Credit and Loan Assessment

Project Report

Credit Card and Loan Assessment

Submitted by

Vedansh Jain
Roll No. JGNPGDM0856
PGDM First Batch
(2008-2010)

Submitted to

Jagannath Institute of Management Studies
48/4 Knowledge Park III, Greater Noida,U.P

1

Acknowledgement:
“For any successful work, it owes its thanks to many”

Summer training is one of the most vital and active part of the curriculum of
management students. I did the work as a management trainee at AXIS Bank.

Hard work, knowledge, dedication & positive attitude all are necessary to do
any task successfully but one ingredient which is also very important than
others and at times more important than others is cooperation & guidance of
experts and experienced person.

Firstly I would like to extend my heartfelt gratitude to Mr. Navneet Ralli
the Branch Manager, for his guidance throughout the project. Without his
support and cooperation I would have failed in my endeavours and targets in
the summer training.

I emphatically express the regards and gratitude towards my speculative guide
Mr. Shakti Singh Rathore (BSM), Mr. Kapil Singh Shekhwat and
Mr. Om Thanvi For his expert and invaluable guidance, constant
encouragement, and constructive criticism to accomplish such laborious and
exhaustive work timely and perfectly.

I avail the opportunity to thanks Mr. Lokesh Agarwal, Mr. Vishal
Sharma and Mr. Hasmukh who helped to ease my burden of works and
extended their helping hands during my training.

2

I would also like to thank all the Staff of Axis Bank, Jaipur for their
invaluable suggestion and cooperation to complete my project successfully.
CONTENTS
Serial
Particular Page No.
No.
1 Candidate Declaration 5
2 Certificate From Organisation 6
3 Executive Summary 7
4 Banking In India: Overview 9
Nationalized Bank In India 12
Private Sector bank In India 13
5 About AXIS Bank 14
Retail Banking 19
Corporate Banking 19
Financial Performance 21
6 Easy Credit Card 22
Variants 23
Pricing 24
Process 28
Documentation 31
7 Loan Assessment 32
1. Home Loan 33
Documentation 34
Interest Rate 35
2. Personal Loan 36
Normal Salaried Individual 36
Salaried Professional 37
Salaried Doctor 38

3

Documentation 39
Interest Grid 39
Serial
Particular Page No.
No.
3. Loan Against Property 40
Salaried Individual 40
Professional 41
Self Employed Individual 42
Documentation 43
Interest Grid 45
4. Auto Loan 46
Category Grid 46
Salaried Employee 47
Self Employed 48
Partnership 49
Private and public limited company 50
Documentation 51
Interest Rate 53
5. Agriculture Loan 54
Commodity Power-(Warehouse
54
Receipt financing)
Agricultural Gold Loan ‘Power Gold’ 60
Power Gold Plus 64
Kisan Power 65
Direct Financing to Farmers for Cattle
76
Loans through Dairies/ Cooperatives
Direct Financing to Farmer Under
81
Contract Farming
6. Education Loan 86

4

8 Abbreviations and Acronyms (Glossary) 88
9 Appendix 91

Candidate's Declaration

I hereby declare that the project report titled “Credit Card and Loan
Assessment” is prepared during completion of training of 45 days on 30th
June, 2009 and it is an authentic record of my work carried out under the
guidance of Mr. Shakti Singh Rathore, Axis Bank Jaipur.

VEDANSH JAIN Date: June 30, 2009
Roll No. JGNPGDM0856 Place: Jaipur
PGDM First Batch
(2008-2010)

5

Certificate

TO WHOMSOEVER IT MAY CONCERN

This is to certify that the above declaration made by MR. VEDANSH JAIN ,
PGDM (Finance)-First Batch, Jagannath Institute of Management Studies,
Greater Noida, U.P., for the successful completion of 45 days summer
training at AXIS Bank, Jaipur, and preparation of project report titled
“Credit Card and Loan Assessment” is true and fair to the best of my
knowledge and belief.

Mr. Shakti Singh Rathore Date: June 30, 2009
Authorised Signatory Place: Jaipur
Axis Bank Jaipur.

6

Executive Summary:

Introduction:
I have done my training from Axis Bank, Jaipur Branch. I learned there
working and functioning of the bank. Axis bank is one of the fastest growing
banks in India and has extremely competitive and profitable banking franchise.
Axis bank is the first new generation private sector bank to be established in
India under the overall reform programme initiated by Government of India
in 1991.Axis bank started its operation from 1994.

Objective:

The main objective of undergoing training of 6 weeks (15th May, 2009 to 30
june, 2009) is to:
 Understand how banking activities actually takes place.
 To gain an insight and in depth knowledge about banking products.
 To know how the other services provided by bank to its customer.
 To learn about corporate banking culture in India.

Research Methodology:

The method adopted to carry out this report was based on both the primary
and secondary sources.

Primary sources:
 Interaction with the existing employees and deputy manager.

7

 Personal interaction with the customers visiting to the bank.

Secondary sources:
 Manuals of the bank.
 Websites
 Journals
 Circulars
 Annual Report

Learning and Conclusions:
 It was a great opportunity to gain an insight about various activities that
takes place in the bank.
 I came to know what banking is all about.
 About AXIS Bank.
 The kind of products and services are provided by AXIS Bank.
 This training increased my confidence level and it was a great opportunity
to learn about corporate culture and etiquettes.
 It was a great opportunity to develop persuasion skills and communication
skills.

8

Banking In India: Overview:

Banking in India originated in the first decade of 18th century. The first banks
were The General Bank of India, which started in 1786, and Bank of
Hindustan, both of which are now defunct. The oldest bank in existence in
India is the State Bank of India, which originated in the "The Bank of Bengal"
in Calcutta in June 1806. This was one of the three presidency banks, the
other two being the Bank of Bombay and the Bank of Madras. The presidency
banks were established under charters from the British East India Company.
They merged in 1925 to form the Imperial Bank of India, which, upon India's
independence, became the State Bank of India. For many years the Presidency
banks acted as quasi-central banks, as did their successors. The Reserve Bank
of India formally took on the responsibility of regulating the Indian banking
sector from 1935. After India's independence in 1947, the Reserve Bank was
nationalized and given broader powers.

RESERVE BANK OF INDIA Central Bank and
supreme monetary authority

Scheduled Banks Non Scheduled Banks

Cooperative Commercial

Urban State Public Private Foreign
Cooperatives Cooperatives Sector Sector Banks

Other Nationalized SBI & Regional Rural
Banks Associates Banks
9

Early History:

The first fully Indian owned bank was the Allahabad Bank, established in 1865.
However, at the end of late-18th century, there were hardly any banks in
India in the modern sense of the term. The American Civil War stopped the
supply of cotton to Lancashire from the Confederate States. Promoters
opened banks to finance trading in Indian cotton. With large exposure to
speculative ventures, most of the banks opened in India during that period
failed. The depositors lost money and lost interest in keeping deposits with
banks. Subsequently, banking in India remained the exclusive domain of
Europeans for next several decades until the beginning of the 20th century.
Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The
Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and
another in Bombay in 1862; branches in Madras and Pondichery, then a
French colony, followed. Calcutta was the most active trading port in India,
mainly due to the trade of the British Empire, and so became a banking
centre.

The Bank of Bengal, which later became the State Bank of India.

Around the turn of the 20th Century, the Indian economy was passing
through a relative period of stability. Around five decades had elapsed since
the Indian Mutiny, and the social, industrial and other infrastructure had
improved. Indians had established small banks, most of which served
particular ethnic and religious communities.

10

The presidency banks dominated banking in India. There were also some
exchange banks and a number of Indian joint stock banks. All these banks
operated in different segments of the economy. The exchange banks, mostly
owned by Europeans, concentrated on financing foreign trade. Indian joint
stock banks were generally under capitalized and lacked the experience and
maturity to compete with the presidency and exchange banks. This
segmentation let Lord Curzon to observe, "In respect of banking it seems we
are behind the times. We are like some old fashioned sailing ship, divided by
solid wooden bulkheads into separate and cumbersome compartments."

By the 1900s, the market expanded with the establishment of banks such as
Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in
Mumbai - both of which were founded under private ownership. Punjab
National Bank is the first Swadeshi Bank founded by the leaders like Lala
Lajpat Rai, Sardar Dyal Singh Majithia. The Swadeshi movement in particular
inspired local businessmen and political figures to found banks of and for the
Indian community. A number of banks established then have survived to the
present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda,
Canara Bank and Central Bank of India.

11

Nationalized Banks in India:

Banking System in India is dominated by nationalized banks. The
nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the
then prime minister. The major objective behind nationalization was to spread
banking infrastructure in rural areas and make available cheap finance to Indian
farmers. Fourteen banks were nationalized in 1969. Before 1969, State Bank
of India (SBI) was the only public sector bank in India. SBI was nationalized in
1955 under the SBI Act of 1955. The second phase of nationalization of Indian
banks took place in the year 1980. Seven more banks were nationalized with
deposits over 200 crores.

List of Public Sector Banks in India is as follows:

➢ Allahabad Bank ➢ State Bank of India (SBI)
➢ State Bank of Indore ➢ State Bank of Mysore
➢ State Bank of Patiala ➢ State Bank of Saurashtra
➢ State Bank of Travancore ➢ Syndicate Bank
➢ UCO Bank ➢ Union Bank of India
➢ United Bank of India s ➢ Vijaya Bank
➢ Andhra Bank ➢ Bank of Baroda
➢ Bank of India ➢ Bank of Maharashtra
➢ Canara Bank ➢ Central Bank of India
➢ Corporation Bank ➢ Dena Bank
➢ Indian Bank ➢ Indian Overseas Bank
➢ Oriental Bank of Commerce ➢ Punjab and Sind Bank
➢ Punjab National Bank ➢ State Bank of Bikaner & Jaipur
➢ State Bank of Hyderabad

Private Banks in India:

12

All the banks in India were earlier private banks. They were founded in the
pre-independence era to cater to the banking needs of the people. But after
nationalization of banks in 1969 public sector banks came to occupy dominant
role in the banking structure. Private sector banking in India received a fillip
in 1994 when Reserve Bank of India encouraged setting up of private banks as
part of its policy of liberalization of the Indian Banking Industry. Housing
Development Finance Corporation Limited (HDFC) was amongst the first to
receive an 'in principle' approval from the Reserve Bank of India (RBI) to set
up a bank in the private sector.
Private Banks have played a major role in the development of Indian banking
industry. They have made banking more efficient and customer friendly. In
the process they have jolted public sector banks out of complacency and
forced them to become more competitive.

List of Private Sector Banks in India is as follows:

 Bank of Rajasthan ➢Bharat Overseas Bank
 Axis Bank ➢Catholic Syrian Bank
 Centurion Bank of Punjab ➢Dhanalakshmi Bank
 Federal Bank ➢HDFC Bank
 ICICI Bank ➢IDBI Bank
 IndusInd Bank ➢ING Vysya Bank
 Jammu & Kashmir Bank ➢Karnataka Bank
 Karur Vysya Bank ➢Kotak Mahindra Bank
 SBI Commercial and International Bank ➢South Indian Bank
 United Western Bank ➢ YES Bank

13

About AXIS:

Start on 1994

On July 2007 UTI Bank rebrand as Axis Bank

Promoters:

Unit Trust Of India (UTI)
Life Insurance Corporation (LIC)
General Insurance Corporation (GIC)
National Insurance Company Limited
New India Assurance Company Limited
The Oriented Insurance Company Limited
United India Insurance Company Limited

Capitalization:

359 crore

Public Holding = 57.60%

Registered Office:

Ahemdabad

Central Office:

Mumbai
15

Total Branches:

827

ATM:

3595

Bank Strengths:

Retail Banking
Corporate Banking

Directors:

Shri N.C. Singhal Director
Shri J.R. Varma Director
Dr. R.H. Patil Director
Smt. Rama Bijapurkar Director
Shri R.B.L. Vaish Director
Shri M.V. Subbiah Director
Shri Ramesh Ramanathan Director
Shri K. N. Prithviraj Director

Auditors:

M/s. S. R. Batliboi & Co. Auditors Chartered Accountants

16

Registrar and Share Transfer Agent:
M/s. Karvy Computershare Private Limited

Competitors:

Private Sector competitors:

HDFC
ICICI

Public Sector competitors:

SBI
PNB

Profile:

Axis Bank is one of the fastest growing banks in the country and has an
extremely competitive and profitable banking franchise evidenced by:
Comprehensive portfolio of banking services include Corporate Credit, Retail
Banking, Business Banking, Capital Markets, Treasury and International
Banking.

The Position as on 31st March 2009 was as under: -

Balance Sheet Size Rs 1,47,722 crore

Total Deposits Rs 1,17,374 crore

Net Advances Rs 81,557 crore

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Investments Rs 46,330 crore

Net NPA 0.35%

Capital Adequacy Ratio 13.69% %

Axis Bank has in place a sound technological platform:

Sound technological platform with centralized database and operations
enabling 24*7*365 ‘Anywhere Banking’, in order to render the best customer
service to its 5.5 million customer base.

Mission and Values:

 Customer Service and Product Innovation tuned to diverse needs of
individual and corporate clientele.
 Continuous technology up gradation while maintaining human values.
 Progressive globalization and achieving international standards.
 Efficiency and effectiveness built on ethical practices.
 Customer Satisfaction through providing quality service effectively and
efficiently.
 "Smile, it enhances your face value" is a service quality stressed on Periodic
Customer Service Audits.
 Maximization of Stakeholder value.
 Success through Teamwork, Integrity and People.

18

Retail Banking:
The Bank continued with its thrust on customer segmentation in the retail
liabilities business to spearhead growth during the financial year 2008-09.
Savings Bank deposits grew to Rs. 25,822 crores on 31st March 2009 from
Rs. 19,982 crores as on 31st March 2008 showing a year on year growth of
29%.

Corporate Banking:
The Business Banking Department (Erstwhile Institutional Business
Department) was set up in the year 2000, with the objective of having a
special cell to serve the institutional and corporate clientele of the Bank.
Business Banking initiatives revolve around transaction banking services to
garner Business Current Accounts, Cash Management Service mandates,
Government Business - Collection & Payment Services. As a natural corollary,
scope of the business was extended this year to Business loans for Small
Businesses so that all product and services to small business enterprises are
comprehensively made available.

19

The Department presently focuses on the four broad areas
through the respective Business Groups, as under:
Business Current Accounts
Business Assets
Cash Management Services
Government Business

Corporate Credit:

Current Account deposits grew by 24% yoy, from Rs. 20,045 crores as at end
March’08 to Rs. 24,822 crores as at end March’09. The daily average Current
Account balances over the year grew by 24% yoy. The Corporate Credit
portfolio of the Bank comprising advances to large and midcorporates grew by
68.33% to Rs. 29,026 crores from Rs. 17,244 crores a year ago. This includes
advances at overseas branches amounting to Rs. 5,381 crores (equivalent to
USD 134 million) comprising in main the portfolio of Indian corporates and
their subsidiaries, as also trade finance. Credit exposures are taken based on
risk analyses and mitigation measures, with proposals being subjected to
critical scrutiny by the Bank's Risk Department. Efforts are made to constantly
upgrade the skills required for faster turnaround of credit proposals and
structuring of financial products. In addition to working capital loans, the
Bank also takes long-term exposures to infrastructure and manufacturing
projects set up by reputed industry groups. Relationship groups in the Bank
are organised with an industry sector focus for better evaluation of specified
risks. The credit policy of the Bank has also put in place ceilings on exposures

20

to various industries with a view to containing concentration risk and
facilitating portfolio diversification.

Financial Performance:
 Profit after tax up 69% to Rs.1,815.36 crores.
 Net Interest Income up 43% to Rs.3686.21 crores.
 Other Income up 61% to Rs.2,896.88 crores.
 Fee Income up 64% to Rs.2,447.35 crores
 Deposits up 34% to Rs.1,17,374 crores.
 Demand Deposits up 37% to Rs.50644 Crores.
 Advances up 61.79% to Rs.81,557 crores .
 Retail Assets up 18% to Rs.16,052 crores.
 Network of branches and extension counters increased from 827.
 Total number of ATMs 3595.
 Net NPA ratio as a percentage of net customer assets down to 0.35%
0.36% from 0.36 %.
 Earning per share (Basic) increased from Rs.31.31 to Rs50.27.
 Proposed Dividend up from 45% to 60%.
 Capital Adequacy Ratio stood at 13.69% as against the minimum
regulatory norm of 9.26%.
21

**********************

Easy Credit Card:

What is Easy Credit Card?

A Credit Card that is ...
Easy for customers to get!
Easy for us to sell!

Why is it “Easy” for the Customer?

 Flexible Credit Limit (Up to 80% of the FD amount)
 High Cash Withdrawal Facility
 Minimum Documentation (No Income Proof/KYC required)
 Fast Delivery of the Card
 Substantially Lower Interest Rate of 1.95% p.m.
 Guaranteed Approval
 Free Credit Period of 20-50 days
 Comprehensive Insurance
 Attractive Reward Points
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 Other benefits of a regular credit card

Easier than Other Modes of Payment:

Easier than Other Credit Cards
 Guaranteed Approval
 No Income Proof required
 Lower interest rate
 Credit Limit of choice
 Higher Cash withdrawal facility

Easier than Debit Cards
 Interest free credit period of up to 50 days
 Higher Insurance Package
 Ease of Online & MOTO transactions

Easier than O/D against FD
 Interest free credit period of up to 50 days
 Reward Points
 Complimentary Insurance
 Record of transactions

Easier than Cash

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 Convenience of Plastic
 Complimentary Insurance
 Reward Points
 Record of transactions

Variants:

Available in three variants:
 Easy Platinum Premium (In sourcing locations only)

 Easy Platinum

 Easy Gold

Pricing:

Annual Fee
Joining
Type Annual Fee Waiver
Fee
for Year 2

Platinum
Premium 5,000 1,000 Customer Spends
> Rs.2,00,000 in
Year 1

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Customer Spends
Platinum 1,000 500 > Rs.2,00,000 in
Year 1

100 Customer Spends
Gold Nil (Two Years > Rs. 50,000 in One
onwards) Year

* Annual Fee can be adjusted against Reward Points

Easy Platinum Premium :

 Platinum Comprehensive Insurance Cover
 Fuel savings of 2.5% at All Petrol Pumps
 Attractive Rewards Program
 Free Espirit watch worth Rs.6,000Attractive

Platinum Preferential Features

 Chip Card for Additional Security
 Complimentary Priority Pass Membership
 International Concierge Services
 Exciting shopping offers

Platinum Standard Features

 Low Interest Rate of 1.95% p.m.
 Credit Limit of Choice
25

 High Cash Withdrawal Limit of 40% of Credit Limit
 Balance Transfer Options

Easy Platinum:

 Comprehensive Insurance Cover
 Fuel savings of 2.5%at ALL Petrol Pumps

Platinum Preferential Features:
 Chip Card for Additional Security
 Complimentary Priority Pass Membership
 International Concierge Services
 Exciting shopping offers

Standard Features:

26


Easy Gold:

 Comprehensive Insurance Cover
 Fuel savings of 2.5%at ALL Petrol Pumps

Standard Features:

27

Process Simplified:
Step 1

Crédit Card Application Form
Letter of Lien
Only One Single Application
Addendum to Credit Card No
Form
Application Form
Draft Letter

Step 2

Separate KYC for Easy Credit
Double KYC No
Card

Step 3

FD receipt to remain with the
customer
FD retained at the branch
No Only photocopy to be attached
Lien marked centrally on Finacle

28

Step 4

Customer signature on form to be Customer signature to be verified
verified by Branch heads No by Branch head/ BSO/BSM

Step 5

Sent to customer in Courier
Card dispatched to Branch serviceable areas
No Sent to branch in Courier non-
serviceable areas
Application Processing- Existing FD
Customers:

Application Pickup
 Easy Credit Card App Form filled
 Copy of FD receipt attached
 No Additional Documents

At Branch
 Application Signed-off by Branch head/ BSO / BSM
 Lien Stamp on FD by any Branch official–Original returned to customer

CC-APU
 Centralized Lien marking
 Data Entry , Card & Limit Setup
 No CIBIL, No FV, No TV

29

Dispatch
 Direct to customer in Courier serviceable areas
 To branch in Courier non-serviceable areas

Application Processing -New FD Customers:

Application Pickup

 Easy Credit Card App Form filled
 FD Form filled with KYC & PAN only by BDE/Any Branch Staff

At Branch
 Sign-off by Branch head/ BSO/ BSM

CPU-Mumbai
 FD Data Entry
 FD Account No. entered on Easy Card Application Form

CC-APU

30

 Centralized Lien marking
 Data Entry , Card & Limit Setup
 No CIBIL, No FV, No TV

Dispatch
 FD & Card dispatched together
 Direct to customer in Courier serviceable areas
 To branch in Courier non-serviceable areas

Documentation:

Existing FD Customers:
 Easy Card Application Form
 Photocopy of FD Certificate with Notification of Lien as follows: “Lien
marked for Issuance of Easy Credit Card” To be written, signed & stamped
by any Branch Official on the front side of the FD receipt
 FD Certificate with notification returned to customer
 Most Important Document (MID)

New FD Customers:
 Easy Card Application Form
 Duly Completed FD Application Form (ONLY by BDE/Any Branch Staff)

31

 Most Important Document (MID)

************************

Loan Assessment:

Types of Loan:

 Home loan
 Personal Loan
 Loan Against Property
 Auto loan
 Agriculture Loan
 Education Loan
32

Home Loan:

Professional Self Employed
Criteria Salaried Individual
s Individuals
Min. work exp 2 (3 if current
3
(Years) employment <1 year)
Min net income
15000pm 1.50 lacs pa
(Rs.)

>24 ~ <= than
Min ~ Max age
superannuation at loan >24 ~ <= 65 at loan termination
(Years)
termination
Min ~ Max
Maximum 240 Maximum 240 Maximum 240
Tenor (Months)

Maximum LTV 80%

33

Clubbing of
Allowed for spouse only
Income
Pre payment
NIL
penalty

Processing fee 1% of loan amt + 10.30% Service Tax as applicable

Other Products / Variants
Takeover of
existing HL
from other
Allowed
financier
(Balance
Transfer)
Refinance
Allowed for properties purchased in last 6 months
Option
Documents required for Home Loan:

Proof of Identity, Signature & Age:
 Passport
 Voter's Card
 Driving License
 PAN card
 Photograph

Proof of Residence:
 Ration Card
 Passport
 Latest Electricity Bill
 Latest Telephone Bill
 Latest Credit Card Bill.

34

Proof of Income:
 Latest 3 salary slip showing all deductions
 IT Returns
 Computation of income
 Balance Sheet and P/L A/c for the last 2 years certified by a C.A.

Bank Statement:
 Last 6 months where salary/income is credited

Proof of Qualification:
 Degree / Diploma - proof of professional qualification

Interest Rate:

Home loan amount Applicable rate of interest

Up to Rs. 30 Lacks 9.00% p.a

Above Rs. 30 Lacks 9.50% p.a.

Other terms & conditions:
 The property should be located within 50 Km radius of nearest
Branch/RAC.

35

 Properties under HUF, Properties inherited under Hindu succession act,
Godowns, Factories & Hospitals, Cinema Halls, Restaurants, Banquet
Halls, and Schools will not be financed under the scheme.
 For Purchase of Residential Plots within Municipal / Government
approved layouts only. Agricultural land, commercial plots, properties
under HUF, properties inherited under Hindu succession act, plots under
litigation and acquisition by Public authorities will not be financed under
plot loan scheme.
 Loan against property (LAP) will be offered only against fully constructed
properties.

Personal Loan:

For Salaried Individual:

Criteria Salaried Individual Normal

Interest rate as per category As per category grid

Min. work exp (years) 2

Min net income (Rs. p.m.) 15,000

> 21 & < superannuation at loan
Min ~ Max age
termination

36

1.25- 15 lakes (1.25 lakes loan is only
Min ~ Max loan amt (Rs.) available for customers having salary power
relationship)

12 ~ 60 (For CAT C and D employees
Min ~ Max Tenor (months)
maximum tenor is 48 months)
Security/Collateral/Guarant
Optional
or
Cat A & B - Last 3 months
Banking relationships
Cat C & D - Last 6 months
Phone landline / mobile / WLL mandatory

Processing fee 2% of loan amt

Max loan =(Net monthly income -
Eligibility calculation obligations) x Multiplier. Multiplier varies
from 5 to 13 depending upon tenure.

Residence Present residence => 6 months
Salaried Individual Prof (MBA,
Criteria Engineer, Architect, CA, CS,
ICWA)
Interest rate as per category As per category grid


Min net income (Rs. p.m.) 15,000

> 21 & < superannuation at loan
Min ~ Max age
termination

37

1.25 - 15 lakhs (1.25 lakh loan is only
relationship)

Min ~ Max Tenor (months) 12 ~ 60

Optional
or
Cat A & B - Last 3 months
Banking relationships
Cat C & D - Last 6 months



Max loan =(Net monthly income -

Degree / Diploma - proof of professional qualification

Criteria Salaried Doctors

Doctor in Cat B/C/D at a min of
Interest rate as per category
MBBS/BDS/ MS/MD = Cat B rate


Min net income (Rs. p.m.) 15,000 (gross)

Min ~ Max age >24 and <65 at loan termination

38

1.25 - 15 lakhs (1.25 lakh loan is only
relationship)

Min ~ Max Tenor (months) 12 ~ 60

Optional
or
Banking relationships Last 6 months



Max loan = (Gross monthly salary -


Degree, Registration with respective state
Proof of Qualification medical councils Or Dentists Association.

Documentation:

39

Documents Required
Interest Rate Grid:
Proof of Identity, Passport/ Voter's Card/ Driving License/ PAN
Signature & Age Interest&Rate Grid
card Photograph.
Personal Loans ROI (only Fixed)
Latest bill of landline/ mobile/ WLL stating
Proof of Telephone Bill
name of borrower or address of borrower.
Salaried - Cat A 15.00%
Ration Card/ Passport/ Latest Electricity Bill/
Proof of Residence
Salaried - Cat B Latest Telephone Bill/ Latest Credit Card Bill.
17.00%
Latest salary slip showing all deductions and Last
Proof of - Cat C
Salaried Income 19.00%
2 years Form 16 along with current dated salary
certificate
Salaried - Cat D 21.00%
Bank Statement / Pass
Cat A & B - Last 3 months, Cat C & D - Last 6
Book where salary is
months
Credited

Loan against Property:

Criteria Salaried Individual

Min 1 Year If Total Exp 2 Or (3 If Current
Work Experience (Years)
Employment <1 Yr)

Min Net Income (Rs.) 7500 Per Month

>24 ~ <= Than Superannuation At Loan
Min ~ Max Age (Years)
Termination

40

Min ~ Max Tenor Residential Property Up To 180 Months,
(Months) Commercial Property Up To 120 Months

Residential Property Up To 60%, Commercial
Maximum LTV
50%, Commercial Purchase 80%

2% Will Be Charged If The Amount Exceeds 25 %
Pre Payment Penalty Of The Principle Outstanding During A Quarter,
Otherwise No Penalty.

Processing Fee 1% Of Loan Amt + Service Tax As Applicable

Takeover Of Existing
Mortgage With Allowed
Additional Refinance

Criteria Professionals

Work Exp (Years) Min 3 If Doctor Else 4

Min Net Income (Rs.) 1.50 Lacs Per Year

Min ~ Max Age (Years) >24 ~ <= 65 At Loan Termination

Min ~ Max Tenor Residential Property Up To 180 Months,
(Months) Commercial Property Up To 120 Months

41

Residential Property Up To 60%,
Maximum LTV Commercial 45%,
Commercial Purchase 75%

2% Will Be Charged If The Amount Exceeds 25
Pre Payment Penalty % Of The Principle Outstanding During A
Quarter, Otherwise No Penalty.

Processing Fee 1% Of Loan Amt + Service Tas As Applicable


Criteria Self Employed Individuals

Work Exp (Years) Min 3

Min Net Income (Rs.) 1.50 Lacs Per Year

Min ~ Max Age (Years) >24 ~ <= 65 At Loan Termination

Min ~ Max Tenor
Up To 120 Months Irrespective Of Property Type
(Months)

42

Residential Property Up To 60%, Commercial
Maximum LTV
45%, Commercial Purchase 70%

2% Will Be Charged If The Amount Exceeds 25 %
Pre Payment Penalty Of The Principle Outstanding During A Quarter,
Otherwise No Penalty.

Processing Fee 1% Of Loan Amt + Service Tax As Applicable


Documents required for Loan against property:

For Salaried Individual:

Proof Of Identity, Passport/ Voter's Card/ Driving License/ PAN
Signature & Age Card & Photograph.

Proof Of Residence
Latest Telephone Bill/ Latest Credit Card Bill.

Proof Of Income Latest 3 Salary Slip Showing All Deductions

Bank Statement Last 6 Months Where Salary/Income Is Credited

Proof Of Qualification N/A

43

For Professionals:

Proof Of Identity, Passport/ Voter's Card/ Driving License/ PAN

Proof Of Residence

IT Returns, Computation Of Income, Balance
Proof Of Income Sheet And P/L A/C For The Last 2 Years Certified
By A C.A.


Degree / Diploma - Proof Of Professional
Proof Of Qualification
Qualification

For Self Employed Individuals:

Proof Of Identity, Passport/ Voter's Card/ Driving License/ Pan

Proof Of Residence

It Returns, Computation Of Income, Balance Sheet
Proof Of Income And P/L A/C For The Last 2 Years Certified By A
C.A.

Proof Of
N/A
Qualification

Other Terms & Conditions:

44

 The property should be located within 50 km radius of nearest branch.
 Properties under HUF, Properties inherited under Hindu Succession Act,
Godowns, Factories & Hospitals, Cinema Halls, Restaurants, Banquet
Halls, and Schools will not be financed under the scheme.
 For Purchase of Residential Plots within Municipal / Government
Approved Layouts only Agricultural Land, Commercial Plots, Properties
Under HUF, Properties Inherited Under Hindu Succession Act, Plots
Under Litigation and Acquisition by Public Authorities will not be financed
under plot loan scheme.
 Loan against property (lap) will be offered only against fully constructed
properties.
 No lap will be offered against plot of land
Interest Rate Grid:

Personal Loan Interest Rate of Interest

Residential Property 12.75%

Commercial Property 13.75%

45

Auto Loan:

Category Grid

Category A Maruti 800, Omni Van, Matiz

Category B
(Upto 5 lakh)
Alto, Wagner, I10, spark, Swift, Indica Vista, Palio,
Getz, a-star, Zen

46

(Upto 10 lakh)
Category C Swift Dezire, Verna, Esteem, Honda City, Acent,
Verna, Fista, Indigo CS, Optra, Scorpio,Logan

(More Than 10 Lakh)
Category D
Safari, Corela, Endeavour, Optiva, Skoda,

Criteria Salaried

Min 21 Years At Sanction To Maximum 58 Years At
Age
The Time Of Loan Maturity

Loan Amount Minimum Rs. 100,000

Tenure 1 - 7 Yrs

LTV Up To 85% Of On Road Price*

47

Gross Salary Of Rs. 1 Lac P.A. For Cat A/B Cars &
Income Norms
Rs 2 Lacs P.A. For Cat C/D Cars

Work-Experience Minimum 2 Years Of Total Employment

Landline / WLL Phone At Residence. In Case No
Telephone Phone At Resident Post-paid Mobile Connection
With Resident Address Required.

Foreclosure 4% + Principal Outstanding

Minimum Of Rs 2500 For Cat A Cars, Rs. 3000 For
Cat B & C Cars And Rs 3500 For Cat D Cars (Plus
Processing Fee
Upto 1% Of The Loan Amount At The Discretion Of
The Branch Manager)

3 Times Of Annual Gross Or 30 Times Of Avg Net
Eligibility
Salary Of 3 Months. EMI Must Not Exceed 50% Of
Calculation
Net Salary

Criteria Self-Employed

Min 21 Years At Sanction To Maximum 65 Years At The
Age
Time Of Loan Maturity


Tenure 1 - 7 Yrs

LTV Up To 85% Of On Road Price*

48

Gross Income Of Rs. 60,000 P.A. For Cat A/B Cars &
Income Norms Rs 1 Lac P.A. For Cat C/D Cars (Gross Income : N.P
After Tax & Depreciation)

Work-Experience Minimum 3 Years In Business

Landline / WLL Phone At Residence. In Case No Phone
Telephone At Residence Postpaid Mobile Connection With
Residence Address Required.


Minimum Of Rs 2500 For Cat A Cars, Rs. 3000 For Cat
B & C Cars And Rs 3500 For Cat D Cars (Plus Upto 1%
Processing Fee
Of The Loan Amount At The Discretion Of The Branch
Manager)

Eligibility 6 Times Gross Income P.A. (Gross Income = Net Profit
Calculation + 50% Of Depreciation For The Last Financial Year.)

Criteria Partnership Firms

Min 21 Years At Sanction To Maximum 58 Years At The
Age
Time Of Loan Maturity For Loan Executing Partner.


Tenure 1 - 7 Year

LTV Up To 85% Of On Road Price

49

Gross Income Of Rs. 60,000 P.A. For Cat A/B Cars &
Income Norms Rs 1 Lac P.A. For Cat C/D Cars (Gross Income: N.P
After Tax & Depreciation). Min Turnover Of Rs 4.5 Lacs

Work-Experience Minimum 3 Years In Business

Landline / WLL Phone At Resident. & Office For Loan
Executing Partner. In Case No Phone At Resident, Post-
Telephone
Paid Mobile Connection With Resident. Address Is
Required


Minimum Of Rs 2500 For Cat A Cars, Rs. 3000 For Cat
B & C Cars And Rs 3500 For Cat D Cars (Plus Upto 1%
Processing Fee
Of The Loan Amount At The Discretion Of The Branch
Manager)

6 Times Gross Income P.A. (Gross Income = Share In
Eligibility Profit + Salary + Interest On Capital + 50% Of
Calculation Depreciation For The Last Financial Year) (To The
Extent Of His Share In Partnership)

Criteria Private & Public Ltd. Companies

Min 21 years at sanction to Maximum 65 years at the
Age time of loan maturity for the loan executing
director/authorized signatory

Loan amount Minimum Rs. 100,000

Tenure 1 - 5 yrs

50

LTV Up to 85% of On road price*

Min Turnover of Rs. 2 Crore and Minimum Net Profit of
Income Norms
Rs 50 Lacs. (No Cash Loss in the last 2 yrs)

Work-experience Minimum 3 years in business

Landline / WLL phone at Resident & Office for loan
executing director/authorized signatory. In case no
Telephone
phone at Resident, post-paid mobile connection with
Resident Address is required

Foreclosure 4% + principal outstanding

Minimum of Rs 2500 for CAT A cars, Rs. 3000 for Cat B
Processing Fee & C Cars and Rs 3500 for Cat D cars (plus upto 1% of
the loan amount at the discretion of the Branch Manager)

Eligibility
6 times Avg. Net Profit of the Last 2 Years
calculation

Documents required:

For Salaried:

Passport / Voter’s Card / Driving License with
Proof of Identity
Photograph/ PAN card

Latest salary slip showing all deductions AND
Proof of Income Latest Form 16 / Income Tax Return (Form 16
FYE March should be available June onwards)

51

Ration Card/Latest Electricity Bill/Latest
Address Proof (of
Telephone Bill/Passport/Latest Credit Card
the residing city)
Bill/ Driving License

Signature Passport copy/ Driving License with
Verification Photograph/ Banker’s Verification

Additional Document NA

For Self-Employed:

Proof of Identity
Latest Income Tax Return and Computation of
Proof of Income
income
Ration Card/Latest Electricity Bill/Latest
Address Proof (of
Telephone Bill/Passport/Latest Credit Card
the residing city)
Bill/ Driving License

Signature Passport copy/ Driving License with
Verification Photograph/ Banker’s Verification

Additional Document Declaration from Proprietor
For Partnership Firms:

Copy of Partnership Deed & the following
documents required for the loan executing partner:
Proof of Identity
Audited Balance Sheet, Profit & Loss Account for
Proof of Income last 2 years along with the latest 2 Income Tax
Returns

52

Telephone Bill/Electricity Bill/ Shop &
Address Proof (of
Establishment Act Certificate/ SSI Registered
the residing city)
Certificate/ Sales Tax Certificate
Signature
Banker’s Verification
Verification
Additional
Authority letter signed by all partners
Documentation

For Private & Public Ltd. Companies:

Copy of Memorandum & Articles of Association &
the following documents required for the loan
Proof of Identity executing director/authorized signatory. Passport /
Voter’s Card / Driving License with Photograph/
PAN card

Proof of Income Last 2 Years Audited Financials

Telephone Bill/Electricity Bill/ Shop &
Address Proof (of
Establishment Act Certificate/SSI Registered
the residing city)
Certificate/ Sales Tax Certificate/PAN No.
Signature
Banker’s Verification
Verification
Additional List of Directors, Share Holding pattern, Copy of
Documentation Board Resolution
On Road Price = Ex Showroom rate + Insurance + Road Tax +
Registration charges

Interest Rate Grid:

Interest Rate Grid (Direct Branch Source)

53

60 – 84
Car Category Upto 35 months 36 - 60 months
months

Cat A 13.00% 12.00% 13.50%

Cat B 13.00% 11.50% 13.50%

Cat C 13.00% 11.50% 13.50%

Cat D 13.00% 11.00% 13.50%

Interest Rate Grid (Dealer/DSA sourcing)

60 – 84
Car Category Upto 35 months 36 - 60 months
months

Cat A 14.50% 13.25% 15.50%

Cat B 14.50% 12.50% 15.50%

Cat C 14.50% 12.00% 15.50%

CAT D 14.50% 11.75% 15.50%

Agricultural Loan:

Financing farmers against pledge of warehouse or
cold storage receipts:

54

Facility Limit:
Ceiling of Rs. 5.0 lac per farmer

Nature of Facility:
Loan against the pledge of warehouse and/ or cold storage receipts

Eligibility for Farmers:
 Original depositors of the receipts.
 The borrower to undertake that he is a farmer and also to provide a
declaration to the effect that he/she is not defaulter to any Bank/Financial
Institution

Designated Warehouse:
CWC/SWC Warehouses Private warehouses/Cold storages/Godowns with a
minimum storage capacity of 100 MT

Value of Loan:
Value of the loan = Value of commodity minus commodity specific margin
amount

Rate of Interest:
BPLR- 4.75%; at present 15.25 % p.a. payable with the principal repayment.

Margin:
Min 40%.

55

Tenure of the Loan:
The maximum tenure of each loan shall be 12 months.

Valuation:
The value of the commodity as security shall be the lower of the following:
 Value of goods as reflected in the warehouse receipt.
 Value of the goods based on the average price prevailing in the nearest
mandi on the day previous to the date of disbursement.
 Price provided by the Commodity Business Group, Central Office from
time to time for various commodities

Insurance:
The stocks pledged to the Bank should be insured adequately with Bank
clause.

Security Upto Rs. 200,000:
Primary-: Pledge of warehouse receipts duly endorsed in Bank’s favour

Security over Rs. 200,000:
Primary-: Pledge of warehouse receipts duly endorsed in Bank’s favour,
Collateral-: Third party Guarantee
Disbursement:
The individual borrower availing this facility will have to open an account at
the concerned local branch (the account can be opened under ‘SBSPL’
category wherein the average balance requirement is Rs. 1000/-). The

56

amount will disbursed by crediting the account of the borrower, at the
concerned branch.

Selection of the Warehouse/Cold Storage:
The warehouse/cold storage has to have adequate facilities (like aeration, pest
control, loading and unloading facilities, electricity, security, etc.) to allow
for the storage of the produce with minimum loss in quality and quantity. It is
suggested that branches may give preference to the warehouses accredited by
National Commodity and Derivative Exchange, India (NCDEX) who provide
warehouse receipts to the farmers in dematerialized form.

Security from Warehouse Owner/Manager:
Have to sign M&C agreement with Bank to buy or arrange for the sale of the
stock in case of default of farmer Letter of guarantee/comfort letter is to be
obtain (in absence of the letter of guarantee).

Monitoring & M&C Agent Charges:
M&C agent has to monitor the security. The quality and quantity report has to
be sent to the branch on a monthly basis. Normally 1% of the loan amount.
However, branches can pay maximum 1.5% of the loan amount wherever
required.
Other Conditions:
Post dated cheques to be collected from borrowers

Repayment:
Bullet repayment along with interest on due date.
57

Penal Interest:
2% p.a. on overdue loan/unpaid interest

Pre-payment Charges:
2% (if loan is repaid within one month. Otherwise nil)

Processing Fee:
.40% of the loan sanctioned

Documents to be executed by the Borrower:
 DP Note
 DP delivery letter
 Letter of waiver
 Pledge Agreement
 Warehouse receipt

Documents to be executed by the M&C Agent:
Management and Collection Agreement: To be finalized in consultation with
the Law Department
Event of Default:
In the event of default of a borrower, M&C agent should arrange for
buyers/buy back of the stock. The Bank shall be entitled to sell the pledged
goods either through the M&C agent/ public auction/private sale/through
any commodity exchange and adjust the sale proceeds against the amount
58

outstanding from the borrower. The price at which the pledged commodity is
sold by the Bank is final and binding on the borrower. However, in case the
proceeds from such a sale are not sufficient to satisfy the amount outstanding
in full, the Bank will be entitled to recover the shortfall from borrower.

Registers to be maintained:
Registers to be maintained by the branch:
Loan application cum disposal register
Price, Stock and Margin recovery register
Insurance due date register
Branches would keep the above mentioned registers in physical form or in a
excel sheet in the system. The records should be updated at the stipulated
time and hard copies be preserved in a separate file.
Registers to be filled in by M&C agent:
Stock and margin register

Rating Tool for Farmer/Agriculture:

Score Sheet for Agricultural Loans
(For individuals)

No Parameters Score Scoring

59

Own: 5
1. Type of land holding
Leasehold: 3
More than 10 acres: 5
Extent of land under
2. More than 5 and Upto 10 acres: 3
cultivation
5 acres and below: 2

Type of crop under Cash crops: 5
3.
cultivation Non cash: 3

Drip/Sprinkler irrigation: 5
4. Irrigation Well/canal: 3
Dry farming: 1

Through Co-Operative
Marketing Societies/Private corporates: 5
5.
arrangement Through Govt. agencies: 3
Direct: 1
Source of income
from activities allied Yes: 3
6.
to agriculture/other No: 0
source of income

Bench marking: (Out of 28):

Score above 18 A1
15-18 A2
10-14 A3
Score below 10 A4

Agricultural Gold Loan – ‘Power Gold’:

Eligibility:

60

 Any individual who has completed 18 years of age and is involved in
agriculture/allied activities.
 In case one spouse is availing of the loan against gold ornaments owned by
the other, the borrowing should be in the joint names.
 Gold bullion will not be accepted as security.
 Only original owner of the Jewellery.
 Jewellery below 20 carat should be avoided.

Limit :
Minimum - Rs.15,000
Maximum - Rs.10,00,000

Loan Amount and Margin:
Loan Amount = (Net weight. of ornament in terms of 22 carat) * (Advance
rate)Net weight of ornament in terms of 22 carat = (Net weight of ornaments
* Purity)/ 22
 Advance rate at present: Rs.740/- per gram
 BH can selectively increase advance rate by Rs.10/-

Margin Call:
During the tenure of the loan, if the margin of the loan, based on the market
value of the gold, falls below 20%, the borrower would be called upon to

61

deposit the shortfall. If the borrower fails to pay the shortfall within 15 days,
the Bank will have the right to dispose off the gold ornaments.

Security:
 Primary - Nil
 Collateral - Pledge of gold ornaments

Custody Charges:

 If gold value > 5 times loan amount
 Rs. 1000 + ST per year

Pricing:
 For limit up to Rs. 1.00 Lakh: BPLR-4.25%
 For limit above Rs. 1.00 lacs: BPLR-4.75%
 Interest application is Annual and to be paid along with principal

Penal interest:
2% per year on overdue amount.

Disbursement:
 Up to Rs.50,000/- in Cash.
 Above Rs.50,000/- by Pay Order.

Documentation:
Following documents should be obtained from borrower.

62

 Application form
 D.P.Note
 D.P.Note delivery cum waiver letter
 Letter of Pledge
 Proof of agricultural activity (copy of land records, land revenue tax
receipts etc.)
 Declaration of ownership of the ornaments pledged
 Authorisation from the borrower for disclosure of information

The following document should be obtained from the appraiser
Certificate of valuation

Processing & Appraiser fees:
 0.25%+ST subject to maximum of Rs. 500+ST
 BH has discretion to waive/ reduce if RoI is increased by 0.30%
 No fee up to Rs.25,000/- loan
 0.25% subject to maximum of Rs.500/-

Insurance:
Gold ornaments pledged to the Bank will be covered under the Master policy
of theft and burglary. Bank’s indemnity policy will be obtained by the Bank
centrally.

Sanctioning Authority:

63

The sanctioning authority would be the Branch Head in the category of
Manager/AVP/VP. The branches should send the Control Returns on
monthly basis to the Zonal Office for noting and review. The VP (Credit &
Forex) will be the reviewing authority at the Zonal Office.

Repayment:

Repayment period not exceed 18 months. The facility will be renewable at
the request of the borrower after 18 months. The repayment schedule should
be aligned with the crop harvest cycle.
Release of the gold ornaments on repayment by borrower

The branch should release the security only if the full amount of interest,
other charges and principal has been repaid. The borrower should present the
signed receipt issued to him/her by the Bank while taking delivery of the
ornaments. The borrower(s) needs to sign the receipt acknowledging that the
gold ornaments have been received by him/her in good order and condition.
The signed receipts should be arranged as per the date of closure of loan
account and shown to the inspecting authority at the time of the inspection.
Guidelines for the release of the pledged jewellery on liquidation of the loan
on death of the borrower will be issued later in consultation with the Law
Department.

Right of Disposal of Security:

In case of default, Bank has the right to dispose the gold ornaments for
satisfaction of the loan by way of public auction or private treaty and proceed
against the borrower.

64

Power Gold Plus:
Difference from Power Gold:
 Minimum Rs. 2.00 lacs to Rs. 10.00 lacs.
 Monthly interest application.
 Drawing Power: 80% of value of the ornament.
 Field inspection report to confirm the activity is to be undertaken.
 Maximum 6 redemptions and pledges can be permitted in a year, Rs.250/-
plus ST will be charged per redemption/pledge.
 Custodian charges of Rs.3,000/- plus ST, will be charged per year if the
value of the security is more than 5 times the loan amount.

Pricing:
 Direct Agriculture: BPLR–3.75%.
 Indirect Agriculture: BPLR-3.25%.
 Fee: 0.25% subject to maximum of Rs.1,000/-.
 Appraiser Fee: 0.25% subject to maximum Rs.1,000/-.

Product Features:
 CC facility against gold (CCAPG)

Target Group:
 For allied agricultural activities like poultry, dairy, fisheries etc- Direct
Agriculture.
 Financing agriculture input dealers, Arthias/ Commission agents etc –
Indirect Agriculture. Crop cultivation should not be financed.
65

Kisan Power Scheme:

Purpose:

Production Credit i.e. for meeting cost of crop cultivation/allied agricultural
activities.
Investment Loan for meeting any investment need, other than production
expenses, that can improve borrower’s farm productivity i.e. purchase of
agricultural equipments, land levelling, land development, vehicles etc.
Consumption Loan for meeting consumption needs
Financing of all allied agricultural activities except the following is eligible
under Kisan Power-No tractor /trailer shall be financed under the Kisan
Power Scheme. Poultry shall not be financed under Kisan Power Scheme

Eligibility:

Any individual who is a major Owner Cultivators Tenant Cultivators and
Share Croppers may be financed selectively. Minimum landholding should be
two acres of cultivable land. Landholding has to be supported by land
documents like 7/12 extract, Patta, chitta, Adangal (confirming ownership,
crop pattern) etc. Joint holding (single or multiple locations) up to five
persons are permitted.
In case the borrower is more than 60 years of age, a co-borrower is
mandatory. The co-borrower should be a family member / relative of the
Borrower.

66

Radius of Operation:

Radius of operation restricted to 50 km from the Branch. However, VPAF
may allow financing select cases under the scheme beyond 50 kms and upto 75
kms, provided the distance will not come in the way of effective follow up and
recovery.

Nature of Facility:

Term loan – Consumption Loan and Investment Loan
Cash credit – Production Credit
Sanctioning authority should ensure that a cash credit facility is extended in all
cases without exception

Amount of Loan:

Overall Limit:
Minimum: Rs. 25001/-
Maximum: Rs. 25,00,000/-
Individual Components:
Facility Min Limit Max Limit
Investment Loan 25001/ 24,74,999/-

Production Credit* 25,001/ 25,00,000/-

Consumption Loan 50,000/ 5,00,000/- For States of
Punjab, Rajasthan &
Haryana and
3,00,000/- For all other
states

67

*Production Credit is Mandatory

Assessment/Fixation of Limit:

Overall Limit
The overall loan amount/ credit limit will be fixed on the basis of 5 times
annual farm income or 70% of the value of collateral security whichever is less
subject to maximum of Rs. 25,00,000/-
Production Credit
For any Kisan Power account, Production Credit is a must. While calculating
Production Credit Limit, scale of finance should be the basis of assessment,
which is decided every year by District level Technical committee (DLTC).
The Production Credit Limit can be maximum upto 150% of the amount of
Scale of Finance advised by DLTC. Crop insurance premium may be debited
to production credit, but the outstanding should be within limit. In other
words the disbursement needs to be net of crop insurance premium.
Production Credit Limit may be extended for leased land also, subject to the
terms and conditions on security/guarantee etc.
Consumption Loan
The Consumption Loan amount should not be more than 3 times of annual
farm income, and subject to the security criteria, within the upper cap of Rs.
5 lacs/3 lacs as the case may be.
The assessment of consumption requirement is to be based on the written
declaration of the applicant, and 100% of the declared amount would be
allowed subject to maximum limits specified.
Investment Loan

68

For purchase of Two/Three/Four Wheelers used for carrying farm goods or
Farm Machinery-:
In such cases, the branches shall ensure that the price of the two/three/four
wheelers or machinery should be equal to or less than the MRP (maximum ex
showroom price, which includes all the state level taxes, but excludes the
registration fee, road tax and insurance) published by the manufacturer. The
actual cost of registration, road tax and insurance can be financed.
In case of vehicles, the Bank’s interest is to be noted in the RC book and the
vehicles are to be insured under a comprehensive insurance policy. Along with
invoice receipt, RC book copy, a photograph of the vehicle and the Borrower
standing nearby is to be obtained and kept on record. This may be obtained
within 45 days of disbursement. Our charge on the vehicle should be
explicitly mentioned on the vehicle.
In respect of development works like deepening/drilling of wells,
construction of pump house/sheds/cattle sheds etc, the estimates made by the
farmers themselves can be accepted, provided the cost does not exceed more
than 20% of the unit cost approved for that activity/purpose in that region by
NABARD.

Security:

Upto Rs. 50000/-
Primary: Hypothecation of crops and other assets
Collateral : Nil
Over Rs. 50000/-
Primary : Hypothecation of crops and other assets

69

Collateral: Mortgage/ Charge of land owned by the prospective borrower
upto 140% (1.4 times) of the amount of loan as per State laws.
Margin:

Investment Loan for creation of
assets and allied activities (except 25%
vehicles)

Investment Loan for vehicles
30%
Nil. The labour input by the farmer is
Production Credit considered as the margin. Hence no
separate cash margin is insisted for crop
loans.
Consumption Loan
NIL

Rate of Interest:

For consumption loans:
Amount Interest Rate
Loan from Rs 50,000 upto Rs 2,00,000 BPLR 1.50%
Loan from Rs 2,00,001 upto Rs 5,00,000 BPLR 1%
For all other loans -:
Amount Interest Rate
Limit up to Rs. 50,000 BPLR 3.50%
Loan from Rs 50,001 upto Rs 2,00,000 BPLR 3%

70

Loan from Rs 2,00,001 upto Rs 5,00,000 BPLR 2%

Processing Fee:
Fee @ 0.50% for production credit and 1.00% for Investment Loan and
Consumption Loan. Subject to a minimum of Rs.500/-. Service tax is to be
recovered at the applicable rate.
Sanctioning Authority may at their discretion allow reduction/waiver are free
to recover a higher processing fees on selective basis.

Crop Insurance :

The production credit is to be covered under National Agricultural Insurance
Scheme (NAIS) provided by the Agriculture Insurance Company of India Ltd
(AICIL). Zonal Offices/Advances cells are authorised to waive this
requirement.
Branches to debit actual crop insurance premium from production credit
account (CCAGR). However, no overdrawing should be allowed. It is to be
ensured that the disbursement is made after keeping sufficient balance for
debit of all future insurance premiums.

Accident Insurance:

All KCC holders shall be covered under Personal Accident Insurance upto
Rs.50, 000/- as per the extant guidelines of Kisan Credit card scheme. This is
done under a master policy with Bajaj Alliance General Insurance Co Ltd by
Central Office and the premium amount of Rs. 15 will be incurred by the
Bank. Also, in case of a claim (due to accidental death, partial disability or

71

total disability), branches should take up the matter with Bank Assurance Cell
in Retail Banking department at CO for an early claim settlement. The
proceeds of insurance are to be credited to CCAGR account of the borrower.
Insurance of Assets:

All the securities (Building, equipment and Vehicles) created out of the loan
or otherwise are to be insured for full value. Branches may take the help of
our insurance advisers for this purpose.

Disbursement:

Wherever cash disbursement is to be made (in case of Production
credit/Investment Loan or Consumption Loan), the funds should be credited
to the operative (SB/CC) account of the borrower and should be withdrawn
through cheque leaf.
Investment Loan
Investment loan is to be disbursed in one or more instalments depending upon
the progress of work.
In case of Investment loan for purchase of implements/ equipments/vehicles,
the borrower should be asked to deposit the margin money with the Bank, and
the disbursement is given to the dealer/manufacturer/supplier directly by
DD/ Pay order along with margin.
In case the implement/ equipment is already purchased by the Borrower,
disbursement is permitted after inspection by the Bank’s official and after
getting the stamped receipt and invoice. These purchases should not be older
than 75 days.

72

Cash disbursement may be made for purchase of animals, construction of farm
shed etc. and the relative receipt is to be obtained within 45 days of
disbursement. The labour component in Investment loan can be released in
cash after getting written request cum declaration from the Borrower.
Repayment:

Production Credit
Annual review and renewal in every three years. Branches should encourage
Borrowers to bring the sale proceeds of their agricultural produce to their
CCAGR a/c .
Consumption Loan and Investment Loan
All the investment loans (except horticulture projects) and consumption loan
should be repayable within a maximum period of 5 years. Repayment period
up to 7 years is permitted in case of horticultural projects which is inclusive of
moratorium period upto maximum of 3 years. Sanctioning authorities to
ensure that projects having sufficient cash generation in the residual loan
period (I.e. total period minus moratorium period) to ensure repayments only
are considered. A suitable moratorium may be allowed upto maximum of 2
years in case of Investment Loan (except horticulture projects and vehicle
loans). The instalments should be monthly/quarterly/Half yearly/yearly
depending on harvesting of crop and other income sources like dairy, salary,
other employment etc. depending on the income stream the repayment of
vehicle loans is to be fixed at monthly/quarterly or half yearly intervals and
the maximum moratorium for vehicle loan is to be restricted to 6 months.

Penal Interest:
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2% p.a. on overdue amount.

Documentation:
Borrower:
 Demand Promissory Note for Production Credit
 Letter of waiver cum DP Note delivery letter for Production Credit
 Loan cum hypothecation Document – ACD 1.
 Simple (Registered) Mortgage - ACD 2 / Equitable Mortgage (ACD-4A &
4B).
 Duly signed PDCs along with covering letter
 Duplicate copy of the sanction letter duly signed by the borrower/s and
guarantor/s.
 A letter addressed to the Village Revenue Officer advising him to record
the charge of the Bank for the amount of the loan on the land records with
him.
Guarantor:
 Deed of Guarantee - ACD 3.
 Additional Documentation for Vehicles
 Power of Attorney for registering the vehicle in favour of one of the joint
accountholders in case there are more than one borrowers
 A letter of authority to the Bank for effecting disbursement of the loan
directly to the dealer.
 RTO forms no.26, 29,30,34,35
74

MIS and Monitoring :
Monthly Control Returns to be submitted by the branches/Cluster Heads to
Advances Cell/Zonal Office for reporting advances.
Appraisal and Sanction:
Application for Kisan Power should be obtained from the proposed borrowers
and also the guarantor in the prescribed format. Branches need to offer
comments in the proposal on the value of the main security, collateral
security, i.e. value of the land being mortgaged to the bank and the basis of
calculation of limit to the farmer. The agriculture officers/branch staffs
identified to deal with the scheme is to travel to each of the individual centres
to meet the applicants, verify the details and put up the proposal for sanction
to the Branch Head/Cluster Head. The recommending and the sanctioning
authority should sign the proposal.

Pre sanction Visit:
The focus of visit should be on an evaluation of the income stream of the
borrower, and a comprehensive assessment of credit needs taking into account
track record, credibility, capability, as well as technical viability of the existing
and proposed activities. Short-term credit needs of the farmer should include
all requirements directly and indirectly related to production, post harvest
and household expenses. Repayment capacity should be assessed on the basis
of aggregate household income from all sources including crop production and
ancillary activities.
The following details should be observed during farm inspection:

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Necessity of the development/s proposed to be undertaken.
The crops cultivated and suitability of the crops proposed after the
development Past experience in the activity In case of Investment Loan, it
should be ensured that the land on which the developments are proposed is
available as security.
Additional guidelines for Vehicles:

Margin payment should be made to the Bank and under no circumstances, the
Borrower should be allowed to pay directly to the dealer and produce a
receipt. Registration of vehicles and Stamped receipt from dealers for the cost
of the vehicle financed by us should be obtained. Our charge on the vehicle
should be explicitly mentioned.

Registers to be maintained:

 Loan Application Receipt cum Disposal Register
 Mortgage Register
 Document Execution Register

Recovery:

Sanctioning authority to designate an officer (In the cluster HQ/ Stand alone
branch) for recoveries. He should monitor the accounts regularly and initiate
action, whenever required. Branches may seek help of outsourced agencies for
recovery. The appointment of outsourced agency shall be sanctioned by VPAF
after doing a cost benefit analysis.

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Direct Financing to Farmers for Cattle Loans
through Dairies/ Cooperatives:

Facility:
Term Loan

Purpose:
 Purchasing Milch animal
 Construction of shed for keeping cattle.

Extent of Finance:
The extent of finance shall be 85% of the cost of animals/ shed constructed.
The borrower’s own contribution shall be to the extent of minimum 15% of
the total cost of cattle purchased/shed constructed. The minimum indicative
costs can be found out from the State Level Unit Cost Committee of
NABARD.

Amount:
Minimum Amount: Rs. 30,000
Maximum Amount: Rs. 2,00,000

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*The cost per cattle is assumed to be around Rs. 18,000-19,000. As per the
eligibility criteria borrower has to purchase a minimum of two milch cattle
from loan amount hence, the minimum availment should be around Rs.
30,000 keeping a margin of 15 % by farmer.

Age:
Any major individual pursuing dairy farming activity.
Eligibility Criteria:
Farmer should have a record of supplying minimum 10 litres of milk per day
on an average for at least one year with the Village Dairy Cooperative Society.

Margin:
15 % of value of cattle to be purchased and/or shed to be constructed.

Rating:
The score sheet for agricultural advances may be used for the purpose. The
farmer with a rating of A1 and A2 may be considered for the loan.

Tenor:
Maximum period of Four Years from the first transaction of disbursement to
borrower with a maximum moratorium period of 3 months before start of
principal repayment.

M&C Commission:
The Dairy will be paid 0.5% of the loan amount as commission for acting as an
M&C agent for the Bank.

Documentation:

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 Hypothecation cum Term Loan Agreement. Guarantee from Village Dairy
Cooperative Society format is being finalized in consultation with Law
Dept. Personal Guarantee from member of dairy coop society or third
party.
 Letter addressed by Borrower to Sponsor and Sponsor to Bank.
 Letter of comfort/Guarantee from Dairy/Milk Union
 M&C Agency agreement between the Dairy and the Bank.
Repayment:
The repayment will be made through escrow mechanism with a maximum
moratorium of 3 months. Thereafter, the loan is to be repaid in maximum 4
years in monthly instalments.

Rate of interest:
The pricing will be irrespective of the rating:
Loan Amount Rate Penal interest:
Rs. 30,000-2,00,000 BPLR-3% 2.00% p.a. on the overdue
interest and instalments.
Above Rs. 2,00,000 BPLR-3.5%
Prepayment Charges:
In case of prepayment of loan within one year from the disbursement: 2% of
the amount prepaid.

Security:

79

Primary: Hypothecation of cattle financed by the Bank and other movable
assets.
Collateral: Letter of Comfort/Guarantee by the Union against the loan
Guarantee from Village Dairy Cooperative Society/Personal Guarantee.
In case the loan amount exceeds Rs. 1 lakh the same would be further
secured by noting of the Bank’s charge on the land records of the
borrower or create a mortgage of land in favour of the Bank.

Insurance:
Cattle/Shed will be comprehensively Insured with the beneficiary clause as
UTI Bank Ltd. The premium payable is added in the cost of the project.

Processing Fee:
0.5% of the total loan amount

Other Terms and Conditions:

In case guarantee is not available from Village Dairy cooperative, a guarantee
from a person within the group or a guarantee from a third person acceptable
to the Bank should be obtained. The personal guarantee has to be obtained
from a guarantor should own his/her own tractor/own at least 2 acres of
irrigated land/4 acres of dry land employed in government, semi government
employment in the category of Scale III and above or working with any
reputed private sector undertakings at a respectable positions Running own
business and having assets with a market value equal to the amount of the
loan. The Branch will reserve the right to reject any loan application based on
its own appraisal, having right to conduct inspections without any prior
80

notice. In case the Borrower stops supplying milk to the Union the entire loan
amount shall be repayable in lump sum/ recalled.

Bench marking: (Out of 30)

Score of 26 and above A1
25-21 A2
16-20 A3
<16 A4
Score Sheet for Dairy/Milk Union:

Parameters Score Scoring

Positive PAT for past 3 years: 5
Positive PAT for 2 years out of 3
Financial Performance of
years: 3
Dairy/Union
Negative PAT for for 2 years and
above out of past 3 years: 0

Less than 7 days: 5
Milk Payment cycle More than 7 and Upto 15 days: 3
More than 15 days: 0

Extension Services
All three services provided: 5
available through Dairy/
Two out of three services
Milk Union:
provided: 3
Cattle Feed
One service provided: 2
Veterinary service
Not provided: 0
Artificial Insemination

81

Average capacity utilisation Above 60%: 5
of Milk Processing Plant Between 60%-45%: 3
over past 3 years Less than 45%: 0

Average daily milk supplied More than 10 litres: 5
per farmer member over Between 5-10 litres: 3
current financial year Less than 5 litres: 0

Collateral Security Guarantee or cash margin: 5
available from Union Letter of Comfort: 3

Direct Financing to Farmers under Contract
Farming:
Contract farming can be defined as an agreement between farmers and
processing and/or marketing firms for the production and supply of
agricultural products under forward agreements, frequently at predetermined
prices. The arrangement also invariably involves the purchaser in providing a
degree of production support through. The basis of such arrangements is a
commitment on the part of the farmer to provide a specific commodity in
quantities and at quality standards determined by the purchaser and a
commitment on the part of the company to support the farmer’s production
and to purchase the commodity. The intensity of the contractual arrangement
varies according to the depth and complexity of the provisions in each of the
following three areas:
Market provision: The grower and buyer agree to terms and conditions
for the future sale and purchase of a crop or livestock product;

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Resource provision: In conjunction with the marketing arrangements the
buyer agrees to supply selected inputs, including the inputs required for land
preparation and technical advice;
Management specifications: The grower agrees to follow recommended
production methods, inputs regimes and cultivation and harvesting
specifications.
Parties to the contract farming financing:
 Farmer
 Bank
 Sponsor
Sponsor can act as management and Collection agent to undertake the
following functions:

 Identification and screening of borrowers.
 Completing application form and other formalities like getting extracts of
land records, no due certificate etc. of the proposed borrowers.
 Recommending the Bank for loan.
 Getting security documents executed by the borrower after sanction from
the Bank and forwarding the same to the Bank.
 Paying the amount to the farmer disbursed by the Bank.
 Getting stamped receipt from the borrowers in token of having received
the amount of loan and p0ass on to the Bank.
 After the supply is over, sending to the Bank the entire proceeds payable to
the farmer. In case amount payable to farmer by the sponsor is less than

83

loan outstanding, to recover the balance amount from the farmer and remit
to the Bank against the loan out standings.
 Submitting the monthly MIS.

Eligibility Criteria:
Cultivable fertile land of 3 acre and above. It has to be supported by land
documents like Patta, chitta, adangal, 7/12, 8/A extract (confirming
ownership, crop pattern etc) etc.

Rating:
The individual account will not be rated in view of the structure of the scheme
and comfort available from Sponsor.
Sanctioning and Disbursement of Loan:
Bank and the sponsor based upon the scale of finance as decided by the DLCC
of the lead Bank or a mutually agreed upon scale will be arrived upon by the
Bank and the sponsor.
The disbursement of loans will be effected to the credit of current a/c to be
opened by the sponsor with our Bank exclusively for the said purpose. In
order to make the disbursement to the farmers who are located at different
centres, the sponsor will open a current account with any other local bank,
again exclusively for making disbursement of loans to the farmers. The
sponsor will also arrange to obtain a stamped receipt from the farmer
borrowers in token of having received the amount of loan.
The agriculture extension officers of sponsor will identify the individual
farmers and complete all the documentation formalities as prescribed by the

84

Bank. After the satisfaction of our branch personnel about the completion of
documentation formalities, our branch will issue a consolidated cheque
favouring the sponsor’s dedicated current account with our bank.
Sponsor will arrange to provide us the transactions details of the loan
disbursement account on a monthly basis certified by a Charted Accountant.

Amount:
Depending on scale of finance as decided by the DLCC of the lead Bank per
acre of land; or what is mutually agreed upon by the Bank and the sponsor, as
the case may be.

Rate of Interest:
7.00%-12.00% per year. Payable half yearly depending on case to case basis.

Tenor:
Duration of the crop plus two months

Security:
 Hypothecation of crop.
 Letter of Guarantee / Comfort letter (in absence of the letter of guarantee)
from the sponsor

Collateral Security:
Nil

Insurance:
Wherever available the crop should be insured with standard bank clause.

Processing Fees:

85

Nil

Disbursement:

The agriculture extension officers of sponsor will identify the individual
farmers and complete all the documentation formalities as prescribed by the
Bank. Sponsor will forward our branch, the individual applications for the
loan along with the required documents as detailed in the scheme.
After the satisfaction of our branch personnel about the completion of
documentation formalities, our branch will issue a consolidated cheque
favouring the sponsor’s dedicated current account with our bank.
The sponsor will arrange to obtain a stamped receipt from the farmer
borrower in token of having received the amount of loan and pass on to the
Bank. Sponsor will arrange to provide us the transactions details of the loan
disbursement account on a monthly basis certified by a Charted Accountant.
Repayment:

After the supply is over, sponsor shall send to the Bank the entire proceeds
payable to the farmer. The bank will make balance payment to the farmer
after deducting their crop loan dues. In case amount payable to farmer by the
sponsor is less than loan outstanding, sponsor will recover the balance amount
from the farmer and remit to the Bank against the loan out standings.
Our branch would conduct inspection on a half-yearly basis or as decided by
the Bank to verify the crop. Our branch would also verify the books of
accounts of the sponsor at half yearly interval to verify the disbursal of loan as
per the scheme. Also, if required an external auditor would be appointed to
audit the accounts.

86

Other Terms:
Sponsor will sign M & C agency agreement with the Bank.

Education Loan:

Axis Bank's Study Power aims to provide financial support to deserving
students for pursuing higher professional or technical education in India and
abroad. The loan would be provided to students who have obtained admission
to career-oriented courses eg, medicine, engineering, management etc.,
either at the graduate or post-graduate level.

Quantum of loan:
The quantum of finance under the scheme is capped at Rs.10 lacs for studies in
87

India and RS 20 Lacs for studies abroad, which cover tuition fees, hostel
charges (if any), cost of books, etc. The minimum amount of loan would be
RS 50000.

Margin:
No margin for loans upto Rs 4 lacs. For loans above Rs 4 lacs, 5% margin for
studies within India and 15% for higher studies overseas.

Rate of interest:
Interest rates linked to PLR.

Role of the Guardian:
The parent(s) or guardian of the student would be treated as a co-applicant of
the loan. His or her role would be, necessarily, like the primary debtor.

Security:
Third party guarantee and/or collateral security may be asked for in
appropriate cases.

Additional Security:
Assignment of LIC Policy in favour of the Bank for the sum assured being at
least 100% of the loan amount. The policy is kept alive during the currency of
the loan. To ensure this, the annual premium may be include in the
computation of the loan requirement, along with the tuition fees and other
recurring charges. Further, the future income of the student needs to be

88

assigned in favour of the Bank for meeting the instalment obligations.

Disbursement:
The loan will be disbursed in full or in suitable instalments taking into account
the requirement of funds and/or fee schedule as assessed by the Bank directly
to the educational institution or vendor of books or equipment or
instruments.

Penalty for early closure:
Nil

**********************

Abbreviations and Acronyms (Glossary):
Bank:
RBI : Reserve Bank of India
BIS : Bank of International Settlement
BCBS : Basel committee on Banking Supervisory Practices
NABARD : National Bank of Agriculture and Rural Development
DICGC : Deposit Insurance and Credit Guarantee Corporation
ECGC : Export Credit Guarantee Corporation

Delivery Channels:

SOL : Service Out-let
ATM : Automatic Teller Machine

89

PIN : Personal Identification Number
POS : Point of Sale
VbV : Verified by Visa (Secured Internet Payment System)
WWW : World Wide Web
SMS : Short Messaging Service

Overseas Investor:
FII : Foreign Institutional Investor
NRI : Non Resident Indians
PIO : Persons of Indian Origin
FDI : Foreign Direct Investor
OCB : Overseas Corporate Body

Fixed Deposit:
STD : Short Term Deposit
MIC : Monthly Income Certificate
QIC : Quarterly Income Certificate
RIC : Re-Investment Certificate

Interest:
LIBOR : London Inter Bank Offered Rate
MIBOR : Mumbai Inter Bank Offered Rate

Payment and Settlement System :

IDRBT : Institute for Development and Research in Banking Technology
INFINET : Indian Financial Network
SFMS : Structured Financial messaging Solution
RTGS : Real Time Gross Settlement (System)
NEFT : National Electronic Fund Transfer (System)
IFSC : Indian Financial System Code
SEFT : Special Electronic Fund Transfer

90

ECS : Electronic Fund Transfer
SWIFT : Society for World Wide Inter Bank Financial Telecommunication (Network)
MICR : Magnetic Ink Character Recognition

Regulators:

AMFI : The Association of Mutual Funds in India
IRDA : Insurance Regulatory and Development Authority
SEBI : Security and Exchange Board of India
CBIL : Credit Information bureau (India) Ltd.

Investment:

CRR : Cash Reserve Ratio
SLR : Statutory Liquidity Ratio
ALM : Assets liability Management
ALCO : Assets Liability Committee
REPO : Reverse Purchase Order
GDR : Global Depository Receipt
ADR : American Depository Receipt

General:

BPLR : Benchmark Prime landing Rate
FCNR : Foreign Currency Non Resident
NRE : Non Resident External
NRO : Non Resident Ordinary
FEMA : Foreign Exchange Management Act, 1999
FERA : Foreign Exchange Regulation Act, 1973
FEDAI : Foreign Exchange Dealers Association of India
HUF : Hindu Undivided Family
COPRA : Consumer Protection Act.
Ombudsman : To Take Public Complaints against the Public Authorities
TDS : Tax Deductible at Source
KYC : Know Your Costumer

91

FATE : Financial Action Task Force
FIU-IND : Financial Intelligence Unit India
CAR : Capital Adequacy Ratio
CRAR : Capital to Risk-Weighted Assets Ratio
GAAP : Generally Accepted Accounting Principles
NPA : Non Performing Assets
SARFAESI : Securitisation and Reconstruction of Financial Assets and enforcement of
Securities Interest (Act)
GRACE : Ground Rules and Codes of Ethics

Appendix

 www.axisbank.com
 Journals
 Circulars
 Annual Report

*********************

92

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