PUNJAB NATIONAL BANK INTEGRATED RISK MANAGEMENT DIVISION (CREDIT POLICY SECTION) HO: 7, Bhikhaiji Cama Place, New

Delhi-110607.

L&A
Cir. No. 30/2014
CPY-409 March 06, 2014

TO ALL OFFICES

In supersession of L&A Circulars No. 143 49 02 Date 24.09.07 31.05.10 11.01.11 No. 21 04 Date 05.02.13 10.01.14

LOANS & ADVANCES CIRCULAR NO. 30 Consolidated Circular - Monthly Statement of Limits Sanctioned

Detailed guidelines in respect of Monthly Statement of Limits Sanctioned have been circulated vide L&A Circular No. 143 dated 24.09.2007 and subsequent circulars issued on the subject from time to time. 2. On review, it has been decided to strengthen the control aspects by prescribing guidelines for scrutiny, monitoring and closure of the Limit Sanctioned Statement. 3. To obviate reference to various circulars, the operative guidelines/ instructions on the subject have been consolidated incorporating the control aspects as above and are available as per Annexure.

(B. L. PATHEJA) GENERAL MANAGER

INDEX: LIMITS SANCTIONED STATEMENT

Annexure

GUIDELINES ON MONTHLY STATEMENT OF LIMITS SANCTIONED

1. Sanctioning Authorities are required to submit all limits sanctioned, whether fresh/renewal/reduction/enhancement or adhoc in the prescribed format of Limits Sanctioned Statement as on the last day of the month to the next higher authority for monitoring as under: Incumbents of branches to submit the Statement of Limits Sanctioned to the respective Circle Offices/FGMOs (to whom they are reporting). The designated Chief Managers posted in ELBs shall exercise their vested powers and such cases shall be reported every month to respective controlling Offices along with facilities sanctioned by the Incumbent Incharge.

2. LSS & minutes of the loans sanctioned by Credit Approval Committees (CACs) at various levels shall be submitted as under: LSS of the CAC COCAC FGMCAC Competent authority to which LSS is to be submitted FGMO for putting up to the FGM Credit Division, HO for putting up to the respective Executive Director (ED) HOCAC Level-I HOCAC Level-II by Credit Division, HO HOCAC Level-II Management Committee (MC) of the Board by Credit HOCAC Level- Division, HO. III

2.1 Minutes of CACs shall be placed to the higher authority for oversighting as under: Minutes of CAC COCAC FGMCAC HOCAC Level-I HOCAC Level-II HOCAC Level-III Competent authority to which minutes are to be placed FGMCAC HOCAC Level-II HOCAC Level-II Board

2.2 The placing of CAC minutes should not be reckoned as a substitute for monitoring/reporting system. Proposals such as OTS/Write off/Restructuring etc. may continue to be monitored as per the extant system by owner Division.

3. The Monthly Statement of Limits Sanctioned is to be submitted in the proforma (PNB-207) as given in Part I & II of Appendix I. However, it should be ensured that the LSS generated from the CBS system only, to be submitted, after making necessary additions/deletions in it wherever required. Submission of manual statements should be avoided. Operational Instructions for submitting the statement in the above proforma have been given by way of footnote in the form itself which should be meticulously followed. 3. The Monthly Statement of Limits Sanctioned should be submitted in 5 parts as under: Part-A Part-B Part-C Part-D Part-E Sanctions falling within vested powers Adhoc sanctions within vested powers Details of excess drawings/limits permitted Details of loan proposals rejected during the month (Appendix II) Details of cases requiring confirmation of action as under E-I - Details of cases requiring confirmation of action shall be reported by Branches/COs/FGMOs along with its present status (Appendix-III). E-II - Cases received from branches/COs and pending at COs/FGMOs/HOs shall be reported along with reasons for pendency (Appendix-IV).

3.2 All adhoc sanctions within vested powers as well as details of all excess drawings/limits permitted by the sanctioning officials during a month are invariably to be reported in Part B and Part C respectively of the Monthly statement of Limits Sanctioned, irrespective of whether the same are adjusted or not by the reporting date. The Adhoc Limits and Temporary Overdrawings are defined as under: Adhoc Facilities: Adhoc limit/facility should be granted as regular sanction for fixed period to the borrower after analyzing the financials & requirements of the borrowers only for unexpected business and subject to the other laid down stipulations for sanction of adhoc limits. The adhoc facilities are not to be allowed by Branch Incumbents (other than Incumbents of LCBs and branches headed by AGMs/DGMs) for proposals falling upto their vested loaning powers as well as sanctions by the higher authorities. The cases for sanction of adhoc facility for fixed period (above 7 days) emanating from these branches shall be considered by Circle Head and above within their vested loaning powers. Circle Heads/Incumbents of LCBs and officials in the rank of AGMs/DGMs to exercise their existing loaning powers for sanction of adhoc facilities in an account for maximum of two occasions within a year from the date of last sanction/ renewal/ review/ enhancement of the regular limit.

GM (HO/Field) and above to exercise their existing loaning powers for sanction of adhoc facilities as per the extant system.

Temporary Overdrawings (TOD): In fund based secured advances overdrawings may be allowed for payment of statutory dues, salaries, wages or any other justifiable debits for very short period say 2-3 days but not exceeding 7 days (including roll over, if any) to meet temporary mismatch of funds in unforeseen circumstances within the vested loaning powers for sanction of adhoc facility. In case TOD is not adjusted within maximum period of 7 days from the date of sanction, the matter may be referred to the Circle Head & above for confirmation of action/sanction of regular adhoc limits. 3.3 The cases of TODs as mentioned above should be reported by way of a separate MIS available as Appendix-V on monthly basis. Further, TODs not adjusted within the prescribed time limit and requiring confirmation to be reported in Part E as above. 4. While submitting the Limits Sanctioned Statement, following guidelines should be kept in view: a) b) The statement is to be submitted as at the last day of the month. The statement is to be submitted by the sanctioning authority to the next higher authority, properly filled up in all respects, within 7 days of the close of the month to which it relates. In case the statement is not received within the prescribed time limit, the controlling office should follow up closely. In case the same is not submitted within 10 days from the close of the month to which it pertains, disciplinary action shall be initiated against the erring officials for non compliance of the instructions. It is advised that all sanctions irrespective of nature should be entered in the limits sanctioned register. Similarly all proposals rejected during the month should be entered in a register to be devised as per format given in Appendix II. Further, prescribed loan documents depending on the nature of facilities sanctioned including on adhoc basis, as in case of enhancements, be also obtained and entered in the loan document register to safeguard banks interest. Non rating of eligible accounts for credit risk rating is violation of HO guidelines, which defeats the very purpose of credit risk assessment. Accordingly, a column for Credit Risk Rating/Score alongwith respective PNB Trac/Score ID to ensure credit risk rating of all eligible accounts has been incorporated in LSS Format. Further, a column for Credit Proposal Tracking System No./Date has been added to capture the unique No. generated by the Proposal Tracking System for each proposal to facilitate ascertaining the status of the proposal at any point of time. The controlling offices, while scrutinizing the Limits Sanctioned Statement, should ensure that the guidelines of credit risk rating have been complied with in all loan accounts eligible for credit risk rating as per laid down guidelines.

c)

d)

e)

In terms of extant guidelines CIRs (Credit Information Reports) on the borrowers and guarantors/co-obligants should be drawn at the time of sanction of fresh credit facilities as well as at the time of renewal/review/enhancement. Since drawing of CIRs helps the bank to take conscious decisions, the relevant column in LSS (column no. 18) should be invariably filled up while reporting the sanctions made during the month to the Controlling Office.

5. To bring uniformity in the scrutiny of LSS and to make it a more effective control tool, guidelines for scrutiny of LSS and its timely closure is advised as under: 5.1 GENERAL CONTROL ASPECTS:

5.1.1 While putting up the LSS before the Competent Authority, sanctions of the branches will be summarized as under to monitor the progress of the branch towards credit budget achievement:
(Amt. Rs. in lacs) Category of Advance During the Previous Month (name of the month) Fr 1 En 2 Re 3 Total of A+B+C D LIMITS SANCTIONED During the Reporting Month (name of the month) Fr1 En2 Re3 Total of E+F+G H Cumulative up to Reporting Month (name of the month) Fr1 En2 Re3 Total of I+J+K L

A Agriculture FBWC NFBWC TL SME FBWC NFBWC TL Retail FBWC NFBWC TL Others FBWC NFBWC TL Total

Fresh Cases Enhancement (Enhanced Portion only)/Adhoc 3 Renewal

2

5.1.2 The scrutiny/ analysis of LSS will be done on the following parameters: A. It shall be ensured that branches have complied with all extant guidelines on the scheme viz. eligibility, margin, ROI, security creation, security verification etc. B. Compliance of the following general guidelines shall also be ensured: Compliance of loaning powers under the scheme/overall loaning powers. Compliance of KYC Norms in terms of Chapter III of Book of Instructions (Routine) (Ref: L&A Cir No. 04 dated 05.01.2013). Compliance of guidelines on extraction of Credit Information Reports (CIRs) before sanction of credit facilities on borrowers and guarantors/co-obligants in all eligible cases from the Credit Information Companies (Ref: L&A Cir No.69 dated 18.06.2013). Compliance of obtainment Post Dated Cheques (wherever applicable) and its safe custody (Ref: I&A Cir No.33 dated 24.06.2011). Compliance of due diligence in the preparation of Confidential Reports, proper compilation & indexing (Ref: L&A Cir No.33 dated 31.03.2011). Compliance of recovery of necessary upfront / processing and documentation charges in respect of all facilities sanctioned including ad hoc / excess allowed during the month. Compliance of submission of Legal Compliance Certificate in respect of all facilities of Rs. 10.00 lacs and above (Ref: L&A Cir No. 99 dated 01.10.2011). Compliance of creation of legally valid & enforceable EM of the property (s) as per banks extant guidelines & entry of the reference number, asset ID, security ID of the property on which the EM is entered on CERSAI website, at proper place in the EM register. Compliance of entering of all proposals in the Online Proposal Tracking system. Compliance of conducting of Credit Risk Rating/PNB Score (Retail/SME/Agri) in all eligible accounts. Compliance of vetting of loan documents in all eligible cases (Ref: L&A Cir No.40 dated 14.03.2009). Compliance of pre-sanction Inspection guidelines in terms of extant guidelines (Ref: L&A Cir No. 45 dated 17.04.2013). Compliance for end use verification & insurance for the securities created out of bank loan. Compliance regarding registration of charge with ROC in all eligible cases sanctioned during previous month. Compliance for obtaining CGTMSE cover in all eligible accounts. C. Branches shall send confirmation as per Appendix VI along with the LSS.

5.2

BUISENESS DEVELOPMENT & OTHER CONTROL ASPECTS:

5.2.1 While scrutinizing the LSS, any sudden spurt in the credit growth/continuously similar loans in large number every month in a branch shall be duly analyzed and reasons thereof along with necessary steps taken, if any, will be recorded in the note put up to the authorities. 5.2.2 The branches not sanctioning any loan other than staff loans, loans against bank deposits/postal securities & govt. sponsored schemes need to be pulled up. 5.3 TIME NORMS & COMPLIANCE CERTIFICATE:

5.3.1 LSS received should be scrutinized and observations, if any to be communicated to the concerned branches/offices within 10 days of receipt of the LSS. 5.3.2 It shall be ensured that all the LSS are monitored till its logical end and shall be closed within 3 months. A compliance certificate as per Appendix VII shall be submitted quarterly by the Circle Offices to FGMOs for branch sanctions & and by FGMOs to Credit Monitoring Division, HO for CO sanctions. 6. GENERAL INSTRUCTIONS

6.1 The statement received at Circle Office should be put up to the Circle Head and statement received at Field General Manager Office should be put up to the FGM. 6.2 The monitoring authority should ensure that Limits Sanctioned Statement complete in all respects is received in time, scrutinized and put up to the authorities concerned expeditiously. The scrutiny should be completed before the end of the following month. Further, the serious irregularities/ discrepancies observed in sanctions, if any should be conveyed to respective Branches/Controlling Offices and the same be closely monitored till rectification. 6.3 The Inspectors/Auditors to scrutinize the cases of temporary overdrawings during the course of concurrent/regular inspection to ensure that the laid down guidelines in the matter are meticulously followed.

********

Appendix I (Part I)
PUNJAB NATIONAL BANK BO:_______________ STATEMENT OF LIMITS SANCTIONED DURING THE MONTH OF ______ Loans Including SME Loan over Rs.25,000 MONTHLY RETURN AS ON LAST DAY OF THE MONTH

o CO o FGMO O to HO
Financial Postion Limit Sanctioned Facilities from other Banks, If any. Facilities Sanctioned/ availed by Associate/ Allied Concerns

(Rs. in Thousands)

ame, ure of ness & titution e party

Date of CR

Net Means (Value of IP to be shown separately)

Fresh/ Enhancement/ Renewal

Nature

Amount

Nature of Security

Name & Complete Adresss of Seller/Supplier of Goods/ Merchandise $

Margin

Rate of Interest/ Commission

Name of Guarantor if any with means, Collateral Security, its valuation and the basis thereof Nature Limit

Nature

Extent

Sanctioning Authority

Figures for Sales & Profit for the last three years

Paid up Capital, Reserves & Surplus

Misc. Exp. & Losses

Comments about Conduct & Operation of the A/c including Details of Outstanding Serious Irregularities

Sanctioning Authority

Whethe CIRs have been drawn from CICs Databas If yes, details of advers feature noted. no, giv reasons

10 2 3 4 5 6 7 8 9 11 12 13 14 15 16 17

18

C' is to be submitted in case of renewal/enhancment/reduction. f the guarantee should invariably be stated. For deferred payment guarantee, the period of guarantee and name of the beneficiary should be stated. tification for sanction of higher limits and the existing limits should be indicated in Column No. 3 (Part I). t sanction in case of existing limits should be mentioned in col. No.3 (Part I). For delay in sanction/renewal/enhancement/rejection, justification should be given. nt period of term loan should be indicated. or not obtaining latest CRs/Balance Sheet under Col. 3 (Part I) be given in cases where credit facilities have been sanctioned/renewed/enhanced without getting these. ot covered under refinance scheme of IDBI/NABARD.

rate of interest, margin and commission etc. are as per bank's latest guidelines and that the borrower fulfills all the Criteria laid down in different special credit/other schemes of the bank. It is further certified tha ate concerns of the borrower have been sanctioned considering them as one borrower, that obtaining of the refinance has been stipulated as a condition of sanction and that the stipulations under Selective Credit Cont ave been adhered to. It is also certified that audited financial statement with Auditor's report and other financial data, wherever necessary, have been obtained and the reporting in the statement has been made in respect of oc limits allowed by the Incumbent within his vested loaning powers as well as all the cases requiring confirmation of action during the month..............

INCUMBENT

Appendix I (Part II) PUNJAB NATIONAL BANK BO____________ For Staff Loans, Advance Against Deposits, LIC Policy, Government Securities etc. and Priority Sector Loans including SME upto Rs. 25,000/- Nature Name** LimitSanctioned Margin Rateof Name&Complete Schemeunder Remarks of Nature Amount Interest Security Adresssof which Seller/Supplier Sanctioned ofGoods/ Merchandise$ 1 2 3 4 5 6 7 8 *AdvancesuptoRs.10,000/tobeclubbedtogetherinaconsolidatedformandgroupedschemewise/activitywise **Incaseofstaffloan,designationofthestaffmembershouldalsobeindicated $Incolumnno.6detailsrelatingtotermloanonlyaretobegiven. INCUMBENT INCHARGE

Appendix II

DETAILS OF LOAN PROPOSALS REJECTED DURING THE MONTH______________

S. No.

Name of Borrower/ Guarantor

Credit Facilities Applied For Nature Extent

Financials/ Net Means Borrower Guarantor

Whether Fresh/ Renewal/Enhancement

Date of Loan Application/ Proposal

Date of Rejection of Proposal

Brief Reasons For Rejection Of Proposal

Date

Officer/Manager

Incumbent Incharge

Annexure-III (Part E-I) DETAILS OF CASES REQUIRING CONFIRMATION OF ACTION

S. No . Name of Borrower Branc h& Region Status of Account viz. Standard / Substandard/ Rating etc. Nature & Extant of Sanctione d Limits Date of Enhancement/ Official Allowin Accommodatio Who n g permitted Allowed Excess/ Excess Adhoc (Amount) Drawings Limits Authority Competen t To Confirm Action Proposal Sent to CO/FGMO/ HO for Confirmatio n on Proposals pending at CO/FGMO/ HO Remarks (Present Status/ Reasons for delay, etc.)

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

INCUMBENT INCHARGE

Appendix-IV (Part-E-II)

DETAILS OF CASES REQUIRING CONFIRMATION OF ACTION PENDING AT CO/FGMO/HO LEVEL

S. No. Name of Borrower Branch/ Region/ Zone Status of Account viz. Standard/ Substandard/ Rating etc. 4. Nature & Extant of Sanctioned Limits Date of Allowing Excess/ Adhoc Limits Enhancement/ Accommodation Allowed (Amount) Official Who permitted Excess Drawings Authority Competent to Confirm Action Proposals received for Confirmation On Reason for Pendency

1.

2.

3.

5.

6.

7.

8.

9.

10.

11.

INCUMBENT INCHARGE

Appendix-V

STATEMENT OF CASES OF TEMPORARY OVERDRAWINGS (TOD) PERMITTED DURING THE MONTH ENDED______________

S. No.

Name of the borrower

Nature & amount limits sanctioned

of

TOD permitted No. of times Maximum allowed Amount

Remarks

Appendix VI

CONFIRMATION FORMAT (To be submitted along with Limit Sanctioned Statement for accounts as per Annexure I Part I)
Applicable Guidelines Applicable in the accounts mentioned at LSS Sr. No.______ Whether Complied Yes No If no, reasons thereof & steps taken

GENERAL confirmations 1 Compliance of loaning powers under the scheme/overall loaning powers. 2 Compliance of KYC Norms in terms of Chapter III of Book of Instructions (Routine) (Ref: L&A Cir No. 04 dated 05.01.2013). 3 Compliance of guidelines on extraction of Credit Information Reports (CIRs) before sanction of credit facilities on borrowers and guarantors/co-obligants in all eligible cases from the Credit Information Companies (Ref: L&A Cir No.69 dated 18.06.2013). 5 Compliance of due diligence in the preparation of Confidential Reports, proper compilation & indexing (Ref: L&A Cir No.33 dated 31.03.2011). 6 Compliance of recovery of necessary upfront / processing and documentation charges in respect of all facilities sanctioned including ad hoc / excess allowed during the month. 9 Compliance of entering of all proposals in the Online Proposal Tracking system. 4 Compliance of obtainment Post Dated Cheques (wherever applicable) and its safe custody (Ref: I&A Cir No.33 dated 24.06.2011). 7 Compliance of submission of Legal Compliance Certificate in respect of all facilities of Rs. 10.00 lacs and above (Ref: L&A Cir No. 99 dated 01.10.2011). 8 Compliance of creation of legally valid & enforceable EM of the property (s) as per banks extant guidelines & entry of the reference number, asset ID, Security ID of the property on which the EM is entered on CERSAI website, at proper place in the EM register.

ALL ALL

ALL

ALL

ALL

ALL

10

11

12

13

14

15

Compliance of conducting of Credit Risk Rating/PNB Score (Retail/SME/Agri) in all eligible accounts. Compliance of vetting of loan documents in all eligible cases (Ref: L&A Cir No.40 dated 14.03.2009). Compliance of pre-sanction Inspection guidelines in terms of extant guidelines (Ref: L&A Cir No. 45 dated 17.04.2013). Compliance for end use verification & insurance for the securities created out of bank loan. Compliance regarding registration of charge with ROC in all eligible cases sanctioned during previous month. Compliance for obtaining CGTMSE cover in all eligible accounts.

SCHEME SPECIFIC confirmations 1 Compliance of extant guidelines of the scheme viz. Eligibility, margin, ROI, security creation, end use verification etc.

*****

Appendix VII

The FGM/ GM FGMO/HO

Monthly Limit Sanctioned Statement - Compliance Certificate for QE*...............

We hereby confirm that all the LSS for the QE........... have been duly analyzed, put up to the Authorities and reply to the queries raised, have since been received and all the LSS stand closed. Or We hereby confirm that all the LSS for the QE......... have been duly analyzed, put up to the Authorities and reply to the queries raised, have since been received and LSS except following months, stand closed:

S. No. 01. 02. 03.

Name of Branch

the Month for which LSS Reasons for Timeframe are Outstanding Outstanding for Closure

CIRCLE HEAD/FGM

*Compliance Report is to be submitted within 7 days from the close of the quarter for the
months pertaining to the previous quarter viz. for the months Jan, Feb & Mar pertaining to QE March, compliance certificate will be submitted within 7 days from the close of June quarter i.e. up to 7th July and likewise for every quarter.