CORPORATION BANK

BEST PRACTICES CODE [BPC]

(Updated till 31.12.2009)

CORPORATION BANK
ORGANISATION & METHODS DIVISION HO-MANGALORE

CORPORATION BANK
BEST PRACTICES CODE CONTENTS 1.0 DEPOSITS Point no. Particulars 1.1 Account Opening-Customer Identification 1.1.1 Identification 1.1.2 Introduction 1.1.3 Documents for introduction 1.1.4 Identification of Customers other than Individuals 1.1.5. Limited Companies 1.1.6 Society/Clubs/Associations 1.1.7 Hindu Undivided Family (HUF) 1.1.8 Trusts 1.1.9 Partnership Firms 1.1.10 Letter of thanks 1.1.11 Interview of the prospective Customer 1.1.12 Interview of the introducer 1.1.13 Address Verification 1.1.14 Obtention of photographs of the prospective Account holder 1.1.15 Opening of NRI Account 1.1.16 Customer Profile 1.1.17 Flagging of the New Account 1.1.18 Conduct of New Accounts 1.2 Servicing of Deposit Accounts 1.2.1 Specimen Signatures 1.2.2 Cheque Book Issue 1.2.3 Non-Cheque Book SB Account 1.2.4 Pass Book 1.2.5 Statement of Account/Pass Book/Duplicate Pass Book 1.2.6 Payment of Cheque 1.2.7 High Value Transactions 1.2.8 Debit only through cheques 1.2.9 Change of address 1.2.10 Stop-Payment of cheque 1.2.11 Withdrawal in the account of illiterates 1.2.12 Issue of token 1.2.13 Cheques received for deposit 1.2.14 Collection of Cheques/Bills

1.3 1.3.1 1.3.2 1.4 1.4.1 1.4.2 1.5 1.5.1 1.6 1.6.1 1.7 1.7.1 1.8 1.8.1 1.8.2 1.9 1.10

Transfer of Accounts Verification of identity and address by the transferee Branch Opening of transferred account Closure of Accounts In person Deceased constituent's accounts Duplicate Receipt Issue of duplicate receipts Standing Instructions Credit to third parties Inoperative Accounts Operations and Closure Overdue Deposits Review of overdue deposits Minimum period of renewal Staff Accounts Nomination

2.0 CREDIT MANAGEMENT 2.1 2.1.1 2.1.2 2.1.3 2.1.4 2.1.5 2.1.6 2.1.7 2.1.8 2.1.9 2.1.10 2.1.11 2.1.12 2.1.13 2.1.14 2.1.15 2.1.16 2.1.17 2.1.18 2.1.19 2.1.20 2.1.21 2.1.22 2.1.23 2.1.24 General instructions Application form and check-list of documents Preliminary scrutiny of loan application Confidential Opinion Due Diligence Concurrent borrowings Information on Group/ Associate concerns List of defaulters Margin Borrowing Power Rejection of application Registrar of Companies (ROC) Search Valuation of property & obtention of EC Land and other immovable properties as collateral Appraisal Pre-sanction Inspection Seeking Clearance for Sanction Grid Mechanism Control Return Credit Sanction intimation Documentation Legal Audit Pricing & Rating rationale Compliance of sanction terms End Use of Funds 3

2.1.25 2.1.26 2.1.27 2.1.28 2.1.29 2.1.30 2.1.31 2.1.32 2.1.33 2.1.34 2.1.35 2.1.36 2.1.37 2.1.38 2.1.39 2.2 2.2.1 2.2.2 2.2.3 2.2.4 2.2.5 2.2.6 2.2.7 2.2.8 2.2.9 2.2.10 2.2.11 2.2.12 2.2.13 2.3 2.3.1 2.3.2 2.3.3 2.3.4 2.3.5 2.3.6 2.3.7 2.3.8 2.3.9 2.3.10 2.3.11 2.3.12 2.3.13 2.3.14

Term Loan disbursement Periodical verification of assets Insurance of assets Periodical Statements Interest & Service Charges Scrutiny of the account Irregularity in accounts Stock Statement Unit inspection Follow up Review/Renewal Revival of documents Stressed Assets Recall of loan Recovery of loan Bank Guarantees Eligibility Non-customers Precautions Advance Payment Guarantee Deferred Payment Guarantee (DPG) Guarantee not to be issued Margin Security IBA format Security Features Counter Guarantee Safety Measures Cancellation before expiry Letter of Credit Basis for issuing a Letter of Credit (LC) Rules relating to opening and operating LCs. Legal provisions Basic aspects to be observed while opening LCs. Exchange/Trade Control aspects Documents Advising Bank Confirming Bank Negotiating Bank Devolvement of LC Crystallization of Bills Amendment Rules Precautions Letter of Credit (Beneficiary)

2.4 2.4.1 2.4.2 2.4.3 2.4.4 2.4.5

Priority Sector Application received cum disposal register Collateral Security Achievement of targets Photo Identity Card Genuineness of borrowers

3.0 RETAIL LENDING 3.1 Corp Schemes 3.1.1 Declarations 3.1.2 Product Innovation 3.1.3 Loan information 3.1.4 Loan application 3.1.5 Interest Rates 3.1.6 Loan charges 3.1.7 Sanctioning Terms 3.1.8 Documentation 3.1.9 Operation in accounts 3.1.10 Information Secrecy 3.1.11 Grievance Redressal 4.0 FINANCIAL MANAGEMENT 4.1 4.1.1 4.1.2 4.1.3 4.1.4 4.1.5 4.1.6 4.1.7 4.1.8 4.1.9 4.1.10 4.1.11 4.1.12 4.1.13 4.1.14 4.1.15 4.2 4.2.1 4.2.2 4.2.3 4.2.4 4.2.5 Cash Department Strong Room Keys Custody of Currency Notes Procedure Mutilated Notes Forged Notes Bank Cash Balance Shortage/e/Excess Cash Intra-day verification Cash verification Rotation of Duties Clean Note Policy Cash Retention Limit and insurance cover Remittance of Cash and valuables Cash in transit and its insurance House Keeping Suspense account Sundry Deposit account Inter-branch Reconciliation Tax Payments Local Bank Accounts 5

5.0 5.1 5.1.1 5.1.2 5.1.3 5.1.4 5.1.5 5.1.6 5.1.7 5.1.8 5.1.9 5.1.10 5.2 5.2.1 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.10.1 5.10.2 5.10.3 5.11 5.11.1 5.11.2 5.11.3

INFORMATION TECHNOLOGY Core Banking User Access User Types User Creation Access Control Maker-Checker Change of Password Exceptional Report End of Day (EOD) Back up of data Information Security Internet Banking Precautions Shopping online Off-line Transactions Cyber Caf Security Password Mobile Banking-Usage ATM/Debit Card Using Credit Card Procurement Guidelines Procedures Reporting Disposal Guidelines Procedures Reporting

6.0 RECOVERY 6.1 6.2 6.2.1 6.2.2 6.3 6.4 6.5 Broad Objectives Methods of Recovery Legal Action Other measures Compromise Settlement Policy Sale of NPAs to Banks/FIs and ARCs Training

7.0 BRANCH EXPANSION & SUPPORT SERVICES

7.1 Consideration for selecting the centres 7.1.1 Potential for CASA 7.1.2 IT/BT Centres 7.1.3 Identified SEZ/S M E Zones 7.1.4 Agriculture lending 7.1.5 Minority dominated Districts 7.1.6 Under-banked centres 7.1.7 Top 200 Centres 7.1.8 Geographical spread 7.2 Steps to be taken to ensure good customer service 7.2.1 Core Banking 7.2.2 Technology Products 7.2.3 Staff and Stationery 7.2.4 Customer Information materials 7.2.5 Standard Ambience 7.2.6 Publicity 7.3 Branch Authorisation 7.3.1 Opening of new branches / ATM/ CPC etc. 7.3.2 Shifting, Merger, Conversion etc. 7.4 Strong Room 7.4.1 Visibility 7.4.2 Specification 7.4.3 Maintenance 7.5 Safe Deposit Lockers 7.5.1 Identification 7.5.2 Security Deposit 7.5.3 Access and operations of the locker 7.5.4 Change of lock 7.5.5 Locker Keys 7.5.6 Checking of operated lockers 7.5.7 Recovery of rent 7.6 Procurement 7.6.1 Guidelines 7.6.2 Procedures 7.6.3 Reporting 7.7 Compliance 7.7.1 Instructions/Directions received from Govt/RBI 7.7.2 Reporting 7.8 Safe Custody of Security Forms 7.8.1 Receipt/verification of security Forms 7.8.2 Stock of Security Forms 7.8.3 Joint custody of forms 7.8.4 Bank Guarantee and LC forms 7.9 Disposal of Assets 7.9.1 Methods

8.0 COLLECTIONS & PAYMENT SERVICES (CAPS) 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 FCS Operations by operating Branches CCS Operations Payment Products Courier arrangement Marketing Research & Development Management Information System (MIS) I T related matters

9.0 GOVERNMENT BUSINESS 9.1 9.1 9.2 9.3 9.4 10 10.1 10.2 10.3 Government business Type of business Receipts Pension Payments Reporting of Transactions BANCASSURANCE Life Insurance Business and Bancassurance product sales General Insurance Mutual Funds

11. CORPORATE COMMUNICATION, PUBLICITY AND PUBLIC RELATIONS 11.1 11.2 11.3 11.4 11.5 11.6 11.7 Outdoor publicity (ODP) Public Relations (PR) Specialty Advertisement (SPADV) Print & Electronic Media (PEM) Centenary Village Library project of setting up of 100 Rural libraries Corp Compassion Scheme Corp Bank Gold Medal Scheme

12. INSPECTION & AUDIT 12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 Audit Policy Purpose Budget/Plan Coverage Process Rectification Procedure at Controlling Offices Scanning & Rating 8

12.9 12.10

Audit by External Agencies Training

13. CREDIT CARD 13.1 13.2 13.3 13.4 Commitments Confidentiality Recovery of Dues Redressal of Grievances

14. MARKETING 14.1 14.2 14.3 Information on products Communication Financial products/Services

15. PERSONNEL ADMINISTRATION & HUMAN RESOURCES MANAGEMENT 15.1 15.1.1 15.2 15.2.1 15.2.2 15.2.3 Personnel Administration Rotation of Duties Human Resources Management Recruitment Policy People Engagement Policy Motivational Schemes

16. INVESTMENT & INTERNATIONAL BANKING 16.1 Foreign Exchange Transactions 16.1.1 Deposits 16.1.2 FCDL/FCTL/PCFC/EBR loans 16.1.3 Pre/Post shipment credits 16.1.4 Sale of Foreign Currency 16.1.5 Clean Remittance 16.1.6 Import Bills 16.1.7 Traveler's Cheque (TC) and Foreign Currency Notes (FCN) 16.1.8 Export Bills 16.1.9 Forward Contracts 16.1.10 Import Letters of Credit 16.1.11 Crystallization of Bills (Import) 16.1.12 SWIFT 16.2 Treasury Operations-Foreign Exchange 16.2.1 Functional Separation 16.2.2 Place of Dealing 16.2.3 Characteristics required in the Dealers 16.2.4 Training of Dealers 16.2.5 Trading Deals 9

16.2.6 Overnight and Daylight limits 16.2.7 Functions of Mid-Office 16.2.8 Managing Risks 16.2.9 Documentation to reduce Legal Risks 16.2.10 Recording of Deals 16.2.11 Stop-Loss Limits 16.2.12 Strict Confidentiality 16.2.13 Other duties of the Dealer 16.2.14 Compulsory Leave 16.2.15 Code of Conduct for Dealers 16.2.16 Concurrent Audits and Statutory Audits 16.2.17 Written Contingency Plans 16.2.18 Strict Compliance with RBI guidelines 16.3 Treasury Operations-Rupees 16.3.1 Investments 16.3.2 Functional Separation 16.3.3 Place of Dealing 16.3.4 Mid-Office 16.3.5 Regulations 16.3.6 Targeted Returns 16.3.7 Documentation to reduce Legal Risks 16.3.8 Recording of Deals 16.3.9 Concurrent Audits and Statutory Audits 16.3.10 Cut-Loss levels 16.3.11 Overshooting of limits 16.3.12 Contingency Plans 16.3.13 Sub-Limits for Brokers 16.3.14 Strict Confidentiality 16.4 Policy for Trading in Central Government Securities 16.4.1 Risk Management Systems 16.4.2 Ceiling for Risk positions 16.4.3 Risk control & Risk Management 16.4.4 Counter party limits 16.4.5 Mid-office functions and monitoring 16.4.6 Defeasance Period 16.5 Equity Investment 16.5.1 Equity Investments and total outstanding positions 16.6 Policy on Derivatives 16.6.1 Derivatives 16.6.2 Cut-Loss levels 16.6.3 Know Your Customer 16.6.4 Notional Amounts 16.6.5 Policy for Hedging 16.6.6 Contracting parties and counter party limits 16.6.7 Risk Disclosure statement 16.7 Prudential guidelines on Bank's investment in Non-SLR securities 16.7.1 Non-SLR Securities 10

16.7.2 Market Repos with counter parties other than RBI 16.8 Policy for dealing in assigned/securitized assets 16.8.1 Assigned/Securitized Assets 16.8.2 Credit Rating 16.8.3 Compliance Officer 16.8.4 Confidentiality 16.8.5 Unpublished price sensitive information 16.9 Code for Corporate Disclosure Practices 16.9.1 Prompt Disclosure of price sensitive information 16.9.2 Information released to stock exchanges 16.9.3 Compliance Officer 16.9.4 Investment Policy 16.9.5 Parameters set by ALCO 16.9.6 Statutory prescriptions

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1. DEPOSITS
1.1 Account Opening -Customer Identification-Know Your Customer (KYC) Norms 1.1.1 Identification Identity of the prospective customer should be ascertained to the full satisfaction of the Bank Official competent to authorize opening of the Account. As a matter of Rule, the prospective customer should be introduced by an existing customer of the Bank with a satisfactory track record for the last six months. Alternatively, where the customer is unable to provide introduction but is able to tender Officially Valid Documents for identification & address proof, the Branch Head can permit opening of SB account after complying with the guidelines stipulated for opening of SB accounts based on selfintroduction. 1. Identity Proof : Passport, Voters ID Card, PAN Card, Driving Licence, ID Card issued by Govt/Defence Authorities, reputed employers. 2. Address Proof : Telephone Bill [Landline/Mobile-Postpaid], Electricity Bill, Gas Refill Bills, Credit Card Statement [maximum 2 months old], copy of a current & valid Rent/Lease agreement. For dependents [spouse, children, parents, brothers/sisters, et al], any one document under [1] plus any one document under [2] of the person with whom they claim joint living, along with a declaration by the person confirming their stay with him/her.

1.1.2

Introduction

1.1.3

Documents for introduction

The photocopies of the above documents must be invariably verified against the originals or the copies tendered must be certified ones. 1.1.4 Identification of customers other than Individuals 1.1.5 Limited Documents Required : Companies Certificate of Incorporation Memorandum & Articles of Association Certificate of Commencement of Business [in case of Public Limited Cos.] Copy of the certified Board Resolution authorizing to open the Bank Account and naming the authorized signatories. 1.1.6 Associations/S Copy of the Bye Laws; ociety/Clubs Copy of the Registration Certificate, if registered; Copy of the Resolution authorizing opening of the Bank Account, mode of operation, authorized signatories, etc. In case of Co-Op Societies, Certificate of Approval issued by the Registrar of Co-op Societies List of authorized signatories to be updated annually.

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1.1.7

HUF

1.1.8

Trusts

1.1.9
1.1.10

Partnership Firms Letter of Thanks

1.1.11

1.1.12

Interview of the prospective Customer Interview of the Introducer

1.1.13

Address Verification

1.1.14

1.1.15

Obtention of Photographs of the Prospective Account holder Opening of NRI Account

Account Opening Form to be signed by the Karta and all Adult Co-Parceners and wives of deceased Co-Parceners. Joint Hindu Family Letter ID 303 Certified Copy of the Trust Deed, Original Certificate of Registration under the Public Trusts Act and the up to date list of Trustees [to be updated every year] Partnership Letter, Partnership Deed; and with proper Introduction By way of due diligence, the Welcome Kit containing any or all of the following to be sent to the residence address furnished by the account holder Pass Book, Cheque Book, Welcome Letter, Debit Card, Internet Pin, etc] AND a thanksgiving letter to the introducer. If either of the communication is returned UNDELIVERED, the matter needs to be pursued thoroughly. The prospective Customer ought to be interviewed thoroughly without haste by the Branch Head/In Charge or the Officer In Charge, to ascertain the reasons to open an account, background, source of funds, etc. Wherever possible and whenever the introducer comes in person, he should be interviewed to ascertain his/her association with the person he/she is trying to introduce, his/her knowledge about the whereabouts and the financial position of the person he/she is introducing, since how long he/she knows him/her, responsibilities of introduction, etc need to be explained to him/her. Branches should obtain independent confirmation of the account holder in all cases by personal visits/by writing to the address provided in the account opening form and through Due Diligence Agency to a limited extent [Current Accounts]. For all accounts, two passport size photographs of each of the account holders who are authorized to operate the account should be obtained exception: Local Bodies/Authorities & Government Departments.

1.1.16

Customer Profile

The specified Account Opening Form is exhaustive and includes the list of documents to be obtained and the procedure to be followed in case of face-2-face & non face-2face account opening by non-residents. Complete customer profile [giving nature of activity, Income, Contact details, PAN, Phone/Cell Nos. date of birth, educational qualification etc] should be entered in Master Data Sheet and verified by the concerned Official of the Branch and held in records.

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1.1.17

The first cheque book issued to the newly opened account, should be stamped with a seal bearing the words New Account and due care must be exercised while dealing with such cheques. 1.1.18 Conduct of The conduct of newly opened accounts requires close New Accounts monitoring. High Value credits by way of DDs/TTs/instruments should be thoroughly scrutinized. Back dated cheques/DDs for collection requires thorough examination by the department In charge/Branch Head. 1.2 Servicing of Deposit Accounts 1.2.1 Specimen Specimen Signatures of the newly opened accounts must be Signatures scanned and tagged on the same day. 1.2.2 Cheque Book Cheque Book may be issued on the day of opening account Issue itself. However, the first cheque book to be delivered to the customer only against acknowledgement, or sent by Registered Post Acknowledgement Due to the residential address, after completing the account opening formalities. The first cheque book leaves are to be affixed with the seal bearing the words New Account. Subsequently, cheque book to be issued against the requisition slip duly signed by the customer and authorized by the competent officer. In all other cases, the Branch Head/Branch In Charge to authorize issue of cheque book. Cheque books must be issued after entering the issue details in the system and after authorization. 1.2.3 Non-Cheque The account holder should personally visit the Branch along with Book SB the Pass Book. Loose leaf to be issued to the account holder Account only against production of Pass Book. Exception could be made by the Branch Head in respect of accounts held by visually impaired persons. 1.2.4 Pass Book After completing the account opening formalities, the account holder is to be supplied with a Pass Book containing important details and the transaction details. Whenever customers leave the pass book for updation with the branches, the branch to ensure that the pass books are under proper custody until they are collected by the customers/their representatives. 1.2.5 Statement of The statement of account/Passbook is an important document Account/Pass for the customer and it should be issued/updated, properly and Book/Duplicat promptly. The entries must be legible and must contain the e Pass Book details of the transaction. Under no circumstances, passbooks/statement of accounts should be left lying in open trays. Duplicate Pass Book to be issued to the customer only against a written request. Flagging of the New Account

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1.2.6

Payment of Cheque

Cheques are to be paid in due course in accordance with Sec 10 of NI Act. However, extreme care should be exercised while making payment of the bearer cheque especially for Rs.10,000/- and above and in case of any discrepancy/suspicion, the drawer needs to be discretely contacted before making payment. In case of material alteration, close scrutiny of the authentication, subjecting the cheque for examination under UV lamp and adhering to HO guidelines must be scrupulously followed. A separate register should be maintained to enter cash deposit/withdrawal of Rs.10 lakhs or more as per HO guidelines. Issue of DD/TT/PO/RTGS/NEFT for Rs.50,000/- and above should be through debit to customers account or against cheques. Normally, no debit to account must be permitted other than by cheques only, except in case of interest, charges, taxes, premia, standing instructions, ECS, etc. Any request for change of address must be in writing by the customer. A communication acknowledging and for having changed the address must be sent to the customer to both the new and old addresses. Any request for stop payment of the cheque must be submitted in writing and in duplicate. Before acknowledging, the following points need to be verified: A] the signature of the customer in the request letter B] date of the letter [not pre-dated] C] verify in the system whether the cheque in question remains unpaid. If already paid, record the details on the request letter and return it to the customer/his representative. D] If not paid, affix the date stamp on the both the copies of the letter, record the time of receipt and obtain the signature of the officer in charge/Branch Head. E] Immediately, enter the stop payment request in the appropriate menu and get it authorized. F]Handover one copy of the letter to the customer/representative. The person should visit the branch personally along with the Pass Book. The identity of the customer must be ensured by verifying the photograph. The thumb impression to be obtained, the amount of withdrawal to be informed to the customer.

1.2.7

High Value Transactions

1.2.8

1.2.9

Debit only through cheques Change of address

1.2.10

Stop Payment of Cheque

1.2.11

Withdrawal in account of illiterates

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1.2.12

Token must be issued after ensuring that the cheque is in order, adequate balance available, the presenter has been identified properly. Tokens should be accounted for and to be held under joint custody. 1.2.13 Cheques Clearing Cheques received should be immediately branded received for with special crossing stamp and clearing stamp of the branch deposit on instruments. 1.2.14 Collection of Cheques/Bills along with schedules and realization advice Cheques/Bills should not be handed over to the customer or his representative for delivery at the destination branch/office. 1.3 Transfer of Accounts 1.3.1 Verification The transferee branch must carefully identify the customer of identify and verify the address/address proof furnished by the and the customer independently and be satisfied before opening the address by account. transferee branch 1.3.2 Opening of The transferee branch to send a communication to the new transferred address of the customer; as well as a copy marked to the account transferor branch informing about opening of the account. Both the transferor branch and the transferee branch must comply with the instructions. 1.4 Closure of Accounts 1.4.1 In person The customer to call on the Branch Manager and to submit application in writing citing the reasons for closure. After ensuring that no charges, bills/instruments/cheques outstanding, the Branch Head/In Charge to authorize closure. Branch should also verify for indirect liability before closure [Refer article 15 in SB Manual in this regard]. 1.4.2 Deceased Record the notice of death in the system. constituent's Verify whether Nomination is available. accounts 1.5 Duplicate Receipt 1.5.1 Issue of After verifying in the system that the deposit account in Duplicate respect of which the customer is requesting for duplicate Receipts receipt, is outstanding and after obtaining request in writing and necessary indemnity, duplicate receipt may be issued through the system. Issue of Token

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1.6 Standing Instructions 1.6.1 Credit to Whenever standing instruction to transfer funds to the third parties account of third party is received, verify the signature of the customer and the address. If the customer does not visit personally, a letter acknowledging his instructions and informing about the implementation of his instructions be sent to his residential address. 1.7 Inoperative Accounts 1.7.1 Operations & Operations in the account to be allowed after proper Closure identity, signature verification and by the competent officer/Branch Head. Request for closure must also be handled equally diligently as above. 1.8 Overdue Deposits 1.8.1 Review of Outstanding overdue deposits should be reviewed overdue periodically and attempts should be made to contact the deposits depositors to get the deposit closed or renewed as per the option given by the Depositor. Run Menu option any time to transfer all matured deposits to overdue category. 1.8.2 Minimum period of Renewal Staff Accounts Nomination The overdue deposits should be renewed for a minimum period of further 15 days from the date of renewal.

Staff account needs to be monitored periodically to observe any abnormal transactions. 1.10 Nomination to be ensured for all SB, Current & Term Deposit accounts. F:\OANDM\BPC-DEPO.DOC 1.9

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2. CREDIT MANAGEMENT 2.1 General instructions 2.1.1 Application Form and Checklist of documents 2.1.2 Preliminary scrutiny of loan application

Proper Application Form to be provided to the prospective customers along with an exhaustive checklist of documents for the type of loan the customer is seeking.

On receipt of duly filled application form from the prospective customer, same to be entered in the Loan Application Recd. & Disposed Register. Preliminary scrutiny to be done to ensure compliance with KYC norms and for prima facie acceptability of the proposal. 2.1.3 Confidential Confidential opinion pertaining to borrower/ co-obligant / Opinion proprietor/ partner/ director/ trustee/ guarantor, etc. to be obtained from their existing banker/s. Further, such opinion to be obtained annually thereafter. 2.1.4 Due Diligence Steps to be taken to conduct Due Diligence Exercise 2.1.5 Concurrent Confidential Opinion to be sought from the customer's borrowings existing banker, if customer is already enjoying credit facility/ies with other bank/s. 2.1.6 Information on Information about all associate concerns/ group companies, Group/ its financial statements on common date and opinion from Associate its existing banker/s to be obtained. concerns 2.1.7 List of Reference to be made to the list of defaulters issued by RBI/ defaulters CIBIL/ ECGC to ascertain whether the applicant/ partner/ director/ borrowers/ co-obligant/ guarantors are defaulters to any financial institution. 2.1.8 Margin Source of prescribed margin to be ascertained 2.1.9 Borrowing Partnership Deed, Memorandum/Articles of Association, Power Trust Deed and any other relevant documents to be verified as to ensure that there shall be no restrictions placed for availing bank credit. 2.1.10 Rejection of If credit facilities applied for, are wholly or partially Application rejected, the reasons thereof to be recorded in the Loan Application & Disposal Register and same to be informed to the party. Wherever, the party is belonging to SC/ ST or proposal pertaining SSI, prior permission of the Zonal Head is necessary to take decision for such rejections.

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2.1.11 Registrar of Companies [RoC] Search 2.1.12 Valuation of Property & obtention of EC

For corporate accounts, initial search with RoC to be carried out. On registering Bank's charge, periodical search to be ensured. Valuation Report on property charged to the Bank is to be obtained before sanction and once in 3 years thereafter. Further, Encumbrance Certificate [EC] to be obtained periodically. 2.1.13 Land and other The Bank Officials shall visit the site to ascertain the immovable correctness of the address and approximate value of the properties as property based on the current market price. Enquiries to collateral be made with the local people to ascertain ownership/ occupancy of property. The legal report, as per bank's approved format, indicating a clear, absolute and marketable title, to be obtained from the approved advocate. 2.1.14 Appraisal Appraisal of the proposal to be carried out expeditiously, as per Bank's procedure. Borrower to be appraised of the need for Credit Rating Exercise, wherever applicable. The completed appraisal memorandum along with proper recommendations to be put up to the sanctioning authority. All commercial credit proposals for limits of Rs.10 lakh and above to be processed through "Risk Assessment Model" (RAM) at CCPC. 2.1.15 Pre-sanction To be conducted unfailingly. Inspection 2.1.16 Seeking Prior administrative clearance, wherever applicable, to be clearance for obtained from the competent authority. sanction 2.1.17 Grid The credit proposals required to be cleared by the Grid Mechanism Committee to be placed before it for clearance. 2.1.18 Control Return The Register of Sanction [Book No.87] to be submitted by the sanctioning authority to the next higher authority, on monthly basis. 2.1.19 Credit Sanction The applicant to be provided with a copy of the Credit Intimation Sanction Intimation [CSI] in duplicate and a copy of the same with signature of the applicant, having consented for the terms therein, to be obtained & held with the loan documents. 2.1.20 Documentation Security Documents complete in all respects to be executed by the borrower/s and wherever necessary common seal to be affixed on the documents. Copy of the documents executed by the borrower/s shall be given to the borrower/s on request 2.1.21 Legal Audit Legal Audit to be conducted as per Bank's procedure

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2.1.22 Pricing & Rating rationale 2.1.23 Compliance of sanction terms

Borrower shall be informed of the rating rationale and to be given an opportunity to improve his rating to get the benefit in rate of interest. Loans to be disbursed only on compliance of all terms and conditions of sanction. Specific prior approval is to be obtained from the sanctioning authority for any waiver/ concession/ deviation in the terms of sanction, before making disbursement. 2.1.24 End use of End use of funds to be ensured through post-disbursement funds supervision. When the loan is for purchase of an asset, pay order / DD to be sent directly to the supplier for full invoice amount, by obtaining margin money from the borrower. If reimbursement is being sought, prior permission to be obtained from the competent authority. 2.1.25 Term loan Term loan to be disbursed in stages as per the progress in disbursement implementation of the project. Engineer's/ Auditor's certificate wherever applicable to be obtained. 2.1.26 Periodical Assets financed must be verified at regular intervals as verification of prescribed in the terms of sanction. assets 2.1.27 Insurance of Asset charged to the bank to be insured comprehensively for Assets full market value, covering all related risks with the Bank Clause noted thereon. 2.1.28 Periodical Branch to obtain statements such as QIS/ SOD etc. statements periodically from the borrowers and the same has to be analysed to initiate corrective steps, if any, required. 2.1.29 Interest and Proper Interest rate to be applied and service charges Service recovered. Charges 2.1.30 Scrutiny of the Accounts to be scrutinized regularly to ensure satisfactory account conduct. 2.1.31 Irregularity in Irregularity, if any, noticed in the account has to be brought accounts to the notice of the sanctioning authority and directions of the sanctioning authority on the above, to be implemented. 2.1.32 Stock Stock statement in the prescribed format to be obtained Statement periodically Stock statement to be scrutinized and Drawing Power to be arrived as per the laid down procedure and DP so arrived should be noted in the system

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2.1.33

2.1.34

2.1.35 2.1.36

2.1.37 2.1.38

2.1.39

Stock statement as on 31st March to be obtained every year and it to be compared with value of stock shown in audited Balance Sheet. Variance, if any to be got clarified from the borrower. Unit inspection The unit to be inspected at regular intervals at uncommon dates. During the inspection, level of activity, value & quality of stock, the present condition and utilization capacity of the assets charged to Bank and its insurance coverage etc. to be ascertained. The stock statement also to be verified with the stock register for its correctness. If there is obsolete/ non-moving stock, same have to be excluded while calculating drawing power. Follow-up Sale proceeds/ bill transactions preferably to be routed though our Bank. In case of consortium finance, pro-rata share of forex, non-fund and bill business to be ensured. Review/ Working capital advances to be renewed every year. Term Renewal loan accounts have to be reviewed annually. Revival of The branch to ensure that security documents are always documents kept in force. Efforts for revival to be initiated at least 9 months before the expiry of the documents. Stressed Assets Special Mention Accounts to be identified periodically and appropriate corrective action to be initiated. Recall of loan If the applicant violates the terms and conditions of the loan despite requests to comply with the same and if the irregularity persists for long, recommendations for recall of loan to be put up to the sanctioning authority without any delay. Recovery of Before a loan is recalled, branch to ensure that security loan documents, charges etc are in order. A notice to be served to the borrower/ guarantor communicating Bank's decision to recall the loan. If borrowers/ guarantors do not repay the loan fully within the prescribed period and no other remedies are available for recovery, the legal action to be initiated with the prior approval of the sanctioning authority.

21

2.2 BANK GUARANTEES 2.2.1 Eligibility Bank shall extend BG facility only in respect of borrower constituent. BGs may be granted in favour of other banks/FIs/ other lending agencies to enable our borrower to avail additional credit facilities from other banks/ FIs/ lending agencies, provided our Bank assumes a funded exposure of at least 10% of guarantee exposure [5% in respect infrastructure projects]. 2.2.2 Non-Customers Bank shall refrain from entertaining BG to those who do not enjoy credit facility with our Bank. 2.2.3 Precautions Bank to ensure the customer's capacity to reimburse to the Bank the BG amount, in case of invocation of BG. In the case of Performance Guarantee, the experience of the customer, capacity & means to perform the obligations under the contract, to be ensured. 2.2.4 Advance Construction companies/ contractors ordinarily require these Payment guarantees. The end-use of funds by the applicant to be Guarantee monitored in each case. 2.2.5 Deferred The process of appraisal of DPG is to be carried out in line Payment with that of term loans. Guarantee [DPG] 2.2.6 Guarantee Not [I] Bank shall not execute guarantees covering interto be Issued company deposits/ loans thereby guaranteeing refund of deposits/ loans accepted by NBFC/ firms from other NBFC/ firms [ii] Bank should not extend guarantees in favour of overseas lenders including those assignable to overseas lenders. However, same is subject to FEMA provisions contained in Notification No.FEMA 8/2000-RB dated 03.05.2000. 2.2.7 Margin For BG issued in connection with disputed customs/ central excise duties, 100% margin to be obtained unless otherwise specified in the sanction. 2.2.8 Security BG to be usually secured by extension of charge on current assets/ fixed assets obtained to cover working capital facilities. 2.2.9 IBA format BG shall normally be issued on the format standardized by the Indian Banks Association. When it is required to be issued on a different format, it should be ensured that the BG is For a definite period having a definite objective enforceable on the happening of a definite event For a specific amount In respect of a bona fide trade/commercial 22

2.2.10 Security Features 2.2.11 Counter Guarantee 2.2.12 Safety Measures

transaction Having the Banks standard limitation clause Not stipulating any onerous clause Not containing any clause for its automatic renewal on expiry BG is to be issued only on pre-printed serially numbered security forms. BG to be issued by signing in full on all pages with the officials specimen signature number. Whenever a BG is issued, a suitable counter guarantee to be obtained from the borrower. The original and a copy of the guarantee to be despatched to the beneficiary separately. After expiry, follow-up to be made with the beneficiary for return of the original guarantee. Immediate steps to be taken for cancellation of Expired BGs. BG can be cancelled prior to its expiry only with the written consent of both the beneficiary & the applicant, on duly surrendering back the original BG to the Bank.

2.2.13 Cancellation before expiry

2.3 Letter of Credit 2.3.1 Basis for issuing Uniform Customs and Practices of Documentary Credits a Letter of (UCPDC) provide the basic framework fir LC and for its Credit operations. It is necessary to incorporate a statement that the Letter of Credit has been issued subject to UCPDC. Once the issuing Bank incorporates such a statement into the text of the credit, the provisions of UCPDC bind all the parties handling the credit, unless otherwise expressly stipulated in the credit 2.3.2 Rules relating Opening Bank acts at the request of the customer only to opening and Applicants authorization necessary for the bank to operating L/Cs pay the beneficiary in case of discrepant documents The issuing Bank promises to pay the beneficiary at sight after a specific number of days of shipment or number of days after sight i.e. on presentation of the documents to the beneficiary and acceptance thereof (usance) The applicant stipulates the documents against which payment can be made. The main documents called for in a LC are Bill of exchange, Commercial Invoice, Packing List, Transport documents, Insurance documents, Certificate of origin and Inspection Report/Quality certificate in line with the terms of LC The opening bank to scrutinize the documents before making payment The applicant should undertake to reimburse the 23

2.3.3

2.3.4

opening Bank on the due date If the documents are not in order, the applicant can refuse to reimburse the opening bank. The issuing bank, confirming bank are expected to complete the scrutiny of documents received within 5 banking days after receipt of the documents. In case of revolving LC we have to take more than ordinary care. Legal provisions Banks are to act according to the provision of UCPDC in matters relating to credits and documents submitted under credits, as long as these are not in conflict with any law. Wherever there is a conflict between an article of UCPDC and provisions of another statute, the local law should take precedence. Basic aspects to It should be ensured that be observed The proposal for LC limit is appraised with the same while opening diligence as in the case of fund based limits. LCs Adequate cover in each case should be obtained by way of margin and security. If the LC is for purchase of goods required in the normal course of business, the quantity of material and the ruling price should be satisfied. LC exposure on the customer to be critically examined taking into account his integrity, credit worthiness, financial strength, solvency and liquidity. The standard application cum guarantee form complete in all respects should be obtained and alterations, if any, are to be authenticated. The nonjudicial stamp as applicable should be fixed. The person signing the LC application should be authorized by the applicant firm/Company. Issue of a LC should be recorded in the LC and liability registers for proper control and reporting. Issue of LCs beyond discretionary powers should be avoided. Irregularities, if any should be reported. The place and date of expiry should be specified in the credit. The last dates for shipment/negotiation are to be incorporated

24

The imports should be covered under valid import licence wherever required. The amount, balance available, type of goods imported, country of origin, and validity period of licence should be scrutinized. The credit should not contain any clause detrimental to the Banks interest. Method of reimbursement to negotiating bank should be specified. If the credit is transferable and freely negotiable, a Bank should be nominated for transferring the credit 2.3.5 Exchange/Trade It should be ensured that The item proposed is not in the prohibited list under Control Aspects the Exim Policy For imports from Nepal/Bhutan the amount should be denominated only in Rupees The usance period should not exceed 6 months from the date of shipment in case of non-capital goods. In case the company has availed buyer's line of credit, usance period can be extended upto 360 days. Interest if any payable for the usance period, should not exceed the prime rate for the currency in which the bill is drawn. Documents Check that L/C is explicit about the supporting documents Each document serves a specific purpose. All documents required for completing customs and trade control formalities are listed in the credit. Full sets of transport documents are routed through the Bank. If a clause to the contrary is included, then extra precaution is to be exercised. Documents issued prior to opening of the credit are not accepted unless provided for in the credit Transport documents are consistent with the nature of goods. For perishable items, Bill of Lading or multimodal transport documents are not stipulated unless refrigerated containers are used. Bill of Lading is required only for port-to-port shipment. It should be ensured that the shipping to/from locations are in fact port towns Banks interest in the goods is noted on the Bill of lading, Multimodal document. The insurance risk cover is suitable for the type of goods involved and in the same currency of the LC Risks required to be covered are specified in the policy The particulars of the credit are incorporated in all 25

2.3.6

2.3.7

Advising Bank

2.3.8

Confirming Bank

2.3.9

Negotiating Bank

2.3.10 Devolvement of L/C

2.3.11 Crystallisation of Bills

the documents for proper identification and banks interest is noted on the insurance policy. Established beyond doubt the genuineness of the message (SWIFT, SFMS, Cable) received from the opening bank, before advising the customer If credit is restricted to the Bank itself, it should be made clear in the letter to the beneficiary that the Bank does not undertake to negotiate any discrepant documents Service charges are to be recovered from the beneficiary or as per LC terms. Confirmation of LC by the Bank is only at the request from the issuing Bank/Beneficiary Undertakes to pay at sight/on due date as applicable Liability of the confirming bank is same as that of the issuing Bank. The beneficiary is at liberty to submit documents and demand payment or acceptance from the confirming bank without approaching the issuing bank The confirming bank can claim reimbursement from the issuing Bank on negotiation of bills drawn as per the terms and conditions on the LC The opening Bank can authorize another Bank called the negotiating Bank to make payment to the beneficiary. The Negotiating Bank should scrutinize the documents and ensure that the documents fully conform to the terms of credit. Payment should be made to the beneficiary and reimbursement claimed from the opening Bank In case of devolvement if the irregularity in the account is not adjusted within 15 days, opening of further L/Cs are subject to detailed scrutiny and reasons for opening of further LC should be recorded. Demand and Usance Bills in Foreign Currency should be cyrstallised within 5 banking days of receipt of the Bill and on the date of maturity of the bill respectively, at Bill selling rate or at the contracted rate, if a forward contract has been booked for the purpose. Any amendment has to be made by the opening Bank and advised to the beneficiary in the same way as the original credit was advised Am3endments to the credit should be done only at the request of the applicant and exactly as per the request The amendment is binding on the Issuing Bank from the moment it is issued 26

2.3.12 Amendment Rules

2.3.13 Precautions

The amendment is not binding on the beneficiary unless he chooses to accept it. The terms of the LC should be carefully cross checked with the application before delivery The margin amount and service charges should be recovered The amount of credit under the LC should be commensurate with holding level of raw materials The opening of the LC should be within the sanctioned limit and authorized by the appropriate authority. LC limit sanctioned for purchase of raw material should not be used for import of capital goods The message for opening the LC should be transmitted by means of authenticated SWIFT/SFMS. If the LC has been issued in printed form it should be ensured that the same is signed by two authorized signatories It is to be ensured that there is no double transmission of the message. No mail confirmation should be sent for credits transmitted over SWIFT/CABLE/SFMS as these are considered to be operative credit instruments. Additional precaution is required in case of nonnegotiable transport documents like Airway Bills and where delivery is against acceptance. Airway bills/Charter parties BL are not documents of title to goods and do not offer any protection to the bank. Security and margin should therefore be more stringent in case of air consignments. Transport documents such as Railway receipts/Truck receipts/Bills of lading should be scrutinized carefully to verify their genuineness, quality and quantity of merchandise covered by them, the date of issue etc. The transport receipts should be from IBA approved carriers. Submission of one copy of the BL directly to the consignee should not be acceded to unless full margin is available The issuing Bank, Confirming Bank are expected to complete the scrutiny of documents received within 5 banking days after receipt of the documents. In case of revolving LC we have to take more than ordinary care. Insist on your buyers advising LC through your bankers If you receive LC directly from buyer, deposit it with your banker and advise them that you intend to negotiate the documents under the LC so that your banker may ascertain 27

2.3.14 Letter of Credit (Beneficiary)

the genuineness of the LC. Before dispatch of goods, ascertain from your banker whether they are willing for negotiation of bills under that LC The terms and conditions of the LC should be read carefully and documents should be prepared accordingly. If any of the terms and conditions are difficult to comply with then the buyer should be asked to arrange for suitable amendments before dispatch of the goods. Irrespective of an LC being furnished, before entering into commercial transactions with any party independent inquiries need to be made to ascertain genuineness, trustworthiness, track record and competency of the other party. 2.4 Priority Sector 2.4.1 Applications All applications received should be entered in the received cum- Applications received cum-disposal register immediately. disposal register Applications should be disposed within the prescribed period. 2.4.2 Collateral Branches should adhere to the guidelines/instructions laid Security down with regard to the obtention of collateral security for loans under the various Government Sponsored Schemes. 2.4.3 Achievement of All endeavor should be made by the Branches to reach the targets stipulated targets under Government Sponsored Schemes as per guidelines of the Bank. 2.4.4 Photo Identity Photo identity card issued by the Election Commission can Card also be used as a proof for identification of the beneficiaries. 2.4.5 Genuineness of While sanctioning of loans, Branch should ensure that the borrowers applicants are genuine and ensure that the loan amount is used for the purpose for which it is intended.

3. RETAIL LENDING
3.1 CORP SCHEMES 3.1.1 Declarations The Bank declares and undertakes : To provide professional, efficient, diligent, courteous and speedy services in the matter of retail loans. 28

Not to discriminate on the basis of caste, religion, sex, etc., while considering the credit facility. To be fair & honest in advertisement & marketing of retail loan products. To provide borrower with transparent terms of loan sanctions. To comply with all regulatory requirements in good faith. To attempt in good faith to resolve customer complaints, if any; 3.1.2 Product Innovation Loan products are to be developed keeping in mind the needs of various segments of borrowers, market demand, Bank's policy and other regulatory requirements. Such products should be re-packaged in tune with market demand and in compliance with regulatory requirements. Prospective borrower should be given all necessary information regarding range of retail loan products to suit his/her needs. On exercise of option, the borrower should be given relevant information about the loan product of his/her choice. The borrower should be informed the process flow, right from submission of loan application to disbursement of loan and time frame within which the process would normally be complete. Name and contact number of the Bank Official should be made available to prospective borrower to contact regarding product features, loan application and delay in service etc Retail loan product information should be made available on: Website of the Bank: www.corpbank.co.in Email queries should be replied on the same day, unless it is a Bank holiday. 3.1.4 Loan application On request, loan application should be given to the prospective borrower along with exhaustive check list and list of various charges applicable to the loan. Retail loan applications with checklist should be made available in the Bank's website, which borrower can download. Interest rates on various retail loan products should 29

3.1.3

Loan information

3.1.5

Interest

Rates

be made available through any of the following media: In the Bank's website. Over phone, where tele-banking facility is provided. Through prominent display in the Branches and at other delivery points. Revision in rate of interest: Revision in rate of interest should be notified to the existing borrowers by way of individual communication. Interest rate should be posted on the Bank's website. Notice to this effect should be displayed at the Branches. On demand, the borrower should be given the details of method of application of interest. Borrower should be allowed view loan/interest details of his/her loan account, where he/she is enjoying net banking facility. The Bank should inform the borrower clearly the terms of charging penal interest and overdue interest. The Bank should notify details of charges applicable in relation to the loan product chosen by borrower. List of charges should be supplied as an annexure to loan application. Any upward revision in charges should be informed 30 days in advance, before implementation. Details regarding charges are to be made available in website. The Bank should normally give an acknowledgment of receipt of loan application. If demanded by the borrower, a copy of the application form duly acknowledged should also be given. The Bank should inform the borrower about the various documents that are required for processing the loan. The Bank should inform the borrower regarding loan sanctioning process, sanctioning authority, time required for sanctioning of loan in normal course etc. On sanctioning of the loan, the Bank should intimate the same to the borrower. The Bank should show to the borrower the 30

3.1.6

Loan Charges

3.1.7

Sanctioning terms

3.1.8

Documentati on

documents that are required to be executed. The Bank should explain, if necessary, the relevant terms and conditions of sanction & disbursement of loan. After execution of the documents, the Bank should give copy of full set of documents executed by the borrower to him/her on demand. In case of rejection of loans, the Bank should convey reason for such rejection. The borrower should be given report on copy of retail scorecard, CIBIL report, due diligence reports, on demand. 3.1.9 Operation in accounts The Bank should provide statement of loan accounts, unless not found necessary by the borrower. The borrower may be issued loan passbook on demand. The borrower should be allowed to view/ download his/her loan account statement, if he/she is provided with net-banking facility by the Bank. Loan account statement should also be e-mailed, on demand.

31

3.1.10

Information Secrecy

All personal information of the borrower should be kept confidential and should not be disclosed to any third party unless agreed to by the borrower except the following: Law enforcement agencies. Credit Information Bureau like CIBIL etc.. Reserve Bank of India. Government Other Banks and financial institutions. Borrower information should be revealed only under the following circumstances. If the Bank is compelled by law. If it is in the public interest. If the interests of the Bank require disclosure. To Due Diligence Agencies where the borrower has consented.

3.1.11

Grievance Redressal

Complaints/grievances of customers should be resolved within maximum period of 30 days, unless the nature of complaint is such that it requires verification of facts and figures.

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32

4. FINANCIAL MANAGEMENT
4.1 Cash Department 4.1.1 Strong Branches should ensure that the activities in the strong room Room are not visible to public. Strong room should be constructed as per RBI specifications. Fitness Certificate from the competent authority should be obtained at prescribed intervals. Electric connection should be controlled from outside. The Security alarm system should be tested periodically. Armed guards should guard the strong room of chest branches round the clock. Strong room should be kept free from dampness/termites. Branches should adhere to the ceiling prescribed by Head Office for retaining cash in the strong room. 4.1.2 Keys Main Keys of the branch (e.g. keys of the strong room, safe deposit vault etc.) should be in the possession of identified and duly authorised official. Unauthorised officials/ employees should not be permitted to handle them. No portion of the safe should lie dormant for a long time. Contents must be kept in circulation. Notes should be stored denomination wise. Issuable, non-issuable and mutilated notes should be sorted and kept separately.

4.1.3

Custody of Currency Notes

33

4.1.4

Procedure

Cash should always be kept locked. At commencement of business; Joint Custodians should withdraw sufficient cash for the days requirement from the chest and enter the particulars in the vault register under the signature of the joint custodians. Similarly at the time of depositing into the chest, particulars have to be entered in the vault register under the signatures of both the joint custodians. After withdrawal from the chest, no cash will remain in the custody of the cash officer. He should distribute the cash amongst designated staff as per their estimated requirement. Each designated staff at the time of receiving the cash will verify that the packets are intact and will count the number of packets and all loose notes. He will acknowledge receipt of cash in Double Lock Register. During the day if any designated staff accumulates cash beyond the stipulated limit, he should hand it over to the Cash Officer against acknowledgement in the Double Lock Register. Cash receipt/ delivery amongst designated staff should be done only when instructed by Cash Officer. The transaction should be recorded in Doubt Lock Register of both the cashiers. All cash receipts should be scrutinized by receiving cashier for ensuring exact quantity as per voucher and acceptable quality of notes. In case of doubt on quality of the note the matter should be referred to Cash Officer. Receiving cashier to separate issuable and soiled notes. Receiving cashier should make packets of 100 pieces of notes denomination wise. He should place a note slip on the packet and sign it after tying it with a string as per prescribed procedure. Before making payment cashier should collect and verify token from the customer.

34

4.1.5

Mutilated notes

Half-value, mutilated, mismatched or altered notes and notes disfigured by oil or other substances in such a manner as to render their identification doubtful should not be accepted. These should be exchanged or otherwise disposed off in terms of Reserve Bank of India Note Refund Rules. All notes accepted over the counters should be carefully examined for their genuineness. For quick and easier detection of forged notes, ultraviolet lamps should be used. Forged notes detected at the branches should be handed over to the local police for further investigations. A receipt of impounded notes should be issued to the tenderers. Monthly report on the forged notes so detected should be sent to HO/RBIs Issue Office on a monthly basis. The particulars of the Bank Cash Balance at the close of business each day should be recorded in the Cash Balance Book, duly bifurcated into Single Custody and Joint Custody and should be signed by joint custodians.

4.1.6

Forged notes

4.1.7

Bank cash Balance

4.1.8

Shortage/Excess All shortages/excess found in cash should be cash reported to the Controlling Authority immediately after detection, even if the shortages are made good in full by the concerned employee/ official. A special register should be maintained to record instances of shortfall. Excess cash found should be deposited into sundry deposit account with full particulars. Intra day verification The Cash Officer/Branch Head should carry out intra-day verification of cash at the cash counters at irregular intervals. Suitable record of such verification should be maintained. The Zonal Office should arrange for the verification of cash at currency chest and small coin depot balances at the branches at irregular intervals, at least once in every month. Duties of cash department staff should be rotated periodically Note packets should not be stitched or stapled. Separate packets should be prepared for soiled and issuable notes. 35

4.1.9

4.1.10

Cash verification

4.1.11 4.1.12

Rotation of duties Clean Note Policy

Branches should display posters exchange of cut and soiled notes.

regarding

New notes should be made available to the customers / general public without any discrimination. Branches should freely accept coins of all denominations. Branches should freely distribute customers / non-customers 4.1.13 Cash retention limit and insurance cover coins to

Non-chest branches should not allow their cash balance to exceed retention limit and the insurance cover. Information regarding remittances should be discussed only on a need to know basis and not divulged even to the concerned employees earlier than necessary. Remittances between a Chest branch and link branch should be packed in steel boxes and locked. Of the two sets of keys, one set should be retained at the sending branch and the other at the receiving branch. Keys should not be carried with the remittance. Greatest secrecy should be maintained regarding the actual timings of dispatch of remittances. The armed guard escorting the remittance should not be used to carry boxes from/to the vehicle. The remittances should be transported in a closed vehicle. The vehicle should be hired from known and reputed transport providers. The remittance box should be securely chained (with a chain and a padlock) to the body/ seats of the vehicle. The receiving branch should be informed of the approximate time of arrival of remittance. If the vehicle is unduly delayed, the receiving branch should get in touch with the remitting branch.

4.1.14

Remittances of cash and valuables

4.1.15

Cash in transit and its Insurance

Cash in Transit insurance is arranged by the Head Office. The policy contains stipulations such as the (i) ceiling on value of cash per remittance (ii) number of employees (iii) armed guards required to accompany the remittance, and (iv) other precautionary measures to be taken while effecting a remittance. The branch should meticulously comply with all the precautionary measures advised to them. The value of each remittance should not exceed 36

the limit prescribed under the transit insurance policy. 4.2. Housekeeping 4.2.1 Suspense Account No debit should be made in the suspense account without authorisation of Branch Manager. Suspense account should not be used for providing temporary accommodation. The entries in suspense account for more than one month should be followed up rigorously. The monthly statement of suspense account should be sent to controlling authority promptly. 4.2.2 Sundry Deposit Account The reversal of entries in Sundry Deposit Account should be authorised by Branch Manager The old outstanding entries in sundry deposit account should be followed up for early reversal. Monthly statement of outstanding entries should be sent to controlling authority without delay. 4.2.3 Inter Branch Reconciliation Originating debit entries in respect of inter branch should be raised only in respect of permitted items. Originating debits towards cash shortage, cut notes sent for collection, service charges, courier charges are strictly prohibited. Any debit for the purpose of credit of Income Account is prohibited. All inter-branch entries have to be adjusted within the time limit stipulated by HO. Inter-branch entries relating to customer transactions such as MT, TT, and Transfer of Accounts should be adjusted on a priority basis. All pending entries should be adjusted on a priority basis after seeking necessary clarification from other branches / IBR, HO. Service Branches / main branches in charge of clearing at each centre should ensure that interbranch transactions emanating from them relating to clearing operations are adjusted by the branches on the same day. 4.2.4 Tax Payments Branches should deduct TDS wherever applicable and remit the same to Government in time. 37

Branches should file ETDS Return at quarterly intervals in time. TDS Certificates should be sent to depositors / deductees within the stipulated period. PAN No. of the customers should be obtained in respect of all specified transactions. 4.2.5 Local Bank Accounts Monthly reconciliation has to be carried out and statements should be submitted to Zonal Office. No charges should be debited to Local Bank account other than the permitted items. Minimum balance should be kept in Local Bank A/c and excess funds should be transferred to RBI Account on the same day. Zonal office should submit monthly reconciliation statement in respect of all branches in the Zone before 5th of the succeeding month to Head Office.
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38

5. INFORMATION TECHNOLOGY
5.1 Core Banking 5.1.1 User Access The Bank has placed two factor authentication system in place to prevent unauthroised access to the Core Banking Software (CBS). Any user has to first access through his User ID and Password to the server and then to the CBS by giving his second level of authentication of User ID and Password. The Bank has segregated different category of users to access data based on the need and level of user with appropriate rights. A user can be introduced to CBS system based on his validation in Employee database and access is restricted to the business unit where he has joined to restrict the users to access the data of their business unit and not any other data. User is always identified with his Employee Number to maintain uniqueness of user. The access is permitted from the I P address range set in the CBS system for a business unit and users of other business units cannot access from different IP address range or from different networks. All transactions are applied to Maker Checker concept subjecting transactions entry and authorization by different users to prevent frauds and inadvertent mistakes in CBS. Users are forced to change their own passwords at regular intervals specifying minimum length of password etc The system generates Exception Report giving all details of exceptions like cheque not issued, operation in Inoperative account, exceeding new account limit, TODs, against clearing etc., for effective monitoring. The system checks at the time of EOD any inconsistencies in the account data with General Ledger, unauthorized transactions to maintain the data integrity on day-to-day basis. Bank maintains data backup to safe guard the customer interest and business continuity. Back up is taken locally as well as online updation is done at Near Site and Disaster Recovery Site. Local backup version of Report Server is being used by Branches in case of non availability of Primary server to conduct minimum level of business with the customers. Bank has implemented IPSEC on the network to protect from data tampering and continuously monitoring all the network through agencies for security of data and information assets.

5.1.2

User Types

5.1.3

User Creation

5.1.4

Access Control

5.1.5

Maker Checker Change of Password Exceptional Report

5.1.6 5.1.7

5.1.8

End of Day (EOD)

5.1.9

Backup Data

of

5.1.10

Information Security

39

5.2 Internet Banking 5.2.1 Precautions

Regular monitoring of the activities in the account by checking the balances and statements online through the Banks website shall be ensured. This would help the customers to promptly detect any fraudulent transactions. The earlier a fraud is detected, the smaller will be its financial impact. Always type the address of the website in the address bar of the browser or access it from your stored list of favourites. Do not share Passwords with anyone Exercise caution as no one including the Bank officials will ask you for the Internet Banking Passwords. Change your Passwords frequently - Use the best practices for creating passwords based tips on creating passwords in the respective sections. Use Virtual Keyboard - Using the virtual keyboard wherever available would help prevent key logger compromises as in such cases the keyboard is not being used for the input. Check for your Last Login Time - Login to the Banks Internet banking website to view the date and time of your last login. Limit the use of physical statements easier to manage and instantly retrievable. documents are sent through chance for a possible fraud. statements Online than paper statements The fewer personal the post, the less the

Review account statements carefully - Make a habit of reviewing your account statements regularly. The Mini Statement and Detailed Statement options available on the Internet banking site shall help you to review your bank account statements thoroughly. Sign Up for SMS Alerts - Register for Mobile Banking and receive alerts upon all transactions in account. Be Vigilant - Never fill in any form that one has accessed via a link with sensitive data such as User-ID, Password, PINs, and other account related 40

information. Login Frequently - Logging into the internet banking website not only helps one keep track of accounts online but also enables to notice and stop any fraudulent activity quickly. Be Cautious - Do not leave Internet banking session unattended. Always ensure sign off after use from your online banking session. Update the customer profile in the Internet banking website, key in the answers to the security questionnaire, register the e-mail IDs and mobile number for better service and security options. 5.3 Shopping Online

Be very sure of the website address. The website address is reflected on the address bar of the Internet Browser. This check is recommended every time any website is accessed from a link given elsewhere. Always type the website address or bookmark the websites that one visits frequently. Never enter, confirm or update account-related details on a pop-up window.

Delete suspicious emails without opening them and if anyone happened to open a suspicious email, care shall be taken to not respond to online solicitations for personal information. It is also prudent not to open any attachments or click on any links it may contain. Never provide any sensitive account or personal information in response to an email. If any personal information has been entered / parted with, report it to the Bank immediately by calling the Banks Web Centre or sending mail to webcentre@corpbank.co.in or to ibank@corpbank.co.in. Enjoy added security when using your Credit card online: If one tends to use Credit Cards frequently for online 41

shopping, make sure that he signs up for websites displaying Verified by Visa and/or Master Card Secure Code program(s). Confirm that website is a secure one: Make sure any Internet purchase activity one engages in is secured with encryption to protect account information. Look for "secure transaction" symbols. Shop Online only from reputed websites. Beware of online offers that require to provide your account details for ' verification' 5.4 Offline transactions Make photocopies of all information carried daily by customers like credit cards, debit cards etc. and store them in a secure location like a safe deposit locker. Shred financial or personal documents before discarding. Most fraud and identity theft incidences happen as a result of mail thefts. Whenever you or your family are away from home, get the incoming post collected by a trusted acquaintance and if you are going to be away for a longer period, arrange to get your mails diverted to an alternate address. Do not leave your incoming post lying around in your absence. 5.5 Cyber Cafe Security While accessing any website including the Banks website from a cyber cafe, or from any shared computer or from a computer other than own computer, care shall be taken to change user passwords after any such use immediately thereafter, from own PC at workplace or at home. It is very important to do so especially when one has entered their transaction password from such shared computer or cyber cafe computer, as the sensitive details including user-ids and passwords could have been tracked by key loggers both hardware or software based meant for the purpose in such systems. Please note to change these passwords from the users own PC at their workplace or at the house. Always choose unique passwords that include a mix of letters, numbers and characters wherever permitted. Make it a point to use longer passwords as allowed by 42

5.6

Password

your application using a mix of letters, numbers and special characters as they are much more difficult to figure out than shorter, more straightforward passwords. Please avoid choosing passwords that are obvious, easily guessable, such as names of family members or pets, nicknames, birthdays and telephone numbers that might be easy for others to figure out. The customers are solely responsible and liable for any loss arising from their sharing / compromise of sensitive account related information such as User Ids, passwords, cards, card numbers or PINs with anyone or from their consequent unauthorized use. Customers are required to understand the importance of keeping such details confidential as well as be aware of the consequences of their misuse. Customers shall also take care to destroy the PIN mailer after memorizing the PIN / Password and/or change the PIN after the first usage. The Internet Banking Password (both meant for Login and Transaction authorisation) shall be changed after the first login and thereafter regularly (at least once in a month). Customers shall create and maintain different passwords for Login and for Transaction authorisation. This would provide additional security for financial transactions through Internet Banking. Customers shall avoid using the same password for multiple applications or Internet services. Make it a practice to use a unique password for each website and purpose. In case someone has more than one Internet Banking User-ID, use a different password for each of the Internet Banking User-IDs. The passwords shall be complex and difficult for others to guess. Use letters, numbers and special characters [such as !,@, #,$, %, ^, &,* (, )] in passwords to increase the security of the passwords. Avoid using passwords that are obvious, like ones name/ nickname, names of family members, address, phone number or any other information that a fraudster might easily find in a purse or wallet. Do not use a password that contains part of your User ID or account number. Try to avoid passwords that are real [as in dictionary] words and always use cryptic words as passwords. Avoid using the same password as the one, which normally one uses to login to ones PC or access his email account to the online transaction accounts. If the login IDs or passwords automatically appear in 43

the sign-in page of a secure Web site, the auto complete function shall be disabled to increase the security of information. While accessing any website including the Banks website from cyber cafe, any shared computer or from a computer other than that of ones own personal one, care shall be taken to change the passwords after such use, from the own PC at workplace or at house. It is very important to do so especially when one has entered his transaction password from such shared computer or cyber cafe computer. Change these Passwords from the own PC at the workplace or residence. Due care shall be taken to not to share passwords with others, including family members and to not disclose the Internet Banking password to anybody, not even to a Bank employee. 5.7 Mobile Banking -Usage

Set up the password of mobile phone Usually, all mobile phones have the optional feature of a password or a PIN, which can be, set up once one switch on the mobile phone or make some configuration changes. It is advisable to enable this feature. Protect mobile phone against virus Like computers, a mobile phone especially if it is a smart phone with GPRS is vulnerable to viruses. Viruses may harm mobile phones when it is connected to the Internet. They may also give hackers the opportunity to access your mobile phone to steal or alter ones personal information. Therefore, it would prove to be beneficial always to ensure the following: Install anti-virus software in the mobile phone Delete junk messages and chain messages Do NOT follow any URL in messages that one is not sure about Do NOT download any file from sites (e.g. applications, games, pictures, music) or people (e.g. e-mail attachment) that one is not sure about. Beware of Trojans/Spyware Do not download any software without verifying its security and privacy features from the website. The following steps are recommended to shield the device from this threat: 44

Install anti-spyware software in the mobile phone. There are products designed specifically for PDAs (personal digital assistants) such as McAfee PDA Virus Scanner and PDA Spybot. Get educated on spyware and be alert to any spywarelike activities on the mobile phone. Also be suspicious if one gets lots of unsolicited e-mails/messages. Always have the latest software updates The manufacturer or dealer of the mobile phone shall be approached to provide updated software for mobile phones from time to time. The availability of software updates shall be checked and installed regularly. Avoid sharing mobile phone Do not forget the following if the mobile phone is shared or sent for repair/maintenance: Remove the temporary files and the cache that were stored in the memory of the phone, as the temporary files and the cache may contain some of the sensitive personal information of the owner such as account numbers. Clear the browsing history regularly. Do NOT allow others to access a mobile phone before logging out from the sites (banking/financial/shopping) that one has entered. Beware of online offers that require to provide account details for 'verification'. Do not share passwords with anyone. Be cautious. Do not leave Mobile Banking application session unattended. Always sign off from a session. 5.8 ATM/Debit Card Have the ATM card handy to use as one enters the ATM center. Ensure that no one sees when entering Personal Identification Number (PIN). Do not leave transaction records at the ATM cabin, but shred it before discarding. Always keep the card in a safe place, just like one would take care of cash and chequebooks. 45

If a replacement card is received, be sure to destroy the old card and discard it immediately. After completing the transaction, secure the card and cash immediately. Always count the cash before exiting the ATM cabin and not outside it. Sign the signature panel on the ATM/Debit Cards as soon as they are received. Never carry your PIN (Personal Identification Number) on your person. Memorize it. Change ATM PIN frequently, at least once in a month or so. If the card is lost or stolen, contact ftscentre@corpbank.co.in immediately. Shop with only known merchants who can be trusted. Never allow the shopkeeper to take the card to a different shop/room for swiping it. It shall be ensured that the debit card is returned after completing a purchase and also that the card returned is the own / original one. After a purchase, always make it a point to take the payment charge slips and tear up any carbon copies. Check the payment charge slips against the monthly account statements to verify the transactions and report any unauthorized transactions immediately to ftscentre@corpbank.co.in. Once the account statements are reconciled, tear all receipts and discard them immediately. Shred printed statements as soon as the information is verified with charge slips/transaction records. Never leave ones purse or wallet unattended and keep the cards out of sight for others to see. Never give the ATM / Debit card to others. Never allow a stranger to assist you while using an ATM. All our ATMs are covered under Digital Video 46

5.9

Using Credit Card

Recorders for surveillance. Sign the signature panel on the Credit Card(s) as soon the same is received. Subscribe to Credit Statements through email / verify the details in the websites. Limit the use of physical statements. View and verify all credit card statements online and be on the lookout for unusual charges. Never carry PIN (Personal Identification Number) on anything / ones person. Memorize it and destroy the PIN mailer immediately. It shall be ensured that the credit card is received after completing a purchase and make sure that the card that has been returned, is the own / original one. Always remember to take the charge slips and to tear up any duplicates. Check the receipts against online monthly billing statements to verify all transactions and to report any unauthorized transactions immediately. Once the billing statements are reconciled, destroy all receipts and discard them immediately. Be careful while entering the credit card number and other details online. Always use Photo Card option in credit cards. Never leave the purse or wallet unattended and always keep the cards out of sight of others. Keep a list of all the card numbers and make sure they are in a secure place. If you have multiple credit cards, always use different PIN numbers. Do not use a common PIN number for all your cards.

5.10 5.10.1

Procurement Guidelines

5.10.2 Procedures

Guidelines issued by CVC from time to time have to be followed in respect of procurement of computer capital assets. The procedures in respect of publication of tenders in website, newspapers etc., opening of tenders and award of tender has to be done according to the procedures. 47

5.10.3 5.11 5.11.1 5.11.2 5.11.3

Reporting Disposal Guidelines Procedures Reporting

All records have to be kept properly and reporting to be done to the authorities concerned. Guidelines issued from time to time have to be followed in respect of disposal of computer capital assets. The procedures in respect of disposal of computer capital assets have to be followed scrupulously. All records have to be kept properly and reporting to be done to the authorities concerned.

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6. RECOVERY
6.1 Broad Objectives Minimising the incidence of fresh NPAs by Effective monitoring of the borrowal accounts. Proper classification of accounts under Special Mention Accounts categories and close monitoring thereof, to avoid slippage even by exercising the Exit option, if necessary. Implementation of preventive and corrective measures to pre-empt slippages in the first instance, where the account shows signs of sickness. The Branch and Zonal Office is involved in the identification and revival process at the beginning whenever an account starts showing signs of weakness. The A2/A3 preventive model has been approved and Monitoring Committees are formed at all the Zonal Offices to check fresh delinquencies. In the Corporate office an exclusive cell has been set up to supervise and guide the Zonal Office/Branches to take timely steps in the upgradation of the Special Mention Accounts. Reduction in the level of NPAs by recovery, adopting various legal and other measures such asa) Enforcement of provisions of SARFAESI Act in all eligible accounts. b) Filing of suits in appropriate civil Courts/Debt Recovery Tribunals. c) Invoking the provisions of Revenue Recovery Act, wherever applicable. d) Referring the cases to Lok Adalat for settlement through conciliation. e) Conducting Bank's own Adalat and campaigns for simplified and transparent OTS for small/medium loans through reconciliation. 49

f) Settlement through compromise. g) Sale of assets to ARCs /Banks/FIs etc. Close follow up of sticky / irregular accounts including sick units, suit filed and decreed accounts and those referred to the Debt Recovery Tribunals for speedy recovery of the dues by Execution of decrees within one year of obtention of orders. Upgradation of the existing NPAs by improving the quality of assets by recovering the overdue amount. Restructuring/rephasement of accounts wherever feasible in tune with RBI Guidelines. Recovery of amount as per the scheme in respect of BIFR NPA accounts. Preventing deterioration in the quality of the assets by Regular inspection of securities (movable/immovable) 6.2 Methods Recovery of Persuasion / personal contacts. Seizure and disposal of securities assisted by empanelled recovery agents wherever required. Resorting to provisions under Securitisation Act, 2002. Sale of assets to Securitisation Companies Asset Reconstruction Companies / Banks/FIs etc. 6.2.1 Legal action Legal action is the last resort adopted for recovery of the dues. Before initiating legal action, Bank has to exhaust all other avenues of recovery and thoroughly examine the pros and cons of filing suit. Such cases of Rs. 10 Lakh above are taken up with the DRTs.

50

6.2.2

Other measures Compromise Settlement Policy

Pursue CGFT/ECGC claim settlement Settlement through compromise Compromise settlements, as a mode of recovery, is being pursued, as it is an effective method resulting in quick recovery enabling the Bank to recycle the funds instead of resorting to expensive and protracted legal proceedings. The Bank has adopted MODULAR APPROACH FOR COMPROMISE SETTLEMENT for high value accounts. The modular approach seeks to ascertain the various factors such as realizable value of securities, net-worth of the borrowers, age of NPA and legal position of the account etc. which shall determine the settlement amount in a more scientific and realistic manner. These individual parameters are to be ranked in a 40-point scale. The scoring under all parameters cumulatively adds up to the final total determining the quantum of minimum amount to be negotiated. The related extraneous factors under various parameters would also be reckoned in arriving at the minimum compromise amount. While considering compromise settlements, realizable value of security held and/or attached vis--vis the dues to the Bank, other secured creditors, if any, preferential/priority creditors including workers statutory dues etc, if any, should be taken into consideration. Such valuation of security/ies should not be older than 12 months from the date of the proposal and it should reflect the realizable value of security, keeping in view the location, tenancy, forced sale aspect, etc. In addition physical/financial 51 to the present status of the

6.3

borrower/unit/activity financed, the Bank will make proper distinction between willful defaulters who have the capacity to pay and borrowers defaulting in repayments due to circumstances beyond their control. The Bank would also consider whether there was any willful/malfeasance and/or fraud in the account. Pursuant to the instructions of the Central Vigilance Commission for collection of information on NPA borrowers of Rs. 25 lakh and above who are categorized as Willful Defaulters and dissemination of information to Banks and Financial Institutions, RBI has framed detailed guidelines and as approved by our Board a high powered Committee has been formed with the Top Management functionaries at HO entrusted with the task of examining the Willful Default aspect in respect of fresh NPAs of Rs. 25 lakh and above. The Committee is also empowered to examine the case/s for actions to be initiated for criminal breach of trust. A Grievance Redressal Committee for considering the representations of borrowers aggrieved by such classification as willful defaulters has also been formed with the Top Management Functionaries. A well-defined delegated power structure is adopted for compromise/write off including settlements under Lok Adalats, Write off powers and waiver of legal action. The authority exercising the powers delegated for compromise/write off/waiver of legal action shall not use such powers for the loans and advances sanctioned by him earlier. Where compromise, write off, waiver of legal action has been considered, neither fresh credit facility shall be extended to such persons nor they shall be accepted as guarantors for any limits. 52

The Bank is having a delegated power structure to various functionaries for fixing the Reserve Price based on the valuation by the Board Approved Valuer, of sale of assets by way of auction / tender / private treaty and sale to Asset Reconstruction Companies. 6.4 Sale of NPAs to Banks/FIs and ARCs Based on the RBI guidelines the Bank has put in a place a system envisaging both buy and sale of Non Performing financial Assets / Non Performing Investments to the Banks, FIs, ARCs and NBFCs. The identification of the assets to be sold to the Banks/ARCs shall be done by a Committee at the Corporate Office. The Bank shall secure maximum quotations from prospective buyers of NPAs in order to realize maximum amount from the sale. The valuation of financial assets shall be done by a valuer, approved by the Board for the purpose under Security Interest (Enforcement) Rules, 2002. The sale to other Banks/FIs/NBFCs shall be only on cash basis. The entire sale consideration should be received upfront & the asset be taken out of the Books of the Bank on receipt of the entire sale consideration. Sale shall be on sans recourse basis with the entire credit risk associated with the financial assets being transferred. The assets shall be taken out of the books of the Bank. There should not be any known liability devolving on the Bank once the sale is completed. It shall be ensured that subsequent to sale of the financial assets, the Bank does not assume any operational, legal or any 53

other type of risks relating to the financial assets sold. If the sale is at a price below the net book value (NBV)(i.e., Book Value Less Provisions held), the shortfall shall be debited to the profit and loss account of that year. The Bank would sell Financial Assets to SC/ARC, who is on the empanelled list duly approved by the Board of Directors. Bonds/debentures received by the Bank as sale consideration towards sale of financial assets to SC/ARC shall be classified as investments in the books of the Bank. The Bank may also invest in security receipts (SRs), Pass Through Certificates (PTCs) or other bonds/debentures issued by SC/ARC. These securities shall also be classified as investments in the books of the Bank. Investment formulated from time applicable category of policy of the Bank and approved by the Board to time is to be made mutatis mutandis to this investments.

Investments by the Bank in debentures/bonds/SRs/PTCs issued by a SC/ARC shall constitute exposure on the SC/ARC. In cases of specific financial assets, where it is considered necessary, the Bank may enter into agreement with SC/ARC to share, in agreed proportion, any surplus realised by SC/ARC on the eventual realisation of the concerned asset. In such cases the terms of sale should provide for a report from the SC/ARC to the Bank on the value realised from the asset. No credit for the expected profit will be taken by the 54

Bank until the profit materializes on actual payment from the SC/ARC. 6.5 Training The Bank is conducting workshops for functionaries in administrative and controlling units and also for Law Officers of the bank who will guide/clarify on practical aspects to the field level officials of the Bank. The workshops will also chalk out plans for recovery in tune with trends in the market. The Bank envisages and imparts training to target groups of field level officials on the practical aspects of NPA management and recovery.
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7. BRANCH EXPANSION & SUPPORT SERVICES

7.1 7.1.1 7.1.2 7.1.3 7.1.4 7.1.5 Consideration for selecting the centres Potential for Identified centre should have good potential for CASA CASA IT/BT Centres Up coming IT/BT centres should be preferred. Identified SEZ/ S M E Zones Agriculture lending Minority dominated Districts Under-banked centres Top 200 Centres Centres located in SEZ/SME Zone get preference Potential for lending to agriculture should be considered Minority dominated districts, as per Prime Minsters National Programme should be preferred. Under-banked centres should be preferred we should have our presence business expansion in top 200 centres for

7.1.6 7.1.7

7.1.8

Geographical spread

Better geographical spread of our Banks network should be achieved by covering uncovered Districts.

7.2 7.2.1 7.2.2

Steps to be taken to ensure good customer service Core Banking Technology Products New Branches are opened under the Core Banking Solutions having fully networked connections Banks technology products such as Any Branch Banking, Multicity Cheque Facility, Internet Banking, Mobile banking., Debit Card, Credit Card, NEFT, RTGS etc., are offered to customers immediately after opening the account with the newly opened branches also. & Branches are opened with complement of minimum number of required staff and all the necessary stationery [Forms, letters, brochures, pamphlets, applications] items are made available to customers All customer information posters, policies, books and publications meant for customers are provided. Premises are fixed keeping in view the provision of standard ambience to customers and customer amenities. Publicity is given in the media before opening the branch.

7.2.3

Staff Stationery

7.2.4

7.2.5

Customer Information materials Standard Ambience Publicity

7.2.6

56

7.3 7.3.1

Branch Authorisation Opening of new All the regulations / procedures / guidelines branches / ATM/ stipulated by RBI from time to time should be CPC etc. scrupulously followed while opening new branches, off site ATMs, Central Processing Centres / back offices, call centres & service centres. Shifting, Merger, Bank shall strictly follow the guidelines stipulated by Conversion etc. RBI in the matter of shifting, merger, conversion, upgradation & closure of branches. Strong Room Visibility The Branch Layout Plan is so designed to ensure that the activities in the strong room are not visible to public Specification Strong Room should be constructed as per RBI specifications. Fitness Certificate from the competent authority should be obtained at prescribed intervals Maintenance Strong Room should be kept free from dampness/termites Safe Deposit Lockers Identification Locker to be allotted to customers identified as per KYC norms Security Deposit As directed by RBI, three years rent advance along with breakage charges(in case of non operation of lockers) has to be obtained and kept in deposit at the Branch Access and Access to lockers should be allowed to the person operation of the authorized to operate the locker against identity and locker verification of signature obtained in the access slip Change of lock When a locker is surrendered, its lock should be replaced before offering it to any new customer Locker Keys Bank Code and Branch Code to be embossed on the locker keys as per RBI guidelines Checking of At the end of the day, all lockers operated during the operated lockers day have to be checked for proper closure of the locker units Recovery of rent Standing Instructions should be obtained for recovery of locker rent. If rent is overdue, access to locker should not be allowed.

7.3.2

7.4 7.4.1

7.4.2

7.4.3 7.5 7.5.1 7.5.2

7.5.3

7.5.4 7.5.5 7.5.6

7.5.7

57

7.6 7.6.1

Procurement Guidelines Guidelines issued by CVC from time to time have to be followed in respect of Procurement of goods and services The procedures in respect of publication of tenders in website, newspapers etc., opening of tenders and award of tender has to be done according to the procedures All records have to be kept properly and reporting to be done to the authorities concerned The instructions/directions received from the Government/RBI/IBA and other authorities have to be complied

7.6.2

Procedures

7.6.3 7.7 7.7.1

Reporting Compliance Instructions/dire ctions received from Govt./RBI and other authorities Reporting

7.7.2 7.8 7.8.1

Reporting of compliance of instructions/directions to be done to the authorities concerned Safe Custody of Security Forms Receipt/verifica- Immediately on receipt of security forms, Branches -tion of Security should verify the contents from the invoice and send Forms acknowledgement to Printing & Stationery Dept. All security forms after verification should be kept in the strong room or in FBR safes.

Printing & Stationery Dept., should obtain confirmation signed by the joint custodians of the Branches regarding receipt of security forms. 7.8.2 Stock of Security The Branch should have stock of only 12 months Forms requirements. Surplus stock should be disposed off, in consultation with Printing & Stationery Dept./Controlling Office. 7..8.3 Joint Custody of The stock of security items should be kept in joint Forms custody. The forms, which are currently in use, are to be issued to the concerned officer against acknowledgement, which will be held in his single custody. The concerned officer should issue/receive back security forms to/from assistants through security forms receipt and/or delivery book only. 7.8.4 Bank Guarantee Receipt/movement of these forms should be duly and LC forms recorded and kept in the custody of a supervising official. 7.9 Disposal of Assets

58

7.9.1

Methods

Disposal of assets should be through newspaper publication, publishing in website and by tender-cumauction.

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8. COLLECTION & PAYMENT SERVICES

8.1

FCS Operations: By Operating Branches

Due Care and caution is to be exercised in handling FCS operations. FCS instruments should be presented in the immediate clearing without any delay so that the financial implications thereof are avoided. Returned cheques should be handed over to the client/his representative without any delay. Genuine business cheques are only to be entertained under Corp Instant, Corp Clear, Corp Comfort, Corp Local and Corp Express Services. Exposure limits fixed should not be exceeded. Collection cheques entered in CCS Module should be dispatched for collection on the same day along with forwarding schedule. Instruments drawn on locations within Network should be collected within 4 days. Before sending cheques for collection to outside network bank branches, proper address of the other bank branches with telephone numbers should be obtained. Personnel telephonic contact with the official concerned at the other bank branch should be made for hassle free and timely collection of outside network instruments. Returned instruments /reversed instruments which are not funded within a minimum period of 5 days should be recovered by contacting the parent CAPS/ client without waiting for fresh collections. Cheques once returned for other than on technical grounds should not be handled under CIS and should be handled under Collection arrangements only. Local cheques are not to be processed under CIS under any circumstances and should be handled under local cheque collection arrangement (F C S or Corp Local) and should be released only on realization. 60

8.2 CCS Operations

 8.3 Payment Products:

Reposting of cheques should be minimum.

Prompt timely payment at the other end should be ensured. Courier arrangement is most important in cash management services. Strict vigil on the courier arrangement should be kept for giving prompt service to our CAPS clients. Best courier service that is efficient and capable of delivering the goods at competitive rates is only to be employed.

8.4

Courier arrangement:

The Courier shall invariably visit the entire pick up points on all working days. Courier representative, calling at the clients doorsteps for pick-ups, shall present himself properly. If on any day, should a courier representative fail to turn up, the agency shall make alternative arrangement immediately so that inconvenience of any nature to the client is avoided.

Payment to the courier agencies to be made only after thorough scrutiny of run sheets in respect of pickup of local cheques and P O Ds' in respect of upcountry cheques. Periodical visits to the clients offices should be made by branch/ bank officials to enquire about the level of servicing and also to get other business support to the branch / bank. Good relationship to be maintained with the client / his representative locally. Immediate and prompt attention to be given to grievances.

8.5

Marketing

8.6

Research & Development

New products should be innovated keeping in mind customer requirements / desires. Existing products to be modified / altered according to the customers needs.

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8.7

MIS

Required MIS to be generated and the same should be sent to the clients on a daily basis. MIS received from FCS and other CAPS branches to be sent to clients on daily basis. Housekeeping reports like daily/weekly/monthly and quarterly to be generated and the records to be maintained. Required reports to be generated and sent to controlling offices. Charges report / turnover report should be checked. If there is any reduction, clients should be contacted immediately.

8.8

I T related matters

Cheques should not be processed in other menus. Cheques should be processed in CMS Menu only. Offline programme should be used whenever there is leased lines/ connectivity problem so that cheques can be presented in the clearing without any delay. Details like telephone No. Address and names of contact persons of vendors should be noted and good rapport to be maintained with the vendors so that breakdown period of the systems could be reduced. AMC of all the computer systems, Fax Machine, Air Conditioners etc., should be made and renewals of AMC should be done well in time. Outside floppies should be checked for virus. E- Mail can be used for sending / receiving of data.

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9. GOVERNMENT BUSINESS
9.1 Type of business 1. Central Government Business Bank is authorized to collect Direct taxes (Income Tax, Co 2. State Government Business Bank is authorized to collect State Government Taxes viz; VAT, Entertainment Tax, Luxury Tax etc in the States of Maharashtra, Delhi, Gujarath and Goa. Customers pay government dues by cash and cheques. Only Computer Generated Receipt has to be handed over to the taxpayers and in case of cheques presented in clearing, receipt should be given after realization of cheques mentioning clearly CIN no., BSR Code, Date of Tender, Date of Realisation and Amount. Bank is authorized to disburse Central, Defence, BSNL, Telecom etc and State Government Pensions. In the States authorized by Government. Branches should disburse pension as per the directions given in the Pension Payment Order. Every pension payment should be entered in the disbursers portion of the PPO and authenticated. Pension should not be paid in cash. Pension should be credited to the SB account of the pensioner with the paying branch. Life Certificates are to be obtained from the Pensioners every year in the month of November. Non-employment certificate should be obtained every six months in May and November. Undertaking should be obtained from the pensioner in the prescribed format stating that any excess pension paid may be recovered subsequently. TDS at prescribed rates should be deducted.

9.2

Receipts

9.3

Pension payments

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9.4

Reporting of transactions

All State and Central Government transactions should be reported to the respective Focal Point branches on a daily basis. Monthly statements should be tallied with the putthrough statements Funds settlement of Central Government transactions should be done through RBI, CAS Nagpur.

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10. BANCASSURANCE
10.1 Life Insurance Business and Bancassurance products sales The branches should sell Life Insurance policies of LIC of India only as per the MOU. As per IRDA guidelines stipulate that only Specified Persons should solicit new business from the prospective investors by explaining all the features of the scheme. Group Insurance schemes viz; Corp Jeevan Raksha, for all the account holders, Corp Jeevan Griha Raksha for home loan borrowers and Corp Suraksha for education loan borrowers should be sold to the customers of the Bank by properly explaining the features of the scheme. Proper acknowledgement / Certificate should be handed over to the customers immediately after accepting their consent cum application forms. The Bank has tied up with New India Assurance Co. Ltd in distributing general insurance products. The branches should market insurance products of New India to the desired clients. The Bank should also sell Corp Mediclaim policies under the New India's group insurance scheme by explaining all the features of the scheme. The Bank has tied up with 19 Mutual Fund houses and the branches should distribute the mutual fund products of these fund houses through the Bank's AMFI certified employees by properly explaining about the Fund features, the risk involved in investing in the Funds and the brokerage for the service rendered.

10.2

General Insurance

10.3

Mutual Funds

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11. CORPORATE COMMUNICATIONS, PUBLICITY AND PUBLIC RELATIONS

11.1 Out Door Publicity [ODP] The Total Budget for the financial year under this sub head of the Publicity is sought from the Board of Directors before commencement of the Financial Year. The Budget is arrived at after considering the previous year's actual expenses and requirement. Zone-wise Budget is allocated taking into consideration the spread/ branch network/ business of the zones. The sanctioning power vests with Head Office at various levels as per the amount. Zonal Office inspects the sites/ media shown by various agencies, selects the sites, negotiates the rates with the agencies and forwards the proposal to HO along with photographs for approval. Site visibility/ rates are checked at HO and negotiation with the agencies is done to ensure that rates quoted are reasonable. Thereafter a note is placed before the Competent Authority for sanction specifying the details of sites like location, type, size, rate, period etc. 11.2 Public Relations (PR)

The Total Budget for the financial year for Public Relations (PR) is sought from the Board of Directors before commencement of the Financial Year. The Budget is arrived at after considering the previous year's actual expenses and requirement. The sanctioning power vests with both Head Office and Zonal Office. Allocation of Budgets, Non-lending powers to the competent authorities, per occasion limit, annual ceiling etc., are sought from the Board while seeking Publicity Budget for the financial year. On receipt of the proposals/request from the organizers/Zonal Offices/Branches, basing on the merits of the case viz., cause, purpose, benefits to the Bank etc., note will be placed before the competent authority for approval.

66

11.3

Specialty Advertisement (SPADV)

The Specialty Advertisement (SPADV) includes Banks Wall Calendars, Table Calendars, Diaries, Give-away carrying Banks name and logo, Table tents and other tools of publicity such as T-shirts, Caps, and Danglers. The Total Budget for the financial year under Specialty Advertisement (SPADV) is sought from the Board of Directors before commencing of the Financial Year. Non-lending powers under Specialty Advertisements to the competent authorities are clearly mentioned while approving the annual budget. The sanctioning power on Specialty Advertisements remains only with the Corporate Office. Samples, specimens, designs of various items, which are required to be procured, printed, are placed before the top management for selection. The Agency/Vendor/ Printer whose items are selected by the top management gets the supply order.

11.4

Print & Electronic Media [PEM]

The Total Budget for the financial year under this sub head of the Publicity is sought from the Board of Directors before commencement of the Financial Year. The Budget is arrived at after considering actual expenses for the previous year and requirement. The sanctioning power on Print & Electronic Media remains only with the Corporate Office. The Advertisement creatives and storyboard are done by the Empanelled Advertising Agencies of the Bank. The brief on various products, services and campaigns, which are required to be advertised, are given to the agencies. The creatives/storyboard submitted by the Agencies are placed before the top management for selection. The Agency whose creative is selected by the top management gets the Media releases. The note for releasing to the media is placed before the Competent Authority specifying the details of the publications/channels/stations, size, colour, position, spots, date etc. The media estimate is given by the Agency. Corporate Office also checks for the rates and negotiates with the publications/stations, if required.

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11.5

Corp Compassion Scheme:

The Corp Compassion scheme was devised by the Bank as an innovative scheme by combining the business and marketing initiatives with the charitable activities under taken under its corporate social responsibilities, with a view to reaching out to the underprivileged, destitute, orphans, senior citizens and special children of the society. Under the scheme for every SB Account opened during a specific campaign period, the Bank would set apart a sum of Rs.10/- from out of its profits for donation. Each Zonal Office of the Bank is entitled to donate the eligible amount arrived at as per the total no. of new accounts canvassed, to deserving and identified charitable institutions in their zone. The Zonal Head would personally visit the identified charitable institutions to familiarize with the social activities conducted by the charitable institution, its track record, the personalities behind it and after assessing the eligibility of the institution for corporate support, would submit a proposal to the sanctioning authority with specific recommendation. On approval of the proposal by competent authority at HO, the donation amount would be handed over to the identified institution by the Zonal Head in a befitting function with due publicity.

11.6

Corp Bank Gold Medal Scheme

The Gold Medal would be awarded to Best outgoing Students in the College for a period of 3 years, initially. Each college identified by the Bank under the scheme would select its Best outgoing student. For this purpose, the college would give wide publicity to the scheme by displaying the Banks handbill on the subject on the College Notice Board. The Best outgoing student would be selected on the basis of his/her outstanding performance in academic as well as in extra curricular activities The selection of the student would be made by a panel consisting of the representatives of the management and the teaching faculty of the college concerned.

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12. INSPECTION & AUDIT

12.1 Audit Policy Inspection & Audit Policy is framed keeping in mind RBI/CVC guidelines/directives issued from time to time and Inspection & Audit of the Branches/offices are carried out through Internal/External Auditors strictly as per the approved Inspection & Audit Policy of the Bank. Mission of the Inspection & Audit Division is to see that, every Branch improves its rating in each of the parameters under qualitative and quantitative risk parameters and in overall risk rating in every Inspection. Inspection & Audit plan and Budget for the ensuing year (quarter wise) is prepared/ approved well in advance. Inspection & Audit of the Branch is to cover all areas of Branch functioning with special focus on verification of compliance level of instructions issued by various Functional Divisions at HO from time to time including recommendations of Mitra Committee, Ghosh Committee, Jilani Committee on prevention of Bank frauds and malpractices. Advance intimation is sent to the Branches/Offices about the forthcoming inspection and audit so as to enable the Branches/Offices to be in preparedness for the smooth conduct of the Inspection & Audit. Inspection & Audit of the Branches/offices are commenced well before the due date and completed within the shortest possible time. Qualified/experienced officer is deputed for conducting the Inspection & Audit. Inspection & Audit is carried out at the Branches/Offices in a conducive atmosphere and non biased, non partisan approach is adopted by the Auditors. Irregularities observed by the auditors are 69

12.2

Purpose

12.3

Budget/Plan

12.4

Coverage

12.5

Process

12.6

12.7

12.8

12.9

12.10

factual. A list of pending/residual irregularities that have not been rectified at the time of closure of the previous inspection report, is furnished to the auditors to confirm its rectification. Rectification Spot rectifications of the irregularities by the Branches are ensured and closure of the report with complete rectification of the irregularities, are ensured within the internal time norms. Procedure at Controlling offices pursue and ensure Controlling Offices complete rectification of various irregularities minor or serious in nature, recovery of all seepage of income, before recommending/closing the inspection report. Scanning & Rating Scanning of the Inspection report, preparation of Executive Summary, rating of individual risk parameters and overall rating of the Branch is done without any bias, prejudice and purely on the basis of findings of the report submitted by the Inspecting Official/s. Audit by External Selection of External Audit Firms for Agencies conducting concurrent/Income audit or any other audit is purely as per laid down guidelines of the Bank without any bias or prejudice and without any third party intervention. Appraisal of the performance of the External Audit Firms are also carried out without any bias or prejudice Training Inspection & Audit Division shall arrange for in-house/external Induction/Refresher Training Programmes/Workshops to Internal Auditors/External Audit Firms to update their knowledge/audit capabilities.

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13. CREDIT CARD

13.1 Commitments The Bank will act fairly and reasonably in all its dealings with Credit Card Holder by: Meeting the commitments and standards in this Code, for the products and services that are offered and in the procedures and practices the Bank's staff follow. Making sure Bank's Credit Card services meet relevant laws and regulations. Ensuring that Bank's dealings with Credit Card Holders will rest on ethical principles of integrity and transparency. The Bank will not engage in any unlawful or unethical Consumer practices. The Bank will help the Card Holders to understand how the credit card products and services work by giving the Card Holders the following information in a simple language: What are the benefits to the Credit Card holders. How Credit Card holders can avail of the benefits What are the financial implications Whom the Credit Card holders can contact for addressing their queries and how The Bank will treat all the personal information given in the Credit Card application forms as private & confidential (even when the Card holder is no longer a customer) unless required under statutory obligations or by law enforcing agencies or regulators, or in public interest. If Card holders ask the Bank to reveal the information, or if the Bank has Card holder's permission to provide such information to Bank's group/associate/entities or companies when the Bank has tie-up arrangements for providing other financial services/products, the information will be shared. Banks Credit Card dues collection policy is built on courtesy, fair treatment and persuasion. The Bank believes in fostering customer confidence and long-term relationship. The Bank staff or any person authorized to represent the Bank in collection of dues or/and security repossession will identify himself/herself and interact with the Cardholder in a civil manner. The Bank will provide the Cardholder with all the information regarding 71

13.2

Confidentiality

13.3

Recovery dues

of

dues and will give sufficient notice for payment of dues. The Bank's staff is governed by Model Code for Collection of dues and repossession of security, issued by the Indian Banks Association. 13.4 Redressal grievances of As per RBI guidelines the terms and conditions of Credit Card are indicated on the reverse of the bill. The terms and conditions of the Credit Card are also available in its web site, www.corpbank.in. The Bank has a Grievance Redressal Cell within the organization The Bank has furnished the details of grievance redressal mechanism in its website www.corpbank.in along with the names of the Authorities and their addresses. The Card holders may contact the Bank at hoccdccare@corpbank.co.in if the grievances are not redressed within 3 working days.

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14. MARKETING
14.1 Information products on The Bank shall ensure that for each new (or potentially new) customer, Marketing Personnel/Branch officials shall give clear information on the key features of the product, the customer is interested in. The Bank shall ensure that all the communications/interactions with customers is clear, fair, reasonable and not misleading. The Bank shall provide the customers with a broad range of financial services, products, some of which are the Bank's own products while some other are products of the Bank's group/associate/entities or Companies with whom the Bank has tie-up arrangements with. The Bank shall however tell the customers about the Bank's associate/group entities or Companies having business tie-up arrangements with the Bank and if the customers so desire, direct their staff/agents for marketing their products.

14.2

Communication

14.3

Financial Products/services

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15. PERSONNEL ADMINISTRATION AND HUMAN RESOURCES MANAGEMENT

15.1 Personnel Administration 15.1.1 Rotation of Duties and responsibilities of each supervisory Duties and clerical cadre employees be defined in relation to the work expected by each one of them and a system of rotation of duties be followed. 15.2 Human Resources Management 15.2.1 Recruitment The Bank has a transparent recruitment policy Policy reviewed from time to time. Shortening of recruitment process and resultant collapse of time frame is a positive aspect. This is attempted through campus recruitment. 15.2.2 People i) Training: Bank has developed multi-locational Engagement training infrastructure to meet the skill Policy development in various cadres. Specialised training are provided through external and international institutions. ii) Bank encourages self-development through reimbursement of cost of the pre-announced professional courses. iii) Competency mapping: Based on the skills, exposure and competency career path is drawn for employees by placing them in suitable positions and responsibilities. iv) Career Path: Fast track promotion policy is put in place to provide opportunity to career oriented performers. v) Performance Appraisal: System of performance appraisal (PA) is put in place and used as a tool for evaluation and providing career to officers. 15.2.3 Motivational Bank has promoted incentive schemes, based on Schemes performance. This helps the employees to attain their fuller potential. Schemes like Chairman's Club Membership, Super Ordinate Goal Performers, Best Branch Award are some such schemes recognizing the employees based on the performance.

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16. INVESTMENT & INTERNATIONAL BANKING

16.1 16.1 Foreign Exchange Transactions Branch level NRE deposits : Accounts should be opened with the 16.1.1 Deposits usual precautions. The antecedents of the NRI should be ascertained from the passport, overseas appointment letter etc. Clear instructions should be obtained regarding the currency in which the deposit is intended. Accordingly NRE or FCNR account should be opened. The source of funds should be Remittance from abroad Transfer from another NRE account Conversion of foreign currency (FC) brought from abroad Interest etc. on investments from NRE sources The deposit receipt should be handed over to the depositor or his authorized representative. The overseas contact number/e-mail address of the NRI should be kept on record, to keep in touch with the depositor. Any instruction from the NRI received from the representative must be cross-checked with the NRI for authenticity. In case of a B category branch., contact must be maintained with the link branch in respect of the deposit, its maturity , remittance of interest etc. Appropriate rates should be applied while converting NRE deposits from Rupee to Foreign currency and vice versa. FCDL/FCTL/PCFC/E Funds angle clearance should be obtained from FD BR loans in each case of FCDL/FCTL and PCFC/EBR. This is applicable in case of renewals too. Forward contracts should be booked for repayments, wherever applicable The limits should be appropriately reduced from sanctioned Rupee limits of the borrower.

16.1.2

75

16.1.3

16.1.4

16.1.5

16.1.6

Pre-post shipment Opinion report of overseas buyers should be credits obtained before sanctioning post shipment limits RBI defaulters list and ECGCs Special Approval List should be verified before granting PCL/PCFC. The exporter should be impressed to obtain specific cover in such cases. Export order/LC/advance value of stock should be verified before releasing PCL/PCFC. Running account PCL/PCFC facility should be granted to only those exporters who have proven good track record. In case of PCL to deemed exporter, a letter confirming that no PCL has been granted should be taken from the bank of the Merchant Exporter Non-Fund Based limits. While confirming LC opened by a foreign bank or issuing Bank Guarantee on behalf of a foreign bank, clearance for country risk and Bank Exposure should be obtained from competent authority. Sale of Foreign Appropriate rates should be applied according to Currency the value of the transaction. If amount is more than USD3000 rates should be obtained from FD stating the type of transaction. Appropriate rates should be applied for Bills & TTs Compliance of FEMA guidelines should be ensured. Appropriate declaration should be obtained from customers Clean Remittance Purpose and quantum should be in accordance with the FEMA/EXIM policy. Remittance should be preferably made through SWIFT and through our own foreign offices Drafts: All precautions mentioned in the relevant Best Practice Code must be observed while issuing drafts. Name of the Bank and account number of beneficiary should be written on the draft All remittances must be reconciled from the statement of account to ensure execution. Import Bills Know Your Customer guidelines should be adhered to Bills, if drawn under own LC, must be verified with the LC. If any discrepancy is found, negotiation bank must be informed, and no payment should be entertained In usance bills, adhesive stamps of appropriate value should be affixed before releasing the bill Demand bills should be presented immediately for payment. 76

16.1.7

Cheque Sale : The stocks should be periodically verified. Foreign Correct rates should be applied Notes Purchase: Care should be taken while purchasing TC or FCN. The list of stolen/lost TC should be verified as also security features. UV lamps may be used. Local address and passport details of the tenderer should be kept on record for any future reference Compliance of FEMA provisions should be ensured. 16.1.8 Export Bills Negotiation: LCs established by our branches/correspondent banks should be authenticated on receipt. Bills should be verified with LC. If found to be drawn as per the terms of LC, the same should be negotiated and reimbursement obtained as per terms of Credit Appropriate Bills buying rates should be applied Advance remittance, if obtained should be earmarked and certificate issued Transit period should be calculated as per FEDAI guidelines. 16.1.9 Forward contracts Should be booked for genuine trade transactions only 16.1.10 Import Letters of Should be opened against sanctioned limit. The Credit material should be either under OGL or valid import licence It should be ensured before opening of LC that sufficient funds will be available for retiring the bills on due dates. Extra care should be observed while opening usance LC 16.1.11 Crystallization of Demand Bills and usance bills in Foreign Currency Bills (Import) should be crystallized within 10 days of receipt of the bill or on the date of maturity respectively.

Travelers (TC) & Currency (FCN)

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16.1.12 SWIFT

The message should be fed only against authenticated input forms The message transmitted should be verified and authenticated as per laid down procedure Incoming messages should be authenticated.

16.2 Treasury Operations Foreign Exchange 16.2.1 Functional separation Clear and functional separation of Front Office (Trading), Back Office (processing, control and Accounting) and Mid Office (R0isk Control) should be ensured. 16.2.2 Place of dealing Only from office. Dealings to be done using approved communication media like telephones with recording system of Negotiated Dealing Systems like Reuters/NDS/EBS etc. No deal should be done by using mobile phone. Dealings are to be conducted during prescribed/approved intra-day hours of the bank. 16.2.3 Characteristics required in The following characteristics are required in the Dealers Forex Dealers: High level of knowledge, skills and fast reflexes. Ability to take quick decisions Mental alertness and proactive disposition of mind Ability to keep cool under stress Willingness to accept responsibility Drive and aggressiveness Readiness to acknowledge and learn from mistakes High level of integrity 16.2.4 Training of Dealers Dealers should be properly trained in Foreign Exchange Bourse Programmes and other related programmes in which they are supposed to deal. Trading deals Trading deals are required to be concluded only with Banks for whom counterparty limits have been approved and these should be within the limit. Trading should be done in approved currencies only. Overnight and daylight limits Limits should be set up for pure trading with currency wise sub limits within the overall sanctioned limits to be reviewed from time 78

16.2.5

16.2.6

16.2.7 16.2.8

Functions of Mid Office Managing Risks

to time. Should independently analyse risks associated with trading activities Risks involved in trading activities should be measured, analysed, monitored and managed as per approved procedure

16.2.9

Documentation Legal Risks

16.2.10

16.2.11

16.2.12

16.2.13

16.2.14 16.2.15

16.2.16

Reduce Reporting to various higher authorities should be done as per laid down system Deals not in line with market rates should not be permitted. The Mid Office and Back Office should ensure this. Recording of deals Record of each transaction, showing the entire key data must be kept in the Back Office after the deal is concluded. Each deal should be recorded to determine the respective trading position Stop Loss limits Market risk on foreign exchange open positions resulting from trading should be kept within allocated stop loss limits The maximum loss booked on any single day should be within the limit approved by the Board. Different action points must be triggered at the stipulated Cumulative Loss levels in a financial year and the strategies reviewed. Strict confidentiality Strict confidentiality with respect to trades is to be maintained by all the concerned staff handling processes involved in trading activity Other duties of a Dealer Dealers should not be associated with accounting and reconciliation work relating to dealing room activities. Compulsory leave All dealers must take minimum 2 weeks leave every year Code of Conduct for Dealers All FOREX Dealers should give an undertaking to adhere to the Banks laid down code of conduct for Forex Dealers Concurrent Audits and The following areas should be put to audit Statutory Audits by the concurrent auditor, statutory auditor and the Banks internal auditors o Limit systems o Determination and reconciliation of positions and profits/loss o Completeness, correctness and timeliness of the internal reporting system. o Functional separation 79

to

o Degree to which the trades/deals are in line with market conditions o Confirmations and counter confirmations 16.2.17 Written Contingency Plans All concerned should be aware of contingency plan (for ensuring among other things that in the event of breakdown of the technical equipment necessary for trading activities, back up facilities can be deployed at short notice) and their respective role in that plan. 16.2.18 Strict compliance with the Organising Dealing Room set up RBI guidelines in the Selection and training of Dealers Dealing procedures following areas Code of Conduct for dealers as prescribed by FEDAI Accounting department (Back Office) operations. 16.3 Treasury Operations Rupees 16.3.1 Investments All RBI guidelines for classification, valuation and operations of investment portfolio by bank should be complied with meticulously. 16.3.2 Functional Clear and functional separation of Front Office separation (Trading) Back Office (Processing, control and accounting) and Mid Office (Risk Control) should be ensured. 16.3.3 Place of Dealing Only from office site. Dealings to be done using approved communication media like telephones with recording system or Negotiated Dealing systems like Reuters/NDS/EBS etc. except in case when EBS is not working. In that case dealing may be done through other phones after taking the permission from DGM. No deal should be done by using mobile phone. Dealings to be conducted during prescribed/approved intra-day hours of the bank. 16.3.4 Mid Office Should analyse risks associated with trading activities. 16.3.5 Regulations - Regulatory, Listing and Ratings as suggested by RBI - Trading and settlements As per regulatory (RBI/SEBI/FIMMDA) guidelines 16.3.6 Targeted Returns Should be fixed against the bench mark of PLR/Yield on Govt.Securities, T. BILLS, CP Reuters reference rate etc.

80

16.3.7

16.3.8

16.3.9

16.3.10

16.3.11

16.3.12

16.3.13

16.3.14

Documentation to - All trades should be based on clear and correctly reduce Legal Risks documented agreements and market practice - Reporting to various higher authorities should be done as per laid down system - All concerned staff handling processes involved in trading activity should maintain strict confidentiality. - Deals not in line with market rates should generally not be permitted. If circumstances warrant, approval for deviation from competent authority should be obtained. The Mid Office and Back Office should ensure this. A record of each transaction, showing all the key Recording of deals data must be kept in the Back Office after the deal is concluded. Each deal should be recorded to determine the respective trading position. Telephonic conversation should be recorded. Concurrent Audits The following areas should put to audit by the and Statutory Audits. concurrent auditor, statutory auditor and the Banks internal auditors: Limit systems Determination & Reconciliation of positions and profits Changes in the eDP systems Completeness, correctness and timeliness of the internal reporting system Functional separation Degree to which the trades/deals are in line with market conditions Confirmations Cut Loss levels Different policies laid down for each of the categories to set up Cut Loss limits should be adhered to. Overshooting of The procedure for reacting to any overshooting of limits the cut loss limits and to extreme market developments should be adhered to. Contingency Plans All concerned should be aware of contingency plan (for ensuring among other things that in the event of breakdown of the technical equipment necessary for trading activities, back up facilities can be deployed at short notice) and their respective role in that plan. Sub limits for Deals routed through the brokers should be within brokers the ceiling. The overall transaction that would be routed should not exceed the 5% ceiling to any single broker, as specified by RBI guidelines. Strict Confidentiality Strict confidentiality with respect to trades is to be maintained by all the concerned staff handling 81

processes involved in trading activity. 16.4 Policy for trading in Central Government Securities (CG-Sec) 16.4.1 Risk Management The policy regarding volume, maximum maturity, systems in Banks holding period, duration stop loss, defeasance Guidelines circulated period, etc. for classifying securities in the trading by RBI book should be observed meticulously. 16.4.2 Ceilings for Risk Ceiling for risk positions for the CG-Sec trading Positions fixed by the Bank in the following instances should be adhered to: 1. Total amount of positions outstanding at any point of time 2. Total amount in an individual time bucket 3. Maximum adverse movement permissible (Stop Loss) 4. Defeasance period 16.4.3 Risk Control & Risk The Risk Control and Risk Management system Management designed keeping in view the scale, complexity and risk content of the trading activities conducted or envisaged should be followed 16.4.4 Counter party limits All trades except transactions in which amount has been remitted or is to be remitted on a delivery versus payment basis should be concluded only with contracting parties for whom counterparty limits have been sanctioned and within sanctioned limits. 16.4.5 Mid Office functions The Back Office should prepare reports on risk and monitoring positions and the trading results every day 16.4.6 Defeasance period Investments can be held in Held for Trading (HFT) for 90 days, before which they should be sold or a decision should be taken by an appropriate committee whether to transfer them to the Available for Sale category and make provisions as per the revaluation norms of RBI or to sell the scrip and book losses 16.5 Equity Investment 16.5.1 Equity A limit for outstanding in the Equities Book at any point of time Investments should be fixed. Equity investments in the trading book should and total be made only in those securities, which are in the universe of outstanding securities approved for this purpose. positions 16.6 Policy on derivatives 16.6.1 Derivatives All deals undertaken in derivatives should be governed by scope, rules, legal framework, market practices and documentation prescribed in addition to the guidelines given by RBI, SEBI other non-regulatory bodies like ISDA, Fixed Income Money Market and Derivatives Association (FIMMDA), FEDAI, Clearing Corporation of India Ltd. Etc 82

16.6.2 16.6.3 16.6.4

16.6.5 16.6.6

16.6.7

16.7 16.7.1

16.7.2

16.8 16.8.1 16.8.2

16.8.3 16.8.4

- Ceilings for notional amounts on Risk positions for Futures, IRS, FRAs and Indian Rupee Cross Currency Interest Swaps should be observed. - Trading should be undertaken only in instruments where market making is allowed by RBI. - All the types of Derivatives dealing should be within the ceiling. Policy for Policy for hedging the market risks inherent in banking business Hedging should be observed Contracting All trades must be concluded only with contracting parties for parties and whom counter party limits have been sanctioned and ISDA counter agreements signed. party limits Risk The principles of Risk Disclosure Statement for Over-theDisclosure counter (OTC) derivative transactions should be adhered. statement Prudential guidelines on Banks investment in Non-SLR securities Non-SLR securities Prudential guidelines should be observed regarding investments in Non-SLR securities The investment policy should be adhered to No investment should be made in unrated papers Prudential norms in unlisted non-SLR securities to be adhered to Investments proposals in Non-SLR securities should be subjected to credit appraisal and rating Portfolio to be periodically reviewed Details of issuer composition of non-SLR investments and the non performing non SLR investments to be disclosed in the balance sheet Trading and settlements should be as per SEBI guidelines Market Repos with Exposure limits fixed for counter parties should be counterparties adhered to. other than RBI Policy for dealing in assigned/securitized assets Assigned / The policy for purchase and sale of loan assets should Securitized Assets be followed. Credit Rating The assets should be linked to their credit rating in terms of CRISIL ratings for Structured Obligations (SO) or similar ratings Compliance The Compliance officer to ensure compliance of the officer code Confidentiality The Directors and Designated Employees should 83

Cut Loss levels Know your customer Notional amounts

Different policies laid down for Cut Loss limits should be adhered to. Counter parties should be well identified as per KYC norms

maintain confidentiality of all unpublished Price Sensitive Information. They should not pass on such information to any person directly by way of making a recommendation for the purchase or sale of securities of the Bank based on the same. 16.8.5 Unpublished Price All Directors/Designated Employees and/or their Sensitive Dependent Family members should be subject to Information certain trading restrictions to be detailed in the code. 16.9 Code of Corporate Disclosure Practices for Prevention of Insider Trading in the Securities of CORPORATION BANK. 16.9.1 Prompt disclosure Price sensitive information should be given to stock of price sensitive exchanges and disseminated on a continuous and information immediate basis. 16.9.2 Information Suitable ways of supplementing information released to released to Stock stock exchanges by improving investor access to their exchanges public announcements should be ensured. 16.9.3 Compliance The designated Compliance Officer should oversee Officer corporate disclosure practices. He should be responsible for ensuring that the Bank complies with continuous disclosure requirements, overseeing and coordinating disclosure of price sensitive information to stock exchanges, analysts, shareholders and media and educating staff on disclosure policies and procedure. 16.9.4 Investment Policy The purpose of the Investment Policy is to create a broad framework within which the Treasury Department would take investment decisions based on Target return Target duration of the portfolio as determined by Investment Committee/Asset Liability Management Committee (ALCO) Liquidity considerations Credit Risk The compliance of the investment policy should be ensured Parameters set The parameters should be in accordance with the ALM by ALCO policy of the Bank. Statutory - The Treasury Department to comply with statutory prescriptions prescriptions relating to investments (SLR maintenance etc.) in managing the Banks portfolio. The investments should be within prudential limits fixed by RBI, in conformity with the BR Act 1949, and other applicable laws and guidelines that are issued by RBI, SEBI and other such bodies. - While taking investment decision, among other things, default, liquidity and interest rate risks should be considered on the basis of available information. 84

16.9.5 16.9.6