A REPORT

ON

A STUDY ON THE CREDIT APPRAISAL PROCESS OF MORTGAGE LOANS

FOLLOWED IN REPCO BANK

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT

FOR THE AWARD OF THE POST GRADUATE DIPLOMA IN MANAGEMENT

BY

V.RAAKESH

REGISTRATION NO : PGDM16187002

SPECIALIZATION : FINANCE

INTERNSHIP COMPANY : REPCO BANK -CHENNAI

UNDER THE GUIDANCE OF

PROF.DR.V.RAMASUBRAMANIAN

INSTITUTE FOR TECHNOLOGY AND MANAGEMENT

SIPCOT IT PARK, SIRUSERI, CHENNAI – 603 103

Submission Date: 09/09/2017____

 ACKNOWLEDGEMENTS

First and foremost I would like to take this opportunity to record my sincere thanks to our
Director, Dr.Prasanna Sivanandam , who has always been a source of inspiration in all my
endeavours.

I would like to offer my sincere gratitude to my project guide, Prof.Dr.V.Ramasubramanian,

whose guidance, inspiration and encouragement has enabled me to pursue and complete my
project.
I would like to thank our PGP Co-ordinator, Mr. H.Ahmed Shaffi for his sincere guidance
throughout the process of internship.

I would like to offer my sincere gratitude to Smt.R.S Isabella , Executive Director/ Managing
Director in charge, REPCO Bank for permitting me to do my project and complete my
internship in their prestigious company .

Last but not the least, I thank all my family members for their support and God for showering his
blessings in completing the project successfully.

Date: 09/09/2017 Name of the student: V.RAAKESH

Place: Chennai

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 BONAFIDE CERTIFICATE

I hereby declare that “A study on the credit appraisal process of mortgage loans followed in
Repco bank” has been prepared by me during the academic year 2016-2018.The internship was
done under the supervision and able guidance of “Prof.Dr.V.Ramasubramanian” of Institute
for Technology and Management, Chennai in partial fulfillment of the requirement for the post
graduate Diploma in management at the institute .

I also declare that this report is the result of my original work and has not been submitted to any
other institution for the award of any degree or diploma.

Date: 09/09/2017 (Signature of the Student)

Place: Chennai V.RAAKESH

3
 CERTIFICATE OF APPROVAL

The foregoing report titled “A study on the credit appraisal process of mortgage

loans followed in Repco bank” is hereby approved as a creditable study of the

Internship undergone and has been presented in a satisfactory manner to warrant its

acceptance as pre-requisite for the award of Post Graduate Diploma in Management for

which it was submitted .

It is understood that by this approval, the undersigned do not necessarily endorse any

conclusion drawn or opinion expressed therein, but approve the report for the purpose

which it is submitted.

Prof.Dr.V.Ramasubramanian
[Faculty Guide]

Panel of Examiners:

1. Name of the Examiner:____________________________

2. Name of the Examiner:____________________________

3. Name of the Examiner:____________________________

4
Table of Contents:
LIST OF ILLUSTRATIONS: ........................................................................................................................................ 7
ABSTRACT: ............................................................................................................................................................. 8
INTRODUCTION : ................................................................................................................................................... 8
STATEMENT OF THE PROBLEM :............................................................................................................................. 8
SIGNIFICANCE OF THE PROBLEM:........................................................................................................................... 9
INDUSTRY PROFILE : .............................................................................................................................................. 9
COMPANY PROFILE: ............................................................................................................................................. 12
MISSION: ..................................................................................................................................................................12
VISION: ....................................................................................................................................................................12
ORGANIZATIONAL STRUCTURE: ...............................................................................................................................13
PRODUCTS AND SERVICES: .................................................................................................................................. 15
DEPOSITS: ................................................................................................................................................................15
Cash Certificate ..................................................................................................................................................15
Recurring Deposit ...............................................................................................................................................15
FLEXIBLE RECURRING DEPOSIT: ..............................................................................................................................16
Mahila Growth ....................................................................................................................................................16
Daily Deposit ......................................................................................................................................................17
SAVINGS BANK ACCOUNT .......................................................................................................................................17
Salient Features ..................................................................................................................................................17
Interest rate .........................................................................................................................................................18
TDS .....................................................................................................................................................................18
FIXED DEPOSIT ........................................................................................................................................................18
OORUNI / MPS .........................................................................................................................................................19
MAHILA INCOME......................................................................................................................................................19
LOANS: ....................................................................................................................................................................20
LOAN ON DEPOSIT ...................................................................................................................................................20
Features ..............................................................................................................................................................20
OVERDRAFT LOAN ...................................................................................................................................................20
Features ..............................................................................................................................................................20
JEWEL LOANS ..........................................................................................................................................................20
Features: .............................................................................................................................................................20
Interest rate .........................................................................................................................................................20
DEVELOPMENT LOAN ..............................................................................................................................................20
Features: .............................................................................................................................................................20
Eligibility: ...........................................................................................................................................................21
VEHICLE LOAN ........................................................................................................................................................21
Features ..............................................................................................................................................................21
MORTGAGE LOANS: .................................................................................................................................................21
SECURED LOANS ......................................................................................................................................................21

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 Features ..............................................................................................................................................................21
HOUSING LOANS ......................................................................................................................................................21
Features ..............................................................................................................................................................21
SAFE DEPOSIT LOCKER ............................................................................................................................................21
CORE BANKING: ................................................................................................................................................... 22
IMPLEMENTATION OF CORE BANKING SOLUTION ....................................................................................................22
REPCO GENIUS .........................................................................................................................................................22
LOAN ORIGINATION SYSTEM (LOS) ........................................................................................................................22
FINANCIAL PERFORMANCE .................................................................................................................................. 23
NEED FOR THE STUDY: ......................................................................................................................................... 23
SCOPE OF THE STUDY : ......................................................................................................................................... 24
LITERATURE REVIEW : .......................................................................................................................................... 24
OBJECTIVES/TASKS: ............................................................................................................................................. 27
PURPOSE AND MODUS OPERANDI OF COMPLETING THE IIP. .............................................................................. 27
CREDIT RATING CHART FOR ALLOTTING CREDIT RATING SCORE FOR BUSINESS APPLICANTS:...................................30
CREDIT RATING CHART FOR ALLOTTING CREDIT RATING SCORE FOR NON - BUSINESS APPLICANTS: .........................34
VALUATION FORMAT FOR THE PROPERTY TO BE MORTGAGED : ..............................................................................40
MORTGAGE LOAN SCHEMES AT REPCO BANK :.................................................................................................... 43
SECURED LOAN BENEFIT PLUS: ................................................................................................................................43
SECURED LOAN CORPORATE PLUS : ..........................................................................................................................44
MAHILA SHAKTHI LOAN PLUS : ................................................................................................................................45
REPCO RETAIL 48: ...................................................................................................................................................46
REGULATIONS ON LOANS BY RBI: ........................................................................................................................ 47
DOCUMENTS COLLECTED FOR VERIFICATION PROCESS : ...................................................................................... 48
FOR BORROWER VERIFICATION: ...............................................................................................................................48
BASED ON PURPOSE OF THE LOAN:...........................................................................................................................48
BASED ON THE SECURITY OFFERED:.........................................................................................................................48
CERSAI : ............................................................................................................................................................... 49
TASKS PERFORMED AND OBJECTIVES ACHIEVED: ................................................................................................ 50
CONCLUSION : ..................................................................................................................................................... 51
RECOMMENDATIONS: ......................................................................................................................................... 51
LEARNING OUTCOMES: ........................................................................................................................................ 52
REFERENCES:........................................................................................................................................................ 52

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List of Illustrations:

TABLE 1 - FINANCIAL PERFORMANCE ............................................................................................ 23

TABLE 2 - CREDIT RATING CHART- BUSINESS APPLICANTS ............................................................. 30
TABLE 3 - CREDIT RATING CHART - NON BUSINESS APPLICANTS .................................................... 34
TABLE 4- ASSESSMENT OF RISK ..................................................................................................... 37

FIGURE 1 - VALUATION OF PROPERTY ............................................................................................ 40

FIGURE 2 - VALUATION OF PROPERTY ............................................................................................ 41

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Abstract:

The project area dealt here is the process followed in credit appraisal of mortgage loans and an in
depth study of the same is discussed in this report. Credit appraisal is extremely critical for any
bank or a financial company as it is the key area which boosts the profit and growth potential.
The credibility of the customer is assessed by means of various parameters and it is discussed in
detail. Here at REPCO bank the credit policy is framed keeping in mind the financial stability of
the bank and also to seek customer retention .Hence, I will be illustrating the key areas focused
by them in framing the credit appraisal. In the end of the report a few recommendations to
improve the process have been suggested.

Introduction :

Statement of the Problem :

Giving credit to a person or a company is quite challenging as various aspects of the customer
are to be analyzed. Here the core of the problem is to evaluate the credibility of the customer in
repaying the loan . In this process it is also checked whether the property to be mortgaged is free
from encumbrance or has any litigation issues. The mortgage loan appraisal process involves
verifying and validating the entire data of the customer in order to avoid bad debts/NPA. Hence,
the project area chosen is to understand this process in detail so that the amount of risk involved
can be reduced.

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Significance of the Problem:

A proper understanding of the credit appraisal process is very essential, not only does it bring
profit to the bank but also it reduces loan cases where a higher chance of default of loan is
possible. The customer‟s complete information is collected and validated in order to give the
loans only to deserving people. The credit appraisal of mortgage loans is done based on a set of
procedures. This enables faster processing of loans and paves the way for process improvement.

Industry profile :

Banking in India originated in the first decade of 18th century with The General Bank of India
coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks are
now defunct. After this, the Indian government established three presidency banks in India. The
first of three was the Bank of Bengal, which obtains charter in 1809, the other two presidency
banks, viz., the Bank of Bombay and the Bank of Madras, were established in 1840 and 1843,
respectively. The three presidency banks were subsequently amalgamated into the Imperial Bank
of India (IBI) under the Imperial Bank of India Act, 1920 – which is now known as the State
Bank of India. A couple of decades later, foreign banks like Credit Lyonnais started their
Calcutta operations in the 1850s. At that point of time, Calcutta was the most active trading port,
mainly due to the trade of the British Empire, and due to which banking activity took roots there
and prospered. The first fully Indian owned bank was the Allahabad Bank, which was
established in 1865. By the 1900s, the market expanded with the establishment of banks such as
Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai – both of which
were founded under private ownership.

The Reserve Bank of India formally took on the responsibility of regulating the Indian banking
sector from 1935. After India‟s independence in 1947, the Reserve Bank was nationalized and
given broader powers. As the banking institutions expand and become increasingly complex
under the impact of deregulation, innovation and technological up-gradation, it is crucial to
maintain balance between efficiency and stability. During the last 30 years since nationalization
tremendous changes have taken place in the financial markets as well as in the banking industry
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due to financial sector reforms. The banks have shed their traditional functions and have been
innovating, improving and coming out with new types of services to cater emerging needs of
their customers. Rapid advancement of technology has contributed to significant reduction in
transaction costs, facilitated greater diversification of portfolio and improvements in credit
delivery of banks. Prudential norms, in line with international standards, have been put in place
for promoting and enhancing the efficiency of banks. The process of institution building has
been strengthened with several measures in the areas of debt recovery, asset reconstruction and
securitization, consolidation, convergence, mass banking etc. Despite this commendable
progress, serious problems have emerged reflecting in a decline in productivity and efficiency,
and erosion of the profitability of the banking sector. There has been deterioration in the quality
of loan portfolio which, in turn, has come in the way of bank‟s income generation and
enhancement of their capital funds.

The growth in the Indian Banking Industry has been more quantitative than qualitative and it is
expected to remain the same in the coming years. The Indian Banking industry, which is
governed by the Banking Regulation Act of India, 1949 can be broadly classified into two major
categories, nonscheduled banks and scheduled banks. Scheduled banks comprise commercial
banks and the co-operative banks. In terms of ownership, commercial banks can be further
grouped into nationalized banks, the State Bank of India and its group banks, regional rural
banks and private sector banks (the old/ new domestic and foreign). These banks have over
67,000 branches spread across the country. The Public Sector Banks (PSBs), which are the base
of the Banking sector in India account for more than 78 per cent of the total banking industry
assets. Unfortunately they are burdened with excessive Non Performing assets (NPAs), massive
manpower and lack of modern technology. On the other hand the Private Sector Banks are
making tremendous progress. They are leaders in Internet banking, mobile banking, phone
banking, ATMs. As far as foreign banks are concerned they are likely to succeed in the Indian
Banking Industry. In the Indian Banking Industry some of the Private Sector Banks operating
are IDBI Bank, ING Vyasa Bank, SBI Commercial and International Bank Ltd, Bank of
Rajasthan Ltd. and banks from the Public Sector include Punjab National bank, Vijaya Bank,
UCO Bank, Oriental Bank, Allahabad Bank among others. ANZ Grindlays Bank, ABN-AMRO
Bank, American Express Bank Ltd, Citibank are some of the foreign banks operating in the

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Indian Banking Industry. As far as the present scenario is concerned the Banking Industry in
India is going through a transitional phase. The first phase of financial reforms resulted in the
nationalization of 14 major banks in 1969 and resulted in a shift from Class banking to Mass
banking. This in turn resulted in a significant growth in the geographical coverage of banks.
Every bank had to earmark a minimum percentage of their loan portfolio to sectors identified as
“priority sectors”. The next wave of reforms saw the nationalization of 6 more commercial banks
in 1980. Since then the number of scheduled commercial banks increased four-fold and the
number of bank branches increased eight-fold. After the second phase of financial sector reforms
and liberalization of the sector in the early nineties, the Public Sector Banks (PSB) s found it
extremely difficult to compete with the new private sector banks and the foreign banks. The new
private sector banks first made their appearance after the guidelines permitting them were issued
in January 1993. Eight new private sector banks are presently in operation. These banks due to
their late start have access to state-of-the-art technology, which in turn helps them to save on
manpower costs and provide better services.

A co-operative bank is a financial entity which belongs to its members, who are at the same
time the owners and the customers of their bank. Co-operative banks are often created by persons
belonging to the same local or professional community of sharing a common interest.
Cooperative banks generally provide their members with a wide range of banking and financial
services (loans, deposits, banking accounts, etc.). Co- operative banks differ from stockholders
bank by their organization, their goals, their values and their governance. In most countries, they
are supervised and controlled by banking authorities and have to respect prudential banking
regulations, which put them at a level playing field with stockholders banks. Depending on
countries, this control and supervision can be implemented directly by state entities or delegated
to a co-operative federation or central body.

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Company profile:

Repatriates Cooperative Finance and Development Bank Ltd., (REPCO BANK) was registered
on 19.11.1969 as a Cooperative Society under the relevant provisions of Madras Cooperative
Societies Act, 1961 with Jurisdiction over the State of Tamilnadu, Andhra Pradesh, Karnataka,
Kerala and Union Territory of Puducherry for the purpose of promoting the rehabilitation
activities for repatriates from neighbouring countries mainly from Sri Lanka and Burma. Though
originally registered under the Madras Cooperative Societies Act, 1961, the Bank is deemed to
be registered under the Multi State Cooperative Societies Act, 2002. The Bank is under the
administrative control of FFR Division, Ministry of Home Affairs, Govt. of India.
Constitutionally, the Bank is a Multi State Cooperative Society. The Bank was promoted by
Government of India, Ministry of Home Affairs in association with the State Governments of
Tamil Nadu, Kerala, Karnataka and Andhra Pradesh. The Society‟s rules and regulations are
governed by its byelaws. In terms of the byelaws, as the share of the Government is more than
51%, the Board of Directors are appointed by the Govt. of India. The area of operation of the
bank covers the south Indian states viz., Tamil Nadu, Andhra Pradesh, Karnataka, Kerala, and
the Union Territory of Puducherry. Repco bank currently has 108 branches.

Mission:
Committed to banking and extending banking services in a comprehensive way for the benefit of
repatriates, stakeholders, member customers and employees. Repco aspires to evolve into a
professional player in banking industry. Modern technology is to be adopted for efficiency of
operation and for attaining a significant position as a preferred Bank.

Vision:
Repco aspires to be the Bank of choice for the retail clients by offering a variety of products
designed to provide best customer satisfaction through a rewarding relationship guided by
excellent human values arising out of integrity of highest order. A specific mention needs to be
made that the cost is entirely borne by Repco – not out of any budgetary support from
Government.

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Organizational structure:

Managing Director

Executive Director

Chief General Manager

General Manager

Joint General Manager

Deputy General Manager

Assistant General Manager

Chief Manager

Assistant Manager

Junior Assistant 13
Smt. R.S. Isabella, Executive Director/Managing Director In-Charge of the Bank, has an
outstanding academic record to her credit being a State Rank Holder in Higher Secondary
Examinations and also a Gold Medalist in B.Com., besides holding a Masters‟ Degree in Bank
Management (MBM) and a Masters‟ Degree in Business Administration (MBA) from reputed
institutions. She is also a Certified Associate of Indian Institute of Bankers. She started her
career in Karur Vysya Bank as an Officer and has worked in various capacities in almost all key
operational segments of Banking and specializing as a Credit Officer. She joined Repco Bank in
the year 1999 and has handled important portfolios such as Credit, Information Technology,
Accounts and Audit, Pension, Repatriates Rehabilitation and Human Resource Training. She was
instrumental in introduction of Loan Origination System – online processing and sanction of
credit proposals and establishment of Disaster Recovery Centre for the Bank‟s IT Operations and
introduction of Redundancy Leased Line for all branches. She is an active member of Credit
Committee, Investment Committee, IT Steering Committee, Asset Liability Committee,
Settlement Advisory Committee etc. She has a rich experience in banking for more than 2
decades and has been instrumental in formulation of policies and implementation of systems and
procedures in key functional areas. She is a Trustee in Repatriates Welfare Trust and Repco
Foundation for Micro Credit.

Shri.P.Yogaseran, Chief General Manager, a Repatriate, started his career in Co-operative

Department, Handlooms and Textiles, Tamilnadu Government as Handloom Inspector in the
year 1984. With his vast experience in areas such as Co-operative accounting and inspection, he
joined Repco Bank in the year 1990 as Officer. He worked in Branches for more than 20 years
and later on in Head Office in various capacities. He has handled important Portfolio such as
Human Resource, Accounts and Audit, Inspection, Training & Development, Insurance and
Information Technology.
He is an active member of Credit Committee, Investment Committee, I.T.Steering Committee,
Settlement Advisory Committee, Procurement Committee, He is a Trustee in Repatriates
Welfare Trust and Repco Bank (Employees‟) Pension Fund Trust.

14
He has good experience in Co-operative accounting norms and extensive exposure in banking
operations for more than 3 decades. He was instrumental in formulation of policies and
implementation of systems & procedures in specific areas such as Inspection Policy, Information
Technology Policy & Information Security Policy and Business Continuity & Disaster Recovery
Plan.

Products and services:

Deposits:

Cash Certificate
Repco offers this Money multiplier scheme - An ideal way to invest to get a good yield in future.
Interest paid not only on your deposit amount but also on the interest payable by the bank. Thus,
the investment grows faster for the future use.
 Eligibility - All Members
 Period - Min 12 months and Max 60 months
 Interest Payment - On Maturity (Compounded Quarterly)
 Preclosure - Less 1% from the applicable ROI for the run period
 Mode of operation - Self / E or S / other modes
 Loan on deposit available.

Recurring Deposit
A small amount of monthly remittance of deposit slowly and steadily growing along with interest
and end up with a large kitty on maturity.
 Eligibility - All Members
 Period - Min 1 year and Max 5 years
 Option - Growth (Cumulative quarterly)
 Interest Payable – On Maturity (Compounded quarterly)
 Preclosure - Less 1% from the applicable ROI for the run period
 Penalty on late payment : Charges - Rs.2/- per 100

15
Flexible Recurring Deposit:

Repco offers very flexible monthly savings scheme. Multiple monthly remittances are possible.
Interest calculated on daily basis and credited quarterly.
 Eligibility – Individuals Only
 Period – 12 to 60 months
 Core amount - The member customer must decide the core amount of deposit per month Min
Rs.1,000/- & Max Rs.5,000/-
 Maximum remittance - Ten times of the core amount or Rs. 50000 per month whichever is
lower payable in one or more installments in a month. Each installment shall not be less than
the core amount.
 Penalty - levied for core amount or shortfall in core amount.
 Loan on deposit available.
 Preclosure Charge - Less 1% from the applicable ROI for the period

Mahila Growth

 Recognizing the importance of women and to empower them, Repco offers a special scheme
exclusively for Women depositors.
 Eligibility – Individual Female Members Only (including Minor)
 Period – 18 Months
 Option - Growth (Cumulative quarterly)
 Interest Payable – On Maturity (Compounded quarterly)
 Preclosure - Less 1% from the applicable ROI for the period
 Mode of operation - Self / E or S / other modes
 Loan on deposit available.

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Daily Deposit

 Repco offers Traders friendly deposit scheme collected at your door steps and accounted
through Intelligent Hand Held Device. This tiny / pigmy savings accumulates and becomes
an asset for future needs
 Collection of Deposit - Daily at the door steps of depositor.
 Eligibility - All members
 Interest rate - 2% for 12 months period
 Quantum of Deposit - Min Rs.100
 Period - 12 months
 Loan on deposit available.
 Preclosure charges - 3% on the outstanding amount

Savings Bank Account

REPCO offers Savings accounts for the purpose of inculcating the habit of savings among
member customers so that a portion of one's hard earned money can be set apart for short term
needs.

Salient Features

 Nomination facility available

 Cash remittance at base branch is free
 Cash withdrawal at base branch is permitted free upto 5 transactions in a month.
 Minimum balance of Rs. 250/- to be maintained in Savings Account
 Penalty will be levied for non-maintenance of minimum balance.
 PassBook facility is available
 Standing instructions facility is available
 Nomination facility is available

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 The account will be opened on submission of the duly filled in application form along with
the initial deposit amount in cash (Minimum Rs.500/-) along with suitable introduction from
a person known to the bank.

Interest rate

 This may change from time to time as decided by the bank. Such interest is calculated on
daily product basis and paid to the customer twice per year. (i.e. At the end of March /
September every year)

TDS

 No TDS For interest earned in SB Account.

Fixed Deposit

 To invest your money for a set period time and get returns with a higher rate of Interest.
Interest is payable in monthly / quarterly / half yearly / annual rest. Short term deposits
available.
 Eligibility - All Members
 Interest Payment - Monthly discounted simple rate at Monthly rest and Simple rate at
Quarterly / Half yearly / annual rest
 Monthly Interest Payable through SB / Cheque / NEFT
 Preclosure - Less 1% from the applicable ROI for the period
 Mode of operation - Self / E or S / other modes
 Loan on deposit available.

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Ooruni / MPS

 Special scheme for Retired / Senior Citizens to get Monthly Income from their deposit.
 Eligibility - Senior Citizen of 60 years ( 55 years for VRS), Defence service 50 years
 Period - 24 months
 Quantum of Deposit – Rs.1 lakh up to Rs.10 lakhs
 Interest Payment – Monthly without discount (non-cumulative)
 Monthly interest to be credited to SB A/c of the depositor / Cheque / NEFT.
 Special Features - For all other deposit, interest is payable at quarterly rest. If a depositor
needs monthly interest, the same is paid at discount. But in this MPS, interest is payable
without discount as a gesture to Senior Citizen
 Preclosure Charge - Less 1% from the applicable ROI for the period.
 Loan on deposit available.

Mahila Income

 Recognising the importance of women and to empower them, Repco offers a special scheme
exclusively for Women depositors.
 Eligibility – Individual Female Members Only (including Minor)
 Period – 18 Months
 Option - Income (Non cumulative)
 Interest Payable at Monthly rest (Discounted rate)
 Quarterly rest (Simple rate)
 Preclosure - Less 1% from the applicable ROI for the period
 Mode of operation - Self / E or S / other modes
 Loan on deposit available.

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Loans:

Loan on Deposit

Features

 Loan against deposits

 Rate of interest 2% over and above your deposit rate.

Overdraft Loan

Features

 Loan against NSC, LIC polices at attractive rates on pledging / assigning the instrument to
Bank

Jewel Loans

Features:

 Instant loan against Jewels

 On the spot redemption

Interest rate

 Offered at competitive rates

Development Loan

Features:

 Deposit linked loan schemes for development of business

 Quick processing, sanctioning and disbursement
 Collection of loan installments at your door steps

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Eligibility:

 Shall be a daily deposit customer and run a business

Vehicle Loan

Features

 Loans upto 75% of cost of vehicle

 For purchase of two wheeler, three wheeler and four wheeler
 Loans against hypothecation of vehicle and collateral securities if required

Mortgage loans:

Secured Loans

Features

 Loans for any bankable purpose against mortgage of immovable properties

 For salaried and business class people

Housing loans

Features

 Loans for purchase of property, construction of residential or commercial building and

extension / renovation of existing building against mortgage of immovable properties

Safe Deposit Locker

 For the safety of valuables, Repco offers locker facilities to member customers at branches.
 Rent has to be paid on annual basis
 Locker can be operated during business hours by the Locker holder only
21
Core Banking:

Implementation of Core Banking Solution

Repco‟s technology initiatives are clearly focused on the customer. The level of attention given
by top management to leverage IT as a tool to achieve and sustain operational excellence is
increasing. I.T. function at the bank ensures that it lowers operation costs and gives the
organization a competitive edge in the market.

Repco Genius
Repco Genius Hand Held Device has been introduced by the Bank during the year 2004 for
collection of deposit amount at the doorsteps of the customers.

Loan Origination System (LOS)

Repco has been the pioneer in Introduction of Loan Origination System (LOS), enabling online
application processing, loan appraisal, credit rating, loan sanction, loan documentation and
account creation. This system operates on workflow driven application which automates the
front end loan processing cycle and integrates its financial accounting system also providing
valuable management information systems. This solution enables the bank to manage, monitor
and effectively control the entire life cycle of a loan contract

22
Financial Performance

The Bank's Financial Performance under various parameters (Rs in crores) for last five years is
furnished as below:
Table 1 - Financial performance

Particulars 2012 - 13 2013 - 14 2014 - 15 2015 - 16 2016 - 17

Deposits 5088 6401 7236 7760 8166

Advances 3917 4523 4903 5248 5349

Total Business 9005 10924 12139 13008 13515

Profit After Tax (PAT) 86 101 109 117 121

Credit Deposit Ratio (%) 77 71 68 68 66

Number of Branches 85 100 105 107 108

Gross NPA % 1.56 2.02 3.03 3.42 5.61

Net NPA % Nil Nil Nil Nil 1.16

Need for the study:

The ultimate goal is to understand the best practices followed by the bank in the credit division. It is
therefore needed to understand and study the entire functioning of the Mortgage loan division so as to
get an overall picture of the credit process followed in a bank. A better understanding of the functioning
of the bank is got by learning from the credit division.

23
Scope of the study :

Banking is the industry chosen for the project. Repco Bank is a co-operative bank and the area
chosen in it is the mortgage loan division. Credit has always been a major growth area in the
domain of Finance .With respect to Banks it is one of the most important revenue generating
areas. Credit appraisal is extremely critical for any bank as it is the key area which boosts the
profit and growth potential. Credit appraisal process adopted by the bank is being studied in
detail .This refers to understanding of the circulars, credit policy of the bank and working based
on the requirements of the company guide.

Literature review :

1) A research work on the topic “On the appraisal on consumer credit banking products with
the asset quality frame: A multiple criteria application” done by Panagiotis Xidonas,
Alexandros Flamos, Sortirios Koussouris,Dimitrious Askouins & Ioannis Psarras from National
Technical University of Athens in 2007 says that Asset quality refers to thelikelihood that the ba
nk's earning assets will continue to perform and requires both a qualitative and quantitative
assessment. Decision problems like the " internal appraisal of banking products", are problems
with strong multiple-criteria character and it seems that the methodological framework of
Multiple Criteria Decision Making could provide a reliable solution. In this paper , the
Asset Quality banking indicators are the so called, "criteria", the value of these indicators are the,
so called,"scores" in each criterion and the P.R.O.METH.E.E. [Preference Ranking Organization
Method of Enrichment Evaluations,Brans & Vincke (1985)] Multiple Criteria method is applied,
towards modelling banking products appraisal problems. A Multiple Criteria process, strictly
mathematically defined, integrates the behavior of each indicator-criterion and utilizes each score
in order to rank the so called "alternatives", i.e. categories of banking products

2) The focal point of the study made by Das and Udaykumar Lal (2002), in his book Banking
Reforms in Lead Bank Scheme, (Deep and Deep Publication, new Delhi) was the critical
evaluation of the lead bank scheme in 35 the light of banking sector reforms. Das in this book
observed that high level of NPAs, large number of un-remunerative branches, low productivity,
overstaff and archaic methods of operations have affected the profitability of public sector banks.
24
Das sincerely felt that the whole banking sector in India is to be revolutionized to cope with the
changing dimensions of the satellite one world. Further, he felt that the backward areas should be
given more funds for investment in priority sectors and more and more people should be brought
under its coverage and the procedures of extending credit should be simplified and there should
be least hassle cost.

3) The research Paper on “Evaluation of decision support systems for credit

management decisions ” by S. Kanungo , S.Sharma , P.K. Jain from Department of studies, IIT
Delhi have conducted a study to evaluate the efficiency of decision support system (DSS) for
credit management. This study formed a larger initiative to access the effectiveness of the I.T
based credit management process at SBI. Such a study was necessitated since credit appraisal has
become an integral sub-function of the Indian banks in view of growing incidence of non-
performing assets. The DSS they have assessed was a credit appraisal system developed by
Quattro pro at SBI. This system helps in analysis of balance sheets, Calculation of financial
ratios, cash flow analysis, future projections, sensitivity analysis and risk evaluation as per SBI
norms. They have also used a strong Quassi experimental design called Solomon‟s four group
design for the assessment. In the experiment the managers of SBI who attended the training
programme were the subjects the experiment consisted of the measurements that were taken
as pre and post tests. An experimental intervention was applied between the pre-tests and the
pro-tests. The intervention or stimulus consisted of DSS training and use. There were four groups
in the experiment. The stimulus remained constant as the they took care to ensure that the course
content as well as the instructors remained the same during the course of the experiment. Two
were experimental groups and two were control groups. All four groups underwent training in
credit management between the pre and the post tests. Results from research shows that while the
DSS is effective, improvement needs to be done in the methodology to assess such
improvements. Moreover such assessment frameworks while being adequate from a DSS-centric
viewpoint do not respond to the assessment of DSS in an organizational setting . In the
concluding section they have discussed how this evaluative framework can be strengthened to
initiate an activity that will allow the long term and possibly the only meaningful evaluation
framework for such a system.

25
4) The research paper on the topic “Competitive analysis in banking: Appraisal of the
methodologies” by Nicola Cetorelli has discussed about the U.S. banking industry has
experienced significant structural changes as the result of an intense process of consolidation.
From 1975 to 1997, the number of commercial banks decreased by about 35 percent, from14,
318 to 9,215. Since the early 1980s, there has been an average of more than 400 mergers per year
(see Avery et al., 1997, and Simmons and Stavins, 1998). The relaxation of intrastate branching
restrictions, effective to differing degrees in all states by 1992,
and the passage in 1994 of the Riegle.Neal Interstate Banking and Branching Efficiency Act,
which allows bank holding companies to acquire banks in any state and, since June 1, 1997, to
open interstate branches, is certainly accelerating the process of consolidation. These significant
changes raise important policy concerns. On the one hand, one could argue that banks are
merging to fully exploit potential economies of scale and/or scope. The possible improvements
in efficiency may translate into welfare gains for the economy, to the extent that customers pay
lower prices for banks. services or are able to obtain higher quality services or services that could
not have been offered before.1 On the other hand, from the point of view of public policy it is
equally important to focus on the effect of this restructuring process on the competitive
conditions of the banking industry. Do banks gain market power from merging? If so, they will
be able to charge higher than competitive prices for their products, thus inflicting welfare costs
that could more than offset any presumed benefit associated with mergers. In this article, analysis
of competition in the banking industry is done highlighting a very fundamental issue: How
market power is measured and how do regulators rely on accurate and effective procedures to
evaluate the competitive effects of a merger.

26
Objectives/Tasks:

 To study and understand the credit appraisal process followed at the bank
 To analyze the methods and procedures adopted by the credit division.
 To work and understand the shortfalls in the process followed.
 To assist the bank staff in their day - to - day tasks/requirements.
 To practice the charging/discharging formalities of mortgage loans.
 To handle customer‟s queries and to solve them then and there.
 To accompany the Deputy General Manager in site inspection visits.
 Checking the CIBIL reports of loan customers for any adverse remarks.
 Preparation of customer data for CIBIL report generation.
 Validation of documents given by the customer for loan processing.
 To prepare the credit rating chart for customers.
 To take care of NPA recovery and reduction of defaulters.
 To take care of demand and collection practices followed by the bank.

Purpose and modus operandi of completing the IIP.

Projects can be handled and approached in various ways .Here the approach chosen is a case
based approach and the scenarios in real time are being studied, that is real time documents and
data from the customers of the bank are being taken for critically analyzing the project area.

The credit appraisal process followed is explained below:

1) Title clearance of the property is checked with the panel lawyer. This is the first step and
is it very important .If there is any litigation in the property offered by the customer or
any other issue with the property, then the loan process will be stopped and the property
document will be returned to the customer.

27
2) Legal clearance certificate (LCC) is a certificate which the Head office of Repco bank
will provide to the branch. This is given as a legal clearance to proceed further with the
other formalities to be done.

3) CIBIL report is requested for the main applicant, co-applicant and the guarantor .The
report is checked for any adverse remarks .A score of 300 is said to be very low and a
score of 900 is said to be excellent .Though scores above 700 are said to be good enough
for sanctioning loans .This report contains the entire credit history of the applicant.

4) Once the above steps are fine, the application form is handed over to the customer .The
customer has to give the completed application form along with the requested documents
to the bank.

5) Site visit /Inspection is then conducted by the Head /Deputy general manager of the
branch and verification of the property is done visually .This includes verification of the
direction, exact location and landmark of the property that is to be mortgaged.

6) Panel valuation of the property (both the land and the building) is conducted and the
report is provided to the branch .This panel valuation is done by a private company which
is established and is registered for land valuation. For loans below 25 lakhs, the bank
does the valuation and only when it crosses above 25 lakhs a private valuation company
will be asked to assess the place.

7) Loan Origination System (LOS) is a platform where the entire loan processing is taken
care of, it enables online application processing, loan appraisal, credit rating, loan
sanction, and loan documentation and account creation. This system operates on a
workflow driven application which automates the front end loan processing cycle and
integrates its financial accounting system .This solution enables the bank to manage,

28
 monitor and effectively control the entire life cycle of a loan .It requires approval from
the branch manager and assistant manager of the respective branch .

8) Post the required approvals are obtained, the branch will take the process to the next
level, i.e. To generate the Loan sanction order (LSO). If the loan amount requested by
the customer is within 75 lakhs, it will be generated by the branch .If it is above that
amount then the branch will send it to the head office for the sanction to be done. This is
because every branch will have its own sanctioning limit, above which it has to pass to
the Head office for sanction.

9) Preparation of mortgage deed and other loan related documents are then completed.

10) Execution of the prepared documents is done as the next step .Execution is a process
where the customer has to sign and accept to all the terms and conditions of the mortgage
loan.

11) The mortgage deed is registered at the sub-registrar office. Customer and the assistant
manager have to be present there to complete the formalities.

12) Once the MOD (mortgage deed) is registered, disbursement of cheque is made to the
customer/vendor directly based on the purpose. Disbursement is not given on the whole
at once.

13) End utilization certificate is prepared after checking whether the customer has used the
money disbursed for the purpose requested.

29
Credit rating chart for allotting credit rating score for business applicants:

Table 2 - Credit rating chart- business applicants

Score
S No Risk Category Grading Score Allotted Remarks
Prescribed

I. Management
Well experienced 5
Experience of the
1 Less experienced 3 Applicable
borrower
New to the field 0

More than 10 years 5

Completed years of the 5 years to 10 years 4

2 Applicable
unit Below 3 years 3

For new unit 2

Regular 5
Maintenance of proper
3 Occasionally regular 3 Applicable
books of accounts
Irregular 0

Excellent 3

4 Present stage of the unit Good 2 Applicable

Fair 0

Individual /
3
Proprietor

5 Constitution Partnership / Pvt Ltd Applicable

2
/ Public Ltd

Trust 1

Family members 3
Partners / Directors / Applicable / Not
6 Family members
trustees 2 applicable
with others

30
 Non family members 1

Total 24

2. Market / Industry Risk Assessment

Near Monopoly 5

Moderate 3
1 Competition Applicable
Tough 2

Very Tough 0

2 Excellent 5
Future of Industry /
Good 3
business / economic Applicable
Satisfactory 2
prospects
Uncertain 0

Expected change in Favorable change 5

Government Policy / No particular change 3

3 Applicable
other regulations Unfavorable change 0
affecting the business
Excellent 5
Technology &Quality of
Good 3
4 the brand / products Applicable
Satisfactory 2
sold
Inadequate 20

3. Financial and operational risk assessment

Available for 3
5
years
Filling of ITR
1 (immediate preceding 1 to 2 years 4 Applicable
year) Auditor Certified 3

Others 0

Growth in Sales turnover 30% &above 5

2 Applicable
previous year 15 % to 29% 3

31
 1 % to 14% 2

Negative Growth 0

30% &above 5

Growth in profit over 15 % to 29% 3

3 Applicable
previous year 1 % to 14% 2

Negative Growth 0

50% &above 3
Income from other
30% to 49% 2
4 sources as a percentage Applicable
10% to 29% 1
of EMI
Negative Growth 0

Less than 2 5

Debt Equity Ratio (for the 2 to 3 3 Applicable /

5
recent year) Above 3 and upto 4 1 Not applicable

Above 4 0

1.33 &above 5

Current Ratio (for the 1.20 to 1.32 3 Applicable /

6
recent year) 1.00 to 1.19 1 Not applicable

Less than 1 0

Less than 3 5

Solvency ratio (for the 3 to 5 3 Applicable /

7
recent year) Above 5 and upto 7 1 Not applicable

Above 7 0

3 and above 3
Applicable / Not
8 Average DSCR 1.50 to 3 2
applicable
Less than 1.5 – 0 0

32
 Total 36

4. Security
Above 2.5 times 7

2 – 2.50 times 5
1 Security Coverage Applicable
1.33 to 2 times 3

Below 1.33 0

Residential 7

2 Type of security Commercial 5 Applicable

Vacant site 3

Excellent 6
Marketability /
Good 4
3 Enforceability / Applicable
Average 2
Liquidity of security
Poor 0

Total 20

33
 Total score
S No Risk Component Weightage Maximum Minimum
Allotted

1 Management 24% 24

2 Market / Credit risk 20% 20

3 Financial and 36% 36

operational risk

4 Security 20% 20

100% 100

Credit rating chart for allotting credit rating score for non - business applicants:

Table 3 - Credit rating chart - Non business applicants

Score
S No Risk Category Grading Score Allotted Remarks
Prescribed

I. Security
Above 2.5 times 10

2 >2.50 times 7
1 Security Coverage Applicable
1.33 >2 times 5

Below 1.33 0

Residential 10

2 Type of security Commercial 7 Applicable

Vacant site 5

34
 Excellent 10
Marketability /
Good 7
3 Enforceability / Applicable
Average 5
Liquidity of security
Poor 0

Total 30

II. Income
Above EMI 10

Co-applicant, or other 50% of EMI 7

1 Applicable
sources of income 25% of EMI 5

Below 25% 0

Available for three

10
years
Applicable / Not
2 Filling of ITR 1 to 2 years 7
applicable
Auditor Certified 5

Others 0

Permanent 5

Contract 3 Applicable / Not

3 Employment
Agent 2 applicable

Others 0

PF Deducted with
5
Bank credit

Non PF Deducted
Applicable / Not
4 Salary with bank credit / 3
applicable
by Cheque

Others (By cash

2
thro pay

35
 certificate)

Others (without 0
proof)

Govt 10

PSU 7 Applicable / Not

5 Working nature
Private 5 applicable

Others 0

More than
5 Applicable / Not
6 Remaining Service repayment period
applicable
Others 0

Agreed for
Tripartite covering 5
EMI

Supported by 4
Applicable / Not
7 Rental income Rental agreements
applicable
Only 3
Branchverification
/ certification

Others 0

Total 50

III. Repayment Habits

1 CIBIL score Above 700 10 Applicable

Above 650 &upto 7

700

Above 500 &upto 5

650

36
 2 Earlier loan repayment Regular 10 Applicable / Not

with Repco applicable

Satisfactory 7

Others 0

Total 20

Total score
S No Risk Component Weightage Maximum Minimum
Alotted

1 Security 30% 30

2 Income 50% 50

3 Repayment habits 20% 20

100% 100

Table 4- Assessment of risk

Allocation of Credit Risk Score

Credit Risk Code Risk Code Interpretation of the Grade

CR 01 Highest Safety 85% &above

CR 02 High Safety 75% - 84 %

CR 03 Safe 65% - 74%

CR 04 Adequate Safety 60% - 64%

CR 05 Moderate Safety 50% - 59%

CR 06 Inadequate Safety Upto 49%

37
 The above listed credit rating is derived for the customer based on the parameters
mentioned in the rating chart.

 The various factors considered for arriving at the credit rating are CIBIL report, repaying
capacity, other sources of income, existing assets and liabilities, asset coverage ratio, etc.

 The asset coverage ratio is computed by the below formula:

Total market value of the property

______________________________
Loan amount requested by the customer

 Here the total market value refers to the value of both the land and building .Market value
of the property can be taken from the panel valuer‟s report or bank valuation report .If
there is any deviation in the building approval of the property then the land value alone
will be considered for calculating the total market value .Hence deviations in the property
will affect the asset coverage ratio. Asset coverage ratio should be at least in the range of
1.25-1.5

38
  With CR01 being a very safe rating where the customer has higher chance of getting the
loan and CR06 being the least in safety .Thus, customers having a risk rating of CR05
and CR06 are not given loans.

Compliance to basic financial parameters:

 Liquidity: Current Ratio : 1.33

 Security : Security Coverage Ratio : 1.25-1.5

39
Valuation format for the property to be mortgaged :
Figure 1 - Valuation of property

40
Figure 2 - Valuation of property

41
The valuation of the property to be mortgaged is done with the above form .Here the basic details
of the property is entered , such as the address of the property , nearest landmark , boundaries ,
type of roofing etc .There are two options for mortgage of property , either it can be an
individual house or a flat. For an individual house, the guideline rate for that land is obtained
from the registration department .Then the guideline rate per sq.ft is multiplied with the total
sq.ft area which gives the guideline value .For Market value the same procedure is followed but
the market rate will always be higher than the guideline rate .For Flat system the undivided share
of land (UDSL) will be used in the calculation .The market value of the flat can be obtained by
multiplying the UDS sq.ft area and the current market rate for that flat .The assessed value is
obtained by estimating the current condition of the flat and its location . Thus, the Market value
or the Assessed value whichever is less, is taken for the total property valuation.

For Individual house :

The total value of property = value of land (GV/MV whichever is less) + value of building

For Flat :
The total value of property = total value of undivided share of land + value of flat assessed.

Approach diagram of the property is represented in the space given in the form in order to identify the
location of the property at any point in time.

42
Mortgage loan schemes at Repco Bank :

Secured loan Benefit plus:

Purpose: Any bankable purpose (Domestic,Business,etc.)

Eligibility: Loan shall be entertained from existing /new customers

(Individuals/proprietoryship/partnership/corporates/trusts/companies )

Quantum of loan : Minimum quantum of loan under this scheme is above Rs.50 lakhs and
maximum quantum of loan is below 100 lakhs .

Security : 65% of market value of land and building property shall be taken for security
coverage or 50% of the market value of the land shall be taken for security coverage

ROI and Tenor : Rate of interest shall be charged at 13.50% .Repayment period upto 7 years
.For selective cases including construction purpose ,repayment period may be considered upto
120 months

43
Secured loan corporate plus :
Purpose: Any bankable purpose (Domestic,Business,etc.)

Eligibility: The prospective corporate customers shall be :

1) Public sector undertaking

2) Reputed companies – both public and private limited
3) Individuals/Sole proprietorship/partnership/socities .

Quantum of loan : Minimum quantum of loan under this scheme is above Rs.100 lakhs and
maximum no limit.

Security: 65% of market value of land and building property shall be taken for security coverage
or 50% of the market value of the land shall be taken for security coverage

ROI and Tenor : Rate of interest shall be charged at 13% .Repayment period upto 7 years .For
selective cases including construction purpose ,repayment period may be considered upto 120
months

44
Mahila shakthi loan plus :

Purpose: Any bankable purpose (Domestic,Business,etc.)

Eligibility: Loan shall be entertained from existing /new female customers Either the security in
the name of women applicant /jointly in the name of women applicant along with others may
also be considered (or) the repayment capacity shall be possessed by the women applicant .

Quantum of loan : Minimum quantum of loan under this scheme is above Rs.5 lakhs and
maximum is 50 lakhs.

Security :

65% of market value of land and building property shall be taken for security coverage or 50%
of the market value of the land shall be taken for security coverage

ROI and Tenor :

Rate of interest shall be charged at 13.25% .Repayment period upto 7 years .For selective cases
including construction purpose ,repayment period may be considered upto 120 months

45
Repco Retail 48:
Purpose: Any bankable purpose (Domestic,Business,etc.)

Eligibility: Loan shall be entertained from existing /new customers

(Individuals/proprietoryship/partnership/corporates/trusts/companies )

Quantum of loan: Minimum quantum of loan under this scheme is above Rs.5 lakhs and
maximum is 50 lakhs.

Security:

65% of market value of land and building property shall be taken for security coverage or 50%
of the market value of the land shall be taken for security coverage

ROI and Tenor:

Rate of interest shall be charged at 13% .Repayment period up to 7 years .For selective cases
including construction purpose, repayment period may be considered up to 120 months

46
Regulations on loans by RBI:

While appraising loan proposals involving real estate, banks should ensure that the borrowers
have obtained prior permission from government / local governments / other statutory authorities
for the project, wherever required. In order that the loan approval process is not hampered on
account of this, while the proposals could be sanctioned in normal course, the disbursements
should be made only after the borrower has obtained requisite clearances from the government
authorities.MSE units having working capital limits of up to Rupees five crore from the banking
system are to be provided working capital finance computed on the basis of 20 percent of their
projected annual turnover. The banks should adopt the simplified procedure in respect of all
MSE units (new as well as existing).

In the case of borrowers enjoying working capital credit limits of Rupees ten crore and above
from the banking system, the loan component should normally be 80 percent. Banks, however,
have the freedom to change the composition of working capital by increasing the cash credit
component beyond 20 percent or to increase the „Loan Component‟ beyond 80 percent, as the
case may be, if they so desire. Banks are expected to appropriately price each of the two
components of working capital finance, taking into account the impact of such decisions on their
cash and liquidity management. In the case of borrowers enjoying working capital credit limit of
less than Rupees ten crore, banks may persuade them to go in for the „Loan System‟ by offering
an incentive in the form of lower rate of interest on the loan component, as compared to the cash
credit component. The actual percentage of „loan component‟ in these cases may be settled by
the bank with its borrower clients. In respect of certain business activities, which are cyclical and
seasonal in nature or have inherent volatility, the strict application of loan system may create
difficulties for the borrowers. Banks may, with the approval of their respective Boards, identify
such business activities, which may be exempted from the loan system of delivery

47
Documents collected for verification process :

For borrower verification:

 Address proof and ID proof (Pan card/Aadhar card/Passport/ Driving license/voter

ID/Ration card)
 Salary slip of the customer for the past 6 months
 Bank statement of the customer for the past 1 year.

Based on Purpose of the loan:

 Expansion of business - Estimation bill / building plan / other supporting documents.

 Renovation of house - Estimation in detail.
 Marriage expenses -Marriage invitation

Based on the Security offered:

 Legal opinion from panel lawyer based on the title deed given by the customer
 Building approval, plan approval
 Electricity bill,water tax and property tax receipts.
 Patta/chitta/Adangal
 Encumbrance certificate .
 Parent deed
 Sale deed/settlement deed /gift deed

48
CERSAI :

Central Registry of Securitisation Asset Reconstruction and Security Interest of India is a

Government of India Company licensed under section 8 of the Companies Act, 2013 with Govt.
of India having a shareholding of 51% by the Central Government and select Public Sector
Banks and the National Housing Bank also being shareholders of the Company.
The objective of the company is to maintain and operate a Registration System for the purpose of
registration of transactions of securitisation, asset reconstruction of financial assets and creation
of security interest over property, as contemplated under the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). CERSAI is
providing the platform for filing registrations of transactions of securitization , asset
reconstruction and security interest by the banks and financial institutions. At present the portal
provides facility to file security interest in immovables created through all types of mortgages
and in units under constructions besides filing of Security Interests in movable , intangibles and
factoring transactions is also available on the portal. More than a statutory obligation CERSAI is
a risk mitigation tool for the Banks / Housing Finance companies, FIs and public at large to
prevent multiple financing against the same property. Online search is available to public to
enable them to search and inspect the records maintained by the Registry on payment of fees
prescribed under the Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest (Central Registry) Rules, 2011. The search can be made on the basis of both
Asset Details as well as on the basis of Debtor's details.

49
Tasks performed and objectives achieved:

 Preparation of credit rating chart based on various factors.

 CIBIL - customer data report preparation for main applicant, co-applicant and the
guarantor

 Assisting the Deputy General Manager in site inspection visits.

 Taking care of the registration formalities at the sub-registrar office along with the
Assistant manager –credit division.

 Assisting the assistant manager in reducing the NPA cases

 Interviewing the customer on loan requirements and getting the required information for
loan appraisal/processing.

 Assisting the customer in filling the loan application documents.

 Execution formalities are taken care of and the document preparation for the same is
made.

 Discharge formalities and the necessary documentation is being done.

 Learning and following the credit policy and circulars of the bank.

 Assisting the other department staff with tasks related to fixed deposits and Savings bank
account creation.

 Been a part of the Marketing campaign conducted for special loan schemes introduced at
the bank.

50
Conclusion :

The whole experience gained from this internship project was phenomenal. The entire credit
division of mortgaged loans was studied and practiced. The real time challenges involved in this
area of the bank were witnessed practically which gave me the urge to learn and develop my
knowledge on credit .The recommendations given to the company below will help them to
progress in various areas such as processing of loans, NPA reduction and recovery of loans.

Recommendations:

1. Credit appraisal process can be optimized by creating a online application platform for
mortgage loans .The need for this system is for faster processing of loans .Paper work is
getting redundant and the same is very difficult to handle and process .Instead of posting
the data from the paper application to the LOS, the customers can feed the information in
the online portal and which will become a prerequisite for the LOS process that is being
currently followed.

2. The purpose for which the customer took the loan should be checked in detail as a part of
the end utilization process, for the loans that have been issued .The purpose which is very
important when taking a loan becomes way less important after granting it . The end
utilization norms should be made more stringent so that the purpose does not change.

3. With respect to Non Performing assets (NPA) it is advisable to double the penalty every
month .If the default of EMI reaches more than six months then it could be better to take
the necessary legal action as per SARFAESI Act 2002 rather than waiting for the
customer to clear his dues once in every three months to skip NPA.

4. There should be a dedicated department to take care of the recovery of loans at each
branch .This can drastically reduce the amount of NPA‟s that exist within the bank.

51
Learning outcomes:

 Detailed understanding of the credit appraisal process followed at the bank

 Concepts taught in class were applied in practice and came to know about the real time
challenges a manager has to face .This has enhanced my decision making skills .

 Handling and educating the customers about the loan schemes was something new to me and
it was a great learning meeting new people on a daily basis.

 Understanding the techniques used in determining the credibility of the customer.

 In depth understanding of credit rating chart, CIBIL report analysis, valuation of property.

References:

1. https://www.repcobank.com/index.php

2. https://www.cersai.org.in/CERSAI/

3. https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=9024&Mode=0#23

52