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CHAPTER 12
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NON PERFORMING ASSETS
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Updated upto 08-03-2019


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Compiled by: Shri Gaurav Sharma


Vetted by Shri Rajesh Singh,
Training Manager, ZTC Dehradun
NPA CHAPTER - ZTC DEHRADUN Page 1of 162
CHAPTER 1: IRAC NORMS
PRUDENTIAL NORMS ON INCOME RECOGNITION, ASSETS CLASSIFICATION

BACKGROUND: In the wake of the financial reforms undertaken by the Government of India
based on the Narasimham Committee Report I and II, Prudential Norms for the advances portfolio
of the banks and Financial Institutionswere introduced by Reserve Bank of India in Phased
manner w.e.f. 1/4/92 to address the credit monitoring process being adopted and pursued by the
banks and financial institutions. The norm for NPA classification initially stipulated the
delinquency period of 4 quarters (non-recovery of interest/instalment up to 4 quarters) and the
same was progressively reduced to 90 days w.e.f.31.03.2004.
To strengthen further the recovery of dues by banks and financial institutions, Government of
India promulgated The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002.

INCOME RECOGNITION:
 The policy of income recognition should be objective and based on record of recovery

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rather than on any subjectiveconsiderations.
 Interest on advances against term deposits, NSCs, IVPs, KVPs and Life policies may be
taken to income account on the due date, provided adequate margin is available in the

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account.
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Income from non-performing assets is not recognized on accrual basis but is booked as
income only when it is actually realized.This will apply to Government guaranteed
accountsalso.
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 Fees/Commission and any similar income earned by banks on NPA a/c should not be
recognized until it is actuallyrealized.
 Charges/Expenses/Insurance etc on NPA Borrowal account should not be debited to the
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account unless recovered. The same needs to be recorded in the memoranda account after
charging to Bank‟srevenue.
 On an account turning NPA, the interest already charged and not collected is to be
reversed by debiting Profit and Loss account at the end of quarter/half year/year, and
further application of interest is to be stopped. However, accrued interest is to be recorded
in a Memoranda account.
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 Fees, Commission and similar income that have accrued should cease to accrue in current
period and should be reversed with respect to past period, ifuncollected.
 Interest on advance guaranteed by Central Government irrespective of itsassets
classification status is not to be taken to income account unless theinterest has been
actuallyrealized.
 Fees and commission earned by Bank as a result of renegotiations orre-scheduling of
outstanding debts should be recognized on an accrual basisover the period of time covered
by the re-negotiated or rescheduledextensions ofcredit.
In PNB the unrealized interest in the accounts classified as NPA is credited in the account itself
by debiting Profit & Loss Account with the particulars: “Unrecovered Interest reversed and
recorded in Memoranda A/c”. Existing DI/SI of each NPA/PA a/c has been credited back to the
concerned NPA/PA account and simultaneously accounted for as Recorded Interest in the
memorandaaccount.

NPA CHAPTER - ZTC DEHRADUN Page 2of 162


ASSET CLASSIFICATION: FINANCIAL PARAMETERS: (IRAC Norms videRD
Circular no 03/2018 dt.06.01.2018)
An asset, including a leased asset, becomes non performing when it ceases to generate income for
the bank. A non-performing asset (NPA) is a loan or an advance where:
S.no. Category of account Criteria for classification of account as NPA

1 Term Loan If interest and/or installment of principal remain overdue for a


period of more than 90 days.

2 Cash Credits and i) If the account remains out of order for a period of more
Overdrafts than 90 days.
Conditions for treating the account as out of order:
(a) The outstanding balance remains continuously in excess
of the sanctioned limit/drawing power.
(b) Though the outstanding balance is less than the

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sanctioned limit/drawing power but there are no credits
continuously for
90 days as on the date of balance sheet or credits are not

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enough to cover the interest debited during the same period
(i) The outstanding in the account based on drawing power
calculated from stock statements older than three months,
would be deemed as irregular. A working capital borrowal
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account will become NPA if such irregular drawings are
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permitted in the account for a continuous period of 90 days


even though the unit may be working or the borrower‟s
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financial position is satisfactory.


(i) Regular and ad-hoc credit limits need to be reviewed /
regularized not later than three months from the due date /
date of ad-hoc sanction. In case of constraints such as non-
availability of financial statements and other data from the
borrower branch should show that renewal/ review of the
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facility already on. In any case delay beyond 6 months is not


considered desirable as a general discipline. An account
where the regular/adhoc credit limits have not been
reviewed/renewed within 180 days from the due date/date of
regular/adhoc
sanction will be treated as NPA.
3 Bills Purchased and If the bill remains overdue for a period of more than 90 days.
Discounted

4 Direct Agricultural The installment of principal or interest thereon remains


Advances overdue for two Crop seasons for short duration crops or one
crop season for long duration crop.
The crop season for each crop, which means the period up to
harvesting of the crops raised, would be as determined by the
State Level Bankers‟ Committee in each State.

NPA CHAPTER - ZTC DEHRADUN Page 3of 162


5 Securitization Amount ofliquidityfacilityremainsoutstandingformore
transaction than 90 days

6 Derivative transactions The overdue receivables representing positive mark-to-


market value of a derivative contract, if these remain unpaid
for a period of 90 days from the specified due date for
payment.
7 Other Accounts If any amount to be received in respect of that facility
remains overdue for a period of more than 90 days.

8 Payment of Interest In case of default in payment of interest only an account


should be classified as NPA if the interest charged during
any quarter is not serviced fully within 90 days from the end
of thequarter.
9 Accounts where a If the accounts of the borrowers have been regularised before
solitary or a few credits the balance sheet date by repayment of overdue amounts

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are recorded beforethe through genuine sources (and not by sanction of additional
balance sheet date. facilities or transfer of funds between accounts) the accounts
need not be treated as NPAWhere the account indicates
inherent weakness on the basis of the data available, the

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account should be deemed as a NPA. In other genuine cases,
the banks must furnish satisfactory evidence to the Statutory
Auditors/Inspecting Officers about the manner of
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regularization of the account to eliminate doubts on their
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performing status.
10 Overdue Amount due to the bank under any credit facility is overdue,
if it is not paid on the due date fixed by the bank.
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CREDIT CARDS – Income Recognition/Asset classification/compromise / settlements


( CCD 12/2016)
1 Credit Card Accounts A credit card account will be treated as non-performing asset if
the minimum amount due, as mentioned in the statement, is not
paid fully within 90 days from the payment due date (Ref; RBI
Circular No. RBI/2015-16/126 dated 16.07.2015
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2 Asset Classification a) Standard Credit Card Account: Credit Card account willbe
standard account so long as the cardholder pays the MAD amount
by the due date.
b) Substandard Credit Card Account: The account which has
remained NPA for a period less than or equal to 12 months shall be
a sub standardaccount.
c) Loss Credit Card Account: Loss credit card accounts will be
one where the account has remained NPA for more than 12
months.
When a credit card account is classified as NPA, all other credit
facilities in similar capacity granted to the cardholder will be
treated as NPA, as NPA classification is done borrower wise.

NPA CHAPTER - ZTC DEHRADUN Page 4of 162


3 Appropriation of Appropriation of recoveries in NPA accounts(irrespective of the
Recovery mode/status/stage ofrecovery actions) shall be regulated in the
following order of priority:
i) Expenditure/out of Pocket expenses,incurred for recovery
(earlier recorded inMemorandumDues);
ii) Principal irregularities i.e. NPAoutstanding in the accountgets
updated /adjusted, whichever is earlier;
iii) Thereafter towards the interestirregularities/accruedinterest.
4 De-recognized Income Interest and other charges credited to the bank‟s income account in
the past periods, and has not been realized, should be reversed and
credited back in the respective accounts at the close of the quarter
by debiting to Profit & Loss Account with following particulars:
―Unrecovered Interest/ charges reversed and recorded in
Memoranda A/c‖

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NPA CHAPTER - ZTC DEHRADUN Page 5of 162


Special provision for dues payable between November 1,2016 and
December31,2016(RD36/2016)
Consequent upon Government of India‟s directions on demonetization of currency notes of Rs.
500/- and Rs. 1000/- RBIvide notification no. DBR.no. BP/BC.37/21.04.048/2016-17 dated
21.11.16 decided that an additional 60 days beyond what is applicable for recognition of a
loan account as substandard be allowed in the following cases:
(i) Running working capital accounts (OD/CC/crop loans) the sanctioned limit whereof Rs. 1
Crore or lessis
(ii) Term loans, whether business or personal, secured or otherwise with original sanction amount
of Rs. 1 Crore or less. This shall include housing loans and agricultureloans.
Note: The limits at (i) and (ii) above are mutually exclusive limits applicable to respective
category of loans.
(iii) Loans sanctioned to NBFC (MFI), NBFCs, Housing Finance Companies, andPACs.

Relaxation due to demonetization – (RAD 38/2016


30 days extra in addition to 60 days already provided is allowed for recognition of a loan account
as substandard in the following cases:
(i) Running working capital accounts (OD/CC)/crop loans, the sanctioned limit whereof is Rs. 1

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crore orless;
(ii) Term loans, for business purposes, secured or otherwise, the original sanctioned amount
whereof Rs. 1 Crore or less. This shall include agricultureloans.

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Note: The limits at (i) and (ii) above are mutually exclusive limits applicable to respective
category of loans.
Deferment of down grade of a standard account to NPA for any reason during November 1, 2016
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to December 31, 2016, by 90 days from the date of such downgrade in the above mentioned
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categories (i &ii) of accounts is permitted. The above relaxation will only defer classification of
an existing standard asset as substandard& will not impact migration of an account across sub-
categories ofNPA.
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Dues payable on or after 01.01.2017 will be covered by extant guidelines contained in RD


circular 06/2017 dated 17.01.2017 with regard to recognition ofNPA.

SAMV DIVISION CIRCULAR NO. 29/2018 dt.13.06.2018


Detailed guidelines on Prudential Norms on Income Recognition, Asset Classification and
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Provisioning pertaining to Advances to MSME Borrowers registered under Goods &


Services Tax (GST) were issued vide RD Circular No. 08/2018 dated 08.02.18.

In continuation of the same, RBI vide letter No: RBI/2017-18/186 DBR. No.
BP.BC.108/21.04.048/2017-18 dated 06.06.18 has informed that having regards to the input credit
linkages and ancillary affiliations, it has now been decided to temporarily allow banks and
NBFCs to classify their exposure, as per the 180 days past due criterion, to all MSMEs, including
those not registered under GST, as a standard asset, subject to the followingconditions:

1. The aggregate exposure, including non-fund based facilities, of banks and NBFCs to the
borrower does not exceed Rs 250 million (Rs 25.00 crores) as on May 31,2018

2. The borrower‟s account was standard as on August 31,2017.

3. The payments due from the borrower as on September 1, 2017 and falling due thereafter up to
December 31, 2018 were/are paid not later than 180 days from their original duedate.

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4. In respect of dues payable by GST-registered MSMEs from January 1, 2019 onwards, the 180
days past due criterion shall be aligned to the extant IRAC norms in a phased manner, as given in
Annex. However, for MSMEs that are not registered under GST as on December 31, 2018, the
asset classification in respect of dues payable from January 1, 2019 onwards shall immediately
revert to the extant IRACnorms.
Vide MSME cir no 3/2019 dated 14.01.2019 Board has approved one time restructuring of STD
MSME loans as on 01.01.2019.In the eligible account the total exposure per borrower should not
exceed 25 cr as on 01.01.2019.If the act in STD as on 01.01.2019 shall remain so till restructuring
is implemented. The entity should be GST registered or exempted form registration. Restructuring
should happen on or before 31.03.2020.Post restructuring of the STD asset/NPA under the above
scheme shall follow the guidelines under IRAC norms as laid down in SASTRA div cir no
3/2018.For further details refer MSME cir no 3/2019 to be read in refeMSME cir on FRR
40/2016.
MSME Cir 15/2019 dt.01.03.2019 giving ref to RBI notification RBI/2018-19/127 has clarified
that the eligibility for restructuring without GST registration should be determined on the basis of
exemption limit prevailing as on 01.01.2019

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General Guidelines:
1. Branches should, classify an account as NPA only if the interest charged during any
quarter is not serviced fully within 90 days from the end of thequarter.

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2. All the facilities granted to a borrower /investments in securities issued by the
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borrower will have to be treated as NPA and not a particular facility/ investment
or part thereof which has become NPA. If the amount in default of any borrower is
outstanding in default account i.e. LC-default account/ LG-default account / DPG
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default account/ Co-accepted bills default account, the balance outstanding in that
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accountalsoshouldbetreatedasapartoftheborrower‟sprincipaloperatingaccount for the


purpose of application of prudential norms on income recognition, asset classification
and provisioning i.e. all the facilities granted to a borrower / investment made have to
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be classified as NPA/NPI if one of them becomes NPA. There are a few exceptions
for this asunder:
a. Commonality of a Collateral Security has no role in determining the Asset
Classification.
b.
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c. The bill discounted under LC favoring a borrower may not be classified as


a Non Performing Advances (NPA), when any other facility granted to the
borrower is classified as NPA. However, in case documents under LC are
not accepted on presentation or the payment under the LC is not made on
the due date by the LC Issuing Bank for any reason and the borrower does
not immediately make good the amount disbursed as a result of discounting
of concerned bills, the outstanding bills discounted will immediately be
classified as NPA with effect from the date when the other facilities had
been classified asNPA.
d. In respect of agricultural advances, as well as advances for other purposes
granted by banks to ceded PACS / FSS under the on lending system, only
that particular credit facility granted to a Primary Agricultural Credit
Society (PACS) / Farmers Service Societies (FSS) which is in default for a
period of two crop seasons in case of short duration crop & one crop season
in case of long duration crop, as the case may be, after it has become
overdue, will be classified as NPA and not all the credit facilities
sanctioned to a PACS/FSS. However, other direct loans and advances, if
NPA CHAPTER - ZTC DEHRADUN Page 7of 162
any, granted by the bank to the member borrower of a PACS/FSS outside
the on-lending arrangement will become NPA even if one of the credit
facilities granted to the same borrower becomesNPA.
e. In case of bank finance given for industrial projects or for agricultural
plantations, etc.where moratorium is available for payment of interest,
payment of interest, becomes „due' only after the moratorium or
gestation period is over.They become overdue after due date for payment
of interest, ifuncollected.
3. Availability of security or net worth of borrower/guarantor should not be taken into
accountforthepurposeoftreatinganadvanceasNPA,asassetclassificationand

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NPA CHAPTER - ZTC DEHRADUN Page 8of 162


income recognition is based on record of recovery and compliance of other non-
financial indicators.
4. The classification of an asset as NPA should be based on the record of recovery. An
account need not classify as NPA merely due to the existence of some deficiencies
which are temporary in nature such as non-availability of adequate drawing power
based on the latest available stock statement, balance outstanding exceeding the limit
temporarily non-submission of stock statements and non-renewal of the limits on the
due dateetc.
5. Advances against Term Deposits, NSCs eligible for surrender, Indira Vikas Patras,
Kisan Vikas Patras and Life Insurance Policies, need not be treated as NPAs although
interest thereon has not been paid for 90days provided adequate margin is available in
the accounts. However, advances against gold ornaments,Govt. securities and all
other securities are not covered by thisexemption.
Accounts covered under above exemption are exempted from application of principle
of percolation (i.e. principle of classifying all accounts of the Borrower are to be
classified as NPA if one account becomes NPA).
6. In respect of housing loans/Car loans or similar advances granted to staff members
where interest is payable after recovery of principal, interest need not be considered

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as overdue from the first quarter onwards. Such loans/advances should be classified
as NPA only when there is default in payment of interest on due date ofpayment.7.
7. In respect of consortium advances, each bank may classify the borrowal accounts
according to its own record of recovery and other aspects having a bearing on the

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recoverability of the advances, as in the case of multiple bankingarrangements.
8. Agriculture Advance: A loan granted for short duration crops will be treated as NPA
if the instalment of principal or interest thereon remains overdue for two crop
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seasons. A loan granted for long duration crops will be treated as NPA if the
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instalment of principal or interest thereon remains overdue for one crop season. Long
duration crops are those where crop season is longer than one year and the crops
which are not long duration crops will be treated as short duration crops. The crop
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season for each crop which means the period up to harvesting of the crops raised,
wouldbeasdeterminedbyTheStateLevelBankers‟Committeeineachstate.
9. KCC would be deemed NPA if it remains out of order for a period of two crop/one
crop season (as the case may be). A KCC account will be treated as out of order if:
a) There are no credits in the account continuously for two crop seasons/one crop
season (as the case may be) as on the date of balancesheet
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b) The outstanding remains continuously in excess of the limit for two


cropseasons/one crop season (as the case may be) as on the date of balancesheet
c) The credits in the account are not sufficient even to cover the interest debitedin
respect of the account for two crop seasons/one crop season (as the casemaybe).
10. In respect of agricultural loans other than those specified aboveandterm loans
given to non-agriculturists identification of NPAs would be done on the same basis as
non-agricultural advances which at present are the 90 days delinquencynorms.
11. Where natural calamities impair the repaying capacity of agricultural borrowers,
relief measures are decided by bank/ branches like - conversion of the short-term
production loan into term loan or reschedulement of the repayment period and
sanctioning of fresh short-term loan subject to guidelines issued by PS&LB HO. In
such cases of conversion or re-schedulement, the term loan as well as fresh short-
term loan may be treated as current dues and need not be classified as NPA. The asset
classification of these loans would thereafter be governed by the revised terms &
conditions.

NPA CHAPTER - ZTC DEHRADUN Page 9of 162


12. Rural Housing Advances: While fixing the repayment schedule in case of Rural
housing advances granted to agriculturists under Indira Awas Yozana and Golden
Jubilee Rural Housing Finance scheme it is to be ensured that interest / installment
payable on such advances are linked to cropcycle.
13. The credit facility backed by the Central Government Guarantee, though overdue
may be treated as NPA only when the Government repudiates its guarantee when
invoked. This exemption from classification of Government guaranteed advances as
NPA is not for the purpose of recognition ofincome.
14. A State Government guaranteed advance, where interest and/or instalment of
principal/or any other amount due to the bank remains overdue for a period more
than 90 days, shall become a non performingadvance.
15 Take-out Finance: Take out finance is the product emerging in the context of the
funding of long term infrastructure projects. Under this arrangement the institution /
the bank financing infrastructure projects will have an arrangement with any
financial institution for transferring to the latter the outstanding in respect of such
financing in their books on a pre-determined basis. The norms of asset classification
will have to be followed by the concerned bank/ financial institution in whose books
the account stands as balance sheet item as on the relevant date. The taking over

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institution on taking over such assets should make provisions treating the account as
NPA from the actual date of it becoming NPA even though the account was not in its
books as on thatdate.
16Postshipmentsupplier‟scredit:Inrespectofpost-shipmentcreditextendedbythe

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bankscoveringexportofgoodstocountriesforwhichtheECGC‟scoverisavailable. EXIM
Bank has introduced a guarantee-cum-refinance programme whereby, in the event of
default, EXIM Bank will pay the guaranteed amount to the bank within a period of 30
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days from the day the bank invokes the guarantee after the exporter has filed claim
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with ECGC. To the extent payment has been received from the EXIM Bank, the
advance may not be treated as a non-performing asset for asset classification and
provisioningpurposes.
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17. In case of bank finance given for industrial projects or for agricultural plantations,
etc. where moratorium is available for payment of interest, payment of interest
becomes „due' only after the moratorium or gestation period isover.
18.In case of EXPORT PROJECT FINANCE, where the lending bank is able to
establish through documentary evidence that the importer has cleared the dues in full
by depositing the amount in the bank abroad before it turned into NPA in the books
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ofthebank,buttheimporter‟scountryisnotallowingthefundstoberemitteddueto political
or other reasons, the asset classification may be made after a period of one year from
the date the amount was deposited by the importer in the bankabroad.
19. The net lease rentals (finance charge) on the leased asset accrued and credited to
income account before the asset became non-performing, and remaining unrealized,
should be reversed or provided for in the current accounting period. The term „net
lease rentals' would mean the amount of finance charge taken to the credit of P&L
account and would be worked out as gross lease rentals adjusted by amount of
statutory depreciation and lease equalization a/c.
20Advances to Staff members, under staff welfare Scheme In respect of Housing/Car
loans or similar advances granted to staffmembers where interest is payable after
recovery of principal, interest neednot be considered as `overdue' from the first
quarter onwards. Suchloans/advances should be classified as NPA only when there is
default inrepayment of installment of principal or payment of interest on due date
ofpayment.

NPA CHAPTER - ZTC DEHRADUN Page 10of 162


IRAC Norms-Agricultural Advances Income Recognition, Asset Classification,
Provisioning & Related Aspects-Agricultural Advances- Kisan Credit Card Scheme
(RD 06/2017 dated 17.01.2017)

(i) Kisan Credit Card Schemes aim at providing adequate and timely credit support
from the banking system under a single window to the farmers for their cultivation
& other needs as indicatedbelow:
a) To meet the short term credit requirements for cultivation ofcrops
b) Post harvestexpenses
c) Produce Marketingloan
d) Consumption requirements of farmerhousehold
e) Working capital for maintenance of farm assets and activities allied to
agriculture, likedairy
Animals, inland fishery etc.
f) Investment credit requirement for agriculture and allied activities like pump sets,
sprayers, dairy animalsetc.
(While the aggregate of components a) to e) above forms the short term credit limit

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portion, the aggregate of components under f) forms the long term credit limit portion.)

(ii) Kisan Card Cash Credit limits are being sanctioned and opened in CBS under
scheme code – CCAKC and all the operative guidelines for opening of these

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guidelines in the system have to be meticulouslyfollowed.

(iii) RBI has prescribed that “the repayment period may be fixed by banks as per the
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anticipated harvesting and marketing period for the crops for which a loan has been
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granted and the extant prudential norms for income recognition, asset-classification
and provisioning will continue to apply for loans granted under revised KCC
Scheme.”
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(iv) Income Recognition & Asset Classification (IRAC) Norms as prescribed by RBI
are being circulated by HO Recovery Division interalia explaining applicability of
IRAC norms to the Agriculture Advances asfollows:

“A loan granted for short duration crops will be treated as NPA, if the installment of
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principal or interest thereon remains overdue for two crop seasons. A loan granted
for long duration crops will be treated as NPA, if the installment of principal or
interest thereon remains overdue for one crop season. For the purpose of these
guidelines, “long duration” crops would be crops with crop season longer than one
year and crops, which are not “long duration” crops would be treated as “short
duration” crops. The crop season for each crop, which means the period up to
harvesting of the crops raised, would be as determined by the State Level Bankers‟
Committee in each State. Depending upon the duration of crops raised by an
agriculturist, the above NPA norms would also be made applicable to agricultural
term loans availed of by him. The above norms should be made applicable to all
direct agricultural advances as listed below:”

(v) Thus, the KCC facility being essentially in the nature of Cash Credit
accommodation for agricultural purposes, the prudential norms as applicable to
Cash Credit facilities would apply to the KCC accounts in other words, theKisan

NPA CHAPTER - ZTC DEHRADUN Page 11of 162


Credit Card Account would be deemed to be a Non-Performing Asset (NPA) if it
remains out of order for a period of two crop seasons/one crop season (as the case
may be). Therefore a KCC account can be treated as out of order in the
following circumstances:
a) There are no credits in the account continuously for two crop seasons/one crop
season (as the case may be) as on the date of balancesheet.
b) The outstanding remains continuously in excess of the limit for twocrop
seasons/one crop season (as the case may be) as on the date of balancesheet.
c) The credits in the account are not sufficient even to cover the interest debited in
respect of the account for two crop seasons/one crop season (as the case maybe).

(vi) The following relaxations in assets classification norms in credit facilities granted
to borrowers affected by Cyclones or other natural calamities in District &Block
Notified by State Government areavailable:

(Where natural calamities impair the repaying capacity of agricultural borrowers,


relief measures are decided by bank/ branches like - conversion of the short-term
production loan into term loan or re-schedulement of the repayment period; and the

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sanctioning of fresh short-term loan subject to guidelines issued by PS & LB HO.
Such cases of conversion or re-schedulement, the term loan as well as fresh short-
term loan may be treated as current dues and need not be classified as NPA. The
asset classification of these loans would thereafter be governed by the revised terms

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& conditions and would be treated as NPA if interest and/or instalment of principal
remains overdue for two crop seasons for short duration crops and for one crop
season for long duration crops. For the purpose of these guidelines, “long duration”
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crops would be crops with crop season longer than one year and crops which are not
long duration would be treated as “short duration”crops.)
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(vii) The norms prescribed under para iv above are also applicable to all direct
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agricultural advances as listed in below:

DIRECT FINANCE
1.1 Finance to individual farmers (including self help group (SHGs) or Joint
Liability Group (JLGs), i.e. groups of individual farmers provided banks
maintain disaggregated data on such finance) for agriculture.
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1.1.1 Short term loans for raising crops, i.e. for crop loans. This will
include traditional / non-traditional plantations and horticulture
1.1.2 Advances uptoRs.50 lac against pledge / hypothecation of
agricultural produce (including warehouse receipts) for a
periodnotexceeding12months,irrespectiveofwhetherthe
farmers were given crop loan for raising the produce or not.
1.1.3 Working capital and term loans for financing production and
investment requirements for agriculture.
1.1.4 Loanstosmallandmarginalfarmersforpurchaseoflandfor
agriculture purpose.
1.1.5 Loans to distressed farmers indebted to non-institutional lenders
against appropriate collateral or group security.
1.1.6 Loans granted for pre-harvest and post-harvest activities such as
spraying, weeding harvesting, grading, sorting, processing and
transporting undertaken by individuals, SHGs andcooperatives

NPA CHAPTER - ZTC DEHRADUN Page 12of 162


in rural areas.

1.1.7 Loans granted for agricultural activities, irrespective of whether


the borrowing entity is engaged in export or otherwise.
1.2 Finance to others (such as corporate, partnership firms and
institutions) for agriculture
1.2.1 Loans granted for pre-harvest and post harvest activities such as
spraying, weeding, harvesting, grading, sorting and
transporting.
1.2.2 Finance upto an aggregate amount of Rs. One crore per borrower
for the purposes listed at 1.1.1, 1.1.2, 1.1.3 and 1.2.1 above
1.2.3 One third of loans in excess of Rs. One crore in aggregate per
borrower for agriculture.
In respect of agricultural loans, other than those specified in the said Annexure and
term loans given to non-agriculturists, identification of NPAs would be done on the
same basis as non-agricultural a advance which, at present, is the 90 days
delinquency norm.

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INCOME RECOGNITION NORMS FOR RESTRUCTURED ACCOUNTS
Interest income in respect of restructured accounts classified as 'standard assets' will be recognized
19
on accrual basis and that in respect of the accounts classified as 'non-performing assets' will be
/03 41

recognized on cash basis.


Inthecaseofrestructuredaccountsclassifiedas„standard‟,theincome,ifany,generatedbydebt/ equity
instruments created on conversion of dues may be recognized on accrual basis. In the case of
3

restructured accounts classified as non-performing assets, the income, if any, generated bythese
instruments may be recognized only on cash basis.
RECOGNITION OF INCOME & APPROPRIATION OF RECOVERY IN NPA A/C
1) Income from non-performing assets is not recognised on accrual basis but is booked
as income only when it is actually realized. Branches should not charge and take to
income account interest on any NPA. This will apply to Govt. guaranteed accounts
12

also. For this purpose simultaneous transfer of account to General Ledger Head: NPA is a
pre-requisite. Interest realized on NPAs may be taken to income provided the credits in the
account are not out of fresh/additional credit facilities sanctioned to the borrower
concerned.
2) Branchesshouldnottaketoincomeanyfees/commissionandanysimilarincomeonnon-
performingassetsuntilitisactuallyrealized.Charges/expenses/insuranceetc.onsuchaBorrowal
account should not be debited to the Borrower‟s accountunlessrecovered, the same need
to be recorded in the Memoranda Account after charging toBank‟s
Revenue.
3) Interest on advances against term deposits, NSCs, IVPs, KVPs and Life Policies should be
taken to income account on the due date, provided adequate margin is available in the
accounts.
4) When a credit facility is classified for the first time as NPA the interest accrued & credited
to the income account in the past periods, which has not been realized should be ascertained and
same should be reversed and should be credited back in the respective account itself atthe

NPA CHAPTER - ZTC DEHRADUN Page 13of 162


close of the year/half year/Quarter at the branch levelbydebiting Profit & Loss Account
with followingparticulars:
―Unrecovered Interest reversed and recorded in Memoranda A/c‖
This will apply to Govt. guaranteed accounts also.
5) For operational convenience and future records, it is necessary that Branches should first
charge interest (including Penal Interest, if any) up to the date of classification of account
as NPA and then simultaneously ascertain the quantum of interest not realized (DI) which
is required to be reversed as above. This amount will be recorded separately in
MemorandumAccount.
6) In respect of NPAs, fees, commission and similar income that have accrued should cease
to accrue in the current period and should be reversed with respect of past periods, if
uncollected.
7) Interest on advance guaranteed by Central Government, irrespective of its assets
classification status is not to be taken to income account unless the interest has been
actuallyrealized.

XTENDING CONCESSION IN NPA ACCOUNTS (IRMD LA 25/2017)


i) No discretionary powers should be exercised up to HOCAC-Ilevel.

:41
ii) Any existing concession in service charges will stand automatically withdrawn on change
in asset classification of an account from standard to sub-standard, except in accounts in
CDR/Restructuring where the concession in service charges is part of the rehabilitation
package.

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iii) HOCAC-II and above shall exercise full powers for giving concessions in NPA accounts
keeping in view the recovery prospect and possibility of up gradation ofaccount.
19
FUTURE INTEREST APPLICATION
/03 41

1) On an account becoming NPA, further application of interest has to be stopped. However


Accrued Interest (including Penal Interest, if any) will continue to be recorded in
Memorandumaccounts.
3

2) Fees and commission earned by Bank as a result of renegotiations or rescheduling of


outstanding debts should be recognized on an accrual basis over the period of time
covered by the re-negotiated or rescheduled extensions ofcredit.

APPROPRIATION OF RECOVERIES
Following are the revised guidelines for appropriation of recovery in NPA Accounts
12

Category of NPA Mode of appropriation in order to priority


Suit filed and decreed account Recoveries in NPA Accounts (irrespective of the mode /
status / stage of recovery actions), henceforth shall be
OTS/ compromise cases appropriated in the following order of priority:
i) Expenditure/Out of Pocket Expenses incurred for
NPA where recovery is under Recovery, including under SARFAESI action (earlier
SARFAESI ACT recorded in MemorandumDues;
ii) Principal irregularities i.e. NPA outstanding in the account
Other NPAs gets up-graded / adjusted, whichever is earlier;
iii) Thereafter towards interest irregularities/accruedinterest.

Miscellaneous Issues in Asset Classification


1) For treating an irregular account as NPA some branches wrongly mention the date as at
the end of financial year/quarter i.e. For example, in case an account becomes out oforder

NPA CHAPTER - ZTC DEHRADUN Page 14of 162


or irregular from 26.10.2015, it shall be treated as NPA as on 24.01.2016, in case default
persists. The date of NPA in this account will be 24.01.2016 and not31.03.2016.
2) Pari-passu/second charge on all block assets should be treated as security. While
calculating our share, availability of security to cover our exposure & share in security of
the 1st charge holder should be assessed. Reporting of available security cover should
always be correctly explained restricted to our shareonly.
3) Surplus security available in one facility of an account should be considered in another
facility of the same borrower where there isshortfall.
4) In case of primary security, value of security should be taken on the basis of the latest
stock report. In case the stock report is not available/ old, bank official should inspect the
stock physically, after drawing a stock report where signature of borrower/ borrower‟s
authorized signatory is obtained and fair value be arrivedat.

Important Note
Operative guidelines in respect of transferring the accounts to NPA category in the GL/SGL
Heads, up-dation/maintenance of Heads, Due Date Defaults, Memoranda Registers, generation of
Reports through CBS are stipulated in the Recovery Division Circulars issued from time time on
IRACP norms, latest being Recovery Division Circular no. 06/2017 dated 17.01.2017.

:41
TREATMENT IN CASH CREDIT- NPA ACCOUNTS WITH TAGGING FACILITY:
Debits in Cash Credit - NPA account with tagging facility can be allowed dependent upon extent
of tagging permitted by appropriate authority. The proceeds received through tagging

20
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arrangement would also be utilized in the following order ofpriority:

(i) Expenditure/Out of pocket Expenses incurred forrecovery.


19
(ii) Principal outstanding balance in Working Capital Facility till it is brought withinthe
/03 41

DP/Limit (Whichever islower)


(iii) Installments in arrear in Term Loan Account.
(iv) Recognition of RecordedInterest.
3

ASSETS PURCHASED FROM OTHERBANKS


Any recovery in respect of a non performing asset purchased from other banks should first be
adjusted against its acquisition cost. Recoveries in excess of the acquisition cost can be recognised
as profit.
12

Take out finance is the product emerging in the context of the funding of long-term infrastructure
projects. Under this arrangement, the institution/ the bank financing infrastructure projects will
have an arrangement with any financial institution for transferring to the latter the outstanding in
respect of such financing in their books on a pre-determined basis .If an asset has become NPA
before taking over by another institution, the lending institution in whose books at present the
asset is outstanding should treat it NPA for all purposes irrespective of the fact that it ultimately is
to be taken over by another institution. When the asset is actually taken over, the lending
institution should reverse the provisions earlier made in its books, whereas the taking over
institution, should make provision from the actual date the asset became NPA and not from the
date of taking over of theasset.

NPA CHAPTER - ZTC DEHRADUN Page 15of 162


CHAPTER 2: PROVISIONING REQUIREMENTS
SR. Category of CRITERIA RATE OF PROVISION
No. Accounts
1 Sub- Standard A sub-standard asset is one, which A general provision @ of 15% on total
has remained NPA for a period less outstanding be made without making any
than or equal to 12 months; such an allowance for ECGC guarantee cover and
asset will have well defined credit securities available.
weaknesses. If after commencement The unsecured exposures which identified
of commercial production and as „Substandard‟ would attract additional
classifying a/c as sub-standard a/c provision of 10% i.e. total of 25% on
will continue in SS category for O/Sbalance.
specified period provided facility is Infrastructure loan accounts which are
fully secured. (Specified period classified as Sub Standard will attract a
means 1 year period fromfirst provisioning of 20%
payment of interest.
2 Doubtful  If a/c remains in Sub – Standard Provision asunder

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for 12 monthssuch an asset will (i) On Unsecured Portion: 100% of
havewell defined credit unsecuredportion,
weaknesses with the added (ii) On Secured Portion: On tangible

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characteristic that the weaknesses security-
make collection or liquidation in  Up to one year 25%
full, on the basis of currently  >One to three year40%
known facts, conditions and  > 3years100%
19
values, highly questionable and Provision is to be made on outstanding net
/03 41

improbable. of DI.
 Straightwayclassification
3

When realizable value of security


is less than 50% of value assessed
by the bank or accepted by RBI at
the time of last inspection, such
a/c may be straightaway classified
under doubtful
12

3 Loss asset  A loss asset is one where loss has 100% of theOutstanding.
been identified by the bank or
internal or external auditors or the
RBI Inspectors but the amount
has not been written off,wholly.
 Realisable value of security as
assessed by bank‟s approved
valuer / RBI is less than 10% of
outstanding in the a/c then a/c
straightaway classified as loss
asset
Provision on Standard Accounts on Global Loan Portfolio basis
1 STANDARD ON 1) Direct Agriculture & SME -0.25%
ACCCOUNT GLOBAL 2) Commercial Real Estate (CRE) –1%
(Other than LOAN 3) CommercialRealEstate–ResidentialHousing(CRE-RH)*–

NPA CHAPTER - ZTC DEHRADUN Page 16of 162


Restructured PORTFOLIO 0.75%
Advances) BASIS 4) Housing loans granted at „Teaser Rates‟** –2%
5) All other loans not included above –0.40%
* CRE-RH would consist of loans to builders/developers for
residential housing projects (except for captive consumption)
under CRE
** The provisioning on these assets
would revert to 0.40% after 1 year from
the date on which the rates are reset at
higher rates if the accounts remain
„standard‟
The provision on Standard Accounts is not reckonedfor arriving at net NPAs and is not netted from
gross advances but is shown separately as “Contingent Provisions against Standard Assets” under Other
Liabilities and Provisions-others in Schedule-5 of the balance sheet.

PROVISIONING NORMS FOR RESTRUCTURED ACCOUNTS


Normal provisions

:41
(i) Banks will hold provision against the restructured advances as per the extant provisioning
norms. (ii) Restructured accounts classified as standard advances will attract a higher
provision (as prescribed from time to time) in the first two years from the date of
restructuring. In cases of moratorium on payment of interest/principal after restructuring,

20
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such advances will attract the prescribed higher provision for the period covering moratorium
and two yearsthereafter.
(iii) Restructured accounts classified as non-performing assets, when upgraded to standard
19
category will attract a provision of 5% in the first year from the date of upgradation.
/03 41

(iv) The above-mentioned higher provision on restructured standard advances (2.75 per cent as
prescribed vide circular dated November 26, 2012) would increase to 5 per cent in respect of
new restructured standard accounts (flow) with effect from June 1, 2013 and increase in a
3

phased manner for the stock of restructured standard accounts as on May 31, 2013 as under:
i)3.50% - with effect from March 31, 2014 (spread over the four quarters of 2013-14)
ii)4.25% - with effect from March 31, 2015 (spread over the four quarters of 2014-15)
iii)5.00%- with effect from March 31, 2016 (spread over the four quarters of 2015-16)

PROVISION FOR DIMINUTION IN THE FAIR VALUE OF


12

RESTRUCTUREDADVANCES

1) Reduction in the rate of interest and /or reschedulement of the repayment of principal
amount, as part of the restructuring, will result in diminution in the fair value of the advance.
Such diminution in value is an economic loss for the bank and will have impact on the
bank‟smarketvalueofequity.Itis,therefore,necessary for banks to measure such
diminution in the fair value of the advance and make provisions for it by debit to Profit &
Loss Account. Such provision should be held in addition to the provisions as per existing
Provisioning norms, and in an account distinct from that for normalprovisions.
2)For this purpose, the erosion in the fair value of the advance should be computed as the
difference between the fair value of the loan before and after restructuring Fair value of the
loan before restructuring will be computed as the present value of cash flows representingthe
interest at the existing rate charged on the advance before restructuring and the principal,
discounted at a rate equal to the bank‟s BPLR as on the date of restructuring plus the
appropriate term premium and credit risk premium for the borrower category on the dateof

NPA CHAPTER - ZTC DEHRADUN Page 17of 162


restructuring. Fair value of the loan after restructuring will be computed as the present value
of cash flows representing the interest at the rate charged on the advance on restructuring and
the principal, discounted at a rate equal to the bank‟s BPLR as on the date of restructuring
plus the appropriate term premium and credit risk premium for the borrower category on the
date of restructuring.
3) The above formula moderates the swing in the diminution of present value of loans with the
interest rate cycle and will have to be followed consistently by banks in future. Further, it is
reiterated that the provisions required as above arise due to the action of the banks resulting
in change in contractual terms of the loan upon restructuring which are in the nature of
financial concessions. These provisions are distinct from the provisions which are linked to
the asset classification of the account classified as NPA and reflect the impairment due to
deterioration in the credit quality of the loan. Thus, the two types of the provisions are not
substitute for eachother.
4)Inthecaseofworkingcapitalfacilities,thediminutioninthefairvalueofthecashcredit
/overdraft component may be computed as above, reckoning the higher of the outstanding
amount or the limit sanctioned as the principal amount and taking the tenor of the advance as
one year. The term premium in the discount factor would be as applicable for one year. The
fair value of the term loan components (Working Capital Term Loan and Funded Interest

:41
Term Loan) would be computed as per actual cash flows and taking the term premium in the
discount factor as applicable for the maturity of the respective term loan components.
5) In the event any security is taken in lieu of the diminution in the fair value of the advance, it
should be valued at Rs. 1/- till maturity of the security. This will ensure that the effect of

20
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charging off the economic sacrifice to the Profit & Loss account is notnegated.
6) The diminution in the fair value may be re-computed on each balance sheet date till
satisfactory completion of all repayment obligations and full repayment of the outstanding in
19
the account, so as to capture the changes in the fair value on account of changes in BPLR,
/03 41

term premium and the credit category of the borrower. Consequently, banks may provide for
the shortfall in provision or reverse the amount of excess provision held in the distinct
account.
3

7)If due to lack of expertise/ appropriate infrastructure, a bank finds it difficult to ensure
computation of diminution in the fair value of advances extended by small/rural branches, as
an alternative to the methodology prescribed above for computing the amount of diminution
in the fair value, banks will have the option of notionally computing the amount of
diminution in the fair value and providing therefore, at five percent of the total exposure, in
respect of all restructured accounts where the total dues to bank(s) are less than rupees one
12

crore.
8) The total provisions required against an account (normal provisions plus provisions in lieu of
diminution in the fair value of the advance) are capped at 100% of the outstanding debt
amount.

PRUDENTIAL NORMS FOR CONVERSION OF PRINCIPAL INTO DEBT / EQUITY

1) Asset classification norms: A part of the outstanding principal amount can be converted
into debt or equity instruments as part of restructuring. The debt / equity instruments so
created will be classified in the same asset classification category in which the restructured
advance has been classified. Further movement in the asset classification of these
instruments would also be determined based on the subsequent asset classification of the
restructuredadvance.

NPA CHAPTER - ZTC DEHRADUN Page 18of 162


2) Income recognition norms:
a) Standard Accounts In the case of restructured accounts classified as 'standard', the income, if
any, generated by these instruments may be recognised on accrualbasis.
b) Non- Performing Accounts In the case of restructured accounts classified as non-performing
assets, the income, if any, generated by these instruments may be recognized only on cash
basis.

3) Valuation and provisioningnorms:


These instruments should be held under AFS and valued as per usual valuation norms. Equity
classified as standard asset should be valued either at market value, if quoted, or at break-up
value, if not quoted (without considering the revaluation reserve, if any) which is to be
ascertained from the company's latest balance sheet. In case the latest balance sheet is not
available, the shares are to be valued at Re. 1. Equity instrument classified as NPA should be
valued at market value, if quoted, and in case where equity is not quoted, it should be valued
at Re. 1. Depreciation on these instruments should not be offset against the appreciation in
any other securities held under the AFS category.

PRUDENTIAL NORMS FOR CONVERSION OF UNPAID INTEREST INTO

:41
'FUNDEDINTEREST TERM LOAN' (FITL), DEBT OR EQUITY INSTRUMENTS

1) Asset classification norms The FITL / debt or equity instrument created by conversion of
unpaid interest will be classified in the same asset classification category in which the

20
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restructured advance has been classified. Further movement in the asset classification of
FITL / debt or equity instruments would also be determined based on the subsequent asset
classification of the restructuredadvance.
19
/03 41

2) Income recognitionnorms
a) The income, if any, generated by these instruments may be recognised on accrual basis, if
these instruments are classified as 'standard', and on cash basis in the cases where these have
3

been classified as a non-performingasset.


b)The unrealized income represented by FITL / Debt or equity instrument should have a
corresponding credit in an account styled as "Sundry Liabilities Account (Interest
Capitalization)".
c) In the case of conversion of unrealized interest income into equity, which is quoted, interest
income can be recognized after the account is upgraded to standard category at market value
12

of equity, on the date of such upgradation, not exceeding the amount of interest converted
intoequity.
d) Only on repayment in case of FITL or sale / redemption proceeds of the debt / equity
instruments, the amount received will be recognized in the P&L Account, while
simultaneously reducing the balance in the "Sundry Liabilities Account (Interest
Capitalization)".
e) It is learnt that banks have not uniformly adhered to these instructions. It is reiterated that
whenever the unrealized interest income of a loan is converted into FITL / Debt or equity
instrument, banks must have a corresponding credit in an account styled as "Sundry
Liabilities Account (InterestCapitalization).

3) Valuation & Provisioning norms Valuation and provisioning norms would be as per above
guidelines. The depreciation, if any, on valuation may be charged to the Sundry Liabilities
(Interest Capitalization)Account.

NPA CHAPTER - ZTC DEHRADUN Page 19of 162


MISC. GUIDELINES Provisioning requirement

1) The banks should decide on theissue 0.40%


regarding convertibility (into equity) option
as a part of restructuring exercise whereby
the banks / financial institutions shall have
the right to convert a portion of the
restructured amount into equity, keeping in
view the statutory requirement under Section
19 of the Banking Regulation Act, 1949, (in
the case of banks) and relevant SEBI
regulations.
2) Conversion of debt into preference shares
should be done only as a last resort and such
conversion of debt into equity/preference
shares should, in any case, be restricted to a
cap (say 10 per cent of the restructured
debt). Further, any conversion of debt into

:41
equity should be done only in the case of
listedcompanies.
3) Acquisition of equity shares / convertible
bonds / convertible debentures in companies

20
/20 402
by way of conversion of debt / overdue
interest can be done without seeking prior
approval from RBI, even if by such
19
acquisition the prudential capital market
/03 41

exposure limit prescribed by the RBI is


breached. However, this will be subject to
reporting of such holdings to RBI,
3

Department of Banking Supervision (DBS),


every month along with the regular DSB
Return on Asset Quality. Nonetheless, banks
will have to comply with the provisions of
Section 19(2) of the Banking Regulation
Act, 1949. 4) Acquisition of non-SLR
12

securities by way of conversion of debt is


exempted from the mandatory rating
requirement and the prudential limit on
investment in unlisted non-SLR securities,
prescribed by the RBI, subject to periodical
reporting to the RBI in the aforesaid DSB
return.
5) Banks may consider incorporating in the
approvedrestructuringpackagescreditor‟s
rights to accelerate repayment and the
borrower‟s right to pre pay. Further, all
restructuring packages must incorporate
„Right to recompense‟ clause and it should
be based on certain performance criteria of
theborrower.Inanycase,minimum75per

NPA CHAPTER - ZTC DEHRADUN Page 20of 162


cent of the recompense amount shouldbe
recovered by the lenders and in cases where
some facility under restructuring has been
extended below base rate, 100 per cent ofthe
recompense amount should berecovered.
6) As stipulating personal guarantee will ensure
promoters‟ “skin in the game” or
commitment to the restructuring package,
promoters‟ personal guarantee should be
obtained in all cases of restructuring and
corporate guarantee cannot be accepted as a
substitute for personal guarantee. However,
corporate guarantee can be accepted in those
cases where the promoters of a company are
not individuals but other corporate bodies or
where the individual promoters cannot be
clearlyidentified.
7) All restructuring packages will be required

:41
to be implemented in a time bound manner.
All restructuring packages under
CDR/JLF/Consortium/MBA arrangement
should be implemented within 90 days from

20
/20 402
the date of approval. Other restructuring
packages should be implemented within 120
days from the date of receipt of application
19
by thebank.
/03 41

8) Promoters must bring additional funds in all


cases of restructuring. Additional funds
brought by promoters should be a minimum
3

of 20 per cent of banks‟ sacrifice or 2 per


cent of the restructured debt, whichever is
higher. The promoters‟ contribution should
invariably be brought upfront while
extending the restructuring benefits to the
borrowers.Promoter‟scontributionneednot
12

necessarily be brought in cash and can be


brought in the form of conversion of
unsecured loan from the promoters into
equity;
9) Banks should determine a reasonable time
period during which the account is likely to
become viable, based on the cash flow and
the Techno Economic Viability (TEV)
study;
10) Banks should be satisfied that the post
restructuring repayment period is reasonable
and commensurate with the estimated cash
flows and required DSCR in the account as
per their own Board approvedpolicy.
11) Each bank should clearly document itsown

NPA CHAPTER - ZTC DEHRADUN Page 21of 162


due diligence done in assessing the TEV and
the viability of the assumptions underlying
the restructured repayment terms.

DISCLOSURE Project Loans restructured w.e.f. 01.06.2013


5.00 per cent – From the date of such restructuring
till the revised DCCO or 2 years from the date of
restructuring, whichever is later.
Stock of project loans classified as restructured as
on June 1, 2013

1. 3.50 per cent - with effect from March 31, 2014


(spread over the four quarters of2013-14)
2. 4.25 per cent - with effect from March 31, 2015
(spread over the four quarters of2014-15)
3. 5.00 per cent - - with effect from March 31,
2016 (spread over the four quarters of 2015-
16)

:41
The above provisions will be applicable from
the date of restructuring till the revised DCCO
or 2 years from the date of restructuring,

20
whichever is later.
/20 402
BanksarerequiredtodiscloseintheirpublishedannualBalanceSheets,under"Noteson
Accounts", information relating to number and amount of advances restructured, and the
amount of diminution in the fair value of the restructured advances. The information on
19
advances restructured under CDR Mechanism, SME Debt Restructuring Mechanism and
/03 41

other categories is required to be disclosed separately. Total amount outstanding in all the
accounts / facilities of borrowers whose accounts have been restructured along with the
3

restructured part or facility must be disclosed. This means even if only one of the facilities /
accounts of a borrower has been restructured, the bank should also disclose the entire
outstanding amount pertaining to all the facilities / accounts of that particular borrower.
Reserve for Exchange Rate Fluctuations Account (RERFA)
When exchange rate movements of Indian rupee turn adverse, the outstanding amount of foreign currency
denominated loan (where actual disbursement was made in Indian Rupee) which becomesoverdue goes up
12

correspondingly, with its attendant implications of provisioning requirements. Such assets should not
normally be revalued. In case such assets need to be revalued as per requirement of accounting practices or
for any other requirement, the following procedure may be adopted:
 The loss on revaluation of assets has to be booked in the bank's Profit & LossAccount.
 Besides the provisioning requirement as per Asset Classification, banks should treat the full amount of
the Revaluation Gain relating to the corresponding assets, if any, on account of Foreign Exchange
Fluctuation as provision against the particularassets.
PROVISIONING FOR COUNTRY RISK
With effect from 31 March 2003, banks are to make provisions on the net funded country exposures as per
the following schedule:
Risk category ECGC Classification Provisioning Requirement (per cent)
Insignificant A1 0.25
Low A2 0.25
Moderate B1 5

NPA CHAPTER - ZTC DEHRADUN Page 22of 162


High B2 20
Very high C1 25
Restricted C2 100
Offcredit D 100
 Banks are required to make provision for country risk in respect of a country whereits net funded
exposure is one per cent or more of its total assets.
 The provision for country risk shall be in addition to the provisions required to be held according to the
asset classification status of theasset.
 In the case of „loss assets‟ and „doubtful assets‟, provision held, including provision held for country
risk, may not exceed 100% of theoutstanding.
 Banksmaynotmakeanyprovisionfor„homecountry‟exposuresi.e.exposuretoIndia.
 The exposures of foreign branches of Indian banks to the host country should be included. Foreign banks
shall compute the country exposures of their Indian branches and shall hold appropriate provisions in
their Indian books. However, their exposures to India will beexcluded.
 Banks may make a lower level of provisioning (say 25% of the requirement) in respect of short-term
exposures (i.e. exposures with contractual maturity of less than 180days).

OPERATING INSTRUCTIONS AND ACCOUNTING

:41
1) For treating an irregular account as NPA some branches wrongly mention the date as at the
end of financial year i.e. 31st March. For example, in case an account becomes out of order or

20
irregular from 26.01.2013, it shall be treated as NPA as on 26.04.2013, in case default persists.
/20 402
The date of NPA in this account will be 26.04.2013 (and not30.06.2013).
2) Surplus security available in one facility of an account should be considered in another facility
of the same borrower where there isshortfall.
19
3) Net means of borrowers and guarantors are not to be included assecurity.
/03 41

4) In all accounts identified as NPAs including Govt. guaranteed accounts under standard assets,
the unrealized interest (earlier termed as Derecognized Interest) and future interest is tobe
3

recorded only. Recorded Interest should be calculated, checked and recorded under
authentication of the concerned official. Further, in NPA accounts (except where operations
are allowed under tagging arrangement & accounts covered under Credit Guarantee scheme)
expenses like Insurance Premium, Stamp Duty, Legal Expenses, Emoluments paid to
theGodown Keeper or such other expenses incurred for safeguarding the interest of the
bank should not be debited to the concerned NPA account. Instead, such expenses should be
12

charged to revenue and recorded in the NPA Memoranda Account. The same may be claimed by
the branch from the borrower at the time of filing the suit or entering into Negotiated Settlement.
If recovered, the same may be taken to revenue at the time of actual recovery. In NPA Accounts
where operations are allowed as per the tagging arrangement by the competent authority, such
charges are to be recovered in addition totagging.
5) Whenever any payment through cheque is collected in any NPA account, except where
operation is being allowed, the credit entry pertaining to such payment should only be credited
after realizationof the cheque. (Till realization, such credit be kept in „Sundry‟account). Collection
of any cheque /Transfer Instruments in NPA accounts is strictlyprohibited.
6) Updation and maintenance of GL Head„NPA‟:
a) All NPAs as per LADDER (including fresh slippages) must be simultaneously
marked NPA in CBS. Advances classified NPAs by Auditors through MOCs should
also be marked NPAs in CBS promptly. Thereafter the same shall be transferred to
appropriate Sub code of GL Head“NPA”
b) The „Due Date Defaults‟ in advances attract 90 days NPA norms as per
theextantguidelines.TheNPAsin„DueDateDefaults‟willbetransferredtoNPA
NPA CHAPTER - ZTC DEHRADUN Page 23of 162
Heads as under:
64100LC-Defaults : NPA-DL76100
64110DPG-Defaults : NPA-TL76120
64120LG-Defaults : NPA-DL76100
64130 CO-Accepted Bills-Default : NPA-TL 76120

To enhance the soundness of individual banks and the stability of the financial sector, RBI has has
asked the banks to augment their provisioning cushions (consisting of specific provisions against
NPAs as well as floating provisions) and ensure that their total provisioning coverage ratio,
including floating provisions, is not less than 70 per cent by 30.09.2010. Also, the PCR is to be
disclosed in the Notes to Accounts to the Balance Sheet.
Particular Amount in Rs. Cr.
1 Gross NPAs plus technical / prudential write-off.
2. Specific Provisions held including provisions for diminution in
fair value of the restructured accounts classified as NPAs plus
technical / prudential write-off.
3. Floating Provisions for Advances (only to the extent they are not
used as Tier II Capital).

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4. DICGC / ECGC claims received and held pending adjustment.
5. Part payment received and kept in Suspense account or any other
similar account
6. Total (2 to 5)

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7. Provision Coverage Ratio [( Row 6/ Row 1) * 100%)]

Technical or prudential write-off is the amount of non-performing loans which are


19
outstanding in the books of the branches, but have been written-off (fully or partially) at
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Head Office level


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NPA CHAPTER - ZTC DEHRADUN Page 24of 162


CHAPTER 3-
Prevention of NPAs- Time bound actions for SMA-2 accounts
Given below is the list of time bound actions, which is illustrative in nature and not
exhaustive, which may be initiated, based upon case to case analysis, in case of SMA-2
accounts, which are likely to be NPA.

Proposed Action Time Line


Personal meeting with the defaulting borrower/guarantor/co- Day 1st
borrower, where the balance outstanding in the account is:
(i) Up to Rs. 10 lacs- BranchHead
(ii) More than Rs. 10 lacs to Rs. 5 crore- CircleHead
(iii) More than Rs. 5 crore- ZonalManager
Visit by branch officials to evaluate physical verification of Day 10th
primary and collateral security. In case it is found that there is

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marked depletion in security and there is no business activity
or at a very low level, such accounts must be kept under
constant monitoring and marked for

20
restructuring/rehabilitation and/or transferring toNPA
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category.
Papers to be vetted by Bank‟s approved advocate to ensure Day 15th
validity of mortgage/bank‟s charge on securities, if the latest
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valuation report is more than 6 months old.


Time bound actions for NPA accounts
Realization and appropriation of proceeds of secured financialassets, Day 1st
3

as far as possible e,g FDR/Other Bank Deposits/Cash margin/ LIC


Policies/Shares/Debentures/Bonds/Gold pledged to the bank.
Personal meeting with the defaulting borrower/guarantor/co- Day 1
borrower, where the balance outstanding in the accountis:
(i) Up to Rs. 10 lacs- BranchHead
(ii) More than Rs. 10 lacs to Rs. 5 crore- CircleHead
12

(iii) More than Rs. 5 crore- ZonalManager


During deliberations, the defaulting borrowers/co-
borrowers/guarantors be apprised of the repercussions of
classification of their account as NPA e.g initiating action under
SARFAESI Act, filing of suit, passport impounding, declarationas
willful defaulter etc.
In case of no response to the personal contact/recalcitrant borrowers, Day 3-4
issue of recall notice to all the borrowers/co-borrowers/guarantors
(Non- SARFAESI accounts). Issue of notice under Section 13(2)
under SARFAESI Act, in the eligible cases.
Complete review of account, examining the position of Secured Day 5-10
assets/ Quick mortality/Lodging of FIR/ Forensic Audit/ Wilful
default etc. to decide future course of action

In eligible cases, submission of Circle Office /Zonal Office Day 31-32


recommendations for declaration of Wilful Defaulter

NPA CHAPTER - ZTC DEHRADUN Page 25of 162


Issuance of 13(4) notice under SARFAESI Act and moving of Day 62-64
application to the DM for physical possession.
Take possession (symbolic/physical) under Section 13(4), preferably Day 80
physical possession.
Go for filing of suit in the DRT/Court including Attachment Before Day 90
Judgement Application (ABJ) and passport impounding.

The above dates are to be meticulously complied with and deviation must carry prior
approval of the Circle Head and in case of LCBs by the Zonal Manager. Similarly prior
permission of the Circle Head (other than LCB branches) and Zonal Manager (for LCBs)
must be taken for deferring or delaying realization of financial secured assets e.g FDR,
Cash Margin, LIC Policy, Pledged shares etc.

INVOCATION OF PLEDGE OF SHARES / SALE OF PLEDGED SHARES IN NPA


ACCOUNTS – NEED FOR TAKING URGENT STEPS (RD 23/2016)

Where Bank is having security by way of pledge of shares, steps for invocation of pledge / sale of
pledged shares need to be taken immediately upon classification of account as NPA to expedite

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recovery of Bank‟s dues. Keeping in view the above, all field functionaries are advised as under:

10. In case our Bank is sole lender, the steps for invocation of pledge / sale of pledged shares be
initiated immediately, and in all eventuality, not later than a week from the classification of

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the account asNPA.
11. In case of consortium accounts where our Bank is leader, the consortium meeting be
immediately called after slipping of account to NPA to initiate steps to invoke pledge of
19
shares / sale of pledgedshares.
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12. In case of consortium accounts where PNB is not the lead bank, the lead bank be requested
to call consortium meeting immediately upon classification of such account as NPA for
initiating steps to invoke pledge of shares / sale of pledgedshares.
3

13. The steps initiated for invocation of pledge / sale of pledged shares be taken to logical end
without timegaps.
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NPA CHAPTER - ZTC DEHRADUN Page 26of 162


CHAPTER 4-
POLICY ON COLLECTION OF DUES & REPOSSESSION OF SECURITY
(RD(SASTRA) Cir no 32/2018 dated 29.06.2018, no changes from RD cir no 04/2017 dt 16.01.17)
1) The debt collection policy of the bank is build around dignity and respect to the customers. The
repayment schedule for any loan sanctioned by bank will be fixed taking into account repaying
capacity and cash flow pattern. The bank will explain upfront the method of calculation of
interest and how the equated monthly installments or payments through any other mode of
repayment will be appropriated against interest and principal due.
2) Banks security repossession policy aims of recovery of dues in the event of default and is not
aimed at whimsical deprivation of the property. The policy recognizes fairness and transparency
in repossession, valuation and realization of security.
3) General Guidelines
All the members of staff or any person authorized to represent our bank in collection or /and
security repossession would following the guidelines:
a) Borrower would be contacted ordinarily at the place of his choice and in the absence of any
specified place at the place of residence and if unavailable at residence at the place of
business/occupation.

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b)Identity and authority of persons authorized to represent Bank for follow up and recovery of
dues would be made known at the first instance. The bank staff or any person authorized to
represent the bank in collection of dues or/ and security repossession will identify himself /
herself and display the authority letter issued by bank uponrequest.

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c) Bank would respectprivacy.
d) All written and verbal communication will be in simple business language and bank will
adopt civil manners for interaction withborrowers.
19
e)Normally bank‟s representative will contact between 0700 hrs and 1900 hrs unless the special
/03 41

circumstances warrants to contact at a differenttime.


f)Request to avoid calls at a particular time or at a particular place would be honoured as far as
possible
3

g)Bank will documents the efforts made for recovery of dues and copy of communication send
to you will be kept on record.
h)All assistance will be given to resolve disputes or differences regarding dues in a mutually
acceptable and in an orderlymanner.
i)Inappropriate occasions such as bereavement in the family or such other calamitous occasions
will be avoided for making calls/ visits to collectdues.
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4) Notice
While written communications, telephonic reminders or visits by the Bank‟s representatives to
borrower‟splaceorresidencewillbeusedasloanfollowupmeasures,theBankwillnotinitiateany legal or
other recovery measures including repossession of the security without giving due notice in writing.
The notice shall be given by Registered Post with Acknowledgement Due. Any genuine difficulties
expressed/disputes raised by you will be considered. Where the Bank has reasons to
believethatborrowerareavoidingacknowledgement,itwillfollowallsuchproceduresasrequired
under law for recovery / repossession of security.
5) Repossession of Security
Repossession of security is aimed at recovery of dues and not to deprive of the property. The
recovery process through repossession of security will involve repossession, valuation of security
and realization of security through appropriate means. All these would be carried out in a fair and
transparent manner. Repossession will be done only after issuing the notice as detailed above. Due
process of law will be followed while taking repossession of the property. The Bank will take all
reasonable care for ensuring the safety and security of the property after taking custody, in the
ordinary course of the business and necessary cost will be charged to you.

NPA CHAPTER -ZTCDEHRADUN Page 25 of 162


6) Valuation and sale of property
Valuation and sale of property repossessed by the Bank will be carried out as per law and in a
fair and transparent manner. The Bank will have right to recover from the borrower the balance
due if any, after sale of property. Excess amount if any, obtained on sale of property will be
returned to you after meeting all the related expenses, provided the Bank is not having any other
claims against you.
In the case of hypothecated assets after taking possession if no payment is forthcoming, a Sale
Notice of 7 days time to respond will be sent to you. Thereafter the Bank will arrange for the
sale of the hypothecated assets in such a manner as deemed fit by the Bank. In respect of cases
under SARFAESI Act as per the provisions of the Act, 30 days‟ notice of sale will be
sent.When public auction or by tender is envisaged, the same will be published in two leading
newspapers, out of which one is in local vernacular paper.
7) Opportunity to take back the security
Bank will resort to repossession of security only for purpose of realization of its dues as the last
resort and not with intention of depriving you of the property. Accordingly the Bank will be willing
to consider handing over possession of property to you any time after repossession and before sale
transaction of the property takes place, provided the Bank dues are cleared in full. If satisfied with
the genuineness of your inability to pay the loan installments as per the schedule which resulted in

:41
the repossession of security, the Bank may consider handing over the property after receiving the
installments in arrears.
If the amounts are repaid, either as stipulated by the Bank or dues settled as agreed to by the Bank,

20
possession of seized assets will be handed back to you/person concerned within 7 days after date of
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permission from competent authority of the Bank or court/DRT concerned if recovery proceedings
are filed and pending before such forums.
8) Engagement of Recovery Agents
19
The Bank may utilize the services of Recovery Agents for collection of dues and repossession
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of securities. Recovery Agents will be appointed as per regulatory guidelines issued in this
regard. In thisrespect:
(a) ThenameandaddressofalltheRecoveryAgentsontheBank‟sapprovedpanelwillbeplaced
3

on the Bank‟s website for information of all theconcerned.


(b) Recovery Agents from the approved panel only will be engaged by theBank.
(c) In case Bank engages service of such recovery/enforcement/seizure agent for anyrecovery
case, the identity of the agent will bedisclosed.
(d) The Recovery Agents engaged by the Bank will be required to follow a code of conduct
12

covering their dealings withyou.

NPA CHAPTER - ZTC DEHRADUN Page 26of 162


CHAPTER 5- RESTRUCTURING
Up-gradation of NPA accounts through Restructuring (RD 16/2017 dated 01.04.2017)
1)The circumstances leading to the account becoming NPA are examined in detail with a
dispassionate mind and in genuine cases of default, the matter is examined for Re-phasing/
Restructuring/ Rescheduling /Extension of Moratorium/ Partial Recoveries through Tagging etc.
2) At the initial stage, an account may be operative NPA and it can be resolved either through
recovery of overdue amount while in some accounts there may be a need for financial
restructuring / rehabilitation / reschedulement of the credit facilities on merits after studyingthe
specificproblemsandfeasibility/viabilityofindividualaccountsintermsofBank‟sguidelines.
Different mechanisms presently available for restructuring of debt are asunder:
i. Rehabilitation scheme sanctioned under the aegis ofBIFR
ii. Corporate DebtRestructuring
iii. Restructuring under Debt Restructuring Mechanism for Small and Medium Enterprises(SMEs)
iv. Reschedulement of Terms Loans –Interest/instalment
3) Restructuring Cells have already been set up at controlling offices for implementing and
monitoring restructuring of debt under CDR and Debt Restructuring Mechanism for SMEs.The
policies in respect of restructuring are issued by HO: IRD. Restructuring of debt or Financial

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restructuring involves three basic steps asunder:
i. Timely identification of theproblem
ii. Realistic assessment of the business potentials and cashflows
iii. Aligning the capital structure and debt servicing obligations to realistically projectedcash

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flows
Guidelines issued by the HO:IRMD from time to time be meticulously followed in respect of
restructuring.
19
4) In respect of cases referred to BIFR, more efforts have to be made towards improvingcontrols
/03 41

and preventing further deterioration of assets charged to the Bank because legal action for
recovery/regularization can‟t be taken in isolation without formulating a rehabilitative
restructuring/one time settlement scheme as common approach (in case of consortium advances)
3

and without the approval of BIFR.


5) However, for initiating recovery action under SARFAESI Act, 2002, BIFR permission isnot
required if consent of secured creditors representing not less than three-fourth in value of the
amount outstanding against financial assistance disbursed to the borrower, is available. After
secured creditors, representing not less than three-fourth in value of the amount outstanding
against financial assistance disbursed to the borrower, have taken any measures under section
12

13(4) of SARFAESI Act, 2002 BIFR reference gets abated.


6) Follow-up, therefore, in such accounts is directedtowards:
a. Preventing borrowers from disposal of primary and collateralsecurities.
b. Avoiding further increase in credit exposure and minimizing funding dues to thebank.
c. Obtaining additional securities (Primary and/or collateral) and personal guarantees.
d.Strengthening existing securities by completing pending documentation formalities,
creation/registration of charges on movable and immovable assets of theborrower(s)/guarantor(s),
but in quick time when the account is runningsatisfactory.

NPA CHAPTER - ZTC DEHRADUN Page 27of 162


Prudential Guidelines on Restructuringof Advances by banks.(RD cir06/2017dated
17/01/2017)
1 Restructuring is the situation where the Bank, for economic or legal reasons relating to
the borrower‟s financial difficulty, grants to the borrower concessions that the Bank
would not otherwise consider. Restructuring would normally involve modification of
terms of the advances/securities, which would generally include, among others, alteration
of repayment period / repayable amount / the amount of installments / rate of interest (due
to reasons other than competitive reasons).
2 Eligibility criteria  Accountsclassifiedunder„Standard‟,„Sub-standard‟and
Doubtful are eligible. Rescheduling / Restructuring /
renegotiation cannot be with retrospective effect. While a
restructuring proposal is under consideration, the usual
asset classification norms would continue toapply.
 The process of re- classification of an asset should not stop
merely because restructuring proposal is under
consideration. The asset classification status as on the date
ofapprovaloftherestructuredpackagebythecompetent
authority would be relevant to decide the asset

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classification status of the account after restructuring /
rescheduling /renegotiation.
 Frauds and malfeasance will continue to remainineligible
 Banks may review the reasons for classification of the

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borrowers as wilful defaulters, especially in old cases
where the manner of classification of a borrower as a wilful
defaulter was not transparent, and satisfy itself that the
19
borrower is in a position to rectify the wilful default. The
/03 41

restructuring of such cases may be done with Board's


approval, while for such accounts the restructuring under
the CDR Mechanism may be carried out with the approval
3

of the Core Grouponly.


 No account will be taken up for restructuring by the banks
unless the financial viability is established and there is a
reasonable certainty of repayment from the borrower, as
per the terms of restructuring package. Any restructuring
done without looking into cash flows of the borrower and
12

assessing the viability of the projects / activity financed by


banks would be treated as an attempt at ever greening a
weak credit facility and would invite supervisory action by
RBI.
 No account will be taken up for restructuring unless the
financial viability is established and there is a reasonable
certaintyofrepaymentfromtheborrower,aspertheterms
of restructuring package. Any restructuring donewithout
looking into cash flows of the borrower and assessing the
viability of the projects / activity financed by bank would
tantamount to an attempt at evergreening a weak credit
facility and would invite supervisory concerns / action.
3 Broad bench markfor  Return on capital employed should be atleast equivalent
Viability Parameters to 5 year Government security yield plus 2 per cent.
 The debt service coverage ratio should be greaterthan

NPA CHAPTER - ZTC DEHRADUN Page 28of 162


1.25 within the 5 years period in which the unit should
become viable and on year to year basis the ratio should
be above 1. The normal debt service coverage ratio for 10
years repayment period should be around1.33.
 The benchmark gap between internal rate of return and
cost of capital should be at least 1percent.
 Operating and cash break even points should be worked
out and they should be comparable with the industry
norms.
 Trends of the company based on historical data and future
projections should be comparable with the industry. Thus
behavior of past and future EBIDTA should be studied
and compared with industryaverage.
 Loan life ratio (LLR), as defined below should be 1.4,
which would give a cushion of 40% to the amount of loan
to beserviced.
 LLR= (Present value of total available cashflow (ACF)
during the loan life period (including interest and

:41
principal) / (Maximum amount ofloan).
4 Process  While a restructuring proposal is under consideration, the
usual asset classification norms would continue toapply.
 Normally, restructuring cannot take place unless alteration /

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changes in the original loan agreement are made with the
formal consent / application of the debtor. However, the
process of restructuring can be initiated by the bank in
19
deserving cases subject to customer agreeing to the terms
/03 41

andconditions.
5 Asset Classification Restructuring of advances can take place in the following
Norms – General stages:
3

a) before commencement of commercial production /


operation;
b) after commencement of commercial production / operation
but before the asset has been classified as'sub-standard';
c) after commencement of commercial production / operation
and the asset has been classified as 'sub-standard' or'doubtful'.
12

1) The accounts classified as 'standard assets' should be


immediatelyre- classified as 'sub-standard assets' upon
restructuring
2) The non-performing assets, upon restructuring, would
continue to have the same asset classification as prior to
restructuring and slip into further lower asset classification
categories as per extant asset classification norms with
reference to the pre-restructuring repaymentschedule..
3) Standard accounts classified as NPA and NPA accounts
retained in the same category on restructuring by the bank
should be upgraded only when all the outstanding
loan/facilities in the account perform satisfactorily during the
specified period‟ i.e. principal and interest on all facilities inthe
account are serviced as per terms of payment during that
period.(SpecifiedPeriodmeansaperiodofoneyearfromthe

NPA CHAPTER - ZTC DEHRADUN Page 29of 162


commencement of the first payment of interest or principal,
whichever is later, on the credit facility with longest period of
moratorium under the terms of restructuring package)
Satisfactory Performance means:
a) Non-Agricultural Cash CreditAccounts
In the case of non-agricultural cash credit accounts, the account
should not be out of order any time during the specified period,
for a duration of more than 90 days. In addition, there should
not be any overdues at the end of the specified period.
b) Non-Agricultural Term LoanAccounts
In the case of non-agricultural term loan accounts, no payment
shouldremain overdue for a period of more than 90 days. In
addition there should not be any overdues at the end of the
specified period.
c) Housing & other personal Loanaccounts:
It is observed that in a rising interest rate scenario, the
repayment period is normally extended by keeping the EMI
constant. However, in a few cases this results in extending the

:41
repayment period much beyond the retirement age or the
revenue generating capacity of the borrower. Therefore, it is
advised that
(i) While extending repayment period in respect of housing

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loans to keep the EMI unchanged, branches should satisfy
themselves about therevenue generation / repaying capacity of
the borrower during the entire repayment period including the
19
extended repaymentperiod.
/03 41

(ii) Branches should not extend the repayment period of such


borrowers where they have concerns regarding the repaying
capacity over the extended period, even if the borrowers want
3

to extend the tenor to keep the EMIunchanged.


(iii) Branches should provide the option of higher EMI to such
borrowers who want to repay the housing loan as per the
original repaymentperiod.
d) All Agriculture Accounts
In case of agriculture accounts, at the end of the specified
12

period theaccount should be regular.


1) Wheresatisfactoryperformanceafterthespecifiedperiodisnotevidenced,theasset
classification of the restructured account would be governed as per the applicable prudential norms
with reference to the pre-restructuring payment schedule.

2) Any additional finance may be treated as 'standard asset' during the specified period under the
approved restructuring package. However, in the case of accounts where the pre-restructuring
facilities were classified as 'sub-standard' and 'doubtful', interest income on the additional finance
should be recognized only on cash basis. If the restructured asset does not qualify for upgradation
at the end of the above specified period, the additional finance shall be placed in the same asset
classification category as the restructureddebt.
3) If a restructured asset, which is a standard asset on restructuring is subjected to restructuring on
a subsequent occasion, it should be classified as substandard. If the restructured asset is a sub-
standard or a doubtful asset and is subjected to restructuring, on a subsequent occasion, its asset
classification will be reckoned from the date when it became NPA on the firstoccasion.

NPA CHAPTER - ZTC DEHRADUN Page 30of 162


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3
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NPA CHAPTER - ZTC DEHRADUN Page 31of 162


CHAPTER 6- SECURITIZATION & RECONSTRUCTION OF FINANCIAL
ASSETS AND ENFORCEMENT OF SECURITY INTEREST (SARFAESI)

Background: In order to help banks and FIs to resolve the NPAs, the Govt. of India promulgated
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest
(SARFAESI) Ordinance, 2002 on 21.06.2002, which was later replaced by Act 54 of 2002.

It has 42 sections divided into VI chapters. The act is applicable to whole of India including J&K.

Supreme Court vide its judgment dated 8.04.2004, in the case of M/s. Mardia Chemicals Ltd. &
others Vs Union of India & Others, upheld the validity of the Act except subsection 2 of the
Section 17 of the Act (deposit of 75% of the amount claimed with DRT along with the
application), which was declared ultra virus of Article 14 of the Constitution of India and directed
the Govt. of India to make certain amendments/modifications in the Act. As a result, the
Enforcement of Security Interest and Recovery of Debts (ESI & RD) Laws (Amendment) Act
2004 came into force w.e.f. 11.11.04

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Delegation of Powers To initiate action under SARFAESI Act (RD Cir. 31/2017)
To enable field functionaries to avail provisions of the Act the Board in its meeting held on
26.06.2012, vide Resolution No. 36, approved following revised guidelines: “Incumbents In-
charge of the branches including LCBs, irrespective of the Scale shall have full powers

20
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irrespective of amount of loan outstanding, to permit for initiation of SARFAESI Action….”
Salient provisions of the act are as under:-
19
ENFORCEMENT OF SECURITY INTEREST:
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1) Powers to the secured creditor: Any secured creditor having security interest by way of
Mortgage, Charge, Hypothecation and assignment (not by lien/pledge) may exercise powers
under the Law to take possession of secured assets (U/s 13-4), appoint a person to manage the
3

secured assets, require any person who has acquired secured assets, to pay to the secured creditor
and if a secured creditor is a Securitization Company, it can exercise power of takeover of
management of business ofborrower

2) Conditions for exercising powers under the act: Such power can be exercisedprovided:
 The Asset is classified as NPA as per RBInorms
12

 Value of Financial Assets is more than Rs. Onelac;


 Security Interest is not created on agriculture land, an aircraft or a shipping
vessel;
 Amount due is 20% or more, of principal and interestthereon;
 Debt is not timebarred;
 Loan is not secured by way of pledge, lien & by security of bankdeposits;
 Asset is not on conditional sale or hire purchase orlease;
 Property is not liable to attachment or sale under code of CivilProcedure.
 The assets though exempted U/s 60 CPC (One residential house etc), if it is
charged to secure the debts, can be enforced under SARFAESIact.

NPA CHAPTER - ZTC DEHRADUN Page 32of 162


3) HOW TOPROCEED
On behalf of the secured creditor bank, action can be taken by „Authorized
Officers‟ (as per Board sanction, Officers in Scale IV and above are eligible to
takeactionas„AuthorizedOfficer‟).

When an account becomes NPA, Authorized Officer can issue notice to the
borrower /guarantor / mortgagor (all referred to as borrower in the Act), who has
created interest in secured assets, under section 13(2) of the SARFAESI Act
demanding him/her/them to discharge in full the liabilities within 60 days from
the date ofnotice.

4) HOW TO ENSURE SERVICE OFNOTICE:


As per SARFAESI Act the service of demand notice shall be made by delivering or transmitting
at the place where the borrower or his agent, empowered to accept the notice or documents on
behalf of the borrower, actually and voluntarily resides or carries on business or personally works
for gain, by registered post with acknowledgement due, addressed to the borrower or his agent
empowered to accept the service or by Speed Post or by Courier or by any other means of
transmission of documents like fax message or electronic mailservice.

:41
In case borrower is avoiding service of the notice, the service shall be effected by affixing a copy
of the demand notice on the outer door or some other conspicuous part of the house or building in
which the borrower ordinarily resides or carries on business and also by publishing the contents of

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the demand notice in two leading newspapers, one in vernacular language, having sufficient
circulation in that locality.
19
On issue of such a notice, if the borrower/guarantor raises objections by way of representation
/03 41

under section 13 (3A), bank has to give explanation/suitable reply within 15 days from the date of
receipt of the objections / representation.
3

In consortium accountsconsent of 60% of the secured creditors (in BIFR reference consent of
3/4th of secured creditors) needs to be taken before taking possession/other measures u/s 13(4) of
SARFAESI Act. Such action shall be binding on all secured creditors including those who have
not given consent in favour. Where PNB is the Leader, such consent for the joint action under the
Act shall be sought from all the members avoiding any delay on this count. For this purpose, the
branches need not make any reference to the Circle Head/FGM/HO to take approval of
12

giving/seeking consent.

Applicability of the Act in case of Agricultural lands


(LAWDivision Cir -05/2014 dated 30.01.2014) -- Under Section 31(i) of the SARFAESI Act, it
has been provided that the provisions of the Act shall not apply to any security interest created in
agricultural land.
However, instances have come to notice where IPs charged to the Bank by way of mortgage are
shown as agricultural land in the revenue records but the same are not being used for the
purposes of agriculture and are being used for purposes other thanagriculture.
In this regard, attention is invited to the decision the of the Hon‟ble High Court of Andhra
Pradesh in the case of Gajula Exim (P) Ltd. Vs. Authorized Officer, Andhra Bank, Main Branch
and two Others (AIR 2008 AP 184), wherein it has been held that -

NPA CHAPTER - ZTC DEHRADUN Page 33of 162


„The present characteristics and not the potentialities of a land are the proper criterion (to
decide whether the land is agricultural or not). If a land is ordinarily used for purposes of
agriculture or for purposes subservient to or allied to agriculture it would be agricultural
land. If it is not so used, it would not be agricultural land. The question, how a land is
ordinarily used, would be one of fact depending on the evidence in each case‟.
The Hon‟ble Court, after going through the entire material in the case took the view that the land
on which the factory is situated cannot be treated as an agricultural land. Therefore, it is not
exempted under the Act.
It may also be added that the aforesaid view of the Hon‟ble Court was challenged before the
Hon‟bleSupremeCourtbywayofSLP(Civil)No.17714/2008butthesamewasdismissedbythe Supreme
Court vide its order dated 04.08.2008 with the observations that ―We do not find any ground to
interfere with the impugnedorder‖.
In view of the above legal position, it is advised that whenever the Bank‟s action under the
SARFAESI Act is challenged in a similar situation, the aforesaid legal position can be of
assistance to the Bank to contest the same.

In other cases, where the mortgaged IP is being used for agriculture purpose, recovery

:41
proceedings be initiated by filing suit in DRT/Court, as the case may be, and the property in
question be got attached and sold through the DRT/Court.

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SALE OF ASSET:
1) Minimum Notice Period: A minimum 30 days‟ noticebe given to the owner after taking
possession by the authorized officer and the eventual sale of both movable and immovable
19
properties. In a recently concluded case, Supreme Court held that it is left at the discretion of the
/03 41

Authorized Officer to take or not to take the physical possession of the immovable property
before effecting the sale as per Rule 9 framed under theact.
2) Designated official: The authorized officer has to be an officer in the Rank of the Chief
3

Manager of a Public Sector Bank or such other person authorized as such by the board of
Directors of theBank.
3) Mode of sale: After taking possession, lender can sell the asset throughpublic
auction/obtaining quotation/inviting tenders or by private treaty. If it is by public auction/tender, it
should be backed by public notice in two newspapers out of which in vernacular language having
sufficientcirculation.
12

4) Reserve Price: Reserve price would be arrived at after making proper valuation. For movable
assets authorized officer will take estimated value & for immovable assets, authorized officer will
obtain valuation from board approved valuer. Sale below the reserve price can be done only if
both borrower and lender agree except when there is a natural decay or cost of possession
may exceed the saleprice.
5) Confirmation of Sale: Sale will be confirmed after deposit of 25% by the highest bidder,
balance will be paid within 15 days of confirmation ofsale.

CONDUCTING AUCTIONS BY THE BANK-CONSOLIDATED


GUIDELINESGist of RECOVERY DIVISION CIRCULAR NO. 29 /2015 dtd
02.11.2015-
The sale may be made by any of the following modes, with an aim to secure ―maximum
price‖ for the assets to be sold:

(a) By obtaining quotations from parties dealing in secured assets or otherwise interested in
buying the securedassets
NPA CHAPTER - ZTC DEHRADUN Page 34of 162
(b) By inviting tenders frompublic
(c) By holding public auctionor
(d) By privatetreaty

Out of the above mentioned modes, it has been noted that the most transparent and effective
method of sale of the secured assets is by holding Public Auction or by inviting Tenders
fromPublic.

Until Sep, 2012, the Bank had been following the traditional method of holding Auctions
manually. However, such auctions were always prone to the deliberate and planned impact
of the cartel formation, resulting in lower price fetching. Later on as advised by the
Ministry of Finance, auctions (under SARFAESI Act as well as DRT auctions) were being
conducted through e-auction mode.

The Management Committee (MC) vide its resolution dated 02.02.2015 directed that all E-
Auctions (i.e. under SARFAESI Act and DRT) will be conducted in-house by the Circles from
01.04.2015 onwards.

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Accordingly, w.e.f. 01.04.2015, e-auctions (under SARFAESI Act and DRT auctions) are being
conducted on the PNB Portal/website 2 www.pnbindia.biz. The guidelines for conducting e-
auctions (under SARFAESI Act and DRT auctions), in house were circulated vide Recovery
Division Circular no. 29/2015 dated 02.11.2015.

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As per sastra division cir no 55/2018 dt 14-12-18 few amendments have been by the government
called security interest (enforcement ) amendment rules 2018. The amendments are as under :


19
If the sale of such secured assets is being effected by either inviting tenders from the
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public or by holding public auction, the secured creditor shall cause a public notice in the
Form given in Appendix II-A to be published in two leading newspapers, including one in
vernacular language, having wide circulation in that locality
3

 A new para has been inserted as Rule 6 {sub rule(4)} of “The Security Interest
(Enforcement) Rule, 2002 which deals with uploading of terms and conditions of sale of
movable secured assets on the web site of secured creditor, which states as under: “(4) The
Authorized officer shall upload the detailed terms and conditions of the sale of movable
secured assets on the web-site of the secured creditor, which shall include, (a) Details
about the borrower and secured creditor: (b) Complete description of movable secured
12

assets to be sold with identification marks or numbers, if any, on them; (c) Reserve price
of the movable secured assets, if any, and the time and manner of payment; (d) Time and
place of public auction or the time after which sale by any other mode shall be completed;
(e) Deposit of earnest money as may be stipulated by the secured creditor; (f) Any other
terms or conditions which the authorized officer considers it necessary for a purchaser to
know the nature and value of movable secured assets.”
 The existing para of the provision of Rule 8 {sub rule(6)} of “The Security Interest
(Enforcement) Rule, 2002”, which deals with Sale of Immovable Secured Assets has been
modified as under - Provided that if the sale of such secured assets is being effected by
either inviting tenders from the public or by holding public auction, the secured creditor
shall cause a public notice in the Form given in Appendix IV-A to be published in two
leading newspapers, including one in vernacular language, having wide circulation in that
locality
 The existing para of the provision of Rule 8 {sub rule(7)} of “The Security Interest
(Enforcement) Rule, 2002”, which deals with Sale of Immovable Secured Assets has also
been modified as under----Every notice of sale shall be affixed on a conspicuous part of
NPA CHAPTER - ZTC DEHRADUN Page 35of 162
the immovable property and the authorized officer, shall upload the detailed terms and
conditions of the sale, on the website of the secured creditor, which shall include: (a) The
Description of the immovable property to be sold, including the details of the
encumbrances known to the secured creditor; (b)The secured debt for recovery of which
property is to be sold; (c)Reserve price of the immovable secured assets below which
property may not be sold; (d)Time and place of public auction or the time after which sale
by any other mode shall be completed; (e)Deposit of money as may be stipulated by the
secured creditor; (f) Any other terms and conditions, which the authorized officer
considers it necessary for a purchaser to know the nature and value of the property.
 Based on the above changes , the Sample Sale Notice as given in Annexure I-C of
SASTRA Division Circular No 29/2015 dated 02.11.2015 has been amended as per the
provisions of Annexure IV-A and is enclosed for reference (cir no.55/2018 sastra
division). The sample sale notices have been bifurcated in four parts: 1. Sample Sale
notice for Uploading on Website (For E-auction of Immovable Properties) - Annexure IC.
2. Sample Sale notice for Uploading on Website (For E-auction of Movable Properties) -
Annexure ID. 3. Sample Sale notice for Publication in Newspapers (For E-auction of
Immovable Properties) - Annexure IE. 4. Sample Sale notice for Publication in
Newspapers (For E-auction of Movable Properties) - Annexure IF.

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Further operational amendments for conducting e-auctions

20
Rule 9 (2) of the Security Interest (Enforcement) Rules provides as under: “The sale shall be
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confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or
quotation or offer to the authorized officer and shall be subject to confirmation by the secured
19
creditor; Provided that no sale under this rule shall be confirmed, if the amount offered by sale
price is less than the reserve price specified under sub-rule (5) of Rule 9. Provided further, that if
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the authorized officer fails to obtain a price higher than the reserve price, he may, with the
consent of the borrower and the secured creditor effect the sale at suchprice.
3

Keeping the above provisions in view, Law Division, HO has opined that though technically, a
bidder can start bidding at the reserve price, however, as the sale at reserve price can be effected
with the consent of the borrower only, the first bidding should start for any amount higher than
the reserve price. The minimum incremental amount, if any stipulated, is to be made applicable
for subsequent bids only after firstbid.
12

In the past the Authorized Officer (AO) was not given access to the e-auction due to which he had
to be present in the Circle Office during the e-auction. Now Nodal officer of the Circle office will
create the User ID of the Authorized Officer (AO), thus providing him access to the e-auction to
view the proceedings.

All offices including LCBs/ARMBs will get their e-auctions conducted through their respective
Circle Offices only.

Mode of sale of secured assets-Recovery Division circular 29/2015 dated 02.11.2015 and 33/2015
dtd. 27.11.2015

NPA CHAPTER - ZTC DEHRADUN Page 36of 162


To make the sale process more effective and in line with the instructions of the Ministry of
Finance, certain amendments had been approved by the Board in its meeting held on 29.06.2015
vide Resolution no. 8. The revised guidelines are again given below for ready reference:

All auctions in the case of properties, which are being sold in municipal areas, would be through
e-auction as preferred mode.
Auctions may be conducted manually where:
 The book outstanding in the account is less than Rs. 5 lacs OR Value of the property being
placed for sale is less than Rs. 5 lacs.

 In case of properties in rural areas, where the response is not adequate or for any other
reason, if the Tribunal (in case of auctions under DRT) deems it necessary, such method
may be adopted as the Tribunal considers appropriate, for sale of the property of the
defaulters.

 In case of auctions under SARFAESI Act also, in case of properties in rural areas, where
the response is not adequate or for any other reason, the Circle Head on recommendations
of the Authorized Officer may decide the mode of sale (e-auction/manualauction/tenders).

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 In all cases where in the past (irrespective of the time period / gap), e-auction attempt has
failed at-least once and it is contemplated that instead of e-auction mode, other modes of
sale may be a better option, Circle Head on recommendations of the Authorized Officer,

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may decide the mode of sale (e-auction/manualauction/tenders).

 In all those cases where manual auction mode has been adopted due to any of the reasons
19
mentioned above, the decision will be taken by the Circle Head on recommendations of
/03 41

the AuthorizedOfficer.

 Further, in all such cases, reasons for adopting the manual mode be recorded, kept on
3

record and informed to the Head Office Recovery Division, as the information is also
required to be submitted to the Ministry of Finance on quarterlybasis.
Timeline For
Actions Under SARFAESI Act Initiating Steps
Under
12

SARFAESI
Act
An account becomes NPA
Day-1
Prepare SI-2 (SARFAESI Manual). Get administrative sanction for
Recall and taking SARFAESI Action, which lies with Incumbent Incharge
irrespective of scale.

Issue 60 Days‟“Notice under Section 13(2)” of SARFAESI Act-cum- Day 2nd/4th


RecallNotice/Invocation of Guarantee as per format SI-4 (SARFAESI
Manual) forborrowers and SI-4A (SARFAESI Manual) for
guarantors.(Section 13(2) Notice to be issued by Designated Authorized
Officer appointedby Circle Office. Branches upto Scale III to send SI-
2(SARFAESI Manual)along with draft notice to Designated Authorized
Officer by Circle Office, who will issue Notice within 3days.)

NPA CHAPTER - ZTC DEHRADUN Page 37of 162


Notice served: Notice un-served: By 9th/11th Day

In the ordinary course, service of Within a reasonable period, say


notices is effected within a of 7 days or so, if service of
reasonable period, say 7 days or so. notices on all/some of the
Check and ensure that notice stands borrowers who have created
served on all the borrowers who security interest is found to be
have created security interest. not effected, fresh steps be taken
Authorized Officer to satisfy that for service /Substituted
service is complete. Proof of sending Service by affixation of13(2)
notices, (Postal Receipts,AD Notice where borrower
Cards, POD, etc. be kept on /mortgagor ordinarily resides or
records). carries on business and also by
publicationin two newspapers,
one of which should be in
vernacular language. Authorized
Officer
to satisfy that service is complete.

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Proof of sending notices, (Postal
Receipts, Notices received back
(without opening /tearing them),
AD Cards, POD, and

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publications in the newspapers
etc. be kept onrecords.)
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Representation by the borrower under Section 13(3A) By 69th/ 71st


In case borrowers submit representation/raise objections under Section Day
13(3A), suitable reply to be submitted by Authorized Officer within
3

maximum mandatorytime limit of 15 daysfrom the date of receipt of


representation from the borrowers, {preferably within the 60 days period
of having issued Notice under Section 13 (2)}.

STEPS AFTER SECTION 13 (2) NOTICE


12

Engagement of Supporting Agency and its role All these steps to


For pre-take over examination of identified secured assets, taking over be imultaneously
possession, obtaining assistance of DM/CMM for taking over possession, completed by
acting as custodian, providing security for protection and preservation of 69th/71st Day
assets taken in possession and assisting bank for sale of assets.
Take permission of Circle Head/FGM for engagement of supporting All these steps to
agency Letter to the Supporting Agency to be issued by Authorized beimultaneously
Officer as to its engagement and specific services/support it has to render completed by
to Authorized Officer, as per policy guidelines pertaining to Supporting 69th/71stDay
Agencies.

Supporting agency to make pre possession survey and submit report. The
report be examined as to what precautions and steps need to be taken for
possession. If everything is found in order, Authorized Officer to proceed
for further action. In Consortium Accounts consent of 60% of the secured

NPA CHAPTER - ZTC DEHRADUN Page 38of 162


creditors (in BIFR reference consent of 3/4 of secured creditors) need to
be taken before taking possession /other measures u/s 13(4) of
SARFAESI Act.

Pre-Possession Notice (Form SI-6 of SARFAESI Manual)


In case service of notice is found to be complete and representation u/s
13(3A), if any received, stands duly replied, issue “Notice to deliver
possession of secured assets” (Form SI-6) giving reasonable time to hand On 69th /71st
over possession of secured assets. (Although issue of Notice to deliver Day
possession, is not a legal requirement as per SARFAESI Act)

Taking over of possession


Wait for 10 days after issue of “Notice to deliver the possession of On 79th/ 81st
secured assets” and in case still there is no response, proceed under Day
Section 13(4) to take Possession on or after the date given in the said
Pre- Possession Notice. Check up that there is no stay granted by DRT/
Court/High Court. Court orders received at any stage are to be
honoured after examining its intent &directions.

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Possession Day (Movables) Possession Day (Immovables)

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1) Take possession of 1) Take Possession of immovable On 79th/ 81st
movables. property by delivering Possession Day Publication
2) Prepare Panchnama form SI - Notice (Form-SI-10- SARFAESI by
19
7A/7B/7C/7D (SARFAESI Manual) to the borrower. 82nd/84th Day
/03 41

Manual). (2) Simultaneously affix such


3) Prepare inventory under rule Possession Notice on the outer door
4(2) as per format (SI8). or at such conspicuous place of the
3

(4) Deliver a copy of inventory property.


(SI-8- SARFAESI Manual) to (3) Prepare inventory as per format
the person entitled to receive the (SI -9- SARFAESI Manual).
same. However, in case of refusal (4) Deliver a copy of Possession
and to give acknowledgement, Notice and inventory (SI-9) to the
send it by Regd.Post person entitled to receive the same.
12

AD/Speed Post/Courieretc However, in case of refusal to give


acknowledgement, send it by
(5) Take Valuer with you for Regd.Post AD/Speed Post/Courier
valuation as it would obviate etc
delay in getting valuation of (5) Publication ofPossession
movables. Notice
As per Rule 8(2), for
immovableproperties it is
mandatory to get the ―Possession
Notice‖ (Forms
SI-10, SI-10A &SI-10B-
SARFAESI Manual), which may
be suitably modified as
circumstances warrant published in
the two leading newspaperswithin
7 days out of which, onein
NPA CHAPTER - ZTC DEHRADUN Page 39of 162
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19
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3
12

NPA CHAPTER - ZTC DEHRADUN Page 40of 162


vernacular language having
sufficient circulation in the locality.
(i) Form SI-10- Possession Notice
for a single NPA A/c (may be
multipleproperties)
(ii) Form SI-10A- Possession
Notice for multiple NPA A/cs and
related to one AuthorizedOfficer.
(iii) Form SI-10B- Possession
Notice for multiple NPA A/cs and
related to more than one Authorized
Officer.
(6)Take Valuer with you for
valuation as it would obviate delay
in getting valuation of secured
assets.

Valuation of secured assets By 82nd/84 Day

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· Obtain Valuation Report from Board Approved Valuer
· (No need to wait for actual possession of immovable securedassets)

Actual physical possession not delivered voluntarily/ resisted File DM/CMM

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byborrower application by
If there is resistance in delivering actual possession:
· Filing of application before DM/CMM for taking possession u/s14 90th/ 92 Day
19
of SARFAESIAct.
/03 41

· When application is allowed, possession be taken as per orders ofthe


DM/CMM.
Fixation of Reserve Price of secured assets (movables
3

&immovables) By 84th/86 Day


Authorized Officer to send recommendations to COCESI along with
valuation reports and get fixed the Reserve Price and the mode of sale.
COCESI to finalize the Reserve Price maximum within 2 days.
Movables Immovables Issue of Notice of
Issue “Notice for intended  Issue “Notice for intended Sale by intended Sale
12

Saleby Auction/Tender” of Auction/Tender” of 30 Days (Form SI- and


30Days(Form SI-13- 13). Publicationby
SARFAESIManual).  Issue Public Notice
Issue Public Notice (Proclamation of Sale) SI-14 87th/89 Day
(Proclamation of Sale) SI- /Invitation for Tender -form SI- Day of Auction
14/Invitation for Tender - 24. 121st/123rd
form SI-24-SARFAESI  Serve notice of intended sale by
Manual . Auction/Tender SI-13 sale by
Serve notice of intended sale Auction/Tender and Proclamation
by Auction/Tender SI-13 of Sale SI-14 /Invitation for Tender -
and Proclamation of SaleSI- form SI- 24 on theBorrower
14 /Invitation for Tender - /Mortgagor\ and guarantors.
form SI-24 on the Borrower  Proclamation of Sale Notice (SI- 14)/
andguarantors. Invitation for Tender –form SI-24 is to
Publish Public Notice be affixed on the conspicuous part ofthe

NPA CHAPTER - ZTC DEHRADUN Page 41of 162


(Proclamation of Sale SI-14) property to be sold/auctioned.
/Invitation for Tender -form  Publish Public Notice
SI- 24, in the two leading (Proclamation of Sale SI-14)/
newspapers, out of which, one Invitation for Tender -form SI-24 in
in vernacular language having the two leadingnewspapers,
sufficient circulation in the out of which, one in vernacular
locality. language having sufficient
circulation in thelocality.
There should be minimum 30  There should be minimum 30 days
days gap (Expiry of 30 days) gap (Expiry of 30 days) between the date
between the date of of publication and the date of Auction or
publication and the date of date of opening thetenders.
Auction or date of opening the
tenders.
Sale through E- Auctions is to be conducted as per extant guidelines. In case of E-Auctions,Sale
Notice is to be compulsorily placed at (i) www.pnbindia.in(ii)www.tenders.gov.inand(iii)
www.pnbindia.biz for at-least 30 days in addition to publication in the newspapers. Foradopting
the mode to conduct auction e.g e-auction, manual auction etc. please refer to thelatest guidelines

:41
issued by the recovery Division.· If sale is by inviting tenders, as soon as publication is made in
the newspaper, keep ready theTender Form (SI-25) along with Annexure of Terms &Conditions
which is to be submitted bythe Tenderer/Bidder duly signed with EMD in a sealed cover
accompanying a covering letter –Form-SI-26.Check up that there is no stay granted by

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DRT/Court/High Court. Court ordersreceived at any stage are to be honoured.

Auction Process (Manual Tender Process


19
Auction)  Tenders be opened at the place, On 121st/123rd
/03 41

time and on the day mentioned in Day


Auction be held at the place, Public Notice in the presence of
time and on the day mentioned bidders.
3

in Public Notice.  Recording of Tenders. All


Earnest Money Deposit: Get EMD the Tenders received from
from the Participants/Bidders as individual bidders be recorded
notified in the Public Notice on the Bid- Sheet on the format SI-
(Generally 10% of the reserve price). 19. Each bid be checked up that
No bidder, whose bid is below Terms &Conditions Form (SI-25)
12

Reserve Price, be allowed to of Tender is duly accepted and


participate. signed by bidder and is
accompanied with EMD.
Acceptance of Terms &Conditions Take care that bidder/participant
by bidders-Form SI -18 A. Before has not changed any condition of
commencement of bid, read out tender. Sort out the eligible
terms of sale to bidders and obtain bids.
signatures in token of acceptance of  As Terms &Conditions Form
these terms andconditions. (SI-25) duly signed have already
been submitted there is no need to
Recording of Bids After completing take Form SI 18 A. However,
all the above formalities, start before commencement of bid. read
inviting inter se bids from the out Terms & Conditions of sale to
bidders. All the bids received from bidders.
individual bidders be recorded on the  Recording of Bids: Decidethe

NPA CHAPTER - ZTC DEHRADUN Page 42of 162


Bid- Sheet on the format SI-19. tenderer which has made the
highest bid. In case inter se
When the auction reaches at the bidding is contemplated as per
climax, where no bidder is ready to terms of tender terms, inter se
increase the bid as against the bidding from the bidders be called
highest bid received, the second and these bids berecorded.
highest bidder be asked whether he  Where no bidder is ready to
wants to increase the bid and on increase the bid as against the
refusal , the fact be recorded and his highest bid received, the second
signature be obtained . Similarly, all highest bidder be asked whether he
the bids received from individual wants to increase the bid and on
bidders be recorded on the Bid- refusal , the fact be recorded and
Sheet (Form SI-19) and their his signature be obtained .
signatures beobtained. Similarly, all the bids received
from individual bidders be
Highest bidder be declared as recorded on the Bid- Sheet (Form
successful bidder. SI-19) and their signatures be
Initial deposit : The successful obtained. Highest bidder be

:41
Highest Bidder is required to make declared as successfulbidder.
initial deposit of 25% immediately Initial deposit : The successful
of the bid /sale amount after Highest Bidder is required to make
adjusting the EMD. Balance 75% is initial deposit of 25% immediately

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to be paid within 15days. of the bid /sale amount after
E-Auction adjusting the EMD. Balance 75%
Please refer to Recovery Division is to be paid within 15days.
19
Circulars issued from time to time.
/03 41

Get Bio-data of the Highest Get Bio-data of the Highest Balance 75%
Bidder‟s per format SI-20. Bidder as per format SI-20. amount by136th/
3

 On getting initial  On getting initial 138 Day


deposit,communication of deposit,communication of
acceptance of bid be given to the acceptance of bid be given to the
Highest Bidder as performat-SI-21. Highest Bidder as performat-SI-
In case of Immovable, Move to 21.
Circle Office (Committee of In caseofImmovable ,
12

Officers) immediately but not later Move to Circle Office


than 15 days, to getconfirmation of (Committee of Officers)
sale from them as a Secured immediately butnot
Creditor . And this confirmation later than 15 days, to
of sale be communicated to the getconfirmation of sale
Highest Bidder as performat-SI- from them as a
22. No confirmation of sale of SecuredCreditor
Secured Creditor is required . And this confirmation of
in case of sale of movables. salebe
communicated to the Highest
Execution of Agreement to Sell:be Bidder as per format-SI-22.
executed with the purchaser as per No confirmation of sale of
formatSI-23. Secured Creditor is
 Balance bid amount of 75% is required in case of sale of
received within time of 15days movables.
 Execution of Agreement toSell:
NPA CHAPTER - ZTC DEHRADUN Page 43of 162
be executed with the

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19
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3
12

NPA CHAPTER - ZTC DEHRADUN Page 44of 162


as per Terms &Conditions of purchaser as per format SI-23.
the auction.  Balance bid amount of 75% is
received within time of 15 days
as per Terms &Conditions of the
Tender.
Certificate of sale be issued (when sale price is received in full and asset sold is delivered.)
Form SI- 15/ or SI 16 for Movables and Form 17 for Immovables.
Appropriation of sale proceeds
· All the costs, charges and expenses incurred for Sarfaesi action which inter-alia include
postage, publication, watch & ward, insurance, godown charges, fees of supporting
agency needs to berecovered.
· Care must be taken that sale expenses are to be appropriated first from the sale proceeds.
The balance proceeds of the sale be credited in the NPA account for liquidation of
Principal bank dues, then to interest as per Recovery Division HO Circular no.26/2013
dated dated 04.06.2013.The residue/balance amount shall be paid to the person entitled
thereto.

SARFAESI Action – Initiation of action against all secured assets viz. movable as well as

:41
immovable properties & need for taking physical possession of secured assets.

As per the definition provided under Section 2 (t) of SARFAESI Act, the term „property‟, inter
alia, includes immovable property, movable property as well as book debts. As such SARFAESI

20
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action has to be initiated in all the NPA accounts including those where eligible secured assets are
available in the form of hypothecated movable properties and book debts only.
Take physical possession of maximum eligible properties because it is easy to sell the properties
19
which are under physical possession of bank, and moreover, properties under physical possession
/03 41

of bank fetch better price also. As such, all field functionaries are again advised as under:
3

 All possible efforts be made to take eligible properties under physical possession ofbank.
 Applications before DM / CMM for taking physical possession need to be filed only in those
cases where Authorized Officer / branch has exhausted all other means to take physical
possession.
 In all those cases where there are chances of resistance / hindrance from borrower / mortgagor,
applications be filed before DM / CMM for taking physical possession immediately after
12

expiry of notice period issued under Section 13 (4) ofSARFAESIAct.


 The applications filed before DM / CMM be closely followed up for expediting physical
possession. If needed, meetings be held with DM requesting to expedite thematters.
 In all those cases where DMs / CMMs are delaying the matters, writ petitions be filed seeking
directions to concerned DMs / CMMs to expedite action in pendingmatters.
 Realistic reserve price be fixed to avoid failure of sale on account of inflated reserve price. If
required, fresh valuation of secured assets be obtained to ascertain actualvalue.
 The data relating to SARFAESI action be updated at SARFAESI portal on regular basis as the
data extracted from SARFAESI portal is being used for various MISpurposes.

(Cir 49/2017 )Public Sale Notices- Important Details For Publication and Uploading

Latest guidelines & reiteration of guidelines pertaining to Conducting E-Auctions-


Uploading of Auction Notices on Website& Other Relevant Details, are enumerated in
latestSASTRA DIVISION CIRCULAR NO.41/2018

NPA CHAPTER - ZTC DEHRADUN Page 45of 162


As per extant guidelines of the Bank, under the SARFAESI Act, Auction Notices are required to
be uploaded on following websites, besides publication in two newspapers, as per the provisions
of SARFAESI Act:

(i) www.pnbindia.in (Regulatory Disclosure) -Bank‟swebsite

(ii) www.tenders.gov.in - The Indian Government Website

(iii) www.pnbindia.biz - Bank‟s portal fore-auctions

Hon‟ble Ms. Justice Hima Kohli & Hon‟ble Ms. Justice Deepa Sharma of High Court Delhi,
inRajesh Gems & Jewels (P) Ltd vs. India Overseas Bank through their judgement dated
20.09.2017 advisedthat:

“In the larger public interest, henceforth Banks to ensure that the public notices issuedfor
auctioning of immovable properties under SARFAESI Act, contain all the relevant details and
state whether the same is freehold or leasehold, give its measurement, location etc. including
other details for it, to attract as many bidspossible.”

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Strategies For Successful Sale Process Under SARFAESI Act

Under the SARFAESI Act when we go for sale of secured assets, the aim is to secure maximum price

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for the assets to be sold. Over a period of time it has become a proven fact that the most transparent
and effective methods of sale of the secured assets are: Public Auction and Inviting Tenders
However, experience has revealed that in large number of cases the sale efforts are thwarted on
19
account of non-receipt of bids or buyers offering sale price not commensurate with the Market
/03 41

Value/Reserve Price. In pursuit of free, fair and transparent auctions Ministry of Finance directed the
Banks to adopt the Electronic medium for conducting auctions also known by the name “E-Auctions”.
However, to improve the success rate of even e-auctions, we need to initiate certain steps, which are
3

given below:

1. Valuation of securedassets
Valuation Report relied upon should normally be not more than a year old. Branch Incumbent, besides
relying upon the Valuation Report submitted by the Valuer(s), as per extant guidelines, should involve
12

him/herself in the process and make discreet enquiries from the Property Dealers/Real Estate
Agents/Residents of that area etc. so that a fair assessment may be made, before fixing the Reserve
Price.

2. Fixation of ReservePrice
A realistic Reserve Price will always improve the chances of successful sale process. Reserve Price
needs to be fixed by taking into cognizance, various factors e.g location of the property, multiple
tenancy, IPs not demarcated, various Government obligations/litigations/attachments etc.
3.Publicity
In the current scenario, publicity plays a vital role to make an E-Auction a successful event. Publicity
can be bifurcated mainly into two parts:
 As per statutory/regulatoryguidelines
1. Sale advertisement to be published compulsorily in 2 newspapers, of which one must be in
vernacularlanguage.
2. 30 days Notice to be issued to the borrower/mortgagor/guarantor, Sale Notice is also required
to be affixed on the conspicuous part of theproperty.

NPA CHAPTER - ZTC DEHRADUN Page 46of 162


3. The Sale Notice is to be loaded at the following two websites, compulsorily:
www.pnbindia.in&www.tenders.gov.in
4. In case of e-auction notice must also be compulsorily loaded atwww.pnbindia.biz
 General practices for fetching betterquotes/price.

1. Display in the notice boards & ATM cabins of all branches in theCircle.
2. Besides the 2 newspaper ads, it can be published in some additional Newspapers, having good
circulation in that particulararea.
3. Scrolling/Running Strips can be displayed on the Local Cable TV/Other TV Channels for
some period say aweek/fortnight/month.
4. Hand Bills/Pamphlets can be circulated through NewspaperVendors.
5. In cases of sale of properties with high Reserve Price (1 crore & above), pamphlets/brochures
containing description and photos of the property (wherever possible) can also be considered
forcirculation.
6. In all advertisements & publicity materials the positive features of the properties, like posh
locality, proximity to markets/schools/station/airport/ other civic amenities etc may be
mentioned clearly to attract potentialbidders.
7. A database of the prospective Valuable Customers/Real Estate Agents/Property Dealers etc.

:41
may be prepared and kept hand for future sale transactions also. In case of any fresh sale
process, E-Mails/Invitation letters may be sent to such prospectivebuyers.
8. Spot Inspection of the property should be arranged and Enquiries by the Prospective Buyers
must be attended to properly, correctly andhonestly.

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9. Facelift of the Properties- before opening the property to spot inspection, wherever possible,
efforts must be made for giving them a face lift by spending a nominal amount and taking
help of the labour for whitewash, removal of weeds/grass, cleaning the premisesetc.
19
10. Actual /Physical vis-à-vis Symbolic Possession- In case Bank has actual/physical possession
/03 41

of the property, the chances of success of the auction/saleincrease.


11. Utilization of services of Supporting Agencies- For utilization of services of Supporting
Agencies, Circle Heads may take a final call in this regard and wherever required, services of
3

such Agencies may be utilized as these agencies can play pivotal roles through their
professional approach & localcontacts.

CONFIRMATION OF SALE AND ISSUE OF SALE CERTIFICATE


Confirmation of Sale: “On payment of initial deposit, the sale shall be confirmed. Confirmation
12

of sale be recorded and conveyed to the highest bidder. The steps needs to be taken immediately
but within 15 days from the date of Auction for getting the sale confirmed from the secured
creditor i.e. Committee of Officers and confirmation be conveyed to the highest bidder.

1) IMMOVABLE ASSETS–

Confirmation by the „Authorized Officer‟ and confirmation by the secured creditor are
necessary only in respect of sale of immovable assets. Sale of immovable property is to be got
confirmed (Form SI-22 of SARFAESI Manual) by the Authorized Officer from the Secured
Creditor. In terms of SARFAESI Rules, 2002 {Rule 9(6)}:

“On confirmation of sale by the secured creditor (Committee of Officers) and if the terms of
payment have been complied with, the Authorized Officer exercising the power of sale shall
issue a ―Certificate of Sale‖ of the immovable property in favor of the purchaser.” (Form SI-17
of the SARFAESI Manual)‖

NPA CHAPTER - ZTC DEHRADUN Page 47of 162


2) MOVABLE ASSETS
In case of sale of movable assets, wherever it is found inconvenient, the procedure of
confirmation of sale by the Authorized Officer/ Secured Creditor (i.e Committee of Officers) may
be dispensed with/may not be followed, as in case of movable assets, sale confirmation is not
required. Further, in case of sale of movable assets, on payment of full sale price, Authorized
Officer shall issue “Certificate of Sale” (Form SI-15 of the SARFAESI Manual). Certificate of
Sale may attract stamp duty. If the purchaser does not insist for a Certificate of Sale, he can be
given a receipt (see Appendix B- Form SI – 16 of the SARFAESI Manual) for the sale price
received.

3) NON CONFIRMATION OFSALE

If it is found by the Committee of Officers that sale is not to be confirmed, the reasons for not
confirming the sale be recorded in the minutes of the meeting and should be immediately
conveyed to the purchaser and initial deposit be returned.

4) COMMITTEE OF OFFICERS FOR CONFIRMATION OFSALE

:41
S.No. Particulars Committee to sale Members of committee
confirmation
1 For branches other COCESI ( Circle office 1.Circle Head (Chairperson)

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than LCBs committee for 2.Second in command at CO
enforcement ofsecurity 3.Chief/Sr. Manager of Recovery
interest 4.Sr.Manager/Manager Law
19
2 For LCBs Committee of LCB for 1.Head of the LCB
/03 41

enforcement of security 2.Second in command


interest 3.Relationship/ Dealing manager
The above Committees will confirm the sale of secured assets(compulsorily for immovable
3

property), in the capacity of secured creditor.


In this regard, provisions of Rule 9(2) of The Security Interest (Enforcement) Rules, 2002,
provide as under:
―The sale shall be confirmed in favor of the purchaser who has offered the highest sale
price in his bid or tender or quotation or offer to the authoried officer and shall be subject
to confirmation by the securedcreditor.‖
12

Mandatory provisions of the SARFAESI Act read with Rules are complied with meticulously and
all concerned are requested to ensure that-
a) WhilepublishingtheSaleNoticesanduploadingthemattheE-Auctionsites/Bank‟swebsite
/Govt website (tenders.gov.in) etc., there is no variation in the nomenclature used and regarding
confirmation of sale, it is invariably mentioned that “Sale would be subject to confirmation by the
secured creditor”.

b) However, where in a particular account, there are both movable and immovable assets and
common procedure is adopted for sale thereof then it must be ensured to incorporate in the sale
proclamation/Public Notices/ advertisements in the newspapers etc. that “Sale is to be confirmed
by the SecuredCreditor”.

5) EXTENSION OF TIME LIMIT FOR PAYMENT OF BALANCEAMOUNT

NPA CHAPTER - ZTC DEHRADUN Page 48of 162


Rule 9(3) of The Security Interest (Enforcement) Rules, 2002 states that:
―On every sale of immovable property, the purchaser shall immediately pay a deposit of 25% of
the amount of the sale price, to the Authorized Officer…‖
Further Rule 9(4) provides that:
“The balance amount of 75% of the purchase price payable shall be paid by the purchaser to the
Authorized Officer on or before the fifteenth day from date of confirmation of sale of the
immovable property or such extended period as may be agreed upon in writing between the
parties.‖

Supreme Court in its Judgment in the case of J.Rajiv Subramaniyan & Anr.Vs.Pandiyas and Ors.
Decided on 14.3.2014, held that sale by any other method in terms of Rule 8(8) of SARFAESI
Rules other than public auction or tender shall be on such terms as may be settled between the
parties in writing. According to the Court, the parties mean the borrower (mortgagor),
purchaser and the bank. Thus ―Extension in the time period (i.e beyond 15 days, as
specified in Rule 9(4) of the SARFAESIAct), for depositing of the balance amount be
permitted onlywhen:

(i) It is mutually agreed upon by the Borrower(mortgagor), Bank and purchaserOR

:41
(ii) Consent is given by the borrower/mortgagor for doingso.

SALE OF IP BY PRIVATE TREATY AND ON FAILURE/CANCELLATION OF SALE-


Based on the instructions of Ministry of Finance, necessary guidelines were approved by the

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Board in its meeting held on 08/09.05.12 vide Resolution No. 11 and the same are given below
for meticulouscompliance:
1. Alternative of private treaty should generally be resorted to only when the other more
19
transparent methods of obtaining quotations/inviting tenders or public auction etc. have not been
/03 41

successful.
2. Minimum number of attempts of sale of immovable secured assets through other more
transparent methods, depending upon the assessed value/reserve price fixed for the secured assets
3

is givenbelow:
One such attempt is prescribed for assets with a value up to Rs.1 crore.
Two such attempts are prescribed for assets with a value more than Rs.1 crore. However, the
alternative of private treaty may be considered without resorting to other methods if all the dues
of the bank/banks in the case are fullyrecovered.
12

Further, where dues of the bank(s) are not being fully recovered and the amount recoverable
through sale in private treaty is less than the assessed value/reserve price, the approval of one
level above the authority competent to enter into private treaty should be invariably be obtained.
As per Bank‟s extant guidelines Circle Heads have full powers for initiation of SARFAESI
action. However, LCBs (Large Corporate Branches) seek permission from the concernedFGM.

Latest Supreme Court Judgement on Sale through Private Treaty Supreme Court has given
decision in respect of the “Sale Through Private Treaty”, in case of J. Rajiv Subramaniyan & Anr.
Vs. Pandiyas & Ors., decided on 14.03.14, that: “In case of sale of property under Private Treaty,
consent of the mortgagor, bank and the proposed purchasers are required. The Secured Creditor
should ensure that the borrower was clearly put on notice of the date and time, by which, either
the sale or transfer will be effected, in order to provide the required opportunity to the borrower to
take all possible steps for retrieving hisproperty.”
In view of the above, it must be ensured that while going for sale of property (ies) through Private
Treaty, consent of the mortgagor, bank & the proposed purchaser is invariably taken.

NPA CHAPTER - ZTC DEHRADUN Page 49of 162


Action Required On Failure/Cancellation of Sale- Entire Process Be Followed Afresh
It is pertinent to mention that as per the existing guidelines, there is no mention about the
procedure to be adopted, in cases, where the attempt to sell the secured assets fails, at the first
instance and is being attempted again. It has been further brought that in the subsequent attempts
for sale of secured assets, there had been no uniformity in the process adopted by the Authorized
Officer.

This issue has been taken care by the following important judgement given by the Supreme Court.
In the case of Mathew Varghese Vs. M. Amritha Kumar & Ors, the Supreme Court in its order
dated 10.02.2014 held that: “Once the sale does not take place pursuant to the Notice issued under
Rule 8 and 9 (The Security Interest Enforcement Rules, 2002), read along-with Section 13(8) of
the SARFAESI Act, for which entire blame cannot be thrown on the borrower, it is imperative
that for effecting the sale, the procedure prescribed in the Act will have to be followed afresh, as
the notice issued earlier wouldlapse.”

In view of the above judgment, it is to be ensured that after failure/cancellation of sale process,
which may be through any of the four modes prescribed under the SARFAESI Act i.e
Auctions/Tenders/Quotations/Private Treaty, before making another attempt the whole procedure
is to be started afresh e.g issue of 30 days‟ notice to the borrower, publication in the two

:41
newspapers etc. as if the sale process has been started for the first time.

APPEAL PROVISIONS:

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1) Appeal to DRT: The borrower may appeal to DRT without depositing any amount. Such
appeal has to be preferred within 45 days (U/s 17) from the date on which such measures had
been taken. The appeal can be made only if secured creditor takes possession of the securities or
19
any other action U/s 13(4) and not merely on notice U/s 13(2). Since the act has not given any
/03 41

limit for filing appeal before DRT, therefore appeal can be made even for amounts below
Rs.10 lac. The court fee as applicable for filing suit before DRT in general cases, shall be
applicable.
3

2) Appeal to DRAT: The borrower has to deposit 50% of the amount decreed by the DRT or
claimed by the secured creditor, whichever is less, before making application at the 2nd stage i.e.
DRAT. DRAT, however, may reduce it to 25%.This appeal should be made within 30 days (U/s
18) from the date of receipt of orders of DRT.
12

3) Time Limit: It has also been made mandatory that the DRTs would dispose of the cases within
60 days & may extend the period upto 4 months after recording the reasons in writing else any
party may move to DRAT which may direct DRT for expeditiousdisposal.

4) Provisions for J & K: In the state of Jammu & Kashmir the borrower may move to the court
of District Judge and against his order to the High Court after depositing 50% of the amount
decreed by the District Judge which has power to reduce this amount to25%.

RD CIR 9/2014dt.25.02.2014 :- “Issue notices u/s 13(2) and 13(4) of SARFAESI Act separately
for the securities situated outside the State of J&K and separately for the securities situated in the
state of J&K”

CONTRAVENTION:-

NPA CHAPTER - ZTC DEHRADUN Page 50of 162


1) Imprisonment: Any person who contravenes or attempts to contravene or abets to contravene
the provisions of this act or any rules made under the act can be punished with imprisonment for a
term which may extend to one year or with fine orboth.

2) Penalty: Contravention or non-compliance may attract fine which may extend to Rs.5000/- for
every day ofdefault.

3) Additional Fine: U/s 28, if Securitization/Reconstruction company or any of its officers fail
to comply with the directions given by Reserve Bank, they can be fined upto an amount of Rs.5
lac and in case of continuing offence they can be charged with additional fine of Rs.10000/- for
every day during which the offencecontinues.

SARFAESI AND OTHER RECOVERY MEASURES:

1) Cases under BIFR/SICA: Protection under SICA is not available once a secured creditor
takes action under this act. In case any reference is pending before BIFR/SICA, it will abate and
SARFAESI willprevail.

:41
2) Action under Civil Courts: U/s 37, the remedy available under this act is in addition to all
remedies available under any other law. Hence creditor can proceed under this act even in the
matters which are under consideration by any Court Of Law.or sub-judice. However, if the
competent court has already passed any order, bank can proceed under this act only after taking

20
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prior permission from the court of competentjurisdiction.

3) Cases already pending before DRT: In Transcore V/s Union of India and IOB, Supreme
19
Court has decided that even if proceedings are pending with DRT, the bank can proceed against
/03 41

the borrower under thisact.

Our Bank has also advised as under: - (Cir 31/2017 dated 30/06/2017)
3

(i) In the cases where huge stakes of the bank are involved or it is apprehended that
borrower/mortgagor may file appeal against SARFAESI action of the Bank, CAVEAT
Application be filed in theDRT/DRAT/Court.
(ii) Proper reply/applications are filed in the DRTs/DRATs/Courts for vacation of
stay/preponement of next dates of hearingsetc.
12

(iii) Bank Officials and the dealing Counsel should invariably attend the hearing of the
SARFAESI appeal in the DRTs so as to ensure that SARFAESI appeals are disposed off
within 4 months and no stay orders remainoperative.

SARFAESIACT2002 - UPLOADING OF AUCTION NOTICES AT WEBSITES -


GUIDELINES (SASTRA DIV 02/2015 dated 09.01.2015,29/2015)
 All Auction Notices are to be placed compulsorily on the following websites as per the
procedure explained in the subsequent paragraphs, in addition to publication in the
newspapers, as per the provisions of the SARFAESI Act 2002:
(i) www.pnbindia.in (Regulatory Disclosure) -> Bank‟swebsite
(ii) www.tenders.gov.in -> The Indian Govt.Website
(iii) www.pnbindia.biz
 Besides above mentioned two websites, for further exploring the market of prospective
buyers, FGM/Circle Head may decide to upload the Auction Notice on the following
privatewebsite,approvedbytheExecutiveCommitteeinitsmeetingheldon
NPA CHAPTER - ZTC DEHRADUN Page 51of 162
20.11.2010(RecoveryDivision‟sNotedated22.09.2010),wherevalueofIPisRs.5.00 crore
andabove:
www.foreclosure.com
For placing the information on the above mentioned optional website, matter may be taken
up directly, with M/s Foreclosure India by e-mail. The contact details of the Company are
given below:
Fax No. : 040-23836405
Email :
info@foreclosureindia.comWebsite
:www.foreclosureindia.com

For listing of Auction Notices on their website, the Company may be paid Rs. 800/- per
account/borrower, inclusive of service Tax. In addition to this, Company shall also
upload the same Auction Notice in vernacular language without any extra cost. In caseof
Auctions, new dates of auction shall be intimated to M/s Foreclosure India. However,no
further charges shall be payable. Further, on sale of listed properties, no commissionetc.
shall be payable to the Company.

:41
Procedure for uploading Auction Notices at www.pnbindia.in (RD 02/2015 dt.
09.01.2015)For uploading the Auction Notice at www.pnbindia.in, no extra information is
required from the Circle Offices. The Auction Notice published/to be published in the
newspapers, in the PDF format fulfills the requirement.

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UploadinganyNotification/Noticeetc.ontheBank‟swebsitewilltakeplaceinacentralized
manner. Therefore, now onwards all the Auction Notices will be uploaded on the Bank‟s
19
website centrally by the HO: MASD and not by Recovery Division. Instead of sending these
/03 41

Auction Notices to Recovery Division, Head Office, New Delhi, Circles Offices will ssend
copy of auction Notice published in the Newspapers to MASD, HO in PDF Format at
following e-mail IDs (No Hard Copy) and only its copy be endorsed to Recovery Division,
3

Head Office, New Delhi:

S.NO. Division Email address


1 HO:MASD website@pnb.co.in
2. HO: RECOVERY DIVISION prerona.misra@pnb.co.in
sc.aggarwal@pnb.co.in
12

Procedure for uploading Auction Notices at www.tenders.gov.in


Circles would be responsible for uploading the Auctions on Government Website
www.tenders.gov.in.

For uploading the Auction Notices at www.tenders.gov.in, the required information is given in
the Annexure-II-Summarized Information. Circle Offices may seek the required information
from the concerned branch for uploading the Notice.

Circles will also upload the Auction Notices for the Large Corporate Branches and Large
Corporate Branches (LCBs) will get their Auction Notices uploaded through the respective
Circle Offices.

Executive Incharge, Recovery Section at the Circle Offices will be responsible for
uploading of the Auction Notices at the Government website www.tenders.gov.in of the
Branches of the Circle and of the Large Corporate Branch also located in theirarea.

NPA CHAPTER - ZTC DEHRADUN Page 52of 162


For uploading of such Auction Notices at the Govt. website, step by step work
flow is stipulated in the Annexure-I-Work Flow & Annexure-IV-User Manual {RD Cir
02/2015 dated 09.01.2015}

Important Terms and Conditions

1. Auction Notice should be invariably placed on the Bank‟s and Govt. of India
websites for at-least 30 days inadvance.
2. Branches will send details of the Auction Notice(s) to its Circle Office (soft as
well as hard copy) and Circle Offices for placing the Auction Notices on the
Government website www.tenders.gov.inafter verifying the facts and
completeness of requisiteinformation.
3. Circle Office will maintain a record of such Auction Notices and allot/mark
serial number starting from 1 (year-wise) e.g for 2014 the first Auction Notice
sent to Recovery Division shall bear serial number 1. Similarly in 2015 it will
again start from 1 and soon.
4. All other guidelines for enforcing the Security Interest under SARFAESI Act
have to be complied with,meticulously.
5. Regarding creation of User IDs information on the prescribed format (RAD

:41
02/2015) besubmitted to recovery division HO NewDelhi.

New Features at E-auction portal of the bank (RD 08/2017 dated 02.02.2017)

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1) Location wise (State & District) Search of properties : Earlier properties put to auction
could by searched by prospective buyers based on auction reference number / auction date /
asset type / account name / circle but now it can also be searched on State andDistrict
19
name wise to enable buyer to locate the property specific location wise.
/03 41

2) Viewing Image of Properties alongwith ProminentFeatures:


Availability of images of properties for viewing by prospective buyer will enhance the
3

chances of sale. As such New features have been added in the portal to facilitate the
prospective buyers to view the image(s) of the properties along with their prominent
features. To view the images and prominent features of a property the prospective buyers
may click the „ View Property Image‟ button at the home page.

Company under liquidation, notice U/s 13(2) of SARFAESI act is to be served on to the
12

official liquidator and if no response is received, bank to obtain leave of the Company Court
under section 537 of Companies Act to take measure under section 13(4) of the SARFAESIact.

POLICY FOR ENGAGEMENT OF SUPPORTINGAGENCIESUNDER SARFAESI


ACT 2002 (RD 13/2017 dated30.3.2017)
Nature of services The following services/activities/sub-activities need to be performed by
such professional Supporting Agencies:
1)Pre-take over examination of identified units/assets including survey
which shall include:
(i) Location of theunit/asset,
(ii) Its status i.e whether the unit is running or closed, whetherthe
IP is vacant or occupied, if occupied by owner or bytenants
etc.
(iii) Requirement of manpower (security personnel) at the timeof
taking over the actualpossession,

NPA CHAPTER - ZTC DEHRADUN Page 53of 162


(iv) Assessment as to whether the owner is likely to hand over the
possession voluntarily and/or peacefully or offer resistance.
2) Facilitating the Bank in seizure of securities/taking possessionof
movable and immovableassets.
3) To provide security for preservation and protection of assetstaken
inpossession.
4) To act as Custodian of securedassets.
5) Obtaining assistance of District Magistrate/Metropolitan
Magistrate for taking over possession of securities. Forthis
servicesofanadvocatefromBank‟spanelmaybeutilized
6) Assisting the Bank for sale of assets taken in possessionthrough
auction orotherwise.
Authority for Circle Head is authorized for empanelment of a Supporting Agency.
engagement / FGM/CH irrespective of Rank have full Powers for engagement of
empanelment Supporting Agencies for assignment of task to them. In case of LCBs the
power for engagement of Supporting Agencies shall vest with the
Incumbent of the LCB.
Utilization of In case, services of a Supporting Agency engaged by a particular Circle

:41
services of the Office anywhere in the country, are required by any other Circle Office who
Supporting has not engaged that Supporting Agency, the proposals duly recommended
Agents out of the by the Branch Incumbent may be submitted to their Circle Head (in case of
geographical LCB, to their FGM) for consideration. Circle Head (for LCBs, FGM will

20
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jurisdiction accord approval) may accord approval in such cases, purely on merits and
genuineness of the problem e.g the property/security is located at different
place/centre and/or non availability of services of Agencies in a particular
19
area.
/03 41

However, in such cases it is essential that the other Circle Office (who had
not engaged the Supporting Agency, originally) also gets the prescribed
3

Agreement/Documents signed from that Agency. These


Agreements/Documents must be kept in records by the Circle
Office/Branch, to avoid any disputes/complications at a later stage.

Validity of panel The panel of Supporting Agencies will remain valid till the time revised/up-
dated list is placed on the Bank‟s website, preferably on yearly basis.
12

Addition/ Circle head is authorized


delisting

Payment of fees Annexure II and III of the circular and are all inclusive of taxes whatsoever
may be payable. The Fee Structure given in the Annexure does not cover
the charges for Seizure of Vehicles including Tractors‖, for which there
is separate Policy approved by the Board
For obtaining assistance from DM / Chief metropolitan magistrate for
taking over possession of securities the fees shall be paid in twostages:
a) 50% at the beginning on moving theapplication
b) Balance 50% after obtaining possession of securedassets.
As per revised guidelines vide Circular no 43/2017 Recovery Division –
i) In case the Property Dealer/ Real Estate Agency , Who although is
not working as Supporting Agency , on behalf of the Bank,but

NPA CHAPTER - ZTC DEHRADUN Page 54of 162


brings a buyer for a property / any other secured asset, put on sale
by the Bank, Commission of 1% of the total sale price shall be
payable to the dealer/agency by the Bank. In that case no
commission shall be payable to the Supporting Agency who was
assigned the task of sale of the property / any other secured asset
originally , as the Supporting Agency has not played any active role
in identification of the prospective buyer.
In terms of Para ( ii) of the Annexure 3 of the extant policy for sale
of acquired Assets through auction or otherwise, it is already
stipulated that :- The fees be paid only when the Supporting
Agencies have played active role for sale of Assets .
ii) In case, The sale price of the Property / Secured Asset is more than
the amount due to the bank, which may be recoverable dues /
memoranda dues/ balance outstanding, depending on the OTS /
Settlement terms on case to case basis, then 1% commission will be
paid on proportionate basis by the Bank and the defaulting
borrower and the balance amount after deducting the commission
shall be paid back to the defaultingborrower.

:41
iii) In case the Supporting Agency itself utilizes services of a Property
Dealer/ Real Estate Agency at their own, who brings a buyer for a
Property/ any other secured asset put on sale by the Bank, then
commission to the dealer/ agency will be paid by the Supporting

20
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Agency, as per their own arrangement, and no additional
commission of 1% shall be paid by theBank.
19
Further, Commission to the Property Dealer/ Real Estate Agency
/03 41

shall be payable subject to the following conditions:


The buyer shall be brought before last date of submission of
3

Earnest Money Deposit (EMD). Authorized Officer to


completely satisfy him/herself of the proactive role played
by the Property Dealer/ Real EstateAgent.
 Credentials of the Property Dealer/ Real Estate Agent will
be verified by authorized officer and kept onrecord.
 Commission will be payable only when the buyer brought
12

by the property dealer/ real estate agent comes out to be the


successful bidder and deposits the sale price with the bank.
No commission will be payable on partial amount
deposited.
 Further, it must be ensured that one agency is engaged at a
time.
 In case more than one bid is received from the prospective
buyers, commission will be payable for the successful bidder
only, brought by any Supporting Agency/ Property Dealer/
Real EstateAgency.
All other guidelines of the policy e.g.: payment after deducting
GST, Expenditure head to be debited etc. will continue to prevailon
suchpayments.
Payment of Expenditure: Outsourcing of Financial Services-SupportingAgencies
commission {P &L- GL Report Code 11427 (Account No. <solid>1142703) as

NPA CHAPTER - ZTC DEHRADUN Page 55of 162


revenue head mentioned in I&AD Cir No.51/08 dated 18.09.2008
Recovery through Where supporting agencies have played a proactive role in recovering
OTS bank‟s dues through OTS or otherwise (normal recoveries) after taking
possession under the Act but there is no sale of assets, Circle Head may
approve fee to the Agency at the rate of 50% of normal fee (i.e. fee payable
for sale of asset) with the ceiling of Rs.1,50,000/-
Competent The payment will be made by the concerned branch as per the directions of
Authority for theAuthorized Officer.
payment and In case of any dispute, Circle Head may take the final decision,
settlement of considering facts of the case and for LCBs the concerned FGM shall be
disputes the competent authority for settlement of disputes.
Monitoring Quarterly review meetings shall be held with the staff of Supporting
Agencies by the Branch to review the progress of the Supporting Agencies
for the task/job entrusted to them.
The Circle Offices will submit the progress report to their FGMOs and a
copy to be sent directly to the Head Office Recovery Division within a
fortnight‟stimefromtheendofthequarter.Circle-wiseprogresswillbe placed
to the GM (Recovery Division) on quarterly basis. FGMOs to also

:41
analyzetheCircle-wiseprogressandensurethatwhereverrequired,
services of the Supporting Agencies are utilized by the Circle Offices
for expeditious resolution ofNPAs.

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POLICY ON SEIZURE AND SALE OF VEHICLES(INCLUDING TRACTORS) OF
DEFAULTER BORROWERS (RD(SASTRA) Cir no 33/2018 dated 29.06.2018, no
19
changes from RD cir no 15/2017 dt 31.03.17)
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It has been observed that a sizeable amount of NPAs under the segment of below Rs.10 lac is
locked up in vehicle loans particularly Tractor advances. Besides, a large number of vehicle /
3

tractor loans are running irregular and are likely to slip to NPAs, if immediate corrective
action is not taken.
For dealing with delinquency / irregularity arising on account of natural calamities (floods,
droughts etc) and consequently inadequate income generation, the bank has a well laid down
system of reschedulement / restructuring / rephasement. However, in cases of deliberate
12

default, at times effective recovery measures need to be taken so as to enforce our security
interests including seizure of tractors, cars, trucks and other vehicles, taking physical
possession and realizing its value by sale for credit to the borrower‟s loan account as per the
covenants of the contract / provisions of law.

Based on the feedback received from the field and/or experience gained in implementing
the Policies, there are no issues warranting any changes/modifications in the existing
policy. Thus, Board in its meeting held on 14.05.2018, vide Resolution no. 12 approved to
continue with the existing Policy for the year 2018-2019 also.
As per terms of various agreements- like Priority Sector TL Agreement PNB 639 (Para 7) ,
Letter of Hypothecation- PNB 504 (penultimate para) and Hypothecation Agreement PNB-
1041 ( Para 10) the bank has a right to demand, have possession of and sell charged securities
in case of default by borrower.
In the interest of Natural justice, it is considered necessary that Bank should not initiate any

NPA CHAPTER - ZTC DEHRADUN Page 56of 162


legal or other recovery measures including repossession of the security without giving due
notice in writing. Also it is to be ensured that due process of law is followed while taking
repossession of the property; that all reasonable care is taken for ensuring the safety and
security of the property after taking custody, in the ordinary course of the business; and that
the entire process is fair and transparent.
Keeping in view the above aspects, with a view to impart thrust for recovery of Bank‟s dues
in irregular and NPA vehicle loans (including Tractor advances), following procedure is to be
followed by Branch Manager for repossession and disposal of the security of vehicle
including Tractors.

1. Issue of firstnotice
In addition to the usual / normal recovery reminders / notices / efforts, a 15 days‟ notice
calling upon the borrower to remedy the default shall be given (with copy to guarantor/s) in
writing in local vernacular language. The notice shall state that in the event of failure on the part
of the borrower / guarantor to do so within the prescribed time, the bank shall be entitled to seize
the vehicle and proceed for selling it to recover its dues as per terms of the loan agreements and
in consonance with the law.

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2. Secondnotice
In case the default persists, another possession-cum-sale notice of 10 days shall be given to

20
Borrower/Guarantor in writing in local vernacular language intimating the date of taking over
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possession of the vehicle/tractor and conveying bank‟s intention of selling it to recover its
dues on a date to be specified in the notice.
19
3. The borrower shall be at liberty to repay bank‟s dues on any day before the date
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fixed for sale and get back possession of his vehicle. In such an eventuality
further action of sale shall bestopped.
3

4. Estimated price of vehicle shall be ascertained and notified to the borrower /


guarantor, and on the notified date for sale, the vehicle shall be sold by Public
Auction/Tender/Quotations and/or through a private contract at the sole
discretion of the bank in a fair and transparent manner, where borrower will also
be advised to bepresent.
12

5. Proceeds of sale, net of expenses incurred in this regard, shall be promptly


credited to borrower‟s loan account towards liquidation. Any surplus shall be
refunded to the borrower and for any deficit further recovery action shall be
initiated as per our normalguidelines.
6. For taking possession and /or for sale, the BM may require services of a suitable
Agency. Circle Heads may shortlist suitable Agencies out of the panels of
approved Recovery Agencies and Supporting Agencies keeping in view their
infrastructure, expertise, skills, storage space, past performance, area of operation
etc as “Seizure & Disposal Agents” for undertaking the job of seizure, storage
and disposal of tractors and of othervehicles.

7. While initiating action for seizure of vehicles (including tractors), intimation to


the Police Authorities is neither regulatory nor mandatory requirement. However,
it is advisable to send such communication to the Police Authorities, for
informationonly.
NPA CHAPTER - ZTC DEHRADUN Page 57of 162
8. In case the borrower refuses to sign the paper/possession memo (document for
establishing the fact that Bank has taken possession of the vehicle) when the
vehicle is repossessed by the Bank, copy of same be sent to the borrower through
Registered Post (Acknowledgement Due). Further, on repossession of the vehicle
by the Bank, immediate information be also provided to the local Police
Authorities, intimating time and place when the vehicle was repossessed (Rajeev
Raijyada versus S Ravindra Bhat, High Court decision dated 18.01.2005).

9. After seizure of the vehicle, prompt and quick steps shall be taken to dispose off /
sell the vehicle but in any case not exceeding 60 days from the date of seizure,
failing which the vehicle / tractor may be restored back to the borrower.
The following fee structure has been approved for Seizure & Disposal agents
S.No. Service rendered Fee payable
A Seizure and transporting the vehicle Maximum Rs.3000/- per vehicle (Cars,
to a nearby godown & Trucks etc.),
Maximum Rs.4000/- per vehicle for Tractors
B Acting as custodian of vehicle / Maximum Rs.125/- per day for a maximum

:41
Storage Charges period of 60 days during which either the
possession is to be restored to the borrower or
the vehicle is sold.

20
C Sale of vehicle 5% of amount realized.
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D Recovery without seizure of 5% of amount recovered
vehicle/Tractor
(4) Sale proceeds net of these expenses shall be credited to the borrower‟s account. If there is
19
surplus, the same shall be remitted to the borrower(s) and in case of deficit, further
/03 41

recovery measures should be taken.


Opening of Accounts outside Consortium Arrangement (SASTRA DIVCIR. NO. 47/2018)
3

Integrated Risk Management Division vide its circular dated 36/2013 dated 25.03.2013 had issued
guidelines w.r.t “Policy on Joint Lending Arrangement (JLA)” wherein under points16.4 -
Financing outside the Consortium” and 16.5, it is mentioned that:

“In the case of borrowers enjoying credit limits from one bank and/or from a JLA/ Multiple
12

lenders, as the case may be, no other bank shall extend any additional banking facility, or extend
bill limits, guarantees/ acceptances, letters of credit, etc., without concurrence of existing single
bank/ consortium/multiple bankers.

In the case of borrowers enjoying credit limits under multiple banking arrangement/consortium,
no other bank shall open current account (or any other form of transacting account) without the
concurrence of the existing lenders/consortium. In case any bank opens such account without
consent/NOC from the existing lenders, there shall be a regulatory provision of penalty on such
bank.”

In the Board meeting held on 27.09.2018, Board has desired that opening of accounts by
Borrowers from outside the consortium be prohibited and if any account is opened by Non-
consortium Banks without obtaining „No Objection Certificate (NOC)‟ from Consortiumlenders
then action be taken against such deviating banks. Board felt that Non-consortium Banks
indulginginsuchpracticesresultingindivergenceoffundsfromconsortiumBanksmustbeheld

NPA CHAPTER - ZTC DEHRADUN Page 58of 162


equally culpable for fund divergence and should be reported to RBI/appropriate regulatory
authorities.

ANNEXURE A

SAMPLE LETTER

To,
The Director General,
The Central Economic Intelligence Bureau, 6th Floor, B Wing, Janpath Bhawan,

Sir/Madam,

Reg: ReportonM/s as per Ministry of FinanceGuidelines

As per guidelines issued by Ministry of Finance, banks have been asked to seek report from CEIB
in case an account turns into NPA which shall be provided by the bureau within one week after

:41
receiving such a request from the bank. Accordingly, the details of the NPA borrower are:

Particulars Details
Name

20
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Address
CIN No
DIN No
19
PAN No.
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Director Details Name & Designation DIN No. PAN No.


3

Exposure
(FB+NFB)
12

You are requested to furnish the report on the above borrower within the specified period at
following address (Address of Zonal Office):

Thanking You.
Yours Faithfully

(Name & Designation of Zonal Office Official)

NPA CHAPTER - ZTC DEHRADUN Page 59of 162


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3
12

NPA CHAPTER - ZTC DEHRADUN Page 60of 162


SPECIAL SCHEME FOR ONE TIME SETTLEMENT OF NPAs-2018

Bank‟s extant Policy on Recovery & Management of NPAs was approved by the Board in its
meeting held on 02.11.2017. The ways & strategies to improve the NPA Management as well as
the terms of Compromise/ Negotiated settlements, Write off/ Waiver of Legal Action / Appeal
etc. were elaborated in the said policy and were circulated vide Recovery Division Circular
No.45/2017 dated 28.11.2017.

1. Two Special OTS Schemes for resolution of NPA accounts were launched during the previous
financial year. These schemes were in force up to 31.03.2018 and got tremendous response from
thefield.

2. In order to reduce the mounting NPA accounts in the mid segment categories, a new
“Special Scheme for one time Settlement” for NPA accounts with balance outstanding up to Rs.
25 Crores, as on 31.03.2018 was approved by the Board in its meeting held on 15.06.2018 vide
Resolution No. 30. The scheme shall be applicable to all such accounts, except NPA Accounts of
up to Rs.10.00 lacs under Agriculture Loan Category which shall continue to be covered under

:41
the existing policy of one timesettlement/compromise.

3. The scheme will be non-discriminatory and non-discretionary innature.

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4. The scheme will remain in force up to31-03-2019 as per sastra div cir no. 2/2019 dt 01-01-19

SPECIAL SCHEME FOR ONE TIME SETTLEMENT OF NPAs - 2018


19
(RD (SASTRA) Cir. No.30/2018 dt.15.06.18)
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1. Nomenclature: Special Scheme for One Time Settlement of NPAs for accounts with
outstanding up to Rs.25.00Crores.
3

2. SalientFeatures:
a) This is a non-discretionary and non-discriminatoryScheme.
b) The scheme shall be valid up to31.03.2019
c) The scheme shall be applicable to accounts categorized as NPAs, on or before 31.03.2018 (Post
MOCData).
12

d) Concession to be given as per the IRAC status of the account as on31.03.2018.

3. EligibilityCriteria:
i. All NPA accounts, which are under Sub-Standard, Doubtful- I, Doubtful-II, Doubtful III and
Loss category with ledger outstanding (also termed as balance) up to Rs.25.00 Crores as on
31.03.2018 shall be eligible under this Special Scheme for One Time Settlement of NPAs.
However, NPA Accounts of up to Rs.10.00 lacs, under Agriculture Credit Category are covered
under the existing scheme, therefore, kept out of the thisscheme.

ii. Cases pending before Courts / DRTs will be eligible. However, consent terms with default
clause will have to be filed before presiding officer of Court/ DRT for obtaining consentdecree.

iii. Cases where Bank has initiated the action under Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act (SARFAESI-2002) will beeligible.

NPA CHAPTER - ZTC DEHRADUN Page 61of 162


iv. Accounts under Consortium or Multiple Banking arrangements will beeligible.

v. Eligible accounts referred for Revenue Recovery action under State Recovery Laws will be
eligible, subject to requisite charges, if any payable, being recovered separately and remitted to
the StateAuthorities.

vi. The scheme shall not be applicable for those NPA accounts, where bank has already entered
into a compromise/settlement. However, in case such approved OTS/Compromises have already
been declared failed, prior to 31.03.18, attempts may be made for resolution of the eligible
accounts under this specialscheme.

vii. NPAaccountsalreadywrittenoffinthebranch‟sbookswith/withoutleavingresidualbalance of Rs.


100/- will continue to be governed by the existing OTS Policy containing “Special Guidelines for
OTS in Written off accounts” as circulated vide Recovery Division Circular no. 45/2017 dated
01.04.2017. As such, these accounts shall not be covered under this special OTS scheme.

4. Exceptions
(i) Cases reported as fraud/Criminal ActionCases.

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(ii) Borrowers declared as willfuldefaulters.
(iii) Central Govt. /State Govt. guaranteedaccounts.
(iv) Units under rehabilitation/restructuring (Alreadyapproved)
(v) Cases referred to NCLT under Insolvency and Bankruptcy Code,2016

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(vi) Accounts identified as Quick Mortality cases after the1st April2017.
(vii) Loan against Gold/Jewellery and other liquid securities e.g. LIC/NSCs/KVPsetc.
(viii) Agriculture Advances with balance outstanding up to Rs.10.00lacs.
19
(ix) StaffAccounts
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5. Applicability of theScheme
The schemes will remain in vogue till 31st December 2018, as a onetime measure.
3

6. SanctioningAuthority
All eligible cases, satisfying the eligibility criteria mentioned above, Sanctioning authority will
be asunder:
S.no. Category (Ledger outstanding as on 31.03.2018) Sanctioning Authority
1. Upto 20 lacs *Branch Head up to Scale III on
12

the recommendations of 2nd man.


2. Up to Rs.50.00 lacs *Branch Head in Scale IV/V/VIon
the recommendations of 2ndMan.
3. Above Rs. 20 lacs to up to Rs. 10.00 Crores ( For
Branches headed by up to Scale III Officers)
COCAC/ ZOCAC for LCBs
Above Rs.50 lacs to up to Rs.10.00 Crores ( For
branches headed by Scale IV/V/VI Officers)

4. Above Rs.10 crore up to Rs.25 crore ZOCAC


*In case Branch/ARMB//LCB Head himself was the sanctioning authority (in any
capacity/scale) of the loan sanctioned, in that case the Sanctioning Authority will be COCAC
and in case of Large Corporate Branch (LCB), ZOCAC will be the competent authority.

NPA CHAPTER - ZTC DEHRADUN Page 62of 162


7. Settlement Amount
OTS amount for Accounts having balance O/s up to 25 Crores as on 31.03.2018 (other than Agriculture
advances up to Rs.10.00 lacs)

S.no. Category as on 31.03.2018 OTS amount for Secured Portion OTS amount for
(Primary + Collateral Security) Unsecured Portion
1 Sub Standard 100% 80%
2 DB-I 90 70
3 DB-II 80 60
4 DB-III 70 50
5 Loss 50 50

7.1 Example:
Balance Outstanding ason 31.03.2018: 4,00,00,000
Category of account as on 31.03.2018 : DB II
Expenses incurred on suit filing, Insurance,
Security Guards etc. since NPA: 30,00,000
Recovery after 01.04.2018:10,00,000
Value of Security (Primary+ Collateral):3,40,00,000

:41
In the above case: Secured Portion is: 3,40,00,000 Unsecured portion is: Rs.80,00,000
(Outstanding + Expenses since NPA – Recovery since 01.04.2018) – Value of Security)
Hence OTS amount shall be : 80% of 3,40,00,000 + 60% of 80,00,000 i.e. 2,72,00,000+

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48,00,000 = 3,20,00,000

7.2 In respect of NPA accounts where claims under CGTMSE Scheme have been received and
19
credited to the account (refer Recovery Division Circular no. 32/2013 dated 06.07.13), the
credit/entry of CGTMSE claim received, be ignored i.e. the credit received on account of
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CGTMSE claim received, be added back to the ledger outstanding while computing the OTS
amount.
3

7.3 Legal expenses, Insurance Charges and other expenses incurred by the bank be added to the
outstanding balance in the account for the purpose of calculation of settlement of the account
under the OTS Scheme. However, DI/SI/RI is not required to be added for the purpose of
calculation of OTSamount.
12

7.4 During the period, this Special OTS policy remains in force, the existing OTS Policy of the
Bank will also continue to be applicable on all theaccounts.

7.5 All other guidelines as contained in the extant general OTS/Compromise etc. policy will
continue to be applicable to this Special OTS scheme also viz. claiming Revenue Loss, Post
Facto scrutiny etc. as applicable in othercases.

7.6 A model format for approval of cases under Special OTS Scheme is given at Annexure II.
The format may be amended as per the requirements on case to casebasis.

8 VALUATION OFSECURITIES:
The basis of valuation of securities shall be as under in case of Special OTS Scheme:
8.1 Market Value of the Securities is to be considered at the time of assessment of the value of
security under Special OTS Scheme. Further, it should be ensured that the valuation reports are
analyzed and self-assessment is adequately made about the genuineness of the Market Valueof

NPA CHAPTER - ZTC DEHRADUN Page 63of 162


the securities given by the valuer, keeping in mind the real estate market and other attendant
factors prevailing in the area so that it proves to be an effective tool for discussion.

8.2 Arriving at realistic value of securities is an important aspect in considering an OTS. It is thus
necessary that, for the purpose of OTS under the Special OTS Policy, especially in respect of the
IPs having market value up to Rs.5.00 Crores, the valuation report should be as recent as possible
but not more than 1 year old. Further, wherever properties are valued at above Rs.5crore,
minimum two independent latest Valuation Reports (not more than six months old) from Bank‟s
approved valuers‟ beobtained.

8.3 The valuation assessed by the approved valuer shall be verified and vetted by the Bank
officials after due cognizance of the above guidelines as under, depending upon the outstanding
balance in theaccount:

Up to Rs.50 lacs Valuation to be verified/vetted by an official of the bank


independently not below the rank of Scale II.
More than Rs. 50 lacs and up Valuation to be verified/vetted by 2 officials of the Bank
to Rs. 5.00crores independently, one of the officials should not be below the rank

:41
of Chief Manager.
More than Rs. 5.00 crores Valuation to be verified/vetted by 2 officials of the Bank
independently, one of the officials must not be below the rank
of ChiefManager.

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Further additional vetting shall be done by two Circle Office
officials independently, one of whom should not be less than
the rank of Chief Manager.
19
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Officials verifying/vetting the valuation given by the approved valuers only shall submit their
report on the Performa as per appendix III of L &A Circular no. 58/2016 dated 05.08.2016.
3

8.4 In case of Plant & Machinery, only Realizable Value (as mentioned in the Book on
instructions on loans) should be taken into consideration after taking cognizance of brand
name/make of Plant & Machinery/Year of installation/Original cost/Depreciation/Current
physical conditions/technical changes and obsolescence/present industry scenario and future
viabilityetc.
12

8.5 Valuation of stocks be done by personal inspection by the branch officials and the report of
the branch official should not be more than one month old. Further, the valuations be
corroborated with the last stock statements, wherever available, submitted by theborrower.

9. Terms of Payment:
(i) 10% of the settlement amount in respect of accounts having balance outstanding above Rs.1.00
Crores and 25% of the settlement amount in case of balance outstanding upto Rs.1.00 Crores to
bedepositedupfront,maximumwithinaweek‟stimeaftersubmittingtheOTSofferinwritingby the
borrower. Sanction Letter be given to the borrower apprising further terms and conditions, only
after appropriation of the above upfront amount in the NPAaccount.

(ii) Remaining balance to be paid maximum within 90 days from the date of Sanction Letter given
to the borrower. The sanctioning authority, may consider extending this period beyond 90 days on
merits of individual case. However, there shall be no extension beyond 180 days from the date of
conveying the sanction. Further, interest at rate of MCLR (for one year) be charged from thedate

NPA CHAPTER - ZTC DEHRADUN Page 64of 162


of conveying the sanction in case of any delay in repayment beyond 90 days i.e. interest to be
charged for 100 days on reducing balance method in case the OTS amount is paid within 100 days
from the date of conveying the sanction

(iii) The Post-dated cheques coinciding with the dates of payment for the remaining amount of
OTS amount be obtained, while conveying thesanction.

10. OtherStipulations
10.1 In case Bank has filed a suit against the borrower/obtained a Decree, Bank‟s satisfaction of
its claim may be got recorded only after closure/settlement of accountcompletely.
10.2 Wherever the borrower/guarantor/co-borrower/any other affected party has filed a counter-
claim/case against the Bank, the Special Scheme will be applicable only subject to withdrawal of
thecase/claim,forwhichsufficientdocumentaryproofmaybeprovidedforBank‟srecords.
10.3 In all those cases, where OTS is approved and CGTMSE claim has been received and
credited in the borrowal account, CGTMSE be informed, in terms of the extant guidelines.
Recoveries made in the account from the borrower be remitted to CGTMSE as per the extant
guidelines.
10.4 In those cases wherein insurance claim or any other claim on third parties is received after

:41
the settlement of the account under the Special OTS Scheme, the amount of sacrifice be
appropriated from the claim amount and the remaining amount, if any, be credited to the
borrower‟saccount.
10.5 Staff accountability aspects, if any, should have been examined and put up to the appropriate

20
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authority before entertaining the OTS proposal, as required, as per extant guidelines. However, no
proposal should be declined if staff accountability has not beeninitiated.
10.6 In case of OTS is being enforced with the efforts of Supporting/Recovery/Enforcement
19
agency, the bank shall pay the respective commission to the agency as in the case of other
/03 41

recoveries.

11. Deviations
3

The policy will be non-discriminatory and non-discretionary in nature and no deviations will be
permitted up to Zonal Office level. In case of any deviation, the specific case be referred to
Recovery Division, with recommendation of ZOCAC. The HOCAC-II shall be the competent
authority to permit the deviation, if any, for the specific reference.

12. Actions to beinitiated


12

12.1 By ZOs/CircleOffices
(i) Prepare strategy for follow-up and timely guidance/support to thebranches.
(ii) Convene meetings of the branches, starting with the thrust branches immediately (not later
than a week‟s time), emphasizing the need, salient features of the scheme and formulation of
result oriented strategies with the time line.
(iii) Meeting of Recovery Agencies and Resolution Agents for bringing eligible cases for
negotiation for settlement through compromise and make efforts for maximizing the cash
recoveries during the period ofscheme.
(iv) Guide and monitor the progress on day to day basis by calling for the required information
along-with the details of recoveries made in each individualaccount.
12.2 ByBranches
(i) Prepare the list of eligible accounts (maximum within 7 days).
a. To immediately arrange staff meeting in order to motivate and appraise the details of scheme to
all staff members.

NPA CHAPTER - ZTC DEHRADUN Page 65of 162


b. In the internal staff meeting at branch level, the corporate concern in respect of low recovery in
mid segment accounts and strategy to augment the cash recovery under this Special Scheme
should bediscussed.
c. Accounts covered under the scheme may be allocated amongst all staff members for contacting
the borrowers/guarantors, personally and for subsequent personal/telephonic follow-up for
striking compromise proposals in these accounts during the period of thisScheme.

13. Publicity of the Special OTSScheme

13.1 Letters as per AnnexureIII (Draft Letter), to be translated in local language, wherever
required, be sent to all the eligible borrowers/co-borrowers/guarantors, within aweek.
13.2 Banners & posters be affixed at conspicuous places of the area so as to catch attention of the
generalpublic.
13.3 The branch to ensure personal meetings with each borrower, negotiate for settlement through
compromise and make efforts for maximizing the cash recoveries during the period ofscheme.

14. Monitoring of thescheme:


Circle Offices shall submit the progress report of this special OTS scheme on weekly basis to

:41
their respective ZOs, who in turn shall closely monitor the progress of each Circle under their
jurisdiction and shall submit circle-wise progress within 7 days from the close of the fortnight to
Head Office: Recovery Division through email : horecovery@pnb.co.in, as per AnnexureIV.

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In continuation of the above scheme, SASTRA division has come out with a draft letter to be sent
to all eligible borrowers under DB-III & LOSS category (where no OTS has been approved under
Special Scheme and General OTS Scheme).
19
The draft letter may be found in SASTRA division circular no. 45/2018.
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NOTE: Kindly refer the above OTS circular for Annexures.


3

ONLINE OTS PORTAL- CONSOLIDATED GUIDELINES


SASTRA DIVISION CIRCULAR NO. 46/2018
BRIEF BACKGROUND
As part of PSBs Reforms Agenda for Responsive & Responsible PSBs, one of the EASE Agenda
was EASE through transparent and robust OTS mechanism, for timely and better realization
through an online OTS platform with:
12

 End-to-end processing, till repayment or recovery in case of non- adherence to OTS;and


 Automated escalation andmonitoring
2. To comply with the EASE Agenda and to develop a seamless approach towards the entire
process of receipt, processing, approval and monitoring of OTS, an OTS Portal has been
developed summarized guidelines of which are asunder:

2.1 The OTS Portal has been made live and a link “Online OTS” is provided on Non-CBS
Application Home Page. The OTS application is accessible through
URL:https://10.192.11.91/OTS1

SAILENT FEATURES OF OTS PORTAL


 This complies EASE agenda of Ministry of Finance(MOF).
 End toEnd application- from application processing, approvalto
implementation.

NPA CHAPTER - ZTC DEHRADUN Page 66of 162


 User friendlyapplication.
 Track list of accounts identified for OTS bybank.
 Identify approval authority within the bank forOTS.
 Real time tracking ofapplications.
 Tracking of recovery schedule andamounts
 Automaticescalations
 Automated customerintimation
 Availability to customers outside CBS and on internet toapply.
 Portal for customer to track OTSstatus
2.2 Detailed guidelines are available for all types of Users i.e. Branch User, Circle User, ZOUser,
HO user under the followingheads:

(1) Accessibility
(2) User Types
(3) OTS Proposal Entry
(4) OTSProposals
(5) View SubmittedOTS

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(6) ApprovedOTS
(7) SearchOTS
(8) Role of Branch Checker, Branch Approver, Circle Maker, Circle Checker, CircleApprover,

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Zonal Maker, Zonal Checker, Zonal Approver, HO Maker, HO Checker and HOApprover

2.3 User ID / password for ZO Users is to be created by SASTRA Division, HO who will in turn
19
create User ID/password for Circle user. User ID / password for Branches is to be created by
/03 41

respective Circle Users. Zonal Maker and Checker can also create User ID / password for other
officials of Circle Office as per need. Similarly, Circle Checker and Approver can make add and
edit Branch users in the system. For Large Corporate Branches (LCBs), Users can be created
3

by the respective CircleOffices.

2.4 Transfer of Users to any location within the same Circle can be updated in the application by
Circle User by changing the “SOL ID / Name” field appropriately. Transfer of Users to any
location can be updated by AdminUser.
Role of User can be allocated by changing the “User Level” field under Edit User link.
12

2.5 For making entry in the Portal, Branch Maker has to login and go to the link “OTS
Proposal Entry”. Using this link Branch maker can enter the new OTS proposal. This will include
entry into five pages and complete OTS proposal will be entered into thesystem.

3. How To Use OTS PortalEffectively


To make full utility of the Portal as an effective tool not only for quick disposal of OTS cases but
also as a monitoring tool, officials at different level shall ensure as under: -
3.1 At BranchLevel:
As all OTS proposals are generated/ processed at first at Branch level, Branches to ensure that all
OTS proposals which are received are processed through the OTS portal. On verification/approval
by Branch Checker/Approver, the OTS if it is under Branch power the same will be automatically
approved.
3.2 At Circle OfficeLevel:

NPA CHAPTER - ZTC DEHRADUN Page 67of 162


i). For proposals which are under COCAC Power, subsequent to verification of the proposals by
Branch checker, the proposal will come under Circle office purview. The Circle Approver will be
the Circle Vertical Head who will approve the proposal on the portal, after the same has been
approved byCOCAC.

ii). Circle users are also required to keep track of number of proposals that have been entered by
Branches in the portal and to ensure that proposals are entered with fulldetails.

iii). When a proposal is approved by competent authority and marked as approved in the portal,
any payment/recovery made in the account in CBS is reflected automatically in the portal. Circle
users are to ensure that amount wise follow-up for approved OTS cases for branches under their
purview isdone.

iv). Circle office approver and checker also are nodal officers for adding/editing/unlocking branch
users in the system along with Resetting password for Branch users in thesystem.

3.4 ZO Level:
i) For proposals which are under ZOCAC Power, subsequent to verification of the proposals by

:41
Circle checker, the proposal will come under Zonal office purview. The Zone Approver will be
the Zonal Vertical Head who will approve the proposal on the portal, after the same has been
approved byZOCAC.

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ii). Zonal office users are also required to keep track of number of proposals that have been
entered by Branches/Circles in the portal and to ensure that proposals are entered with fulldetails
19
iii). When a proposal is approved by competent authority and marked as approved in the portal,
/03 41

any payment/recovery made in the account in CBS is reflected automatically in the portal. Zonal
office users are to ensure that amount wise follow-up for approved OTS cases for branches/circles
under their purview isdone.
3

4. Creation of User ID:


IDs of Zonal office Maker, Checker and Approver will be created by SASTRA Division, HO. For
this purpose Zonal offices are requested to send details of officials whose user ID is to be created
to SASTRA Division, HO in the following format:
12

Name of theOfficial:

Designation:

ContactNo:

E-mailID:

GBPANo:

Sol ID ofZO:

NPA CHAPTER - ZTC DEHRADUN Page 68of 162


Zonal offices will in turn create IDs for Circle Office Maker, Checker and Approver and Circle
offices will create IDs for Maker, Checker and Approver of Branch, LCBs & ARMBs.

5. OTS Applications received fromBorrowers


The link for the OTS portal is available on Bank‟s corporate website and through the link,
borrowers may submit their request for OTS. Once any NPA Borrower applies for OTS, the
notification will go to the

BRANCH/CIRCLE/ZONAL/HEAD OFFICE MAKER:-CAN ENTER, EDIT THE OTS PROPOSAL AND REVERT BACK
TO LOWER LEVEL EXCEPT BRANCH MAKER.
BRANCH/CIRCLE/ZONAL/HEAD OFFICE CHECKER:-CAN VERIFY AND REVERT BACK THE OTS PROPOSAL TO
MAKER FOR EDITING.
BRANCH/CIRCLE/ZONAL/HEAD OFFICE APPROVER:- CAN FORWARD AND REVERT BACK THE OTS
PROPOSAL TO MAKER/CHECKER FOR EDITING.
MC USER:-APPROVING AUTHORITY.

However,As per Sastra Div Cir no 10/2019 , keeping in view the quantum
of NPA accounts in the Bank and the detailed information which is required to be fed

:41
into the portal, it has been decided that the minimum threshold limit for the portal be
fixed at Rs 25.00 lacs i.e. OTS in NPA accounts above Rs 25.00 lacs, irrespective
of the sanctioning authority, be invariably entered and processed through the
portal.

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A complete user manual for the above online portal is given in the circular as mentioned
above, kindly refer the same.
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3
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NPA CHAPTER - ZTC DEHRADUN Page 69of 162


CHAPTER 7-CERSAI

CENTRAL REGISTRY:-Central Govt. has set up a Central Registry. After its set up,
particulars of every transaction of creation of security interest be filed within 30 days of creation.
Any modification be also filed.The Company is a Government Company with a shareholdingof
51% by the Central Government .Select Public Sector Banks , National Housing Bank are also
shareholders of theCompany.
Help Desk.
* CERSAI has set up help desk at New Delhi for trouble shooting both in technical and functional
areas through telephone (Nos. 011 26176847, 011-26176855, 011-26176856) and email (email
IDhelpdesk@cersai.org.in).
* web based Helpdesk system w.e.f. 01.12.2011 and the same can be accessed
athttp://www.helpdesk.cesai.org.inthrough internet.

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NPA CHAPTER - ZTC DEHRADUN Page 70of 162


CHAPTER 8- LEGAL REMEDIES SARFAESI, DRT, LOK ADALAT, IBC-2016

DEBT RECOVERY TRIBUNALS (DRT)

DRTs were established in 1993 under “Recovery of Debts Due to Banks and Financial
Institutions Act 1993”, on recommendations of Narsimham Committee. The act came into effect
on 25th June 1993 and extends to whole of India except J & K. It contains 37 sections spread over
6chapters.

Composition: DRT is headed by Presiding Officer (appointed by Central Govt). The Presiding
Officer will hold office for a period of 5 years or until he attains the age of 62 years, whichever is
earlier. It does not go with CPC, but act on the principal of natural justice.

Recovery Officer: Once the claim is upheld, DRT issues a certificate to the Recovery Officer
who has various powers in execution such as attachment, arrest and may also require debtor to
declare on affidavit his assets and liabilities. Appeal against order of recovery officer to DRT can
be made within 30 days from the date oforder.

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Amount: It deals with cases of Rs.10 lac& above (Central Govt. can reduce the amount to Rs.1
lac). All the accounts of a borrower can be combined and one application can be made.
“A notification issued by DFS, MoF, pertaining to enhancement of limits upto Rs.20 lacs has

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been published by SASTRA division 44/2018 dt 04.10.2018but Hon’ble Rajasthan High Courrt
Bench at Jaipur has issued a Stay Notice on the notification till further notification.”
19
Nature of Debts covered: All lawful debts (not time barred by limitation), which have arisen
/03 41

during ordinary course of business of Banks/FIs, are eligible to be filed. Cases relating to
misappropriation of any amount of a bank by an employee are not covered.
3

Civil Imprisonment:The tribunal can issue orders of attachment and can also order for detention
of the defendant for a term not exceeding 3 months.
Time Frame: of 6 months from the date of application has been stipulated for decision in a case..

Appellate Tribunal (DRAT):-The appellate tribunal consists of the Chairperson, appointed by


the Central Govt. He will hold office for a period of 5 years or until he attains the age of 65 years,
12

whichever is earlier.

Appeal: (i) Appeal against DRT is to be filed to Appellate Tribunal within 45 days of receipt of
order. (ii) The Appellate Tribunal should dispose of the appeal within a period of 6 months from
the date of appeal. (iii) Appeal to be made after depositing 75 % of amount due as determined by
the Tribunal (DRT). DRAT may wave/relax this condition on merits.

Disposal of Cases by DRTs – Non production of original documents in the cases, which are
being investigated by outside Agencies

Law Division vide its Circular No. 07/Law/2013 dated 23.01.2013 has issued the guidelines to the
effect that in respect of seizure / production of document during investigation of case in terms of
Section 91 of the Criminal Procedure Code, 1973, when any Officer Incharge of a Police Station
considers that the production of any document is necessary for the purpose of any investigation,
enquiry of a case, such officer can issue a written order to the person in whose possession such

NPA CHAPTER - ZTC DEHRADUN Page 71of 162


document is, to produce the same. Such an order of Police Officer be complied with after
obtaining seizure memo and keeping a record the attested copies of the documents.

Guidelines for filing & follow-up of Recovery cases before Civil Courts/ DRTs – Ref Law Div
Cir. No. 03/2014 dated 30.01.2014,

Monitoring of DRT/DRAT matters- DRT Portal on CBS Screen- Ref : Rec Div Cir 46/2013 dt
09.10.2013.

LOK ADALATS

ACT:Lok Adalats are created under Legal Services Authority Act-1987.

Category of accounts: All NPA accounts both suit filed and non suit filed

Amount ceiling: Eligible category of accounts with outstanding up to & inclusive of Rs.20 lac
(increased from Rs.5 lac), without any cut-off date. For coverage under Lok Adalat, the
claimamount should not exceed Rs. 20lac.

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Banks may also participate in Lok Adalats organized by DRT/DRAT for settlement in accounts
where outstanding are above Rs.20lac.
Policies: Lok Adalat cases are examined by the Compromise Committee formed at various levels

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to arrive at a “range” within which compromise can be considered in a given case and the
decision regarding waiver can be considered by competent authority keeping in view the sacrifice
involved in thesettlement.
19
Payment: The down payment of the compromise amount is preferred. On merits of the case,
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monthly/quarterly installments (maximum upto 2 years) may be agreed with the default clause
providing for the failure of the compromise in case of non deposit of OTS amount as per the
terms ofaward.
3

Interest: Future interest may be agreed to as per General Guidelines for settlement of NPAs
through Negotiated settlement.

Benefits: (i) No court fee is involved. (ii) If no settlement is arrived, parties may go/continue with
legal proceeding.
12

Legal status: Its decrees have legal status and are binding on both the parties, however, decree
being in nature of „consent decree‟, no appeal against the decree is allowed. If no settlement is
arrived at, the parties can continue with court proceedings, if already initiated.

Limitation clause: Pendency of matters with the Lok Adalat does not save limitation; therefore
care must be taken for filing suits with civil courts within the limitation period, if need be.

INSOLVENCY AND BANKRUPTCY CODE (IBC 2016) (RD 09/2017) and (RD 42/2017-
EMPANELMENT OF INSOLVENCY RESOLUTION PROFESSIONALS (IRPs) &
OTHER IMPORTANT MATTERS)

The captioned Act has come into force and functional regulations made effective from 01.12.2016
and National Company Law Tribunals (NCLTs) have been bestowed with the powers to act as the
adjudicating authority for corporate persons. Operational guidelines have been issued by Law
Division circular no. 2/2017 dated 19.01.2017.

NPA CHAPTER - ZTC DEHRADUN Page 72of 162


Scope 1) There must be a default apparent of Rs.1 lac and above, againstthe
Corporate debtor.
2) In absence of any previous notice, a demand notice of the amountdue
with a reasonable period minimum 14 days must be given tothe
Corporate debtors.
3) Draft of the demand notice is provided in the Law divisioncircular
2/2017 which may be modified as per requirement of thesame
Competent As per law division circular 6/2016 AGM & above was the competent
authority to initiate authority to sanction filing/defending in the name of the Bank. Since the
action under IBC cases now will cover resolution, winding up as well as insolvency resolution
2016 under IBC powers vested with the authorities for permitting action under
Insolvency and Banruptcy code:
Balance Outstanding in the NPA Competent authority
Account
Upto Rs.1 Crore Circle Head/LCB Head
Above Rs.1 Crore to Rs.50 Crore Zonal Manager
Above Rs.50 Crore up to Rs.100 Crore Domain ED
Above Rs.100 Crore MD & CEO

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IRPs duty IRPs mean Interim resolution professionals and RPs mean Resolution
professional. IRPs are required to perform the following duties:
i) If the unit is running, to run the unit as going concern with the help of

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available Management of the Company and committee ofcreditors.
ii) Prepare a scheme for resolution in consultation with the committee of
creditors.
19
Payment of Fee For the Liquidator rates have been prescribed in the IBC 2016
/03 41

For IRPs (Interim Resolution Professionals) as per Para 33 the Applicant


(means Bank) shall fix the expenses to be incurred on or by the IRP.
Sub Rule 2 states that Adjudicating Authority shall fix expenses where the
3

applicant has not fixed the expenses.


A) Fees payable to the IRPs who are also appointed as RPs by
committee of creditors ( Revised vide Circular 42/2017)
Book outstanding in the account (PNB‟s Maximum fee
shareonly) payable to IRP*
12

(PNB Share only)


Upto Rs.1 Crore Rs. 2lac
Above Rs.1 Crore uptoRs.50 Crore Rs. 3lac
Above Rs.50 Crore uptoRs.100Crore Rs. 5lac
Above Rs.100 Crore Rs. 10lac
*GST will be payable over and above the fee. TDS as applicable will be deducted.
B) Fees payable to the IRPs who are Not appointed as RPs by the
Committee of Creditors: ( Revised vide Circular42/2017)
Book outstanding in the account (PNB‟s Maximum fee
shareonly) payable to IRP*
(PNB Share only)
UptoRs.50 Crore Rs.1Lac
AboveRs.50Crore Rs.2Lac
* GST will be payable over and above the fee. TDS as applicable will be deducted.
The above maximum amount of fees will be payable in case PNB is the sole
creditor. In case of consortium/multiple banking advances the feeswill

NPA CHAPTER - ZTC DEHRADUN Page 73of 162


Beshared equally by the member banks, subject to PNB‟s maximum share
mentioned the above table. Where PNB is the leader fees may be negotiated
keeping in view the above table.
Sanctioning Authority & Powers to pay fees and other expenses to IRPs
The powers to pay the fees including higher fees than the above
mentioned maximum limits (in both cases i.e where PNB is Sole
Creditor Or in case of Consortium/Multiple banking cases), powers
shall be vested with different authorities, as per details given below:
S.No. Competent Authority Maximum limit of fees & other
expenses payable per
borrower(not per account)
1. Branch Head other than Up to Rs. 2 lacs
LCB
2. Branch Head of LCB Up to Rs. 5 lacs
(irrespective of scalebut
not less than Scale-IV)
3. COCAC Above Rs. 2 lacs up to Rs.10 lacs
4. ZOCAC Above Rs. 10 lacs up to Rs. 1 Crore

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5. HOCAC-II Above 1 Crore (full powers)
Panel of A List of Insolvency Professional is available on the website of„Insolvency
insolvency & Bankruptcy Board of India (IBBI) Dealing official may visit
professionals and www.ibbi.gov.in ->Services provider ->Insolvency Professionals -

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authority for >Registered IPs
allocation of Till the time a panel of Insolvency professionals is prepared ZMs may
account engage IRPs from the list after having interaction with them.
19
Circular no 42/2017- EMPANELMENT OF INSOLVENCY RESOLUTIONPROFESSIONALS
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(IRPs) & OTHER IMPORTANT MATTERS: There have been a lot of queries received from the
field for setting up of some criteria for selection of Insolvency Resolution Professionals. Further,
for successful implementation of the Insolvency & Bankruptcy Code, several decisions need to be
3

taken by the IRPs, for which necessary mandate is being sought from the Bank within a very short
span of time. Therefore, the guidelines related to process of empanelment of Insolvency
Resolution Professionals (IRPs), for giving mandate, revised fee structure etc. were approved by
the Board in its meeting held on 27.09.2017, vide Resolution 47.
Process of empanelment of Insolvency Resolution Professionals (IRPs)
1. Advertisement:Head Office Recovery Division shall get the advertisement
12

published in two National newspapers. The advertisement will also be uploaded on


the Bank‟s website along-with the Application Forms, Undertakings, Eligibility
Criteria etc. which will continue to appear on the Bank‟s website from 1st July to
31st July, every year.
2. Application: To be forwarded to the Recovery Section of the concerned Zonal
Office.Zonal Office, shall maintain a proper record, by noting in a Register, of the
applications received, acknowledged, approved/rejected with reasons thereof.
While acknowledging the receipt of application to the IRPs it may be clarified that
final decision will be in due course of time onmerits.
3. Empanelment of IRPs exercise will be carried out, on „once a year basis‟. The
process shall start from 1st July every year and Head Office Recovery Division
will publish the advertisements during first/second week of July month in the
newspapers, giving sufficient number of days (say 15-20 days) for submission of
applications and relevant documents at ZonalOffices.
Since all applications along-with the relevant documents for empanelment offresh

NPA CHAPTER - ZTC DEHRADUN Page 74of 162


IRPs are to be received at the Zonal Office, the process of empanelment to be
carried out through Committee Approach. For this, a Committee for empanelment
of IRPs to be constituted at the Zonal Office, to be named as “Zonal Office
Committee for Empanelment of Insolvency Resolution Professionals (IRPs). Even
for depanelment of IRPs also, this Committee will take final decision.
After scrutiny of applications and documents submitted by the IRPs, Zonal office
Committee shall conduct interviews and shortlist the candidates and take a final
view on their empanelment. Details of the empanelled entities/professionals
(names, Key Persons, Contact Details) will be reported to Head Office Recovery
Division positively by 31st August. HO: Recovery Division will consolidate Zone-
wise details of the IRPs and circulate a consolidated list for all the
branches/offices.
4. The empanelment of Insolvency Resolution Professionals (IRPs) shall be for a
period of five years. However, the quality of service provided / performance of the
IRPs shall be reviewed annually by the Zonal Committee and only those IRPs shall
continue to be on the Bank‟s panel whose performance is found satisfactory.After
5 years IRPs will submit fresh applications/documents etc. to the Zonal Offices,
for their empanelment with theBank.

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5. The applicant IRP should be registered with Insolvency & Bankruptcy Board of
India (IBBI) at the time of submission of the application to the bank. The
individual IRP should have necessary acumen as specified herein and have
unblemishedintegrity.

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Besides having registration with IBBI, preference shall be given to the IRPs having
5 years of relevant experience in handling matters relating to rehabilitation of
companies, which may include Corporate Debt Restructuring/ Strategic Debt
19
Restructuring Scheme or Arrangement under Sections 319 to 394 of the
/03 41

Companies Act, 1956/ winding up of companies, BIFR cases under Sick Industrial
Companies (Special provisions) Act/ financial restructuring / change in
management of companies. The applicants shall provide valid documents in
3

support of their claim of experience e.g work orders, copies of the agreements,
assignment of task letters etc. Since IRP will be already registered with IBBI, in
addition to Insolvency & bankruptcy Code 2016, he/she should be well versed with
the Companies Act 2013. It will be desirable that IRPhas:
 Appropriate support system of professionals, consultants and advisors to
complete the Corporate Insolvency resolution in the manner, prescribed under the
12

Code;
 Having resources to appoint lawyers, valuers, industry experts, accountants and
other experts as per the expertise required e.g. ITsolutions;
 Capacity to organize and arrange the interim management of the debtor and
operations as a goingconcern;
 Capacity to secure, protect & preserve the assets of the debtor to protect the
underlying value of the enterprise / debtorcompany.
 The IRP to be ready to abide by the Bank‟s terms and conditions as to fees, charges
etc.
 The IRP, who seeks to be empanelled by the Bank, should not have a conflict of
interest.
 The IRP if empanelled with the bank shall undertake that he/she shall not
appear/advise or represent interest, adverse to the Bank‟s interests.

NPA CHAPTER - ZTC DEHRADUN Page 75of 162


Committee of Till introduction of this Act, Head Office: Industrial Rehabilitation Division
Creditors (IRD) had been interacting with BIFR and AAIFR (which stands dissolved
after constitution of NCLT) and framing resolution scheme on case to case
basis. As per the Act, the IRP is required to constitute a Committee of
Creditors, Bank has proposed following structure of the participatingmembers,
on behalf of our Bank:
Where location of a Member of the committee of creditors
particular account is at
Branches other than LCBs (i) BranchHead
(ii) Dealing Official from Circle officeof
not less than Scale IV (Chief
Manager) to be decided by the Circle
Head
LCBs (i) BranchHead
(ii) Dealing Official from Zonal officeof
not less than Scale V (AGM) to be
decided by theZM
Powers for giving The powers for approval of restructuring have been vested with different field

:41
consent for functionaries as per the guidelines issued by MSME Division and IRMD from
approval of time to time. The Committee of Creditors is required to seek approval of any
Resolution Plan action including Resolution Plan if 75% of the Financial Creditors approve.
Thecompetentauthoritytoapproverestructuringwillgiveitsconsentforany

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action by the Committee of Creditors including Resolution Plan.
Over a period of time it has been observed that while enforcing the Insolvency & Bankruptcy Code,
several actions need to be initiated by the IRPs on the basis of decisions taken by the Committee of
Creditors which are not only crucial in nature but are time bound e.g. to provide interim finance for
19
ongoing operations of the Corporate Debtor etc. These decisions have wider financial implications,
/03 41

involving huge amount involved. In L & A Circular no. 40/2016 dated 01.06.16 issued by
Integrated Risk Management Division (IRMD) powers have been entrusted to the different
committees based on the aggregate exposure. On the similar lines, for NCLT cases, in
3

consortium/multiple banking accounts and even in cases where PNB is Sole Creditor, same powers
except powers to pay fees and other expenses to IRPs, may be entrusted to different committees,
based on the exposure in the accounts. The powers for NCLT cases, in line with those mentioned at
Para A of the said L&A Circular are reiteratedbelow:

Powers for approval of mandate in NCLT cases, in case of Joint Lender Forum and
12

where PNB is Sole Creditor


S.No. Aggregate Exposure intheAccount Authority Formandate

1 Upto Rs50 Crore ZMCAC


2 Above Rs 50Crore and Upto Rs75 Crore HOCAC-I
3 Above Rs 75Crore and Upto Rs150 Crore HOCAC-II
4 Above Rs150 Crores HOCAC-III

Mandate beyond ZMCAC to be obtained from Head Office through GM (Recovery), if recovery
angle is involved and through GM (Credit), if credit angle is there. In other than NPA accounts, the
domain GM Credit will present the case.
Although, keeping in view the aggregate exposure in the account, the mandate falls within the
powers of the authorities mentioned above but there are instances where sanction of resolution plan
of the same does not fall within their powers due to amount
of sacrifice / haircut, powers for sanction of which have been conveyed at para 3.2 of Recovery
Division Circular 56/2018 dtd 24-12-2018

NPA CHAPTER - ZTC DEHRADUN Page 76of 162


There can be vice-versa instances, where sanction of resolution plan (OTS) falls under lower
authority on the basis of amount of sacrifice and power for approving mandate falls within the
powers of higher authority on the basis of aggregate exposure.
The powers to approve sacrifice as mentioned above are for OTS only. However, in cases of
resolutions under IBC, 2016, in addition to situation like OTS (i.e. entire amount proposed to be
received as bullet payment), there can be situation of Resolution Plan with other options e.g.
issuance of debentures/equity, change of management & restructuring etc. Further, haircut/sacrifice
in most of the cases are comparatively on higher side.
In such cases, we may clarify the definition of haircut/sacrifice for the purpose of sanction/approval
of Resolution Plan as under:
Haircut/Sacrifice forthe =Total Claim lodged by the Bank – NPV of amount proposed to be
Bank received under Resolutionplan.
Further, time given by Resolution Professionals for voting on the Resolution Plan is very short
(sometimes 24 hours) in most of the cases. Also, the frequency of MC meetings is once or twice in
a month. The matter was placed before Board which in its meeting held on 14.05.2018 (vide item
No 56) have approved powers to sacrifice in NCLT cases at Zonal Office/Head Office level as
under:

Authority Powers to approve sacrifice in NCLTCases

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ZMCAC Rs. 5.00 crore
HOCAC-I Rs. 10.00crore
HOCAC-II Rs. 20.00crore
HOCAC-III FullPowers

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It has been further clarified that at the time of approving any resolution plan & giving mandate
accordingly, powers will be exercised by higher of the two authorities as mentioned in the above
19
tables.
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However, as per SASTRA division circular no. 38/2018, with the formation of the Stressed
Asset Management Vertical in the bank, the proposals related to resolution in NPA accounts
along with proposals for mandate in NCLT cases are routed to the resolution vertical at
3

SASTRA Division, HO headed by GM (Resolution), hence the guidelines related to Mandate


may now be read as under:
ExistingGuidelines RevisedGuidelines
Mandate beyond ZMCAC to be obtained In NPA accounts, mandate beyond ZMCAC
from Head Office through GM (Recovery) if powers to be obtained from Head Office
recovery angle is involved and through GM through GM (SASTRA Resolution). For
12

(Credit) if credit angle is there. In other than Non-NPA accounts, mandate to be obtained
NPA accounts, the domain GM (Credit) will from Head Office through GM (Credit) of
presentthecase respectiveZone

Monitoring of Insolvency Resolution against a corporate debtor can be initiated by afinancial


IBBIs Website creditor/operational creditor/corporate debtor, if a default of Rs. 1 lac
(RD 10/2017 dated subsists against him. As such it is not necessary that the insolvency proceedings
27.03.2017) be initiated by the bank as a financial creditor only.The Nodal Officer, to look
after the publication under IBC, 2016 in the newspapers, against the borrowers
and to keep track of the website of the IBBI (www.ibbi.gov.in-Public
Announcement by Insolvency Professional) everyday, at each Circle Office
and LCBs, will be of minimum Chief Manager rank (Scale-IV). The powers
tonominatetheNodalOfficerforCirclesandLCBswillbevestedwiththe
Circle Head and LCB Head, respectively.

NPA CHAPTER - ZTC DEHRADUN Page 77of 162


Creation of NCLT Headed by Sh. J.K Gupta, GM Recovery
Cell at Recovery
Division The names and contact numbers of the NCLT Officials are as under
S.No Name Designation Contact No Email ID
Monitoring and 1 Sh Satish DGM 8894327432, satishkchawla@pnb.co.in
supervision of Kumar 011-28044223
cases underNCLT Chawla
2 Sh H.S AGM 9999532102 hs.kanwar@pnb.co.in
Kanwar 011-28044343
3 Ms Babita Manager 9910459550, law@pnb.co.in
Devi Law 011-28044856
4 Sh Mohit Officer 9990818411, Mohit.verma@pnb.co.in
Kumar 011-28044629
Verma

All the Zonal Offices are also requested to create a cell on the similar lines at
their level to keep a track on the NCLT Cases in view of the specific
timelines fixed for their resolution.
Performa for proposal for giving mandate for accepting/non accepting Resolution

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Planreceived through NCLT proceedings in NPA Account. (SASTRA div Cir 36
dt.18.08.18)

A revised format for proposal for giving mandate for accepting / non accepting Resolution Plan

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received through NCLT proceedings in NPA accounts has been devised as below:
* The proposal should be on A-4 size paper with Arial 12font.
* Name of the borrower should be in Capital BoldLetters.
19
* The alignment of the figures given in the table form should be rightaligned.
/03 41

ANNEXURE – I
3

EXECTIVE SUMMARY

Balance Outstanding as on
Provision as on
PNB Total
Amount of claim lodged with NCLT by:
12

Amount of Net claim admitted as on date of


voting for Resolution Plan
Liquidation Value
Fair Value
Amount offeredby Resolution Applicant to
FinancialCreditors
NPV of amount offered to Financial Creditors
Sacrifice:
- Claim
- Booko/s
Impact on P&L
Banking Arrangement Lead Bank (with
Share):
PNB’s Share:
Timelines for Payment to financial Creditors
under the Resolution Plan

NPA CHAPTER - ZTC DEHRADUN Page 78of 162


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NPA CHAPTER - ZTC DEHRADUN Page 79of 162


Name of the Borrower:
Branch Office:
CO/ ZO:

(To be prepared in not more than 2 pages as running matter in small paras, as per the following broad
parameters as a gist to Mandate Proposal. The following are indicative. Only relevant items are to be
covered and reported)

1. Present Proposalisfor
2. Borrower/Group/ Main Promoter/Since when dealingwithPNB.
3. Year of Establishment/ Location of Regd./ CorporateOffice/Plants.
4. Activity of Borrower with Capacity,ifany.
5. Reasons for Impairment of theAccount.
6. Brief highlight of CIRP proceedings in the account including details of RP, Legal Counsels,
Process Advisor etc. Details of Claim filed by the Financial Creditors, Operational Creditors,
CIRP Cost, Employee & Workmen Dues etc tobeinformed.
7. Findings of Forensic Audit Report/ Transaction Audit Reportinbrief.
8. ResolutionPlan:
 Brief overview of theResolutionApplicant

:41
 Brief contours of the Resolution Plan including Sources of Funds to be infused and itsuses
including details of any other terms and conditions oftheplan.
9. Compliance of the Resolution Plan with i) Insolvency & Bankruptcy Code and its SubSections

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including Sec 29A ii) CIRP Regulations iii)ProcessDocument.
10. Comments of effects of Resolution Plan including Conditions, Prayers & Reliefs sought bythe
ResolutionApplicant.
19
11. Any othermaterialfacts.
/03 41

12. Justifications for Recommendation for Approval/ Disapproval of theResolutionPlan.


3

RelationshipManager ChiefManager AGM/DGM/CH/ZM

FORMAT FOR MANDATE FOR APPROVAL/ NON- APPROVAL OF RESOLUTION PLAN

Balance Outstanding as on
Provision as on
12

PNB Total
Amount of claim lodged with NCLT by:
Amount of Net claim admitted as on date of voting
for Resolution Plan
Liquidation Value
Fair Value
Amount offered by Resolution Applicant to Financial
Creditors
NPV of amount offered to Financial Creditors
Sacrifice:
- As per NetClaimAdmitted
- As perBookOutstanding
Impact on P&L

NPA CHAPTER - ZTC DEHRADUN Page 80of 162


Banking Arrangement Lead Bank (with
Share):
PNB’s Share:
Timelines for Payment to financial Creditors under
the Resolution Plan
Sanctioning Authority: HOCAC-III/ II/ I/ ZOCAC\

The Proposal falls under the powers of on account of

Name of the Borrower:


Branch Office:
CO/ZO:

GIST OF PROPOSAL:

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Proposal for approval for acceptance/ Non acceptance of the Highest Evaluated Compliant Resolution Plan
submitted by (Name of Resolution Applicant) for (Name of Corporate Debtor) under the Corporate
Insolvency Resolution Process (“CIRP”) under Insolvency & Bankruptcy

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Code(IBC),2016,leadingtoUpfrontCashRecoveryofRs. crore (being our share of the overall
UpfrontCashRecoveryofRs. crore to Financial Creditors) including all
associated approvals and conditions for implementation of the Resolution Plan including but not limited to
19
approvals as per SECTION A onthisNote
/03 41

INDEX OF PROPOSAL NOTE:


3

Particulars Page No.


SECTION A – PROPOSAL
SECTION B – PARTICULARS OF THE ACCOUNT
B.1. Borrower Profile
B.2. Brief Financials
B.3. Position of Accountason
12

B.4. Security Available


B.5. Position of Legal actions initiated
SECTION C – BRIEF HISTORY INCLUDING DEVELOPMENTS
DURING CIRPPERIOD
C.1. Brief History
C.2. Reason for Impairment of the Account
C.3. Resolution after account turning NPA
C.4. Corporate Insolvency Resolution Process
C.5. Evaluation of Resolution Plans
C.6. Scoring of Resolution Plans
SECTION D
D (I) Overview of Highest Evaluated Compliant Resolution Applicant
D (II) Brief contours of the Resolution Plan
D (III) Effects of the Resolution Plan
D (IV) Process of Acquisition/ Resolution

NPA CHAPTER - ZTC DEHRADUN Page 81of 162


D (V) Distribution of total Settlement Amount
D (VI) Conditions stipulated by Resolution Applicant in the Resolution
Plan
D (VII) Supervision, Implementation of the Resolution Plan and
RegulatoryApprovals
D (VIII) Compliance with IBC, CIRP Regulations and Process Document
D (IX) Any other Material Information including impact of Resolution on
Allied/ Associates/ Group Companies
D (X) Effects of payment of the Upfront Cash Recovery to the Financial
Creditors
SECTION E - JUSTIFICATIONS
SECTION F - RECOMMENDATION
F (I) BO/ZO Recommendation
F (II) HO Recommendation
ANNEXURE – II : SECURITY
ANNEXURE – III : EVALUATION MATRIX & JUSTIFICATIONS FOR
SCORING OF QUALITATIVE PARAMETERS

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SECTION A - PROPOSAL:

Approval for:

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i) Acceptance/ Non-Acceptance of repayment amount of Rs.crore against total claimed &
admittedamountofRs. croreason and total duesofRs.
crore ason and additional details asunder:
19
CALCULATIONOFSACRIFICE: (Rsin
/03 41

1 Ledger Outstanding as on
2 Admitted Claim
3

3 NPV of Resolution Amount offered (excluding Value of Equity Upside if


any)
4 Sacrifice:
i. As per Net ClaimAdmitted
ii. As perBookOutstanding
5 Total provision held:
12

Provision asperLadderason : xxxx


AdditionalProvisionason : xxxx xxxx
Provision to be appropriated in terms of Resolution Plan xxxx
Provision to be released xxxx
(Other specific approvals sought as per Resolution Plan to be mentioned)

SECTION B – PARTICULARS OF THE ACCOUNT:

B.1. BorrowerProfile:
Group Name
Address of Regd./ Corporate Registered Office:
Office
Corporate Office:
Works/Factory

NPA CHAPTER - ZTC DEHRADUN Page 82of 162


Constitution of Corporate
Debtor
Date of Incorporation/
Establishment
Dealing with PNB since
Industry/Sector
Activity
Banking Arrangement Lead Bank:
PNB’s Share:
(Details of Net Claim Admitted from all lenders of committee
of Creditors to furnished as per Annexure – III)
Date of NPA
Asset Classification as on
Brief reasons of account (To be mentioned in points)
becomingNPA
Date of filing suit at
DRT/Court

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Whether the names of the
Company/directors appear in
CICs/RBI’s defaulters/ Willful

20
defaulters list
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Name of the associate
concerns and their bankers
including their Asset
19
Classification
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B.2. BriefFinancials:
31.3. 31.3. 31.03.
S.No. Particulars
Audited Audited Audited
3

1. Gross Sales
2. % growth
3. Profit before tax
4. Profit after tax
5. Operating Profit/Loss
12

6. Tangible Net Worth


7. Net Working Capital
8. Current Ratio
9. Debt Equity Ratio
10. TOL/ Adjusted TNW
B.3. PositionofAccountason :
S. No Nature Limit Balance
O/s
Fund Based Cash Credit/ Overdraft etc
Total FB Ceiling
LG/LC
Total NFB Ceiling
TERM LOAN TL
Total TL Ceiling

NPA CHAPTER - ZTC DEHRADUN Page 83of 162


Total Exposure in India
ECB
Total Exposure

Details of NFB Facilities standing Undevolved/ Uncrystallised as on date of approval of


Resolution Plan:
Nature Amount Expiry Date Whether issued During CIRP or
before CIRP Commencementdate
LC/ BG
B.4. SecurityAvailable:
Value of Primary Security Details to be furnished in Annexure II. Comments to
be given for treatment of these securities if
Value of Collateral Security Resolution Planisapproved.
Intangibles like Guarantees:

Details of Valuation carried out under Corporate Insolvency Resolution Process of

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Corporate Debtor:
Name of Valuer Date of Fair Value Liquidation Value
Valuation

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B.5. Position of Legal actionsinitiated:
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i Date of Notice u/s 13 (2)


ii Date of Notice u/s 13 (4)
3

iii Date of Symbolic possession:


iv Date of physical possession:
v Details of auction attempts along with
reserve price:
vi Suit filed on:
vii Decreed on:
12

viii Execution of Decree Filed on:


ix Present status of Execution of Decree
filed:
x NDH with purpose
xi Willful Default declared on:
xii Details of OTS, if any:
xiii Whether fraud declared in the Account by
PNB:

SECTION C – BRIEF HISTORY INCLUDING DEVELOPMENTS DURING CIRP


PERIOD:
C.1. Brief History of Account: (Profile of the borrowing concern along
with brief about the various divisions and their activities and any other
borrower specific major/significant features about management to
bementioned)
NPA CHAPTER - ZTC DEHRADUN Page 84of 162
C.2. Reason for Impairment of the Account: (Detailed account of
various reasons which lead to the impairment of the account to be
informed including details of restructurings approved/ implemented in
theaccount.)
C.3. Resolution after account turning NPA: (Details of various
measures taken by the Bank/ Consortium for up-gradation/ Resolution of
theAccount)
C.4. Corporate Insolvency Resolution Process: (Details of Corporate
Insolvency Resolution Process of the Corporate Debtor be informed
including but not limited tothefollowing:
- Details of admission of the Account to NCLT including dates of
application, admission and submissionofclaim.
- Appointment of IRP/ RP, Legal Counsels to RP/ CoC, Process
Advisors, Valuers, Auditors etc intheAccount.
- Details of issuance of Expression of Interest (EoI), Public
Announcementsetc.

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- BriefsummaryofagendaexecutedbytheCoCinallitsmeetings.
- Details of Transaction Audit carried out on the Corporate Debtor
under Corporate Insolvency Resolution Process (CIRP). Details of

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Forensic Audit carried out on the Company, if any to
bealsoinformed.
19
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C.5. Evaluation of Resolution Plans: (Brief details of all the


Compliant Resolution Plans received for the Corporate Debtor be informed
3

including the background of the compliant Resolution Applicants (RA)


preferably in tabular formatasunder.)
S.No. Particulars RA1 RA2 RA3
1 Brief Background of RA
2 Financial Summary of
12

Resolution Plan (i.e.


payment towards CIRP
Cost, Workmen &
Employee Dues,
Financial Creditors,
Operational Creditors,
Statutory Dues etc.)
3 Timelines of Payment
4 Major Terms &
Conditions
C.6. Scoring of Resolution Plans: (Scoring Matrix for all the Compliant
Resolution Applicants to be furnished based on which the Highest
Compliant Resolution Applicant was decided bytheCoC.)

NPA CHAPTER - ZTC DEHRADUN Page 85of 162


Indicative Format:
S.No Parameter and Score Matrix RA1 RA2 RA3

A.1 Upfront Cash Recovery for financial creditors


A.2 NPV factoring in upfront cash recovery (based
on tiered rate of discount)
A.3 Equity Upside: Expected Upside, if any
A.4 Fresh Fund infusion for improving operations (If
lenders continue with the Company)
A.5
A.6
A Total Quantitative Score
B.1 Reasonableness of Financial Projections i.e.
Sales, EBIDTA, EBIT, etc./ Certainty/
Likelihood/ Feasibility/ Eventuality ofhonoring
proposed commitments
B.2 Ability to turnaround distressed
companies

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-Managerial competence and technical abilities,
Key managerial personnel, track record in
implementing turnaround of stressed assets,

20
etc.
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B.3 Standing of the Bidder/Group in sector/External
Rating/ Adherence to financial discipline/record
of regulatory compliance/ Whether NPA,
19
including group companies, < 12 months
/03 41

B.4
B.5
3

B Total Qualitative Score


C Total Score (A + B)
D Ranking of Compliant Resolution Applicants
(The above scoring matrix is only indicative. The Scoring matrix as approved Committee of
Creditors as part of the Bid Process Document should be furnished above)
12

SECTION D:

D (I) OVERVIEW OF HIGHEST EVALUATED COMPLIANT RESOLUTION APPLICANT:

Brief Background of the Company


including business activity
Group
Office/ Factory
Capacity
Products
Domestic Rating
International Rating
Brief Financial Indicators i.e. Net
Turnover, TNW, EBIDTA,PATetc

NPA CHAPTER - ZTC DEHRADUN Page 86of 162


Track record in implementing
turnaround of stressed assets (include
names of Companies which have
beenturnedaround)
(Any details in addition to the above may be added above.)
D (II). BRIEF CONTOURS OF THE RESOLUTION PLAN:

Repayment Details (Details of repayment of existing debt as per


Resolution Plan)

Mode of Acquisition (Whether directly through the Company or an SPV/


Affiliates/ Group Companies/ Trust etc.)

Acquisition Structure (Whether write down of existing equity, conversion


of Debt to Equity, Invocation of Pledge etc
mentioned in the Resolution Plan)

Post - Acquisition Holding (Percentage holding of various entities in the

:41
Corporate Debtor post Resolution)

Capital Structure (Post (Details of Debt – Equity mix)

20
Acquisition)
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Estimated timeline for Closure of (Indicative timelines for various approvals like
Resolution as per Resolution Plan approval from Competition Commission of India,
RBI etc and final payment to be informed)
19
/03 41

Treatment of Employees of (Whether the Resolution Applicant proposes to


CorporateDebtor retain the existing Employees/ Workmen/
Management of the Company as mentioned in the
3

Resolution Plan to be informed)

Business Plan Summary (Plan of the Resolution Applicant for revival of the
Corporate Debtor to be informed)
12

Comment on Operational
Efficiency, Future Sales
Arrangements, Raw Material
Sourcingetc
Any other Key Considerations of
the Resolution Plan

D (III). EFFECTS OF THE RESOLUTION PLAN:


(The effects of the Resolution Plan on the Financial Creditors, Operational Creditors, Other
Creditors, Promoters& Guarantors etc including their rights, claims or security interests over the
Block Assets of the Company, Right over Personal Guarantors etc after approval of the Plan by
the Adjudicating Authority beinformed.)

NPA CHAPTER - ZTC DEHRADUN Page 87of 162


D. (IV) PROCESS OF ACQUISITION:
(The step wise process of acquisition/ Resolution of the Corporate Debtor as set out in the
Resolution Plan be informed. The Process should identify the details of shares written down/
acquired, price at which the shares are acquired and various stages of implementation.)
D. (V) DISTRIBUTION OF TOTAL SETTLEMENT AMOUNT:
(The order of priority of distribution/ appropriation of the total amount offered by the Resolution
Applicant as per the Resolution Plan be informed)
D. (VI) CONDITIONS STIPULATED BY THE RESOLUTION APPLICANT IN THE
RESOLUTION PLAN:

(The implementation of the Resolution Plan may be subject to completion of certain events like
approval from Competition Commission of India, RBI, NCLT etc (unless the same are waived by
the Resolution Applicant or exempted by the relevant Governmental Authority)

D. (VII) SUPERVISION, IMPLEMENTATION OF THE RESOLUTION PLAN AND


REGULATORY APPROVALS:

:41
Details of Effective date for implementation of the Resolution Plan, Closing Date etc to be
informed. Mechanism & Timelines for supervision and implementation of the Resolution Plan
(like Monitoring Agency or Steering Committee) and various Regulatory approvals required be

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informed.)

D (VIII) – COMPLIANCE WITH IBC, CIRP REGULATIONS AND PROCESS


19
DOCUMENT
/03 41

(Comments on the Compliance of the Resolution Plan with Insolvency & Bankruptcy Code, CIRP
Regulations and Process Document be informed)
3

D. (IX) ANY OTHER MATERIAL INFORMATION INCLUDING IMPACT OF


RESOLUTION ON ALLIED/ ASSOCIATES/ GROUPCOMPANIES:

(Comments on possible impact of the Resolution Plan on any of the Allied/ Associates/ Group
12

companies be informed)

D. (X) EFFECTS OF PAYMENT OF THE UPFRONT CASH RECOVERY TO THE


FINACNIALCREDITORS:

(Effect of implementation of the Resolution Plan including extinguishment of rights/ claims/


Security interest of the Creditors, Withdrawal, Abatement, Settlement or Extinguishment of any
legal proceedings etc be informed.)

SECTION E - JUSTIFICATIONS:

(Justifications for Approval/ Non-Approval of the Resolution Plan be submitted)

SECTION F:

NPA CHAPTER - ZTC DEHRADUN Page 88of 162


F (I) BO/ZO RECOMMENDATION: Based on justifications above, we recommend for
acceptance/ non-acceptance of the Highest Evaluated Compliant Resolution Plan (H1 Resolution
Plan)submittedby (NameofRA)for (Name
of Corporate Debtor) under the Corporate Insolvency Resolution Process (CIRP) under
Insolvency & Bankruptcy Code (IBC), 2016, leading to UpfrontCash RecoveryofRs. crore
(being our share of the overall UpfrontCash RecoveryofRs. crore to
Financial Creditors) with asacrificeofRs. croreintermsofRecoveryDivCircular
including all associated approvals and conditions for implementation of the Resolution Plan
including but not limited to approvalsasunder:

1.

2.

3.

F (II) HO RECOMMENDATION: Based on justifications above, weendorse the

:41
recommendations of BH/CH/ZM for acceptance/ non-acceptanceof the
HighestEvaluatedCompliantResolutionPlan(H1ResolutionPlan)submittedby (NameofRA)for
(Name of Corporate Debtor) under the Corporate

20
InsolvencyResolution Process(CIRP)under
/20 402
Insolvency&BankruptcyCode(IBC),2016,leadingtoUpfrontCash
RecoveryofRs. crore(beingourshareoftheoverallUpfrontCashRecoveryof
19
Rs. croretoFinancialCreditors)withasacrificeofRs. crore in
/03 41

termsof Recovery Div Circular _including all associated approvals and


conditions for implementation of the Resolution Plan including but not limited to approvals as
under:
3

1.

2.

3.
12

ANNEXURE – II

SECURITY:

A. PrimarySecurity:

B. CollateralSecurity:

C. Personal/CorporateGuarantee:

(Details of existing security as above to be furnished along with details of


treatment of such security post implementation of Resolution Plan)

NPA CHAPTER - ZTC DEHRADUN Page 89of 162


ANNEXURE – III
Evaluation Matrix & Justifications for scoring of Qualitative Parameters:

(Brief justification and merits based on which evaluation was carried out for the
Qualitative parameters of the Evaluation matrix be informed)

ANNEXURE – IV
Details of Net Claim Admitted & Lender wise allocation of Cash recovery as on
date of voting for Approval/ Non approval of Resolution Plan:

(Indicative format is furnished below)


Amount Share as per Amount of Recovery if
Name of Net Claims
S.No of Admitted no Financial Creditors
Bank Admitted
Claim Claims (%) are dissenting
1
2
3

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4
Total

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ANNEXURE-V
19
Details of Forensic Audit/ Transaction Audit:
/03 41

(Findings of Forensic Audit/ Transaction Audit carried out in the account


to be informed along with actions taken by the Committee of Creditors/
3

Resolution Professional w.r.t. the same)

(End of Performa)
12

FRAMEWORK FOR RESOLUTION OF STRESSED ASSETS UNDER


INTERCREDITOR AGREEMENT – ―PROJECT SHASHAKT‖SASTRA Div cir
No 7/2019 dated 01/02/2019.(The cir aims at resolution of stressed assets related to
corporate borrowers with exposure of 50 cr and above through multiple bank finance
/consortium finance.The circular has annexure III which is copy of ICA for resolution
of stressed assets and annexure III also contains schedule I which is list of lenders.Any
new lender can become part of scheduleI through deed of accession as mentioned in
schedule II in annexure III.Besides the circular has annexure I(operating guidelines
For the lead lender) and annexure II (operating guidelines for overseeing
committee).Both operating guidelines as mentioned in annexure I & II was laid down
by IBA on 19.10.2018.We have not reproduced the annexures I,II & III
hereunder.For that please see sastra div cir no 7/2019 dated 01.02.19)
NPA CHAPTER - ZTC DEHRADUN Page 90of 162
INTRODUCTION: Pursuant to the recommendations of the Sunil Mehta Committee set up to look
into faster
resolution of stressed assets under the Scheme “Project Shashakt”, an Intercreditor Agreement (ICA)
was executed by 34 lenders on 23.07.2018 as an enabler master agreement by lenders. The Salient
features of the ICA(INTER CREDITOR AGREEMENT FOR RESOLUTION OF
STRESSEDASSETS-Annexure III in sastra div cir no 7/2019 dt 01.02.19) are summarized below:
a. The ICA will be applicable to all the corporate borrowers who have availed loans and financial
assistance for an
amount of Rs.50 crore or more under consortium lending/ multiple banking arrangement;
b. The lead lender (i.e. the lender with the highest exposure) shall be authorized to formulate the
Resolution Plan which shall be presented to the lenders for their approval;
c. The decision making shall be by way of approval of „majority lenders‟ (i.e. the lenders with 66%
share in the aggregate exposure). Once a resolution plan is approved by the majority lenders, it shall be
binding on all the
lenders that are party to the ICA; and
d. Each resolution plan that is formulated in terms of the ICA shall be in compliance with the RBI circulars

:41
and all the lenders that are a party to the ICA shall be in compliance with the RBI circulars and all other
applicable laws and guidelines.
Subsequent to execution of ICA, Operating Guidelines were framed and circulated by the Indian
Banks‟

20
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Association (IBA) on 19.10.2018 for: (i) Discharge of roles and responsibilities of the Lead Lender
and in
Relation to the Resolution Process under the ICA for resolution of stressed assets (ii) Functioning of
19
Overseeing Committee
/03 41

under the ICA for resolution of stressed assets Accordingly, policy guidelines on the ICA for
resolution of
stressed assets in the economy have been prepared. These operating guidelines should be read together
3

with the provisions of the ICA and the Operating Guidelines for Discharge of Roles and
Responsibilities of the Lead
Lender and in relation to the Resolution Process.
The framework for the Bank for Resolution of Stressed Assets under “Project Shashakt” is divided into two
set of Operating Guidelines as under: a. Operating Guidelines for Discharge of Roles and Responsibilities
12

of the Lead Lender(Annexure I in sastra div cir no 7/2019) b. Operating Guidelines for functioning of
Overseeing Committee under ICA(Annexure II in sastra div cir no 7/2019). The ICA is referred as
ANNEXURE III in the cir no 7/2019 of SASTRA DIV.
. In case of Consortium/ Multiple banking arrangements which consist of Banks/ FIs etc which are not
signatories to the Intercreditor Agreement, decision to refer accounts for resolution under “Project
Shashakt” may be considered by the lenders in the Consortium/ Multiple Banking arrangement on a case to
case basis. In accounts where Punjab National Bank (PNB) is the “Lead Lender” as defined in the
Intercreditor Agreement, appointment of “Independent Entity” and others including consultants, Valuers,
Legal Advisors etc. to be made out of respective panel available with the Bank unless otherwise suggested/
decided by “Majority Lenders”. All other guidelines w.r.t. to Bank‟s Policy & Framework for Resolution
of Stressed Assets including powers to approve Resolution Plans for stressed assets shall be governed by the
provisions as set forth in L&A Circular 49/2018 dated June 6, 2018.

NPA CHAPTER - ZTC DEHRADUN Page 91of 162


FINANCIAL POWERS FOR MISCELLANEOUS EXPENDITURE RELATED TO
ONLY RECOVERY MATTERSINCLUDING NATIONAL COMPANIES LAW
TRIBUNAL‟S
CASES ( Circular no 41/2017)

For all types of expenses required for recovery purpose (including NCLT), in absence of
any guidelines, matters are referred to Head Office, due to which on occasions, decision is
delayed and bank‟s interest thus jeopardized. Matter was placed to the Board and the
following guidelines have been approved in its meeting held on 27.09.2017 vide
Resolution no.12:
In recovery matters including NCLT cases, for all types of expenses (excluding
Financial powers for Law Matters) for which there are no separate existing guidelines,
which may include the above mentioned cases also, the powers will be vested with the
different authorities, as given below:

S. Competent Authority Maximum limit of expenses* per


No. borrower (not per account)
1 Authorized Officer (Scale-IV & above) Up to Rs. 2 lacs

:41
designated in an account in other than LCBs.

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19
/03 41
3
12

NPA CHAPTER - ZTC DEHRADUN Page 92of 162


2 Branch Head of LCB (irrespective of scale but Up to Rs. 5 lacs
not less than Scale-IV)
3 COCAC Above Rs. 2 lacs up to Rs.10 lacs
4 ZOCAC Above Rs. 10 lacs up to Rs. 1 crore
5 HOCAC-II Above 1 crore (full powers)

*ExpenseswhicharenotcoveredunderanyoftheBank‟sextantpoliciesissuedbydifferent HO
divisions from time totime.
Proper record of such expenses be maintained, which will be part of the memoranda dues
and thus will be recoverable from the borrower and in case of recoveries similar treatment
will be applicable as is, in other types of expenditure.
New Expenditure Head:Since the expenditure so incurred/required to be incurred is not of
normal routine, a new Expenditure SGL Head- “Miscellaneous Expenditure-Recovery
Related Expenses” will be opened in the CBS. For this matter is being taken up with the IT
Division through Finance Division and till the time, said head is opened, branches may debit
Miscellaneous Expenses not specified elsewhere (HO Power). However, it must be ensured
that a proper record of such expenses is maintained at the branch/circle/zonal level, as the
case may be, so that after opening the said new head, the expenses are debited to that head, to

:41
have a true and transparent picture of suchexpenses.
In all those cases which fall under the powers of COCAC or ZOCAC, recommendations of
the Authorized Officer (Branch Head, in case of LCB) must be invariably taken, giving full
justification of the expenditure. Cases being referred to Head Office will be duly

20
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recommended by theZOCAC.
Once, approval has been given by the competent authority, payment will be made by the
concerned branch/office having that particular account, in which action has been initiated
19
under SARFAESI Act and no further permission will be required for payment.
/03 41

The case will be referred to the higher authority i.e Authorized Officer to Circle Head,
Branch Head of LCB to Zonal Manager, COCAC to Zonal Manager and ZOCAC to Head
Office, only when the powers vested with them have been exhausted.
3

As per RD Cir no 26/2018 dt.01.06.18, it has been advised asbelow:

In cases of diversion in NCLT referred accounts, efforts must be made to recover the amount
besides initiation of action against the malafide borrowersinvariably.
12

INSOLVENCY & BANKRUPTCY CODE, 2016 – AMMENDMENT IN IBBI


REGULATIONS, 2016(Sastra Div cir no 6/2019 dated 31.01.2019)
TheInsolvency and Bankruptcy Board of India has notified the Insolvency and Bankruptcy
Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment)
Regulations, 2019 on January 24, 2019 to discourage persons, other than genuine,
capable and credible resolution applicants, to submit resolution plans.

The amendment mandates that the request for resolution plans shall require the
resolution applicant, in case its resolution plan is approved by the committee of
creditors, to provide a performance security. Performance security means security of
such nature, value, duration and source, as may be approved by the committee of
creditors, having regard to the nature of resolution plan and business of the corporate
debtor.

NPA CHAPTER - ZTC DEHRADUN Page 93of 162


The Resolution Professional shall attach the evidence of receipt of performance security
while submitting the resolution plan to the Adjudicating Authority for approval. Such
performance security shall be forfeited if the resolution applicant of such plan, after its
approval by the adjudicating authority, fails to implement or contributes to the failure of
implementation of the plan.
The amendment also requires that the resolution plan shall include a statement as to
whether the resolution applicant or any of its related parties has failed to implement or
contributed to the failure of implementation of any resolution plan approved by the
Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016 at any time in
the past.
The amendment enables a creditor, who is aggrieved by non-implementation of a
resolution plan approved by the Adjudicating Authority, to apply to the Adjudicating
Authority for appropriate directions.
This notification issued by the Insolvency & Bankruptcy Board of India can be viewed on
www.ibbi.gov.in > Legal Framework > Regulations.

:41
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19
/03 41
3
12

NPA CHAPTER - ZTC DEHRADUN Page 94of 162


CHAPTER 9-
Policy for sale/transfer of financial assets to Securitization Companies (SCs) / Reconstruction
Companies (RCs) /Other Banks/ FIs / NBFCs etc. (excluding RRBs) including Portfolio sale
(SASTRA DIV Cir. 05/2017 dated 17.01.2017)

Scope  This policy is applicable to transfer / sale of financial assets by the


Bank to Securitization Companies / ReconstructionCompanies,
under the Securitization and Reconstruction of Financial Assets &
Enforcement of Security Interest Act, 2002 (SARFAESI Act)/Other
Banks/FIs/NBFCs (excluding RRBs).
 A financial asset may be transferred to Securitization Company /
Reconstruction Company on outright sale basis under Sections
5(1)(a) and 5(1)(b), or Agency basis under Section 10(1) of the
SARFAESIAct.
 The policy shall comply with the guidelines issued by RBI from
time to time and shall be transparent andfair.
Objective It helps in resolution of NPAs

:41
It helps in swiftly realizing as much of total dues as possible
depending upon valuation of underlying security interest.
It reduces expenditure on NPA maintenance.
It sends signals that the Bank is serious in resolution of NPAs.

20
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It helps in creating an active and vibrant market for NPA/
Restructured debt papers.
To develop a healthy secondary market for NPAs/NPIs.
19
Factors in favour of a) Realization of assets is expected over a longerperiod.
/03 41

sale of FA b) Multiple litigations areinvolved.


c) Outstandingtowardsworkmen‟sduesand/orgovernmenttaxes etc
are either large or cannot be estimated reasonably /accurately.
3

d) Other contingent liabilities areexisting.


e) Sale is in the larger interest of thebank
Eligibility of SCs/ Financial assets would be offered for transfer / sale to only those
RCs for purchase of Securitization Company (ies) / Reconstruction Company (ies) who
financial asset of has / have obtained the Certificate of Registration from RBI under
bank Section 3 of the SARFAESI Act before providing information in
12

respect of a financial asset to them.

Whenever Bank‟s financial assets are placed for sale to the


SCs/RCs/NBFCs/FIs/Banks etc. (whether Bank approaches them or
they approach the Bank), it must be ensured that invitation is sent to
minimum 5 SCs/RCs/Banks/NBFCs etc. in order to get better offers.
Proper record be maintained at the FGM & Circle level for having
sent the invitation to at-least 5 prospective buyers.
Eligibility criteria for  Before considering transfer / sale of a financial asset, pros and cons
accounts to be placed of going for enforcement of the related security interest by the bank
for sale / transfer itselfunderSARFAESIActvis-à-vistransfer/saleofthefinancial
asset to a Securitization Company/ Reconstruction Company/Other
Banks/FIs/NBFCs be analyzed.
While finalizing the list of identified accounts to be placed for sale,
latest guidelines issued by the Recovery Division for valuation of

NPA CHAPTER - ZTC DEHRADUN Page 95of 162


securities in NPA accounts be complied with along with the other
practical aspects e.g the assets should be pooled on geographical
basis for assessing the Stamp Duty implications and/or all assets
with common underlying security/financial assets belonging to
same group to be auctioned as part of samepool.
 Identification of accounts for sale will be carried out twice a year, in
the month of June (after finalization of Bank‟s annual accounts) and
December every year and the

same will be got approved by Management Committee of
Board(MC).
 In case of any emergent circumstances, if a need arises for sale of
some accounts and/or some offer is received from a prospective
buyer for purchase of accounts, which were not gotapproved from
the MC during identification process (twice a year), the
procedure of calling of PIMs from Zones, fixation of Reserve
Price by HOASC, recommending to HOCAC-III to start the

:41
sale process and final approval of sale by MC etc. will continue
to prevail, on merits of thecase.
List of Financial Assets which can be sold to

20
SCs/RCs Banks/FIs/NBFCs
/20 402
1) A NPA, including a non- A financial asset, including
Performingbond/debenture. assets under multiple/
2) Standard Asset,where: consortium banking
19
(a) The asset is underconsortium arrangements, would be eligible
/03 41

/multiple banking arrangements, for sale to Banks/FIs/NBFCs


(b) At least 75% by value of the etc. if it is non-performing
3

asset is classified as non- asset / non-performing


performing assets in the books of investment in the books of the
other Banks/FIsand Bank.
(c) At least 75% by value of the Banks will be permitted to sell
banks/FIs who are under their NPAs to other Banks /FIs
consortium/multiple banking /NBFCs (excluding SC/RC)
12

arrangements agree to sale of the without any initial holding


asset to SC/RC. period. However, the non-
3)An asset reported as SMA-2 performing financial asset
(Special Mention Account- where should be held by the
principal or interest payment is purchasing bank for a period
overdue between 61-90 days) by of 12 months before it is sold
the Bank/FI to Central Repository to other Banks/FIs/NBFCs
for information on Large Credit (excludingSC/RC).
(CRILC) in terms of
DBOD.BP.BC.No.98 /21.04.132
/2013-14 dated 26.02.2014.
Additional Sub-Category of accounts permitted for sale
Category of Accounts Remarks

NPA CHAPTER - ZTC DEHRADUN Page 96of 162


Willful defaulters/Criminal Proposal for approval shall be
Action (only non-fraudulent considered by the
cases) cases. As per RBI Management Committee on
guidelines, fraud cases cannotbe merits of thecase.
considered for sale.

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19
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3
12

NPA CHAPTER - ZTC DEHRADUN Page 97of 162


Accounts backed by Govt. Such cases may also be
Guarantees considered for sale, subjectto
approval by the Board.
A written off NPA may also be considered for transfer / sale.
A financial asset in respect of which any case is pending before a
Court/DRT/BIFR etc. may also be considered for sale
All the financial assets due from a single debtor shall be
considered for transfer / sale. Similarly, financial assets having
linkages to the same collateral/common security shall be
considered for transfer / sale simultaneously.
Both fund and non-fund based financial assets may be included
in the list of assets for transfer /sale.
Retail NPAs of homogeneous nature may also be sold on portfolio
basis to SCs/RCs/Other Banks/FIs/NBFCs etc.
Exceptions:
Pool of assets being sold does not contain any loan originated
fraudulently or has been classified as fraud as on the date of sale.
Exempted category of  Any loan originated fraudulently or has been classified as fraud ason

:41
advances for sale the date of sale. This is equally applicable to standalone/bilateral sale
ofaccounts.
 NPAs in respect of which OTS is already concluded and is under
implementation.

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 NPAs where restructuring is already approved and is under
implementation.
 NPAs where DICGC/ECGC claim has already been received,
should normally be avoided forSale.
19
/03 41

Authority /  Identification of accounts to be placed for sale to


Delegation of power SCs/RCs/FIs/NBFCs etc. may be done at the
for identification & Branch/Circle/FGMO/HO Level. Workflow be referredfor
3

initiating sale process sending the cases to HO.


 In case a Branch/Circle identifies account(s) and/or any buyer
approaches Circle/Branch for purchase of account(s), in both the
situations concurrence of the FGM be invariably be taken before
proceeding further in thematter.
 The powers for permitting for initiation of sale of identified
12

financial assets to SCs/RCs/Other banks/FIs/NBFCs etc. will be


vested with HOCAC-III.
 In case of non-NPA accounts e.g Standard Accounts or Accounts
under SMA-2 category, to start the sale process in such accounts,
necessary permission from the HOCAC-III to start the process will
be obtained by the concerned Head Office Division, dealing with
such accounts and after obtaining the permission, rest ofthe
modalities will be taken care by the Recovery Division, in terms of
the extant Sale Policy. In such cases the General Manager of the
concerned Head Office Division will also be inducted as additional
member of the Head Office Assets Sale Committee (HOASC) so as
to take decisions in the interest of the bank, in case he/she is not
already member of it..
Threshold limit for  “All Doubtful accounts with balance outstanding of Rs. 50 crores &
review of Doubtful above will be reviewed and placed to the Management Committeefor

NPA CHAPTER - ZTC DEHRADUN Page 98of 162


Assets identification of accounts which may be offered to the the
ARCs/NBFCs etc. during the year.” To comply with this condition,
twice a year, while identifying the accounts for sale to ARCs/NBFCs
etc., the required inputs in respect of all doubtful assets with balance
outstanding of Rs. 50 crore & above will be obtained from the
respective zones and Recovery Division on merits of the case, will
submit its recommendations, directly to the Management Committee
(without routing through HOASC & HOCAC-III) for taking afinal
decision for selection of such Doubtful Assets for exiting through
sale route.
Time for Due  Minimum period of two weeks will be given to the prospective buyer to
Diligence Exercise complete their Due DiligenceExercise.
Approving authority Looking to sensitivity involved in cases relating to sale of financial
assets, the proposal(s) shall be considered for approval by the
Management Committee (MC) through:
 Circle Office Asset SaleCommittee(COASC)
 Field General Manager Office Asset Sale Committee
(FGMOASC)
 Head Office Asset Sale Committee(HOASC)and

:41
 Head Office Settlement Advisory Committee(HOSAC):
HOSAC consists of (i) one retired High Court Judge, (ii)
one eminent/ reputed person (iii) three General Managers,
out of which General Manager (Recovery Division) is the

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Member Convener. The two General Managers (other than
GM/RD), are nominated by the Chairman & Managing
Director/MD & CEO for a period of six months by
19
rotation. However, in case of OTS/Write off/Settlement of
/03 41

other financial assets e.g investments, non-NPA accounts,


debit card etc. General Manager of the dealing Division
will also be co-opted as additional member of the HOSAC,
3

to participate in the meeting and present the case to the


committee.( RD Circular56/2018)
―All decisions with regard to sale of accounts, including identification of
accounts, may be taken by the Management Committee of Board (MC)
and matter may not be referred to the Board again and again.”
12

Withdrawal of The powers for withdrawal of the account due to any reason, e.g
accounts from the non-availability of the latest valuation report, OTS/Compromise
Sale Process- Offer received from the borrower/co-borrower, any
Authority &Criteria regulatory/legal requirement/restriction etc. from sale process are
vested with ED/CMD. In case obligant(s) and co obligant(s) come
forwards, for OTS, before finalization of sale process by the
proposed buyer(s), the concerned account may be withdrawn from
the sale process considering account specific merits,provided:
a) The minimum offer of OTS shall be as under:
WhereOutstandingis Percentage
UptoRs.10 lacs 115% of Reserved price
More than 10 lacs upto50 lacs 110% of ReservedPrice
More than50lacs 105% of ReservedPrice
AND
b) The party deposits 50% cash as upfront money immediately and
remaining within 3 months of approval of OTS.
NPA CHAPTER - ZTC DEHRADUN Page 99of 162
Sale Consideration In case of sale of financial assets to the SCs/RCs, minimum cash
for the Financial component will be 15% of the sale price and rest 85% in the form of
Assets Sold to Security Receipts/Bonds etc.
SCs/RCs (only)
Bond & Debentures  The Bank may receive cash or bonds or debentures as sale
consideration for the financial assets sold toSecuritization
Companies/ Reconstruction Companies. The SCs/RCs can issue
bonds or debentures or other similar security to the Bank on agreed
terms and conditions [Section 5(1)(a) of SARFAESI Act 2002].
 The securities (bonds and debentures) offered by Securitization
Company/ Reconstruction Company as sale consideration should
satisfy the guidelines issued by RBIpresently
(i) The securities must not have a term in excess of sixyears.
(ii)The securities must carry a rate of interest which is not lower
than 1.5% above the Bank Rate in force at the time of issue.
(iii)Thesecuritiesmustbesecuredbyanappropriatechargeon
assets transferred.
(iv) The securities must provide for part or full prepayment in the
event the SCs/RCs sells the asset securing the security before

:41
the maturity date of thesecurity.
(v) The commitment of the SC/RC to redeem the securities must
be unconditional and not linked to realization of theassets.

20
(vi) Whenever the security is transferred to any other party, notice
/20 402
of transfer should be issued to theSC/RC.
Validity Period of SRs
In terms of RBI guidelines SRs are redeemable within 5 years which
19
can be extended upto 8 years with the approval of the Boards of
/03 41

the SCs/RCs. However, there is no guarantee of return onSRs.


Yield on Security Receipts
3

In case of sale by way of SRs, the expected yield for SRs to be in the
range of 5-10% p.a.
Sale  Sale to other Banks/FIs/NBFCs etc, will be made only on cash
Considerationf basis. The entire sale consideration should be received upfront and
or the Financial theassetcanbetakenoutofthebooksofthesellingBankonlyon
Assets Sold to Other receipt of the entire sale consideration. Under no circumstances
12

Banks/FIs/NBFCs can a sale to other banks be made at a contingent price.


etc. ( i.e otherthan
the SCs/RCs)
Swiss Challenge  The sale of financial assets can also take place through a newly
Method(SCM) introduced method, known as, Swiss Challenge Method(SCM).
a) A prospective buyer interested in buying a specific stressed
asset may offer a bid to thebank
b) If the asset features in the list of assets for sale maintained by
the bank and if the aforesaid bidder offer more than the minimum
percentage specified in the Bank‟s Policy (say 30% of the O/S
loan) in the form of cash, the bank shall be required to publicly call
for counter bids from the other prospective buyer on
comparableterms.
c) Once the bids are received the Bank shall first invite the
SC/RC, if any which has already acquired the highest stake to
match the highest bid. Order of preference to sell the asset shallbe
NPA CHAPTER - ZTC DEHRADUN Page 100of 162
:41
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19
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3
12

NPA CHAPTER - ZTC DEHRADUN Page 101of 162


as follows:
i) The SC/RC with highest stake
ii)The original bidder
iii)The highest bidder during the counter bidding process.
d)Bank will have following two options:
i) Sell the asset to winning Bidder as determinedabove
ii) If bank decides not to sell the asset to the winning bidder. Bank
will be required to make immediate provision on the account to the
extent of the higherof:
a) The discount on the book value quoted by the highestbidder
b) The provision required as per extant asset classification and
provisioningnorms.
Miscellaneous  Bank will not use auction process for sale of NPAs as a price
discovery mechanism for such assets, where the bids are invited
fromSCs/RCsandnobidisacceptedwithoutassigningany
reason.
 If a bid received is above the Reserve Price and a minimum 50%
of sale proceeds is in cash and also fulfills the other conditions
specified in Offer Document, acceptance of that bid would be

:41
mandatory for theBank.
Fixation of Reserve Important aspects associated with fixation of Reserve Price
Price  The Reserve Price for each account placed for the sale, in which

20
/20 402
prospective buyers (ARCs/Banks/FIs etc.) have evinced interest,
will be declared before hand, at the time of sending invitation to
them to submit bids. For this, the HOASC will finalize the Reserve
19
Price based on the recommendations received from FGMOASC. In
/03 41

those accounts where no interest has been shown by the buyers, the
Reserve Price will not bedisclosed.
 Separate Reserve Price may be fixed for offers receivedon
3

(a) 100% cash basis and


(b) Other than 100% cash basis
 Since sale on cash basis is always beneficial for the bank, the
Reserve price fixed for 100% cash basis will be 10%-15% (to
be decided by HOASC) less than that on other than 100%cash
basis. Further, in case offers are received at the minimum Reserve
12

Price fixed in both the cases, the offer at 100% cash basis will be
preferred.
 Where 50% (by value) or more, Banks/FIs have already
sold/assigned their share in a financial asset to any
ARCs/Banks/NBFCs etc., the Reserve Price at which the Other
Banks have sold their shares to the ARCs, may be considered as an
Indicative Price, wherever the information is available,which
however shall not be binding on our Bank to sell our share.
 Discount rate used by banks in the valuation exercise shall be spelt
out in the policy. This may be either cost of equity or average cost of
funds or opportunity cost or some other relevant rate, subject toa
floor of the contracted interest rate and penalty (i.e minimum
discount), if any. Keeping in view the present structure of Base Rate
(9.60%) and penal interest rate (2% to 3%), Board approved to
apply a flat discount of 15% on Net Present Realizable Value
(NPRV), may be considered while arriving at the Reserve Price

NPA CHAPTER - ZTC DEHRADUN Page 102of 162


 In case of emergent circumstance, if need arises for sale of some
accounts which were not approved from the MC during identification
process, the procedure for calling of PIMs from zones, fixationof
Reserve price by HOASC and then finally to HOSAC recommending
to HOCAC-III to start the sale process and final approval of sale by
MC etc. will continue to prevail on merit of each case.
Pricing / Valuation  The objectives of the valuation are essentiallyto:
a) arrive at Net Present Realizable Value of theassets;
b) provide a basis for fixation of Reserve Price, evaluationand
acceptance of offer of Securitization Companies /
Reconstruction Companies/ other banks/FIs/NBFCs etc for
sale / transfer ofassets
 The bank shall make internal assessment to determine Net Present
Realizable Value (NPRV), which will be preferably based on the
latestvaluationreportobtainedfromtheBank‟sapprovedvaluer
 Latest Valuation Report which should not be older than 1 year,
as on the date of submission of PIM to the intending buyer.
Wherever it is not possible to have fresh Valuation Report i.e less
than 1 year old, such accounts must be immediately

:41
recommended for withdrawl from the saleprocess.
 In case the value of immovable property tobe mortgaged/ charged
isRs.5 crore & above, branches shall get valuation of such IPs

20
done from minimum two valuers on the Bank‟s approved
/20 402
panel. In addition to this criterion two independent valuation
reports will also be obtained in case of exposures (FB+NFB) of
19
Rs.50 crores and above.
And
/03 41

In case the difference in valuation by the two valuers is less


than 15%, the average value may be taken. Same procedure may
3

be adopted while assessing the latest value of the securities, before


going for sale of financialassets.
(a) Enterprise / Business Valuation– using discountedcash
flow technique on the future earning projections in caseof
operating units / potentially viable units.
b) Net Present Realisable Value of Assets (NPRV)– Keeping in
12

view the difficulties faced by the field staff and subjectivity


involved in the calculation of NPRV, due to different percentage of
discounting factors, a simpler and objective procedure is to be
adopted in line with the Bank‟s OTS Policy. The calculation of
NPRV is to be done.
Factors for computation of Net Present Realizable Value (NPRV)
Board has approved for switching over from the current method for
computation of NPRV to Distress Sale Value method. Revised
guidelines are as under:
Market value of Existing Revised
factors on
MVdis.
FDRs/NSCs/IVPs etc. NIL NIL
Stocks upto 6 months old 50% Distress sale value assessed
by the Zonal office Asset
sale committee.

NPA CHAPTER - ZTC DEHRADUN Page 103of 162


Stocks more than 6 months 100% Distress sale value assessed
old is to be taken by the Zonal office Asset
sale committee.
Receivables upto 6 months 50% Distress sale value assessed
old by the Zonal office Asset
sale committee.
Receivables more than 6 100% Distress sale value assessed
months old by the Zonal office Asset
sale committee.
Plant & Machinery 50% Distress sale value (as per
Industrial Shed &structure approved valuer of
theBank)
Market value of IPs where
SARFAESI Act is
applicable
i) GeneralDiscount 10%
ii) IPs having old/multiple
tenancy, multiple 20%
suits/dispute about
validity/enforceability of Distress sale value (as per

:41
mortgage/charge approved valuer of the
iii) More than 1 year stay Bank)
against SARFAESI action
and/or SARFAESI action 10%

20
/20 402
initiated and IPs put to
auction but auction failed
as no biddercame
19
iv) IPs not demarcated / 10%
/03 41

undivided share mortgaged


v)Mortgagor is dead 10%
vi)Market value of all
3

other IPs where 50%


SARFAESI Act is not
applicable
Resolution Cost discount 20% NO discounting onaccount
(on NPRV) of Resolution cost. Instead a
flat discount of 15% will be
12

applicable on the NPRV


calculated as per above
mentioned parameters.
In addition to the above factors, Zonal Office Assets Sale Committee
(ZOASC), while calculating the NPRV, will take due cognizance of the
Net means of the personal guarantors and Net worth of the corporate
guarantors and wherever deemed proper, may enhance the NPRV with
proper justifications. The increase in NPRV due to net means/net worth
of guarantors, will depend upon their amount of attachable assets, not
secured to the Bank and its realizability. Similarly for considering the
value of shares available in an account, to be added to the NPRV, may
be determined by the ZOASC, depending upon its liquidity, whether
quoted or not, trading pattern in the market etc.
Cost of Valuation  In case of sale of accounts, the cost of valuation will be borne by the
Bank, for which Miscellaneous Expenditure head may be debited.
Note : In only those accounts which are being placed for saleto

NPA CHAPTER - ZTC DEHRADUN Page 104of 162


ARCs/NBFCs etc, in case valuation is required to be got done in
terms of Bank‟s guidelines, then only the cost will be borne by the
Bank and in all other cases the cost will continue to be borne by
theborrower.

Resolution cost  Besides discounting factors permitted under Bank‟s


OTS/compromise Policy on the market value ofassets, further
discounting factor of 20% in the form of Resolution Cost
(which may include cost related to insurance, litigation etc. & Cost
involved due to time factor for realization of securities etc.) is also
applied for arriving at theNPRV.
 Further, while adopting the sale of financial assets route for
resolution of NPAs, application of Resolution Cost factor isnot
compulsory for calculation of the Net Present Value and must be
use with prudence.
Evaluation of offer  Intending buyers may be given 25-30 days period for doing due
diligence and also submission of their Price bidoffers.
 There exists a well laid down policy in the Bank for calculation of

:41
recoverable dues (as per general guidelines of compromise) for
considering OTS/Compromise in NPAs. Same procedure shall be
adopted in calculation of recoverable dues for considering

20
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sacrifice.
 The COASC shall fix the Reserve Price as per the latest present
realizable value of available security net of cost of realization, as
per Annexure-NPRV and recommend to the ZOASC,which
19
will review it and further recommend to the HOASC, for
/03 41

finalization. Sale price should not be lower than NPRV.


 HOASC will examine & recommend the Reserve Price on the
basis of recommendations received from ZOASC. Reserve Priceso
3

recommended by the HOASC will be placed to the Head Office


settlement Advisory committee (HOSAC) for consideration and
final approval. Thereafter complete t&C including reserve price
approved by HOSAC will be placed to HOCAC III seeking
permission to start the sale process.
 Since Reserve Price will be approved by the HOSAC before
12

beginning of the sale process, after receipt of bids at the amount


equal to or higher than the approved Reserved Price, the sale
proposal duly recommended by the ZOASC will be directly placed
to MC for final approval without referring gain to theHOSAC.
Prudential norms  When the bank sells its financial assets to Securitization Company/
Reconstruction Company, on transfer the same will be removed
from itsbooks.
 If the sale to SCs/RCs is at a price below the Net Book Value
(NBV) (i.e Book Value less provisions held), the shortfall
shouldbedebitedtotheProfit&Lossaccountofthatyear.
Bank can also use countercyclical / floating provisions for
meeting the shortfall on sale of NPAs i.e. when the sale is at a
price below the NBV.
 Forassetssoldonorafter26.02.2014andupto31.03.2016,as

NPA CHAPTER - ZTC DEHRADUN Page 105of 162


incentive for early sale of NPAs, banks can spread overany
shortfall, if the sale value is lower than the NBV, over a period
of two years. However, assets sold from 01.04.16 to 31.03.17,
shortfallistobeamortizedoveraperiodofonlyfourquarters
from the quarter, inwhich the sale took place.
Resolution of  If there is any dispute between Securitization
disputes Company/Reconstruction Company/Other Banks/FIs/NBFCs etc.
andPNBorQualifiedInstitutionalBuyersinrespectof
securitization or reconstruction or non-payment of any amount due
including interest, it shall be settled in accordance with Section 11
of the SARFAESI Act.
 The disputes between Securitisation Company/ Reconstruction
Company/Other Banks/FIs/NBFCs etc., Bank and Qualified
Institutional Buyers cannot be taken to civilcourt.
Monitoring  Recovery Division, Head Office shall monitor progress in the
matter of sale of financial assets to Securitisation Companies /
Reconstruction Companies/ /Other Banks/FIs/NBFCsetc..
Para No. 6.4 {d (ii)- on sale of financial assets} of the RBI Master Circular dated 1 st July,

:41
2015 on IRAC norms, provides that in the case of consortium / multiple banking
arrangements, if 75% (by value of amount outstanding) of the banks / FIs decide to accept
the offer, the remaining banks / FIs will be obligated to accept the offer.

20
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STRATEGY FOR UPGRADATION OF VIABLE NPAs – TAGGING ARRANGEMENT
RD 21/2009 dtd.26/12/2009 read with RD 16/2017 dated 01.04.2017In certain viable cases,
19
operations may be allowed in NPA accounts with a view to upgrade the accounts by
/03 41

appropriating a certain part of the credits in the accounts (i.e. tagging a part of credit) for
regularization of the overdues/irregularities and allowing the borrower to utilize the balance
amounts for operating activities.
3

Tagging of 15% and above may be sanctioned by Incumbents Incharge, and 10% to less
than 15% by Circle Head, for credit facilities sanctioned by any authority. If tagging is to
be fixed at less than 10%, the sanctioning authority is Zonal Manager.
12

NPA CHAPTER - ZTC DEHRADUN Page 106of 162


CHAPTER 10-
POLICY FOR ENGAGEMENT OF RECOVERY AGENCIES/ RESOLUTION AGENTS

POLICY FOR ENGAGEMENT OF RECOVERY AGENCIES


(RD Cir. 12/2017dt. 30.03.2017)
Eligible  All Doubtful and Loss category accounts (whether non-suit filed, suit
accounts filed or decreed) with ledger outstanding not exceeding Rs.10lac.
 All written off accounts shall be covered by the scheme except accounts
where compromises have been approved (including those reached at in
Lok Adalats) and have not been treated asfailed.
 The Branch will allocate the account(s) to Recovery Agency engaged by
them. Branch should ensure that proper mix of Doubtful/Loss accounts
(difficult to resolve) & written off accounts is allocated to the Recovery
Agencies so that they can make sincere efforts with keen interest, for
recoveries in NPAs and the assignment becomes commercially viable and
becomes win win situation for the Bank and them . Circle Head shall
ensure that sufficient number of accounts is (approximately 500 in

:41
number) allocated to each Recovery Agent to get optimum results. In case
onebranchisunabletoproviderequisitenumberofaccounts,Recovery
Agents be allocated accounts from nearby branches.
Empanel-  Recovery Agencies shall be empanelled for the entire District or Cluster

20
/20 402
ment of ofDistricts. Only agencies (companies, corporations, firms,
Recovery NBFCs etc.) with sufficient means/ resources/ field experience will be
Agencies considered for empanelment. Factors such as past experience, financial
19
soundness, business reputation, standards of performance, market
/03 41

feedback and external factors e.g. political, social, legal & economic
environment should also be kept into consideration while empanelling
the recoveryagencies.
3

 Applications would be invited at the concerned Circle Offices, from


interested parties through advertisements to be placed in two local
newspapers, out of which one should be vernacular. Committee
comprising of 2nd in command of Circle Office, Chief Manager and Sr.
Manager/ Manager (Recovery Deptt.) will interview the applicants and
recommend the empanelment.
12

 Competent Authority to approve the empanelment of Agency will be


respective Head of the Circle Office. The decision of Head of Circle
Office would be final. There would be no review process by any higher
authority.
 The panel of Recovery Agency will be reviewed by Circle Office on
annual basis. However, bank has right to terminate the contract at any
time without assigning anyreason.
 The up to date details of the Recovery Agency firms/companies engaged
byCircleOfficeshallalsobepostedonthebank‟swebsite.
Guarantee  The Agency shall furnish to the Bank‟s Circle Office, a Bank guarantee
for an amount of Rs. 1,00,000/-. Alternatively, the Agency shall make a
security deposit (by way of term deposit) for equivalent amount which
shall be returned to the Agency on termination of thearrangement.
 If reputed recovery agencies having good track of effecting recoveries of
theBanksanddesirousofgettingempanelledwithotherCircleOffices

NPA CHAPTER - ZTC DEHRADUN Page 107of 162


shall provide Bank Guarantee/ Security deposit of Rs.1 lac in each Circle
Office subject to maximum of Rs.3 lac.
 Every field staff of the Recovery Agency shall be issued a temper-proof
Identity Card (with in-built photo as in Electronic Photo Identity Card
issued by Election Commission) at the cost of Recovery Agency, to be
signed by 2nd in command of Circle Office and authorized signatory of
RecoveryAgency.
Mode of Recovery Agents shall not accept cash. Cash recoveries, if any, shall be
Settlement directly deposited by the borrower or his representative in the branch.
The field staff of Recovery Agency shall not receive any cheque/draft in
his name or in the name of the Agency. The cheques / drafts should be
drawn in favor of PNBA/c (title of the account for which
collection is made) and crossed „A/c Payeeonly‟.
When recoveries are made in suit-filed / decreed accounts, satisfaction
to the extent of the realization made shall be got recorded by
appropriate application / statement before theCourt.
RBI‟sGuidelinesonFairPracticesCodeforLendersandIBA‟sModel Code
for Collection of Dues and Repossession of Security (CDRS Code) shall

:41
be adhered to, wherever required, by the RecoveryAgency.
Supreme Court has cautioned the Banks against use of coercive methods
for recovery of loans and in the other case on the same issue State
Consumer Forum of New Delhi has given stern warning to Banks that if

20
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any complaint is received against any Bank alleging use of force by
recovery agents, the punishment of minimum one month imprisonment
shall be imposed under section 27 of the Consumer Protection Act 1986.
19
The branch should inform the borrower the details of Recovery Agency
/03 41

firms/companies while forwarding default cases to the Recovery Agency.


Commission For NPA accounts (suit filed / non suit filed)
Age of NPA Commission payable on amount of
3

recovery
A/cs withO/s A/cs with O/s above
upto Rs.1 lac Rs.1 lac
Upto 3 years 7.5% 5%
3 years upto 5 years 10% 7.5%
Beyond 5 years 15% 10%
12

For decreed accounts


Age of decree Commission payable
Upto 3 years 5% of amount recovered
Above 3 years upto 5 years 7.5% of amount recovered
Above 5 years 10% of amount recovered.
The allocated accounts may be withdrawn from Recovery Agencies after six
months from the date of allocation in case no effective result is achieved by
Recovery Agencies within this period subject to approval of Circle Head.

NPA CHAPTER - ZTC DEHRADUN Page 108of 162


Training The number of hours of training for various categories of Recovery Agents

Sl. Educational Qualification No. of hours


Training
1. Below 12th Pass 100hours.
2. 12th pass and above and below 70 hours.
graduation
3. Graduation and above 50hours.
Monitoring / The progress shall be monitored on Monthly basis by 2nd in command of
Supervision Circle Office. Circle Head him/herself shall review the performance of
& Control Recovery Agencies on Half-Yearly basis
The progress under the scheme shall be monitored by RD HO on
quarterly basis and review note will be placed to the GM (RD) on
quarterly basis and to Executive Director on annual basis.
An officer shall be designated as Nodal Officer at Circle Office.
Any complaint arising in the matter to be addressed by the Nodal
Officer within 7 days of receipt ofcomplaints.

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ENGAGEMENT OF SECURITISATION/ RECONSTRUCTION COMPANIES
(SCs/RCs)/FIRMS/COMPANIES/ (other than SCs/RCs)/ RETIRED BANK (PNB)

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EMPLOYEES AS RESOLUTION AGENT (RD Cir. 15/2018 dated 04.05.2018)

Bank has decided to empanel SC/RC, Other Firms / companies, Retired Bank employees to
19
act as resolution agents for resolving NPAs .The guidelines are as under:
/03 41

Particulars SCs/RCs Other Firms PNB Employees


2. Eligibility The Securitisation / A Firm/Company Honorably retired bank
3

Criteria for Reconstruction Companies promoted by and/or employees (including


empanelment (SCs/RCs) which have employing Voluntarily Retired
of Resolution obtained thecertificate of professionalperson Employees).
Agents registration from RBI under /persons like Condition-1
Section 3 of the SARFAESI CharteredAccountant PNB retired employees
Act /CompanySecretary / who have worked in
12

and having Object Clause of Cost Accountantand / the last 5 years of their
Memorandum of or honorably service in the Head
Association permitting them retiredSenior Office Recovery
to act as Resolution Agent for Executives of the Division/ Recovery
the bank. Banks (not less than Sections at Zonal
DGM/GM) with Office/Circle and/or in
minimum 3 years ARMBs, there will be
experience in the a cooling period of 2
resolution of NPAs. years between the
Firms/Companies not retirement date of the
having 3 PNB retired employees
years‟expe and date of their
riencebut engagement as
havingprofessionals ResolutionAgent.
with Condition-2
minimum 3
NPA CHAPTER - ZTC DEHRADUN Page 109of 162
years‟
experience in

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19
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3
12

NPA CHAPTER - ZTC DEHRADUN Page 110of 162


resolution There will be no baron
of NPAs, will also be Maximum age of the
eligible. PNB retired
For all other cases, employees, working as
the matter may be Resolution Agent of
referred to the Head the Bank. However
Office, Recovery after attaining the age
Division to consider of 65 years
on merits of thecase. performance of the
PNB retired employee
will be reviewed by the
circle head and on
finding the same as
satisfactory the tenure
of engagement may be
extended for further
twoyears.
Invitation of Head office , Recovery Concerned Field HRD and/or Recovery

:41
applications Division shall invite General Managers Division of concerned
applications from SCs/RCs. shall invite Circle office shall
applications from invite applications
Firms / Companies from the honorably

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(other than SCs/Rcs) retired bank employees
(including Voluntarily
RetiredEmployees).
19
Competent ED for empanelment as FGM, After Upto Circle Head
/03 41

Authority for Resolution cum Recovery engagement of scale-III


empanelment Agents and allocation of Resolution Agents Scale IV FGM
NPAs under Retail Loans CH may advise the &V
3

on portfoliobasis dealing officials ScaleVI Executive


from the office to & VII Director
visit the site/office of (through
the HRD)
Firms/Companies This panel shall be
circulated to all the
12

offices for the


utilization of their
services for
resolution of non
performing accounts
under thescheme
Eligibility of Following eligibility criteria are common for all the 3 categoriesof
accounts for Resolution Agents i.e. SCS/RCs, Other Firms & PNB Retired employees:
allotment to (i) NPA accounts categorized as Doubtful / Loss whether non suit filed, suit
Resolution filed or decreed accounts shall be covered under theScheme.
Agents (ii) AfinancialassetinwhichanycaseispendingbeforeaCourt/DRT/BIFR
/ Action under SARFAESI may also be considered for allocation under the
Scheme.
(iii) Thefinancialassetswherenonfundedfacilitiesareyettobecrystallized
are not to be allocated.

NPA CHAPTER - ZTC DEHRADUN Page 111of 162


(iv) In case of written off accounts, outstanding balance at the time of write off,
shall be taken as Notional outstanding.
Clarification As per the revised policy, there is no upper age limit for the PNB retired
employees to work as Resolution Agents on behalf of the Bank. Only principle
is that after attaining the age of 65 years, the Circle Head will review the
performance and extend the engagement period for further 2 years, at a time. It
means after 67 years the performance will be again reviewed and then after 69
years it will be reviewed again and so on. (RD 21/2017)

5. Rs. 1Cr Zonal More than Circle Up to Rs. Clerical Circle


Identification to 5 Cr. Manager Rs.10 lac Head 25 Lac staff head
& Allocation Above Domain And upto Above Rs. Scale I, Circle
of accounts – Rs.5 ED of Rs. 1crore 1 Lac but II & III Head
Delegation of Crore.* Zone Above Field up to Rs.
Powers. Rs. 1 crore Zonal 100 Lac
up to Rs. 5 Manager Above Rs. Scale Circle
crores 10 Lac IV & Head
upto Scale-

:41
V
Rs.250
Above 5 Domain
crores* ED of lacs
the Zone Above

20
Scale Circle
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Rs.10 lacs VI & Head
upto above
19
Rs.500
/03 41

lacs

*For allocation of above Rs. 5 crore accounts to ARCs, Zonal Manager will be the recommending
3

authority.

Since basic purpose for framing this policy is to get maximum recoveries in big borrowal NPA
accounts, besides ARCs, eligible NPA accounts with balance outstanding of more than
Rs. 5 crore may be allocated to the Other Firms also.
12

However, to have better control and monitoring at the corporate level, for
allocation of Rs. 5 crore & above Doubtful & Loss accounts to the ARCs/Other
Firms, the permission will be granted by the domain ED handling recovery of that
particular Zone.

While submitting recommendations to the HO: Recovery Division, Zonal Managers will
also submit latest position of the accounts and reasons for allocating the accounts to
Resolution Agents and efforts made at the Branch, Circle & Zonal level for resolution of the
NPA account.

Criteria for Ledgeroutstanding Ledger outstandingof Ledger outstanding upto


allocation of of Rs.1 cr. & above more than Rs. 10lacs. Rs. 5 crores, subject to
accounts (Further, all Retail the condition that
Loans under retired employees be
Doubtful/Loss not given such accounts for

NPA CHAPTER - ZTC DEHRADUN Page 112of 162


category may be resolution which
allocated to them they handled whilein
Circle-wiseon service i.e the accounts
portfolio basis in which were either
addition to NPAs sanctioned by them or
(Doubtful/Loss) of their operations
Rs. 1 cr. & above.) were handled by them
during their stay in
that particular branch.

Limit forA Resolution Agent The Resolution Agent A Resolution Officer shall be
number ofshall be initially shall be allocated allocated maximum 50
Accounts to beallocated 25 to 50 maximum 100 accounts and based on their
allocated toaccounts for accounts and based on performance, number of
the Resolutionresolution and it their performance they accounts may beincreased
Agents. may be subsequently shall be entitled to get by the Allocating Authority
allocated more more accounts for subject to the performance of
accounts based on resolution subject to the Resolution Agent.

:41
theirperformance. ceiling of 50 accounts at
However, in case of a time.
eligible Retail Loan

20
NPAs under
/20 402
portfolio basis, the
limit will be
restricted to 50
19
accounts per Circle
/03 41

with total ceiling of


8 Circles. Therefore
3

at a time, a
maximum of 400
NPA accounts will
be allocated under
Retail Loan Scheme
on portfolio basis to
12

a single SC/RC, in
addition to eligible
accounts with
balanceoutstanding
of Rs. 1 crore &
above
Period of Maximum period for resolution of allocated accounts shall be 12 months if
resolution of Resolution Agent fails, accounts will be taken back. However, same can be
accounts (common extended upto 24 months by Field General Manager on merits of the
for case, keeping in view the steps taken by the Agent forrecovery.
SCs/RCs/Other
Firms/PNB
Retired
Employees.
Commission Fixed Component.

NPA CHAPTER - ZTC DEHRADUN Page 113of 162


For SCs/RCs and Firms/Companies other than SCs/RCs may be paid
SCs/RCs/Other commission at the rate of 5% of the recoveries, as fixed component.
Firms/Companies However, there are no changes in the other expenses payable AS
MENTINED IN THE RD Cir no. 12/2012 e.g Insurance charges,
Security/Valuation charges after taking the possession by Bank/Official
Liquidator/DRT Receiver, legal expenses including fees to the advocates,
charges relating to auction, which shall be borne by the Bank.
Commission VariableComponent
For S.No Distress value Rec up to Recovery Recovery
SCs/RCs/Other of security 90% of above 90% above
Firms/Companies Principal up to principal
principal
1 Cases with No No 5% of the
distress Incentive Incentive recovery
value of tangible in excess of
security more principal
thanprincipal
amount.

:41
2 Cases with No 6% of recovery in excess of
distress Incentive 90% of the principal
value of tangible

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security between
50%
to 90% of
19
principal
/03 41

amount.
3 Cases with 7% of any recovery
distress
3

value of tangible
security less than
50%
of principal
amount
4 Cases without 10% of any recovery
12

tangible
security
Note.A consolidated commission of 10% of recovery shall be payable to the SCs/RCs for
resolution of Retail Loans under NPAs entrusted to them on portfolio basis.

Ceiling on payment of commission to ARCs and Other Firms

S.No. In case of recoveries through Maximum Amount of Commission


ARCs/Other Firms working as Payable/Ceiling
Resolution Agents
1. Up to Rs. 5 crore Rs. 25 lacs
2. Above Rs. 5 crore up to Rs. 10 crore Sub Rs. 35lacs
categories
(i) > Rs. 5 cr up to Rs. 6cr Rs. 27lacs
(ii) > Rs. 6 cr up to Rs. 7cr Rs. 29lacs
(iii) > Rs. 7 cr up to Rs. 8cr Rs. 31lacs

NPA CHAPTER - ZTC DEHRADUN Page 114of 162


(iv) > Rs. 8 cr up to Rs. 9cr Rs. 33lacs
(v) > Rs. 9 cr up to Rs. 10cr Rs. 35lacs
3. Above Rs. 10 crore Rs. 50 lacs

The above ceilings must be immediately brought to the notice of the SCs/RCs and Other
Firms/Companies who are already working as Resolution Agents of the Bank, by the Zonal
Offices by way of registered letters and mails and a proper record must be maintained to avoid
any complaints in the future. For the fresh Resolution Agents, revised agreement be gotsigned.

For PNB Retired Employees.

Commis
sion Outstanding If the Age of NPA is If Age of NPA is more than 3
up to 3 Years years.
Up to Rs. 1 Lac 8% 10%
Above Rs. 1 lac to 7% 9%
Rs. 50 Lac
Above Rs. 50 Lac to 1 6% 8%

:41
crore
Above Rs.1 core upto 5% 6%
Rs.5 crore (Max Rs.15 lacs) (Max Rs.15 lacs)

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 The above mentioned rates payable to all categories of Resolution Agents are all
inclusive of taxes whatsoever may beapplicable.
19
 For resolution /recovery of accounts expenses on conveyance/travelling, salary to staff
/03 41

employed by the Resolution Agent/fee paid to the Supporting Agency for taking
possession/ other out of pocket expenses shall be borne by the Resolution Agents.
However, Insurance charges, Security/Valuation charges after taking the possession
3

by Bank/Official Liquidator/DRT Receiver, legal expenses including fees to the


advocates, charges relating to auction shall be born by theBank.

 Commission is to be paid by the branches to the debit of Expenditure: Outsourcing of


Financial Services {P & L- GL Report Code 11427 as mentioned in Inspection &
Audit Division Circular no.51/08 dated 18.09.2008. Further as informed by IT Division
12

vide their letter ITD/CBS dated 11.05.2011 that commission payable to the Resolution
Agents, be debited to SGL Code 1142710-Payment to Resolution Agents, already
opened and replicated to allSols.

 Incumbent Incharge of the branch will be the competent authority to finalize the
bill/claim submitted by the Resolution Agents and its payment, based on their record
of recoveries and as per the Bank‟s extant guidelines. In case of any dispute, Circle
Head may take the final decision, considering facts of the case and for LCBs the
concerned FGM shall be the competent authority for settlement ofdisputes

Miscellaneous Terms & Conditions


Following terms and conditions are applicable to all the 3 categories of Resolution Agents.

 Borrowers/co-obligants shall be informed of the engagement of ResolutionAgent


at the time of assigning the job for resolution to the concernedSC/RC.

NPA CHAPTER - ZTC DEHRADUN Page 115of 162


 The Circle Office where the account is located shall provide to ResolutionAgentall
information including Dues of the borrower/claim lodged with the liquidator in case of
liquidation, complete address of borrowers/co-obligants and copies of plaints in case of
suit filed and the details of the charged securities, attachments if any, if desired by the
Resolution Agents. Further, Circle office shall coordinate the job of Resolution Agent
through a Nodal Officer not below the rank of ChiefManager.

 Ensure that the agents engaged in the recovery process carry outverification of the
antecedents of their employees, (police verification) Further, re-verification of antecedents
should be resorted to at an interval of 2years.

 In case Resolution Agents desire for Power of Attorney from Bank to act on behalf of the
Bank for the resolution of the account, they may be provided as per format- Annexure-
POA enclosed as perCircular.

 Keeping in view the provisions of the RTI Act, salient features of the Policy e.g criteria
for empanelment, experience, fees/commission etc. may be placed on the Bank‟s Website

:41
for the convenience of the ResolutionAgents.

 Resolution Agent shall ensure that while acting as Resolution Agent, they do notgive rise
to any pecuniary liability to bank otherwise they shall be held liable for theiraction.

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 Bank has right to withdraw any financial asset allocated to the ResolutionAgent
without assigning any reason subject to approval of Field GeneralManager.
19
/03 41

 Bank has right to terminate the empanelment of Resolution Agent at any time without
assigning any reason subject to approval of Field General Manager for SCs/RCs/Other
Firms/PNB Retired Employees based on the inputs/information provided by the Circle
3

Head. The financial assets allocated to them will also be withdrawn.

 The recovery effected by the Resolution Agent shall be deposited with the branch
concerned immediately and a statement of account of the recovery duly certified by the
Branch Incumbent for all 3 categories i.e SCs/RCs, Other Firms and PNB Retired
12

Employees, shall be submitted by the Agent on quarterly basis to thebranch.

 In case Borrower/co-obligants approaches the bank for OTS in theaccounts


allocated to SCs/RCs/Other Firms/PNB Retired Employees and the same is accepted by
the competent authority, Resolution Agent shall also be entitled for the commission on
actual amount of recovery.

 In case any dispute arises the matter cannot be taken to CivilCourt.

 The object clause of SC/RC/Company (under category of Other Firms) is to permit to act
as Resolution Agent for bank/banks.

 The branch should inform the borrower, details of the Resolution Agent whileforwarding
default cases to the Resolution Agents, for which they may use Annexure-10.of the
circular. Further, since in some of the cases, the borrower might not have received the
details about the Resolution Agents due to refusal/non-availability /avoidance andto
NPA CHAPTER - ZTC DEHRADUN Page 116of 162
ensure identification, it would be appropriate if the agent also carries a copy of the notice
and the authorization letter from the bank along with the identity card issued to him by the
bank and the agency firm/company. Further, where the Resolution Agent is changed
during the recovery process the borrower should be notified the change of Agent and new
Resolution Agent should carry the notice and the authorization letter along-with his
identitycard.

 Legal Action/Follow-up by the ResolutionAgents


Circle Offices shall advise and ensure that branches, having their accounts allocated to
Resolution Agents (ARCs/Other Firms/Retired PNB Employees), shall inform the
concerned lawyers/advocates, about their engagement and wherever required, seek their
services for expeditious resolution of NPAs. For this purpose, identity of the Resolution
Agents can be verified by the concerned lawyers/advocates through identity cards issued
to the Resolution Agents bythe Bank.
This will facilitate the Resolution Agents to keep track of developments. However, any
meeting of the Resolution Agents with the lawyers/advocates must be attended by the
concerned branch official. In case any account is withdrawn from the Agencies, the same
should also be promptly informed to the concerned lawyer.

:41
 Involvement of Resolution Agents during negotiations with borrowers
Branches/Circles should generally involve the Resolution Agents to participate during
settlement discussions with the borrowers. In fact, presence of Resolution Agents who are

20
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responsible for follow-up with the borrowers is beneficial for settlement through
negotiations and can result into higher settlement. This facilitates to integrate the efforts of
the Resolution Agents and Bank officials and avoids any communicationgap.
19
Circle Heads to ensure that:
/03 41

Police verification Reports of the antecedents of their employees, which may include pre-
employment police verification, as a matter of abundant caution areavailable in the
Circle Office records. Further, re-verification of antecedents should be resorted to at an
3

interval of 2years.
 It has been brought to the notice that branches, while providing the requisite
information pertaining to allotted NPA accounts to the Resolution Agents, also part with
the documents e.g the file, mortgage deeds etc., which may jeopardize the bank‟sinterest.
It must be ensured that parting of documents to Resolution Agents is not permitted under
anycircumstances.
12

* Resolution Agents must ensure that:


(i) There is a tape recording of the contents/text of the calls made by them to the
customers, and vice versa. It may take reasonable precaution such as intimating the
customer that the conversation is being recorded,etc.
(ii) They preserve documents and/or data in accordance with the legal/regulatory
obligation of thebank

Monitoring & Review of the Scheme


 The list of SCs/RCs/Other Firms/PNB Retired Employees as Resolution Agents, shall be
placed on the Bank‟swebsite.
 Circle Office shall monitor the progress in the matter of Resolution of NPAs through
Resolution Agents on quarterly basis, and FGM on half-yearly basisand by HO on
yearly basis and same shall be placed beforeED.
CHAPTER 11- POLICY ON ENGAGEMENT OF DETECTIVE AGENCIES
NPA CHAPTER - ZTC DEHRADUN Page 117of 162
(SASTRA DIV 11/2018 dated 22.03.2018)

Objective 1) Locate the borrower(s)/ co-borrower(s)/ guarantor(s)/mortgagor(s),


(in/outside India) including their legal heirs who are either
untraceable or not available at the addresses given in Bank‟s
records;
2) Ascertain latest information about their present address(es)/
occupation(s), business(es), income streams, details of their all
assets, whether charged or uncharged, their location(whetherin
India or abroad), value and ownership,etc.;
3) Give details of bank accounts maintained by the defaulting
borrower(s)/guarantor(s), including their legalheirs;
4) Give details of credit facilities availed/to be availed bydefaulting
borrower(s)/ guarantor(s) from otherBanks;
5) Confirm present state of ownership of the secured assets bypersonal
visit(s)/market report, duly confirmed by thedocuments.
6) Gather any other information which the Bank cannot access by

:41
utilizing normal channels like CIBIL/internet/local enquiries and
which may be considered necessary by the Bank for recovery ofthe
Bank‟sdues;
Accounts allocation NPA accounts under any category i.e. Sub-Standard, Doubtful and Loss

20
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category (whether non-suit filed, suit filed or decreed) in which engagement
of detective is deemed appropriate as per requirement.
Competent authority ZM will be the competent authority to engage any Detective Agency
19
for engagement In case in a particular account,branch requires services of Detective
/03 41

Agencies other than those empanelled by their ZO,the matter shall be


forwarded to their CO(ZO in case of LCBs)
As per RD Circular 11/2018 Circle Head will be the competent authority
3

to take final decision in the matter, for the branches other than LCBs and
for LCBs, Zonal Manager will continue to be the competent authority,
looking into the exigencies and merits of the case.
Competent authority Once an Agency has been engaged, Circle Head (ZM in case of LCBs) will
for assignment of be the competent authority to assign any task to the Detective Agencies,
12

task based on the recommendations received from the Branches. Assignment of


tasktomorethanoneDetectiveAgencyinrespectofsingleaccountcanbe
done by CH (ZM in case of LCB), depending upon the requirement and
exigencies.
Eligibility criteria Only agencies (Partnership Firms, Companies, Corporations etc.) with
for detectiveagency sufficient means/ resources/ field experience will be considered for
engagement. Since there are no regulatory and statutory guidelines for
Detective Agencies, preferably the Agencies must be member of
―Association of Private Detectives & Investigators‖ of India, also known
by the name APDI.
The Agency must have minimum 3 years of experience in this activity.
Different factors as indicated in RD 14/2017 also to be looked into.
Tenure A Detective Agency once engaged by a ZO will continue to be in its panel
foroneyear,whichmaybefurtherextendedonyearlybasis,subjectto
satisfactory performance.

NPA CHAPTER - ZTC DEHRADUN Page 118of 162


Time Frame for Maximum 60 days
submission ofreport In emergent circumstances 30 days may be extended by CH (ZM in case of
LCB) thus total 90 days can be allowed.
Fee payable to detective agencies

:41
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19
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3
12

NPA CHAPTER - ZTC DEHRADUN Page 119of 162


Nature of task assigned Fee payable
On receipt of information about whereabouts of the Rs. 7,500/- per person subject
missing/absconding borrower / guarantor / co-borrower / to maximum fee of Rs.
director etc. subject to production of documentary 30,000/- under this category,
proof/evidence. peraccount.
Forlocatingpropertiesotherthandetailsofwhichareavailable Rs. 20,000/- for eachproperty
in Bank‟s records, which may lead to attachment of the same located, subject to maximum fee
along-withthedocumentaryproof.(Allthepropertiesinone of Rs. 1.50 lacs under this
title deed to be considered as one property). category per account.
For providing any other information, which may be helpfulfor Rs. 2,500/- per piece of
recovery ofBank‟s dues e.g. information about other businesses, credit information, with maximum
facilities from other banks, accounts with other banks including amount of Rs. 10,000/- per
verification of present position of properties as per Bank‟s records, account
subject to production of documentary proof/evidence.
Payment of reasonableout of pocket expenses may also be sanctioned subject to maximum ofRs.
10,000/- per account. Circe Head will be the competent Authority to take a decision for payment of such
out of pocket expenses. The Detective Agency to give details of visits/proof of expenditure
In case the Detective Agency fails to trace the borrower/guarantor Maximum fee of Rs. 3,000/- per
etc. accountcan be paid.

:41
In case the Detective Agency fails to trace the property Maximum fee of Rs.7000/- per
account.
In exceptional circumstances, keeping in view complexities of the case, in case Detective Agencies
brings to the notice of the Circle Head/ZM(in case of LCBs) (as the case may be) beforehand, any

20
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special efforts/expenses required, the Circle Head/ZM (in case of LCBs) may consider sanction of
maximum of 25% extra fees/reimbursement of expenses.
All the above rates are inclusive of the taxes.
19
Expenditure Head for The fees will be paid by the branches to the debit of Expenditure:
/03 41

payment of fee Outsourcing of Financial Services-Supporting Agencies {P & L- GL


Report Code 11427 (Account No. <solid>1142703) as mentioned in
Inspection & Audit Division Circular no.51/08 dated 18.09.2008.
3

Please refer SASTRA Division Cir no 49/2018 dt. 26.11.2018 for All – India
Circle-Wise list of Approved:-
1. RecoveryAgencies
2. ResolutionAgents
12

3. Supporting Agencies
4. DetectiveAgencies
CHAPTER 12-

NPA CHAPTER - ZTC DEHRADUN Page 120of 162


IMPLEMENTATION OF GST – FEES PAID TO THE OUTSOURCING AGENCIES
(SASTRA DIV33/2017 dated 02.08.2017)

1) As per the guidelines contained in Finance Division circular NO. 16/2017 and 19/2017
Vendor Payments have been segregated into three categories:
(i) Vendors/Suppliers registered under GST and having GSTIN (GSTIdentification
Number)
(ii) Composite Vendors, registered under Composite Scheme with annual turnoverof
upto Rs. 75lacs.
(iii) UnregisteredVendors
2) In case of unregistered vendors, GST is to be paid by the Bank under Reverse Charge i.e
the receiver of the services is liable to pay tax instead of seller/provider of services.
Certain services mentioned in Annexure-III of Finance Division circular 16/2017, where
payments made even to a registered vendor are also covered under Reverse Charge. Out
of the various such type of services mentioned in Annexure-III, „Services
provided by Recovery Agents‟, are relevant for our division. Thus, in case of any
payments made to the Recovery Agents, onus of deduction of GST lies with theBank.
3) Recovery Division is the nodal division for framing policies of the following outsourcing

:41
agencies whose services are utilized for the recoverypurpose:
(a) RecoveryAgencies
(b) ResolutionAgents

20
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(c) SupportingAgencies
(d) DetectiveAgencies
Although in the said Finance Division Circular only “Recovery Agent Services” has been
19
mentioned, however since services of all the above mentioned agencies are utilized for
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recovery purpose in NPA accounts, it is considered as implied that the GST guidelines
will be applicable for the fees/commission paid to all the fouragencies.
4) As per guidelines in vogue for all the above mentioned agencies, the fees are all inclusive
3

of all types of taxes and are paid to debit of Expenditure-Outsourcing of financial services-
Code no. 11427.In fact, before introduction of the concept of GST, the payment of fees to
the agencies was made after deducting the Service Tax, as per Finance Division
guidelines. Thus, in the similar manner now the fees will be payable after deduction of
GST, as stipulated in the Finance Division Circulars. To facilitate the field staff for
payment of fees Branches may refer to the example of transaction in thecircular.
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NPA CHAPTER - ZTC DEHRADUN Page 110 of 162


CHAPTER 13- NPA RESOLUTION THROUGH MISSION GANDHIGIRI
(SASTRA DIV 27/2017dt. 31.05.2017)

Applicability The cardinal principle will be to “name & shame” the defaulting
borrowers without saying a word but through more visibility.The
concept will be implemented on Pan India basis, covering all districts,
depending upon location of the borrower‟s
office/shop/residence/factory/business activity location etc.
Nature of work The employees selected to implement Mission Gandhigiri will be
provided with bags and a Jeep/Car etc. by the Circle Office, carrying
banners with Bank‟s name & Logo (on maroon background with
yellow paint) in vogue . On banner following words are to be painted:
―PNB Recovery Team- Bank on wheels to recover bad
loans‖Employees in the recovery team, will wear sleeveless jackets in
maroon color with PNB Logo in yellow color and slogan ―PNB
Recovery Team‖ which will be supplied directly by the Corporate
Communication Division to the Circles.

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Each employee will be carrying placards with following slogans which
may be translated into vernacular language as per the requirement.
―Repay PNB loan to secure a peaceful sleep at night‖
―PNB Ka Karz Chukayen, Samaj Mein Izzat Payen‖

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The employees will sit/stand with placards silently in front of the
office/shop/factory/business location of the borrower. Duration and
periodicity of the silent dhrana will be decided by the Circle Head,
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depending upon the requirement and results achieved
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Large Corporate Branches (LCBs) do not come under purview of the


Circle Heads but they will place their request for utilization of services
of the team under Mission Gandhigiri to their Zonal Office for giving
3

necessary directions to Circle Heads.


Circle Heads to ensure to form Recovery Teams comprising of
minimum 4 employees in each team. For formation of teams, the
Circle Heads may also utilize services of their Agricultural
Officers, if required. The Team may be headed by anOfficer,
preferably, a Chief Manager.
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To have greater impact of peaceful Dharna and Gandhigiri, borrower


may be informed in advance about our intention to do so.
Selection criteria for Employees, irrespective of cadre, will be identified by the Circle Head,
employees satisfying preferably following criteria:
i) Employees who have more inclination for field job and arewilling
to be mobile
ii) Aptitude for recovery in NPAaccounts
iii) Knowledge of the local area/locallanguage
Payment of TA DA Selected employees would be paid as per their entitlement of
conveyance allowance, TA/DA (if services are utilized outside the
jurisdictional area of their parent branch). These employees will
continue to be on the rolls of their parent branch but their reporting will
be based on the instructions received from their Circle Offices.
Selection criteria for Circle Head may decide the account but it is desirable that those
NPA Accounts accountsareselectedwhereotherrecoverymethodse.gSARFAESI

NPA CHAPTER - ZTC DEHRADUN Page 111of 162


notices, personal contacts, OTS attempts, sale of secured assets etc.
have failed to produce desired results. So to start the process,
preference be given to the Doubtful accounts having sufficient
securities and/or where business activity is still
continuing.Balanceoutstanding in the account is also a key parameter
to be kept inconsideration

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NPA CHAPTER - ZTC DEHRADUN Page 112of 162


CHAPTER 14-
POLICY FOR CLASSIFICATION AS WILFUL DEFAULTERS IN NPA A/Cs
(RD Cir. No. 22/2015 dated 01/09/2015).

Guidelines on Wilful Defaulters and action their against


Definition A "wilful default" would be deemed to have occurred if any of the following
events is noted :-
(a) Capacity to pay -The unit has defaulted in meeting its payment /repayment
obligations to the lender even when it has the capacity to honour thesaid
obligations.
(b) Diversion of Funds -The unit has defaulted in meeting its payment /
repayment obligations to the lender and has not utilised the finance fromthe
lender for the specific purposes for which finance was availed of buthas
diverted the funds for other purposes.
( c) Siphoning of funds- The unit has defaulted in meeting its payment /
repayment obligations to the lender and has siphoned off the funds so that
the funds have not been utilised for the specific purpose for which finance

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was availed of, nor are the funds available with the unit in the form of other
assets.
(d) Unauthorized Disposal of Charged Assets - The unit has defaulted in
meeting its payment / repayment obligations to the lender and has also

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disposed off or removed the movable fixed assets or immovable property
given by him or it for the purpose of securing a term loan without the
knowledge of the bank/lender.
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Willful Detailed workflow chart for declaring a borrower as willful defaulter may be
defaulters – followed (SASTRA DIV Cir No 22/2015 dated 01.09.2015)
workflowchart
3

Diversion and „Diversion of funds‟ would be construed to include any one of the undernoted
siphoning of occurrences:
funds (a) Utilisation of short-term working capital funds for long-term purposes
not in conformity with the terms ofsanction;
(b) Deploying borrowed funds for purposes / activities or creation of assets
other than those for which the loan wassanctioned;
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© Transferring funds to the subsidiaries / Group companies orother


corporates by whatevermodalities;
(d) Routing of funds through any bank other than the lender bank ormembers
of consortium without prior permission of thelender;
(e) Investment in other companies by way of acquiring equities /debt
instruments without approval oflenders;
(f) Shortfall in deployment of funds vis-à-vis the amounts disbursed / drawn
and the difference not being accountedfor.

Siphoning of Siphoning of funds, should be construed to occur if any funds borrowed


Funds from Banks / FIs are utilised for purposes un-related to the operations of
the borrower, to the detriment of the financial health of the entity or of the
lender. The decision as to whether a particular instance amounts to
siphoning of funds would have to be a judgment of the lenders based on
objective facts and circumstances of the case.

NPA CHAPTER - ZTC DEHRADUN Page 113of 162


Cut-off limits Guidelines relating to „Willful Defaulters‟ would be applicable to all non-
performing borrowal accounts with outstanding (funded facilities and such non-
funded facilities which are converted into funded facilities) aggregating Rs.25
lakhs and above, where „willful default‟ is identified by the Bank.
The accounts where outstanding comes below the cut off limit of Rs.25 lac
and in cases where Bank has agreed for compromise settlement and the
borrower has fully paid the compromise amount need not be included in the
„Wilful Defaulters‟ lists.
In identified/reported cases of willful defaulters where outstanding amount
has come down below Rs. 25 lac on account of write off and not due to
settlement/recovery from the borrower, the branches should still report the
name of the borrower in the list of wilful defaulters as per the extant system.
Identification a)Bank is advancing loans/making finance to different entities such as
of person Individuals, HUF, Firms and Legal entities such as Corporate Bodies,
Companies, Societies, and Trusts etc. Keeping in view, the constitution of
borrowers and the persons responsible for looking after the affairs of the
enterprise/ business of the borrower, need is to identify as to whether there is any

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involvement of the person proposed to be a willful defaulter in the events of
Willful Default.
Such persons may be:
(i) Borrowers

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(ii) Entrepreneurs
(iii) Karta ofHUF
(iv) Promoters of Company
19
(v) Directors of Company, (when the account becameNPA).
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(vi) PresentDirectors
(vii) NomineeDirectors
(viii) IndependentDirectors
3

(ix) Partners/ Sole Proprietor/ Trustees etc. in individualcapacity.


(The role of Directors/Promoters of the Company who leave or resign the
Company without the permission of the Bank in contravention to the covenants/
terms of sanction of Loan, be looked into while identifying willful defaulters)
(The above list is only indicative and not exhaustive)
b) While dealing with „willful default‟ of a single borrowing company in a
12

Group, the Bank should consider the track record of the individual company,
with reference to its repayment performance to itslenders.
c) Individual Guarantors - In case of individual Guarantors, the events of
willful default on their part need to be identified on account of which the
Guarantor is to be reckoned as willful defaulters. It be identified asto:-
(i) Whether the guarantors having capacity/means to repay the dues of the
bank but not paying dues of the Bank despite recall of the Loan anddemand
for payment has been made upon theguarantors.
(ii) Whether the guarantors have been transferring their assets so thatBank
may not be able to recover itsdues?
(iii) Whether guarantors are beneficiary of „siphoning / diversion of funds‟, or
are party to the fraudulenttransactions?

Process for a) Preliminary Notice to Rectify Default


declaring Immediately on classification of an account as NPA and subsequent

NPA CHAPTER - ZTC DEHRADUN Page 114of 162


willful identification of the specific events/ transactions perceived to have constituted as
defaulter “Willful Default”, as a measure of natural justice, Branches are advised to call
upon the borrower including the persons as identified above as per draft letter
Annexure-I by registered post with AD as well as E-mail, if available, giving
them 10 days‟time to rectify the default, indicating that the Bank intendsto
classify them as willfuldefaulter
Notice be sent to all identified persons, specifying the events of default on their
part and it should not be just an endorsement for information. For eg: They have
the capacity to pay, but not paying, Directors etc. responsible for carrying of
affairs/ business of the Borrower Company for which event of Willful default has
happened.
b) Reply to the Preliminary Notice
After service of above notice replies received, if any, be examined and
responded by the Branch, maximum within 7 days time and a final view to
identify the borrower as a Willful Defaulter be taken after factoring in the
attendant circumstances leading to default in theaccount.
c) Proposal to Recovery Division,HO
If default is not rectified, immediately on expiry of the Notice period, the Branch

:41
to submit the prescribed proposal (as per Annexure-II) within 5-6 days to Circle
Office along with recommendations supported by requisite evidence/ documents.
Such proposals after due examination by Circle Head through FGMO be
forwarded to HO along with recommendation for placing it before Committee on

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Willful Defaulters headed by ED. The correspondence exchanged will form an
integral part of the Annexure II.
Penal  In order to prevent the access to the capital markets by the willful
19
Measures defaulters, a copy of the list of willful defaulters (non-suit filed
/03 41

accounts) and list of willful defaulters (suit filed accounts) are


forwarded to SEBI by RBI and Credit Information Bureau (India)
Ltd. (CIBIL)respectively.
3

 NoadditionalfacilitiesshouldbegrantedbyanyBranchtothelisted
„willfuldefaulters‟.
 These are debarred from Institutional finance from SCBs/FIs/ NBFCs
for floating new ventures for a period of 5years.
 Branch may initiate criminal proceedings against such
borrower/guarantor.
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 RBI will publicize the names of such persons/units. The consent


should beobtained.
 As per our Standardized Loan Agreement, a borrowing company would not
induct a person as a promoter or director on the Board of a company which
has been identified as a willful defaulter and that in case, such a person is
found to be on the Board of the borrower company, expeditious andeffective
steps for removal of the said willful defaulters from its Board be taken.
Reporting to  Branches to compile the list of willful defaulter of Rs.25 lac and above
RBI / Credit as at end of March, June, September and December every year and
Information submit the information to their Circle office within 7 days from the
Companies close of thequarter.
 Circle Office, after consolidating the information shall submit the
consolidated information within 12 days from the close of the quarter
to Recovery Division, HO for onward submission to RBI (in case of
NonsuitFiledCases),CIBILandotherthreecompaniesnamelyM/s

NPA CHAPTER - ZTC DEHRADUN Page 115of 162


Experian Credit Information Company of India Pvt. Ltd., M/s Equifax
Credit Information (P) Ltd. & M/s High Mark Credit Information
Service (P) Ltd.( in case of Suit Filed Cases) of which the our bank is
member.
Procedure for  With a view to imparting more objectivity in identifying cases of willful
Identification default, decisions to classify the borrower as willful defaulter has been
of Willful entrusted to a Committee on Willful Defaulters (headed by Executive
Defaulters Director) consistingof:
(i) Executive Director (Incharge ofRecovery)
(ii) General Manager, Recovery Division,HO
(iii) General Manager, Credit Division,HO
(iv) Dy. General Manager, Recovery Division, HO(Convenor)
Recovery Division, Head Office will place the matter before Committee on
Willful Defaulters and communicate decision of the Committee on Willful
Defaulters to the Circle/ Branch. The decision taken on classification of willful
defaulters should be well documented, supported by requisite evidence and
should clearly spell out the reasons for which the borrower has been declared as
wilful defaulter vis-à-vis RBI guidelines

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 The borrower should thereafter be suitably advised about the proposal
to classify him as willful defaulter along with the reasons thereof. The
borrower concerned should be provided reasonable time (say 15 days)
for making representation against such decision, if he so desires, to a

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Grievance Redressal Committee headed by the Chairman and
Managing Director and consisting of two other seniorofficials.
 On receipt of any representation within the stipulated period of 15
19
days, the same may be sent to HO for consideration of the Grievance
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Redressal Committee. The cases where no such representation is


received may also be informed to Recovery Division, HO so as to
enable the authorities at HO level to take a view on final declaration
3

of the said borrower as willfuldefaulter.


 Grievance Redressal Committee should also give a hearing to the
borrower if he represents that he has been wrongly classified as
willfuldefaulter.
 Afinaldeclarationas„willfuldefaulter‟shouldbemadeafteraview is taken
by the Committee on the representation and the borrower should be
12

suitablyadvised.
 The branch concerned is advised to inform the borrower of bank‟s
intention to identify him as willful defaulter on a draft letter under
Registered AD and provide him 30 days time to rectify thedefault.
 A final declaration of the borrower as willful defaulter would be made
after a view is taken by the Grievance Redressal Committee on the
representation and the borrower would be suitably advised inthe
matter.
Review  As per RBI guidelines Review Committee headed by the ManagingDirector
Committee & CEO should also give hearing to the borrower if he represents that he has
wrongly been declared as Willful defaulter. Accordingly, Bank has
constituted Review Committee, consisting of:
(i) Managing Director &CEO
(ii) Two Independent Directors of the Bank
(i) GM (RecoveryDiv.)

NPA CHAPTER - ZTC DEHRADUN Page 116of 162


 OnreceiptofanyrepresentationbytheBranchwithinthestipulatedperiod
of 15 days, the same be sent through Circle Head and FGMO to HO for
consideration
 Review Committee shall give a hearing to the borrower if he
represents that he has been wrongly classified as willful defaulter.The
Notice to the borrower/person who has made the representation be given as
Per Annexure-IV for personal hearing by the Grievance Redressal
Committee of the Bank.
Miscellaneous  Theidentificationofthe„willfuldefault‟shouldbemadekeepingin
view the track record of the borrowers and should not be decided on
the basis of isolated transactions/incidents. The default to be
categorizedas„willful‟mustbeintentional,deliberateandcalculated.
 In cases where a letter of comfort and / or the guarantees furnished by
the companies within the Group on behalf of the willfully defaulting
units are not honoured when invoked by the Bank, such Group
companies should also be reckoned as willfuldefaulters.

Publication of photographs of the willful defaulters:( SASTRA DIV CIRCULAR NO. 17/2018

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dt. 11.05.18)

The policy on Publication of photographs of the willful defaulters was earlier placed to the Board
in its meeting held on 05.11.2015 and was approved vide Resolution No. 6. While approving, the

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Board advised that photographs of wilful defaulters with outstanding of Rs.25 lacs & above be
only published.
19
Law Division vide their letter dated 20.03.2018 has interalia opined, as under:
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“In view of the guidelines issued by RBI, Bank can publish photographs of Wilful Defaulters in
all states after formulating a policy to that end with the approval of the Board of Directors in
3

compliance with the aforesaid guidelines issued by RBI.”

 Branches/Offices may consider publishing the photographs of Wilful Defaulters only,


with outstanding of Rs.25 lacs and above in the Newspapers, in all the States/Union
Territories (UTs) where the branch (having the concerned loan account) is located. For
publication of photographs in the newspapers, the administrative sanction will be given
12

by the Circle Head and in case of LCBs by theZM.


 Circle Head may also permit to publish the photographs of Wilful Defaulters in the
Possession/Sale Notice, instead of publishing separately, depending upon the
requirement and on case to casebasis.
 Branches/Offices must ensure that they have exhausted all conciliatory methods to
recover the dues and they must maintain record/documentary proofs of such methods
adopted to avoid any complaint in thefuture.
 As a precautionary measure, branches may send a Notice through Registered Post to
the Wilful Defaulters (borrower/guarantor) in the local language, intimating that in
case of non-repayment of the pending amount in the loan account, within a month‟s
time from the date of Notice, their names and photographs will be published in the
newspapers.

 In case of partial recoveries/token amount deposited subsequent to such Notice


issued, decision may be taken by the Incumbent Incharge of the branch (including
LCBs)keepinginconsideration,financialconditionoftheborrowerandotheraspects
NPA CHAPTER - ZTC DEHRADUN Page 117of 162
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NPA CHAPTER - ZTC DEHRADUN Page 118of 162


which justify the delay in publication of such Notices. In such cases a time bound
repayment schedule be taken in writing, failing which, branches may proceed for
publication of Notices with photographs in the newspapers. In extreme emergent
circumstances only, further extensions may be permitted, that too, with prior
permission from the Circle Head and in case of LCBs, from the ZM.
 To facilitate the field staff, drafts of the notices, to be sent to the wilful defaulters
(borrower/guarantor) and advertisement to be published in the newspapers, are
given as Annexures A, B, C & D, which may be suitably amended as per
requirement.
 As advised by the Ministry of Finance (Department of Financial services) vide their
letter no. F.No.1(1)/2011-CP dated 13.12.13, it must be ensured that names &
photographs of the defaulting students in the educational loans are not to be published
(Recovery Division Circular no. 4/2014 dated14.02.2014).
 All the field functionaries are advised that publication of photographs of willful
defaulters shall not apply to non-whole time directors who are exempted from being
considered as wilful defaulters unless the following special conditions aresatisfied:
1. he was aware of the fact of wilful default by the borrower by virtue of any
proceedings recorded in the Minutes of the Board or a Committee of the Board and

:41
has not recorded his objection to the same in the Minutes,or,
2. The willful default had taken place with his consent orconnivance.

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NPA CHAPTER - ZTC DEHRADUN Page 119of 162


CHAPTER 15- POLICY OF THE BANK ON RECOVERY & MANAGEMENT OF
NPAs SASTRA DIV CIR NO. 56/2018

Coverage Compromise settlement refers to a negotiated settlement under


which Bank endeavors to recover maximum amount in a
minimum time with minimum expenses. Settlement invariably
involves certain sacrifice by the Bank (by way of write off and/or
waiver) of a portion of its dues.
Objective In respect of funds so blocked up in NPAs, Bank has to
1) Maintain capital at the prescribed level to comply with capital
adequacynorms
2) ContinueincurringcosttoservicethefundsblockedinNPAsand
3) Bear the cost for loss of opportunity to lend these funds at
favourable rates.
4 Make provisions for such loan losses in terms of IRAC norms.
All these have adverse impact on Bank‟s Profit & Loss Account.
Factors to be taken into 1) Genuineness of the case and difficulties of the borrower(s) and

:41
account his/her/their readiness to enter into compromise for repayment of the
dues;
2) Age and status of the advance outstanding in the account. Death of

20
the borrower(s)/partner(s)/guarantor(s) during the course of the
/20 402
account(s) with the Bank; materially affecting the affairs of the
borrower(s);
3) Availability of primary and/or collateral securities other attachable
19
security and realizable value of thesecurity
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4) Advisability of compromise negotiated settlements without


recourse to legal actions. Assessment of chances and extent of
recovery through courtproceedings.
3

Norms for permitting Recover maximum possible dues through compromise route. Ensure
sacrifice/waiver that compromise decisions are taken judiciously and in the best
interest of the Bank in a professional and transparent manner.
Approach for considering waiver sacrifice/loss on compromise can be
in the following order based on merits and attendant circumstance of
each individual case:
12

1) Waiver of penalinterest
2) Waiver of the effect of compounding the interest by applying
simpleinterest
3)Waiver of whole or part of simpleinterest
4) Waiver of part ofprincipaldues outstanding in bank‟s books
keeping in view the facts and circumstances of thecase
Eligibility criteria All Borrowal/Loan accounts identified as NPA in terms of extant
RBI guidelines outstanding as at the end of last quarter shall be
eligible for considering under these Policy guidelines for
compromise/negotiated settlement/one time settlement and/or
writeoff..
Calculation of Recoverable Outstanding amount as on date of transfer to Protested
dues Account/Health Code 5/NPA should be treated as the Principal
Amountandunapplied/RecordedInterestontheaforesaidamountbe
calculated on PLR (at that time Base Rate Mechanism was not in
operations) operating as on the date of working out the compromise

NPA CHAPTER - ZTC DEHRADUN Page 120of 162


settlement and applied on simple basis.
Relevant/Material date Date on which account was transferred to Protested Advances
Category or the date of NPA, whichever is earlier shall be the
Relevant/Material Date for calculation of Recoverable Dues.
Treatment of Unrealised Unrealized interest as outstanding on relevant/material date is not to
interest /DI be taken to income and identified as “Suspended/Derecognized
Interest” which is to be credited back to the Borrowal Account as on
Relevant/Material Date.
Recoverable dues 1) Recoverable Dues shall be calculated w.e.f. the date of NPA onthe
Book outstanding as existing on the date of NPA (inclusive of SI/DI
reversed subsequently) duly adjusted for recoveries/further debits in
the account, ignoring the interest, if any credited/debited in the
account after the date of NPA, on simple basis on daily reducing
balance @ Base Rate or Contractual Rate of interest, whichever is
lower as prevailing on the date of consideration of proposal. The
interest/charges, if any debited to the account after classification of
account as NPA be netted off from the recoverable interest to give
effect to the correct calculation of simple interest.
2)NPAs under Direct Agriculture Advances with balance outstanding

:41
up to Rs. 10 lacs (including KCC but excluding Tractor Loans)
recoverable dues shall be calculated with interest @6% simple from
the date of classification of the account asNPA.
3)Recoverable dues being only a Notional concept and purely an

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internal exercise, the calculations shall be kept strictly
confidentialandundernocircumstancesshallbemadeknownto
the borrower.
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Valuation of Securities 1) Proper distinction has to be made between Market Value and
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Distress Sale Value (Realizable Value) of the securities while


considering/recommending OTS proposals. Valuation Report
should indicate Distress Sale Value (Realizable Value) in addition
3

to the Market Value, in terms of the guidelines circulated by


IRMD in respect of Valuation ofProperties.
2) There should be uniformity in reporting the “Value of securities”,
while preparing/submitting Status Notes/Review Notes and/or while
fixing the Reserve Price under SARFAESI and/or at the time of
considering the OTS/Compromise etc.proposal.
12

Validity and periodicity of 1) Accounts involving book outstanding of upto Rs. 2 crore, the
valuation report valuation report should be as recent as possible but not more
than 1 yearold.
2) where book outstanding and/or Value of Securities is more than
Rs. 2 crore, valuation of property(ies) and other details should
not be more than 6 monthsold
3) wherever properties are valued at Rs. 5 crore or above, minimum
two independent latest Valuation Reports from Bank‟s Board
approved valuers shall beobtained.
Above mentioned periodicity for valuation reports is meant only in
case of OTS/Compromise/Write off cases and in other NPA
accounts, the valuation will continue to be done as per the
Valuation Policy framed by HO: IRMD from time to time
through L & A Circulars.
Variation in valuation report While considering an OTS/Compromise etc. proposal:
(i) In case the difference in valuation is less than 15%, the average

NPA CHAPTER - ZTC DEHRADUN Page 120 of 162


value may be taken
(ii)In case the difference in valuations is more than 15%, fresh
valuation may be got done from independent third valuer approved
by the Bank‟s Board) and average of those two valuation reports be
taken, in which the variation is less than 15%.

Discharge of liability of one or Discharge of liability of one or more obligants/release of charge on


more obligants/Release of the secured assets which may include Mortgaged Property/Plant &
Charge on mortgaged property
machinery etc. may be considered by the competent authority not
/Plant & Machinery
As per Sastra Div cir no below the level of ZOCAC, but that competent authority will be one
56/2018 step higher than the sanctioning authority of the last sanctioned
limits in the concerned account.However, it must be ensured that at
the time of release of secured assets in the shape of Mortgaged
Land & Building, minimum amount of money to be received
against release of secured assets will be higher of the following
three: (iv) Market value of secured assets to be released at the time

:41
of last sanction of the limits. (v)Market value of the secured assets
to be released at the time of making request for release of secured
assets. (vi) Market value of the secured assets to be released as per

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the last valuation.
In case of plant and machinery, minimum amount of money to be
received against release of secured assets will be higher of the
19
following two: (i) Depreciated value of plant and machinery as
/03 41

given in the latest audited Balance sheet of the borrowing


firm/company. For pvt ltd/ public limited companies, the last
3

audited balance sheet will be the one filed with ROC/ Income Tax
Department. (ii) Market Value as per valuation report obtained from
Bank‟s Board approved valuer.The periodicity of valuation report
in this case should be as per guidelines given below: 
Accounts involving book outstanding of upto Rs. 2
12

crore, the valuation report should be as recent as


possible but not more than 1 year old. 
Accounts where book outstanding and/or Value of Securities is
more than Rs. 2 crore, valuation of property(ies) and other details
should not be more than 6 months old.
Further, wherever plant and machinery is valued at Rs. 5
crore or above, minimum two independent latest
Valuation Reports from Bank‟s Board approved valuers
shall be obtained.

NPA CHAPTER - ZTC DEHRADUN Page 121of 162


Vetting of valuation report Upto Rs. 50 lacs
Valuation to be verified/vetted by an official of the bank
independently not below the rank of Scale II
More than 50 lac and upto Rs.5 crores
Valuation to be verified/vetted by 2 officials of the Bank
independently, one of the officials should not be below the rank of
Chief Manager.
More than Rs.5 crores
i) Valuation to be verified/vetted by 2 officials of the Bank
independently, one of the officials must not be below the rank of
ChiefManager.
ii) additional vetting shall be done by two Circle Office officials
independently, one of whom should not be less than the rank of Chief
Manager.
Net Present realizable value As per RBI As the payment of the compromise amount may be in
instalments, the net present value of the settlement amount should be
calculated and this amount should generally not be less than the net
present realizable value of securities.
Net present value ofthe 1) Paymentwithin3monthswithoutinterestisconsideredimmediate

:41
OTS Amount payment and as such would not require calculation of net present
value of OTS amount.
2) Where OTS amount is to be paid along-with the interest @Base
Rate, from the date of conveying OTS - OTSAmount

20
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3) Where the OTS amount is to be recovered without interest or at a
rate lower than the Base Rate-
Net Present Value (NPV) shall be calculated by deducting the
19
difference in the interest component, calculated as per Base Rate and
/03 41

as per the rate of interest as per the OTS sanction, from the approved
OTS amount i.e NPV= Approved OTS amount Less {Intt. @Base
Rate (-) Intt. @OTS sanctioned Rate}
3

Net Present realizable value Present Market Value of the charged securities net of cost of
of security realisation discounted appropriately for the attendant factors affecting
its realisability shall be called Net Present Realisable Value of
Securities.
Market value of the charge securities (Excl- Plant & Machinary)net
of cost of realization shall be discounted asunder:
12

a) General Discount (Sale through Bank attracts tax 10%


burden/sharing of increase in value of IP with lessor etc. and
results in diminutive realizable value)
b) Specific Discount i) IPs having old/multiple 20%
tenancy/multiple suits and / or dispute about validity /
enforceability of the mortgage/charge
ii) More than 1 year old stay against SARFAESI Action 10%
and/or SARFAESI action initiated and IPs put on auction
but auction failed as no bidder came forward.iii)
Attachment of IP by Sale Tax / Income Tax / Other Revenue 10%
Authority (If there is no priority charge)

NPA CHAPTER - ZTC DEHRADUN Page 122of 162


iv) IP not demarcated/Undivided Sharemortgaged/no 10%
independent Access
v) Mortgagor isdead 10%
The maximum discount having more than one attendant
factors attached to IP shall be restricted to 40% only.
For Plant and Machinary
only Realizable Value (as mentioned in the Book on instructions on
loans) should be taken into consideration after taking cognizance of
brand name/make of Plant & Machinery/Year of installation/Original
cost/Depreciation/Current physical conditions/technical changes and
obsolescence/present industry scenario and future viability etc.
Where 2 or more Bids under SARFAESI have failed, the last Reserve
Price or NPRV as above, whichever is lower, shall be accepted as
NPRV.
Direct Agriculture Advances
Direct Agriculture Advances with balance outstanding upto Rs. 10
lac, the realizable value of primary/collateral security will exclude the
agricultural land offered as security. However, security available
other than agricultural land shall be taken into considerationfor

:41
arriving at the NPRV as hitherto fore.
Minimum Indicative OTS Minimum indicative OTS amount will Minimum Indicative
Amount be arrived at as under: Situation OTS Amount
1. Where NPRV > Recoverable Dues Recoverable Dues.

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2. Where NPRV < Recoverable Dues NPRV of the securities
but more than Book Outstanding
3. Where NPRV < less than Book NPRV of the securities
19
Outstanding
/03 41

4. Where NPRV is Zero Whatever maximum can


be recovered
The basis for negotiation shall always be Memoranda Dues and
3

should aim at recovering maximum share of the same.


Minimum Indicative OTS Amount in case of Direct Agricultural
Advances having balance outstanding up to Rs. 10 lacs, will be as
under where NPRV Calculated (As above) is less than Book
Outstanding
Sub-Std NPAs: Minimum 50% of Book O/s
12

Doubtful NPAs: Minimum 40% of Book O/s


Where NPRV is ZERO – Above guidelines will be applicable

OTS/Write Off in willful Bank‟s commercial decision to accept OTS offer/recovery ofentire
default / Borrowal frauds/ outstanding amount shall have no bearing whatsoever on the
Criminal action cases ongoing criminal cases/investigation being carried out by the
CBI/Police and the same shall proceed as perlaw.

Compromise agreement is reached with such borrowers or consent


decree is obtained from the Court/DRT, the same would contain a
specific clause that the settlement is subject to continuation of criminal
proceedings against the borrowers/ obligants, which cannot be
withdrawn by the Bank as such cases are on behalf of the ―State‟ and not
on behalf of―Bank‟.

NPA CHAPTER - ZTC DEHRADUN Page 123of 162


The Powers to consider OTS in Default/Frauds (RBI
Reported)/Criminal action cases have been revised as shown
below.
The criminal cases filed under Section 138 of Negotiable Instrument
Act shall not be governed by these guidelines and OTS proposals in
such cases shall be dealt in normal course as per vested powers.
( Revised vide Policy Circular 56/2018)
Limits Where OTS offer is Authority
Up to Rs. 75lacs Higher than NPRV/Book COCAC
O/s (whichever is higher)
is lesser than ZOCAC
NPRV/Book outstanding
More than Rs. 75 lacs up Higher thanNPRV/Book ZOCAC
to Rs. 115 lacs O/s (whichever ishigher)
is lesser than HOCAC-I
NPRV/Book outstanding
More than Rs. 115 lacs Higher thanNPRV/Book HOCAC-I
up to Rs. 150 lacs O/s (whichever ishigher)

:41
is lesser than HOCAC-II
NPRV/Book outstanding
More than 150 lacs upto Higher thanNPRV/Book HOCAC-II
Rs.300 lacs O/s (whichever ishigher)

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is lesser than HOCAC-III
NPRV/Bookoutstanding
More than Rs.300 lacs Higher thanNPRV/Book HOCAC-III
19
upto Rs 500 lacs O/s (whichever ishigher)
/03 41

is lesser than MC/Board


NPRV/Book outstanding
More than Rs.500 lacs Higher thanNPRV/Book MC/Board
3

O/s (whichever ishigher)


is lesser than MC/Board
NPRV/Book outstanding
Power to consider Write Off
Write off is purely an internal exercise and obligants are in no way
12

released from their liability towards bank. Therefore, write off of wilful
defaulters/fraud cases/cases where bank or other outside agencies like
police/CBI have initiated investigations/criminal action and such
investigations/criminal actions are yet to be concluded may be
considered at the level given above in thetable.

OTS / Write Off in StaffOTS/ Write off proposals in accounts where an existing or ex-staff is
accounts a borrower/guarantor shall be considered by an authority not below
the level of COCAC subject to delegated powers. This clause will not be
applicable in case credit facilities were sanctioned, where staff has
become a borrower/guarantor/co-obligant,
afterretirement/resignation from the services of the Bank.
OTS Backed by Accounts backed by Govt. Guarantees shall not be eligible to be
Government Guarantee considered for Negotiated Settlement / Write off.
OTS THROUGH DEBT- If the bank deems it fit to go in for the offer looking to utility of the
ASSET SWAP concerned property for bank‟s use or otherwise, then a combined

NPA CHAPTER - ZTC DEHRADUN Page 124of 162


&ACQUISITION proposal can be considered for settlement of account through OTS or
THROUGH SELF- otherwise on one hand and for purchase of such property at market
BIDDING competitive rates on the other hand.
OTS THROUGH LOK The institution of Lok Adalat constituted under Legal Services
ADALAT Authorities Act 1987 helps in resolving the disputes between the parties
by conciliation, mediation, compromise or by amicable settlement. Every
award of the Lok Adalat shall be deemed to be a decree of a Civil Court
and no appeal shall lie to any Court against the award made by the Lok
Adalat. Field functionaries are to make best possible use of forum ofLok
Adalat for amicable and quick resolution of NPAs.
Down Payment / Upfront Efforts should be made to get upfront payment to show borrowers‟
Payment seriousness in settlement of OTS proposal as under:
Details ofOTSOffer Upfront Amount
OTS Offer up to Rs.10lacs Upfront 20%
OTS offer more than Rs. 10 lacs up to Rs. Upfront 15%
50 lacs
OTS offer more than Rs.50lacs Upfront 10%
Where Upfront amount is difficult to be insisted upon Minimum amount
as given below to be deposited should be insisted upon:

:41
OTS Offer Upfront Upfront Amount
Amount difficult to provide
prescribed upfront

20
Amount
/20 402
Upto Rs. 10 lacs 20% NIL
Rs. 10 lacs to Rs. 50 15% Rs. 0.50 lacs
lacs
19
Rs. 50 lacs to Rs. 100 10% Rs. 1.00 lacs
/03 41

lacs
Rs. 100 lacs to 500 10% Rs. 5.00 lacs
lacs
3

Rs. 500 lacs & Above 10% Rs.10.00 lacs


Payment terms of OTS 1) „OneTimeSettlement,‟obviouslyacceptanceofnegotiatedamountas
Amount one time down payment
2) Where the OTS amount is to be paid beyond a period of 3 months
from the date of conveying approval, and/ or payment in installments,
future interest on the settlement amount to be charged at least @ 6-10%
12

on simple basis on reducing balance from the date of conveying approval


in writing to the borrower by thebranch.
3) where OTS amount is payable/or is paid within three months from the
date of settlement borrowers be allowed to pay OTS amount without any
interest.
4) ZMCAC(previouslyCOCAClevelII)andaboveinexceptional
circumstances may consider sanction of OTS at lower rate/without
interest
Extension of time period for Without further Sacrifice:
OTS Amount Extension of time period beyond the originally stipulated due date
of payment for OTS amount in already approved OTS cases
without any further sacrifice can be granted by respective
sanctioning authorities maximum up to:
COCAC ZOCAC HOCAC HOCAC HOCAC
Level -I Level-I Level-II Level-III
12 Months 15 Months 24 Months Full Full

NPA CHAPTER - ZTC DEHRADUN Page 125of 162


powers* Powers
*HOCAC-II will have full powers in the cases falling up to HOCAC-II
level only.
With further sacrifice
Extension of Time Period with further sacrifices i.e. without/partial
payment of interest shall be placed to the next higher authority other than
who had originally approved the OTS, who shall exercise the above
powers subject to his delegated authority provided total sacrifice
(sacrificeatthetimeofapprovalplusfurtherproposedsacrificeof
interest loss) remains in his powers
Write off of NPA Accounts While considering write off, it shall be ensured that:
i). avenuesavailablefortherecoveryofBank‟sdueshavebeenexplored, and
ii). accounts involving ledger outstanding of Rs. 20 lac and above,where
write off is considered should be backed by the report of Detective
Agency/ Investigating agency w.r.t. the traceability of the obligants/
ascertaining the attachable assets of the borrowers/guarantors.
iii). the staff accountability has beenfinalized.
Write off may be considered in respect of the
i). Borrowal accounts which were classified as Loss Assets on or before

:41
the preceding financial year/ half-year and 100% provision there against
has beenmade.
ii). Borrowal accounts, in Doubtful Category, where no security is
available but the same have been classified as Doubtful Assets merely

20
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because DICGC/ ECGC claim isavailable.
1) The accounts where write off is approved by the competentauthority,
notional balance of Rs.100/- shall be left in the account to pursue likely
19
recovery over a period oftime.
/03 41

2) Final view to write off the residual amount of Rs.100/- may be taken at
the level of the authority competent to sanction the write off as per
present policy for original written off amount, after three years of such
3

write off, if it is considered that no useful purpose is likely to be achieved


by continuing to hold the asset in the Books. in accounts written off with
balance outstanding up to Rs.25000/- final view to write off the residual
amount of Rs.100/- may be taken at the level of authority whohas
sanctioned the write off after one year of such write off where no
recovery is forthcoming and there are no chances of recovery infuture.
12

OTS/Write Off in Credit Non performing credit cards OTS/ Write off will be consider by the
Card separate policy.
Rejection • Any proposal submitted by the branch can be rejected byan
authority one step higher than the authority competent to approve
the proposal. ( but should be put up in max 15 days to the
SA/CO)
• Any proposal submitted by the branch can be rejected by an
authority one step higher than the authority competent to approve
the proposal. Accordingly, competent authority should refer the
case for rejection to his next higher authority, giving reasons
thereof. However, proposals falling under the powers of HOCAC
Level III and above may be rejected at the level of HOCACLevel
III itself, as hither-tofore.
Failure of OTS In case of obligants‟ failure to pay the OTS amount as per scheduleof
payment, the OTS should be declared as failed with the priorapproval

NPA CHAPTER - ZTC DEHRADUN Page 126of 162


of Circle Head. The failure should be notified to the party maximum
within one month after giving due notice.
Reopening of failed OTS Failure of OTS
cases If a proposal is offered by the borrower for revival of the failed OTS and
/ or OTS is offered with revis3ed terms and if such revised proposals are
considered beyond the scope of delegated powers for extensio0n of time
period ( with/ without further sacrifice) such proposals shall be
considered as Fresh/. Denovoproposals.
Associate/Allied concerns For the purpose of exercising above powers for approval of sacrifice, as
per guidelines contained in the latest L & A Circulars (latest being
85/2014 dated 10.07.14) Associate/Allied concerns and connected
accounts shall be considered as one borrower/debtor for the purposes of
exercising above powers for approval of sacrifice by the officers upto the
AGM level (other than Circle Heads). However, Credit Approval
Committees (previously Credit Appraisal Committees) headed by Circle
Head and above are empowered to approve sacrifice to allied/associate
concerns/connected accounts taken together upto 2 times the powers
vested to them as above.

:41
Non-borrowal fraud cases / Cases of Theft and Dacoity

20
These cases will be considered for write off by FPIS, HO by the appropriate authority. For all
/20 402
cases of loss of cash in theft/dacoity/robbery etc. and non-borrowal Fraud and non-borrowal other
Impaired Assets,
Delegation of Powers.
19
• Level ofAuthority HOCAC (Amt. in lac)
/03 41

• Level-IHOCAC---------- 50.00
• Level–IIHOCAC--------- 75.00
• Level–IIIHOCAC---------
3

100.00
• MC---------------------------- FULL
The above powers to approve sacrifice in Non Borrowal Impaired Assets shall be exercised by the
respective authorities, if duly recommended by the Committee constituted.

GUIDELINES ON ONE TIME SETTLEMENT IN WRITTEN OFF ACCOUNTS


12

Eligibility Borrowal NPA accounts, which were written off earlier duly
approved by the competent authority, whether by leaving a balance of
Rs.100/ - or not, shall be eligible to be considered for OTS under
these specialguidelines.
Recoverable dues Net Outstanding prior to Write off i.e. the book outstanding
(exclusive of Suspended Interest/ De-recognized Interest) as on the
relevant/ material date shall be the relevantamount.
Minimum indicative A comprehensive view on the capacity of the borrower(s)/
Amount Guarantor(s) shall have to be taken. Since these cases were already
written off by competent authority in the past in terms of bank‟s laid
down policy on „write off‟, whatever maximum can be recovered
through negotiations
Sacrifice/Waiver Sacrifice/ waiver in such cases shall be calculated as the „Difference
between Recoverable Dues and the Compromise amount‟.
Payment of settlement The amount of settlement arrived at in above cases, should preferably
amount be paid in lump sum. Cases where the borrower is unable to pay the

NPA CHAPTER - ZTC DEHRADUN Page 127of 162


entire amount in lump sum, 15-25% of the amount of settlement
should be recovered upfront and the balance amount should be
recovered within a period of 3 months
Delegation of powers
1) Accounts written off with balance outstanding up to Rs.1 lac Where the compromise offer is
50% or more of the Recoverable Dues, the Branch Heads of all categories of branches are vested with
the powers to approve thesacrifice.
2) Accounts written off with balance outstanding more than Rs.1lac
Cases where the Compromise Offer is 50% or more of the Recoverable Dues, the Branch Heads
of all category of branches may exercise the powers asunder,
(Amount Rs. lac)
BM Scale I BM Scale BM Scale BM Scale BM Scale
II III IV V/VI
Approval of sacrifice/waiver, not 1.00 2.00 3.00 5.00 10.00
exceeding:

The powers to approve sacrifice in OTS/negotiated settlements being debit to bank revenue
/waiver of RI/ PI /Legal and other expenses & waiver of legal action in terms of recoverable
duesare as under:The powers stands revised as per sastra div cir no 45/2017 and is the sameas

:41
per sastra div cir no 56/2018.

At ARMBs/Circle Offices/Zonal Offices/Head Offices

20
Committeeheadedby ExistingPowers RevisedPowers
/20 402
ChiefMgr, ARMB Rs. 8lacs Rs. 15lacs
AGM,ARMB Rs. 25lacs Rs. 40lacs
DGM,ARMB Rs. 40lacs Rs. 80lacs
19
COCAC-I headedbyAGM Rs. 25lacs Rs. 50lacs
/03 41

COCAC-I headedbyDGM Rs. 40lacs Rs. 100lacs


ZMCAC Rs.75 lacs Rs. 150lacs
3

HOCAC-I Rs.115 lacs Rs. 200lacs


HOCAC-II Rs.225 lacs Rs. 300lacs
HOCAC-III Rs.300 lacs Rs. 500lacs
MC/Board Fullpowers Fullpowers
As per Sastra Div cir no 9/2019 all proposals beyond the powers of ZOCAC, being
submitted to the HeadOffice for approval must be routed through ZO and must invariably
12

carry recommendations of the respective ZOCACs. (Including for ARMBs and LCBs)
and COCAC. Further for proposals under ZOCAC sanctioning powers, proposals
beingsubmitted to the Zonal Office for approvalmust be routed through CO and must
invariably carry recommendations of therespective COCACs (including forARMBs)
At Branch level Including Large Corporate Branches (LCBs)Powers to approve sacrifice
on entering OTS/negotiated settlement are as under
Committee headed by Existing Powers Revised Powers
Branch Manager Scale-I Rs. 0.25 lacs Rs. 0.50 *lacs
Branch Manager Scale-II Rs. 0.50 lacs Rs. 1.00 *lacs
Branch Manager Scale-III Rs. 1.00 lacs Rs. 2.00 *lacs

Branch Manager Scale-IV Rs. 2.00 lacs Rs. 5.00 **lacs


Branch Manager Scale-V Rs. 5.00 lacs Rs. 10.00**lacs
Branch Manager Scale-VI Rs. 10.00 lacs Rs. 25.00**lacs

* Sacrifice being only on account of waiver of RI/PI/legal and other expenses.

NPA CHAPTER - ZTC DEHRADUN Page 128of 162


Cases involving Debit to Revenue, if any shall be considered by respective competent authorities
atCO/HO level.

** Sacrifice involving Debit to Revenue maximum upto the provision held in the account
as on last quarter can also be considered besides the sacrifice on account of Waiver of
RI/PI/legal & other expenses within the above delegated powers. Cases beyond these
powers shall be considered by the respective competent authorities at CO/HO level.

GUIDELINES FOR FORMATION OF COMMITTEE FOR APPROVAL OF OTS/WRITE OFF


/WAIVER OF LEGAL ACTION/APPEAL etc-GENERAL GUIDELINES—ANNEXURE I
As per Sastra Div cir no 9/2019 DATED 12/02/2019 following changes have been made in Annexure I.
As laid down in SASTRA DIV cir no 56/2018.They are as under:

1) In HOCC-B, besides GM (SASTRA) as convener, there are two other GMs as members of the
committee. For considering the proposals, out of the two other GMs, at-least one GM must be
present in the meeting.

:41
2) In case any nominated General Manager is on leave OR away on duty on the date of the
meeting of HOCCB/HOSAC, then the meeting will be attended by the General Manager(s)
whose name is given as the Alternate Arrangement for the nominated GM, as per the Office

20
Order of Alternate Arrangement of GMs. For this purpose the office order in force on the day
/20 402
of the meeting will be referred to.
OTHER IMPORTANT GUIDELINES (L&A cir 50/2018 dated 14-06-18 Read with
19
SASTRA DIV.Circular 56/2018 )
/03 41

Valuation of Securities in NPA Accounts: -


3

i) Wherever the Incumbent feels that realizable value of IPs is significantly lower than the
one on bank‟s record in accounts with aggregate limits/ outstanding ofRs.10 lakhs&
12

NPA CHAPTER - ZTC DEHRADUN Page 129of 162


above but less than Rs.1 crore and value of immovableproperty mortgaged/charged
to the bank is Rs.20 lakhs & above, he may getthe property re-valued from the bank‟s
approved valuer provided the valuation ismore than one yearold.

i) As regards borrowal accounts having aggregate limit of Rs. 1 crore & above,valuation of
immovable properties charged/mortgaged to the Bank be got donefrom approved valuer
once in three years.However, where the value of immovable property to be mortgaged/
charged isRs.5 crore & above, branches shall get valuation of such IPs done
fromminimum two valuers on the Bank‟s approvedpanel.

ii) Over a period of time it has been noted that, in some NPA accounts periodicalvaluation of
IPs available as secured assets with the Bank, in the names ofborrowers and/or guarantors
is not got done, in terms of the ―Policy on valuationof Properties‖ which is a matter of
serious concern. It is imperative to notethat such lapses have adverse bearing on Bank‟s
performance parameters e.gprofitability, CRARetc.

iv) In absence of correct valuation of property, the provisioning in NPAaccounts as per


RBI norms, cannot be computed correctly.

:41
v) RBI teams and Statutory Auditors also donot entertain the old valuationreports, as
result of which higher provision rates are advised bythem.

vi) In absence of latest valuation report, which should not be normally morethan 1 year

20
/20 402
old, as per Bank‟s guidelines for fixation of Reserve Pricefor a sale process, non-
realistic Reserve Price is fixed, which is the mainreason for failure of saleprocess.
19
Note: Thus, it is clarified that, the criteria for valuation of properties (bothborrower‟s and/or
/03 41

guarantors) in existing accounts, circulated throughcirculars by HO: IRMD also holds good
for NPA accounts except where OTS/Sale to ARCs proposals/Sale under SARFAESI Act
are underconsideration/processing, for which separate guidelines have beenprovided.
3

Thus it must be ensured that the periodicity stipulated by HO:IRMD isstrictly adhered to
and proper record of latest valuation reports is alsomaintained for verification by the
Auditors/RBI teams.
In case of NPA accounts, where OTS proposals (Circular no. 5/2016)/Sale toARCs (Circular
no. 3/2016)/ Sale proposals under SARFAESI Act (Circularno. 31/2017) are under
consideration/processing, the guidelines stipulatedin the Recovery Division Circulars be
12

adhered to.
Annexure -IV
Policy for Write off/Settlement of Non Performing Investments (NPIs)
1. BACKGROUND:
1.1 Treasury invests in SLR securities as well as Non-SLR securities of different entities as
a part of investments within the framework of Investment Policy and in conformity with
the guidelines issued by RBI/FIMMDA. SLR securities are Government securities and
other approved securities issued by Central Government/State Government/Municipal
corporations, PSUs and FIs which are eligible for maintenance of the SLR.
1.2 Non SLR investment portfolio includes all other investments of the bank except those
qualify for SLR purposes. It primarily includes Bonds/Debentures, Equity (ordinary &
preference), Mutual Funds, CDs and CPs.
1.3 However within the investment portfolio some investments turn into non-performing
category on default by the issuer and non availability of financial statements/quotes in
the market in terms of RBI guidelines.
1.4 The valuation, classification and provisioning norms prescribed by RBI, as applicable to
NPA CHAPTER - ZTC DEHRADUN Page 130of 162
non performing investment assets (NPI) will only be applicable.
2. COVERAGE:
The category of the investments along with their eligibility for write off will be as under:
2.1 Non-SLR - Debentures, Bonds &
Commercial Paper –
i) Investment categorized as NPI and
classified as loss assets in the books of
the bank and
ii) Issuer Company is under liquidation
or already liquidated OR its name has
been struck off from registrar of the
companiesand
iii) All recourses for recovery have been
exhausted.
(All the above condition are to be satisfied
for considering writing off the NPI
2.2 Non – SLR – Equity /Preference Shares
i) Investment categorized as NPI and
classified as loss assets in the books of

:41
the bank and
ii) The company is under liquidation or
already liquidated OR its name has been struck off from registrar of the companies

20
/20 402
and(All the above conditions are to be satisfied for considering writing off the NPI)
2.3 Investment in Securities backed by Govt. Guarantee
Generally investment in securities guaranteed by Central / State Govt. which qualifies
for SLR purpose or otherwise shall not be eligible for write off. It would be proper to
19
initiate legal action in such cases. However, in exceptional circumstances write off
/03 41

proposal / OTS, if any, in securities guaranteed by Central / State Govt. may be


considered for approval on merits, by Board.
3

44
2.4 Investment in Security Receipts issued by the trusts floated by Securitisation
Companies/Reconstruction Companies
The Security receipts issued by the trusts floated by Securitisation Companies/
Reconstruction Companies would be eligible for write off on closure of its trusts and
there is no chance of any recovery. These cases would be considered by competent
12

authority. The amount outstanding in the books at the time of closure of the Trust be
adjusted by obtaining the outstanding amount from HO: Finance Division from the
provision held for the purpose.
3. RECOVERABLE DUES:
3.1 Debentures & Bonds - Principal outstanding + unrealized interest at Base Rate or
coupon/contracted rate whichever is lower up to the date of maturity.
3.2 Equity Shares: Acquisition cost
3.3 Preference shares (Cumulative) - Principal outstanding + unrealized cumulative
dividend upto the date of maturity.
3.4 Preference shares (Non-Cumulative) - Principal outstanding + dividend declared but
not realized.
3.5 Commercial Paper – Face value of the commercial paper
4. SANCTIONING AUTHORITY:
OR
Powers to Book Losses in respect of Share, Debenture and Bonds etc. as per
applicable investment policy of the Bank, whichever is higher.
NPA CHAPTER - ZTC DEHRADUN Page 131of 162
(Rs. in lacs)
Level of Authority
HOCAC
Level- I
HOCAC
Level -II
HOCAC
Level -III
MC
Power to approve
Sacrifice
35.00 150.00 200.00 FULL
4.1 All the proposals for write off would be placed by the Treasury Division for
consideration of the respective authorities through HOSAC.
4.2 The authority who had earlier sanctioned the particular investment shall not recommend
and/or participate as a member of any committee constituted for the write off/settlement
proposals. Another officer authorized to work in his/her absence as per office
arrangement shall be substituted in his/her place.
5. Other General Guidelines regarding compilation/presentation of proposal, reporting of

:41
approvals/rejections/post-facto scrutiny and monitoring as stipulated in General
Guidelines (Annexure-A) shall mutatis-mutandis form part of these guidelines also.
**************

20
/20 402
19
/03 41
3
12

NPA CHAPTER - ZTC DEHRADUN Page 132of 162


CHAPTER 16: WAYS & STRATEGIES TO IMPROVE MANAGEMENT OF NPAs

Monitoring and Identification of NPAS


Functionaries responsible for proper classification
Loan Accounts With Balance Responsibility & validation level for proper
Outstanding of asset classification
Rs.1 crore and above Circle Head / Branch Head of LCB (Under
intimation to Zonal Manager)
Rs.10 lac and above but below Rs.1 AGM/Chief Manager of ELBs/VLBs/MCB/ Circle
crore Office (Under intimation to Circle Head &Zonal
Manager in case of LCB)
Branch Heads jointly with the Concurrent Auditor
wherever posted.

Loan accounts of below Rs. 10 lac In other branches, Branch Head jointly with the
Incharge of Loans Department.

Incharge of Loan Department in respect of


ELBs/VLBs/LCBs jointly with Concurrent Auditor

:41
wherever posted (Loan Officer Incharge wherever
Concurrent Auditor is not posted)
Channel to settle doubts in Asset Classification

20
Level seeking clarification Authority to settle the Maximum Time period
/20 402
doubts
Branch Heads of Branches other AGM/ CM of respective Within 48 hours of reference
than ELBs/ VLBs Circles received.
19
Branch Heads of ELBs/VLBs/MCB Circle Head of Within 3 days of reference
/03 41

respective Circles received.


Circle Heads/ DGM of LCB Zonal Manager or any Within 3 days of reference
functionary authorized received
3

by ZM

Order of Appropriation of Recoveries in NPAs Following Revised Guidelines on Appropriation of


Recoveries in NPA Accounts have come into force w.e.f. Ist January 2013:
Category of NPA Mode of appropriation in order to priority
Revised Guidelines
12

Suit filed & Decreed A/cs Recoveries in NPA Accounts (irrespective of the mode /
status / stage of recovery actions), henceforth shall be
OTS/Compromise cases appropriated in the following order of priority:
i) Expenditure/Out of Pocket Expenses incurred for
NPA where recovery is under Recovery, including under SARFAESI action (earlier
SARFAESI Act recorded in MemorandumDues;
ii) Principal irregularities i.e. NPA outstanding in the
Other NPAs account gets up-graded / adjusted, whichever isearlier;
iii) Thereafter towards interestirregularities/accrued
interest.

NPA CHAPTER - ZTC DEHRADUN Page 133of 162


Miscellaneous Issues in Asset Classification
1) For treating an irregular account as NPA some branches wrongly mention the date
as at the end of financial year/quarter i.e. For example, in case an account becomes
out of order or irregular from 26.10.2015, it shall be treated as NPA as on
24.01.2016, in case default persists. The date of NPA in this account will be
24.01.2016 and not31.03.2016.
2) Pari-passu/second charge on all block assets should be treated as security. While
calculating our share, availability of security to cover our exposure & share insecurity
of the 1st charge holder should be assessed. Reporting of available security cover
should always be correctly explained restricted to our shareonly.
3) Surplus security available in one facility of an account should be considered in
another facility of the same borrower where there isshortfall.

Monitoring and Review of NPA Accounts


Keeping in view, the surge in number and amount outstanding of NPA accounts along with
various new initiatives proposed by regulators to monitor NPAs, blurring the line between NPAs
and SMAs with creation of special Recovery Verticals along with time constraints of various
authorities at HO level, the matter was placed before Board which in its meeting held on
14.05.2018 (vide item no.30) approved the following 03 amendmentsin existing Para A.6 (at

:41
page 74) of Recovery Division Circular No. 45/2017 dated 28.11.2017:
Category of NPA Monitoring authority Periodicity
1) FRESH SLIPPAGE DURING THE YEAR

20
NPAs with outstanding balance of more than MD & CEO As and when*
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Rs. 15.00 crore (amended)
NPAs with outstanding balance of more than ED As and when*
Rs. 5.00 crore, up to Rs.15.00 crore (amended)
19
NPAs with outstanding balance of more than GM Recovery As and when*
/03 41

Rs. 50.00 lacs up to Rs.5.00 crore (amended) Division


NPAs with outstanding balance of more thanRs. Zonal Manager As and when*
3

10.00 lacs, up to Rs. 50.00 lacs


NPAs with outstanding balance of more than Circle Head / LCB Head As and when*
Rs.1.00 lac, up to Rs.10.00 lacs
NPAs with outstanding balance of Rs. 1 lac and Branch Manager As and when*
below
*review is required to be undertaken and Action Points/Resolution Strategies are to be evolved within
12

one month of the close of the quarter.


2) Review and Monitoring
Top 100 borrowal a/cs of <5.00cr in each cat Sub Management committee Once in a Year
STD DF and Loss
NPAs With O/s > 5 Cr as outstanding as on 31st ED Once in a Year
March of previous Financial Year
NPAs with outstanding Balance of more than Rs. GM Recovery Division Quarterly
50.00 lacs as outstanding as on last day of
previous quarter
NPAs with outstanding Balance of more than Zonal Manager Quarterly
Rs.10.00 lacs, up to Rs.50.00 lacs as outstanding
as on last day of previous quarter
NPAs with outstanding Balance of more than Rs. Circle Head / LCB Head Quarterly
1.00 lacs, up to Rs. 10.00 lacs as outstanding as
last day of previous quarter

NPA CHAPTER - ZTC DEHRADUN Page 130 of 162


NPAs with outstanding Balance of Rs. 1.00 lac Branch Head Quarterly
and below, as outstanding as on last day of
previous quarter

UPDATING & MAINTENANCE OF STATUS NOTES


A detailed Status Note on prescribed format shall be required to be placed with details given
below:
(i) Fresh Slippage Notes of NPA accounts with balance outstanding of Rs. 10 lacs & above
up to Rs. 50 lacs will be submitted by the Circle Offices to their ZonalOffices.
(ii) Fresh Slippage Notes of NPA accounts with balance outstanding of above Rs. 50 lacs will
be submitted by the Circle Offices to HO: Recovery Division, under copy to the Zonal
Office.
Such Status Notes shall always be kept updated by the Circles in soft copies and can be
requisitioned at very short notices.

List of Important Parameters for inclusion in Status note


1 Credit Details  original date and amount of sanctionedlimits
 renewal/review oflimits,

:41
 enhancement/ additional/bridge loan facilities granted
etc.
 Current means of the borrowers & guarantorsetc.

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/20 402
2 Reason for NPA Business reasons like
 Whether circumstances beyond control e.g slow down
ofeconomy
19
 Closure of business activity withreasons
/03 41

 Non-existence of market for productsmanufactured


 Change in Govt. policies or regulatoryguidelines
 Malafiedintention
3

 Siphoning of funds to other activities/sister concerns


etc.
 Non-realization of SundryDebtors
3 Current status of activity whether unit closed or functioning and information about
source of income/livelihood of the borrower
4 Details of securities Inform the nature of primary & collateral securities
12

(stocks/immovable property/book debts/plant &


machinery), their present value and date of last valuation
got done. Mention clearly date of the last visit made by the
branch officials and their findings.
5 Knocking the door of Details of the personal contacts made with the
defaultingborrower borrowers/guarantors/meetings at Circle or Zonal level,
including date of meeting, participating persons etc. held
with defaulting borrowers and/or guarantors at theBranch,
Circle and Zonal level and their outcome are notinformed.
6 Action under Sarfaesi Act Mention why the notice has not been sent under Section
13(2) under SARFAESI Act. It needs to be taken care of
that maximum limit for keeping the action under
SARFAESI Act in abeyance is 60 days, in case of OTS or
any other reason at any stage if the competent authority
deems fit.

NPA CHAPTER - ZTC DEHRADUN Page 131of 162


Important
Once the account becomes NPA, notice under Section
13(2) must be immediately issued, in the eligible cases,
until and unless, there is any contrary situation to keep
it in abeyance, e.g part has deposited some amount,
submitted a concrete proposal for liquidation etc.
7 Filing of suit In the eligible cases, where it is anticipated that personal
contacts and conciliatory efforts will prove out to be futile,
do not wait for filing the suit. If suit filing is not on card,
mention the reasons for not filing the suit. In case it is
planned to file the suit, whether search reports from
Detective Agencies have been taken?
8 Consortium / Multiple Banking Details of the bank-wise limits sanctioned/share are not
Arrangements informed and what is the value of security available to the
group and our bank. Further, in case any Bank has sold its
share to ARC, the price at which the share has been sold
must be invariably mentioned, along-with the name of the
ARC, in the status notes. In consortium NPA accounts,
details of the JLMs (Joint Lenders‟ Meetings) held in

:41
thepast and in the future are not mentioned. Whether any
joint action is being proposed by the consortiumleader?
9 Passport impounding & Mention the action initiated for passport impounding and

20
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declaration of willful defaulter for declaration of Wilful Defaulter or the reasons for not
initiating such deterrent actions against the defaulting
borrowers/guarantors
19
10 Critical Amount due (CADU) Mention the Critical Amount Due (CADU) in the account.
/03 41

11 Allied concern and family Details of allied concerns or family loan accounts must not
Loan account be missed as such details provide an opportunity to take a
holistic view for resolution of the group as a whole.
3

12 Lodgement of FIR In case party has disposed off the securities without
depositing the sale proceeds in the account, position of
filing the FIR be informed.
13 Engagement of detective Mention utilization of services of Detective Agencies,
agency especially in those cases where the whereabouts of the
borrowers/guarantors are not known/certain and/or there
12

are doubts about security position.


14 Guarantor net means / Assets Where guarantors have sufficient means/attachable assets
and recoveries are not coming in the accounts by
persuasions/personal contacts, legal action may prove to
be an effective tool. Thus, this aspect needs to be
mentioned in the status note.

NPA CHAPTER - ZTC DEHRADUN Page 132of 162


PHYSICAL VERIFICATION OF SECURITIES/IMMOVABLE PROPERTIES:

On classifying an account as NPA Branch Managers to immediately visit and verify the primary
and collateral securities and thereafter regularly at irregular intervals so that the same are not
diluted/disposed off/alienated by the obligants. The following guidelines have been laid down:

i) Branch Head should ensure that title deeds of the charged IPs are intact and mortgage
continues to be legallyenforceable.
ii) All NPA accounts be distributed among branch officials for verification of
primary/collateral securities and proper record be maintained. The verification in respect
of IPs charged to the Bank is to be done through independent discreet enquiries/market
report as well and strict compliance of Bank guidelines is to be ensured. At the time of
verification of securities, the obligants are also to be followed up for
regularization/upgradation/adjustment through negotiatedsettlement.
iii) In case any dilution/short fall in the securities is noticed, immediate action is taken and
effortsaremadetostrengthenthesecurityaspecttosafeguardBank‟sinterest.
iv) The public at large is also informed about charge on the assets of the obligants through
brief pressadvertisement.

:41
v) Details of other attachable assets of the obligants are also required to be
ascertained/verifiedandplaced on bank‟s recordwith thehelp of DetectiveAgencies etc..

INTER CIRCLE TRANSFER OF NPA A/CS

20
/20 402
There may be some cases where securities mortgaged to bank are situated at places other than
where the unit was situated/where the advance was made. On account becoming NPA/closure of
unit, the obligants might also shift where the assets are situated. Further, the DRT suit may be
19
being pursued at centre other than where the account is being maintained. There may also be other
/03 41

situations, which warrant inter-circle transfer of accounts for their effective monitoring and follow
up with obligants for recovery.
3

Such cases shall be referred to HO for seeking approval for transfer of the NPA accounts to other
Circles with proper justification and reasons of transfer. At Head Office, General Manager, Recovery
Division shall be the competent authority to allow such Inter Circle transfer of NPA accounts in
similar situations, Circle Heads may allow transfer of such NPA accounts within the Circle and in
case of accounts of LCB, Zonal Manager will take decision. However, Inter-Circle transfers
within the same Zone may be done by the Zonal Manager
12

TRANSFER OF NPA ACCOUNTS TO ARMBS

1) NPA accounts of Rs. 10 lacs & above of all the branches at the Centre of ARMB and NPA
accounts of Rs. 50 lacs & above in the entire Circle should be promptly transferred to
ARMB immediately after the “cooling period (3 months)” is over and/or a final call for
initiating recovery action has been taken on finding it non viable for up-
gradation/rehabilitation or rehabilitation package is declared failed. However, accounts
covered under CGTMSE Guarantee Cover shall not be transferred to ARMBs. The branch
where such NPA accounts exist, the same shall lodge claim for Guarantee Cover with
CGFT and shall make all efforts for resolution of accounts, till its logicalconclusion.
2) Files and other record be handed over by branch to ARMB in person by dealingofficial.
3) Guidelines for ControllingOffice:
i) The fresh slippage accounts be dealt with on priority basis as there is a good scope
for their resolution through upgradation by recovering overdueamount.

NPA CHAPTER - ZTC DEHRADUN Page 133of 162


ii) Reasons of account becoming NPA be analyzed and chances of
Rescheduling/restructuring/rehabilitation be also explored without delay.
Wherever required, Techno-economic Viability Study be also gotconducted
within three months of account turningNPA.
iii) If account has been classified NPA due to non-financial parameters, needful be
done to ensure itsupgradation.

Measures to be adopted before transfer the accounts to ARMB (SASTRA DIV


. 07/2017)
On turning the account as NPA, immediately all possible efforts must be made for its up-gradation
through various measures viz.

 Recovery of CADUamount
 By allowing operations through taggingarrangement
 Rephasing/Rescheduling
 Restructuring/Rehabilitation

All efforts should be made to take a final and conclusive view within a period of 3 months of

:41
“cooling period” and if after exhausting all these measures, a final view emerges to recall the
advance and initiate Recovery measures, the account shall be transferred to ARMB.

20
COMPETENT AUTHORITY TO TRANSFER ACCOUNT TO ARMB
/20 402
Depending upon the balance outstanding in the account following are the competent authority for
permitting transfer of account to ARMBs
19
Balance O/S in NPA a/c Competent authority Recommending Authority
/03 41

Upto Rs.5 crores Circle Head Branch Head


(For LCB Branch head to
3

submit Recommendations to
ZM)
Above 5 crores upto 50 crores Zonal Manager Circle Head
Above 50 crores Head Office (GM Recovery) Zonal Manager
While submitting recommendations to the competent authority, it must be ensured that the
recovery actions initiated along-with the dates and their outcome, are mentioned in the Proposal,
12

for example:

 Action initiated under SARFAESI Act (issue of notices under Section 13(2), position of
possession taken, efforts for sale of secured assetsetc.)
 Filing ofsuit
 Impounding ofpassport
 Examining the Wilful Defaulter‟saspect
 Any details or any proposal for restructuring, tagging, SDR etc. underconsideration.

NPA CHAPTER - ZTC DEHRADUN Page 134of 162


RECOVERY CAMPS/RIN MUKTI SHIVIR

(i) To launch well planned and sustainable Recovery Campaigns. The RMSs and MRMSs should
not be conducted merely as a ritual/formality without doing an effective spade work. Proactive
action in this regard will ensure good turnout in the Shivirs with resolution of NPAs up to the
expectedlevel.
(ii) Such Shivirs maty be organized preferably with cluster of 9-10 branches on a Non-Public
Working Day(NPWD).
(iii) Circle Heads need to set targets for themselves and motivate their Branch Incumbents to
make all possible efforts to adhere to the benchmarks for number of borrowers attending the
camp, cash recoveries and OTSproposals.
(iv) Effectiveness of the RMSs/MRMSs should be reflected through numbers of NPA accounts
resolved and amount recovered, instead by number of shivirsorganized.
During Special Recovery Campaigns launched by the Head Office, Circle Offices are advised to
organize Mega Rin Mukti Shivirs (MRMSs) for which following parameters have been laid
down:

:41
S.No. Benchmarks Per MRMS Number / Amount
1 Minimum borrowers 200

20
2 Overall Cash Recoveries including in the written off A/Cs Rs. 50 lacs
/20 402
and OTS approved cases
3 Cash Recovery in written-off accounts (out of 2 above) Rs. 2 lacs
19
4 OTS Proposals (Amount O/s in the NPA A/Cs) Rs.150 lacs
/03 41

Important Note
3

(i) All such Shivirs where the above mentioned criteria remain unfulfilled, do not qualify for the
Mega Rin MuktiShivirs.
(ii) During the Rin Mukti Shivirs and Mega Rin Mukti Shivirs progress made in respect of NPA
accounts with balance outstanding of upto Rs. 10 lacs only, will be accounted, for performance
assessment. Although Circle Heads may resolve high value NPA accounts during such Shivirs but
12

recoveries, up-gradation, OTS approved will not form part ofreporting.

Conducting Recovery Suits – Interim Reliefs INTERLOCULATORY APPLICATIONS.


To ensure recovery of dues to the Bank and to safeguard the securities / assets available with the
defendants during the pendency of the suits various interim reliefs to be prayed have been
included in the Model Draft of the Plaint circulated vide Law Division Circular No.03/2014 dated
30.01.2014. Therefore it has been repeatedly stressed that we should move applications before the
courts / DRTs to obtain injunction / restraint order, attachment before judgment, appointment of
receiver etc. wherever such measures arenecessary.

It is observed that such interim reliefs are generally not sought while filing the suit and even
thereafter applications for obtaining interim reliefs are generally not filed and/or if filed/included
in the plaint are not properly agitated/contested/pursued. The detailed relevant provisions of
hypothecation /pledge/bookdebts agreementetc. are giveninthe SASTRA DIVCir.12/2011 dated

NPA CHAPTER - ZTC DEHRADUN Page 135of 162


28/06/2011, for taking up with the concerned counsels for filing applications for interim reliefs
quoting the relevant clauses of the agreements to facilitate decision by courts / DRTs in favour of
the Bank.

Prayaas Staff Incentive Scheme :

Staff Incentive Scheme to boost recovery of NPAs is also in place. The Circles are required to
advocate for the same by highlighting its benefits for the entire field staff. Even, the staff at
Circles including the Circle Head can get the financial benefit if their own job profile of
monitoring and motivating the staff is done with full concentration and they own the job of
Recovery & Resolution of NPAs. As per Govt. of India guidelines, in case Net NPA level of the
Bank exceeds 3%, no incentive is payable to its employees. Thus applicability of this policy is
dependent on this principle.

Wilful Defaulter
There are several NPA cases where the borrower has the capacity to repay the loan but does not

:41
come forward due to malafied intention. In such cases the borrower resorts to siphoning off the
funds, disposal of Banks secured assets without depositing the amount in the loan account and
other unethical practices. When reconciliatory efforts fail to produce the desired results, efforts

20
/20 402
may be made to declare such eligible defaulters as Wilful Defaulters. Branches may refer to
Circulars/Circular Letters issued by the HO: Recovery Division from time to time (latest circular
being 22/2015 dated 31.08.15).
19
/03 41

Invocation of Pledge of shares/ Sale of Pledged Shares in NPA accounts

In a number of loan accounts, the promoters / guarantors / other persons, pledge shares of
3

substantial value held by them either in the borrower company or in any other company, in favour
of Bank as collateral security. Pledged shares being easily saleable liquid security should be
enforced at first instance after classification of account as NPA. However, it is observed that
pledge of shares is not invoked immediately after classification of account as NPA. Such non-
invocation of pledge in time, not only results in uncalled for delays in recovery of bank‟s dues,
12

but also results in loss to Bank as value of pledged shares often falls drastically with the passage
of time on account of various reasons such as adverse changes in the net worth position of the
companies / loss of reputation consequent to NPA tag etc.

1) Pledged shares are either in physical form or in dematerialized form. The detailed
procedure for invocation of pledge of shares in both the forms has been providedunder
Annexure 8 to Loans & Advances Circular No. 66/2014 dated 16.06.2014. Recovery Division has
also issued guidelines in respect vide Circular no. 23/2016 dated 26.05.2016. The applicable
instructions contained in above circular, as modified from time to time, be meticulously followed.
2) Further, in case the pledged shares are of a listed company, the same are to be sold
throughconcernedstockexchange.Insuchcases,assistanceofTreasuryDivision,
Mumbai, may be taken. In case the pledged shares are ofunlisted company/ies, Bank may
proceed for sale of pledged shares by inviting quotations from public through news papers /
Bank‟swebsiteetc..Beforesaleofpledgedshares,anotice of invocation of pledge

NPA CHAPTER - ZTC DEHRADUN Page 136of 162


beissued to the pledgor of shares. In case of anydifficultyin this regard, guidance from
Law Division, HO may beobtained.
3) A draft format of the Notice to be issued to the pledgors (Annexure–I of this circular)
as well as the notice to be published in the newspaper/s inviting quotations for sale of
shares (Annexure–II of this circular), as aforesaid, are attachedherewith.
These draft notices be used after confirming the factual positionvis-a-vis the shares pledged.
The notices may be suitably modified at yours keepingin view the facts of thematter.
4) In all the cases where Bank is having security by way of pledge of shares, steps for
invocation of pledge / sale of pledged shares need to be taken immediately upon
classificationofaccountasNPAtoexpediterecoveryofBank‟sdues.Keepinginview
the above, all field functionaries are advised as under:
 In case our Bank is sole lender, the steps for invocation of pledge / sale of pledgedshares
be initiated immediately, and in all eventuality, not later than a week from the
classification of the account as NPA.
 In case of consortium accounts where our Bank is leader, the consortium meeting be
immediately called after slipping of account to NPA to initiate steps to invoke pledgeof
shares / sale of pledgedshares.

:41
 In case of consortium accounts where PNB is not the lead bank, the lead bank be
requested to call consortium meeting immediately upon classification of such accountas

20
NPA for initiating steps to invoke pledge of shares / sale of pledgedshares.
/20 402
 The steps initiated for invocation of pledge / sale of pledged shares be taken to logical end
without timegaps.
19
/03 41

5) As pointed out above, delay in invoking pledge of shares / sale of pledged sharesin
time may result in loss to Bank, and for any unreasonable delay, the erring officials
will be answerable. The Inspectors while inspecting the branches / Circle Heads and
3

other inspecting officials during their branch visits, shall view and point out this aspect
also.

Stock Audit of Large Borrowal Accounts in NPA Category (SASTRA DIV Cir No. 03/2013
12

dated 09.01.2013 and LA Cir No. 109/2013 dated 11.10.2013)

Detailed guidelines in respect of Stock Audit of Large Borrowal Accounts are as under:

(i). Annual stock audit should be got compulsorily done in respect of all borrowers enjoying fund
based and working capital limits of Rs. 5 crore and above from ourbank.

(ii). In case of borrowers enjoying fund based working capital limits less than Rs. 5 crore, stock
auditmayalsobegotdoneinemergentcasesand/orwherebank‟sinterestsdemand.However,for
modalities of stock audit, prior concurrence of the concerned Circle Head beobtained.

(iii). In cases where the borrower is enjoying working capital limits (fund based) of less than Rs. 5
crore from our Bank and Rs. 20 crore and above in aggregate from the banking system, thematter

NPA CHAPTER - ZTC DEHRADUN Page 137of 162


should be taken up with lead bank/major share-holder banks in multiple banking arrangement for
getting the stock audit conducted.

(iv). Annualstockauditshouldbecompulsorilyconductedinall„B2‟to„C3‟riskratedaccounts and NPA


accounts enjoying fund based and non fund based working capital limits of Rs. 3 crore andabove.

(v). In case of Consortium/Multiple Financing, where the borrower is enjoying working capital
limits (fund based) of less than Rs.5 crore from our Bank and Rs.20 crore and above in aggregate
from the banking system, branches should take up with lead bank/major share-holder banks in
multiple banking arrangement for getting the stock auditconducted.

In respect of consortium advances, where we are the leader, the stock audit may be got conducted
with the consent of the member banks and in cases where we are not the leader, we may take up
the matter with the Lead Bank for getting the stock audited of the borrowal account. The final
decision regarding stock audit in the account shall, however, be based on the consensus amongst
the member banks.

It has been observed that despite above guidelines, Circle Offices are neither getting the Stock

:41
Audit done in NPA accounts nor the position of Primary Security in the shape of hypothecation of
Stocks/Book Debts is getting monitored/controlled in the Post NPA stage of the account; which
interalia facilitates the borrower to dispose off the hypothecated securities without

20
routing/depositing their sale proceeds in the account, resultantly adversely affecting the
/20 402
recovery/up-gradation efforts due to dilution of the securities at the time of enforcement either
through SARFAESI / Court / otherwise.
19
/03 41

It isfurther clarified that calculation of Drawing Poweras„Nil‟in terms of sanction does not
necessarily mean that value of the Hypothecated Security too can be treated as „Nil‟. Field is
advised to take a careful note of incorporating the correct/reliable value of security of
3

Hypothecated Stocks/Book Debts while submitting Status Notes/Progress Reports of NPA


accounts as also incorporate the same properly and correctly in LADDER, so that system
generated calculation of Provisions in NPA accounts has completereliability.

CAMPAIGN FOR RECOVERY IN SPECIFICALLY IDENTIFIED ACCOUNTS, 2018


12

SASTRA Div Cir no 52/2018 dt. 05.12.2018


During the “Zero Hour Discussion” held in Board meeting dated 02.11.2018, Board had
deliberated that Bank should specifically target those accounts which have been fully provided for
in our Books i.e. Carry 100% provision. Any recovery made in these accounts can be straight
away written back to Bank‟s profit. The Board further opined that each branch must contributeto
this kitty and a huge nationwide campaign may be initiated immediately for Branch/Circle/Zone
wise contributions by March2019.
Kindly refer the above circular for complete details of the campaign.

NPA CHAPTER - ZTC DEHRADUN Page 138of 162


FORENSIC AUDIT POLICY- IMPORTANT GUIDELINES & EMPANELMENT
OF FORENSIC AUDITORS- PANEL-2018-2019
(SASTRA DIV Cir no 28/2018
Dt.11.06.2018)
Policy on Forensic Audit has been framed and circulated by the Fraud Risk Management Division vide
FRMD Circular no. 12/2017 dated 31.03.2017. Operational modalities and empanelment of Forensic
Auditors the guidelines are given below:

Procedure to seek permission to conduct Forensic Audit


While seeking permission to conduct forensic audit in ―Other than Red Flagged Accounts (RFAs)‖ with
exposures of Rs.50 crore & above, Zonal Office Committee (not any official in the individual
capacity) will send recommendations to Head Office Recovery Division, to be placed in the Head Office
Committee for consideration.

Once Head Office permits to conduct the forensic audit in an account, final allocation of task to a
particular forensic auditor, will be done by the respective ZO.

:41
Eligible cases where Forensic Audit is not being conducted
1) For RFAs with exposure of Rs. 50 crore & above, if Zonal Office decides not to conduct
forensic audit, a report be sent along-with the justificationsto:

20
/20 402
(i) Head Office Recovery Division for NPAaccounts
and
(ii) Head Office CRMD/FRMD for non-NPAaccounts
19
/03 41

2) For all such cases which have although been recommended by the Zonal Office Committee But not
agreed by the Head Office Committee, shall be placed to the MD &CEO/ED.
3

Monitoring of progress
Zonal Offices will submit following reports on quarterly basis to Head Office Recovery Division:

(i) Progress report of all the Forensic Audit conducted cases, i.e permitted by
ZO/HO/MD & CEO, as perAnnexure-2.
12

(ii) Details of Red Flagged NPA Accounts with exposure of Rs. 50 crores & above,where
Zonal Office has decided Not to conduct Forensic Audit, as per Annexure-3

Advertisements in the newspapers & PNB website


All the Zones will publish advertisements for empanelment of Forensic Auditors in two
newspapers, out of which, one must be in the vernacular language. Further, the applications
forms, criteria for empanelment, fee structure etc. as per latest FRMD guidelines will also
up-loaded at the Bank‟s website www.pnbindia.in.

Receipt and Scrutiny of applications at the Zonal level


Based on the eligibility criteria mentioned in the FRMD Circular no. 12/2017 dated 31.03.2017,
applications of the eligible Forensic Auditors to be received at the Zonal Offices, which will be
scrutinizedbythe Zonal Office Committees comprisingof ZM,2ndman atthe Zonal Office and
ExecutiveInchargeofCreditSection.Afterduediligence,verificationsofaddress,infrastructure

NPA CHAPTER - ZTC DEHRADUN Page 139of 162


etc. recommendations of Zonal Office Committees will be submitted to the HO: Recovery Division,
with details of applications received, rejected with reasons and final recommended list of proposed
Forensic Auditors. Zonal Office Committee will also review performance of the exiting Forensic
Auditors and send the list of the existing and fresh auditors to the Recovery Division.

Final approval of thepanel


Based on the recommendations of the Zonal Office Committees, the panel was reviewed and list
of Forensic Auditors was finalized by the Head Office Committee comprising of any 4 of the
following GeneralManagers
(i) General Manager(s)Recovery
(ii) General Manager, Inspection & AuditDivision
(iii) General Manager,CRMD
(iv) Senior most General Manager,Credit
(v) General Manager, FRMD &
And DGM, Recovery, who will be the convener of the meeting.
Minimum 4 GMs must be present in the meeting and in case more than one, of the above mentioned
five GMs is/are on Bank duty or leave, the GM(s) on leave arrangement may participate in the

:41
meeting, in case of emergent circumstances, to avoid delays.

Competent Authority for empanelment of Forensic Auditors will be the Executive Director

20
/20 402
Incharge of Recovery Division, who will consider & allow empanelment of Forensic Auditors
upon recommendations of the HO Committee of GMs.
19
Fulfillment of criteria & Issue of Empanelment letters
/03 41

ZOs must ensure that before issuing the letter of empanelment, all criteria mentioned in the
FRMD Circular are fulfilled (refer FRMD circular 12/2017), for example:
 Certification of CFE (Certified Fraud Examiner) or FAFP (Forensic Audit & fraud
3

Prevention)
 Empanelment with RBI for Bank auditsetc.
 Proven track record of conducting a number of Forensic & Investigative audits and
exposed/establishedfrauds
 Firm should preferably have at-least 5 years‟ experience of doing statutory or internal
12

audit of organizationof
(i) Listed companiesor
(ii) Unlisted companies having a paid-up share capital of Rs. 10 crores or moreor
(iii) All companies (private and public) which do not meet the threshold mentioned above
but have public borrowings from banks/financial institutions or public deposits of more
than Rs. 50croresetc.
Further, the corresponding supporting documents/papers must be kept in Bank‟s record.

Zonal Offices to ensure to issue letter of empanelment to all the respective approved Forensic
Auditors mentioned in the Annexure, only after completion of proper documentation as
mentioned in FRMD Circular no. 12/2017 dated 31.03.2017. At the time of issuing appointment
letter, ZOs must ensure to mention fee/remuneration structure, scope of work, time line for
submission of reports etc. so as to avoid any complaints/conflicts at a laterstage.

NPA CHAPTER - ZTC DEHRADUN Page 140 of 162


Assignment of job
After taking decision by the competent authority, for identification of a particular account for
forensic audit, the concerned Zonal Office will issue letter to the approved Firm for assignment of
task of Forensic Audit.
Work may be allocated by the concerned Zonal Manager/Competent Authority, depending
upon experience and reputation of the Firm after doing Due Diligence about conflict of interest
of theconcernedForensic Auditorinthe accountandmustworkatanarms‟lengthsoasto ensure
objective Forensic Audit and unbiased report to find out the correct factualposition.

Utilization of services outside the geographical area


IntermsofBank‟sguidelinesinvogue(referPara11ofFRMDCircular12/2017):
1) Allotment of accounts for forensic audit shall be such that no forensic auditor shall have
more than 2 accounts of PNB for forensic audit at atime.
2) The approved panel of Forensic Auditors will be valid for whole of India; however,
preference for allocation of work to be given to local / nearby located ForensicAuditors.
3) In case a ZO requires to avail services of a Forensic Auditor, not empanelled by them, i.e

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outside their geographical jurisdiction, copy of the agreement signed by that Firm with the
other ZO (which have empanelled that Firm), be kept in their records also. Further,
before assigning the job, such ZOs must ensure to obtain a confirmation from all the

20
other ZOs who have empanelled that Firm, about number of accounts allocated, so that
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the required condition of not more than 2 accounts, is complied with. After assigning an
account to that Firm, it will be responsibility of that ZO (who had not empanelled the Firm)
to inform all the ZOs, who have empanelled that Firm, about assignment of account, so that
19
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they may also up-date theirrecords.


4) Review of performance & Fresh Empanelment process Empanelment will be subject to
satisfactory performance and annual review by the Zonal Office Committee for
3

empanelment of Forensic Auditors, which is to be completed by 31st December, every


year and the minutes of the meeting be kept in record. Documentation need not be done
again for the already empanelled Forensic Auditors, with satisfactory performance. ZOs
will submit its recommendations to Recovery Division HO by 31st December each year to
finalize the process by end ofMarch.
12

Depanelment of Forensic Auditors (refer Para 10.1(e) of FRMD Circular)


In case of unsatisfactory performance or any conflict relating to misconduct/false reporting by any
Forensic auditor, the same committee at HO level will take a view on depanelment /blacklisting
during any time of the year and without waiting for the annual exercise. The names of delisted
forensic auditors shall be reported to HO: Recovery Division for onward reporting to IBA and
circulation to all other offices. HO: Recovery Division shall also circulate the
depanelment/blacklisting of forensic auditor, if any adverse report is received directly from
IBA/Other Banks/Vigilance Division/CBI/Police etc.

According to SASTRA DIVCircular 39/2017: IBA vide their letter no. C&I-II/FA/3449 dated
28.08.17 has sent a list of 75 firms empanelled with them, comprising of:
(i) 36 firms selected for frauds upto an exposure of Rs. 50Crore

NPA CHAPTER - ZTC DEHRADUN Page 141of 162


(ii) 2 firms selected for frauds above Rs. 50Crore
(iii) 37 firms selected under both thecategories.

Out of the firms empanelled by the IBA, some are already empanelled with our Bank and the
details are available in the circular 18/2017 of the Recovery Division. Further, it must be noted
that criteria based on the exposure (of upto and above Rs. 50 Crore) are stipulated by IBA and not
by the Bank. So, while selecting Forensic Auditors, decision be taken based on own analysis and
reputation of the Firms. . In view of the above facts, if required, services of the Forensic Auditors
which are available in the IBA list but are not available in the Bank‟s empanelled list, may be
utilized purely on merits, however priority should be given to the panel already approved by our
Bank. While assigning any task to such IBA empanelled Forensic Auditors, which are not in
Bank‟sempanelled,itmustbeensuredthatrestoftheextantguidelinesstipulatedbyHO:FRMD &
Recovery Division e.g. procedure for assigning the task, payment of fees, review of performance,
period for submission of reports etc. will continue to prevail, for which while sending them the
invitation, our Bank‟s terms and conditions be duly informed to them. Further, segregation of
firms, depending upon the exposure (given above) will be applicable to only those firms which
are in IBA list but not in Bank‟slist.

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Please refer latest SASTRA Div. circular 54/2018dt.10.12.2018for LIST OF IBA
EMPANELLED FORENSIC AUDITORS-REVISEDLIST

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GETTING INFORMATION OF ATTACHABLE ASSETS OF LOAN DEFAULTERS BY
19
OBTAINING WEALTH TAX RETURNS FROM WEALTH TAX AUTHORITIES
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(SASTRA DIV 27/2014 DATED09.06.2014)

Bank has been filing Original Applications (OA) in Debt Recovery Tribunals (DRTs) wherever its
3

dues are Rs.10 lac and above and Civil suits in the Civil Courts where the dues are less than Rs.10
lacs. A number of decrees remain unexecuted due to inability of the bank to provide attachable
assets of the Judgment Debtors. As per Wealth Tax Act, every individual, Hindu Undivided Family
and Company whose net wealth exceeds the maximum amount (presently Rs.30 lacs), is liable to
file Wealth Tax Return. Ministry of Finance, Department of Revenue (Central Board of Direct
12

Taxes) after examining the position has clarified that information on the assets of loan defaulters to
enable recovery of loans by Public Sector Bank (PSB) from such defaulters is in public interest and
if application is made in the prescribed format, to the Chief Commissioner or Commission,
information asked for can be provided.

Procedure of obtaining Wealth Tax Return


(i) Necessary application as per the prescribed format Form-I (Annexure-II) as
prescribed under Sub rule (I) of Rule-9 of Section 42 B of the Wealth Tax
Act, 1957 is to be moved to the concerned Chief Commissioner/or Commissioner
of Wealth Tax. (It is to clarify that the Income Tax Authorities work as Wealth
TaxAuthorities).
(ii) The information is to be sought in respect of the borrower/Mortgagor/Guarantor
ofthe Loanonly.
(iii) The application as aforesaid be signed by an Officer not below the rank of
Manager of the Branchconcerned.
(iv) An undertaking may be sought by the Chief Commission/Commissioner

NPA CHAPTER - ZTC DEHRADUN Page 142of 162


containing confidentiality clause specifying that such information will be
used only for the purpose of recovery of loan and will not be shared.
(v) In order to ensure that tax dues of the Department against the defaulter(if any) are
safeguarded, the concerned bank officials will also submit an undertaking to the
Commissioner wealth Tax, stating that:

―Before appropriation of the surplus amount recovered from sale of immovable/movable


assets of the defaulter, after adjustment of the loan dues, whose information was shared by
the Wealth Tax Authorities with the bank, a No Objection Certificate (NOC) will be obtained
from the jurisdictional CIT (Commissioner of Income Tax), of the loan Defaulter.‖ Therefore
utmost care be taken that on sale of such properties, after appropriation of the sale proceeds
towards recovery of loan amount of the bank, the surplus proceeds or balance, if any remains,
the same is not to be remitted to any person including borrower/obligant unless & until No
objection Certificate is obtained from the jurisdictional CIT (Commissioner of Income Tax) of
the loan defaulter.

Recalcitrant borrower from Public Sector Banks & excercises in camouflage, leading to loss of
valuable resources of the honest public

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(SASTRA DIVCIRCULAR NO. 27/2018 dt.06.06.2018)

Director, Vigilance Section, Department of Financial Service, Ministry of Finance, Government


of India has written a letter dated 28.05.18 on the captioned subject addressed to Chairman of SBI

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&ChairmanandManagingDirectorofallPSB‟s,highlightingthefollowingpoints:

1. RBI vide its Notification no. RBI/DBS/2016-17/28 dated 01.07.16 (updated on 03.07.17) has
19
enumerated guidelines (under Consortium loans or Multiple Banking arrangement) to classify any
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Standard/NPA account as RFA or Fraud wherein it is mentioned that within 15 days of


RFA/Fraud classification, the bank which has red flagged the account or detected the Fraud would
ask the consortium leader or the largest lender under Multiple Banking Arrangement (MBA) to
3

convene a meeting of JLF to discuss theissue

2. Department has come across instances where the Banks have chosen to lift the red flagging of
an account for the reason that the Forensic Audit into the Account was inconclusive due to non-
cooperation of the borrower. Such a decision appears to provide a perverse incentive to the
borrower to not cooperate with ForensicAudit.
12

3. Under these circumstances where the borrowers do not share information with the Auditors and
the Forensic Audit Reports remain inconclusive, the JLF, based on such inconclusive reports,
defer the declaration of the account as Fraud or otherwise, which ultimately defeats the very
purpose and content of RBIcircular.

4. Such instances of inconclusive Forensic Audit Reports, resulting from uncooperative borrower,
necessitate taking suitable action in such cases to ensure that Bank‟s interest is not jeopardized.
Banks may keep this aspect in view while deciding suchcases

In view of the above, all the field functionaries are advised to keep the advisory issued by
the Ministry in mind while dealing with Forensic Audit Reports ofborrowers.

NPA CHAPTER - ZTC DEHRADUN Page 143of 162


CHAPTER 17-
MONITORING OF QUICK MORTALITY CASES – (SASTRA DIV 06/2015 dated
24.02.2015)
EMPANELMENT OF VALUER – CONSOLIDATED GUIDELINES (SASTRA DIV 25/2017)
Bank‟s consolidated guidelines on empanelment of valuers and the panel of valuers are given in
SASTRA DIVCir 25/2017 dated 08/05/2017.Field officials must also ensure compliance of the
“Policy on Valuation of Assets” issued by HO: Integrated Risk Management through their Circulars
issued from time to time, latest being IRMD L& A Circulars no. 46/2017 dated 05.05.2017.

(i) Land & Building/RealEstate


(ii) Plant &Machinery
(iii) Agricultural Land (Newly introducedcategory)
(iv) Agricultural Land-Plantations (Newly introducedcategory)
(v) Stock (Inventory) & Shares (Newly introducedcategory)
Before entrusting any valuation job, it should be ensured that the name of the approved Valuer does
not appear in the list of Black listed Valuers , issued by the Head Office Recovery Division from time

:41
to time (latest being SASTRA DIV24/2017 dated 08.05.2017)

The revised Fee Structure (including SARFEASI), both, for Immovable Properties and Plant
& Machineryis appended:

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VALUE OF PROPERTY VALUATION FEE* (RS.)
MINIMUM MAXIMUM
19
Upto Rs. 20 lacs 1000/- 1500/-
/03 41

Over Rs. 20 lacs to Rs. 50 lacs Rs.1500+ 0.05% of amount above Rs. 20 lacs 2500/-
Over Rs. 50 lacs to Rs. 1 cr Rs.2500+ 0.05% of amount above Rs. 50 lacs 4500/-
Over Rs.1 cr to Rs. 5 cr Rs.4500+ 0.005% of amount above Rs. 1 cr 9000/-
3

Over Rs. 5 cr to Rs. 10 cr Rs.9000+ 0.005% of amount above Rs. 5 cr 15000/-


Over Rs.10 cr Rs.15000+ 0.005% of amount above Rs. 10 cr 25000/-
*Note: The fees are inclusive of out of pocket expenses. However, in exceptional
circumstances, Circle Heads may permit payment of fees to valuers beyond the above ceilings
subject to a maximum of Rs.50,000. Further, Incumbents Incharge of LCBs (specialised
branches, with heavy credit portfolio requiring valuation of high value primary/collateral
12

securities), in exceptional circumstances, shall also exercise discretionary powers for payment of
fees to valuers beyond Rs.25,000/- subject to a maximum of Rs. 50,000/-. Circle Heads/
Incumbents Incharge of LCBs shall exercise these powers strictly on merits of each case keeping
in view the quantum of work involved.
It is pertinent to mention that the above fee structure which was previously applicable for
immovable properties only, will now be applicable for both, Immovable Properties and
Plant &Machinery.

Please refer SASTRA DIVISION CIRCULAR NO. 53/2018 dt.10.12.18 for BLACKLISTING
OF VALUERS-SHARING OF INFORMATION

NPA CHAPTER - ZTC DEHRADUN Page 144of 162


CREATION OF STRESSED ASSET MANAGEMENT VERTICAL
(SAMV)(SASTRA DIV Cir no 23/2018 dt 23.05.2018)

Ministry of Finance, Government of Indiahas laid down certain parameters for


providingadditional capital to the Public Sector Banks.One of the important parameters is
―creation of a Stressed Asset Management Vertical (SAMV)‖.
For further details of SAMV, kindly refer circular as mentioned above.

NPA Resolution - Felicitation of outstanding performers - SAMV


SASTRA DIVISION CIRCULAR NO. 40/2018

In compliance of parameters laid down by Ministry of Finance, Bank has created Specialized
Stressed Asset Management Verticals (SAMVs) for focused recovery efforts through the
dedicated and motivated teams. The guidelines relating to the scope, roles and responsibilities of
the Vertical along with that of the staff deployed for the functioning of the vertical were
circulated vide Recovery Division Circular No.23/2018 dated 23.05.18.The guidelines for
felicitation for outstanding performers were to be submittedseparately.
Recognizing the fact that a motivated and charged workforce can deliver better results, proposed

:41
broad guidelines on Rewarding &Recognizing outstanding performers are given in the circular.
KINDLY REFER THE ABOVE CIRCULAR FOR FURTHER DETAILS.
Additional role of SAMV persons by giving them SV users in CBS by circle offices through

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application name as “SAMV-SV Users”.The user would generate data validation report
under PNBREP/PNBRPT and modifying necessary details at account level for asset classification,
repayment and moratorium periods and filling correct security details.Menus in finacle available
19
shall be a)Customer account Inquiry,b)Change context service outlet,c)Customer Account
/03 41

Maintenance through HACI/HACILA,


d)System asset classification,e)Collateral maintenance(HCLL),Loan Overdue Position Inquiry
(HLAOPI)f)Transaction Inquiry(HTI)g)PNBREP,h)PNBRPT,i)HPR,j)DELPQT .Modifications done
3

by SV user shall be authorized by another official.For further details please refer to SASTRA DIV
cir no 4/2019.
The cir also speaks about work of SAMV staff 1)Field visit 2)Actions under SARFAESI,U/S
138 of NI act,Lodging of FIRS,RECOVERY SUIT WITH drt/nclt,initiate process of willful defaulter,
restructuring etc.3)Task assigned by branch/Circle vertical head,4)Should know all the
12

recovery guidelines(Resolution/restructuring/SARFAESI/General OTS/Special OTS etc)


of the Bank.5)Maintain and update database of the defaulters in CBS,LADDER and other Portals
For further roles of SAMV staff refer to SASTRA div cir no 23/2018..

NPA MODULE IN CBS

UPDATION OF DATA OF NPA ACCOUNTS IN CBS SYSTEM(SASTRA DIV26/2016)

All information related to NPA accounts is extrapolated from the CBS system, including inputs
required for the LADDER, which further facilitates to generate various statements, including
quarterly closing returns based on which, asset classification and provisioning requirements, as
per RBI‟s guidelines, are complied with. During finalization of the Bank‟s balance Sheet on
quarterly basis, NPA provisioning vouchers are passed in the books of accounts of the bank,
having direct bearing on profitability of theBank.
NPA CHAPTER - ZTC DEHRADUN Page 145of 162
Observations made by RBI & ACB
“Value of security is not up-dated in the system periodically, especially in NPA accounts.”
Importance of up-dation of data in the system
 In a loan account, non-updation of stock statement‟s date may result in slippage to NPA
category due to non-financialparameters.

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3
12

NPA CHAPTER - ZTC DEHRADUN Page 146of 162


 In an NPA account, despite upward revision in value of security after revaluation, Bank
will be making higher NPA provision, which will adversely affect profitability of the Bank,
unnecessarily.Thus,itisveryimportantthat,Bank‟sguidelinesonperiodicvaluationof
securities in all loan accounts, including NPA accounts are adhered to. On the other hand in
a multiple banking and/or consortium advances, only our Bank‟s share must be mentioned in
the system to calculate correct NPA provisionrequirement.

 There will be wrong classification of accounts and thus the financial results of the Bank
will not depict a transparent and true picture and attract unwarranted observations from the
RBI, SEBI, Investors and general public at large, aswell.

As such account-wise data should be up-dated in the CBS, especially in NPA accounts, periodically,
in all thebranches
ACTIVITY AFTER CLASSIFICATION AN ACCOUNT AS NPA

Some accounts during the life time of loans and advances becomes irregular because of various
reasons and are required to be monitored closely. Based on the guidelines of Reserve Bank of
India and SAMD HO New Delhi these accounts are identified as NPA. Focused and continuous
attention is required for the remaining period of the account till its closure.

:41
The NPA accounts can be closed in one of the following ways:
UPGRADATION TO INITIATION OF LEGAL ACTION WAIVER OF

20
NORMAL CATEGORY LEGALACTION
/20 402
1) Through Recovery 1)SARFAESI 1) Compromise/
2) Through 2)Suit filed /Decree / Executionof OTS
Restructuring Decree 2) WriteOff
19
3) Compromise
/03 41

4)WriteOff
3

NPA are to be categorized in separate GL/SGL heads to have instant data related to fresh addition
/ reduction and NPA Level as on any date.

Description GL Sub Head Description GL_SUB Balance


Head Sheet
Code code
12

Non Performing NPA Demand Loan 76100 62120


Advances ( Weekly code-
55299, OfficeAccount
Code-<Sol_id5529901)
NPA Cash Credit 76110
NPA OverDraft 76115
NPA Term Loan 76120
NPA Inland Bills Purchased 76125
NPA Inland Bills Discounted 76130
NPA Pre-shipment Advances 76135
NPA Foreign Bills Purchased 76140
NPA Foreign Bills Discounted 76145
NPA Advances to Commercial banks in 76150
India
NPA Advances to Co-operative Banks in 76155

NPA CHAPTER - ZTC DEHRADUN Page 147of 162


India
NPA Advances to banks outside India 76160
NPA – Others 76165
NPA – suit filed 76170
NPA Decreed 76175
NPA Borrowal Fraud 76180
Non Borrowal Impaired Loss of Cash Internal Fraud 86100 63120
Assets (Weekly code
57117, Office a/c
<Sol_id5711701)
Non Borrowal Impaired Loss of Cash Theft / Dacoity /Burglary 86100 63120
Assets (Weekly code
57117, Office a/c
<Sol_id5711702)
Non Borrowal Impaired Other than Loss of Cash Internal Fraud 86100 63120
Assets (Weekly code
57117, Office a/c
<Sol_id5711703)

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Non Borrowal Impaired Other than Loss of Cash External Fraud 86100 63120
Assets (Weekly code
57117, Office a/c
<Sol_id5711704)

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Non Borrowal Impaired Non-borrowal impaired _ others 86100 63120
Assets (Weekly code
57117, Office a/c
19
<Sol_id5711705)
/03 41

1. „NPAGLXFR‟ - for transferring the NPA accounts to appropriate NPA GLCodes.


3

2. „MEAC‟ -forchangeof assetclassification code.


3. „UPGNPA‟ - on up-gradation, account has to be shifted from NPA GL Head to
Corresponding operative GL Head as well as the Classification of account has to be
changed to Standard through Menu option MEAC. For the convenience of the user, a
menu option „UPGNPA‟has been customized for combined (Shifting of GL Head and
change of classification)activity.
12

CLASSIFICATION OF ASSETS - CODE

Main Classification:
01 - PerformingAsset
02 - Non- PerformingAsset

Sub Classification:
001 - Standard Asset
002 - Sub-standard Asset
003 - Doubtful Asset
004 - Loss Asset

A menu option NPADET (six sub menu options) has been customized to capture additional data
required for these reports

NPA CHAPTER - ZTC DEHRADUN Page 148of 162


MENU OPTION DESCRIPTION
NPAD NPA A/C RELATED DETAILS
COWO COMPROMISE / WRITE OFF DETAILS
SARF SARFAESI DETAILS
RCYM RECOVERY DETAILS
RADM RECOVERY AGENT DETAILS
MISC MISC. DETAILS

User is required to feed data related to all NPA accounts marked in the CBS system using the
menu option „NPAD‟.
This data is required to generate the following:
1. Memoranda of dues(RI).
To create the memoranda records user is required to follow the steps given below:
i) Generate report through menu option PNBRPT 28/3 (Report to know the list of
NPA A/Cs
to be entered through menu option „ NPAD‟)
ii) Feed all the relevant fields through the menu option (NPAD).

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RELEVANT FIELDS FOR CREATION OFMEMORANDA ARE EXPLAINED
HEREUNDER:

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MENU OPTION - NPAD

FIELD DESCRIPTION
19
FUNCTION CODE Options are available at key
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F1.(Add/Modify/Inquiry/Delete/Undelete/Cancel/Verify).
ENTITY TYPE user to input „AC‟-Account in this field
User has to give valid account no. of sixteen digits. Customer
3

ENTITY ID
id will be populated on press of key F4.
DI/SI REVERESED DI/SI reversed and credited in the account as per revised
/APPROPRIATED guidelines or appropriated during write off be given in this
field
RI Unrecovered interest amount up to the last accrual date(last
12

interest applied upto NPA date), This date has been made
available in report(PNBRPT-28/3). RI will be calculated by
the system after this date
DICGC/CGFT Claim received amount/appropriated at the time of write off be
given here.
EXTENT OF Extent of Amount of guarantee availableto
GOVT.GUARANTEE secure the outstanding amount in the account from
Central/stategovt
NET MEANS OF Amount of net means of guarantor as per latest
GUARANTOR CR.
IP OF GUARANTOR Value of IPs available as part of net means of guarantor
CONSORTIUM Name of banks/FIs if applicable
BANKS/FIs
EXPOSURE IN LOANS Amount of loans at exposure in the account
SHARE ON SECURITY percentage of share on security available

NPA CHAPTER - ZTC DEHRADUN Page 149of 162


MODE OF RESOLUTION It is a text field of 70 character length. Userhas to propose
PROPOSED appropriate action/strategy for resolution of the account e.g.
(If RC filed user to enter “RC FILED ON 01-01-2015”) Date
can be changed
EXPECTED DATE OF Expected date of account closure is to be given on the basis of
ACCOUNT CLOSURE action/strategy suggested in the previous field
REASON FOR NOT SUIT If suit has not been filed in the account the reasons for
the same in short be given as text in this field
STAFF It is also a text field of 70 character length. User has to give
ACCOUNTABILITY brief information on staff side
SUIT STATUS If suit has been filed in the account. The status of the suit is to
be given in brief.
RCVRY APP TO DISI In case of recovery in the account the amount appropriated
against recovery of DI/SI be reported in this field
RCVRY APP TO RI In case of recovery in the account the amount appropriated
against recovery of RI be reported in this field
RCVRY APP TO DICGC In case of recovery in the account the amount
appropriated for remitting to DICGC be given in this field

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INCOME BOOKED to be discussed with SAMD
CDR flg?: Appropriate value is „Y‟or „N‟(value „Y‟is to be given if
account hasbeen restructured as per extent guidelines on
corporate debt restructuring issued from time totime.

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TECH WRITE OFF DATE Date of technical write off be given in this field if available
(list of technically writen off account is available with HO
SAMD).
19
TECH WRITE OFF AMT Amount written off in such accounts be given in this field.
/03 41

NOTE: THE DETAILS ENTERED THROUGH THE MENU OPTION ARE TO BE VERIFIED
BY THE OTHER USER WITH FUNCTION „V‟ THROUGH THE SAME MENU
3

OPTION.

Though these fields are not mandatory, but (0.00) may be entered if nothing is to be reported
against these fields instead of leaving blank. Values fed in this fields will populate in the
relevant fields at screen in menu option “COWO”. The details of other fields which shall be
12

used for generation of other NPA monitoring reports(NPAMGT) are givenbelow.

SARFAESIDETAILS
Menu Option =SARF
FIELD DESCRIPTION
FUNCTION CODE Options are available at key
F1.(Add/Modify/Inquiry/Delete/Undelete/Cancel/Verify).
ACCOUNT NUMBER USER TO PUT ACCOUNT NUMBER
ACCOUNT NAME USER TO put account name here
ELIGIBLE FOR Whether account is eligible for Sarfaesi Action put Y/N
SARFAESI
Date of eligibility Mention here date when account is eligible for Sarfaesi action
DATE OF NOTICE 13(2) Give here date of notice issued under Sarfaesi act section 13(2)
DATE OF NOTICE 13(4) Give here date of notice issued under Sarfaesi act section 13(4)
DATE OF POCESSION GIVE date when possession of security taken
OF SECURITY
NPA CHAPTER - ZTC DEHRADUN Page 150of 162
NATURE OF SESCURITY Give here nature of security
DATE OF SECURITY Put here date when security was sold
SALE
SECURITY SALE Sold amount of security
AMOUNT
APPROACHED FOR Whether customer approached for compromise?
COMPR
COMPROMISE Whether compromise has been settled or not?
SETTLED
OTS Recovery amount If compromise settled give here OTS Recovery amount
Other Recovery Amount If recovered other the OTS give amount here
NPA Account sale date IF NPA account sold give date of sale here
SC/RC/OTHER Put here to whom NPA Account has been sold
BANK/NBFC
NPA A/c SALE AMOUNT Give here Sale Amount of NPA
LATEST STATUS Give here present status of the account which be modified time
to time
DI REVERSED DI reversed amount put here

:41
DICGC CLAIM STATUS of DICGC Claim be given
APPROVED
ECGC CLAIM Status of ECGC Claim be given

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APPROVED
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NRR Balance Give here net recoverable amount
PROVISION HELD Put here provision amount
19
KITTY AVAILABLE IN WRITTEN OFF ACCOUNTS
/03 41

The guidelines for creation of write off kitty are applicable to both existing written off accounts
(not close in the system) and accounts which will be written off after the cut off date
3

(31.03.2010).

(KITTY=AMOUNTACTUALLYWRITTENOFFMINUSRECOVERIES AFFECTED IN
THE ACCOUNT AFTERWRITE OFF ) Out of all theNPA accounts,entered through NPAD,
data related to written off accountsare to befed.
12

COMPROMISE AND WRITE OFF DETAILS


MENU OPTION = COWO
FIELD DESCRIPTION
FUNCTION CODE Options are available at key F1. Add/Modify/Inquiry/Delete/
Undelete/ Cancel/Verify).
ACCOUNT NUMBER The sixteen digits account number be given for which details
have already been fed through Menu option NPAD
ACCOUNT NAME The name will populate on press of key F4 after giving account
number.
DI/SI DI/SI amount entered throughNPAD will populated here
automatically, otherwise it is to be entered through NPADmenu
option
RI Amount of unrecovered/recorded interest as entered through
NPAD will populate here automatically, otherwise it is tobe
entered through NPAD menu option.

NPA CHAPTER - ZTC DEHRADUN Page 150 of 162


DICGC/CGFT Amount of claim as entered through NPAD will populate here
automatically, otherwise it is to be entered through NPAD menu
option
Base amt/WO amount Ledger outstanding in the account as on the date of
write off be given in this field.
WLA Flg Valid values are„Y‟ or„N”
WLA Date Date of WLA(Waiver of legal action) approved be given in this
field
Written Off Flg ?: Valid values are„Y‟ or„N‟–to be mentioned as„Y‟when the
account is written off.
Written Off Date Date of write off i.e. when the amount of revenue loss was
credited in the account be given in this field
Revenue Loss Amount of revenue loss, (i.e) the amount credited in the written
off account be given in this field. (The amount should be equal to
Base amt- DICGC+DI Appropriated)
Written Off Apprv Lvl Write off approval level be given in this field. Help is
available at key F1.
DETAILS IN OTHER FIELDS ARE NOT REQUIRED FOR CREATION OF

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WRITEOFF KITTY HOWEVER IF COMPROMISE IN WRITTEN OFF ACCOUNT
ISAPPROVED THE DETAILS IN OTHER FIELDS SHOULD ALSO BE ENTERED.

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Apprch for Comp? Value „Y‟be given if party has approached for compromise or
else value „N‟ be given in this field
Mode of Settlement : User has to select one of the modes of settlement available
19
on F1key. „LA‟for Lok Adalat, „RA‟for recovery agencies,
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„RC‟ for recovery camps and OTH for others.


Compr( OTS) date Date of approval of compromise be given in this field
Compr (OTS) Amount Amount of compromise be given in this field
3

Compro Appro Lvl.: list of Compromise approval level is available at key


F1.Appropriate value to be selected
Compromise due date The earliest due date of depositof compromise Amount
/installment by the party be given in this field. The next date is to
be fed in case of compromise amount is payable in more than one
12

installment and the date should be fed after expiring of the earlier
date
Amt Payable Due date The amount of compromise due on thedate mentioned inthe
previous field
Fresh Dr. to Bkrevenue As mentioned in OTS Proposal
Waiver Int Exp (RI) As mentioned in OTS Proposal
Set off DI/SI Amount As mentioned in OTS Proposal
Income to be Booked In case compromise amount is more than the ledger
outstanding the surplus credit transferred to income amount be
given in this field
Set off of provision As mentioned in OTS Proposal
Compro failed If compromise is failed reasons in brief be given in the next three
fields.

NPA CHAPTER - ZTC DEHRADUN Page 151of 162


NOTE: THE DETAILS ENTERED THROUGH THE MENU OPTION ARE TO BE VERIFIED
BY THE OTHER USER WITH FUNCTION „V‟ THROUGH THE SAME MENU OPTION.

RECOVERY IN NPA/WRITTEN OFF/OTS APPROVEDACCOUNTS

User is required to feed recovery upto 31.03.2010 in all NPA accounts through menu option
RCYM as the recovery details of all NPA accounts may not be available in the CBS system due
to migration of account through different legacy systems. The recovery details can be entered
through the menu option in consolidated form in single entry with date of recovery as
31.03.2010.The records of recovery after 31.03.2010 will be taken into report from the CBS
system.

RECOVERY DETAILS
MENU OPTION = RCYM

This menu option is to be used for handling recovery received in written of accounts.
The fields are explained here under :

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FIELD DESCRIPTION
FUNCTION CODE User to select function code „A‟ (ADD)
ACCOUNT NUMBER The valid account no. of sixteen digits be given, for which
details are required to be entered

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ACCOUNT NAME The name will populate on press of key F4 after giving account
number in the previous field.
WO/Compr Recvry? Validvalueis„W‟forrecoveryinwrittenoffaccounts,„C‟forOTSapprov
19
edin writtenoff accountsand „N‟forall otherNPA
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accounts which neither written off nor compromised


Mode of Rec Help at Key F1 is available. Valid values are „LA‟ for Lok
Adalat, „RA‟ for recovery agencies, „RC‟ for recovery camps
3

and OTH forothers


Recovery Date In respect of existing accounts user to give date of recovery as
31.03.2010.
Recovery Amount Consolidated recovery amount for an account up to the cut off
date i.e 31.03.2010 is to be entered
12

NOTE: Verification of records entered through RCYM is not required. User is required to enter
details through menu option NPAD and COWO for the accounts written off even after the
31.03.2010 but recovery details in such accounts will not be required to be entered by the user
through menu option RCYM.

RECOVERY AGENT DETAILS


MENU – RADM

FIELD DESCRIPTION
FUNCTION CODE Options are available at key F1. Add/Modify/Inquiry/Delete/
Undelete/ Cancel/Verify)
ACCOUNT NUMBER The valid account no. of sixteen digits be given, for which
details are required to be entered
ACCOUNT NAME The name will populate on press of key F4 after giving account

NPA CHAPTER - ZTC DEHRADUN Page 152of 162


number in the previous field.
Agent Code Give here Recovery Agent code allocated
Agent Name Give here name of Recovery Agent
Date of Allocation Date of Allocation of the account for recovery be mention here
Commission paid Commission paid for this account for recovery

MISCELLNAEOUS DETAILS
MENU – MISC

FIELD DESCRIPTION
FUNCTION CODE Options are available at key F1. Add/Modify/ Inquiry/
Delete/Undelete /Cancel/Verify)
ACCOUNT NUMBER The valid account no. of sixteen digits be given, for which
details are required to be entered
ACCOUNT NAME The name will populate on press of key F4 after giving account
number in the previous field.
SECTOR Give here Sector as RBI loan classification
Method of lending Give here method of lending whether consortium etc.

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CONSORTIUM DETAIL Put here maximum 70 character name of bank etc.
MRTP/GROUP Give here details of Group etc.

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REPORTS - PNBRPT 28 (NPA MANAGEMENT)
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1. Report on NPA a/c not transferred to NPA GLHEAD
2. Report on RI Calculation and MemorandaDues
19
3. Report of NPA Accounts details not entered inNPAD
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4. Report on WRITE OFF KITTYPOSITION


5. Report of standard a/cs under NPA GLhead
6. Report on status of charges due in NPAa/c
3

7. Report on appropriation of charges pending in NPAa/c


8. Report on Related A/Cs of NPA Accounts for a SOL

OTHERREPORTS
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1. List of a/cs where limitation has expired (PNBRPT3/5)


2. List of a/cs where limitation is going toexpire.
(PNBRPT3/5A)

FIELDS REQUIRED FORPROPER GENERATION OF LIMIATION EXPIRED


ACCOUNT RELATEDREPORTS

REASON FIELD DESCRIPTION


LIMITATION EXPIRY Mention Debt acknowledgement date in S details of
Account through ACM-M option and verify
NPA ACCOUNTS Use Menu NPAD and fill up details of (i) DI REVERSED
(ii) RI UPTOACCRUAL DT (iii) PROVISION (iv)
DICGC/CGFT (v)ECGC
RC FILED CASES Update suit status field in NPAD menu giving RC FILED
ON [ DATE] field
SUIT FILED /DECREE Update GL sub head code of the account through TACBSH

NPA CHAPTER - ZTC DEHRADUN Page 153of 162


OBTAINED
WLA (WAIVEMENT OF Update through menu Option COWO – Enter “Y” in WLA
LEGAL ACTION) APPROVED approved field and give date of WLA
WRITTEN OFF CASES Use COWO menu and update Written Off Flag “Y”, Date
of write off, Revenue loss amount if any, Write off approval
level.

RESTRUCTURED ACCOUNT MAINTENANCE IN CBS

To facilitate data addition / modification /deletion / inquiry in CBS in respect of restructured


facilities the existing menu option RSAM is to be used and data may be fed in following ways:

Account Number Valid account number is one which has been rescheduled in CBS i.e.
the Schedule No. in E-details is other than 01. In CBS it is
necessarytore-phasetherestructuredfacilityfirstandthenaddit
through RSAM
Repay Start Date This date need not be entered as the system will automatically pick
up the same from E-details of the account
Restruct Reason Suitable codes from the list should be filled in

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Deleted? This field is not accessible. It only populates the status of deletion of
a particular record
Multiple Records This field is not accessible.

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Date of Restructure This should be the date on which account is rephrased / rescheduled
in the system
Remarks This is a free t ext column to be filled with any relevant information
19
pertaining to the account
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CDR Flag This flag should be Y for the a/cs restructured under CDR
mechanism where multiple banks are involved. For MSME
accounts,thisflagwouldalwaysbeN.Necessarycheckshavebeen
3

put in the system


Cut Off Date This is a mandatory field. For all restructured customers of Rs.1
crore & above category, the Cut Off date should be a past date i.e.
the date, balance as on which has been referred in the restructured
proposal. The Cut off date for below 1 cr category of customers
should be same as the Date of Restructure. The cut off date is
12

relevant for all those customers where diminishing fair value (DFV)
or provisioin on account of sacrifice is required to be calculated. As
per extant guidelines, DFV is computed for customers withexposure
Rs.1 Cr. And above.
Exit CDR This flag is by default shown as N and relevant for only those
accounts where CDR flag I Y. Whenever, restructured fails and the
customer is downgraded to NPA, this flag is required to be updated
toYafterobtainingdueapprovaloftheCDRforum.Thevalueof
this flag can be Y only for NPA accounts.

MODIFICATION IN RSAM MENU VIA MSME CIR 13/2019 – For data maintenance of restructured accounts
under MSME inn RSAM menu “M” - MSME field has been added. Previous restructuring in MSME done as per
MSME cir 40/2016 too, has too , is to be entered using RSAM menu.

NPA CHAPTER - ZTC DEHRADUN Page 154of 162


Modification in restructuring power in MSMEvia MSME Cir 11/2019 –
Upto SMALL Branch (Scale – 1) – NIL
Medium Branch/LARGE/VLB/ELB/MCB/LCB – Upto vested loaning powers as per loaning power chart.
For FITL/WCTL powers utilized shall be as laid under unsecured loans.
Loaning powers as per LA Cir 122/2017, restructuring power MSME 40/2016 & LA Cir 449/2018 may be referred.

MSME Cir no 12/2019 dt 27..02.2019 – inclusion of food and agro processing units for restructuring , upto
sanctioned limits of Rs.100 crores per borrower registered as MSME and falling under the ambit of one time
restructuring scheme of RBI for MSME dated 01.01.2019 , as notified by our bank via MSME cir 03/2019 dt
14.01.2019 and 11/2019 dt 27.02.2019

NPACHRG – HANDLING OF CHARGES IN NPA ACCOUNTS - GUIDELINES


Expenditure/Charges like Law Charges, Postage Charges, misc charges etc. are debited to
separateaccount(expenditureAccount)andnotinLoanaccountitselfforNPAAccounts,to
identify such charges and to recover from customer on receipt of recovery made in the NPA
account thereafter, a separate menu option “NPACHRG” has been customized in CBS.

This menu has following 3 features:-

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1. C- Capturing of Charges: - Charges debited to office accounts (expenditure Account)
with respect to NPA Account can becaptured.
2. W- Waiver of Charges: - In case of OTC/Write –off, charges made for the NPA account

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may required to be waived. The same can be done for the already captured charges (partof
orfull).
3. R- Recovery of Charges: - System will check credits made in NPA Account from the last
19
recovery date and create transaction, for outstanding charge amount or recovery made in
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the account whichever is lower, debit the Loan Account and credit the expenditure head
which ever has been debitedearlier.
3

For monitoring following 2 reports are made available in CBS-MIS:

PNBRPT- 28 /6:- Status of Charges due in NPA Account (for a set)


PNBRPT- 28 /7:- Appropriation of recovery of Charges pending in NPA Account (for a set)

Users are required to capture charges incurred for recovery of NPA account debited to
12

expenditure head directly. Capturing of charges should be made separately of each loan account
vis-à-vis expenditure account. Branch users are required to run menu option for „C‟ option for
capturing of charges as and when incurred and debited to expenditureaccount.

Branch users are required to recover the charges on recovery in the NPA account. For the
convenience of the user, PNBRPT-28/7 report has been customized which will show all the NPA
accounts wherever recovery has been received and appropriation of recovery for the charges made
in the expenditure account has not been done.

Menu option – NPACHRG

There can be following 5 valid Function Codes A – Add I - Inquire M – Modify D – Delete V –
Verify

ENTERING CHARGE DETAILS TO BE RECOVERED


Here user has to input required data for a Account, help is available on F1 key press. A – Add
NPA CHAPTER - ZTC DEHRADUN Page 155of 162
(For type – C - Charge details of payment made from office account for a NPAAccount)

Valid Data Fields are as under:

Field Inputs
Function Code A- Add, M-Modify, V-Verify, D-Delete, I-
Inquiry
Loan Account 16 digit Account number of the customer
Total Amount Due Auto Populated on the basis of existing data
Total Charges
Total Waiver
Total Recovery

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NPA CHAPTER - ZTC DEHRADUN Page 156of 162


Option C- Charge details capturing ,W- Waiver of
charges, R- Recovery of charges
Amount to be filled only if Amount of Charges/Waiver , Auto
option is C/W Populated in case of R- Recovery
Charge Account Number to be filled only if Office Account from which
option is C-Charge charge/expenditure has been debited for the
(to be blank for NPA Account. On recovery the same
W-Waiver or account will bereversed.
Charge Particulars R-Recovery) Charge Particulars, Description
Charge Date Tran Date of Charge made from office
account for the NPA Account
Confirm (Y/N) Y/N

M – Modify (Unverified record can be modified, after Verification modification not allowed)
V – Verify - Verification should be done with user other than the one who has Added/Modified.
Verification is must after any of the operation (Add/Modify)
I – inquiry (Input Account Number, only Status like total charges, waiver, Recovery and total

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amount due is displayed in Inquiry, for details reports are also available)
D – Delete ( Only unverified record can be deleted)

WAIVER DETAILS OF NPA ACCOUNT

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A – Add (For type – W - Waiver details for a NPA Account, Waiver amount should be less than
the outstanding amount)
I – inquiry (Input Account Number, afterwaiver)
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RECOVERY DETAILS OF NPAACCOUNT


A – Add (For type – R - Recovery details for a NPA Account, Recovery amount is calculated
automatically by the system on the basis of credits after the charge/last adjustment date)
3

V – Verify - Verification should be done with user other than the one who has Added/Modified.
Verification is must after any of the operation (Add/Modify)
On verification Transaction is created debiting customer account and crediting Expenditure head
which was debited earlier for the charges (as per the details added in C-option of NPACHRG
menu)
12

NPA MANAGEMENT REPORTS:-MENU OPTION - NPAMIS ( PHASE –I )

Sr.No. Module/report name Report description


1 SAMD_3 Sec. 1 portfolio analysis part A
2 SAMD_4 Sec.2 Classification of risk assets part A
3 SAMD_5 DSB: Off Balance sheet items.
4 SAMD_6 Sec.3 Change in asset quality profile.
5 SAMD_7 Quarterly Balance
6 SAMD_8 Top Impaired Accounts
7 SAMD_9 Industry wise exposure of NPAs
8 SAMD_10 Zone wise of position of High value NPAs
9 SAMD_11 Asset wise breakup of High value NPAs
10 SAMD_12 Customer NPA Profile
11 SAMD_13 Fresh slippage as on date
12 SAMD_14 Fresh slippage and cumulative postion
NPA CHAPTER - ZTC DEHRADUN Page 157of 162
13 SAMD_15 NPA accounts fallen below Rs.1 Crore.
14 SAMD_16 Evaluation of High value NPA accounts.
15 SAMD_18 Amount wise breakup of Gross NPA
16 SAMD_20 Movement of NPA since beginning
17 SAMD_21 Comparative position of NPAs
18 SAMD_22 Movement of NPAs
19 SAMD_23 Top 100 NPA accounts below Rs.1 Crore.
20 SAMD_33 Additional disclosure in balance sheet
21 SAMD_36 Monitoring Management of NPAs
22 SAMD_37 Visit of Sr.Executive from HO
23 SAMD_48 Resolution strategy on Individual accounts
24 SAMD_49 Amount wise break up of gross NPA(Comparision
with previous Half Year.
25 SAMD_50 Analysis of Balance sheet.
26 SAMD_53 NPA related Budget V/s Performance
MENU OPTION – NPAMGT (PHASE-II)
Sr.No. Report name Description
1 SAMD_REC1 Weekly reduction of existing NPAs

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2 SAMD_REC2 Weekly reduction of existing NPAs amt wise
breakup
3 SAMD_REC3 Weekly reduction out of fresh slippage in last FY

20
4 SAMD_REC4 Weekly reduction out of fresh slippage in last FY
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amt wise breakup
5 SAMD_REC5 Weekly reduction out of fresh slippage since last YE
6 SAMD_REC6 Weekly reduction out of fresh slippage since last YE
19
amt wise breakup
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7 SAMD_REC7 Recovery though recovery agents


8 SAMD_SAR1 monthly return progress report on
3

recovery/reduction in NPAs for the period


9 SAMD_ SAR2 Monthly return SA II : Summary of enforcement
action as on month end date
10 SAMD_ SAR3 for accounts which are NPA as on statement despite
issuance of notices
11 SAMD_ SAR4 Details of financial assets sold to
12

securitization/Reconstruction companies/other
Banks/Fis/NBFCs during the Qtr.
12 RBI_M1 Details of borrowal accounts with working capital
limit of Rs.10 crore and above from the entire
banking system
13 SAMD_M2 Details of Primary/ Collateral security -
ANNEXURE 1
14 SAMD_TWO Position of HO indentified accounts
15 SAMD_LOSS Review of loss assets for the half year ended with
the outstanding of Rs. 10 lac and above
16 SAMD_RLEST Statement of NPA under Real Estate
17 Fresh slippage 5 crore and above during the prev.
SAMD_SLP5C
Qtr.
18 SAMD_REUP1 Recovery/ Up gradation of Rs. 1 Crore.
19 SAMD_OTSWO OTS approved in write off accounts for the qtr.

NPA CHAPTER - ZTC DEHRADUN Page 158of 162


20 SAMD_CSLA Compromise settlement by Lok Adalat
21 SAMD_RTRC Recovery through recovery Camps
22 SAMD_MZCA Month wise/zone wise compromise approved.
23 Reduction in NPA:Recovery in comp.prop.
SAMD_RCPA
approved.
24 SAMD_RPAD Recovery position as on date.
25 SAMD_RWOA Recovery in written off accounts
26 SAMD_WOPQ Write off proposals for qtr end.
27 SAMD_HVNPA Evaluation of high value npa accounts
28 SAMD_PDCLA Prudential classification.
29 DATA_INP List of data captured accounts.

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NPA CHAPTER - ZTC DEHRADUN Page 159of 162


MARKING LIEN ON DEPOSIT ACCOUNTS OF NPA BORROWERS (SASTRA DIV35/2016)

Bank has a right of lien/set-off of amounts deposited by the party in any account towards their
overdue loan liabilities, Head Office: IT Division has already customized reports and placed
under DAYRPT 24/11 & DAYRPT 24/11A and PNBRPT 28/8, PNBRPT 28/8A & PNBRPT
28/8B.Further a menu option ―MARKLIEN‖ has been customised for marking lien in operative
account of NPA borrowers. Operative instructions to mark and unmark lien are annexed.
This command can be run at any time of the day. 3. In this process certain possible scenarios are
visualised for which the Branch head may take the followingsteps:

1)Scenario-1
(i) Account has been marked NPA due to Non Financial reasons.
(ii) In NPA account overdue amount has recovered but account has not been upgraded.
Compliance/Action Required (if any) Branch Manager has to take call and modify/vacatelien.
2)Scenario-2
(i) An NPA A/c having multiple operative accounts (in multiplesols),
(ii) For a customer multiple NPA account and single/multiple operativeaccounts.
Compliance/Action Required (if any)
The lien equivalent to the value of outstanding in all NPAs of the borrower will be marked in

:41
every operative account (SF/CA), in all sols of the party. Therefore, the branch head has to take
steps to recover the entire memoranda dues and vacate lien on remaining amount, if any.
3) Scenario-3 Outstanding of NPA does not include DI, RI, Chargesetc.

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Compliance/Action Required, if any
The lien will be marked to the extent of total NPA outstanding (Ledger outstanding).
4) Scenario-4 Loan account is NPA but in operative account transaction is allowed.
19
Compliance/Action Required (if any)
/03 41

The lien will be got marked in the operative account to the extent of principal outstanding of NPA
for the time being and branch head has to take the call to vacate lien after examining the basis on
which operations are being allowed.
3

5) Scenario-5 Some operative accounts are having already debit freeze


status.Compliance/Action Required (if any) Already debit free status will continue.However,
lien will still be marked in the account. Branch Manager has to take call and modify/vacate lien.
6)6)Scenario-6 There may be court cases where recovery is not to be done from operative
account. Compliance/Action required(if any) The lien will be marked in the account. The
12

branch head will have to examine such cases and act according to the directions of thecourt.
7)Scenario-7 There may be cases where tagging is allowed in NPA account. Compliance/Action
Required (if any) Branch Manager has to take call and modify/vacate lien. 8)Scenario-8 There
may be cases of OTS/Compromise settlement cases.

Compliance/Action Required (if any) Branch Manager to see that lien is marked to the extent of
the overdue OTS amount and not for the entire OTS amount. In case of any other scenario
observed apart from the aforesaid, Branch Manager has to take call and modify/vacate lien.
Branch Heads are advised to run the command and generate DAYRPT 24/11A & PNBRPT 28/8B
statement and cross check the errors, if any and whatever adjustments are required as per above
scenario to recover the amount/vacate the lien be taken today itself to avoid objections/complaints
from the party. They have the authority to modify/vacate the lien on case to case basis.

Effect on operation of bank accounts of Companies struck off from the Register of

NPA CHAPTER - ZTC DEHRADUN Page 160of 162


Companies u/s 248(5) of the Companies Act, 2013 (SASTRA DIV37/2017 dated 01.09.2017)

Indian Banks‟ Association (IBA) vide their communication no. CI/RoC dated 10.08.17 has
informed that Government of India, Ministry of Corporate Affairs vide their letter dated
01.08.17 has apprised that, Registrar of Companies (ROCs) under the said Ministry has struck
off the names of 1.62 lac companies as of 12.07.2017. The ROCs have published notices in the
Official Gazette under Section 248(5) of the Companies Act 2013 and consequently these
companies stand dissolved. Under Section 248(5) of the Companies Act 2013, at the expiry of
the time mentioned in the notice, the Registrar may, unless cause to the contrary is shown by
the company, strike off its name from the register of companies, and shall publish notice
thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the
company shall standdissolved.

2. The ROC-wise list of such companies dissolved is available on the website of Ministry at the
following link:http://mca.gov.in/MinistryV2/stk7publicnotices5.html
3. Ministry of Corporate Affairs (MCA) has further advisedthat:

:41
“Banks need to ensure that any Debit from Or Credit to the accounts belonging to these
companies is made only for the purposes prescribed under Section 250 of the Act. Section 250
of the Companies Act permits operations in the account of such companies for realizing the

20
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amount due to the company and for payment or discharge of the liabilities and obligations of
the company. Banks shall put in place a system to ensure that the above mentioned
transactions are allowed only after the Bank officials /designated bank officers are satisfied
19
that the nature of transaction is for the purposes mentioned above to a duly identified
/03 41

beneficiary. In no case a company be allowed to use the account to continue


business/operations, as the same would be in contravention of section 250 of the Companies
3

Act,2013.”

4. In view of the above developments, all Branch Heads must ensure to visit the above
mentioned site to check whether any companywhose name has been struck off is(are) having
NPA account(s) in the branch and in such an eventuality, if there is credit balance in the
company‟s current account, the same can be appropriated towards discharge of liability of the
12

company to the Bank. Branches should exercise right of set off from such account towards
adjustment of NPAliability.

In other words debit from or credit to, be made only for the purpose of realizing the amount
due to the companies and for the payment of discharge of the liabilities or obligations of the
company.

4.1 In case of such transactions, only Branch Head will be empowered to permit the
transactions and in case he/she is on leave/duty, the second man in command of the branch
shall permitdebits/credits.

However, in case of LCBs/ELBs, Branch Incumbent or any other officer, not below the rank of
Scale-IV, designated by the Branch Incumbent of the LCB/ELB, will permit such transactions.

NPA CHAPTER - ZTC DEHRADUN Page 160 of 162


CEIB- Central Economic Intelligence Bureau- Framework for Timely Detection, Reporting,
Investigation etc relating to Large Value Frauds- Circular 48/2017

The bureau was set up with an intention of creating a body which would coordinate & strengthen
the intelligence gathering activities as well as investigative efforts of all agencies which enforce
economic laws. Accordingly, the following functions have been entrusted to the Bureau:

a. To collect intelligence and information regarding aspects of the black economy which require
close watch and investigation. Also, keeping in view the scene of economic offences, the Bureau
is required to collect information and provide periodical and special reports to the concerned
authorities;
b. To keep a watch on different aspects of economic offences and the emergence of new types of
such offences. The Bureau was made responsible for evolving counter - measures required for
effectively dealing with existing and new types of economicoffences;
c. To act as the nodal agency for cooperation and coordination at the international level with other

:41
customs , drugs, law enforcement and other agencies in the area of economicoffences....
d. For implementation of the COFEPOSA(i.e. Conservation of Foreign Exchange & Prevention of
Smuggling Activities Act, 1971 which provides for preventive detention of persons involved in

20
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smuggling and foreign exchange rackets under certain specifiedcircumstances)
e. To act as a Secretariat of the Economic Intelligence Council which acts as the apex body to
19
ensure full co-ordination among the various Agencies including Central Bureau of Investigation,
/03 41

Reserve Bank of India, Intelligence Bureau etc

IRMD (Credit Policy Section) vide circular no 89/2017 dated 10.10.17 advised credit division to
3

seek report from CEIB on any prospective borrower at the time of pre-sanction stage for
proposals coming under the power of HOCAC-I & above (at present exceeding Rs 50.00crores).

It is further stated that “While banks should Endeavour to seek a report from CEIB on any
prospective borrower at the time of pre-sanction stage, in case an account turns NPA, the bank
shall be required to seek a report on the borrower from CEIB. Report would be furnished within a
12

week by CEIB after receiving request from the bank.”

As per the sastra div .cir. no 58/2018 dt 28/12/18 any up gradation in NPA accounts should be
through CBS ID of Branch Incumbent. Subsequently, we have been informed by ITD, HO that
menu option available to branches for upgrading/downgrading the account i.e. UPGDWNAC has
now been enabled for incumbent user only i.e. work class 100. The menu option would require no
further verification by any other user once incumbent runs the same.

NPA CHAPTER - ZTC DEHRADUN Page 161of 162


WEEKLYCHANGES: NIL

ZTC DEHRADUN

THANKS

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