Professional Documents
Culture Documents
Segregation of Duties as a
tool of CRM
An overview of Industry
On September, 2012
Total No. of Banks 47
Total No. of PCB. 30
20.68%
A Prelude
Credit Banks Prime Product
An integral Part of Basic Banking
Credit Departments are evolving
From underwright and hold
To
underwright to Distribute
Segregation of Duties
Best Practices
To be designed a system of checks and
balances to decrease the likelihood of errors
and irregularities.
The person who prepares documentation
should not be the same person to authorize
and execute the transaction Banks should aim
to segregate the following lending functions:
Segregation of Duties
Relationship Management/ Marketing/
Corporate Banking Unit
Credit Approval/Risk Management CRM
Credit Administration / NITS
Credit Monitoring & Recovery
Credit/ Loan Auditing
Proactive Approach
- Remedial Management for Problem Accounts may be
known as Special Asset management.
- The remedial Account Manager to learn how to behave
when the grasses are not greener on the other side.
- Keep the original RM and Client in good humer.
- Review the existing security arrangement, try your
best to restructure the loon by improving collateral
position.
- Make sure the repayment Schedule is in line with
Trade/Business cycle.
- And get into a new repayment agreement with client.
- Improve your knowledge, patients, skill on Risk
Management, Legal matters and interpersonal
Monitoring Process
The prime objective of the Cell - continuous monitoring
the performance of Loan A/c [whether the loan A/c is
deteriorating].
It covers all the Credit portfolios except defaulted
A/c(s).
To remind branches to monitor cash flow vis--vis stock
To identify the deteriorating and irregular A/c(s).
To classify the irregular Loan A/c(s) in accordance with
their degree of defects.
To innovate device and strategies for regularizing the
defectives, overdue Loan A/c(s).
To furnish action plan for regularizing the defective
Loan A/c(s) and to suggest the Branch to furnish their
action plan and to monitor the Branch to keep the credit
Monitoring Process
Continue regular follow up and supervision for finding
ways to recover Banks dues in accordance with sanction
terms.
To point out the defects and furnishing the required
information to the Head of CRM.
To keep all the Branches under close watch on all of its
Loan & Advance A/c(s) except adversely classified to
ensure the timely action plan to be taken for adjustment /
regularization / timely renewal.
To tell all the borrowers to find out early indication of
the deteriorating financial health of them and to take
action plan for next course of action by analyzing the
Financial Statement.
Monitoring Process
To develop an IT enabled system to monitor and to take action plan
to recover, regularize past dues, principal or interest payment, past
due trade bills, account excess and breach of loan covenants
To monitor terms & conditions of Loan as approved are being
observed.
Financial statement is to be received on regular basis and covenants,
breaches or exception are referred to the Head of CRM and to
take action plan to regularize the same.
To monitor if the Loan Accounts are being Audited/reviewed on
appropriate basis.
Monthly return of the Loan & Advances of the Branches must be
collected in time and will review the same to keep all the credit
portfolio regular and even to check through Flora UBS to monitor the
transaction in the A/c, repayment installments, operation of A/c(s) as
per terms of sanction.
Surprise checking even on site visit to branches and clients.
Level of Monitoring
At Branch level by RM.
At CRM by Special Monitoring Cell.
At CAD by their team before loading Limit.
To address all concerned including Head
of CRM and Risks.
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