Loans

Loan Policy


The main objective of the loan policy is to distribute the available funds (FUND) of the bank in such a way that the fund of the bank is protected and beneficial to the bank. This objective has to be fulfilled by following various instructions issued by the Reserve Bank of India as well as the Co-operative Cooperation Committees. It is also to be noted that the loan is disbursed among members. For priority sectors lending and targets bank must go for the notifications issued by RBI from time to time.

Scope ofApplication

The policy is applicable to the all branches. All employees shall be familiar with this document and should implement it in their daily work. The provisions of the loan policy are applicable to the entire range of Bank’s lending. The principles of feasibility, desirability and reasonableness apply in equal measure to the Bank’s loans to its employees and officers.

All loan assets are classified as per guidelines of RBI on Income Recognition and Asset Classification (IRAC). There are various options available to deal with stressed/non-performing assets, including restructuring, if fundamentally viable, early exit, one time settlement, enforcement of security under SARFAESI Act, and litigation in DRT / Court and NCLT. The suitability of the approach adopted is determined on the principle of ensuring minimum loss to the Bank, taking into account, the time value of money. Approval of designated sanctioning authority is obtained for any of the actions indicated above, as per the delegatedpowers.

Procedure for sanctioning loan

Every loan application will be received by the branch manager. After the initial investigation, if they are satisfied, then they can prepare a loan proposal. In which they will obtain the necessary information from the applicant according to the checklist made for this purpose and submit the proposal to the Chief Executive Officer along with their recommendation.On being satisfied with the above proposal, the Chief Executive Officer, after checking from his level, will send the Loan Committee for approval with his recommendation. After the approval of the "Loan Committee" the loan will be disbursed by the branch manager.

Procedure for sanctioning loan

All powers are vested in the "Board of Directors" to approve loans. For smooth operation, the Board of Directors constituted a "Loan Committee" and embodied all the powers related to loan approval.

All the loans sanctioned by this Loan committee are presented for approval in the upcoming board of directors meeting.

Exposure limit of loans

According to the RBI guidelines and notifications, it has been decided that, henceforth, the prudential exposure limits for a single borrower/party and a group of connected borrowers/parties shall be 15 per cent and 25 per cent, respectively, of their tier-I capital.

Free loan disbursement by bank officials

Liquid securities up to 90% of the face value or current value of LIP, NSC, KVP, and BANK’S OWN DEPOSITS etc. will be accepted by the Chief Executive Officer or Branch Manager and VEHICLE LOAN (2/3/4 WHEELER) - Up to Rs 4 lakh will be approved by the Chief Executive Officer on the recommendation of the Branch Manager.

Loans are given by for various purposes and such loans are known by different nomenclature. Different interest rates are prescribed for different types of loans. (Equivalent to other bank's interest rates / made competitive.) The limit for different side securities has been fixed for different loans. The maximum limit for different types of loans has also been fixed per borrower. The rate table for various loans and the interest affected on them is attached.

Time norms for disposal of credit proposals

The time norms mentioned for disposal of applications complete in all respects accompanied by documents are as below:

Agriculture

AMOUNT Time lines for disposal of loan applications
Upton Rs.25000 Within 7 days
Beyond Rs.25000 and up to Rs.50000– fresh limits and increase in limits for existing units Within 2 weeks
Above Rs.50000 –fresh limits and increase in limits for existing units Within 3 weeks
RESERVE 265.80

Branches should dispose of all the applications at the earliest time possible, preferably within 2-3 days as most of the applications received in Branches are in respect of tailor-made schemes.

MSME AND OTHERS

AMOUNT Timelines for disposal of loan applications
Loans up to Rs.5.00 Lakh Within 2 weeks
Above Rs.5.00 Lakh and up to Rs.25.00 Lakh Within 3 weeks
Above Rs.25.00 Lakh Within 6 weeks

Loans to Staff members

All loans given to staff of Bank will be assigned with the retirement benefits and superannuation, gratuity and pension scheme and other benefits payable on retirements. However EMIs will be deducted as monthly basis.

Supervision of loan accounts after disbursement of loans

To ensure that all the loans disbursed by the bank remain Standard Assets, the bank has formulated a plan to continue to supervise the loan after disbursement. Under this policy, the branch managers of the bank will visit the special customers on quarterly basis in their respective regions as per checklist made for this purpose and also to monitor the enduse of funds. By doing this, the latest status of customers will be assessed, as well as the problem of the customer will also be diagnosed. The immovable assets taken as securities to the loans must be reviewed once in every five years.

Review of LOAN A/cs

It was decided to keep a close watch on all the loans disbursed. For this, an officer of the bank will be responsible, who will keep an eye on the operation of each loan account and inform the concerned branch manager, the chief executive officer as necessary to mention here specifically that if the condition of a borrower is accidentally deteriorated. If the situation of the loan extended by the bank is in danger, then the said officer should also inform the top official (chairman) of the bank.

Extension of validity of credit limits

  • Review/renewal to be submitted before 2 months of the scheduled due date of review/renewal.
  • In case of delay due to non-availability of required information/documents, such as, audited/provisional financial statements, operational data, borrower/s being out of station, etc., operational review to be submitted to the concerned sanctioning authority. Sanctioning authority shall record the same in review proposal and may reviewtheaccountforamaximumperiodof90daysfromtheduedateonexistingterms and conditions. Such review is restricted to two times within 180 days from the due date of renewal.
  • MD/CEO/BM is authorized to accord review/renewal of limits falling under powers. The same may be placed to Loan committee forratification.
  • However, within 180 days from the original due date renewal must becompleted.
  • Existing concessions including concessional ROI would stand withdrawn from the due date of review/renewal if the same is not permitted for continuation during sanctionreview.

In order to review the loan accounts, the bank officer should pay attention to the following points:

  • Whether the money was used for the purpose for which the loan was taken?
  • Whether or not growth in the debtor's business has been reflected since obtaining a loan from the bank?
  • Whether or not Primary Security (Stocks) is maintained in debt ratio
  • The customer deposits all the credits in his bank account, or also makes cash payments directly.
  • Does the bank regularly submit stock statements? If not, he should give written instructions to give stock statements regularly.
  • Insurance of stock and other assets of the establishment should be regular in order. Should not have Under Valuation Insurance
  • How is the performance of the stock of the borrower's establishment maintained?
  • How is the Borrower's Books of A / c? Systematic & Sound? Or Haphazard? JOURNAL, CASH BOOK, GENERAL LEDGER, PURCHASE BOOK, SALE REGISTER, and STOCK BOOK all maintained and updated?
  • Applicant G.S.T. And other government tax paid on time or not? If the establishment is in the rented premises, does the borrower pay the monthly rent under the deadline or late? 100 percent cash sale or credit sale. If there is a credit sale, then the percentage of credit sale? In how many days does the credit sale come?
  • The total sale of the borrower is how many times the finance provided by the bank?
  • Copy of Income Tax Return P / L a / c, B / S should be obtained at the end of the year.

STATUTORY RESTRICTIONS

Advances against Bank's own shares Section 20 (1) (a) Banking Regulation Amt 1949 (AACS) Primary (Urban) Cooperative Bank is prohibited from granting loans and advances against own shares.

BANK GUARANTEE

Bank Guarantee can be given on 100% liquid security and commission of 2% of guarantee every year.

CREDIT INFORMATION COMPANIES

Before the approval of loan applications above two lakh rupees, at least two credit information companies will get information about the credibility of the applicant. The BOARD has decided that only applications of 600 credit score or more marks will be considered.

If for any reason the application less than 600 CREDIT SCORE - 600 is to be considered, then the bank should take sufficient LIQUID SECURITY from the lender to make the RISK FACTOR negligible.

After disbursing the loan, it was decided to send information regularly to the four credit information companies.

There is no need to investigate the credit information company before disbursing loans given against 100% liquid security.

GUARANTORS

GUARANTOR will be mandatory for every loan except loans given against 100% liquid security.

The voter card / Aadhar card, PAN card of the guarantor is compulsory. If the loan amount is five lakh or more, a copy of the income tax return of the guarantor should be taken (at least 2 years) along with their net worth. Each guarantor has to create a NOMINAL MEMBER of the bank if he is not already a member. For this, the fee prescribed in the bye-laws is to be obtained.

LOANS TO DIRECTORS OR THEIR RELATIVES

Loan will be given to the members of the Board of Directors and their relatives against LIC policy and fixed deposit receipt in the name of them only. Which will apply to both fund based (FUNDED) and non-fund based (NON - FUNDED) loans. Establishments where members of the board of directors or their relatives are involved also have a restriction on the loan.

The relatives of the members of the Board of Directors will be determined according to the instructions of the Reserve Bank of India.

CREDIT LIMIT CRITERIA

The maximum loan limit has been determined in the light of the instructions of the Master Circular of the Reserve Bank of India, whose details are as follows:

UNSECURED LOAN will be sanctioned to any one borrower. The maximum limit of total unsecured loans will be according to the prescribed manner taking into the aspects and guidelines of RBI and subject a change from time to time.
The maximum limit for the loan of a nominal member (NOMINAL MEMBER) will be Rs 50000 / -.
The maximum limit of HOUSING LOAN will be Rs. 30,00,000 / - (Thirty Lakh).

LOAN AGAINST HOME LOAN OR COMMERCIAL REAL ESTATE

As a special precaution before disbursing home loans, it is mandatory to evaluate the "house property" against which the loan is to be given by the approved appraiser of the bank. Also, two officials of the bank will report on-site investigation of the "house property" against which the loan is to be given.

Similarly, it is mandatory to give loan for the purchase of commercial property or to get it evaluated by the authorized assessee of the bank before giving loan against commercial property. Even before lending for commercial property, on-site investigation by bank officer is mandatory.

Increase in debt limit

2 - 3 years after the operation of the loan account, usually the borrowers apply for an increase in the loan limit. The loan review report must be considered before increasing the loan limit, increase the liquid security and other security as per the limit.

Special attention should be paid to whether the borrower really needs additional funds in his business. If the need is felt due to the managerial laxity of the borrower, the borrower must be advised of caution in management.

ENHANCEMENT OF LIMIT IN FORM OF TERM LOAN

It is the view of the Board that if the proposal to increase the limit of C/C limit is acceptable after scrutiny, then a term loan of 5 years should be given for the same amount so that the work of the borrower is carried out and the additional loan burden of the bank did not even grow.

TEMPORARY OVER DRAFTS

The release of ad hoc / additional credit for meeting temporary requirements may be considered by the bank only after the borrower has fully utilised / exhausted the existing limit. If the customer's credit is good and the transaction with the bank is good, then TOD must not be exceeding 20% at any time of the actual amount of limit sanctioned, and time duration will be for 90 days with additional interest of 2% over and above.

Corporate Address: Tiwary Complex, Kashidih Chowk, Near Mansarovar Hotel, Sakchi, Jamshedpur-831001   |  Phone: 0657-2440211/2442751  |  Email: info@jucbl.com
Mango Branch: Old Purulia Road, Mango, Near Jishu Bhawan, 832110  |  Phone: +91-8797777722, 8797777733