Vijeta October 2022 - MDI

This booklet is intended for internal
circulation only, and may not be

distributed externally or reproduced for
external distribution in any form.
Bank of India
Management Development Institute
CBD Belapur, Navi Mumbai
Dear colleagues,
Education can turn the mirrors to windows and expands the ways
to success.
The whole process of education is to turn the dreams to reality. We

all know this quarter binds the year to close but also to boost
everyone to step forward in this organization. This season brings
countless reasons to learn as the countdown of promotion process will
begin with the start of 2023. This is also the time and responsibility
of “Team MDI” for issuance of another new and updated version
VIJETA – October’2022, a handy compendium for all our BOI star
members say- “BOIans” to get updated database of various
functional areas and products.
In golden words of Swami Vivekananda ji- “Education is not the

amount of information that is put into your brain and runs riot
there, undigested, all your life. We must have life building, man-
making, character-making assimilation of ideas. If you have
assimilated five ideas and made them your life and character, you
have more education than any man who has got by heart a whole
library.”
Our Team MDI is committed to enlighten the BOIans with excellence

and updated structure which may help all to enrich themselves and
safely discharge their duties.
Never stop learning, there’s always one more step to go.
May all your dreams come true.
With best wishes,

Stay safe.
Rajeev Sinha
Deputy General Manager & Principal MDI
Index
S.No Topic Page Number

1 KYC/AML/CFT 1
2 Banking Law & Practice 27
3 Risk, Capital & Fund Management 57
4 MSME 71
5 Retail Credit 129
6 Commercial & Institutional Credit 160
7 Credit-Monitoring & NPA Management 185
8 Foreign Exchange 207
9 Deposits 213
10 F.I., Priority Sector & Agriculture 259
11 Official Language (Rajbhasha) 325
Vijeta – October 2022

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KYC/AML/CFT
The objective of Know Your Customer (KYC) / Anti-Money Laundering (AML)

Measures/ Combating of Financing of Terrorism (CFT) guidelines is to prevent the
banks being used, intentionally or unintentionally, by criminal elements for money
laundering or terrorist financing activities. The PMLA/CFT is applicable to all
persons which include individuals, companies, firms, partnership firms, associations
of persons or incorporations and any agency, office or branch owned or controlled by
any of the above-mentioned persons. The KYC procedures also enable banks to
know/understand their customers and their financial dealings better which in turn help
them manage their risks prudently.
KNOW YOUR CUSTOMER (KYC)
A ‘Customer’ is defined as:
 a person or entity that maintains an account and/or has a business

relationship with the bank;
 a person on whose behalf the account is maintained (i.e. the beneficial
owner).
 A beneficiary of transactions conducted by professional intermediaries,
such as Stock Brokers, Chartered Accountants, Solicitors etc. as permitted
under the law, and
 any person or entity connected with a financial transaction which can
pose significant reputational or other risks to the bank, say, a wire transfer
or issue of a high value demand draft as a single transaction.
KYC Policy:
Banks are required to frame their KYC policies incorporating the following four
key elements:
 Customer Acceptance Policy;

 Customer Identification Procedures;
 Monitoring of Transactions; and
 Risk Management.
Customer Acceptance Policy (CAP)
a. Every Bank has to develop their CAP with explicit guidelines as under:-
 No account is opened in anonymous or fictitious/benami name.
 Parameters of risk perception in terms of the nature of business activity,
location of customer and his clients, mode of payments, volume of
turnover, social and financial status etc. should be defined for categorization
of customers into low, medium and high risk.
 Documentation/information requirements to be collected from different
categories of customers depending on perceived risk and keeping in
mind the requirements of PML Act, 2002 and instructions/guidelines
issued by Reserve Bank from time to time.
 Not to open an account or close an existing account where the bank is
unable to apply appropriate customer due diligence measures including
verification of identity/intention of required documents, etc.

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 Circumstances, in which a customer is permitted to act on behalf of
another person/entity, should be clearly spelt out in conformity with the
established law and practice of banking.
 Cross verification of identity of customers that does not match with any
person with known criminal background or with banned entities such as
individual terrorists or terrorist organizations, etc.
b. Banks may prepare a profile for each new customer based on risk
categorization with relevant information relating to customer’s identity,
social/financial status, nature of business activity, details of his clients’ business
and their location etc. This information should be treated as confidential.
c. Individuals (other than High Net worth) and entities whose identities and
sources of wealth can be easily identified and transactions in whose
accounts by and large conform to the known profile may be categorized as low
risk. Customers that are likely to pose a higher than average risk to the bank
should be categorized as medium or high risk.
d. The customer acceptance policy should not be too restrictive and must not
result in denial of banking services to general public, especially to those, who
are financially or socially disadvantaged.
e. KYC Procedure shall be followed during the periodic updation.
f. Where Permanent Account Number (PAN) is obtained, the same shall be
verified from the verification facility of the issuing authority.
g. Where an equivalent e-document is obtained from the customer, Bank shall
verify the digital signature as per the provisions of the Information
Technology Act.
h. Re-KYC exercise shall be carried out as per profile/category of the customer.
Customer Identification Procedures (CIP)

 Customer identification means identifying the customer and
verifying his/her identity by using reliable, independent source documents, data
or information.
 The Policy approved by the Board should explicitly spell out the Customer
Identification Procedure to be carried out at different stages i.e. while
establishing a banking relationship, carrying out a financial transaction
or when the bank has a doubt about the authenticity/veracity or the adequacy
of the previously obtained customer identification data, etc.
 Banks need to obtain such information that are sufficient to establish
to their satisfaction the identity of each new customer irrespective of the
nature/status of the people and taking into account the risk perception
involved.
 In case of any room of suspicion of money laundering or terrorist
financing or when other factors give rise to a belief that the customer does not,
in fact, pose a low risk, banks should carry out full scale customer due
diligence (CDD) before opening an account. In case of an existing customer in
case of suspicion, banks should review the due diligence measures
including verifying again the identity of the client and obtaining information on
the purpose and intended nature of the business relationship.
 In case of close relatives e.g. wife, son, daughter and parents, etc. who live with
their husband, father/mother and son, as the case may be, find difficult to
open an account for want of address verification, Banks can open account

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by obtaining an identity document and a utility bill of the relative with whom the
prospective customer is living along with a declaration from the relative that the
said person (prospective customer) wanting to open an account is a relative
and is staying with him/her.
 Banks should introduce a system of periodical updation of Customer
identification data (including photograph/s) after the account is opened. The
periodicity of such updation should not be less than once in ten years in
case of low risk category customers and not less than once in two years in
case of high and for medium risk categories, the period is eight year.
 An indicative list of the nature and type of documents/information that may be
relied upon for customer identification is annexed to RBI Master Circular dated
01.07.2011.
Customer Identification Requirements (Indicative)
i. Walk-in Customers
• Transaction/s for amount equal to or exceeds Rupees
fifty thousand, by a walk in customer (non-account holder) whether
constructed as a single transaction or several transactions, the customer's
identity and address should be verified.
• Banks/FIs are required to verify the identity of the customers for all
international money transfer operations and also consider filing a suspicious
transaction report (STR) to FIU-IND(Rule 9 of the PML Rules 2005)
ii. Salaried Persons
• For salaried employees, banks can rely on certificate/letter of identity
/address issued only from corporate and other entities of repute and should
be aware of the competent authority designated by the concerned employer to
issue such certificate/letter and additionally insist for at least one of
officially valid documents as provided in the Prevention of Money Laundering
Rules (viz. Passport, driving licence, PAN Card, Voter’s Identity card,
etc.) Or utility bills for KYC purposes for opening bank accounts.
iii. Trust/Nominee or Fiduciary Accounts

• While opening an account for a trust, banks are required to verify
the identity of the trustees and the settlers of trust (including any person
settling assets into the trust), grantors, protectors, beneficiaries and signatories.
In case of Foundation, steps should be taken to verify the founder
managers/directors and in both the cases the beneficiaries should be
identified, if defined.
iv. Accounts of companies and firms

• Banks need to examine the control structure of the entity, determine the source
of funds and identify the natural persons who have a controlling interest and
who comprise the management. These requirements may be moderated
according to the risk perception e.g. in the case of a public company it will not
be necessary to identify all the shareholders.
v. Client accounts opened by professional intermediaries
• If the account is opened for a single client by the professional intermediary,
the client must be identified. In case of ‘pooled’ accounts managed by

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professional intermediaries on behalf of entities like mutual funds, pension
funds or other types of funds and accounts managed by Lawyers/CAs or
Stockbrokers for funds held ‘on deposit' or 'in escrow' for a range of clients, and
the funds held by the intermediaries are not co- mingled at the bank and
there are 'sub-accounts', each of them attributable to a beneficial owner, all
the beneficial owners must be identified.
• Banks should not allow opening and/or holding of an account on behalf of a
client/s by professional intermediaries who are unable to disclose true
identity the owner of the account/funds due to any professional obligation of
customer confidentiality.
vi. Accounts of Politically Exposed Persons (PEPs) resident outside India
• Politically exposed persons are individuals who are or have been entrusted
with prominent public functions in a foreign country, e.g., Heads of States
or of Governments, senior politicians, senior government/judicial/military
officers, senior executives of state-owned corporations, important political party
officials, etc.
• Banks need to verify the identity of the person and seek information
about the sources of funds before accepting the PEP as a customer and the
decision to open an account for a PEP should be taken at a senior
level as per the Customer Acceptance Policy. Such accounts should be
subject to enhanced monitoring on an ongoing basis. The above norms may
also be applied to the accounts of the family members or close relatives of
PEPs.
• Decision on continuance of an existing account for having
becoming the account holder a PEP should also be taken at Senior level
and the account should be subjected to the CDD measures as applicable to
the customers of PEP category including enhanced monitoring on an
ongoing basis.
• Further, banks are required to have appropriate ongoing risk
management procedures for identifying and applying enhanced CDD to PEPs,
customers who are close relatives of PEPs, and accounts of which PEP is the
ultimate beneficial owner.
vii. Accounts of non-face-to-face customers
• In case of non-face-to face customers, Banks have to insist for certification
of all the documents presented and if necessary additional documents may be
called for. First payment to be effected through another bank which adheres
to similar KYC standards. In the case of cross-border customers, the bank may
have to rely on third party certification/introduction. In such cases, it must be
ensured that the third party is a regulated and supervised entity and has
adequate KYC systems in place.
viii. Accounts of proprietary concerns
• Banks, besides the extant guidelines on customer identification procedure as
applicable to the proprietor, insist for any two of the documents in the
name of the proprietary concern viz.) Proof of the name, address and
activity of the concern, like registration certificate (in the case of a registered
concern), certificate/license issued by the Municipal authorities under Shop &
Establishment Act, sales and income tax returns, CSTNAT/GST certificate,
certificate/registration document issued by Sales Tax/Service Tax/Professional
Tax authorities, License issued by the Registering authority like Certificate of

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Practice issued by Institute of Chartered Accountants of India, Institute of Cost
Accountants of India, Institute of Company Secretaries of India, Indian Medical
Council, Food and Drug Control Authorities, registration/licensing document
issued in the name of the proprietary concern by the Central Government or
State Government Authority/Department. Banks may also accept IEC (Importer
Exporter Code) issued to the proprietary concern by the office of DGFT
as an identity document for opening of the bank account, etc.
The Accounts Of Prisoners

• Reserve Bank Of India Vide their circular No. RBI/2019-
20/37DBR.AML.BC.N0.- 11/14.01.001/2019-20 dated 9th August 2019
have issued direction that where the individual is a prisoner in a jail, the
signature or thumb impression shall be affixed in presence of the officer in-
charge of the jail and the said officer shall certify the same under his signature
and the account shall remain operational on annual submission of certificate of
proof of address issued by the officer in-charge of the jail.
Accounts of Non-Government Organizations (NGOs):
a) Accounts of NGOs should be opened only after fully complying with

the KYC/AML/CFT guidelines. Accounts of NGOs receiving foreign contribution
should be registered with the Ministry of Home Affairs, Government of India or
possess prior approval of the Government for receiving foreign funds.
b) All NGO accounts opened (except those promoted by the United Nations or its
agencies) should be classified as High Risk category accounts AB INITIO
and transactions in these accounts should be properly scrutinized with
enhanced due diligence on continuous basis.
c) All foreign inward remittances to the credit of these accounts should be scrutinized
taking into account the customer profile, country of origin of funds, etc. and
extant guidelines regarding such remittances.
Account of Foreign students in India
•Branch may open Non Resident Ordinary (NRO) bank account of a foreign
student on the basis of his/her passport (with appropriate visa & immigration
endorsement) along with a photograph and a letter offering admission from
educational institution.
• Within a period of 30 days of opening of account, the foreign
student should submit, a valid address proof giving local address, a letter
from educational Institution as proof of living in a facility provided by the educational
Institution.
• During the 30 days, the account should be operated with a condition
of allowing foreign remittance not exceeding USD 1000 in the account and cap of
monthly withdrawal of Rs.50000/- pending verification of address.
• On submission of proof of current address, the account would be treated as

Normal NRO Account.

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Operation of bank accounts & money mules
• In order to minimize the operations in mule accounts as also to

monitoring of transactions in order to protect themselves and their customers
from misuse by such fraudsters, it has been directed that Banks should follow
meticulously the guidelines on KYC/AML/CFT issued from time to time and to those
relating to periodical updation of customer identification data after the
account is opened. Bank no longer knows the true identity.
• In the circumstances when a bank believes that it would no longer be

satisfied that it knows the true identity of the account holder, the bank should also file
an STR with FIU-IND.
Accounts with Introduction

• In case of low income group persons both in urban and rural areas who
find it difficult to produce the documents for identification and address, the
Banks may consider opening of Small Deposit Accounts subject to introduction
from another account holder who has been subjected to full KYC
procedure. The maximum balances not exceeding Rupees Fifty Thousand
(Rs. 50,000/-) in all their accounts taken together and the total credit in all
the accounts taken together is not expected to exceed Rupees One Lakh
(Rs.1,00,000/-) in a year. The introducer’s account with the bank should be at
least six months old and should show satisfactory transactions. Photograph of
the customer who proposes to open the account and also his address
needs to be certified by the introducer, or any other evidence as to the
identity and address of the customer to the satisfaction of the bank.
Small Account
Small Accounts are accounts wherein:-
i. The aggregate of all credits in a financial year does not exceed

rupees one lakh
ii. The aggregate of all withdrawals and transfers in a month does not exceed
rupees ten thousand.
iii. The balance at any point of time does not exceed rupees fifty thousand.
Provided, that this limit on balance shall not be considered while making deposits
through Government grants, welfare benefits and payment against procurements.
Banks are advised to ensure adherence to the procedure provided in the Rules for
opening of small accounts. In terms of the Notification, job card issued by NREGA
duly signed by an officer of the State Government or the letters issued by the
Unique Identification Authority of India containing details of name, address
and Aadhaar number, etc. can be accepted as documentary evidence of identification
a proof of address.

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Monitoring of Transactions
• Every bank has to set key indicators for accounts taking note of the
background of the customer, such as the country of origin, sources of funds, the
type of transactions involved and other risk factors. High risk associated with accounts
of bullion dealers (including sub-dealers) & jewellers should be taken into account by
banks to identify suspicious transactions for filing Suspicious Transaction Reports
(STRs) to Financial Intelligence Unit- India (FIU-IND).
• Banks are required to put in place a system of periodical review of risk
categorization of accounts and the need for applying enhanced due diligence
measures. Such review of risk categorization of customers should be carried out at a
periodicity of not less than once in six months.
• Banks are required to exercise ongoing due diligence with respect to the
business relationship with every client and closely examine the transactions in
order to ensure that they are consistent with their knowledge of the client,
his business and risk profile and where necessary, the source of funds.
Any cross border inward remittance above Rs. 5 Lakh is being scrutinized centrally
and CBWTR report is generated I reported to FIU-IND periodically.
Treatment of accounts for non-adherence with KYC guidelines:
Bank is required to conduct ongoing due diligence by way of Re-KYC as well as

transaction monitoring and during this process require to conduct ongoing due
diligence by way of Re-KYC as well as transaction monitoring and during this
process, requires to obtain updated documents and additional information. The
following procedure shall be followed for customer who does not submit KYC
documents:
 First notice to be sent on registered address of the customer allowing three
month’s time to submit’ documents .
 Second notice to be sent on registered address of the customer allowing one
more month’s time failing which account shall be debit freezed.
 The Branch has to take a conclusive decision whether to continue banking

relation with customer or not , if account is still not KYC Complaint.
Risk Management
• The Board of Directors of the bank are expected to ensure that an

effective KYC programme covering proper management oversight, systems and
controls, segregation of duties, training and other related matters is put in
place by establishing appropriate procedures and ensuring their effective
implementation. Responsibility should be explicitly allocated within the bank
for ensuring effective implementation of the policies and procedures.
• Banks are expected to ensure that its internal audit and

compliance functions should specifically check and verify the application of KYC
procedures at the branches and comment on the lapses observed in this regard. The
compliance in this regard should be put up before the Audit Committee of the Board
on quarterly intervals.

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• Customers to be categorized as Low, Medium & High based on the
assessment and risk perception i.e. as per the profile of the customer at the initial
stage depending upon Customer’s identity, social/financial status, nature of
business activity, location & other information. It is to be reviewed every six months
based on transactions/turnover in the account.
Few category of customers are put always under HIGH RISK i.e. NRI, GEM &
Jewellery business, Diamond Traders, Real Estate, Trust, NGOs,
• Low Risk :Every Ten Years
• Medium Risk :Every Eight Years
• High Risk :Every Two Years
Periodic updation of a customer’s profile as per above mentioned period is mandatory.
Introduction of New Technologies –

Credit I Debit I Smart I Gift Cards, Mobile Wallet, Net Banking/ Mobile Banking,
RTGS/ NEFTIECS/ IMPS, Demat Services/ E-KYC Banks are expected to ensure
that preventive measures are put in place to take care of the money laundering threats
that may arise from new or developing technologies including internet banking. Banks
should ensure that full compliance with all KYC/AML/CFT guidelines issued from time
to time, in respect of add-on/ supplementary cardholders also. It is also desirable that
Marketing Agents of these products are also subjected to KYC measures.
Combating Financing of Terrorism
• Any transaction which gives rise to a reasonable ground of

suspicion that may involve financing of the activities relating to terrorism is to be
treated as suspicious transaction (PMLA rules). Banks should develop suitable
mechanism through appropriate policy framework for enhanced monitoring of
accounts suspected of having terrorist links and swift identification of the transactions
and making suitable reports to the Financial Intelligence Unit – India (FIU-IND) on
priority.
• RBI provides list of individuals and entities having terrorist

connections periodically. Banks/Financial Institutions should ensure to update the
consolidated list of individuals and entities as circulated by RBI. Banks should scan
its existing portfolio to ensure that no account is held by or linked to any of the entities
or individuals included in the list as also before opening any new account it should be
ensured that the name/s of the proposed customer does not appear in the list. Full
details of accounts bearing resemblance with any of the individuals/entities in the
list should immediately be intimated to RBI and FIUIND.

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Freezing of Assets under Section 51A of Unlawful
Activities (Prevention) Act, 1967
• Central Government is empowered to freeze, seize or attach funds and

other financial assets or economic resources held by, on behalf of or at the direction
of the individuals or entities or any other person engaged in or suspected to be
engaged in terrorism and prohibit any individual or entity from making any funds,
financial assets or economic resources or related services available for the benefit
of the individuals or entities or any other person engaged in or suspected to
be engaged in terrorism (Sec. 51A of UAPA).
• Banks are required to strictly follow the procedure laid down in the
UAPA Order and ensure meticulous compliance.
• Banks have to maintain the list of individuals or entities in
electronic form and run a check on the given parameters and in case the particulars
match with any of its existing customers, the banks shall immediately, not later than
24 hours from the time of finding out such customer, inform full particulars of the
funds, financial assets or economic resources or related services held in the form of
bank accounts, held by such customer on their books to the Joint Secretary
(CTCR), Ministry of Home Affairs, by Fax and also convey over telephone followed
by post and e-mail duly marking copy to the UAPA nodal officer of RBI, CGM, DBOD,
RBI (AML Division).
• Banks shall also file a Suspicious Transaction Report (STR) with FIU- IND
covering all transactions in the accounts covered by paragraph (b) above, carried
through or attempted, as per the prescribed format.
Freezing of financial assets
• On receipt of the particulars from Bank/FI, the MHA would get the veracity
of the data verified by State Police and /or the Central Agencies. The verification
would be completed within a period not exceeding 5 working days from the date of
receipt of such particulars.
• In case of positive findings, an order to freeze these assets under section

51A of the UAPA would be issued within 24 hours of such verification and conveyed
electronically to the concerned bank branch under intimation to Reserve Bank of India
and FIU- IND. The order shall take place without prior notice to the designated
individuals/entities. Implementation of request received from foreign countries under
U.N. Security Council Resolution 1373 of 2001.
• U.N. Security Council Resolution 1373 obligates countries to

freeze without delay the funds or other assets of persons or entities figured in
the list. Such requests from foreign countries under U.N. Security Council Resolution
1373, shall be examined by the Ministry of External Affairs (MEA) and forward it
electronically, with their comments, to the UAPA nodal officer of IS-I Division for
freezing of funds or other assets.The UAPA nodal officer upon examination of
the request and having satisfied, the same would be passed on to
RBI who in turn forwards the same to the concerned bank/s for freezing of the
assets. Procedure for unfreezing of financial assets inadvertently affected

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• Any individual or entity whose financial assets are frozen
inadvertently can move an application to the concerned bank in writing with sufficient
evidence. The bank would forward the request to the nodal officer of IS-I Division of
MHA within two working days The Joint Secretary (IS- I), MHA, being the nodal
officer for (IS-I) Division of MHA, shall cause such verification as may be required on
the basis of the evidence furnished by the individual/entity and if he is satisfied, he
shall pass an order, within fifteen working days, unfreezing the financial
assets under intimation to the concerned bank through RBI.
Jurisdictions that do not or insufficiently apply the fatf Recommendations
• Banks are required to take into account risks arising from the
deficiencies in AML/CFT regime of the jurisdictions included in the Financial
Action Task Force (FATF) and should also give special attention to business
relationships and transactions with persons (including legal persons and other
financial institutions) from or in countries that do not or insufficiently apply the FATF
Recommendations.
• If the transactions have no apparent economic or visible lawful purpose, the
background and purpose of such transactions should, as far as possible be
examined, and written findings together with all documents should be retained
and made available to Reserve Bank/other relevant authorities, on request.
Correspondent Banking
• Correspondent banking is the provision of banking services viz.
cash/funds management, international wire transfers, drawing arrangements for
demand drafts and mail transfers, payable- through-accounts, cheques clearing etc.
by one bank (the “correspondent bank”) to another bank (the “respondent bank”). Prior
to establishing such relationships, Banks should carry our due diligence by collecting
various information including level of AML/CFT compliance, whether the other bank
has been subject to any money laundering or terrorist financing investigation or
regulatory action, etc. Proper approval of the Board or committee headed by the
CMD/CEO is desirable.
Correspondent relationship with a “Shell Bank”
• A Shell Bank is one which is incorporated in a country where it has no physical
presence and is unaffiliated to any regulated financial group. Shell banks are not
permitted to operate in India. Banks should not enter into relationship with shell
banks and should ensure that its foreign respondent institution does not permit its
accounts to be used by shell banks. Applicability to branches and subsidiaries outside
India
• The guidelines on KYC/AML/CFT shall apply to the branches and majority

owned subsidiaries located abroad, especially, in countries which do not or
insufficiently apply the FATF Recommendations, to the extent local laws permit.
Any deviation to the RBI guidelines should be reported to RBI.
Wire Transfer
• Wire transfer is a transaction carried out on behalf of an originator (both
natural and legal) through a bank by electronic means with a view to making an amount
of money available to a beneficiary person at a bank. Cross-border wire transfer
means where the originator and the beneficiary bank or financial institution are
located at different countries whereas domestic wire transfer where the originator
and beneficiary are located in the same country. It is an expeditious method for
transferring funds between bank accounts.

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• Basic information on the originator of wire transfers should be made
available to appropriate law enforcement and/or prosecutorial authorities in order to
assist them in detecting, investigating, prosecuting terrorists or other criminals
and tracing their assets. The information can be used by Financial Intelligence Unit -
India (FIU-IND) for analyzing suspicious or unusual activity and disseminating it as
necessary. Banks must ensure that all wire transfers whether cross-border or
Domestic must be accompanied by the originator information. Interbank transfers
and settlements where both the originator and beneficiary are banks or
financial institutions would be exempted from the above requirements
Role of Ordering, Intermediary and Beneficiary banks
Ordering Bank / Intermediary Bank

• An ordering bank is the one that originates a wire transfer as per the
order placed by its customer. The ordering bank as well as the
intermediary bank for both cross-border and domestic wire transfers must
ensure that the wire transfers contain complete originator information and
the same should be retained for at least for a period of ten years (AML Act
2002).
Beneficiary bank
• A beneficiary bank has to identify the wire transfers lacking complete
originator information. Any suspicious transaction should be reported to the FIU-
IND. The bank should also take up the matter with the ordering bank if a transaction
is not accompanied by detailed information of the fund remitter.
Principal Officer
• Banks are required to appoint a senior management officer to be

designated as Principal Officer for reporting/monitoring of all transactions and sharing
of information as required under the law. The role and responsibilities of the
Principal Officer include overseeing and ensuring overall compliance with regulatory
guidelines on KYC/AML/CFT issued from time to time.
• The Principal Officer and other appropriate staff should have timely
access to customer identification data and other CDD information, transaction
records and other relevant information.
Maintenance of records of transactions (Rule 3 of PML Rules, 2005)
Banks are expected to maintain:-
a) All cash transactions of the value of more than Rupees Ten Lakh or its
equivalent in foreign currency,
b) All series of cash transactions integrally connected to each other which
have been valued below Rupees Ten Lakh or its equivalent in foreign
currency where such series of transactions have taken place within a month
and the aggregate value of such transactions exceed Rupees Ten Lakh
c) All transactions involving receipts by non-profit organizations of
value more than rupees ten lakh or its equivalent in foreign currency
d) All cash transactions where forged or counterfeit currency notes or bank notes
have been used as genuine and where any forgery of a valuable security or a
document has taken place facilitating the transaction and
e) All suspicious transactions whether or not made in cash and by way of
as mentioned in the Rules.
f) All integrated transactions exceeding Rs. 10 Lakh.

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Information to be preserved Banks are required to maintain information as
under:
a) The nature of the transactions;

b) The amount of the transaction and the currency in which it was denominated;
c) The date on which the transaction was conducted.
d) The parties to the transaction
Maintenance and Preservation of record

• Banks are expected to maintain/preserve records for at least five
years from the date of transaction between the bank and the client all necessary
records of transactions, both domestic or international including records pertaining
to the identification of the customer and his address which will permit reconstruction
of individual transactions (including the amounts and types of currency involved if
any) so as to provide, if necessary, evidence for prosecution of persons involved in
criminal activity. Reporting to Financial Intelligence Unit - India
 •Banks are required to report information relating to cash and
suspicious transactions and all transactions involving receipts by non-profit
organizations of value more than rupees ten lakh or its equivalent in foreign
currency to the Director, FIU-IND (PMLA Rules).
 • There are altogether eight reporting formats, viz. i)
Cash Transactions Report (CTR) ii) Summary of CTR iii) Electronic File
Structure- CTR, iv) Suspicious Transactions Report (STR), v) Electronic
File Structure-STR vi) Counterfeit Currency Report (CCR) vii) Summary of
CCR and viii) Electronic File Structure CCR for reporting by the Banks.
Detailed guidelines for filing of the reports along with periodicity of
submission are given in the instruction part of each report.
 Banks are required to prepare a profile for each customer based on risk
categorization and undertake review of the same periodically.
 AMLOCK package envisaging various online alerts related to financial
transactions must be utilized at every stages.
 Customer Education/ Training of Employees /Hiring of
Employees.
 Customer Education
 Banks are required to introduce suitable means to educate the
customers of the objectives of the KYC programme so as to avoid any
resistance from the customers.
 Training of Employees
 Banks must have an ongoing employee training programme so that the

members of the staff are adequately trained in KYC/AML/CFT policies &
procedures. E- Learning modules on AML/KYC to be made compulsory for all
staff members.
 Hiring of Employees
 Banks are required to put in place adequate screening mechanism as an
integral part of their recruitment/hiring process of personnel so as to ensure
that criminals are not allowed to misuse the banking channels.

12
Operation of Bank Accounts & Money Mules:-
“Money Mules” which are used to launder the proceeds of fraud schemes (e.g.,
phishing and identity theft) by criminals who gain illegal access to deposit
accounts by recruiting third parties which act as “money mules.
Identify and exit such accounts if it is already exiting. For new a/cs, during discussion
/ interaction if any indication noticed, customer must be avoided.
Identification of Beneficial Owner:

a) The beneficial owner is a natural person, who, whether acting alone or together,
or through one or more juridical person, has /have ownership of / entitlement in
partnership firm & unincorporated association or body of individuals - more
than 15% of capital or profits in the entity
b) Company – more than 25% of the shares or capital or the profits

c) Trust – 15% and more
Simplified Due Diligence
The due diligence which is applied to establish identity of the customer by involving
less stringent norms than basic due diligence is termed as Simplified Due
Diligence. RBI guidelines relates in these to people belonging to low income group
and to enable Financial Inclusion to this segment. Capture additional information/
sources related with customer risk assessment as well as verifiable adverse media
searches associated with ML/TF risks.
Enhanced Due Diligence (EDD)

Any additional due diligence, as desired, over and above basic due diligence is termed
as EDD. RBI guidelines make EDD mandatory for all customers irrespective of the
Risk Category. EDD is required to be done on On- going basis during the
course of business transaction essentially as and when AML alert is generated
and customer is graded as High Risk. RE- KYC norms as per guidelines are to be
implemented. Scrutiny of Customers, nature and purpose of the loan product,
business relationship and related transactions in the line with the risk assessment and
individual customer risk profile.
On-going Due Diligence- points for observations:-
 Transactions in the account are inconsistent with the profile of customer

If large and complex transactions including RTGS and with unusual patterns or
with no apparent economic rationale Transactions exceeding thresholds
 Deposit of third party cheques in existing / newly opened a/cs followed

by cash withdrawals for large amounts.
 Scrutiny source of funds/wealth involved establishing no crime is constituted

Scrutiny of transactions establishing not potentially suspicious.

13
Normally, we can open THREE type of accounts i.e. Normal, Simplified KYC
& Small Accounts. DO’s & DON’Ts for each type of account are given as:
DO`s :
A. Normal Accounts: applicable OVDs as “PROOF OF IDENTITY AND ADDRESS” -
Any one of the 6 documents, listed below can be accepted:
1. Passport (Within validity);
2. Driving License (Within validity);
3. Voters Identity Card;
4. MNREGA Job Card
5. Aadhar Card (Voluntary)
6. Letter issued by the National Population Register containing details of name and
address
Note:
i. PAN or Form 60 shall be obtained from each customer
ii. Recent photograph shall be obtained while opening new account as well as
undertaking Re-KYC exercise.
iii. Re-KYC exercise shall be undertaken as per Risk Category,
a) while issuing ATM / cheque book, if not issued at the time of opening
of account
b) if any customer submits new OVD replacing the existing one,
c) requests for change in mobile number after a reasonable gap.
Address: In case the identity information relating to OVD submitted by the customer
does not have current address, an OVD defined as under, shall be obtained from the
customer which shall be called as deemed OVD and shall be valid for limited purpose
for 3 months,
1. Utility bill which is not more than two months old of any service provider
(electricity, telephone, post-paid mobile phone, piped gas, water bill);
2. Property or Municipal tax receipt;
3. Pension or family pension payment orders (PPOs) issued to retired employees by
Government Departments or Public Sector Undertakings, if they contain the address;
4. Letter of allotment of accommodation from employer issued by State Government
or Central Government Departments, statutory or regulatory bodies, public sector
undertakings, scheduled commercial banks, financial institutions and listed companies
and leave and licence agreements with such employers allotting official
accommodation.
B. Simplified KYC norms:
 Applicable ONLY for Customers who are assessed under Low risk category.
 Documents out of the following list in which Identity and / or Address proof is
given, can, be accepted towards “Proof of Identity and Address”.
 Identity Card with applicants photograph issued by Central / State Government

Department, Statutory / Regulatory Authorities, Public Sector Undertakings,
Scheduled Commercial Banks and Public Financial Institution.
 Letter issued by a Gazetted Officer with a duly attested photograph.

14
 Utility bill which is not more than two months old of any service provider
(electricity, telephone, post-paid mobile phone, piped gas, water bill).
 Property or Municipal Tax receipt.
 Bank account or Post Office savings bank account statement.
 Pension or family pension payment orders (PPOs) issued to retired

employees by Government Departments or Public Sector Undertakings, if they
contain the address.
 Letter of allotment of accommodation from employer issued by State or

Central Government departments, statutory or regulatory bodies, and public
sector undertakings, scheduled commercial banks, financial institutions
and listed companies. Similarly, leave and license agreements with
such employers allotting official accommodation.
 Documents issued by Government departments of foreign
jurisdictions or letter issued by Foreign Embassy or Mission in India.
C. Small Accounts: applicable ONLY for customers who have no

KYC document
 Obtain recent photograph, (self- attested)
 Signature or Thumb impression on Account opening form in front of Bank
Official.
NOTE: Limitations for the account –
a. Balance in the account at any point of time should not exceed Rs.50,000/-,
b. Total of all debits and transfers in a month should not exceed Rs.10, 000/-
c. Total credit in account should not exceed Rs.1 lac in one financial year
d. The account to remain operational initially for 12 months; the period can
be extended further for 12 months provided the customer applies and
furnishes evidence of having applied for any of the OVDs during first 12
months of opening the account.
e. Entire relaxation to be reviewed after 24 months.
f. The following facilities, namely: cheque book, Debit/ATM cards, ABB facility
and Internet Banking facility etc. that are normally available to KYC compliant
accounts, shall not be available under BSBD Small account scheme.

15
Further necessary guidelines/ instructions:
1. Always insist for recent photograph in all accounts,
2. Photocopies of all the KYC documents are to verified with the originals,
copies of OVDs (KYC) must be self-certified by the customer and further essentially
must be certified by the account opening staff with clear wordings i.e. “Original seen
and verified” and must be signed by the account opening staff with employee ID and
date of verification,
3. Complete Customer Profile Sheet- it must be filled in by the Branch
official, should be strictly P & C, and need not be shared with customer in any
circumstance,
4. At the initial stage, classify the customer as Low, Medium and High risk
as per Customer Profile Sheet
5. Ensure filling in all the fields in ‘CUMM’ with correct code.

6. Do obtain details of Beneficial Owners in eligible cases and update the same
in Finacle.
7. Screen the customer name against banned entity and PEP list.
8. Always generate the report of RE-KYC (KYCRPT) periodically and take action
on that i.e. update the KYC as per the stipulated periodic intervals viz.
every 2 years for High risk accounts, every 8 years for Medium risk accounts
and every 10 years for Low risk accounts.
9. After obtaining the updated KYC documents, enter them in menu KYCDET in
the Finacle system.
10. Monitor the transactions of the customer and escalate if any suspicious
transactions found.
11. Familiarise yourself thoroughly with the KYC/AML/CFT policy and
amendments notified subsequently, if any.
12. Name Screening: As and when the updated U.N.lists are received
from RBI, they are uploaded in KRISH menu in our CBS system from where the
branches check / take a search in the list before opening the account.
13. For monitoring of daily transactions, the Finacle system

generates 5 Exception reports viz. (a) Major Exceptions (b) Minor
Exceptions (c) Audit Trails (d) Temporary Overdrafts and (e) Temporary Over
limits, at the day end and the branches have been instructed to check
the same on a daily basis. It is covered by Risk Based Internal / Concurrent
Auditors also.
14. Beneficial Owner- a/cs other than individuals & proprietary concerns
need to be captured with details & Identity of Beneficial owner,
such details must be put in FINACLE.
15. Issue of Bank’s certificate for obtaining Import /Export Code ( IE Code) :
Authority for issuing such certificate on request of the customer, has since
been delegated to ZO level, NOT AT BRANCH LEVEL. Such certificate is to be
issued only after proper Due Diligence and in a well conducted a/c running
satisfactorily for a sufficiently long period. (For details -Please refer to the
circular letter 2015-16 / 201 dt 15.03.2016).

16
DON’Ts:
1. Never depend on third party for obtaining / updating KYC,
2. Never open / continue with account of banned entities,
3. Do not part with the Customer Profile Sheet to the customer for filling. This is
to be filled in by branch officials only,
4. Do not disclose the Risk Classification to the customer,
5. Do not give any wrong adviseto the customer,
6. Do not advise the customer to structure cash deposits below Rs.10 lacs
or below Rs.50000/-; if the customer does it on his own, report it to Head Office
confidentially as suspicious transaction;
7. Not to open accounts of professional intermediaries who are bound by client
confidentiality that prohibits disclosure of client details to Bank
8. Not to open a/cs of Students with Pakistani nationality without prior approval
from RBI Central KYC Registry.
To facilitate the Centralization work of KYC, Government of India vide notification
dated 07.07.2015 amended the Prevention of Money Laundering (Maintenance of
Records) rules 2005 for setting up Central KYC Records Registry (CKYCR) The
work of CKYC Registry is entrusted to CERSAI by Government of India. The
CERSAI would receive, store,safeguard and retrieve the KYC documents of the client
in digital form. The KYC records received from Banks and stored by the CKYCR could
be retrieved online by any Bank across the financial sector for the purpose
ofestablishing an account based relationship. The new Account Opening Form
along with Foreign Account Tax Compliance Act declaration has been mandated to
be used by the Branches. The revised eighteen pages Account Opening form has
been standardized in view C-KYC norms including declaration under
FATCA/Common Reporting Standard. Branches should obtain Account Opening
Forms filled in BLACK INK along with clear readable copies of Officially Valid
Documents.(Ref. Cir. Letter No.2017-18/101 dated 27.12.2017)
KYC DOCUMENTS FOR VARIOUS TYPES OF ACCOUNTS:
Sr Particulars
1. Proof of identity and address
Originals of any of the SIX Officially Valid Documents (OVD) along with RECENT
PHOTOGRAPH for each individual related to Bank account. A copy of the same to
be submitted for Branch records
1. Passport (Within validity); 2. Driving License (Within validity);
3. Voters Identity Card; 4. Letter issued by the National Population Register
containing details of name and address; 5. Aadhar Card; and 6. MNREGA Card
NOTE: PAN or Form 60 shall be obtained from each customer;
If identity & address both are available in one document, that single
document fulfils KYC norms; If applicant resides outside the city, obtain OVD as
above along with self-declaration about local address.
Additional information with supporting documents for NRI /PIO and
foreign nationals.

17
2. Proprietorship Firm
a. CDD of the individual (proprietor) shall be carried out
b. Proprietorship letter in Banks’ format;
c. Power of attorney, if any granted by the Proprietor;
d. IEC (Importer Exporter Code) issued to the proprietary concern by the office of
DGFT Or Licence/certificate of practice issued in the name of the proprietary concern
by any professional body incorporated under a statute
e. Any two of the documents mentioned below in the name of proprietary
concern:
1. Registration certificate (in the case of a registered concern)
2. Certificate/license issued by the Municipal authorities under Shop &
Establishment Act,
3. Sales and income tax returns or CST/VAT certificate
4. Certificate/registration document issued by Service Tax/ Professional

Tax authorities.
5. License/certificate of practice issued in the name of the proprietary
concern by any.
IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT Or
Licence/certificate of practice issued in the name of the proprietary concern by any
professional body incorporated under a statute
3. Partnership Firm account
a) Partnership Letter in Bank’s format & Partnership Deed.
b) Registration certificate, if registered.
c) PAN of partnership firm.
d) Power of attorney, if any, granted by the firm to transact business

on its behalf.
e) An OVD in respect of the person holding an attorney to transact

on its behalf;

18
4. Trust account
a) Registration certificate, if registered,
b) Trust deed.
c) Permanent Account Number (PAN) or Form No.60 of the trust)

Resolution for opening and operating the account, signed by all the
Trustees.
d) A list of the names of the trustees with their addresses.
e) An OVD to identify the those holding Power of Attorney.
5. Accounts of Unincorporated association or body of Individuals:

a) Resolution
f) List of theOwner
of Beneficial managing body
along withofOVD
suchofassociation
all trustees.or body
of individuals.
b) Permanent Account Number (PAN) or Form No. 60 of the unincorporated

association or a body of individuals.
c) Documents, as specified in Section 16, relating to beneficial owner, the

managers, officers or employees, as the case may be, holding an
attorney to transact on its behalf.
d) An OVD the person holding an attorney to transact on its behalf

and Information to collectively establish the legal existence of
an association/ body of individuals.
e) Power of attorney granted to transact on its behalf.

NOTE : Explanation: Unregistered Trusts I. Partnership Firms shall be
included under the term 'Unincorporated Association.

19
6 Company
a) Certificate of incorporation;
b) Memorandum and Articles of Association;
c) Permanent Account Number (PAN) of the company.
d) A resolution of the Board of Directors to open the account and conveying
authority to operate the account;
e) Power of attorney, if any, granted by the Company to transact on its behalf;
f) An OVD in respect of person holding a Power of Attorney;
g) Certificate of Commencement of Business (for Public Ltd. Cos.)
h) List of present Directors of the company and OVD of each Director;
i) A list of authorized signatories with their signatures duly authorized by the
Chairman / Secretary;
j) List of shareholders and beneficial owner(s) ( in case of unlisted companies)
along with OVD.
7. Society / Association / Club :
a) Certificate of Registration, if registered;
b) Memorandum of Association;
c) Rules, regulations and bye-laws;
d) Committee resolution for opening and operating the account;
e) A list of Authorized signatories with their signatures duly Authorized by the
Chairman / Secretary;
8. Hindu Undivided
f) List of Family
Beneficial Owner(HUF),
(s) and office bearer if any along with OVD.
a) Declaration from Karta;
b) Joint Hindu family letter signed by the Karta and all the major co-
parceners;
c) Permanent Account Number (PAN) of the HUF.
9. For All Current/OD/CC A/c
Bills Form 1005
10 Self Help Groups (SHGs)
Under the simplified norms:Id and address proof of all Office bearers to be
obtained.
a. CDD of all the members of SHG shall not be required while opening the
savings bank account of the SHG. CDD of all the office bearers shall suffice.
b. No separate CDD as per the CDD procedure mentioned in these directions of
the members or office bearers shall be necessary at the time of credit linking of
SHGs

20
MONEY LAUNDERING (M/L)/TERORIST FINANCING (TF) RISK ASSESSMENT
POLICY 2021:
•Financial institutions (FIs) to adopt a holistic risk-based approach to carry out

'Money Laundering (ML) and Terrorist Financing (TF) Risk Assessment' exercise to
identify, assess and take effective measures to mitigate its Money Laundering and
Terrorist Financing risk for clients, countries or geographic areas, “Proceeds of
crime” involving offensively holding property, “Schedule offence”(where the total
value involved Rs One Crore or more) products, services, transactions or delivery
channels, etc.
• The Regulated Entities include Banks, NBFCs, Financial Institutions and

all payment system providers. RBI further added that the internal risk assessment
carried out by the Regulated Entities should be commensurate to its size, geographical
presence, and complexity of activities I structure.
• Financial Institutions have been using customer risk rating (CRR) as a focal
point of their ML and TF risk assessment and compliance programmes. Fls are
required to enhance Channel of delivery and sectorial risks parameters.
Client Customer type, legal form of the
customer and employment status
Geography Nationality, residence country, country of
incorporation, place of business and operations
Product/Services Nationality, residence country, country of

incorporation, place of business and operations
Transactions Parties involved in the transaction, simple or
complex nature of transaction and value
Delivery Channels Intermediaries involved and non-face-to-face
customers
Other factors Expected client growth, integration of
information technology (IT) systems, internal
audit findings, new products or technology, etc.

21
Concept & Risk Assessment I Risk Based Approach:
The concept of ML and TF risk assessment evolves from the recommendations of

Financial Action Task Force (FATF. It involves the risk that funds or other assets
intended for a terrorist or terrorist organization are being raised, moved, stored or
used in or through a jurisdiction, in the form of legitimate or illegitimate funds or
other assets."
Specific guidelines of FATF for banking and financial sector, for doing the process of
risk assessment stages: Stage 1- Collection of information, Stage- 2 Threat
identification, Stage-3 Assessment of ML/TF vulnerabilities, Stage- 4 Analysis of
ML/TF threats and vulnerabilities, Stage-5 Risk Mitigation which comprises a) Focus
on CDD procedure, b) Enhanced Due Diligence EDD, c) Simplified Due
Diligence(SOD), d) Ongoing CDD and Monitoring, e) Reporting, f) Internal Controls
and g) Recruitment and Training, Stage-6 Follow-up and maintaining up-to-date risk
assessment. Already discussed above, for further details go through Branch circular
115/214, Ref:COMPL/AM/2021/892-967dated 02-11-2021.
National Risk Assessment:
• Top priority adherence for Assessment of risk, threat and vulnerability of ML

associated with some top banking products a) Forex outward remittance b) Forex
inward remittance c) Current accounts of all types and d) Retail Saving accounts
*Diamond Savings Bank Account* BOI Saving Plus* BOI Super & Saving having
minimum average balance Rs25000/ or more.
STANDARD OPERATING PROCEDURE FOR MONEY LAUNDERING &

TERRORIST FINANCING RISK ASSESSMENT
• At Branch level Following risk involving sources adequately require risk

assessment as per SOP on ML& TF Risk assessment.
Client Customer type, legal form of the customer and employment
status Countries & Geography Nationality, , country of corporation
Product/Services Nationality, residence country, country of incorporation, place of
business and operations Transactions Parties involved in the transaction & Value
,nature of transaction Delivery Channels Value and size of the product, Cash-intensive
nature & transparency of the product
The risk assessment shall be assessed at Branch level as under :

• Customer Due Diligence (COD)
• Enhanced Due Diligence (EDD)
• Simplified Due Diligence (SOD)
• Ongoing COD and Monitoring
• Reporting of Suspicious transactions to their ZO I HO, AML Cell
• Internal Controls
• Relieving of Staff members for Training on AML/KYC/CFT.

22
Product-wise risk assessment has to be done as under :
Asset Products
Responsibilities at Branch Responsibilities at

Products HO
Asset Cash 1. To monitor any AML Cell - Scrutinize
Backed Credit and suspicious the alerts of CC/OD
overdraft transaction. transactions
accounts generated through
2. Scrutinize the
transaction & check centralized
weather transactions are AMLOCK package.
happening Any adverse findings
as per business style would lead to STR
filing to FlU IND.
mentioned in the
proposals.
3. End use of the fund to be Credit Monitoring

ensured. Department at ZO I NBG I
HO to monitor the EWS alerts
4. Enhance due diligence to
of the account, wherever
be done for
applicable. In case of
Customer/Supplier/
any suspicious observation,
Beneficiary.
the same should be reported
5. Any adverse/suspicious to AML Cell at HO.
observation
in accordance with
MLITF should be
reported at HO AML Cell.

23
Term Loan 1. Enhance due diligence to AML Cell - If any is
I Demand be done for Offline scenarios escalated
Loan Customer/Supplier/ by branch it should be
Beneficiary. brought to notice of
2. End use of the fund to be AML ZO/HO cell to
ensured.
analyse same.
3. In case of foreclosure of
Any adverse findings
account or very high
would lead to STR
contribution of margin filing to FlU IND.
without any rational profile
of the customer, the
same should be
scrutinized thoroughly.
Non Clean Term a) Branch to be AML cell - If any

Asset Loan/ careful in offline scenarios is escalated
backed Demand Loan assessing the by branch, it should be brought
limits based on to notice of AML cell ZO/HO to
its purpose as it analyse the same.
may be used for Any adverse findings would
ML/TF layering lead to STR filing to FlU IND.
directly or
indirectly.
b) Enhance due
diligence to be
done for
Trade customer.
LC I BG I Pre I Enhanced CDD FBD To screen
based c)
Post- Shipment process In case of
to names of the remitter I
Finance Credit foreclosure
understand of beneficiary with the help of
account or very
customer's FIRCO software.
business.high Types Risk Management Dept. : To
of contribution
information the of provide list of Country-wise
margin without
bank could obtain Risk rating
any
include rational
the International Dept. :
profile of
countries with which the To provide any important
the customer,
customer trades,the information pertaining to
same should
the trading routes be overseas trade finance.
scrutinized
used, goods traded, AML Cell Monitor Cross
whothoroughly.
the customer Border Wire Transfer
does business with transactions.
(buyers, suppliers,
etc.), whether the
customer uses
agents or third
parties, and, if so,
where these are
based. This should
help banks
understand who
Vijeta – October 2022the
customer24is and aid
the detection of
unusual or
suspicious
Bank • Branch should Risk Management Dept. : To
Guarantee be careful provide list of Country-wise
while dealing Riskrating
with
Inland/Foreign International Dept. : To
Bank
Guarantees. provide any important
information pertaining to
•Checks on other
parties to the overseas trade finance.
transaction
• Ensure enhance
due diligence for
customer I
Supplier I
Beneficiary
Since LCs and BGs are largely paper-based and accompanied by

trade-related documents
(e.g. invoices, bills of lading and manifests), automated transaction monitoring may
not be feasible. The processing branch should assess these documents for
consistency with the terms of the trade transactions and require staff concerned to
use professional expertise and judgement to consider whether any unusual features
warrant the application of EDD measures or give rise to suspicion of ML/TF. Over
invoicing I under invoicing I multiple invoicing I over or under quantity I payment by
I to third parties (other than exporter I importer) I countries not related to
manufacturing I processing of goods under reference I services provided in the name
of Computers I Software I IT products are to be looked in-to carefully as these are the
red flags for Money Laundering I Terrorist Financing
Deliver Cross Boarder AML Cell Monitor

y
Channe wire
transfers I RTGS
l I Long chains of Cross Border Wire
intermediaries
NEFT /IMPS Transfer transactions.

DWH Provide
counter party details
as and when required.
Swift Cell : Provide

counter party details
as and when required.

25
Liability Products
Generally all the suspicious AML Cell
transaction are monitored by HO Compliance
centralized AML cell in all SB I CD Department monitors all the transaction
I Deposits accounts. However, through centralized AMLOCK package & analyse
any suspicious transaction in any the transactions. In case of any suspicious
of the accounts should transaction observed, the same should be
immediately be reported to their reported to FlU IND.
respective zone as well as Head
Office, AML Cell.
Branch should also observe offline

alerts which are mainly based on
customer behaviour and if they
find any suspicious activity, the
same has to be reported to their
respective zone as well as HO
AML cell.
Special care to be taken for

High Risk accounts.
Branch should execute EDD

for Beneficial Owners/PEP's
Management of information
A) Proper Record-keeping - Branch should ensure information obtained in the context
of Customer Due Diligence and recording the documents of the customer or the
Beneficial Owner, and transcription into the bank's own IT systems of the relevant
COD information.
B) Adequate records documenting the evaluation process related to ongoing

monitoring I review/ conclusions drawn to be maintained as when required bank's
compliance with COD requirements and ability to manage ML and FT risk.
C) Updation of information : Up-to-date information will enhance the bank's ability to

effectively monitor the account for unusual or suspicious activities. In order to help law
enforcement agencies or financial intelligence units effectively in the context of
AMUCFT.
D) Supplying information to the supervisors - Branches to provide information I

Customer Profile Sheet I Nomination details I KYC documents I Account Opening
Form I Beneficiary Owner details I Authorised Signatories' details as and when
required for onward submission to Law Enforcement Agencies I Regulators.

26
Banking Law & Practice
The Indian Contract Act-1872
• When one person signifies to another his willingness to do or to

abstain from doing anything, with a view to obtaining the assent of
that other to such act or abstinence, he is said to make a proposal; The
Indian Contract Act, 1872 provides right in personam to the parties
who have bound their promises in a contract. Thus, the parties in
such a situation can only enforce their contractual rights against each
other only and not against the world at large.
• When the person to whom the proposal is made signifies his assent
thereto, the proposal is said to be accepted. A proposal, when
accepted, becomes a promise;
• The person making the proposal is called the "promisor", and the
person accepting the proposal is called the "promisee";
• When, at the desire of the promisor, the promisee or any other person
has done or abstained from doing, or does or abstains from doing, or
promises to do or to abstain from doing, something, such act or
abstinence or promise is called a consideration for the promise;
• Every promise and every set of promises, forming the consideration
for each other, is an agreement;
• Promises, which form the consideration or part, of the consideration
for each other are called reciprocal promises;
• An agreement not enforceable by law is said to be void;
• An agreement enforceable by law is a contract;
• An agreement which is enforceable by law at the option of one or
more of the parties - thereto, but not at the option of the other or
others, is a voidable contract;
• A contract which ceases to be enforceable by law becomes void when
it ceases to be enforceable.
• According to Section 10, "All agreements are contracts, if they are
made by the free consent of the parties, competent to contract, for a
lawful consideration, with a lawful object and are not expressly
declared by the Act to be void.
• Essential Elements of a Contract as defined in Section 10- •
Agreement - Offer and Acceptance
• Legal purpose and Lawful Consideration
• Capacity to contract and Consent to contract
• Lawful object and Certainty
• Possibility of Performance
• Not expressly declared void Legal formalities like Writing, Registration etc.
• Capacity to Contract- Section 11 says, "Every person is competent to
contract, who is of the age of majority, according to law, which he is subject to also
who is of sound mind and who is not disqualified from contracting by any law to
which he is the subject"

27
Disqualifications
• An incorporated company cannot be part of contract.
• A minor is also incompetent to enter into a contract subject to certain
exceptions
• Mental in-capacity. Section 12 says "A person is said to be of sound
mind for the purpose of making a contract, if at the time when he makes
it, he is capable of understanding it and of forming a rational judgement
to its effect upon his interests"
A person who suffers from insanity at intervals can enter into a
contract, when he is of sound mind.
A person who suffers from insanity occasionally cannot enter
into a contract, when he is of unsound mind.
• Quasi-Contracts- Under special circumstances, obligations
resembling those created by a contract are imposed by law although
there is no contract between the parties. Such contracts are called
Quasi-Contracts.
Sections 68 to 72 deal with Quasi-Contractual Obligations-
• Claim for Necessaries supplied to a person incapable of contracting or
on his account
• Reimbursement of person paying money due by another, in payment
of which he is interested
• Obligation of person enjoying benefit of non-gratuitous act
• Responsibility of finder of goods
• Liability of person to whom money is paid, or thing delivered by
mistake or under coercion.
• Discharge of Contract- A Contract may be discharged in any of the
following ways
• Discharge by Performance.
• Discharge by Mutual Consent or Agreement
Novation - When a new contract is substituted for an existing contract
Alteration,Rescission
Remission - Accepting the lesser sum of amount than what was
contracted for
• Discharge by subsequent illegality or impossibility
Destruction of Subject-matter
Failure of ultimate purpose
Death or personal incapacity of Promisor
Change of Law
• Discharge by lapse of time
• Discharge by operation of law
• Discharge by breach of contract Anticipatory breach Actual breach.
• Section 133: Discharge of surety by variance in terms of contract.

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Breach of a Contract- Chapter VI of Contract Act with Sections 73 to
75 deals with the consequences- When a contract is breached, the
injured party is entitled to one or more of the following remedies.
• Rescission of the contract
• Suit for damages
• Suit upon quantum merit
• Suit for specific performance of the contract
• Suit for injunction
The Indian Partnership Act- 1932
• The Indian Partnership Act, 1932 is an act enacted by the Parliament

of India to regulate partnership firms in India. It received the assent of
the Governor-General on 8 April 1932 and came into force on 1
October 1932.
Before the enactment of this act, partnerships were governed by the
provisions of the Indian Contract Act. The act is administered through the
Ministry of Corporate Affairs.
• The act is not applicable to Limited Liability Partnerships, since they
are governed by the Limited liability Partnership Act, 2008.
• The term 'partnership' is defined under section 4 of Indian partnership
act 1932 as under "Partnership is an agreement between two or more
persons who have agreed to share profits of the business carried on
by all or any one of them acting upon all."
• Partnership refers to an agreement between persons to share their
profits or losses arising on account of actions carried by all or one of
them acting on behalf of all. The persons who have entered such an
agreement are called partners and give their collective business a name,
which is necessarily their firm-name. This relation between partners
arises out of a contract or an agreement, which means a husband and
wife carrying on a business or members of a Hindu undivided family are
not into partnership. The share of profits received by any individual from
the firm, money received by a lender of money, salary received by a
worker or a servant, annuity received by a widow or a child of a deceased
partner, does not make them a partner of the firm.

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 contents of partnership deed
Partnership deed should contain the following details –
- Firm name, Names and addresses of partners,
- Details of business of partnership,
- Address of business place,
- Profit sharing ratio
- Date of commencement of partnership firm,
- Duration of partnership firm,- Amount of capital contribution,
- Salaries, commission and remuneration to partners,
- Rights of the partners,
- Liabilities of the partners,
- Details of retirement of partners,
- Provision for expulsion of a partner,
- Arbitration clause for the settlement of disputes
Negotiable Instruments Act 1881
• Payment in due course – Where a cheque is paid in accordance with

apparent tenor thereof, in good faith, to a payee, endorsee or holder in
due course without having any doubt in his title, the payment is said
to be in due course and banker will get protection. (Under Section10)
• A bearer cheque paid to bearer if otherwise in order
• A crossed cheque paid through a bank a/c
• A specially crossed cheque paid to the bank to which it is crossed
• If endorsements of the cheques are regular
• The following are not payment in due course:
• Where it is a stale cheque or a post-dated cheque

• Where crossed cheque is paid across counter
• Where amount in words and figures differ
• Where drawer’s signature is not matching
• Payment of a cheque stopped by drawer
• Collecting banker- Collecting banker should collect the instrument

for a customer. The cheque should be drawn or endorsed in favour of
the customer. In cases of CTS the collecting banker is responsible for
any material alteration in the instrument not detectable by the naked eye.
Hence outward clearing cheques should be put through UV lamps to
detect any such material alteration.

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• Endorsements – Order cheques are transferable by endorsement
and delivery. Paying bankers should ensure that endorsement is
regular.
• Crossing – When a cheque bears across its face two parallel

transvers lines with or without words “and co”, “not negotiable”,
“a/c payee” the cheque is said to be crossed generally (Sec 123).
When it bears the name of a bank as payee or otherwise (other
than as drawee) the cheque is crossed specially to that bank (Sec
124). A cheque crossed generally should be paid only through a bank
account and a cheque crossed specially should be paid only to the
bank to which it is crossed.
The negotiable Instrument Act 1881 has been amended under sec
142 of the Act w.e.f. 15-06-2015.
The bill amends the Act to state that cases of bouncing of cheques u/s 138 can
be filed only in a court in whose jurisdiction the bank branch of the payee (Person
who received the cheque) lies. The Bill also amends of “Cheque in the
electronic form”. Under the Act it was defined as a cheque containing the exact
mirror image of a paper cheque and generated in a secure system using a digital
signature. The definition has been amended to mean a cheque drawn in
electronic medium using any computer resource and which is signed in a secure
system with a digital signature, or electronic system.
The Negotiable Instruments (Amendment) Act, 2018 ("Amendment Act")
was notified on August 02, 2018. The Key features of the amendments are –
• Section 143A has been inserted which essentially empowers the court
trying the offence under Section 138 of the Act, to direct the drawer of the
cheque to pay interim compensation to the Payee in situations of a
summary trial or summons case wherein the drawer pleads to be "not
guilty". This new provision seeks to cap interim compensation to 20%
of the cheque amount.
• Another provision introduced as Section 148 specifies that in case the
drawer files an appeal against his/her conviction, the Appellate court has
the power to direct the drawer to deposit a minimum amount of
20% of the fine or compensation that was awarded by the Trial court. The
Appellate Court may direct to release the amount deposited by the
appellant to the complainant at any time during the pendency of the
appeal.
Banker Customers Relationship - In Different Transactions
• In deposit accounts - Debtor and Creditor
• In loan accounts - Creditor and Debtor
• Safe custody – Bailee/Trustee and Bailor
• In Safe Deposit Vault – Lessor & Lessee or Licensor and Licensee
• Sale of third party products – Agent
• Collection of cheque for customer - Agent & Principal

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Companies Act 2013
Companies Act 2013 has overhauled many of the provisions of the earlier Act
of 1956. The salient features are given below:
• Maximum Number of Members: This has been increased to 200 in
case of private Ltd Companies .While minimum has been maintained
at 2. For public ltd companies minimum is 7, there is no maximum.
• One Person Company: A new concept called One Person company
has been included providing for one member of Indian Citizen and
Resident in India to constitute a company. OPC cannot convert
voluntarily into any kind of company unless two years have expired from
the date of incorporation, except where the paid up share capital is
increased beyond Rs 50 lakhs or its average annual turnover during the
relevant period exceeds Rs 2 Crores.
• Small Company: Defined as (other than a public company) with paid up
share capital of not more than 2 Crore rupees or such other
amount as may be prescribed not more than 10 Crores. Turnover as per
P&L account not exceeding Rs.20 crore or such other amount as
may prescribe not exceeding Rs.100 crore.(as per modification u/s
2(85) of Companies (Amendment) Act, 2017)
• Acceptance of Deposits: There is prohibition in accepting deposit
from the public. Companies can accept deposits only from its
members subject to passing a resolution in the General Meeting and
complying with guidelines prescribed by SEBI/RBI in this regard.
• Filing of Charge: Even though Company is primarily responsible to
register the charge on its assets, any creditor can also go ahead and file
the charges if it feels that the Company is not cooperating in registering
the charges. Form for filing charge is CHG 1 which is applicable also
for modification of charge. Charge has to be filed within
30 days, but registrar can extend the period for filing up to 300 days if
convincing reasons given. CHG 4 is to be used for filing satisfaction of
charge. For making application to Central Govt. for extension of time
for registration/modification/satisfaction of charge form CHG 8 to be
used. For creation of charge in respect of issue of debentures form
CHG 9 to be used. CHG 6 to be used for appointment of receiver or
cessation of receiver.
• Board of Directors: The maximum number of members in the board
shall be 15. However the company can pass special resolution in
General Me e t in g t o i n c r e a s e t h e n u m b e r . Minimum n u m b e r
o f directors in case of public Ltd Company is 3 and in case of Pvt. Ltd.
Company is 2 and in case of one Person Company is 1. 1/3 of the total
number of directors in a public limited company shall be independent
directors.
At least one of the directors shall be resident in India i.e. he should have
stayed in India for not less than 182 days in the previous calendar year.
Maximum number of directorship a director can take at any point of time
is 20.

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• Powers of Board: The following powers can be exercised by the
Board only with consent of the Company by Special Resolution.
 To sell, lease, or otherwise dispose of the whole or substantially the whole of
the undertaking of the company.
 To invest otherwise than trust securities the money received in merger,
amalgamation.
 To borrow money in excess of the paid up capital and free reserves of
the company.
 To remit or give time for repayment to director of a loan(Sec180)
• Section 185- No company can give any loan or furnish any security
for any loan given to any director or any firm or company or person in
whom the director is interested or furnish any guarantee or security
for any loan taken by him or such other person. This provision shall
not apply to any loan or guarantee or security given by a holding
company to its subsidiary for its principal business.
• Section 186 stipulates that a company shall not make investment
through more than 2 layers of investment companies. No company
can acquire securities by purchase, subscription or otherwise more
than 60% of it’s paid up share capital plus free reserves and securities
premium account or 100% of free reserves and securities premium
account whichever is more.
• Related Party Transaction- Section 188: Except with approval of
board of directors and by a special resolution of the general meeting
no company shall enter into any related party transactions like awarding
contracts, purchase of land or other services, appointment as agent or
any other deal which will result in pecuniary benefit to the related
party.The related party/director shall not vote on such resolution and the
full particulars of the transaction with complete nature of interest of the
related party shall be disclosed to all members.
• Class Action Suit -Section 245: a class action suit refers to a
lawsuit that allows a large number of people with a common interest in
a matter to sue or be sued as a group. It is a procedural device enabling
one or more plaintiffs to file and prosecute litigation on behalf of
a larger group or class, wherein such class has common rights and
grievances . As pe r Section 245(1) read with S e ct ion 245(3), a
Class Action Suit may be filed by: -
1. Member or members or any class of them, as described below –
a. in the case of a company having a share capital,
 Any 100 or more members of the company, or members equal to or
exceeding 10% of the total number of its members, whichever is less, or
ii. Any member or members singly or jointly holding at least 10% of the issued
share capital of the company, Subject to the condition that the applicant or
applicants has or have paid all calls and other sums due on his or their
shares.iii.In the case of a company not having a share capital, members
equal to or exceeding 1/5th of the total number of its members.
See more at:http://taxguru.in/company-law/class-action- suitscompanies-act-
2013.

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2. Depositor or depositors or any class of them, as described below –
a. any 100 or more depositors of the company, or depositors equal
to or exceeding 10% of the total number of its depositors, whichever
is less.
or
b. Any depositor or depositors singly or jointly holding at least 10%
of the total value of outstanding deposits of the company.
3. The Central Government, if it is of the opinion that the affairs of the
company are being conducted in a manner prejudicial to public interest
4. Application for class action suit has to be filed before the National
Company Law Board Tribunal
(NCLT/Tribunal).
• Doctrine of I ndoor Ma n a ge me n t : As the Ltd Company has
distinct legal entity from its members and management, third parties
entering into any dealings with the company act through directors or
officers of the company. This principle implies that such third parties
needed to be protected against any internal procedural lapse or violation
due to which company cannot revoke such deals to their detriment. Such
third parties are entitled to presume that the persons acting on behalf of
the company are acting within the rules of the company and their powers
unless they have reason to believe that this is not so or this fact is
known to them at time of entering into the deal.
• Lifting the Corporate Veil: This legal principle involves that directors
or officers of the company cannot act fraudulently against third party and
company cannot set up the defence under the cloak of corporate entity
to avoid liability to third parties. Where the persons in power to take
decisions in the company commit fraud on outsiders, the court in
keeping with the equity and principles of natural justice will lift the
corporate veil and see inside as to who are wielding the power in the
company to make them accountable.
• Doctrine of Ultra Vires: The concept of ultra vires is to prevent
the company from acting in a controversial manner flouting all internal
rules. Acts which are ultra vires the articles of association or the board
of directors can be ratified by the company in general meeting. However
acts which are ultra vires the Memorandum of association or company
or the company law cannot be ratified and will be void. However third
parties who enter into such transactions without knowledge will get
protection provided they prove that they did not know that the
transaction was one which the company does not have authority to enter
into. However company will not be liable but the directors will be
personally liable.

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• Significant Beneficial Owners : The Ministry of Corporate Affairs
(the MCA) in the month of January & February 2019 has issued the
amendments notification under the Companies Act 2013 (the Act) –
• Every individual, who acting alone or together, or through one or
more persons or trust, possesses one or more of the following rights
in a company shall be deemed to be a significant beneficial owner (SBO):
holds indirectly, or together with any direct holdings, at least 10% of the
shares or voting rights has the right to receive or participate (by
virtue of their indirect and/or direct holdings) in not less than 10% of
the total distributable dividend or any other distribution; or
has the right to exercise significant influence or control (through their
indirect holdings only) on the company.
However, individuals directly holding shares of the company in their
own name or holds or acquires beneficial interest in the share of the
reporting company under subsection section 89 (2) of the Act and
necessary reporting is made is not be considered to be a significant
beneficial owner.
Transfer of Property Act 1882

The Transfer of Property Act 1882 is an Indian legislation which regulates
the transfer of property in India. It contains specific provisions regarding
what constitutes transfer and the conditions attached to it. It came
into force on 1st July 1882. According to the Act, 'transfer of property'
means an act by which a person conveys property to one or more
persons, or himself and one or more other persons. The act of transfer
may be done in the present or for the future. The person may include
an individual, company or association or body of individuals, and any
kind of property may be transferred, including the transfer of immovable
property.
• The Interpretation of the Act, says "Immovable property does not
includes standing timber, growing crops or grass". Section 3(26), The
General Clauses Act, 1897, defines, " immovable property" shall
include land, benefits to arise out of land, and things attached to the
earth, or permanently fastened to anything attached to the earth.
Also,
The Registration Act, 1908, 2(6) says- "immovable property" includes
land, buildings, hereditary allowances, rights to ways, lights, ferries,
fisheries or any other benefit to arise out of land, and things attached to
the earth or permanently fastened to anything which is attached to the
earth, but not standing timber, growing crops nor grass.
• A transfer of property passes forthwith to the transferee all the interest

which the transferor is then capable of passing in the property,
unless a different intention is expressed or implied.

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• According to Section 43 of the Transfer of Property Act 1882, in
case a person either fraudulently or erroneously represents that he is
authorised to transfer certain immovable property and does some acts
to transfer such property for consideration, then such a transfer will
continue to operate in future. It will operate on any interest which the
transferor may acquire in such property. This will be at the option of the
transferee and can be done during the time during which the contract of
transfer exists. As per this rule, the rights of bona fide transferee, who
has no notice of the earlier transfer or of the option, are protected. This
rule embodies a rule of estoppel i.e.a person who makes a
representation cannot later on go against it.
• Every person, who is competent to contract, is competent to
transfer property, which can be transferred in whole or in part. He should
be entitled to the transferable property, or authorized to dispose of
transferable property which is not his own. The right may be either
absolute or conditional, and the property may be movable or immovable,
present or future. Such a transfer can be made orally, unless a transfer
in writing is specifically required under any law.
• According to Section 6 of the Transfer of Property Act, property of
any kind may be transferred. The person insisting non-transferability
must prove the existence of some law or custom which restricts the right
of transfer. Unless there is some legal restriction preventing the transfer,
the owner of the property may transfer it. However, in some cases there
may be transfer of property by unauthorised person who subsequently
acquires interest in such property.
• In case the property is transferred subject to the condition which
absolutely restrains the transferee from parting with or disposing of
his interest in the property, the condition is void. The only exception is in
the case of a lease where the condition is for the benefit of the
lessor or those claiming under him. Generally, only the person having
interest in the property is authorised to transfer his interest in the property
and can pass on the proper title to any other person.
 The T P Act has no application to the disposal of property by will and
does not deal with cases of succession of property.
* In a mortgage transaction , the transferor is called a mortgagor, the
transferee a mortgagee.
• The rights of the transferees will not be adversely affected,
provided: they acted in good faith; the property was acquired for
consideration; and the transferees had acted without notice of the defect
in title of the transferor. It should be noted that these conditions
must be satisfied .
• There must be a representation by the transferor that he has authority

to transfer the immovable property.
• The representation should be either fraudulent or erroneous. The
transferee must act on the representation in good faith.

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• The transfer should be done for a consideration.
• The transferor should subsequently acquire some interest in the

property he had agreed to transfer.
• The transferee may have the option to acquire the interest which
the transferor subsequently acquires.
Rights of Mortgagor –
a) Right of redemption – on repayment of loan, mortgagor can take

the property back.
b) Right against clog (obstruction) on equity of redemption – any

Condition which stops the mortgagor from recovering property will
be void and mortgagor and take back.
c) Right of partial redemption
Redemption- The mortgagor is entitled to get back his property on

Payment of the principal and interest. This right of the mortgagor is
called the Right of Redemption.
PML Act, 2002 & KYC Guidelines 2005 - Present guidelines of RBI to Banks
• Money laundering is the process where proceeds of a crime or
unlawful activity are filtered in such a way that the source of their
origin is disguised. Section 3 of Prevention of Money Laundering
Act,2002 (hereinafter referred to as PMLA) defines “money laundering”
as Whosoever attempts to indulge in any process or activity connected
proceeds of crime including its concealment, possession, acquisition or
use and projecting or claiming it as untainted property shall be guilty of
offence of money-laundering. As per PML amendment dated October 31,
2018, Banks must upload customer data for all new individual accounts
on the CKYCR within ten days from the date of account opening.
• Thus, the proceeds from criminal activities further propel crimes
and create a parallel economy and all of these transactions operate
being unnoticed.
• The PMLA also enumerates a list of offences which are classified as
‘Scheduled offences’ constitute as
‘crimes’.
• Single Document for Proof of Identity and Address- Earlier, as
part of the KYC process, one had to submit separate proofs for
address and identity. The RBI has done away with this. Now, a single
document with photograph and address of the applicant will suffice.

37
Among the documents approved for KYC include passport, the driving
licence, proof of possession of Aadhaar number, the Voter's Identity Card
issued by the Election Commission of India, job card issued by NREGA
duly signed by an officer of the State Government and letter issued by
the National Population Register containing details of name and address.
• Relaxation for Low-Risk Customers- A person without valid KYC
documents but categorized as 'low-risk' can open an account by
submitting any of the following-identity card with applicant's photograph
issued by a central/state government department, statutory/regulatory
authority, public sector undertaking, scheduled commercial bank or
public financial institution; or, a letter issued by a Gazetted Officer, PPO.
• Small Accounts' for those with No KYC Document-This is probably
the best piece of news for students who live away from home and migrant
workers. They can now open a 'small account' instead of a full service
account.
• A small account can be opened by self-attesting a photograph and
giving thumb impression on the application in the presence of a bank
employee. Small accounts, as the name suggests, will have
restrictions in terms of all credits (a maximum of Rs. 1 lakh a year),
withdrawals (not more than Rs 10,000 a month) and maximum
balance (Rs. 50,000 at any point of time).
• These accounts will be operational only for a year. However, if the
account holder provides proof that he/she has applied for a valid KYC
document, the account can be extended for another 12 months.
• Further, if low-risk customers are not able to submit the KYC
documents due to genuine reasons, they can do so within six months
from the date of opening the account.
• V-CIP: The Reserve Bank of India (RBI) has introduced Aadhaar-
based Video Customer Identification Process (V-CIP) to allow banks
and other lenders to remotely complete KYC of customers on video.
Lenders can use this facility as an alternative to the already available
e-KYC facility. The central bank has amended its guidelines under the
Prevention of Money-laundering (Maintenance of Records) Rules, 2005
to introduce V-CIP.
BCSBI (UNDER DISSOLUTION)
The Banking Codes and Standards Board of India (BCSB) was set up in
February 2006 to evolve Codes and Standards for fair treatment of
customers by banks. Banks which are members of BCSBI voluntarily
adopt the Codes for implementation.
some time back RBI had informed that the issues pertaining to setting
up of The Banking Codes and Standards Board of India (BCSBI), its role
and functions over a period of time, its utility in the present context, etc.,
were discussed in detail at RBI and since institutionally RBI has been
able to undertake the activities identified for BCSBI by itself, BCSBI has
been directed to initiate the process for its dissolution. Accordingly,
BCSBI had stopped activities as per its Objects and were taking steps
for its dissolution for the last few months.

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Banking Codes and Standards Board of India (BCSBI)
BCSBI is an independent and autonomous watchdog to monitor and

ensure that banking codes and Standards adopted by the banks are
adhered to in true spirit while delivering their services. It is based on
Shri S S Tarapore (the former Dy. Governor of RBI) committee
recommendations to improve the Quality of banking services to
individual customers. It is registered under Societies registration act
1860. BCSBI has on 03-07-2006 released the codes for customer
service which is
voluntary.
• The Banking Codes and Standards Board of India (BCSBI) in
collaboration with the Indian Banks' Association (IBA) has evolved two
codes - Code of Bank's Commitment to Customers and the Code of
Bank's Commitment to Micro and Small Enterprises which have been
voluntarily adopted by member banks.
• The coverage of codes to customers- Deposits, Safe deposit
lockers, settlement of accounts of deceased accounts holders, foreign
exchange services, remittances within India, loans and advances and
guarantees, credit cards, debit cards, internet banking. The codes
inter alia dwells upon Interest rates, Tariff schedule, terms &
conditions governing relationship between the bank & the customer,
compensation for loss, if any to the customer due to the acts of omission
and commission, Privacy and confidentiality of the information relating
to the customer, norms governing advertisements, marketing and sales
by banks.
` Objectives of the Code- are -

• To give a positive thrust to the MSE sector by providing easy access
to efficient banking services.
• To promote good and fair banking practices by setting minimum
standards in dealing with you.
• To increase transparency so that you can have a better

understanding of what you can reasonably expect of the services.
• To improve our understanding of your business through effective

communication.
• To encourage market forces, through competition, to achieve higher

operating standards.
• To promote a fair and cordial relationship between you and us and

also ensure timely and quick response to your banking needs.
• To foster confidence in the banking system.

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• Application of the Code- As defined in the Micro, Small and
Medium Enterprises Development Act, 2006, MSE’s cover Micro and
Small Enterprises engaged in the manufacturing or production or
processing or preservation of goods and those engaged in providing or
rendering of services. Unless it says otherwise, this Code will apply to all
the products and services listed below, under current regulatory
instructions, whether they are provided by branches, subsidiaries,
joint ventures or agents, across the counter, over the phone, by post,
through interactive electronic devices, on the internet or by any other
mode. However, all products discussed here may or may not be offered.
• Current accounts, term deposits, recurring deposits, and all other

deposit accounts.
• Payment services such as payment orders, remittances by way of

Demand Drafts and wire transfers, and all electronic transactions like
Real Time Gross Settlement (RTGS), Electronic Funds Transfer (EFT),
National Electronic Funds Transfer (NEFT) or any other mode.
• Banking services related to Government transactions.
• Demat accounts, equity, government bonds.

• Indian currency notes exchange facility.
• Collection of cheques / instruments, safe custody services.
• Loans and other credit facilities which include fund based such as
cash credit, overdraft, cheque and bill purchase/discounting (both inland
and foreign), negotiation under reserve of documents tendered under
Letter of Credit (both inland and foreign) and non-fund based such as
establishment of inland and /or foreign Letter of Credit (D/P or D/A),
issuing of Guarantee (both inland and foreign), Inland or foreign bill
or cheque for collection, Co- acceptance and avalisation of bills, buyer’s
credit, etc.
•Foreign Exchange Services as permitted under Foreign Exchange

Management Act (FEMA) / Reserve Bank of India’s guidelines including
money changing.
• Third party insurance and investment products marketed through our

branches and/ or our authorized representatives or agents
• Card products like ATM/ Debit/Credit cards, and services

.• Factoring services.
• Merchant Services.

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Consumer Protection Act 2019 (COPRA)
The Consumer Protection Act, 1986 was enacted to provide a simpler and
quicker access to redressal of consumer grievances. The Act for the first time
introduced the concept of ‘consumer’ and conferred express additional rights
on him. It is interesting to note that the Act doesn’t seek to protect every
consumer within the literal meaning of the term. The protection is meant for the
person who fits in the definition of ‘consumer’ given by the Act. The Act has
provided machinery whereby consumers can file their complaints which will be
entertained by the Consumer Forums with special powers so that action
can be taken against erring suppliers and the possible compensation may be
awarded to consumer for the hardships he has undergone. No court fee is
required to be paid to these forums and there is no need to engage a lawyer to
present the case.
Consumer Protection Act, 2019 has recently replaced the three decade old
Consumer Protection Act,
1986.
The new Act proposes a slew of measures and tightens the existing rules to
further safeguard consumer rights.
Coverage: All goods and services including banking, insurance, transport,

processing, electricity, physicians, etc. in private, public and cooperative
sector, and all banking services are covered.
• Limitation for the claim is 2 years from cause of action.
• Who is a consumer- The Consumer Protection Act defines

consumer as, who —
• buys any goods for a consideration which has been paid or

promised or partly paid and partly promised, or under any system of
deferred payment, and includes any user of such goods other than the
person who buys such goods for consideration paid or promised or partly
paid or partly promised, or under any system of deferred payment when
such use is made with the approval of such person, but does not include
a person who obtains such goods for resale or for any commercial
purpose, or
• hires or avails of any services for a consideration which has been

paid or promised or partly paid and partly promised, or under any system
of deferred payment, and includes any beneficiary of such services other
than the person who hires or avails of the services for consideration paid
or promised, or partly paid and partly promised, or under any system
of deferred payment, when such services are availed of with the
approval of the first mentioned person.

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• The goods are bought for consideration - There must be a sale
transaction between a seller and a buyer; the sale must be of goods; the
buying of goods must be for consideration. The terms sale, goods, and
consideration have not been defined in the Consumer Protection Act.
The meaning of the terms ‘sale’, and ‘goods’ is to be construed according
to the Sale of Goods Act, and the meaning of the term ‘consideration’
is to be construed according to the Indian Contract Act. In the new Act,
there is the introduction of a central regulator (Central Consumer
Protection Authority - CCPA), strict penalties for misleading
advertisements and guidelines for e-commerce and electronic service
providers
• Three levels of redressal machinery under COPRA • District
Commission- empowered to settle claims up to Rs.1 Crore.
• State Commission – empowered to settle claim exceeds Rs. 1 crore,

but does not exceed Rs.10 crore and also to settle Appeals against
Dist. forum.
• National Commission - empowered to settle claim exceeds Rs.10
crores and also to settle Appeals against State Commission.
• Supreme Court to settle appeals against National commission within
30 days from the date of the order.
Right to Information Act (Act no 22/2005)

• The Parliament has enacted the Act known as the Right to
Information Act, 2005 which came into force on 15.6.2005.
• The Parliament has enacted the said act in order to promote the
transparency and accountability in the working of every public authority.
• The expression Public Authority means: - Any Authority or Body or
Institution of self-government established or constituted:
• by or under the constitution
• by any other Law made by Parliament,
• by any other Law made by State Legislature,
• by Notification issued or Order made by the appropriate
Government,
• Information includes records, documents, memos, e-mails,
opinions, advises, press releases, circulars, orders, log books, contracts,
reports, data material held in any electronic form and information relating
to any private body which can be accessed by a Public Authority.
• Every citizen of the Country who desires to have the information in
the control of the Public authority can make a request, subject to
payment of the fee prescribed by Government of India after
12/10/2005. The request may be made in writing or through electronic
means in English or in Hindi or in the official language of the area.
• Our Bank has designated its officers as Central Public Information
Officers (CPIO) and Appellate Authorities (AA). Branch Manager is
ACPIO, Dy. Zonal Manager is CPIO and Zonal Manager is AA.

42
The Reserve Bank - Integrated Ombudsman Scheme(RB-IOS), 2021
A. The Scheme integrates the existing three Ombudsman schemes of RBI

namely, (i) the Banking Ombudsman Scheme, 2006; (ii) the Ombudsman
Scheme for Non-Banking Financial Companies, 2018; and (iii) the
Ombudsman Scheme for Digital Transactions, 2019. The Scheme, framed
by the Reserve
B. Bank in exercise of the powers conferred on it under Section 35A of the

Banking Regulation Act, 1949 of the Reserve Bank of India Act, 1934 and
Section 18 of the Payment and Settlement Systems Act, 2007, will provide
cost-free redress of customer complaints involving deficiency in services
rendered by entities regulated by RBI, if not resolved to the satisfaction of
the customers or not replied within a period of 30 days by the regulated
entity.
C. In addition to integrating the three existing schemes, the Scheme also

includes under its ambit Non-Scheduled Primary Co-operative Banks with a
deposit size of ₹50 crore and above. The Scheme adopts ‘One Nation One
Ombudsman’ approach by making the RBI Ombudsman mechanism
jurisdiction neutral.
D. Some of the salient features of the Scheme are:
i. It will no longer be necessary for a complainant to identify under which scheme
he/she should file complaint with the Ombudsman.
ii. The Scheme defines ‘deficiency in service’ as the ground for filing a complaint,
with a specified list of exclusions. Therefore, the complaints would no longer
be rejected simply on account of “not covered under the grounds listed in the
scheme”.
iii. The Scheme has done away with the jurisdiction of each ombudsman office.
iv. A Centralised Receipt and Processing Centre(CRPC) has been set up at RBI,
Chandigarh for receipt and initial processing of physical and email complaints
in any language.
v. The responsibility of representing the Regulated Entity and furnishing
information in respect of complaints filed by customers against the Regulated
Entity would be that of the Principal Nodal Officer in the rank of a General
Manager in a Public Sector Bank or equivalent.
vi. The Regulated Entity will not have the right to appeal in cases where an Award
is issued by the ombudsman against it for not furnishing satisfactory and timely
information/documents.
vii. The Ombudsman is a quasi-judicial authority appointed by RBI to redress
customer complaints against deficiency in services provided by the Regulated
Entities and endeavours to reach a settlement between the customers and
banks through conciliation and/or mediation and in the event of failure to arrive
at the settlement, passes an award against the bank / regulated entity.

43
Banking Ombudsman Scheme 2006
• The Banking Ombudsman Scheme enables an expeditious and
inexpensive forum to bank customers for resolution of complaints
relating to certain services rendered by banks.
• The Banking Ombudsman Scheme is introduced under Section 35 A
of the Banking Regulation Act, 1949 by RBI with effect from 1995.
• The Banking Ombudsman is a senior official appointed by the
Reserve Bank of India to redress customer complaints against deficiency
in certain banking services.
• All Scheduled Commercial Banks, Regional Rural Banks and
Scheduled Primary Co-operative Banks are covered under the
Scheme.
• The Banking Ombudsman can receive and consider any complaint
relating to the following deficiency in banking services (including internet
banking).
• non-payment or inordinate delay in the payment or collection of
cheques, drafts, bills etc.
• non-acceptance, without sufficient cause, of small denomination
notes tendered for any purpose, and for charging of commission in
respect thereof;
• non-acceptance, without sufficient cause, of coins tendered and for
charging of commission in respect thereof.
• non-payment or delay in payment of inward remittances .
• failure to issue or delay in issue of drafts, pay orders or bankers’
Cheque
• non-adherence to prescribed working hours ;• failure to provide or
delay in providing a banking facility (other than loans and advances)
promised in writing by a bank or its direct selling agents;
• delays, non-credit of proceeds to parties' accounts, non-payment of
deposit or non-observance of the Reserve Bank directives, if any,
applicable to rate of interest on deposits in any savings, current or other
account maintained with a bank ;
• complaints from Non-Resident Indians having accounts in India in
relation to their remittances from abroad, deposits and other bank related
matters.
• refusal to open deposit accounts without any valid reason for
refusa.
• levying of charges without adequate prior notice to the customer;
• Non-adherence to the instructions of Reserve Bank on ATM / Debit
Card and Prepaid Card operations in India by the bank or its subsidiaries
• Non-adherence by the bank or its subsidiaries to the instructions of
Reserve Bank on credit cardoperations
• Non-adherence to the instructions of Reserve Bank with regard to
Mobile Banking / Electronic Banking service in India by the bank

44
• Non-disbursement or delay in disbursement of pension (to the
extent the grievance can be attributed to the action on the part of the
bank concerned, but not with regard to its employees);
• Refusal to accept or delay in accepting payment towards taxes, as
required by Reserve Bank/Government;
• Refusal to issue or delay in issuing, or failure to service or delay in
servicing or redemption of Government securities;
• Forced closure of deposit accounts without due notice or without
sufficient reason;
• Refusal to close or delay in closing the accounts;
• Non-adherence to the fair practices code as adopted by the bank;
• Non-adherence to the provisions of the Code of Bank's
Commitments to Customers issued by Banking Codes and Standards
Board of India and as adopted by the bank ;
• Non-observance of Reserve Bank guidelines on engagement of
recovery agents by banks;
• Non-adherence to Reserve Bank guidelines on para-banking
activities like sale of insurance / mutual fund /other third party investment
products by banks
• Any other matter relating to the violation of the directives issued by
the Reserve Bank in relation to banking or other services.
• A customer can also lodge a complaint on the following grounds of

deficiency in service with respect to loans and advances.
• non-observance of Reserve Bank Directives on interest rates.
• delays in sanction, disbursement or non-observance of prescribed

time schedule for disposal of loan applications.
• non-acceptance of application for loans without furnishing valid

reasons to the applicant; and• Non-adherence to the provisions of
the fair practices code for lenders as adopted by the bank or Code of
Bank’s Commitment to Customers, as the case may be;
• Non-observance of any other direction or instruction of the Reserve
Bank as may be specified by the Reserve Bank for this purpose from
time to time.
• The Banking Ombudsman may also deal with such other matter as
may be specified by the Reserve Bank from time to time.
• One can file a complaint before the Banking Ombudsman if the
reply is not received from the bank within a period of one month after the
bank concerned has received one’s representation, or the bank rejects
the complaint, or if the complainant is not satisfied with the reply given
by the bank.

45
• One’s complaint will not be considered if:
• One has not approached his bank for redressal of his grievance
first.
• One has not made the complaint within one year from the date one
has received the reply of the bank or if no reply is received if it is
more than one year and one month from the date of representation to
the bank.
• The subject matter of the complaint is pending for disposal / has
already been dealt with at any other forum like court of law, consumer
court etc.
• Frivolous or exatious.
• The institution complained against is not covered under the
scheme.
• The subject matter of the complaint is not within the ambit of the
banking ombudsment .
• If the complaint is for the same subject matter that was settled through
the office of the Banking Ombudsman in any previous proceedings.
• The Banking Ombudsman does not charge any fee for filing and
resolving customers’ complaints. The amount, if any, to be paid by the
bank to the complainant by way of compensation for any loss suffered
by the complainant is limited to the amount arising directly out of the act
or omission of the bank or Rs 20 lakhs, whichever is lower.
• The Banking Ombudsman may award compensation not exceeding
Rs 1 lakh to the complainant only in the case of complaints relating to
credit card operations for mental agony and harassment. The Banking
Ombudsman will take into account the loss of the complainant’s time,
expenses incurred by the complainant, harassment and mental
anguish suffered by the complainant while passing such award. If a
complaint is not settled by an agreement within a period of one
month, the Banking Ombudsman proceeds further to pass an award.
Before passing an award, the Banking Ombudsman provides
reasonable opportunity to the complainant and the bank, to present their
case.
• It is up to the complainant to accept the award in full and final
settlement of your complaint or to reject it. If one is not satisfied with the
decision passed by the Banking Ombudsman, one can approach the
appellate authority against the Banking Ombudsmen’s decision.
• Appellate Authority is vested with a Deputy Governor of the RBI.
One can also explore any other recourse and/or remedies available to
him/her as per the law.
• The bank also has the option to file an appeal before the appellate
authority under the scheme.
• If one is aggrieved by the decision, one may, within 30 days of the
date of receipt of the award, appeal against the award before the
appellate authority. The appellate authority may, if he/ she is satisfied
that the applicant had sufficient cause for not making an application
for appeal within time, also allow a further period not exceeding 30 days.

46
The Insurance Ombudsman scheme
Created by the Government of India for individual policyholders to
have their complaints settled out of the courts system in a cost- effective,
efficient and impartial way.
One can approach the Ombudsman with complaint if:

 You have first approached your insurance company with
the complaint and
 They have rejected it

 Not resolved it to your satisfaction or
 Not responded to it at all for 30 days
 Your complaint pertains to any policy you have taken in your capacity
as an individual and
 The value of the claim including expenses claimed is not above Rs 30 lakhs.
The complaint to the Ombudsman can be about:
a) Delay in settlement of claims, beyond the time specified in the

regulations, framed under the IRDAI Act, 1999.
b) Any partial or total repudiation of claims by the Life insurer, General
insurer or the Health insurer.
b) Any dispute about premium paid or payable in terms of insurance policy
d) Misrepresentation of policy terms and conditions at any time in the policy

document or policy contract.
e) Legal construction of insurance policies in so far as the dispute relates

to claim.
f) Policy servicing related grievances against insurers and

their agents and intermediaries.
g) Issuance of life insurance policy, general insurance policy including health

insurance policy which is not in conformity with the proposal
form submitted by the proposer.
h) Non issuance of insurance policy after receipt of premium in life insurance

and general insurance including health insurance and
i) Any other matter resulting from the violation of provisions of the

Insurance Act, 1938 or the regulations, circulars, guidelines or instructions
issued by the IRDAI from time to time or the terms and conditions of the
policy contract, in so far as they relate to issues mentioned at clauses (a) to
(f)

47
Internal Ombudsman Scheme, 2018 for Scheduled Commercial Banks
Reserve Bank of India (RBI) had, in May 2015, advised all public-sector and
select private and foreign banks to appoint Internal Ombudsman (IO) as an
independent authority to review complaints that were partially or wholly
rejected by the respective banks so as to minimize the need for the
customers to approach other fora for redressal. The IO shall, inter alia,
examine customer complaints which are in the nature of deficiency in
service on the part of the bank, (including those on the grounds of
complaints listed in Clause 8 of the Banking Ombudsman Scheme,
2006) that are partly or wholly rejected by the bank.
Ombudsman Scheme for Digital Transactions, 2019
 Digital transaction in the banking industry is increasing day by day. In order

to deal specifically with complaints relating to digital transaction, the RBI
has introduced under Section 18 Payment and Settlement Systems Act,
2007, a separate Ombudsman Scheme for digital transactions in January
2019.
 The Ombudsman for Digital Transactions is a senior official appointed by

the Reserve Bank of India to redress customer complaints against System
Participants.
Grounds of complaints?
1) Prepaid Payment Instruments: Non-adherence to the instructions of

1
Reserve Bank by System Participants about Prepaid Payment Instruments
on any of the following:
a. Failure in crediting merchant's account within reasonable time;
b. Failure to load funds within reasonable time in wallets / cards;
c. Unauthorized electronic fund transfer;
d. Non-Transfer / Refusal to transfer/ failure to transfer within reasonable
time, the balance in the Prepaid Payment Instruments to the holder’s ‘own’
bank account or back to source at the time of closure, expiry of validity period
etc., of the Prepaid Payment Instrument;
e. Failure to refund within reasonable time / refusal to refund in case of
unsuccessful / returned / rejected / cancelled / transactions;
f. Non-credit / delay in crediting the account of the Prepaid Payment
Instrument holder as per the terms and conditions of the promotions offer(s)
from time to time, if any;
g. Non-adherence to any other instruction of the Reserve Bank on Prepaid
Payment Instruments.

48
(2) Mobile / Electronic Fund Transfers: Non-adherence to the instructions
of the Reserve Bank on Mobile / Electronic fund transfers by System
Participants on any of the following:
a. Failure to effect online payment / fund transfer within reasonable time;
b. Unauthorized electronic fund transfer;
c. Failure to act upon stop-payment instructions within the time frame and
under the circumstances notified to the customers within prescribed timeline;
d. Failure to reverse the amount debited from customer account in cases of
failed payment transactions within prescribed timeline;
e. Non-adherence to any other instruction of the Reserve Bank on
Mobile/Electronic fund transfers.
(3) Non-adherence to instructions of Reserve Bank / respective System
Provider to System Participants, on payment transactions through Unified
Payments Interface (UPI) / Bharat Bill Payment System (BBPS) / Bharat QR
Code / UPI QR Code on the following grounds:
a. Failure in crediting funds to the beneficiaries’ account;
b. Failure to return within reasonable time the payment to the originating
member in case of failure to credit the funds to the beneficiary’s account;
c. Failure to / delay in refund of money back to account in case of transaction
failure or declined transactions (i.e. failed transactions);
d. Non-adherence to any other instruction of the Reserve Bank on payment
transactions / through Unified Payments Interface (UPI) / Bharat Bill Payment
System (BBPS)/ Bharat QR Code / UPI QR Code.
(4) Non-reversal / failure to reverse within reasonable time, funds wrongly
transferred to the beneficiary account due to lapse at the end of System
Participant.
(5) Any other matter relating to the violation of the directives including on
fees / charges, if any, issued by the Reserve Bank in relation to digital
transactions.
NOTE: In respect of digital transactions done on third party platforms, it will
be the responsibility of the Payment Service Provider to resolve customer
disputes arising out of such transactions.

49
Complaints not be considered by the Ombudsman
a. If not covered under the Scheme & not pertaining to the grounds of
complaint specified under Clause 8 of the Scheme.
b. If one has not approached the System Participant concerned in the first
instance for redressal of the grievance.
c. If one has not made the complaint within one year from the date of
receipt of reply from the System Participant; or if no reply is received, and
the complaint to the Ombudsman is made after the lapse of more than one
year and one month from the date of complaint to the System Participant.
In exceptional circumstances as decided by the Ombudsman, a complaint
made after the period mentioned above may be accepted by the
Ombudsman, provided the complaint is made before the expiry of the
period of limitation prescribed under the Indian Limitation Act, 1963 for such
claims.
e. If the subject matter of the complaint is pending for disposal / has already
been dealt with at any other forum like court of law, consumer court etc.
f. If the complaint is for the same subject matter that was settled through
the office of the Ombudsman in any previous proceedings.
g. If the complaint is frivolous or vexatious.
h. The complaint falls under the disputes covered under Section 24 of the
Payment and Settlement Systems Act, 2007.
i. The complaint pertains to dispute arising from a transaction between
customers.
if the complaint is not settled by agreement:
The Ombudsman proceeds to pass an Award. Before passing an Award,

the
Ombudsman will provide reasonable opportunity to the complainant and the
System Participant to present their case. It is upto the complainant to accept
the Award in full and final settlement or reject it. If rejected can approach to
the Appellate Authority for redressal.
The appellate authority may:
a. Dismiss the appeal
or,
b. Allow the appeal and set aside the Award
or,
c. Remand the matter to the Ombudsman for fresh disposal in accordance
with such directions as the Appellate Authority may consider necessary
or proper
or,
d. Modify the Award and pass such directions as may be necessary to give
effect to the Award so modified.
or,
e. Pass any other order as it may deem it.

50
Charges
As per Companies Act 2013, charge is defined in Sec. 2(16) of the act as “charge
means an interest or lien created on the property or assets
of the company or any of its undertakings or both as security and
includes mortgage”.
Various Type Of Charges-
• Pledge – (Sec. 172- Indian Contract Act-1872) it is defined as bailment
of goods to secure repayment of debt or performance of a promise.
Possession & control of goods remain with bank and ownership remains
with borrower. Bank can sell the goods in case of non-payment by giving
notice of sale which is mandatory. Bank has to take due care of the
goods, insure it. Pledger should have clear title to goods and any defect
or hazardous nature should be intimated to pledgee. On repayment,
bank is bound to hand over possession of goods to pledger.
• Hypothecation – (SARFAESI Act 2002- Sec 2 (n))-This is a charge

on movable assets. Fixed charge is created on specific and identifiable
assets like machinery, vehicle etc. Floating charge is created on
assets class which is constantly changing and not the same. Stock as
a class will remain but particular stocks will change. Charge floats or
hovers until it is crystalized. Possession and ownership of goods
remain with borrower.
It can also be defined as mortgage of movable property and will be

converted into pledge on non-payment of debt by taking the possession
through SERFAESI Act 2002.Vide HO Circular Letter No. 2018-19/116
dated 12-2-2019, charge is to be noted with CERSAI in respect of
following assets created out of bank’s finance
under Agriculture advance:

a. Hypothecation of standing crops (KCC).
b. Plant & Machinery under Agriculture allied activities.
c. Land & Building under commercial agriculture activities.
d. Stocks / Book debts or receivables, whether existing or future.
• Mortgage - (Transfer of Property Act-1882 Sec 58) Mortgage is defined

as transfer of interest in specific immovable property for securing present
debt, and future debt or for performance of an engagement which may
give rise to a pecuniary obligation.
•Simple mortgage- (Transfer of Property Act-1882 Sec 58(b))
Mortgagor binds himself personally to repay the amount failing which
bank has right to sell the property through court or file suit for recovery.
It requires registration.

51
• E q u i t a b l e Mortgage: (Transfer of Property Act-1882 Sec 58(f))
Mortgage by deposit of Original title deeds, with intention to create
equitable mortgage. In some states it requires registration but in
other states it doesn’t. To prove intention in case of need, attendance
register is maintained and should be written by borrower himself or
his relative in case he is illiterate. Only owner of property can create
mortgage by handing over the original title deed of the property to the
creditor or its agent. Can be created by a person; in any of the following
towns, namely, Kolkata, Chennai, Mumbai and in any other town which
the State Government concerned notified by notification in the Official
Gazette. Oral assent of the mortgagor to be recorded on register.
• In case of housing loan to NRI power of attorney holder, who is a
relative of NRI customer can create mortgage. Such POA should be
executed before Indian Embassy in that country and attested by the
embassy official. On receipt in India should be notarized and properly
stamped (within 3 months). The original borrower should confirm the
execution of documents and creation of mortgage subsequently.
• EQM can also be created by certified copy of original in very special
circumstances, with permission of appropriate authority, Where
original is irretrievably lost an FIR should be filed. Advertisement
should be given in 2 local newspapers regarding the loss and intention
to create mortgage with certified copies of the same, and inviting
objections if any from anybody. If no objections are received then
EQM can be created and all original back documents should be taken
into custody. In case of partition deed, there may be more than one
original and after assuring that which original belongs to whom EQM can
be created. In Maharashtra intimation of EQM has to be filed with SRO
within a period of 30 days and no extension is permitted. The EQM
created should be registered with CERSAI within 30 days of creation of
EQM (as per CERSAI rules) before sanction of loan a search should be
conducted in the site of CERSAI to ascertain any subsisting charge.
Current instruction is that, a token disbursement be made and EQM
created and registration of EQM done before full and final disbursement
is made.
• Usufructuary Mortgage - (Transfer of Property Act-1882 Sec

58(d)) here possession of property is handed over to the mortgagee who
is entitled to enjoy the rent, income and other benefits accruing on the
property for repaying the obligation.
• Mortgage By Conditional Sale - (Transfer of Property Act-1882
Sec 58(c)) it is mortgage whereby the mortgagor ostensibly (only
perceived and not real) sale the immovable property to mortgagee on
certain conditions. The sale will be absolute if the money is not repaid on
specific date and on payment, the transaction of ostensible sale become
void.
• Anomalous Mortgage (Transfer of Property Act-1882 Sec 58(g)
If one or more of mortgages are combined, it becomes anomalous
mortgage.

52
• English Mortgage. (Transfer of Property Act-1882 Sec 58(e)) In
English mortgage the ownership of property is transferred to the
mortgagee and upon fulfilment of the contract, ownership is re- conveyed
to the mortgagor.
• Assignment- (Transfer of Property Act-1882 Sec 130)-Actionable
claims can be assigned. Actionable claim is a claim to any debt, not
secured by mortgage, pledge, hypothecation or any beneficial interest in
movable property not in possession of claimant, which the courts
consider as affording grounds of relief. LIC policy, Book debts, dues
from Govt. dept., NSC/KVP etc. Assignment can be legal which is in
writing, send a notice by the assignee and absolute transfer of actionable
claim.
• Lien. (Indian Contract Act 1872- Sec 170 & 171) - It is a right to
retain securities that come to banker in the normal course of business,
in respect of due by the customer. Lien are of - particular lien and
general lien.
• Particular lien can be exercised only on those securities, goods over
which the person has expended some labour/money etc.
• General lien extends to all securities that pass through the hands in
the normal course.
• Banker’s lien is general lien and is extensive. Bank cannot exercise
right of lien if there is a contract to the contrary.
• Negative lien is a declaration from borrower that he has not
encumbered nor will encumber the assets in favour of third parties as
long as he is indebted to the bank.
• Set Off. Set off is a right to appropriate a credit balance towards a
debit balance of the same person in the same right and capacity. This
involves netting of credit and debit balance with or without consent of the
customer. Debit balance should be due at time of set off and known
to the borrower. Credit balance should belong to the same person whose
debit balance is intended to be wiped off. For eg: if A is the borrower
and he is having a deposit jointly with B then bank cannot exercise
this right.
• Limited Company. Any charge created on the movable or
immovable property of the company should be registered with ROC
(registrar of companies) within a period of 30 days from the date of
creation of charge (As per section 125 of Companies Act). Otherwise it
will be void against the liquidator in case of winding up and bank will rank
as unsecured creditor (sec 77of Companies Act 2013). But the charge
will not be invalid against the company as a going concern. Registrar
can extend the date by another 270 days (maximum 300 days).
Thereafter bank has to approach Central Govt. for condonation of delay
in filing the charge. Except pledge all other charge requires registration
with ROC, with an exception of companies being required to register
pledge over shares. Before creating charge bank has to undertake a
search of the Register of charge maintained with ROC in respect of the

53
company to ensure that no prior charges exist. The charge should be
filed in form CHG 1 (both for creation and modification) within 30 days.
For satisfaction of charge Form CHG 4 to be used. CHG 8 is used
for application to Central Govt. for extension of time for registering the
charge.
• Suggested references
• Indian Contract Act 1872
• Transfer of property Act 1882
• Negotiable Instrument Act 1881
• Companies Act 2013
• SARFAESI Act 2002
Different Types of Borrowers/Execution of Documents

Banks generally grant advance to persons having legal capacity to enter into a
contract. Minors/lunatics/drunken persons etc. who cannot enter into a
valid contract may not be favoured as borrowers and no credit facilities may
be sanctioned to such persons. The borrowers may have different constitution
conferring on themselves various legal rights and responsibilities and banks
as creditors will be interested to know the exact constitution of the borrower.
Banks may also require additional undertakings information in some cases.
This information is very essential for the banks while getting the documents
executed from the borrowers. The documents can be executed only by the
persons who can validly bind the borrower. Common practice of most of the
banks is as-
Constitution Additional papers Persons authorised
of required
borrower
1.Individual ---- Individual in his personal

capacity
2.Joint All the borrowers in their
---- personal capacity binding
themselves jointly and severally.
3.Sole Declaration regarding his sole Sole proprietor in his capacity

Proprietor- interest in the business. as sole proprietor. He is,
ship however, personally liable for
all the dealings and obligations
in the name of business.

54
4.Joint Hindu 1. Letter of Joint Hindu Family All documents to be signed by
Family giving details of all the Karta of HUF and also all
coparceners including minors major coparceners including
2. Declaration to the effect that Karta in their individual
the advances will be utilised capacity.
only for the family business to
be signed by Karta
& all other major coparceners.
5.Trusts 1. Copy of trust deed. All the trustees in their
2. Legal opinion regarding representative capacity or as
the power of trustee to borrow. per trust deed and supported
by the legal opinion.
6.Partnership 1. Copy of partnership deed. All partners in their

firm 2. Declaration from all partners representative capacity i.e. as
to inform the bank of any partner and also in their
change in constitution. individual capacity.
7.Limited 1. Articles and Memorandum Documents to be signed by
Companies of Association authorised persons in terms of
2. Copy of Certificate of board resolution in their
incorporation.
representative capacity. The
3.Copy of Certificate of
common seal of the company
commencement of business
is also required to be affixed
(only in case of public limited
companies) wherever necessary. The
charge created by the
4. Copy of Board Resolution
company over its assets will
empowering the company to
borrow from the bank and also also require registration under
authorising managing director/ Section 125 of Companies
directors/other officers to Act, 1956.
execute the documents as
required by the bank.
5. Copy of the resolution of
general body meeting of the
company under Section 293
(1) (D) authorising the
company to borrow in excess
of its own paid up capital and
free reserve.
6.Declaration from the
company that borrowings will
remain within the powers
conferred on it as in (5) above

55
Various kinds of charge over securities
Nature of Types of Kind of charge Defined in Act
security security
Immovable Land & Building Mortgage Transfer of property
property Act 1882 sec.58

Actionable claims Book Assignment Transfer of property
debts, Act 1882 sec.130
FDR,NSC
Movable Plant
Life & Pledge or Indian contract
property/goods Machinery,
policies hypothecation Act1872 sec.172
Stocks, /lien Pledge
vehicle SARFAESI Act 2002
etc. Sec.2-n
Paper securities Shares, Lien Indian contract
Debenture Act
s, Bonds Sec 170 & 171
Mutual fund
units. Etc.
Personal Promoters and Personal liability Indian Contract
guarantee 3rd party Act. 1872
LAW OF LIMITATION
To keep the documents alive and enforceable in law, banks have to obtain
renewal document, i.e. letter of acknowledgement of debt and security for
extending the period of limitation of documents. Limitation period of various
documents are as follows-
• D P Note – 3 years from date of execution
• All agreements 3 years from date of execution
• Agreement of guarantee – 3 years from date of invocation by
beneficiary or 3 years from repudiation by guarantor
• Term loan agreement – Each instalment will be treated as separate
dues and 3 years from due date of each instalments
• Mortgage Deed - 12 years from date of mortgage
• Decree – 12 years from date of decree
• Appeal to High Court against Lower Court- 90 days from the date of
decree
• Appeal to other Courts on the decree of lower court- 30 days from
date of decree.
• Suit by State/Central Govt.- 30 years from the period when
limitation begins.

56
Risk, Capital & Fund Management
Capital
1. Capital Funds-Equity contribution o f o w n e r s . The b a s i c a
p p r o a c h o f capital adequacy framework is that a bank should have
sufficient capital to provide a stable resource to absorb any losses
arising from the risks in its business. Capital is divided into different
tiers according to the characteristics / qualities of each qualifying
instrument.For supervisory purposes capital is split into two categories:
Tier I and Tier II.
2. Common Equity Tier I (CET 1) Capital-A term used to refer to one
of the components of regulatory capital. It consists mainly of share
capital and disclosed reserves (minus goodwill, if any). Tier items are
deemed to be of the highest quality because they are fully available to
cover losses Hence it is also termed as core capital.
3. Additional Tier I Capital- In addition to commonequityTier I Capital
(CET I) Basel III has proposed Additional Tier I Capital (ATI) to the
extent of1.5% of the RWA (Risk Weightedassets).
This consists of Perpetual Non-Cumulative Preference Shares (PNCPS)
and such other eligible instruments as declared by RBI.
4. Tier II Capital-Refers to one of the components of regulatory
capital. Also known as supplementary capital, it consists of certain
reserves and certain t y p e s o f s u b o r d i n a t e d d e b t . Tier I I i t e m s
q u a l i f y a s r e g u l a t o r y capital to the extent that they can be used to
absorb losses arising from a Bank’s activities. Tier II's capital loss
absorption capacity is lower than that of Tier I capital.
5. Revaluation reserves- Revaluation reserves arising out of change in the

carrying amount of a bank’s property consequent upon its revaluation
may, at the discretion of banks, be reckoned as CET1 capital at a discount of
55%, subject to meeting the following conditions:
• Bank is able to sell the property readily at its own will and there is no
legal impediment in selling the property.
• The revaluation reserves are shown under Schedule 2: Reserves &
Surplus in the Balance Sheet of the bank.Revaluations are realistic, in
accordance with Indian Accounting Standards.
• valuations are obtained, from two independent valuers, at least once in
every 3 years, where the value of the property has been substantially
impaired by any event, these are to be immediately revalued and
appropriately factored into capital adequacy computations;
•The external auditors of the bank have not expressed a qualified opinion
on the revaluation of the property.
6. Capital reserves- That portion of a company's profits not paid out as
Dividends to shareholders.They are also known as un- distributable
reserves and are ploughed back into the business.
7. Deferred Tax Assets-Unabsorbed depreciation and carry forward of
losses which can be set-off against future taxable income which
is considered as timing differences result in deferred tax assets.
The deferred Tax Assets are accounted as per the Accounting Standard.
8. Deferred Tax Liabilities-Deferred tax liabilities have an effectof

57
increasing future year’s income tax payments, which indicates that they
are accrued income taxes and meet definition of liabilities.
9. Subordinated debt-Refers to the status of the debt. In the event of
the bankruptcy or liquidation of the debtor, subordinated debt only has a
secondary claim on repayments, after other debt has been repaid.
10. Hybrid debt capital instruments-In this category, fall a number of
capital instruments, which combine certain characteristics of equity and
certain characteristics of debt. Each has a particular feature, which can be
considered to affect its quality as capital. Where these instruments
have close similarities to equity, in particular when they are able to
support losses on an ongoing basis without triggering liquidation, they
may be included in Tier II capital.
11. BASEL Committee on Banking Supervision-The BASEL Committee is
a committee of bank supervisors consisting of members from each
of the G10 countries. The Committee is a forum for discussion on the
handling of specific supervisory problems of Banking Industries. It coordinates
the sharing of supervisory responsibilities among national authorities in
respect of banks' foreign establishments with the aim of ensuring effective
supervision of banks' activities worldwide.
12. BASEL Capital accord-The BASEL Capital Accord is an Agreement
concluded among country representatives in 1988 to develop
standardized risk-based capital requirements for banks across countries.
The Accord was replaced with a new capital adequacy
framework (BASEL II), published in June 2004. BASEL II is based on
three mutually reinforcing pillars has allow banks and supervisors to
evaluate properly the various risks that banks face.
These three pillars are:

I. Minimum capital requirements, which seek to refine
the present measurement framework
II. Supervisory review of an institution's capital adequacy and internal
assessment process;
III. Market discipline through effective disclosure to encourage safe and
sound banking practices
13. Risk Weighted Asset (RWA)-Risk Weight (RW) is a multiplication factor
prescribed by RBI to indicate the riskiness of the asset to the bank. RBI
has prescribed different RWs for different asset classes /types of credit
exposure. Risk weight for different assets vary e.g. 0% on a Government
Debt Security and 20% on a AAA rated loans etc. Risk Weighted
Asset (RWA) is bank’s on-balance sheet and off balance sheet
exposures , weighted according to Risk . This is used in determining the
capital requirement or Capital to Risk Weighted Assets Ratio (CRAR)
for the bank. Total RWA of the bank consists of Credit RWA, Market
RWA and Operational RWA.
14. CRAR(Capital to Risk Weighted Assets Ratio)-Capital to risk
weighted assets ratio is arrived at by dividing the capital of the bank with
aggregated risk weighted assets for credit risk, market risk and
operational risk. The higher the CRAR of a bank the better
capitalized it is.

58
Eligible Total
Capital
CRAR = ----------------------------------------------------- Credit
RWA + Market RWA + Operational RWA
15. Credit Risk-The risk that a party to a contractual agreement or
transaction will be unable to meet its obligations or will default on
commitments. Credit risk can be associated with almost any financial
transaction. BASEL-II provides two options for measurement of capital
charge for credit risk-
1. Standardized approach (SA) - Under the SA, the banks use a risk-
weighting schedule for measuring the credit risk of its assets
by assigning risk weights based on the rating assigned by the
external credit rating agencies.
2. Internal rating based approach (IRB) - The IRB approach, on
the other hand, allows banks to use their own
internal ratings systems of counterparties and
exposures, which permit a finer differentiation of risk for various
exposures and hence delivers capital requirements that
are better aligned to the degree of risks.
The IRB approaches are of two types:

a) Foundation IRB (FIRB): The bank estimates the
Probability of Default ( PD) a s s o c i a t e d with e a
c h b o r r o w e r , a n d t h e s u p e r v i s o r supplies other
inputs
such as Loss Given Default (LGD) and Exposure At
Default (EAD).
b) Advanced IRB (AIRB): In addition to Probability of Default
(PD), the bank estimates other inputs such as EAD and LGD.
The requirements for this approach are more exacting. The
adoption of advanced approaches would require the banks to
meet minimum requirements relating to internal ratings at
the outset and on an ongoing basis such as those relating
to the design of the rating system, operations, controls,
corporate governance, and estimation and validation of credit
risk components, viz., PD for both FIRB and AIRB and LGD
and EAD for AIRB.
16. Market risk-Market risk is defined as the risk of loss arising from
adverse movements in market prices or rates away from the rates or
prices set out in a transaction or agreement. The capital charge for
market risk was introduced by the BASEL Committee on Banking
Supervision through the Market Risk Amendment of January 1996 to the
capital accord of 1988 (BASEL I Framework).
There are two methodologies available to estimate the capital
requirement to cover market risks:

59
1) The Standardised Measurement Method: This
method, currently implemented by the Reserve Bank, adopts a
‘building block’ approach for interest-rate related and
equity instruments which differentiate capital requirements for
‘specific risk’ from those of ‘general market risk’.The
‘specific risk charge’ is designed to protect against an adverse
movement in the price of an individual security due to
factors related to the individual issuer. The ‘general market risk
charge’ is designed to protect against the interest rate risk in
the portfolio.
2) The Internal Models Approach (IMA): This method enables
banks to use their proprietary in-house method which must
meet the qualitative and quantitative criteria set out by the Basel
Committee on Banking Supervision (BCBS) and is subject to the
explicit approval of the supervisory authority.
17. Operational Risk-The revised BASEL II framework offers the

following three approaches for estimating capital charges for operational
risk:
I. The Basic Indicator Approach (BIA): This approach sets a

charge for operational risk as a fixed percentage ("alpha
factor") of a single indicator, which serves as a proxy for the
bank’s risk exposure.
II. The Standardised Approach (TSA): This approach requires

that the institution separate its operations into eight standard
business lines, and the capital charge for each business
line is calculated by multiplying gross income of that
business line by a factor (denoted beta) assigned to that
business line.
III. Advanced Measurement Approach (AMA): Under t h i s a p p r o a c h ,

the regulatory capital requirement will equal the risk measure
generated by the banks’ internal operational risk measurement
system.
In India, the banks have been advised to adopt the BIA to estimate the
capital charge for operational risk and 15% of average p o s i t
i ve gross income of last three years is taken for calculating
capital charge for operational risk.
18. Internal Capital Adequacy Assessment Process (ICAAP)-In terms

of the guidelines on BASEL II, the banks are required to have a
board-approved policy on internal capital adequacy assessment process
(ICAAP) to assess the capital requirement as per ICAAP at the solo as
well as consolidated level. The ICAAP is required to form an integral
part of the management and decision-making culture of a bank. ICAAP
document is required to clearly demarcate the quantifiable and
qualitatively assessed risks. The ICAAP is also required to include

60
stress tests and cenario analyses, to be conducted periodically,
particularly in respect of the bank’s material risk exposures, in order to
evaluate the potential vulnerability of the bank to some unlikely but
plausible events or movements in the market conditions that could
have an adverse impact on the bank’s capital.
19. Supervisory Review Process (SRP)-Supervisory review

process envisages the establishment of suitable risk
management systems in
banks and their review by the supervisory authority. The objective of
the SRP is to ensure that the banks have adequate capital to
support all the risks in their business as also to encourage them to
develop and use better risk management techniques for monitoring
and managing their risks.
20. Market Discipline-Market Discipline seeks to achieve

increased transparency through expanded disclosure
requirements for banks.
21. Credit risk mitigation-Techniques used to mitigate the credit risks

through exposure being collateralised in whole or in part with cash or
securities or guaranteed by a third party.
22. Mortgage Back Security- A bond-type security in which the collateral is
provided by a poolof mortgages. Income from the
underlying mortgages is used to meet interest andprincipal
repayments.
23. Derivative- A derivative instrument derives its value from an underlying
product. There are basically three derivatives
A. Forward Contract- A forward contract is an agreement between two
parties to buy or sell an agreed amount of a commodity or
financial instrument at an agreed price, for delivery on an agreed future
date. Future Contract- Is a standardized exchange tradable forward
contract executed at an exchange. In contrast to a futures contract, a
forward contract is not transferable or exchange tradable, its terms are
not standardized and no margin is exchanged. The buyer of the
forward contract is said to be long on the contract and the seller is
said to be short on the contract.
B. Options- An option is a contract which grants the buyer the right, but
not the obligation, to buy (call option) or sell (put option) an asset,
commodity, currency or financial instrument at an agreed
rate (exercise price on or before an agreed date (expiry or
settlement date). The buyer pays the seller an amount called the
premium in exchange for this right. This premium is the price of the
option.
C. Swaps- Is an agreement to exchange future cash flow at pre-specified
Intervals. Typically one cash flow is based on a variable price
and other on affixed one.
24. Duration-Duration (Macaulay duration) measures the price volatility of
fixed income securities. It is often used in the comparison of interest
rate risk between securities with different coupons and

61
different maturities. It is defined as the weighted average time to cash flows
of a bond where the weights are nothing but the present value of the
cash flows themselves. It is expressed in years. The duration of a
fixed income security is always shorter than its term to maturity,
except in the case of zero coupon securities where they are the
same.
25. Modified Duration-Modified Duration = Macaulay Duration/ (1+y/m),
where ‘y’ is the yield (%), ‘m’ is the number of times compounding
occurs in a year. For example if interest is paid twice year
m=2.Modified Duration is a measure of the percentage change in price
of a bond for a 1% change in yield.
26. Off Balance Sheet Exposure-Off-Balance Sheet exposures
refer to the business activities of a bank that generally do not
involvebooking assets (loans) and taking deposits. Off-balance sheet
activities normally generate fees,but produce liabilities or assets that are
deferred or contingent and thus, do not appear on the institution's
balance sheet until and unless they become actual assets or liabilities.
27. Current Exposure Method-The credit equivalent amount of a market

related off-balance sheet transaction is calculated using the
current exposure method by adding the current credit exposure to
the potential future credit exposure of these contracts. Current
credit exposure i s defined as the sum of the positive mark to
market value of a contract.
Funds and Investment:-
1. High Cost Deposit-Deposits accepted above card rate (for

the deposits) of the bank.
2. Liquid Assets- Liquid assets consists of :Cash,Balances with
RBI,Balances in currents accounts with banks,money at call and short
notice, inter-bank placements due within 30 days and securities under
“held for trading” and “available for sale” categories,
excluding securities that do not have ready market.
3. Funding Volatility Ratio-Liquid assets [as above] to current and
savings deposits - (Higher the ratio, the better)
4. Market Liability Ratio-Inter-bank and money market
deposit liabilities to Average Total Assets
5. ALM-Asset Liability Management (ALM) is concerned with
strategic balance sheet management involving all market risks. It also
deals with
liquidity management, funds management, trading and capital planning.
6. ALCO-Asset-Liability Management Committee (ALCO) is strategic
decision making body, formulating and overseeing the function of asset
liability management (ALM) of a bank.
7. Banking B o o k -The banking book comprises assets and liabilities,
which are contracted basically on account of relationship or for steady
income and statutory obligations and are generally held till maturity.
8. Venture Capital Fund-A fund set up for the purpose of investing in
startup businesses that is perceived to have excellent

62
growth prospects but does not have access to capital markets.
9. Held for Trading (HFT)-Securities where the intention is to trade by
taking advantage of short-term price / interest rate movements.
10. Available for Sale (AFS)-The securities available for sale are those
securities where the intention of the bank is neither to trade nor to
hold till maturity. These securities are valued at the fair value which is
determined by reference to the best available source of current
market quotations or other data relative to current value.
11. Yield to maturity (YTM) or Yield-The Yield to maturity (YTM) is the
yield promised to the bondholder on the assumption that the bond will
be held to maturity and coupon payments will be reinvested at the
YTM. It is a measure of the return of the bond.
12. Convexity-This represents the rate of change of duration. It is the
difference between actual price of a bond and the price estimated by
modified duration.
13. Foreign Currency Convertible Bond-A bond issued in foreign
currency abroad giving the investor the option to convert the bond into
equity at a fixed conversion price or as per a pre-determined
pricing formula.
14. Trading Book-Investments in trading book are heldfor

generating profits on the short term differences in prices/yields. Held
for t r a d i n g ( HFT) a n d A v a i l a b l e f o r s a l e ( AFS) c a t e g o r y
c o n s t i t u t e trading book.
15. Stress testing-Stress testing is used to evaluate a

bank’s potential vulnerability to certain unlikely but plausible events or
movements in financial variables. The vulnerability is usually measured
with reference to the bank’s profitability and /or capital adequacy.
16. Scenario Analysis-A method in which the earnings or value impact is
computed for different interest rate scenario.
17. LIBOR-London Inter-Bank Offered Rate. The interest rate at
which banks offer to lend funds in the interbank market.
18. Basis Point-Is one hundredth of one percent.1 basis point means
0.01%. Used for measuring change in interest rate/yield.
Basel Norms - Basel frame work stands on 3 pillars.
• Minimum Regulatory capital requirements
• Supervisory review process and
• Market discipline.
• Capital requirements- Based on BASEL III guidelines,RBI
has framed guidelines for Indian banks in this regard. Under
pillar I banks are required to maintain a minimum total
capital of 9% of their Risk Weighted assets as capital for credit
risk, operational risk and market risk calculated as given in
the guidelines. The entire guidelines as per Basel III was to be
fully implemented by 31.03.2019, but which has been extended
by RBI on several occasion.

63
Common Equity 5.50
Capital Conservation buffer ( common equity) 2.50
Total including CCB 8.00
Additional Tier I 1.50
Minimum Tier I (5.50 + 1.50) 7.00
Tier II 2.00
Minimum total capital (7.00+2.00) 9.00
Total capital including CCB 11.50
CCB is an additional capital buffer to be created out of normal years profits

to be used during a period of down turn and stress.CCB is a product of the
subprime crisis that shook the world during 2008.
The Phase-in arrangements of Basel III implementation in India, is as under-
(% of Total RWAs)
Minimum 31.03.16 31.03.17 31.03.18 31.03.20
Capital
Minimum 5.5% 5.5% 5.5% 5.5%
Common
Capital 0.625% 1.25% 1.875% *2.5%
Conservation
Total CET 1 6.125% 6.75% 7.375% 8%
(Minimum
Minimum Tier 1 Capital 7% 7% 7% 7%
Minimum Total Capital 9% 9% 9% 9%
Minimum Total Capital 9.625% 10.25% 10.875% 11.5%
+ CCB (i.e.CRAR)
* In view of the continuing stress on account of COVID-19 and in order to aid in
the recovery process, it has been decided to defer the implementation of the last
tranche of 0.625 per cent of the Capital Conservation Buffer (CCB) from October1,
2021 to april 1, 2022.
One more type of capital which is envisaged in Basel III is counter cyclical
buffer, which is a capital buffer to be created during boom period of credit
expansion to take care of risk of loss during economically depressed times.
Supervisory Review Process: This deals with central bank’s powers to
regulate banking system to avoid risks building up in the system and to take
timely regulatory actions.
Market Discipline:To encourage banks toput in place series of
disclosures to various stake holders to instil confidence in the system
and to apprise them of the risk management policies and practices followed by
banks.
CRAR – It is the Capital to Risk weighted asset Ratio. Capital
consists of Equity capital, Preference shares, General Reserves, P&L credit
balance and other unencumbered reserves.RWA is arrived at by multiplying
asset value to risk weight attached to different assets
Credit Conversion Factor: -As per Basel norms, off balance sheet
items carry risk to the bank like forex forward contracts, derivatives,
contingent Liabilities like letter of credit, bank guarantees etc. To capture risk
inherent in such exposures, and to provide capital charge to cover these risks,

64
RBI has stipulated certain credit conversion factors to convert these
into credit equivalents and provide capital accordingly. For e.g. If the
total guarantees and letter of credit of a bank is Rs.100 crores and RBI’s CCF is
say 1.5%, then credit equivalent is Rs.1.5cr on which 9% minimum
capital is to be maintained. CCF is linked to the duration of the
exposure i.e.; longer the duration of unexpired exposure higher the CCF and
vice versa.
Leverage Ratio: The Basel III leverage ratio is defined as the
capital measure (the numerator) divided by the exposure
measure (the denominator), with this ratio expressed as a percentage
Capital Measure
Leverage Ratio = -------------------------
Exposure Measure
The Basel Committee will use the revised framework,

for testing a minimum Tier 1 leverage ratio of 3% during the parallel run
period up
to January 1, 2017. The Basel Committee will continue to track the impact of
using either Common Equity Tier 1 (CET1) or total regulatory capital as the
capital measure for the leverage ratio. The final calibration, and any further
adjustments to the definition, will be completed by 2017, with a view to
migrating to a Pillar 1 treatment on January 1, 2018. It has been decided by
RBI, that the minimum Leverage Ratio shall be 4% for Domestic Systemically
Important Banks (DSIBs) and 3.5% for other banks. These guidelines shall be
effective from the quarter commencing October 1, 2019.
Liquidity Risk: BCBS had observed that one of the factors for the
recent financial crisis were due to inaccurate and ineffective
management of Liquidity Risk. To overcome this , BCBS had come out
with two ratios – Liquidity Coverage Ratio and Net Stable Funding Ratio
(NSFR).
❖ The Liquidity Coverage Ratio(LCR):This ratio ensures enough

liquid assets to survive an acute stress scenario lasting for 30 days .
❖ The objective of LCR is to promote short term resilience of

the liquidity risk profile of the banks. This is done by ensuring that
a bank maintains an adequate level of unencumbered HQLAs that
can be converted into cash to meet its liquidity needs for a 30 calendar day
time horizon under a significantly severe liquidity stress scenario specified by
supervisors. At a minimum, the stock of liquid assets should enable the
bank to survive until day 30 of the stress scenario, by which time it is assumed
that appropriate corrective actions can be taken
❖ This ratio is introduced from 1st January 2015.
❖ The LCR requirement would be binding on banks from January 1,
2015; with a view to provide a transition time for banks, the requirement
would be minimum 60% for the calendar year 2015 i.e. with effect from
January 1, 2015, and rise in equal steps to reach the minimum required
level of 100% on January 1, 2019. Banks are required to maintain LCR of

65
100 per cent with effect from January 1, 2019. In order to accommodate the
burden on banks’ cash flows on account of the Covid19 pandemic, banks are
permitted by RBI to maintain LCR as under:
From April 17, 2020 to

80 per cent
September 30, 2020 -
Oct 1, 2020 to March 31, 2021 - 90 per cent
April 1, 2021 onwards - 100 per cent
❖ The formula for arriving LCR is LCR =Stock of high quality liquid assets
(HQLAs)/Total Net Cash Outflows over the next 30 calendar days ×100
❖ Liquid assets comprise of high quality assets that can be readily
sold or used as collateral to obtain funds in a range of stress
scenarios. They should be unencumbe re d i.e. without le gal,
regulatory or operational impediments. HQLA are comprised of Level 1
and Level 2 assets. Level 1 assets generally include cash, central bank
reserves, and certain marketable securities backed by sovereigns and
central banks, among others. These assets are typically of the highest quality
and the most liquid, and there is no limit on the extent to which a bank can
hold these assets to meet the LCR. Level 2 assets are comprised of Level
2A and Level 2B assets. Level 2A assets include, for example, certain
government securities, covered bonds and corporate debt securities.
Level 2B assets include lower rated corporate bonds, residential mortgage
backed securities and equities that meet certain conditions. Level 2
assets may not in aggregate account for more than 40% of a bank’s
stock of HQLA. Level 2B assets may not account for more than 15% of a
ank’s total stock of HQLA.
❖ The Net Stable Funding Ratio: This ratio aims at promoting medium to
long term structure funding of assets and activities of the Banks.
BCBS aims to trial this ratio from 2012 and makes it mandatory in
January 2018. In view of the ongoing stress on account of COVID-19, it
has been decided to defer the implementation of NSFR guidelines by a
further period of six months. Accordingly, the NSFR Guidelines shall
come into effect from October 1, 2021.
❖ The Objective of NSFR is to ensure that banks maintain a stable funding

profile in relation to the composition of their assets and off- balance
sheet activities. A sustainable funding structure is intended to reduce the
probability of erosion of a bank’s liquidity position due to disruptions in a
bank’s regular sources of funding that would increase the risk of its
failure and potentially lead to broader systemic stress. The NSFR
limits overreliance on short-term wholesale funding, encourages better
assessment of funding risk across all on-and off- balance sheet items,
and promotes funding stability
❖ Definition of NSFR: The NSFR is defined as the amount of available
stable funding relative to the amount of required stable funding.
“Available stable funding” is defined as the portion of capital and
liabilities expected to be reliable over the time horizon considered
by the NSFR, which extends to one year. The amount of
stable funding required ("Required stable funding") of a specific

66
institution is a function of the liquidity characteristics and residual
maturities of the various assets held by that institution as well as
those of its off-balance sheet (OBS) exposures
NSFR= (Available S t a b l e funding ( ASF))/Required stable funding
(RSF)) x 100 = should be 100% or above.
Prompt Corrective Action (PCA) Framework for Banks

PCA framework is a process or mechanism under which RBI can initiate a
corrective action which involves monitoring of certain performance indicators of
the banks as an early warning exercise and is initiated once such
thresholds as relating to capital, asset quality, ROA etc. are breached. Its
objective is to facilitate the banks to take corrective measures including those
prescribed by the Reserve Bank, in a timely manner, in order to restore their
financial health.
Capital, asset quality and profitability continue to be the key areas for
monitoring in the revised framework. Indicators to be tracked for
Capital, asset quality and profitability would be CRAR/ Common Equity
Tier I ratio, Net NPA ratio and Return on Assets respectively.
Leverage would be monitored additionally as part of the PCA framework.
Breach of any risk threshold would result in invocation of PCA. A bank will be placed
under PCA framework, based on the audited Annual Financial Results and the
Supervisory Assessment made by RBI. However, RBI may impose PCA on any
bank during the course of a year (including migration from one threshold to
another) in case the circumstances so warrant.
Once Bank are put under PCA, it has three risk threshold levels (1 being the
lowest and 3 the highest) based on where a bank stands on these ratios. Banks
with a capital to risk-weighted assets ratio (CRAR) of less than 10.25 per cent
but more than 7.75 per cent fall under threshold 1.
Those with CRAR of more than 6.25 per cent but less than 7.75 per cent fall in
the second threshold. In case a bank’s common equity Tier 1 (the bare
minimum capital under CRAR) falls below 3.625 per cent, it gets categorised under
the third threshold level.Banks that have a net NPA of 6 per cent or more but less
than 9 per cent fall under threshold 1, and those with 12 per cent or more fall under
the third threshold level.
On profitability, banks with negative return on assets for two, three and four
consecutive years fall under threshold 1, threshold 2 and threshold 3, respectively.
Banks are to undertake certain Mandatory actions as per Risk Threshold

level they breached and have to face discretionary actions from RBI , which
is as under:

67
PCA M a t r i x
Indicator RRisk Risk
iThreshold 2 Threshold 3
Area s
Capital CRAR- Minimum aup to 250 bps kmore than -
regultory below T250 bps
prescription for capital to risk Indicator hbut not
assets ratio + applicable rexceeding
capital conservation buffer(CCB) e 400 bps
s -
current minimum RBI h below
prescription oIndicator
of total 10.875% l
(9% minimum capital <10.875% but d In excess of
plus 1.875%* of CCB as on >=8.375% 1 312.50 bps
31 March <8.375% below Indicator
(Breach of 2018) but
either CRA R >=6.87%
or CET And/or Regulatory pre-specified
1 ratio of CBC trigger of Common
trigger PCA) Equity up to 162.50 <3.625%
(CET1min)+applicable bps below more than
C a p i t a l conservation buffer Indicator 162.50
(CCB) bps
current minimum RBI below but not
prescription exceeding
7.375% (5.5% plus 1.875%* of 312.50 bps
as on March31-2018 below
Breach of either CRAR Indicator
or CET 1ratio to trigger PCA <7.375% but
>=5.75% <5.75%
but
>=4.25%
Asset Net Non-performing >>=9.0% >=12.0%
Quality advances (NNPA) ratio =but < 12.0%
6
Profitability Return on assets (ROA) N
.Negative Negative ROA
e ROA for four
0
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Mandatory and discretionary actions
Discretionary
Specifications Mandatory actions actions
Risk Threshold 1 Restriction on dividend distribution/remittance of Special Supervisory
profits. Promoters/owners/parent in the case of Interactions,
foreign banks to bring in capital Strategy related,
Risk Threshold 2 In addition to mandatory actions of Threshold 1, Governance related,
Restriction on branch expansion; domestic Capital related,
and/or Credit risk
overseas Higher provisions as part of the related, Market risk
coverage regime
related, HR related,
Risk Threshold 3 In addition to mandatory actions of Threshold 1, Profitability related,
Restriction on branch expansion; domestic Operations related
and/or overseas Restriction on management Any other
compensation and directors’ fees, as applicable
Loan to Value Ratio: The loan-to-value ratio (LTV Ratio) is a lending

risk assessment ratio that Banks and Financial institutions arrive at before
sanctioning of Housing or Home Loans. The formula for calculating LTV
ratio is:
Loan to Value Ratio= (Loan amount sanctioned/Apprised value of the
property) x 100.
The risk weights for all new housing loans sanctioned on or after
October 16,2020 and upto March 31, 2023 shall be as under:
LTV Ratio (%) Risk Weight (RW) (%)

<= 80 35
>80 and <= 90 50
For the housing loans sanctioned prior to October 16. 2020, the extant
guidelines, based on both size of the loan as well as the LTV ratio,
will continue to be applicable as hitherto -RBI, in its second bi-monthly
monetary policy statement 2017-18, revised the LTV ratio, Risk
Weight and Standard Asset Provisioning rates, as under, for loans
sanctioned on or after June 7, 2017:

69
Category of LTV ratio (%) Risk Weight Standard Asset
Loan (%) Provision (%)
Up to Rs. 30 Equal to and less 35
lakhs than 80%
More than 80% 50
and equal to and
less than 90% 0.25%
Above Rs 30 Equal to and less 35
lakhs and up to than 80%
Rs 75 lakhs
Above Rs 75 Equal to and 50
lakhs Less than 75%
Bank’s re-capitalisation:
Bank recapitalisation, as the name suggests, means recapitalising banks with new
capital to improve their balance sheet. The government, using different instruments,
infuses capital into banks undergoing credit crunch. Capital is the money invested by
shareholders in the business. Since the government is the biggest shareholder in
public sector banks, the responsibility of infusing capital majorly lies with the
government. The recapitalisation plan comes into action when banks get caught
in a situation where their liabilities are comparatively higher than their assets. The
liquidity with banks is a liability as it is the money deposited by customers, which needs
to be paid sooner or later. Due to this their balance-sheet weakens and banks find
it difficult to raise capital from the open market. The government, which is also the
biggest shareholder, can infuse capital in banks by either buying new shares or by
issuing bond.

70
MSME POLICY
In India, MSMEs contribute nearly 8% of the country's GDP, around 45% of the
manufacturing output, and approximately 40% of the country's exports. The
contribution of the sector in the economy is currently constrained due to several
challenges affecting growth of the sector. Some of the major ones are mentioned
below:
a) Policy and institutional interventions
b) Accelerating growth and enabling formalization
c) Addressing infrastructural bottlenecks
d) Facilitating capacity building
e) Facilitating access to credit and risk capital
f) Technological interventions for improving underwriting standards and delivery
g) Enabling market linkage and tie up with public procurement platforms.
Government of India enacted MSMED act 2006 with an aim to enable MSME
Entrepreneurs for increasing their worth and efficiency so that they may sustain
the Competition, enlarge their scope of activity and enlist them among the top
performers. Further to broaden the scope of MSMEs, Government of India
modified/amended the MSME act, based on the recommendations of the
advisory committee in July 2020 changed the classifications of MSMEs.
Micro, Small & Medium Enterprises Development (MSMED) Act, 2006

The Government of India enacted the Micro, Small and Medium Enterprises
Development (MSMED) Act, 2006 on 16th June, 2006 which was notified on 2nd
October, 2006. The Act was enacted to provide for facilitating the promotion and
development and enhancing the competitiveness of micro, small and medium
enterprises and for matters connected therewith or incidental thereto.
Government of India vide a Gazette notification dated 01 July, 2020 amended
the MSMED act 2006 and notified certain criteria for classifying the enterprises
as micro, small and medium enterprises and specifies the forms and procedures
for filing Udyam Registration memorandum. Accordingly the Definition /
Classification of MSME stands modified
Definition of Micro, Small and Medium Enterprises:
An enterprise shall be classified as Micro, Small and Medium enterprise
on the basis of the following criteria, namely: -
A. Micro Enterprises: An enterprise will be classified as micro, where the
investment in Plant & Machineries or equipment does not exceed Rs One Crore
and turnover does not exceed Five Crore.
B. Small Enterprises: An enterprise will be classified as Small, where the
investment in Plant & Machineries or equipment does not exceed Rs Ten Crore
and turnover does not exceed Rs Fifty Crore.
C. Medium Enterprises: An enterprise will be classified as Medium, where the
investment in Plant & Machineries or equipment does not exceed Rs fifty crore
and turnover does not exceed Rs Two hundred and fifty crore.
D. Further such MSMEs should be engaged in the manufacture or production of
goods, in any manner, pertaining to any industry specified in the first schedule
to the Industries (Development & Regulation) act,1951 or engaged in providing
or rendering of any service or services.

71
Composite Criteria of Investment & Turnover for Classification:
i) A Composite Criterion of investment and turnover shall apply for classification

of an enterprise as micro, small or medium.
ii) If an enterprise crosses the ceiling limits specified for its present category in
either of the two criteria of investment or turnover, it will cease to exist in that
category and be placed in the next higher category but no enterprise shall be
placed in the lower category unless it goes below the ceiling limits specified for
its present category in both the criteria of investment as well as turnover.
iii) All units with Goods & Services Tax Identification Number (GSTIN) listed
against same Permanent Account Number (PAN) shall be collectively treated as
one enterprise and the turnover and investment figures for all of such entities shall
be seen together and only the aggregate values will be considered for deciding
the category of micro, small or medium.
Calculation of Investment in Plant & Machinery or Equipment:
i) The Calculation of investment in plant & machinery or equipment will be linked

to the Income tax return (ITR) of the previous years filed under the Income tax
act,
1961.Written Down Value (WDV) as at the end of each financial year as defined in
the
Income Tax act and not the actual acquisition cost will or original price will be the
value of Investment in plant & machineries.
ii) In case of a new enterprise, where no prior ITR is available, the investment will
be based on self-declaration of the promoter of the enterprise and such relaxation
shall end after 31St March of the financial year in which it files its first ITR.
iii) The expression "Plant & Machineries" or " Equipment" of the enterprise shall have
the same meaning as assigned to the Plant & Machinery in the income tax rules,
1962 framed under the income tax act 1961, and shall include all tangible assets
(other than land and building, furniture & fittings).
iv) The purchase (Invoice) value of plant & machinery or equipment, whether
purchased first hand or second hand shall be taken into account excluding Goods &
Services (GST), on self-disclosure basis, if the enterprise is a new one without ITR.
Exclusions from list of plant & machineries / equipment:-
However, cost of the following plant & machinery / equipment etc. would
be excluded for computation of investment value.
I. Equipment such as tools, jigs, dies, moulds, and spare parts for
maintenance and the cost of consumable stores.
ii. installation cost of plant &machinery.
iii.Research & development and pollution control equipment.
iv. Power generation set and extra transformer installed by the enterprise as
per the Regulations of the State Electricity Board.
v .Bank charges and Service Charges paid to the National Small Industries
Corporation or the State Small Industries Corporation.
vi. Procurement or Installation of cables, wiring bars, electrical control panels
(not mounted on individual machines)

72
vii. Oil circuit breakers or miniature circuit breakers which are necessarily to
be used for providing electrical power to the plant and machinery or for
safety measures;
viii. Gas producing plants.
ix. Transportation charges (other than sales tax or value-added tax and
excise duty) for indigenous machinery from the place of their manufacture
to the site of the enterprise).
x. Charges paid for technical know-how for erection of plant machinery.
xi. Such storage tanks which store raw materials and finished products only
and are not linked with the manufacturing process.
xii. Fire-fighting equipment and
xiii. Such other items as may be specified, by notification from time to time.
In case of Service Enterprises, the original cost to exclude furniture, fittings and other
items not directly related to the services rendered. Cost of Land and Building should
be excluded while computing the investments in P& M I Equipment for both
Manufacturing
& Service Industries.
In case of imported machinery/equipment, the following duty/charges/costs

shall be included in calculating their value:
i. Import Duty (excluding miscellaneous expenses such as transportation

from the port to the site of the factory, demurrage paid at the port).
ii. Shipping Charges.
iii. Customs Clearance charges and
iv. Sales Tax or Value-added Tax.
Calculation of Turnover:
i) Exports of goods or services or both, shall be excluded while calculating the

turnover of any enterprise whether micro, small or medium for the purpose of
classification.
ii) Information as regards to turnover and exports turnover for an enterprise shall
be linked to the Income Tax act or the central goods and services act (CGST
act) and the GSTIN.
iii) The turnover related figures of such enterprise which do not have PAN will be
considered on self — declaration basis for a period up to 31st March 2021 and
thereafter PAN and GSTIN shall be mandatory.
Priority Sector Classification:

All Bank Loans to Micro, Small and Medium enterprises (MSMEs), both
Manufacturing and Service unit (s) are eligible to be classified under Priority
Sector advance as per new classification of MSME.

73
Factoring Transactions:
i) With Recourse factoring transactions by Banks which carry out the business of
factoring departmentally wherever the assignor if a Micro, Small or Medium
Enterprises would be eligible for classification under MSME category on the
reporting dates.
ii) The borrower's bank shall obtain from the borrower, periodical certificates
regarding factored receivables to avoid double financing / counting. Further the
factors must intimate the limits sanctioned to the borrower and details of debts
factored to the banks concerned taking responsibility to avoid double financing.
iii) Factoring transactions pertaining to MSMEs taking place through the Trade
Receivables Discounting System (TReDS) shall also be eligible for classification
under priority sector.
Export Credit:
i) All Export Credit under MSME sector are allowed to be classified as Priority Sector
Lending.
ii) Export Credit includes Pre Shipment and Post Shipment export credit
(excluding off balance sheet item).
Khadi and Village Industries Sector (KVI)

All loans sanctioned to units in the KVI sector, irrespective of their size of operations,
location will be eligible for classification under the sub-target of 7.5% prescribed for
micro enterprises within the Micro and Small enterprises segment under priority
sector.
If the loans under General Credit Card (GCC) are sanctioned to Micro and Small
Enterprises, such loans should be classified under respective categories of Micro
and Small Enterprises.
Other Finance to MSMEs :
i) Loans up to Rs 50 Crore to Start Ups as per definition of Ministry of Commerce and

Industry, Government of India that confirm to the definition of MSME.
ii) Loans to entities involved in assisting the decentralized sector in the supply of
inputs to and marketing of produce of artisans, village and cottage industries.
iii) Loans to cooperatives of producers in the decentralized sector viz. artisans village
iv) Loans sanctioned to NBFC — MFIs and other MFIs (Societies, trusts etc) which
are members of RBI recognized SRO for the sector for on lending to MSME sector.
v) Loans to registered NBFCs (other than MFIs) for on lending to Micro &
Small enterprises.
vi) Overdraft to Pradhan Mantri Jan Dhan Yojana (PMJDY) account holders as per
limits and conditions prescribed by Department of Financial Services (DFS), Ministry
of Finance from time to time will qualify as achievement of the target for lending to
Micro Enterprises.
vii) Outstanding deposit with SIDBI and MUDRA Ltd on account of priority
sector shortfall.
viii) Loans extended under co-lending arrangement will be classified as PSL in
respect of Banks share of loan.

74
Targets / sub targets for lending to Micro, Small and Medium enterprises
(MSME) sector by Domestic Commercial Banks:
Micro Enterprises:
A target of 7.5 percent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent
Amount of Off-Balance Sheet Exposure, whichever is higher has been prescribed
for Micro Enterprises.
Advances to Micro, Small & Medium Enterprises (MSME) sector shall be reckoned
in computing achievement under the overall Priority Sector target of 40 percent of
ANBC or credit equivalent amount of off-Balance Sheet Exposure, whichever is
higher as per extant guidelines on priority sector lending.
In terms of the recommendations of the Prime Minister's Task Force on MSMEs,
banks have to achieve a 20 per cent year-on- year growth in credit to micro and
small enterprises and a 10 per cent Y-O-Y growth in the number of Micro enterprise
accounts.
60 per cent of total lending to MSE -sector as on _corresponding quarter of the
previous year to Micro enterprises.
The target for lending to Micro Enterprises within the MSE sector (i.e. 60% of total
lending to MSE sector should go to Micro enterprises) will be computed with
reference to the outstanding credit to MSE sector as on preceding March 31St.
Common Guidelines / Instructions for Lending to MSME Sector
Issue of acknowledgement of Loan Applications to MSME borrowers:

Branches have to mandatorily acknowledge all loan applications from
MSME borrowers, submitted manually or online, and ensure that a running
serial number is recorded on the application form as well as on the
acknowledgement receipt.
We have also put in place a system of Central Registration of loan
applications and a system of e tracking of MSE loan applications. The
detailed guidelines on the matter have been circulated through HOBC
112/54 dated 11/07/2018.
Time Norms for Disposal of Applications:
The processing of the loan application and decision to be conveyed within the
prescribed time limit as give below; (time limit start from the date of submission
of complete information/data by the applicant) :
Limits Time Limit Not Exceeding

Up to and including Rs.25,000/- Business Days.
Over Rs.25,000/- and up 8 Business Days.
to Rs. 10 Lakhs
Over Rs. 10 Lakhs up 12 Business Days.
to Rs.5 Crores
Over Rs.5 Crores 20 Business Days.
In case of rejection of loan request, approval shall be obtained from the next
higher authority, not below the rank of Zonal Manager.

75
Collateral:
Reserve Bank of India has mandated not to accept collateral security in case of
loans up to Rs 10 lakhs extended to units in the MSE sector. Reserve Bank of
India has further advised that Banks may on the basis of good track record and
the financial position of the MSE units, increase the limit to dispense with the
collateral requirement for loans up to Rs 25 lakhs (with the approval of the ZLCC)
However, the issue of collateral security would be addressed on a case-specific
basis.
Composite Loan:
A Composite loan limit can be sanctioned by branches to enable the MSE
entrepreneurs to avail of their working capital and term loan requirement through
single window.
Udyami Registration:
i) All enterprises who wishes themselves to be classified as MSME are required to file
Udyam Registration on Udyam Registration portal.
ii) Aadhaar Number is mandatory for filing Udyam Registration. Adhaar number
shall be of the proprietor in the case of proprietorship firm, managing partner
in case of partnership firm and of karta in the case of Hindu Undivided family
(HUF).
iii) In case of company or a limited liability company partnership or a cooperative
society or a society or trust, the organization or its authorized signatory shall provide
its GSTIN and PAN.
iv) All existing enterprise are required to register again on the Udyam
Registration portal, even though they previously were in possession Udyog
Adhaar Number.
v) It will be mandatory for the branches to obtain Udyam Registration Certificate
from the borrowers, while considering any new loan, wef 01.09.2020. (In case
URC is not available, they should be prompted to obtain the same before
disbursement through the portal)
vi) In case of existing borrower the Udyam Registration Certificate is to be
obtained from all borrower within 31/03/2021 and should be kept on record.
vii) Accounts will be classified as Micro, Small & Medium on the basis of Udyam
Registration Certificate.
vii) An enterprise registered with any other organization under the ministry of
Micro, Small and Medium enterprises shall register itself under Udyam
Registration.
Financial Support to MSMEs in ZED certification scheme:
The ZED Certification scheme of Ministry of MSME is aimed at enhancing the global
Competitiveness of Indian MSMEs on quality and environment aspects in their
systems and processes. It is a continual improvement & rating scheme involving
Handholding and Certification of MSMEs with financial support from Government
of India. Ministry of MSME has nominated QCI (Quality Council of India) as the
National Monitoring and Implementing Unit (NMIU) of this scheme.
In our application forms and proposal format ZED certification are duly captured
and all the branches have been advised to encourage borrowers for obtaining
ZED certification.
For full information on ZED certification, branches may visit https://www.zed.onin/ .

76
Delayed Payments By Companies to Micro/Small Enterprise units:
Under Delayed Payment Act, April 1993 (Amended in 1998), interest on delayed
payment by Corporate to Small Scale units and Ancillary Industrial Undertakings,
penal provisions have been incorporated to take care of delayed payments to
MSME units. After the enactment of the Micro, Small and Medium Enterprises
Development (MSMED) Act 2006, the existing provisions of the Interest on
Delayed Payment Act, 1998 to Small Scale units and Ancillary Industrial
Undertakings, have been strengthened as under:
(i) Whenever any supplier, supplies any goods or renders service to any buyer,
the buyer shall make payments in the following manner:
a) On or before the date agreed upon between him (buyer) and

the supplier in writing or
b) Where there is no agreement in this behalf, before the appointed

day. However in no case the period agreed upon between the
supplier and the buyer in writing shall exceed 45 days from the
day of acceptance or day of deemed acceptance.
(ii) Where any buyer fails to make payment of the amount to the
supplier, as mentioned under (i) above, the buyer is liable to pay
compound interest with monthly rests to the supplier on that amount
from the appointed day at three times of the Bank Rate notified by
Reserve Bank of India.
(iii) For any goods supplied or services rendered by the supplier, the buyer
shall be liable to pay the interest as advised at (ii) above.
(iv) In case of any dispute with regard to any amount due, any party to a dispute
may make a reference to the Micro and Small Enterprises Facilitation Council,
constituted by the respective State Government.
Further, banks have been advised by Reserve Bank of India to fix sub-limits
within the overall working capital limits to the large borrowers specifically for
meeting the payment obligation in respect of purchases from MSMEs.
Branches should take note of the above provisions of the MSMED Act, 2006 while
verifying the receivables shown by the SME Borrower in their Book Debts Statement
as well as annual balance sheet by cross-checking if these receivables appear in the
respective buyers' audited balance sheet(s). For the same reason, if any Corporate
or other buyers (of any SME suppliers' products) happen to be our Bank's borrowers,
branches should verify whether the dues to the supplier (SMEs) are reflected in their
audited balance sheet(s).

77
Different application forms
Application for MSME Loan up-to Rs. 200 Lakhs is given in BC 112/27 dated
01-06-2018 & Application for MUDRA Loan is given in BC 110/89 dated 09-08-2016.
Different Formats of proposals: (For proposal format please refer Br. Cir. No.
112/88 dated 17-09-2018)
MSME-1 for Small Road Transport Operators irrespective of the Limit
MSME-2 for all Micro and Small Enterprises for limits up to Rs. 25 Lakhs
MSME-3 for all activities under Micro and Small Enterprises for limits above
Rs.25 lakhs up to Rs. 200 Lakhs.
Loan request for more than Rs.200 lakhs should be processed in executive
summary format — used for large borrowal accounts in the format
circulated by C&IC department.
Working capital assessment:
Turnover method - for working capital limits requirement up to Rs.5 Crores, turnover
method would be applicable as per Nayak Committee recommendations.
MPBF (Maximum Permissible Bank Finance) method — is conventional method of

assessing working capital for units with longer operating cycle and / or for units
requiring working capital in excess of Rs. .5 Crores. The assessment is based on the
build-up of Current Assets and Current Liabilities.
Cash Budget method — where working capital requirement is more than Rs.5 crore
assessments should be carried out under cash budget method especially where the
borrower is engaged as contractor or revenue is recognized on progressive billing
basis, etc. Under this method, the peak level cash deficit will be the level of total
working capital finance to be extended to the borrower.
Various MSME Products

Bank has launched several MSME Products. They are listed herein below-
Star MSME GST Plus –BC 111/155 Dt. 29/12/2017
✓ For GST compliant borrowers for their working capital requirement.
Assessment to be done on the basis of GST returns filed by them.
✓ Valid for MSME units engaged in manufacturing and trading. Only working capital
can be sanctioned under this scheme.
✓ Unit should have valid GSTIN. Rating of the account should be of
minimum investment grade and complying entry level norms.
✓ Quantum of loan-Minimum Rs.10 Lakhs and maximum Rs.500- Lakhs.
✓In case of finance against both, stocks and book debts, DP allowed
against book debts should not be more than 40% of the total limit.
✓ In case of finance against only book debts the maximum quantum of loan is
restricted to Rs. 200 Lakhs.
✓ Assessment is done strictly as per turn over specified in GSTR-1 and GSTR -4
✓Quantum of working capital limit should not exceed 25% of the annual turnover
assessed (for Micro & small enterprises) and 20% (for medium enterprises.)
 Primary security- hypothecation of stock & Bookdebts ( upto 90 days)
Collateral security- Where CGTMSE is not available, minimum CCR should be 65%.

78
PMMY -110/89 Dt. 09/08/2016
✓ SCHEME CODE 300,369,370 -Free code 3

✓ OBJECTIVE-TARGET – Non Corporate Small Business segment
w.e.f.
01-04-2016, Allied agriculture activities also gets covered under
PMMY
✓ Weavers and artisans can be covered under Mission Mudra.
ELIGIBILITY- Individual, Prop., Partnership, Ltd Co. etc.

PURPOSE-For setting up of new / upgrading existing Micro business
enterprises in the manufacturing, processing, trading, service sector and
activities allied to agriculture – Pisciculture, Beekeeping, Poultry, Live-
stock, rearing, grading, sorting, dairy, fishery, agri-clinics, agro business
centre, food & agro processing, Power tillers, tractors etc., financing to
weavers and artisans. (Income generating activity).
NATURE OF FACILITY -Term Loan and/or Working Capital up to maximum

Rs. 10 lakhs.
REPAYMENT - Maximum - 36 months for Demand Loan and 84 months for

term loan including moratorium. Interest to be serviced as and when
charged.
EXTENT OF FINANCE-
SHISHU -- up to Rs. 50,000/-
KISHORE -- above Rs. 50,000/- up to Rs.5. lakh
TARUN -- above Rs. 5.00 lakh up to Rs. 10.00 lakh

MARGIN-
SHISHU – NIL
KISHORE & TARUN -- 15%
PRIMARY SECURITY-
(i) Hypothecation of all assets acquired out of bank

finance.
(ii) Personal guarantee of promoters/directors.
Collateral Security — NIL
All eligible activity would be covered under the guarantee cover of
'Credit Guarantee Fund for Micro Units' (CGFMU)
[No collateral security/third party guarantee to be obtained].

79
WOMEN BENEFIACARIES CONCESSION –
SHISHU -- <50,000 NIL
KISHORE & TARUN - Under Priyadarshani Yojana 1% concession in ROI
Prime Minister's Employment Generation Programme (PMEGP)

(HOBC 116/123 dt 05.08.2022)
PMEGP is a central sector scheme administered by the Ministry of MSME. The
scheme is implemented through Khadi and Village Industries Commission (KVIC).
Objectives:
(i)To generate employment opportunities in rural as well as urban areas of the
country through setting up of new self-employment ventures/project To provide
continuous and sustainable employment.
(ii)To increase the wage-earning capacity of workers and artisans and contribute to
increase in the growth rate of rural and urban employment.
(iii) If the total project cost submitted by the borrower for First/Second financial
assistance under the scheme exceeds the respective limits admissible for subsidy,
the balance amount may be considered for financing without any Government
subsidy.
(iv) EDP Training: At least 10 Days (for offline mode)/ 60 hours (for online mode)
under Entrepreneurship Development Programme (EDP) / Skill Development
Programme SDP) / Entrepreneurship cum Skill Development Programme (ESDP) or
Vocational Training (VT) to be completed by the applicant under the scheme.
(v) All the areas, irrespective of their population, falling under Panchayati Raj
Institutions will be accounted under rural areas, whereas areas falling under
Municipality to be treated as urban areas.
Nature of assistance: The maximum cost of the project/unit admissible in

manufacturing sector is ₹ 25 lakhs and in the business/service sector, it is ₹ 10
lakhs.
Categories of Beneficiary’s Rate of subsidy under PMEGP (of project cost) Area
(location of project/unit) General category 15%(Urban), 25%(Rural), Special
25%(Urban), 35%(Rural) (including SC/ ST/ OBC/ Minorities/Women, Ex-
servicemen, Physically handicapped, NER, Hill and Border areas, etc.)
The balance amount of the total project cost will be provided by the banks in the form
of term loan and working capital.

80
1) The maximum cost of the project/unit admissible for Margin Money subsidy
under Manufacturing sector is Rs.50 Iakhs.
under Business/Service sector is Rs.20 Iakhs.
3) The balance amount (excluding the own contribution) of the total project cost
will be provided by Banks.
4) If the total project cost exceeds Rs.50 lakhs or Rs.20 lakhs for Manufacturing
and Service/Business sector respectively, the balance amount may be
provided by Banks without any Government subsidy.
Second financial assistance to existing PMEGP / Mudra borrowers
under Manufacturing sector for upgradation is Rs.1.00 Crore. Maximum
subsidy would be Rs.15 lakh (Rs.20 lakh for NER and Hill States).
under Business/Service sector for upgradation is Rs.25 lakh. Maximum
subsidy would be Rs.3.75 lakh (Rs.5 lakh for NER and Hill States).
3) If the total project cost exceeds, the balance amount maybe provided by banks
without any Government subsidy.
Mudra Card
✓ To facilitate WC transactions
✓ RUPAY debit card, Per day Limit Rs.25000/-
✓ Insurance coverage – Rs. 1 Lakh
✓ No charge for issuance
✓ Limit can be fixed 20% to 100%
Star Laghu Udyami Samekit Loan: The then existing Samekit Loan scheme was
modified and now a composite loan in the form of demand loan and/or term loan is
provided to all Micro & Small Entrepreneurs at a margin of 15% with prescribed
ceilings for the quantum of Bank finance varying as per location of the unit. As per
scheme before modification, Metro area entrepreneurs were excluded from the
scheme and repayment period allowed was maximum 36 months. Now, it could be
up to 60 months.
The maximum quantum of loan:
For units located in Maximum quantum
Rural Areas Rs. 5,00,000/-
Semi-urban Areas Rs 10,00,000/-
Urban Areas Rs. 50,00,000/-
Metro Areas Rs. 100,00,000/-
With special approval of ZM, Branches can grant up to Rs. 100 Lakhs. CGTMSE cover
has been made mandatory under the scheme. Bank considers Composite Loan under
this scheme for the purpose of investment as well as working capital. (HOBC 104/58
dated 10.08.2010)

81
Star MSME Demand Term Loan:
This is a scheme which is very much on par with Star Laghu Udyami Samekit
Loan. Under the MSE Demand/Term Loan scheme, demand loan and term loan
can be considered separately for purchase of plant, machinery, equipment, and
other movable assets, BUT NOT FOR WORKING CAPITAL REQUIREMENTS, at
15% margin with prescribed ceilings depending upon the location of the unit,
maximum being Rs. 100 Lakhs in Metro areas and Rs. 5 Lakhs in rural areas Rs.
50 lakh in urban and Rs. 10 lakh in semi urban. CGTMSE cover has been made
mandatory for advances under the scheme. (HOBC 104/158 dated 10.08.2010).
Star Priyadarshini Yojana :-
The scheme is specially designed for women entrepreneurs for purchase of

equipment, machinery, vehicle, furniture and fixture etc., as well as for their
working capital requirements. Under this scheme concession of 0.50% for loan
up to Rs. 50,000/ and 1% for loan above Rs. 50,000/ is extended to the women
entrepreneurs in applicable rate of interest. There is no upper ceiling for the loan
amount. Women enterprises where women entrepreneurs hold not less than 51%
of financial holding are also covered under the scheme. (HOBC 101I25 dated
21.05.2007).
Star SME Liquid Plus:
The product is formulated for entrepreneurs who are engaged in business
for a period of at least 3 years and whose audited financials are in place. The unit
should be profit marking for last 2 years. They can avail term loan for purchase of
machineries, equipment, for preliminary expenses, for R&D activity, marketing and
advertising expenses, etc.,against unencumbered value of their property. The
minimum and maximum advance facilities available under the scheme are Rs. 10
Lakhs and Rs. 5OO Lakhs, respectively. Amount of loan will be assessed on the basis
of 50% of unencumbered value of property offered or 75% of requirement whichever
is lesser. (HOBC 104/112 dated 13.01.2011).
Star SME Auto Express:

Under the scheme term loan is extended to individuals, Proprietary /
Partnership firms, limited companies, Trusts and Societies for purchase of new
Transport Vehicles, to be used for delivering the products, services. Educational
Institutions too can avail finance under the scheme for plying of students. Maximum
limit is presently Rs. 500 lakhs. Margin should be minimum 20% (HOBC 104/129
dated 13.01.2011)
Star SME Contractor Credit Line:

It is designed to meet working capital requirements of established contractors,
engaged in business for past 3 years, having audited financials in place. Finance
can be availed in form of Cash Credit, Bank Guarantee, Letter of Credit, etc., with
minimum of Rs. 10 Lakhs & maximum of Rs. 500 Lakhs. Appraisal will be on 30% of
average of last 2 years turnover of which 2/3 should be fund based & 1/3 to be non-
fund based. (HOBC 104/129 dated 13.01.2011)

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Star SME Education Plus:-
Approved educational institutions i.e. Universities, Colleges and Schools with 3
years audited financials and record of profit making for at least continuous 2 years
can avail Term loan for Construction, Renovation, Repair of building, and for
purchase of computers, equipment, furniture, etc. New institutions can also be
considered on projected basis. The minimum and maximum loan which can be
granted under the scheme is Rs. 10 Lakhs and Rs. 500 Lakhs, respectively. Margin
should be minimum 20%. Term loan to be repaid in maximum 8 years inclusive of
initial moratorium of 12 to 18 months. Periodicity of instalment to be determined on
the basis of cash flow (HOBC 104/129 dated 13.01.2011).
BOI STAR Vyapar
In order to derive credit growth under MSME Sector Lending and with a
view to targeting this segment, a new scheme for financing Retail Traders as well as
whole sale traders to meet their working capital requirements is devised. The extent
of finance under the scheme is capped at Rs. 1000 Lakhs (Minimum Rs. 10 Lakhs)
Maximum Rs.500 lakh for Micro & Small Enterprises and Rs. 1000 lakhs for Medium
Enterprises. The advance under the scheme will, in addition to the Principal
Security of stock and or book debt, be collaterally secured by tangible security
(mortgage of immovable property and/or liquid security) having market value of
minimum of 110% of Limit availed. The Unique Selling Proposition (USP) of the
scheme is the offer of lower Rate of Interest, based on the market value of collateral
security. Where loan is given only against book debts maximum amount is Rs.5
Crores (for medium enterprises) and Rs. 2.5 Crores for MSE. Where it is combined
with stock and book debt, Limit against book debt should not exceed 50% of total
limit. Retail trade is now covered under CGTMSE scheme. The ROI will move
proportionately upward or downward according to the market value of security, with
a provision for topping up the security margin, i.e., higher the value of collateral,
lower will be the rate of interest. Minimum 25% margin is required against stock and
book debts (HOBC106I127 dated 17.11.2012; Circular Letter No. 2012-13I223 dated
06.12.2012 & 109/217 dated 03.03.2016).
BOI STAR DOCTOR PLUS:
The “BOI STAR DOCTOR PLUS” scheme envisages extending credit facilities
to qualified RMPs from the streams, MBBS, BHMS, BDS, BAMS, BUMS, BPT & BOT.
The credit facility is extended for any bona-fide purpose relating to medical
profession, like, setting up new clinic, purchase of equipment, purchase of vehicle,
expansion / upgradation, modernization of existing clinics, etc. The scheme has
proposed no upper limit for consideration of term facility for construction of new /
renovation of existing hospitals, clinics, laboratories, etc., and purchase of
equipment related to the profession, subject to obtaining stipulated margin. However,
maximum quantum of loan is fixed at Rs.100 Lakhs for purchase of vehicles
(ambulance, vans and other utility vehicles) & Rs. 100 Lakhs by way of clean working
capital facility. The scheme has other attractive features with regard to softer ROI
and not too stringent a requirement of collateral security. Up to Rs. 1 Crore may
be covered under CGTMSE (if eligible) and Rs.1 Crore to Rs.10 Crores no
collateral to be obtained and above Rs. 10 Crore, minimum 20% collateral is
required. (HOBC107/154 dated 06.11.2013 & HOBC 110/150 dated 09.11.2016)

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Loan against TDR for business purpose:
Advance availed for business / Commercial purposes even against cash
collaterals like TDRs/NSCs etc., can be classified under MSME sector provided
borrower/firm/company is/are eligible for such classification as per MSMED Act
2006 in terms of investment made in P&MI Equipment. In such cases the account
should be classified as per the occupation of the borrower and the advance is used
for business/productive purpose. Branch must keep the records along with the
documents evidencing eligibility of the advance as per MSMED Act 2006.
Star Channel Credit:

Our Bank had introduced credit product 'Star Channel Credit' (SCC) for
financing under invoice bill discounting scheme to vendors / dealers of
manufacturers, wh o le sa le rs , d ist r ib u t o rs , etc. vide HOBC No. 98/49 dated
23.06.2004. The main corporate should have account/facilities with us. The scheme
has been revamped vide the new circular in 2014. Amendments were made vide
HOBC 100/89 dated 01.09.2006, Circular letter No. 2006-07I 106 dated
27.12.2006 & HOBC 100I191 dated 03.03.2007, HO BC 108/54 date
12.06.2014. (Latest circular No HOBC 112/125 dated 25-10-2018).
Under the scheme the facility is extended to vendor/suppliers and dealers of

sponsoring corporates. The quantum for vendor is assessed at 20% of supplies to
corporate and for dealer based on turnover method/MPFB. The finance is in the
nature of invoice/bill discounting. The tenor of the facility is maximum 90 days, No
Grace Period is allowed. For vendor/supplier credit rating may be dispensed with for
the dealer it should be carried out.
BOI ENERGY SAVER for MSME:

To meet funding requirement for modernization / up gradation / installation
/ adapting energy saving machinery and equipment, which results in reduction of fuel
cost, make it eco-friendly, minimize emission levels. Max. Rs. 100 lakhs, Margin
15%. All eligible activity will be covered under CGTMSE. The Dealers in Energy
Saving Devices are not eligible under the scheme.

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SPECIAL SCHEMES FOR FINANCING SRTOS/EQUIPMENT HIRERS UNDER
MOU WITH ORIGINAL EQUIPMENT MANUFACTURERS (OEM)
(HOBC111/56 Dt 12.07.2017 & 110/204 Dt 19.01.2017)
Purpose of Advance-
To finance commercial vehicles/earthmoving equipment/excavators for commercial
use and/or captive use.
Eligibility/Entry level norms:
For limits up to Rs.100 lacs for SRTO borrowers, scoring sheet is applicable and
entry level is 20 marks. For SRTOs with limits above Rs.100 lacs and Equipment
Hirers irrespective of limit, appropriate Rating Model to be used and entry level as
per extant guidelines will be applicable.(In case of Partnership firms/Private Limited
Companies Branches can also use SBS Model for rating below Rs 100 lakh)Items to
be financed Cost of equipment/“On the road" cost of vehicle (to include cost of
chassis, body, tools, insurance for the loan tenure, registration cost, road tax,
accessories and AMC)
Margin: 15% of the project cost as given under Items to be financed. In
exceptional cases, like in case of large fleet owners with long standing in
the industry, margin lower than 15% can be allowed by GM-NBG, GM, HO and
above.
Security
Primary Hypothecation of vehicle/Equipment
(Registration of Bank's charge with the RTO and in the
RC Book in the case of vehicles)
Collateral 1. Wherever the account is covered by CGTMSE
guarantee, no third party guarantee/collateral security to
be obtained.
2. Where CGTMSE cover is not available, suitable third
party guarantee and/or collateral security may be
obtained
Repayment:
Up to 7 years including moratorium of 6 month in EMI’s with repayment. Holiday
of 3 months during rainy/lean season every year may be considered in the original
proposal within the original tenor of the term loan.
Appraisal: Min DSCR- 1.25
Small Business:
Eligibility: Individuals or firms providing any service (other than professional
service) Example: Cycle hiring shops, hair dressing saloons, small lunch homes,
launderers, tea-stalls, restaurants and hotels, beauty parlours, sweetmeat shops,
tent house, caters etc.
Purpose:
o Purchase of necessary equipment’s, equipment such as furniture and
fixtures directly related to the profession/business.
o For purchase of equipment and other fixed assets. (The original cost price
of equipment should not exceed Rs. 200 Lakhs for micro and small
enterprises and Rs. 500 Lakh for medium enterprises.)
o Accounts covered under Micro and Small enterprises are classified under
Priority Sector Advances.
O For working capital needs as per need.

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Loan Amount: Need-based limit without any ceiling for working capital limits and
term loan subject to total investment ceiling as stated above
Margin:
For loans up to Rs. 25,000/- NIL

For loans above Rs. 25,000/- 25%
Rate of Interest: as applicable from time to time
Security
 Limit up to Rs. 25,000/- Hypothecation of assets acquired out of Bank
Finance
• Limit above Rs. 25,000/- up to Rs. 200 Lakh, no collateral / third party
guarantee if CGTMSE guarantee cover available.
Repayment: Working capital advances are normally repayable on demand.

However for the convenience of the borrower, repayment period not exceeding 3
years may be granted. Term loan is repayable over a max. period of 10 years.
Professional & Self-Employed Persons

Individuals or all the members of the firm who have undergone
degree/diploma from any institution, etc. recognized by the Government or those
who are technically qualified, skilled or have adequate experience. Examples:
Chartered/Cost Accountants, Practicing Company Secretaries Lawyers (or)
Solicitors, Architects, Engineers, Surveyors, medical practitioners, Construction
contractors or management Consultants or to a person trained in any other art
or craft who holds either
a degree or diploma from any institutions established, aided or recognized by
Government or to a persons who is considered by the bank as technically qualified
or skilled in the field in which he is employed for example mechanics, electrician,
plumber, carpenter, gold smith, ironsmith etc.
Credits for the purpose of purchasing equipment, acquisition of premises

(strictly for business) and tools to practicing company secretaries who are not in the
regular employment of any employer.
Financial assistance for running ‘Health Centre’ by an individual who is not
a doctor, but has received some formal training about the use of various
instruments of physical exercises.
Preference may be given by banks to financing professionals like doctors,
etc., who are carrying on their profession in rural or semi-urban areas. The term also
includes firms and joint ventures of such Professional and Self-employed persons.
This category will include all advances granted by the bank under special schemes,
if any, introduced for the purpose.

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Purpose
 Loans for purchase of furniture, fixtures, etc. directly related to
the profession or business and also for repairing or renovating existing
equipment and/or acquiring and Repairing business premises or for
purchasing tools related to the profession (motor vehicles are
not considered only for Medical Practitioners)
 For acquisition of premises on rental/ownership basis. Such limits
should be secured by Mortgage.
 For working capital needs.
 For professionals other than doctors, loan for purchase of vehicles

cannot be granted under Priority sector. They will be considered only
under C & IC sector.
Amount of Loan
Need-based limit subject to complying with ceiling criterion of original
investment in equipment. In case of Micro enterprises maximum original investment
in equipment not to exceed Rs. 10 Lakh and for Small enterprises it can be between
Rs. 10 Lakh to Rs. 200 Lakh. Micro and Small enterprises shall be covered under
priority sector. If the original investment is more than Rs. 200 Lakh but not exceeding
Rs. 500 Lakh account will be classified under Medium enterprise.
Margin:
o For loans up-to Rs. 25,000/- - NIL
o For loans above Rs. 25,000/- -20% in rural/semi-urban/specified backward
areas and 25% in others.
Rate of Interest: As advised by Bank from time to time.
Security:
 Up to Rs. 25,000/- Pledge/Hypothecation/Mortgage of assets acquired
out of Bank finance.
 Limit above Rs. 25,000/- Rs 200 Lakh –No collateral security / third
party guarantee if account eligible for CGTMSE guarantees cover.
Retail Trade
The Scheme will apply to individuals, firms (proprietary / partnership), fair price
shops, consumer co-operative stores engaged/intending to engage in retail trading
of various commodities such as textile, provisions, medicines and cosmetics items,
durable goods and perishable commodities such as meat, vegetables, fruits, milk etc.
The persons intending to start retail trading activity should have some experience in
the line. The condition regarding experience may be waived at the discretion of the
sanctioning authority if he is satisfied that the person is capable of managing the
activity successfully.
Purpose:
Advances under the Scheme may be granted to meet the genuine credit needs only
of the trader to hold and sell goods. Advances may also be considered for acquisition
of Capital Assets and for ancillary equipment like refrigerator, accounting machine,
furnishing/renovating the shop etc.

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Type of Advance:
Advances under the Scheme may be granted by way of cash credit/overdraft.
If, in the opinion of the sanctioning authority, the applicant does not need a revolving
facility for his working capital needs, then a demand loan should be granted.
Quantum of advance:
There is no ceiling on quantum of advance that may be sanctioned to fair price

shops or consumer co-operative stores. Need-based finance may be sanctioned
depending upon the income generation and repayment capacity of the borrower.
Security and Third Party Guarantee: Credit Limit & Security-

Credit limit up to & inclusive of Rs 25,000/-- Hypothecation / Pledge / Mortgage
of assets created out of bank finance Credit limit over Rs 25,000/- & up to Rs. 100
Lakhs - as stated above plus CGTMSE Cover Credit limit over Rs. 100
Lakhs -Hypothecation/Pledge/Mortgage of assets created out of bank finance
and adequate collateral security and /or third party guarantee to be obtained to
strengthen the advance.
In case of advances to retail traders for acquisition of premises, equitable
mortgage of premises acquired with Bank finance should be taken. In the case of
premises acquired from a co-operative housing society, share certificates and other
relevant documents evidencing purchase of premises should be deposited with the
Bank for creating equitable mortgage of premises. The Bank’s lien on the premises
should be registered with the co-operative society.
Margin: Credit Limit & Margin-
 Credit limit up to & inclusive of Rs 25,000/- NIL (irrespective of location
of unit)
 Credit limit over Rs 25,000/- 20% in rural/semi-urban/centrally notified
backward areas. 25% in other areas.
Rate of Interest:
Interest may be charged at applicable rates as advised by the Bank from time to time.
Disbursement
The Loan amount should be disbursed directly to the manufacturer/
dealer/supplier against proper bills/receipts. However, with a view to ensuring
safe delivery of the assets, it is suggested that the demand draft/pay order drawn in
favour of the supplier may be handed over to the borrower against his
acknowledgement and an undertaking may also be obtained from the borrower that
he will duly deliver the draft to the supplier.
Insurance:
The assets charged to the Bank should be fully insured against all risks and Bank
mortgage clause to be incorporated in the insurance policy.

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Waiver of Insurance:
Waiver of insurance may be considered for credit limit not exceeding Rs. 25,000/-
The Branch Manager may consider such waiver provided sanction of credit limit falls
within his delegated power. Care should be taken to see that the security charged to
the bank is invariably insured in cases where it is so required by law.
Repayment:
Working capital advances granted by way of demand loans should be repaid in
monthly/quarterly or more frequent instalments spread over a period of less than 3
years, inclusive of initial moratorium of three months. Branches may consider
stipulating repayment in Equated Monthly Instalments.
Review
Branches need not to prepare separate proposals/statements in lieu of proposals
for the review of accounts with credit limit of Rs. 500,000/- and less. These accounts
will be treated as reviewed as on the date of completion of credit inspection of the
branch by Officials deputed by the Zonal Office for that purpose. All other advances
with credit limits over Rs. 500,000/- should be reviewed as per applicable format.
Stand-up India Scheme: (HO BC No. 110/51 dated 27.05.2016)
To promote entrepreneurship at grass root level for economic empowerment
and job creation for SC / ST / and/or Women entrepreneurs above 18 years
of age. In case of non-individual enterprises at least 51% of the shareholding and
controlling stake should be held by either an SC/ST or Woman entrepreneur.
Eligibility Criteria:-
 SC/ST and/or woman entrepreneurs, above 18 yrs of age
 Loans to Greenfield projects. Green field signifies the first time venture of the
beneficiary in the manufacturing or services or trading sector including activities
allied to agriculture.
 Borrower should not be in default to any Bank/FI
Security - Besides primary security, the loan amount be secured by collateral
security or guarantee of Credit Guarantee Fund Scheme for Stand-Up India Loans
(CGSSI) BC 111/38 Dtd. 15-06-2017)
Repayment-The loan is repayable in 84 months with maximum moratorium
period of 18 months. The Scheme envisages min 15% margin money.
For Working capital up-to Rs. 10 lakh, the same may be sanctioned by way of
overdraft. Rupay Debit card to be issued for convenience of the borrower.
Working Capital limit above Rs.10 lakh to be sanctioned by way of Cash Credit
limit. The portal (www.standupmitra.in) provides information to a potential
borrower on various kinds of handholding support from different agencies and
also provides a window to get in touch with Banks for availing loans
➢ The Applicant first clicks to 'Register' and answers to a few short
questions on the Registration Page of the portal.
➢ Based on the response, the Applicant would be classified as a Trainee
Borrower or Ready Borrower.
➢ Applicant would also be given feedback on his/her eligibility for Stand-Up
India loan.

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Credit Guarantee Scheme for Stand-Up India (CGSSI)
(BC 111/38 dated 19.06.2017)
To guarantee credit facilities of over Rs. 10 lakh & up-to Rs. 100 lakh under
Stand Up India Scheme.
Guarantee Cover
To the extent of 80% of the amount in default for credit facility above Rs. 10 lakh
and up-to Rs. 50 lakh, subject to a maximum of Rs. 40 lakh. For credit facility above
Rs. 50 lakh and up-to Rs.100 lakh - Rs. 40 lakh plus 50% of amount in default above
Rs. 50 lakh subject to overall ceiling of Rs. 65 lakh of the amount in default.
Guarantee Tenor –
Term loan - Loan period as per sanction proposal.
Working Capital - 12 months from account opening date, which will be updated
every year
GUARANTEE FEE -
Presently Standard Basic Rate of Guarantee Fees is 0.85% of Sanction Limit.
Further, The Guarantee Fee on Differential Rates will be based on NPA % and
Claim pay-out ratio of Bank, as per the existing database of CGTMSE and in
accordance with the Circular No. 107/2015-16 dated January 28, 2016 issued by
CGTMSE.
For NPA accounts fee to be paid till lodgement of claim for such accounts. In
case of Non-payment of Guarantee Fee within the stipulated time, liability of the
CGSSI would lapse.
Ineligible cases
1. Facilities already secured by DICGC or other government

guaranteed schemes.
2. Credit facility sanctioned against collateral security and I or third party
guarantee
3. Credit facility sanctioned which is not conforming to the Stand Up India
Scheme
Claims
Within a maximum period of two years from the date of NPA, if NPA is
after the lock-in period (lock-in period of 18 months from the date of commencement
of guarantee) or within two years of lock in period.
Account has been recalled and the recovery proceedings have been initiated.
If claim is in order, CGSSI shall pay 75 per cent of the guaranteed
amount within 30 days. Balance 25 % will be paid on conclusion of r e c o v e r y
proceedings. The Trust shall pay to the Bank interest at the prevailing Bank
Rate for the period of delay beyond 30 days.
Bank to use SARFAESI and the amount realized from the sale of such assets
or otherwise shall first be credited in full by the Bank to the Trust.
Bank to refund the claim released by the CGSSI together with penal interest
at the rate of 4% above the prevailing Bank Rate if there is any delay beyond 30
days.

90
Ease of MSME Finance: MUDRA franchise / dealers / Aggregators Scheme
(HO BC 112/74 dated 27-08-2018)
SOP is circulated for financing to franchise / dealers / aggregators
identified by the Corporate and a common corporate specific product will be framed
(within the ambit of the PMMY). Approving authority rests with the EDLCC. A MOU
with the Corporate will be executed. Delegation to sanction individual proposal will
be as per normal Delegation of Powers.
STAR START UP SCHEME (BC No. 111/28 dated 25.05.2017)
Start Up means an entity, incorporated or registered in India existence should be less

than five years, with annual turnover not exceeding Rs 25 crore in any preceding
financial year, working towards innovation, development, deployment or
commercialization of new products, processes or services driven by technology or
intellectual proper-ty. Provided that such entity is not formed by splitting up or
reconstruction of a business already in existence .
The unit must be eligible and certified as start up by the concerned government
authority as per Start Up India scheme.
The constitution of the unit should be private limited company (under the companies
act 2013), Registered Partnership firm (under the Indian Partnership act 1932) and
limited liability Partnership (under the limited liability partnership act 2008).
Margin - T/L (25%), W/C (10%),
Quantum - Min Rs.10 Lakh to Max. Rs. 5 Crores
Guarantee cover: The facility should be covered under credit guarantee cover for
start Ups or CGTMSE as per applicability.
Repayment - For Term Loan-120 Months, including moratorium of 24 Months.
For Working Capital- 120months subject to annual renewal.
Seed capital, Venture capital investment can be taken as margin.
Star Weaver Mudra Scheme:
(Circular Letter No. 2016-17-165 dated 30.11.2016
To provide timely and adequate assistance to weavers to meet their credit

requirements.
New and existing handloom weavers involved in weaving activity also eligible.
Maximum Loan Rs. 5 lakh. Margin 20% of Project Cost. Ministry of
Textile, Govt. of India to bear margin @ 20% of project cost with max of Rs.
10,000.00. Balance margin to be borne by the borrower.
Term Loan repayable within three to five years over and above the gestation
period of six months.
CGTMSE fee will be paid by Ministry of Textile (Max for three years). Interest subsidy
will be limited to 6%, difference between actual interest and 6% to be paid by the
borrower. Interest subvention is capped at 7 % (max for 3 years from the date of first
disbursement).
Security: Hypothecation of assets & loans to be covered under CGFMU/CGTMSE.

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Subsidy Scheme under Technology and Quality Upgradation (TEQUP)
Any MSME unit who has filed an Entrepreneurial Memorandum with
the authority or who has erstwhile DIC registration, subject to:-
The MSME unit should have been audited for energy consumption and detail
project report on EETs, prepared by a qualified Energy Manager \ Auditor.
Unit must lead to at least 15% reduction in energy consumption. Investment
in new plant, machinery and equipment should focused on enhancing
energy efficiency.
The unit should not be covered under any other subsidy scheme. Sanction of
Subsidy shall be done after loan disbursement. Up to 2 years, after completion, unit
should submit operational and performance details to the branch.
Subsidy - Up to 25% of the project cost, Max. Rs. 10 Lakhs. Subsidy

will be adjusted against the last principal instalments of the loan account.
CGFSSD - CREDIT GUARANTEE FUND SCHEME FOR SKILL DEVELOPMENT

(HO BC 111/76 dated 31-7-2017)
The cover under this is mandatory for all loans granted under PM Kaushal
Rin Yojana (Skill Loans). The Fund is being operated by NCGTC – National Credit
Guarantee Trust Company, a wholly GOI owned company.
Salient features of CGFSSD are as under:

1. Date of Notification : 20-11-2015
2. Coverage : New loans sanctioned on or after 15-07-2016 without any

collateral security / third party guarantee.
3. Loan Limit: Min. Rs. 5000/- and Max. 150,000/-.
4. Interest Rate: Max. Interest rate not to exceed 1.50% over Base Rate /
MCLR of the Bank.
5. Guarantee Cover : 75% of the amount in default, which will be settled on

invocation of the guarantee, in one go, after the Bank submit a
certificate stating to the effect that all avenues of recovering the
amount in default have been exhausted; that there is no further scope
for recovering the default amount and that the claim is found in order and
complete in all respects.
6. Guarantee Fee : 0.50% p.a. of the outstanding portfolio balance of Skill

Loans to be borne by the Bank.
7. Mode of payment of Guarantee Fee: Online through a payment Gateway.

Please refer to HO BC 111/76 dated 31-7-2017 for detailed information

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National Skill Development Corporation (NSDC)-Prime Minister’
Kaushal Vikas Yojana Programme (PMKVY) - (BC 109/175 dated.
11.12.2015 and BC 109/224 dtd. 10.03.2016)
• NSDC was incorporated as a Sec 25 company under Companies Act
(1956) (NEW Sec 8) was initially set up under the Prime Minister’s National
Council on Skill Development with the primary mandate of
enhancing and supporting Private Sector initiatives for Skill Development
objectives, it has both funding and non-funding proposals to further its
objectives.
• NSDC signed a MOU with BOI on 30.12.2013 and renewed
on
03.08.2015 for enabling opening of bank accounts of candidates. BOI
launched PMKVY on line portal for opening of accounts of
students/Trainees under the scheme. Existing accounts holders of BOI can
also be covered under the scheme.
URL is http://ola.bankofindia.com/PMKVY/WPPages/TrainingPartner.aspx
▪ On line a/c opening form is available also on our website Under “Apply &
track Online Option PMKVYscheme
▪ Training partner should have a corporate CD a/c with us should sign Letter
cum undertaking & Standard Operating Procedure duly signed along with KYC
documents
▪ Branch on receipt of the same should confirm the same by email to
[email protected]
▪ HO on receipt of above from branch will create Unique ID/Code
for Training partner for providing access to online portal for filling up a/c
opening form.
▪ If student/trainee is in another location other than parent branch a
manual a/c to be opened under scheme 105/106 with same Cust ID
charge code as NSDC for all accounts under this scheme.
▪ For minor account to be opened with parent/natural guardian on
E or S basis After data entry, student to visit branch with A/c opening
form, Debit Mandate Letter, Aadhar card etc.
▪ The documents to be signed before officials at branch.
▪ Branch to check Aadhar and amount in Mandate and A/c opening
form are same& KYC guidelines
▪ Funds received from NSDC will be credited to trainees account
from Nodal Branch (CGO Complex Br) Restriction should be put for
withdrawal in the account
▪ Once funds are credited to trainee’s a/c it should be debited and training
partners account to be credited. All fund transfer will be handled
centrally by CGO complex br.
▪ A charge of 1.50% (Min Rs.150) + service tax to be recovered
from amount to be paid to training partners.
▪ RuPay card with Rs. 1 lakh personal accident Insurance cover to
be issued.

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MSME Classification:
Direct Finance
1 Loans for Food & Agro processing - Agriculture
2 Loans to dealers/sellers of fertilizers, pesticides, seeds, cattle feed,
poultry feed, agricultural implements - MSME (Services)
3 All loans sanctioned to KVIC sector - MSME Micro
4 Export credit to MSE units for export of goods/services produced/rendered by
them – MSME
Indirect Finance:
1. Loans to cooperatives of producers & persons involved in assisting the
decentralized sector in supply of inputs to and marketing of produce of
artisans, village and cottage industries- MSME
2. Loans sanctioned by Banks to MFIs (Micro Finance Institutions) for on
lending to MSE sector - MSME
Udyam Mitra Portal by SIDBI:

A universal portal for financial and non-financial sector is designed by
SIDBI at https://www.udyamimitra.in where support is being given for availing loans
in easy steps for Business Enterprises and MSMEs, New unit or Existing unit.
This portal is helpful in respect of fulfilling all types of needs under Manufacturing /
Services / Trading (Stand-Up India & Mudra). This portal supports providing Loan
applications / check lists for MUDRA Loans – Shishu, Kishore as well as Tarun
apart from Stand-Up India Loans and other MSME Loans to the needy
entrepreneurs.
Online application can be submitted by the beneficiaries on this portal.
The portal is extending support to the enterprises for:
a. Business loan
b. Project / Working Capital
c. Modernisation
d. Expansion
e. Diversification
The entrepreneurs can use the portal for:
a. Application filling
b. Project report preparation
c. Financial Training
d. Margin money / subsidy
e. Work shed
f. Vocational skilling
g. Entrepreneur Development Programme
h. Mentoring

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DEBT RESTRUCTURING MECHANISM & REHABILITATION POLICY FOR
SMALL & MEDIUM ENTERPRISES (SMEs) (HOBC 110/69 dtd. 11-7-2016 and
HO BC 111/143 dated 17.06.2017):
Objective:
To ensure timely and transparent mechanism for restructuring the debts of
viable SMEs facing internal/external problems, outside the purview of BIFR, DRT,
and other legal proceedings. Rehabilitating viable sick SMEs to minimize the losses
to the creditors (the Bank) and other stakeholders through an orderly, coordinated
and pre-emptive restructuring program or rehabilitation package.
Eligibility
Criteria:
➢ Standard & Substandard or doubtful which are Viable or Potentially Viable
units of corporate & Non corporate SMEs with outstanding of FB & NFB
up-
to Rs.10 Crores under multiple/consortium banking arrangement..
➢ BIFR cases and cases where operating agencies are appointed.
➢ Accounts involving wilful defaults, fraud, malfeasance and Loss assets will
not be eligible.
➢ Restructuring may be undertaken where funds diverted earlier but brought
back into the business and/or there is change of management and/or where
the diversion is intra company, Diversion in intra-/ inter-company taken
place are eligible provided it is rectified in reasonable time.
Viability Criteria
Viability and the ability to service the debt after restructuring shall be the
important criteria for determining eligible cases i.e. servicing the debt including
restructured debt during concession period (maximum 7 yrs.), and also after
concession package is over servicing debt without help of any more concessions.
The repayment period for restructured (past) debts should not exceed 10 years from
the date of implementation of the package. Average DSCR should be 1.25:1 over
the restructuring period with annual DSCR not less than 1:1.
Time:
Restructuring/Rehabilitation package should be done and implemented within a
maximum period of 120 days from the date of submission of the borrower’s request.
Repeated Restructuring:
Normally restructuring is done for the first time. However further restructuring
may be necessitated in some cases of genuine difficulties. However, the special
dispensation for asset classification enumerated hereinafter in
paragraph (12) would be available only when the restructuring is done for
the first time.

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Holding On Operations:
While identifying and implementing the restructuring/rehabilitation
package, “holding on operation” may be considered for a period of 6 months
(which can be further approved for six months by the normal delegate, subject to
reporting to Sanctioning authority. In exceptional cases with proper justification, it
may be considered beyond 12 months by the respective regular Sanctioning
Authority, minimum EDLCC) with a cut back of Minimum 5% towards reduction in
overdues and to allow operations within existing outstanding and exposure level.
Cutback below 5%, it would be considered by EDLCC & above only.
Holding on Operations essentially implies:
➢ Continuous operations in the account, like opening fresh LCs to the extent
of reduction in devolvement, even if devolvement is not fully cleared,Roll over
of LC opened by the Bank, allowing operations in the cash credit account
despite interest/forced debits not being cleared, fall in drawing power etc.
➢ Renewal of BGs (not fresh guarantee) should also be allowed subject to
recovery of normal charges and availability of margin as per sanction
terms. Holding on Operations within the overall Sanctioned
Limits may be permitted by the level of Branch Manager of chief
manager level and above subject to report to the next higher
authority within 10 days.
DIFFERENTIAL RATE OF INTEREST (DRI) SCHEME:

DRI Scheme was introduced by Govt. of India in March 1972 to provide
finance at concessional rates of interest to low income groups of people. The
scheme is operative throughout the country. Banks should lend a minimum of 1%of
the aggregate advances of the previous year under this scheme. 40% of this credit
should flow to borrowers belonging to Scheduled Castes/ Tribes. A
concessional rate of interest at 4.00% p.a. should be charged. Persons who satisfy
the income (Rs. 24000/- per annum in urban or semi-urban areas or Rs. 18000/-
p.a. in rural areas) and land holdings (exceed 1 acre in the case of irrigated land
and 2.5 acres in the case of non-irrigated land) criteria and fall in the category
indicated below will be eligible for the benefits of the scheme:
i. SC, ST and others engaged on a very modest scale, in agricultural
activities.
ii. People who themselves collect or do elementary processing of forest
products and people who themselves collect fodder in difficult areas and
sell them to farmers or traders.
iii. People physically engaged on a modest scale in the fields of cottage and
rural industries and vocations.
iv. Indigent students of merit going in for higher education who do not get
scholarships/maintenance g r a n t s f r o m G o v e r n m e n t or educational
authorities.
v. Physically handicapped persons pursuing a gainful occupation where some
durable equipment and/or continuous supply of raw materials is useful.
vi. Institutions for physically handicapped persons pursuinggainful
occupations where some durable equipment and/or continuous supply
of raw materials is useful.
viii. Orphanages and women’s homes where saleable goods are made for which no
adequate and dependable source of finance exists.

96
viii. These limits are not applicable to borrowers in (f) and (g) categories).
Members of SC/ST are eligible for the loans irrespective of their land
holding provided they satisfy the other criteria”.
ix. Loan under the scheme should not exceed Rs. 15000/- for business
purpose and Rs. 20000/- for a housing. Margin money should not be
insisted upon. Rate of interest will be uniform. The repayment of
principal amount under term loan shall not exceed 5 years, including a
grace period not exceeding 2 years which should be worked out in
each case having regard to the nature of facility of the borrower and
economics of the scheme. The assets purchased with the loan may be
hypothecated to the Bank and in appropriate cases, group guarantees
may be accepted. Insurance waived. If considered necessary, premium
to be debited to branch P/L.
ARTISAN CREDIT CARD (ACC)

To provide adequate and timely assistance to artisans to meet their credit
requirements- both investment needs as well as working capital. Investment
loans for purchase of tools/equipment by way of Demand Loan/term Loan with
appropriate repayment schedule. The scheme would be applicable both in rural
and urban areas.
Eligibility
▪ All existing artisan borrowers of the bank enjoying credit limits up to Rs. 2 Lakh
and having satisfactory dealing with the bank.
▪ All artisans involved in production/manufacturing process.
▪ Preference would be given to artisans registered with
Development
Commissioner (Handicrafts).
▪ Thrust in financing on cluster of artisans and artisans who have joined to form
Self-Help Groups (SHGs)
▪ Beneficiaries of other Government Sponsored Schemes not eligible.
Issue of Cards
A photo Identity Card with sanctioned limit, validity period of credit facility
along-with a passbook incorporating Name, Address, Borrowing Limit, Validity
Period, etc., will be issued.
Credit Limit
Credit limit to be fixed based on assessment of Working Capital requirements
as well as cost of tools and equipment required for carrying out manufacturing
process. For evaluating working capital requirement 25% of anticipated turnover
will be taken into consideration.
Maximum Limit: Rs. 2 Lakh per borrower
Security: Hypothecation of Assets created out of Bank Finance.
Margin
Upto Rs. 25,000/- : NIL
Above Rs.25,000/-: 25-25%
Rate of Interest : As stipulated from time to time.

97
% to
25
%
Validity/Renewal of Limits
Limit valid for 3 years, subject to annual review. Annual review without asking
financial statement from the borrower but based on assessment of performance by
the Bank’s Field officials made in course of field inspections.
NATIONAL EQUITY FUND (NEF) SCHEME
To provide support to entrepreneurs for setting up new projects in tiny/SSI
sector, for undertaking expansion, modernisation technology up gradation and
diversification by existing tiny, SSI and service enterprises and for rehabilitation of
viable sick units in SSI NEF helps the SSI in strengthening their equity base and
thereby improving the acceptability for term financing by banks.
ELIGIBILITY: New projects in tiny and SSI
All new & existing enterprises- In case of service enterprises the assistance under
NEF would be made available only for acquisition of fixed assets Sick units under
Micro & Small enterprises including service enterprises which are potentially
viable.
Project which avail of any margin money or seed capital assistance under the
scheme of central/state govt. is not eligible for assistance Availability or refinance
in respect of term loan for the project from SIDBI is a pre requisite for extending
equity type assistance under the scheme.
PROJECT COST
Project cost should not exceed Rs.50 lakhs in case of new projects. In the
case of existing units and service enterprises, the total outlay including the
proposed outlay on expansion / modernisation / technology up-gradation
/diversification or rehabilitation should not exceed Rs. 50 lakhs.
PROMOTER’S CONTRIBUTION
Minimum 10% of project cost Debt equity ratio: 3:1. However a flexible approach
may be followed in the case of rehabilitation proposals.
NATURE OF ASSISTANCE: Equity type of assistance in the form of soft loan.
AMOUNT OF ASSISTANCE:
To meet the gap in equity as per prescribed debt equity norm after taking into account
promoters’ contribution subject to a maximum of 25% of project cost or Rs. l0 Lakh
project, whichever is lower.
INTEREST:
No interest is charged on soft loan component except service charges of 5% p.a.
SECURITY:
No security including collaterals is to be insisted upon for the soft loan.
Cluster Based Finance (HO BC 112/75 dtd. 27-8-2019)

Objective:
To frame cluster based schemes for providing assistance to a pool of borrowers
engaged in common business activity in a particular geographical area.

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Identification of Cluster:
To be identified as per potential available in the cluster.
Minimum 30 units should be active within the cluster. Cluster may be defined as a
geographical area within a range of say 200 km to 250 km.
All the units in the cluster should have proper backward/forward integration/ linkages
Cluster identified by UNIDO ,Ministry of MSME.
Purpose of Finance:
For meeting the Fund Based (Working Capital / Term Loan) and Non fund based
(BG/LC) Requirements of units/borrowers in a particular cluster.
Nature of Facility: Working Capital, Term Loan and NFB (LC/BG) limits.
Quantum of Finance:
The quantum of finance to an individual borrower in a specific cluster should be
need based and to be assessed as per requirement of business.
Eligibility criterion for individual borrowers under cluster:

All business entities engaged in manufacturing /services and should be classified
under MSME, as per MSMED act. All business entities should have valid GST
Registration, wherever it is applicable.
Security criterion for individual borrowers:

CGTMSE covered accounts:
CGTMSE coverage should be obtained in all eligible accounts.
Coverage under Hybrid Security Product of CGTMSE to be encouraged.
Non CGTMSE Covered accounts:
For Working Capital : Minimum CCR: 0.65
For Term Loan /Composite Loan: Minimum FACR: 1.00
CREDIT FACILITY TO VILLAGE LEVEL ENTERPRENEURS (VLEs)

(HO BC 111\120 Dated 23-10-2017)
Purpose : To provide credit facilities to VLEs acquire the infrastructure for
providing e-Services
Eligibility Criteria: Registered VLEs with CSC-
SPV Type of Facility: Fund Based – Term Loan
Amount of facility: Max. Rs. 1,60,000/-
Margin: 15% of the Project Cost
Rate of Interest: As applicable to Micro Enterprises under MSME from time to
time
Period of Credit: Door to door tenor 36 months
Security:
Primary: Hypothecation of Equipment financed.
Collateral: NIL. Branch to obtain CGFMU cover of NCGTC in all eligible cases
Penal Rate: 2% over the contracted Rate of Interest
Disbursement: Disbursement through Pay order / NEFT / RTGS directly to
Suppliers of the equipment. Branch to follow extant guidelines in this regards.
Repayment: Maximum 36 EMIs with NO MORATORIUM
Insurance: To be insured for the full market value for all the risks as per extant
guidelines of the bank, with bank’s hypothecation clause.

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Inspection: Quarterly in normal case and immediately after default alert.
Security documents: As prescribed by the Bank for the scheme.
Flow chart:
 On the basis of specific Bank branch chosen by the VLE, CSC will issue a
forwarding letter addressed to the Bank branch with all the details of the
 VLE along with all necessary documents and the estimated commission to
be earned by the VLE per month based on past earning.
 On proper scrutiny of the documents and on the basis of estimated earning of
the VLE, branch will sanction loan to the VLE for purchase of equipment.
 On sanction of loan to VLE, branch will advise CSC the details of loan
account number, loan amount, EMI amount, IFSC code and date of
commencement of instalment.
 The forwarding letter issued by the CSC will also contain an undertaking
stating that on intimation by the Branch, it will deduct the monthly
instalment from the Escrow account of the VLE and remit the same as per
details to be provided by the branch.
 In the event of default in payment of EMI, on intimation from the branch,
CSC will facilitate recovery in the account on best effort basis and discontinue
/ cancel the membership of the VLE immediately.
 CSC will maintain ESCROW account of each VLE from which the EMI will
be paid to BOI for crediting made loan amount of VLEs.
Other points:
1. Dealing branches would carry KYC, CIBIL enquiry and other due diligence
of individual VLEs as per Bank’s extant guidelines.
2. In the event of any change in trade terms with the VLEs, the same should
be intimated to the bank immediately by CSC.3. Credit facility would be
sanctioned subject to the condition that the
applicant would be eligible for finance under the Bank’s extant instructions
/ guidelines.
3. Default will take place if the VLEs fail to repay the EMI on the due date.

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Trade Receivables Discounting System (TReDS):
(HO BC 110/170 dated 9-1-2018)
TReDS is an initiative of RBI to facilitate MSME receivable payments from Corporates.
Objective:
To address the critical needs of MSMEs i.e. the twin issues of promptly en-
cashing receivables and eliminating credit risk. TReDS platform of RXIL is expected to
be a catalyst in the growth of MEMEs by bringing in transparency in the business
Eco-system.
TReDS platform enables discounting of invoices / Bills of Exchange of MEME
sellers against large corporates, including Govt. Dept. And PSUs, through an
auction mechanism to ensure prompt realization of trade receivables at competitive
market rates.
TReDS is the first attempt in India to introduce factoring without recourse to
the seller and will help MSME Sellers, not only in quick realization of receivables but
also efficient price discovery.
Eligible entities who can participate in TReDS platform:

The TReDS will provide the platform to bring different participants together
for facilitating uploading, accepting, discounting, trading and settlement of the
invoices / bills of MSMEs. Different participants would be as under:
MSME Suppliers (defines as per MSMED Act, 2006): Supplying goods or
services to Buyers
Buyers: Corporates / Govt. Dept. / PSUs & Others
Financiers: Banks / NBFC Factors.
Who can initiate TReDS Transactions?

Both, the seller and the buyer can initiate TReDS transactions for financing
of trade receivables of MSME Sellers.
When the MSME Seller uploads the invoices and bears the interest cost, it
is termed as “Factoring” i.e. Single Seller – Multiple Buyers.
In case of “Reverse Factoring” i.e. Single Buyer – Multiple Sellers, the Buyer
initiates the transaction and the interest cost is also borne by the Buyer.
On boarding on TReDS Platform:

Bank has on boarded the TReDS platform floated by Receivables Exchange
of India Ltd. (RXIL) and all the customers willing to avail factoring facility from the
bank can upload their invoices on TReDS platform of RXIL.
Key benefits of TReDS to various parties are as under:
All participants:
Automated transparent platform Paperless and hassle free Cost Reduction
Benefits to Sellers:
Competitive price discovery Without recourse to Seller MSMEs have
the right to choose the best bid Payment received on T+1 on successful
auction
No follow-up with the buyers for payment Not dependent on single
financier
Enhanced productivity and efficient liquidity management Widening the
financing options

101
Benefits to Buyers:
Compliant with MSMED Act, 2006 Can negotiate better terms with
MSME Vendors Lower cost of inputs for Buyers Lower administrative
costCan avail extended credit period Competitive Price Discovery
Efficient cash-flow managementEnsure that their vendors are not
strapped for cash / working capital.
Benefits to Financiers:
Banks are eligible for Priority sector lending benefits.
Financiers can rely KYC of TReDS platform.
Acquire new customers at lower cost.
Reduce operational cost.
Rate of interest: ROI is linked to 1M/3M/6M MCLR.
CONTACTLESS MSME LOANS: (HO BC 112/124 dated 25-10-2018)

Contactless Platform is an online digital loan management platform for MSME
borrowers which entails In - Principle sanction of loan without physical contact within
59 minutes. URL for the contactless platform is
www.PSBLOANSIN59MINUTES.COM/boi for use by borrower.
The loans are undertaken without physically contacting the borrower till
sanction or disbursement stage. The solution uses algorithms and techniques to
read complex balance sheet, IT returns and bank statements in a very short span of
time (within 25 to 30 min).The module captures the basic details of the
applicant from documents which are available, through smart analytics.
The Contactless platform is the only platform with majority stake of public
sector entities (Public Sector Banks & SIDB1), it is the only platform that has a
Bankers interface which covers Branch level integrations. The platform has
Integrations with multiple agencies for GST, ITR, Bank Statement analyser, Fraud
Check, Credit Information Bureau check, CGTMSE among others. Our Bank has
on boarded the platform and loan to our proponents /borrowers can be
sanctioned till the in principle stage through the platform. The quantum of loan on
contactless platform will range from Rs 1 lakhs to Rs 500 lakhs. The Platform can
also be utilized for renewal of limits in future. The details of new products uploaded
on the portal are enumerated below:
a) Renewal Product of Normal Working Capital and Term Loan.

b) New Working Capital Product based on One Year ITR.
c) Renewal of Working Capital product based on One Year ITR
d) New Working Capital product based on Presumptive Tax filing/ITR IV The

broad guidelines including Risk rating model for financing under these
products has been detailed under annexure I, II & Ill of HO BC 112/124 dated
25-10-2018.
All our Branches and MSME delivery points should actively participate in
garnering quality business through the portal and ensure meticulous compliance of
the lending guidelines contained in this circular.

102
GUIDELINES FOR CONTACTLESS LOAN:
A. GENERAL GUIDELINES:
Range of Loan: Min. Rs. 1.00 lakhs, Max: Rs. 500.00 lakhs
Constitution of Borrowers: Proprietorship, Partnership & Private Ltd. Co.
Eligible Borrowers:
i) GST Registered should have valid GST registration no.

ii) Income Tax Compliant should have valid ITR (ITR IV filing will not be
accepted by the portal)
Category of Borrowers:
New & existing Business
B. GUIDELINES ON LENDING PARAMETERS:

Financial Parameters
i. Debt Equity Ratio : Maximum 5

ii. Current Ratio : Minimum 1
iii. ISCR : Minimum 1.20
iv. DSCR : Minimum 1.25
v. Turnover trend : Showing an increasing trend
vi. Profitability : Showing an increasing trend
Other Parameters
i) Commercial CIBIL: Satisfactory.
ii) Consumer CIBIL: Satisfactory (in case of proprietor, partner, and director)
iii) No. of Cheque bounced: It is desirable that no. of cheque bounces should
not exceed six in last six months and if it exceeds six proper justification
should be recorded in the proposal.
Repayment
i) Working Capital: 01 Year (Renewal every
year)
ii) Term Loan: Maximum 10 years
Margin: Min. 20% for both Working Capital & Term Loan.
Risk Rating: For Contactless Platform a new Credit Rating model has been devised.
The Rating will run on the contactless platform and the final rating will be available
in the CAM report.

103
Entry Level Norms: 5 (Total Score of risk rating: 64 & Entry level Score: 31)
Processing Fees: 0.50% of the loan amount. Other Charges such as
Documentation, Inspection, and Mortgage if applicable should be recovered as per
policy.
C. OPERATIONAL GUIDELINES:
Due Diligence:
Branch to carry out due diligence of the borrower in all aspects as per Bank's
guidelines:
1. The CAM report contain basic validations of borrower including GST, ITR,
ABS etc.
2. However branches should scrutinize the documents and
ensure correctness of the same.
4. In case of Companies ROC Search report should be obtained before
Sanction.Since detailed CIBIL report is available in the CAM report, separate
CIBIL report need not to be generated.5. Though analysis of balance sheet
is available in the CAM report, branches are required to obtain audited
balance sheet and undertake the analysis and incorporate the same in the
credit appraisal note.
6. Branches should carry out physical inspection and other due diligence of
the borrower as per Bank's policy.
Principal Security:
Hypothecation of Assets created out of Bank's finance.
Collateral Security / CGTMSE coverage
i) Collateral Security, if offered by the borrower during the in principle stage should be
accepted after detailed technical, valuation and acceptability analysis.
ii) CGTMSE coverage may also be obtained, if agreed upon by the borrower during
in principal stage.
Documentation: As per Bank's norms
Delegation: As per Delegation of Power issued by RMD.
Delegation for approving Deviation in Financial Parameters:

In case of deviation in financial parameters from as prescribed under credit policy,
guidelines as per HOBC 109/69 dated 01/07/2015 or any circular issued in future on
subject matter should invariably be followed.*
TAT: Should not exceed 08 working days from the date of in principal sanction.
Sanction or Rejection is to be intimated within stipulated time frame.
Free Code: Branch to incorporate free code 385 in ACM V, free code 3 option in
Finacle.
Others:
1. All Bank's policy and guidelines has to be invariably followed while
considering any proposal from Contactless platform.
2. We have rolled out review at existing limit on the platform. Detailed guidelines
of review product will be issued in due course.
{* 1. In case of proposals on contactless loans, if there is any deviation in DER
(TOL/TNW) beyond the standard norms as per credit policy but within the
maximum permissible relaxation by the board, branch has to seek prior approval from
ZLCC & above as the case may be, for deviation in DER before sanctioning
the proposal (i.e. before according the final approval)
2. In case of ISCR, relaxation in ISCR may be permitted by the sanctioning authority
subject to the reasons / justifications for acceptability of ISCR below norms)

104
Star MSME GST Udyami Loan (ONLINE PSB LOANS IN 59 MIN) –
HO BC 113/103 dtd. 21-08-2019
A new product “Star MSME GST Udyami Loan" (for Working Capital loans
above Rs. 1 Crore up-to Rs. 5 Crores, under MSME) has been uploaded on the
"onlinepsbloans" portal and made live for the use of borrowers/branches.
Presently only working capital loans are made live for loan amount ranging above
Rs. 1 Crore to Rs. 5 Crores. The Term Loan product will be made live in due course
in future.
Important features are as under:
Limit: Above Rs. 1 Crore & up-to Rs. 5 Crores, Presently only WC loans.
Due diligence: Online GST, ITR, Bank statement, Fraud databases, MCA, Bureau
Reports & others to be verified.
Processing: Up-to Rs. 2 Crores under CAPS & above Rs. 2 Crores, manually as
per bank’s policy.
Verification: Site visit (Residence / Unit – both) to be carried out and veracity of
documents to be verified.
Entry Level: CLP CR 1 to CLP CR 5 only.
Credit Rating: Branch to carry out Credit Rating as per SME / other applicable
model. Credit Rating model from Portal is only for in-principle approval. RoI to be
assigned as per internal Credit Rating.
Industry: All (EXCEPT Gems & Jewellery. Carbon emitting Industries, Aviation,
Defence, Real Estate, Power).
Asset Coverage: Min. 100%
Takeover / Multiple Banking Arrangement: NOT ALLOWED

Debt Equity Ratio: Max. 4:1
Current Ratio: Min. 1:1 (for last year)
ISCR: Min. 1.5:1
DSCR: Min. 1.25:1
TOL/TNW: Max. 4:1
Customer Concentration: Less than 20%
No. of cheques bounced: Less than 3 in last one month & less than 6 in last 6
months.
Age of unit & positive profitability history: Min. One year.
Min. CIBIL score (Director / Promoter / Prop.): 700
Comm. CIBIL DPD Max. : 30 days in last ONE year
Repayment of Term Loan: Max 10 years
Margin: Min. 25% for Manufacturing & Min. 30% for Service / Trading units.
CGTSME coverage: Allowed – up-to Max. Rs. 2 Crores
Collateral coverage: Min. 60%
Utilization: Min. 80%
Rate of interest: Mapped with 1 year MCLR along-with BSS (0.30) & CRP as per
Internal Risk Rating. It is to be charged on actual Internal Credit Rating.
Scoring Parameters for psb59minutes:
A Management Risk 12 sub sections With Max. 48 Marks
B Financial Risk 11 sub sections With Max. 44 Marks
C Business Risk 12 sub sections With Max. 48 Marks
TOTAL 35 sub sections With Max. 140 Marks

105
STAR MSME WELCOME OFFER:
(BC 115/139 dt.31.07.2021 & BC 115/284 DT. 28.1.22)
Bank has prepared a list of Most Desirable Accounts (MDAs) presently
banking with other banks and the accounts it lost to other Banks due to concessional
rate of interest offered by them, in the recent past. It was felt that our bank should
also come out with some lucrative offers under MSME to bring these MDAs and Lost
accounts to our fold.
In view of the above, STAR MSME Welcome Offer scheme was launched
In the month of June, 2018. Various concessions in RoI & Processing Fee has
been offered under the scheme. Previously it was based on CIBIL MSME Rank
(CMR), now Commercial Bureau Rank (CBR) for any credit information company has
been introduced in the modification. This scheme is valid upto 30.09.2022.
Salient features of the scheme are as under:
Borrowers: Falling under MSME Category as per regulatory definition
Target Group: New to Bank and new to credit including Takeover
from other banks:
Eligibility conditions:
i) Borrowers having MSME Commercial Bureau Rank (CBR), from any of the
CICs i.e. Cibil/Equifax/Experian, of 1 to 2 are eligible with minimum
Collateral Coverage of 50% or FACR 1.00.
ii) Borrowers having CBR of 3 to 4 from any of the CICs i.e. Cibil /Equifax
/Experian, are eligible under the offer with minimum collateral coverage of
60% or FACR of 1.10.
iii) Borrowers having CMR 5 and below are not eligible under the Offer.
iv) New to Credit:
a) In case Borrower is new to Credit due to which CBR is not available.
However, the unit is in existence for minimum 3 years with satisfactory
financials and generated net profit during last FY based on audited financials
are eligible in the Welcome offer with minimum collateral coverage of 60% or
FACR of 1.10 and applicable ROI will be at par with the borrowers having
CBR 4.
b) Such new to credit borrowers up to Rs. 7.50 Crs of credit facilities can be
considered under CGTMSE under Hybrid / Partial Security product, subject
to minimum CCR being 50% of total sanction limit.
Facilities: Working Capital / Term Loan / NFB Limits
Loan Amount: Min. Rs. 50 Lakhs, Max. Below Rs. 5 Crore
Credit Rating / Investment Grade: Complying Entry Level Norms – SBS 5 / SME 5
(No Deviation in Credit Rating allowed). Accounts with CBR 1 to 5 are eligible.
Concessions offered:
Rate of Interest: Rate of Interest to be linked with RBLR with spread (Spread
consist of BSP +CRP). Any movement in RBLR to be passed on to the borrower.
To retain the borrowers canvassed under Welcome Offer 2021 the above ROI grid
will be applicable as a onetime measure upon next Comprehensive review is done
within 12 months. Effective Rate of Interest should not be below RBLR in any case.
At the time of annual review if normal applicable ROI as per internal rating is less than
the ROI offered for respective internal rating under Welcome offer 2021 then lower of
the ROI to be charged in the account. In case rating is below entry level normal ROI
as per internal rating to be charged.
Scheme code: Free code 3 - 381, ACM- V

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Service Charges : 50% concession in applicable PPC charges. Other charges to
be recovered, as applicable.
BG Commission / LC Charges:
a. 50% concession in applicable BG Charges;
b. 30% concession in applicable LC Charges.
Policy guidelines for Commercial Bureau Rank (CBR)
Commercial Bureau Report is like a report card of Company's credit
behavior. It serves as a record of the company's credit history. The main
purpose of the report is to assess the credit behavior of a Borrower.
Since then Trans Union CIBIL MSME Rank in getting generated with Credit
Reports on commercial entities, viz. - proprietorship, partnership, limited
company etc. while processing the proposals relating to their business
concerns and taking the base of CIBIL MSMSE Rank (CMR) for Go/ No
Go criteria. It was available for borrowers with aggregate commercial
borrowings up to Rs. 50 Crs .
Similarly other Credit Information Companies (CICs) i.e. Equifax and
Experian are also offering commercial rank to MSME borrowers
irrespective of amount of their borrowings from banks/Fis. The existing
"policy on CIBIL MSME Rank" is now modified with the "Policy guidelines
for Commercial Bureau Rank (CBR)"
Approved CICs: TRANSUNION CIBIL, EQUIFAX, EXPERIEN
Applicability of CBR: All the borrowers availing credit facilities for
business purposes irrespective of credit facility amount.
Rational of CBR:
CBR Meaning Description
Borrowers in this rank are expected to
have the highest likelihood/probability to
CBR-1 Lowest Risk of service their credit obligations on time.
Default Such borrowers carry lowest credit
risk.
have very high likelihood/probability to
CBR-2 Very Low Risk of service their credit obligations on time.
Default Such borrowers carry very low credit
risk.
have high likelihood/probability to service
CBR-3 Low Risk of Default their credit obligations on time. Such
borrowers carry low credit risk.
Borrowers are expected to have much
Significantly lower better ability to service credit obligations
CBR-4 than average than the average borrower. Such
Default borrowers carry much lower than average
credit risk.
Borrowers in this rank are expected

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to be marginally better than average
Marginally Lower ability to service their credit obligations in
CBR-5 than average a timely manner. Such borrowers have
marginally better than average credit
Likelihood to Default
risk.
Borrowers in this rank are expected
Average Likelihood to have average safety regarding timely
CBR-6 servicing of credit obligations
of default
have higher risk in servicing their debt
Higher than obligations than average borrower.
CBR-7 average likelihood Borrowers are considered to have higher
of Default than average credit risk.
Borrowers have defaulted or been
CBR-8 High Likelihood delinquent in past and have high
of Default likelihood to be in default status.
Borrowers have defaulted or been
Very High
CBsR- delinquent in past and have very high
Likelihood of Default
9 likelihood to be in default status.
or Imminent Default
Past Defaulters and have highest
Highest Likelihood
CBR- likelihood to continue in default status.
of Default or in
10
Default
Usage of CBR:
1. Commercial Bureau report I Rank to be obtained for all new business
loans and review of existing business loans having credit limit up to Rs.10
Lakhs from any one of the two ClCs i.e. Equifax or Experian through LOS
once thee-platform is launched.
2. Experian Report / Rank to be generated through LOS only as the ranking
has been customized for our Bank in the order of 1 to 10 where 1 is best
and 10 is worst.
3. Commercial report I Rank from any one of the 3 CICs i.e. CIBIL, Equifax,
Experian to be obtained at the time of processing of all new commercial
business loan proposals and review of existing business loans having
limits above Rs.10 Lakh.
4. CBR is to be used only for the purpose of screening the applicants and in
no way it can be used as a substitute for credit rating exercise of the Bank.
5. The report to be obtained from any one of the CICs and only in case
of anomaly in the report viz. non generation of CBR despite having
credit facilities more than 6 months old, Multiple PAN numbers issue,
No/ wrong PAN number issues, Non-reflection of existing credit
facilities of the borrower or any other anomalies identified by
processing officers then only another commercial report should be
generated from other bureaus.

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CBR Policy Guidelines
CBR 1 to CBR 5 All New Credit Proposals/Review with enhancement
should be considered by the delegated authority
CBR 6 to CBR 7 Any new credit facilities/Review with enhancement, should
be considered by the delegated authority on a
selective basis with proper justification and
stipulation of some additional covenant such as
security/ guarantee among others.
CBR 8 to CBR 10 1. New Borrowers should not be considered for
sanction.
2. In case existing borrower requests for enhancement
delegated authority may consider with overall CCR
0.75
3. Justification for enhancement should clearly dealt
with.
All other guidelines for delegation, pricing etc is to be followed as per

extant policies.
STAR STANDBY LINE OF CREDIT FOR MSME (HO BC 113/166 dtd. 13-12-2019)
A short term credit facility is designed by the bank for MSMEs falling under MSME
category as per MSMED act 2006, to meet temporary liquidity mismatches and
urgent business requirement. The Product will be known as STAR STAND BY LINE
OF CREDIT FOR MSMEs and only fund based limit demand loan Maximum to
the tune of Rs. 1.25 Crores, for maximum period of 12 months (including 3
month moratorium period) will be sanctioned under the scheme.
All existing satisfactorily conducted Standard accounts enjoying WC Limits with

our Bank; all Borrowers having valid GSTIN or Borrowers exempted from GST are
eligible under the scheme.
Assessment:
Maximum 25% of Existing Working Capital Limit (FBWC + NFBWC). Limits will be
over and above the MPBF/ABF, to be restricted within available Drawing Power.
Security
a) Hypothecation of Stocks & Book Debts; Extension of charge on other existing
Primary and Collateral
security.
b) In case CGTMSE/CGSSI/CGFMU coverage is applicable and available, it should
be obtained for additional limit.
Credit Rating: As per applicable rating models. Entry level norms to be complied
with. Accounts below Entry Level can also be considered under the scheme, by
one level higher than the normal sanctioning authority.
Interest Rate:
0.50% above the present ROI sanctioned to borrower. ROI to be linked to
MCLR/RBLR as the case may be in the original working capital limit.
Margin:

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Nil, under the scheme. However margin for the existing limits will continue as
per sanctioned terms.
Processing Fee: Nil. Other charges such as Documentation, Mortgage, inspection
as applicable.
Sanctioning Authority:
The delegation under the scheme is being delinked with regular DOP and Chief
Manager & above will sanction the limit subject to its delegation under
secured/unsecured exposure, mapped with internal credit rating.
If Regular Limits are sanctioned by any higher authority, the limits under the scheme
can be considered by Chief Manager & above subject to reporting of the same to
Sanctioning authority of regular limits.
In case of accounts below entry level, the sanctioning authority will be one level
higher than the normal delegated authority.
Repayment: The limit to be repaid in next 12 months, including initial moratorium
max. three months. The Limit shall be repaid either in one bullet repayment or in
equated monthly instalments in the next 09 months after the moratorium period, if
any.
Drawing Power to reduce in line with equated monthly instalments every month after
moratorium period is over and interest to be served every month as and when
applied.
Others
➢ Deviation in Financial parameters are accepted under the scheme up to the
level of maximum relaxation permitted by Board. No specific permission will
be required, in this case. In cases wherein there is deviation in financial
parameters beyond maximum permissible limit as approved by Board, the
same has to be dealt, as per existing guidelines.
➢ While considering limits under the scheme, sanctioning authority to ensure
that all other prevalent norms and guidelines (except those as permitted
under the scheme) as per MSME policy are complied with.
➢ Branch to consider limit under the scheme after verifying the genuine
requirements of the unit/firm/borrower.
➢ Branch may obtain CA certificate for delayed realization of receivables,
receipt of GST input tax credit etc.
➢ Clean Limits are not allowed under the scheme.
➢ The facility will be considered as an exposure on the borrower and the
guidelines stipulated under the RBI Prudential norms shall be adhered to.
➢ Branches to verify end use of funds.
➢ Branches to undertake comprehensive review of the accounts while
considering limits under the scheme, if last review/sanction date is more
than nine months old.
➢ If the account has been reviewed within nine months, limits under the
scheme can be considered on a standalone basis.
➢ Limits under the scheme will be considered only at the specific request of
the borrower.
Scheme Code/Free Code: A New Free Code/ Scheme Code will be assigned.
To be entered in Free Code 3, under MIS code V in Finacle.

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ZERO DEFECT ZERO EFFECT
Addressing the nation on India's 68th Independence Day, Hon'ble Prime
Minister Shri Narendra Modi urged the industry, especially the Micro, Small and
Medium Enterprises (MSMEs) of India, to manufacture goods in the country with
"Zero Defects" so that our exported goods are never returned to us and to ensure
that the goods have "Zero Effect" that they should not have a negative impact on
the environment.
The Ministry of MSME has decided to implement the ZED Certification

Scheme with the help of Quality Council of India (as NMIU) & other stakeholders for
22,222 micro, small and medium enterprises (MSMEs) with a total budget of Rs. 491
Crores (including Government of India contribution of Rs. 365 Crores) during the
12th Five Year Plan. The objectives of the scheme include inculcating Zero Defect
& Zero Effect practices in manufacturing processes; ensure continuous improvement
and supporting the Make in India initiative. The scheme is an extensive drive of the
Government of India to enhance global competiveness of MSMEs by providing them
financial support in assessment, rating & hand holding of its manufacturing
processes on quality and environment aspects.
Thus, the ZED model aims to achieve high quality manufacturing that’s also
green. While India putting efforts to become global manufacturing hub, the ZED
model is necessary to take forward the efforts.
Star Subordinate Debt for Stressed MSME (SSDSM) & Credit Guarantee
Scheme for Subordinate Debt (CGSSD) (HO BC 114/95 dtd. 05-08-2020)
GoI through Ministry of MSME has introduced a scheme for the purpose of providing
guarantees in respect of credit facilities extended to stressed borrowers under
MSME category, named as “Distressed Assets Fund – Subordinate Debt for
Stressed MSME” and the credit product for which guarantee would be provided
under the scheme is named as “Credit Guarantee Scheme for Subordinate Debt
(CGSSD)”.
The scheme would be administered by CGTMSE and objective is to facilitate

personal loans to promoters of stressed MSMEs for infusion as equity / quasi equity
in their associated business, which are eligible for restructuring, as per RBI
guidelines.
The CGSSD scheme is part of various liquidity measures for MSMEs announced by
GoI vide it’s Atmanirbhar (self-reliant) relief package.
It should be ensured that the finance to promoters under SSDSM should only be
done if the associated MSME unit is found viable as per viability parameters outlined
under restructuring package. Personal loan to promoters cannot be considered on
an isolation basis.

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Eligible Borrowers:
a) Borrowers whose accounts have been standard as on 31.03.2018 and have
been in regular operations, either as standard account or as NPA account during
FY 2018-19 and FY 2019-20.
b) The scheme is valid for MSME units which stressed viz SMA-2 and NPA as on
30.04.2020 and who are eligible for restructuring as per RBI guidelines.
c) Fraud/ wilful defaulters will not be considered.
d) All MSME accounts including those reclassified under new definition are eligible.
Over and above the MPBF/ABF, to be restricted within available Drawing Power. e)
Individuals/ Proprietorship/ LLP/ Partnership/ Pvt Ltd or Registered Companies are
eligible.
Facility, type and tenor of Loan:

a) Personal loan to be provided to the promoters of Stressed MSME. The same will
be classified as MSME Term Loan. Max 10 years from the guarantee availment
date or 31.03.2021 whichever is earlier.
b) Moratorium of 7 years is allowed. Interest is to be paid as and when applied.
Moratorium is linked to the repayment period of senior debt/ main debt.
Quantum: Promoter(s) of the MSME unit will be given credit equal to 15 % of his/her
stake (equity plus debt) or Rs 75 lakh whichever is lower.
Rate of Interest:
2.50% over
RBLR
Margin:10% of sub debt.
Security:
The sub debt facility so sanctioned will have 2nd charge of the assets financed
under existing facilities for entire tenor.
Guarantee Fee & Coverage: The Guarantee Fee is 1.50% per annum on
outstanding balance which will be recovered from the borrower. The extent of
guarantee will be 90% of the loan amount.
Any guarantee approved under the scheme shall be over and above guarantee
coverage available for existing loan, if available (over & above the eligible limit of
Rs. 200 Lakhs).
Processing Fee: Nil. Other charges such as Documentation, Mortgage, inspection

as applicable.
Sanctioning uthority:
To be sanctioned along with the implementation of restructuring of associated

MSME units. The delegation to sanction will the same delegate under whose
delegation the restructuring of associated unit falls.

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Others
➢ It should be ensured that the sub debt/ credit released to the promoter is
brought back as equity/ quasi equity/ sub debt in the MSME unit.
➢ In case where borrower is having limits from more than one lender, the
loan under this scheme can be availed though one lender only.
➢ Cases where recovery proceedings are underway, such as through
SARFAESI, DRT, Suit filed etc. are also eligible.
➢ Accounts restructured earlier also eligible.
➢ Risk weight for CGTMSE covered portion will be zero.
➢ Finance is irrespective of credit rating in this scheme.
Free Code: Free Code: 460, Guarantee Cover:17 to be entered under MIS code
V in Finacle.
BOI Star Asset Backed Loan (BSABL) HOBC 115/220 dtd 02-11-21)
A substantial portion of the MSME sector have grown in peer Banks through
collateral based lending. Now, with the implementation of GST, the aim of asset
based lending is to make available customised product for general business
deployment assistance at very competitive price with low risk.
Target Group:
a) All business units who want to avail loan facility for manufacturing and services
activities covered by MSMED Act.
b) All existing business enterprises complied with applicable
statutory requirements such as Udhyam registration, GST Registration, License
under Shops & Commercial Establishment Act, Trade License/other necessary
license to run the unit (as the case may be) etc.
c) Unit should be in operation in last three years and should have earned cash
accrual at least in last preceding year.
d) HUFs are not eligible.
e) Gems and Jewellery business not allowed under the scheme.
Purpose:
a) To provide working capital for building up of current assets.
b) To acquire fixed assets.
c) To purchase/ renovate/ construct business premises/ office/ godown/ shop/
unit .
d) To tide over temporary liquidity mismatch.
e) To repay high cost debt (business, bank, FI)
Facility:
a) Overdraft limit (regular/ reducing)
b) Term Loan
c) NFB (LC/ BGs) as sub limit of Fund based limits.
Loan Amount:
Minimum Rs. 0.10 crores
Maximum Rs.15 crores.

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Tenure of Loan /Repayment:
Overdraft: One year subject to annual review.
Reducing/ Dropdown OD: a) Limits can be sanctioned 12 months to 180

months with either equated / equal reduction in limit or customised reduction in
limit, depending upon the cash accruals.
b) Moratorium not more than 3 months
c) The drawing limit shall be reduced quarterly/ monthly so as to have the
overdraft liquidated at the end of the period.
Term Loan: Max repayment tenor 15 years inclusive of maximum 12 months
moratorium. Instalments may be recovered monthly/ quarterly.
NFB: BG/LC should be preferably earmarked with FB limits subject to additional
20% cash margin.
Interest to be recovered every month as and when applied during moratorium. All
facilities to be repaid/adjusted 5 years prior to the residual life of property.
Security:
a) Immovable property in form of EQM/ Registered Mortgage by way of first

charge.
No second charge or pari-passu charge will be extended for other Bank/ FI.
b) Security provided should not be linked with other loan / liabilities. Property
should be exclusive to BSABL. However, the same can be extended with NIL value
in other accounts. However, Properties mortgaged as security for housing loan with
our Bank can be considered for BSABL for residual value of the property after
meeting the minimum margin requirement of Home loan.
c) In case of existing SABL borrower where charge over assets in favor of Bank is
available then Drawing Power not to be linked with level of stocks / book debts /
other assets.
d) CERSAI verification shall also be made on the Securities.
Credit Rating:
As per applicable rating models. Entry level norms to be complied with.
In case, at the time of review, if the rating is below entry level, the interest benefit will
be withdrawn and the same may be restored at the time of subsequent reviews
subject to upgradation in rating.
Interest Rate:
a) For tenor up to 5 years - RBLR one year + BSP/BSD + CRP (0.90)
b) For tenor above 5 yrs - RBLR one year + BSP/BSD + CRP (1.25)
Loan to Value Ratio:
a) Residential Property: Maximum up to 60% of realisable value of property.
b) Other than Residential Property: Maximum 50% of realisable value.

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Financial Ratios: Since the loan is against immovable property no other
benchmark ratio except DSCR will be applicable.
Sanctioning Authority:
SMELCC-II: 2.50 Cr
ZLCC: 7.50 Cr
NBGLCC: Full powers
Processing of loans under the scheme is restricted to SMECC / SMEUConly.
BOI STAR AAROGYAM: Branch Circular No. 116/146 Date : 15.09.22

In the present scenario, BOI STAR AAROGYAM Scheme will provide hassle free credit
to meet the requirements of a wide range of Healthcare sector in the form of Fund
Based (WC & TL) and Non-Fund Based (BG & LC). Under the scheme, banks can
provide fresh lending support to a wide range of entities including vaccine
manufactures; importers/ suppliers of vaccines and priority medical devices;
hospitals/dispensaries; pathology labs; manufactures and suppliers of oxygen and
ventilators; importers of vaccines and COVID related drugs; logistics firms and also
patients for treatment.
Target Group :
 Hospitals/ Nursing Homes

• Manufacturers (both Medical professionals as well as nonmedical
• Professionals) of healthcare products
• Manufacturers and suppliers of medical oxygen, Oxygen
• cylinders, Oxygen concentrators, Pulse Oximeters
• Manufacturers of permitted drugs (including Covid-19 drugs),
Vaccines, Ventilators, PPEs, Inhalation masks, ICU Beds etc.
• Importers of vaccines and Covid related drugs.
• Logistic firms engaged in critical healthcare supply.
• Diagnostic Centres and Pathology Laboratories
• Eye Centres, ENT Centres, Small and Medium size specialty
 clients like skin clinics, dental clinics, dialysis centres, endoscopy
centres, IVF centres, poly clinics, X-ray labs etc
 Public Healthcare facilities
 Project Location for coverage under LGSCAS;
Non-Metro Centres (i.e. Excluding projects under municipal areas of
Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi &
Pune. )
However projects in Suburbs of these cities are eligible.

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Purpose :
a) For Individual and Non-Individual borrowers;
• For acquiring premises on ownership basis or on rented basis or purchase of plot
and construction thereof for the purpose of establishing / running Clinics/Nursing
Homes/Pathological labs subject to compliance with license / registration
requirements under laws of State / Central Govt. as the case may be.
• Expansion/ renovation/ modernization of existing premises/Clinic/ Nursing Home/
Pathological lab/hospitals.
• For purchase of furniture & fixture, furnishing, renovating existing clinics/nursing
homes/pathology lab/hospitals.
• For purchase of medical equipment for Clinics/Hospitals/ scanning centres/
pathological laboratories/ diagnostic centres, professional tools, computers, UPS,
software, books.
• For purchase of Ambulance/ Utility Vehicles.
• To provide finance to manufacturers of healthcare products for meeting working
capital requirement and acquisition of fixed assets.
• To set up Oxygen plant along with power back up for medical use.
• To manufacture permitted drugs (including Covid-19 drugs), Vaccines, Ventilators,
PPEs, Inhalation masks, ICU Beds etc.
• To import Vaccines and Covid related drugs.
• To finance logistic firms engaged in healthcare activities.
• Financing of Receivables of hospitals empanelled under AB PM-JAY
• Build-up of current assets like stocking of vaccines, medicines, consumables etc.
• For Capex LC (front ended): For import of Capital Goods, to be liquidated on due
date by debit to Term Loan account.
• Working Capital requirement for meeting recurring expenses, stock of medicines /
consumables etc.
b) For coverage under LGSCAS;
i) Non Individuals borrowers for setting up or modernising
/expanding
a) Hospitals/dispensaries/clinics/medical colleges/pathology labs / diagnostic
centres;
b) Facilities for manufacturing of vaccines/oxygen/ventilators / priority medical
devices;
c) Public healthcare facilities.
ii) Individual borrowers are not eligible under LGSCAS.
Quantum of loan: Minimum- no minimum limit

Maximum: Up to Rs. 100 Crores
Nature of facility: Term Loan, Cash Credit, Bank Guarantee, Letter of Credit
Pricing:
For Internal rating grades 1 to 4:- RBLR + 2.00% p.a
For Internal Rating grades 5 to 6:- RBLR + 2.50% p.a.
In case of coverage under LGSCAS;
ROI to be capped at 7.95% p.a. till the availability of guarantee coverage under
LGSCAS after that pricing will be as per existing norms of the scheme.

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Collateral Security:
Loans up to Rs.2 Cr:
• Nil Collateral, if covered under CGTMSE.

• Guarantee Fee to be borne by borrower.
• For coverage under CGTMSE, partial collateral security model is also applicable as
per extant CGTMSE guidelines. However, If the borrower is not willing to pay the
guarantee fee or not willing to cover the exposure under CGTMSE, then Min. 25%
SARFAESI enabled collateral security needs to be obtained.
Loans above Rs.2 Cr to Rs.100 Cr:

Minimum 25% SARFAESI enabled tangible collateral security and if Hospital agrees
to maintain escrow a/c for capturing cash flow and the average credit balance in
Escrow is 25% of outstanding at any point then no separate margin by way of
collateral is required.
The manufacturer is having a firm buying agreement from Govt./hospitals and
agrees to maintain the escrow A/c.
In case of coverage under LGSCAS No additional collateral to be sought. However,
project assets and other security whatsoever available in the account shall be
charged to the Bank.
Repayment:
For working capital: Payable on demand (annual review)
For Term Loan: Maximum period of 10 years including moratorium period.
Maximum moratorium 18 months for construction of Hospital/Nursing
home/Clinic (6 months in case of purchase of equipment only)

117
Star Hawker Atmanirbhar Loan (SHAL) Scheme under PM Street Vendor's
Atmanirbhar Nidhi (PMSVANIDHI) Scheme Second Loan up to Rs.50000/- under
PMSVAnidhi (Tranche III) HO BC 115/174 dt.30.08.21, BC 116/83 dt 29.06.22 &
BC 116/143 dt 08.09.22
Ministry of Housing and Urban Affairs, Government of India has come out with
Scheme "PM Street Vendor's Atma Nirbhar Nidhi (PM SVANIDHI)" aimed for
financing to street vendors in order to make them self-reliant and come out of distress
situation due to COVID-19 pandemic and consequent Iockdown. In order to
implement the said Scheme in our Bank, a new Scheme named Star Hawker
Atmanirbhar Loan (SHAL) was launched for Street Vendors engaged in vending in
Urban area , who are in possession of certificate of vending / Identity card issued by
Urban Local Bodies (ULBs), or identified in the survey but yet to be issued Identity
Card / or issued Letter of Recommendation (LoR)by the ULB / as notified in the
website of Ministry / State Govt. / ULB and portal created for this purpose by
Government. Joint Liability Groups (JLG) of eligible vendors covered under ULB-led
identification will also be eligible.
Gol — MoHUA vide its communication Ref. No. F.No.K-12017(30)/2/2020-UPA-

IIUD
(EFS 9088388) dated 1st June, 2022 have advised that Cabinet Committee on
Economics Affairs in its meeting held on 27.04.2022 approved the proposal for
continuation of PM SVANIDHI scheme 2.0 beyond March, 2022. The details
proposal are as under:
i. Extension of the lending period from March 2022 to December 2024.

ii. Provision of 3rd loan up to 50,000 with a term of 36 months, in addition to 1 st &
2nd loan of 10,000 and 20,000 respectively.
iii. Modification in Credit Guarantee cover for 1st, 2nd and 31d loans. The effective
credit guarantee on 1St loans is enhanced from 12.50% to 31.875%, on 2 nd loans is
reduced from 12.5% to 8.25% and on 3rd loans is reduced from 12.5% to 6%.
iv. Payment of Interest Subsidy and Credit Guarantee claims on all loans till March
2028.
I. Eligibility — Existing Street Vendors who has prepaid/ Paid their 1st & 2nd
Loan availed from our Bank
ii. Minimum Repayment Period for 2nd loan: Minimum repayment period of 6
months for 2nd loans.
iii. Quantum of Loan: max Rs 50000/-
iv. Tenure: 36 months
v. ROI: 6.5% over RBLR p.a.
vi. Credit Guarantee by CGTMSE - The Guarantee coverage will be operated

on a portfolio basis :
a) First loss Default ( up to 8%): 75% coverage
b) Maximum guarantee coverage will be 8% of the 1 portfolio. Valid till March

2028.

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Credit Guarantee Fund Trust Scheme for Micro and Small Enterprises
Credit Guarantee Funds Trust for Micro and Small Enterprises (CGTMSE) is
a trust established by the Government of India, under the Ministry of Micro, Small
and Medium Enterprise (Mo MSME) and Small Industries Development Bank of
India (SIDBI) in August 1, 2000 to cover the credit loss incurred by the lender in the
event of credit default by a MSE unit, which availed collateral free credit facility and
fails to discharge its liabilities to the lender. The main objective is to give importance
to project viability and secure the credit facility purely on the primary security of the
assets financed. Credit Guarantee Fund Scheme for Small Industries (CGFSI) has
since been changed to Credit Guarantee Fund Scheme for Micro & Small
Enterprises (CGTMSE) with effect from 2nd July 2007. The salient features of the
scheme are as under-
Eligibility of Borrowers for CGTMSE Coverage:
a) All Credit Facilities sanctioned to Micro & Small units defined as per MSMED
act 2006, on the basis of investment in Plant & Machineries/Equipment.
b) Units under both the sectors viz. Manufacturing, Services and Retail Trade can
be covered under CGTMSE.c) All the units should be engaged in the activities
approved by CGTMSE for coverage.
d) Maximum Quantum of loan to a single borrower eligible for coverage should not
exceed the cap of Rs. 200 Lakhs.
e) The guarantee coverage of one-time limit of 200 Lakhs has been removed and
the borrower can avail incremental credit facilities (i.e. to the extent of reduction in
the outstanding exposure limit)-under Credit Guarantee Scheme of CGTMSE,
subject to maximum cap of Rs. 200 Lakhs.
f) For loans upto Rs. 10 Lakhs, no collateral security or third party guarantee should
be obtained, to be eligible under the scheme. Any Credit facility for loans upto Rs.
10 lakh to Micro Enterprises shall not be eligible to be covered under the Scheme if
the said credit facility has been covered under MUDRA Guarantee Scheme
(CGFMU) through NCGTC Ltd.
g) For loans above 10 Lakhs, Partial Collateral security may be obtained. CGTMSE
has introduced Hybrid Security product which allows guarantee cover for the portion
of credit facility not covered by collateral security. In the partial collateral security
model, the MLIs are allowed to obtain collateral security for a part of the credit facility
whereas the remaining part of the credit facility up to a maximum of 200 Lakhs can
be covered under Credit Guarantee Scheme. CGTMSE will however have pari
passu charge on the primary security as well as on the collateral security provided
by the borrower for the credit facility. The Hybrid Credit Model is applicable to fresh
credit facilities eligible for coverage on or after 28.02.2018.
h) Under the Credit Guarantee Scheme, the CGTMSE encourages composite credit
being extended to a single borrower by a Bank. Joint financing by a financial
institution (e.g. Small Industries Development Bank of India, National Small
Industries Corporation, and North Eastern Development Finance Corporation Ltd.,
etc.) and commercial bank can be covered under the scheme. For e.g. MSE unit is
financed by term loan from State financial institution/development financial
institution and Working capital from a commercial bank. However, sharing of
securities will not be permitted.i) Loan under Consortium are not eligible under the
scheme.j) Any Credit Facility which is otherwise eligible under the scheme and has
been sanctioned by the lending institution with the interest rate charged as per RBI
guidelines would be eligible for coverage under the scheme.

119
Eligible Accounts:
a) Both Term Loan and Working Capital (both fund based and non-fund based)
can be covered.b) Composite Loan can also be covered under the scheme.
c) In case of fresh coverage / credit facility applying for the first time for guarantee
coverage i.e. the same credit facility should not have been covered previously under
CGTMSE / coverage discontinued in between, will be covered anytime during the
tenure of Loan, provided the credit facility was not restructured I remained in SMA2
status in last 1 year from the date of submission of application.
d) For Working Capital, the tenure of guarantee cover is fixed for a block of 5 years.
CGTMSE has removed the tenure cap of 10 years for coverage of working capital
facilities. Therefore, a review would be undertaken after each block of 5 years by
CGTMSE before renewal of the guarantee coverage for next 5 years. For
review/renewal of Working Capital, the requisite data / information has to be fed in
the Working Capital Renewal Module on CGTMSE Portal. The Working Capital
account covered under CGTMSE can be renewed within 12 months from guarantee
expiry date. Guarantee Fee has to be paid afresh for renewed guarantee cover
thereafter for the next block of 5 years. Only Standard account at the end of the
block of five years will be renewed and substandard accounts will be rejected.
e) The Guarantee Cover shall run through the entire agreed tenure of the Term
Credit in case Term Loan, sanctioned alone.
f) In case of Composite Loan (wherein Cash Credit & Term loan are sanctioned
together), the guarantee cover of Term Loan will run through the entire period of the
loan or term loan termination date whichever is earlier. The cash credit account will
be fixed for block of 5 years and would be renewed after review undertaken after
each block of 5 years.
g) Where the borrower is enjoying several distinct credit facilities, one or more out
of the same can be covered up to the maximum cap of 200 Lakhs.
h) The account of the borrowing unit should be standard and regular (not reported
under SMA) as per RBI guidelines as on application date.
Non-Eligibility:
a) Loans to SHGs are not eligible under the scheme.
b) Any Credit facility in respect of which risks are additionally covered under a
scheme operated /administered by Deposit Insurance and Credit Guarantee
Corporation (DICGC) or the Reserve Bank of India to the extent they are covered.
c) Any Credit facility shall not be eligible to be covered under CGTMSE, if the said
facility is already covered under any other guarantee scheme viz.
ECGC/CGFMU/CGSSI etc.
d) Any credit facility, which does not conform to, or is in any way inconsistent with,
the provisions of any law, or with any directives or instructions issued by the Central
Government or the Reserve Bank of India, which may, for the time being, be in force.
e) Any Borrower, who has previously availed himself any other credit facility covered
under the scheme and the lending institution has invoked the guarantee provided
by the trust, is not eligible for fresh coverage under the scheme.
f) As per the scheme, Primary security is must for coverage. Clean ODs/CCs are
not eligible to be covered under the scheme.g) FITL accounts and partial conversion
of working capital (WC) to working capital term loan (WCTL) are not eligible for
coverage under CGTMSE.

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Eligibility of coverage of credit facility to Producer Organization (PO) /
Farmers Producer Organization (FPO)
POs/FPOs constituted and registered under any of the following legal provisions:
a) Cooperative Societies Act / Autonomous or Mutually Aided Cooperative

Societies Act of the respective State.
b) Multi-State Cooperative Society Act, 2002
c) Company under Indian Companies Act, 1956, as amended in 2013.
d) Societies registered under Society Registration Act, 1860
e) Public Trusts registered under Indian Trusts Act, 1882, are eligible to be covered
under CGTMSE.
Credit facilities extended to POs / FPOs for Core Agricultural activities are not
eligible to be covered under the Credit Guarantee Scheme of CGTMSE.
Fundamentally, the POs / FPOs should be identified as a separate legal entity and
the business activities should fall under Manufacturing, Service activities and retail
Trading as per MSMED Act, to be eligible for coverage.
CGTMSE Cover for Borrowers engaged in MSE RETAIL TRADE:
Credit Facility extended to Borrowers engaged in Retail Trade activity are covered
under CGTMSE scheme. The details are hereunder:
a. Exposure Limit for Credit facility of Retail trade segment will be upto 100 Lakh
per MSE Borrower.
b. Extent of Guarantee coverage to such credit facility would be 50% of amount in

default irrespective of the category of the borrower.
c. Applicable Fee i.e. AGF will be charged at the rate of 2% of the guaranteed
amount for the first year and on outstanding amount for the remaining tenure of the
credit facility. Differential pricing structure depending upon NPA percentage and
Claim payout ratio of the Member Lending Institution (MLI) will also be applicable
on the AGF.
CGTMSE Cover for Borrowers engaged in WHOLESALE TRADE &

EDUCATIONAL/TRAINING INSTITUTES:
a. The Wholesale Trade would be considered at par with MSE Retail Trade and
therefore, all the existing terms & conditions of coverage applicable to MSE
Retail Trade would be applied for coverage of Wholesale Trade under the
scheme.
b. The Educational/Training Institutes would attract fee, extent of coverage and
other terms & conditions as applicable under existing normal scheme.

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Credit Guarantee Cover:
The Trust shall provide guarantee as under; (102/195 dated 09.02.2009, 107/181
dated 02.01.2014 & 112/30 dated 7-6-2018)
Category Max. extent of Guarantee where credit facility is

Up to Rs.5 Above 5 Lakhs up to Between 50 Lakhs
Lakhs 50 Lakhs and up to 200 Lakhs
Micro enterprises 85% of 75% of amount
amount in in default max. of
default, Rs. 37.50 Lakhs
Max. Rs.
4.25 Lakhs
75% of amount in
Women entrepreneurs 80% of amount in default
/units located in maximum Rs. 40 Lakhs. default subject to a
NE regions (including maximum of Rs.
Sikkim) 150 Lakhs
(other than Credi facilities
up to Rs.5 Lakh to micro
enterprises)
All other category 75% of amount in default
of borrowers maximum Rs.37.50 Lakhs
MSE Retail Trade / 50% of the amount in default subject to a maximum of
Wholesale Trade 50 lakh.
(up to 100 lakh)
The revised guidelines for increase in the extent of guarantee coverage to

75% and increase in the Standard AGF rate will be applicable for cases
sanctioned on or after 01-04-2018. In accounts where original sanctions are prior
to April 01, 2018 and the enhancement in the limits are on or after this date, the
earlier rate structure and extent of guarantee coverage would continue to apply
even for the enhanced portion. The Guarantee Cover will commence from the date
of payment of guarantee fee.
Additional credit facilities in respect of accounts guaranteed under
CGTMSE –
Additional credit facilities (within an aggregate limit of Rs. 200 Lakhs per
borrower) sanctioned to units covered under CGTMSE will also be eligible for cover
under the Scheme, if the unit is otherwise eligible for cover after sanction of additional
limits.
o In such cases, fresh applications have to be submitted for the additional
loan/limit.
o While submitting such applications, the CGPAN already allotted by CGTMSE
to that particular borrower at the time of initial guarantee cover should be
mentioned in the field Bank Reference Number after the reference number
of the branch.

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Maximum Risk Cover:
a) The credit facilities extended by the Bank, CGTMSE guarantees, in case of default
by the borrower, up to 50% / 75% / 80% /85% as the case may be of the defaulted
principal amount in respect of term loan and / or outstanding Working Capital
advances (inclusive of interest), as on the date of account becoming NPA, or as on
the date of filing the suit, whichever is less.
b) Other charges such as interest on principal term loan, penal interest, commitment
charge, service charge, or any other levies/ expenses shall not qualify for the
guarantee cover.
c) Guarantee cover under the scheme is available for a maximum credit/loan ceiling
of 200 Lakhs even though the actual loan/limit may be in excess of 200 Lakhs,
provided the account is otherwise eligible for cover under the scheme.
Annual Guarantee Fee (AGF) and Annual Service Fee (ASF)
A. CGTMSE has revised guidelines for collection of fees under the scheme
w.e.f. 01.04.2018 as under:
AGF will be charged on the guaranteed amount for the first year and on the
outstanding amount for the remaining tenure of the credit facilities sanctioned /
renewed to MSEs on or after April 01, 2018 as detailed below:
Credit Facility ANNUAL GUARANTEE FEE (AGF) (% p.a.)

Women, Micro Ent. & Others
units covered in North
East Region
Upto Rs. 5 lakh 1.00 + Risk Premium
Above Rs.5 lakh to 1.35 + Risk Premium 1.50 + Risk Premium
Rs.50 Lakh
Above Rs.50 lakh & 1.80 + Risk Premium
upto Rs.200 Lakh
MSE Retail Trade 2.00 + Risk Premium
upto 100 Lakhs
For Loan covered under Retail Trade : 2% + Risk Premium
Risk premium is applicable to all accounts irrespective of the sanction date.
B. ASF / AGF (Applicable for accounts Sanctioned before 01.01.2013)
Demand for ASF will be generated in the accounts in which guarantees issued up
to March 31, 2013 against the credit facilities sanctioned / approved / renewed by
Bank up to Dec 31, 2012 (i.e. For Accounts sanctioned before 01-01-2013).
Details of ASF is as under:
Credit Facility ASF in % p.a.

Up to Rs. 5 lakh 0.50
Above Rs. 5 lakh & upto 100 lakhs 0.75

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C. ASF / AGF (Applicable for accounts Sanctioned on or after
01.01.2013 till 31.03.2018
Composite all-in Guarantee Fee payable on the Sanctioned credit facility upfront.
Rate of Guarantee Fee is as under:
Credit Facility Annual Guarantee Fee (AGF) [% in p.a.]
Women, Micro Enterprises, units in Others
North East Region (Inc. Sikkim)
Up to Rs. 5 lakh 0.75% 1%
Above Rs. 5 lakh and 0.85% 1%
Up to 200 lakh
Composite guarantee fee at rate mentioned above payable per year up front.
Risk Premium as applicable and intimated by CGTMSE will be applicable over
and above the rates as mentioned above.
D. Risk Premium
CGTMSE had introduced risk based pricing structure based on NPA
percentage and claim pay-out ratio for charging of annual service fees / annual
guarantee fees. This Risk premium would be charged over and above applicable
Standard Rate (SR) on credit facility sanctioned on or after April 01, 2016 and
cover under Credit Guarantee Scheme.
Sharing of Guarantee Fee & Annual Service Fee:
Credit Facility Present Sharing Pattern

Limits up to 50 Lakh Bank to bear 100% of First year's Annual Guarantee
Fee (AGF) for all categories of borrowers.
The borrowers to bear the full AGF from 2nd year
onwards.
Limit above 50 Lakh Bank to bear 50% of Annual Guarantee Fee (AGF) and
to 100 Lakh remaining 50% to be borne by the borrower for first year
for all categories of borrowers
The borrowers to bear the full AGF from 2nd year
onwards
Limit above 100 Lakh 100% of AGF for Entire tenure and entire loan amount
to 200 Lakh will be borne by Borrower.
PMEGP Borrowers 100% of AGF for Entire tenure will be borne by Bank.
Borrowers of Category 100% of AGF for Entire tenure for credit limit up to 100
of SC/ST, Lakh only will be borne by the Bank.
Women beneficiaries Credit limit above 2100 Lakhs the AGF will be borne by
Minority the borrower for the entire loan amount.
Units in NE incl.Sikkim
Units in J&K
a. The Office of the Development Commissioner (Handicrafts) reimburses the

Guarantee Fee and Annual Service Fee in case of Handicraft Artisans by way of
incentive to Banking Institutions as conveyed vide Branch Circular No. 100/60 dated
01.07.2006.

124
b. The credit guarantee coverage is available to eligible borrowers for financing under
Agriculture Infrastructure Fund (AIF). The guarantee fees of CGTMSE is paid by
Government. Please refer HOBC 114/102 dated 20.08.2020 for details of the scheme.
c. Since the scheme is operated through Zonal Offices, the portion of fee to be borne
by the Bank should be paid by the Zonal Offices to the debit of their P&L A/c.
Commission. Proper records shall be maintained by Zonal Offices for consolidation on
half yearly basis in respect of such guarantee fee paid. (Ref:Br.Cir.98/89 dated
07.08.2004).
Primary Security:
As per the Scheme Primary security is must for coverage. As such Clean ODs/CCs
are not eligible to be covered under the scheme. Further, CGTMSE has clarified that
any Cash Credit sanctioned under Stocks & Book debts or purely against Book debts
are also eligible under CGTMSE. Assets created out of credit facility and
unencumbered assets (movables/immovable) pertaining to the business of the
borrower are treated as primary security.
Waiver of Coverage under CGTMSE
Applicable to aggregate credit exposure up to 200 Lakhs.

i. No collateral should be accepted in case of loans up to t10 lakh extended to units in
the MSE sectors. Sanctioning authority should cover all loans up to 10 lakh extended
to Micro & Small Enterprises and are eligible for coverage under guarantee scheme of
CGTMSE or other approved institutions such as CGFMU without any exception.
ii. Sanctioning authority may consider proposals with CCR 60% & above for all
accounts which are above Z10 lakh and otherwise eligible under CGTMSE, without
obtaining CGTMSE coverage.
iii. Proposals under Hybrid Security Product (irrespective of level of CCR) may be
considered by sanctioning authority.
iv. For Proposals above t10 lakh and proposed to be covered only under CGTMSE,
the delegation rests with the Sanctioning Authority (No prior clearance required).
v. In case of borrowers are not inclined to take CGTMSE coverage and No Collateral
or CCR is less than 60% then delegated authority to approve waiver of CGTMSE cover
will be vested with ZLCC onwards.
Concession in ROI:
All Existing and New Micro & Small Enterprises accounts with limits upto 2100 Lakhs
and covered only under CGTMSE will be eligible for concession of 0.50% on the
applicable rate of interest. Presently, no concession is allowed for limits above 2100
Lakhs and up to 2200 Lakhs. Once the borrower limit exceeds 2100 Lakhs, the
concession on ROI will cease for the borrower. Accounts under Hybrid Model will not
be eligible for concession.
Rehabilitation assistance:
For the unit covered under CGTMSE and becoming sick due to factors beyond the
control of management, assistance for rehabilitation extended by the
Bank could also be covered under the scheme provided the overall assistance is within
the credit cap of Rs.200 lakhs.

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Invocation of guarantee:
Guarantee of CGTMSE in respect of accounts covered under CGTMSE may be

invoked and claim may be applied within the given timeline as per the following
criteria:
a. Accounts sanctioned before 01.01.2013: within a maximum period of 1 year from
date of NPA, if NPA is after lock-in period OR within 1 year of expiry of lock-in period,
if NPA is within lock-in period.
b. Accounts sanctioned on or after 01.01.2013, but turned NPA before 15.03.2018:
within a maximum period of 2 years from date of NPA, if NPA is after lock-in period
or within 2 years of expiry of lock-in period, if NPA is within lock-in period.
c. Accounts turned NPA on or after 15.03.2018, irrespective of sanction date: within
a maximum period of 3 Years from the date of NPA, if NPA is after lock in period or
within 3 years of expiry of lock in period, if NPA is within lock in period.
The following conditions must be satisfied for invoking credit guarantee: -

i. The guarantee in respect of that credit facility was in force at the time of account
turning NPA.
ii. The lock-in period of 18 months from either the date of last disbursement of the
loan to the borrower or the date of payment of the guarantee fee in respect of credit
facility to the borrower, whichever is later, has elapsed.
iii. The amount due and payable to the lending institution in respect of the credit
facility has not been paid and the dues have been classified by the lending institution
as Non- Performing Assets. Provided that the lending institution shall not make or be
entitled to make any claim on the Trust in respect of the said credit facility if the loss
in respect of the said credit facility had occurred owing to actions / decisions taken
contrary to or in contravention of the guidelines issued by the Trust.
iv. The credit facility has been recalled and the recovery proceedings have been
initiated under due process of law. Mere issuance of recall notice under SARFAESI
Act 2002 cannot be construed as initiation of legal proceedings for purpose of
preferment of claim under Credit Guarantee Scheme (CGS). Banks are advised to
take further action as -contained in Section 13 (4) of the above Act wherein a secured
creditor can take recourse to any one or more of the recovery measures before
submitting claims for first instalment of guaranteed amount. In case the Bank is not
in a position to take any of the action indicated in Section 13(4) of the aforesaid Act,
they may initiate fresh recovery proceeding under any other applicable law and seek
the claim for first instalment from the Trust.
v. For the purpose of the scheme, issue of notice under Lok Adalat is sufficient to
prove the legal proceedings have initiated for the cases where the total default is up
to 20 lakhs only.
vi. Waiver of Legal action in respect of smaller loans: CGTMSE has waived the pre-
condition of initiation of legal proceedings for invoking of guarantees where the
aggregate outstanding amount considered eligible for claim settlement by CGTMSE
does not exceed 250000 per claim effective for those claims lodged on or after
14.03.2018. Now, this waiver has been revised to 100,000 for those claims lodged
on or after 08.10.2021. The aggregate outstanding amount considered is the total
outstanding of all credit facilities of particular borrower as on NPA date.

126
Claim Settlement
a. CGTMSE shall pay 75% of the Guaranteed Amount (referred as "1st Claim") on
preferring of eligible claim, within 30 days, subject to claim being otherwise found in
order and complete in all respects. If 75% of the guaranteed amount is not paid within
30 days, CGTMSE shall pay interest on the eligible claim amount at the prevailing
Bank Rate for the period of delay beyond 30 days.
b. The balance 25% of the Guaranteed Amount (referred as "2 nd Claim" or "Final
Claim") will be paid by CGTMSE on conclusion of recovery proceedings.
c. On a claim being paid, the CGTMSE shall be deemed to have been discharged
from all its liabilities on account of the guarantee in force in respect of the borrower
concerned.
d. In the event of default, the lending institution shall exercise its rights, if any, to take
over the assets of the borrowers and the amount realized, if any, from the sale of
such assets or otherwise shall first be remitted in full after adjusting the cost incurred
by the Bank for recovery-of the amount.
CGTMSE shall appropriate the same towards the pending service fee, penal interest
and other charges due to CGTMSE, if any, in respect of the concerned credit facility.
Only thereafter claim for the remaining 25% of the guaranteed amount may be made.
e. The Bank shall be liable to refund the claim released by the CGTMSE together
with penal interest at the rate of 4% above the prevailing Bank Rate, if such a recall
is made by the Trust in the event of serious deficiencies having existed in the matter
of appraisal / renewal / follow-up / conduct of the credit facility or where lodgement
of the claim was more than once or where there existed suppression of any material
information on part of the lending institutions for the settlement of claims. Bank shall
pay such penal interest, when demanded by the Trust, from the date of the initial
release of the claim by the Trust to the date of refund of the claim. Finally, the loss
will be shared by CGTMSE and Bank in the proportion of 50%/ 75%/ 80%/ 85% and
50%/ 25%/ 20%/ 15% respectively i.e. based on extent of guarantee cover obtained.
CGTMSE is making all claims/refund payments through RTGS/NEFT system.
Appropriation of Claims received from CGTMSE— Accounting Procedure
The 1st Claim amount received from CGTMSE will have to be kept in Sundry Credits
and only after the recovery efforts are exhausted and claim finally settled, the amount
may be appropriated to the borrowers' loan account in terms of the agreement that
the Bank has entered into with CGTMSE / the rules of the Government for the same
in vogue. All the branches are advised to keep the claim received from CGTMSE in
Sundry credit account "XXXXXSUNCR801" especially created for this purpose & not
to credit in loan account. At the same time the claim received has to be entered in
finacle menu CGTMSE.

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Finacle menu `CGTMSE':
The following functionality is available in `CGTMSE' module in finacle which is to be

updated by Branch/ZO from time to time.
S.no Functionality Option Ownership

1 Application Details A Branch
2 Updating of CGPAN U Zonal Office
3 NPA Reporting N Branch
4 NPA reporting on CGTMSE NR Zonal Office
Portal
5 Claim C Branch
6 Claim on CGTMSE Portal CR Zonal Office
7 Settlement (for 1st & 2nd Claim) S Branch
8 Upgradation UG Branch
9 Rescheduling/ Restructuring RS Branch
10 Account Closure reporting CL Branch
Available Reports – In MISRPT+> CGTMSE Set – ID – Branch Sol ID

Following reports are available:
I. CGTMSE01 – Consolidated report for A – Application Details
II. CGTMSE02 – Consolidated report for U – Updation of CGPAN
III. CGTMSE03 – Consolidated report for N – NPA Reporting
IV. CGTMSE04 – Consolidated report for C – NPA Claim
V. CGTMSE05 – Consolidated report for R- Reschedule
VI. CGTMSE06 – Consolidated report for CL – Closed Accounts
VII. CGTMSE07 – Report on accounts opened but application not forwarded
to ZO / CGTMSE
VIII. CGTMSE08 – Report on application forwarded to CGTMSE but CGPAN
not yet received
IX. CGTMSE09 – Report on accounts slipped to NPA but reporting not done
X. CGTMSE10 – Report on accounts where NPA reporting has been done but
claims not lodged
XI. CGTMSE11 – Report for accounts where NPA reporting has been done
and lock in period not completed
XII. CGTMSE12 – Report will be generated where guarantee code is “7”
and CGPAN is blank
XIII. CGTMSE13 – Report of expiry of guarantee cover
XIV. CGTMSE14 – Report on accounts settled under CGTMSE
XV. CGTMSE15 – Details of account which are not entered in CGTMSE
XVI. CGTMSE16 –Claim reported for CGTMSE on web portal of CGTMSE
XVII. CGTMSE17 – NPA reported for CGTMSE on web portal of CGTMSE

128
RETAIL CREDIT
Star Home Loan and its variants Branch Circular No. : 116/ 05 Date 01.04.2022
Purpose:
a) To purchase/construct house/flat on ownership basis
b) To renovate/extend/repair existing house/flat.
c) To purchase a plot of land for construction of house.
d) i. To acquire household articles along with the house/flat - for furnishing
the House/flat.
ii. Loan for installation of Solar PVs
Eligible Components
i) Cost of the Plot of land.
ii) Cost of Construction.
iii) Cost of Flat in case of Purchase of Flat.
iv) Expenses for furnishing the house/flat/installation of Solar PVs
v) Undertaking regarding Cost of GST and other charges levied Levied Any refund
shall be deposited in the respective housing loan account.
vi) Other costs such as payment towards extra amenities like Parking slot,
Swimming Pool, Club membership, charges towards electric meter, Charges
towards Garden maintenance, etc. & all such costs/expenses which are borne by
the proponent separately from his own sources
Eligible Borrowers
The Scheme is targeted to attract select customers who are -
i) In permanent salaried employment or
ii) Professionals like Doctors, Lawyers, Engineers, Chartered Accountants, etc.or
iii) Self-employed persons having regular income and/or
iv) Having any other regular source of income.
Age
Repayment Period for salaried persons as well as others: - Up to the age of 70
Years.

129
Net take Home Pay (NTHP)
In respect of home loan to individuals, Net take home pay/income (Net of EMI of
Proposed loan) is stipulated as under
For Individuals :
Gross Monthly Income upto Rs.1 lac 40%

40%
Gross Monthly Income over Rs.1 lac 30%

upto Rs.5 lacs
Gross Monthly Income over Rs.5 lacs 25%
Authority for Deviation For Individuals: SZLCC and above within their delegation.
For Firm/Corporate DSCR-1.50
In case of Firms/Corporates, DSCR up to 1.25 (in place of 1.50) can be
Considered subject to obtention of personal guarantee of partners/directors and
Authority for aforesaid deviation lies with ZLCC.
Margin & LTV
Quantum of loan Margin on first Margin for 2nd or Margin where
Home subsequent house Reimbursement of
with or without loan is considered
existing home loan 1st,or 2nd housing
loan
Up to 30 Lacs 10% 20% 25%
>30 - <75 lacs 20% 20% 25%
Over 75 Lacs 25% 25% 25%
Margin to be calculated on pure cost of the house /flat plus GST excluding stamp
Duty, registration charge and other documentation charges i. e sale consideration
Amount as mentioned in the agreement to sale plus GST or value of the property as
per valuation report, whichever is lower.
• Wherever the cost of the house/dwelling unit does not exceed Rs.10 Lacs, RBI has
Permitted adding expenses such as stamp duty, registration and other Documentation
charges in the project cost.
• LTV is to be calculated based on the fair market value of the property, as per the
latest valuation report.

130
Credit Information Report
Presently our Bank has membership and service agreement with four Credit
Information Companies such as CIBIL, Equifax Credit Information Services Pvt. Ltd,
CRIF High Mark Information Services Pvt. Ltd and Experian Credit Information
Company of India Pvt. Ltd for transfer of Data and generation of CIRs. Generation of
Credit Information Report is mandatory since 10.05.2008.
Quantum of Loan with Purpose
Construction/Purchase of a House/Flat
• All Metro cities/State capitals/Towns having Domestic Airports :-750.00
• Other Cities/Places: - 500.00
Purchase of plot: The loan amount for purchase of land should not exceed
40% of total ceiling as mentioned above i.e. Rs. 300.00 Lacs and Rs. 200.00
Lacs respectively Addition/extension/repairs/renovation of House/Flat:-
Existing Housing Loan Customers:-
• 20% of original sanction limit
• Only after 5 years of satisfactory repayment period.
• Age of the dwelling unit should be more than 5 years old
• CIBIL personal score of 700 and above.
Calculation of Quantum of Loan

Category Quantum of Loan
Salaried Employees. 72 times of gross monthly salary OR 6
times of gross annual income based on
Income Tax Returns
Self-employed Professionals 6 times of their gross annual
Doctors, Chartered Accountants/ based on Income Tax Returns
individuals engaged in Trade/
Commerce/Business
HUF/Prop. Firm/Partnership firm 6 times of cash accruals (PAT +
/Corporate Borrowers: Depreciation) as per their audited
Balance sheet/P&L A/c.
Cases where Income-tax Returns are not filed or cases where income tax Returns are
not required to be filed: Two times average Net Annual Income (NAI) for the last 3
years on the basis of their activity (i.e. farming, dairy, poultry and orchards), land
holding, cropping pattern, Yield etc. and the level of income derived there from. In all
cases, the maximum loan amount should not exceed Rs.15 lacs either singly or jointly.
Minimum size of Housing Loan

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Housing - Priority Sector Lending
RBI vide its notification dated 04-09-2020 modified the definition as under:-
Bank loans to Housing sector as per limits prescribed below are eligible for priority
sector classification:
 Loans to individuals up to Rs. 35 lacs in metropolitan centres (with population
of
ten lacs and above) and up to Rs.25 lacs in other centres for
purchase/construction of a dwelling unit per family provided the overall cost of
the dwelling unit in the metropolitan centres and at other centres does not
exceed Rs.35 lacs and Rs. 30 lacs respectively.
 Housing loans to banks' own employees will not be eligible for classification
under the priority sector.
 Since Housing loans which are backed by long term bonds are exempted from
ANBC, banks should not classify such loans under priority sector.
 Loans up to Rs.10 lacs in metropolitan centres and up to Rs. 6 lacs in other
centres for repairs to damaged dwelling units conforming to the overall cost of
the dwelling unit as prescribed in para 12.1 of RBI notification dated 04-09-
2020.
 Bank loans to any governmental agency for construction of dwelling units or for
slum clearance and rehabilitation of slum dwellers subject to dwelling units with
carpet area of not more than 60 sq.m.
 Bank loans for affordable housing projects using at least 50% of FAR/FSI for
dwelling units with carpet area of not more than 60 sq.m.
 Bank loans to HFCs (approved by NHB for their refinance) for on-lending, up to
Rs. 20 lacs for individual borrowers, for purchase/construction/ reconstruction
of individual dwelling units or for slum clearance and rehabilitation of slum
dwellers, subject to conditions specified in para 23 and 24 of RBI notification
dated 04-09-2020.
 Outstanding deposits with NHB on account of priority sector shortfall. The
eligibility under priority sector loans to HFCs is restricted to five percent of the
individual bank's total priority sector lending, on an ongoing basis. The maturity
of bank loans should be co-terminus with average maturity of loans extended
by HFCs. Banks should maintain necessary borrower-wise details of the
underlying portfolio

132
VARIANTS OF HOME LOANS
 STAR DIAMOND HOME LOAN
 STAR PRAVASI LOAN
 STAR SMART HOME LOAN
 SPECIAL STAR HOME LOAN SCHEME LA755
 FINANCING BARE HOUSE/FLAT
 BOI STAR JAI JAWAN HOME LOAN SCHEME
 PRADHAN MANTRI AWAS YOJANA (PMAY)
 TOP-UP LOAN
 GOLDEN JUBILEE RURAL HOUSING FINANCE SCHEME
 HOME LOAN TO NRI/PIO
 HOME LOAN TO STAFF MEMBERS
 TAKE OVER OF HOME LOAN ACCOUNTS
 HOUSING LOAN ON REIMBURSEMENT BASIS
 HOUSING LOAN FOR BUILDING CONSTRUCTION
STAR DIAMOND HOME LOAN : (Branch Circular No. : 116/ 05 Date 01.04.2022 Part
-2 Page 122)
Scheme Details Scheme Norms

Eligible customers High Net worth Individuals, Firms/ Corporate for
residential accommodation of their
partners/directors, having minimum average gross
income of Rs.1 crore and above during the last 3
years, as per IT Returns/Audited Balance Sheet
Quantum of Loan Over Rs. 7.5 crore
Geographical Location All Metro Cities
of the properties/ • All State Capitals
house/flat to be • All Cities/towns having domestic airports
financed NBGLCC can allow deviation on case to case basis,
exceeding the above limits.
Margin 20% on pure Value of Property — i.e. on cost of
construction /acquisition renovation /extension etc.,(No
other costs such as stamp duty, registration charges,
taxes, charges etc., to be added to the cost of property
while calculating margin.
Take home pay For Individuals : 25% of the Gross Income;For
/DSCR Firms/Corporate : DSCR -1.5
Entry Level Norms For individuals : As per Home Loan Model
For Firm/Corporate : As per applicable SBS/MS/LC
Model
Rate of Interest Applicable rate for Star Home Loan. Festive offer HOBC
116/175 dt 28.09.22

133
STAR PRAVASI LOAN (Branch Circular No. : 116/ 05 Date 01.04.2022 page 123)
Purpose Same as Star Home Loan Scheme
Eligible All those components which are considered for Star Home
components Loan
Eligible Borrowers NRIs have valid Indian Passport. PIOs/OCI holding Foreign
Passport.Branch to ensure PIOs status of borrower. NRI’s with
total work experience/job contract/working in merchant navy
for mini-mum period of 2 years experience or contract having
steady income.
In case of officials having assignment with foreign
government/International or Gov-ernment Agency/Officials of
entral/State/PSU deputed or posted abroad.(Minimum service
criteria of 2 years will not be applicable)
Age Same as per Home Loan Scheme (70 years)
Income Same as Star Home Loan Scheme except that the income in
foreign country to be supported by annu-al Income Return filed
in the country in which the applicant resides. Where 70% of
rental income is considered for calculation of quantum of
loan/NTH, the rental income to be credited to the Home Loan
Account directly.Income documents to be obtained from
Salaried/other than salaried borrowers.
Co-borrower All co-owners to be co-applicants for the loan. Coapplicant also
could be a resident Indian in which case his/her income also
could be considered for calculation of quantum of loan
/repayment capacity.
However, foreign national of non-Indian origincannot be
included as a co-owner or co-borrower
Family Members Same as Star Home Loan Scheme.
as Co-borrower
Margin Same as Star Home Loan Scheme except full amount of
margin (own contribution) to be paid by the borrower before
1st disbursement of loan and margin should be re-covered by
debiting NRE/FCNR/NRO account in India or through
remittance from abroad (encashment of Foreign Currency
Notes or TCs are not allowed).
Net take home pay Same as Star Home Loan Scheme
Credit Information Credit Information Report
Report Report to be generated from CIBIL or any other approved
credit rating agency in India. Also, the applicant to submit
credit report from a Credit Rating Agency from the country in
which the
applicant resides-if such reports are easily available. The
report is available in countries like USA, Canada, UK,
Germany, Malaysia, Hong Kong,
Singapore, Japan, South Africa, South America etc.This
stipulation may be waived by the sanctioning
authority in respect of those countries where suchreports are
not easily available

134
BOI Star Smart Home Loan (SSHL)
(Branch Circular No. : 116/ 05 Date 01.04.2022 page 139 to 142)
Eligible Customer Existing SB/CD customer with average balance of Rs.5000/-
for last one year and New customer who opens a new SB/CD
account with opening balance of Rs.5000/- Present
/prospective Salaried Employees whose salary is credited to
BOI Branch and repayments are proposed to be made from
this account, irrespective of minimum balance.
SB/CD Account to be maintained throughout the tenureof the
loan.
Minimum Loan Amt For salaried — Minimum Rs. 5 Lacs

For other — Minimum Rs.10 Lacs
Maximum Limit — As per normal home loan Scheme
Type of Loan& Home Loan Overdraft- Account under this category to be
linkage with deposit opened Under separate Finacle Code i.e.LA-757 (ODA
account Type). The account will be linked to SB/CD account of the
customer and balance above a threshold limit is
automatically transferred to the Home Loan Overdraft
Account in multiples of Rs.5000/- . (There will be sweep out
of funds from SB/CD Accounts but there will be no sweep in
from loan
account) The threshold limit 'Minimum amount to be held in
SB or CD Account for operational convenience]to be decided
by the customer in advance and the same to be above the
minimum balance requirement of concerned account
Operation of account Mandate from borrower authorizing bank to transfer amount
in Finacle over and above threshold limit fixed by the borrower to the
loan account of the borrower to be obtained. The borrower
could also directly deposit surplus amount to the loan
account
Repayment Borrowers will have to remit Equated monthly instalments
(EMIs) as in the case of usual home loans. Repayment by
Standing Instructions for debit of account or ECS. Since the
account is ODA Type, Payment of EMI every month is
compulsory and any default in repayment will lead to
slippage of account to NPA category, despite having
adequate drawing power in the account.
Rate of Interest(R01) As per guidelines issued on Rate of interest from time to time.
Festive offer HOBC 116/175 dt 28.09.22

135
SPECIAL STAR HOME LOAN SCHEME
Financing flats in Housing Projects of reputed builders Pending creation
of mortgage as security Tripartite Agreement and other important
stipulations
Updated S c h e m e Guidelines with Modification in Scheme norms
Scheme Only those states where undivided share of the property being
coverage developed, i.e, (houses/flats in under construction projects) is not
registered(The scheme will not be applicable to the branches in
Mumbai/Maharashtra
For small cities and towns (tier II and tier Ill cities only}: Minimum
Quantum of project cost of Rs.8 Lac and minimum Home Loan requirement
loan of Rs.5.00 Lac can be entertained under this Special
Scheme For other cities- Metros & Major cities:
Project cost of the individual flat to be minimum Rs.20.00 Lac
and minimum Home Loan finance to be Rs.15.00Lac
i. Existing Credit customers of the bank with satisfactory
Eligible track record for past 3 years.
Customers
ii. All existing Deposit customers of the Bank classified as
'Diamond Customers' based on their balances in SB/CD
accounts.
iii. All existing Fixed (term) Deposits customers with average
deposits of Rs.5 lac with the branch during last 3 years.
iv. All new customers with established regular source of
income including Centrai/State/PSU permanent
employees, professionals like Doctors, CAs, etc. after
ensuring compliance with KYC norms and with
Average Gross annual Income of not less than Rs.5
lac during last 3 years.
v. All permanent employees of Public/Private sector
maintaining their salary accounts with the branch.
vi. All 801 Credit Card holders with satisfactory track record
during last 3 years.
vii.lndividualshaving movable/immovable assets of min.
Rs.10 lacs as part of their worth after ensuring compliance
with KYC norms along with Due diligence from an outside
agency

136
BOI STAR JAI JAWAN HOME LOAN SCHEME
ELIGIBLE BORROWERS The following members who are allotted

flats/dwelling units by AWHO (Army Welfare
Housing Organization) with specific
Number/Floors/Blocks are eligible under the
scheme:
Army serving personnel
Widows of all ranks of regular army
Ex-serviceman
Parents of unmarried fatal battle casualty
The scheme will be applicable to Para-
Military forces, CISF, BSF, ITBP, Coast
Guard etc., on same guidelines
Restriction of FINANCING BRANCH The finance under the scheme will

be restricted to one branch per
zone which should be either RBC
having license to park accounts at the
respective RBC or Branch where ZO
accounts are maintained
Margin & LTV Ratio Same as Star Home loan policy
Permission for Mortgage Will be given by AWHO
Non Encumbrance certificate Will be given by AWHO
Unregistered sale agreement AWHO does not have the system

between borrower and builder of entering into registered sale
agreement with flat buyer /allottee
before completion of construction &
receipt of full payment. However
allotment letter and separate Tripartite
Agreement between Borrower, AWHO &
Bank will be available

137
PRADHAN MANTRI AWAS YOJANA (PMAY)
Eligibility The applicants/proponents family should not have any Pucca

r---
dwelling unit in his/her or their names across India. In case of
married couple capturing details of spouse is mandatory.The
applicants should furnish Aadhaar card details a s proof of
identity (POl) and also Proof of address (POA)
Scheme EWS LIG

Parameters
Max. household Up to Rs. 3.00 lacs Up to Rs. 6.00 lacs
Income p.a.
Max.Carpet 30s q . mts. 60sq.mts
Area of the LIG (A bigger carpet area may LIG (A bigger carpet area
Dwelling unit be considered in case of may be considered in case of
construction/acquisition of construction/ acquisition
new house/flat but not in case of new house/flat but not in
of loan for repairs/ renovations) case of loan for
repairs/renovations
Ownership of Women must be sole/co- Women must be sole/co-

the Property owner in the property (except owner in the property (except
in case of construction of house in case of construction of
on existing plot) house on existing plot)
Max. Loan Up to Rs. 6 Lacs Up to Rs. 6 Lacs
amount eligible
for subsidy
Max. tenor of 15 years 20 years
loan
Max. Subsidy Rs.2.68 Lakh Rs.2.68 Lakh
Home Loan to Staff Members:

The home loan scheme is also extended to members of our staff and the instructions
issued by Personnel Department in this regard will continue to be applicable. Newly
recruited staff member of the bank who had completed 12 months of satisfactory
service is eligible for Home Loan on the same terms and conditions as applicable for
Members of public (with NIL processing charges) subject to other instructions of the
Bank in this regard.

138
Takeover of Home Loan Accounts :
 Takeover of home loans can be considered by sanctioning authority without

any
prior approval from higher authority.
 Account meant for take-over should be of standard category (excluding SMA-
1
and 2) with other Bank/FI/NBFC. There should not have been any reschedulement
in the last two years for financial reasons (excluding accounts rescheduled under RBI's
Resolution Framework).
 The units (purchase of flats from a residential project) which are under
construction (Irrespective of mortgage available or not) can also be considered
by minimum ZLCC, subject to compliance of
 Project should have been registered with RERA.
 b. Approved Building plan by concerned authority is in place and
construction is as per the schedule.
 c. Obtention of third party guarantee of reasonable net worth.
 d. Should be reaistered with CERSAI based on agreement of sale/tripartite
or,allotment letter.
 The account to be taken over with Transferor Bank should have run for a period
of at least one year (excluding moratorium period) and the CIBIL personal
scoreshould be 700 and above (In case of joint accounts , the CIBIL score of
the applicant whose income is considered for recovery of installment is to be
reckoned)
 E. Takeover of Housing Loan from other Banks shall be considered by ZLCC
even if the account with transferor Bank is run for a period of less than oneyear
(excluding moratorium period) subject to:
 CIBIL personal score is 700 and above
 The applicant is our existing customer of the bank with satisfactorily
conducted account at least for a period of 6 months or
 Salaried Persons of Govt. /PSUs/MNCs/Reputed Corporate or
Organizations where the employees drawing salary through our bank or
other bank where salary account has been conducted satisfactorily for at
least 6 months.
 In case if salary account is not with us then NACH mandate is compulsory
 Obtention of Third party guarantee: Third party guarantee is required to be

obtained in all cases of Takeover, as the equitable mortgage is not available on
the date or immediately after disbursement. However, sanctioning authority can
allow waiver of obtention of third party guarantee, based on the merits of the
case.

139
Real Estate (Regulation and Development) Act 2016 (RERA)
Government of India has enacted the Real Estate (Regulation and Development) Act
2016 (RERA) which game into effect W.e.f 01.05.2017. While some Of the States have
already notified the Rules, the remaining States are expected to notify the same in due
course of time. The salient features Of the RERA Guidelines are as under:
The salient features Of the RERA Guidelines are as under
1 RERA applies to all projects both residential & commercial except the following :-
 Where area proposed to be developed does not exceed 500 sq. mts number of
apartments proposed to be developed does not exceed 8 inclusive of all of
phases.
 Where promoter has received completion certificate for Real Estate Project
prior to commencement Of Act.
 For purpose of renovation or repair or re-development which does not involve

marketing, advertising, selling or new allotment of any apartment, plot or
building, under real estate project
Prior registration of real estate project With Real Estate Regulatory Authority is
Mandatory (Applicable in the states Where RERA has been notified and implanted).
Operative Guidelines in respect Of project Approval (Builder Tie-up) & Home Loan
financing:
 In States where the RERA has already been enacted, notified and
implemented, all the Real Estate project loans should be sanctioned and also
the new projects Should be approved Only after Obtaining registration number
issued by the RERA Authority. The disbursements should be made into the
escrow account specifically opened as required under RERA.
 Further, all the existing approved projects should be reviewed to ensure that
the project complies with the RERA guidelines. Moreover, in All the existing
Home Loan accounts disbursed after 01.05, 2017, Where possession have not
been received by the borrower, While being reviewed annually, the compliance
regarding RERA Guidelines should be necessarily looked into. A check list is
annexed (Annexure-I), which should be submitted by the processing officers
along with the appraisal form for all Horne Loans/project approvals. In other
States & UTs, where the RERA is yet to be implemented, extant guidelines
continues.

140
Star Vehicle Loan
Branch Circular No 116/06 date 01.04.2022. Date 116/111 Date 27.07.2022

STAR VEHICLE LOAN SCHEME — INDIVIDUALS
Particulars Terms
Eligible All individuals including farmers, NRIs (jointly with resident close
Customer relatives),Senior citizens, Pen-sioners ,Retired employees of the
Bank (other than dismissed/compulsorily retired),staff members,
proprietorship/partnership firms, corporate entities etc. (except
HUF).Newly recruited BOI Staff with minimum 6 months satisfactory
service The request of Bank's confirmed staff for Car loan can be
considered under the Star vehicle loan scheme for amount over and
above the eligible loan amount under Staff vehicle loan scheme
(HOBC 109/212 dated 12/02/2016), with all terms and conditions as
applicable to general public
Purpose Purchase of New Two/Four Wheeler (including jeeps & vans not
requiring Heavy Duty License).
Purchase of Water vehicles such as Motor Boats / Boats / Sports
Boats and other water vehicles for personal use. (Second hand
Water vehicles not to be financed)
Second Hand - up to 3 years old provided comprehensive insurance
and other vehi-cle documents available). No accident history.
Electronic /battery operated vehicle – Vehicle to be registered and
preferably collat-eral security to be obtained where registration is
not required. Reimbursement of cost of four wheeler vehicle
purchased from own sources subject to certain conditions
(Delegation SZLCC) Reimbursement of cost of four wheeler
purchased from own sources.
Subject to: Vehicle should not be more than 3 months old and
purchase done through Cheque/ Card/ electronic mode only.
Vehicle should not have met any accident, valuation by a reputed
automobile engineer. Obtention of original invoice, RC, Insurance.
‘The reimbursement will be made only after registration of our
charge with RTO and hypothecation charge on insurance with
Bank’s Standard clause.
Quantum of Max. 200 Lakhs For Individuals: 36 times of average of last 6
finance months salary drawn/or 3 times of latest Form 16 / 3 times Gross
aver-age income of last 2 years ITR
For Others: 4 times Gross average income of last 2 years ITR /48
times of average of last 6 months salary drawn/or 4 times of latest
Form 16/ with Net take home pay (NTHP) as under:
■ Up to Rs.1.00 lakh per month: 40%
• Up to Rs.5.00 lakhs per month :30%
▪ Above Rs.5.00 lakhs per month: 25%.
For Indian make vehicles: Rs.200 lakhs;
Imported vehicles: Rs. 200 lakhs;
For companies & corporates: Rs.200 lakhs (can be a fleet of
vehicles).

141
Net take For individuals: 40%- For gross monthly income of Rs.1 lakhs
home pay 30%- For gross monthly income of Rs.1 lakhs and above and up to
5 lakhs
25%- For gross monthly income of Rs. 5 lakhs and above
Age Not exceeding 65 at the time of availing finance
Margin Individuals (including NRIs):
New vehicles only) :10% (on 'ON ROAD PRICE') uniformly for all
limits. Marginincludes basic price of vehicle, Road Tax, Insurance
andRegistration excluding cost of accessories.
For Second hand vehicles: Minimum Margin 30% (on
depreciated value or value assessed by valuer or sale
consideration whichever is lower.)
Repayment For New vehicles :
2 wheelers — Max. 5 years
4 wheelers/Water Vehicle - Max. 7 year.
For pre-owned (second hand) vehicles:
A. Two wheelers: Maximum repayment period shall be 5
years from the original date of registration
B. Four Wheelers: Maximum repayment period shall be 7
years from original date of registration
Security Principal security — Hypothecation of assets purchased out
of Bank finance & charge to be registered with RTO and
registered as Personal vehicles.
2) Comprehensive insurance (including third party) of the
vehicle with Bank clause.
3) Collateral Security- Appropriate Collateral security to be insisted
a). For loan limits exceeding the maximum quantum of loan as
specified in point no. 7, Quantum of loan.
• In case of liquid security: 100% of loan amount
• In case of immovable properties: 125% of loan amount
• In case of shares/mutual funds: 200% of loan amount
b). For Water vehicles: collateral security to be obtained
irrespective of sanction limit.
• In case of liquid security: 100% of loan amount
• In case of immovable properties: 125% of loan amount
• In case of shares/mutual funds: 200% of loan amount
c.) In respect of vehicles run on non-conventional energy not
requiring registration with RTO, collateral security to be
obtained for loans limits over Rs.1.00 lac.
Finance to be given only for vehicles purchased from dealers.
Takeover of Takeover of car loans from other banks can be permitted subject to:
vehicle The applicant is our existing customer with satisfactorily conducted
Loans from account with the Bank for at least two years.
other 1. The vehicle is not more than 2 years old, It is a single ownership
Banks vehicle.No insurance claim has been availed
4. The borrower's a/c with the other bank is a Standard Asset ie. All
repayments are made as per terms of sanction of the original
financier.5. No change in ownership is envisaged.
6. Repayment period as applicable to second hand loans.

142
Clubbing of Income of any one family member -spouse, father, mother, brother
income or sister - may be included for arriving at loan eligibility and he/she
of co to join as a co-borrower. Maximum number of applicants to be
applicants/ restricted to two. Loan repayment to be made from a/c of the
joint account applicant in whose name vehicle is registered or through an a/c with
holders us in the joint names of the borrowers. However, the vehicle shall
be registered in the name of main applicant who is the major earning
member among the applicants
STAR VEHICLE LOAN SCHEME — ENTITIES OTHER THAN INDIVIDUALS

Particulars Terms
Eligible Customer Companies, Partnership firms, Proprietary concern and

other types of Corporate entities. HUFs not permitted.
Purpose  For purchase of new two wheeler/four wheeler vehicles.

 For purchase of used / second hand 2 and 4 wheeler
— Age of the vehicle not to exceed 3 years.
 Finance can be granted against the vehicle when
Comprehensive Insurance Cover is available and
valuation to be obtained from Bank's Approved valuer).
 For purchase of light personal vehicles not requiring
heavy duty driving license viz; Jeeps, Vans etc.
 For purchase of Water vehicles such as Motor Boats /
Boats / Sports Boats and other water vehicles for
corporate use. (Second hand Water vehicles not to be
financed).
Delegation to finance Water Vehicles shall rest with minimum
SZLCC and above.
 Vehicles powered by non-conventional energy, such
as electronic/battery operated small vehicles for urban
transport provided not registered with RTO can be financed
subject to specified curtailed limits of advance preferably with
collateral security).
 Reimbursement of cost of four wheeler vehicle

Purchased from own sources. Subject to: -
1. Purchase of New Four Wheeler Vehicle.
2. Purchased Vehicle should not be more than 3

months old.
Quantum of finance Max. Rs.300 Lacs (Authority for deviation Above Rs.300.00
Lakhs NBGLCC)

143
Calculation of 3 times of average annual cash accrual (i.e. PAT +
Quantum of Loan Depreciation) as per last two years I.T. Returns, Audited
balance sheet, P&L Account filed in respective
assessment years subject to a minimum DSCR of 1.25
Margin New Vehicles:15% (on 'ON ROAD PRICE')

For Second hand vehicles: Minimum Margin 30% (on
depreciated value or value assessed by valuer or sale
consideration whichever is lower.)
Rate of Interest ROI is subject to change from time to time as per HOBC Ref.
no.115/45 dated 04.05.2021. Festive offer HOBC 116/175 dt
28.09.22
Concession in ROI: 0.10% concession in ROI can be given for the below
mentioned category of borrowers,
i. CIBIL commercial score of company/firm is CMR5 and

below and loan amount of Rs 20.00 lakhs and above
OR
ii. For purchase of vehicles run on non-conventional
sources of energy Delegation to allow concession in ROI: RBC
and above
Repayment For New vehicles:
2 wheelers — Max. 5 years
4 wheelers/Water Vehicle - Max. 7 year.
For pre-owned (second hand) vehicles :
Two Wheelers : Maximum repayment period shall be 5 years
from the original date of registration
Four Wheelers: Maximum repayment period shall be 7 years
from the original date of registration

144
STAR DOCTOR PLUS SCHEME (RETAIL) VEHICLE LOAN —
INDIVIDUALS AND PROPRIETORSHIP FIRMS
Purpose Purchase of Personal Vehicles (Two/Four Wheeler)
Eligibility Qualified registered medical practitioner with minimum
3
years' experience in any branch of medical science
recognized by MCl/DCI /other statutory /regulatory
authorities to practice in India
Constitution of Borrower Individual / Proprietorship
Age 25-75 Years. Outer age is the age by which the
advance
facility should be repaid in full.
Authority for deviation : SZLCC and above
Loan Limit Maximum: For Indian make vehicles/ imported vehicles
: Rs.200 lakhs
Calculation of For Salaried :
Loan 4 times Gross average income of last 2 years ITR / 4
times gross average income of latest form-16/ with Net
take home pay (NTHP) as under
• Up to Rs.1.00 lakh per month: 40%
• Up to Rs.5.00 lakhs per month : 30%
• Above Rs.5.00 lakhs per month: 25%.
For Proprietorship Firm:
Four times of average annual cash accrual (i.e. PAT +
Depreciation) as per last two years I.T. Returns,
Balance
sheet, P&L Account filed in respective assessment
years, subject to a minimum DSCR of 1.25
Security Hypothecation of Assets created out of bank finance;
Bank's charge to be registered with RTO.
Margin For Individuals/ Proprietorship firms ( New vehicles
only) : 10% (on 'ON ROAD PRICE')
Repayment 84 Months (Repayment to commence from next month
of first disbursement )
Take Home Pay (Incl. EMI Minimum NTHP for gross monthly income
for proposed up to Rs.1 lac - 40%
Loan) over Rs.1 Lac to Rs.5 lacs - 30%
over Rs. 5 lacs - 25%
Rate of Interest Rate of Interest as per HOBC Ref. no.115/45 dated
04.05.2021. Festive offer HOBC 116/175 dt 28.09.22
Concession in Concession in ROI will be considered by
ROI NBGLCC/GMLCC/EDLCC as per its delegation

145
Star Education Loan and its variants
Branch Circular No. :116/07 Date 01.04.2022, BC 116/109 date 27.07.2022)
 Star Progressive Education loan: For studies from Pre-school to Higher Seco.
School
 Star Education Loan: For Studies in India (From Higher Secondary school
onwards)
 Star Education Loan: For Studies Abroad (From Higher Secondary school
onwards)
 Star Vidya Loan: For studies in premier Educational Institutes.
 Star Pradhan Mantri_Kaushal Rin Yojana: For Skills/Vocational studies
 Star Education Loan to Working Professionals
 Takeover of Education Loans from other Banks
 PADHO PARDESH — Scheme of Interest Subsidy on Educational Loans for
Overseas Studies for the Students belonging to the Minority Communities
STAR PROGRESSIVE EDUCATION LOAN

Target group:
Parents of students persuing school education from Pre-School (3 years of Play school
to 2nd Class)-Stage I, Primary School (3rd to 5th Class)- Stage II, Upper Primary (6th
to 8th Class)-Stage III, Secondary School (9th to 10th Class)- Stage IV & Senior
Secondary School (11th to 12th Class)- Stage V.
Parents of Students pursuing School education from Pre-school, Primary School to
Senior Secondary school (Indian studies only)
Personal Credit Score Model – minimum 20 out of 53 Marks. Loan to be granted in
the name of Father / mother of the student having reasonable source of income.
Admission/Age of Stage Grade No. of years
the student in each stage
The school admission will be after completion of age of 3 years
Children between Pre school 1. First three years:
3-8 years will be Play school
included 2. Next two years: 5
Class 1st and 2 nd
class
Children Primary School 1. First year : 3rd
between 8-11years class
2. Second year : 3
4 th class
3. Third year: 5th
class
Students of the Upper Primary 1. First year : 6th
age group of 11- 14 school class
years 2.Second year : 7th 3
class
3. Third year: 8th

146
class
Students of the Secondary 1. First year 9th
age group of 14-16 school class
2 Second year :
10th class
Students of the Senior 1. First year : 11h 4
age group of 16-18 Secondary class
school 2. Second year :
12th class
Eligibility Parent and student should be resident Indian. Student should
have secured admission to recognized school/High School/Jr
College conducting studies of BSE/ICSE/IGCSE/State Board.
Personal Credit Score Model – minimum 20 out of 53 Marks.
Loan to be granted in the name of Father / mother of the student
having reasonable source of income.
Expenses to be Fee payable to Junior College / School
considered • Examination / Library / Laboratory fee.
• Fee and other charges payable to hostel
• Purchase of books /equipment/ instruments/ uniforms.
• Personal Computers / Laptops wherever required.
• Caution deposit / building fund / refundable deposit supported
by Institution bills / receipts.
• Expenses towards lodging / boarding, if the student does not
secure hostel facilities with educational institute. A realistic
assessment to be made of the requirement accordingly.
• The details of expenses to be obtained from Jr.College / school
/ institution .In case such details are not furnished by the school
authorities, suitable declaration from parents be obtained and
carefully examined / satisfied. A realistic assessment to be made
of the requirement accordingly.
Note: Cost of external coaching / tuition is not to be considered
Reimbursement For the first year of study, at times school/Institutions insist that
of expenses the students pay the fees immediately on admission. Such
amount may be reimbursed after obtaining necessary proof of
payment i.e. bills & receipts In genuine cases, expenses for
purchase of books etc. may be reimbursed after obtaining
necessary proof of purchases and payment for previous years
Quantum of Maximum cap Rs. 4.00 Lakh (For each stage)
finance
Margin Up to Rs. 4.00 lakhs: NIL
Note: Scholarship to be included in the margin.
Rate of Interest RBLR+ CRP of 1.70 % p.a., floating with monthly rests.
Repayment 12 equated monthly instalments immediately after disbursement
Repayment 1. 75% (where monthly income is more than Rs. 5.00 Lakhs)
Capacity of 2. 70% (Where monthly income is between Rs. 1.00 to 5.00
Parent/s Lakhs)
3. 60% (Where the monthly income is less than Rs. 1.00 lakh) of
total income.
Security Clean

147
Star Education Loan: For Studies in India
Parameter Scheme Guideline
Eligibility The student should be an Indian National Non-Resident Indian/Persons of
Criteria Indian Origin (PIO) /Overseas Citizens of India (OCI) shall also be eligible
In case of adverse credit history of Applicant i.e CIBIL personal score less
than 675 shall not be considered
Admission Student Should have secured admission to a higher education course i.e.
Criteria Graduation, Post-Graduation,Technical, professional & other courses in
recognized institutions in India through Entrance Test/Merit based
selection process after completion of HSC (10 plus 2 or equivalent).loan
for students are also available who will take admission under Management
Quota subject to compliance of terms as mentioned in orignal policy.
Eligible The Course should be approved/ recognized by the designated academic
courses authority/regulatory body for the stream of study concerned in
India.Important Website References For Courses:
1. www.uqc.ac.in,2. www.aicte.orq.in 3. www.education.nic.in,
4. http://mhrd.gov.in/itechnical-education-1
5. http://mhrd.gov.in/institutions-national-importance.
6. http://www. naac.gov. in/Universities_Colleges.asp
7. http.//www.nbaind.org/accreditation-status.aspx.
Expenses a) Fee payable to college/school/hostel.b) Examination/Library/Laboratory
considered fee.c) Caution deposit/building fund/refundable deposit supported by
for Institutionbills/receipts.d)Purchaseof
loan books/equipment/instruments/uniforms.e) Purchase of computers/Laptops
Expenses f) Any other expense required to complete the course — like study tours,
project work, thesis, etc. g) Life Insurance Premium for life cover of
student/co- borrower for total tenure of loan.
Maximum Need based finance to meet educational expenses and having
quantum of regard to student’s earning potential after completion of course &
loan not his parents’ income or worth subject to Higher limit for both
medical and Non medical courses up to Rs. 150.00 lakhs can be
considered at the level of ZLCC &Limit and above Rs. 150.00 lakhs can be
considered at the level of NBGLCC and above (BC 116/109 date
27.07.2022)
Margin Up to 4.00 Lakhs NIL Above Rs. 4.00 Lakhs please ref. Circular
Repayment 15 years after completion of moratorium period.
Moratorium Course period + 1 year
Rate of Floating Rate of Interest linked to RBLR, per annum, at monthly rests, as
Interest advised from time to time.
Security Obtention of guarantee under Credit Guarantee Fund Scheme for
Education loans (CGFSEL) by National Credit Guarantee Trustee
Company (NCGTC) is mandatory for all loans upto Rs 7.50 lakhs.
Concession Concession in ROI will be considered by
in Rate of NBGLCC/GMLCC/EDLCC as per its delegation.
Interest

148
Education Loans to individuals for educational purposes, including vocational
Loan courses, not exceeding Rs. 20 lakh will be considered as eligible for priority
under sector classification.
Priority
Sector
Star Education Loan: For Studies Abroad
Eligibility The student should be an Indian National
Criteria In case of adverse credit history of Applicant i.e CIBIL personal score
less than 675 shall not be considered
Admission Student Should have secured admission to a higher education course
Criteria i.e. Graduation, Post-Graduation, Technical, professional & other
courses in recognized institutions abroad through Entrance Test/Merit
based selection process after completion of HSC (10 plus 2 or
equivalent).
Eligible The Course should be approved/ recognized by the designated local
courses academic authority/regulatory body for the stream of study concerned.
Institutes or Universities upto world ranking of 3000 provided in the
website www.webometrics.info (indicative only) / the Institutes or
Universities upto world Ranking 1000 provided in the website www.
topuniversities. corn/ www. qs. corn (indicative only) will be covered
Expenses a) Fee payable to college/school/hostel.
considered b) Examination/Library/Laboratory fee.
for c) Caution deposit/building fund/refundable deposit
loan Supported by Institution bills/receipts.
Expenses d) Purchase of books/equipment/instruments/uniforms.
e) Travel expenses/passage money for studies abroad
(one way airfare only).
f) Purchase of computers/Laptops
g) Any other expense required to complete the course — like study
tours, project work, thesis, etc.
h) Life Insurance Premium for life cover of student/co- borrower for
total tenure of loan
Maximum Need based finance to meet educational expenses and having
quantum of regard to student’s earning potential after completion of
loan course & not his parents’ income or worth subject to Higher
limit for both medical and Non medical courses up to Rs. 150.00 lakhs
can be considered at the level of ZLCC &Limit and above Rs. 150.00
lakhs can be considered at the level of NBGLCC and above (BC
116/109 date 27.07.2022)
Margin Up to 4.00 Lakhs NIL Above Rs. 4.00 Lakhs please ref. Circular
Rate of Floating Rate of Interest linked to RBLR, per annum, at monthly rests,
Interest as advised from time to time
Security Obtention of guarantee under Credit Guarantee Fund Scheme for
Education loans (CGFSEL) by National Credit Guarantee Trustee
Company (NCGTC) is mandatory for all loans upto Rs 7.50 Iakhs.

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Concession Concession in ROI will be considered by
inRate of NBGLCC/GMLCC/EDLCC as per its delegation.
Interest
Education Loans to individuals for educational purposes, including vocational
Loan under courses, not exceeding Rs. 20 lakh will be considered as eligible for
Priority priority sector classification
Sector
BOI STAR VIDYA LOAN - FOR STUDENTS OF PREMIER INSTITUTIONS
Eligibility The student should be an Indian National Non-Resident
Criteria
Admission Student Should have secured admission in recognized premier
Criteria institutions in India through Entrance Test/Merit based selection
process after completion of HSC (10 plus 2 or equivalent).
Loan to be granted to students who have secured admission
under merit quota only.C) Credit History of student:
1. Normally, the Applicant i.e. student borrower may not have a
credit history and as such he/she is assumed to be creditworthy.
2. In case of adverse credit history of Applicant i.e. CIBIL personal
score less than 675 shall not be considered.
Eligible courses Regular full time Degree/Diploma courses conducted by listed
premier Institutes. ( Refer list of Institutes as per Annexure - )
Certificate / part time courses are not allowed Full time Executive
Management Courses like PGPX (for Ms) are also covered.
considered for b) Examination/Library/Laboratory fee.
loan Expenses c) Caution deposit/building fund/refundable deposit supported by
Institution bills/receipts.
d) Purchase of books/equipment/instruments/uniforms.
e) Purchase of computers/Laptops
f) Any other expense required to complete the course — like study
tours, project work, thesis, etc.
g) Life Insurance Premium for life cover of student/co- borrower
for total tenure of loan.
Maximum Institution Category Loan Amount
quantum of List A Max. Rs.40.00 lacs
loan
List B Max. Rs.25.00 lacs
List C Max. Rs.15.00 lacs
Max:Rs. 150.00 lakhs can be considered at the level of ZLCC
&Limit and above Rs. 150.00 lakhs can be considered at the level
of NBGLCC and above (BC 116/109 date 27.07.2022)
Margin NIL
Rate of Interest @RBLR.
Security 1. Co-obligation of parents/guardian borrowers.
2. Assignment of future income of student.

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STAR PRADHAN MANTRI KAUSHAL RIN YOJANA (SKILL LOAN SCHEME)
Objective Skill Loan Scheme aims at providing a loan facility to individuals who
intend to take up skill development courses as per the Skilling Loan
Eligibility Criteria
Eligibility Criteria The student should be an Indian National Any individual who has
secured admission in a course run by Industrial Training Institutes (ITIs),
Polytechnics or in a school recognized by Central or State education
Boards or in a college affiliated to recognized university, training partners
affiliated to National Skill Development Corporation (NSDC)/Sector Skill
Councils, State Skill Mission, State Skill Corporation, preferably leading
to a certificate / diploma / degree issued by such organization as per
National Skill Qualification Framework (NSQF) is eligible for a Skilling
Loan. The Government of India / State Governments may, from time to
time, notify institutes/organizations for the purpose.
Eligible courses Courses run by Industrial Training Institutes (ITIs), Polytechnics or in a
school recognized by central or State education Boards or in a college
affiliated to recognized university, training partners affiliated to National
Skill Development Corporation (NSDC)/Sector Skill Councils, State Skill
Mission, State Skill Corporation, preferably leading to a certificate /
diploma / degree issued by such organization as per National Skill
Qualification Framework (NSQFshall be covered by the Skill Loan
Minimum Duration There is no minimum course duration.
Minimum As required by the enrolling institutions/ organizations as per NSQF.
Qualification
e) Any other reasonable expenditure found necessary for completion of
the course. (As such courses are localized boarding, lodging may not be
necessary. However, wherever
it has been found necessary, the same could be considered on merits
Maximum Need based finance to meet expenses as Mentioned above will be
quantum of loan considered subject to the following ceilings : Loans will be in the range
of Rs. 5,000/- to Rs.150,000/-
Margin NIL
Repayment The loan will be repaid after the moratorium period in Equated Monthly
Installments (EMIs) as follows:
Loan Up to Rs. 50,000/- Up to 3 years
Loans between Rs. 50,000/- to Rs. 1.00 lakh Up to 5 years
Loans above Rs. 1.00 lakh Up to 7 years
Rate of Interest 1 50% over RBLR
Insurance Optional at the request of the borrower

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STAR EDUCATION LOAN TO WORKING PROFESSIONALS
Eligibility The student should be an Indian National
Criteria
Employment Should be permanent employee of the Central Govt. /
Criteria State Govt. / reputed Private Sector/ MNC/ Public Sector
companies or Institutions.
• Should be gainfully employed during the tenure of course
period.
Age The Applicant should be below 55 years of age and should
have a work experience of at least 2 years.
Admission The Applicant must secure admission in a Part-Time or Distance
Criteria Education course of recognized universities.
• Online/Offline Executive Diploma/Certificate Programs
(EDP) provided by top notch B schools listed in "List —A"
under Star Vidya Loan scheme.
Credit History The credit history of Applicant to be ascertained through
of student CIBIL report and the Applicant should have CIBIL score of
minimum 675 or No credit history (-1 / 0).
Eligible • Approved Part time/Evening courses or distance learning
Courses courses of recognized Universities/Institutions
• Online/Offline Executive Diploma/Certificate Programs
(EDP) provided by top notch B schools listed in "List —A"
under Star Vidya Loan scheme
Note: The Course should be approved/ recognized by the
designated academic authority/regulatory body for the stream of
study concerned in India.
e) Any other reasonable expenditure found necessary for
completion of the course. Like study tours, project work, thesis,
etc. These items may not be available in the schedule of fees.
Therefore, a realistic assessment may be made of the
requirement under these heads.
• Life Insurance Premium for life cover of student/coborrower
for total tenure of loan.
Mess, Lodging and boarding charges will be not be
considered
Maximum Maximum loan amount should not exceed Rs. 20.00 Lacs
quantum of
loan
Margin Loan Amount Margin %
Upto Rs 4.00 Lacs 5%
Above Rs 4.00 Lacs — upto Rs 7.50 Lacs 10%
Above Rs. 7.50 Lacs 15%

152
Repayment Loan to be repaid by the age of 60 years or 10 years after
Completion of course period, whichever is earlier. No moratorium
period after completion of course
Rate of Interest As applicable in Star Education loan. No additional concession
to be provided.
Security Upto Rs 4.00 Lakhs NIL
Above Rs 4.00 Lakhs Tangible Collateral security of suitable value
acceptable to the Bank. Assignment of future income of the
student for payment of instalments
Other terms Salary deduction from the employer or ECS to be obtained
and conditions mandatorily.
Classification The accounts financed under the scheme to be classified under
Priority, as per the RBI guidelines
Star Personal Loan and its variants

Branch Circular No. : 116/08 Date 01.04.2022
Star Personal Loan
Financing Central Govt./ State Govt. employees etc., Under approved schemes
with Tie up arrangement for recovery of Loans
Star Doctor Plus Personal Loan
Star Mitra Personal Loan 18
Star Pensioner Loan

153
BOI Star Personal Loan Scheme
Eligibility: Salaried employees, professionals and High Net-worth Individuals (HNI) Purpose: Any bo
Age: Salaried Person : Not to exceed retirement age of the employee For
professionals and others not to exceed 70 years of age.
Loan Limit:
Nature of Advance Minimum Advance Maximum Advance
Unsecured/ Clean Rs. 0.25 lace Rs. 10.00 Lacs
Secured Rs. 1.00 lacs* Rs. 20.00 Lacs
Calculation of Quantum of Loan:Unsecured/Clean :- Salaried persons: 15 times of
monthly Net Emoluments. Other individuals: 100% of Gross Average Annual Income
as per last three Income Tax Returns.
Secured :- Salaried persons: 30 times of monthly Gross Emoluments.
Other individuals: 200% of Gross Average Annual Income as per last three Income
Tax Returns.
Security:
 Equitable/Legal Mortgage of commercial/residential property/ flat valued by
approved valuer for not less than 150% of quantum of loan.
b) Whenever mortgage of property (Land/Building) is proposed as security,
extant guidelines on Valuation, Title Search, Charge Creation, Registration
etc./ as per Home Loan/Loan Against Property shall be strictly complied with.
 c) Collateral Security in the form of Pledge of Gold/Gold Ornaments, National
Savings Certificates/KVP, Bonds, Assignment of LIC Policy with adequate
surrender value, at least equal to loan amount.
 d) Pledge of Demat Shares, Units etc. of market value not less than 200% of
the amount of the loan.
Margin: 10% for Secured Advances. No specific margin to be insisted upon for clean
advances Repayment period: Maximum repayment period should not exceed 84
months in case of secured or clean advances, commencing from subsequent month
of first disbursement. In case of salaried employees, the repayment period should be
84 months or residual service period whichever is earlier. For the purpose of holiday
trips (within India/ abroad), maximum repayment period should not exceed 36 months.
Net Take home pay/income (NTHP): Not less than 40% of Gross income
Processing charges: Shall be guided by the circular issued on Service charges from
time to time and the latest being HOBC Ref. No.115/262 dated 31/12/2021
ROI: Shall be guided by the circular issued on Rate of interest from time to time and
the latest being HOBC Ref. No. 115/45 dated 04/05/2021.
Fully Secured – RBLR + 4.50 % Clean – RBLR + 5.50 %
For Senior Citizens aged 60 & above for loans up to Rs.50,000/- ROI is RBLR + 3.50
%
(Source:- BC 116/08 Dt. 01.04.2022 Master Circular ).

154
STAR Personal Loan to Government Employees
Target Group: The scheme should be approved by ZLCC. MOU with the organization
is required, for financing clean/unsecured loans to GROUP of permanent/confirmed
employees of central/state government, PSBs/PSEs of Central & State Govt. (earning
profit for last three years), teachers of government schools and colleges and staff of
regulatory bodies like RBI, SEBI, IRDA etc. Where salary deduction of EMI is available
or proper mechanism for deduction of EMI from the employee borrower’s salary is in
place.
Clean/Unsecured loans: Max. Quantum of finance is Rs. 20 Lakhs.
Net Take Home Pay (NTHP):-
Net take home Monthly gross income
Upto Rs. 1 lacs 40%
Rs. 1 lacs to Rs. 5 lacs 30%
Rs. 5 lacs and above 25%
Calculation of quantum of loan: Clean -15 times of monthly net emoluments.

Secured: 30 Times of monthly gross emoluments
All other provisions, (including concession in ROI and modification/ deviation in policy
norms) and modification except the specific norms as mentioned hereinabove, as
perStar Personal Loan scheme to be strictly complied with
(Source: - BC 116/08 Dt. 01.04.2022 Master BC)

155
BOI Star Doctor-Plus-Personal Loan
Eligibility: Qualified registered medical practitioner with minimum 3 yrs.’ Experience in
any branch of medical science recognized by statutory/ regulatory authorities to
practice in India.
Purpose: Any approved purpose.Constitution: Individual/Joint/Proprietorship
Age: 25 to 75 years Authority for deviation: SZLCC and above
Loan Limit: Rs.25 Lakhs

Calculation of Quantum of Loan:
For salaried:36 times of gross monthly salary
For others:3 times of gross annual income as per ITR
Security: For limit up to Rs.5 lakh - No collateral security
For Loan over Rs. 5 lakh up to Rs.10 Lakh- Third Party Guarantee of Adequate Value.
One Person cannot guarantee more than one loan account.
For Loan over Rs.10 lakh up to Rs. 25 Lakh- Equivalent collateral security for loan
over Rs.10 lakh.
Type of Advance: I. Demand / Term Loan
ii. Overdraft (DP reducible by Monthly Equated installments).
iii. Overdraft (Non Reducible- Max. Limit Rs. 20 lacs), provided the account is secured by
collateral security and should not have any cash credit/overdraft limits with any other
Bank.
Repayment period: For loan/reducible OD—84 months wef next month of first
disbursement. For non-reducible OD- Repayment should be fixed on reaching the age
of 68 years to ensure closure of loan before completion of 75 years of age.
Net Take home pay/income (NTHP):
For Gross monthly income up to Rs.1 lakh-NTHP minimum 40%
For Gross monthly income over Rs. 1 lakh to Rs.5 lakhs minimum30%
For Gross monthly income over Rs.5 lakhs- minimum 25%
Processing charges: 50% concession in charges
Rate of Interest: Spread is from 2.00% to 3.00%
1.Fully Secured RBLR+2.00%=8.85%
2. Clean/ Unsecured RBLR+3.00%=9.85%
Shall be guided by the circular issued on Rate of interest from time to time and the
latest being HOBC Ref. No.115/45 dated 04/05/2021.
(Source: BC 116/08 Dt. 01.04.2022 Master Circular)

156
Star Mitra Personal Loan
Objective- To help “Divyang” (Physically Challenged) persons to function
independently.
Purpose: To purchase durable and sophisticated aids / appliances that promote their
physical and social rehabilitation
Eligibility-All Physically Challenged Individuals – both salaried and self- employed,

All Physically Challenged Minors through their Parents/Legal Guardians. No advances
to middle-men and NGOs.
Type of Advance: Demand / Term Loan – Secured.
Amount- For salaried: Max. 2 lac -- For self-employed/ Professionals: Max. 1 lac
Eligible Amount-
15 times of net salary for salaried persons and 100% of net annual income as per
latest Income Tax Return for Self-employed/ Professionals.
Net take home income should not be less than -

40% after availing this loan. (In case of Minors, the income of the Parents/Legal
Guardians would be the deciding criteria for eligibility).
Margin: 10% (May be waived in deserving cases, as also in DRI cases, Discretion
with the Sanctioning Authority).
Repayment:
12 to 60 months, commencing one month after full disbursement/ three months after
first disbursement, whichever is earlier.
Rate of I n t e r e s t (ROI): At 1% above Base Rate/MCLR (Fixed Rate during tenure

of loan, compounded monthly, on daily reducing balance basis).
Security: Hypothecation of the Equipment purchased out of Bank Finance.

Insurance:Waived. However,Borrower may be advised to obtain insurance at his own
cost.
Processing Charges Waived.
Delegation As per powers for sanctioning secured Star Personal Loan

Other Terms and Conditions: Doctor’s Certificate to be obtained from the borrower
regarding the extent of handicap and the need for the equipment.
Quotation/Invoice in respect of the equipment to be purchased.
Stamped receipt to be submitted after purchase of the equipment.
Staff members also permitted (other than those who are under suspension) from those
branches where the salary account of the employee is maintained. Loan to be repaid
before retirement/ recovered from terminal dues in case of cessation from service. All
Other Terms & Conditions Including Documentation of Star Personal Loan Scheme
Will Apply Ref:BC 116/08 01.04.2022.

157
STAR Pensioner Loan Scheme
Eligibility:
Regular Pensioner, Family Pensioners drawing regular monthly pension through the
branch. Retired employees (other than dismissed/compulsorily retired) of our Bank
drawing pension from the Bank. Pensioners who are getting pension through
Treasury/Defense Pension disbursing Office (DPDO) directly to the credit of their
Savings Bank Account with our branches are also eligi-ble subject to conditions :
The Pensioners copy of Original PPO to be lodged with the Branch.
Duplicate/Triplicate of the stamped undertaking as per Annexure II of the Master
Circular on Pensioner Loan Scheme furnished to the Bank to be submitted to the
Treasury/DPDO and acknowledged copy to be kept on records.
Purpose: Any bonafide activity other than speculation activities
Age: For loans over Rs.1.00 lakh, not to exceed 75 years at the end of repayment
period For Repayment period beyond 75 years (Age): Max. loan limit Rs. 1.00 lac
Loan Limit/Quantum of finance: 15 months Net pension for secured & 20 - months of
Net pension for unsecured loan.
Regular Pensioner/ Family Pensioner where PPO is held at Nagpur Govt. Business
Branch- Max. Rs.10 00 000/-.
Pensioners who are getting pension through Treasury/ Defence Pension Disbursing
Office directly to the credit of their Savings Account with our Nagpur Govt. Business
Branch- Max. Rs. 5 00,000/-
Family Pensioner who is getting pension through Treasury/ Defence Pension
Disbursing Office- Max.Rs. 3, 00,000/-.( *Subject to the loan tenure should not exceed
the age of ceasing / stopping of pension as per Pension Payment Order.)
Co-Borrower: In case of regular pensioners, nominee/legal heir and in case
of family pensioner legal heir will be co borrower.
OD Facility up to 3 months Net pension, max. Rs.100,000/- only to those pensioner
drawing pension from the branch which should be holding their PPOs.
Processing charges: No processing charge for Senior Citizens (60 years & above).
For others — one time @ 2% of loan amount Min.Rs.500 and Max. Rs.2,000/-. No
processing charges for senior citizens.
ROI for both Secured & Unsecured: Shall be guided by Circulars issued from time to
time and latest being HOBC Ref. No. 115/45 dated 04/05/2021. (RBLR+2.50 %)
All other terms & conditions: - As per Star Personal Loan Scheme
(Source: BC 116/08 Dt. 01.04.2022 Master BC)

158
Star Loan against Property
Branch Circular No. : 116/09 Date 01.04.2022 116/110 Date 27.07.2022
PURPOSE:
 To meet the credit needs of trade, commercial activity, other general
business/
 profession, as also for their bona fide requirements;
 To meet educational expenses of family members including near relatives;
 To undertake repairs/renovation/extension to the residential/commercial
property;
 To purchase / construct residential house / flat, purchase of a Plot of land for
construction of house/premises for business/commercial use
 Repayment of existing loans availed from other Banks / F1's conforming to the
 extant guidelines regarding "takeover" of account
 Any other purpose except for financial speculation of any nature
TARGET (ELIGIBLE) CUSTOMERS
Individuals:
Resident Indians: Existing or New customers
Regular and confirmed Employees/individuals with high net worth. Professionals, self-
employed and people engaged in trade, commerce and business, engaged in
business/profession for a minimum period of 3 years
Non-Resident Indians (NRIs):
Non-Resident Indians (NRIs) holding Indian passport having a regular job abroad in
a reputed Indian I foreign company, organization or government department.
NRIs holding a valid job contract / work permit for minimum past -3- years or employed
/ self-employed or having a business unit and staying abroad at least for past -3 years.
The CIBIL personal score should be 675 and above
The ITRs for the last three years should have been filed in respective assessment
years
LAP can be considered for those retired persons having regular source of income in
addition to pension.
Non-Individuals: Non-individual customers have been excluded from our eligible

customer base of our Loan against Property Scheme as the same has been included
in the "BOI STAR ASSET BACKED LOAN" (BSABL) scheme launched by HO SME
department. The advance under BSABL will be covered under priority sector
MAXIMUM AGE LIMIT

a) Individuals in permanent service: Max. 60 years or Retirement age whichever is
earlier.
b) For self-employed/non-salaried people, sanctioning authority may relax the age
limit by 10 years i.e. upto 70 years.
Deviation in age-beyond the limits as above, may be permitted by ZLCC and above .

159
TYPE OF ADVANCE:
Demand /Term Loan(Repayable by installments) and Overdraft (Reducible Overdraft:
Drawing limit as per repayment schedule)
QUANTUM OF ADVANCE (Rs. In Lacs)
Maximum Quantum of loan under the scheme shall be Rs.15.00 Crores against
residential or commercial property (Open land/plot not to be considered for Loan limits
above Rs. 7.50 Crores) * Authority for consideration of deviation: NBGLCC within the
overall ceiling of Rs.7.5crores
CALCULATION OF QUANTUM OF ADVANCE
Individual- 72 times of average monthly net emoluments
Salaried/ (take home salary) based on salary slip/Form
Selfemployed/ 16/Income Tax Return.
Professionals OR
6 times of net annual income with other rental
income from property etc. based on I.T returns for
last 2/3 Financial Years
Doctor/s- in 6 times of average net annual income of last 2/3
case of joint years based on IT Returns for last 2/3 Financial
accounts all Years
to be doctors*
MARGIN (ON VALUE OF PROPERTY):

The loan limit will be based on valuation of the property i.e. 100% of circle rate
reckoned for payment of stamp duty/registration purpose / 40% of market value(60%
margin on market value) / 50% of distress value(50% margin on distress value),
whichever is lower
Advance on Distress Sale Value of Property" Margin to be 50% of the distress value
and need for 2ndvaluation).
Value of property for calculation of quantum of advance/determining margin will
Involve the following:
A. Market value
B. Distress Sale value
C. Circle Rate /Registration value of similar property as on date of valuation
NET TAKE HOME PAY (NTHP)
Gross monthly income NTHP %
Up to Rs. 1.00 lakhs 40%
Over Rs. 1.00 Lakhs to Rs. 5.00 Lakhs 30%
Above Rs.5.00 Lakhs 25%
No deviation in NTHP is permitted at any level

160
RATE OF INTEREST
Rate of interest shall be linked to CIBIL Bureau score. As advised from time to time.
Presently please refer to our HOBC Cir No. 115_045 dated 04.05.2021 & also refer to
our 10M Ref No. RBD/CSB/21- 22/178 dated 28.12.2021 regarding pricing, delegation
& acceptability.
No loan to be considered under the scheme for customers having CIBIL Personal
score below 675. Satisfactory CRILIC report for limit of Rs.5.00 crores and above
should not be under RFA report SMA 1 & SMA2.
REPAYMENT
For loans (Repayable By instalments) : max. 15 years by way of equated monthly
Instalments (EMIs) (excluding the moratorium period, if any).
Overdraft (Reducible Limit) : Total Repayment period of max. 12 years however

Interest to be serviced on monthly basis
SECURITY:
a) Equitable / Legal mortgage charge over the property (including registration of
equitable mortgage charge in applicable states & Registration of EQM charge with
CERSAI in eligible accounts)
b) Obtaining personal guarantee of additional individual(s) is left to the discretion
of the sanctioning authority.
GUARANTOR:
Obtention of guarantor/s has not been specifically stipulated under the scheme. The
sanctioning authority may consider obtaining guarantor/s to strengthen the credit
proposition. In case mortgage of property standing in the name of a third party is
obtained, the guarantee of the person/s in whose names the property stands must be
obtained

161
Star Reverse Mortgage Loan
Branch Circular No. : 116/10 Date 01.04.2022 116/112 Date 27-07-2022
Target customer Senior citizens over the age of 60 years who apparently have no
regular income and pensioners having pension as only source of
income but have a self-occupied residential property in their own
name or jointly with spouse, which is free from encumbrance and
commands value in the present market.
Purpose To provide a source of additional income( not from speculation) for
senior citizens of India who own self-occupied house property in
India.
Eligibility Borrowers age above 60 years and not more than 80 years shall be
owner and occupant of residential property (House or flat) in his
name or jointly with the name of spouse and free from all
encumbrance, located in India. The residual life of the property
should be 1.5 times of the repayment period Minimum 20 years.
Type of advance Term loan
Quantum of Minimum Rs.5.00 Lacs
Advance Maximum Rs.150.00 Lacs
Margin Depending upon the age of the borrower 35% to 55%
margin of the value of property proposed to be mortgaged
Loan tenure Completed age up to 65 ears - Maximum 15 years
Completed age above 65 years - Max.10 years subject to tenure of
loan not to go beyond borrower's age of 80 years.
The monthly payments will be extended during the loan period or till
death of last surviving spouse, whichever is earlier.
Rate of interest Presently 2.00% above 1 Year MCLR, subject to reset clause at the
end of every 5 year period
Security Advance shall be secured by equitable mortgage of the self-
occupied/ self-owned residential property in favour of the Bank after
due valuation and title verification.
Disbursement a) Lump sum — to the extent of 50% of the total eligible
amount of loan Max. Rs.15.00 lacs whichever is lower
b) Periodic payments (monthly/quarterly/half yearly/
annual) to be decided mutually Max. rs. 50000/-
Insurance The mortgaged residential property shall be insured for the value of
the property above plinth area against general risk at the cost of
borrower/s for a minimum period of 10 years.
Taxation All payments under Reverse Mortgage Loan are exempt from
income tax under section 10(43) of the Income Tax Act, 1961
Non-Recourse This is a covenant of NHB which means that Bank shall not recover
Guarantee (No more than the net realizable value of his mortgaged property,
negative equityl provided terms & conditions of the loan have been complied with.
Further, the Bank cannot look to any other assets of the borrower
including bank accounts, fixed deposits. Shares, debentures etc. for
recovery of the loan, except the moneys returned by the insurance
company on demise of the last surviving borrower. [These are as
per the guidelines & a typical feature of the RML scheme as
mandated by NHB].

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Star Suvidha Express Personal Loan (SSEPL)
Branch Circular No. : 116/73 Date 07.06.2022 116/163 Date 22.09.2022
Target Customer I. Existing standard housing loan customers (excluding
accounts
under moratorium and Accounts should not be SMA1 and
SMA2 in last 12 months) & where EQM has been created
(Both salaried and self-employed) and whose accounts are
not restructured under RBI's Resolution Framework (RFCRS
1.0 or RFCRS 2.0)
II. Existing standard personal loan (Including COVID 19
Personal loan) customers (Both salaried and self employed)
and whose accounts are not restructured under Resolution
Framework and whose CIBIL personal score is 675 and
above or -1/0/No credit history.
III. Customers (individuals only) who have availed loan under
Bank's scheme "Loan against Property" and whose accounts
are standard (Accounts should not be SMA1 and SMA2 in
last 12 months) and whose accounts are not restructured
underResolution Framework
IV. Existing Permanent and confirmed employees of Central/
State/ PSUs/ Other Corporates having employee base not
less than 20, who have salary account with us with minimum
salary credit for one month, having satisfactory CIBIL Report
3 years ITRs in the respective assessment years
I. Regular/ Retired Staff of our Bank/ Pensioners (excluding
who are on probation & staff against whom disciplinary action
has been initiated/ contemplated/ pending) as eligible
customers subject to NTHP of 30%
Purpose Any bonafide purpose other than speculation purpose
Facility type Demand loan/Term loan
Age At the time of availing the personal loan should not exceed
65/68 years
Loan amount I. For existing salary account holders / Pensioners drawing
Salary / pension through our Bank and who do not have any
existing housing loan/ LAP/ Education Loan with our Bank:
24
times of last drawn gross salary/pension; Max: Rs. 20.00
Lakhs without any adverse remarkssubject to NTHP of 30%
V. Regular employees of Central/ State/ PSU and other
corporates who do not have salary account with us and
employer agreeable for salary deduction, having CIBIL
personal score 675 and above or - 1/0/ No credit history
subject to NTHP of 30%
VI. Customers (individuals only) who have availed loan under
Bank's scheme "Star Education Loan" with immovable
property as collateral security and whose accounts are
standard (excluding SMA2 accounts) with minimum

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satisfactory repayment history of Two year and whose
accounts are not restructured under Resolution Framework
LIC Agents who have Home loan/ LAP with us (excluding
accounts where no EQM has been created)
(a) Not restructured under RBI's Resolution Framework
(RFCRS 1.0 or RFCRS2.0).
(b) Should not be in SMA-1 or SMA-2 category.
(c) With satisfactory CIBIL report.
VIII. LIC Agents (without home loan with us) whose
commission accounts maintained with us, have been
conducted satisfactorily with appropriate commission credit
from LIC and whose CIBIL personal score of - 1/0/No credit
history & 700 and above (No deviations allowed in respect of
CIBIL Personal Score)
II. For existing Housing loan/ LAP/Education Loan borrowers:
A. For Salaried/ Pensioners: 36 times of last drawn gross
salary/Pension; Max: Rs. 20.00 Lakhs
B. For Self-employed: 36 times of monthly income based on
the latest ITR
III.For Loans to LIC Agents: 2 times of average gross annual
income based on last 3 years ITRs files in the respective
assessment year. To those who have Home loan with us —
Max.Rs.20.00 Lakhs To those who do not have Home
loan with us — Max.Rs.10.00 Lakhs
Repayment 84 months (without moratorium) Age at the end of repayment
period
A. Not to exceed retirement age of the employee
B. 75 years in case of retired staff/Pensioners.
C. Residual repayment period in case of Housing loan
borrowers or retirement age whichever is later
NTHP NTHP should be as per the existing guidelines on Retail
Loans i.e.
A. Monthly gross Salary up to Rs.1.00 Lac: 40%
B. Monthly gross salary above Rs.1.00 Lac and Rs 5.00 lacs:
30%.
C. Monthly gross salary above Rs. 5.00 lacs: 25%
Margin Nil
Rate of interest RBLR +1.00%
Security I. Clean
II. Third party guarantee/personal guarantee in case of
Pensioners.
III. In case of loan to LIC agents, suitable third party
guarantee with minimum net worth of proposed loan amount
to be obtained

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Commercial & Institutional Credit
Credit Policy of the Bank
 Bank’s Credit Policy was last approved on 14.07.2022 in the Board Meeting and
circulated vide HOBC 116/125 dated 08.08.2022.
 This policy has 27 Chapters and 18 annexures.
 It comprehensively covers, inter alia :
a. Purpose of Credit Policy
b. Bank’s Credit Philosophy, Credit Culture, Vision, Mission
c. All aspects relating to Credits, investments, leasing, factoring etc.
d. Guidelines on credit delivery, credit expansion, due diligence, appraisal of credit
exposure, exposure norms, Industry exposure
e. Collateral and Margin Norms.
f. Pricing norms
g. Resolution of stressed assets and exit policy guidelines
 Its Annexures, inter alia, contain guidelines on:
a. Consortium/Multiple/Joint Lending Arrangement
b. Sharing of information
c. Risk Rating
d. Credit process Audit
e. Group Concepts
f. Check points for mitigating advances related frauds
g. National Disaster Management Authority NDMA Guidelines
MCLR (Marginal Cost of Fund Based Lending Rate)

With effect from 01.04.2016, Rate of interest on advances are being linked to Marginal
Cost of Fund Based Lending Rates (MCLR) in respect of all new rupee loans
sanctioned and all credit limits renewed. A minimum of following 6 MCLRs of various
maturities shall be reviewed and published on monthly basis on a pre-announced date
as under:
• Overnight MCLR
• 1 month MCLR
• 3 month MCLR
• 6 month MCLR
• 1 year MCLR
• 3 year MCLR* ( *Introduced w.e.f 10.01.2020, applicable for "Co-origination by Banks
and NBFCs for lending to priority sector")
The ROI based MCLR prevailing on the date of first disbursement will be applicable
till the next reset (review) date, irrespective of the changes in the benchmark during
the interim period.
RBI has permitted Banks to charge Spread for two components 1. Business Strategy
Spread and 2. Credit Risk Premium (Credit Spread) over and above applicable MCLR.
The final rate of Interest shall be as under:-
Rate of Interest = MCLR + Business Strategy spread + Credit Risk Premium.

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REPO LINKED RATE OF INTEREST FOR MSME ADVANCES
RBI has mandated Banks to link all their floating rate of interest Retail and Micro &
Small category of loans with external benchmark rate w.e.f. 01.10.2019. Repo Based
Lending Rate (RBLR) is external benchmark rate. The Major components of RBLR
includes Repo Rate and Mark Up. Business Strategy discount/premium will be over
RBLR (Repo Rate plus Mark Up).
RBLR = Repo Rate + Mark Up
The applicable interest card rate will be arrived as under-

Applicable ROI = RBLR + Business Strategy Discount/Premium +CRP
Exposure Norms
 Exposure shall include credit exposure (funded and non-funded credit limits) and
investment exposure (including underwriting and similar commitments). The sanctioned
limits or outstanding, whichever are higher, shall be reckoned for arriving at the exposure
limit. However, in the case of fully drawn term loans upto the sanctioned limits, banks may
reckon the outstanding as the exposure.
 The exposure ceilings in respect of various categories of borrowers in terms of the
guidelines of Reserve Bank of India are to be reckoned in relation to Bank's capital funds
as per the published accounts as on March 31st of the previous year. Infusion of capital
subsequent to the published balance sheet date can also be taken into account subject to
certain conditions.
 The Large Exposure Limits: Single Counterparty: The sum of all the exposure values of the
Bank to a single counterparty must not be higher than 20 percent of the Bank's available
eligible capital base at all times. In exceptional cases, the Board may allow an additional 5
percent exposure.
Groups of Connected Counterparties: The sum of all the exposure values of the bank to a
group of connected counterparties must not be higher than 25percent of the Bank's
available eligible capital base at all times i.e. limit has to be adhered on day end basis even
if reporting to RBI is done at monthly intervals.
M. Com is authorized to approve additional 5% exposure.
 The total exposure of accounts, in which the tangible security properly charged to the bank
at the time of sanction is less than 10% of the exposure, should not exceed 30% of the
Bank's outstanding total exposure
 Bank exposure to Equipment Leasing, Hire Purchase and Factoring Services are not
to exceed 10% of total advances.
 Bank's aggregate Capital Market Exposure is restricted to 40% of the net worth of the
Bank on a solo and consolidated basis. Consolidated Direct Capital Market Exposure
(direct investment in shares, convertible bonds/debentures, units of equity oriented mutual
funds and all exposure to Venture Capital Funds) is restricted to 20% of net worth.
 Exposure to NBFCs - 13.5% of Gross Domestic Advances outstanding at the end of the
previous quarter or Rs.47,000 crore, whichever is less .
 Whenever a borrower's credit requirements exceed 50% of the exposure ceiling or Rs.100
crores whichever is higher, borrower would be encouraged to scout for another

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Bank/institution to share the credit facility/ies under multiple banking or consortium, Joint
Lending Arrangement (as per norms) or syndication arrangement.
• In case of term loans over Rs. 50 crores, our exposure should not generally exceed 50%
of the cost of project /maximum Rs.350 crores per borrower. Exceptions can be made in
respect in deserving cases by the delegated authority subject to documenting the reasons
in the proposal.
• The credit equivalent of total contingent liabilities, which would include Letters of credit,
Bank guarantees, Acceptances and similar other obligations, after applying credit
conversion factor , should not exceed 100% of the credit exposure on fund based facilities
including loans, cash credits, overdrafts as also investment in equity /debt instruments
such as Commercial Paper, Debentures etc.
• Bank's total credit exposure to all units in a particular industry should not exceed 25% of
the total of the banking industry's exposure in India to such industry.
Term Exposure
 The aggregate of domestic term exposure in the form of term loans, deferred payment
guarantees, term letters of credit , non-convertible debentures and other investments in
corporate debt instruments (including redeemable preference shares) should not exceed
50% of the total domestic credit exposure of the Bank.
 The Bank would assume exposures with an initial maturity of 10 years or less for industry,
trade or business as also in the personal segment.
 In the agricultural segment and also for infrastructure projects, the maximum initial maturity
could extend upto 25 years.
 A further exception in this regard is retail loan for financing houses etc. where a clear cut
scheme has been evolved for granting loans for long maturity periods.
 In other cases where longer duration exposures are to be taken, the same may be
approved by the Management Committee.
Administrative Clearance
Normally, requests for credit facilities may be initiated at Branch / Zonal Office / NBG /
Head Office level as per the instructions in force. In case of bigger proposals, the same
may be initiated in consultation with the delegatee within whose powers the limits fall for
sanction or higher authorities. The highlights of the revised "New Business Group
Clearance" guidelines is as under -
1. ACC (Administrative Clearance Committee) at NBG Offices will be authorized to approve
all New Business Clearances from Rs.5 crores and upto Rs.35 crores subject to -
• Maximum of NBGACC level sanction and -
• The proposal have at least entry level ratings (internal credit rating)
• Risk Weight of 100% and better (as per external credit rating)
Except proposals pertaining to NBFC, Commercial Real Estate sector and Infrastructure
and other sectors as per respective Policy, wherein the branches / offices are required
to obtain the ACC clearances at HO in case of new /additional limits.
2. All proposals > Rs.35 crores and exposure to sensitive sector as mentioned above,
to be considered by ACC at Head Office.

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 Administrative Clearance granted in an account is valid for a period of 6 months.
 ACC clearance does not tantamount to sanction of the advance. Branches are not
required to issue sanction letter to borrowers/customers based on clearance given by
ACC.
 Proposals exempt from obtention of New Business Clearance are given below:
i) Exposure with aggregate limits (fund based + non fund based) less than Rs.5.00 crores;
ii) Priority Sector advances;
iii) Business pertaining to PSUs (Central /State);
iv) Requests of existing groups/borrowers enjoying limits for more than one year,
subject to credit rating(both internal and external)
v) Exposure secured by cash margin of 100% or more;
vi) Central/State Government Guaranteed advances;
Techno-Economic Viability Study / Technical Appraisal
The purpose of carrying out a Techno-Economic Viability Study (TEVS) is to help Bank
to take a view on the acceptability of risk level. TEVS a risk mitigation process undertaken
in respect of any industrial activity prior to deciding on whether Bank should lend for such
activity or not. It is appraisal of technical aspects of a project and its impact on the
financial angle.It is mandatory to obtain Techno-Economic Viability Study (TEVS) report
in all new accounts as well as accounts being taken over from other banks in respect of
industrial projects where aggregate limits where the project cost is more than Rs.50 crore
OR aggregate limits are more than Rs.35 crore. Aggregate limits under this section shall
refer to the sum of all limits availed from Banks / NBFCs for the same activity/ unit or
additional aggregate limits are equal to or above the specified threshold limit.
A TEVS report shall remain valid for a period of one year from the date of the report,
subject to there being no change in the scope of the project, beyond which it needs to be
referred for re-appraisal.
Legal Entity Identifier (LEI)

The Legal Entity Identifier (LEI) is a 20-digit number used to uniquely identify parties
to financial transactions worldwide to improve the quality and accuracy of financial data
systems. LEI has been introduced by the Reserve Bank in a phased manner for
participants in the over the counter (OTC) derivative, non-derivative markets, large
corporate borrowers and large value transactions in centralised payment systems. RBI
had directed the Banks to make it mandatory for the corporate borrowers having
aggregate FB & NFB exposures of Rs 5 crores and above to obtain LEI Registration
No. and capture the same in the Central Repository of Information on Large Credits
(CRILC).
To ensure strict compliance, Bank has directed that following functions will not be
allowed for any borrower in the Finacle system with total exposure of Rs 5 crore and
above unless the borrower has a valid LEI No. No new account (except
individual/Government) to be opened for any borrower in the Finacle system with total
exposure of Rs 5 crore, Updation of limits/ disbursement /restructuring be allowed in
Finacle System for any existing borrower with total exposure of Rs 5 crore and LEI
Number to be made part of CPA 2/CPA 3 process. No disbursement be allowed in any
eligible account/CPA 2 not to be closed in any account unless the LEI Number is

168
available/held on record. With effect from 01 Oct 2022, AD Branches shall obtain LEI
number from resident entities (non-individuals) undertaking capital and current account
transactions of Rs.50 Crs. and above per transaction. Please importantly note that once
an entity has obtained LEI number, same has to be reported in all transactions of such
entity, irrespective of transaction value.Legal Entity Identifier India Limited
(https://www.ccilindia-lei.co.in) – A Wholly Owned Subsidiary of The Clearing
Corporation of India Ltd. acts as a Local Operating Unit (LOU) for issuing globally
compatible Legal Entity Identifiers (LEIs) in India.
TENURE OF CREDIT
As a commercial bank, we should have a proper mix of short (up to one year), medium
(one to three years) and long term (three years and above) exposures. Ideally exposure
within the short and medium term tenure would be desirable especially in view of the
reducing maturity of term deposits.
The asset liability match is monitored by the Asset Liability Committee of the Bank. The
ALM Committee decides a suitable cap on term exposure in relation to the total credit
exposure of the Bank .The longer the term of the credit, the greater the uncertainty and
the attendant risks. The Bank is essentially in the short term market and is not expected
to assume very long term exposures.
Maximum repayment period for term loans in case of infrastructure projects/core
industries shall be 25 years including initial moratorium period and 10 years in case of
non-infrastructure projects, including initial moratorium period. A further exception could
be made in regard to personal loans for financing houses etc. where a clear cut scheme
has been evolved for granting loans for longer maturity periods.
In cases where the tenure need to be exceeded for reasons like high cost of project
specific approval of the sanctioning authority for such elongated periods must be
obtained.
CREDIT EXPANSION/ACQUISITION
Primary Acquisition
These are direct credit acquisitions through marketing efforts, subject to extant
guidelines. An asset may be acquired by us as sole banker or through consortium or
multiple banking arrangements or syndication.
Direct acquisition through robust marketing efforts, lead generation, proper due diligence,
good turnaround time and a effective credit delivery mechanism are the cornerstones of
direct acquisition.
Secondary Acquisition
Takeover of sound and remunerative accounts maybe considered with proper
verification of past records keeping in mind that most corporates and other entities are
no longer bound by traditional alignment with a bank, due to past connections. Guidelines
in this regard will be laid down by the Board or Management Committee of the Board
from time to time.

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CREDIT APPRAISAL- SOME POINTS
The following should be taken into account for appraisal.
 Technical appraisal-This takes care of technical feasibility of the project, and
machinery required type of manufacturing process etc and its cost. Relevance of
the selection of particular type of technology should be addressed here
 Economic & Financial viability: This is done through various projected
financial ratios, break even analysis, Internal Rate of Return (IRR) Cash flow
and fund flow statements and compared to actual performance. General
conditions of similar industries operating in the area are also to be studied.
 Market Research: To understand the demand for the product and consumer
preferences also similar products available in the market and their performance to
assess whether this product will be able to compete successfully with other
products quantity, quality wise and price wise.
 Political scenario: Like change in policy and policy to similar industries, their
consistency etc is studied to gauge the risk on the unit from such existing and likely
changes in the policy vis-à-vis the priority of the govt.
 Availability of utilities: like raw materials, cheap uninterrupted power supply, stand
by back arrangement, labour, logistics, markets etc.
 Execution risk as to experience of the promoters is also assessed. Technical
appraisal-This takes care of technical feasibility of the project, and machinery
required type of manufacturing process etc and its cost. Relevance of the selection
of particular type of technology should be addressed here.
 Economic & Financial viability: This is done through various projected
financial ratios, break even analysis, Internal Rate of Return (IRR) Cash flow
and fund flow statements and compared to actual performance. General
conditions of similar industries operating in the area are also to be studied.
 Market Research: To understand the demand for the product and consumer
preferences also similar products available in the market and their performance to
assess whether this product will be able to compete successfully with other
products quantity, quality wise and price wise.
 Political scenario: Like change in policy and policy to similar industries, their
consistency etc is studied to gauge the risk on the unit from such existing and likely
changes in the policy vis-à-vis the priority of the govt.
 Availability of utilities: like raw materials, cheap uninterrupted power supply, stand
by back arrangement, labour, logistics, markets etc.
 Execution risk as to experience of the promoters is also assessed.
WORKING CAPITAL
Working capital is required for day-to-day operations of an enterprise. Working capital is

also called gross current assets. An enterprise starts from cash and goes through a cycle
of raw material, work in process, finished goods, receivables and then again cash. This
cash to cash cycle is known as Operating Cycle. Operating cycle is the time lag between
the cash investment in purchase of raw material and realizing cash through sale of
finished goods. It is during this operating cycle that an enterprise needs working capital
to support its operations smoothly.

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At present assessment of working capital requirements of units engaged in trade,
manufacture and services are bifurcated into borrowers having fund based working
capital limits (i) upto Rs.5 crores and (ii) more than Rs.5 crores from the banking system.
L/C (DA) limits are treated as a part of working capital limits.
We may continue to adopt the three extant methods of assessment of working capital
limits as follows:
Working Capital Limits upto Rs.5 crores from the banking system
1. Turnover method.
Working Capital Limits for more than Rs.5 crores from the banking system
Two methods are available under this category –
(i) Holding level/MPBF and
(ii) Cash budget method.
TURNOVER METHOD
i) This method may be applicable to all borrowers enjoying fund-based working capital
credit limits upto and inclusive of Rs.5 crores with the banking system. The working
capital requirements of the borrower may be computed at 25% of the projected annual
turnover of which at least four-fifth (i.e. 20% of the projected annual turnover) should be
provided by the bank as working capital finance, and balance one-fifth (i.e. 5% of the
projected annual turnover) contributed by the borrower, as margin towards working
capital.
ii) These guidelines have been formulated assuming average production/ business cycle
of 3 months. In reality, this cycle could be longer or shorter. The borrower’s working
capital requirement may also be assessed on the basis of traditional approach of
production/business cycle and limits may be considered in excess of 20% of the
projected annual turnover wherever warranted due to longer cycle, keeping a minimum
margin of one-fifth of the working capital requirements. On the other hand, in case of
shorter production/ business cycle, working capital limits at 20% of the projected annual
turnover may be sanctioned and actual drawing should be allowed on the basis of
drawing power after excluding unpaid stocks/stocks acquired under D/A L/C.
MPBF METHOD / HOLDING LEVEL METHOD

At present, banks have the freedom to determine the level of holding for inventory and
receivables for various industries. We may continue to accept those levels which are in
conformity with the past levels of holding of the borrower (on the basis of actuals for last
2 years). Deviations in this regard may be permitted by the sanctioning authority, based
on justifications
MPBF can also be worked out on the basis of Second Method as under:
a. MPBF = Working Capital Gap – 25% of Total Current Assets
Or
b. MPBF = Working Capital Gap - Actual/ Projected NWC
MPBF to be approved / sanctioned is lower of a or b.

171
Note:
Working capital gap = Current assets – Current liabilities (excluding bank borrowings)
Actual projected NWC(Net Working Capital) = Current assets – Current liabilities
(Inclusive of bank borrowings)
CASH BUDGET METHOD
Borrowers enjoying working capital limits in excess of Rs.5 crore may be given option to
adopt the Cash Budgeting Method at the discretion of the Bank. In case such borrowers
choose the Cash Budget System of lending, they have to satisfy the Bank that they have
necessary infrastructure in place to submit the required information periodically in time.
The scope of internal MIS should be satisfactory and commensurate with the level of
operations. The borrower must have a finance professional and computerised
environment.
Under this method, the peak level cash deficit will be the level of total working capital
finance to be extended to the borrower by the banking system. The peak level cash
deficit will be ascertained from the projected Cash Budget Statement submitted by the
borrower.
Assessment of working capital requirements may be done on the basis of the annual
projected Cash Budget Statement comprising of projected receipts and payments for the
next 12 months on account of (i) Business Operations, (ii) Non-business Operations, (iii)
Cash flow from capital accounts and (iv) Sundry items.
In the case of Services Industry, Infrastructure, IT, etc. the limits computed may not be
supported by drawing power due to the nature of business. e.g. in the case of a logistics
company operating a fleet of trucks, major part of working capital funds may be utilized
for salary, lease rentals, fuel, toll etc. There may not be inventory except spares,
consumables etc. However there may be receivables in the books. Hence, the working
capital limits may have unsecured portion. Branches should therefore structure the limits
appropriately and also go by delegation applicable to unsecured/partly secured limits.
MONTHLY SELECT OPERATIONAL DATA (MSOD):

In respect of borrowers enjoying working capital facilities of Rs.10.00 Lakh and above
MSOD is required to be obtained in addition to usual stocks /book debt statements. Actual
production and sales are to be compared with the annual projections earlier submitted.
In case, there is substantial variation, the borrower needs to be advised suitably to take
appropriate action.
RETURN UNDER QUARTERLY INFORMATION SYSTEM (QIS):
The borrowers enjoying working capital facilities of Rs.1.00 Crore and above from the
Banking system are required to submit following statement under QIS, in addition to
MSOD and usual stocks/book debts statements:-
QIS-l: Estimates for the ensuing quarter (to be submitted in the week preceding the
commencement of quarter to which it relates).

172
QIS-lI: Performance during the quarter (Within 6 weeks from the close of the quarter
to which it relates)
QIS-Ill: Half yearly operating statements and Half Yearly funds flow statements
(Within 2 months from the close of half-year).
Financial Follow-up Report (FFR): FFR statement may be accepted from the borrowers
enjoying working capital limits under Consortium Arrangement, on monthly basis, issued
by State Bank of India/ Other Bank/ Other Fl wherever it is Lead Bank, to fall in line with
other lenders.
Any deviation from the accepted level and actual performance are required to be looked
into which will have impact on the operative limit. ln case of large variations, further
operations in the account will have to be permitted very judiciously.
TEMPORARY/ADHOC/ADDITIONAL LIMITS/OVER LIMITS
In exceptional circumstances like natural calamities, fall in prices, change in

government policies, cross border situation, other contingencies etc., the borrower may
face liquidity crunch needing higher fund requirements than envisaged. Further,
even in normal circumstances borrowers may face temporary liquidity constraints and
require additional funds.
Adhoc/additional credit for meeting temporary requirement can be disbursed by the

Bank only after the borrower has fully utilized/exhausted the existing limits. In such
cases requests from units for temporary over limits for periods not exceeding 30 days
and ad-hoc limits(for periods not exceeding 90 days) in excess of regular limits
sanctioned to the borrower, may be considered as per the delegation in force.
Temporary overdrafts should not be allowed within first six months of the opening of
an account with us. However, in very emergent cases over limits not exceeding 30
days and ad-hoc limits for not exceeding 90 days may be considered. It should be
ensured that TOL/ Adhoc limit put together should not exceed 180 days in a financial
year (April to March) in a particular account.
Guarantees
 Bank Guarantee is an indemnity letter in which the bank commits itself in writing to be
legally bound to pay a certain sum of money. The bank will pay if its party fails to
perform or if any other form of default occurs.
 There are three parties involved in a Guarantee:
1. Applicant who is the Principal Debtor
2. Bank who stands as a Guarantor, and
3. The Beneficiary in whose favour, the guarantee has to be issued by the bank.
 Factors considered by Banks for appraisal of Bank Guarantee limit:
1) Purpose:

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2) Frequency
3) Amount of Bank Guarantee
4) Past Record of Applicant:
i) With regard to invocation of guarantee
ii) With regard to Managerial/Technical competency of customer.
iii) Amount of Margin
iv) Amount of Collateral Security
 Guarantee to be issued must be unconditional and for -
a) Definite period
b) Definite amount
c) Definite purpose
 For issuing BG with onerous clauses 115 % margin needed
 Issuing BG beyond 3 years ZLCC/ Scale VI onwards.
 Bank Guarantee may be required by an enterprise for a variety of reasons. Quantum
of BG required for procuring raw materials can be assessed based on operating cycle
.
 But very often an enterprise may be required to submit BG in lieu of security deposit
or earnest money. In such a case requirement of funds depend on the following factors
and guarantee limit may be sanctioned accordingly.
a) Number of tenders likely to be submitted by the enterprise

b) At any point of time how many tenders are live/outstanding
c) Funds blocked in tender deposits
d) Period for which these deposits are held by the beneficiary.
 Guarantees are broadly of two types:
I. Financial:
1) In favour of customs/Excise/Tax authorities towards tax/duties payment etc.
2) Favouring courts for release of amounts
3) for guaranteeing loan repayments
II. Performance:
1) In lieu of earnest money deposit

2) In lieu of tender deposits
3) In lieu of security deposits
4) To obtain advance payments
5) For performance in terms of any agreed contract
6) Bidding/Tendering for project contracts
7) for securing retention amount
8) for payment for services/supplies made/rendered
9) to obtain mobilization advance etc

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 As per RBI Master circular dated 01.04.2022 - No bank guarantee should normally
have a maturity of more than 10 years. However, in view of the changed scenario of
the banking industry where banks extend long term loans for periods longer than 10
years for various projects, it has been decided to allow banks to also issue guarantees
for periods beyond 10 years. While issuing such guarantees, banks are advised to take
into account the impact of very long duration guarantees on their Asset Liability
Management.
Such guarantees beyond 10 years may be considered by ZLCC /DGM (LCB) and
above and those guarantees are to be secured with 100% cash margin. Any deviation
in this regard to be approved by minimum authority of HLCC I and above for sanctions
up to its level.
 Guarantees may continue to be issued in Paper Form and delivered by issuing Banks
to beneficiary/applicant as being done presently. However, it addition to it, a separate
advise of the BG to be sent to the advising bank through SFMS only after which paper
BG could become operative.
LETTER OF CREDIT
 A Letter of credit (Documentary Credit) is an instrument, which can be used for settling
the trade payments. It may be defined as follows:
“Credit means any arrangement, however, named or described, that is irrevocable and
thereby constitutes a definite undertaking of the issuing bank to honour* a complying
presentation.”
* Honour means:
a. To pay at sight if the credit is available by Sight payment.
b. To incur a deferred payment undertaking and pay at maturity if the credit is
available by deferred payment.
c. To accept a bill of exchange (‘draft’) drawn by the beneficiary and pay at maturity
if the credit is available by acceptance.
 In common parlance, documentary credit is like a bank guarantee except that the bank
guarantee covers a situation of non-performance of the contract (payment is made
when our customer does not perform as per the contract). Whereas a documentary
credit covers a situation where payment is made on performance of contract. From
the definition, we can derive five important features of documentary credits, viz.:
• It is an irrevocable undertaking in writing
• Given by a Bank called the Opening Bank
• On behalf of its customer who is the importer or buyer
• To honour bills drawn by a third party who may be the beneficiary or the transferee
under the credit, subject to compliance with terms and conditions of the credit

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 Parties to the Letter of Credit:
I. Opener (Importer/Buyer): means the party on whose request the credit is issued.
II. Issuing Bank: means the bank that issued a credit at the request of an applicant or
on its own behalf.
III. Advising Bank: means a bank that advises the credit at the request of the issuing
bank.
IV. Beneficiary (seller/ exporter): means the party in whose favor the credit is issued
V. Nominated Bank: means the bank, with which the credit is available or any bank
in the case of a credit available with any bank.
VI. Confirming Bank: means the bank which guarantees honouring of bills by the
Opening Bank under the credit i.e. if the Opening Bank fails for any reason to
honour the bills, Confirming Bank honours the same, wherever available.
VII. Reimbursing Bank: the bank which pays claims made by the nominated bank after
negotiating bills drawn by the exporter under the credit.
Modes of Banking Arrangement
The credit requirements may be dispensed by any one of following modes:
 Sole Banking Arrangement –

Under sole banking arrangements (subject to our exposure ceilings), We may endeavor
to finance the accounts with above entry level credit rating However, below entry level
rated borrowers may also be financed in the normal course of business on case to case
basis as per Bank's policies.
Whenever a borrower's credit requirement exceeds 50% of the exposure ceiling or
Rs.100 crores whichever is higher, the borrower should be encouraged to scout for
another bank/institution to share the credit facility/ies under consortium/Multiple Banking
Arrangements/ Syndication.
 Multiple Banking Arrangement

Multiple banking is an arrangement where a borrower avails of finance independently
from more than one bank. Thus, there is no contractual relationship between various
bankers. Also, in such arrangements, each banker is free to do his own credit
assessment and hold security independent of other bankers. In such cases, Bank's
exposure for working capital needs should normally not exceed 75% of the total working
capital requirements of the borrower.
Sharing of information between banks financing under multiple banking arrangement
has been necessitated and standardized by RBI

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 Consortium
Consortium advances mean advancing loans to a borrower by two or more banks jointly
by forming consortium. Under consortium financing, several banks (or financial
institutions) finance a single borrower with common appraisal, common documentation,
joint supervision and follow-up exercises. Documentation shall be based on single
window concept and the same will be undertaken by the lead bank. The bank with the
highest share in the consortium will be normally designated as Lead Bank or as decided
by the consortium.
Number of participating banks: Maximum 10 banks in case of fund based working capital
limits upto Rs.100 crores and Maximum 15 banks in case of limits above Rs.100 crores.
Bank has 2 segments of consortium accounts as:
i) Accounts where we are holding less than 10% share in consortium and
ii) More than 10% share in consortium.
Based on the criteria of credit rating/risk weight of the account, the accounts where
internal rating is within entry level and external rating is 'A' and above, Branches should
endeavour to increase/maintain our share at 10% or more. However, in case of accounts
with deviation in entry level norms and risk weight is 100 or more, attempt would be made
to exit from the consortium in a time bound manner, on a case to case basis.
 Syndication
Debt Syndication is an arrangement whereby a number of banks, known as a Syndicate,

agree jointly to provide credit facilities (usually term loan, ECB, debentures/bonds etc) to
a borrower on uniform terms and conditions, usually through signature of one document
or a set of documents. In a syndicated loan. Every Syndicate member has a separate
claim on the debtor, although there is a single loan agreement contract.
Syndication can be on the basis of:
Underwriting / Best effort Syndication / Secondary Syndication / Joint Syndication, Club
Syndication
BOI Merchant Bankers Ltd (BOIMB), a wholly owned subsidiary was incorporated on
31.10.2014 by our Bank to undertake the Merchant Banking activity. BOIMB also carries
out the activity of Debt Syndication and arranges debt through Syndication/Underwriting.
 Joint Lending Arrangement
Joint Lending Agreement (JLA) has been introduced as per Ministry of Finance
guidelines in July 2012 and the revised guidelines are in force since June 2013. The
scheme shall be applicable to all lending arrangements, with a single borrower with
aggregate credit limits (both fund based and non-fund based) of Rs.150 crore and above
involving more than one Public Sector Bank.

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 Sub-participation
Sub-participation is often used where a lender, whilst wishing to share the risks of certain
loans, nonetheless prefers to maintain the status quo. There is no change to the loan
documentation – the lender simply sells all or part of the loan portfolio to another lender
or lenders.
CREDIT PROCESS AUDIT 2 (CPA-2)
 Credit Process Audit shall be carried out in all accounts - existing as well new accounts
with limit of Rs.50 lakh and above before disbursement of new/additional limit. However,
it will not be applicable for release of ad-hoc/ over limit/one time facility unless and
otherwise specified by the sanctioning authority.
 After necessary security documents are executed, charges and other relevant pre
disbursement formalities are completed; the disbursing officer will submit a certificate as
per the format (CPA-1) to the department/Branch head to this effect. The concerned
controlling head at branch level will verify & satisfy that all pre-disbursement formalities
are completed as per sanctioned proposal. He will then countersign the certificate and
forward to the Zonal Manager with the request to depute CPO. On receipt of the
certificate (CPA-1) Zonal Manager shall depute the CPO to the branch to check, verify
and report about the compliance of sanctioned terms, security creation etc. immediately.
CPO will submit his report in format CPA-2 to the Branch Manager. If no material
deviations from sanction terms found discernible, the Branch Manager shall recommend
for closure of CPA-2. However, if material non-compliance is noticed, the Branch will
ensure compliance of all conditions or approach the sanctioning authority for approval
to release limit pending compliance of certain terms of sanction.
 The sanctioned limits will be released only after closure of CPA-2 / approval to release
limit pending compliance of certain terms by Sanctioning Authority.
CREDIT PROCESS AUDIT 3 (CPA-3)
 CPA-3 is applicable to all standard accounts with limits of Rs.5.00 Crores and above
including standard and NPA Restructured accounts- New/Review with additional limit
sanctions. It is also applicable in case review with same limit with modification in terms.
This covers overseas account also with threshold limit of USD 1 Mio and above or its
equivalent. However, review with same limit with same terms CPA- 3 is not required/
applicable.
 CPA-3 will be carried out by Concurrent Auditor of the Branch as separate report Quarter
wise for all –

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(a) New Limits/additional limits & review same limits with change of terms
(b) Pending compliance in previous quarter .

Concurrent Auditor to submit report to Branch Head and copy to Zonal Office in case of
NBG branches and HO Corporate Credit in case of LCBs. In case no Concurrent Audit
– Zonal manager will depute a suitable officer on a quarterly basis to carry out verification
of compliance of post-disbursement terms of sanction.
Secured/ Unsecured /Clean Facilities
 For the purpose of determining whether any advance is 'secured' or 'unsecured' or

'clean' for the purpose of Bank's balance sheet, availability of tangible security either
primary or collateral, shall constitute the basis.
 The advances against Book Debts shall he considered as unsecured for the purpose
of delegation.
 Second charge on Movable / Immovable assets and available collateral security shall
be considered as unsecured for delegation purposes, however, for classification in
Balance Sheet, the credit exposures would be treated as secured to the extent
covered by residual value.
 For the purpose of delegation, the definition will be as per delegation of powers
approved by the Board. Availability of corporate/personal guarantee would not make
an advance a secured one.
SECURITY & CHARGE
Nature of security Types of security Kind of charge Defined in Act

Immovable property Land and Buildings, Mortgage Transfer of
Machinery Property Act
embedded in earth
Actionable claims Book debts, FDR, Assignment Transfer of
(A claim to any debt NSC, LIC Policies Property Act
other than a debt
secured by mortgage)
Movable property / Plant and machinery Pledge or Indian Contract
goods and stocks hypothecation Act
Paper securities Shares, debentures, Lien Indian Contract
Mutual fund etc Act

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Corporate Credit:
Customers with turnover of Rs.250 crore & above (as per revised norms w.e.f.
01.07.2020) are serviced through Large Corporate and other Large branches.
Financial Statements
Financial statements generally include:

• Balance Sheet (Including Auditors’ Report, annexures etc.)- Balance Sheet is
the statement of abstracts of various ledger accounts pertaining to assets and liabilities
of an entity, as on particular accounting date. As regards contents of the Balance
Sheet, it reveals position of assets and liabilities of the firm/company on a given date
and so far as nature is concerned, it leads us to understand status/health of the entity.
• Profit and Loss Account with all annexures- Profit & Loss Account is an account
in the books of an organization to which incomes and gains are credited and expenses
and losses debited, so as to show the net profit or loss over a given period. Thus, it is
a financial statement showing a company's net profit or loss during a given period.
BALANCE SHEET ITEMS

Liabilities
For the purpose of analysis, the liabilities are classified into three groups viz, owners’
funds, long term liabilities and current liabilities.
Net Worth: This category consists of: Ordinary share capital, General reserve,
Revaluation reserve, other reserves (excluding provisions), Retained earnings,
Preference shares. All the items coming under owner’s funds form the Net Worth of a
concern after deduction of intangible assets.
Long Term Liabilities: All loans which are not repayable within one year from the
date of balance sheet are grouped under long term liabilities. Under long term liabilities
the items normally appear are: Term borrowings from banks, Term borrowings from
other term lending institutions, Debentures, Deferred payment credits, fixed deposits,
and unsecured loan not payable within 12 months period.
Current Liabilities: All liabilities which are repayable within a period of one year are
grouped under current liabilities.
Major items that come under current liabilities are: Short term borrowings (including
bills purchased & discounted) from (a) Banks (b) Others , Unsecured loans
payable within a year , Public deposits maturing within one year, Sundry creditors
(Trade) for raw material and consumable stores and spares, Interest and other charges
accrued but not due for payment, Advance payments from customers, Deposit from
dealer, selling agents etc. (these deposits may be treated as term liabilities irrespective
of their tenure if such deposits are accepted to be repayable only when the dealership/
agency is terminated), Instalments of term loans, deferred payment credits,
debentures, redeemable preference shares and long term deposits payable within one
year, Provident fund dues, Provision for taxation, Obligation towards workers
considered as statutory, Provision for dividend, Gratuity payable within one year, Other
provisions, Any other payment due within one year.

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Assets
Assets are the properties owned by business are grouped under four heads Viz Fixed
Asset, Current Asset, Non-Current Asset and Intangible Asset
Fixed Assets: Fixed assets are meant for use in the business as permanent capital
assets. These are otherwise known as block assets. It includes land, building, plant &
machinery, furniture & fixtures, vehicles etc. They also include capital work in progress.
Fixed asset of one concern may be a current asset for another. A sewing machine is
a fixed asset for the tailor but for the company manufacturing sewing machines, it is a
current asset.
Current Assets : Current assets are the liquid assets in a business concern
determining the solvency of it and are held for sale or conversion into cash during the
operating cycle of the business or with in twelve month. The operating cycle of most
of the business enterprises is usually less than one year. As they are easily convertible
into cash, they are called liquid assets.
Items coming under current assets are: Cash and bank balances; Fixed deposits
pledged as margin for BG and LC, Receivables arising out of sales other than deferred
receivables (including bills purchased and discounted by bankers); Instalments of
deferred receivables due within one year; Raw materials and components used in the
process of manufacture including those in transit; Stocks in process including semi-
finished goods; Finished goods including goods in transit; Other consumable spares
(12 months’ consumption for imported items and 9 months’ consumption for
indigenous items may be treated as current assets for the purpose of assessment of
working capital requirements); Advance payment for tax; Pre-paid expenses;
Advances for purchase of raw materials, components & consumable stores; Monies
receivable from contracted sale of fixed assets during the next 12 months.
Non-Current Assets: Assets which are neither current in nature nor fixed in nature
are grouped under this head. These include all non-current assets such as book-debts
above 6 months, unquoted investments, loans and advances to employees, officers
and directors, loans to and investments in subsidiaries, deferred receivables,
advances to suppliers of capital goods and contractors, non- consumable stores
and spares, security deposit etc..
Intangible Assets: These are assets of value to the business, but are not of a tangible
nature. They are non-physical assets having quite a long period of usefulness in the
business. It Includes a) Goodwill b) Patents & Trade Marks c) Copyrights d) Preliminary
& other formation expenses e) Development Expenses f) Deferred Revenue
Expenditure g) Bad & Doubtful Debts h) Carried forward loss etc.
Important Ratios being computed and analysed by the Bank
• Debt equity Ratio: The total outside liabilities of the firm is divided by the Net worth
to compute this ratio. Again Net worth is calculated by Capital + Free Reserve –
intangible asset. In that sense, bankers do not take into account the intangible asset.
For us, capital means Capital minus intangible asset and we call it as Net Worth. An
acceptable ratio is maximum 3:1 as per Industry Norms. However, our bank accepts
it at 4.00. The main purpose of this ratio is to ascertain the relative financial stakes of
the creditor’s vis-à-vis the owners of an enterprises.

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• Current Ratio: This is worked out to ascertain liquidity of the firm, as the quotient
of Current asset/Current Liabilities. If the ratio is 1, it means that the current asset
and liabilities are equal. Ideally, the ratio as per industry norm is minimum 1.33.
However, our Bank accepts it up to 1. If it is more than one, which means that some
funds have come other than current liabilities as a source of current asset, which can
only be from borrowers contribution to current Asset/or sales proceeds of fixed asset.
This portion of borrower’s contribution is called NET WORKING CAPITAL. If current
ratio is 1, net working capital is zero, and if it is less than one, net working capital is
negative. It is also not advisable to have a much higher current Ratio; which means
that the borrowers long term funds are held up in current assets, may be in stocks.
• Debt Service Coverage Ratio: This is calculated to assess the repayment capacity
of the unit out of the internal income generation. It is calculated at the time of
sanctioning a Term loan. It should be calculated for all the years till repayment. It
is calculated as the cash profit generated plus provision for interest divided by total
payment commitment. It is worked out as
(NET PROFIT + DEPRECIATION + INTEREST ON TERM LOAN) DIVIDED BY
(INTEREST ON TERM LOAN + INSTALMENT). Higher ratio represents higher
repayment Capacity.
• Interest Service Coverage Ratio (ISCR) : (PAT +Depreciation+ Interest)/ Interest.
• Net Profit/Sales%: This is computed as: Net profit / Sales*100. It shows the relation
between the final profits of the company to sales.
• Activity Ratios :
a) Inventory Turnover Ratio = Sales/ Avg. Stock ,
b) Debtor Turnover = Sale / Avg. Debtor ,
c) Debtor Velocity =Avg. Debtor / sales *12 or 365,
d) Creditor Velocity =Avg. Creditor / Purchases *12 or 365,
e) Raw Material Holding
= Stock of Raw material/ Raw Material Consumed* 12 or 365,
f) Stock In process holding = Stock of stock in process/Cost of Production*12.
Earnings
 Total income-Sum of interest / discount earned, commission, exchange, brokerage

and other operating income.
 Total operating expenses-Sum of interest expended, staff expenses and other

overheads.
 Operating profit before provisions-Net of total income and total operating

expenses.
 Net operating profit-Operating profit before provision minus provision for loan losses,
depreciation in investments, write off and other provisions.

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 Profit before tax (PBT)-Net operating profit +/- realized gains/ losses on sale of
assets.
 Profit after tax (PAT)- Profit before tax – provision for tax.
 Retained earnings- Profit after tax – dividend paid/proposed.
 Average Yield-(Interest and discount earned/average interest earning assets)*100
 Average cost-(Interest expended on deposits and borrowings/Average interest

bearing liabilities)*100.
 Return on Asset (ROA) - After Tax-Return on Assets (ROA) is a profitability

ratio which indicates the net profit (net income) generated on total assets. It is
computed by dividing net income by average total assets. Formula- (Profit after tax/Av.
Total assets)*100.
 Return on equity (ROE) - After Tax-Return on Equity (ROE) is a ratio relating net
profit (net income) to shareholders’ equity. Here the equity refers to share capital
reserves and surplus of the bank. Formula- Profit after tax/(Total equity + Total equity
at the end of previous year)/2}*100.
 Accretion to equity-(Retained earnings/Total equity at the end of previous year)*100.
 Net Non-Interest Income-The differential (surplus or deficit) between non-interest

income and non-interest expenses as a percentage to average total assets.
 Net Interest Income (NII)-The NII is the difference between the interest income and
the interest expenses.
 Net Interest Margin-Net interest margin is the net interest income divided by average
interest earning assets.
 Cost income ratio (Efficiency ratio)-The cost income ratio reflects the extent to
which non-interest expenses of a bank make a charge on the net total income (total
income – interest expense). The lower the ratio, the more efficient is the bank.
Formula: Non interest expenditure / Net Total Income *
100.
CMA Data
This contains various prescribed forms wherein the figures of Balance Sheet and Profit
& Loss account are re-classified in such a way, so that the Lender can compute/analyse
various ratios and ascertain the financial position i.e. past performance and the
projections of the company. Various forms under CMA Data are as under:
- Form I: Particulars of the existing/proposed limits from the banking system
- Form II: Operating Statement (Mostly, Profit & Loss Figures)
- Form III: Analysis of Balance Sheet
- Form IV: Comparative statement of current assets and current liabilities
- Form V: Computation of Maximum Permissible Bank Finance
- Form VI: Funds flow statement

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• Banker attaches paramount importance to the study of the financial
statements. A banker studies balance sheet of a firm/organization while
considering loan application. The main concern of banker is to find out whether-
- Firm/Organization is financially sound and stable i.e. solvent
- Its liquidity is satisfactory.
- Profitability or earning capacity is up to the required standard and
- Management of firm is competent and whether they can manage the business
Relaxations in financial parameters
Financial Bench mark As per Credit Relaxation by Board

parameter policy
Debt Equity Ratio Max. 3 Max. 4 5 for all cases
Debt Quasi
Equity Ratio
Current Ratio 1.33 1.00 0.7 for Sugar & seasonal
industries & sectors
where assessment is
made through cash
budget method
For others 0.8
Debt Service 1.50 1.25 1.1
Coverage Ratio (Min. Average) (Min. Average) (For all cases)

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Credit Monitoring & NPA Management
 Credit Monitoring
Credit monitoring is nothing but all those steps taken by the Bank to ensure that
the standard asset (advance account) remains standard for ever. Ideally
speaking, credit monitoring starts the moment request for loan is received.
The purpose of credit monitoring is:-
 To maintain asset quality – Standard accounts to remain as standard for
ever. To prevent slippage of account to NPA category.
 To ensure compliance with pre disbursement /post disbursement terms &
conditions of sanction
 To ensure end use of funds
 To ensure timely repayment of principal, interest & other charges in loans
 To prevent diversion of funds at all times during currency of advance
 To ensure/monitor that projections of sales/cash flow/profitability are achieved
 To detect early warning signals and take effective corrective steps to
Safeguard Bank’s interest
Credit Monitoring of an account can be at three different stages:-

 Pre sanction stage
 Post sanction –Pre disbursement stage
 Post disbursement stage
Pre Sanction Stage:

It consists of project appraisal like technical, economic, commercial, financial
appraisals including market appraisal.
Management Appraisal: It includes investigation into the integrity, qualification,

experience, track record, capacity and character of persons behind the project.
Importance of personal inspection/visit: - No document can substitute what

you can observe in person while on a visit to the premises of the borrower.
Records and returns do not capture many small things which you can observe
during inspections which can have a bearing on the exposure.
CIBIL Reports- If many enquiries are present in the report, the borrower may be
credit hungry, trying to obtain loan from other banks. Also take individual reports
of the directors and also group concerns to ensure that they do not have abnormal
debts and this company has not guaranteed the debts of such group
company.
Income Tax/Wealth Tax Returns- Fake income tax return frauds are on the
increase. Verification of the tax return is of utmost importance. Along with
acknowledgement, ask for tax paid challan and this can be verified online from
the site www.tin.tin.nsdl.com. Input challan identification number, BSR code of
bank/branch where tax remitted, amount and date. The online details should
match with what you have fed. In case of error it is sure that the challan is not
genuine. Also ask the borrower to generate his 26Q from the system on your
presence which should tally with what he has submitted. In case of audited
balance sheet ascertain the genuineness from the CA who audited the same.

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Also check with ICAI website for authenticity of the CA. Other figures in the
balance sheet should be cross checked by inspection as the scale of operation,
vat returns etc.
Other Pre Disbursement Tools
 Obtaining Status/ Credit Report from bankers.
 Issuance of sanction letter containing all terms & conditions and getting
acknowledgement signed by borrowers & guarantors.
 Execution of all relevant documents and creation of all stipulated securities
as per terms of sanction.
 Registration of charge with ROC/CERSAI/RTO/Post Office/LIC or such
other authorities as per the law within the time limit prescribed.
 Vetting of Documents & CPA process wherever applicable (limits of Rs. 50
Lakhs or above except retail loans (but for Loan against property of Rs. 50
Lakhs & above CPA is applicable).
 Carrying out other due diligence of borrows/guarantors by obtaining CBD
23 and verifying the particulars therein.
 Not to disburse working capital until machinery is commissioned & trial run
is successful.
 Remittance of funds directly to suppliers (after verifying their bank a/c and
status report from supplier’s banker where the invoice value of total supply
is Rs.10 Lakh and above) and obtaining receipts for record.
Other indicators/signals of adverse nature-Even though SASCL throws up

irregular accounts and branches need confine their focus on those irregular
accounts. However, identification of the reasons for irregularity is of utmost
significance. Unless the malady is correctly diagnosed, correct line of treatment
may not be possible. If correct treatment is not administered, it may be
ineffective.
Corrective Action Plan-The medicine depends upon the malady diagnosed. This
may include the following depending upon type of problem.
 Holding on operations in the account for temporary aberration
 Giving moratorium for repayment (delay in project implementation)
 Rescheduling of instalments (ballooning repayment/postponement of
repayment)
 Infusion of fresh capital by the Borrower
 Converting pre sale (stock) finance to post sale (bills/book debts)
 Considering additional long term loan
 Restructuring of loans etc.
Special Mention Accounts (SMA)
RBI has come out with a frame work to identify early the distress in borrowal
accounts so that corrective action can be put in place before it is too late. The
classification of a borrowal account will be as follows:
 SMA 0 – Where interest/principal are not overdue for more than 30 days
but showing signs of incipient sickness
 SMA 1- Where interest /principal payment is overdue in between 31 to 60
days
 SMA 2- Where principal/interest payment is more than 60 days but not more
than 90 days.

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Reporting of SMA 2 accounts over Rs. 5.00 Crore to RBI-CRILC (Credit Repository
of Information in Large Credit on weekly basis.
Reporting of SMA 0, 1 and 2 accounts to RBI on quarterly basis.
RBI will insist on accelerated provisioning for these accounts if not reported.
Staff clean Overdraft will be reviewed under Credit inspection if it is in order.

Red flagging of Accounts: For accounts having exposure of Rs. 50 Crores and
above where there is suspicion of fraudulent activity thrown up by the presence of
one or more Early Warning Signals (EWS).
 SASCL means System Asset Classification List NPA are marked through the
system. DC generates SASCL reports of the accounts which are likely to
become NPA on a particular date.
Accounts may appear in the SASCL list due to:-
 Overdue up to 90 days
 In sufficient Credit
 No Credit
 Review Expired
 Stock Expired
 Percolation
Post Sanction Review System:-
 To improve quality of sanction/ Appraisal

 Accounts with Rs 2.00 Lakhs and above, Branches/ Zones/ NBGs are
required to send copy of sanctioned proposals (New/ Review) to the Zonal
Office/ NBG/
HO along with monthly reporting statement.
 Time limit: 7th of the succeeding months.

 Key parameter to be scrutinized are Delegation, Prudential norms,compliance
to the laid down guidelines of the Bank/ RBI as regards Security, margin, rate
of interest and financial ratio
 Credit rating Exercise is done properly
 Staff Housing Loan, Vehicle Loan, PF Loan, Clean OD as also advance to
public against Deposit and against gold/ silver ornaments/ articles are
exempted
 PSRS Menu has been automated in the Finacle for generation of statements.
 It is based on sanctioning Authority entered in ACLHM limit details will
consider sanction level entered as 1- Branch in ACLHM
 M1: Statement of monthly overdraft Business

 M2A:Statement of monthly over-limit Business
 M3: Statement of Bills/ Cheques purchased on Casual Basis.
 M4: Statement of Advances sanctioned d for a month.
 M5: Monthly statement of fresh disbursement.

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 To ensure that the disbursing officer, before parting with the Bank's funds, has
taken all necessary measures for creation of security and safety .
 Verification of compliance of pre-disbursement terms of sanction by an

independent officer.
 If any condition could not be complied with, Brach should take approval for the
deviation from the Authority.
CPA
Scope of Coverage : FB and NFB limit of Rs. 50.00 Lakhs and above for new/
additional.
CPA For Retail Loans: CPA-I & II is to be carried out for proposals under Star Loan
against Property Scheme with limits of Rs.5O lacs & above and Star Home Loan
Scheme with limits of Rs 5OO Lakhs & above.
CPA for TDR loan: will hereafter be applicable to all loan against TDRs with limits
of Rs.5 crores and above of non-individuals such as Corporates, Societies,
Government Departments (irrespective of whether the deposits are in the name
of the borrower or third parties)..
 Check List as per Branch Circular 98/12 dated 16.04.2004, 98/186 dated. 04-
12-2004 should be prepared.
 The check list should be kept along with other security documents.
 Zonal Manager may reduce this CPA threshold limit at below Rs 50 Lakhs, as
he deems fit, considering the overall Credit Portfolio of the Zone and risk
perception in terms of compliance of Pre disbursement sanctioned terms.
CREDIT PROCESS AUDIT Audit was introduced in April,1999. The objective of CPA
is to ensure that the disbursing officer, before parting with the Bank's funds,
has taken all necessary measures for creation of security and compliance of pre
disbursement terms of sanction-:-. Further, the purpose of CPA is to ensure
verification of compliance of pre-disbursement terms of sanction by an independent
officer, not connected with the sanction/disbursement who is expected to point out
deficiencies, if any, in compliance at right time so that corrective measures can be
taken immediately to avoid possible damage
CPA process has to be completed BEFORE DISBURSEMENT & CPA-II to be

submitted to the competent authority (General Manager, HO – respective functional
Dept.) for closure. The Board has also directed that response from HO should be
within 48 business hours of receipt of request. Format of CPA is also modified.
CPA 3 :-
 To take care of compliance of post disbursement conditions.
 Standard Account with limit of Rs 5.00 Crores and above( including NPA -
Restructured account) new review sanction. This would cover overseas
accounts also with threshold limit of USD 1 Million and above and its
equivalent.

188
 Quarter wise disbursement to be verified and shall be done by the next month
and reports to be submitted by 10th of Aug, 10th of Nov, 10th of Feb, 10th of May
for Q1, Q2, Q3 and Q4 respectively to the respective controlling authorities
Will be carried out by concurrent Auditor of the Branch :
A) Covering new or review sanctions have been made during the quarter.
B) Pending compliance there in previous quarter.
 Limits disbursed where post disbursement conditions are stipulated and not
Complied, Credit In charge and Branch Manager jointly responsible to ensure
compliance of post disbursement terms.
MSOD/QIS
 Stock statement is applicable to all Cash Credit Limit
 MSOD is monthly Select Operational Data: Applicable for Limits of Rs 10
Lakhs and above
 QIS stands for Quarterly Information System is applicable to limits of Rs 1.00
Crore and above
 QIS I: Estimate for Quarter to be submitted in the week preceding the
commencement of the quarter
 QIS II: Actual for the Quarter ended to be submitted within six weeks
for the close of Quarter.
 QIS III: actual for Half Year and to be submitted within two months from
the close of the quarter.
IRAC norms were introduced by Narasimhan Committee in 1991 and made
applicable from 1993. Asset Classification is based on record of recovery and
not based on value of securities, worth of borrowers/guarantors.
I. Red Flagging of Accounts:
Presently. Branches reporting to ZO/NBG. With sanction limits Rs.50 crore and
above, the delegation of Red Flagging/Fraud examination of account is assigned
to HO FMG (Fraud Monitoring Group), while with sanction limits less than Rs.50crore
to FMG-NBG. However, in case of LCBs irrespective of amount the RFA approval is
done at HO-FMG.
As per RBI directives, Bank should act prudently and initiate appropriate steps
and complete the process of RFA/Fraud declaration within 180 days of first date of
RFA by any Bank in consortium and our Banks policy is in tune with the same.
However, as per DFS instructions (EASE compliance) the said procedures are to be
completed within 120 days.
II. FRAUD EXAMINATION
Once an account is Red flagged by HO-FMG or of NBG-FMG as the case may be in
respect Consortium accounts where our Bank is Leader of the consortium (or) sole
Banker, Forensic Auditor should be appointed by NBG in respect of Branches falling
under their control and DGM-Large Corporate for their respective Branches within 5
days of receipt of approved RFA memorandum by them from HO or NBG as the
case may be. Thereafter the audit firm assigned the Job of carrying out Forensic
Audit should complete the audit and submit the final report within a period of 90 days
from the date of allotment of Forensic Audit. The completion of audit within 90 days
of allotment should be a term of scope of audit and mentioned invariably in the
allotment letter. Thus a final decision on classification of the account as fraud or

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lifting of RFA (where no fraud discernible decision taken by HO FMG or NBG FMG
as the case may be) is to be completed within a maximum period of 120 days from
the date of classification as RFA.
Steps involved from the declaration of RFA to declaration of fraud (or) lifting of RFA
are furnished in the flow chart.
 Branch/Zonal office/NBG submit memorandum for declaration of account as
Fraud or no Fraud to HO Cr.MD for decision to be taken by HO-FMG and
simultaneously another memorandum for closure of Forensic audit report to
Functional Department (C&IC/ MSME/Retail as the case may be) respectively
for Rs.50 crores and above and by LCBs irrespective of amount of exposure
while Branch/Zone to submit to NBG-FMG in respect of accounts less than
Rs.50 crores.
 Respective FMGs would decide on classification of account as Fraud or for
lifting of RFA based on recommendations from NBG/ LCB. Reporting to RBI
(CRILC platform)
Photo publication of wilful defaulters:
The branches would issue Demand Notice to those borrowers, including proprietors /
partners / directors / guarantors of the borrower firms / companies, who have been
declared as wilful defaulters by Head Office and who are having means to pay either
fully or partially but are deliberately avoiding payment of legitimate dues of the Bank,
followed by publication of photographs in the newspapers in default of payment,
subject to —
a) The decision of issuing such demand notice and publication of photographs in the
newspapers in respect of the Wilful Defaulter declared borrowers including
Proprietors/ Partners/ Directors/Guarantors etc. in the deserving cases will be taken
by the Zonal Manager/Chief Incumbents of Large Corporate Branches, on case to
case basis, except in cases where court/tribunal directives/ prohibitory orders are
there not to publish photographs. The demand notice issued to the wilful defaulter
including proprietors / partners / directors / guarantors may specify a period of 7 days
from the date of notice within which the borrower/guarantor may repay the
outstanding dues with interest, costs, charges and expenses.
SOP for declaring wilful defaulters
RBI in its Master Circular DBR.No.CID.BC.22/20.16.003/2015-16 dated July 1, 2015,
inter alia clearly stated the reasons based on which the wilful default would be
deemed to have occurred if:
(a) A unit has defaulted in meeting its payment even when it has the capacity to
honour the said obligations.
(b) It had not utilised the finance for the purpose lent but has diverted the same for
other purposes.
(c) It had siphoned off the funds - neither utilised for the purpose availed nor are
funds available in the form of other assets.
(d) It had disposed of or removed the movable fixed assets or immovable property
given by it for the purpose of securing a term loan.
Further, RBI cautions that Identification of wilful default should be made keeping in
view the track of the borrower and should not be derived on the basis of isolated
incidents. The default to be categorised as wilful must be intentional, deliberate and
information on wilful default should be collected in case of wilful default of Rs.25
lakhs and above. If one is found guilty on any of the above factors, following penal
measures should be initiated which include debarring additional credit facilities by

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any bank/FI/NBFCs:
i) Photo publication of the borrowers/guarantors by following the procedure for photo
publication;
ii) Legal process wherever warranted against the borrowers /guarantors and
Foreclosure for recovery of dues;
iii) Proactive approach for change of management etc. Provisions of IPC 1980 and
Companies Act 2013 shall be imposed on the very person;
iv) Making request to the Bureau of Immigration for issue of look out circular as per
extant guidelines;
v) Filing FIR with appropriate authority in fraud reported cases.
SOP Remarks
SOP-1 Rs 25 Lakhs & above up to below Rs 5 Cr
Branch to Examine wilful default angle and recommend to ZO as per SOP-1
SOP-2 Rs 5 Cr & above up to below Rs 50 Cr ZO/LCB to Examine wilful default
angle and recommend to HO as per SOP-2
SOP-3 Rs 50 Cr & above HO will examine as per SOP-3
LCB to examine all their accounts with wilful default angle & submit the
memorandum directly to HO.
NPA Rules
An asset, including a leased asset, becomes nonperforming when it ceases to
generate income for the bank. A non-performing asset (NPA) is a loan or an advance
where;
i. interest and/ or instalment of principal remains overdue for a period of more than 90
days in respect of a term loan,
ii. The account remains 'out of order', in respect of an Overdraft/Cash Credit (OD/CC).
The previous 90 days period for determination of out of order status of a
CC/OD account shall be inclusive of the day for which the day-end process is being
run,
iii. The bill remains overdue for a period of more than 90 days in the case of bills
purchased and discounted,
iv. The instalment of principal or interest thereon remains overdue for two crop
seasons for short duration crops,
v. The instalment of principal or interest thereon remains overdue for one crop season
for long duration crops,
vi. The amount of liquidity facility remains outstanding for more than 90 days, in respect
of a securitisation transaction undertaken in terms of the Reserve Bank
of India (Securitisation of Standard Assets) Directions, 2021.
vii. in respect of derivative transactions, the overdue receivables representing positive
mark-to-market value of a derivative contract, if these remain un paid for a period of
90 days from the specified due date for payment ( pertains to Treasury Br.)
In case of interest payments, an account becomes NPA only if the interest due and
charged during any quarter is not serviced fully within 90 days from the end
of the quarter. The definition of 'out of order', as clarified shall be applicable to all loan
products being offered as an overdraft facility, including those not meant for
business purposes and / or which entail interest repayment as the only credits

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Impact of NPA
• Application of interest in the account immediately ceases and bank has to
make provision for NPA
• Reverse the interest already charged but not realized to the debit of P&L and
transfer to it sundry credit “unrealized interest “.
• Provisioning needs to be done for NPAs which impacts Net profits.
• Additionally capital has to be provided as per Basel committee recommendation,
depending upon the provisioning percentage.
Provisioning
Standard Assets:
• A general provision of 0.25% for all agricultural & SME accounts
• For Commercial Real Estate (CRE) Sector at 1.00 per cent
• For Commercial Real Estate–Residential Housing Sector (CRE-RH) 0.75%
• For all others 0.40%
• For home loans with teaser rates (below base rates) 2%
• For restructured loans 5%
Substandard Assets (21 &22)
i) Substandard—(Secured) Assets—Code 21 will require 15% provision of the outstanding
dues net of URI & FITL parked in sundry credit.
ii) Substandard—(Unsecured) Assets — Code 22: RBI has made norms of provision
requirement on unsecured exposure of Banks more stringent, Asset code 22 requires,
25% provision of the outstanding dues net of URI & FITL parked in sundry credit.
• infrastructure loan accounts which are classified as substandard
will attract a provisioning of 20 per cent instead of the aforesaid prescription
of 25 per.
Doubtful Assets (31, 32 & 33)
Doubtful-I (Code 31) — NPAs over 12 months and up to 24 months i.e. an asset remains
D-1 for a period of 12 months — provision requirement shall be 25% of RVS + 100% of
shortfall in security after making allowance for URI, FITL parked in sundry credit .
ii) Doubtful II (Code 32) — NPAs over 24 months and up to 48 months i.e. an asset
remains D-2 for a period of 24 months — provision requirement shall be 40% ofRVS (w.e.f
31.12.2015) + 100% of shortfall in security after making allowance for URI , FITL parked
in sundry credit. Our Bank was making accelerated provision @ 60% of RVS + 100% of
shortfall for this category of NPAs.
Doubtful III (Code 33) — NPAs over 48 months or Assets remaining for more than
3 years in Doubtful category. As per extant RBI norms, D-3 category shall require
100% provision of net outstanding dues (irrespective of RVS) after making allowance for
URI and FITL parked in sundry credit
• Loss assets- 40 - 100% of outstanding balance.
• In accounts guaranteed by ECGC/CGTMSE the provision has to be calculated after

taking into account the cover available under the scheme. In advances under
consortium arrangement, asset classification should be based on record of recovery
of individual member Banks. Where the remittance by the borrower are pooled with
one bank and/or remitted with one Bank, other members should impress upon that
Bank to remit their share or should ensure to obtain an express consent from the Bank
having funds for transfer the funds to them to ensure proper asset classification in their
books.

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• Calculation of Provision e.g. (Amount in Lakhs)
NO ECGC /CGTMSE cover available
NPA O/S balance (Asset code 31) 10.00 10.00
Realizable value of security (RVS) 3.00 3.00
Unsecured portion 7.00 7.00
CGTMSE/ECGC cover (75%) assumed Not Applicable 5.25 (75% of 7.00)
Net unsecured portion 7.00 1.75 (7.00-5.25)
Provision = 25% of 3.00 + 100% of 7.00 7.75
Provision = 25% of 3.00 + 100% of 1.75 2.50
Project Loans-
• Project loan for non-infra project will become NPA if it fails to commence commercial
production within 12 months of original DCCO (date of commencement of commercial
operations) or COD commercial operation date, unless it is restructured and fresh
DCCO is fixed which should not extend beyond 24 months of original DCCO.
• In case of Infra projects if the project fails to commence commercial operation within
2 years of original DCCO unless it is restructured and DCCO extended as follows:
▪ Project involving court cases another 2 years (total 4 years from original DCCO)
▪ In other cases for reasons beyond the control of promoters another 1 year
(Total 3 years from original DCCO). Mere extension of DCCO will also be
treated as restructuring if the fresh DCCO goes beyond the periods above.
• As per RBI guidelines w.e.f. 01.04.2015 asset classification in respect of restructured
advances, except change in DCCO in cases of infra and noninfra Project loans, cannot
be continued as standard and should be treated as NPA and provided for accordingly.
NPA Management Policy.
• All watch category accounts (30 to 90 days delinquency) appear in “SASCL”
report (System Asset Classification List). This should be followed up for recovery of
entire overdue. If record day is fast approaching and for some reasons, unable to
recover full overdue then at least minimum critical amount should be recovered to
avoid slippage during the record date like 31st march etc.This should be exception
rather than rule. This is Critical Amount Recovery Exercise) CARE.
• Once the account becomes NPA immediate action should be taken to recover the
amount by issuing SARFAESI notice wherever eligible.
Eligible accounts under SARFAESI –
• Contractual Dues should be Rs 1 Lakh and above

• A/c should be NPA as per RBI norms.
• Asset specifically charged to the bank.
• Joint lending - 60% lenders (contractual amount due) agree to initiate action or inter-
se agreement authorizes so.
• Security documents should be in full force. (Documents valid at-least for 1 year from
the date of notice), Documents should be duly filled in.
• If security not registered with CERSAI, SARFAESI action may not be permitted.
• An inspection of the unit to be undertaken immediately to ascertain the condition of
securities charged to bank.
• Fresh valuation of properties to be obtained if more than 2 years old. In case where
original valuation is more than Rs. 50 Lakhs, 2 independent valuation to be obtained.

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All these to be completed before sending SARFAESI notice or filing suit as thereafter
borrower may not cooperate.
• 60 days mandatory notice to be issued, thereafter possession – symbolic /
constructive or actual may be taken.
• After taking possession of property, notice of sale for 30 days should be published in
2 newspapers, one of them should be vernacular & having wide circulation in the local
area where the property is situated.
• Reserve price should be fixed having regard to the valuation of the property and bids
should be invited. Before auction, bank should contact prominent prospective buyers
beforehand and ask them to bid in the process. If tenant is occupying the property,
efforts should be made to vacate property. If no bids available, again re-auction can
be made. In certain circumstances, bank can also bid for the property.
Accounts ineligible under SARFAESI:

• Accounts where contractual dues are less than Rs.1 Lakh.
• Where security created is agricultural land. However other agricultural implements
such as tractors, implements can be covered under SARFAESI.
• Where contractual dues outstanding are less than 20% of principal & interest.
• Assets under pledge, lien are not covered.
Compromise & Write Off:-
• Compromise means Part recovery and associated with sacrifice.

Accounts eligible for compromise -
• A/c. should have been provided as NPA
• Default for reasons beyond control of borrower
• All efforts for up gradation should have been made
• Shortfall in security/difficulty in realization
• Where continuity of relationship with borrower is not in bank’s interest.
NOT ELIGIBLE accounts
(Not eligible in the normal course and should not be entertained by the regular
delegate below the level of ZLCC):
• Wilful defaulter,
• Cases of malfeasance/misfeasance
• Cases of fraud /cheating
• In wilful default accounts the proposal will be approved by M. Com. Irrespective of
amount involved.
• Branch should have proof of wilful default before categorizing the borrower. Where
there is no proof benefit of doubt to be given to borrower.
• One of the key tools in the hands of bank in reducing NPA is compromise and
settlement. Write off is last resort when all other efforts fail and do not yield any result
and security is not available or value of the security is nominal/not likely to recover
entire dues of the bank.
• The following factors need to be taken into account while negotiating for compromise.
• Age of NPA
• Realisable value of security evaluated on distress sale basis
• Strength of documentation
• Age & stage of suit/DRT proceedings
• Condition & availability of security charged to bank

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• Details of other unencumbered assets of the borrower and guarantor
• Means of borrower/guarantor and their present income
• Capacity of the borrower and bank to negotiate
• The social standing of borrower/guarantor
• Character/capacity of borrower/guarantor
• Position of group accounts and present status and activity of borrower/guarantor
Need for Compromise
•Time value of money
• Recycling of funds
• Carrying cost of NPA
•Cleaning of balance sheet
•Avoiding throwing good money after bad
•Saves time & hassles of litigation
•Negotiated settlement prevents ignominy of borrower
In the process of negotiation, sacrifice of various components of the dues as below in
the order of desirability would be considered -
• Penal interest
• Incidental expenses & other charges including inspection/insurance charges
• ECGC/CGTMSE guarantee fees/back ended subsidy
• Legal expenses incurred and to be incurred
• Compounding effect of interest
• Uncharged interest
• Ledger Write off is to be considered only when it is unavoidable
Sacrifice-
It is the difference between ANAP (Adjusted Net Amount Payable) and amount offered
under One Time Settlement (OTS).
• ANAP under “Substandard and Doubtful” categories are calculated by adding
Interest @ 1% MCLR (Simple) from date of NPA to last date of the previous month of
proposal, to amount outstanding on date of NPA
• In case of loss assets no interest is added to ledger outstanding on the date
of NPA.
• Sacrifice will decide the delegated authority for considering approval of compromise
Payment Terms:
• Should preferably be paid in one lump sum or otherwise be deposited in a No Lien
A/c.
• Normally minimum upfront/down payment of 10% of the compromise offer amount
• Residual amount within 90 days of intimation of approval of compromise offer
• In case of merit delegate up-to the level of ZLCC can approve repayment periods up-
to 12 months and NBGLCC/EDLCC/CAC up-to 36 months subject to levying
applicable interest and payment of minimum 25% within 3 months
• SAR to be dealt with before compromise proposal.
Write Off –
• Last resort when all other remedies/avenues fail and did not yield recovery
• Should have been provided for as loss asset and 100% provisioning done
• Prudential Write off of doubtful/loss assets for o/s of more than Rs. 1 Crore is affected
at HO level to clean up balance sheet and account continues at branch level. Suit
should have been filed in DRT.

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Debt Recovery Tribunal (DRT): Debt Recovery Tribunal (DRT) was established
in the year 1993 with the specific purpose of fast tracking the cases involving suit
amount above Rs.10 lakh. The government on 6th Sep 2018 has doubled the monetary
limit to ₹ 20 lakh for filing loan recovery applications in the Debt Recovery Tribunals
(DRT) by banks and financial institutions effective 1-7- 2019
Presently, there are 39 DRTs & 5 DRATs. As per DRT regulations, the Dealing
assistant has to submit scrutiny within 7 days and the Registrar has to accept / reject
the application within 30 days and ensure rectification of defect, if any, within given
time. Any inordinate delay should be brought to the notice of the Registrar / PO by the
branch through the dealing lawyer. Ensure early listing of cases and disposal of the
same in two hearings as it was envisaged to dispose of the cases within 6 months. If
it is not done within 180 days, any party can apply DRAT to direct the DRT for
expeditious disposal. Final orders are to be passed by the PO within 30 days after final
hearing & simultaneously Recovery Certificate is to be issued. DRT is presided over
by Presiding Officer who is generally judge of rank of session judge or district judge.
DRTs are established in all major cities of the country. Where SARFAESI action is
preferred, DRT permission to be obtained. Appeal against DRT can be made with Debt
Recovery Appellate Tribunal (DRAT).
Lok Adalat: Lok Adalat means ‘Peoples’ Court’. Power derived from Legal Services
Authorities Act 1987. There is no court fee payable when a matter is filed in a Lok
Adalat. It is an alternative dispute resolution mechanism. Generally compromise/avoid
legal procedures i.e. without going to court. Maximum amount
- Rs.20.00 lakhs. Suite filed cases, RC cases & pre litigation cases with consent of the
concerned District legal authorities can be heard. Lok Adalats are arranged by State
Authority, District Authority, Supreme Court Legal Services Committee, High Court
Legal Services Committee, and Taluka Legal Services Committee. Lok Adalat is
Presided over by retired judges, social activists, or other members of the legal
profession. The focus in Lok Adalats is on compromise. Award is made and is binding
on the parties. It is enforced as a decree of a civil court.
Reschedulement & Restructuring: Reschedulement is resorted to in cases where
borrower is unable to repay the loan as per original terms & conditions owing to
changes in the circumstances impacting cash flow in the business and his ability to
pay. Reschedulement implies extension of the repayment period of the loan or re-
phasing the periodicity of loan instalments. e.g. Instalment rephased from Monthly to
Quarterly. Reschedulement is resorted to in cases where borrower is unable to repay
the loan as per schedule. Reschedulement is resorted to because default would hurt
both the Borrower and the Bank. Restructuring implies altering the terms & conditions
of the loan so as to make it more favourable to the Borrower.
Examples of Restructuring are:-
• Lowering of Rate of interest

• Funding of overdue interest (FITL)
• Overdue loan amount with facility to repay in easy instalments (WCTL).
It may or may not involve additional funding. Only Standard/Substandard &

Bad & Doubtful accounts can be rescheduled or restructured. Loss Asset Account is
ineligible for reschedulement or restructuring. No reschedulement or restructuring with
retrospective effect. Only viable units which are expected to turn the corner & can be

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brought back on track to be considered for Reschedulement/restructuring. No
reschedulement/restructuring to be considered for Non-viable accounts. Restructuring
of advances could take place in the following stages:
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'.
• The accounts classified as 'standard assets' should be immediately reclassified as

'sub-standard assets' upon restructuring.
• 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 repayment schedule.
• 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 (i.e. servicing of interest
and repayment of principal) during the ‘specified period’ i.e. one year from the date
the instalment under principal and/or payment of interest first become due.
• In case, however, satisfactory performance after the specified period is not

evidenced, the asset classification of the restructured account would be governed as
per the applicable prudential norms with reference to the pre restructuring payment
schedule.
• 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 recognised only on cash basis. If
the restructured asset does not qualify for up gradation at the end of the above
specified period, the additional finance shall be placed in the same asset classification
category as the restructured debt.
• 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 first occasion. However, such advances
restructured on second or more occasions may be allowed to be upgraded to standard
category after the “specified period” in terms of the current restructuring package,
subject to satisfactory performance.

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Policy on Resolution of Stressed Assets:
The Bank vide Branch circular No116/21 dated 05.04.2022 has issued detailed
guidelines on empanelment of Insolvency Professionals/ Entities (IP/IPE) and for filing
of cases and fee structure for RPs/Advocates on matters under Insolvency and
Bankruptcy Code, 2016 with following salient points :-
(A) Identification of accounts for initiating action under IBC.
(B) Sanctioning Authority for initiating action under IBC.
(C) Procedure for empanelment of Insolvency Professionals/Entities.
(D) Fee structure for Advocates and RPs engaged in the cases filed under IBC
Liberalised Scheme for NPA Recovery through One Time Settlement:
A. "Star Sanjeevani Scheme 2022-23"
Reference HOBC 116/36 dated 01-04-2022
 All loan accounts with outstanding balance upto Rs.100.00 lakhs under
Doubtful/Loss and Regular written Off category as on 31.03.2022 will be
eligible under the Scheme.
 Staff loans/Loans against TDRs / NSCs / LIC Policies / Gold Loans etc. will
continue to be ineligible under the Scheme.
 Central Government / State Government guaranteed advances are ineligible
under the scheme.
 Liberalized Delegation of Powers for approving sacrifice
 The scheme is non-discretionary and non-discriminatory in nature.
 All accounts with ledger outstanding up to Rs. 100 lakh under doubtful/loss
and regular written off accounts as on 31.03.2022 are eligible. Outstanding
balance in the loan account as on 31.03.2022 should be reckoned as base
amount for arriving at OTS amount to be paid. Any forced debits after
31.03.2022 should be added to the base amount. Any recoveries, by whatever
means and appropriated against UCI charged to that extent before receiving
the application for OTS, will not be reversed. In such cases, base amount will
be balance outstanding in the account as on the date of application for OTS by
the borrower.
 Branch Managers can settle dues up to Rs. 50.00 Lakhs, whereas Ledger O/s
above Rs. 50.00 Lakhs can be considered at SZLCC level. However, in case
of OTS in accounts of Branches LCBs / ARBs (headed by AGM / DGM) /
other Branches headed by AGM / DGM , the Branch Head is delegated
authority to approve OTS for all categories as above and need not send OTS
proposal of above Rs.50.00 Lakh to Rs.100.00 Lakh to SZLCC.
 The authority approving OTS would concurrently approve interim waiver of legal
action. In other words legal remedies are not barred by limitation in OTS failed
accounts. Hence it is advised to obtain a renewal document from the borrower
/ co-borrower / Guarantors at the time of accepting OTS request. SAR to be
closed. If not, Branch to submit to ZO within 30 days.
 Security will be released only after full payment of OTS amount. If security / ies
are extended to any other or Group Account, it will not be released till liabilities
in all the accounts are paid off.
 The powers to be exercised by the Chief Incumbent at the branch
 The official approving compromise proposal should not have sanctioned the
loan in individual capacity.
 The branch to obtain latest inspection report.
 Liquid securities if any must be appropriated in that account after observing due
procedures before accepting OTS

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The scheme remain in force up-to 31.03.2023
Delegation:-
Please Refer the HOBC 116/36 dated 01-04-2022.
Payment Terms:-
1. FOR DUES UPTO Rs. 10 lakh: in one lump sum or latest within 90 days of
approval with minimum 10% upfront.
2. For dues above Rs.10 lakh : Minimum 10% upfront and balance amount
within 6 Months’ time subject to PDCs being obtained for instalment amount.
3. No interest, if full OTS amount is paid within 90 days of conveying approval of
OTS. For payments beyond 90 days, simple interest will be charged @
10% Simple on reducing balance from the date of acceptance of OTS till full
payment. No interest concession should be given for repayment
If repayment exceeds 1 year from the date of acceptance, OTS will be treated
as revoked and payments already made till then shall be forfeited and treated
as normal recovery,
Deviation:
No Deviation allowed in the scheme as it is Non-Discretionary and Non-
Discriminatory. If the proposed OTS does not fit into this scheme, it can be considered
under prevailing NPA Management policy on merits.
B. “BOI OTS 2022":
Reference HO BC 116/37 dated 01.04.2022. The scheme will be known as
"BOI OTS 2022" and valid up to 31.03.2023.
Eligible Accounts -
 NPA a/cs. (Asset code 31, 32, 33, 40 & Regular W/O a/cs.) with O/S above Rs.
1.00 Crore and up-to Rs. 50.00 Crores as on 31.03.2022. All these Accounts
should have been declared as NPA on or before 31.03.2021.
 Cases pending before Courts / DRTs will also be eligible. However, consent
terms with default clause will have to be filed before presiding officer of Court
/ DRT for obtaining consent decree if OTS is entered into.
 Cases where Bank has issued notice u/s 13(2) or taken action u/s 13(4) of the
Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act (SARFAESI-2002) are eligible.
 Accounts under Consortium or Multiple Banking arrangements are eligible to
be covered under the proposed Scheme A/cs.
 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 State Authorities.
 Cases referred or admitted to NCLT under IBC 2016 are eligible.
 Scheme will cover wilful defaulter cases with outstanding up to Rs.25.00 crore,
and where minimum sanctioning authority is NBGLCC. OTS proposal of Willful
Defaulter will be outside the purview of Non-Discretionary and Non
Discriminatory feature of scheme.
 Cases approved earlier under BOI OTS 2021 and which are not paid (whether
approval accepted or not) may be considered for validation under BOI OTS 2022
subject to accepting minimum OTS amount approved earlier under BOI OTS 2021.
In such cases, part amount, if any, paid earlier may be considered as part
payment of OTS amount approved under BOI OTS 2022. be approved
/accepted and for approval of Sanctioning Authority.

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Ineligible Accounts
i) Central Govt. / State Govt. guaranteed accounts will not be considered under this
Scheme.
ii) "Compromise cases" in any other scheme/policy already under repayment.
iii) Units under rehabilitation/restructuring will not be eligible.
iv) NPAs declared as Fraud / malfeasance and Wilful Defaulters are not eligible for OTS
under this scheme.
Salient Features of the scheme –
 Last date for receipt of application: 31.03.2023.

 Last date for conveying sanction: Within 30 working days of receipt of
Application.
 The authority approving OTS would concurrently approve interim waiver of legal
action. It is advised to obtain a renewal document from the borrower / co-
borrower / Guarantors at the time of accepting OTS request.
 Waiver of uncharged interest for all eligible accounts from the date of NPA
and legal expenses already debited to P&L a/c. will be absorbed.
 Release of security and withdrawal of legal action is permitted upon settlement
of full OTS scheme. In case, Securities are extended to other accounts, OTS in
any one of these accounts can be done on stand-alone basis subject to the fact
being brought out in the sanctioned proposal and security will not be released
till liabilities in all the accounts are paid off.
 Where OTS amount is proposed to be paid from sale of charged assets, the
security may be released upon payment of amount equivalent to Realizable
Value of Security (RVS) of property / Security to be released.
 While issuing No Dues Certificate the Branch should obtain following under
takings/declarations and , incorporate following clause in Sanction letter:
a. Any legal dispute due from other would be at the risk and responsibility of the
Borrower and the Company and Promoters has to undertake that the Bank has no
liability with regards to any dispute/ claims/ injunction etc.
b. In future, if any fraud is found, the same will be dealt with as per Bank's policy.
c. The name of Borrower / Company / firm will continue to appear in CIBIL records as
"Account closed under compromise / settled.
As per the Scheme, Sacrifice / Write-off will be reckoned as below for

arriving at the OTS amount. Sacrifice for Rs. 1.00 Crore to Rs. 25.00 Crores
Asset Code as on 31-03-2022
Sacrifice on Dues
Secured portion /Unsecured portion
Doubtful – 1 (D1) 20%/ 75%
Doubtful – 2 (D2) 25%/ 85%
Doubtful – 3 (D3) 30%/ 85%
Loss - (AC - 40) &
Regular Written off Maximum 85 %

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Sacrifice above Rs. 25.00 Crores to Rs. 50.00 Crores
Doubtful – 1 (D1) 15% / 75%
Doubtful – 2 (D2) 20% / 85%
Doubtful – 3 (D3) 30% /85%
Loss - (AC - 40) &
Regular Written off Maximum 85 %
Delegation:-
Please Refer the HOBC 116/37 dated 01.04.2022.
Payments –
 The borrower has to deposit 10% of OTS amount as initial application money, at
the time of submission of the on rejection amount is refundable without interest
within 3 months. In case the OTS repayment amount is from sale of charged
assets, application money may not be insisted.
 The borrower has to deposit ADDITIONAL 15% of the OTS amount as upfront
money within thirty days from the date of conveying approval of OTS
 The balance OTS amount is to be paid, without interest within 90 days from the
date of acceptance of OTS. Payment beyond that, simple interest will be charged
from the date of acceptance of OTS on reducing balance. In case, no upfront is
received apart from 5 % initial application money, interest will be charged @ 10%
Simple on remaining amount from the date of acceptance of OTS.
 Sanctioning authority to have discretion to stipulate periodical instalments
though failure to pay as stipulated may not be an irregularity but to be paid
within the maximum permitted period as per the scheme.
 No refund of any deposited amount would be allowed after acceptance of terms
and conditions of OTS & OTS shall be revoked. This clause would be
incorporated in sanction letter invariably.
Incentive for Early Payments
 To incentivize faster payments, Incentive will be allowed if full OTS amount will
be paid within 90 days from the date of acceptance in following manner:
 Incentive of 5 % of OTS amount will be allowed if full OTS paid within 30 days.
(excluding loss assets).
 ii. Incentive of 2.5 % of OTS amount will be allowed if full OTS paid within 90
days (excluding loss assets).
 The Branch to advise in sanction letter, OTS amount both with incentive &
without incentive as per applicability.
Quick Mortality Policy:
Staff accountability aspect, if any, should have been examined and put up to the
Competent Authority before entertaining the OTS proposal, as per extant guidelines.
However, in case the SAR is submitted and pending at any level, the gist of
recommendations should be incorporated in the proposal and no proposal should be
declined by attributing reasons of non-closure/ not dealt with of Staff
Accountability. However, where SAR has not been closed / concluded, the SAR should
be closed or dealt within 30 days of sanction of OTS.
POLICY ON RESOLUTION OF STRESSED ASSET (HO BC 116/21 dated 05-04-

2022):
Stressed Asset Identification Committee- SAIC: - As per the Enhanced Access and
Service Excellence (EASE), the management of stressed assets (NPA and SMA
accounts) is proposed under an exclusive Stress Assets Management Vertical
(SAMV).

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The constituents of SAMV include (1) Recovery Department, (2) Credit
Monitoring Department and (3) Stressed Asset Resolution Department at HO level.
Under this framework of EASE Guidelines, Head Office- Stressed Asset
Management Vertical will cater to the Stressed accounts having our bank exposure
of Rs.50 Crores and above.For identification of stressed assets from SMA database,
SAIC will be formed at HO comprising of ED (Chairperson) and GMs from Large
Corporate Dept, Credit Monitoring Dept, Recovery Dept and Stressed Asset
Resolutions Dept. Quorum ofthe meeting- Minimum three GMs with GM Recovery
Dept and GM SARD as compulsory members. In case of urgency, decisions can also
be made by way of circulation. MD&CEO and in his absence Executive Director is
authorised to approve
operational guidelines in this respect.
The Department's will differentiate the stressed accounts into SMA and NPA (
NCLT & Non-NCLT Matters) categories so as to formulate overall measures to
manage and lessen the incidence of stress in the performing accounts as well as
maximize recovery in NPA accounts.
Insolvency & Bankruptcy Code 2016
The bank has issued detailed guidelines on empanelment of Insolvency Professional
(IPs) / Insolvency Entities (IPE) and for filing of cases and fee structure of RPs /
Advocates on matters under IBC, 2016 with following salient points:
1. Identification of accounts for initiating action under IBC.
2. Sanctioning Authority for initiation action under IBC.
3. Procedure for empanelment of Insolvency Professional (IPs) / Entities (IPE).
4. Fee structure for Advocates & RPs engaged under the cases filed under IBC.
Identification of Accounts for action under IBC, 2016:
The first and foremost act is identification of the eligible accounts, which can be NPA
as well as those under SMA. Filing of NCLT case may lead to the liquidation of the
company which may close all avenues for recovery of dues. The cost involved in the
process is also on a much higher side compared to other recovery processes. Once
the application is admitted by NCLT, moratorium on all legal proceedings against
the company including those under SARFAESI will commence, which will halt the
other recovery steps initiated by the bank. Various factors should be taken in to
consideration by the branches while identifying accounts to be proceeded under IBC.
Sanctioning Authority for permission for initiating action under IBC, 2016:
A financial creditor can initiate the proceedings under the IBC, in cases where there is
default in repayment of minimum amount of Rs. 1 Lakh. The competent authority for
the purpose of initiating action under IBC will be as under:
Rs. In Crore
Executive Director Full Powers
General Manager 500.00
Deputy General Manager 50.00
Assistant General Manager 20.00
Chief Manager 10.00
Senior Manager 02.00

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NCLT
The Central Government has constituted National Company Law Tribunal (NCLT)
under section 408 of the Companies Act, 2013 (18 of 2013) w.e.f. 01st June 2016.
In the first phase the Ministry of Corporate Affairs have set up eleven Benches, one
Principal Bench at New Delhi and one each Regional Benches at New Delhi,
Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Jaipur,
Hyderabad, Kolkata and Mumbai. Subsequently more benches at Cuttack, Jaipur,
Kochi, Amravati, and Indore have been setup.
It aims to consolidate laws:
- Resolution in a time bound manner
- Framework to either wind up their business or
- Engineer a revival plan.
The provisions of the law are-
Adjudicating authority - NCLT- (Sec 408 of the Companies Act, 2013). The Corporate
debtors-two independent stages:
1. Insolvency Resolution process
2. Liquidation process Insolvency resolution process
Financial Creditors / Operational Creditors / Corporate Debtor may initiate Corporate

Insolvency Resolution Process in case default is committed by Corporate Debtor.
Application to NCLT to be made
Operational Creditor to give 10 days’ notice before approaching NCLT. Corporate
insolvency process to be completed within 180 days. After admission of application,
creditors claim will be frozen for 180 days. Proposals for revival to be heard. Future
course of action is to be decided. Until approval of Resolution / Liquidation Plan, no
proceedings can be launched against the Corporate Debtor.
NCLT appoints interim Insolvency Professional – (IP) within 14 days of acceptance
of application. Interim IP holds office for 30 days only. He takes control of debtor’s
assets and company operations and collects financial information. NCLT announces
and calls for submission of claims.
After announcement, interim IP constitutes the creditors committee. Financial and
operational creditors should be part of Creditors’ Committee. Creditors committee
shall meet first within 7 days of its constitution to decide by 75% to replace or confirm
interim IP as Resolution Professional (RP). Then RP is appointed by NCLT.
If ¾ of financial creditors request for extension of time, NCLT can grant one time
extension of 90 Days. The RP to conduct entire Insolvency / Resolution process and
during the process, manage corporate debtor. The RP shall prepare Information
Memorandum (IM) for Resolution Plan and place it to the committee. The committee
after approval of IM, decide on restructuring plan. The Resolution Plan will be sent to
NCLT for final approval and then implemented.
Liquidation process--on account of failure to submit resolution plan to NCLT within
the prescribed period or Rejection of RP for non-compliance with the requirement of
the code or Decision of creditors committee by vote. During liquidation no suit or
Proceedings shall be instituted except through the Liquidator on behalf of corporate
debtor with permission from NCLT. The RP shall act as Liquidator unless replaced.
Liquidator shall form an estate of all assets, called liquidation estate.
The Liquidator shall receive, verify and admit claims of creditors. Assets will be
distributed in the manner of priorities of debts. Sums due to workmen or employee
from PF, Pension and Gratuity will be considered as priority dues.

203
Upon liquidation of Corporate Debtor’s asset, Liquidator making the application,
NCLT pass an order dissolving the corporate debtor.
Order of priority of payments of debts-
1. IR cost and liquidation cost.
2. Workmen dues (for 24 months before commencement)
3. Wages and unpaid dues to employees(for 12 months)
4. Financial debts to unsecured creditors
5. Debts to secured creditors
6. Remaining debts
7. Preference shareholders
8. Equity shareholders
9. Any surplus remaining after payment
Constitution of NCLT
President: Judge of high court for 5 years.
Judicial member: A Judge of high court/District judge for 5 years / Court advocate
for 10 years.
Technical member: A person who has been a member of Indian Corporate Law
Service or Indian Legal Service or practicing CA or Cost Accountant or CS for 15
Years.NCLTs provides necessary solution for companies facing issues related to
winding up mismanagement and insolvency of business.
NCLT having replaced company law board, is the only tribunal for arbitrating
Company disputes
Authorised Officers under IBC:
Assistant General Managers and Deputy General Managers to sign \ execute
Applications, Appeals, Vakalatnama, before NCLTs, NCLATs, High Court, and
Supreme Court under IBC 2016. All other ancillary Pleadings, Miscellaneous
applications, Affidavits, Written statements etc. can be signed \ executed by the
dealing officials of Branch as being the practice in other court cases.
OTS/Release of Security with Companies under Liquidation / Resolution:
Any dealing with any Company under Liquidation / Resolution whether by way of
OTS / Release / dealing with the security etc. can only be done with the permission
of Official Liquidator / Company Court / NCLT.
Filing of FIR during pendency of NCLT proceedings under IBC 2016:
RP / Liquidator during the CIRP / Liquidation proceedings have the obligation to
peruse the transactions of the Corporate Debtor for a period of two years preceding
the date of admission date to unearth transactions having diversion of funds or
undervalued transactions. If lenders have information about such transactions prior
to two years’ period, they may request to extend the scope / period of Forensic Audit
beyond two years.
If the RP gives clean chit to the debtor but the lenders have information / suspicion,
they may get Forensic audit carried out at their own independently.
Notwithstanding any of the above provisions, lenders have to file a complaint / FIR
with the Law enforcing agencies upon detection of any fraud in line with the Master
direction issued by RBI on Frauds.
Regulations for Insolvency Resolution and Bankruptcy Proceedings of
Personal Guarantor/s to Corporate Debtor
Section 60 (1) of the Code provides that the Adjudicating Authority in relation
to insolvency resolution and liquidation for corporate persons including corporate

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debtor and personal guarantors thereof shall be National Company Law Tribunal
(NCLT). The Section 60 (2) of the Code also provides that where an application for
insolvency resolution or liquidation proceeding of a Corporate Debtor (CD) is
pending before a National Company Law Tribunal (NCLT), an application relating to
insolvency resolution or liquidation or bankruptcy of a corporate guarantor/s or a
personal guarantor/s shall be filed before such NCLT. It further provides that
insolvency resolution, liquidation or bankruptcy proceeding of a corporate guarantor
or a personal guarantor/s of the Corporate Debtor (CD) pending in any court or
tribunal shall stand transferred to the NCLT dealing with insolvency resolution or
liquidation proceeding of such Corporate Debtor (CD).
The Central Government, vide a notification dated 15th November, 2019
Ministry of Corporate Affairs Notification New Delhi, the 15th November, 2019 S.O.
4126(e) appointed 1st December, 2019 as the date for commencement of the
provisions of the Code relating to insolvency resolution and bankruptcy of personal
guarantor/s to Corporate Debtor (CD). The insolvency resolution and bankruptcy of
Partnership/proprietorship firm and individuals (other than personal guarantor of
Corporate Debtor (CD)) are yet to be notified.
GOI also notified the following on the same day (15.11.2019)-
(i) The Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency
Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019; and
(ii) The Insolvency and Bankruptcy (Application to Adjudicating
Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors)
Rules, 2019.
These Rules provide for the process and forms of making applications for
initiating insolvency resolution and bankruptcy proceedings against personal
guarantor/s to Corporate Debtor (CD), withdrawal of such applications, forms
for public notice for inviting claims from the creditors etc.
The Insolvency and Bankruptcy Board of India (IBBI) notified the following
Regulations dated: 20.11.2019:-
A. The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process
for Personal Guarantors to Corporate Debtors) Regulations, 2019, specifying the
details of the insolvency resolution process for personal guarantor/s to Corporate
Debtor (CD), inter-alia, including:
1. Eligibility to act as a resolution professional for an insolvency resolution process;
2. Manner of receipt and verification of claims of creditors;
3. Manner of preparation of list of creditors, holding the meetings of the creditors and
voting in the meeting;
4. Contents of the repayment plan; and
5. Procedure of filing of an application for issuance of discharge order, etc.
B. The Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal
Guarantors to Corporate Debtors) Regulations, 2019 specifying the details of the
bankruptcy process for personal guarantor/s to CD inter-alia, including:
1) Eligibility to act as a bankruptcy trustee for the bankruptcy process;
2) Manner of preparation of reports and timeline for submission by the bankruptcy.
3) Manner of collating claims and formation of committee of creditors, holding
meetings of the committee and voting in the meeting; and
4) Manner of realisation of assets of the bankrupt and its distribution, etc.
These Regulations came into force on 1st December, 2019. They are available at

205
www.mca.dov.in and www.ibbi.dov.in. Various Forms & Formats are also provided as
per the Notifications detailed above. The same may be adopted for running the
process. The Amendment Ordinance 2020 (Jun 8, 2020) has suspended the operation
of Sections 7, 9 & 10 of the Insolvency and Bankruptcy Code, 2016 with respect to
defaults arising on or after 25.03. 2020 for a period of six months, extendable up to a
maximum of one year i.e., 24.03.2021or any such date as may be notified. This period,
where there is a bar on the initiation of the CIR Process in case the defaults occur
after 25.03.2020, shall be extended to a maximum of 12 months, i.e.,
24.03.2021.However applications seeking to initiate CIRP for corporate debtors is
allowed in case the default arose before 25.03.2020.
--------------x-------------

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Foreign Exchange
Non-Residents A/Cs
•As per FEMA, a person who has gone out of India for business or vocation
or any other purpose indicating an indefinite period of stay there is NRI
• A person who is a foreign resident but held a Indian passport any
time/whose parents or grandparents were citizens of India/ foreigner spouse
of an Indian citizen, is a PIO.(Citizens of Countries other than Pakistan,
Bangladesh)
• NRI/PIO can open NRO, NRE, FCNR accounts and make permissible
investments.
• NRIs when they return to India for good become resident Indians and can
open, like ordinary residents, resident accounts including resident foreign
currency accounts such as RFC, RFC (D) accounts.
NRO A/CS
➢ Ordinary S/B is converted to NRO on a resident becoming NRI. Jointly with
non-residents. Can be opened jointly with resident on F or S basis. A/C
balance is partially repatriable with a limit of USD 1 Million per financial year.
➢ TDS applicable on Interest
paid.
➢ Opening of and operations on the accounts of individuals/entities of
Pakistani nationality/ownership and entities of Bangladesh
nationality/ownership require prior approval of Reserve Bank.
NRE A/CS:
• NRI or PIO can open this a/c
• Jointly with NRI/resident close relative (As per Company Law 2013) only on
Former or Survivor basis Fully repatriable.
• Exempted from TDS
FCNR A/CS
• NRI/PIO can open in any freely convertible currency.(Our Bank - 6

• Currencies) Jointly with resident close relative (As per Company Law 2013)
only on F/S basis
• Only Term Deposit 1 year to 5 Years.
• Fully repatriable
• Present scheme is FCNR-B.
RFC A/C
• Non-residents returning to India permanently can open RFC a/c in any
permitted foreign currency (presently USD and GBP in our bank). With
resident relatives (As per Company Law 2013) on F/S terms.
• It can be S/B,C/D OR TDR
• Funds are fully repatriable

207
Facilities to Residents
 Resident Individuals can open RFC (D) a/c

 Resident exporters/importers can open EEFC a/c in foreign currency.
 Both are non-interest bearing current accounts in foreign currency.
 No advance is permitted against these funds.
 To mitigate exchange risk
Various Authorities Supervising Foreign Business
 Ministry Of Commerce through DGFT o FTP 2015-20

 ITC (HS) Classification o IEC No. o License
 Ministry of finance through RBI
 RBI issues guidelines through various circulars, notifications.
 RBI has delegated powers to A.P. (Authorized Persons).
 All transactions in Forex have to be routed through A.P.
 A.P. comprises of Authorized Dealers, Money Changers, Off shore
 Banking Units.
 Customs - Permits Entry & Exit of goods , Valuation of goods.
Assessment & collection of duty.
 E.D -Compliance of FEMA1999/PMLA 2002
Important Organisations
 FEDAI: Foreign Exchange Dealers Association of India

 ECGC: Export Credit Guarantee Corporation
 ICC: International Chamber of Commerce
FEMA 1999
 It has replaced FERA:

 Effective 01-06-2000.
 7 chapters/49 articles
 Rules and regulations have been issued under the act to govern various
Forex transactions and for orderly development of Forex Market.
Forex quotations/ Deals
 Direct Quotation: Where foreign currency is fixed/Home currency varies.

 Indirect Quotation: Where foreign currency is varying and home currency is
fixed.
Rates
 Cash/Ready Rate: Deal & Settlement on same day

 TOM: Deal struck today & Settlement on next working day
 SPOT: Deal today l& Settlement on second working day
 FORWARD: Deal today & Settlement after spot is a forward rate.

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Remittances
 Inward Remittances:
 By DD, SWIFT, Travellers Cheque, Personal Cheques,
 In INR/Foreign Currency
 To confirm credit in Nostro / Vostro Account
 No ceiling on amount
 Purpose letter from Beneficiary/Remitter o FIRC
 Outward Remittances:
 As per FEMA, funds can be released for schedule II & III
transactions subject to compliance of terms & conditions.
 A resident can remit up to USD 2.5 lakh per financial year for
any permitted capital a/c or current a/c transaction or a
combination of both under Liberalized Remittance Scheme
(LRS). As per new provision (budget of 2020-21), if amount to
be remitted is Rs.7lacs and above, tax to be collected at source
by the AD branch @5% for PAN holder (It is 10% for non-PAN
holder but in LRS PAN is mandatory). If remittance is out of loan
for education purpose, TCS to be collected @0.5%. Tax is not
required to be collected at remittance is for purchasing tour
package programme.
 CDF form to be submitted if surrender of currency is of value
USD
 5000 & above/currency & T/C is USD 10000
bove.
 ICC /ATM/DEBIT cards can be used to the extent of prescribed limits
 INR up to Rs.25000 can be taken from /brought in India
Exports
 Documents submission within 21 days of shipment
 Realisation period: maximum within 9 months from date of shipment for all
exporters including Units in SEZs (Special Economic Zones), Status Holder
Exporters, EOUs(Export Oriented Units) , Units in EHTPs (Electronic
Hardware Technology Park), STPs (Software Technology Park) & BTPs
(Bagmane Technology Park) until further notice. (However, as a special Covid
19 relief measure, time limit for realization was increased to 15 months for
goods exported upto July 31, 2020).
 Goods exported to a warehouse established outside India: As soon as it is
realized and in any case within fifteen months from the date of shipment of
goods.
 For delay in realization, extension to RBI has to be applied in form ETX.
 For reduction in invoice value, change of buyer etc .to be applied to A.D.
 EDF (Non EDI Ports)/Shipping bill (EDI ports)/ SOFTEX form used for
exports. SDF discontinued.
 Overdue export bills to be reported in EDPMS now.
 Self-write off of long overdue bills by exporters/A.D. to the extent
permitted as per RBI guidelines. To be reported to RBI through EDPMS.
 Export of INR can be upto Rs. 25,000.00 other than Nepal & Bhutan.

209
 EDPMS- Export Data Processing and Monitoring system
Advance Payments against Exports
 The shipment of goods to be made within one year from the date of receipt of
advance payment
o The rate of interest, if any, payable on the advance payment not to
exceed LIBOR + 100 basis points
o The documents covering the shipment are routed through the same
A.D
Pre-Shipment Credit
 Credit for procurement/Mfg./Packing of goods for export, available for

deemed exports also.
 Against confirmed order/L/C for FOB value
 Available in INR/Foreign Currency
 Concessional Rate of interest up to 360 days
 ROI for PCFC is linked with LIBOR/EUROLIBOR/EURIBOR
 Running P.C. a/c for select exporters
Post Shipment
Credit
 Credit given through FBP/FBD/FBN/Rupee advance against collection Bills

 Status Report on buyer for FBP/FBD
 Exposure limit on Bank for FBN
 ECGC Policy/Guarantee: a) ECIB-PC b) ECIB-PS
 NTP : 25 days
 Export bills purchased/discounted/ negotiated and unpaid should be
crystallised on 30th day after NTP/Notional due date
Imports
 FIBC & L/C

 Remittance of import bills to be done within 6 months from date of imports which
can be extended up to 3 years (6 months at a time) for delays on account of
disputes about quantity or quality or non-fulfilment of terms of contract etc. (In
view of the disruptions due to outbreak of COVID-19 pandemic, with effect
from May 22, 2020, the time period for completion of remittances against
normal imports (except in cases where amounts are withheld towards
guarantee of performance etc.) was extended from six months to twelve
months from the date of shipment for such imports made on or before July 31,
2020).
 For import of books, no time limit.
 Evidence of import to be submitted within 3 months from date of import.
 Bill of entry, post parcel wrapper, courier wrapper with certificate.
 IDPMS- Import data Processing and Management system

210
Advance Remittance against Imports
 Advance remittance can be made without Bank guarantee:

 For import of goods up to USD 200,000 in case of normal
importers
 Up to USD 5 Mn on case to case basis as per internal
guidelines of the Bank
 For import of services up to USD 5 lac.
 If PSU/Govt. Dept. is unable to obtain guarantee from bank of international
repute, waiver from Ministry of Finance required for advance remittance
exceeding USD 100,000.
 A.D. to follow up for import within 6 months from date of remittance.
Letter of Credit
 Letter of Credit means: the arrangement under which a Bank, on behalf of the
Buyer (Importer) undertakes the payment obligation, subject to fulfilment of
certain documentary conditions by the seller (Exporter).
 Requirements:-
 Importer Exporter - Code (IEC) - unless exempted
 Import License - For Restricted Category Goods
 Country of Export - Not banned /Politically stable
 Commodity under permissible category.
 LC to be opened in terms of UCP (Presently Version 600) provision.
 Import License to be endorsed - Exchange Control Copy.
 Margin, if any, stipulated - obtained.
 Importer to be advised to cover exchange Risk.
 Basis of opening LC:-
 Underlying Sale Contract or
 Purchase Order, confirmed by the Supplier
 Performa Invoice from Supplier duly accepted by the Importer
 Indent or offer from Overseas Supplier or by his Authorised Agent.
 Parties to LC
 Applicant / Buyer.
 Beneficiary / Seller.
 Opening / Issuing Bank.
 Advising Bank. – Bank through which LC advised
 Confirming Bank. - In case exporter is not confident with LC opening
bank he will ask importer to get LC confirmed by a Prime Bank. The
liability of the accepting bank is tantamount to that of opening bank.
 Negotiating Bank.- The bank which negotiates the bill under LC
 Reimbursing Bank- As per terms of LC the bank from whom
negotiating bank should claim reimbursement of amount under LC
 Payment of bill under L/C:
 Sight Bill: Within 10 days
 Usance Bill: On Due Date
Rate Applicable: The Bills Selling Rate on the date of payment or Forward
Contract Rate if F.C.is booked

211
Trade Credits--Buyers Credit/Supplier’s credit
(RBI/FED/2018-19/67 FED Master Direction No.5/2018-19 dt 26.03.2019-
Updated 10.12.2021)
 Amount under automatic route: Up to USD 150 million or equivalent per import
transaction for oil/gas refining & marketing, airline and shipping companies. For
others, up to USD 50 million or equivalent per import transaction.
 Eligible Borrower: Person resident in India acting as an importer.
 Maturity period in case of import of non-capital goods is 01 year or the
operating cycle whichever is less. For shipyards / shipbuilders, the period of TC
for import of non-capital goods can be up to three years
 All in cost Ceiling: For FCY denominated TC-Benchmark Rate plus 350 bps
spread: For existing TCs linked to LIBOR whose benchmarks are changed to
ARR. Benchmark rate plus 300 bps spread: For new TCs.
 For Indian Rupee denominated Trade Credit- Benchmark rate plus 250 bps
spread.
Important Returns
 R Returns: Fortnightly Submission of data regarding all credits and debits to
Nostro and Vostro accounts.
Liberalised Remittance Scheme (LRS)
 For resident Individuals including Minors
 Maximum amount USD 250000 per financial year ( April-March)
 For any permitted current and capital account transactions
 The scheme is not available to corporates, partnership firms, HUF, Trusts
 The amount USD 250000 is effective from May 26, 2015
 The permissible capital account transactions under LRS are:
 Opening of foreign currency account abroad
 Purchase of property abroad
 Making investment abroad
 Setting up wholly owned subsidiaries and joint ventures outside India
 Extending loans including loans in Indian Rupees to NRIs who are relatives
as defined in companies Act, 2013
 The limit of USD 250000 under the scheme also includes/subsumes
remittances for current account transactions also.
 Banks should not extend any kind of credit facilities to resident individuals to
facilitate capital account transactions.
 The individual will have to designate a branch of an AD through which all
the remittances under the scheme will be made.
 PAN card is mandatory for remittances.
 The applicants should have maintained the bank account with the Bank for a
minimum period of one year prior to the remittances for capital account
transactions.
 As per new provision (budget of 2020-21), if amount to be remitted is
Rs.7lacs and above, tax to be collected at source by the AD branch @5% for
PAN holder (It is 10% for non-PAN holder but in LRS PAN is mandatory). If
remittance is out of loan for education purpose, TCS to be collected @0.5%.
 Tax is not required to be collected if remittance is for purchasing tour package
programme

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.DEPOSITS INCLUDING NRI DEPOSITS
DEPOSIT INSURANCE
All Commercial Banks including branches of Foreign Banks
functioning in India, Local Area Banks, Regional Rural Banks and all
Co-Operative Banks are insured by the DICGC. The deposit insurance
scheme is compulsory and no bank can withdraw from it. Deposit insurance
premium is borne entirely by the insured bank.
The DICGC insures all deposits such as savings, fixed, current,
recurring, etc. deposits except the following types of deposits -
 Deposits of foreign Governments;

 Deposits of Central/State Governments;
 Inter-Bank Deposits;
 Deposits of the State Land Development Banks with the State Co-
Operative Bank;
 Any amount due on account of and deposit received outside India
 Any amount, which has been specifically exempted by the
Corporation with the previous approval of Reserve Bank of India.
Each depositor in a bank is insured up to a maximum of Rs.5,00,000

(Rupees five Lakh) for both principal and interest amount held by him in the
same capacity and same right as on the date of liquidation /cancellation of
bank's licence or the date on which the scheme of amalgamation/ merger/
reconstruction comes into force. In the event of a bank's liquidation, the
liquidator prepares depositor wise claim list and sends it to the DICGC for
scrutiny and payment. The DICGC pays the money to the liquidator who is
liable to pay to the depositors. In the case of amalgamation / merger of
banks, the amount due to each depositor is paid to the transferee bank.
Banks have the right to set off their dues from the amount of deposits as
on cut off date. The deposit insurance is available after netting of such dues.
The deposits kept in different branches of a bank are aggregated for the
purpose of insurance cover and a maximum amount of up to Rupees five
lakhs is paid. If the funds are in different types of ownership or are
deposited into separate banks they would then be separately insured.

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NOMINATION
Nomination facilities are available only in the case of individual depositors under
Section 45ZE of the Banking Regulation Act, 1949.
 Nomination can be made by the depositor or all the joint
depositors, jointly.
 Nomination can be made only in respect of a deposit which is held in the
individual capacity of the depositor(s) and not in representative capacity as
the holder of any office or otherwise.
 Nomination can be made in favor of only one individual. To further clarify,
in case of joint accounts opened in two or more persons, all of the a/c
holders are required to give nomination in only one name.
 Nomination, cancellation of nomination or variation of nomination can be
made at any time during the currency of the deposit.
 In the case of Term Deposits, nomination or cancellation of nomination or
variation in nomination will not cease to be in force merely by reason of
the renewal of such deposits.
 In the case of Joint Accounts wherein nomination was not made at the
time of opening the account, the surviving depositors can make a valid
nomination upon death of one of the depositors.
 Accounts of Minor: In the case of a deposit made in the name of a minor,
nomination should be made by a person lawfully entitled to act on behalf of
the minor.
 Nomination in favor of a Minor: Where the nominee is a minor, the
depositor(s) while making the nomination should appoint another
individual not being a minor to receive the amount of the deposit on
behalf of the minor nominee in the event of death of the depositor(s) during
the minority of the nominee.
 A Banking company making payment to a nominee, in whose favor
a valid nomination subsists on the death of the depositor(s) gets full
discharge in respect of its liability relating to the deposit, in terms of the
provisions of sub section 4 of Section 45 ZA of the Banking Regulation
Act, 1949. The question, whether the payment to the nominee is made on
or before the due date for maturity of the term deposits would not affect the
said protection available to the banking company.
 Noting of nomination in account first time is free, thereafter Rs.100.00 will
be charged for every change in nomination.

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BANK’S POLICY FOR SETTLEMENT OF DECEASED CLAIMS.
 Settlement of Claim Single account with Nomination – The balance amount will be
paid to nominee on verification of nominee identity and proof of death of depositor.
Premature termination of term deposit account will be permitted at the request of
nominee.
 Settlement of Claim Single account without Nomination - The balance amount will
be paid to legal hair/s (or any one of them as mandated by all legal hairs)on verification
of authority of legal hair/s and proof of death of depositor. Premature termination of term
deposit account will be permitted at the request of legal hair/s.
 Settlement of Claim Joint account with Nomination -
A. Death of one (or more but not all) of the joint account holders - The balance
amount will be paid jointly to survivor/s and legal hair/s of the deceased account holder/s
against their joint claim.
B. Death of all the joint account holders - The balance amount will be paid to nominee.
 Settlement of Claim Joint account without Nomination –
A. Death of one (or more but not all) of the joint account holders - The balance amount
will be paid jointly to survivor/s and legal hair/s of the deceasedaccount holder/s
against their joint claim.
B. Death of all the joint account holders - The balance amount will be paid jointly to
legal hairs of all joint account holders (or any one of them as mandated by all legal hairs)
on verification of authority of legal hair/s and proof of death of depositor. Premature
termination of term deposit account will be permitted at the request of legal hair/s.
 Settlement of Claim Joint Account with mandate “E or S”/ “F or S ”/ “Anyone
or Survivor” with nomination –
A. Death of one (or more but not all) of the joint account holders - The balance
amount will be paid to Survivor.
B. Death of all the joint account holders -The balance amount will be paid to
nominee.
 Settlement of Claim Joint Account with mandate “E or S”/ “F or S ”/ “Anyone or
Survivor” without nomination –
A. Death of one (or more but not all) of the joint account holders - The balance amount
will be paid to Survivor.
B. Death of all the joint account holders - The balance amount will be paid jointly to
legal hairs of all joint account holders.
 Settlement of claims respect of missing person is governed under provision of
Section 107/108 of Indian Evidence Act, 1872. Section 107 Deals with presumption of
continuance and section 108 deals with presumption of death. As per provision of Section
108 of the act, presumption of death can be raised only after a lapse of 7 years from the
date of person being reported missing. As such, the nomination/legal heirs have to raise
an express presumption of death of the depositor under section 107/108 of the Indian
Evidence Act before the competent court.If the court presumes that a person is dead,
then the claim in respect of missing person can be settled.
 Our bank has decided not to insist for legal representation by way of succession
certificate or letter of administration, probate etc. where the amount involved is up to
Rs.40 lakh.
 Note: if there is a dispute between legal heirs/claimants even if the claim is within the
threshold limit of Rs.40 lakh, branches should insist of necessary court order by way of
Succession Certificate or Letter of Administration etc.

215
DORMANT/INOPERATIVE ACCOUNTS
A savings as well as current account shall be treated as inoperative / dormant if there

are no transactions in the account for over a period of two years. For the purpose of
classifying an account as "inoperative" both the type of transactions i.e. debit as well
as credit transactions induced at the instance of customers as well as third party will
be considered. However, the service charges levied by the bank or interest credited
by the bank will not be considered.
There may be instances where the customer has given a mandate for crediting the
interest on term deposit account and / or crediting dividend on shares to the savings
bank account and there are no other operations in the savings b ank account. Since
the interest on term deposit account and / or dividend on shares is credited to the
savings bank accounts as per the mandate of the customer, the same shall be treated
as a customer induced transaction. As such, the account should be treated as
operative account as long as the interest on term deposit account and /or dividend on
shares is credited to the savings bank account. The savings bank account can be
treated as inoperative account only after two years from the date of the last credit entry
of the interest on term deposit account.
Interest on savings bank accounts shall be credited on regular basis whether the
account is operative or not. If a Term Deposit Receipt matures and proceeds are
unpaid, the amount left unclaimed with the bank will attract savings bank rate of interest
if auto renewal facility at the time of placing the deposit was specifically refused by the
customer.
Operations in inoperative / dormant accounts may be allowed after due diligence as

per risk category of the customer. When a request for activation of a dormant account
is received, approval for activation should be accorded by a designated officer at the
branch. He / she will verify and satisfy himself / herself that the account was opened in
a KYC compliant manner and the reasons adduced by the account holder for not
operating the account are genuine. Documentary evidence of new residential proof
shall be obtained, if the depositor could not be contacted at the last address furnished
to the Bank. Further, the amount of deposit available in the account should
commensurate with the occupation level of the customer, as declared in the account
opening form.
Charges for Account activation and penal charges for non-maintenance of minimum
balances are not applicable in inoperative / dormant accounts.
In deposit accounts, where there is no customer induced transaction since last 10

years, amount to be transferred to Depositor Education and Awareness Fund
(DEAF) as per extant RBI guidelines.
Under the provisions of section 26A of Banking Regulation Act, 1949, the credit amount
of any accounts with bank which has not been operated upon for a period of ten years or
any deposit or any amount remaining unclaimed for more than ten years, including the
accrued interest that the bank would have been required to pay to the customer /

216
depositor as on the date of transfer shall be credited / transferred to the Fund maintained
with RBI on monthly basis.
The credit balances of following accounts (including customer accounts) shall be credited
/ transferred to the fund -
 Saving Bank Deposit Accounts;
 Fixed Or Term Deposit Accounts;
 Recurring Deposit Accounts;
 Current Deposit accounts;
 Other Deposit Accounts in any form or with any name;
 Cash Credit Accounts;
 Loan accounts after appropriation by the banks;
 Margin money against issue of Letter of Credit / Guarantee etc., or any Security
deposit;
 Outstanding telegraphic transfers, mail transfers, demand drafts, pay Orders,
banker cheques, sundry deposit accounts, Vostro accounts, interbank Clearing
adjustments, unadjusted National Electronic Funds Transfer(NEFT) credit
balances and other such transitory accounts, Unreconciled credit balances on
account of Automated teller Machine (ATM) transactions, etc.;
 Undrawn balance amounts remaining in any prepaid card issued by banks, But
not amounts outstanding against travellers cheques or other similar Instruments,
which have no maturity period;
 Rupee proceeds of foreign currency deposits held by banks after conversion of
foreign currency to rupees in accordance with extant foreign exchange
Regulations;
 Such other amounts as may be specified by the reserve Bank from time to time.
Bank shall display the name and address of account holders of unclaimed deposit
accounts, which are inactive / inoperative for ten years or more on Bank's Website
with find option. In case such accounts are not in the name of individuals, the name of
individuals authorized to operate the accounts should be indicated. Bank shall also
display the information on the process of claiming the unclaimed deposit/ activating
the inoperative account and necessary forms and documents for claiming the same
on the Bank's Website.
No deposit account/s to be closed without prior consent of depositor/s. RBI in their

Risk Assessment Report-2020 has observed that in several cases at the time of
closure of deposit accounts outstanding amount is transferred to PL Miscellaneous
Receipts. All branches/ offices are instructed that:
A. Deposit accounts should be closed only after getting proper consent from
depositor/s;
B. Closure proceeds to be paid to depositor/s preferably through any of the channel
i.e. NEFT /RTGS/ IMPS/ Pay order/Demand Draft or through cash payment as
per depositor's request by adhering to bank's payment guidelines;
C. Under no circumstances closure proceeds of deposit accounts should be
transferred to bank' Profit / Loss accounts.

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ADDITIONAL RATE OF INTEREST
The eligibility of additional Rate of Interest on and above card rates for the Rupee
Term Deposits is as below –
(1). 1% additional Rate of Interest

I. Staff/Ex-Staff Member (including Chairman, Managing Director& CEO,
Executive Director or such other Executive appointed for a fixed tenure and
the bank's exclusive associations), wherein the First account holder is
Staff/Ex-Staff and the employee id is entered in the cust id linked to Term
Deposit account.
II. Spouse of deceased Staff (Spouse of deceased Staff should be First
account holder)
III. Retired Staff who have taken VRS (including VRS prior to finacle)
IV. An association or a fund of Staff members (not of Ex-Staff members)
Note : The eligibility of 1% additional Rate of Interest on and above card is also
available in saving accounts.
(2) 0.50% additional Rate of Interest

Depositor (First Account holder only), whose age is 60 Years & above at the time of
placing the deposit with Bank, for their deposits up to Rs. 2 Crore and for the period
6 months and above to 10 Years subject to the prevailing terms and conditions at the
time of placing the deposit.
(3) 1.50% additional Rate of Interest

Staff/Ex-Staff member (First Account holder only), whose age is 60 years &
above, for minimum deposits of , for their deposits up to Rs.2 Crore and for the period
6 months and above to 10 Years subject to the prevailing terms and conditions at
the time of placing the deposit. Spouse of deceased Staff whose age is 60 years
& above (Spouse of deceased Staff should be First account holder)
Note: Deposit under Capital Gain Account Scheme, NR Deposits and accounts of HUF
are not eligible for any type of additional rate of interest.
Staff members who have retired compulsorily or resigned / dismissed /
terminated / removed from the Bank's service shall not be eligible to avail Additional
ROI.
The benefit of additional interest rate on deposits on account of being bank's own staff
or senior citizens is not available to Rupee Deposits of Non Residents/ Foreign Currency
Deposit i.e. NRE, NRO, FCNR-B and RCF Deposits. This benefit is also not available to
Capital Gains and HUF Deposits.

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ACCOUNTS OF ILLITERATE
The Bank may at its discretion open deposit accounts other than CD accounts of
illiterate persons. The Account of such a person may be opened provided he/she calls
on the Bank personally along with a witness who is known to both the depositor and
the Bank. Normally, no cheque book facility is provided for such SB accounts. At the
time of withdrawal, repayment of deposit amount and/or interest, the Account holder
should affix his/her thumb impression or mark in the presence of the authorized officer
of the branch who should verify the identity of the person. The Bank will explain the
need for proper care and safe keeping of the passbook etc. given to the account
Holder. The Bank official shall explain the terms and conditions governing the
account to the illiterate person in the language known to the customer.
ACCOUNT OF VISUALLY CHALLENGED PERSONS
Bank will facilitate opening of Saving Bank accounts as well as Term Deposit
accounts of persons with visual impairment. The account may be opened in his/ her
sole name or jointly with other person(s). The account of such person may be opened
provided he/she calls on the Bank personally along with a witness who is known to
both the depositor and the Bank.
Bank is committed in providing technology enabled banking facilities like ATM &
Internet banking which will enable the visually challenged persons to operate his/her
own account. The Bank official shall explain the terms and conditions governing the
account to the visually challenged persons in the language known to the customer.
All the banking facilities such as cheque book facility including third party cheques,
ATM facility, Net banking facility, locker facility, retail loans, credit cards etc., may
invariably be offered to the visually challenged without any discrimination.
ACCOUNTS OF MINORS
A. Savings Bank account of a minor may be opened to be operated by the natural

guardian of the minor or by the guardian appointed by the Court.
B. A Savings Bank Account may also be opened in:

1. The single name of a minor aged 10 years or more to be operated by the
minor.
2. The joint names of two minors who have completed the age of 10 years, to
be operated by them jointly.
3. The joint names of two or more minors to be operated by a person who is the
natural guardian of both or all the minors.
4. The minor accounts shall have additional banking facilities like debit card,
cheque book and internet banking upon request, subject to the safeguards
that minor accounts are not allowed to be overdrawn and that these always
remain in credit. When a minor attains majority, the guardian ceases to be the
guardian and the Account ceases to be that of a minor. The payment from
the account will be made to the erstwhile minor, provided the branch is
satisfied about his identity.

219
When a minor, whose account is operated by the guardian on his behalf attains
majority, a Balance Confirmation Letter, duly signed by the erstwhile minor with his
signature duly verified by the guardian shall be obtained. Having done this, it is not
necessary to close the existing account and to open a new account, but the note made
in the system (Master Data) and the account opening form/card to indicate that it is a
minor's account, will be cancelled and new account opening form will be obtained.
Thereafter, the account will be operated only by the erstwhile minor who had attained
majority.
ACCOUNT OF PERSONS WITH AUTISM, CEREBRAL PALSY, MENTAL

RETARDATION & MULTIPLE DISABILITIES
Savings bank and term deposits can also be opened in the name of persons with
autism, cerebral palsy, mental retardation and multiple disabilities by the legal
guardian appointed by the District Court under Mental Health Act, 1987 or by the
Local Level Committees set up under the National Trust for welfare of persons with
autism, cerebral palsy, mental retardation and multiple disabilities under Disabilities
Act, 1999. Legal guardian, so appointed, will furnish an indemnity- cum-undertaking
bond duly stamped as per the local law in force along with Guardianship Certificate.
ACCOUNTS OF TRANSGENDER PERSONS
In case of a person claiming to be transgender and needs to open account or to do

any banking transaction, the person will be recognized as "Third Gender" and the
details shall be accepted in the AOFs/ or other applicable forms as such.
- The salutation of such person shall be Mx"
- All transgender customers shall be treated equally to other male/ female
customers without any discrimination.
SECRECY OF CUSTOMER'S ACCOUNTS
The Bank shall not disclose details/particulars of the customer's Account to a

third person or party without the expressed or implied consent of the customer.
However, there are some exceptions, viz. disclosure of information as required by
any law or by an order of the Court, Regulatory Authority or Govt. Agency and where
interest of the Bank requires disclosure or larger public interest warrants such
disclosure of information.
STOP PAYMENT FACILITY
The Bank will accept Stop Payment instructions from the depositors in respect of
Cheques issued/reported lost and not paid till receipt of stop payment instructions.
Charges, as specified, will be recovered.

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MANDATORY DEBIT FREEZING OF ACCOUNTS REPORTED DECEASED
Whenever any branch receives a proper information with supporting documents
regarding death of a customer, there is a provision in FINACLE to mark the status of
the related customer account as deceased under CODE NO.15- Deceased. But even
after changing the customer status in FINACLE , system allows transaction in the
accounts of deceased customer. To mitigate the cases of fraud in deceased account
Brances are advised to DEBIT FREEZE in all the accounts of the deceased customer
under reason Code 001 - Accountholder Deceased simultaneously, after changing the
status in Customer ID to CODE NO-15.
STANDARD OPERATING PROCEDURE ON USAGE OF WITHDRAWAL SLIPS
• Payment against withdrawal slip is allowed for account without cheque book facility.
• Withdrawal slip when presented for payment by customer must accompany the
relative saving bank pass book.
• Third party cash withdrawals in Saving Bank accounts are not allowed by withdrawals
slip, even if they are accompanied by passbooks.
• Payments against withdrawal slips in accounts without cheque books are not allowed
at non-home branches even if the customer himself presents the passbook and the
withdrawals slip for payment.
• The visual impaired / Illiterate person should personally present himself/ herself before
the branch official who will facilitate filling up the withdrawal slips.
• The natural guardian or by the guardian appointed by the court for Minor can withdraw
money against withdrawal form. However, if a withdrawal form signed by natural
guardian / guardian appointed by court is presented for payment after the date on
which the minor has become major, the erstwhile minor must be contacted and his
instructions sought. If he can't not be contacted, the withdrawal form should be
returned with the answer "Mr./Miss (the erstwhile minor name) has since attained
majority.
• In cases of sick/ old/ incapacitated account holders, who are too ill to sign a cheque
/withdrawal slip and cannot be physically present in the Branch a mark can be obtained
on the cheque/withdrawal form which should be identified by two independent
witnesses, one of whom should be a responsible bank official. This mark can be placed
by the person in any manner. The person who would be actually drawing the money
from the Branch should be asked to furnish his/her identity by way of KYC documents
and signature to the Branch.
• In cases of sick/ old/ incapacitated account holders, who are too ill to sign a cheque
/withdrawal slip and cannot be physically present in the Branch following precautions
should be taken to avert perpetration of frauds or misappropriation of funds in such
accounts,-
I. A remark /note should be made in bold letters on the specimen signature cardand in
the CBS system that the account is of an incapacitated person.
II. As far as possible the account holder should be asked to have a joint account with
close relation and make a nomination in the account.
III. If the old/sick/incapacitated person is not willing to open and operate a joint account,
he/she should be convinced to give Power of Attorney/Mandate for operating the
account. The Power of Attorney or Mandate should be carefully
examined and noted in relevant branch records.

221
• Saving bank withdrawal form / slip should NOT be accepted for inter-account transfer
of funds (i.e. transfer of funds from one saving bank account to another). However, for
such transfer of funds, Branches may allow for transfer of funds from one account to
another with the written authority of the account holder(s). Such transfer of funds
should be effected only by passing separate vouchers on the basis of an authority
letter signed by the account holder.
• Branch should closely and carefully monitor cash withdrawals of substantial amount
by customer against withdrawal slips and report such transactions of Rs. 10 Lacs and
above to their respective zonal offices / FIU-IND in the prescribed format under CTR
/ STR as per the bank guidelines in this regard.
• A depositor / account holder cannot withdraw by withdrawal form a sum of smaller
than Rs. 1 /- or any sum which is not a multiple of Rs. 1 /- unless it beto close the
account.
TYPES OF DEPOSIT ACCOUNTS

 Demand Deposits
• Current Accounts
• Savings Bank Accounts
 Term Deposits
• Recurring Deposit (RD)
• Short Deposit (SDR)
• Monthly/Quarterly Interest Certificate (MIC/QIC)
• Double Benefit Deposit (DBD)
• Other Fixed Deposits
 CASA
• CASA stands for Current Account and Savings Account.
• CASA deposit is the amount of money that gets deposited in the current and savings
accounts of bank customers. It is the cheapest and major source of funds for banks.
• CASA ratio is the proportion of current account and savings account deposits in
the total deposits of the bank. A low CASA ratio means the bank relies heavily on
costlier wholesale funding.
• Net Interest Income (NII) is the difference between the income a bank earns from
its lending activities and the interest it pays to depositors.
• NII = ( Net return on investment – Interest paid)
• Net interest margin (NIM) is a measurement comparing the net interest income
earned from credit products like loans and interest it paid on savings and deposit
accounts
• NIM or net interest margin is calculated by dividing NII by the average interest-
earning assets.
Net Interest Margin = NII / Average interest-earning assets
Growth in CASA = Improved NIM = Improved Profitability.

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SAVINGS BANK ACCOUNTS
Interest shall be paid on Savings Account at the rate specified by Bank from time to
time which will be calculated on daily product basis and will be credited quarterly in
the months of May, August, November and February, respectively or at the time of
closing of account. Interest will be credited if it is Minimum Rs.1/-.
The Rate of interest on Domestic as well as on NRI / NRO Saving Bank deposits w.e.f.
01.05.2022 is as under-
SB Balances ROI (% per annum)

Up to Rs.1.00 lakh 2.75
Above Rs.1.00 lakh 2.90
Savings Bank Accounts can be opened for eligible person/persons and certain
organizations / agencies (as approved by RBI, from time to time).
Savings Bank - Who Can open
Savings bank accounts may be opened in the names of –
I. Individual - Single Accounts

II. Two or more individuals Joint Accounts
III. Illiterate Persons
IV. Blind Persons
V. Minors
VI. Associations, Clubs, Societies, etc.
VII. Trusts
VIII. Institutions/ Agencies specifically permitted by the Reserve Bank of India.
In terms of the Reserve Bank of India directive, savings bank accounts opened
in the name of any trading or business concern, whether such concern is a
proprietary or a partnership firm, a company or an association, would not be
eligible for any interest. The Reserve Bank of India, however, has exempted
certain agencies/institutions from this prohibition on account of the socially
desirable purpose of their activities aiming to serve the weaker sections
of society.
Accordingly, the following institutions/organizations are eligible for earning
interest on their savings bank accounts on the usual terms:
1. Primary Co-operative Credit Society financed by the Bank.

2. Small Farmers Development Agency (SFDA)
3. Marginal Farmers and Agricultural Labourers Agencies (MFAL)
4. Drought Prone Areas Programme (DPAP).
5. District Development Authority (DDA)
6. Rural Development Agency/Society (DRDA/DRDS)
7. Integrated Rural Development Programme (IRDP)
8. Integrated Tribal Development Agency (ITDA)
9. Agriculture Produce Market Committees
District Khadi and Village Industries Boards

223
10. Fish Farmers Development Agencies (FFDA)
11. Development of Women and Children in Rural Areas (DWCRA)
12. Swarna Jayanti Gram Swarojgar Yojana.
13. Self-help Groups (SHG) – registered and unregistered which are
engaged in promoting savings habits among the members. Farmers’ Clubs –
Vikas Volunteer Vahini – VVV.
14. Nagar Panchayats, Nagar Palikas and Municipal bodies in relation to funds
given as Societies registered under the Societies Registration Act, 1960 or any
other corresponding law in force in a State or a Union territory.
15. Companies governed by the Companies Act, 1956 which have been licensed by
the Central Government under Section 25 of the said Act or under the
corresponding
provision in the Indian Companies Act, 1913 and permitted not to add to their
names the word `Limited' or the words "Private Limited".
16. Collector/ District Magistrate /District Commissioner in respect of funds released
for implementation of Member of Parliament Local Area development Scheme
(MPLADS) where the works under the scheme are executed through the Planning
Department of the State Government.
17. Public Sector Banks may also open SB accounts under the said scheme in the
name of District Rural Development Agency (DRDA).
18. Any other institution permitted by the RBI from time to time.
Savings Bank - Who Can not open
There are certain Government Departments, Semi-Government or Quasi-

Government bodies, local bodies and certain organizations engaged in public utility
services e.g. State Housing Boards, State Electricity Boards, etc., which are not liable
to pay income-tax under the Income-tax Act, 1961. However, these institutions /
organizations receive grants, loans or subsidies from the Government and,
therefore, depend on budgetary allocation for performance of their functions. As such
they do not qualify for payment of interest and, hence, savings bank account cannot be
opened in their names.
In the opinion of the Reserve Bank of India, the following institutions do not qualify for
payment of interest:
i. Municipal Corporations/Committees/Panchayat Samitis

ii. State Housing Boards - Industrial Development Authorities
iii. State Electricity Boards
iv. Water and Sewerage/Drainage Boards
v. State Text Books Publishing Corporations / Societies
vi. Metropolitan Development Authority
vii. State District Level Housing Co-operative Societies etc.
Although the activities of the institutions of this type are of developmental nature, these
organizations are not specifically serving any economically weaker/ underprivileged
sections of the society, and as such they do not qualify for exemption under the Reserve
Bank of India directive.

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TYPES OF SAVINGS ACCOUNT
 Salary Account Scheme

• BOI Saral Salary Account Scheme
• BOI Gurukul Savings Bank Account
• Jai Jawan Salary Plus Account
• BOI Salary Plus Account
• BOI Rakshak Salary Scheme
• Star Ratnakar Bachat Salary Account
 BOI Star Senior Citizen Savings Bank account
 BOI Mahila Savings Bank Account.
 BOI Star Yuva Savings Bank Account
 Savings Bank Account for Pensioners
 SB Small accounts
 Basic Savings Bank Deposit Account (BSBDA)
 BOI Savings Plus Scheme.
 BOI Super Savings Plus Scheme
 Star Diamonds Savings Account.
 MACT Claims Savings Account.
 Saving Account for NRI customers.
SALARY ACCOUNT SCHEME
Scheme Code and Special Charge Code are essential for identification of the
account and their category and also for the extension of benefits to the depositor.
The Insurance cover would be strictly based on the product codes extended to the
first account holder only. Salary accounts where salary is not credited for a period
of 6 Consecutive months will be treated as regular Savings Bank Accounts, as the
Insurance cover and other benefits would not be available to them. Dormant alary
Accounts holders shall also be excluded from getting the various benefits.
Features of Salary Saving Bank Accounts
• Minimum Balance Requirement –NIL

• ATM Cum Debit Card - Issuance free of cost for all types of Rupay ATMcum Debit
Cards (Except Rupay Select Cards).
• Free Cheque Leaves - 25 Leaves Per Quarter.
• Free Demand Drafts / Pay Order (upto Rs.50,000/-) - 3 per quarter for Rakshak
Salary & Saral Salary Account and 6 per quarter for all other Salary Schemes.
• Star Share Trade - For holdings upto Rs. 50,000.00 – FREE , For holdings upto
Rs. 2 Lakh : Rs 150.00
• Salary Advance as Easy Overdraft Facility - Quantum: One month's net salary (
not to exceed Rs. 1 Lakh), Subject to: - Minimum one month's Salary Credit in
the salary account and Undertaking from employee / Employer, ROI:As applicable
to Star Personal Loan for the scheme , Repayment: within 30 days, Delegation:
Branch Head irrespective of Scale.
• Instant Personal Loan : Quantum: Demand Loan of 6 months net salary (not to
exceed Rs. 5 Lakh) to be repaid in less than 36 months. Subject to: - Minimum CIBIL
Score of 675, The proponent does not have any existing personal loan from anywhere

225
else, Minimum three months' Salary Credit in the Salary Account. All other prevailing
conditions of Star Personal Loan Scheme are to be complied with.Undertaking from
employee/ employer, ROI: As applicable to Star Personal Loan, Delegation: Branch
Head irrespective of Scale.
• Credit Card- Issuance of Rupay International card free of cost.
• Undertakings while account opening- Undertaking to be taken only from the
Employee.
• Internet Banking / Star Sandesh / Mobile Banking / RTGS / NEFT payment through
Branches/ Internet Banking- Free.
• Concession in Processing Charges on Retail Loans - 50% Waiver of Processing
Charges in Vehicle Loan, Home Loan & Personal Loan ( At times when Festival
Offers are not active)
• Concession in charges of lockers for self & immediate family member - 30%
concession (Subject to availability of Locker at the Branch).
• GROUP PERSONAL ACCIDENTAL COVER:
I. BOI Salary Plus Scheme (for Paramilitary, Centre & State PSU mployees),
BOI Rakshak Salary Scheme, BOI Jai Jawan Scheme, BOI SARAL SALARY
ACCOUNT SCHEME
- Group Personal Accident Death Insurance Cover of up to Rs.50 Lakh*
- Permanent Total Disability Cover (as defined vide Insurance Policy) of up
to Rs.50 lakhs*
- Permanent Partial Disability (50%) Cover (as defined vide Insurance Policy) of
up to Rs.25 lakhs*.
- Air Accidental Insurance of up to Rs.1 Crore*
- Education Benefit of Rs.2 lakh (for cases resulting in death/PTD)
- Golden Hour Cashless Hospitalisation upto Rs.1 lakh (for cases resulting in
Death/PPD/PTD)
* Maximum Insurance Cover available is either 10 timesGross annual income of
account holder or any of the above mentioned applicable Insurance Coverages,
whichever is less.
II. Gurukul/ Salary Plus(Pvt Employee)

Group Personal Accidental Death Insurance of Rs 30 Lakhs. Air Accident Cover
of Rs. 50 Lakhs
III. Ratnakar Bachat Salary
Group Personal Accidental Death Insurance of Rs 5 Lakh. Air Accident Cover of
Rs. 20 Lakhs.
IV. Saral Salary Scheme
Group Personal Accidental Death Insurance of Rs 2 Lakh. Air Accident Cover of
Rs. 10 Lakhs
BOI Saral Salary Account Scheme

• Branch Circular No106/148 dated 24.12.2012
• Scheme Code: SB-165,
• Eligibility: All employees on regular pay roll of any institute (Central Govt. / State
Govt. / PSU / Private sector etc.)
• With minimum 10 employees and each employee is having minimum take home
salary of Rs 5000/- p.m..

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. BOI STAR GURUKUL SAVINGS BANK ACCOUNT
• HO BC 108 / 199 dated 29.01.2015

• Scheme Code:SB-163, Spl Charge Code-GURU
• Eligibility: All permanent teaching and non-teaching staff of
schools, colleges, universities and educational institutions.
• There should be minimum 10 employees. Minimum take home pay should be
Rs.5,000.00.
• The institution should agree to pay salary through the Bank account and sign
a letter of undertaking to this effect.
• Deviation if any to be approved by ZM only.
JAI JAWAN SALARY PLUS
• HOBC 109/41 of 12.05.15.

• Revised/ Upgraded Version of Defence Salary Package Jai Jawan Salary
Plus Account Scheme.
• Eligibility: All permanent employees of defence forces i.e. Indian Army, Indian
Navy, Indian Air Force. There will be 2 categories.
I Commissioned officers,(Scheme code-161),
Il Non-Commissioned officers/staff (scheme code-162).
(Spl Charge Codes are "ARMY" for ARMY officer, "NAVY" for NAVY personnel,
"Al RF" for Air Force Personnel and "COAS" for coastal Guards.)
BOI SALARY PLUS ACCOUNT
• HO BC 108 / 199 dated 29.01.2015.

• Scheme Code: SB-163,
• Special Charge code 0201 for All employees on regular pay roll of Para Military
forces such as Central Reserve Police Force (CRPF), Border Security Force
(BSF), Indo-Tibetan Border Police, Central Industrial Security Force , National
Security Guard (NSG), Shashatra Seema Bal, Rashtriya Rifles, Special
Frontier Force ,• Assam Rifles etc..
• Special Charge Code-0202 for All employees on regular pay roll of Central and
State Government, Universities, Colleges affiliated to Universities.
• Special Charge Code 0203 for All employees on regular pay roll of Public
Sector Undertakings,
• Special Charge Code 0204 for Private sector employees.
• Eligibility: All permanent on regular pay roll. Private Sector employees,
approval of Zonal Manager is required.
• Minimum take home pay should be Rs.10,000.00 at least 70% employees
Whose accounts to be opened.
• The institution should agree to pay salary through the Bank account and sign a
letter of undertaking to this effect.
• Deviation if any to be aproned by ZM only.

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BOI RAKSHAK SALARY SCHEME
• HO BC 111 / 171 dated 17.01.2018
• Scheme Code SB163, Sp. Charge Code RAKSA
• All existing employees of All existing permanent employees of the Central Police
Organisations (other than Central Para Military Forces), Civil Police, home guards,
Traffic Police and Reserve Police of all States, Police Forces of The Union
Territories (Under The Control Of The Central Government), Railway Protection
Force (RPF) (under the Ministry of Railways, Central Government) and Government
Railway Police (GRP) — (part of State Police Force)
• For existing customers of above category, acceptance letter should be
obtained to change their scheme code to BOI Rakshak Salary Scheme.
STAR RATNAKAR BACHAT SALARY ACCOUNT
• HOCL No:2012-12/179 date 17.10.2012.
• For employees of Diamonds Traders only.

Only at selected Branches i.e. Bullion exchange, Opera house, Bharat Diamond
Bourse, Ahmedabad, Bhavnagar, Jamnagar, Pithampur Industrial Estate, and Surat
Branches (NBG WEST AND CENTRAL)
• All feature of Star BOI Salary Plus & Scheme Code: 164
.
BOI STAR SENIOR CITIZEN SAVINGS BANK ACCCOUNT
• Refer HOBC 107/106 date 13.09.2013.
• Launched on 108th Foundation Day.

• Scheme code - 166 .
• Eligibility- all citizens of 57 years of age and above & all senior citizens
drawing pension from other bank.
• AQB of Rs.10,000.00
• 6 DD per quarter free and nil annual charges.
• 50 cheque leaves free in a year

• Free global debit cum ATM card
• Group personal accident death insurance cover of Rs.5 lakhs on debit card,
activated by single POS swipe for each financial year

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BOI STAR MAHILA SAVINGS BANK ACCCOUNT
• Refer HOBC 107/107 dated 13.09.2013

• Launched on 108th foundation day
• Scheme code – 167.
• Eligibility- all adult women from salaried/self-employed or with independent source
of regular income like rentals.
• AQB Rs.5000.00 .
• Group personal accidental death insurance cover of Rs. 5 lakhs on debit card
activated by single POS swipe for each financial year.
• Easy overdraft-only for permanent salary account holders - net salary credited in SB
a/c last month.
• 6 DD per quarter free if AQB Rs.10,000.00 is maintained.
• 50 cheque leaves free in a year.
• Free global Debit cum ATM Card and nil annual charges.
STAR YUVA SAVINGS BANK SCHEME

• BOI Star Yuva - SB 116 (HOBC 108/122 dated 22.09.14)
Category A
• Age 10 – 18 years
• Target group – students
• AQB – Nil
• Transaction limit – total debit Rs.2 lac every financial year
• Cheque book – free 25 leaves
• Discounted health check-up through partnerships.
• Incentives for using alternate delivery channel
Category B
• Age 18 – 35 years
• Target group – students, professionals without dependents, professionals with
dependents.
• AQB –for students up to 21 years - nil,.
• AQB- for age group 21 – 35 years – Rs.5000.00 in metro/urban & Rs. 2500.00
in semi urban/rural branches .
• Incentives for using alternate delivery channel.
• Cheque book – free 50 leaves
• Debit card – Bingo and other Debit Cards as per eligibility norms
• Discounted health check-up through partnerships
• Free personal accidental insurance cover (death benefits) of Rs.50,000.00 for
age group of 18-21 years and after 21 years group personal accidental death
insurance cover of Rs. 5 lakhs on debit card activated by single POS Swipe,
this clause applies to every financial year.

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SAVINGS BANK ACCOUNT FOR PENSIONERS
• HO BC 107/ 143 dated 23.10.2013. Scheme code SB 121.
• All pensioners who are drawing pension through BOI irrespective of age.
• Minimum daily balance: No minimum balance required.
• Group Personal Accident Death Cover Insurance of Rs.5.00 lakhs on debit
card.
• Charges for excess debit entries: Customer induced Debit entries are free for
10 entries.
• Personalized cheque book: Up to 50 leaves free per year.
• Issuance of DD/PS: 6 DD/ PS free per quarter.
• Global ATM cum Debit Cards: Free to all. Platinum cards for higher salary
earners. Annual charges from next year in both cases.
• Overdraft facility – maximum amount 2 months pension amount.
SMALL SAVING BANK ACCOUNTS
• BC 106/8 of 4.04.2012 - Under scheme code:106.
• Small account of resident individuals who don't possess any Officially
Valid Document (OVD) for full KYC compliance for opening of a bank account
can be accepted in branch only and accounts are opened under the scheme
code SB- 106. These BSBDA Small accounts will be valid for first twelve months
subject to customer ensuring submission of valid OVD for full KYC compliance,
otherwise account will be debit frozen after twelve month period from the
account opening date. Thereafter bank will be compelled to close such Non-
KYC compliant BSBDA small accounts after lapse of another twelve months
period i.e. after 24 months completion from date of its opening.
• Small Accounts enrolled through BC ( Non-Face to face) in bank on OVD
/ Aadhaar card online verification will be a BSBDA Small account in nature and
to be opened under scheme code SB-181,182 or 183(i.e. through BC assisted
mode). The account is to be allowed to operate for a period of Twelve
months within which RE-KYC is to be done at the branch by customer
visiting physically at Branch premises. Branch should allow to open such
account after receipt of same and allow operation with few restrictions as
stipulated vide Branch Circular No. 113/157 dated 16-08-2019. Adult individuals
can open the account; firms/joint accounts are not eligible
• The verification of the accounts enrolled through Business Correspondents
should not be denied for the reason of non-physical appearance of the
proposed customer. The account should be instantly verified if otherwise in
order and treated as BSBDA- Small Account till the Customer physically visits the
branch in person for re-KYC. The account will continue for one year with
BSBDA Small account restrictions and thereafter will be frozen in case the
customer does not visit the branch.
• Nomination compulsory.No minimum balance charges
• No third party withdrawal allowed.• Total credit in a financial year should not
exceed one lakh
• Total of withdrawal and transfer not to exceed Rs.10,000.00; maximum two in a
month.• Balance at any point of time not to exceed Rs.50,000.00.
• No Foreign remittances.•Free -Debit Card powered by Rupay
• Free - Unified Payments Interface (UPI)(Bhim-UPI)
• Free Unified Payment interface Quick Response code (UPI QR Code).

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BASIC SAVINGS BANK DEPOSIT ACCOUNT (BSBDA)
• HOBC 113/157 dated 16.08.2019.
• In terms of the RBI guidelines on Financial Inclusion, Value added services are
available to BSBD account holders, w.e.f. 01.09.2019 subject submission of
written mandate for their option and acceptance of payment of applicable
charges thereof to the Bank branch. For opening of a new BSBD account, a
customer must give a Declaration to bank in writing that he\ she (customer) is not
having a BSBD account in any other Bank. This is a mandatory submission to
Branch by resident approaching Bank branch / BC outlet / through on line
application etc. For giving such declaration no service charges is levied to
customer in terms of RBI guide lines.
• Existing Basic banking SB/ Small SB accounts willing to conversion to BSBDA
have to approach person in at Branch counter in submit written application in
presence of Branch official. After following due KYC norms and completion of re-
KYC compliance by each of SB no frill account holder. Further, a customer must
give a Declaration to bank in writing that he\ she (customer) is not having a BSBD
account in any other Bank.
• Eligibility : Individual resident, singly or jointly (Maximum not more than 4 joint
holders), Minor of age above 10 years, An illiterate/ Visually challenged /
Physically challenged / individual suffering from Leprosy is also eligible to open
a BSBD account.
• No minimum balance charges
• Bank customer is offered with following basic minimum facilities in BSBDA, free
of charge, without requirement of minimum balance:
1. The deposit of cash at Bank branch as well as ATMs/ CDMs.
2. Receipt / credit of money through any electronic channel or by means of
deposit/collection of cheque drawn by Central/State Government agencies
and departments.
3. No limit on number and value of deposits that can be made in a month.
4. Minimum of four withdrawals in a month, including ATM withdrawals.
5. ATM card of ATM-cum-debit card.
The BSBDA shall be considered a normal banking service available to all.
• Value added services like issuance of cheque book in BSBDA subject to
customer paying applicable service-Charges (board approved rates).
• This account shall not have the requirement of any minimum balance
maintenance. No charges will be levied for non-operation / activation for
operation /Dormant / small / Jan Dhan account.
• Nomination is compulsory to ensure least operational problems/ issues in the
account.
• BSBDA scheme code: SB-101 with CHRG_LEVEL_CODE = NOMIN and

CHRG_COLL_FLG +N (as per HO BC 111/39 issued by HO compliance or as
amended from time to time).

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BOI SAVINGS PLUS SCHEME
• It aims at Maximizing the earning for the customer without jeopardizing liquidity.
• Mixture of Savings and Term Deposit. AS per HO BC 112/123 dated 12.11.2018
Minimum base amount in SB Plus account was Rs. 50,000.00 and sweep in / out
amount in TDR was in multiples of Rs.10,000.00, Maximum tenure of TDR was
120 months.This scheme has been modified w.e.f. 01.12.2021 (HOBC 115/240
dated 30.11.2021) .The threshold in the base account of Savings Plus Scheme
has been enhanced to Rs. 1 Lakh, Sweep in /out amount will be in multiples of
Rs.25,000.00 and maximum tenure of TDR is allowed up to 364 days. The
accounts, till the date of implementa tion shall follow the existing guidelines and
from 01/12/2021, the account will automatically be migrated to new stipulations
and the system shall automatically sweep in the balance amount to meet the
new threshold. The facility of Sweep In/Sweep Out in the accounts shall
continue. The complete deposit shall not be broken, only the amount equivalent
to meet the new threshold shall be swept in . Since the threshold in the base
account of Savings Plus Scheme has been enhanced to Rs.1 Lakh, these
accounts are automatically flagged as Diamond accounts and all benefits of
SB Diamond account scheme shall also be available to these accounts.
• In case the customer does not wish to continue with the same after
implementation of modified scheme, the customer c an submit an application to
this effect to his home branch and the account will be converted to Normal
Account without the Sweep In/Sweep Out facility.
BOI SUPER SAVINGS PLUS
• Initial Deposit Rs. 20.00 lacs

• AQB : Rs. 5 lacs (Penalty Rs. 500/per quarter)
• Sweep In & Sweep Out : Every 15 days.
• Multiples amount sweep out :15 lacs
• Period of TDR : less than 6 month
• ROI : as applicable to Table of less than Rs.1 Crores
• FREE International Debit cum ATM cards
• FREE SMS/PHONE/INTERNET/ NEFT/RTGS
• FREE personalized cheque book .
STAR DIAMOND SAVINGS ACCOUNT
• The tierisation of saving bank account is based on Average Quarterly Balance (AQB).
The portfolio is segmented into Basic, Silver, Gold and Diamond accounts, based
on theaverage quarterly balances (AQB) maintained in individual account.
• A Basic SB account is one, where AQB up to Rs.5,000/- is maintained.
• A Silver SB account is one, where AQB between Rs.5, 000/- to Rs.25,000/- is
maintained.
• A Gold SB account is one, where AQB is between Rs.25, 000/- to Rs.1 lakh. A Diamond
SB account is where AQB is more than Rs.1 lakh.

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A Diamond SB account would enjoy following additional facilities:-
▪ Free branch debit transactions per month
▪ Unlimited Free Internet Transactions
▪ Unlimited Personalized Chequebook
▪ Free Home Delivery of Demand Drafts by courier.
▪ Free Statements if desired : Unlimited -On demand
▪ Free International Gold Credit Card
▪ Free Relationship Manager : Branch Officer.
▪ Fee Waiver on Personal/Retail Loans-Processing charges
▪ Fee Waiver on Demat Account maintenance charges : Yes
▪ Fee Waiver on local inward cheque return charges : Yes
▪ Waiver of stop payment charges
Accidental Death Insurance cover for Rs.5 lakhs is available for the SB
accounts maintaining Rs.1 lakh AQB.
MOTOR ACCIDENT CLAIMANT ANNUITY DEPOSIT (MACED) MOTOR

ACCIDENT CLAIMS TRIBUNAL (MACT) SB ACCOUNT
• Br. 112\56 dated 03/07/2018.

• TD549 – Motor accident claims Term Deposit.
• SB170 – MACT SB account.
• These accounts are designed as per Hon’ble High Court of Delhi’s
directions and as advised by IBA.
• No deviation is permitted other than what is mentioned in the scheme.
MOTOR ACCIDENT CLAIMS TERM DEPOSIT
Purpose – One time lump sum amount as decided by the court/ tribunal, deposited to
receive in EMIs comprising of principal and interest.
1) Eligibility – Individuals including minors through guardian.
2) Mode – Singly
3) Type of Account – Motor Accident Claims Annuity Deposit Account (MACAD)
4) Amount – Based on monthly annuity of Rs.1000.00 for relevant period.
5) Period – 36 to 120 months
6) If period <36, then FD only. If 120< then by court order
7) Rate of interest – as per prevailing rate.
8) Nomination – Available, as per court directive.
9) Receipts/advice – No receipt. Passbook only.
10) Loan facility – not available.
11) Premature Payment– as per court order. No penalty. Nominee has option to
continue with annuity.
12) Tax – TDS on interest portion as per I-tax rules.

233
MACT CLAIMS SB ACCOUNT
• Eligibility – individual including minor (through guardian) in single name.

• Balance limit – no limit.
• Cheque book/ ATM/ debit card/ welcome kit/ net-banking/ IB & MB facilities –
Not applicable.
• Operation – only single operation (minor through guardian).
• Withdrawal – through withdrawal slip or biometric.
• Product change / account transfer – not allowed.
• Place of account opening – as per court direction.
• Nomination – as per court order.
• Passbook /statement by e-mail – available.
Note : In all Saving Bank accounts , it should be ensured that the balance in the
account does not turn into negative balance solely on account of levy of charges of
minimum balace. In such cases charges not debited due to non-availability of sufficient
credit balance should be accumulated separately by system ( Maximum up to 2
quarters).and it should be debited whenever the account comes in to credit balance.
CURRENT DEPOSIT
Current Account is opened by Businessmen who can have unlimited regular

transactions with the Banks both deposit and withdrawal, it is also known as Demand
Deposit.
TYPES OF CURRENT ACCOUNTS
• Tierised Current Accounts

• Star Benefit CD Plus Account
• Star Crystal current Account
• BOI Current Deposit Plus
• BOI Super Current Plus
• Current Account for NRI customers.
• Star Rera Plus Current Account.
Current accounts may be opened in the names of:
 Individual - Single Accounts.

 Two or more individuals - Joint accounts (Can be opened with operational
instructions "Either or Survivor" or Former or Survivor" or "Any One/All of the
Joint Account Holders").
 Sole Proprietary concerns
 Partnership Firms

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 Joint Hindu Families or Firms
 Associations, Clubs, Societies etc.
 Limited Companies
 Executors and Administrators
 Trusts
 Provident Funds
 Liquidators
 Other Banks
 State Financial Corporations.
Note: In approved cases, branches may open non-operating accounts called

"Collection Accounts".
Branches do not open Current Accounts of entities which enjoy credit facilities (fund
based or non-fund based) from the banking system without specifically obtaining
No-Objection Certificate from the lending Bank(s). RBI has advised banks to
examine and refer Central Repository of information on Large Credits (CRILC)
data and undertake extra due diligence before opening Current Accounts of entities.
Keeping in view the importance of credit discipline, especially in reduction of NPA

levels in banks and to curb such diversion of borrowed funds, banks have to follow the
procedure advised by RBI for opening of current accounts –
I. On visit of the prospective customer(s) at branch for opening of a current

account in the name of any entity, Branches must obtain declaration from the
prospective customer giving particulars of credit facilities enjoyed with any other
bank(s). Based on information as per declaration , Branches should obtain
NOC/ permission from the lending Banks for opening of current account.
If No response is received from the existing banker after a minimum period of
two weeks, branch can open the current account after complying with the
extent KYC and due diligence guidelines and as a matter of diligence guidelines
and as a matter of precaution intimate the lender bank(s).
II. If the prospective entity is enjoying credit facility(ies) of Rs. five crore and
above with other banks than Branch will submit the details of such entity to
Zonal office and Zonal Office will access the CRILC database and thereafter
share the details with Branch. Zonal Office shall submit request for NOC/
Permission from other Bank(s) via emails through the nodal officer(s) . Lead
Bank in case of Consortium Account and all Banks where multiple Banking/
Sole Banking arrangement are in place. On receipt of NOC/ permission as per
requirement branch can open the current account of such entity after
complying with KYC and due diligence guidelines.III. If the prospective
customer declares no credit facility from other Bank, then branch may open
the current account after complying with the extant KYC and due diligence
guidelines.

235
As per RBI revised guidelines, branches are permitted to open specific current
accounts without any restrictions for permitted/ specified transactions
only and there shall be an agreement / arrangements with monitoring of cash flows/
periodic transfer of funds ( if permissible) in these currents accounts. An indicative
list of such accounts is as given below:
A. Accounts for real estate projects mandated under Section 4 (2) I (D) of the Real
Estate (Regulation and Development) Act, 2016 for the purpose of maintaining
70% of advance payments collected from the home buyers.
B. Nodal or escrow accounts of payment aggregators/prepaid payment
instrument issuers for specific activities as permitted by Department of
Payments and Settlement Systems (DPSS), Reserve Bank of India under
Payment and Settlement Systems Act, 2007.
C. Accounts for settlement of dues related to debit card/ATM card/credit card
issuers/acquirers.
D. Accounts permitted under FEMA, 1999.
E. Accounts for the purpose of IPO I NFO /FPO/ share buyback /dividend payment
I issuance of commercial papers/allotment of debentures/gratuity, etc. which
are mandated by respective statutes or regulators and are meant for
specific/limited transactions only.
F. Accounts for payment of taxes, duties, statutory dues etc.opened with banks
authorized to collect the same, for borrowers of such banks which are
not authorized to collect such taxes, duties, statutory dues, etc.
G. Accounts of White Label ATM Operators and their agents for sourcing of
currency.
Tierised Current Accounts
The tierised current accounts are designed on the Average Quarterly Balance (AQB)
requirement instead of Minimum Balance stipulation
Type of Current account AQB Requirement
BOI Normal Current Account Metro – Rs.7500.00
Urban – Rs.5000.00
Semi Urban – Rs. 2000.00
Rural - Rs.2000.00
BOI SILVER Current Account Rs.20,000.00 to less than Rs.50,000.00
BOI GOLD Current Account Rs.50,000.00 to less than Rs.1,00,000.00
BOI GOLD PLUS Current Account Rs.1,00,000.00 to less than Rs.2,00,000.00
BOI DIAMOND Current Account Rs.2,00,000.00 to less than Rs.5,00,000.00
BOI DIAMOND PLUS Current Account Rs.5,00,000.00 to less than Rs.10,00,000.00
BOI PLATINUM Current Account Rs.10,00,000.00 to less than Rs.20,00,000.00
BOI PLATINUM PLUS Current Account Rs.20,00,000.00 and above
The tierised current accounts are opened under following schemes codes. The following
three scheme codes constitute more than 98% of the current deposit portfolio.
SR. No. Name of the Product Scheme Code
1 Current Account - General CD-201
2 Current – Collection Account CD-209
3 Current Account - Institutional CD-211

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The features of Tierised Current account holders are as under :
I. No Daily Minimum Balance Stipulation

II. Lower Average Quarterly Balance requirement
III. New Current Accounts can be opened on DAY ONE ITSELF. Higher tierised
levels like Diamond or Platinum etc. as the case may be, as requested by the
prospective customer
IV. Penal charges to be levied only if AQB goes below the minimum threshold limit
V. Free Cheque Leaves — originally once with opening of Account.
VI. Free/ Reduced NEFT/RTGS Charges*
VII. Free/ Reduced Leger Folio Charges*
VIII. Free Demand Drafts/ Pay Orders*
IX. Waiver on Processing Charges of Retail Loans*
X. Waiver on AMC charges on Demat Account* (only for first year)
XI. Free/ Reduced Charges on Cash Handling for Cash Deposit*
XII. XII. Discount on Point of Sale (POS) offer*
XIII. Improved Forex Rates*
Note :- (*) The free or reduced charges/ discount on various service charges/
add on facilities, are applicable for tierised accounts and are proportionately
higher for tierised accounts with higher Average Quarterly Balances.
STAR BENEFIT CD PLUS ACCOUNT
The account was launched on Bank's foundation day in the year 2010 vide Branch
Circular No. 104/72 dated 08.09.2010 to cater to the needs of small
traders/manufacturers. The features of Star Benefit CD Plus account is as under:-
▪ Average Quarterly Balance Rs.5,000.00 per quarter

▪ Free DD/PSI Up to Rs.5.00 Lac each per month
▪ Star Speed Cheque Collection Free
▪ Debit Card for individuals & Proprietorship concerns Free for First year.
▪ Prevailing AMC charges from 2nd year onwards
▪ First Time Free Cheque Book of 50 leaves. Afterwards issue of MICR Cheque
as per prevailing charges
▪ SMS /Tele /lnternet Banking Free
▪ Remittance of funds (NEFT/RTGS) through net banking Free
▪ Penal charges on account of non-maintenance of stipulated AQB requirement
▪ The accounts under the said scheme shall not be available for tierisation.
Note: - Star Benefit CD Plus Current A/c is a part of the existing Current Deposits
(Scheme Code — CD201). To allow benefit of Star Benefit CD Plus Account while
opening the Account through OAAC / HOAAC menu option user has to select "CDP"
in Special Charge code field.

237
STAR CRYSTAL CURRENT ACCOUNT
It was launched by the Bank in the year 2012 for Diamond Traders vide Branch Circular
Letter No. 2012-13/179 dated 17.10.2012. Features Benefits. Star Crystal Current
Account along with Star Ratnakar Bachat Salary account was introduced at a few
Branches in NBG (West 1) and NBG (Central) viz. Bullion Exchange, Opera House,
Bharat Diamond Bourse, Ahmedabad, Bhavnagar, Jamnagar, Pithampur Industrial
Estate and Surat where there was concentration of Diamond trade, Diamond cutting
& Diamond polishing for Diamond traders and their employees.
• Average Quarterly Balance Rs.5,000.00 per quarter
• Free DD/PSI / RTGS /NEFT through branch up to Rs.5.00 Lac each per month.
• Debit Card for individuals & Proprietorship concerns Free for First year.Prevailing
AMC charges from 2nd year onwards.
• Cheque Book- 100 Leave Free per annum
• SMS/Tele/Internet Banking Free.
• Remittance of funds (NEFT/RTGS) through net banking Free.
• Penal charges on account of non-maintenance of stipulated AQB.
• The accounts under the said scheme shall not be available for tierisation.
• Star Crystal Current A/c is a part of the existing Current Deposits (Scheme Code—
CD201).
• To allow benefit of Star Crystal Current Account while opening the Account through
OAAC / HOAAC menu option user has to select "CRYST" in Special Charge code field.
CURRENT DEPOSIT PLUS ACCOUNT
This product is a combination of Term Deposits and Current Deposit with very attractive
features and incentives for the Customers. The product would maximize the returns for
the customers on their short-term funds which otherwise would not earn any interest in
the Current Deposit Account.
AS per HO BC 112/123 dated 12.11.2018 Minimum base amount in CD Plus account

was Rs.4.00 lacs and sweep in / out amount in SDR was in multiples of Rs.75,000.00,
Maximum tenure of SDR was 179 days.
This scheme has been modified w.e.f. 01.12.2021 (HOBC 115/240 dated 30.11.2021)
.The threshold in the base account of CD Plus Scheme has been enhanced to Rs.
5.00 Lakh, Sweep in /out amount will be in multiples of Rs.1.00 lacs and maximum
tenure of SDR is allowed up to 90 days. The accounts, till the date of implementation
shall follow the existing guidelines and from 01/12/2021, the account will automatically
be migrated to new stipulations and the system shall automatically sweep in the balance
amount to meet the new threshold. The facility of Sweep In/Sweep Out in the
accounts shall continue. The complete deposit shall not be broken, only the amount
equivalent to meet the new threshold shall be swept in . Since the threshold in the base
account of Savings Plus Scheme has been enhanced to Rs. 5.00 Lakh, these accounts
are automatically flagged as Diamond accounts and all benefits of CD Diamond account
scheme shall also be available to these accounts. In case the customer does not wish
to continue with the same after implementation of modified scheme, the customer can
submit an application to this effect to his home branch and the account will be converted
to Normal Account without the Sweep In/Sweep Out facility.

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BOI SUPER PLUS CURRENT ACCOUNT
The Salient features of the scheme are as under:-

 Initial Deposit Rs.50 Lakh
 Average Quarterly Balance Rs.35 Lakh
 Sweep in Daily, Sweep out Daily
 Multiple Amount Rs.15 Lac (Minimum balance in FFD portion is Rs.15 Lac)
 Maximum Cap for Term Deposit - No upper Ceiling .
 ROI- Card Rates as applicable to deposits of above maturity periods.
 Penalty Rs.5000.00+Applicable GST per quarter for non-maintaining AQB of
Rs.35.00 lakhs.
 Tax Deduction at Source- the TDS norms would equally apply to accounts and would
be handled in the usual Manner.
 Lien on BOI Current Deposit Plus Account - The customer must not assign,
transfer, charge, pledge or otherwise encumber any "BOI Current Deposit Plus
Account" except in favour of our Bank, as a security for any obligation of the customer
to the Bank.
 The accounts under the said scheme shall be available for tierisation and
benefits & modalities of respective category of tiered account shall be
applicable.
 Other Incentives / Concessions (Automatically Applicable As for Star Diamond/
Platinum Accounts).
CURRENT ACCOUNT FOR NRI CUSTOMERS
The NRI customers can open Current Account with any of our BOI branch. The
scheme code for Current — Deposits (NRO) is CD 205 and the scheme code for
Current — Deposit (NRE) is CD 206.
NRE CURRENT ACCOUNT
▪ NRIs (Individuals /entities of Bangladesh / Pakistan nationality/ ownership require

prior approval of RBI).
▪ Account can be held jointly by a Non-Resident Indian (persons of Indian
nationality or origin) / with a Resident Indian (Former or Survivor basis).
▪ A Resident Indian can operate the account only as a Mandate / POA holder. The
Resident Indian must be a close relative .
▪ Repatriability- Freely Repatriable.
▪ Taxation - Funds in NRE Account are exempted from income tax in India.
NRO CURRENT ACCOUNT
• Any person resident outside India (other than a person resident in Nepal and
Bhutan).
• Individuals/entities of Pakistan Nationality/ ownership, entities of Bangladesh
ownership and erstwhile Overseas Corporate Bodies require prior approval of
Reserve Bank of India. Account can be held jointly by a Non-Resident Indian
(persons of Indian nationality or origin) / with a Resident Indian only as a

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Mandate / POA holder.
• The Resident Indian must be a close relative.
• Repatriability - Principal up to USD 1 Million. Subject to FEMA
2000 guidelines revised from time to time.
▪ Taxation- Funds in NRO Account are taxable under Indian Income Tax Act.
▪ The rules/guidelines for NRI are subject to change from time to time and it will be as
per the latest guidelines issued by RBI/Bank.
STAR RERA PLUS
 HOBC 112/10 dated 10.04.2018.

 There will be three accounts under the same cust ID and scheme code CD225
 RERA Collection Account [RCA]:- All collection proceeds of the project shall be
deposited.
 RERA Project Account [RPA] :- Minimum 70% or of the proceeds from the RCA
will be transferred as per mandate given by the a/c holder.
 Operative Account [OA] :- Balanced fund transferred from RCA i.e. 30% or less.
 Note:- If present CD account is to be used as OA, then RCA & RPA must be
opened in the same cust ID.
 Only one account opening form should be used for all the 3 accounts. Following
documents should be obtained:-
1) Copy of RERA registration certificate or RERA application form.
2) Copy of ESCROW agreement.
3) An undertaking that the promoters will be solely responsible for any deviation
from RERA provisions.
4) Standing instructions for transfer of funds.
 No cheque book to be issued.
 Only viewing facility for internet banking.
 At the end of the day, system will transfer clear balance from RCA to RPA &
OA as per pre decided ratio i.e. minimum 70% to ROA.
 Withdrawal in RPA is permitted only as per RERA rules and up on
reciept of undertaking of the account holder issued on its letterhead and along
with any other document as per state Govt. directives.
 Up on completion of the project, if the developer makes a written
request to transfer funds from RPA, it can be done if he gives completion
certificate and occupancy certificate.

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TERM DEPOSIT
A Deposit held at a Bank that has a fixed term. Term Deposit is an extremely
safe investment and is therefore very appealing to conservative low risk
investors. Term Deposit accounts may be opened in the names of :
(i) Individual - Single Accounts

(ii) Two or more individuals - Joint Accounts
(iii) Sole Proprietory Concerns
(iv) Partnership Firms
(v) Illiterate Persons
(vi) Blind Persons
(vii) Minors
(viii) Limited Companies
(ix) Associations, Clubs, Societies, etc.
(x) Trusts
(xi) Joint Hindu families (accounts of non-trading nature only)
(xii) Municipalities
(xiii) Government and Quasi-Government Bodies.
(xiv) Panchayats
(xv) Religious Institutions
(xvi) Educational Institutions (including Universities)
(xvii) Charitable Institutions.
Note : As the Recurring Deposit Scheme is designed to cater to the needs
of the small depositors. Only Individuals are eligible to open Recurring Deposit
Accounts. Recurring Deposit Accounts can be opened in the names of:
(i) Individual — Single Accounts
(ii) Two or more individuals — Joint Accounts
(iii) Illiterate Persons
(iv) Blind Persons
(v) Minors
INTEREST ON TERM DEPOSITS shall be as applicable on the date of

issue/renewal of the Term Deposit Receipt. Interest would be calculated at
Quarterly or larger intervals (and not monthly). In the case of Monthly Income
Certificate (MIC) Scheme, the Interest is paid monthly at discounted value of the
interest for one month.
The Bank has statutory obligations to deduct tax at source if the total interest
Paid / payable on all Term Deposits held by a person during a financial year
exceeds the amount specified under the Income Tax Act. The customer may give
instructions to deduct TDS payable on the deposit, from operative account linked
to the Term Deposit account; otherwise the amount of tax would be deducted
from interest payable on term deposits and the maturity proceeds of the deposits
will be lower than that mentioned on Term Deposit receipt. The Bank will issue
a Tax Deduction Certificate (TDS) for the amount of tax deducted. The
depositor, if entitled for exemption from TDS can submit declaration in the

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prescribed format i.e. Form 15G/15H at the beginning of every financial
year. DEPOSITORS must furnish their PAN Number along with 15G /15H.
Failure to furnish PAN will result in deduction of TDS at the prevailing rate
advised by Income Tax department. TDS will be deducted on the interest
earned on the total amount of deposits held by a customer in the Bank as a
whole, and not on individual deposits held by him branch-wise including
Recurring Deposits.
MODE OF CALCULATION OF INTEREST ON SHORT DEPOSITS AND FIXED

DEPOSITS:
A. SHORT DEPOSIT: (Repayable within six months)

Interest would be paid for the actual number of days on the basis of 365 days in
a year
B. FIXED DEPOSITS: (Repayable six months and above)
Interest would be paid for the actual number of days/months on the basis of 365
days in a year
NOTE: In respect of any "Special Deposit Scheme" announced by the Bank, it

will have different interest calculation method as per the scheme offer.
Types Of Terms Deposit
• Short Deposit
• Fixed Deposit
• Monthly Deposit / Quarterly Deposit
• Double Benefit Deposit
• Recurring Deposit
• Flexi RD.
• Term deposit for NRI customers.
TAX SAVINGS DEPOSIT

Provide Tax exemption under Section 80C of Income Tax Act. Types of Tax Savings
Deposit-
• Capital Gain Tax Savings Deposit

• Sukanya Samrudhhi Account
• Public Provident Fund.
• Star Sunidhi Tax Deposit
SHORT DEPOSIT
• Period 7 days to 179 days.

• Minimum amount Rs1,00,000.00 for 7 to 14 days.
• Interest is payable on the basis of actual number of days on the basis of 365
days in a calendar year
• Refer HOBC 98/256 of 31.03.2005 .

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FIXED DEPOSIT
• Period 6 months to 120 months

• Minimum amount –
• 10000 for Metro/Urban
• 5000 for Rural/Semi Urban
• 5000 for Senior Citizen
• Interest will be calculated for the complete months and when the terminal
month is incomplete the actual number of days on the basis of 365 days in a
calendar year
• Payment of interest on Half Yearly Basis on 1st October and 1st April
• Refer HOBC 98/256 of 31.03.2005.
MONTHLY/QUARTERLY INCOME CERTIFICATE
• All SB/CD account holder are eligible

• Payment of Interest every month at Discounted value
• Payment of Interest every quarter at actual Payment of Interest value.
• Minimum amount that may be accepted for deposits under the
• Monthly Income Certificate Scheme shall be Rs.10,000/- (Minimum per Receipt)
at Metro & Urban Branches while Rs.5,000/-(Minimum per Receipt) at Rural
& Semi Urban Branches and the amount above this can be accepted in the
multiples of Rs. 100/-.
• TDS is applicable
• Nomination is available
• LOAN / OD is available.
DOUBLE BENEFIT DEPOSIT
▪ Period ranges from 6 months to 120 months (beyond 120 months allowed
in case of minor or on having court order)
▪ ROI quarterly compounded payable half yearly in September and March
/or at renewal/closure.
• Minimum amount -10000 in Metro/Urban, 5000 in Rural/Semi Urban, 5000
for Senior Citizen
▪ Minimum amount not applicable in-
i) Automatic Renewal
ii) Staff accounts
iii) Subsidy kept under Government sponsored schemes, Margin
Money Deposits, Earnest Money Deposits and Court attached /ordered
deposits.
• Principal along with compounded interest is payable on maturity / closure renewal.
• Premature payment allowed without penalty
• Advance is available
• TDS is applicable as per IT ACT
• Safe investment with fixed and predetermined maturity.

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RECURRING DEPOSIT
• Only Individual, Blinds, Illiterate, Minors.

• Period ranges from 3 months to 120 months (in multiples of 3 months)
• Minimum monthly instalment - 500 in Metro/Urban, 100 in Rural / Semi Urban
• Instalment payable on or before last day of month Penalty for late instalment-
- 1.50/per 100 for deposit 5 year.
- 2.00/per 100 for more than 5 year
• Waiver of late instalment by advance instalment
FLEXI RECURRING DEPOSIT
• HOBC: 108/125 of 24.9.14

• Only Individual & Joint accounts including Minors.
• Minimum = Rs.500.00 for Metro & Urban and Rs100.00 for Semi Urban & Rural,
Maximum “NO LIMIT”.
• Flexi Instalment = Any amount in multiples of core instalment Only one core & one
flexi instalment per month. Maximum flexi instalment can be 10 times the core
instalment.
• No Flexi installment should be accepted in the last month of the RD A/c.
• Period = Min 12 month to Max 120 month (in multiple of 3 M)
• Penalty for late instalments
• No Advance instalment is allowed for flexi instalments
• Maturity value = Will be calculated by the System, depending on the amount of flexi
instalments, NO FIXED maturity value.
• Standing Instructions only for Core Instalment only
• No Auto renewal
• Loan/OD/Advance available.
• TDS Applicable.
STAR SUNIDHI TAX SAVINGS

• Refer HOBC 100/90 of 01.09.2006
• Exemption under sec 80C of Income Tax Act
• Only Individual, HUF, NRI (under NRO category) having PAN Numbers
• Minimum Rs.10,000.00 Maximum Rs.1,50,000.00
• Type = FDR/MIC/QIC/DBD @ROI as applicable on TDR
• Period minimum 5 year maximum 10 year
• Rate of Interest - As fixed from time to time 0.50% extra for Senior Citizens
1% extra for Staff embers
• Premature not available up to 5 year
• No advance is available
• Nomination is available except for and on behalf of Minor
• Pledge of security not allowed.

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CAPITAL GAIN ACCOUNT 1988
 Refer Master Circular HOBC 109/51 dated 25.05.2015

 Section 54, 54B, 54D, 54F, 54G, and 54GB of the Income tax Act 1961, provide
for capital gains tax for a seller if, the Seller /assessed utilize the amount of capital
gain for specified purposes.
 Capital Gains Accounts can be opened for the following specified transactions
which results in capital gains.
a. Sale of residential property (Section 54)- Long Term Capital Gains
b. Transfer of agriculture land (Section 54 B).
c. Compulsory acquisition of land & building forming part of an Industrial Undertaking
( Section 54D).
d. Transfer of any other “Long Term Capital Asset” (other than residential House)
– Section 54F).
e. Transfer of Assets on shifting of industrial undertaking from urban area
(section 54G).
f. Transfer of residential property not to be charged in certain cases
(Section 54GB)
 Branches Authorized: Non Rural Branches (i.e. All Semi-Urban/ Urban/ Metro
Branches).
 Types of Accounts:
Account ‘A’ (Savings Bank),
Account ‘B’ (Term Deposit cumulative/ non-cumulative)
(Savings Plus Scheme not permitted).
 Eligible Applicants: Resident Individuals, Hindu Undivided Family (HUF),
Proprietorship firms, Companies, Association of persons etc. Non –Resident
Indians (NRIs), Artificial Judicial persons who have capital gains, taxable in
India.
 Period of Deposit: Account ‘B’ can be opened for period not exceeding 2 to 3
years from the date of transfer of original asset as given under.
Maximum 24 Months : If Capital Gain is under Section 54B,54F,54G
Maximum 36 Months: If Capital Gain is under Section 54,54D.
 No Cheque Book and Debit card Facility.
 No outward NEFT /RTGS Facility (Inward permitted).
 Rate of Interest: Account ‘A’ – Applicable to SB Accounts,
Account ‘B’ – As per Bank’s TDR Rates.
 No additional interest rate benefits for Senior Citizens, staff and Ex- staff. No
Lien: Amount cannot be pledged or offered as Security for any loan or guarantee and
cannot be charged or alienated.
 Transfer of Account: Account can be transferred to another Branch of the same Bank.
 Withdrawal: Amount can be withdrawn from deposit A” (Savings Bank Account) by
furnishing an application in form ‘C’ along with Pass Book.
 Premature withdrawal from Deposit ‘B’ (TDR) is permitted by converting account
from ‘B’ to ‘A’ and by levying 1% penal interest for premature payment as in case of
TDRs. Form B will be used for conversion of Account ‘B’ to ‘A’.
 For Scheme A Accounts no cheque book or ATM Card to be issued.Withdrawal can
be made from deposit SB by furnishing an application in Form C along with Pass Book
(no cheque book will be issued).
 Premature payment is permitted from Term Deposit and by levying 1% penal

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interest. Form B is used for conversion of TD account SB
 Interest is not exempted under Income Tax Act, 1961 and TDS will be deducted as
per rules. Maximum period of TDR is 36 months.
 Proof of utilization of amount withdrawn, to be obtained
 Nomination on Form E-max 3 nominee and for variation/cancellation Form F. If
depositor dies Form H for nominees for payment.
 Withdrawal cash up to Rs.25000.00 and above by crossed DD. Closure of account
in Form G.
 Renewal of overdue deposit is permitted.
SUKANYA SAMRIDDHI ACCOUNT SCHEME

 Government of India has introduced Sukanya Samriddhi Account (SSA) under its
Campaign (te WUT3t tet 4-47311 - Beti Bachao, Beti Padhao) vide notification
no. G.S.R. 863 (E) dated 2nd December 2014.Tax benefit under section 80(C) of
Income tax Act 1961 for investment made during financial year.
 Eligible person: Depositor as an individual on behalf of a minor girl child of whom he
or she is the guardian. NRIs are not eligible to open this account.
 One girl one account: Can’t open more than one account for the same girl child under
the scheme. Accounts for two girls can only be opened. Third account can be opened
in case of twin only.
 Age restriction: A/c can be opened up to the age of 10 years.
 Necessary document: At the time of account opening guardian has to submit date of
birth certificate of the girl child. (Scheme code: SK169). KYC documents as per existing
norms.
 Initial deposit: Account can be opened with minimum Rs.250.00 & thereafter in
multiple of Rs.50.00. Minimum of Rs.250.00 and maximum Rs.1.5 lakhs can be
deposited in a financial year.
 Tenor of the Account: Deposit can be made up to 15 years from the date of account
opening. Maturity of the account is 21 years from the account opening date or till the
marriage whichever is earlier.
 ROI: As per HO advise from time to time.
 Treatment of Irregular account: If account becomes irregular by not depositing
Rs.250.00 per year, it can be regularized by paying penalty of Rs.50.00 per year
along with minimum yearly deposit of Rs.250.00. If in case of any account default is
not regularized within 15 years of opening of account than whole deposit shall be
eligible only for ROI prescribed for Post Office Saving Bank at the time of maturity. Any
amount Credited wrongly by way of interest in to the account under default shall be
reverted.
 Account operation: Natural guardian or legal guardian of the girl child will operate
the account, till the girl child attains age of 18 years thereafter she herself will operate
the account.
 Passbook will be issued.
 Account is transferrable.

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 Premature closure: On the death of the account holder, account will be closed
immediately and amount with interest will be paid to the guardian.
 Premature withdrawal :
i. To meet the financial requirements like higher education, marriage - 50%
of the account balance available at the end of preceding FY after the a/c holder attains
18 years age or has passed tenth standard, whichever is earlier.
ii. Closure on or before maturity of the a/c allowed due to marriage of a/c holder on
submission of affidavit that she is not less than 18 years on the date of closure of account.
SENIOR CITIZEN SAVING SCHEME (SCSS)
 Senior Citizen Saving Scheme 2004 is a Government of India Scheme which is targeted
at senior citizens & retired personnel and it provides high yield and tax benefit under
section 80 C of Income Tax Act, 1961 along with a regular income.
 Eligibility: The account can be opened by following individuals:
1. An individual who has attained the age of 60 years & above on the date of opening of
account.
2. On superannuation/voluntary retirement, retired personnel of 55 years & more but less
than 60 years as on date of account opening.
3. Retired Defense personnel above 50 years.
4. HUF & NRI are not eligible to open these accounts.
 Joint account with spouse can be opened. While opening the joint account age of first
account holder will be considered for eligibility.
 Minimum Rs.1000.00 & thereafter in multiple of Rs.1000.00 and not exceeding
Rs.15,00,000.00.In case multiple SCSS accounts the cumulative deposit including all
accounts should not exceed Rs. fifteen lakhs.
 Amount of deposit is restricted to retirement benefits or Rs. fifteen lakhs which ever is
lower.
 Rate of interest will be same as applicable on the date of account opening for the entire
tenure of the account till its maturity. Presently, Gol has decided toannounce ROI on
quarterly basis w.e.f 1st April 2016.
 Interest shall be paid quarterly in the saving account of the depositor on 1st working
day of April/ July/ October/ January for the quarter ended March/ June/ September/
December.
 In case of an account is extended, the account shall earn interest at the rate
applicable to new account opened or to be opened.
 In case account is not extended nor closed, post maturity interest will be
applicable as per Post Office Saving Bank interest rate up to the end of the month
preceding the month of closure.
 Maturity of the account is after five years from the date of account opening. Account can
be extended for further period of three years within a period of one year from the
maturity period of five year. The extension of the account shall be deemed to have been
made from the date of maturity irrespective of date of application.

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 In case of premature closure –
1. In case, the account is closed before one year after the date of opening of
account, interest paid on the deposit in the account shall be recovered from the deposit
and the balance shall be paid to the account holder.
2. In case the account is closed after the expiry of one year but before the
expiry of two years from the date of its opening, an amount equal to one and a half per
cent of the deposit shall be deducted and the balance shall be paid to the account
holder.
3. In case the account is closed on or after the expiry of two years from the date of
its opening, an amount equal to one per cent of the deposit shall be deducted and the
balance shall be paid to the account holder.
4. The depositor availing the facility of extension of account may be permitted to
withdraw the deposit & close the account at any time after expiry of one year from the
date of extension of account without any deduction.
5. No deduction shall be made in case of premature closure of an account at any
time due to death of the depositor.
 Nomination can be made for one or more persons but not exceeding four
individuals.
 Deposit in the account qualifies for deduction under section 80C of Income Tax Act.
 Interest earned in the account is taxable.
PUBLIC PROVIDENT FUND (PPF) SCHEME

 Public Provident Fund (PPF) is one of the scheme which we are distributing as an
Agency Bank. It is a statutory scheme of the Central Goverment framed under
the provisions of the Public Provident Fund Act, 1968.
 The subscription to PPF qualifies for exemption under section 80(C) of the Income Tax
Act, 1961.
 Opening of PPF Account:
- A resident Indian individual can open a PPF Account in his/her own name.
- An individual may also open one account on behalf of each minor or a person of
unsound mind of whom he is the guardian.
 The individual can have only one PPF account.
 Joint accounts are not allowed.
 HUF and NRI are not eligible to open PPF account.
 Nomination can be made for one or more persons but not exceeding four individuals.
 The interest as decided by the Government of India from time to time. The minimum
balance in the account between the close of the 5th day and the end of the month is
reckoned for interest calculation Interest is to be credited to the PPF account at the end
of every financial year.
 The subscription, which shall be in multiples of Rs.50.00 (minimum Rs.500.00 and
currently maximum Rs.1,50,000.00 per annum) may be paid into the account in
one lump sum or in installments in a year.
 In case of additional account on behalf of minor, the total subscription including the

248
minor accounts should not exceed the maximum threshold of Rs.1,50,000.00 in a F.Y.
 The PPF account can be transferred at the request of the subscriber from one
authorized branch/ bank/ post office to another branch/ bank/ post office.
 The PPF account shall mature after expiry of 15 financial years from the close of
financial year in which the initial subscription was made the account holder on the
expiry of fifteen years from the end of the year in which the account was opened, may
extend his/her account and continue to make deposit for a further block period of five
years by applying to the Bank. The option of extension of account shall be made by
the account holder before expiry of one year from the maturity of the account.
 Premature closure is allowed only after completion of five financial years from the
date of account opening. Such premature closure is subject to deduction of one percent
(1%) interest from the applicable interest from time to time since the date of account
opening.
 A subscriber can make only one withdrawal during a financial year. The first
withdrawal can be made any time after the expiry of 5 years, an amount not exceeding
fifty per cent of the amount (for minor also) that stood to his/her credit at the end of the
fourth year immediately preceding the year of withdrawal or at the end of the preceding
year, whichever is lower.
 A subscriber can avail a loan against the PPF account, after the expiry of one year
from the end of the year in which the initial subscription was made, but not after the
end of the fifth year in which the initial subscription was made. The amount of the loan
is restricted to 25% of the balance including interest at the end of second immediately
preceding year. The loan (principal) is repayable either in lump sum or in convenient
installments, not exceeding 36 months.
 Amount standing to the credit of any account holder shall not be liable to
attachment under any order or decree of any court in respect of any debt or liability
incurred by the account holder.
 Tax Benefits
i. Subscription in PPF account qualify for tax rebate under section 80-C
of Income Tax Act.
ii. Interest accrued in PPF account and withdrawals thereof are fully
exempt under sec. 10(11) of Income Tax Act.
iii. iii. Balances held in PPF account is also exempt from wealth tax.

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NRI DEPOSITS
NON-RESIDENT EXTERNAL (NRE) ACCOUNTS
The salient features of the scheme are given below:

 Non-resident Indians (NRIs) and Person of Indian Origin (PIOs) are permitted to open
and maintain these accounts. (individuals/ entities of Bangladesh/Pakistan
nationality/ownership require prior approval of RBI).
 The accounts may be maintained in any form, e.g. savings, current, recurring or fixed
deposit account etc.
 Joint accounts can be opened by two or more NRIs and/or PIOs or by an NRI/PIO with a
resident relative(s) on ‘former or survivor’ basis. However, during the life time of the
NRI/PIO account holder, the resident relative can operate the account only as a Power of
Attorney holder.
 Inward remittances to the account and remittances outside India from NRE account are
permitted.
 Credits also permitted to this account are interest accruing on the account, interest on
investment, transfer from other NRE/ FCNR (B) accounts, maturity proceeds if such
investments were made from this account or Current income of NRI/PIO account holder
like rent, dividend, pension, interest etc. net of income tax paid.
 The debits allowed from this account are local disbursements, transfer to other NRE/
FCNR (B) and investments in India.
 Authorised Dealers/ banks in India can grant loans against the security of the funds held
in NRE accounts to the account holder/ third party in India, without any limits, subject
to the usual margin requirements. The loan cannot be repatriated outside India and shall
be used for the permitted purposes only.
 The facility for premature withdrawal of deposits will not be available where loans against
such deposits are availed of.
 NRE accounts should be designated as resident accounts or the funds held in these
accounts may be transferred to the RFC accounts, at the option of the account holder,
immediately upon the return of the account holder to India and on change in the residential
status.
 In the event of the demise of an account holder, balances in the account can be
transferred to the non-resident nominee of the deceased account holder.
 Operations on an NRE account may be allowed in terms of Power of Attorney or other
authority granted in favour of a resident by the non-resident account holder, provided such
operations are restricted to withdrawals for local payments or remittance to the account
holder himself through banking channels.
 The resident Power of Attorney holder is not allowed to:
(a) Open a NRE account;
(b) Repatriate outside India funds held in the account other than to the account holder
himself;
(c) Make payment by way of gift to a resident on behalf of the account holder;

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(d) Transfer funds from the account to another NRE account.
 Income from interest on balances standing to the credit of NRE Accounts is exempt from
Income Tax. Likewise balances held in such accounts are exempt from wealth tax.
 The rate of interest and tenor applicable to these accounts will be in accordance with
the directions/ instructions issued by the Department of Banking Regulations, Reserve
Bank of India.
NON-RESIDENT (ORDINARY) ACCOUNT SCHEME – NRO ACCOUNT
The salient features of the scheme are given below:

 Any person resident outside India (as per Section 2 (w) of FEMA), may open
andmaintain NRO account with an Authorised Dealer or an Authorised Bank.
 NRO (current/ savings) account can be opened by a foreign national of non-
Indianorigin visiting India, with funds remitted from outside India through banking
channel or by sale of foreign exchange brought by him to India. The balance in the
NRO account may be paid to the account holder at the time of his departure from India
provided the account has been maintained for a period not exceeding six months and
the account has not been credited with any local funds, other than interest accrued
thereon.
 Opening of accounts by individuals/ entities of Pakistan nationality/ownership and
entities of Bangladesh ownership requires prior approval of the Reserve Bank.
 The accounts may be maintained in any form, e.g. savings, current, recurring or fixed
deposit account.
 The accounts may be held jointly with residents on ‘Former of Survivor’ basis. NRIs
and PIOs may hold an NRO account jointly with other NRIs and PIOs.
 Inward remittances from outside India, legitimate dues in India, transfers from other
NRO accounts and Rupee gift/ loan made by a resident to a NRI/PIO relative (within
LRS limit) are permissible credits to NRO account.
 The account can be debited for the purpose of local payments, transfers to other NRO
accounts or remittance of current income abroad. Up to USD 1 million can be
repatriated/transferred to NRE account per year, subject to FEMA guidelines.
 Loans against the deposits can be granted in India to the account holder or third party
subject to usual norms and margin requirement. The loan amount shall not be used for
relending, carrying on agricultural/plantation activities or investment in real estate.
 NRO accounts should be designated as resident accounts immediately upon the return
of the account holder to India and change in the residential status.
 Operations in NRO account may be allowed in terms of Power of Attorney granted in
favour of a resident. Such operations are restricted to withdrawals for local payments
or remittance to the account holder himself through banking channels.
 Income-Tax - It shall be mandatory on the part of Authorised Dealers to comply with
the requirement of tax laws, as applicable.

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BRIEF COMPARISON OF THE NRE & NRO SCHEMES:
PARTICULARS NRE NRO
Who can open accounts NRIs NRIs
Joint accounts of two or Permitted Permitted

more NRIs
Joint account with Permitted Permitted
Residents
Nomination facility Available Available Currency of
account
Nomination facility Available Available Currency of
account
Repatriability Freely Repatriable Up to USD 1Mn. Subject
to FEMA guidelines.
Type of account Saving, Current and Term Saving, Current and Term
deposit deposit
Period 12 months to 10 years Period
Important Instructions/Circulars on Deposits

• HOBC.113/157 dated 16.08.2019 - Basic Saving Bank a ccount (BSBDA).
• HOBC 115/70 dated 02.06.2021- Bank’s Policy on Deposit.
• HOBC 115/ 179 dated 24.09.2021 - Mandatory Debit Freezing of accounts
reported deceased in finacle
• HOBC 115/ 262 dated 31.12.2021 – Revision in service charges w.e.f.
01.02.2022
• HOBC 115/199 dated 20.10.2021 - Policy on Inoperative / Dormant Accounts
• HOBC 115/297 dated 02.03.2022 –Settlement of claims in Deceased
depositor’ accounts.
• HOBC 115/298 dated 02.03.2022 –Settlement of claims in missing persons
maintaining with Bank.
• HOBC 116/44 dated 30.04.2022 – ROI on SB Deposit.
• HOBC 116/ 92 dated 30.06.2022 - Revamped Salary Account Schemes of
the Bank.
• Circular Letter No. : 2022-23/ 50 dated 01.07.2022 - Standard Operating
Procedure (SOP)on usage of Withdrawal Slips

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Priority Sector & Agriculture Finance
Priority Sector – New guidelines HOBC 116/135 dated 25.08.2022
Broad Categories:
Agriculture- Comprises Farm credit, Allied Activities & Agr.
Infrastructure. No distinction between Direct & Indirect agriculture now. No separate
targets either.
o Farm Credit: Includes all finances for farm activities [all ST/ MT/ LT
loans]. To include, inter alia, Loans to distressed/indebted farmers, Loans
to SF/MF for purchase of Agri. Land; Loan to farmers for installation of
standalone agriculture pumps and for solarisation of grid connected
Agriculture pumps; Loan to farmers for installation of solar power plants
on barren/fallow land or in stilt fashion on agriculture land owned
by farmer. Loans to Corporates/Societies, etc. up to Rs.2 cr.,
Loan to farmers upto Rs.75 lakhs against pledge of NWRs/eNWRs and
upto Rs.50 lakhs for other than NWRs/eNWRs, repayable in 12 months.
Loan up to Rs.5.00 crores per borrowing entities to FPOs/FPCs
undertaking farming with assured marketing of their produce at a pre-
determined prices.
o Agriculture Ancillary activities include Finances to Co-op societies for
marketing of produce [up to Rs.5 cr.], Loans up to ₹50 crore to Start-ups,
as per definition of Ministry of Commerce and Industry, Govt. of India that
are engaged in agriculture and allied services, Loans to Custom Service
Units managed by individuals, institutions or organizations who maintain
a fleet of tractors, bulldozers, well-boring equipment, threshers, combines
etc, and undertake farm work for farmers on contract basis, Food & Agro
processing [up to Rs.100 Cr. per borrower], PACs, LAMPS, FSS, MFI &
NBFCs for onward lending to farmers, etc. & RIDF contributions
o Agri. Infrastructure includes Godowns, Cold storage, chain of cold
storages etc., Soil conservation & watershed development, Tissue
culture/Seed production, Bio- technology, Vermi compost, construction of
oil extraction/ processing units for production of bio-fuels, for setting up
Compressed Bio Gas (CBG) plants etc. [ Max. Rs.100 Cr. per borrower]
o Small and Marginal farmer is defined as:1) marginal farmer is the
farmer having land holding 1 hectare, small farmer is the farmer having
land holding above 1 ha and upto
2 hectares, 2) landless agriculture labors, tenant farmers, oral lessee,
share cropper whose share of landholding is as per MF & SF definition, 3)
SHG & JLG if bank is maintaining
disaggregated data of such loans, 4) Loans to FPOs/FPC of individual farmers and
co-operatives of farmers directly engaged in Agriculture and Allied Activities where the
land-holding share of SMFs is not less than 75 per cent
Loan to the following categories are classified under MSME sector -

All loans to units in the KVI sector will be eligible for classification under the
subtarget
of 7.5 percent prescribed for Micro Enterprises under priority sector.
Loan to co-operatives of artisans, village & cottage industries.

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Loans up to ₹50 crore to Start-ups, as per definition of Ministry of
Commerce and Industry, Govt. of India that confirm to the definition
of MSME
Credit outstanding under GCC, ACC, LUC, Swarojgar Credit Card,
Weaver’s Card etc. are covered in MSME.
Loan to NBFC / MFI for onward lending to MSME units shall be
covered in MSME subject to fulfilment of certain regulatory
guidelines.
Overdraft to Pradhan Mantri Jan-Dhan Yojana (PMJDY) account
holders as
per limits and conditions prescribed by Department of Financial
Services,
Ministry of Finance from time to time, will qualify as achievement
of the target
for lending to Micro Enterprises.
Outstanding deposits with SIDBI and MUDRA Ltd. towards the
shortfall in Priority Sector lending
Factoring transactions pertaining to MSMEs taking place through the
Trade Receivables Discounting System (TReDS) shall also be eligible
for classification under priority sector.
`With Recourse' Factoring transactions by banks which carry out the
business of factoring departmentally wherever the 'assignor' is a
Micro,Small or Medium Enterprise would be eligible for classification
under MSME category on the reporting dates.
Inter Bank Participation Certificates bought by the bank on risk

sharing basis are eligible for classification under respective
categories of priority sector, provided the underlying assets are
eligible to be categorized under the respective categories of
priority sector and bank fulfil the RBI guidelines on IBPC.
Investment by Bank in Securitized Assets
Investment by banks in securitized assets except ‘others’ category
representing loans under priority sector, such investment is classified
as priority sector investment.
Transfer of Assets through Direct Assignment /Outright
purchase -
Assignment/outright purchase of pool of assets by banks
representing loans under various categories of priority sector, except
the ‘others’ category, will be eligible for classification under
respective categories of priority sector provided fulfillment of RBI
guidelines.
Priority Sector Lending Certificates (PSLC) -
The outstanding PSLC bought by banks will be eligible for
classification under respective categories of priority sector provided
the assets are originated by banks are eligible to be classified as
priority sector advances and fulfil the RBI guidelines on priority sector
lending certificates.

254
Housing Loan - Loan up Rs.35 lac in Metro, with project cost up
to Rs.45 lac; Loan up to Rs.25 lac, with PC up to Rs.30 lac [other
areas]. Loan for repair to damaged dwelling units up to Rs.10
lakhs in metropolitan areas and up to Rs.6 lakhs in other areas are
covered in PS. Bank loan to any Govt. Agency for construction of
dwelling units or slum clearance and rehabilitation of slum dwellers
subject to dwelling units with carpet area of not more than 60 sq.m.,
Bank loans for affordable housing projects using at least
50% of FAR/FSI for dwelling units with carpet area of not more
than 60 sq.m., Loan sanctioned by banks for housing projects
exclusively for EWS & LIG under PMAY are covered in PS. Bank
loan to HFCs approved by NHB for refinance for on-lending subjected
to ceiling of Rs.20 lakhs per borrower, Outstanding deposits with
NHB on account of priority sector shortfall are covered in PS.
Export Credit- Incremental export credit over corresponding date

of the preceding year, up to 2 per cent of ANBC or CEOBE whichever
is higher, subject to a sanctioned limit of up to ₹ 40 crore per
borrower for PSBs. For Foreign banks having more than
20 branches - Incremental export credit over corresponding date
of the preceding year, up to 2 percent of ANBC or CEOBE
whichever is higher. 32% of ANBC or CEOBE whichever is higher
for foreign banks with less than 20 branches.
Education- Education loan including vocational courses not

exceeding ₹ 20 lakh will be considered as eligible for priority sector
classification.
Social Infrastructure - Includes Schools, Hospitals/ Health units,
Sanitation, etc. Finances under this head up to Rs. 5 cr per borrower
is under PSA. Loans up to a limit of ₹10 crore per borrower for
building health care facilities including under
‘Ayushman Bharat’ in Tier II to Tier VI centres, Bank loans to MFIs
extended for on-lending to individuals and also to members of
SHGs/JLGs for water and sanitation facilities subject to the certain
criteria is under PSA.
Renewable Energy - Includes finances up to Rs 30 cr per borrower

for solar generators, wind mills, micro-hydel, village electrification,
etc. However, Loan limit is Rs.10 lakhs/borrower for individuals

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Others-
o loans not exceeding ₹2.00 lakh provided directly by

banks to SHG/JLG for activities other than agriculture or
MSME, viz., loans for meeting social needs, construction
or repair of house, construction of toilets or any viable
common activity started by the SHGs.
o Loan to distressed persons @ max Rs. 1 lac to non-
farmers for repayment of debts to non-institutional
lenders.
o Loans to SC/ST/ State organizations for inputs &
marketing.
o Loans up to ₹50 crore to Start-ups, as per definition of
Ministry of Commerce and Industry, Govt. of India that
are engaged in activities other than Agriculture or MSME
Targets /Sub-targets for Priority sector
Categories Domestic Foreign banks Regional Rural Small

commercial banks with less than Banks Finance
(excl. RRBs & 20 branches Banks
SFBs) & foreign
banks with 20
branches and
above
Total 40% of ANBC or 40 per cent of 75 per cent of 75 per cent of
Priority credit equivalent of ANBC or CEOBE ANBC or CEOBE ANBC as
Sector Off-Balance sheet whichever is whichever is computed in
exposure (CEOBE) higher; out of higher; However, para 6 below or
whichever is higher. which up to 32% lending to Medium CEOBE
can be in the Enterprises, Social whichever is
form of lending to Infrastructure and higher.
Exports and not Renewable Energy
less than 8% can shall be reckoned
be to any other for priority sector
priority sector achievement only
up to 15 per cent of
Agriculture 18 per cent of Not applicable ANBC.
18 per cent 18 per cent
ANBC or CEOBE, ANBC or of ANBC or
whichever is CEOBE, CEOBE,
higher; out of whichever is whichever is
which a target of higher; out of higher; out of
10 percent# is which a target of which a
prescribed for 10 percent# target of 10
Small and is prescribed for percent# is
SMFs prescribed
Marginal Farmers
for SMFs
(SMFs)

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Micro 7.5 per cent of Not applicable 7.5 per cent of 7.5 per cent
Enterprises ANBC or CEOBE, ANBC or of ANBC or
whichever is CEOBE, CEOBE,
higher whichever is whichever is
higher higher
Advances 12 percent# of Not applicable 15 per cent of 12 percent#
to Weaker ANBC or CEOBE, ANBC or of ANBC or
Sections whichever is CEOBE, CEOBE,
higher whichever is whichever is
higher higher
# Revised targets for Agriculture and SMFs will be implemented in a phased
manner as below –
Financial Year Small and Marginal Weaker Sections target ^

Farmers target *
2020-21 8% 10%
2021-22 9% 11%
2022-23 9.50% 11.5%
2023-24 10% 12%
* Not applicable to UCBs
^ Weaker Sections target for RRBs will continue to be 15% of ANBC or CEOBE,
whichever is higher.
Abbreviations
ANBC = Adjusted net Bank Credit
CEOBE = Credit equivalent of off-balance sheet items

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Computation of Adjusted Net Bank Credit (ANBC)
Bank Credit in India [As prescribed in item No.VI of Form I
`A’ under Section 42(2) of the RBI Act, 1934]
Bills Rediscounted with RBI and other approved Financial II
Institutions
Net Bank Credit (NBC)* III(I-II)
Outstanding Deposits under RIDF and other eligible funds IV
with NABARD, NHB, SIDBI and MUDRA Ltd in lieu of non-
achievement of priority sector lending targets/sub-targets
+ outstanding PSLCs
Eligible amount for exemptions on issuance of long-term V
bonds for infrastructure and affordable housing
Advances extended in India against the incremental FCNR VI
(B)/NRE deposits, qualifying for exemption from CRR/SLR
requirements
Investments made by public sector banks in the VII
Recapitalization Bonds floated by Government of India
Other investments eligible to be treated as priority sector VIII
(e.g. investments in securitised assets)
Face Value of securities acquired and kept under HTM IX
category under the TLTRO 2.0 and SLF-MF- and also
Extended Regulatory Benefits under SLFMF Scheme
Bonds/debentures in Non-SLR categories under HTM X
category
For UCBs: investments made after August 30, 2007 in XI
permitted non SLR bonds held under ‘Held to Maturity’
(HTM) category
ANBC (Other than UCBs) III + IV- (V+VI+VII) +VIII - IX + X
ANBC for UCBs III + IV - VI - IX + XI
Small and Marginal Farmers :-
 Farmers with landholding of up to 1 hectare (Marginal Farmers).
 Farmers with a landholding of more than 1 hectare and up to 2 hectares (Small
Farmers).
 Landless agricultural labourers, tenant farmers, oral lessees and share-
croppers, whose share of landholding is within the limits prescribed for small
and marginal farmers.
 Loans to Self Help Groups (SHGs) or Joint Liability Groups (JLGs), i.e. groups
of individual Small and Marginal farmers directly engaged in Agriculture and
Allied Activities, provided banks maintain disaggregated data of such loans.
 Loans up to ₹2 lakh to individuals solely engaged in Allied activities without any
accompanying land holding criteria.
 Loans to FPOs/FPCs of individual farmers, and co-operatives of farmers
directly engaged in Agriculture and Allied Activities, where the land-holding
share of SMFs is not less than 75 per cent.

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AGRICULTURE
Agricultural Finance H.O B.C 116/01 dated 01.04.22
Agriculture is one of the most important sector of Indian Economy. Indian

agriculture sector accounts for 18% of India's Gross Domestic Product (GOP) and
provides employment to 50% of the country's workforce. Agriculture is primary
source of livelihood for 58% of Indian population.
Agriculture, with its allied sectors, is the largest source of livelihood in India. 70%
of its rural households still depend primarily on agriculture for their livelihood,
with 87% of farmers being small and marginal. The share of agriculture in GOP
increased to 19.9% in 2020-21 from 17.8% in 2019-20. Indian Agriculture has
registered impressive growth over last few decades.
.
Agricultural Finance
FARM CREDIT
Loans to individual farmers such as Crop loan, SHGs, JLGs, Dairy,
Fishery, Animal Husbandry, Poultry, bee keeping, sericulture,
Horticulture etc. Term loan for purchase of agri. Implements,
equipment, irrigation, pre & post harvesting activities,
transportation of farm produce. Loan limit up to ₹75 lakh against
NWRs/eNWRs and up to ₹50 lakh against warehouse receipts other
than NWRs/eNWRs, for a period not exceeding 12 months. Loan to
distressed farmers indebted to non-institutional lenders. Loan to
farmers in Kisan Credit Card Scheme. Loan to small and marginal
farmers for purchase of land for agriculture purpose. Loans to
farmers for installation of stand-alone Solar Agriculture Pumps and
for solarisation of grid connected Agriculture Pumps. Loans to
farmers for installation of solar power plants on barren/fallow land or
in stilt fashion on agriculture land owned by farmer. Loans to
corporate farmers, farmer producer organizations/ companies of
individual farmers, partnership firms and co-op. of farmers directly
engaged in agri. Activities upto a limit of Rs.2 crore per borrower.
Loans up to ₹5 crore per borrowing entity to FPOs/FPCs undertaking
farming with assured marketing of their produce at a pre-determined
price. etc.
AGRICULTURE INFRA STRUCTURE

Loan for construction of storage facilities including cold storage
units/cold storage chains irrespective of locations, Soil conservation
and watershed development, Tissue culture and biotechnology seed
production, production of bio-pesticides, bio-fertilizers,
vermicomposting, for construction of oil extraction/ processing units
for production of bio-fuels, their storage and distribution
infrastructure along with loans to entrepreneurs for setting up
Compressed Bio Gas (CBG) plant. Aggregate sanction limit of
Rs.100 crs./borrower.

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ANCILLIARY ACTIVITIES
Loan up to Rs.5 crs to co-op societies of farmers for disposing of
produce of members. Loan for setting up of Agro Clinic and Agro
Business centers. Loan for food and agro processing centers up to
Rs.100 crs/borrower. Loan to PACS, FSS, LAMPS. Loans up to ₹50
crore to Start-ups, as per definition of Ministry of Commerce and
Industry, Govt. of India that are engaged in agriculture and allied
services. Loans to Custom Service Units managed by individuals,
institutions/organizations who maintain a fleet of tractors, bulldozers,
well-boring equipment, threshers etc., and undertake farm work on
contract basis. Loans sanctioned by banks to MFIs for on-lending to
agriculture sector. Outstanding deposits under RIDF, eligible funds
with NABARD
Selected Allied Activities under Agricultural Financing-

Dry-Land Farming –Dry land farming means raising of crops in an area where
the rainfall is less than 20" or 500mm. About 70 percent of the total cultivated area
in our country is dry land and they contribute only 42 percent of the total food grains
production in the country. In-spite of all the adverse features, these areas offer wide
scope to increase the food production if the following techniques are adopted-
i) Soil and water conservation techniques.
ii) Use of drought resistance variety of crops.
iii) Crops which are of short duration and high yielding.
iv) Development of water-sheds etc.
Dairy Farming-
Purpose:
• Establishment of Mini dairy unit (with 2 to 4 animals), Small dairy unit ( 6 to
10 animals) Commercial dairy unit ( More than 10 animals)
• Establishment of new medium/large dairy units or expansion of existing units by
experienced, trained/qualified entrepreneurs as a main occupation
• Collection, processing and distribution of milk. Manufacturing of milk products
and other related business.
• Establishment of breeding bull farms, semen banks, artificial insemination
centres, veterinary clinics as custom service units.
The following activities are eligible for finance under dairy schemes:
• Purchase of improved/cross breed milch cattle
• Purchase of breeding bulls in case of large schemes
• Construction of cattle
shed.
The cattle which are in good health need to be selected. Animals should have
low maturity age, long lactation period (i.e. more number of milking days) and high
milk yielding per lactation period.
Other documents such as loan application forms, security aspects, margin
money requirements etc. are also examined. A field visit to the scheme area is

260
undertaken for conducting a techno-economic feasibility study for appraisal of
the scheme.
In case of Cross bred cows the milk yield per day is about 12-15 litters, with length
of the lactation period being 280 to 310 days and dry days being 60-90 days. Some
of the important cross bred cows are Holstein Friesian, Jersey, Brown Swiss,
Swedish Red etc. In case of buffaloes, the milk yield per day are about 8-10 litres
with length of the lactation period being 220-270 days and dry days being 120-180
days. Some of the important buffalo breeds are Mehsana, Murrah, Jafrabadi, Surti
and Nili-Ravi.
A small unit of 2 milch cattle is considered to be financially viable for a small farmer
with a regular milk yield if animals are initially purchased with an interval of 6
months. The animals should be purchased after 30 days of second calving. The net
income from the sale of milk can pay off the loan within 3 lactations.
Star Kisan Ghar :- Scheme for financing of farm structures cum dwelling unit
HOBC no. 115/66 Dt. 02.06.2021 & Circular Letter No.:2021-22/27 Dated
22.07.2021
Background
 Branches are already granting Farm structures cum dwelling unit loans, as
developmental activities undertaken on the farm.
 There is no uniformity amongst various branches.
 Agricultural lands are usually situated away from villages/ towns.
 There is growing trend amongst farmers to construct farm structure cum
dwelling unit for —
 i) Residence
 ii) Storing / Sorting of agriculture produce
 iii) Cattle Shed
 iv) Parking / Store house for farm equipment - implements
 v) Grading / Packing Agri. produce.
Objectives
 i) To provide finance for construction of new farm structures on agricultural land
owned by the farmer along with storage-cum-godown, parking-cum-garage,
shed for multipurpose use connected to farm activities such as bullock/ cattle
shed, tractor/ truck/ implement shed, packing shed, farm silos and threshing
yard, etc., which serves as dwelling unit with one or more farm structures as
aforesaid.
 ii) Renovation/ repairs of existing farm structures cum dwelling units.
Eligibility
 Farmers engaged in agricultural activities/allied agricultural activities having
KCC accounts.
 Age Limit: Age at loan maturity should not exceed 70 Years.
For applicants above age 55, suitable co-applicant has to be taken considering
age/ succession.

261
 No finance should be granted against leased land.
 Farmers should have adequate income, liquidity and capacity to serve the loan
instalments. Income of co-applicants may be clubbed for deciding quantum of
loan and repayment capacity if property held jointly by them or individually.
 Note: The person who is closely involved/ engaged in agriculture activities
should be treated as principal borrower. Owner of the land should be taken as
co-borrower if he/she is not principal borrower.
Quantum of Finance
Based on cost of project
 a) New farm structures cum dwelling unit: Min. Rs.1.00 lakh & max.Rs.50.00
lakh
 b) Renovation & repairs of farm structures cum dwelling unit: Min.Rs.1.00 lakh
& max.Rs.10.00 lakh.
 Depending on cost of project & subject to assessment as above
A. Based on income -
 (i) Farmers with Income Tax Returns :
Income based on IT Returns Six times of gross annual income based on
income tax returns (last 2-3 years average).
OR
 (ii) Farmers without Income Tax Returns:
Farm Income Six times of total net annual farm receipts/

value of crops (anticipated from the farm
taking into consideration type of crops, area
under cultivation)
PLUS
Other income/ Income from allied Six times of net annual income/ profit
activities from allied activities/ other economic
activities (like business/ rent/ salary,
etc., if any)
B. Based on value of land / collateral security-
Value of security / collateral security 75% of value of land

mortgaged as security plus 100% of
liquid collateral security.
 Note: The valuation of agriculture land be obtained from concerned Sub
registrar-Office or our approved valuer.
Loan amount
Whichever is lower amongst
1. Income (A) OR
2. Value of land/ collateral security (B)
Repayment
 To be repaid fully within maximum 15 years including moratorium period.
 Moratorium/ gestation period may be allowed maximum upto 18 months or
completion of the construction whichever is earlier.
 Interest during moratorium period may be capitalized or recovered depending
upon basis of income of the applicant.
 Repayment can be stipulated yearly/ half yearly/ quarterly/ monthly linked with

262
crop raised/ harvested, disposable income/ cash flow from his own farm, allied
activities as well as from other sources like custom hering.
 The repayment can be fixed at Equated Monthly/ Half Yearly/ Yearly
Installment basis or Principal + Interest charged and due for payment basis.
Repayment should not exceed 70 years of age of the principal borrower. Deviation
if any, in repayment period exceeding 70 years of age, to be approved by ZLCC.
Delegation
 a) Branches will not exercise their delegation.
 b) SKVK/ SZLCC to sanction the loans as per their delegation.
 Deviations if any, related to age, to be considered at ZLCC.
Farm Mechanization
HOBC no. 115/103 Dt. 28.06.2021 & Circular Letter No.:2021-22/ 74 dated
18.10.2021
Introduction
 Farm Mechanization is to use machines (engineering/ technology) to replace
human and animal energy to do a job in a better way.
 Objectives of Farm Mechanization is to increase productivity per agriculture
worker and quality of farm work.
 Why Farm Mechanization is Critical?
 Rural-urban migration
 Labor shortages
 An aging population remaining in Agri-Sector
 Increase in number of mouths to feed
 Decrease in number of producer
 High Labor cost
 Modified Farm Mechanization Scheme covers detailed guidelines related to -
 a) Tractor (engine having more than 12 HP power)
 b) Power Tiller (engine having power less than 12 HP)
 c) Combined Harvester
 d) Other farm Machineries
 e) Repairing and overhauling of farm machineries.
What’s new -
 In this modified scheme, minimum land holding criteria, minimum
implements criteria - relaxed, covering all type of farm machineries
including combined harvesters, pay out to the dealers, security and
margin norms.
Eligibility
Land Tractor Power Combined Other Farm Repair Loan
Tiller Harvester Machinery
Irrigated 2.5 ac or 1 1.5 ac or 6 ac or 2.40 1 ac or 0.40 Land is
ha 0.60 ha ha ha considered
Un- 5 acres 3 acres 12 acres 2 acres as per the
Irrigated or 2 ha. or 1.20 ha. or 4.80 ha. Or 0.80 ha. requirement
of respective
Machinery

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 Finance will also be considered in combination of irrigated and unirrigated
land (1 acre Irrigated land= 2 acre Unirrigated land to be considered
 Minimum irrigated land holding criteria may be relaxed by 1 acre for tractor
and combined harvester by SZLCC if;- a) economically viable. b) Minimum
50% of collateral liquid security by way of paper security.
Minimum two implements are compulsory while purchasing of Tractor, if not owned
Tractor Power Tiller Combined Other Farm Repair

Period * Harvester Machinery Loan
Upto 3 Upto 2 Upto 2 years No finance No finance
years years
*The Period considered is from date of registration with RTO, if applicable.

Repair Loan
a) The borrower should own agriculture land as well as the machinery.
b) Age of machinery for which loan is required is not more than 4 years.
c) Repair loan is eligible for the borrowers who have purchased machineries by
availing loan from us or from their own sources.
d) Machinery should have free from encumbrances of other FI.
e) The borrower will avail the loan only once per machinery.
Quantum of Finance
Land Tractor Power Combined Other Farm Repair Loan
Tiller Harvester Machinery
New *85% of total Project Cost 70% of estimate
(machinery has (*Total project cost is including cost of provided by service
necessary implements and accessories, registration, station max Rs.2.00
commercial test taxes, insurance, etc.) lakh for Tractor and
report as per BIS power tiller and max
code issued by Rs.10.00 lakh for
Central Farm combined harvester.
Machinery Training Other Farm
& Testing Institute machineries are not
(CFMTTI) eligible.
Second Hand 60% of Depreciate value or No No Finance
value assessed by the Finance
approved valuer or sale
consideration which is lower.
Assessment of Income
 i) Income assessment of farmers is based on the cropping pattern and income
generated from farm and non-farm activity such as farm machinery, allied
activity related to agriculture.
 ii) Income tax return or Income certificate issued by revenue authority may be
considered for assessment of income, if available.
Repayment
Type of Tractor Power Combined Other *Repair
Machinery Tiller Harvester Farm Loan
Machinery
New Max 9 Max 7 Max 9 Max 5 Max 3
Years Years years years years

264
Period *Second Max 4 Max 3 Max5 No finance No
Hand Years Years years finance
* Subject to within the residual/economic life of the machinery
Maximum 6-12 months of Gestation period may be allowed within the total
repayment period.
Instalment/ Interest Application Frequency
Repayment Principal Interest
Frequency Half Yearly plus interest (if Kharif and Rabi Half Yearly
both crops are cultivated)
Yearly plus interest (if mono/Annual crop is Half Yearly
cultivated)
Security
 For Loans up to Rs.1.60 lakhs & above Rs.1.60 lacs (all loans): -
 Primary
 i) Hypothecation of primary asset.
 ii) Comprehensive insurance of the vehicle with bank clause.
 iii) Bank's charge with RTO on implements & machineries wherever applicable
 Collateral only for Loans above Rs.1.60 lakhs:-
 Mortgage of land or declaration as per Agricultural credit Act. OR
 Third party guarantee of individuals having sufficient net worth may be obtained
at the discretion of sanctioning authority.
OR
 Liquid security such as TDR /LIC/NSC, etc. whose realizable value is equivalent
to loan amount will be considered. Relaxation in mortgage of land in deserving
cases with 60% of the collateral liquid security. (Delegation: SZLCC).
DSCR DSCR ratio while assessing the loan is mandatory and
required minimum ratio of 1.5:1
Age Deviation Age at loan maturity should not exceed 75 years. For
applicants above age 60 years, suitable co-applicant has
to be taken considering age/succession. Age Deviation in
the scheme will be approved by SZLCC and above
Festival Offer - Waived with effect from 01.10.2021 to 31.12.2021
Waiver of Processing
charges
Technical Feasibility & Economic Viability
Technical i) Financing of farm machinery should be based on viability of
Feasibility individual investment, suitability of the machinery, scope of custom
hiring, anticipated increase in farm production, net incremental income
on acquisition of the tractor.
ii) Machinery is approved by Central Farm Machinery Training &
Testing Institute (CFMTTI) / or the agencies approved by Central/State
Government.
iii) Arrangement for repairs, supply of spare parts, fuel, after sale
service, etc. should be in the proximity.
Economic Productive Tractor Power Combined Other Farm
Viability Work/ Custom Tiller Harvester Machinery
Hiring minimum 1000 600 1000 300
hours

265
STAR PISCICULTURE SCHEME (SPS): HOBC no. 115/124 dated 12.07.2021
India is the second largest fish producing countries in the world and shares
7.58% to the global production, contributing 1.24% to India's Gross Value Added
(GVA) and 7.28%
(2018-19) to the agricultural GVA. The sector provides livelihood to about 25 million
fishers and fish farmers at the primary level and twice the number along the value
chain. As per master direction of Reserve Bank of India, Fishery has been classified
under Agriculture
sector (Allied activity).
Government of India, through Ministry of Fisheries, Animal Husbandry and
Dairying, Department of Fisheries has launched an all India Centrally Sponsored
Scheme
"Pradhan Mantri Matsya Sampada Yojana (PMMSY)" as a part of "Atmanirbhar Bharat
Abhiyaan".
This circular supersedes earlier guidelines barring specifically issued under
Govt. schemes like PMMSY (HOBC 114/140 dated 30.06.2020).
Aquaculture is the breeding, rearing, and harvesting of fish, shellfish, algae, and other
organisms in all types of water environments.
Pisciculture- The breeding, rearing, and transplantation of fish by artificial means is
called pisciculture, in other words, fish farming.
Fishery-Fishery is the enterprise of raising or harvesting fish and other aquatic life.
There are three main types of fisheries viz. Marine fisheries, Inland fisheries and
brackish
water fisheries.
(A)Marine Fisheries: - It is mainly divided in three parts based on its fishing
operations and details are as under:-
1. In-Shore Fishing - In-shore fishing is confined to its operations in inshore
waters up to a depth of 9 miles.
2. Off-Shore Fishing - Off-shore fishing would extend beyond 10 miles up to 20
miles depth.
3. Deep-Sea fishing - lying beyond a depth of 20 miles from shore.
(B) Inland Fisheries:- Rivers, Dams, Tanks, ponds, lakes and swamps constitute a
very large part of the available water resources.
(C) Brackish water:- Brackish water is mixture of fresh and salty water which usually
occurs in estuaries.
Composite Fish Culture Technique-

By composite fish culture technique, it has been possible to increase the yield of fish
production. In the usual fish culture practice, 3 or 4 varieties of carps viz. Catla, Rohu,
Mrigal and common carp are cultured, however exotic varieties, viz., Silver carp and
Grass carp are also used.
Traditional Cultural Practices-
1. Prawn and Fish culture in Paddy Field-
2. Brackish water Culture in Impoundments
Some Advanced Practices
1. Cage culture
2. Biofloc
3. Biofloc and clear-water RAS systems

266
Technical Parameters for Fishery:
a) Site selection, items of development, pre and post stocking operations, stocking
density, fertilization, feeding etc.
b) The main criteria to be kept in mind while selecting the pond/tank is that the soil
should
be water retentive, adequate supply of water is assured and that the pond is not in a
flood prone area.
c) New water body may be excavated with construction of embankments, construction

of
inlets & outlets, construction of other civil structures like watchman's hut, arrangement
of water supply etc.
d) In case of new ponds, pre stocking operations starts with liming and filling of the
pond
with water. However, the first step for existing ponds requires development deals with
clearing the pond of unwanted weeds and also unwanted fishes either by manual,
mechanical or chemical means.
1. Pre-stocking:
 The pond is first cleaned by mechanical/ chemical removal of unwanted weeds
and
predatory fish
 This is accomplished by repeated netting and sun drying or use of mahua cake
 The toxic effect of mahua cake remains for 15 days in which fish is not to be
used for
human consumption
 Lime is used to bring the pH of the pond/tank to the desired level as alkaline
ponds are more productive.
 Lime increases the resistance of soil to parasites. It hastens organic
decomposition
2. Fertilization:
 Fertilization of pond is an important means for intensifying fish culture by
increasing the natural productivity of the pond.
 A combination of both Organic and Inorganic fertilizers may be used for best
results.
 Organic manure to be applied after a gap of 03 days from the date of liming.
Inorganic fertilization to be undertaken after 15 days of organic manuring.
 Organic manuring by use of cow dung ©5000kg/ha.
 Inorganic fertilizers like urea, triple super phosphate depending on the soil
profile, type of fish and the climatic condition.
3. Stocking:
 The pond will be ready for stocking after 15 days of application of fertilizers.
 Fish fingerlings of 50-100 gm size (10cm size) should be used for stocking @
5000
nos. per hectare.
 Fish can be fed with a mixture of rice bran and oilcakes in the ratio 4:1. The feed
should be placed on a feeding tray or in feeding bags and lowered to the pond
bottom to reduce the feed losses.

267
 The recommended feeding rates is 5-6% of the body weight up to 500 gm size of
the
 fish and then reduce to 3.5% of body weight from 500-1000 gm size.
 Organic manuring may be done at monthly intervals.
 Inorganic fertilization may also be done at monthly intervals however alternating
with organic manuring.
4. Harvesting:
 At the end of lslyear the fish will grow to up to 750 — 1000gms.
 Harvesting is done by partial dewatering and netting.
Working Capital Facility For Animal Husbandry And Fishery Borrowers

Br.Cr.112/169 dated 11/03/2019,
Union Govt. through its budget for 2018-19 has decided to extend KCC facility to
animal husbandry farmers for their working capital requirement. In pursuance of that
RBI has decided to extend KCC facility for activities related to animal husbandry
and fisheries.
Purpo
se:
KCC facility to meet the short term credit requirements of rearing animals, birds,
fish, shrimps, other aquatic organism, capture of fish.
Eligibilit
y:
Farmers and dairy farmers either individual or joint borrower, JLG, SHG, tenant
farmers having owned/ leased/ rented sheds. For Fisheries – Fishers, fish
farmers (including individual & groups/ partners/ share croppers/ tenant
farmers) SHG, JLG and Women Groups, having owned/ leased pond/tank/ open
water body, registered fishing vessel/ boat etc.
Scale of
Finance:
Working capital components in scale of finance include recurring cost towards
feeding, veterinary aid, labour, water & electricity charges, seed, feed, organic and
inorganic fertilizers etc depending upon the activity.
Maximum period for assessment of working capital requirement may be based
on cash flow statement or completion of one production cycle.
Interest subvention and PRI:
Interest subvention @ 2%, is to be provided on a maximum limit of ₹ 2 lakh for
animal husbandry KCC, subject to overall limit of Rs.3.00 lakh including Crop
KCC to the farmer, where the limit for crop loan component will take priority for
interest subvention and prompt repayment incentive benefits. An additional interest
subvention of 3% per annum provided to such of those farmers repaying in time,
subject to overall limit of Rs.3 lakh and both the KCC limit repaid in time.
Poultry Farming-The two major commercial activities taken up by farmers
under poultry farming are broiler farming and layer farming. In broiler operation, one
day old chicks are grown for a period up to 6-7 weeks and thereafter are sold
for meat purposes. The live weight of broilers at 6-7 weeks is about 1.8 kg. A farmer
can take up 5-6 batches of broilers in a year. In layer operation, farmers

268
generally purchase one day old chicks and rear it, till the birds give eggs at
economical rates. The laying period commences around 21st week and is normally
considered economical upto 72 (20 + 52) weeks. Today’s genetically superior
poultry birds lay about 270 to 300 eggs in a year, which is about 9 to
10 times its own
weight.
Bank has come out with comprehensive ready reference guidelines on Poultry
Farming to facilitate branches to entertain this credit business:
• Small Poultry Units up to 10,000 birds should be discouraged for
financing except, under Govt. sponsored schemes. Even under Govt.
sponsored schemes, for units with less than 10,000 birds, efforts should
be made for adoption of cluster approach.
• All New Projects with 10,000 Birds & above should incorporate/
adhere to various stipulations laid down in the revised poultry policy
guidelines.
Sericulture - Sericulture, the technique of silk production is an agroindustry, playing

an imminent role in the rural economy of India. Sericulture is a highly labour-
intensive activity. Silk production consists of 4 distinct phases of activities,
viz.,
i) Cultivation of host plant.
ii) Rearing of silk worms up to cocoon stage.
iii) Reeling of cocoons into continuous filaments called raw-silk &
iv) Silk processing and weaving.
Item number i) and ii) are considered under direct finance to Agriculture and
item iii) and iv) are treated as SME finance. Four to five cocoon crops can be taken
in a year under tropical conditions, which ensures periodic income at short intervals.
The market for the end product is readily available and the prices are attractive. It
has also got good export potential. Crop loan can be given for Tuti plantation under
KCC and Term Loan can be given for Shed House for rearing of Silk Worms upto
Cocoon stage. This scheme can be covered under PMMY upto Rs. 10.00 lakhs.
Vermi Culture (Vermi Composting)-Vermi stands for earthworms. Vermi compost

is prepared by subjecting organic matter to decomposition with help of earth worms.
From vermi culture, we get well decomposed worm casts which can be used as
manure for crops, etc. In the process, earth worms also get multiplied. The excess
worms can be converted into vermi protein (poultry feed, fish feed) or vermi wash
(spray on crops). Vermi compost technology has promising potential to meet
manure requirement and in converting agro wastes/city garbage into valuable
agricultural input.
Farm Mechanisation- Farm Mechanization is to use machines (engineering/

technology) to replace human and animal energy to do a job in a better way.
Objectives of Farm Mechanization is to increase productivity per agriculture worker
and quality of farm work. It is not the use of tractor alone but also includes use of
other improved machinery viz., threshers, combine harvester, sprayers, dusters,

269
power tillers, post-harvest processing machines etc. for improving production,
productivity and enables the farmer to carry out the particular operation in lesser
time and with lesser cost. Power driven machinery for carrying out various
agricultural operations such as ploughing, harvesting, land levelling etc. along with
transportation with horsepower more than 12 H.P. is known as tractor and
machinery less than 12 H.P. is known as power tiller. Cultivator should have
minimum 8 acres of perennially irrigated land to make utilisation of tractor viable.
Zonal Managers can sanction farmers with 5 acres of land as a deviation based on
viability of the proposition. Bank also finances for second hand tractor or repairs of
machinery financed by the bank earlier, with some stipulations. The minimum
acreage norms for financing tractor/power tiller can be relaxed at Zonal Office
level on the basis of deposits pledged, custom hiring, value of the account, etc.
We also finance Agro service centres run by Agri. Graduates / technically qualified
persons besides State Govt. undertakings and corporations engaged in financing
Agricultural activities.
The Farm Mechanisation project is based on Techno-financial viability of the project
Viz. suitability of the machinery/implements to the soil topography, climate, crops,
scope for custom hiring, availability of fuel, service centres etc. The economic
viability includes capital cost and working expenses vis-à-vis expected incremental
income/ fair return on their investments. The maximum margin money is 25%
depending on the activity taken by the farmer. Since NABARD has discontinued the
system of sending approved list of Tractors we have to finance those brands of
Tractors which has been given favourable Commercial Test Reports issued by
the Central Farm Machinery Training & Testing Institute, Budni (M.P). We have
also made Tie-up arrangements with leading Tractor manufacturing companies for
financing as per farmer’s choice. Head Office (Rural) sends the list from time
to time. The repayment period varies from 3-9 years depending on the activity
selected by the borrower. The small and marginal farmers should be encouraged
to purchase Power Tillers on the basis of their land holding instead of tractor to
avoid heavy loan burden/less incremental income.
Drip, Sprinkler and Lift Irrigation System-The design, the equipment and
technique of replenishing the Soil Water deficit by applying irrigation water is referred
to as “Irrigation System”. Some of the irrigation systems are surface irrigation system,
drip irrigation system, sprinkler irrigation system and subsoil irrigation system.
Drip Irrigation-It involves slow application of water, drop by drop, as the name
signifies, to the root zone of crop. In this method, water is used very
economically since losses due to deep percolation are reduced to a minimum. In
most of the States subsidy is available for this investment.
Sprinkler Irrigation system-Is a system in which water is applied to the surface of

any crop or soil in the form of a thin spray from above. This method can be adopted
in almost all crops and is very popular in case of cash crops and some orchard
crops. This system is specifically suited to uneven topography where levelling is
not practicable and in areas where water and labour are scarce.

270
Lift Irrigation system-In this system water is lifted from low level water reservoirs
such as wells, lake and river. Horizontal and turbine pumps are used for raising
water for irrigation. Pipe lines are laid for carrying water from river beds to distant
area which is located on the high side of the river. Permission from the
appropriate authority is required before financing under this scheme.
Solar Pump-This is the present trend in energisation of the pumps. Here solar
photovoltaic cells are installed and connected to the electric pumps, its green
solutions, having very little expense for maintenance. Ministry of NRES gives
subsidy for installation of these pumps. We should encourage such investments as
solar power is abundant in India. Advances for installation of solar pumps are
classified under PS-Agriculture
Credit Cards under Agricultural Finance-

The various innovative card products (Agricultural Advances) that are
introduced by Bank in the recent past are:
1. Kisan Credit Card (KCC);
2. Star Bhumiheen Kisan Card (Star BKC)
3. BOI Satabadi Krishi Vikas Card
4. Kisan Samadhan Card.
Star Kisan Credit Card (KCC) Scheme:

Branch Circular No. : 115/ 107 dated 30.06.2021
A RUPAY credit card is issued for availing the limit. Passbook will contain the
name, address, particulars of land holding, borrowing limit/sub limits, validity
period etc.
Credit Limit: Entire production credit requirements of the farmer for the full
year, including the credit requirements for the ancillary activities related
to crop production such as maintenance of agricultural
machinery/implements, electricity charges etc., are taken into consideration
and 10% of limit towards cost escalation in scale of finance for every year is
added to determine the limit for the succeeding years (ie.
2nd, 3rd, 4th, 5th year), thus total requirement of credit for five years is
calculated, accordingly documents are also obtained for full amount of five
years..
The KCCs has interest subvention. As per the recent norms of Govt. of India,
interest subvention is not available to maintenance portion of KCC limit.
This has to kept in mind while arriving at KCC limit.
Type of Facility
• Revolving cash credit: - No restrictions on number of drawls and
repayment within the sanctioned limit.
• Entire repayment once in a year, exception crops like sugarcane
and banana crops in 18 to 24 months.

271
Margin: No separate margin need be stipulated – as it is in-built while
fixing the Scale of finance
But for Term Loan -
Loan Amount(SL) Stipulated margin
Up to Rs.1,60,000/-* Nil
Above Rs. 1,60,000/-* 15-25%
(*Amount of loan net of subsidy)
Security:
Loan Amount(SL) Security

Up to Rs.1,60,000/-* Hypo. of Crops
Above Rs. 1,60,000/-* Hypo. of Crops & suitable
Collateral security
(*Amount of loan net of subsidy, For Tie up arrangement the
threshold limit for without collateral security is Rs.3.00 lakh
Interest Rate – As notified by the Bank from time to time.
Insurance
i) Crop insurance for the notified crops in the notified area under PMFBY.
ii) Personal Accident Insurance Scheme for the card holder sum assured –
Death/permanent disability : Rs.50,000/-
Star Bhumiheen Kissan Card (SBKC) HOBC 102/121 dated29/09/2008:
Documents
Required
i) Documents related to house of the applicant,
ii) Ration Card, and
iii) Voters’ list/Identity card.
iv) Aadhaar card
Purpose
Purchase of improved seeds, manures and fertilisers, plant protection
materials, payment of hire charges for tractors, irrigation charges, electricity
charges etc. and also meeting part of consumption needs.
LIMIT
i) Based on land area taken on tenancy for share cropping or
on oral lease and scale of finance, maximum Rs.50,000/-
ii) Out of the total limit of Rs.50,000-, upto 10% i.e. Rs.5000-
be earmarked for consumption purpose.
iii) Upon satisfactory conduct of the account for three years, the
limit may be enhanced, if requested by the card holder.
Issue of Cards-The farmers under the scheme will be issued a credit
card-cum-pass-book incorporating the name, address, photograph,

272
borrowing limit/sub-limits, validity period, etc. to facilitate recording of the
transactions on an on-going basis.
Sanctioning Authority: As per delegation of powers.
Type of Facility
• Revolving cash credit – Annual Review. The farmer should be allowed
for any number of drawals and repayment within the limit.
• The aggregate credits into the account during the 12 month period
should at least be equal to the maximum outstanding in the account,
• No drawal in the account should remain outstanding for more than 12
months in case of normal crops and 18 months in case of sugarcane
and banana crops.
• In case of re-schedulement of the period of repayment on account of
natural calamities affecting the farmer, the period for reckoning the status
of operations as satisfactory or otherwise would get extended together
with the extended amount of limit. When the proposed extension is
beyond one crop season, the aggregate of debits for which extension is
granted should be transferred to a separate term loan account with
stipulation for repayment in instalments as per existing guidelines.
• On credit balance in the Cash Credit account, interest at the rate
applicable to SB deposits and as per rule/s of Savings Bank deposits is
to be paid
Margin: Nil
Security: Hypothecation of standing crop
Repayment-The sale proceeds should be routed through the cash credit
account. Market linkages, wherever possible, should be ensured.
Other Operational Guidelines
• If a farmer has obtained short term finance from other bank/co-
operative society, such farmer should not be issued Star BKC.
• Wherever crop insurance is available, coverage needs to be obtained.
• Star Bhoomiheen Kisan Card holders should be covered under Personal
Accident Insurance scheme as applicable to KCC / Kisan Samadhan
Card.
• In case of default, the special facilities under the scheme should be
immediately withdrawn and the limit should be treated as normal crop
finance which would broadly mean:-
 Withdrawal of cheque book facility (if issued)
 Future disbursement on regularisation of account against bills/receipts.
 Withdrawal of card (those who have been issued plastic cards)
Application of Prudential Norms-The Star BKC facility being in the nature
of cash credit accommodation for agricultural purposes, the prudential norms
as applicable to such facilities would apply to the BKC accounts. In other
words, the 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, depending on the duration of the crops)
after the repayment due date.

273
Composite Cash Credit (CCC) Scheme-With a view to simplify procedures
for the benefit of farmers and also reduce paper work as well as number of
Borrowal accounts at the Branch level, Bank had introduced a system of
Annual Composite Cash Credit (CCC) Scheme. The salient features of the
“CCC” Scheme are:
Facility: Demand Composite Cash Credit - Annual Review.
Eligibility:
• Individual farmers, registered partnership firms, companies, registered
farming, co-operative societies owning agricultural land, registered
tenants / share croppers with recorded rights.
• Only farmers engaged in production of crops produce suitable for
storage in the cold storage / warehouse godown / regulated market
yard are eligible for finance against storage receipt.
• Farmers who have availed of crop loans from the bank for raising the
concerned crop in that season are eligible for finance under produce
marketing loan scheme.
Quantum of finance / margin
• For production / short term purposes: Loan amount will depend upon the type
of crop, area under cultivation and scale of finance.
• Short Term Working Capital.
• For ancillary activities.
• For minor investment of medium term nature.
• Short Term Credit for consumption / domestic needs to the extent of
maximum 25 percent of gross estimated income of the farmer.
• Finance against storage receipts / produce marketing may be
considered maximum up to 50 percent of the price of the produce prevailing at
the time of storage/sanction of loan and the maximum loan limit should not
exceed Rs.10.00 lakh per farmer for a maximum period of 12 months.
Rate of Interest:
• On Debit Balance: As per RBI Guidelines as applicable to crop loans.
• On Credit Balance: Rate of Interest payable will be as per SB interest
rate & to follow SB Rules except opening a separate account.
Security: There will be common documentation, though the sub-limits
are maintained as separate accounts for the convenience of monitoring.
Security is as applicable to Agricultural Advances. In case the value of
land mortgaged is adequate, no other security should be obtained. For
finance against government Warehouse receipts, mortgage may be
waived. Waiver of mortgage of land in deserving cases may be considered
as per security norms.
–Up to Rs.1,60,000 : Hyp. of crops/other movable assets
–Above Rs.1,60,000 : Hyp. and mortgage of land or collateral

securities.
Margin:
For loans up to Rs. 1,60,000/- Nil
For loans above Rs. 1,60,000/- 15 – 25%

274
Disbursement:
• Up to Rs. 25,000/- may be disbursed in cash to the borrower.
• Above Rs.25,000/- may be disbursed through input suppliers
or against bills / receipts or may be waived at the discretion of
the Manager / Sanctioning Authority.
Repayment:
• Seasonal sub-limits should be adjusted after
harvesting/
marketing of
crops.
• While disbursing finance against storage receipts/produce
marketing, seasonal sub-limits should be adjusted and only
balance amount may be disbursed.
The methodology of arriving at the composite cash credit limit is by

assessing the “total family income based on crop production and other
allied / non- farm activities.” Fixing reasonable credit limit, to take care of:
(i) Short term production requirements.
(ii) Minor investment of medium term nature &
(iii) (iii) Domestic consumption needs.

While (i) & (ii) can be calculated easily, the domestic consumption needs
can be worked out as a thumb rate on the basis of 15% to 20% of total gross
family income of the farmer. Improved supervision & closer monitoring are
inherent components of the successful implementation of the scheme.
ADVANCES AGAINST THE SECURITY OF GOLD ORNAMENTS /GOLD

COINS AND OTHER JEWELLERY – STAR GOLD LOAN SCHEME
(MASTER CIRCULAR- STAR GOLD LOAN SCHEME (POLICY 2021))
Strategic Necessity of Gold Loan Portfolio under Priority Sector
1) Indian Society considers gold as a symbol of
prosperity.
Traditionally, gold has been perceived as safest asset during the
periods of financial and economic stress.
2) Demand for gold is mainly driven by jewellery demand rather than by
investment or industrial demand.
3) It can be instantly liquidated either by disposing off or by availing
loan against the security of gold in emergent circumstances.
4) By extending zero risk weighted advances, we shall conserve the
capital by extending gold loan. Gold loans are given for agriculture
purpose, business purpose or consumption purpose. In the first two
cases, the loans will fall in the Basel “Regulatory Retail” Asset class
(RW 75%) and in the third case, “Consumer Credit” (RW 125%).

275
Notwithstanding above, because of the sufficient margin (130%)
available in these accounts the Net exposure is always NIL and
consequently RWA is zero. Thus there is no capital charge on these
loans.
5) Branches should ensure that at any point of time LTV should not be
more than prescribed by RBI.
Parameters Detailed guidelines
Eligibility  Any individual who is the lawful owner of Gold
Jewellery/ Ornaments/ Coins, either singly or
jointly who maintains KYC compliant SB/CD
account with the branch.
 Pawn brokers, Jewelers & Jewellery shop
owners, Jewel appraisers and their close
relatives are not eligible for gold loans.
 Loans can be granted against gold
jewellery/ornaments and specially minted pure
gold coins sold by our Bank/ other Banks. The
weight of the coin(s) should not exceed 50
grams per customer.
 Gold loans may also be sanctioned to Bank’s
staff, as well as their spouse (provided
ownership rests with them) by Branch
Managers (except for the Branch Manager’s
spouse) at the same terms and conditions as
applicable to other customers without seeking
prior sanction from Zonal Office. In case of
loans to Branch Manager or his/her spouse, the
SZLCC is delegated authority to approve such
loans.
Precautions -
 No advance should be made -
a) against gold jewellery/ ornaments/ coins
with names inscribed of parties other than the
borrowers.
b) against gold jewellery/ ornaments/ coins which
are ‘Stridhan’ unless the wife is made co-borrower
Purpose 1. For meeting crop production expenses
(wherever Interest Subvention is not
applied/ applicable)
2. Maintenance of assets to be used in farming
operation including farm housing, rural
godowns, cold chains, etc.
3. For allied agricultural activities including
animal husbandry activities(wherever
interest subvention is not applied/
applicable).
4. Food and agro processing activities and
other agriculture related activities.
5. Priority Sector:Typical requirements under

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other priority sector are loans for day to day
working capital requirement of business
Other unit, petty trade, purchase of business
tools, furnishing of business premises,
purchase of furniture & fixtures, repairs to
house, etc. The loan amount will be
considered based on a declaration by the
borrower
6. Other than Agriculture/Priority Sector or
Consumption Loan: To meet unforeseen
expenses/ contingencies/ expenses for
medical treatment/ for marriage and other
ceremonies/ expenses for education/
business which are not falling under priority
sector, etc. The loan amount will be
considered based on a declaration by the
borrower.
Gold loans will not be covered under Credit
Guarantee Fund Trust for Micro and Small
Enterprises (CGTMSE) scheme and Interest
Subvention Scheme.
Borrowers Borrowers covered under Debt Swap
covered under (Br.Cir.No.107/14 dated 16.04.2013) can also be
Debt Swap covered under this scheme up to a limit of
Rs.25,000/-.
Farmers who have taken loan from non-institutional
sources and want to come out the clutches of money
lenders/non-institutional sources.
 The credit will be provided to all farmers
including tenant cultivators and oral lessees.
Farmers are required to satisfy the bank regarding
indebtedness from money lenders.
AssessmentofLoan amount requested by applicant/ assessed
Loan amount on declaration;
amount OR
Loan to Value (LTV) as follows:
For Loan period upto 12 months
Purpose 22 caret 19 to 21 18 caret
& above caret
Agriculture 85% 70% 65%
75% 70% 65%
For Loan period from more 12 months to up to 36
Months
Purpose 22 caret 19 to 21 18 caret
& above caret
Agriculture 75% 70% 65%
MSME/OPS/ 70% 70% 65%
Other
purpose

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Valuation  For the purpose of valuation of gold, it has been
decided that gold jewellery/ornaments/coins
accepted as security will have to be valued at
the average of the closing price of 22 and 24
carat gold for the preceding 30 days as quoted
by the India Bullion and Jewellers Association
Ltd. (formerly known as Bombay Bullion
Association Ltd.). If the gold jewellery/ornament
is of purity less than 22 carat, the branch should
translate it into 22 carat and value the exact
grams of it. In other words, gold jewellery/
ornaments of lower purity of gold shall be
valued proportionately lower.
 We should not extend any loan against gold
jewellery/ ornaments with purity of 18 carat
and below.
Appraisal of  The gold jewellery/ornaments/coins are to be
gold jewellery/ invariably appraised by empanelled gold
ornaments/ appraiser to determine the value and purity.
coins  An approved jewel appraiser should certify
quality, gross weight, net weight, etc. of the gold
jewellery/ornaments/coins offered as security.
The weight of pearl, coral or any other stone or
foreign material other than gold contained or
forming part of the jewellery/ ornaments
irrespective of its value shall be deducted from
the gross weight of the jewellery/ornaments to
arrive at the net weight for calculating the
eligibility for the loan. Advance should be
granted only after the Branch Manager/
sanctioning authority is satisfied about the
genuineness, quality, weight, etc., of the gold
jewellery/ornaments/coins.
 Touch stone method and/ or nitric acid test
should invariably be applied in order to
ascertain the true nature of jewellery/
ornaments/coins.
Type of Demand Loan/ Term Loan/ Overdraft/ Cash Credit

facility
Quantum of For Priority Sector activities
Loan/ Min. No limit
borrowers Max. Rs.50.00 lakh
Rate of As applicable from time to time.

Interest Presently as per Branch Circular No.115/181
dated 30.09.2021

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Other Aspects in Agricultural Financing
Scale of Finance-Short Term Credit is granted for meeting the current
expenditure in connection with raising of crops and is, therefore, known as
Crop Loan. An essential feature of crop loan system is that a
cultivator’seligibility for a loan and the size of the loan are determined not
with reference to the value of land or any other tangible security, but on the
basis of the size of the land holding that he cultivates and the cost of
cultivation of crops which the farmer proposes to grow.
Category of borrowers
Marg
in
i) Up to Rs.1,60,000/-All borrowers Nil
ii) Over Rs.1,60,000/- All borrowers 15% to 25%
Notes:
• Short Term Loans include Crop Loans/Working Capital Loans for allied
activities.
• Margin in case of crop finance need not be in cash. The cost of labour
of the farmer and his family and the cost of their inputs not financed by
the Bank can constitute margin.
• The quantum of crop loans should be worked out on the basis of scale
of finance approved by District Level Technical Committee for each
crop.
• Where subsidy is available, same should be treated as margin and no
further margin money should be insisted in the above-mentioned
margin norms except as provided in respective subsidy oriented schemes
like cold storage/rural godowns/hi-tech agri. products where subsidy is
back ended. Hence, normal margin needs to be maintained in such
schemes except employment oriented/Government sponsored schemes
like PMRY, SGSY, etc.
Security:
Type of Credit - Loan Amount - Security to be obtained
A. Crop
Loan
a) Up to Rs. 1,60,000/- - i)Hypothecation of Crops/Stocks
b) Over Rs. 1,60,000/- i) Hypothecation of crops/stocks and
ii) Mortgage of land/ Declaration as
per State Ag. credit Act OR
iii)Collateral Security of Adequate worth.
B. Terms Loans
i) Where movable assets are
created a) Up to Rs.
1,60,000/-
i) Hypothecation of assets created out of bank loan. b) Over Rs. 1,60,000/-
i) Hypothecation of assets created out of bank loan and

279
ii) Mortgage of land OR Declaration as per Agricultural
Credit Act
O
R
iii) Collateral Security of adequate worth.
iv) ii) Where movable assets are not created
a) Up to Rs. 1,60,000/- i) Term Loan agreement
b) Over Rs. 1,60,000/- i) Term Loan Agreement
and ii) Mortgage of land
O
R
Declaration as per State Ag. credit Act
O
R
iii) Collateral security of adequate worth.
Notes:
ZLCC/ SZLCC may permit waiver of this security only in deserving
cases, provided suitable third party guarantee/s of adequate worth could
be obtained. As the third party guarantee in lieu of mortgage/charge on
immovable property or collateral security may be taken for loans above
Rs. 160,000/-, Branches/approving authority should carefully examine
and be satisfied with the antecedents and acceptability of the guarantors
before accepting their guarantees. Normally, care should be taken to
avoid guarantor/s who is/are close relative/s of borrower/s.
• In case of tractor/power tiller advances, relaxation in respect of
eligibility criteria on minimum land holding/mortgage of
land/immovable properties may be permitted on merits by the SZLCC and
above authorities, as per prevailing practices.
• In all other cases of Agricultural Advances not specified herein, i.e.
‘where movable assets are not created’, ZLCC/ SZLCC may permit the
waiver of Mortgage of immovable properties / land depending upon the
genuineness / merits of the borrower/s. This relaxation should be used
judiciously and in exceptional cases.”
• In states where legislation enacted on the lines of Talwar Committee
recommendations has come into force, the branches may obtain the

280
declaration as per State Agriculture Credit Act in lieu of mortgage as
follows:
(i) In states where declaration and mortgage attract stamp duty at same
rate, mortgage of immovable property should be insisted upon. However,
if declaration attracts stamp duty at lower rate than that of legal/
equitable mortgage, creation of charge by declaration may be resorted to.
(ii) If stamp duty is exempted on declaration of and not on mortgage,
declaration for creating charge may be obtained upto exemption limit,
if any, prescribed under respective Act.
• In states where Agriculture Credit Act has not come into force, legal or
equitable mortgage must be obtained, wherever mortgage of land is
stipulated.
• Security norms for agricultural advances granted under centrally
sponsored schemes will be governed by those stipulated for such
schemes.
• For advances over Rs.160,000/- where movable assets are not
created, it is desirable to obtain mortgage of land as a principal
security even though it is not explicitly prescribed.
Non-encumbrance certificate should not be insisted upon where the land
is not taken as security,
However, where the land is stipulated as security, non-encumbrance
certificate/ search should be taken as follows:
(i) For Advances with Limits upto Rs.100 lakhs (w.e.f. 19.1.2000) the
search period stipulated is 13 years.
(ii) For Limits over Rs.100 lakhs the stipulated search period is 30
years.
The Branch Lawyer’s report on title and certificate stating that the “borrower’s
title to the land is clear, marketable and free from encumbrances” is also
essential.
The extracts/ certificates which are essentially required to be produced along
with the application forms are: Extracts of Record of Rights & No Dues
Certificate.
SMALL FARMERS AGRO-BUSINESS CONSORTIUM (SFAC)

It is a Central Sector
Scheme:-
 SFAC is an exclusive Society focused on increasing incomes of small and
marginal farmers through aggregation and development of agribusiness.
 It has pioneered the formation and growth of Farmer Producer
Organizations/Farmer Producer Companies, which is now being implemented
across the length and breadth of the country. SFAC is progressing towards
establishing an eco-system for FPOs/FPCs to make them sustainable and
viable in the long run.
 SFAC offers Schemes like Equity Grant and Credit Guarantee Fund

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 Scheme to FPCs to improve availability of working capital
and development of business activities.
 It promotes development of small agribusiness through its Venture
 Capital Assistance (VCA) Scheme for value added processing
and marketing linkages.
 • SFAC is also implementing the
National Agriculture Market
 Electronic Trading (e-Nam) platform. The purpose is to provide
for
 a single unified market for agricultural products with much
higher price discovery for farmers.
 Farmer Producer Companies (FPC) which are registered after 1st
 January 2014 are eligible for the scheme.
 SFAC to provide equity grant to FPCs equivalent to the amount of
shareholders equity, max Rs.15 lakhs/FPC
 Credit guarantee fund operated by SFAC to provide 85% insurance cover to
all FPC loans up to sanction limit Rs.100 lakhs.
 Loan sanctioned as per the scheme is to be classified under agriculture
infrastructure.
1) Eligibility: Farmer Producer Company should be registered under

Companies Act and incorporated with Registrar of Companies
(ROC). The number of shareholders should be minimum 500.
2) 33% of shareholders should be small, marginal and landless
tenant farmers.
3) Maximum shareholding by any member other than institutional
member should not be more than 5% of total equity of the FPC.
4) FPC should have elected/nominated Board with a minimum 5
members and should have adequate representation of farmers
and minimum 1 woman member.
 FPC should have duly elected Management Board. FPC should have a
business plan and budget for 18 months.
 Bank/ Eligible Lending Institution (ELI) has extended/ sanctioned within 6
months of the date of application for the Guarantee or / in principle agree in
writing has expressed willingness to sanction Term Loan/ Working capital/
Composite Credit Facility without any collateral security or third party
guarantee including personal guarantee of board members. Bank shall
consider all activities related to direct/ indirect agriculture undertaken by the
FPCs.
 Credit facilities (Fund based and /or non-fund based) already sanctioned
/ extended within six months from the date of application for Guarantee
cover or intended to be extended singly or jointly by one or more than one
ELI, to a single FPC borrower by way of TL/Working Capital/Composite credit
facilities without any collateral security and or third party guarantees.
 Bank can extend credit limit up to Rs.100 lakhs without any collateral
security and/or third party guarantees.

282
Security:
Under the scheme Bank has to extend credit facility to FPC without any
collateral security and / or third party guarantee up to limit of Rs.1 crore.
However primary security like hypothecation, pledge,
mortgage, assignment etc. should be obtained as extant norms
of the Bank.
Credit Guarantee Cover:

It is available to FPC borrower for maximum 2 times in the span of 5
years.
Maximum guarantee cover available is 85% of the eligible sanctioned
credit facility or Rs.85 lakhs, whichever is lower. In case of default, claim shall
be settled up to 85% of the amount in default subjected to max. cover of
the scheme.
Guarantee Fee:
0.85% of the credit facility sanctioned subjected to max. Rs.85000/-.
Annual Service Fee;

Annual service fee of 0.25% p.a. shall be charged to keep the guarantee
of SFAC live. The decision of passing on the incidence of Guarantee Fee
and Annual Service Fee to the Borrower is left to the discretion of the ELI.
Guarantee fee and annual service fee once paid to SFAC is non-refundable
except where guarantee cover is not approved.
Invocation of Guarantee:
Condition one: If SFAC and Bank in their joint or independent assessment
are convinced that the FPC has suffered losses, which are genuine such as
crop or asset losses by the members and FPC is not in a position to repay
dues in any circumstances including restructuring/ rephasing/
rescheduling the loan.
Condition two : Bank should have initiated proceedings of recovery before
invocation of guarantee.
Claim Settlement:
1) Bank should submit claim within one year from the date of NPA or
as specified by the SFAC from time to time.
2) SFAC shall honour 75% of the guaranteed amount in default,
subjected to a max. 75 % of the guaranteed cap amount, on
submission of claim by the Bank where appropriate action for recovery
is initiated.

283
3) Balance 25% of default shall be paid on conclusion of recovery
proceedings by the bank
4) SFAC shall pay claim within 90 days if claim is in order and
complete in all respect.
Star Agriculture Infrastructure & Marketing Scheme. (Star - AIMS)
HOBC 112/159 Dt 12/02/2019
Circular Letter No 22-23/16
Date 02.05.2022
The scheme is approved for implementation from 22-10-2018.

Agriculture Marketing Division, DAC&FW, Ministry of Agriculture &
Farmers" Welfare, Government of India has approved the captioned scheme
till 30th Sep. 2022 or till the date the recommendations of 15th Finance
Commission come into effect, whichever is earlier. The erstwhile Gramin
Bhandaran Yojana and scheme for Development/ strengthening of AMI are
subsumed into AIMS.
Aim of the scheme is to promote innovative and latest technologies in
post-harvest and agriculture marketing infrastructure. To benefit the farmers
individually and collectively through FPOs from farm level processing and
marketing of processed produce. To promote creation of scientific storage
capacity for storing of farm produce. To incentivize developing and
upgrading of Gramin Hat. To promote pledge financing through electronic
warehouse receipt system.
Star AIMS will cover - 1) processing infrastructure, Mini oil

expeller, Mini dal mill, 2) Storage infrastructure, eg. cold storage,
godown(50-10000mt), deep freezer, zero energy freezer, pack house,
ripening chamber 3) Development of farmers consumer market/ Rural
Haats/ Common Facilitation Centres, 4) Linkage to marketing reforms.
Scheme doesn’t include renovation of storage
infrastructure.
Eligible beneficiaries:
a) For creation of storage infrastructure (50-5000mt) and non-storage
infrastructure:-
Individual, group of farmers, FPOs, FPCs, partnership/proprietorship
firms, companies, NGOs, SHGs, cooperative marketing
federations, Panchayats, APMCs, State Warehousing Corporations,
State Civil Supplies Corporations etc.
b) For creation of storage infrastructure (50-5000mts):-State agencies
including State Govt. Departments such as APMC & Marketing
Boards, State warehousing Corporations, State Civil supplies
Corporations etc.
c) For development/upgradation of farmer-consumer market and Rural
Hats/ Rural Primary Markets(RPMs):

284
State Govt. agencies nominated by State Govt. for Rural Hat
managed by Panchayat, APMCs, FPOs, FPCs, farmers, individuals,
trustees etc.
Sub-scheme AMI lays special emphasis on developing and upgrading the
Gramin Hats as GrAMs through strengthening of infrastructure. These
GrAMs may function as farmer consumer market and collection point with
linkages to secondary market with participation of FPOs and other eligible
promoters.
Promoters contribution and term loan:-

Minimum promoters contribution should be 20% of the project cost. If
it is less than 20%, then Actual Total Financial Outlay (TFO) of the project
shall be restricted to 5 times of the promoters contribution on completion of
the project, for the calculation of subsidy. Minimum term
loan (including subsidy) should be 50% of the project cost. The
promoter’s contribution may vary from 20-50% of TFO and term loan may
vary from 50-80% of the TFO.
Note: Promoter’s contribution for State Govt. Infrastructure Projects of
the State Govt. agencies financed under RIDF, WIF of NABARD may be
relaxed as per fund guidelines.
Promoter’s contribution in case of own funded state Govt. agency projects

should be 75% / 66.67% of the project cost as the case may be.
Subsidy : The back ended capital subsidy is 25% or 33.33% of the capital
cost depending upon area and category of the beneficiary.
The subsidy structure is as
follows. a) For storage
infrastructure projects -

285
b) For non-storage infrastructure projects including farmers –
consumers market and development & upgradation of Rural Hats etc –
Important Circulars:-
1) Priority Sector Lending – Master Direction—HOBC 116/135 dated
25.08.2022
2) Financial Inclusion & PMJDY – Operational guidelines – Circular Letter
no. 2019-20/123 dated 11.02.2020
3) Master Circular on SHG-Bank Linkage Programme – HOBC no.
116/107 dated 28.07.2022
4) STAR KISAN GHAR – HOBC 115/66 dated 02.06.2021
5) Star Bio Energy Scheme (SBES) – HOBC 115/68 dated 03.06.2021
6) FARM MECHANISATION SCHEME (FMS) – HOBC 115/103 dated
28.06.2021
7) Master Cir. On Gold Loan Scheme – HOBC no. 115/181 dated
30.09.2021,Circular letter 2021-22/152 dated 14.01.2022
8) "Star Animal Husbandry Infra (SAHI)" under Central Sector
Scheme
(AHIDF) – HOBC 114/101 dated 20.08.2020,
9) "Star Agri Infra (SAI)" under Central Sector Scheme (AIF) –
HOBC
no.114/102 dated 20.08.2020 & Circular Letter No.:2022-23 /16 dated
02.05.2022
10) Master Circular - Deendayal Antyodaya Yojana — National Rural
Livelihood
Mission (DAY-NRLM) – HOBC 115/10 dated 07.04.2021
11) Master Circular- Credit facilities to minority Communities – HOBC
115/13 date 07.04.2021
12) Master Circular - Credit facilities to Scheduled Castes (SCs) &
Scheduled
Tribes (STs) dated 19.04.2021
13) Star Kisan Credit Card (KCC) Scheme – Both for Crop & Animal
Husbandry - HOBC 115/107 dated 30.06.2021
14) STAR PISCICULTURE SCHEME (SPS) – HOBC 115/124 dated
12.07.2021
15) Star Krishi Urja Scheme (SKUS) under Central Sector Scheme
(PM KUSUM) – HOBC 114/139 dated 30.09.2020
16) Star Blue Revolution Scheme (SBRS) under Central Sector Scheme
(PM MSY) – HOBC 114/140 dated 30.09.2020
17) Star Micro Food Processing Enterprises Scheme (SMFPE) under
Centrally Sponsored PMFME Scheme – HOBC 114/100
dated
18.08.2020 & Cir. Letter no. 2021-22/23 dated 07.07.2021
18) Star Farmer Producer Organizations (SFPOs) Scheme – Financing to
FPO/FPC – HOBC 114/170 dated 31.10.2020
19) "Star Krishi Vaahan" – HOBC 114/191 dated 03.12.2020
20) All Agriculture Proposal formats -- HOBC 110/192 dated
– 03/01/2017
21) Tatkal Loan – HOBC 106/117 date- 01/11/2017

286
22) PMMY in agriculture – HOBC 110/89 date 09/08/2016
23) Service charges Master Circular– HOBC 114/184 date 18/11/2020
w.e.f.01.01.2021
24) Credit facilities to SC/ST – Master Circular- HOBC 113/75 date
10/07/2019
25) PMMY- Master Circular – HOBC 109/63 date 24/06/2015
26) Stand Up India – Master Circular – HOBC 110/51 27/05/2016
27) Star Start Up – Master Circular – HOBC 111/28 date 25/05/2017
28) Day NULM – Master Circular – HOBC 113/60 date 25/06/2019
29) Transaction Limit at BC outlet – HOBC 113/153 dated 14/10/2019
30) Amendment in BSBDS a/c – HOBC 113/157 dated 16/08/2019

287
Pradhan Mantri Jan-Dhan Yojana –
(PMJDY) is National Mission for Financial Inclusion to ensure access to financial
services, namely, Banking/ Savings & Deposit Accounts, Remittance,
Credit, Insurance, Pension in an affordable manner launched by Government of
India on August, 2014. The highlights are-
 Account can be opened in any bank branch or Business Correspondent
o (Bank Mitra) outlet.
 BSBDA Account are opened under this with features-
 There is no requirement of minimum balance.
 The services available include deposit and withdrawal of cash at bank branch
as well as ATMs; receipt/credit of money through electronic payment
channels or by means of collection/deposit of cheques.
 Rupay debit card can be issued to the account holder after the age of 18
years.
 Facility of ATM card or ATM-cum-Debit card. These facilities are to be
provided without any extra cost.
 Any individual above the age of 10 years can open BSBDA Account.
 Illiterate customers Differently abled Persons, Visually
challenged can be issued RuPay Card, however, Branch
Manager will have to advise all the related risks to the account-
holder at the time of issuance of RuPay Card.
 To get benefit of Accidental Insurance Cover, RuPay Debit Card
must be used for performing minimum one successful transaction
(financial or nonfinancial) by any payment instrument of any
bank, like branch/ ATM/ Micro ATM/ PoS/ e-com/ Bank Mitra ,
at least once in 90 days.
 If someone has two or more accounts and two or more
RuPay Debit
 Cards, accidental insurance cover is available in only one
account /card.
 A person who is already having a bank account with any bank
NEED NOT to open a separate account under PMJDY. He/she
will just have to get issued a RuPay Card in his existing account
to get benefit of insurance. Credit facility can be extended in
the existing account if it is being operated satisfactorily.
 Overdraft facility up to Rs.10000/- will be available to one
account holder of PMJDY per household after 6 months of
satisfactory conduct of the account (Not eligible: Minors,
KCC/GCC, etc. borrowers, more than one member of the same
family). Interest rate not exceeding 2% above base rate of the
bank. To avoid duplication Aadhaar number will also be required.
 Accidental Insurance Cover is Rs.1.00 lac and no premium is
charged to the beneficiary -- NPCI will pay the premium.
Accidental Insurance cover of Rs.1.00 lac will be available to all
accountholders.
 Life insurance cover of Rs. 30,000/( Age 18-59, must have
account opened between 15th August, 2014 and 31st January

288
2015).Overdraft facility upto Rs.10000/- will be available to only
one person in the family (preferably lady of the house).
 Documents required to open an account under Pradhan Mantri
Jan-Dhan Yojana-
 If Aadhaar Card/Aadhaar Number is available then no

other documents is required. If address has changed, then a self-
certification of current address is sufficient.
 If Aadhaar Card is not available, then any one of the following

Officially Valid Documents (OVD) is required: Voter ID Card,
Driving Licence, Passport, NREGA Card NPR certificate. If these
documents also contain your address, it can serve both as
"Proof of Identity and Address".
 If a person does not have any of the "officially valid documents"

mentioned above, but it is categorized as ‘low risk' by the banks,
then he/she can open a bank account by submitting any one of
the following documents.
 Identity Card with applicant's photograph issued by

Central/State Government Departments, Statutory/Regulatory
Authorities, Public Sector Undertakings, Scheduled Commercial
Banks and Public Financial Institutions.
 Letter issued by a gazetted officer, with a duly attested

 photograph of the person.
 In PMJDY accounts are being opened with Zero balance.
However, if the account-holder wishes to get cheque book,
he/she will have to fulfil minimum balance and KYC criteria of the
bank.
 Reserve Bank of India (RBI) vide its Press Release dated
26.08.2014 has clarified as under: "Those persons who do not
have any of the ‘officially valid documents' can open "Small
Accounts" with banks. A "Small Account" can be opened on the
basis of a self-attested photograph and putting his/her signatures
or thumb impression in the presence of officials of the bank.
Such accounts have limitations regarding the aggregate credits
(not more than Rupees one lac in a FY), aggregate
withdrawals (not more than Rupees ten thousand in a month)
and balance in the accounts (not more than Rupees fifty
thousand at any point of time). These accounts would be valid
normally for a period of twelve months. Thereafter, such accounts
would be allowed to continue for a further period of twelve
more months, if the account-holder provides a document
showing that he/she has applied for any of the Officially Valid
Document, within 12 months of opening the small account.

289
 Interest will be charged as per HO guidelines being issued time to
time.
 All banks participating in PMJDY are on CBS (Core Banking

Solution) platform and the account can easily be transferred to
any branch of the bank in any city/town as per the request of the
account-holder.
Business Correspondents & Business Facilitators Model-A tool for

Financial Inclusion
• Focus to rural and farm house holds, to explore innovations using
agency model, RBI internal group under chairmanship of Dr. H. R.
Khan, provided the framework for evolution of concept
of business correspondents (BC) & Business Facilitators (BF), in
report dated 19th July 2005, for Nonfinancial & Financial service as
pass through agents by leveraging MFI/NGOs
• RBI instructions during Jan 2006 to utilize the services of NGOs,
MFIs
& other civil society organizations as intermediaries i.e., BC & BF
• Role of BFs- identification of borrowers, collection & preliminary
processing of loan applications, creating awareness about savings &
other products, advice on managing money & debt counselling.
Processing & submission of application to banks. Promoting
& nurturing SHGs/JLGs, post sanction monitoring &follow up &
recovery.
• BFs-eligibility-NGOs, FCs, Co-ops, community based
organizations, IT enabled rural outlets of corporates, post offices,
insurance agents, well- functioning panchayats, village knowledge
centres, Agri. clinics, KVKs, KVIC/KVIB units - based on comfort
level of banks
• BCs- in addition to BF, disbursal of small value credit, recovery,
collection of small value credit, sale of micro ins., mutual funds,
pension products, receipt & delivery of various instruments. Activities
undertaken by BCs are to be within the normal course of the bank’s
banking business, but conducted through the permitted entities at
places other than the bank premises.
• BCs-eligibility-NGO/MFIs set up under Societies/Trust Act: Post
offices, retired bank employees, ex-service men, retired govt.
employees. Banks have been permitted to engage the following
entities as BCs:
• Individual kirana/medical/fair price shop owners
• Individual Public Call Office(PCO) operators
• Agents of Small Savings Schemes of Government
of
India/Insurance Companies
• Individuals who own Petrol Pumps
• Retired teachers and Authorized functionaries of well-run Self
Help Groups(SHGs) linked to banks, NBFCs

290
• On a review and with a view to providing more flexibility to banks,
it has been decided to permit banks to engage any individual,
including those operating Common Service Centres (CSCs) as BC,
subject to banks’ comfort level and their carrying out suitable due
diligence as also instituting additional safeguards as may be
considered appropriate to minimize the agency risks.
• Working group to review the BC model on Payment of commission,
Capacity building of BC/BF, NABARD support for IIBF course, Risk
mitigation-Reputation, Legal, operational risks, Technology based
solutions for managing risks, Suitable limits on cash holding by
intermediaries, limits on individual customer payments & receipts.
• Transactions are accounted for & reflected in the bank’s book by
end of the day or next working day. All the agreements/contracts
with the customer shall specify that the banks are responsible to the
customer for acts of omission & commission of BC/BF.
• Grievance redressal-names & contact no.s : Time frame
for response not within 60 days-provision to approach Banking
Ombudsman.
• Oversight of operations of BC-place of operation of BC and

the base branch-not to exceed 30 km in rural, semi urban, urban-in
metro-5 km. It can be decided by DCC and SLBC beyond that distance.
While appointment of sub agents due diligence should be done on BC/BF
appointment of sub agents- BC subagents working for our Bank should
not work as BC-subagent for any other bank or institution. After selection and
approval (by Zonal Manager) of BC, we have to enter into an agreement for a
maximum validity period of three years.
• Regulatory issues: settlement within the prescribed time
limit, high delivery costs. There are multiple risks: credit,
operational, legal, liquidity, reputational.
• Road Map for the future: Ensuring viability of BC by paying
minimum amount, this is again fixed by the committee. BCs to
be used for full range of services.
Joint Liability Group
• To augment flow of credit to the group of (4 to 10 members) farmers,

especially small, marginal, tenant farmers, oral lessees, share
croppers/ individuals taking up farm activities. To serve as collateral
substitute for loans to be provided to the target group. To build
mutual trust and confidence between bank and the target group. To
minimize the risks in the loan portfolio for the banks through group
approach, cluster approach, peer education and credit discipline. To
provide food security to vulnerable section by enhanced agriculture
production, productivity and livelihood promotion through JLG
Mechanism. Farmers / JLGs who have cultivable fertile land and are
supplying the produce to corporate/agent and have also been

291
recommended by that corporate / agent. Adequate proof of land
holding will have to be obtained for facility.
• Model– A, Financing individual members of JLG, Model– B, Financing
JLG as a group
• Should have been recommended by the corporate/agent having
cultivable fertile land and are supplying produce to corporate/agent.
Undertaking from Farmers/JLG members to be obtained stating that
no loan is availed from other FI/ Bank. Members should belong to similar
socio-economic status, background and environment carrying out
farming and Allied activities and who agree to function as a joint liability
group. This way the groups would be homogeneous and organized by
likeminded farmers/Individuals and develop mutual trust and respect.
The members should be residing in the same village/ area/
neighbourhood and should know and trust each other well enough
to take up joint liability for group/individual Loans. Members who have
defaulted to any other formal financial Institution, in the past, are
debarred from the Group Membership. More than one person from
the same family should not be included in the same JLG. The
repayments can be made either directly by the JLG or the corporate/
the society who is standing as guarantor, shall send to the bank the
entire proceeds payable to the farmers/ JLGs. The bank will make
payment to the farmers after deducting the loan dues. In the case of pre
harvest finance hypothecation of crop and in the case of post-harvest
finance according to nature of facility viz: receivables etc. In the case
of term loan facility combined hypothecation agreement (Hypothecation
of crop, machinery etc.) For pledge loan – pledge of ware house
receipt. KYC documents as per Banks extant guideline to be obtained
and verified of all the members of the JLG. Ensuring KYC compliance
and proper end use of fund is the sole responsibility of the branch.
Hence, each branch must satisfy itself of the reliability of the corporate
/ society, who is standing as guarantor. The branch will conduct 100%
verification of the assisted farmers and their farm land.
• Scoring as per the scoring model tools communicated by Central
Office, Risk Management Dept should be carried out.
SELF HELP GROUP - NABARD
Self Help Group is a homogeneous group of rural poor voluntarily

formed to save whatever amount they can conveniently save out
of their earnings and mutually agree to contribute to a common
fund of the group to be lent to the members for meeting their productive
and emergent credit needs. A pilot project for linking SHGs so as to
facilitate smoother and meaningful banking facilities to poor was
launched by NABARD in February 1992. RBI advised commercial banks
to actively participate in the linkage programme. The objective of SHG
are as under:-
i) To evolve supplementary credit strategy for reaching rural
poor.

292
ii) To build mutual trust and confidence between banks and the
rural poor.
iii) To encourage banking activities; both thrift as well as credit.
Salient Points on Self Help Group
1) Lending through SHGs reduces transaction costs, and aids

in timely recycling of funds, saving manpower. It is, therefore,
in the interest of rural and semi-urban branches to utilize SHGs
for delivery of credit to rural poor.
2) SHG is a voluntary association of people formed to attain
common goals on collective basis, at the village level.
3) However, emergence of SHGs as facilitators for delivering
rural credit to the poorest of society is a new concept.
4) Functions of SHG:
a) Organize meetings of group members.
b) Create group managed funds through savings (thrift)
c) Give loans to members (credit)
d) Keep records
e) Provide a forum for poor people to reap the benefits of
mutual trust/group empowerment.
5) Four stages are envisaged in the functioning of SHG. They
are:
(a) Forming Stage (people start feeling the need to come
together)
(b) Storming s t a g e ( conflicts g e t r e s o l v e d a n d
leadership emerges)
(c) Norming stage (cohesive unit emerges)
and
(d) Performing stage (the group starts performing the
functions of thrift and credit).
6) Factors leading to emergence of SHGs
(a)Feltnees;
(b)Homogene;
c) Solidarity;
(d)Democratic
participatin;
(e) Leadership;
(f) Benefits of collective
action; (g) Transparency of
operations.
7) S. K. Kalia Working Group (November 1994) observed that
lending through SHGs could offer the much needed solution to
the twin problems being faced by the banks, viz., poor recovery
and high transaction cost in dealing with small borrowal
accounts. With SHGs, the managerial and supervisory load at
branch can be reduced. The burden of identification, assessing
credit needs and supervision will be externalized and reduced,
thus reducing transaction cost. SHGs are helpful in tapping
small savings (thrift). The peer pressure leads to high rate
of recovery.

293
8) The size of the group should be between 10 and 20. May
be formal (registered) or informal (unregistered). Size
is
Maintained below 20 to avoid registration
formalities.
9) Size of the loan may be up to four times the savings of
the group. The SHG should prepare a credit plan and submit
it to the branch with loan application. Where the groups are
sponsored by VA/ NGO, the loan application should be
accompanied by the sponsoring letter. The loan will be given
after Grading/Rating exercise of the SHG.10) The SHG is not
eligible for linkage if :
a) 50% or more members default in
savings;
b) Less than 30% of the group savings have been used
for internal lending;
c) The group is not in active existence for 6 months
and more.
10) The credit limit should be determined on the basis of rejected
average savings of the group for next three years. However,
drawing limit to be based on the actual level of group’s internal
savings.
11) Purpose of lending by the group to members left to the
common wisdom of the group.
12) Productive purpose should be encouraged out of loans from
the Bank.
14) The sanctioned loan should be credited to the group account
and the authorized representatives (President, Secretary and
Treasurer) may jointly draw money.
15) Rate of interest to SHGs: -Advised by H.O time to time

294
'Star SHG Scheme (SSS)'
Branch Circular No. 116/157 Date - 23.09.2022
Particular Proposed Guideline

Purpose of Loan may be used by members of the SHG for various purposes
Loan like emergency needs, social needs, livelihood development,
high cost debt swapping, construction or repair of house,
construction of toilets, acquisition of asset and taking up various
income generating activities. Any permissible business/income
generating activity for benefit of group members Micro Credit Plan
(MCP) prepared by SHGs would form the basis for determining the
purpose and usage of loans. At least 50% of loans above Rs. 1 Iakh,
75% of loans above Rs.4 lakh and at least 85% of loans above Rs.6
Iakh should be used primarily for income generating productive
purposes
Quantum The amount of credit under different facilities are as follows:
of Loan Cash Credit/ Over Draft: minimum loan of Rs.6 lakh for a period of 3
years
•DP for First Year: 6 times of the existing corpus or minimum of Rs.1.5
lakh,
Whichever is higher.
• DP for Second Year: 8 times of the corpus at the time review/
enhancement or min. of Rs.3 lakh, whichever is higher.
• DP for Third Year: Minimum of Rs.6 lakh
DP for Fourth Year onwards: Above Rs.6 lakh, based on the Micro credit
plan prepared by SHG and appraised by the Federations/ Support
agency and the previous credit history.
Term Loan:
• First Dose: 6 times of the existing corpus or min. of Rs.1.50 lakh,
• Second Dose: 8 times of the existing corpus or min. of Rs.3 Iakh,
• Third Dose: Minimum of Rs.6 lakh based on the micro credit plan
prepared by the SHGs and appraised by the Federations/ Support
Fourth Dose onwards: Above Rs.6 lakh, based on the micro credit plan
prepared by the SHGs and appraised by the Federations/ Support
Corpus is inclusive of revolving funds, if any, received by that SHG, its
own savings, interest earning by SHG from on-lending to its members,
income from other sources, and funds from other sources in case of
promotion by other institutes/ NGOs.
 The details of funds considered as corpus are as follows:
 The Group's balance in the SB A/c.
 Amount held as cash with the authorised persons.
 Funds in circulation including amount internally lent amongst the
members.
 Amount received as interest on the loans.

295
 Any other contributions received by the group like grants.
donation, etc.
Margin • For loan upto Rs.10.00 lakh - NIL

• For loan above Rs.10.00 lakh to Rs.20.00 lakh - margin should be
minimum 10%.
• For loan above Rs.20.00 lakh — margin should be minimum 15%
to 20%.
Security For Loans upto Rs.10.00 Iakh:
Primary - Clean/hypothecation
Collateral — NIL
For Loans above Rs.10 lakh and upto Rs.20 Iakh:
• Primary-Hypothecation of assets created out of bank finance.
• Collateral — NIL.
For Loans above Rs.20.00 lakh — for single enterprise:
• Primary: Hypothecation of assets created out of bank finance.
• Collateral: At the discretion of the sanctioning authority. Extant
guidelines under the security norms will be applicable. No
Collateral, if CGTMSE cover is available
Eligible/Tar SHG is an informal group of persons and registration under any
get Societies Act, State Co-operative Act or a Partnership Firm is not
borrowers/ mandatory. (Ref. RBI Circular RPCD.No.Plan.BC.13/PL-09.22/ 90-
Constitutio 91dated 24th July 1991).
n of • The size of the SHG should be between 10 to 20 persons.
borrowers • However, in case of special SHGs i.e. difficult areas –hilly
tracks/regions, groups formed in tribal dominated areas where
communities are dispersed and groups with disabled persons,
this number may be of 5 persons.
• The SHG shall not consist of more than 20 persons.
• The groups may be men or women or mix groups.
• The groups formed with persons with disabilities and other
special categories like elder, transgender will have both men and
women in the group.
Type of a) Cash Credit/Over Draft: On demand - subject to annual review.
facility b) Demand Loan/Term Loan: As per credit plan and term of sanction
which may vary from 24 months to 84 months or as per the norms of
respective scheme/project.
Interest The scheme is limited to Women Self Help Groups under DAY-NRLM in
Subvention rural areas only.
Scheme For outstanding balance up to Rs.3 lakh, banks will be subvented at a
uniform rate of 4.5% per annum during FY 2022-23.
For loans above Rs.3 lakh and up to Rs.5 lakh banks will be subvented
at a uniform rate of 5% per annum during FY 2022-23
Interest subvention will be payable only for the period during which an
account remains in standard category.
No additional subvention is provided to SHGs on prompt repayment of
loan.

296
Subvention is only applicable to SHG sponsored by NRLM or, other
agencies following DAY NRLM protocol and having Unique identification
code
Rate of For Other than NRLM SHGs

interest Limits Revised
Up to Rs.3.00 lakh 1 year MCLR + BSS +CRP
(1.50%)
Above Rs.3.00 lakh & up to 1 year MCLR + BSS +CRP
Rs.10.00 lakh (2.25%)
Above Rs.10.00 lakh & up to 1 year MCLR + BSS +CRP
Rs.1.00 crore (2.50%)
For NRLM SHGs
Limits Proposed ROI
Up to Rs.3.00 lakh @7% up to an aggregate loan
amount of Rs.3.00 lakh
Above Rs.3.00 lakh & up to Up to Rs.3.00 Lakh= @7% p.a.
Rs.5.00 >Rs.3.00 Iakh-Rs.5.00 lakh= 1
Iakh year MCLR
Above Rs.5.00 lakh & up to Up to Rs.3.00 Lakh= @7% p.a.
Rs.10.00 Iakh >Rs.3.00 lakh-Rs.5.00 lakh= 1
year MCLR >Rs.5.00 lakh-
Rs.10.00 lakh= 1 year MCLR +
BSS+ CRP
(2.25%)
Above Rs.10.00 Iakh Up to Rs.3.00 Lakh= @7% p.a.
>Rs.3.00 lakh-Rs.5.00 lakh= 1
year MCLR>Rs.5.00 lakh= 1
year MCLR
+ BSS+ CRP (2.50%)
Benchmark rate can be used as RBLR or any other EBLR (External
Benchmark Lending Rate as decided by Bank from time to time) based
on the facility e.g. for Food and Agro purpose or MSME Loan.
Takeover Branch to obtain status report from exiting Bank/FI before takeover. In
Norms: case the status report is not received within a period of 10 days from the
Regarding date of receipt of request letter branches shall obtain the existing loan
Status account statement for minimum six months or since from opening of
Report loan account (if
Loan account is less than 6 months) and verify carefully whether
repayment done properly or not, cheque bounce, if any and ascertain
the satisfactory repayment history of the group.
Mudra MUDRA loans are provided for activities allied to agriculture, for e.g.
Loan to pisciculture, bee keeping,poultry, livestock-rearing, grading, sorting,
aggregation agro industries, dairy, fishery, agriclinics and agribusiness

297
individual centres, food & agroprocessing, etc., (excluding crop loans, land
SHG improvement such as canals, irrigation, wells ) and services supporting
members these, which promotes livelihood or helps in income generation or any
other permissible activity including MSME under Mudra Scheme. One
Women in every SHG under DAY-NRLM may be provided a loan up to
Rs.1.00 Lakh under MUDRA Scheme, if otherwise eligible
Credit In order to facilitate women SHG members to graduate to entrepreneurs,
facility up banks may consider extending loans up to Z10 lakh to individual
to members of select matured well performing SHGs (SHGs which are
Rs.10.00 more than 2 years old and have accessed at least one dose of bank
Lakh loan with timely repayment)
DAY - National Rural Livelihood Mission

Branch Circular No. 116/157 Date - 23.09.2022
The Ministry of Rural Development, Govt. of India launched a new programme

National Rural Livelihood Mission (NRLM), replacing SGSY on 1st April 2013.
The NRLM programme is renamed as Dindayal Antyoday Yojna NRLM (DAY-
NRLM) on 29th March 2016.
Revolving Fund:
DAY-NRLM will be providing financial assistance in the form of revolving fund,
to the SHGs which are in existence for 3-6 months and follow the norms of good
SHGs. i.e. Panchsutra. Regular Meetings, Regular Savings, Regular in-house
Leading, Regular Recoveries and maintenance of proper books of accounts.
Amount of RF is between Rs.10,000 – 15,000/-
Capital Subsidy has been discontinued under DAY-NRLM:
No Capital Subsidy would be sanctioned to any SHG from the date of implementation
of
DAY-NRLM
Community Investment Support Fund (CIF)
CIF would be provided by MoRD to the SHGs promoted under DAY — NRLM in all
blocks
(intensive and non-intensive) and would be routed through the Village level/ Cluster level
Federations, to be maintained in perpetuity by the Federations. The CIF would be used,
by
the Federations, to advance loans to the SHGs and/or to undertake the
common/collective
socio-economic activities.
Interest subvention
For loans up to t3 lakh under the scheme, banks will extend credit at a concessional
interest rate of 7% per annum. For outstanding balance upto t3 lakh, banks will be
subvented at a uniform rate of 4.5% per annum during FY 2022-23. For loans above t3
lakh
and upto T5 lakh under the scheme, banks will extend credit at interest rate equivalent
to

298
their 1 year-MCLR or any other external benchmark based lending rate or 10% per
annum, whichever is lower. For outstanding balance above lakh and upto lakh, banks
will be subvented at a uniform rate of 5% per annum during FY 2022-23. No additional
subvention is provided To SHGs on prompt repayment of loan
Role of banks:
Opening of Savings account of SHGs and their the Federations
 Know Your Customer (KYC) verification of only the office bearers shall suffice for
 opening of savings bank account. For KYC verification pertaining to SHG
members during opening of accounts, instructions of Department of Banking
Regulation in Master Direction on KYC (dated February 25, 2016, updated as on
March 23, 2021) shall be adhered to.
 The bank may accept declaration in Form No 60 in place of Permanent Account
Number
 Business Correspondents deployed by banks may also be authorized to open
Saving
Bank Accounts of the SHGs after verification/approval of the base branch,
Credit Target Planning

Based on the Potential Linked Plan/State Focus Paper prepared by NABARD, SLBC
sub-committee on SHG Bank Linkage may arrive at the district-wise, block-wise and
branch-wise credit plan.
The district-wise credit plans should be communicated to the DCC. The Block-wise/
Cluster-wise targets are to be communicated to the bank branches through the
Controllers
Post credit follow-up:

Bank branches may observe one fixed day in a fortnight to enable the staff to go to the
field and attend the meetings of the SHGs and Federations to observe the operations of
the SHGs and keep a track of the regularity in the SHGs meetings and performance.
Financial Literacy:
DAY-NRLM has trained and deployed a large number of cadre called 'Financial Literacy
Community Resource Persons (FL-CRPs)' to carry out financial literacy camps at village
level. Financial Literacy Centres (FLC) established by various banks may coordinate
with
respective SRLMs and utilize the services of FL-CRPs to conduct village camps on fL
Financial Literacy.
Data Sharing
Banks should share data of Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and
Pradhan Mantri Suraksha Bima Yojana (PMSBY) with DAY-NRLM on agreed formats to
facilitate higher enrollment and claim settlement under the mentioned schemes.
Funding Pattern:
DAY-NRLM is a Centrally Sponsored Scheme and the financing of the programme
would
be shared between the Centre and the States in the ratio of 60:40 (90:10 in case of
North
Eastern States including Sikkim; completely from the Centre in case of UTs). The
Central

299
allocation earmarked for the States would broadly be distributed in relation to the
incidence
of poverty in the States
Interest Subvention Scheme for Women SHGs
Interest subvention scheme on Credit to Women SHG during the year 2022-23 for all
Public Sector Banks, Private Sector Banks and Small Finance Banks in all districts.
i. The scheme is limited to Women Self Help Groups under DAY-NRLM in rural areas
only.
ii. For loans up to 3 lakh under the scheme, banks will extend credit at a concessional
interest rate of 7% per annum. For outstanding credit balance upto lakh, banks will be
subvented at a uniform rate of 4.5% per annum during FY 2022-23.
iii. For loans above lakh and up to lakh under the scheme, banks will extend credit at
interest rate equivalent to their 1 year-MCLR or any other external benchmark based
lending rate or 10% per annum, whichever is lower. For outstanding credit balance
above lakh and upto lakh, banks will be subvented at a uniform rate of 5% per annum
during FY 2022-23.
iv. Interest Subvention will be payable only for the period during which an account
remains in standard
v. Women SHGs promoted by other agencies and following the DAY-NRLM protocols
will also be eligible for benefit of subvented loans subject to prior submission of the
details of such SHGs on the DAY-NRLM SHG database.
vi. In order to avail the interest subvention on credit extended to the women SHGs,
banks may ensure that the accounts of SHGs (both savings and loans) under DAY-
NRLM are appropriately identified in their CBS with unique codes assigned by DAY-
NRLM/SLRMs.
Self-Employment Scheme for Rehabilitation of Manual Scavengers (SRMS)-

BC116/95dated
13.07.22
Manual Scavenger is defined in Prohibition of Employment as Manual Scavengers

and their Rehabilitation Act,2013 as a person engaged or employed at the
commencement of this act or at any time thereafter by an individual or a local
authority or an agency or a contractor, for manually cleaning, carrying, disposing
of, or otherwise handling in any manner, human excreta in an insanitary latrine, or
in an open drain or pit into which human excreta from the insanitary latrines is
disposed of, or on a railway track or in such other spaces or premises, as the
Central or a State Government may notify, before the excreta fully decomposes
in such manner and the expression “manual scavenging” shall be interpreted
accordingly.
• Cash Assistance-Identified manual scavengers, one from each family will

be eligible for cash assistance of Rs.40,000/- immediately after identification
and he will be allowed to withdraw the amount in monthly instalment of
RS.7,000/-
• Project Cost- Rs.15 for all as well as for sanitation projects such as vaccum
loader, suction machine with vehicle/Garbage disposal vehicle etc.
 Project cost limit for Group Projects: Projects upto Rs. 50 lakh by group

300
of maximum 5 beneficiaries. Maximum projects cost limit per beneficiary Rs.
10.00 lakh
 Revision in the rates of capital subsidy and its enhancement to maximum of
Rs. 5.00 lakh as against Rs. 3.25 lakh at present.
• Provision of Capital Subsidy (Back-end subsidy)
Range of Project Cost (Rs.) Rate of Subsidy

Upto Rs.5.00 lacs 50% of the project cost
Above Rs.5.00 lacs and upto Rs.15.00 Rs.2.50 lacs plus 25% of remaining
lacs project cost (maximum capital subsidy Rs.
5.00 lacs
 Capital subsidy to be paid upfront in place of back-ended capital
subsidy earlier.
• Rate of Interest-For project up to Rs.1,00,000/- 5% per annum (4% per

annum for women beneficiaries) o For project cost above Rs.1,00,000/- 6%
per annum.
 Subsidy for Group Projects: Same rate of capital subsidy as admissible

for individuals. Per individual, maximum capital subsidy Rs. 3.75 lakh.
• Moratorium Period-Up to two years
• Training Period and Stipend during training period-Training period

two year and stipend during training period Rs.3,000/- pm
• Repayment Period (Including Moratorium period)

o For project costing up to Rs.5 lakhs – 5 years
o For projects costing more than Rs.5 lakhs - 7 years.
DAY-National Urban Livelihood Mission (NULM)-(Br.Cr.113/60 dated

25/06/2019)
Swarna Jayanti Shahari Rozgar Yojna (SJSRY), poverty alleviation programme
for urban poor of Government has been restructured and now has been named
in 2013 as National Urban Livelihood Mission. Following are the special features
of the scheme-• The scheme is applicable to all district Head Quarters and
all the cities with population of 1 lakh and above for urban poor living below Urban
Poverty Line.
• 30% beneficiaries should be women, 15% from minorities and 3%
beneficiaries should be differently abled persons.
• SC/ST beneficiaries should to the extent of proportion of their strength in
local population.
• Loan can be sanctioned individuals beneficiaries as well to groups
(minimum of 3
members).

301
• Maximum loan limit for individual beneficiary is Rs.2 lakhs and Rs.10 lakhs
for SHG (Group having minimum 3 members including minimum 70% from
urban poor families, Maximum Rs.2 lakhs/ member).
• Banks will be eligible for interest subsidy at the rate of difference between
7% and prevailing rate of interest of Bank for loan to Individual and Gr.
enterprises. Additional 3% interest subsidy will be provided to all women
SHGs, who repay their loan in time promptly.
• Interest subvention to be claimed through ZO/HO. HO will lodge claim in
“PAiSA”(Portal for Affordable Credit and Interest Subvention Access – a
portal developed by Allahabad Bank) and after receiving claim amount will
credit to borrowers account.
• Loan is to be repaid in 5 to 7 years after initial moratorium period of 6 to
18
months.
• Only Primary security, no collateral required. The banks may approach for
coverage Credit Guarantee Fund Trust for Micro and Small Enterprises
(CGTMSE).
• Margin Money - No margin money should be taken for a loan up to
Rs.50,000 and for higher amount loans, preferably 5% should be taken as
margin money and it should in no case be more than 10% of the project cost.
• While opening loan account under NULM, 105 must be put in free code 3.

302
PMMY
• Activities under non-farm sector covering manufacturing, services and

trading activities and under farm sector allied agriculture activities excluding
crop loan, land development, well loan and minor irrigation, Weaver and
artisans can also be covered under PMMY, Government schemes like
NULM, NRLM, PMEGP etc. complying to conditions of PMMY.
• Segments of PMMY
Segment of Loan limit MIS code-Free Code 3

PMMY
SHISHU Upto Rs 50,000/- 300
KISHORE Above Rs 50,000/- upto Rs 5.00 369

lacs
TARUN Above Rs 5.00 lacs upto Rs 10.00 370
lacs
• Margin –15% for Kishore and Tarun, for loan upto Rs.50,000/ (Sishu)- NIL
Mar
gin.
• Security – 1) Hypothecation of assets created out of bank finance.

3) Personal guarantee of promoter or director as the case may be
• Guarantee cover – CGFMU (under NCGTC)

• Charges – As applicable from time to time and guided by HO.
• Documents – application for shishu – one page application

Application for others MSE1 and proposal MSME2
• Repayment – 5 to 10 years
• Subsidy – no subsidy in Mudra Loan

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Prime Minister Employment Generation Programme (PMEGP)
(Br.Cr.102/139 dated 10/11/2008 Br.Cr.113/08 dated 03.04.2019
The Scheme is implemented by Khadi and Village Industries Commission

(KVIC), as the nodal agency at the National level. At the State level, the
Scheme is implemented through State KVIC Directorates, State Khadi and
Village Industries Boards (KVIBs) and District Industries Centres (DICs) and
banks. The Government subsidy under the Scheme is routed by KVIC through the
identified Banks for eventual distribution to the beneficiaries /
entrepreneurs in their Bank accounts.
The maximum cost of the project/unit admissible under manufacturing sector is

Rs.25 lakh and under business/service sector is Rs.10 lakh.
Any individual, above 18 years of age. At least VIII standard pass for projects
costing above Rs.10 lakh in the manufacturing sector and above Rs. 5 lakh in the
business / service sector. Only new projects are considered for sanction under
PMEGP. Self Help Groups (including those belonging to BPL provided that they
have not availed benefits under any other Scheme), Institutions registered under
Societies Registration Act,1860; Production Co-operative Societies, and Charitable
Trusts are also eligible. Only one person from one family is eligible for obtaining
financial assistance for setting up of projects under PMEGP. The ‘family’ includes
self and spouse.
Existing Units (under PMRY, REGP or any other scheme of Government of India
or State Government) and the units that have already availed Government Subsidy
under any other scheme of Government of India or State Government are NOT
eligible.
Objectives:
I. To generate employment opportunities in rural as well as urban
areas of the country through setting up of new self-employment
ventures/projects/micro enterprises.
II. To bring together widely dispersed traditional artisans/ rural and
urban unemployed youth and give them self-employment
opportunities to the extent possible, at their place.
III. To provide continuous and sustainable employment to a large
segment of traditional and prospective artisans and rural and urban
unemployed youth in the country, so as to help arrest migration of
rural youth to urban areas.
IV. To increase the wage earning capacity of artisans and contribute to
increase in the growth rate of rural and urban employment.Benefits:
The maximum cost of the project/unit admissible under manufacturing

sector is Rs.25 lakh and under business/service sector is Rs.10 lakh.
Per capita investment should not exceed ₹ 1.00 lakh in plain areas
and ₹ 1.50 lakhs in Hilly areas.
Own contribution 5% to 10% of project cost.

304
General category beneficiaries can avail of subsidy of 25 % of the
project cost in rural areas and 15% in urban areas. For beneficiaries
belonging to special categories such as scheduled caste/scheduled
tribe /women the subsidy is 35% in rural areas and 25% in urban areas.
Quantum of Margin Money /Subsidy is given as follows:

Beneficiary’s own
Rate of
Categories of beneficiaries under PMEGP contribution (of
Subsidy
project cost)
Area (location of project /unit) Urban Rural
General Category 10% 15% 25%
Special (including SC/ ST/ OBC/ Minorities/
Women, Physically handicapped, Ex- 05% 25% 35%
Servicemen, NER, Hill and Border areas etc.
Other information
Repayment of 84 months.
Application can be forwarded by KVIC, KVIB & DIC.
Every state is allotted to a PSB as a nodal Bank for settlement of subsidy
claim. Therefore branch to send subsidy claim to the authorized branch of
nodal bank only.
Subsidy should be kept in Subsidy Reserve Fund A/c under lock-in-period
of 3 years. It can be appropriated after that with the permission of sponsoring
department (KVIC, KVIB, DIC) only.
Interest charged to the loan account will be net of subsidy.
Negative List of Activities:
The following list of activities will not be permitted under PMEGP for setting up of
micro enterprises/ projects /units.
Meat processing, canning and/or serving items made of it as food, production or
sale of intoxicant items like Beedi /Pan/ Cigar/ Cigarette etc., sales outlet serving
liquor, any industry/business connected with cultivation of crops/ plantation like
Tea, Coffee, Rubber etc. sericulture (Cocoon rearing), Horticulture, Floriculture,
Animal Husbandry like Pisciculture, Piggery, Poultry, Harvester machines etc.
Manufacturing of Polythene carry bags of less than 20 microns.
2nd Financial Assistance under PMEGP (Br.Cr.113/08 dated 03-04-2019)

This loan is available to the units for upgrading, which are running well in
terms of turnover, profit making and repaying the loan promptly.
Financial assistance up to Rs.1 crs can be given to manufacturing unit and Rs.25
lakhs to service sector units.
Objectives: 1) to fulfil the need of additional financial assistance for upgrading
and expansion to successful and well performing units.
2) To cater the need for bringing the new technology/ automation to modernize
the existing unit.
3) To enhance the productivity of the existing unit with additional financial
assistance.
4) To enhance the capacity of the existing unit with additional employment
generation.

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Eligibility: 1) All existing units financed under PMEGP / MUDRA and whose
margin money is adjusted and loan is repaid properly within stipulated time.
2) Unit should have been making profit for last 3 years.
3) Registration under Udyog Aadhaar is mandatory.
4) Beneficiary may apply to the same bank from where he has availed 1st loan or he
may apply to another bank also.
5) Second loan should lead to additional employment generation.
Quantum and nature of financial assistance:

1) Maximum cost of project unit under manufacturing sector for upgradation is
Rs.1 crores.
2) Maximum cost of project unit under service / trading sector
for upgradation is Rs.25 lakhs.
3) Beneficiary contribution is 10% of proposed expansion / upgradation.
4) Rate of subsidy is 15% (NER and hilly states 20%)
5) Financial assistance by the banks will be in the form of term loan.
6) Ceiling of construction of building should not exceed 25% of the
sanctioned project cost.
7) The capital expenditure component including cost of construction should not
exceed 60% of the total project cost. Working capital cost should not
exceed 40% of the project cost.
Other Conditions :
1) For 2nd loan clearance certificate of the first bank is necessary.

2) As per existing guidelines lock-in-period for margin money of 2nd loan is
18 months.
Implementing and Monitoring Agency:
At national level it is KVIC and at state level KVIB & DIC. On PMEGP e-portal
there is a separate link for 2nd financial assistance. Concerned bank will
sanction loan within 60 days and claim margin money as per procedure in
PMEGP. Margin Money will be kept in TDR and no interest will be paid.
Concerned bank and agency will make joint inspection. Third party
inspection will be carried out by KVIC separately. CGTMSE cover can be
obtained by paying requisite fee.

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STAND UP INDIA
Shri Narendra Modi, Hon’ble Prime Minister of India in his Independence Day
speech on 15th August 2015 unveiled Stand Up India Scheme. The scheme
promotes entrepreneurship at grass root level for economic empowerment and job
creation. The scheme aims at institutional credit structure for underserved sector of
people like SC, ST and woman entrepreneurs above 18 years for setting up a new
ventures/ enterprise in manufacturing, trading or services sector. The scheme
covers all bank branches of India.The scheme is operated in 3 ways :-
1) Directly at the branch
2) Through SIDBI’s Stand Up India portal (www.standupmitra.in)
3) Through Lead District Manager
This loan can be given to greenfield enterprises only. The potential borrower will
register on the portal first. He will answer a set of 8-10 questions. Depending upon
the response, applicant will be classified as ready borrower or trainee borrower.
Ready borrower doesn’t require any hand holding, loan application process starts
and application number is generated. Information of the borrower is shared with
concerned bank branch, LDM, SIDBI and NABARD. The offices of SIDBI/ NABARD
will be Stand Up Connect Centre (SUCC). Generated application will be tracked by
all the above. If applicant indicates need for hand holding, then the application
is shared by LDM, SUCC and indicated Hand Holding agency. Once the hand
holding is done properly, to the satisfaction of LDM and borrower, application is
generated and shared with concerned bank branch.
• In Stand up India, applicants from SC, ST category and woman are
eligible for loan.
• Loan limit may be between Rs.10 lakhs to Rs. 1crore.
 Working capital upto Rs.10 lakhs will be by way of way of overdraft. Any
working capital loan exceeding Rs. 10 lacs will be through Cash Credit limit.
Banks can also issue RuPay debit card for the convenience of the borrower .
• Loan shall be composite loan of term loan for plant and machinery and
working capital.
• Bank finance will be 75% of project cost ( If the borrower’s margins exceed 25%
then loan size will be accordingly be lessened) and the rate of interest would
be MCLR+3%+tenor premium.
• Repayable in 7 years with maximum moratorium of 18 months.
• Besides primary security the Loans are covered under NCGTC and norms
are aligned with CGTMSE scheme/Credit Guarantee Fund Scheme for Stand-
Up India Loans (CGSSI) as decided by the banks
• Stipulated margin is 25%, of which borrower’s contribution will be 10% and
rest can be provided in convergence with other central/state govt. schemes.
• DLCC will review the progress.
• While opening loan account, in free code 3….”372”, Stand Up India
Scheme should be added.
Details of the scheme are given in Br.Circular 110/51 dated 27-05-2016

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STAR START UP SCHEME Br.Cir. 111/28 dated 25.05.2017
• Eligibility -- Entity incorporated or registered in India not prior to 5 years.
Annual turnover not exceeding Rs.25 crores in any preceding financial year.
Entity should be working towards innovation, development, deployment or
commercialization of new products, processes and services driven by technology or
intellectual property. Entity must obtain certification from inter–ministerial
board set up for the scheme.
• Quantum of finance -- Term Loan/Working Capital/Non Fund based limit,
composite loan. Minimum: Rs.0.10 Crores Maximum : Rs.5.00 Crores.
• Margin -- Term Loan-25%, working capital-10%.
• Security -- Primary– All tangible assets created out of Bank's finance shall be
charged in favour of the Bank by way of Hypothecation/Mortgage.
• Collateral – The facility may be covered under CGTMSE( HOBC 114/150 dt.
03.10.2020)/Credit Guarantee fund for start-ups for the limits for which
coverage is available. Beyond the amount covered under CGTMSE/Credit
Guarantee fund for Start Ups as mentioned above, collateral security may
be insisted upon by sanctioning authority.
• Repayment - Working Capital: 12 months subject to annual review.
Term Loan: 120 months including moratorium of 24 months.
• Delegation -- NBGLCC and above.
• Note: Any seed capital/venture capital invested should be treated as
margin / equity for DER.

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PRADHAN MANTRI AWAS YOJANA
 Prime Minister has envisioned “Housing for All by 2022”
 Pradhan Mantri Awas Yojana was launched in the entire nation on 17-06-2015
The implementation period of the PMAY-Urban scheme has been extended until
31 December 2024
 This mission is for urban areas and will be implemented during 2015-22.
 It is operational in all statutory towns and planning areas as notified with
respect to the statutory town and which surrounds the concerned
municipal areas.
1. In Situ – slum redevelopment.
Slum rehabilitation of slum dwellers with participation of
private developers using land as resource.
2. Affordable housing through credit linked subsidy scheme - CLSS.
3. Affordable housing in partnership with public and private sectors.
4. Subsidy for beneficiary- led individual housing construction.
 CLSS vertical of the scheme is monitored by monitoring committee
consisting of secretary (Ministry of Housing and Urban poverty alleviation)
and Secretary (DFS) as Co-chairs.
 National housing bank (NHB) and Housing and Urban Development
 Corporation (HUDCO) have been identified as Central Nodal Agencies.
 Beneficiary family comprises Husband, Wife, unmarried children.
 In addition to these, people belonging to SC, ST, and OBC categories and
women belonging to EWS and LIG income groups will also be eligible for the
PMAY scheme.
 Condition of the scheme – beneficiary family should not own a pucca
house either in his / her name or in the name of any family member in
any part of India.
Salient Features of CLSS -
Particulars EWS LIG MIG-I MIG-II
Interest Subsidy (%) 6.50 6.50 4.00 3.00
Loan Tenure (Max. in Years) 20 Years
Eligible Loan amt for 6.00 6.00 9.00 12.00
Subsidy (Rs. Lacs)
Dwelling unit carpet area 30 60 90 110
(Sq. Mt)
Discounting rate for NPV 9%
of subsidy amount
**Max. Interest subsidy **267280 **267280 235068 230156
amount (Rs.)
Household Minimum Above 3.00 Above 6.00 Above
Income 12.00
(Rs lakhs)
Maximum 3.00 6.00 12.00 18.00
Free code 3 445 448 449 450
 Note ; Interest subsidy @ 6.5% for tenure of 20 years or tenure of loan

whichever is lower.
 Processing fee: 0.25% of sanction limit. Bank has to claim max Rs.1500/-
(per account as processing fee from NHB)

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. PMAY (GRAMIN)
Indira Awas Yojana was launched on January 1996
Has been re-structured into Pradhan Mantri Awaas Yojana –Gramin
(PMAY-G) w.e.f. 1st April 2016.
Launched on 20 November 2016 by Shri.Narendra Modi, Hon’ble Prime
Minister of India.
Aim of the scheme:- To construct 1 Crore pucca houses in rural areas in
next 3 years by providing financial assistance.
Eligibility :-
1) The beneficiaries are selected using housing deprivation parameters in
the Socio Economic, EWS (Economically Weaker Section), LIG (Lower
Income Group), or BPL (Below Poverty Line) category and Caste Census
(SECC), 2011.
2) Preference is given to homeless or who are living in kuchha house.
3) Every year a list of beneficiaries is made.
4) 60% of the target earmarked for SC/ST subject to availability of
beneficiaries
Financial Assistance :-
1) Plane Areas :- Rs.1,20,000/- (60:40)*
2) Hilly Areas :- Rs.1,30,000/- (90:10)*
3) Along with financial assistance, every beneficiary will be offered 90 to 95
days wages for construction work, which would be almost Rs.18,000/-. A
sum of Rs.12,000/- will be offered for construction of toilet.
Other Benefits
1) Financial Assistance will be transferred to the bank or Post Office account
of the beneficiary.
2) Minimum space of the house is 25 Sq.meters.
3) Training or Engineer will be given for construction and the house will be
built with latest technology and earthquake proof and safe from other natural
calamities.
4) The cost of unit assistance is to be shared between Central and State
Government in the ratio 60:40 in plain areas and 90:10 for North Eastern and
the Himalayan States.
5) 3% concession on interest rates on housing loans of up to Rs.2 lakh.
Factors that will exclude Beneficiaries from PMAY Gramin Scheme

1) andidates that have a motorised two wheeler, three-wheeler, four-wheeler
and agriculture equipment or fishing boat.
2) Candidates that have a Kisan Credit Card (KCC) with a limit greater or equal
to Rs.50,000
3) Any household that has at least one member that is employed with the
government or earning more than Rs. 10,000 per month.
4) Any person that pays income tax, professional tax or owns a refrigerator or
landline phone connection.

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PRADHANMANTRI CREDIT SCHEME FOR POWERLOOM WEAVERS
HOBC 112/72 dated 31.08.2018

AIM:- To provide Margin Money subsidy and interest reimbursement as against
the credit facility availed under PMMY by the powerloom weavers/ units.
Margin Money subsidy against the credit facility under Stand up India scheme.
PMMY(Category I) - Eligible beneficiaries: Existing Individual Powerloom units,
new individual/group enterprises, involved in weaving activity who are registered
with MSME/ Udyog Aadhar/ Information memorandum(IM) acknowledgement
issued by office of the textile commissioner. Group enterprises will be covered
without credit guarantee of the govt. and as per the lending norms of the bank. Unit
should not have benefited under ATUF scheme.
Financial Assistance:
1) Margin Money Subsidy @20% of the project cost having ceiling of Rs.1.00
lakh.
2) Interest subvention @6% / year both for working capital and term loan up to
Rs.10.00 lakhs for maximum period of 5 years.
3) Maximum loan limit will be Rs.10 lakhs.
4) Only new loans are eligible for the scheme.
5) Credit guarantee fee 1% of the loan amount or actual fee whichever is
less is charged by the CGTMSE/ NCGTC. It is not applicable to group
activity.
STAND UP INDIA (Category II) - Eligible beneficiaries (Power Tex Stand Up

India Scheme)
1) Only new powerloom units established by person belonging to SC, ST
or
Woman entrepreneur.
2) In case of non-individual units at least 51% of the shareholding and
controlling stake should be held either by SC, ST or woman entrepreneur.
Financial Assistance:
1) 25% of margin money subsidy up to a project cost of Rs.1 crore with
a ceiling of Rs.25 lakhs, the borrower is required to bring 10% of the
project cost as his/her own contribution.
2) Loan shall be from Rs.10 lakhs to Rs.1 crore.
3) Repayment shall be as per prevailing norms of the bank.
4) Credit guarantee fee 1% of the loan amount or actual fee whichever
is less is charged by the CGTMSE/ NCGTC.
Process flow for PowerTex Mudra Scheme and Power Tex Stand Up India
Scheme is as under:-
a) The borrower will submit application to the ministry through online portal
www.ipowertexindia.gov.in

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b) After initial scrutiny ministry will forward the application online to the
concerned bank branch directly.
c) The branch will approve the application and fill the sanction details
and also upload the sanction letter.
d) After approval of application and after installation and commissioning
of the machinery, unit will submit request for inspection by the Joint
Inspection Team (Team=branch+Regional Office of Textile Commission).
Claim Processing:
1) Branch will submit interest subsidy claims online to the nodal office.
2) Nodal office will forward the claim to the ministry.
3) Office of the textile commissioner will release the subsidy through
the bank.
Atal Pension Yojana-

Government of India has launched the ATAL PENSION YOJANA scheme to
provide defined pension, depending on the contribution, and its period.
The scheme is for Indian citizen workers in unorganized sector. It was launched in
2015. The scheme is administered by the Pension Fund Regulatory and
Development Authority (PFRDA) under the National Pension Scheme (NPS).
Following are special features of this scheme-
• The scheme will focus on all Citizen of India especially those in the
unorganized sector, who do not have any formal pension provision. It will
encourage the people to save voluntarily for retirement benefits.
• Person aged between 18 years and 40 years, who have their Bank
account and are not member of any other statutory social security
scheme, who are not income tax payer are eligible to subscribe under this
scheme.
• Minimum contribution (at the age of 18) would be Rs.42/- per month to
get pension of Rs.1000/- per month starting at the age of 60. Contribution
amount may vary depending upon the age of subscriber and amount of
pension required. Maximum contribution would Rs.1454/- per month to have
pension of Rs.5,000/- per month if a subscriber joins the scheme at the age
of 40 Thus minimum pension would be RS.1000/- and maximum would be
Rs.5000/-
• Maximum period of contribution at the age of 18 would be 42 years, and if
person joins at the age of 40 years it would be 20 years.
• Existing Swavalamban Scheme Subscribers between the age of 18-40
would be migrated to Atal Pension Yojna.
• There is penalty for default –
Contribution per month Penalty on default per month
Upto Rs.100/- Re.1/-
Above Rs.100/- upto Rs.500/- Rs.2/-
Above Rs.500/- upto Rs.1000/- Rs.5/-
Above Rs.1000/- Rs,10/-

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• Discontinuation of payments of contribution amount may lead to following
 After 6 months account will be frozen.
 After 12 months account will be deactivated.
 After 24 months account will be closed.
• Continuous information alerts will be sent to subscribers by way of SMS.
• Exit before the age of 60 is permitted by making specific application to
PFRDA or in the event of death of beneficiary or terminal disease.
• Upon completion of 60 years of age, the subscriber will submit the request
to the concerned Bank for drawing the guaranteed pension amount.
 Hand out on deceased claim settlement procedure in APY.

(1) Exit in case of death of the Subscriber: In case, the Subscriber dies
before the age of 60 years, there are two options,
(a) Closure of APY account - In case, spouse wishes to exit from the
scheme and close the account, the corpus will be settled in the
name of spouse. If spouse is not present (where Subscriber is not
married, divorced, legally separated or spouse has expired), then
the corpus will be settled in the name of the nominee.
(b) Continuation of APY account (only for Spouse) – The spouse would
have an option to continue contributing to APY accounts of the
Subscriber, which can be maintained in the spouse's name, for the
remaining vesting period, till the original Subscriber would have
attained the age of 60 years. The spouse of the Subscriber shall be
entitled to receive the same pension amount as that of the
Subscriber until the death of the spouse.
(2) In case of death of the Subscriber before 60 years of age,

(a) The Branch Official of APY-SP shall ensure that the spouse /
nominee has filled up the correct form i.e. Account Closure Form for
Death.
(b) In case of married Subscriber, the Branch Official will identify the
spouse (as registered in the APY system of CRA) and shall ensure
that the form is filled up only by the spouse who is default nominee
under APY. In case, the spouse is not present (where Subscriber is
not married, divorced, legally separated or spouse has expired), the
Branch Official will identify the nominee (as registered in the APY
system of CRA) and shall ensure that the form is filled up by the
correct nominee.
(c) If the form is submitted by spouse, Branch Official shall check that
spouse has provided the correct option in the form i.e., whether
APY account to be closed or to be continued by spouse.
(d) The branch officials have to check that the spouse / nominee has
provided the complete and correct details in the form including the
Bank Account Number along with the IFS Code.
(e) In case of continuation of APY account by Spouse, Bank Official shall
collect separate form for continuation under APY.
(f) The Branch Official shall also collect the relevant documents for
closure of account as per existing Banking norms / stipulated by
PFRDA.

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(g) In case the exit request is submitted by any other claimant (other than
the spouse / nominee registered in the APY system of CRA) Branch
Official shall also collect a legal heir certificate OR a certified copy of
family member’s certificate issued by Executive Magistrate indicating
the relationship of the Claimant with the subscriber.
(3) It will be responsibility of the Branch Official to check the veracity of
the exit request and of the documents submitted along with the
request.
(4) The Branch Official shall check that the Bank Account provided in the
closure form is active (if it is of the same bank), else shall confirm
the same with spouse / nominee.
(5) Acceptance and Issuance of Acknowledgment. If the exit form along with
the complete details and documents (as required) is correct,
the Branch Official shall accept the exit request. The Branch Official
shall issue an acknowledgment to the Subscriber / spouse /
claimant (as per the request) mentioning the Bank Account details
to which the APY corpus of the Subscriber would be credited.
(6) Submission of Requests to CRA.
(a) The APY-SPs shall forward all the exit requests to CRA for
processing along with the covering letter. A scanned image of the
request (along with the IFSC code) may also be forwarded to ‘APY
Claimassist’ on ([email protected]) to initiate the process.
As an alternative, the requests shall be forwarded to CRA in the
following address, APY Claim Processing Cell, 1st Floor, Times
Tower, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel,
Mumbai – 400 013.(b) The letter should be signed by the
Authorised Signatory or the
Compliance Officer / Branch Head of the APY-
SP.
(c) In case of voluntary exit by Subscriber, Branch Official shall select the
relevant remark in the form for transfer of Govt. co-contribution i.e.,
Credited, not credited, returned. If Branch Official has provided the
remarks as "Credited", the amount equivalent to Govt co- contribution
along with return will be deducted from the corpus of the subscriber
and balance amount will be transferred to Subscriber.
(7) Processing of requests at CRA.
(a) CRA will handle the physical exit requests administratively.
(b) CRA will only check for the Claimant’s name in the exit request
received (received from the APY-SP) for death of the Subscriber. In
case there is a mismatch in the Spouse / Nominee Name available
in APY database and the Spouse / Nominee name in exit request
form), the request will be kept on hold and the APY-SP will be
informed to provide for clarification.
(c) Once the exit request is processed, the redeemed amount based on
the units available in APY account will be transferred electronically
to Subscriber / Spouse / Nominee Bank Account as provided in APY
Closure Form.
(d) On transfer of funds, APY Claim Processing Cell will send a
confirmation to APY-SP about execution of exit request.
(e) In case of voluntary exit, if the Subscriber has already availed the

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Govt. Co-contribution, the equivalent amount along with return will be
deducted from the corpus of the Subscriber and balance amount will
be transferred to Subscriber.
 Hand out on Various Grievances / Requests regarding Atal

Pension Yojana (APY).
(1) Majority of the requests / grievances pertains to.
(a) Transaction statement not received.
(b) PRAN card not received (No physical card issued in case of APY).
(c) Aadhaar updation.
(2) With regard to above, NSDL-CRA has developed a frontend facility which
would enables the nodal offices (Banks) to serve the subscribers in a
better way by directing them to use these online facilities instead of
approaching the bank branch every time.
(3) To download Transaction Statement follow the below process.
(a)Visit: https://npslite-nsdl.com/CRAlite/EPranAPYOnloadAction.do
(b) Select from 2 option (with PRAN or without PRAN).
(c) If selected with PRAN.
(i) Enter PRAN.
(ii) Bank Account Number.
(iii) From “view of subscriber” option, selected SOT view.
(iv) Enter captcha and submit.
(d) If selected with without PRAN.
(i) Subscriber Name.
(iii) Date of Birth.
(iv) From “view of subscriber” option, selected SOT view.
(e) Note - Data entered must match with CRA records.
(4) To download e-PRAN follow the below process.
(a) Visit:https://npslite-nsdl.com/CRAlite/EPranAPYOnloadAction.do
(b) Select from 2 option (with PRAN or without PRAN).
(c) If selected with PRAN.
(i) Enter PRAN.
(iii) From “view of subscriber” option, selected APY e-PRAN
view.
(iv) Enter captcha and
submit. (d) If selected with without
PRAN.
(i) Subscriber Name.
(ii) Bank Account
Number. (iii) Date of Birth
(iv) From “view of subscriber” option, selected APY e-PRAN
view.
(e) Note - Data entered must match with CRA records.
(5) Process of Seeding of Aadhaar in APY PRAN.
(a) Visit : https://npslite-nsdl.com/CRAlite/AadhaarOnloadAction.do
(b) Enter PRAN, Aadhaar Number and Captcha in the relevant
boxes and submit.
(c) One Time Password (OTP) will be sent to registered mobile

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number in UIDAI (Aadhaar) database. (not the registered mobile
number in CRA database).
(d) On successful submission of request, 10 digit acknowledgement
number will be displayed as a confirmation of seeded aadhaar.
(6) Process for accessing “APY Mobile Application”.
(a) Visit - Google Play
Store. (b) Type APY and
NPS Lite.
(c) Download the APP “APY and NPS Lite”.
(7) APY Mobile APP features.
(a) Access through PRAN & One Time Password.
(b) Download transaction statement (Financial Year Wise).
(c) Facility to check last 5 contributions received.
(d) Details like name, address, pension amount, contribution
premium can be checked.
(e) Note - OTP will be sent to mobile number registered in CRA
records.
Pradhan Mantri Suraksha Bima Yojana(PMSBY)Br. Cir No116/081 dated

27.06.2022
REVISED RULES FOR THE PRADHAN MANTRI SURAKSHA BIMA YOJANA

DETAILS OF THE SCHEME:
PMSBY will be an Accident Insurance Scheme offering accidental death and
disability cover for death or disability on account of an accident. It would be a one
year cover renewable from year to year. The scheme would be
offered/administered through Public Sector General insurance Companies
(PSGICs) and other private General Insurance Companies willing to offer the
product on similar terms with necessary approvals independently and also in tie
up with Banks for this purpose. Participating banks will be free to engage any
such insurance company for implementing the scheme for their subscribers.
Scope of coverage: All individual bank account holders in the age group of
18 to 70 years in participating banks will be entitled to join. In case of multiple
bank accounts held by an individual in one or different banks, the person
would be eligible to join the scheme through one bank account only.
Aadhar would be the primary KYC for the bank account.
Enrollment Modality / Period: Insurance cover under PMSBY would be
for a period of one year from the date of enrolment (date of auto debit of
premium) under the scheme to allow subscribers to join the scheme at any
point of time. Subscriber would have to submit his consent to join / pay the
premium of Rs.20/- per annum by auto-debit from the designated individual
bank account / Post office in the prescribed form to the Bank / Post Office /
Insurer in order to enroll under the scheme / renew the scheme In case of
direct enrolment through an insurer, the subscriber would also have to submit
an ECS / NACH mandate authorizing the insurer to receive the premium from
his Bank / Post office account. Individuals who exit the scheme at any point
may re-join the scheme in future years by paying the premium provided they
are eligible to join the scheme.

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Benefits: As per the following table: Table of Benefits Sum Insured
a Death Rs. 2 Lakh
b Total and irrecoverable loss of both eyes or loss of use of Rs. 2 Lakh
both hands or feet or loss of sight of one eye and loss of
use of hand or foot
c Total and irrecoverable loss of sight of one eye or loss of Rs. 1 Lakh
use of one hand or foot
Premium: Rs.20/- per annum per subscriber. The premium will be deducted
from the account holder's Bank / Post Office account through 'auto-debit'
facility in one instalment on or before the due date of each annual coverage
period under the scheme. The premium would be reviewed based on annual
claims experience.
Master Policy Holder: Participating Banks / Post Offices would be the
Master policy holders. However, individuals can also approach General
insurers to enroll under the scheme.
Termination of cover:
i)On attaining age 70 years (age nearer birthday).
ii) Closure of account with the Bank / Post office or insufficiency of balance
to keep the insurance in force
iii) In case a member is covered through more than one Bank / Post office
account/insurer and premium is received the Insurance Company
inadvertently, insurance cover will be restricted to one Bank/post office
account only and the premium paid for duplicate insurance(s) shall be liable
to be forfeited.
iii) If the insurance cover is ceased due to any technical reasons such
as insufficient balance on due date or due to any administrative
issues, the same can be reinstated on receipt of full annual
premium, subject to conditions that may be laid down. During this
period, the risk cover will be suspended, and reinstatement of risk
cover will be at the sole discretion of Insurance Company.
iv) Administration: The scheme, subject to the above, will be
administered by General Insurance Companies. The data flow
process and data proforma will be provided separately. It will be
the responsibility of the participating Bank/Post Office/Insurer to
recover the annual premium from the account of subscribers
within the prescribed period through 'auto-debit' process.
Participating Banks/Post Offices would immediately effect the
auto-debit and transfer the data/premium to the insurance
company, but not later than by the 15th day of the month
succeeding the month in which the auto-debit is made. Enrolment
form / Auto-debit authorization in the prescribed proforma shall be
obtained and retained the participating Bank / Post Office. In case
of claim, the Insurance Company may seek submission of the
same. Insurance Company reserves the right to call for these

317
documents at any point of time. Banks / Post Offices / Insurers
collecting the enrolment forms must ensure that the forms are duly
filled and signed. They should check the forms for nominee details
and eligibility of the subscriber and should verify the KYC
documents of the subscriber at the time of enrolment and not at
the time of claim. The acknowledgement slip of the consent cum
enrolment form would be treated as an acknowledgement slip-
cum-certificate of insurance. The acknowledgement slip-cum-
certificate of insurance, duly signed, dated and stamped by the
Bank / Post office / Insurer should mandatorily be given to the
subscriber at the time of enrolment. However, in case if direct
enrolments by the insurers, claim forms will be collected by them
directly from the claimants and claims will be settled in the
accounts of the nominee / legal heirs through Direct Benefit
Transfer.
Appropriation of Premium:
1) Insurance Premium payable to Insurance Company: Rs.20/- per annum
per member
2) Reimbursement of Expenses to BC/Micro/Corporate/Agent by insurer:
Rs.1/- per annum per member
3) Reimbursement of Administrative expenses to participating Bank by
insurer: Rs.1/- per annum per member

318
PRADHAN MANTRI JIVAN JYOTI BIMA YOJNA Br Cir No116/081 dated
27.06.2022
PMJJBY was introduced by GOI to provide insurance cover to citizens of India.
Features of the scheme are as under:-
1) Applicant must be savings bank account holder of the branch. The

account holder will provide certificate of good health along with enrolment
form.
2) Age of the applicant must be between 18 to 50
3) Yearly premium is Rs.436/-. It will be deducted by auto debit method
only.
4) Rs. 2 lakh insurance cover is provided to the account holder who joins
the scheme.
5) Insurance cover is provided for the death due to any reason.
6) Insurance can be renewed up to the age of 55 provided account holder
must have PMJJBY policy at the age of 50.
7) If the renewal is not done every year then the scheme is lapsed.
Account holder can again join the scheme in future by making fresh
application to the branch along with certificate of good health.
8) No insurance claim will be entertained upto 45 days from the date of
enrolment.
9) Insurance premium Rs.436/- is appropriated as under:-
Rs.395/- per annum per member to insurance company
Rs.30/- per annum per member to BC/MICRO/CORPORATE agent
Rs.11 per annum per member to bank as administrative expenses
10) In Bank of India, scheme is administered by SUD-Life.
REVISED RULES FOR PRADHAN MANTRI JEEVAN JYOTI BIMA YOJANA

1. DETAILS OF THE
SCHEME:
PMJJBY is an Insurance Scheme offering life insurance cover for death due to
any reason. It is a one year cover, renewable from year to year. The scheme is
offered / administered through LIC and other Life Insurance companies willing to
offer the product on similar terms with necessary approvals and tie ups with
Banks for this purpose. Participating banks are free to engage any such life
insurance company for implementing the scheme for their subscribers.
2. Scope of coverage: All individual account holders of participating banks in the
age group of 18 to 50 years are entitled to join. In case of multiple bank accounts
held by an individual in one or different banks, the person is eligible to
join the scheme through one bank account only. Aadhar is the primary KYC for the
bank account.
3. Enrolment Modality: The cover shall be for one year period stretching from
1st June to 31st May for which option to join / pay by auto-debit from the designated
individual bank account on the prescribed forms will be required to
be given by 31st May of every year. Delayed enrolment for prospective cover is
possible with payment of pro-rata premium as laid down in above para.

319
For subscribers, insurance cover shall not be available for death (other than due to
accident) occurring during the first 45 days from the date of enrolment into the
scheme (lien period) and in case of death (other than due to accident)
during lien period, no claim would be admissible.
4. Benefits: Rs.2 lakh is payable on member’s death due to any cause.
5. Premium: Rs.436/- per annum per member. The premium will be deducted from
the account holder’s bank account through ‘auto debit’ facility in one instalment, as
per the option given, on or before 31st May of each annual coverage period under
the scheme. Delayed enrolment for prospective cover after 31st May will be
possible with payment of pro-rata premium as laid down in para 3 above. The
premium would be reviewed based on annual claims experience.
6. Eligibility
Conditions:
Individual bank account holders of the participating banks aged between 18
years (completed) and 50 years (age nearer birthday) who give their consent to
join / enable auto-debit, as per the above modality, will be enrolled into the scheme.
7. Master Policy Holder: Participating Banks are the Master policy holders. A
simple and subscriber friendly administration & claim settlement process has
been finalized by LIC / other insurance companies in consultation with the
participating bank.
8. Termination of assurance: The assurance on the life of the member shall

terminate on any of the following events and no benefit will become payable
there under:
1) On attaining age 55 years (age near birth day) subject to annual renewal
up to that date (entry, however, will not be possible beyond the age of 50
yea
rs).
2) Closure of account with the Bank or insufficiency of balance to keep the
insurance in force.
3) In case a member is covered under PMJJBY with LIC of India / other
company through more than one account and premium is received by LIC /
other company inadvertently, insurance cover will be restricted to Rs. 2
Lakh and the premium paid for duplicate insurance(s) shall be liable to be
forfeited.
4) If the insurance cover is ceased due to any technical reasons such as
insufficient balance on due date or due to any administrative issues, the same
can be reinstated on receipt of appropriate premium as mentioned in Para 3
above, subject however to the cover being treated as fresh and the
45 days lien clause being
applicable.
5) Participating Banks shall remit the premium to insurance companies in
case of regular enrolment on or before 30th of June every year and in other
cases in the same month when
received.

320
9. Administration: The scheme, subject to the above, is administered by the
LIC P&GS Units / other insurance company setups. The data flow process and
data proforma has been informed separately.
Members may also give one-time mandate for auto-debit every year till the scheme
is in force.
It is the responsibility of the participating bank to recover the appropriate
premium in one instalment, as per the option, from the account holders on or before
the due date through ‘auto-debit’ process.
Enrolment form / Auto-debit authorization / Consent cum Declaration form in the
prescribed proforma shall be obtained and retained by the participating bank. In
case of claim, LIC / insurance company may seek submission of the same. LIC /
Insurance Company reserves the right to call for these documents at any point
of time.
The acknowledgement slip may be made into an acknowledgement slip-cum-
certificate of insurance.
The experience of the scheme will be monitored on yearly basis for re-calibration
etc., as may be
necessary.
Appropriation of Full Annual Rs.342/- Rs.228/- Rs.114/- is

Premium: Appropriation Premium of collected in collected in the collected in
of Premium Where: Rs.436/- the 2nd 3rd quarter of the 4th
collecte quarter of risk period quarter of
d risk Period risk period
01 Insurance Rs.395/- Rs.309/- Rs.206/- Rs.103/-
Premium to LIC/
Insurance
Company
02 Reimbursement of Rs. 30/- Rs.22.50 Rs.15/- Rs.7.50
Expenses to
BC/Micro/Corpora
t e/ Agent
03 Reimbursement of Rs.11/- Rs.10.50 Rs.7/- Rs.3.50
Administrative
Expenses to
participating
Banks

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Agricultural Finance
Our economy is basically an agricultural economy. Nearly 60% of our population

depend upon agriculture. In the 50s and 60s our country imported food products
and milk products. The successive five year plans embarked upon the green
revolution and white revolution for which modernisation and mechanisation of
agriculture and allied activities was a must and that needed finance. In this context
the major banks were nationalised and agricultural finance became one of the
major portions of directed credit. Specialised agricultural credit departments and
banks were opened for catering to this purpose.
PRADHAN MANTRI FASAL BIMA YOJNA
The Government of India, in April 2016 had launched PMFBY after rolling
back the earlier insurance schemes – National Agriculture Insurance
Scheme (NAIS), Weather based Crop Insurance scheme and Modified
National Agricultural Insurance Scheme (MNAIS). The scheme is
implemented by Agriculture Insurance Company of India (AIC) and other
empanelled private general insurance companies which are selected by the
State Governments through bidding.
PMFBY will provide a comprehensive insurance cover against failure of the
crop thus helping in mitigating risk, stabilising the income of the farmers and
encourage them for adoption of innovative practices.
Crops covered by PMFBY
a) Food crops (Cereals, Millets and Pulses)
b) Oilseeds
c) Annual Commercial / Annual Horticultural crops.
The scheme is compulsory for loanee farmer obtaining Crop Loan/ KCC
account for notified crops. However, voluntary for Other/ non loanee farmers
who have insurable interest in the insured crop(s).
The Maximum Premium payable by the farmers will be 2% for all Kharif Food
& Oilseeds crops, 1.5% for Rabi Food & Oilseeds crops and 5% for Annual
Commercial/ Horticultural Crops.
The difference between premium and the rate of Insurance charges
payable by farmers shall be shared equally by the Central and State Govt.
The seasonality discipline shall be same for loanee and non-loanee
farmers.
The scheme will be implemented by AIC and other empanelled private
general insurance companies. Selection of Implementing Agency (IA) will be
done by the concerned State Government through bidding.
The existing State Level Co-ordination Committee on Crop Insurance
(SLCCCI), Sub-Committee to SLCCCI, District Level Monitoring Committee
(DLMC) shall be responsible for proper management of the Scheme.

322
The Scheme shall be implemented on an 'Area Approach basis'. The unit
of insurance shall be Village, village Panchayat level for major crops and
for other crops it may be a unit of size above the level of Village, village
Panchayat. The Loss assessment for crop losses due to non-preventable
natural risks will be on Area approach. In case of majority of insured crops
of a notified area are prevented from sowing/ planting the insured crops
due to adverse weather conditions that will be eligible for indemnity claims
up to maximum of 25% of the sum-insured.
However losses due to localised perils (Hailstorm, landslide & inundation)
and Post-Harvest losses due to specified perils (Cyclone/ Cyclonic rain &
Unseasonal rains) shall be assessed at the affected insured field of the
individual insured farmer. Three levels of Indemnity, viz., 70%, 80% and
90% corresponding to crop Risk in the areas shall be available for all
crops.
The Threshold Yield (TY) shall be the benchmark yield level at which
Insurance protection shall be given to all the insured farmers in an
Insurance Unit Threshold of the notified crop will be moving average of
yield of last seven years excluding yield upto two notified calamity years
multiplied by Indemnity level.
In case of smaller States, the whole State shall be assigned to one Insurance
Agency (IA), 2-3 for comparatively big States. Selection of IA may be made
for at least 3 years.
General Exclusions: Losses arising out of war and nuclear risks, malicious
damage and other pre-ventable risks shall be excluded. Special efforts shall
be made to ensure maximum coverage of SC/ ST/ Women farmers.
Provision of penalties/incentives for states, Insurance companies and Banks
i.e. 12% interest to be paid by the Insurance Co. to farmer for delay in
settlement of claim beyond two months of prescribed cutoff date. Similarly
State Govt. has to pay 12% interest for de-lay in release of state share of
subsidy beyond three months of prescribed cutoff date/submission of
requisition by Insurance Co.
Important Circulars:-
1) Priority Sector Lending – Master Direction—HOBC 114/124 dated
09.09.2020
2) Financial Inclusion & PMJDY – Operational guidelines – Circular Letter
no. 2019-20/123 dated 11.02.2020 HOBC 114/207 dated 31.12.2020
3) Master Circular on SHG-Bank Linkage Programme – HOBC
no.115/12 dated 07.04.2021
4) Master Cir. On Gold Loan Scheme – HOBC no. 114/86 dated 30.07.2020
5) "Star Animal Husbandry Infra (SAHI)" under Central Sector
Scheme
(AHIDF) – HOBC 114/101 dated 20.08.2020
6) "Star Agri Infra (SAI)" under Central Sector Scheme (AIF) –
HOBC
no.114/102 dated 20.08.2020

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7) Master Circular - Deendayal Antyodaya Yojana — National Rural
Livelihood
Mission (DAY-NRLM) – HOBC 114/133 dated 23.09.2020 HOBC 115/10
dated 07.04.2021 Circular Letter no. 2021-22/33 dated 12.08.2021
8) VISVAS Yojna HOBC 114/230 dated 05.02.2021
9) Star Krishi Urja Scheme (SKUS) under Central Sector Scheme
(PM KUSUM) – HOBC 114/139 dated 30.09.2020
10) Star Blue Revolution Scheme (SBRS) under Central Sector Scheme
(PM MSY) – HOBC 114/140 dated 30.09.2020
11) Star Micro Food Processing Enterprises Scheme (SMFPE) under
Centrally Sponsored PMFME Scheme – HOBC 114/100
dated
18.08.2020
12) Star Farmer Producer Organizations (SFPOs) Scheme – Financing to
FPO/FPC – HOBC 114/170 dated 31.10.2020
13) "Star Krishi Vaahan" – HOBC 114/191 dated 03.12.2020
14) KCC – Master Circular – HOBC 112/55 date – 17/07/2018
15) KCC –Master circular on Animal Husbandary & Fisheries—HOBC
112/169 date 11/03/2019
16) All Agriculture Proposal formats -- HOBC 110/192 dated
–
03/01/2017
17) Tatkal Loan – HOBC 106/117 date- 01/11/2017
18) PMMY in agriculture – HOBC 110/89 date 09/08/2016
19) Service charges Master Circular– HOBC 112/129 date 12/12/2018
w.e.f.15/01/2019
20) Credit facilities to SC/ST – Master Circular- HOBC 113/75 date
10/07/2019
21) Credit facilities to minorities – Master Circular- - HOBC 113/71 date
10/07/2019
22) PMMY- Master Circular – HOBC 109/63 date 24/06/2015
23) Stand Up India – Master Circular – HOBC 110/51 27/05/2016
24) Star Start Up – Master Circular – HOBC 111/28 date 25/05/2017
25) Day NULM – Master Circular – HOBC 113/60 date 25/06/2019
26) Transaction Limit at BC outlet – HOBC 113/153 dated 14/10/2019
27) Amendment in BSBDS a/c – HOBC 113/157 dated 16/08/2019

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राजभाषा
1.भारतीय संविधान का भाग 17 राजभाषा यानी दे िनागरी से संबंवधत है , संघ के शासकीय प्रयोजनों
के विए भारतीय अंकों का अंतरराष्‍्र ीय का का प्रयोग होगा
2. 14.09.1949 को संविधान के भाग 17 संविधान सभा द्वारा ाररत वकया गया था
3. संविधान का भाग 17 को 4 अध्यायों ं व विभावजत वकया गया है , इसं व 343 से 351 तक,
कुि 09 अनुच्छे द भाषा से संबंवधत है
अनुच्छे द 343 – संविधान के अनुच्छे द 343(1) प्रािधान वकया गया है वक – दे िनागरी ं व विखित वहं दी
विव ही संघ की राजभाषा होगी और संघ की शासकीय प्रयोजनों के विए, भारतीय अंकों का
अंतरराष्‍्र ीय का का प्रयोग वकया जाएगा
अनुच्छे द 344 : यह अनुच्छे द राजभाषा ोयोग का ग न एिं संसदीय राजभाषा सवं वत के बारे ं व
अिगत कराएगी
अनुच्छे द 345 : राज्य की राजभाषा या राजभाषांं के संबंध ं व अिगत कराएगी
अनुच्छे द 346: एक राज्य एिं दस सरे राज्य की बी अ ै र वकसी राज्य और संघ के बी त्र व्यिहार
संघ की राजभाषा ं व वकया जाएगा
अनुच्छे 347 : वकसी राज्य की जनसंख्या के एक िगग द्वारा बोिी जाने िािी भाषा के संबंध ं व विशेष
प्रािधान
अनुच्छे द 348 : उच्चतं न्यायािय और उच्च न्यायाियों ं व और वबि अवधवनयं ों ोवद के विए
इस्तें ाि की जाने िािी भाषा अंग्रेजी भाषा ं व होगी जब तक वक संसद कानसन द्वारा अन्यथा प्रदान न
करे
अनुच्छे द 349: भाषा से सं बंवधत कुछ कानसनों को अवधवनयवं त करने के विए विशेष प्रविया.
अनुच्छे द 350 : वशकायतों के वनिारण के विए संघ या राज्य ं व प्रयु्‍त होने िािी वकसी भाषा ं व
अभ्यािेदन दे ने का हक है
अनुच्छे द 350 ए: प्राथवं क स्तर र ं ातृभाषा ं व वशक्षा की सुविधा
अनुच्छे द 350 बी : भाषाई अल्पसंख्यकों के विए विशे ष अवधकारी
अनुच्छे द 351 : वहं दी भाषा के विकास के विए वनदे शों का उल्िेि है
4.भारतीय संविधान की 8िी अनुसस ी ं व कुि 22 भाषांं को ं ान्यता प्रदान की गयी है 8िी ं
अनुसस ी ं व विदे शी भाषा ने ािी को शावं ि वकया गया है
5.राजभाषा अवधवनयं 1963 की धारा 3,26 जनिरी 1965 से िागस होगा है राजभाषा अवधवनयं
1963 की धारा 3(3) का ं हत्व राजभाषा अवधवनयं की धारा 3(3) ं व जारी वकए जाने िािे 14
प्रकार के दस्तािेजों से हैं
6.राजभाषा वनयं को 1976 ं व ाररत वकया गया है और इसका संशोधन 1987 ं व हुो है

325
7.हर िषग “वहं दी वदिस” 14 वसतंबर को ं नाया जाता है
08.हर िषग “विश्ि वहं दी वदिस” 10 जनिरी को ं नाया जाता है
09. गृह ं ंत्रािय राजभाषा से संबंवधत ं हत्व सणग वनणग य िेता है
10. प्रधान ं ंत्री कवद्रीय वहं दी सवं वत के अध्यक्ष हैं
11. राजभाषा कायाग न्वयन सवं वत का ं ुख्य कतगव्य वहन्दी के प्रगां ी प्रयोग की सं ीक्षा करना है
12.राजभाषा कायाग न्ियन सवं वत की बै कों की ोिवधकता 3 ं ाह ं व एक बार करना है
13.नगर राजभाषा कायाग न्ियन सवं वत (TOLIC) की बै कों की ोिवधकता :छ: ं ाह ं व एक

बार करना है
14.राजभाषा अवधवनयं 1963 की धारा 3 (3) के तहत उल्िंघन होने र, ऐसे दस्तािेजों र
हस्ताक्षर करने िािे अवधकारी उ‍तरदाई है
15.हर िषग गृह ं ंत्रािय, राजभाषा विभाग द्वारा राजभाषा र िावषगक कायगिं तैयार एिं जारी
करता है
16.भारत की राजभाषा ्‍या है ? दे िनागरी ं व विखित वहं दी विव . राजभाषा वनयं 1976
17.राजभाषा वनयं ों के अनुसार, भारतीय राज्यों को 3 क्षेत्रों ं व िगीकृत वकया गया है यानी क, ि
एिं ग or A,B AND C ( वनयं 2 of राजभाषा वनयं 1976)
क क्षेत्र/A Region – राज्य : वबहार, हररयाणा, वहं ा ि प्रदे श, ं ध्य प्रदे श,

छ‍तीसगढ,झारिंड, उ‍तरािंड,राजस्थान और उ‍तर प्रदे श एिं अंडं ान ि वनकोबार द्वी सं सह,संघ
राज्य क्षेत्र : वदल्िी
ख क्षेत्र / B Region – गुजराज, ं हाराष्‍्र , ं जाब ि संघ राज्य क्षेत्र : ं डीगढ, दं ण और

दीि तथा दादरा और नगर हिेिी
ग क्षेत्र / C Region – कनाग ्क, तवं िनाडस, केरिा, ोन्र प्रदे श, तेिंगाना, ंवडसा,
िेस्् बवगाि, गोिा, जम्ं स एिं कश्ं ीर , ोसां , नागािैंड, ं ेघािया, अकाणा ि प्रदे श, वस्‍कीं ,
वत्र ुरा, वं झोरां ,ं वण ुर, और संघ राज्य क्षेत्र : ां डु ेरी, िक्ष्यद्वी
18. वहं दी ं व प्राप्त त्र का जिाब अवनिायगत: वहं दी ं व दे ना होगा (वनयं 5 राजभाषा वनयं 1976)
19. ऐसे दस्तािेजों र हस्ताक्षर करने िािे व्यखियों की यह वजम्मे दारी होगी वक िे राजभाषा
अवधवनयं 1963 की धारा 3 (3) का अनु ािन सुवनवित करव (वनयं 6 - राजभाषा वनयं
1976)
20.कोई ोिेदन, अप् ीि या अभ्यािेदन, जब भी वहं दी ं व वकया जाए या हस्ताक्षर वकया जाएा,
उसका उ‍तर वहं दी ं व दे ना होगा (वनयं 7 – राजभाषा वनयं 1976)
21.केद्र सरकार ोदे श द्वारा, ऐसा अवधससव त कायाग िय तय कर सकती है , जहां “व्प्प्णी तथा
प्राका ण िेिन”(Noting & Drafting) और उ्‍त ोदे श ं व बताये गए शासकीय प्रयोजनों के

326
विए कं ग ाररयों द्वारा केिि वहं दी का प्रयोग वकया जाएगा, वजन्हव वहं दी ं व प्रिीणता प्राप्त है (वनयं
8 (4) – राजभाषा वनयं 1976)
22.वकसी कं ग ारी को वहं दी ं व प्रिीणता प्राप्त सं झा जाएगा वक ____उसे वहं दी ं व प्रिीणता प्राप्त
है
1.जब उसने ं ैव्र क या सं कक्षा रीक्षा वहं दी ं ाध्यं से उ‍तीणग कर िी है या
2.स्नातक रीक्षा ं व अथिा उसके सं तु ल्य या उससे उच् तर वकसी अन्य रीक्षा ं व वहं दी को एक
िैकखल्पक विषय (optional subject) के का ं व विया था या
3.घोषणा- त्र प्रस्तु त करता हो (on the declaration basis) (वनयं 9 - राजभाषा वनयं 1976)
23. वकसी कं ग ारी को वहं दी का कायगसाधक ज्ञान प्राप्त सं झा जाएगा वक ____उसे वहं दी कायगसाधक
ज्ञान प्राप्त है
1.उसने ं ैव्र क रीक्षा या उसके सं तु ल्य या उससे उच् तर रीक्षा वहं दी विषय के साथ उ‍तीणग कर िी
है या
2.कवद्रीय सरकार की वहं दी वशक्षण योजना के अंतगगत प्राज्ञ रीक्षा उ‍तीणग कर िी है या
3.घोषणा के ोधार र (On declaration basis) (वनयं 10 – राजभाषा वनयं 1976
24.कवद्रीय सरकार के वकसी कायाग िय के प्रयोग ं व ोने िािे ं ैनुअि, संवहताएं , अन्य प्रविया
सावह‍य, स््े शनरी की िस्तु एं जैसे रां ग , सभी नां ट्टा, सस ना ट्टा, त्रशीषग और विरारों र
उ‍कीणग िेि तथा स््े शनरी की अन्य ं दव वहं दी और अंग्रेजी ं व अथाग त वद्वभाषी होगी (वनयं 11 –
राजभाषा वनयं 1976)
25. राजभाषा अवधवनयं एिं वनयं ों के प्रािधानों का अनु ािन हे तु उ‍तरदावय‍ि कनन है ?
कायाग िय का प्रशासवनक प्रधानAdministrative Head of the Office (वनयं 12 – राजभाषा वनयं
1976 )
26.राजभाषा के क्षेत्र ं व वहं दी कायाग न्ियन के विए कवद्रीय वहं दी सवं वत शीषगस्थ सवं वत है इसकी
अध्यक्षता प्रधानं ंत्री जी करते है
संसदीय राजभाषा सवं वत Parliament Committee on Official Language
28.राजभाषा अवधवनयं 1963 की धारा 4 (1) के तहत जनिरी 1976 ं व संसदीय राजभाषा सवं वत
का ग न वकया गया था इस सवं वत के कुि 30 सदस्य है , वजनं व से 20 िोकसभा से और 10
राज्य सभा से शावं ि है
29.यह सवं वत भारत सरकार की राजभाषा नीवत के अनुका विवभन्न ं ंत्राियों/विभागों ं व राजकीय
प्रयोजनों के विए वहं दी के प्रयोग की वदशा ं व की गई प्रगवत का ुनविगिोकन करके उन र अ नी
वसराररयशों सवहत ं ाननीय राष्‍्र वत को अ नी रर ो्ग प्रस्तु त करती है राष्‍्र वत रर ो्ग को प्र‍ये क
सदन के सं क्ष रििाएं गे और सभी राज्य सरकारों को भेजेगा
30. राजभाषा संबंधी संसदीय सवं वत की कनन-सी उ -सवं वत बैंकों का यगिेक्षण करती है ?

327
साक्ष्य एिं ोिेि सवं वत Committee of Draft and Evidence
31. अंग्रेजी के अवतरर्‍त वहं दी ं व ्ं कण या ोशुविव कायग करने िािे अं ग्रेजी ्ं ककों और
ोशुविव कों को िं शा: रु.160/- और का.240/- प्रवतं ाह वहं दी प्रो‍साहन रावश दी जाती है
32.कोई ोिेदन, अप् ीि या अभ्यािेदन, जब भी वहं दी ं व वकया जाए या हस्ताक्षर वकया जाए तो
उसका उ‍तर वहं दी ं व वदया जाएगा
33.उत्कृ ष्ट ाजभाजाज कज्जन्‍ ् क िए कद ्र राकजा,उ िं और बैंकों और नगर राजभाषा

कायाग न्ियन सवं वतयों को ाजात राकजा,गृह ं ंत्रािय द्वारा ुरस्कृत की जानेिािे सि्च् ुरस्कार
कनन-सी है ? राजभाषा कीवतग ुरस्कार
*****

328
अक्टू बर-2022
Bank of India
Management Development Institute
Plot No.–30, Sector–11
CBD Belapur, Navi Mumbai
Navi Mumbai - 400614

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The whole process of education is to turn the dreams to reality. We

In golden words of Swami Vivekananda ji- “Education is not the

Our Team MDI is committed to enlighten the BOIans with excellence

Never stop learning, there’s always one more step to go.

May all your dreams come true.

With best wishes,

S.No Topic Page Number

Vijeta – October 2022

The objective of Know Your Customer (KYC) / Anti-Money Laundering (AML)

KNOW YOUR CUSTOMER (KYC)

A ‘Customer’ is defined as:

 a person or entity that maintains an account and/or has a business

 Customer Acceptance Policy;

Vijeta – October 2022

Customer Identification Procedures (CIP)

Vijeta – October 2022

Customer Identification Requirements (Indicative)

iii. Trust/Nominee or Fiduciary Accounts

iv. Accounts of companies and firms

Vijeta – October 2022

Vijeta – October 2022

The Accounts Of Prisoners

Accounts of Non-Government Organizations (NGOs):

a) Accounts of NGOs should be opened only after fully complying with

• On submission of proof of current address, the account would be treated as

Vijeta – October 2022

• In order to minimize the operations in mule accounts as also to

• In the circumstances when a bank believes that it would no longer be

Accounts with Introduction

Small Accounts are accounts wherein:-

i. The aggregate of all credits in a financial year does not exceed

Vijeta – October 2022

Treatment of accounts for non-adherence with KYC guidelines:

Bank is required to conduct ongoing due diligence by way of Re-KYC as well as

 The Branch has to take a conclusive decision whether to continue banking

• The Board of Directors of the bank are expected to ensure that an

• Banks are expected to ensure that its internal audit and

Vijeta – October 2022

Periodic updation of a customer’s profile as per above mentioned period is mandatory.

Introduction of New Technologies –

Combating Financing of Terrorism

• Any transaction which gives rise to a reasonable ground of

• RBI provides list of individuals and entities having terrorist

Vijeta – October 2022

• Central Government is empowered to freeze, seize or attach funds and

Freezing of financial assets

• In case of positive findings, an order to freeze these assets under section

• U.N. Security Council Resolution 1373 obligates countries to

Vijeta – October 2022

• The guidelines on KYC/AML/CFT shall apply to the branches and majority

Vijeta – October 2022

Ordering Bank / Intermediary Bank

• Banks are required to appoint a senior management officer to be

Vijeta – October 2022

a) The nature of the transactions;

Maintenance and Preservation of record

 Banks must have an ongoing employee training programme so that the

Vijeta – October 2022

Identification of Beneficial Owner:

b) Company – more than 25% of the shares or capital or the profits

Enhanced Due Diligence (EDD)