
62
63
DRI Advances.
The scheme is introduced in July 1972 with a view to give benefit of bank finance to
weaker sections of the society.
Eligibility: An individual who is engaged in agriculture and /or allied activities collect
or process forest products, collect fodder to be sold to farmers, SC/ST, etc. and
whose family income from all sources should not exceed Rs. 24000/- p.a. in Urban
/Semi urban area and Rs. 18000/- p.a. in Rural.
He/She should not hold land more than one acre irrigated land and 2.5 acres in case of
non irrigated land.( This does not apply to SC/ST Cases), should not employ workers on
regular basis, SHG members who fulfill above criteria can be considered under DRI
Scheme, any handicapped person.
Limit: - Composite loan limit Rs.15000/- and Rs.20000/- in case of Housing Loan
(raised from Rs. 6500/- BCC:BR:99/211 dt. 03.07.2007)
Margin:- NIL. Rate of Interest 4% p.a.
Repayment:-:Generally -60- months.
64
Advantages to Firms :
1.
2.
3.
4.
Financing agri. term loan mainly farm machineries like Four-wheeler to farmers,
Combined harvester/ power tiller, drip /sprinkler irrigation sets, tractor,
horticulture & plantation crops.
Direct agri. finance to NRIs upto Rs.5.00 lac on the basis of Power of Attorney
Take-over of agri. Advances upto Rs.5.00 lac falling under BMs Power.
Financing General Credit Card (Indirect Ag.)
Identifying thrust branches for Agri. financing
More SHG Linkages as our Bank permits to go to 1:10 ratio of group corpus.
Finance to Agri-clinics & Agri-Business Centres
Finance under comprehensive scheme against Warehouse receipt.
Finance to Joint Liability Groups (JLGs)
Financing production and investment requirements for allied activities.
Loans to distressed farmers indebted to non-institutional lenders
65
Project cost
and coverage :
Either individually or jointly/group basis.
Individual -max. Limit Rs.20 lacs
Group - max . Limit.Rs.100 lacs.
Group number - max. 5, out of which 1 may be a management
qualification & experience.
graduate
with
MARGIN
Upto 5 lacs - no margin
Above 5 lacs - 15 %
Rate of interest
As applicable to agri. Advances
Subsidy : 36 % (44% for SC/ST, women) of project cost
66
Activities to be covered:
Financial Education and Financial Inclusion
Information sharing and problem solving on technical issues
Credit counseling
Synergy and liaison with other organizations and development activities
Beneficiarys
contribution
(of
project
cost)
10%
5%
Rate of Subsidy
(of project cost)
Urban
15%
25%
Rural
25%
35%
68
Notes:
1. The maximum cost of the project/unit admissible under manufacturing sector is Rs. 25
lakh.
2. The maximum cost of the project/unit admissible under business/service sector is Rs.
10 lakh.
3. The balance amount of the total project cost i.e. net of beneficiarys contribution and
amount of subsidy will be provided by Banks as term loan.
Eligibility Conditions of Beneficiaries :
i. Any individual, above 18 years of age.
ii. There will be no income ceiling for assistance for setting up projects under PMEGP.
iii. For setting up of project costing above Rs.10 lakh in the manufacturing sector and
above Rs. 5 lakh in the business /service sector, beneficiaries should possess at
least VIII std. pass educational qualification.
iv. Assistance under the Scheme is available only for new projects sanctioned
specifically under the PMEGP.
v. SHG (including those belonging to BPL provided that they have not availed benefits
under any other Scheme) are also eligible for assistance under PMEGP.
vi. Only one person from one family is eligible for obtaining financial assistance for
setting up of projects under PMEGP. The family includes self and spouse.
The Bank will sanction 90% of the project cost in case of General Category of
beneficiary/institution and 95% in case of special category of the beneficiary /
institution, and disburse full amount suitably for setting up of the project.
Bank will finance Capital Expenditure in the form of Term Loan and Working
Capital in the form of cash credit. Project can also be financed by the Bank in
the form of Composite Loan consisting of Capital Expenditure and Working
Capital.
The amount of Bank Credit will be ranging between 60-75% of the total project
cost after deducting 15-35% of margin money (subsidy) and owners contribution
of 10% from beneficiaries belonging to general category and 5% from
beneficiaries belonging to special categories.
Working Capital component should be utilized in such a way that at one point of
stage it touches 100% limit of Cash Credit within three years of lock in period of
Margin Money and not less than 75% utilization of the sanctioned limit. If it does
not touch aforesaid limit, proportionate amount of the Margin Money (subsidy) is
to be recovered by the Bank/Financial Institution and refunded to the KVIC at
the end of the third year.
69
Data Centre has defined Gold as security in Finacle for each carat from 14 carat to 24
carat.
Eligibility/
Beneficiary
Age
Banking
Relationship
Maximum loan
Amount
Margin
Prescribed norms
Term Loan
For purchase of new/used four wheeler including jeep, SUV,
station wagon etc. for using in their farm management activities.
Used vehicle should not be more than 3 years old.
Farmers having family income sufficient to repay the loan.
Farmers with minimum land holding of 4 acres perennially
irrigated land or 8 acres of seasonally irrigated lands.
The Zonal Head is authorized to reduce the land holding criteria
by 50% i.e.up to 2 acres for perennially irrigated lands and 4
acres of seasonally irrigated lands, on merits.
Minimum 21 years
MaximumUp to 65 years as on the date of availment of facility.
If the age of landholder exceeds 60 years, in such case the son
to be made co-borrower
Applicant should be our existing BKCC customer.
funds
71
Eligibility:
Individual Farmers/Joint borrowers who are existing Baroda Kisan Card (BKCC)
Holders having satisfactory track record of at least three years.
Type of Loan:
Term Loan repayable in 3-5 years.
Maximum Loan amount:
Rs.50000/- or 50% of existing BKCC limit (drawing power under Line of Credit)
whichever is lower. While deciding the loan amount, repayment capacity of the
borrower to be ascertained.
Security:
Existing security under BKCC to be extended. The existing norms of no collateral
security up to Rs.1lac to be followed if combined limit is within Rs.1 lac.
Repayment:
Half-yearly / yearly installments depending upon the income generation.
1) The Ministry of New & Renewable Energy under JNNSM programme provides subsidy
for off grid solar applications (solar Water pumping) @ 30% of capital cost.
2) Additional subsidy could be provided by the State Government.
3) It should be noted that the scheme is financially viable only with subsidy of
60%.Hence the additional subsidy/margin contribution to be ensured from the state
govt/beneficiary.
Repayment The loan will be repayable in - 10 - years with one year grace period. The
beneficiary may repay the loan installment with interest earlier than the period if he so
desires.
Classification:--Priority Sector (Direct Agriculture)
Finance against Warehouse / Storage Receipt:
Types of Warehouse/storage receipts eligible to be financed:
01. Warehouse Receipts issued by State/Central Warehouses upto the limits prescribed
under the Scheme.
02. Warehouse/Storage Receipts under tie up arrangement with Collateral Managers
upto the limit prescribed under the scheme.
03. Warehouse Receipts issued by private registered Warehouses approved by
concerned Zonal Head upto individual limits of Rs.50.00 lakhs per farmer.
04. Negotiable Warehouse Receipts issued by Warehouses approved by Warehousing
Development and Regulatory Authority (WDRA) upto the limits prescribed under
the scheme.
(All the three types of Warehouse receipt at point no. 1, 2 or 3 may or may not
be negotiable warehouse receipt issued by warehouses approved by WDRA to issue
negotiable Warehouse Receipts)
Eligibility: Individual farmers who have produced the farm produce in their own farms,
Food grain traders, Millers & Arthias who store agri produce stocks in the Warehouses.
Loan Amount: For farmers: Maximum Rs.50.00 lakhs
For Others: Maximum Rs.5.00 crores. (However for private Godowns approved by
WDRA, the maximum loan amount of Rs.2.00 crores only be considered by the Branches
subject to the discretionary lending power of the sanctioning authority. For limit above
Rs.2.00 crores upto Rs.5.00 crores, activity clearance from the Regional Head be
obtained)
Margin: Minimum of 25%.In case of tie up arrangement with Collateral Managers: 25%
or as prescribed by Collateral Managers, whichever is higher. (The margin should be
increased if there is volatility of price for a particular commodity).
73
75
SME BANKING
How SME sector is defined by our Bank ?
1. Our bank has expanded the coverage of the SMEs well beyond the RBI definitions of
SME, All banking business (Assets & Liabilities) with companies / entities with
annual gross sales turnover / income upto Rs. 150 crore is to be covered under ambit
of SME for our internal purpose for promotion of business across these segments.
However for reporting purpose the statutory definition is to be followed.
2. For our internal purpose SME sector will consist of Professionals, Traders, Micro &
Small Enterprises and Medium enterprises as defined by the RBI, clubs, trusts with
large investable assets and all other entities (non-individuals) with their annual
turnover upto Rs. 150 crores.
3. The entities falling under revised guidelines of our bank for SMEs will be governed
by loan policy guidelines as applicable to C & I.
Definition of SME Sector (As per ammended MSMED Act 2006)
The MSMED Act classified SME units into two categories :
Micro, Small and Medium Enterprises
Particulars
Micro
Enterprises
Small
Enterprises
Medium
Enterprises
In
case
of
Mfg.
Enterprises,
original
investment in Plant and
Machineries
Upto Rs.25 lacs
Credit Rating (SMERA, NSIC-CRISIL) in case of SMEs (but not qualify for Basel
II norms of Capital Adequacy
Internal credit rating as per new credit rating model will be continued, as hitherto. In
addition to this, the credit rating by external agencies like SMERA, NSIC-CRISIL etc.
is compulsory in all Medium Enterprises accounts going for expansion and fresh
sanction involving exposure above Rs.500 lacs. SMERA Rating is not mandatory for SSI
units. However, rating of the SSI units is preferred.
76
ii.
In exceptional cases, finance for 2nd hand machinery may be considered with a minimum
margin of 40% at the discretion of the Sanctioning Authority.
(b) For Working Capital
25% uniform margin is proposed on stocks and receivables.
The next higher authority is authorized to reduce margin maximum by 5% in
deserving cases in respect of Land & Building & Plant & Machineries &
Equipments/Current Assets.
If deviation is proposed beyond 5 %, ED / CMD is authorized for the same.
BRANCHES TO BE DESIGNATED AS SME BRANCHES
At present 72 branches are designated as Specialized SME branches. These branches
are expected to have 60% of their lending to SME sector. Based on ASCROM data, all
branches having more than 60% of their lending to SME Sector will be identified and
the branches having 60% of their loan portfolio to SME Sector for 2 consecutive
77
quarters will be designated as SME 189branches. Designated SME branches will focus
on SME lending. These branches will be authorised to collect taxes etc.
(Source: Loan Policy,2012)
SME PRODUCTS
BARODA SME LOAN PACK
S.N.
Parameters
Particulars
Eligibility
Purpose
Composite Limit
Delivery of Product
Margin
ROI
Security
Other Conditions
78
Parameters
Nature of Facility
Particulars
Overdraft
Purpose
Limit
Eligibility
Margin
Period
ROI
Sanctioning
Authority
79
10
Method
Assessment
11
Financial Ratios
12
Other Conditions
of
Manufacturing sector:
As per Nayak Committee recommendations viz, Min
20% of accepted turnover, or, under PBF method,
whichever is higher.
Service sector:
20% of projected gross receipts subject to
verification of ST returns of previous years/ quarters
in case the enterprise is not under audit.
Note: Drawal for working capital (Fund based and non
fund based) should not exceed advance value of
L&B/sanctioned limit whichever is lower.
Cur. Ratio SE-1.17 ME-1.20 SMEs(Expanded) 1.33
DE Ratio (Existing Accounts) TTL: 3:1 TOL-4.5:1
DE Ratio (Take over A/cs) TTL: 3:1 (SE-4:1)TOL-4.5:1
Assets Coverage Ratio 1.50
Stock/book debt statement to be obtained on half
yearly basis.
Facility under the scheme and as well as under usual
scheme not to be considered simultaneously.
Existing borrowers can get their facilities
transferred to OD against Fixed Assets after
compliance of terms and conditions.
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Parameters
Purpose
Eligible
Borrowers
Limit
Assessment
Limit
Particulars
To Provide hassle-free credit facilities to Small Business Units,
Retail Traders, Artisans, Village Industries, Small Scale Industrial
Units and Tiny Units, Professional and self employed etc.
All existing customers in the categories of Small Business, Retail
Trade, Artisans, Village Industries, Prof.& Self Employed persons
etc having satisfactory track record / dealing with the bank for last
3 years.
Maximum upto Rs 10 lac per borrower
Security
Margin
Insurance
81
Margin
Security
ROI
10
Insurance
11
Group Insurance
82
Parameters
Particulars
Purpose
Enterprises
Group
Eligibility
Amount
Loan
Security
Period
Small and Medium sized Corporate, Business and Trading Houses (incl.
partnership firm)
1. Satisfactory credit rating for the last three years (BOB-4 & above)
2. Accounts with continuous decline in credit rating will not be eligible.
3. Satisfactory financial performance in terms of sales / turnover &
profits. Negative variance, if any, should not be more than 10%.
4. Satisfactory dealing and no major inspection/ audit irregularities.
of Upto 25%of the FB Working Capital Limits for BOB-1, BOB-2 & BOB-3
rated a/cs & Upto 20% of the FB Working Capital Limits for BOB-4
rated a/cs, subject to a minimum of Rs 10 lacs and maximum of Rs 250
lacs
First Charge or extension of existing first charge / Equitable mortgage
of fixed assets of the company / firm, ensuring that there is a min.
asset cover of 1.25
Extension of Charge on Current Assets for the additional facility
ensuring that adequate DP is available.
Extension of all existing guarantees of Directors / Third Party
Guarantee to cover the additional facility
Not exceeding 180 days (min 90 days)
83
Parameters
Purpose
Enterprises
Group
Eligibility
Criteria
Loan
Amount
Security
Period
Loan
Penalty
7
8
of
Time Limit
for
Decision
Particulars
To augment enterprises Working Capital gap and to help in
improvement of current ratio and also for meeting genuine
business requirements. The facility will be available for repayment
of secured and unsecured loans of other banks or institutions, but
purpose related to the enterprises activity.
Small and Medium sized Corporates, Business and Trading Houses
(including partnership firm)
1. Satisfactory credit rating for the last three years (BOB-4 and
above).
2. Accounts with continuous decline in credit rating will not be
eligible.
3. Satisfactory financial performance in terms of sales / turnover
and profits. Negative variance, if any, should not be more than
10%.
4. Satisfactory dealing and no major inspection/ audit
irregularities.
5. D/E Ratio should not be higher than 4.5:1 and TTL and equity
ratio should not be more than 3:1.
6. Average DSCR should not be less than 1.75:1
Upto 25%of the FB Working Capital Limits for BOB-1, BOB-2 &
BOB-3 rated a/cs & Upto 20% of the FB Working Capital Limits
for BOB-4 rated a/cs, subject to a minimum of Rs 25 lacs and
maximum of Rs 500 lacs
First Charge or extension of existing first charge / Equitable
mortgage of fixed assets of the company / firm, ensuring that
there is a min. asset cover of 1.25
Not exceeding 36 months, to be repaid equal quarterly or halfyearly installments
Repayment penalty of 1%, if loans prepaid with in 24 months of
drawdown.
Upto Branch power -5 working days, Beyond Branch power- 10
working days
84
Enterprise
s Criteria
Rate
of
Interest
Security
Quantum
of Loan
6
7
Margin
Period
85
Parameters
Particulars
Objective
PURPOSE
ELIGIBILITY
LIMIT
SECURITY
MARGIN
Method
of
Assessment
8
9
For working capital Against fee collection for one semester with
25% margin. Assessment on cash budget system. OD should be
liquidated within 6 months, max. 2 times in a yr.
REPAYMENT
Maximum 84 months including moratorium period of 2 year,
PERIOD
depending upon the cash flow.
Other
TEV may not be required irrespective of project cost.
Conditions
Disbursement of the loan- direct to the suppliers of equipments, in
other case
CA / Architects certificate after inspection as per banks
guidelines.
Credit rating of the account to be carried out as per banks extant
guidelines and the borrowers with credit rating of BOB-6 and
above only to be financed.
Minimum Security Coverage should not be less than 125%.
Ratio: CR-1.17(in case of OD), D/E-3:1, DSCR(Av)-1.75
86
Objective
PURPOSE
ELIGIBILIT
Y
LIMIT
SECURITY
MARGIN
RATE
OF
INTT
REPAYMENT
PERIOD
Other
Conditions
88
89
90
contract
for
Purpose
i.
Amount of Facility
Margin
Disbursement
Security
of
Repayment
Rate of Interest
This finance will be the part of Service sector and classification will be
SME/Mid Corp/Large Corporate.
92
and
for
the
has
Eligibility
MSME borrowers (Regulatory) and SME (Expanded) rated BOB-5 and above.
The manufacturing/service sector units should have been established in the line of
activity for a minimum period two years, Account running with satisfactory dealings for Last
one year & above and No adverse features are reported in conduct of account.
Purpose
The loan to be considered for the following capital expenditure related with the regular
business activity:
Replacement of old machinery.
Purchase of balancing equipments
Modernization.
Investment in Research and Development.
Installation of captive power plants and Upgradation of technology.
Alteration in lay out of factory/office.
Acquisition of software, hardware, and tools, jigs, fixtures etc. forming part of
Plant & Machinery.
Purchase of cars, passenger cars for staff and other vehicles for use of
business purpose.
Limit
15% of Plant & Machinery
for MSME (Mfg.) and 25% for Services sector
outstanding as per last Audited Balance Sheet or 10% of the working capital whichever is
higher based on DSCR and subject to cap Baroda MSME Capex card : Min. 25 lacs and Max Rs.5.00 Crore.
Baroda MSME Capex Loan: Min 25 lacs and Max Rs. 2.00 Crore.
Average Gross DSCR inclusive of the repayment liability under the proposed STL
should not be less than 1.75. In any year it should not be less than 1 for MSE Borrowers and
1.25 for Medium & SME Expanded Borrowers.
The facility to be made available as Fund Based / or Non-Fund Based Limits (i.e.
including establishment of LCs) ensuring that aggregate exposure does not exceed the overall
limit.
Margin
Land & Building-30%
Plant & Machinery-25%
93
The next higher authority not less than Regional Manger is authorized to reduce the
Margin by 5% in deserving cases.
Repayment
3 to 7 years including the moratorium period.
Operational Issues:
Baroda MSME Capex card Baroda MSME Capex Loan
When to sanction
At the time of sanction/ Renewal of facilities Where Capex card limit has not been
considered (and not rejected) at the time of Regular sanction - instantly as per need
Competent Authority having financial powers to sanction the aggregate of the regular
credit limits and the proposed Capex Card Having financial powers to sanction the proposed
Capex Loan without considering/ excluding the regular credit limits. With 25% additional
discretionary lending powers.
Assessment/Justification
Frequency of Sanction
The facility may be sanctioned at the time of each review/renewal of working capital
limits, based on a fresh assessment. As per need,
but total not exceeding the
prescribed limits
Security -
Primary -first charge on the specific assets reated out of the Bank finance.
First charge on the specific assets created out of the Bank finance.
Collateral Security
Documentation
to be
obtained
before
the
Commitment Charges
NIL
TEV Study
Interest/Other Charges
Eligibility
Purpose
Nature of
Facility
Limit
Repayment
Method of
Assessment
Margin
96
WHOLESALE BANKING
Wholesale Banking Business:
As a part of Business Transformation initiatives the bank is repositioning as Multi
Specialist Bank. Bank has defined wholesale banking in following two parts:
1. Large Corporates: The Companies with annual sales turnover of above Rs. 500 crore.
2. Mid Corporates: Companies with annual sales turnover of over Rs. 150 crore and upto
Rs. 500 crore.
These segmentations facilitated to bring new large corporate whose sales turn-over
is very high but do not have any limits or are enjoying very small limits with the bank.
Existing CFS branches are functioning as Wholesale Banking Branch where the
large/mid corporate accounts of other branches in the city are being parked.
Advantages:
1. To increase the existing client base by canvassing new Corporate accounts and to get
optimum share.
2. To increase the penetration by increasing the number of products used by clients.
3. To increase fee based income business.
4. To have a special focused attention over Large and Mid corporate customers.
Mid corporate Branch:
OBJECTIVES:
1) To set up dedicated Mid Corporate Branches in important cities/centres in the country
to tap the potential that this sector offers.
3) To set up a Mid Corporate Banking segment within the Wholesale Banking Group at
Corporate Office to provide the necessary drive support to achieve the above
objectives.
97
3) All entities i.e. Corporates, Partnership firms, Sole Prop. Firms,Trusts, Corporations etc
having a Gross Turnover of upto Rs 150/- Crores as per the last Audited Balance Sheet
or Previous Financial Year would be classified as SME borrowers.
4) All entities i.e. Corporates, Partnership firms, Sole Prop. Firms, Trusts, Corporations
etc that satisfy the Investment in Plant and Machinery criteria as per Regulatory
Definition would also be classified as SME borrowers.
5) Entities that have Gross Sales of less than Rs 450/- Crores as per Last Audited Balance
Sheet but have a Projected Gross Sales of over Rs 600/- Crores for the current year
shall be classified as Mid Corporate only. The status will be reviewed after reviewing
the Actual Gross Sales for the projected year based on Audited Financials. Similar
situation would prevail in respect of SME borrowers also i.e. borrowers with Actual
Gross Sales of Rs. 125 cr and projected gross sales of Rs.200 cr will be classified as
SME only and will be reviewed based on Actual Sales on receipt of Audited Balance
Sheet for projected period.
6) In respect of New Projects whether Manufacturing, Services, Infrastructure etc Total
Project Cost would determine the Classification as under :
i) Other than Real Estate Projects
a. Project Cost < Rs. 100cr. SME
b. Project Cost=>Rs.100cr. but <Rs.500cr. Mid Corporate
c. Project Cost =>Rs.500 cr Large Corporate
ii) Real Estate Projects
a. Project Cost < Rs. 50 crs SME
b. Project Cost =>Rs.50 cr but <Rs.250 crs. Mid Corporate
c. Project Cost =>Rs.250 cr Large Corporate
Loans
1.
2.
3.
4.
5.
6.
7.
Rs.200.00Lacs (In case of MSME) are to be rated as per new credit rating models
(CRISIL).
8. Bank may entertain fresh exposure (in case of new borrowers) only with minimum
of not less than BBB (Moderate Safety) or BOB6/MSMEBOB6 as acceptable
grade.
Secured /Unsecured Advances:
Security means all tangible security charged to the Bank. Unsecured advance means the
realisable value of the security as assessed is not more than 10% ab-initio, of the
outstanding funded and non funded exposures. RBI has since withdrawn ceiling on
maximum exposure by way of unsecured guarantees and advances. However, as a
prudent policy bank has decided to restrict as under:- The domestic outstanding
unsecured guarantee plus the total of domestic outstanding unsecured advances in
terms of definition of unsecured exposure of RBI as stated above should not exceed 30
percent total domestic outstanding advances.
Activity Clearance & Agreement in Principle:
Under the following activities, proposal for fresh/increase in exposure are subject to
Activity Clearance from corporate centre even though proposals fall under the powers of
Branch/ Region/ Zonal Heads
Leasing, Hire-Purchase, Non-Banking Finance Companies (other than Central/ State
Govt. NBFCs),
Capital Market (other than advances against shares to individuals),
Financing of Film Making (Sanctioning authority rests with CMD/ED only within
their delegated powers)
Bridge Loan.
Financing of Educational Institute
Aviation
Infrastructure-Power
Infrastructure-Roads
Infrastructure-Telecom
IT & ITES
Securitisation / Through Deed of Assignment.
However, in following cases the activity clearance may be accorded by Zonal Head for all
proposals falling under the power of Regional Heads irrespective of substantive rank of
Zonal Head
Plantation (excluding tea, coffee and rubber plantations, common horticulture crops,
Jatropha, spices, medicinal plants, essential oils/ Aromatic plants),
Manufacturing & Trading of Liquor,
Vegetable Oil, Vanaspati
99
f. As regard accounts under old rating models (i.e. exposure less than Rs. 25 lacs) the DLP
will be 100% of normal powers for A+, A & B+ rated accounts and 75% of normal powers
for accounts rated below B+.
Annual Cap for discretionary lending power
Following advances are excluded from the annual cap limit:
a. Advances to staff members under the specific schemes for the banks staff only.
b. Advances against our own deposits and securities such as NSCs / KVPs / LIC Policies /
Relief Bond/ IVPs etc.
c. Advances under Govt. Sponsored programme and to weaker sections
d. Review (including review with decrease in limit) of accounts at the existing level.
e. In case of review with increase only existing limit is excluded whereas increased portion
will be counted for cap limit.
f. However, sanction of retail loans to the Proprietor/Partners/Directors of a firm/
company stands de-linked from per party/group discretionary lending powers.
This provision of annual cap will not be applicable to GMs, the in-charge and second
line officers of Central Processing Cells (CPCs) of Retail Lending / Urban Retail Loan
Factory and SME Loan Factory.
Financial Ratios for Credit Appraisal:
In our loan policy following Ratios are considered as bench mark
1. Current Ratio 1.33:1 (1.20 for Medium Enterprises and 1.17 for Micro & small enterprises)
2. Debt Equity ratio 3:1 (Total term Liab/TNW). TDE= Total outside laib/TNW is 4.5:1
3. FA coverage Ratios = 1:1 (Net FA/Term Liab) SSI/SME Not below 1.25
4. DSCR average 1.75 however in any year it should not be less than 1.25 (For Micro & Small
enterprises it should not be less than 1.00 in any year)
5. The above ratios are indicative and deviations can be considered by the sanctioning
authority on case to case basis, depending on industry, specific problems of unit, etc.
6. An Interest Coverage Ratio of 5 may be considered satisfactory.
Pricing of the loan
Pricing of Loans is quite crucial for banks business. Bank follows a transparent pricing
policy and is also guided by RBI on Government directed/ sponsored lending.
As per extant guidelines, the pricing has been de-linked from credit rating in respect of
advances (fund based) over Rs.2 lacs but less than Rs.25 lacs and the pricing is based on
pre-determined spread irrespective of the credit rating.
For loans of Rs.25 lacs and above pricing continues to be determined by the rating of the
borrower with appropriate spread.
The credit rating in respect of the borrower enjoying credit facilities above Rs.2 lacs
but less than Rs.25 lacs shall continue, even though the pricing is de-linked, for
determining the credit risk perception.
102
Verification of documents:
Advances accounts with aggregate limit of above Rs. 2.00 crore (Funded plus Non-Funded)
would be verified by the Banks Law Officer posted in the respective Zone/ Region and
the documents relating to Advance Accounts with aggregate of Rs. 10 lacs and above but
up to and inclusive of Rs. 2.00 crore shall be verified by the Banks identified Advocate /
Lawyer other than the one who has given the Title Opinion / Non-Encumbrance
Certificate (NEC) / Report in respect of mortgage(s) in the account.
Further, as per Circular No. BCC:WB:POL:F30:99/4511 dated 11th August 2007, it has been
approved by our higher authorities that in respect of following Zones, documents verification
in respect of credit limits between Rs.1 crore and Rs.5 crore can be got done from empanelled
advocate/s of the bank, provided original documents at some stage have been vetted by Zonal
Legal Dept./Law officer of the bank.
1) North Zone 2) Greater Mumbai Zone 3) Southern Zone 4) Eastern Zone 5) Gujarat
Operations 6) Mah. & Goa Zone and 7) Rajasthan Zone.
Notwithstanding what is mentioned above, all documents pertaining to consortium accounts
have to be necessarily got verified from Corporate Legal Dept./Zonal Legal Dept./Law Officer
of Bank.
It may be noted that the documents shall be verified by the Banks identified panel
Advocate/ Lawyer other than the one who has given the Title Opinion/NonEncumbrance Certificate (NEC)/ Report in respect of mortgage(s) in the account.
Legal Audit
In response to RBI guidelines, A system of periodical Legal audit of title deeds and
other loan documents in respect of all credit exposure of Rs.5.00 Crore & above is
introduced for all existing as well as new accounts.
In addition to existing practice of verification of documents, Re-verification of title
deed as to their genuineness with relevant authorities along with verification of
other loan documents will be carried out within a period of 05years from the date of
such first verification of title deeds/ documents and for every block of five years
thereafter till the loan is settled in full.
The re-verification will be carried out by the Banks empanelled advocate.
Regular Review
Credit facilities sanctioned to borrowers are subjected to annual review (except LABOD, staff
loans and the accounts where facilities sanctioned are for a period less than one year etc.) as
per the prevailing guidelines. However in case of borrowal accounts enjoying credit facilities of
103
Rs.10 Crores and above, where the credit rating is BOB-7 or below, the account should be
reviewed on half-yearly basis.. The accounts are required to be reviewed on or before the due
date.
Branches have been advised vide Circular No. BCC:BR:100:14 dated 14.01.2008 to review
advances accounts with limit upto Rs. 20 lacs for facilities enjoyed by borrowers in
trading activities, Micro & Small Enterprises, borrowers in rural area, borrowers having
only term loan accounts, financed under government sponsored programme, borrowers
enjoying only guarantee facility, etc, pending receipt of audited financial statements,
provided the conduct of the account is satisfactory (Source: Loan Policy 2012)
Short Review / Status Note:
The bank has also the practice of Short Review / Status Note, which is done when it is
not possible to carry out a comprehensive Regular Review of the account within the
stipulated period pending receipt of certain particulars/ information or where the
account is placed under special monitoring, etc.
We continue to deal with the matter as under:Consecutive Short Reviews shall be restricted to two with a maximum period of six months for
each short review. But in exceptional cases, status review can be done in respect of accounts
marked for strict monitoring or for recovery. Relaxation is also provided to restructured
accounts and accounts under rehabilitation where for a variety of reasons only, Short Reviews
may have to be done till such time the unit/account becomes normal and healthy.
Inspection of Securities
Periodicity of the inspection of securities to be carried out is as under: Prime securities charges for working capital as per BOBRAM rating:
Latest Credit Rating for BOB 1, BOB 2, BOB 3 (A+ as per old rating model)
Half-yearly basis.
Latest Credit Rating of BOB -4 and BOB 5 (A as per old rating model)
Quarterly basis.
Latest Credit Rating BOB 6 & Below (B+ & below as per old rating model)
Bi-monthly.
Fixed Assets (Charged against Demand/Term Loan/DPG)
Half-yearly i.e. as of January and July
Under consortium arrangement (Exchange of inspection reports / information
with other banks to be ensured.)
As per periodicity fixed by the consortium.
Inspection of Collateral Securities
The inspection of collateral securities to be carried out preferably on annual basis for all
types of facilities i.e. Funded as well as Non-Funded.
104
Bridge Loans
RBI has permitted Banks to sanction bridge loans to companies for a period not exceeding
one year against expected equity flows/issues. Such loans would be included within the
ceiling of 40% of consolidated net worth as on March 31 of the previous year prescribed
for the Banks total exposure, including both fund based and non fund based exposure to
capital market in all forms.
Banks can also extend bridge loans against the expected proceeds of Non-Convertible
Debentures, External Commercial Borrowings, Global Depository Receipts and/or funds in
the nature of Foreign Direct Investments, provided the banks are satisfied that the
borrowing company has already made firm arrangements for raising the aforesaid
resources/funds.
Keeping in view the RBI guidelines, Bank has devised the following guidelines:
Such loans to be considered only at our Corporate Centre, for Corporates who are
banking with us with satisfactory track records.
Such Bridge Lending should be used for the purpose for which the issue
(debenture/ECB/Equity etc.,) is proposed and not for any other purpose.
The amount of individual Bridge Loan shall not exceed 75% of the amount called-up on
the shares minus any other similar bridge lending, interim finance availed or to be
availed.
Repayment period upto a maximum of one year.
CRISIL Rating Models
Management of Credit Risk determines the asset quality of the Bank. An effective way
to mitigate credit risk is to have robust credit rating system in place.
Bank has introduced Basel II compliant credit risk rating models of M/s CRISIL. The
rating models are based on two-dimensional rating methodologies specified under Basel II
requirements wherein 4 types of risks viz. industry risk, business risk, financial risk and
management quality risk are assessed pertaining to characteristics on an
obligor(borrower) while facilities proposed/sanctioned to a borrower are assessed
separately under second dimension of rating i.e. Facility Rating
The Credit rating can (i) Identify potential risk in a particular asset.(ii) Allow a bank to
maintain healthy Asset Quality (iii) Impart flexibility in pricing assets to meet the
required risk return parameters as per the banks strategy and credit policy.
CRISIL Rating Models for commercial advances are based on two dimensional rating
methodology specified under Basel II Accord requirements
105
Eleven models for Credit Risk rating of all commercial advances i.e. existing as well as new
with exposure of Rs.25 lacs and above (FB+NFB) for implementation have been introduced
by our Bank.
These Models involves three types of ratings Obligor Rating(PD)
Facility Risk Rating(LGD)
Composite Rating(EL)
Obligor (borrower) Rating for credit worthiness indicating the Probability of Default
(PD). The obligor rating is indicative of creditworthiness of an obligor or the Probability
of Default(PD) and it is based on the assessment of past; and projected cash flows of the
company. Obligor rating grades range from BOB 1 to BOB 10.
Facility Rating:-It involves assessment of the security coverage for a given facility and
indicates the Loss Given Default (LGD) for a particular facility. Facility Rating is
dependent upon the type of facility and securities charged to the bank against the
facility.
Facility rating grade ranges from FR 1 to FR 8
Composite Rating (CR 1 to CR 10) It is matrix of PD and LGD and indicates the Expected
Loss in case the facility is defaulted. The composite rating is worked out automatically by
software based on the matrix of Obligor Grade and Facility Rating Grade
Composite rating grade ranges from CR 1 to CR 10. Bank has accepted BOB 6 as the cut
off point for the acceptance of an obligor based on obligor rating carried out as the
applicable model
Issuance of NO Objection Certificate:
In respect of borrowers seeking fresh/additional finance from other bank/FI:
-
In case of accounts falling upto the powers of General Manager, the NOC may be
given by the authorities under whose powers the concerned account falls.
For all other cases, Chairman & Managing Director/Executive Director
In respect of advance accounts sanctioned by authorities at the level of Executive
Directors and above (i.e. Executive Director, Chairman and Managing Director and
Management Committee of Board) General Managers have been authorised /
delegated, authority to modify, allow concessions in certain specific terms of
sanction.
106
Methods adopted in Bank of Baroda for assessing F.B. Working Capital finance
PBF-I
PBF-II
PBF-III
PBF-IV
For Working Capital For
Working For Working Capital For Working Capital
limits over Rs 2.00 Capital limits over limits over Rs 5.00 limits over Rs 10.00
lac and up to Rs.2 cr Rs 2.00 Crs and up crore, and up to Rs crore, to all Borrowers
to
non-SME to Rs 5.00 crore to 10.00 crore to all
borrowers and up to non-SME
Borrowers
Rs.5 cr to SME- Borrowers
borrowers
Turnover method
Turnover basis
Asset
Holding Cash Flow basis
Method
where 100% of cash
Borrowers Margin
Borrowers Margin
i.e., NWC is to be deficit
from
5% *
6.25% *
higher of actual operations is financed
amount or 25% of provided, interalia, (a)
Bank Finance
Bank Finance
Total
Current current ratio is not
20% *
18.75% *
Assets (2nd method less than 1.33; and (b)
) and balance amount DER is acceptable and
*
of
projected * of projected in Working Capital the cash surplus in
annual turnover or annual turnover or Gap may be financed non-business
the finance as per the finance as per by
the
bank operations
and
in
1st
method
of method
2nd provided, inter-alia, Balance Sheet items is
lending
(i.e., method of lending (a) current ratio is not genuinely available
operative
cycle (i.e.,
operative not less than 1.33; to fund cash deficit in
basis), whichever is cycle
basis), and (b) DER is business operations.
higher.
whichever
is acceptable.
higher.
whichever is higher. This benchmarking of current ratio at 1.33:1 ensures the borrowers
stake at a minimum of 25%. However, the actual current ratio, wherever higher than
1.33:1, may be allowed to slip-back up to 1.33:1 in the following circumstances:
(a) Without the banks concurrence / consent:
i. Temporary transport bottlenecks deterring sales;
ii Cancellation of purchase orders (leading to piling up of stock but necessitating
retirement of liabilities on raw material purchased on credit);
iii Prudent bulk or economic size procurement of stock-in-trade on credit;
iv Abnormal rise in purchase price of stock-in-trade.
(b) With the banks concurrence / consent:
i. Diversification, expansion, modernization, take-over, acquisitions, merger etc.
ii Rehabilitation of sick units.
PENAL Interest and ADDITIONAL Interest:
1.
Penal interest to be charged for non compliance of terms conditions etc.
2.
Additional interest to be charged over and above applicable/ regular interest for any
adhoc credit facilities, disbursement of credit facilities pending compliance of certain
terms and conditions.
3.
Penal interest and additional interest put together should not exceed 2% p.a.
4.
Export facilities is exempted from the purview of penal and additional interest.
5.
Priority sector lending up to Rs. 25000/-is also exempted from the guidelines of penal
and additional interest. DRI advances.
6.
Waiver/ relaxation of penal interest for non-compliance of terms other than default of
interest/ instalment payments.
a. Zonal Heads, are authorized to waive/relax levy of penal/ additional interest in
respect of accounts falling upto the powers of Regional Managers.
b. GMs (including GMs as Zonal Head) are authorised to waive / relax levy of penal
/additional interest in all other cases.
Advances to accounts where HUF is a partner
1. No credit facility to be granted to a firm where the HUF is a partner.
2. In case of existing accounts where one or more HUF is/are partners, branches shall
obtain letters of consent from the major members of the HUF declaring themselves as
partners of the firm and also to ensure than total number of partners in that firm not
to exceed 20-.
3. Alternatively partnership firm can also decide to carry out reconstitution of the firm by
inducting one or more adult members of HUF as partners.
4. Any of the above changes taking place must be brought to the notice of the guarantor.
5. While doing so, fresh set of documents shall be obtained from all the partners and
guarantors.
6. LAD confirming the previous date balance by the existing partners and guarantors
7. No HUF property shall be obtained as security for any facilities given to any other
individual person, partnership firm and/or any corporate accounts unless and otherwise
108
the Karta and/all major co-parceners of HUF shall claim that offering of such joint
family property is only for the benefits of the HUF and that the guardians of minor
co-parceners shall also indicate the same.
Compliance of terms and conditions and disbursement of credit facilities:
Before disbursement either fresh or increased in limit the followings needs to be ensured:
1. Full compliance of terms and conditions unless some specific exemptions
2. Documents to be vetted as per banks guidelines.
3. Borrowers must have obtained necessary licensee / permission clearance etc. from the
competent authority.
4. Pre disbursement inspection/site visit is made.
5. Creation of charge over Security
i. Filling of Charges with ROC in case of Limited Company
ii. Registration with CERSAI in respect of all the mortgages.
Advances falling under the power of the Branch Manager: it will be the duty of
the BM to ensure above compliance and necessary noting in the prescribed format
to be made.
Advances account falling beyond the powers of BM: he/she has to verify and
confirm that above aspects are complied with and obtain a letter in the form of
prior approval before making any disbursement from the next higher authorities.
As under:
i.
Brs. headed upto MMG-III clearance by DRM or RM (where DRM is not posted)
ii.
Brs. Headed by Chief Managers by DRM in the rank of AGM or Regional head
in the rank of AGM and above otherwise Zonal Head
iii.
Brs. Headed by AGM: by Regional Head in the rank of DGM or zonal Head where
the Regional Head is in AGM rank
iv.
CFS brs. : GM/DGM at Zonal Office can authorize the disbursement..
Personal Guarantee of Promoters/Directors:
1. In case of all new advances to Pvt Ltd. Co (Other than Exporters) personal guarantee of
all promoters and Directors (other than nominee and professional directors) are to be
obtained.
2. In case of all new advances to Public Ltd. Co (Other than Exporters) personal guarantee
of all promoters and Directors who are exercising control or having significant
influence and hold equity share of the company in sole or joint name or in associate
concern, group etc are to be obtained. Now it has been decided to left out this matter
to the sanctioning authority.
3. However in case of consortium/multiple advance where all other member banks are not
insisting on personal guarantee of promoters and Directors, our bank may also not
insist on such guarantee considering large business interests.
109
GUIDELINES FOR TAKE OVER OF THE LOAN ACCOUNT FROM OTHER BANK:
Bank provides the operating units to take over accounts from other FI s/Banks keeping in
view the foremost objective of canvassing only good quality accounts. The following
financial and Non financial aspects are however to be followed:
Non-Financial:
a) Accounts of profit-making (i.e. net profit before tax) concerns only as per last audited
balance sheet.
b) Accounts with existing lenders should be under the category of Standard Assets
c) Satisfactory report from the existing bank/FI and/or satisfactory conduct of account
as per latest statement of accounts.
d) External Rating in respect of credit proposal with exposure above Rs.5 Crore by an
approved credit rating agencies should not be below BBB & equivalent
e) Take-over accounts are to be rated as under: As per BOBRAM credit rating model (CRISIL), minimum BOB6 obligor rating grade for
all exposures of Rs. 25 lacs and above, other than MSME exposures. For MSME
exposures, this rating model is applicable for accounts having exposure of above Rs. 2
crore.
As per New Scoring Card Type model for MSME accounts of Rs.25 lac and above up to
Rs.2 crore subject to minimum MSMEBOB 6 rating (Circular No. BCC:BR:101:194 dated
13.07.2009)
f) Take-over accounts (retails) are to be rated as per the applicable scoring model
subject to minimum grade as per the scoring model.
g) There should not have been any reschedulement / restructuring in the account during
last two years.
h) All other existing norms, guidelines as applicable to borrowal accounts are to be
scrupulously followed.
Financial(other than Retail & SME Regulatory & Expended)
a. Current Ratio
: Min. 1.33.
b. TOL/ TNW
: Max. 4.5:1
Proposals under the powers of Chief Manager and above no prior clearance from next
2. Proposal for takeover under the powers of below Chief Manager: Prior approval of next higher authority i.e. Regional Manager is required for takeover.
After obtaining prior clearance as above, delegated authorities may consider the
proposals as per their discretionary lending powers.
In case of take-over of retail loan, approval from Regional Manager/Zonal Manager
is not required.
Take-over of Retail Loan Accounts
Take over accounts are to be rated as per the applicable scoring model subject to
securing minimum investment grade for the specific produce.
I.
Accounts with existing lenders should be under the category of Standard Assets.
There should not have been any reschedulement/restructuring in the account
during the last two years.
II.
In case of traders loan, accounts should be profit-making and with minimum of
Current Ratio 1.17 and maximum Debt Equity Ratio of 6.1
III.
All existing norms, guidelines as applicable to borrowal accounts are to be
scrupulously followed
Further, it has been decided to introduce the following additional measures in non-financial
aspects of takeover norm:
I.
II.
more of the value of the undertaking as per the audited balance sheet of the
preceding financial year.
In case the total borrowings of any company, whether private or public, exceeds
the aggregate of its paid up share capital and free reserves, apart from temporary
loans , for sale, lease, disposal of its undertaking, including mortgage, Company
shall be required to pass Special Resolution u/s 180 of 2013 Act.
Copies of the special Resolution passed by the company, certified true by the
Director / Company Secretary, should be obtained and kept on records
besides certificate from Statutory Auditor of the company that total borrowings
by the company, including present borrowings, are within the limit specified in the
said special Resolution.
The Bank shall scrupulously follow the other stipulations of RBI regarding safe
custody of LC forms, discounting of bills of Services Sector (to be treated as
unsecured advance) etc.
Loans and Advances against Share debentures etc.
1. No loan to be granted against partly paid shares.
2. No loan to be granted to partnership/proprietorship against primary security of
shares and debentures.
3. Loans against security of shares, convertible bonds, convertible debentures and units
of equity oriented mutual funds to individuals would not exceed the limit of Rs.10 lakh
per individual from banking system if the securities are held in physical form and Rs.
20 lakh per individual from banking system if the securities are held in demat form.
4. A uniform margin of 50% shall generally be maintained on advances against shares. A
minimum cash margin of 25% within the overall 50% ceiling shall be maintained in
respect of guarantees issued by the bank for capital market operations.
5. As per section 19(2) of the Banking Regulation Act 1949, no banking company shall
hold share in any company whether as pledgee or mortgagee or absolute owner, of an
amount exceeding 30% of the paid up share capital of that company or 30% of its own
paid up share capital and reserves, whichever is less.
6. This limit is to be observed while granting any advances against shares, underwriting
an issue of shares or acquiring any shares for investment or even in lieu of debt of any
company.
7. Bank and their subsidy should not undertake financing of Badla transactions
8. List of approved shares & debentures will be advised periodically by CO For any
addition following criteria will be adopted
(a) quoted in major stock exchange
(b) company must have declared dividend for last 3 years
(c) market price should not have fallen below face value any time during last 3 yrs
9. The aggregate exposure of a bank to the capital markets in all forms (both fund based and
nonfund based) would not exceed 40 per cent of its Net Worth as on March 31 of the previous
year.
Safety Net Scheme:
1. Often merchant banker assume large exposures by way of commitments to buy the
relative securities from the original investors at any time during a stipulated period at
a price determined at the time of issue irrespective of the market price.
2. In some cases such schemes were offered without any request from the company
whose issues are supported under the schemes.
3. RBI has advised to banks/subsidiaries to refrain from such Safety Net facilities.
114
Sanction Threshold
(FB+NFB) Other than Retail,
Excluding LABOD &
Staff Loan
Rs.25 Lakhs
Rs.10 Lakhs
Retail
Rs. 5 Lakhs
Rs.5 Lakhs
Sanction Threshold
(FB+NFB) Other than Retail,
Excluding LABOD &
Staff Loan
Above Rs.25 Lakhs
Retail
The PSR authority is required to clear the proposal from PSR angle within a period of 30days from the date of receipt of proposal. If the PSR authority has not made any observation
within the said period, it will be presumed that the PSR authority has no observation to make
and the proposal is cleared from PSR angle.
COMMERCIAL PAPERS
1. Commercial paper is introduced in India in the year 1990 by RBI as per the
recommendations Voghul Committee to enable high rated corporate customers to
diversify their source of short term finance.
2. Commercial paper is a short term money market instrument issued as a usance
unsecured promissory note which is freely negotiable through endorsement and
delivery. It is privately placed at a discounted rate to face value as decided by the
issuing company.
3. Any company whose
a) tangible net worth is not less than Rs. 4 crores as per latest audited balance sheet,
b) has been sanctioned funded working capital finance by the bank.
c) account / s has been classified as standard. In case of consortium lending, the
assets classification with all the member banks should be standard.
d) minimum credit rating as per CRISIL - P2, ICRA - A-2, or equivalent rating by other
agency.
4. Minimum maturity period 07 days and maximum up to one year.
5. Minimum amount of the CP would be Rs. 25 lacs and in multiple of Rs. 5 lacs maximum up
to 100% of Funded working capital finance including bill finance.
6. The total amount should be raised within a period of two weeks from the date of issue
open.
7. Can be issued to any individuals, corporate bodies and also to NRIs on non repatriable
and non transferable basis.
8. Banks and FIs have the flexibility to provide for rollover of the working capital limit at
their individual judgment and discretion.
9. Every issue of CP is to be reported to IECD of RBI within 3 days from the closure of
the issue.
10. After implementation of Base rate system, a many big corporates including banks / FIs
are raising shrt-term funds by issuing CPs, hence, interest rate under CP has increased
considerably.
Yield on advances
1. Yield on advances means the amount of total income received by the bank/branch out of
the total operations of the borrower with the branch as compared to fund based limit
utilized.
2. Yield = (Interest Recd. + Exchange, Commissions and other income + Notional income of
deposit) / Avg. Fund Based limit utilised
116
3. Notional income means interest at notional rate of interest as advised by the bank on all
the deposits of the borrower. The present guidelines is that interest @ 8% on 50% of
the average deposits maintained by the borrower during the year is to be considered.
4. It has further decided that whenever borrower enjoys FCNR Loans the same should be
ignored for the purpose of computation of yield. The calculation of yield should be
based only on deployment of Rupee funds and interest received thereon. However,
amount of interest received on FCNR loans by the branches must be mentioned as foot
note in the yield sheet.
Guidelines for TOD
TODs to be granted only on rare occasions to meet temporary and unforeseen
contingencies
No TOD to be allowed in accounts other than current accounts of the Customer
No TOD to be allowed during first 6 months of operation of the account. However
Bank may also consider sanction of TOD after 3 months of operation, if the
account is Premium / Premium Privilege current accounts
TODs not to be granted in accounts where cheques have been returned for
financial reasons, where cheques deposited by customers are returned frequently,
minimum balance is not maintained, turnover is not satisfactory and/or TODs
granted in the past, were not adjusted in time
Branches headed by officer in JMG Scale-I and MMG Scale-II, are not allowed
to grant TODs but Rural Branches headed by officer in MMG Scale-III and above
are authorised to allow TOD.
TOD can be allowed upto 25% average monthly turnover in the account.
TOD may be given twice a month subject to maximum period of 15 days
altogether. TOD may be sanctioned 10 times within a financial year subject to
maximum 15 days in a month(twice in a month)
TOD should not be granted in anticipation of sanction of regular limits and should
not be converted into demand loans or any other credit facilities.
Granting of TOD in one account for the purpose of adjusting an advance
outstanding in another related account is prohibited.
TODs should not be granted to the parties enjoying separate cash credit facility
also from the branch.
DAUE (Drawing Against Uncleared Effects)
Drawing against uncleared effects:1. No DAUE is to be allowed/sanctioned in newly opened accounts for first -6- months.
2. Not more than 25 % of the amount of instruments or discretionary lending powers
whichever is lower.
3. The facility should be considered/ recommended depending upon the relationship with
the customers, yield on advances, average credit balance in the account etc.
4. Operations in the account must be satisfactory no instances of return of inward or
outward cheque.
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Other Guidelines:
1. No adhoc to be considered in the newly opened account for a period of -12- months by
the branch head
2. Request for adhoc/ excess may be considered only in reviewed accounts with credit
rating not less than BBB, B+, BOB6 . In all other cases reference should be made to
R.O.
3. Delegated authority may grant secured non fund based limit in excess of lending powers
for NFB against proportionate reduction in fund based limit.
LINE OF CREDIT
Line of Credit system offers flexibility to clients to switch over between the various
working capital facilities sanctioned with relative ease as per their needs compared to the
prevalent system of restricting the usage of funds within the maximum limits available
within the facility only. This system will essentially facilitate medium/large business units
in efficient management of their borrowing requirements within the sanctioned Line of
Credit facility.
1. Bank of Baroda is a first runner in introduction of this novel product called Line of
Credit. Under this LOC borrower has been sanctioned an outer limit within which he
has full flexibility to switch over from fund based to non fund based limit and vice a
versa for procurement of current assets.
2. This is to be implemented for all borrowers where the banks exposure by way of
working capital finance ( Funded and non Funded) is of Rs. 1 crore and above. The
conduct of the account must be satisfactory and there is no major adverse features.
3. Under LOC, instead of separate limit for CC stock, Book Debt and DA letter of credit, a
combined limit for CC (Stock) & ( Book Debt) - Cum- DA L/C may be considered with a
sub limit for DA L/C .
4. Margin will be decided separately on case to case basis / facility to facility basis.
5. While calculating the drawing power for Cash Credit facility, deduct the value of
accepted bills under DA L/C from the stock value. On retirement of Advance bill by
debiting CC account the drawing power reinstated i.e. overall DP will cover the
outstanding under CC facilities and DA L/C.
6. Following facilities are not covered by LOC:
(a) DP L/C for procurement of raw materials.
(b) DP & DA L/C for procurement of capital goods
(c) Performance guarantee and guarantee issued in connection with fulfillment of export
obligations.
(d) Financial Guarantees issued in lieu of security deposit and earnest money deposit.
The Line of Credit as a product is innovative and the branches should make every effort
to canvass and make it the Unique Selling Proposition (USP) of the bank.
118
3. Three elements of cost are involved in forfeiting ; discount rate or rate of interest
commitment fee and option fee.
4. The credit is extended by exporter from 180 days to -7- years under forfeiting.
5. It is not only tool for financing but also an important risk management tools.
6. It offers an opportunity to do business where ECGC does not offer a cover.
VENTURE CAPITAL FUND
1. Sometimes an entrepreneur who is having a new idea , relatively untried technology,
desires to implement the project but they are lacking in business experience and
finance to shape their ideas. Moreover due to inherent risk, common investor will not
come forward to invest in the project.
2. At that time venture capital fund provides finance to high-risk, high technology
ventures which are usually promoted by qualified entrepreneurs. Thus, venture capital
is a source of funds used to finance new proposals / ideas involving new technology or
products which are risky but with a potential of high returns. Venture capital is a
source of funds used to finance new proposals/ideas involving new technology or
products which are risky but may provide high returns
3. Financial assistance will be by way of (a) Participating in equity capital with or without
buy back by the company, (b) Long term loans, (c) Conditional loan with option to
convert a part/full loan to equity and (d) Managerial and marketing support through
participative management.
4. It can be provided as start-up capital but at a later stage finance is provided to help
the company to raise public offer also.
5. In India, IFCI, IDBI, SBI capital venture Fund, etc. are the major sponsor for venture
capital Fund or Company.
6. As per Govt. Guidelines, the minimum size of VCC or VCF would be Rs. 10 crores.
7. They may raise the fund also from public provided the promoters contribution should
not be less than 40% of the capital.
8. Total assistance to a unit should not exceed Rs. 10 crores.
9. The entrepreneurs should be relatively new , professionally, technically qualified having
a new untried technology , lacking in adequate resources to finance the project are to
be considered.
10. Investment made by bank in venture capital will be classified as Priority sector lending.
Sensitivity Analysis:
1. While considering project finance a credit officer should carry out future risk inherent
due to some adverse circumstances which may affect the profitability or cash inflow
and out flow during the life of the project. Thus, sensitivity analysis means an
examination of the effect on the project profitability estimates due to variations in
the forecast of cash flow predictions / projections.
2. Mainly four factors; Sales, cost of raw material, cost of Power and Fuel and interest are
to be considered. As per banks guidelines 10% negative variance in sales and
121
be limited to the underlying assets only and not extend to general reserves and assets of
the company.
Limited recourse financing: Under this variant, in addition to project assets, the parent
company attaches other assets/ revenue stream for servicing the instrument to improve
its credit worthiness. Securitisation is one of the method.
Take-out financing:
1. Take-out financing is a method of providing finance for longer duration projects say 15
years or more by banks, particularly in infrastructure lending.
2. Take out financing structure is designed to avoid maturity mismatch of assets and
liability due to the infrastructure financing/ longer duration projects.
3. Under the arrangement, banks financing to the infrastructure project will have an
arrangement with IDFC (Infrastructure Finance development Corporation) or any other
financial institution for transferring to the latter the out standing in their books on pre
determined fixed period/pricing.
4. It allows bankers to lend for infrastructure with the freedom to decide the lending
period and risk profile. When the period end the bank can exit and IDFC will take out
the obligation and charge a fee as per the commitment at the point of sanction, to take
out the entire outstanding loan or part of the loan to the bank after an agreed period
say five years. The credit risk on the project will be appraised by the bank concerned
and not by the IDFC.
5. IDFC and SBI have devised different take out financing structures to suit the
requirements of various banks, addressing issues such as liquidity assets-liability
mismatches, limited availability of project appraisal skills etc. They have also developed
a Model Agreement that can be considered for use as a document for the purpose.
(a) A project is acceptable when the IRR > the expected rate of return or market rate
of return
(b) A project is acceptable when the IRR > the cost of capital.
(c) Higher the IRR, better the project.
INTEREST COVERAGE RATIO
Interest Coverage Ratio indicates the number of times a firm's income in an accounting
period can pay off (cover) the interest on term debt during the same period. Since it
measures the ability to pay interest-due from the earnings of the firm, this ratio is used
in computing the firm's borrowing capacity and in assessing the risk of servicing of debt.
Formula: Earnings before Interest and Tax (EBIT) / Interest expense.
The higher the Interest Coverage Ratio, more secure the Bank is in respect of the
interest servicing ability of the borrower. An Interest Coverage Ratio of 5 may be
considered satisfactory. The sanctioning authority may consider lower interest coverage
ratio depending upon the nature of project / Industry after recording the reasons for
the same.
ADVANCE BILL AND BILLS PAST DUE ACCOUNTS
Advance Bill account:
When documents received under Letter of Credit issued by our branch is presented for
payment/ reimbursement by the negotiating bank, L/C issuing branch is suppose to make
payment/ reimbursement if terms and conditions are strictly complied with.
The payment will always be made through debit of G/L Advance Bill account even though
balance in the customer account permits debit. Subsequently this entry is to be
reversed.
In case of Import Bill under L/C, the party is suppose to retire the bill within 10 days
otherwise the bill will be treated as overdue and fetch higher rate of interest of 2%
over the applicable rate as above.
Bill Past Due Account:
In case of Guarantee issued by our branch, beneficiary has a right to invoke the
guarantee as and when default is committed. The issuing bank/ branch will make
immediate payment to the beneficiary by debiting G/L Bill past due account.
Even in case of Bills purchased remains overdue for a longer period, the entry is to be
reversed to the debit of this bills past due account with permission of RO.
The amount then to be recovered from customer as mentioned in case of A.B.
FUND FLOW STATEMENT:
1. Fund Flow statement depicts the various sources of the fund and their uses. It is a
statement of inflow and outflow of the fund during a specific period.
2. Inflow and out flow of the fund can be noticed by increase or decrease in assets and
liabilities. If assets are increasing it is an application and if it is decreasing it is source
125
127
PERFORMANCE GUARANTEE:
1. Performance guarantee guarantee the satisfactory performance of the work allotted to
the contract as per agreed terms and conditions.
2. The purpose of performance guarantee is to fix the financial responsibility in the event
of default or failure on the part of the customer to perform the obligation undertaken
by him
3. In such guarantee Bank does not undertake such specific performance. The Bank will be
liable to pay a sum not exceeding the guaranteed amount.
4. While issuing such performance guarantee, branches should ensure technical, managerial
and financial aspects of the borrower / contract. Reasonable cash margin and charge on
collateral securities to be obtained.
5. This type of guarantee is generally asked for in case of (a) Turn Key Project and (b)
Performance of machinery/ equipment supplied. (3) Government Contract works.
DEFERRED PAYMENT GUARANTEE:
1. The guarantee is issued at the request of customers for purchase of capital equipment
on long term credit from the supplier.
2. This guarantee, guaranteed the payment of due installment and interest in deferred
manner over a specific period of time. So guarantee amount should inclusive of principal
and interest thereon.
3. DPG is a non fund based facility. However for the purpose of sanctioning/ processing
etc. the guarantee is to be treated as Fund based only. It is to be issued by the Branch
Manager as per Discretionary Lending Power of fund base facilities
4. This guarantee should be considered in line with guidelines for Term Loan.
SHIPPING GUARANTEE
1. Shipping Guarantee is issued in favour of shipping company/ agent when the goods
arrived at port of destination but shipping documents are yet not received i.e. to take
delivery of goods without delivery of shipping documents such as Bill of Lading.
2. The guarantee is to be issued at 100% cash margin, where the bill is routed through the
Bank.
3. An undertaking from the customer to be obtained that the borrower will honour the
bill irrespective of discrepancy, if any with the terms of L/C.
Real Estate Sector:
Real Estate Sector includes (1) Residential Mortgage (2) Commercial Real Estate and (3)
Investment in Mortgage Backed Securities (MBS) and other securities exposures.
(1)Residential Mortgage means finance against the mortgage of residential property which
is occupied by the borrower or is rented.
128
(2)Commercial real Estate means lending secured by mortgage on real estates ( office
buildings, retail space, multi-purpose commercial premises, multi- family residential
building, multi-tenanted commercial premises, individual or warehouse space, hotels,
land acquisition, development and construction etc.) This also includes Non Fund Based
Exposure also.
(3) Investment in Mortgaged Based securities and other securities exposures in
Residential and commercial real estate sector.
(4)Fund based and non-fund based exposures on National Housing Bank and Housing
Finance Companies (HFCs) which is considered as Indirect Exposure.
Ratio at a glance :
RATIO
Current Ratio
Quick Ratio
Solvency Ratio
Debt-Equity Ratio
Assets
Coverage
Ratio
Debt-Service
Coverage Ratio
FORMULA
Current Assets /
Current Liabilities
Quick Assets /
Current Liabilities
OR
C.A.-Inventory
C. Liab.-Bank Borrowing.
Net Tangible assets /
Total Outside Liabilities
INDICATION
Ability to meet current liabilities.
Higher the ratio better the
liquidity
Shortfall indicates diversion of
short term fund.
1.5 to 2 is desirable
Availability of Liquid resources to
meet current liabilities.
1 is desirable
Debtor
turnover
Ratio (No of Days)
Creditor
T/Over
Ratio (No.of days)
Assets
ratio.
turnover
Net Sales
Net Profit After tax X 100
Net Sales
Return
Investment
on
No of equity shares
Profit before Int.& Tax
Return
Investment
on
Capital employed
Market Price of the share
Earning Per share
Measure
the
business
performance.
Inter firm comparison.
Return means PAT + Interest on
long term debt + Prov. For tax
Int. div on non trade investment
+ non trading adjustment
Price earning on present market
value.
PAT = Profit After Tax, FA = Fixed Assets, BEP = Break Even Points, MOS = Margin
of Safety.
MCA21
Project of Ministry of Company Affairs for e-governance
- Online Filing of Charges by companies through e-Forms. The Ministry of Company
Affairs, Government of India is implementing a major e-Governance initiative known
as MCA21. This project envisages introduction of secure electronic filing (e-Filing)
for all services provided by the Registrar of Companies including incorporation of a
company, annual filing, registration of charges and other event-based filings.
130
Quantum of Finance
Repayment
The friendly FEMA came into effect from 1st June 2000 replacing the stringent and
draconian FERA of 1973 (Revised in 1993). The object of FERA was to conserve the foreign
exchange resources. The objective of enactment of FEMA, on the other hand, is to manage
foreign exchange resources and facilitate external trade and payments for promoting the
orderly development and maintenance of foreign exchange market in India.
Extra-territorial jurisdiction of FERA is retained in FEMA
The difference between FERA and FEMA can be summarized as under: Feature
FERA
FEMA
1. No. of Sections 81 sections
49 sections
2. Features
Presumptions of Mens Rea and Presumptions of Mens Rea and
Abatements
Abatements excluded
3. Definition of
Capital/Current
transactions, These transactions/terms are well
Terms
Person,
defined
Service etc. not defined
4. Concept of
Concept authorized to ADs and Concept of authorized personAuthorized
AMCs
widened
to
include
banks,
Person
moneychangers, off shore-banking
units etc.
5. Definition of
Resident/Non-Resident definition This definition is in harmony with
Resident
different from that in Income Tax Income Tax Act
Act
6. Nature of
Violations are criminal offences Violations
are
civil
offences
Offence
punishable with imprisonment
punishable with monetary penalties
7. Provision of
Arrest
8. Amt. of
Monetary
Penalty
9. Right of
Impeded
Person to
take
assistance
10.
Power
of
Police Officer
/ ED
Impeded person did not have the Impeded person has a right to take
right to take legal assistance of legal assistance of Lawyer or
Lawyer or Chartered Accountant
Chartered Accountant
Sweeping powers
Restricted powers
133
Regulation 2 of FEMA notification No. 13 dated May 3, 2000 Person resident outside
India who is a Citizen of India or is a Person of Indian Origin.
a) A person resident outside India who is a Citizen of India i.e.
i) Indian Residents stay abroad for more than 182 days in the preceding financial year
ii) Indian citizens who proceed abroad for employment or for carrying on any business or
vocation or for any other purpose in circumstances indicating indefinite period of
stay outside India.
iii) Indian citizen working abroad on assignment with Foreign Government/Government
Agencies/International / Multilateral Agencies like United Nations Organisation
(UNO), UNICEF, FAO, World Bank, International Monetary Fund etc.
iv) Officials of the Central and State Government and Public Sector Undertakings
deputed abroad on temporary assignments or posted to their offices (including
diplomatic missions) abroad except those situated in Nepal and Bhutan.
b) Person of Indian Origin means a citizen of any country other than Bangladesh or
Pakistan, if
i) he or she at any time held an Indian passport
or
ii) he or either of his parents or any of his grandparents was a citizen of India by virtue
of Constitution of India or the Citizenship Act 1955
or
iii) the person is a spouse of an Indian citizen or a person referred to in i & ii above.
c) Indian Students studying abroad
In terms of FEMA regulations Indian students studying abroad can be treated as
Non Resident Indians having regard to the circumstances stated as under
i) their stay abroad for more than 182 days in the preceding financial year and
ii) their intention to stay outside India for an uncertain period when they go abroad for
their studies
Accordingly, students going abroad for studies are treated as Non- Resident Indians
and are eligible for all the facilities available to NRI under FEMA.
For the purpose of Investment in India in immovable property, a person of Indian origin
means an Individual (other than a citizen of Bangladesh, Pakistan and Sri Lanka)
Persons of following categories will not be considered as NRI:
i) Indians who go abroad for the purpose of
a) tourism
b) pursuing research
c) undertaking business promotion.
d) to receive training
e) obtaining medical treatment.
participating in sports or cultural activities.
ii) Indians or Persons of Indian origin residing in Nepal/Bhutan /Pakistan/Bangladesh.
134
iii) Crew members working for shipping/airlines companies posted in India and those
companies whose registered offices are in India.
The Branch concerned should satisfy itself that the individual is holding valid visa and
valid residential permit issued by Foreigner Registration Office (FRO) / Foreigner
Regional Registration Office (FRRO) concerned
Eligible Credits: Some local credits as permiteed under FEMA, Proceeds of remittance
from overseas to India, From other NRE, FCNR(B), and other NRO A/Cs
Permitted Debits: All local payments in Rupees, Remittance outside India of current
income like rent, dividend, pension, interest, etc.
Repatriability : Rapatriable upto USD 1 million per financial year out of balance held in
A/c. subject to payments of tax and production of C.A. certificate.
Loan Against Term Deposit : Permitted without any limit (As per Advance value of the
deposit)
Joint Accounts : Allowed with other NRIs and local residents also.
Premature Withdrawal: Allowed, Rules applicable as per Resident Deposits.
Tax : TDS is levied at present @ 30% + surcharge on interest earned, Concession if any
is subject to double tax avoidance agreement with certain countries.
Other Facilities : International Debit Card, Internet Banking (Baroda Connect), Account
operation allowed for local payments through Power of Attorney.
A forward contract of one year is executed at the time of opening the deposit account
on the principal amount to enhance the yield out of the forward premium in order to
protect the depositors from exchange risk
On maturity, the deposit will be converted in to INR at the contracted rate and will be
credited to NRE or NRO a/c as per depositor instruction
Foreign Currency Linked Rupee Deposits (FCLR) Scheme
This deposit plan offers the dual advantage and benefits of both NRE Rupee Deposits and
FCNR Deposits. Moreover, since the maturity value is determined in foreign currency at the
time of application, the risk of losing money due to a fall in the exchange rate is eliminated.
Features:
Option to keep the deposit receipt free of cost in Bank's safe custody.
Intimation of due dates enables the depositor to plan finance portfolio.
Automatic Renewal on due date for similar period at the prevailing rate of interest in
the absence of fresh instructions to ensure that money grows timely.
Acceptance and execution of Standing Instructions.
Addition and Deletion of name of account holders is permitted.
Secrecy / confidentiality of transactions and accounts are maintained.
Money stays secure with the bank.
Provides for easy liquidity and convertibility.
Provision for nomination.
Baroda Premium NRE SB Account:
A premium saving bank account specially designed for valued NRIs customer.
Average quarterly balance required to be maintained is INR 50,000.00
Free remittance facility if beneficiary maintains account at any of branch in India
No charges for collection of cheque drawn on self a/c / travel cheques / Currency notes
surrendered during personal visit
Demand draft / Bankers cheque issued free of any charges Cheque book facility
available free of cost
Preferential Exchange Rate for conversion
Baroda Double Dhamaka NRE Term Deposit Scheme for NRIs: As per the prevailing
rate of interest the principal amount is doubled in a given period under RIRD scheme.
BARODA DOUBLE DHAMAKA NRE TERM DEPOSIT SCHEME
Feature
Particulars
Scheme Code
Product Specification
137
Payment of Interest
Maturity Value
Resident Foreign Currency Account - for NRIs returning to India for settling in
India
Our Bank offers remunerative deposits for NRIs returning to India with the intention of
permanently settling down. NRIs can also open RFC account with the ASSETS brought by
them on return as well as their foreign assets held abroad at any future date in case they
desire so. Their present NRI accounts will be re classified and called RFC accounts while the
continuity of the deposit will be maintained till maturity date of the deposit.
138
Amount and Maturity:The maximum amount of ECB which can be raised by a corporate other
than those in the hotel, hospital and software sectors is USD 750 million or its equivalent
during a financial year.
a. Corporates in the services sector viz. hotels, hospitals and software sector are allowed to
avail of ECB up to USD 200 million or its equivalent in a financial year for meeting foreign
currency and/ or Rupee capital expenditure for permissible end-uses. The proceeds of the
ECBs should not be used for acquisition of land
b. ECB up to USD 20 million or its equivalent in a financial year with minimum average maturity
of three years.
c. ECB above USD 20 million or equivalent and up to USD 750 million or its equivalent with a
minimum average maturity of five years.
d. NGOs engaged in micro finance activities and Micro Finance Institutions (MFIs) can raise
ECB up to USD 10 million or its equivalent during a financial year. Designated AD bank has
to ensure that at the time of drawdown the forex exposure of the borrower is fully
hedged.
FCCB ( Foreign currency convertible Bond):
Foreign Currency Convertible Bonds (FCCBs) means, a bond issued by an Indian company
expressed in foreign currency, and the principal and interest in respect of which is payable in
foreign currency. Further, the bonds are required to be issued in accordance with the scheme
viz., "Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) Scheme, 1993, and subscribed by a non-resident in foreign currency and
convertible into ordinary shares of the issuing company in any manner, either in whole, or in
part, on the basis of any equity related warrants attached to debt instruments. The policy for
ECB is also applicable to Foreign Currency Convertible Bonds. The issue of FCCBs are also
required to adhere to the provisions of FEMA Notifications, as amended from time to time.
1. FCCB is a hybrid instrument issued outside the country that offers option to investors
to convert it into equity at a predetermined price. This is a cheaper source of fiance
to Indian companies.
2. The bond holder can enjoy the regular interest payment. Further they can avail price
appreciation once the bonds are converted into equity.
All-in-cost ceilings in respect of ECB:
All-in-cost includes rate of interest, other fees and expenses in foreign currency except
commitment fee, pre-payment fee, and fees payable in Indian Rupees. Moreover, the payment
of withholding tax in Indian Rupees is excluded for calculating the all-in-cost. The current
ceilings are as below:
140
pay, accept or negotiate documents presented in conformity with the terms and
conditions of letter of credit.
5.
BENEFICIARY: He is an exporter or seller of the goods.
REVOLVING LETTER OF CREDIT
A Letter of Credit issued for a specific amount within which series of BP or BN are
purchased/ negotiated. The limit will be automatically reinstated on retirement of earlier
bill purchased or negotiated, is called Revolving Letter of Credit.
Bank should recover the commission on each reinstatement.
In case of Revolving L/C's aggregate turnover of bills under the L/C within the validity
period of L/C in addition to a suitable limit for single transaction should be specified.
RED CLAUSE AND GREEN CLAUSE LETTER OF CREDIT
Red clause Letter of credit which authorize the bank to provides finance to exporter at
the pre-shipment stage which is known as packing credit finance. The credit facility
granted under such letter of credit is to be liquidated by purchase or negotiation of Bills
under the L/C.
Green Clause letter of Credit is one which authorize the bank to grant further finance to
exporter for storage of goods in the name of bank, payment of dockyard, port and insurance
charges etc. Before the shipment is taking place. Green Clause L/C is only an extension of Red
Clause Letter of Credit.
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The letter of credit issued in favour of the local or other suppliers as above is called back
to back letter of credit. The terms and conditions of such back to back L/C should be in
conformity with the original letter of credit.
TRANSFERABLE CREDIT
When a letter of credit authorise to transfer the credit to the second beneficiary at the
request of first beneficiary to the extent of amount and quantity of goods. This is called
transferable credit.
This credit can be transferred once only. This means that second beneficiary cannot
transfer the portion allotted to him to next supplier.
Exchange Rate Mechanism:
a. Direct quotations:
Under a system of Direct Quotations, the exchange rates are quoted where the unit(s) of
foreign currency remains constant, whereas the home currency units fluctuates : i.e.
USD 1 = Rs. 61.65
b. Indirect Quotations:
Under a system of Indirect Quotations, the exchange rates are quoted where the unit(s)
of home currency remains constant against variable units of foreign currency. i.e. Rs.
100/- = USD 1.62
In India we follow the direct method of quoting exchange rates since August 1993.
Types of Rates:
(i) Cash / Ready: When the deal is entered into and its settlement is done on the very
same day then it is known as Cash / Ready Rate. (T + 0)
(II) TOM: When the deal is entered into but the settlement is done on the next working
day then it is known as TOM. (T + 1)
(iii) Spot Rate : Where the cash settlement is to take place after two working days from
the date of contract. It is termed as "SPOT RATE." (T + 2)
(iv) FORWARD RATES: All exchange rates quoted, where the cash settlement is to take
place after the spot rate are termed as "FORWARD RATES" (T + > 2). Forward Rates
are generally quoted as a margin against the spot rate for currency concerned. The
margin may represent either "PREMIUM" or "DISCOUNT".
Premium: Premium is a value of exchange in excess of spot rate. In relation to forward
exchange rate, it means that the currency is dearer for future delivery than for the spot
delivery i.e. currency is dearer for forward purchase than the spot purchase.
143
Discount: Discount is a value of exchange below spot rate. In relation to forward exchange
rate, it means that the currency is cheaper for future delivery than for the spot delivery
i.e. cheaper for forward purchase than the spot purchase.
LIBOR (London Inter-Bank Offered Rate):
LIBOR is a daily reference rate based on the interest rates at which banks offer to lend
funds to other banks in the London inter-bank market.
LIBOR is published by the British Bankers Association (BBA) shortly after 11:00 A.M London
time , every day, and is a filtered average of inter-bank deposit rates offered by designated
contributor banks, for maturities ranging from overnight to one year.
SWIFT
Society for Worldwide Interbank Financial Telecommunication is a co operative society
created under Belgian law and having its corporate office at Brussels. It operates computer
guided communication system to rationalize international payment transfers in a secured
system driven environment. Only authorized officials can access and decode the data /
information / message.
Categories of AD branches:
Category A: Offices and branches maintaining independent foreign currency
accounts (NOSTRO A/C) with overseas correspondents / branches in their own
names. Specialized Integrated Treasury Branch (SITB) Mumbai is the only Category
A Branch.
Category B: Offices and branches not maintaining independent foreign currency
accounts but having powers of operating on the accounts maintained abroad by their
A category branch.
Category C: All other offices and branches handling foreign exchange business
through other offices or branches in category A or B, but not having powers to
operate on the accounts maintained by their head / principle offices.
144
In all there are a total of 11 INCOTERMS instead of 13 used earlier, with 2 new
additions, DAP and DAT and 4 deletions viz. DAF, DDU, DEQ and DES.
The expanded form of the 11 INCOTERMS 2010 are:
Applicable for all modes of transport:
EXW
: Ex Works
FCA
: Free Carrier
CPT
: Carriage Paid To
CIP
: Carriage and Insurance Paid
DAT
: Delivered At Terminal
DAP
: Delivered At Place
DDP
: Delivered Duty Paid
Only applicable for sea and inland waterway transport:
FAS
: Free Alongside Ship
FOB
: Free on Board
CFR
: Cost and Freight
CIF
: Cost, Insurance and Freight
ACCOUNTING ARRANGEMENTS:
NOSTRO ACCOUNT (OUR ACCOUNT): means our account with a bank or branch abroad.
They are the current accounts of the bank with their correspondents / branches in
foreign centers in their currencies.
VOSTRO ACCOUNT (YOUR ACCOUNT): means foreign banks or branchs account with
us in Indian Rupees.
LORO ACCOUNT: Entries passed to the account of a third bank are said to be for
LORO account, e.g., a remittance made by one bank to another for account of a third
bank may be sent by the remitter for credit of a LORO a/c (bank), meaning their
account with you
Foreign Exchange Facilities for Resident Indians
Foreign Exchange can be released to undertake a range of miscellaneous non trade
current account transactions for the following activities:
1. Private Visits:
Up to USD 10000 or its equivalent thereof in one financial year (1st April to 31st
March) for one or more private visits to any country (except Nepal & Bhutan)
2. Business Visits and travel for international conference/seminar/ training
Up to USD 25000 or its equivalent thereof in one financial year per visit.
145
3. Employment/emigration
Up to USD 100,000 or its equivalent thereof in one financial year. The amount also
includes processing/assessment fees for overseas job applications /emigration
consultancy fees.
4. Medical treatment
Up to an amount of USD 100,000 or its equivalent in one financial year. For amount
exceeding the above limit, estimate from the doctor in India or hospital/doctor
abroad, is required to be submitted. A person who has fallen sick after proceeding
abroad may also be released foreign exchange for medical treatment outside India
5. Education abroad
Up to USD 1,00,000 or the estimate from the institution abroad per academic year,
whichever is higher.
Notes:
Out of the overall foreign exchange being sold to a traveller, exchange in the form of foreign
currency notes and coins may be sold up to the limit indicated below:
Travellers proceeding to countries other than Iraq, Libya, Islamic Republic of Iran,
Russian Federation and other Republics of Commonwealth of Independent States - not
exceeding USD 3000 or its equivalent.
Travellers proceeding to Iraq or Libya - not exceeding USD 5000 or its equivalent
Travellers proceeding to Islamic Republic of Iran, Russian Federation and other
Republics of Commonwealth of Independent States - full exchange may be released.
Documents for releasing Foreign Exchange
146
147
2. The account should be Standard continuously for three years and should not be
in the caution list of ECGC or RBI.
3. Export firms making losses for the past three years or having overdue export bills
in excess of 10% of the current years' turnover are not eligible for Gold Card.
Limits:
1. Based on the usual appraisal of credit needs for exports appropriate limits both
for Pre-Shipment/ Post Shipment will be sanctioned for a period of three years
subject to annual review of account.
2. A stand by limit of not less than 20 percent of the assessed limit may be
additionally granted for facilitating urgent credit needs of Gold Card Holder
Exporter for executing sudden orders.
3. Norms for inventory may be relaxed in case of unanticipated export orders, taking
into account the size and nature of the export order.
Concession in Rate of Interest:
0.25 % concession on applicable Interest Rate for Export Credit to the Gold Card
Holder Exporter
Concession in Other Charges:
10% concession will be given to the cardholders in commission and exchange.
Tenor:
The Gold Card will be issued for a period of three years and will be renewed for a
further period of 3 years unless any adverse/ irregularities are noticed, subject to
annual review of the account.
Other Features:
* Preference will be given for grant of PCFC.
* Premium on ECGC policy for Pre Shipment Finance will be borne by the Bank and not
recovered from the Gold Card Holder Exporter.
* Gold Cardholders, on the basis of their track record of timely realization of export
bills, will be considered for issuance of foreign currency credit cards for meeting
urgent payment obligations, etc. in future.
* The loan application of such export clients will be processed within expeditiously
FCNR(B) LOANS
The foreign currency denominated loans in India are granted against the foreign
currency funds. Banks are having FCNR (B) Deposit and other Foreign Currency
deposit accounts like RFC, EEFC and other FC accounts. The loans given from these
FCNR deposit funds are commonly known as FCNR (B) loans.
149
BOB with a wide global presence has a large base of NRI customers/ depositors.
Therefore, BOB has a large resource base of FCNR (B) deposits and is in a position to
offer the Foreign Currency Loans in India under FCNR (B) Scheme at very
competitive rates.
Advantages of FCNR (B) loans:
At times, it may entail lesser interest cost vis--vis Rupee borrowings. The borrower
is not required to go to the International market for raising the funds as foreign
currency funds are made available in India reducing the cost of raising such funds.
Features
Corporate can raise FCNR (B) loans from the Banks who are authorized dealers. BOB
grants FCNR (B) Loans through its Position Maintaining Offices at Mumbai, i.e. SITB
Mumbai
The Indian corporate/ firms are allowed to raise the funds through foreign currency
loans at the selected Indian branches within the prevailing policy guidelines of the
Bank/ RBI.
Purpose
Corporate is allowed to obtain foreign currency denominated loans in India under the
above scheme for the following purposes: 1.
2.
3.
4.
5.
6.
7.
The loan can be granted after proper assessment and sanction of working capital
requirements/ Maximum Permissible Bank Finance (MPBF). The borrowers should
have natural hedge to cover themselves from exchange risk, which are required to be
borne by them. The exporters can avail this facility by way of pre-shipment credit as
well as post shipment credit in foreign currency. All other terms applicable to such
type of Rupee advances shall also be applicable to foreign currency advances.
150
Buyers Credit
Buyers Credit is a financing arrangement under which a lending bank in the suppliers
country lends directly to the buyer or to a bank in the buyers country to enable the
buyer to make payments.
Benefits to the Bank:
Benefits to Corporates
Extremely competitive pricing & Service
Interest rate linked with LIBOR increases stability
Need not to go overseas market as our bank arranges for everything through
Overseas presence
No payment of withholding tax, if availed from our foreign branches
(Foreign Banks are subject to withholding tax)
Better risk coverage by various hedging options
Less formalities
Suppliers Credit
Suppliers credit is a financing arrangement under which a supplier agrees to accept
deferred payment terms from the buyer. Supplier avails funds by discounting or selling
the bills of exchange or promissory notes so created with the bank in its own country.
PRE-SHIPMENT EXPORT CREDIT
Pre-shipment / Packing Credit' means any loan or advance granted or any other credit
provided by a bank to an exporter for financing the purchase, processing, manufacturing
or packing of goods prior to shipment / working capital expenses towards rendering of
services on the basis of irrevocable letter of credit opened in his favour by an overseas
buyer or a confirmed order for the export of goods / services from India or any other
evidence of an order for export from India having been placed on the exporter.
151
Period of Advance
(i) The period for which a packing credit advance may be given by a bank will be operating
cycle or maximum period of 180 days and depending upon the circumstances of the
individual case, such as the time required for procuring, manufacturing or processing
(where necessary) and shipping the relative goods / rendering of services. It is
primarily for the banks to decide the period for which a packing credit advance may
be given, having regard to the various relevant factors so that the period is sufficient
to enable the exporter to ship the goods / render the services.
(ii) If pre-shipment advances are not adjusted by submission of export documents within
360 days from the date of advance, the advances will cease to qualify for concessive
rate of interest to the exporter ab initio.
Disbursement of Packing Credit should be made on FOB vale of LC/Export Order.
Liquidation of Pre-shipment Credit:
Pre-shipment credit is to be liquidated by the purchase of export bills received from
abroad in respect of goods exported / services rendered. Further, subject to mutual
agreement between the exporter and the banker it can also be repaid out of balances in
Exchange Earners Foreign Currency Account (EEFC A/C) as also from proceeds of any
other unfinanced (collection) bills or lastly from Rupee resources if no export takes place.
POST-SHIPMENT EXPORT CREDIT
'Post-shipment Credit' means any loan or advance granted or any other credit provided by
a bank to an exporter of goods / services from India after shipment of goods / rendering
of services.
Types of Post-shipment Credits:
Post-shipment advance can mainly take the form of (i) Export bills purchased/discounted/negotiated.
(ii) Advances against bills for collection.
(iii) Advances against duty drawback receivable from Government.
proceeds of any other unfinanced (collection) bills. Such adjusted export bills should
however continue to be followed up for realization of the export proceeds and will
continue to be reported in the XOS statement.
Normal Transit Period: Bills in Foreign Currencies ( Demand / Sight Bill) 25 days
Crystallization of overdue Export Bill (Purchased/Discounted/Negotiated): Crystallization of
Overdue Export Bills is done on 30th day after the expiry of the Normal Transit Period /
Notional Due Date.
For crystallization into Rupee liability, the Authorised Dealer shall apply its TT selling rate of
exchange. The amount recoverable, thereafter, shall be the crystallized Rupee amount along
with interest and charges, if any.
Diamond Dollar Account :
Firms and companies dealing in purchase/sale of rough or cut and polished diamonds are
permitted to open and transact their business through Diamond Dollar Accounts provided,
they have a satisfactory track record of at least three years in import or export of
diamonds have an average annual turnover of Rs. 3 crores or above during preceding three
licensing years (licensing year is from April to March)
Eligible firms and companies may be allowed to open not more than 5 Diamond Dollar
Accounts with their Bank.
EXPORT DECLARATION FORM (EDF):
RBI has simplified the existing GR/PP forms used for declaration of exports of Goods and
a common form called Export Declaration Form (EDF) has been devised to declare all
types of export of goods from Non-EDI ports. The EDF will replace the existing GR/PP form
used for declaration of export of Goods.
Deemed Exports
Projects aided by bilateral or multilateral agencies/funds (world bank, IBRD, IDA). Under
deemed export goods will not cross the boundary of the India but will be supplied to Govt.
aided projects and the remittance in the form of foreign exchange will be received into
the India. Export Finance to such projects can also be considered by way of preshipment/post shipment credit.
3. AFS-Available for sale: The securities which do not fall under the above two categories
will be under this category.
4. Coupon rate = The rate which is displayed on the instrument and fixed at the time of
issuance.
What do you understand by Derivatives?
It is a financial contract value (spot rate) of which is derived from another financial
products/commodity called underlying (that may be stock, foreign currency, commodity
etc.) Forward contract in forex business is a best example of derivatives.
The basic object of the derivative is to hedge the risk. Future, forwards, options, swaps
are the common instruments of derivatives.
A derivative is an instrument / contract whose value depends on the values of other
underlying instrument / contract.
These variables may be :
Stock Prices
Exchange rates
Interest rates
Functions of Derivatives :
Derivatives shift the risk from the buyer of the derivative product to the seller and as
such are very effective risk management tools.
Derivatives improve the liquidity of the underlying instrument.
Derivatives perform an important economic function viz. price discovery.
They provide better avenues for raising money.
They contribute substantially to increasing the depth of the markets.
Share of Exchange Profit
Treasury Branch passes share of profit on exchange transaction done by Authorised
Branches on half yearly basis i.e. March to August and September to February. This is
passed on to the branches during first fortnight of September and March every year.
FORWARD CONTRACT
A forward foreign exchange transaction is one which is executed today at a rate agreed
today but settlement takes place at an agreed future date.
The contract is negotiated directly by the buyer and seller. It is an OTC (over the
counter ) product
No money exchanges between the parties when it is contracted and the actual
conversion / settlement takes place at agreed rates at future maturity date.
Both the parties are obliged to fulfill their contractual terms.
154
3. The option which can be exercised by the buyer only on the date of maturity is called an
European Option.
4. American Option is the Option which can be exercised on any working day before the
maturity or on the maturity date.
Interest Rate Options :
Interest Rate Options are fundamentally of two types, the Cap and the Floor. A Cap is an
interest rate option in which, the buyer of the option, with the intention of locking
himself to a ceiling in interest costs for his borrowing, reserves the right to receive the
difference in interest rate on a notional principal in case the interest rate on the
underlying borrowing goes higher than the ceiling he has chosen at pre-agreed periodic
intervals for a given time maturity.
It may be noted here that a CAP is nothing but a series of Call options on Interest Rate.
COUPON RATE
The fixed rate of interest which is printed on the Bond certificate is called Coupon rate.
Coupon rates are contractual rates that cannot be changed after the bond is issued.
156
YIELD TO MATURITY
This term popularly known as YTM connotes redemption yield and is very useful for
Treasury Managers whose investment horizon is long term. YTM can be interpreted as
the bonds average compounded rate of return if the bond is bought at the current asked
price and held until it matures and the face value is repaid. That is, YTM can be defined
as the discount rate that equates present value of all cash flows to the present market
price of the Bond. Future cash flows includes interest and capital gain/loss.
MARK TO MARKET (REVALUATION):
1. RBI has directed all the banks in India in valuing their investment portfolio at market
rates. Valuation of securities at market rates is known as marking to market.
2. This process of valuation of the portfolio exposes the Bank to the market risk and
forces the treasury to take suitable steps to hedge such risk. For example if the value
of the securities in the portfolio have depreciated, as per the prevailing market rates,
the profitability and thereby the networth of the bank also gets adversely affected.
3. Conversely, if there is an appreciation, which are unrealised gains, cannot be taken to
profits of the Bank. However RBI issues guidelines on valuation norms from time to
time. As per the latest guidelines, not less than 70% of the portfolio of the Banks in
India should be marked to market.
3. This portion of portfolio which is marked to market is termed as Current category
while the remaining portion which is not marked to market is termed as Permanent
category. RBI has indicated that it is moving towards directing the Banks to mark
100% of their portfolio to market.
4. This will ensure that Banks Capital base could withstand any eventuality of high
volatility in the value of its portfolio at a later date, say when the Capital account
convertibility comes.
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RISK MANAGEMENT
What is Risk?
Risk is a probability of loss, may be direct or indirect. Direct loss may be relating to loss of
capital or earning whereas indirect loss may be loss of business. Thus, risk means probability
of loss of earning, capital or business.
For example:
In case of non-payment of dues bank will suffer a loss, in case of compromise loss of earning
(waiver) or loss of capital in case of write off.
Frauds committed by either employees or outsiders results into loss of business.
What is Risk Management?
The four letters RISK indicates that risk is an unexpected event or incident, which needs
to be identified, measured monitored and control.
R = Rare (Unexpected)
I = Incident (Outcome)
S = Selection (Identification)
K = Knocking (measuring, monitoring, controlling)
Thus, the risk management is a sum of (1) Risk identification (2) Risk measurement (3) Risk
monitoring and (4) Risk control with a view to maximize Risk Adjusted Return on Capital
Employed = (RAROCE).
Different Types of Risks?
Broadly speaking the risk can be divided into four main categories.
(1) Market Risk (2) Operational Risk (3) Credit Risk and (4) Country Risk
Market Risk
The risk of losses in and off balance sheet positions arising from adverse movement
of market variables. Market risk may be relating to:
Liquidity Risk: Potential inability of a bank to meets its repayment obligations in a
timely and cost effective manner e.g. Mismatch of deposits and assets.
Interest Rate Risk: Risk due to change in market interest rate, which might
adversely affect the banks financial position. The NIM will reduce. This depends on
types of assets such as fixed or floating rate, quantum of advance etc.
Foreign Exchange Risk: Risk due to upward/downward movement in exchange rate
when there is an open position, either spot or forward or both in an individual
currency.
Commodity Price Risk: The price fluctuation in commodity, which are charged to the
bank as security etc. by way of hypothecation and /or pledge.
Equity Price Risk is a loss in value of the banks equity investments and or equity
derivatives, arising out of change in equity price. Price fluctuation in stock market
where bank has invested fund.
158
OPERATION RISK:
It is a risk relating to direct or indirect losses arising out of inadequate or failure of
people, process, system, business, management and/or external factors. Generally, any
risk not categorized as market or credit risk is called operational risk.
6. Broadly speaking operational risk covers following:
(1) People (2) Process (3) Management (4) System (5) Business and (6) External.
COUNTRY RISK:
Country Risk is the possibility that a Country will be unable to service or repay its debts
foreign lenders in a timely manner. Country Risk is the risk arising while dealing with other
countries such as sovereign risk, political risk, transfer risk, currency risk, cross border
transactions, defaulter country risk etc.
WHAT IS CREDIT RISK?
Credit risk is a risk of potential loss arising out of inability or un-willingness of a customer
or counter party to meet its commitments in relation to lending. Hedging, settlement and
other financial transactions. Thus, credit risk may be relating to;
Direct lending: Default risk, (non-payment of instalment and interest by the loanee),
portfolio risk.
Off Balance Sheet items: Counter party risk-Invocation of Guarantee or crystallization of
L/C liability for which dues have not been paid or denied by
the counter party.
Treasury Operations: Forward Contract obligations, Credit Derivatives etc. On due date
the party is refusing/ denying the payment/ delivery.
Security transaction: The counter party may not effect fund settlement/ security
settlement.
Counter Party Risk:When there are two or more contracts entered into and liabilities are
depending upon happening of certain events and the party on whose behalf we have taken
exposure express his inability to pay out is called counter party risk.
Portfolio Risk : is also called Credit Concentration Risk. This arises due to failure of
particular segment/activity where the bank is having substantial exposure. To mitigate
such risk there are sectoral exposure, single /group exposure ceiling, activity ceiling etc.
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Defaulter Risk there is one contract only i.e. between bank and borrower, may be due to
unwillingness or inability of the borrower.
TOOLS FOR CREDIT RISK MANAGEMENT:
Credit is considered as core business activity of banking which results into profit.
Therefore, it is necessary to increase the credit portfolio and also to mitigate the risk
relating to credit. Following are the tools available for risk assessment and monitoring:
160
each
assessment.
Forward looking - suggestions for
risk mitigation.
6. Business and Strategic risk - Business risk means current or prospective risk to
earnings and capital arising from changes in the business environment and from adverse
business decisions.
As % Of RWA (Risk
Weighted Asset)
5.50
2.50
8.00
1.50
7.00
2.00
9.00
11.50
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166
assets classification and provisioning have been further strengthened to match the
international standards
NPA DEFINITION
When any asset ceases to generate income for the bank
A non-performing asset (NPA) is defined as a credit facility in respect of which
the interest and / or instalment of principal has remained overdue or, out of
order for a specified period of time i.e. 90 days.
CLASSIFICATION OF ADVANCE
Loan
Cash Credit / Overdraft
Bills Purchased / Discounted
Other Accounts
IDENTIFICATION OF NPA
LOAN
Where interest and / or instalment of principal has remained overdue for more than 90
days, it becomes NPA
CASH CREDIT / OVERDRAFT
Where account has remained Out of order for 90 days as on date of balance sheet.
BILLS PURCHASED / DISCOUNTED
Any facility which has remained overdue and unpaid for more than 90 days
OTHER FACILITIES
If any amount receivable under the facility has remained overdue for more than 90
days.
SPECIAL PROVISION FOR AGRICULTURE
Norms applicable only after end of one crop season in respect of long duration crop
Norms applicable only after end of two crop seasons in respect of short duration crop
Does not cover activity allied to agriculture where normal norms are applicable
Advances against banks own term deposits, NSCs, IVP, KVP, Surrender value of LIC
policies
Staff loans
Provided debit balance in account is less than the market / surrender value of the
securities in all above cases.
ASSET CLASSIFICATION
STANDARD
All performing assets will be classified as Standard.
SUB-STANDARD
A sub standard asset is one, which has been classified as an NPA for a period not
exceeding 12 months
DOUBTFUL
A doubtful asset is one which has remained NPA for a period exceeding 12 months.
LOSS ASSETS
Assets which are classified as Loss by the Banks Internal/External Auditors or where
securities, personal worth etc. are practically zero or less than 10% of the
outstanding amount.
PROVISIONING NORMS:
NPA Category
Sub Standard
Doubtful:
Up to one year
One to three years
More than three
years
Loss assets
Secured portion of
loan outstanding
15%
Unsecured portion
loan outstanding
25%
25%
40%
100%
100%
100%
100%
100%
100%
of
Floating Provision: If any institution makes additional provision, over and above the level
prescribed in IRAC norms of RBI, it is termed as Floating Provision. Floating provisions
170
means, provision not against any particular account but on the entire portfolio of
advances or investments. Floating provisions can be treated as a part of the Tier II
capital within the overall ceiling of 1.25 % of the total risk weighted assets.
Alternatively it can be netted from the gross npas to reach at disclosure of Net NPAs.
Floating provisions once made can not be reversed back to Profit & Loss Account.
Provision Coverage Ratio:
Provision coverage ratio is the ratio of provisions to gross NPA and indicates the extent
of funds, a lender keeps aside to cover loan losses. It is also called as Loan Loss
Coverage Ratio, which is mandatory as per RBI to maintain at least 70% of its Gross
NPA. This ceiling has been withdrawn now.
SANKALP - 6
SALIENT FEATURES
Date of Launching: 01.10.2013 up to 31.03.2014
Scheme is incentive linked
A/cs with outstanding balance upto and inclusive of Rs.25 lac
Accounts Covered:
a. NPA accounts as on 31.03.2012 and classified as Doubtful / Loss category as on
31.03.2013.
b. PWO account outstanding as on 31 March, 2013
c. Written off accounts as on 31.03.2013
Following accounts shall not be considered under this Scheme:
Staffs Accounts
Sub Standard Accounts, if any
Accounts classified as NPA after 31.03.2013
SPECIAL POWERS FOR BRANCH HEADS IN JMG/S I & MMG/SII:
Authority
General Powers
Revised Powers* under
this scheme
Branch Managers in
Rs 0.50 Lacs
Rs 0.75 Lacs
Scale I
Branch Managers in
Rs 0.75 Lacs
Rs 1.50 Lacs
Scale II
(* For Sacrifice including write off & waiver as per recovery policy)
Norms for Risk based inspection/verification of stock & B.Ds:
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Periodicity
Half Yearly
Quarterly
Bi-Monthly
Half yearly (Jan & July)
As fixed by Consortium
Annually
On every disbursement &
thereafter once in -3- years.
On disbursement & then
annually
Once in a year and the gap
between two inspection should
not be less than 10 months
Reschedulement:
1. Under reschedulement pattern of debt repayment obligation will be changed from
EMI to ballooning or descending schedule.
2. In reschedulement no change in repayment period, no increase in our exposure, no
change in the nature of credit facility/ies, no sanction of additional /fresh limit even
within the existing exposure.
3. All Standard, Sub Standard and doubtful accounts can be considered for
reschedulement.
4. All Senior Branch Managers and Sr. Manager (Credit) can consider for a period of six
months in case of proposal falling under their powers.
5. This is to be considered by the Regional Authority after satisfying the needs for
reschedulement.
Rephasement: Rescheduling with increase in repayment period.
Restructuring:
Restructuring can be considered in following ways:
(1) Changing existing repayment period of the debt.
(2) Changing outstanding exposure of the bank
(3) Changing the nature and quantum of existing credit facilities
(4) Sanctioning of fresh credit facility or additional facility
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BIFR cases can also be considered on case to case basis after obtaining approval of
BFIR before implementation of CDR package
Reference to CDR could be triggered by (i) any or more or the secured creditors who
have minimum 20% share in either working capital or term finance or (ii) by the
concerned corporate, if supported by a bank or financial institution having stake as in (i)
above.
Legal Basis of CDR
CDR is a not statutory mechanism. it is a voluntary system based on Debtor Creditor
Agreement (DCA) and Inter Creditor Agreement (ICA)
The debtors shall have to accede to DCA, either at the time of original loan
documentation or at the time of reference to CDR Cell.
ICA would be legally binding agreement amongst the Creditors whereby creditors
would commit themselves to abide by the various elements of CDR system
If 75% of creditors by value and 60% by number agree to a restructuring package of
an existing debt the same would be binding on remaining creditors.
Revised Guidelines on Corporate Debt Restructuring
Based on the recommendations made by the Special Group constituted in September
2004 to review the corporate debt restructuring (CDR) scheme and also the feedback
received on the revised draft guidelines circulated amongst banks for comments, the
scheme has been modified as below:
The coverage of the scheme has been extended to include entities with outstanding
exposure of Rs.10 crore or more.
With a view to making, decision making more equitable, the support of 60 per cent of
creditors by number in addition to the support of 75 per cent of creditors by value,
is required.
The core group to be given the discretion in dealing with willful defaulters in cases,
other than those involving frauds or diversion of funds with malafide intentions.
Reserve Banks role limited to providing broad guidelines for CDR mechanism.
Additional finance requirement by both term lenders and working capital lenders, to
be shared on pro-rata basis.
One time settlement to be allowed as a part of the CDR mechanism to make the exit
option more flexible.
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the version of a small court set up to settle the recovery disputes of borrowers. It is a
cheap method of enforcing recovery. Lok Adalat can:
1.
2.
3.
4.
5.
Take evidence.
Call for any Public Documents from any Public office or court.
Advantages of Lok Adalats
There is no court fee involved when fresh disputes are referred to it.
It can take cognizance of any existing suit in the court as well as look into and
adjudicate upon fresh disputes.
6. If no settlement is arrived at, the parties can continue with court proceedings.
7. The decrees by Lok Adalats are as good as a decree passed by civil court and are
binding on the parties.
8. No appeal lies against the decree passed by Lok Adalats as the matters are settled
through negotiation and mutual consent of the parties.
The ceiling amount for coverage under Lok Adalat is Rs. 20 lacs. All NPA accounts, both
suit filed and others, which are in Doubtful and Loss category, can be included for
reference to the Lok Adalats. Cases pertaining to Non-compoundable offence / offences
are not taken up by Lok Adalat.
176
the one year period is not evidenced, the asset classification of the restructured
account would be governed as per the applicable prudential norms with reference to the
pre-restructuring payment schedule.
STAND STILL CLAUSE .
This is a legally binding agreement under CDR mechanism wherein both the party Debtor
and Creditor agreed not to initiate legal action during the stand still period as agreed
between them may be 90 days or 180 days.
Further during this stand still period borrower agrees that validity of the document will
stand extended for the said stand still period.
He also undertake that he will not resign from the directorship of the company and will
not approach to any other authority for relief concession etc.
Cut Back Arrangement
1. A borrowers account may have become NPA due to un-serviced interest, L.C.
devolvement, excess allowed to meet statutory dues, wages, insurance premium etc.
Or reduction in drawing power. Any credit coming into the account will be
appropriated completely towards the over-dues.
2. The borrower under such circumstances opens a current account with another bank
and routes all sales proceeds through that account. As a consequence the bank not
only fails to recover its legitimate dues but also faces the problem of erosion of
security. Under this circumstance, the bank can consider allowing operations, on
merits, till a revival package is prepared and sanctioned or an acceptable
compromise proposal is submitted by the borrower, upto sanctioned amount or
outstanding with a suitable cut-back, say, ranging from 5 to 10% (or more) of the
credits in the account to reduce/wipe-out the excess/overdues in the account.
3. All Regional Managers can consider allowing operations in the account upto
sanctioned limit or the outstanding with suitable cut back arrangement which would
eventually lead to reduction in the outstanding in the account.
Hand Holding:
Under hand holding operations the small units will be permitted to draw funds from
their cash credit account upto the amount equal to the amount of sale proceeds
deposited in the account. This will facilitate the smooth running of the business.
Once the implementation of rehabilitation package is finalized during the first six
months such hand holding operations are stiupulated/permitted.
178
Right of Recompense:
1. This is the Right available to the creditor to recover the amount of interest and
installment sacrificed while accepting a rehabilitation proposal after the unit has
been revived fully.
2. This is only a Right and it is left to the option of the individual Banks/Financial
Institutions etc. Whether to exercise this right or not. However, branches should
incorporate this clause in the package and in case of any difficulty refer the
matter to Corporate Centre.
Appropriation of recovery in NPA accounts
Non suitfiled NPA accounts:
(1) Principal (2) Un applied interest
Suit filed NPA accounts:
After crediting amount lying in SFSD account (1) Principal (2) Un applied interest
NPA where suit is decreed:
(1) Cost of recovery as per decree order (2) accrued interest and (3) principal
amount.
179
Manpower
Training and development
Incentives to staff
Talent management and
Performance management.
Bank has recently launched a Career Portal in the public domain of internet
(www.bankofbaroda.com, ; career) with an objective to make the new generation people
acquainted about the place of our bank in the market, competitive advantage of the bank from
the angle of business growth as well as career opportunities. It will also attract the new
generation people to be associated with our bank.
Career Path Policy
Bank has recently come out with a detailed guidelines for the areer progression of the
officers with following objectives:
Relevant exposure to be provided to the officers for their all round grooming
Required exposures to meet the promotion guidelines
Adequate opportunities for career progression
HR Audit
HR Audit is a structured mechanism to review the compliance of various service
rules/ regulations governing Human resources in various grade/ scales. It also
monitors compliance of statutory labour Law requirements. Moreover, verification/
scrutiny of sundry charges & P/L expenses ensures stoppage of misutilisation of
funds. HR Audit also enforces discipline and punctuality at the Branch/ Office
level.
An HR audit is like an annual health check-up. It plays a vital role in instilling a
sense of confidence in management of Human Resources related issues in the Bank.
HR Audit is a cost-effective way to reduce risk of liability and realize potential
cost savings incurred in misinterpretation of rules/ regulations.
PASAS
In light of our objective of moving towards Total Performance, we need to set in
place an efficient performance appraisal system for all Award Staff. Accordingly,
a Performance Appraisal System for Award Staff has been formulated and
introduced.
Objectives for introducing PASAS are as under:
To promote a performance oriented culture
To identify good performers.
To identify Talent amongst employees
To improve upon strengths and areas of improvement
To identify Training Needs of employees
To match job roles of employees with aptitude of individuals during Job
Rotation exercise
To identify employees for proper placements
Effective utilisation of aptitude and potential.
181
free of charge, for resolving their psychological problems / worries which may be
disturbing their personal life.
Initially services are available to all employees of BCC, Mumbai and to all employees
of all other branches and offices in Mumbai.
HRnes
Bank of Baroda is a pioneer in the banking industry in establishing professional HR
systems and effectively harnessing it to the advantage of the organization as well as its
people. "hrnes" covers the entire gamut of human resources management function in the
Bank currently being performed and also includes many new sub-functions.
Objectives of HRNes
To put a cost effective and time saving (through leveraging of technology) system by
creating a Central Database which widely facilitates decision making related to almost
all major HR areas
To automate manual HR Processes like Roster, Pay Fixation, Seniority, Calculation of
salary, PF and loan deductions.
To overcome limitations of Manual System.
To facilitate Uniform application of rules.
Plugging Revenue Leakage.
To provide functionality of self Service.
To facilitate online applications for request transfer, grievance redressal, promotions,
selection, asset liability statement, income tax declaration, overseas assignment, faculty
selection etc.
To monitor HR processes through alerts.
The system comprises of four broad modules encompassing different functions:
Oracle Core HR module, covering all current HR processes in the Bank from Recruitment
to Retirement;
Fluous Payroll module, covering Salary, payments of various benefits, perks, welfare
schemes, terminal benefits, leave, Loans etc.
Oracle Learning Management module which includes training administration & e-learning
Employee Self-Service Module
It is a centralized web-enabled package with global data, at central server; Utilization
of single database for integrated decision making; The Central core of HR data would
bring data authenticity, real time information flow and would remove data multiplicity /
duplication and would ultimately improve quality of HR administration for business and
HR people.
183
Three authorities are there in this system- Reporting, Reviewing & Accepting
Authority.
Reporting Authority should be minimum one Scale higher than the Appraisee &
Reviewing Authority should be minimum one Scale higher than the Reporting
Authority. Accepting authority should be one grade above the reviewing Authority
184
ELIGIBILITY:
All individuals singly or jointly
Principal applicant must be employed minimum for three (03) years.
Minimum Age Principal Borrower 21 yrs and Co-borrower - 18 yrs
Maximum age:
Salaried Persons:
(i)
Maximum age is 70 years. i.e., the age by which the Loan should be fully repaid,
subject to availability of sufficient regular and continuous source of income for
servicing the loan repayment, Provided Son/ Daughter/ Spouse who is a legal heir and
preferably below 50 years of age, with sufficient income for servicing the loan
repayment joins as coborrower/Guarantor
(OR)
(ii)
if borrower pledges FDRs / NSCs / Govt. Security etc. of adequate value to ensure
Continuity of income for repayment of loan installment with interest if sanctioning
authority is satisfied about the same
If not fulfilling the above criteria (i) or (ii), age of the borrower plus repayment period should
not be beyond retirement age.
c) Maximum age can be considered upto 70 years, also in case of salaried persons drawing
pension, subject to the condition that 40% of the pension is sufficient to pay EMI. In case EMI
exceeds
40% of the pension, the borrower to deposit adequate amount in the loan account so as to
reduce the outstanding amount of loan to the extent it can be serviced by 40% of the pension.
185
LIMIT:
Maximum Amount of Loan
Rs. 300/- Lacs for Urban & Metro branches
Rs. 100/- Lacs for Rural & Semi-Urban branches
For extension: Rs 10/- Lacs.
Total amount of the loan sanctioned including that for extension should not Exceed Rs
300/- Lacs for Urban & Metro branches and Rs100/- Lacs for Rural & Semi-Urban
branches.
INCOME CRITERIA:
SOURCE
INCOME
Up to Rs. 20,000/=
Salaried
More than Rs. 20,000/
and up to Rs. 1 lac
More than Rs. 1 lac
Other than Salaried Persons
CRITERIA
36 times of monthly gross income
48 times of monthly gross income
54 times of monthly gross income
5 times of average ( last 3 years ) annual
income (Depreciation to be considered for
computing eligibility subject to certain
conditions )
REPAYING CAPACITY:
(i)
In case of Others :
Annual Income
60%
MARGIN:
Loan Amount
Up to
Rs. 20 Lac
Above Rs 20 Lac up to
Rs 75 Lac
Above Rs 75 Lac
Purpose
Purchase of Plot
House / Flat already constructed
from own resources
All other cases
Purchase of Plot
House / Flat already constructed
from own resources
All other cases
Purchase of Plot
House / Flat already constructed
from own resources
All other cases
Margin
10%
10%
10%
20%
20%
20%
25%
25%
25%
187
REPAYMENT:
Maximum repayment period is -30- years, including moratorium period
Maximum moratorium shall be -36- months as under:
18- months moratorium period for under construction Houses and Building upto 7th floor,
thereafter -6- months additional moratorium per floor subject to maximum of -36months
Or
One month after completion of house/ taking possession of flat/house, whichever is earlier.
RISK RATING:
All Home Loan applications are subject to Risk rating. Credit rating to be done as per Home Loan Model
under Retail Rating Models. Total marks are 168 and the cutoff is set at 96 (Investment Grade HL-8)
Maximum age is increased to 70 years i.e. the age by which the Home Loan should be fully
repaid, subject to availability of sufficient regular and continuous source of income for
servicing the loan repayment, provided Son /Daughter /Spouse who is a legal heir and
preferably below 50 years of age, with sufficient income for servicing the loan repayment
joins as Co- Borrower/Guarantor.
188
ELIGIBILITY:
Non Resident Indians (NRIs) holding Indian passport or Persons of Indian origin (PIOs)
holding foreign passport, singly or jointly.
For this purpose person of Indian Origin means an individual ( not being a citizen of
Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or
Bhutan ) if
AGE:
Minimum age must be 21 years. However, the minimum age of co-borrower can be 18
years.
Age of the borrower plus repayment period should not be beyond retirement age or 65
years whichever is earlier.
189
For determining total cost of the house, the cost of car parking place / area located in
the same building / compound / society can be considered. However, it should be noted
that such car parking area should be specific, identifiable and incorporated in the sale
agreement / allotment letter.
PARTICULARS
MINIMUM MAXIMUM
Rs. 5 lacs
Rs. 1 lac
Rs. 25 lacs
Rs. 50 lacs
INCOME CRITERIA:
SOURCE
INCOME
Up to Rs. 20,000/=
Salaried
More than Rs. 20,000/=
and up to Rs. 1 lac
More than Rs. 1 lac
Other than Salaried Persons
CRITERIA
36 times of monthly gross income
48 times of monthly gross income
54 times of monthly gross income
4 times of average ( last 2 years ) annual
income
190
191
Eligibility
All Existing Home Loan Borrowers including NRIs /PIOs, Staff and
Ex-staff Members (availed home loan under public scheme as well as
Staff Housing Loans) whose conduct of the account is good and the
account is classified Standard
There is no adverse feature / Auditor's/Inspecting Officer's
remarks in existing Housing Loan a/c
The facility can also be considered when an account is taken over
from other banks/HFCs
Minimum Rs 1/- Lac
Maximum Rs 200/- Lacs
Or
75% of Residual Value of House Property after deducting 150% of
outstanding loan amount of Existing Home Loan whichever is lower.
25% of Residual Value of House Property after deducting 150% of
outstanding loan amount of Existing Home Loan
As per request of the borrower subject to repayment capacity. However the
maximum period should not be more than the remaining period of Home Loan
Age of borrower + tenure of AAA Loan should not exceed 70 years, in
synchronizing with Home Loan.
1.50% over Base Rate i.e. 11.75% at present with monthly rests.
Loan Limit
Margin
Repayment
Period
Maximum age
Rate of
Interest
192
Eligibility
Age
Maximum Loan
Limit
For purchase of New Car / Old Car (not more than 3 Years) for
private use.
For Installation of CNG/LPG Gas kit in four wheelers (New vehicle/
old vehicle not more than 5 years) and owned by individuals
Take over of existing Car Loans from other Banks.
For purchase of Two wheeler
Salaried Employees
Businessmen, Professionals, Farmers,
Directors of Private/Public Ltd Co.
Proprietors of firms, Partners of partnership firms
High Networth Individuals (HNIs): Individuals with minimum salary of
Rs 1.25 Lacs per month and carry home salary should be at least 40%
(inclusive of proposed deductions) OR with annual income of Rs15/Lacs in case of business persons/farmers
Corporates with minimum Tangible Networth of atleast 10 times of
the Loan requested.
Minimum : 21 Years
Maximum :
a) Salaried Persons Present Age plus Repayment period should not exceed
retirement age
b) Others Present age plus repayment period should not exceed 65 years
For HNIs/ Corporates : Rs 100 Lacs
For Others:
For New Vehicle : Rs 15.00 Lac
For Old vehicle : Rs 10.00 Lac
For Eco friendly Gas Kit : Rs 0.25 lac
Subject to:
24 times of gross monthly income for salaried persons
3 times of gross annual income (average of last 2 years) for others
Margin
Maximum age
Gas Kit :
15%
Two wheeler : 10% on invoice value
Income Level (For all segment
Total deduction not to exceed
of
people)
Up to Rs20,000/- p.m.
50% of Gross Monthly Income
> Rs 20,000/- and up to
Rs 1,00,000/>Rs1,00,000/-
Rate of
Interest
Repayment
194
BARODA EDUCATION LOAN The additional concession 1% in interest for servicing interest debited during repayment
holiday for Loans sanctioned till 30.09.2013. (Not available to new Loans sanctioned
w.e.f 01.10.2013)
0.50 % (w.e.f. 01.10.2013) Concession in rate of interest to loans sanctioned for the
benefit of girl students. (prior to 01.10.2013 concession was 1.00%)
Coverage of
expenses for
Maximum Loan
Limit
Margin
Rate of
Interest
Repayment
Period
Security
Classification
of Advances
Discretionary
Lending Power
Coverage of
expenses for
Maximum Loan
Limit
Margin
196
Rate of
Interest
Moratorium
period
Repayment
Period
Security
Classification
of Advances
Discretionary
Lending Power
197
Eligibility
Coverage of
expenses for
Maximum Loan
Limit
Margin
Rate of
Interest
Moratorium
period
Repayment
Period
Up to Rs 4 Lac NIL
Above Rs 4 Lac 15%
Upto Rs.7.50 lacs : Base Rate + 2.50 %
Above Rs.7.50 Lacs : Base Rate + 1.75 %
0.50 % (w.e.f. 01.10.2013) Concession in rate of interest to loans
sanctioned for the benefit of girl students.
(prior to 01.10.2013 concession was 1.00%)
The additional concession 1% in interest for servicing interest debited
during repayment holiday for Loans sanctioned till 30.09.2013. (Not
available to new Loans sanctioned w.e.f. 01.10.2013)
Course period + 1 year, or 6 months after getting job, whichever is earlier.
The loan is repayable in maximum 10 15 years after the above period as
under:
For loans upto Rs.7.50 lac : Maximum -120- installments
For Loans above Rs.7.50 lac : Maximum -180- installments
If the student is not able to complete the course within the scheduled
time, extension of time for completion of course may be permitted for a
maximum period of 2 years. If the student is not able to complete the
198
Security
Classification
of Advances
Discretionary
Lending Power
Freebies
course for reasons beyond his control, sanctioning authority may at his
discretion consider such extensions as may be deemed necessary to
complete the course.
In case of above extention, moratorium period will stand extended
accordingly.
Up to Rs. 4.00 Lacs: Co-obligation of parent. No Security.
Above Rs. 4.00 Lacs and up to Rs. 7.50 lacs:
Collateral in the form of a suitable third party guarantee along with
assignment of future income.
Above Rs.7.5 lacs :
Tangible collateral security equal to 100% of the loan amount along with
assignment of future income of the student for payment of installments.
Priority Sector (Upto Rs. 10.00 Lacs for study in india & Rs.20/-lac for study
abroad)
For Loans upto Rs.7.50 Lacs, where no tangible securities are available, DLPs
of Clean advance
Drafts in foreign currencies drawn on our branches / subsidiaries required in
favour of college/University /Student will be issued free of exchange /
commission.
199
Eligibility
Limit
Margin
immovable property.
If the property is purchased within last three years, the registered
value to be accepted as the market value.
10% on Banks own FDRs.
15% on the surrender value of Life Insurance Policies, NSCs,
Government Bonds etc.
Base Rate + 3.00%
Rate of
Interest
Period
Repayment
Commitment
charge
Security
0.50% p.a. for utilization of limits below 75% (on quarterly average Basis) of
sanctioned limit in case the Limit sanctioned is Rs.500 lacs and above
Tangible collateral securities in the form of mortgage of land (not
agricultural land) and building.
Property to be mortgaged to be ONLY in the name of Borrower,
Proprietor, Partner, Director or their close relatives.
Property standing in the name of third party can also be accepted,
provided:
a) Owner of property offers personal guarantee, and
b) The credit facility is for Rs. 1 lac and above.
Fresh advance can be granted only to the applicants securing minimum
credit rating of BTL-6 under the new Credit Rating Model applicable
for limits upto Rs.200 lacs hosted on LAPS.
Facilities of more than Rs.200 lacs shall be rated on BOBRAM.
The operating units may take over good quality accounts from other Banks
subject to complying with non-financial norms laid down in Domestic Loan
Policy.
Credit Rating
Take over
Norms
Other
Provisions
201
202
Eligibility
Age
Type of Facility
Limit
Income Criteria
203
co-borrower.)
Rate of
Interest
Margin
Personal
Guarantee
Repayment
Period
Valuation of
Property
Lending Powers
Activity
Clearance
In case of Overdrafts:
Minimum annual turnover in the account should be at least 25% of the
limit.
Wherever it is observed at the time of review that stipulation of
annual turnover is not complied with, the limit should be reduced
annually as under:
Maximum period of overdraft: 10 years.
Reduction in operative limit proportionately by end of each year,
synchronizing with review of the account.
Alternatively it may be explored the possibility of converting the
overdraft facility into term loan and fix EMI for recovery of the
balance amount.
In case of properties acquired within last -3- years, amount of registered
sale deed should be taken as value of property.
(In such cases fresh valuation may be dispensed with if the sanctioning
authority is satisfied with registered value).
Sanctioning authorities upto Grade/Scale III are authorized to
sanction Facilities upto Rs. 25.00 Lacs only.
Sanctioning authorities in Grade/Scale IV and above are authorized
to exercise their normal DLPs for sanction.
Activity Clearance for Sanctions under this product is required to be
obtained from Regional Heads for facilities upto Rs.3 Crores and for
facilities beyond Rs.3 Crores Zonal Heads are authorized to grant
Activity clearance.
Retail Loan Factories have been kept out of purview of activity
clearance.
204
Account
Relationship
Age
CHECK OFF
(Stipulations
for Category A
& Category B)
Minimum Net
Monthly
Income
(NMI)
Loan Amount
Rate of
Interest
Repayment
Period
Credit Rating
For Category- B:
Base Rate + 4.00%
i.e, 14.25% at present
Maximum -84- months in Equated Monthly Installments
Clean Loan Model should be used. Cut off score is 30 and Investment
Grade is CL7 & above.
207
Eligible Amount
Margin
Repayment
Loan to consumer
5 times of GMI
Durable/PC/Laptop or Max Rs 1 Lac
Which ever is
lower
Personal Loan
6 times of
GMI Max Rs 2
Lac
Pension Loan
10 times of
(Civil)
monthly pension
Max Rs 1 Lac
Defence Pensioner 20 times of
monthly
pension; Max
Rs 2 Lac
whichever is
lower
Loan to Doctors
Min Rs 50,000
Max: R/SU Rs
15 lac
(of which
working capital
Rs 1 Lac)
U/Metro Rs 50
Lac
(of which
working capital
Rs 3 Lac)
For Consumer
Durable 10%
For PC/Laptop
25%
60 EMI
Base Rate +
4.50%
36 EMI
Base Rate +
4.50%
36 EMI
Base Rate +
4.50%
60 EMI
Base Rate +
4.50%
Upto Rs 5 Lac
25%
Above Rs 5 Lac
15% of cost of
project
Working capital Nil
Loan 60
EMI
Up to Rs 2
Lac
BR + 3.00%
Above Rs 2
Lac
BR + 2.50%
Baroda Ashray
(For Senior
citizens, Age 60
yrs. Joint
borrower spouse
not below 55 yrs
20% on Present
market value
Base Rate +
1.75%
Loan Against
60% of rent
15 Years.
May be
extended
till survival
of
borrowers.
Life
expectancy
taken as 80
yrs
EMI, for
Base Rate +
208
Future Rent
receivable
(Non Commercial
real Estate)
Loan Against
Future Rent
receivable
( Commercial real
Estate)
due(Net of
TDS, advance
rent, SD) &
receivable
subject to min
Rs 25 lac
For Landlord
of Bank of
Baroda
Premises: No
Min Limit
Max Rs 200 Cr
(Single)
Rs 250 cr
(group)
CRE- 55% of
rent (net of
TDS, advance
rent, security
deposit), due
and receivable,
for the
unexpired
certain period
of lease and
uncertain
period of lease
(optional
period)
Max Rs 200 Cr
(Single)
Rs 250 cr
(group)
Max 10 yrs
or
unexpired
certain of
lease
period,
which ever
is less
3.25 %
209