Rationals

1.

Bank does not insist on stamped indemnity letter for issuing duplicate TDR

1.    TDR is a not a negotiable instrument & therefore not transferable by endorsement and delivery.

2.    It is only a receipt and becomes payable only at the branch where it was issued.

2.

Total reliance only on balance sheet analysis is not desirable while appraisal loan proposals.

1. A Balance Sheet indicates only the state of affairs on a particular date.

2. It can be window dressed to conceal the correct position.

3. It does not take into account the non-monetary factors like labour trouble, market conditions, political instability etc which influence a unit's performance substantially.

3.

Review/Renewal exercise is taken up in case of Working Capital Advances.

1. To enable the Banker to enhance/reduce/suitably tailor the credit needs of the borrower.

2. It is a major criterion for assessing the credit management in Banks.

4.

We obtain periodically stock statements in case of hypothecated advances.

1. To ensure that the outstandings in the account are fully covered by the advance value of the goods hypothecated.

2. To ensure that there is healthy/regular turnover of stocks.

3. To ensure that there are no overdue/sticky bills, unrealised for a long time.

5.

Customer Relations Programme are being arranged at periodical intervals in the Bank.

1.    To improve the direct communication with the customer.

2.    To have an opportunity to redress/arrange for redressal of the customer grievances by taking suitable decisions.

3.    To develop rapport with the customer and enhance customer satisfaction.

6.

Special Mention Accounts (SMAs) have been introduced as part of monitoring of asset portfolio.

1.    To give proper attention to early warning signals in these accounts.

2.    This is part of the Bank's Risk Management process.

3.    RBI is considering provisioning in SMAs also as part of IRAC norms.

7.

Bank's own shares cannot be accepted as security.

1. It is prohibited under Section 20 (1) of the Banking Regulation Act and Section 34 (1) (b) of SBI Act.

2. If financed/accepted as a security it will result in depletion in the share capital of the Bank.

8.

Bank's name plate should be displayed prominently on all goods pledged or hypothecated to the Bank.

1.    To serve as a notice to the world at large of our paramount charge over the goods pledged or hypothecated or the Bank.

2.    To prevent the possibility of multiple financing.

3.    It serves as an advertisement to the Bank.

9.

Goods are preferably insured for the full market value.

1.    To safe guard bank's interest.

2.    As average clause will apply and the unit will get proportionately less amount/less compensation from the insurance company.

3.    To save the borrower from the obligation of meeting any loss on account of uninsured portion.

10.

No advance is granted against shares of Private Limited Companies.

1.    They are not transferable as per definition of a Private Company - Section 3 of the Companies Act 1956.

2.    The Bank will mot be in a position to have the assignment in its favour.

3.    As the shares are not quoted in the Stock Exchange it will not be possible to ascertain their market value.

11.

Before granting an advance to a Company, it's Memorandum and Articles of Association should be scrutinised. 

1.    Memorandum of Association defines the objectives of the Company and borrowing powers of the Directors are contained in the Articles of Association

2.    Any advance given by the bank ultra vires the activity is not binding on the Company.

3.    To ensure protection for the Bank under Company Law and NI Act.

12.

Importance is given for NPA Management.

1.    As it affects the profitability/Capital adequacy of the Bank.

2.    As huge funds are blocked and recycling of funds is not possible.

3.    To guard against the deterioration of bank's image in the minds of the depositors/investors.

13.

Bank has been introducing new Schemes.

1.    To offer need based comprehensive service package to the customers.

2.    To open new avenues in Marketing and thus edge over our competitors. .

3.    To give innovative products for customers to suit their changing aspirations and to fall in line with the policies of the Government and RBI.

14.

Incorporating the name and place of execution of the BP Note and DP delivery letter is required.

1.    The place of making the DP note is an essential part of the cause of action.

2.    The court of place of execution has always jurisdiction to try the suit on the note.

3.    To determine the forum in which the action may be brought on the note.

15.

Discounting bills us preferred to other types of advances like loans, cash credit, overdraft etc.

1.    They represent trade transactions.

2.    They are self liquidating in nature and repayable in a short duration of time.

3.    Recycling of bank's funds for profitable operations and deployment takes place.

16.

Branch Managers should examine all Trust Accounts and Deeds periodically.

1.    Trust Accounts are fiduciary in nature and it must be ensured that their provisions are not overlooked.

2.     Any violation is there it lands the Bank in trouble for refund of monies to the beneficiaries.

17.

Tele services has been introduced in the Bank.

1.    To provide a cutting edge to the customer in this generation of high tech competition.

2.    To provide an additional measure to render efficient and effective customer service to his satisfaction.

18.

Accounting procedure has been modified in respect of DDP Purchase (Cheques).

1.    To streamline the existing dual system of accounting procedures for same type of transactions.

2.    To bring about a uniform treatment of Cheques purchased.

3.    To reduce the pressure of Branch Clearing General Account system, particularly to reduce the originating debits.

19.

Noting/Protesting is necessary for dishonouring of bills and not in the case of cheques.

1.    It is as per Section 99 and 100 of NI Act.

2.    On the basis of noting/protesting the drawer of the bill can be sued in the event of litigation.

3.    In the case of cheques, return memo issued by the Bank will serve the purpose.

20.

Control Returns are sent by BMs to their controllers.

1.    To ensure that the Branch Manager has not exceeded the discretionary powers vested in him.

2.    To ensure that the sanction of advances conform tot he laid down policies, terms and stipulations of the Bank and are in order.