PNB Credit Officer Handbook PDF

Pawan Singh GM- Learning & Development H.O: Centre for Learning & Innovations Dear Credit Officers, Welcome to PNB Parivar! We are excited to have you on board. I am delighted to unveil “Handbook for Credit Officers”, a valuable resource prepared for you to embark on your journey as a Credit Offi...

Pawan Singh GM- Learning & Development H.O: Centre for Learning & Innovations Dear Credit Officers, Welcome to PNB Parivar! We are excited to have you on board. I am delighted to unveil “Handbook for Credit Officers”, a valuable resource prepared for you to embark on your journey as a Credit Officer in the bank. This handbook has been designed to equip you with the essential knowledge and skills. As a Credit Officer, your role is to create value for customers and driving the bank's business. This handbook provides an overview of the bank's Credit Delivery Structure, your roles and responsibilities, due diligence process during the loan lifecycle. It will build your confidence to effectively engage with customers, meet their expectations, to onboard new clients while retaining existing ones through strong customer relationship management. I encourage you to immerse yourself in the material, leverage the insights provided, and apply them to your work. Your success will promote personal growth and significantly enhance our organization’s reputation and the quality of service. I would like to compliment my team at STC Lucknow led by Anuj Verma (Principal-AGM) for the compilation of this handbook specially designed for you. I believe this booklet will serve as a valuable resource, offering essential support for your assignments. Warm regards, September 21, 2024 (Pawan Singh)  INDEX S. No. PARTICULAR Page No. A. Overview of Bank Credit 1. Credit Delivery Structure 03 2. Roles and Responsibilities of Credit Officer 05 3. Loaning Powers 18 4. MSME Credit 22 B. Pre-Sanction Appraisal 5. Dealing with Loan Applications 30 6. Rejection of Loan Proposals 33 7. Due Diligence Process at Pre-Sanction Stage 36 8. Pre-Sanction Visit 40 9. Credit Information Report 42 10. Status cum Net worth (SNW) Report 46 11. Credit Risk Rating 48 12. Appraisal of Loans 54 13. Obtention of Financials 56 14. Benchmark Ratios 59 15. RAROC 61 C. Post Sanction Follow-Up 16. Due Diligence Process at Post Sanction Stage 62 17. Documentation 63 18. Terms & Conditions of Sanction 64 19. Pre-Disbursement Compliance (PDC) 66 20. Post Sanction Visit 68 21. End Use of Funds 72 D. Due Diligence Process: On Going 22. Limit Sanctioned Statements (LSS) 77 23. Monitoring of Borrowal Accounts 79 E. Other 24. Renewal/ Review of Credit Facilities 85 25. Limitation: Balance & Security Confirmation Letters 88 26. Penal Charges on Advances 90 27. Fair Practice Code for Lenders 92 28. Credit Risk Management 98 29. Dispute Resolution & Complaint Handling Related to CIR 101 30. Free Credit Report Utility 105 31. List of Important Policies /Guidelines 109 Disclaimer: The information in this booklet is for the guidance of staff working in credit vertical and is not a substitute of Bank Circulars /guidelines. The contents of the booklet are subject to change from time to time and therefore, in such cases, Bank circulars/latest guidelines shall prevail. Centre for Learning and Innovation Page | 1  Centre For Learning & Innovation Centre for Learning and Innovation (CLI) has set its own vision & mission in alignment with organizational objectives, focusing on Learning & Knowledge enhancement: To Train People with an objective of Training as a knowledge and skill Business Stategic enhancement partner through Learning, Retention and Application. Mission Vision Focused Learning Delivery Leading with Skill Alignment Enhancement Guiding Principles Trusted by Workforce Stakeholders Development Innovative Use of Technology Centre for Learning and Innovation Page | 2  1. CREDIT DELIVERY STRUCTURE Bank has created proper credit delivery channels for building up a sound credit portfolio. Bank has created specialized structure, wherein relationship management concept has also been introduced. The purpose of creating specialized structure is to ensure prompt credit dispensation and improving credit risk management practices. 1.1 Customer Acquisition Centre (CAC) The CACs consists of cells headed by product/ functional heads as under: a) Home loan and Builders Tie Up b) Vehicle loan and other retail loans c) Current deposits and Merchant Acquiring Business d) Corporate Relationships (only at 8 major cities- at other centres role entrusted to Current Deposit and MAB Cell) e) Saving Deposits, NRI Business, Credit Cards and Other liability products f) Business Loan Segment (For loan above ₹10.00 lakh) Detailed guidelines on Customer Acquisition Centre have been circulated vide MPD Circular no. 13 dated 11.12.2023 and as updated from time to time. 1.2 Government Business Vertical The Government Business Vertical focuses on business generation through liaisoning and identifying opportunities through State Government, Municipal Corporations, PSUs and Defence establishments. Detailed guidelines in this regard has been circulated vide MPD Circular no. 15 dated 18.07.2020 and as updated from time to time 1.3 The Credit delivery structure focuses on delivery of credit through 5 types of structures equipped with skilled staff having separate verticals for pre & post sanction by retaining operational work at Branches. The model focuses on delivery of Credit through specialized verticals wherein duties assigned are outlined as under: LCB/ELCB: The structure deals with Pre sanction appraisal, post sanction monitoring and operational work with the clear segregation of pre & post sanction activities. LCB handles loan accounts above ₹50 Crore, whereas ELCB handles loan account above ₹500 crores. CBB: To cater to the business at Centres not having LCBs or where existing LCBs are having limited business potential. Bank has introduced Corporate Banking Branch (CBB) Structure (by conversion of existing General Banking Branches and LCBs) to handle corporate accounts above ₹10 Crore. MCC: MCC deals with Pre sanction appraisal and post sanction monitoring of Loans having exposure above ₹1 Cr to ₹50 Cr. For accounts above ₹1 Crore, only operations to be handled by Branch and all Pre & Post Sanction responsibilities to be handled by MCC. Where LCB is not present, MCC handles accounts above ₹50 Crore as well. PLP: PLP deals with Pre sanction appraisal and sanction of loan accounts above ₹10 Lac and upto ₹1 Crore (above ₹1.00 crore where MCC is not located). Post sanction monitoring and operations to be handled by Branch. There are two type of PNB Loan Point Centres: PLP: Such centres cover all the branches of a defined Circle irrespective of distance. Hybrid PLP: At certain centres, MCCs have been converted to PLP or rationalized with shifting of business to PLPs and setting up of credit monitoring cell for post sanction responsibilities of Non- Retail Accounts having exposure above ₹1 Crore Centre for Learning and Innovation Page | 3  C-PLP: To have focused approach, dedicated processing center and to improve further efficiency & turnaround of leads, a Centralized Structure for handling Retail loans leads sourced through PNBCSL (PNB Cards & Services Ltd.), christened as Centralized PNB Loan Point (C-PLP) has been set up. C-PLP is limited to retail loan products viz., Housing loan (Above ₹10 lakh), Vehicle Loan (Above ₹ 10 lakh) and Education Loan (Above ₹ 7.5 lakh) sourced through PNBCSL. Credit Approval Committees and Respective Delegated Powers CAC at MCC/ CO/ ZO/ HO Headed by Credit proposals level CM Above ₹1 Crore to ₹4 Crore PLP-CAC AGM Above ₹1 Crore to ₹10 Crore MCC-CAC AGM Above ₹1 Crore to ₹10 Crore CHCAC AGM Above ₹10 Crore to ₹15 Crore CHCAC DGM Above ₹10 Crore to ₹30 Crore ZOCAC GM Above ₹30 Crore to ₹50 Crore1 ZOCAC CGM Above ₹30 Crore to ₹75 Crore1 HOCAC Level-I CGM-Credit Above ₹50 Crore to ₹100 Crore2 HOCAC Level-II ED- Corporate Credit Above ₹100 Crore to ₹300 Crore HOCAC Level-III MD & CEO Above ₹300 Crore to ₹800 Crore Management Committee MD & CEO Above ₹800 Crore 1 As ZOCAC is next higher authority to CHCAC, they shall also consider proposals above ₹15 Crore to ₹30 Crore emanating from Circles headed by AGM. 2 HOCAC Level-I shall consider proposals above ₹75 Crore to ₹100 Crore emanating from CGM headed Zones. Note: It should be ensured that the committee structure at field shall not have the appraising officer as part of the committee. Detailed guidelines regarding constitution, scope, quorum and other operational modalities of CACs at various levels have been advised by IRMD L&A circular no. 44 dated 01.04.2023 on Loaning Powers as updated from time to time. Centre for Learning and Innovation Page | 4  2. ROLES AND RESPONSIBILITIES OF CREDIT OFFICER (Ref. CIRCULAR NO. MPD 08/2020,.09/2020, 10/2020 Dated: 18-05-2020; 18/2021 Dated 07.06.2021) PNB Loan Point Structure of PNB Loan Point PLP Head Field Retail Agriculture MSME & Other Verification Segment Head Segment Head Segment Head Head Fresh Renewal Risk Rating Assessment Fresh Renewal Field Officer Sanction Enhanceme Officer Officer Sanction Enhancement Team nt Team Team Team Assessment Officer (MSME) Role: Pre-sanction appraisal of the All the Credit proposal (Fresh, Enhancement/Renewal/Review, Amendment in T & C/ Relaxation in ROI/Service Charges etc.), Allow Adhoc, Confirmation of Branch Action & any other references and place the complete proposal as per extant Bank Guidelines for sanction to Respective Segment Head for Sanction. Responsibility: Examine the lead and scrutinize the application received. Analyze the financials/ CMA/ financial model submitted by the company. Preparation of complete credit proposal (Fresh, Enhancement/Renewal/Review, Amendment in T & C/ Relaxation in ROI/Service Charges etc.) as per extant Bank guidelines and place the same with his/her recommendation to respective Segment Head for their decision &, Conveying the decision of Competent Authority to branch/ borrower. Proposal related to Fresh/Enhancement of Credit facilities & preparation of NBG proposal in case of Fresh exposure of ₹ 50.00 Cr & above. Proposal related to Review/Renewal of existing Credit facilities, Amendment in T & C/ Relaxation in ROI/Service Charges etc.), Allow Adhoc, Confirmation of Branch Action & any other references (Other than fresh/enhancement/NBG) will be dealt by AO (Assessment Officer) of Processing Team. Scoring of the proposal & submitting the scoring report to Field Verification Head for vetting. Provide necessary documents/information to the Risk Rating Team of PLP & Zonal Risk Management Centre for timely completion of Credit Risk Rating under PNB Trac. Ensure completeness of information required during the pre-sanction appraisal process. After receipt of the documents from the linked Branch & Visit of Field Officer, AO to conduct Enhanced Due Diligence of the borrower to control front end delinquencies including verification of documents. Analysis of CIR of the borrowers/ guarantors/ directors etc. Centre for Learning and Innovation Page | 5  Ensure correct preparation of CR on borrowers and guarantors on annual basis. Obtaining confidential report from other banks of the borrower / allied concerns in Bank’s approved Format. Compiling details of Group/Allied/Associate firms and facilities sanctioned to them. Coordination with the lead bank (under consortium) in terms of obtaining relevant documents for pre sanction appraisal including lead bank process note, if applicable. Obtaining copy of External Risk Rating of the borrower, if applicable. Ensure to obtain Search Report on charges registered with ROC before submission of the proposal and after sanction before release of the facilities to the borrowers as per extant guidelines of the Bank. Ensure to get the satisfaction of charges of other banks from the borrower wherever required. Interact with the old as well as new customers and identify their requirements. Gathering information of the borrower/guarantor from the public domain/media. Checking Caution Advices circulated by the Bank/list of Willful defaulters/caution list of ECGC etc. To check whether the borrower or any of the director/designated partner/partner is connected in the past with any NPA/OTS/Compromise/Unscrupulous defaulters. Report from FRMIS database of PNB to check the antecedents of the borrower/guarantor. Conduct due diligence on the prospective borrowers, verify the antecedents and various data bases available with the bank or from public domain MCA website/GST website, checking information of the auditor from ICAI website, web information, Credit Information Bureaus, RBI defaulters list, ECGC caution list etc. with a view to ensure that sanction of credit facilities will not be detrimental to the interest of the bank. Extraction /updation /verification of CIBIL/ Equifax etc Data/RBI defaulter’s list /ECGC Caution list as per Bank’s guidelines. Obtaining certified copy of passport of directors/guarantors/authorized signatories as per extant bank guidelines. Obtaining Legal Entity Identifier (LEI) code in terms of extant bank guidelines. Enhanced Due Diligence with supporting documents and providing comments on the same after incorporation in the Standardized Credit Appraisal format. Analysis of Financial performance of the borrower as per the requirement of the Standardized Credit Appraisal format. Conveying sanction to the borrower & concerned Branch. To prepare Portfolio of the MSME loans of PLP for follow-up and timely renewal of Credit Facilities & Concession if any (Portfolio may contain Borrower Name, Type of Facility, Date of Sanction, Date of Last Review/renewal, Due Date of Renewal, Concession if any, due date of renewal of concession, any other information required) Attending LSS related queries received from ZO. Any other pre sanction assessment duties assigned from time to time as per bank’s extant guidelines. Any other work as per extant bank guidelines. Centre for Learning and Innovation Page | 6  Mid Corporate Centre Structure of Mid Corporate Centre (MCC) MCC HEAD CPC Head CMC Head Security and Assessment Relationship Field Officer Documents Officer Manager Manager Assessment Officer Role: Pre-sanction appraisal of the Fresh, Enhancement, Renewal, Review, Amendment in T & C, Relaxation in ROI, Service Charges etc, to Allow Adhoc, Confirmation of Branch Action & any other credit proposal/references and place the complete proposal as per extant Bank Guidelines for decision to MCC CAC through CPC Head. Responsibility: ▪ Examine the lead and scrutinize the application received. ▪ After receipt of the documents from the Branch & Field Officer, conduct enhanced Due Diligence of the borrower to control front end delinquencies. ▪ Assessment Officer may visit to the factory/office of the borrower in case that aids in better processing (eg- to understand the nuances of business in case of new industry) and visit Report as per bank’s format be held on record. ▪ Perusal of CIRs of the borrowers/guarantors/directors etc. ▪ Ensuring correct preparation of CR on borrowers and guarantors on annual basis. ▪ Obtaining confidential report from other banks of the borrower / allied concerns in Bank’s approved format. ▪ Compiling details of Group/Allied/Associate firms and facilities sanctioned to them. ▪ Coordination with the lead bank in terms of obtaining relevant documents for pre sanction appraisal including lead bank process note, if applicable. ▪ Obtaining copy of External Risk Rating of the borrower. ▪ Ensure to obtain Search Report on charges registered with ROC before submission of the proposal and after sanction before release of the facilities to the borrowers as per extant guidelines of the Bank. Ensure to get the satisfaction of charges filed wherever required. ▪ Interact with the old as well as new customers and identify their requirements. ▪ Gathering information of the borrower/guarantor from the public domain/media. Centre for Learning and Innovation Page | 7  ▪ Checking Caution Advices circulated by the Bank. ▪ Pre sanction discussions with Promoters/ Financial Controller along with MCC Head/ CPC Head, wherever required. ▪ To check whether the borrower or any of the director/designated partner/partner is connected in the past with any NPA/OTS/Compromise/Unscrupulous defaulters. ▪ Report from FRMIS database of PNB to check the antecedents of the borrower/guarantor. ▪ Conduct due diligence on the prospective borrowers, verify the antecedents and various data bases available with the bank or from public domain, CRILC/ MCA website/ GST website, checking information of the auditor & audit firm from ICAI website, web information, Credit Information Bureaus, RBI defaulters list, ECGC caution list etc. with a view to ensure that sanction of credit facilities will not be detrimental to the interest of the bank. ▪ Obtaining certified copy of passport of directors/guarantors/authorized signatories as per extant bank guidelines. ▪ Obtaining Legal Entity Identifier (LEI) code in terms of extant bank guidelines. ▪ Providing necessary information to respective RM, who shall carry rating in borrowal account up- to ₹10 Cr and for borrowal account above ₹10 Crore Exposure, RM will coordinate with ZRMC/HO IRMD for completion of rating. ▪ Propose an appropriate remedial measure for the Risk identified in CRR. ▪ Enhanced Due Diligence with supporting documents and providing comments on the same after incorporation in the Standardized Credit Appraisal format. ▪ Collect and compile financial data relating to core income statement, balance sheet and cash-flow components. ▪ Analysis of Financial performance of the borrower as per the requirement of the Standardized Credit Appraisal format. ▪ Conducting the RAROC analysis and generating the report. ▪ Provide necessary documents/information to ZRMC/HO-IRMD for timely completion of Credit Risk Rating. ▪ Ensure completeness of information required during the pre-sanction appraisal process. ▪ Preparation & Recommendation of credit proposal for fresh, enhancement, renewal, review, Relaxation/Concession, Adhoc & Confirmation of Action, NBG & Mandates approval, if any. ▪ Processing and assessment of loan proposal and recommending the same for approval to Competent Authority. ▪ Transferring the file/documents relating to the account to Credit Monitoring Cell (CMC). ▪ Conveying the decision of Competent Authority to borrower/branch/RM. ▪ Maintaining Due date of renewal and detail of Concessions allowed in the accounts. ▪ To keep the concessions alive in all the credit facilities i.e. the same should be renewed well before expiry. ▪ Attending LSS related queries (pre sanction) received from ZO in allocated accounts. ▪ Any other pre sanction assessment duties assigned from time to time as per bank’s extant guidelines. Centre for Learning and Innovation Page | 8  RELATIONSHIP MANAGER Role ▪ Manage and develop a portfolio of corporate banking customers with an aim to deepen and broaden relationships with our clients. ▪ Post disbursement compliance and working as single touch point for the allocated accounts. Responsibility ▪ Recovery of all bank charges- Upfront Fees, Annual processing fee, review charges, Documentation Charges, Inspection Charges, etc. ▪ Receiving copy of the proposal/other documents like project report, financial papers such as Balance Sheet of the related account from the Assessment Officer. ▪ Conducting Credit Risk Rating in fresh and existing accounts (Renewal/Review as well as Enhancement) with exposure up-to ₹10 Crore and Coordinating with ZRMC for initiating rating of loans above ₹10 Cr and for vetting of loans up-to ₹10 Crore. ▪ Follow-up with borrower for timely submission of documents in Due CRRs. ▪ Providing replies of observations in respect to the risk rating received from the ZRMC/HO IRMD ▪ Ensure compliance of all the terms and conditions of sanction and adherence to guidelines pertaining to Pre-Disbursement Compliance (PDC). Preparation of Compliance Certificate (A1/A2), Clearance Certificate (B1/B2), Reporting & Monitoring (C1/C2) as per LA Cir No. 68/2023. ▪ Submission of confirmation to the sanctioning authority w.r.t compliance of Terms& Conditions prior to disbursement in terms of existing bank guidelines. ▪ Opening of account in CBS with correct MIS codes as per sanction and Creation of limit nodes post permission from MCC Head/ CMC Head. RM to ensure updating CBS data and ensuring accuracy of data fed. ▪ Regular monitoring of transaction and ensure that these are business related & any deviation be taken up with the party & corrective measures may be taken in discussion with CMC Head/MCC Head. ▪ Stock verification of the accounts. ▪ Obtention of re-valuation report by the approved valuer after expiry of existing valuation as per bank guidelines. ▪ To monitor repayment of loan, servicing of interest and regularity of CC account including routing of sales through the account. ▪ Independent follow up in case the account slips to SMA-0 category and the Joint follow up with CMC Head &MCC Head in case the account slips to SMA-1 category. ▪ Follow-up with borrower for periodic submission of documents/ information required in terms of extant bank guidelines like Balance Sheet, CMA Data, etc. ▪ Ensure to obtain timely QMS reports from the borrowers, analyze the same and adverse features, if any be brought to the notice of CAD HO. ▪ Analysis of Stock & Receivables Statement & placement of Stock Audit report to MCC Head through CMC Head. Ensure timely closure of Stock Audit report by competent authority. ▪ Drawing Power Allocation/ Up-dation in CBS with approval of CMC Head. ▪ Ensure disbursement of the facilities to be in line with Bank’s Policies and Regulatory Requirements, within the time frame set and ensuring that all Conditions Precedent are met prior to disbursement. Centre for Learning and Innovation Page | 9  ▪ Creation of securities within the permissible time period in the sanction. ▪ Creation of charge in CERSAI for movable as well as immovable securities. ▪ Preparing note of approval for permission of Release of CC/PC/PS limit, ILC/ILG transaction and Term Loan Disbursement and ensure that the same is in conformity with the terms of sanction. ▪ Submission of status note for SMA/ stressed accounts. ▪ Ensuring Exchange of information on bank’s prescribed format. ▪ Attending LSS related queries (post sanction) received from ZO/HO in allocated accounts and submission of replies to LSS queries. ▪ Ensure customer monitoring for meeting their further needs as well as development of new business from their sources to achieve the targets. ▪ Ensure that correct rate of interest is being charged as per sanction and all the charges are recovered to avoid any leakage in Revenue to the Bank. ▪ Ensure periodical inspection of securities (primary/collateral) and maintain proper record of visits in the visit register and submit visit report to CMC Head. RM Visit of collateral IP as per bank guidelines is mandatory in existing accounts with exposure up-to ₹3 Crore. ▪ In case of enhancement with enhanced exposure up-to ₹3.00 Cr, the additional IP to be mortgaged is to be visited and Visit Report as per bank’s format be held on record. ▪ Coordinating with Internal as well as external auditors. ▪ Rectify irregularities pointed out by Concurrent Auditor / CARD Auditor / SCA and submit reply in ERBIA as per guideline. ▪ Ensure limitation in the accounts is alive and maintain limitation register properly. ▪ Ensure adequate and valid insurance with agreed bank clause of all securities and follow up with the Company for obtaining insurance cover note/policies. ▪ Ensure timely holding of consortium meetings in accounts where the bank is leader and take up with the Lead Bank in all other accounts. ▪ Posting/up-dation of HCLM details covering security, Due Date for Stock Statement, Penal interest, updating Value of Security, Insurance details, Charge creation details etc. ▪ Updating Date of documents, BC Letter, Rate of Interest etc. in the CBS System. ▪ Periodic review of valuation of the securities as per bank guidelines and updating the same in CBS promptly. ▪ Entry of CERSAI ID in CBS for Primary & Collateral securities. ▪ To maintain account wise records for QMS, Insurance, Limitation, COD, site visits / security inspection, Stock Audit, consortium meetings, Internal and External Risk Rating, Income Value, resetting of ROI, reply to CARD and other reports. ▪ Compliance of Limit Node wherever applicable. ▪ Monitoring of Escrow and TRA accounts of the borrower duly ensuring that the waterfall mechanism as determined and agreed. ▪ Follow up for obtaining UFCE information on quarterly basis. ▪ Monitoring and follow-up of ALL Standard Advances, irrespective of its SMA Status, with primary objective of preventing slippages to NPA. ▪ Monitoring and follow-up of SMAs, with primary objective of preventing slippages to NPA, up gradation of freshly slipped NPA during the quarter in coordination with CMC Head/MCC Head. ▪ To monitor the SMAs on the basis of default reported in CRILC. ▪ To ensure timely submission of PMS with correct information i.e. date of Renewal / review of limit, Credit Risk rating , Group, Conduct of accounts, Compliance of terms and conditions of sanction, Creation of primary/ collateral security , Balance confirmation letter / Limitation, Verification of security i.e. end use of funds, Status/ progress in project under implementation, Insurance of security etc. Centre for Learning and Innovation Page | 10  ▪ To monitor Early warning signal through SAJAG (PMS+EWS) and CARD reports. ▪ To provide support to HO to get the accounts red flagged wherever required. ▪ To ensure ASM has been appointed in eligible accounts and irregularities pointed out by ASM has been discussed in consortium meeting and rectified. ▪ To ensure that stock auditor has been appointed in eligible accounts and will be responsible for monitoring of closure of reports as per bank guidelines. ▪ Monitoring of project under implementation (already covered under PMS&ASM) and ensure monitoring of Lenders Independent Engineers (LEI) report. ▪ Follow up for up-dation of stock statement. ▪ Monitoring of compliance of terms & conditions of sanction where the time limit is permitted by the sanctioning authorities. ▪ Monitoring of all time barred loan accounts and expired LCs/LGs including SBLC & Trade credit, and un-hedged exposures. ▪ Monitoring of Overdue Renewal/Review of Working Capital. ▪ Submission of information required by Credit monitoring –HO ▪ Sample checking of regulatory guidelines for credit related issues in coordination with concurrent auditor. ▪ Follow up for recovery of invoked/ devolved BG/LC and ensuring its closure in CBS. ▪ Monitoring of CERSAI and collateral management. Sample checking of primary and collateral security in the system. ▪ Monitoring of closure of current account with other bank opened by our borrowers without NOC. ▪ Issuing notice to non-cooperative borrowers as per bank guidelines. ▪ Monitoring of insurance of security, BC letter of borrower/ guarantor, security visit /verification and other routine issues related to credit monitoring. ▪ Joint Custodian of documents including security documents with CMC Head. ▪ Timely marking in TRAC of accounts slipped to NPA Category ▪ All miscellaneous work and general administration related to Credit Monitoring. ▪ Submission of Limit Sanctioned Statement (LSS) to Administrative office(s). ▪ Compilation of replies received from respective Assessment Head/Relationship Manager against the LSS queries and submission to respective ZO. ▪ All other post sanction monitoring guidelines issued from time to time by the bank are to be complied with in letter and spirit. Corporate Banking Branch Structure of Corporate Banking Branch (CBB) CBB HEAD (V) Credit Processing Credit Monitoring Cell Head (IV) Cell Head (IV) Routing Assessment Relationship Operations Officer (III/II) Manager (III/II) Including Trade Finance (II/I) Centre for Learning and Innovation Page | 11  ▪ Each Assessment Officer/Relationship Manager to deal with 30 Accounts each and routine operations team to be supported with Clerical Staff. ▪ The operations guide for LCBs as annexed with MPD Circular No. 10/2020 dated 18.05.2020 shall be applicable to the CBBs. All the requisite access to softwares such as PNB Trac, PNB LenS, PNB SAJAG (EWS+PMS), CRILC, CFR, etc. shall be made available to staff posted at CBBs. ▪ The responsibilities of Law Manger shall be carried by AOs (pre-sanction)/ RMs (post sanction), supported by Law officer posted at CO/ZO. ▪ The rating of group accounts upto ₹10 Crore to be initiated by RM as maker & CMC Head as vetter for forwarding to ZRMC. ▪ The CBB will be headed by a Scale V officer. The business of the Corporate Branches will be considered in the respective Circle’s/Zone’s Business unlike the LCBs. ▪ CBBs will garner fresh non retail business of above ₹10 Crore only, however, the group accounts even upto ₹10 Crore will also be handled by CBBs. ▪ The loaning power chart of GBBs will be applicable to the CBBs also as conveyed by IRMD from time to time. The request for TOD & Adhoc will be forwarded to ZO. ▪ Proposals of borrowal accounts with exposure above ₹10 Crore (including their group accounts) from these branches will not be routed through MCC/PLP. CBB will be directly reporting branch to ZO with respect to loan proposals under ZO power. ▪ The loans up to the power of ZO will be sanctioned by ZOCAC ▪ For HO Power proposals, CBB will directly submit proposal to Head office under copy to ZO and recommendation of ZM will be submitted to HO by Zonal office. This would ensure efficient TAT for HO power proposals. ▪ The operationalization of CBB will be at par with MCC for handling loans in ticket size (above ₹10 Crore) and will act as one stop solution for all the corporate credit needs ,as all Fund Based as well as Non- Fund based related work will be done at CBB level itself. ▪ Accounts above ₹10 Crore from any other branch in that area may also be shifted to CBBs as per request of the customers. Further, the existing accounts with exposure up to ₹10 Crore may be continued at the CBBs or shifted to other branch as per the request of the customers. ▪ In case the accounts up to ₹10 Crore are continued at CBB, these accounts up to ₹10 Crore shall continue to be dealt with through PLPs/MCCs as per existing structure. Further, additional staff be provided by Circle Offices to cater these accounts up to ₹10 Crore not getting shifted to other branch as well as for other retail liabilities related work to ensure smooth customer services. ▪ The files of accounts above ₹10 Crore & their group accounts will be shifted to CBBs from MCCs. The status note as per opening guide of LCBs annexed with MPD Circular No. 10/2020- Credit Delivery Structure of Bank – Large Corporate Credit dated 18.05.2020 be adhered to. ▪ LSS of own sanctions (in case of loans to staff) of CBB will be submitted to Circle Office. ▪ The NPA Accounts shall continue in the Sol of CBB as detailed in MPD Circular 13/2020 dated 18.07.2021. ▪ The account wise credit monitoring of accounts of CBBs by CO/ZO shall be done as per extant guidelines circulated vide MPD Circular Letter 06/2020 dated 11.09.2020 for roles & responsibilities of CO/ZO. ▪ The establishment related work of these CBBs will be catered to by CO like other GBBs as it falls under CO for all administrative purpose. ▪ CBB Shall be responsible for providing additional business of their corporates to specifically identified Branch/es for Additional Business. Centre for Learning and Innovation Page | 12  Extra Large Corporate Branch/ Large Corporate Branch Structure of ELCB ELCB HEAD (VII) Dy. ELCB Head (VI) Credit Credit Processing Operations Monitoring Law Officer Cell (V/IV) Cell (IV) Cell (V/IV) Relationship Trade Routine Assessment Manager Finance Operations Officer (III/II) (III/II) (III/II/I) (III/II/I) Structure of LCB LCB Head (VI) Credit Credit Operations Cell Processing Cell Monitoring Cell Law Officer (IV) (V/IV) (V/IV) Routine Assessment Relationship Trade Finance Operations Officer (III/II) Manager (III/II) (III/II/I) (III/II/I) ASSESSMENT OFFICER Role: To Process the Credit proposal and perform Pre-Sanction Due Diligence Responsibility: ▪ Processing and assessment of fresh, enhancement, renewal, review, relaxation/ concession, Adhoc, Confirmation of Action, NBG & Mandates approval proposals including facilities against liquid security and recommend the same to authorities for Approval. ▪ After receipt of the documents, conduct enhanced Due Diligence of the borrower to control front end delinquencies including verification of the KYC documents and other documents and providing comments on the same after incorporation in the Standardized Credit Appraisal format. ▪ Pre sanction verification of the security and visit to office/site/plant/residence etc. in terms of extant bank guidelines with CPC Head/LCB Head/Dy LCB Head/ELCB Head. Centre for Learning and Innovation Page | 13  ▪ Perusal of the Valuation Report by the approved valuer and ensuring it is strictly as per the format and every aspect is duly catered to as per the Valuation Report format. ▪ Drawing of CIR of the borrowers/guarantors/directors etc. ▪ Ensuring correct preparation of CR on borrowers and guarantors on annual basis. ▪ Obtaining confidential report from other banks of the borrower / allied concerns in Bank’s approved format. ▪ Compiling details of Group/Allied/Associate firms and facilities sanctioned to them. ▪ Coordination with the lead bank in terms of obtaining relevant documents for pre sanction appraisal including lead bank process note, if applicable. ▪ Obtaining copy of External Risk Rating of the borrower. ▪ Handover the NEC/Legal Search Report & Valuation report to law manager for perusal. ▪ Ensure to obtain Search Report on charges registered with ROC before submission of the proposal and after sanction before release of the facilities to the borrowers as per extant guidelines of the Bank. Ensure to get the satisfaction of charges filed wherever required. ▪ Gathering information of the borrower/guarantor from the public domain/media. ▪ Checking Caution Advices circulated by the Bank. ▪ To check whether the borrower or any of the director/designated partner/partner is connected in the past with any NPA/OTS/Compromise/Unscrupulous defaulters. ▪ Report from FRMIS database of PNB to check the antecedents of the borrower/guarantor. ▪ Conduct due diligence on the prospective borrowers, verify the antecedents and various data bases available with the bank or from public domain, CRILC/MCA website/GST website, checking information of the auditor & audit firm from ICAI website, web information, Credit Information Bureaus, RBI defaulters list, ECGC caution list etc. with a view to ensure that sanction of credit facilities will not be detrimental to the interest of the bank. ▪ Pre-Sanction discussions with Promoters/ Financial Controller along with ELCB Head/LCB Head/Dy. LCB Head/CPC Head wherever required. ▪ Obtaining certified copy of passport of directors/guarantors/authorized signatories as per extant bank guidelines. ▪ Obtaining Legal Entity Identifier (LEI) code in terms of extant bank guidelines. ▪ Co-ordination with HO-IRMD for obtaining credit risk rating of the borrower/facility. ▪ Propose an appropriate remedial measure for the Risk identified in CRR. ▪ Analysis of Financial performance of the borrower as per the requirement of the Standardized Credit Appraisal format. Analyze the financials/CMA/financial model submitted by the borrower. ▪ Conducting the RAROC analysis and generating the report and held a copy of same in record. ▪ Conveying the NBG Sanction/ Regular sanction to the borrower under copy to CMC Head. ▪ Transferring the file/documents relating to the account to Credit Monitoring Cell (CMC) for post sanction follow-up. ▪ Maintaining Due date of renewal and detail of Concessions allowed in the accounts & ensure timely submission of renewal proposal to competent authority for renewal of credit facilities & relaxations. Centre for Learning and Innovation Page | 14  ▪ To keep the concessions alive in all the credit facilities i.e. the same should be renewed well before expiry. ▪ To maintain MIS of leads under process/sanctioned at branch level ▪ Maintaining record of references pending with HO. ▪ Any other pre sanction assessment duties assigned from time to time as per bank’s extant guidelines RELATIONSHIP MANAGER Role: ▪ Manage and develop a portfolio of corporate banking customers with an aim to deepen and broaden relationships with our clients. ▪ Post disbursement compliance and working as single touch point for the allocated accounts. ▪ Conduct regular review and take proactive measures to ensure credit quality. Responsibility: ▪ Recovery of all bank charges- Upfront Fees, Annual processing fee, review charges, Documentation Charges, Inspection Charges, etc. ▪ Ensure compliance of all the terms and conditions of sanction and adherence to guidelines pertaining to Pre-Disbursement Compliance (PDC). Preparation of Compliance Certificate (A1/A2), Clearance Certificate (B1/B2), Reporting & Monitoring (C1/C2) as per LA Cir No. 68/2023. ▪ Submission of confirmation to the sanctioning authority w.r.t compliance of Terms & Conditions prior to disbursement in terms of existing bank guidelines. ▪ Opening of account in CBS with correct codes as per sanction and Creation of limit nodes post permission from LCB Head/ CMC Head. RM to ensure updating CBS data and ensuring accuracy of data fed. ▪ Regular monitoring of transaction and ensure that these are business related & any deviation be taken up with the party & corrective measures may be taken in discussion with CMC Head/LCB Head. ▪ Stock verification of the accounts. ▪ Obtention of re-valuation report by the approved valuer after expiry of existing valuation as per bank guidelines. ▪ To monitor repayment of loan, servicing of interest and regularity of CC account including routing of sales through the account. ▪ Independent follow up in case the account slips to SMA-0 category and the Joint follow up with CMC Head & LCB Head in case the account slips to SMA-1 category. ▪ Follow-up with borrower for periodic submission of documents/ information required in terms of extant bank guidelines like Balance Sheet, CMA Data, etc. ▪ Ensure to obtain timely QMS reports from the borrowers, analyse the same and adverse features, if any be brought to the notice of CAD HO. ▪ Analysis of Stock & Receivables Statement. ▪ Drawing Power Allocation/ Updation in CBS with approval of CMC Head. Centre for Learning and Innovation Page | 15 ▪ Ensure disbursement of the facilities to be in line with Bank’s Policies and Regulatory Requirements, within the time frame set and ensuring that all Conditions Precedent are met prior to disbursement. ▪ Creation of securities within the permissible time period in the sanction. ▪ Submission of Legal Compliance Certificate to Controlling Office. ▪ Creation of charge in CERSAI. ▪ Preparing note of approval for permission of Release of CC/PC/PS limit, ILC/ILG transaction and Term Loan Disbursement and ensure that the same is in conformity with the terms of sanction. ▪ Submission of status note for SMA/ stressed accounts. ▪ Ensuring Exchange of information on bank’s prescribed format. ▪ Attending LSS related queries (post sanction) received from HO in allocated accounts and submission of replies to LSS queries. ▪ Ensure customer monitoring for meeting their further needs as well as development of new business from their sources to achieve the targets. ▪ Ensure that correct rate of interest is being charged as per sanction and all the charges are recovered to avoid any leakage in Revenue to the Bank. ▪ Ensure periodical inspection of securities and maintain proper record of visits in the visit register and submit visit report to CMC Head. ▪ Coordinating with Internal as well as external auditors. ▪ Rectify irregularities pointed out by Concurrent Auditor / CARD Auditor / SCA and submit reply in ERBIA as per guideline. ▪ Ensure limitation in the accounts is alive and maintain limitation register properly. ▪ Ensure adequate and valid insurance with agreed bank clause of all securities and follow up with the Company for obtaining insurance cover note/policies. ▪ Ensure timely holding of consortium meetings in accounts where the bank is leader and take up with the Lead Bank in all other accounts. ▪ Posting/updation of HCLM details covering security, Due Date for Stock Statement, Penal interest, updating Value of Security, Insurance details, Charge creation details etc. ▪ Updating Date of documents, BC Letter, Rate of Interest etc. in the CBS System ▪ Periodic review of valuation of the securities as per bank guidelines and ▪ updation of the same in CBS promptly. ▪ Entry of CERSAI ID in CBS for Primary & Collateral securities. ▪ To maintain account wise records for QMS, Insurance, Limitation, COD, site visits / security inspection, Stock Audit, consortium meetings, Internal and External Risk Rating, Income Value, resetting of ROI, reply to CARD and other reports. ▪ Compliance of Limit Node wherever applicable. ▪ Monitoring of Escrow and TRA accounts of the borrower duly ensuring that the waterfall mechanism as determined and agreed. ▪ Follow up for obtaining UFCE information on quarterly basis. Centre for Learning and Innovation Page | 16 ▪ Monitoring and follow-up of ALL Standard Advances, irrespective of its SMA Status, with primary objective of preventing slippages to NPA. ▪ Monitoring and follow-up of SMAs, with primary objective of preventing slippages to NPA, up gradation of freshly slipped NPA during the quarter in coordination with CMC Head/LCB Head. ▪ Convener of the task force meeting at BO level and conduct meeting along with SAMV head and also monitor task force meeting of BO and submission of minutes/ progress to HO -Credit Monitoring. ▪ To monitor the SMAs on the basis of default reported in CRILC. ▪ To ensure timely submission of PMS with correct information i.e. date of Renewal / review of limit, Credit Risk rating , Group, Conduct of accounts, Compliance of terms and conditions of sanction, Creation of primary/ collateral security , Balance confirmation letter / Limitation, Verification of security i.e. end use of funds, Status/ progress in project under implementation, Insurance of security etc. ▪ To monitor Early warning signal through SAJAG and CARD reports. ▪ To coordinate with ZRMC for initiation of Dynamic Rating in case of observance of trigger for Dynamic Rating. ▪ To provide support to HO to get the accounts red flagged wherever required. ▪ To ensure ASM has been appointed in eligible accounts and irregularities pointed out by ASM has been discussed in consortium meeting and rectified. ▪ To ensure that stock auditor has been appointed in eligible accounts and will be responsible for monitoring of closure of reports as per bank guidelines. ▪ Monitoring of project under implementation (already covered under PMS&ASM) and ensure monitoring of Lenders Independent Engineers (LEI) report. ▪ Follow up for updation of stock statement. ▪ Monitoring of compliance of terms & conditions of sanction where the time limit is permitted by the sanctioning authorities. ▪ Monitoring of all time barred loan accounts and expired LCs/LGs including SBLC & Trade credit, and un-hedged exposures. ▪ Monitoring of Overdue Renewal/Review of Working Capital. ▪ Submission of information required by Credit monitoring –HO ▪ Sample checking of regulatory guidelines for credit related issues in coordination with concurrent auditor. ▪ Follow up for recovery of invoked/ devolved BG/LC and ensuring its closure in CBS. ▪ Monitoring of CERSAI and collateral management. Sample checking of primary and collateral security in the system. ▪ Monitoring of closure of current account with other bank opened by our borrowers without NOC. ▪ Issuing notice to non-cooperative borrowers as per bank guidelines. ▪ Monitoring of insurance of security, BC letter of borrower/ guarantor, security visit /verification and other routine issues related to credit monitoring. ▪ Joint Custodian of documents including security documents with CMC Head. ▪ All miscellaneous work and general administration related to Credit Monitoring. ▪ All other post sanction monitoring guidelines issued from time to time by the bank are to be complied with in letter and spirit. Centre for Learning and Innovation Page | 17  3. Loaning Powers (Reference IRMD LA Circular 50/24 Dt. 19.04.2024) The delegated loaning powers of the various functionaries are to be exercised judiciously within their vested loaning powers and strict compliance of various guidelines enumerated in loaning powers and guidelines for exercising such powers at various levels While exercising the vested loaning powers, the authority shall comply with the general /specific instructions and guidelines prescribed by the RBI /Head Office /other controlling authority (Regulatory /Statutory) from time to time. Loaning Power Chart (₹ in Lakh) A. General Banking Branches (GBBs) Nature of Facilities Branch Heads in All GBBs JMG-I MMG-II MMG-III SMG-IV SMG-V Aggregate Commitment - per 10.00 10.00 10.00 10.00 10.00 Borrower/Group B. Corporate Banking Branches (CBBs) Incumbent of CBBs shall not have Loaning Powers to sanction under aggregate commitment per borrower for fresh proposals, and all proposals shall be sanctioned by CHCAC/ ZOCAC/ HOCACs within their vested powers C. PNB Loan Points (PLP) C1: Individual Powers SEGMENT HEAD Incumbent- Nature of Facilities RETAIL/ AGRICULTURE/ MSME In charge RAM MMG-III SMG-IV# SMG-IV SMG-V# Aggregate Commitment - per Borrower/Group 80.00 100.00 100.00 100.00 C2: Committee Structure PLP-CAC* Credit Approval Committee (Headed By) Nature of Facilities CM AGM (Incumbent of PLP) (Incumbent of PLP) Aggregate Commitment- Per Borrower 400 1000 Aggregate Commitment- Per Group 800 2000 D. LOANING POWER CHART FOR CACs CREDIT APPROVAL COMMITTEES (Headed By) Nature of MCC- CHCAC ZOCAC HOCAC-I HOCAC-II HOCAC-III Facilities CAC Headed By AGM AGM DGM GM CGM CGM Credit ED- MD & CEO Corporate Credit Aggregate Commitment-per 10.00 15.00 30.00 50.00 75.00 100.00 300.00 800.00 borrower Aggregate Commitment – 20.00 30.00 60.00 100.00 150.00 200.00 600.00 1600.00 per Group Centre for Learning and Innovation Page | 18  Certain Restrictions on Loaning Powers i.Gems & Jewellery Sector: To be considered by MC on merits. In case of existing accounts any Additional/Enhancement also to be allowed with the approval of MC. Exception: Cases where Sanctioning Authority shall be other than MC: i. Proposals regarding Lab Grown Diamonds shall be sanctioned by ZOCAC & above as per vested loaning powers. ii. Financing to Jewellers against Mortgage of IP under PNB Sampatti scheme will continue as per extant IRMD/MSME scheme. Note: Renewal of limits shall continue to be considered by competent authority as per vested loaning powers. ii. Infrastructure Sector: The following infrastructure proposals can be sanctioned by PLP-CAC /MCC-CAC and above, within their vested loaning powers: Proposals related to Sanctioning Authority Agro-Processing and Supply of Inputs to Agriculture Setting up of Cold Storages/ Construction of warehouse and Godowns for PLP-CAC /MCC-CAC storing agriculture produce including testing facilities for quality & above Construction/ Purchase/ Setting up of Hospitals including Equipment financing used for running the hospital Water Supply Project, Irrigation Project, Water Treatment System, Sanitation & CHCAC & above Sewerage System or Solid Waste Management System The assistance of technical cell, HO/ZO/reputed consultants of the relative field for technical appraisal may be sought, wherever felt necessary Mini Hydropower Projects Note: 1. In case of construction of educational institutions and hospitals by companies/individuals engaged in construction or development of real estate projects, the loaning powers for financing real estate projects shall be exercised. 2. Where the proposal/project falls under the ambit of both Real Estate and Infrastructure, the loaning powers for financing real estate projects shall be exercised All other proposals relating to infrastructure projects except those mentioned above shall continue to be sanctioned by ZOCAC and above within their vested powers. However, while considering proposals pertaining to infrastructure segments other than listed above, prior administrative approval/ clearance of HOCAC–I is required to be taken. Solar power projects upto ₹10 Cr. shall not require prior administrative clearance. Further, it is clarified that captive power plants shall continue to be kept out of purview of administrative clearance. iii. Confirmation of Action ▪ Any direction (including telephonic direction) for taking action in any case in respect of matters, on which the senior officer or his subordinate has powers to decide, shall ordinarily be conveyed in writing. ▪ The officials shall exercise the vested loaning powers diligently and shall not exceed the vested powers. However, in exceptional circumstances and for bonafide exigencies, wherever such powers are exceeded, reporting the same immediately to the controlling authority for confirmation by the competent authority not later than 3 days from the date of the transaction in any case shall be done on the prescribed format. Centre for Learning and Innovation Page | 19 iv. Takeover of Accounts form Other Bank It should be ensured that takeover of only standard borrowal accounts is considered without increasing our risk profile. The accounts for consideration of takeover should have a IRR of ‘B1 & above’. However, HOCAC II & III may consider takeover of ‘B2’ & ‘B3’ internally rated accounts on merits of the case and MC shall have full powers in this regard. Small loan accounts (aggregate exposure upto ₹5 Crore) with IRR ‘B2 & below’ are not to be considered for takeover. In case borrower was availing credit facilities from another Bank /FIs within the period of 3 months prior to submitting loan proposal to our Bank, such credit proposal shall be treated as ‘Deemed takeover’. Takeover norms would apply on Deemed takeover also. However, in case where such credit facility has been repaid by the applicant borrower as per the terms & conditions of the original sanction, such credit proposals shall not fall under the purview of Deemed Takeover. With the objective of preventing unethical/ unjustified takeover of borrowal accounts, it is advised that takeover of borrowal accounts from the banks, where our present EDs and Managing Director & CEO have worked earlier, need not be considered. However, in all loans (including retail/ agriculture) having limits upto ₹ 7.50 Crore, the above restriction shall not apply and shall be considered by respective sanctioning authority. For borrowal accounts above ₹7.50 Crore, in exceptional cases where takeover is considered from the aforesaid banks, the credit proposal shall be sanctioned by sanctioning authority as per existing delegation of power after obtaining prior administrative approval from the Board and such takeover proposal shall invariably contain the specific reasons justifying the need for takeover. (Detailed guidelines on takeover of accounts circulated vide IRMD L&A Circular No. 185/2022 dated 16.12.2022 as updated from time to time shall also be adhered to.) Note: While exercising vested loaning powers under “aggregate commitment per borrower/ group” as per the loaning power chart, exposure to Retail Loans to borrowers shall not be reckoned. However, all advances under such segment to a borrower shall also be subject to vested loaning powers under aggregate commitment per borrower. example, GBB may sanction a business loan to a borrower of ₹10 Lakh and in addition to this business loan, it may also sanction retail loan/s upto its vested powers, i.e. ₹10 Lakh, to the borrower. “Aggregate Commitment per Borrower” shall include all Fund Based & Non-Fund based facilities sanctioned to the borrower. In case of fully drawn term loans, where there is no scope for redraw of any portion of the sanctioned limits, the outstanding shall be reckoned for arriving at aggregate commitment per borrower. v. Enhancement within 6 months of fresh sanction: The power for enhancement within 6 months of fresh sanction under genuine cases after obtainment of proper justification shall be exercised as under: For Cases Sanctioining Authority Upto the power of CHCAC ZOCAC ZOCAC HOCAC-I HOCAC-I & above Respective Sanctioning Authority Centre for Learning and Innovation Page | 20  What is Temporary Overdrawing (TOD) ? The Temporary Over drawings (TOD) may be allowed in fund based secured advances for payment of statutory dues, salaries, wages or any other justifiable debits for very short period not exceeding 7 days (including roll over, if any) to meet temporary mismatch of funds in unforeseen circumstances. Maximum Occasions to allow TOD: The respective sanctioning authority may allow TODs in fund based secured advances for maximum of 12 occasions within a year from the date of last sanction/ renewal/ enhancement of the regular limit. However, TOD in fund based secured advances for more than 12 occasions within a year from the last sanction/ renewal/ enhancement of the regular limit shall be allowed by the following authorities: For Proposals Dealt At TOD Permitting Authority GBB/PLP/MCC/CBB ZOCAC What is ADHOC Facility? Adhoc limit/facility is granted as regular sanction for fixed period (above 7 days) to the borrower after analyzing the financials & requirements of the borrowers only for unexpected business and subject to the other laid down stipulations for sanction of adhoc limits. ▪ Allowed by Incumbents Incharge of scale V and above in PLPs, CBBs, LCBs and ELCBs and CACs at MCCs and above for proposals falling up to their vested loaning powers as well as sanctions by the higher authorities. ▪ The ADHOC power may exercise their existing loaning powers for sanction of adhoc facilities in an account for maximum of two occasions within a year from the date of last sanction/renewal/review/enhancement of the regular limit. ▪ The ADHOC to be sanctioned only to those borrowers with regular sanctioned credit limit and within the validity of sanction. Centre for Learning and Innovation Page | 21  4. MSME CREDIT Ministry of MSME, GoI, vide Gazette notification no. S.O.2119 (E) dated June 26, 2020 has communicated detailed guidelines viz. Classification of Micro, Small & Medium enterprises, Registration of MSME on Udyam Registration portal, Updation of information on Udyam Registration portal etc. The new criteria has come into effect from July 1, 2020. In terms of revised guidelines, classification is as under: Criteria Where the investment in P&M or Classification & Turnover equipment Does not exceed Micro Sector ₹1.00 Cr & ₹5.00 Cr Small Sector ₹10.00 Cr & ₹ 50.00 Cr Medium Sector ₹50.00 Cr & ₹ 250.00 Cr Note 1: Exports of goods or services or both, shall be excluded while calculating the turnover. Note 2: The value of Plant and Machinery or Equipment shall mean the Written Down Value (WDV) as at the end of the Financial Year as defined in the Income Tax Act and not cost of acquisition or original price. All MSMEs are required to register online on the Udyam registration portal and obtain ‘Udyam Registration Certificate’. For PSL purposes banks shall be guided by the classification recorded in the Udyam Registration Certificate (URC).For PSL purposes bank shall be guided by the classification recorded in the Udyam Registration Certificate (URC). Retail and Wholesale trade are included as MSMEs for the limited purpose of priority sector lending and are allowed to be registered on Udyam Registration Portal. The certificate issued on Udyam Assist Portal (UAP) to Informal Micro Enterprises (IMEs) shall be treated at par with Udyam Registration Certificate for the purpose of availing Priority Sector Lending benefits. IMEs with an Udyam Assist Certificate shall be treated as micro enterprises for the purpose of PSL classification (Ref: MSME & Mid Corporate Division Circular No.15/2024 dated 21.02.2024 and amendment therein from time to time may be referred) Institutional Framework for MSMEs As the MSME Sector is an unorganized sector, after the enactment of MSMED Act 2006, there has been number of institutionalized efforts initiated to take care of the needs and problems faced by them with regulations for the stakeholders. Some of them where the Bank has a role to play are as under: ▪ BCSBI Code ▪ Delayed Payment to MSMEs ▪ Financial literacy and consultancy to the Micro and Small Enterprises Sector ▪ Financial Support to MSMEs in ZED Certification Scheme ▪ SLBC Sub-Committee on MSME ▪ Specialized MSME Branches ▪ Cluster Approach Banking Codes and Standard Board of India (BCSBI) BCSBI Code sets minimum standards of banking practices for banks to follow when they are dealing with Micro and Small Enterprises (MSEs).It provides protection to MSE and explains how banks are expected to deal with MSE for their day-to-day operations and in times of financial difficulty. The Centre for Learning and Innovation Page | 22  Code does not replace or supersede regulatory or supervisory instructions issued by the Reserve Bank of India (RBI) and banks will comply with such instructions /directions issued by the RBI from time to time. While BCSBI has initiated the process of its dissolution, banks may continue to follow their commitments as hitherto under the Code of Bank's Commitment to Micro and Small Enterprises. Delayed Payment In MSMED Act 2006, the provisions of the Interest on Delayed Payment Act, 1998 to Small Scale and Ancillary Industrial Undertakings, have been strengthened as under where penal provisions have been incorporated to take care of delayed payments to MSME units. i. In case the buyer fails to make payment on or before the date agreed on between him and the supplier in writing or, in case of no agreement before the appointed day, the agreement between seller and buyer shall not exceed more than 45 days. ii. In case the buyer fails to make payment of the amount to the supplier, he shall be liable to pay compound interest with monthly rests to the supplier on the amount from the appointed day or, on the date agreed on, at three times of the Bank Rate notified by Reserve Bank. 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 dispute with regard to any amount due, an MSME unit can approach the Micro and Small Enterprises Facilitation Council, constituted by the respective State Government under the Ministry of Micro, Small Enterprises. Cluster Approach All SLBC Convenor banks are advised to incorporate in their Annual Credit Plans, the credit requirement in the clusters identified by the Ministry of Micro, Small and Medium Enterprises, Government of India. They are also encouraged to extend banking services in such clusters / agglomerations which have come up and identified subsequently by SLBC / DCC members. As per Ganguly Committee recommendations (September 4, 2004), banks are advised that a full-service approach to cater to the diverse needs of the SSI sector (now MSE sector) may be achieved through extending banking services to recognized MSE clusters by adopting a 4-C approach namely, Customer focus, Cost control, Cross sell and Contain risk. To remain competitive in the market and to grasp good business through these clusters, there is a need of customized offering in cluster areas. Accordingly, for effective TAT and faster disposal of cluster related issues, a sub-committee of CGMs has been formulated to look after the issues related to clusters and delegation of powers for various Relaxations accorded in approved clusters. MSME Financing Loan Application Form a) Simplified Loan Application has been made available as per IBA format along with provisional acknowledgement through a perforated sheet and check list of documents. Wherever scheme specific application form is prescribed the same should be obtained. b) Photograph of the Borrower: For the purpose of identification of borrowers, branches themselves should make arrangements for the photographs. Cost of photographs of borrowers falling in the category of Weaker Sections should be borne by the Bank. c) Issue of Acknowledgement of Loan Applications: All Branch /Credit Verticals are advised to mandatorily acknowledge all loan applications, submitted manually or online, by their MSME Centre for Learning and Innovation Page | 23  borrowers and ensure that a running serial number /lead number is recorded on the application form as well as on the acknowledgement receipt. d) Register of Receipt /Sanction /Rejection of Applications: A register should be maintained at branch wherein the date of receipt, sanction /rejection /disbursement with reasons thereof etc., should be recorded for all the applications received by the Branches for their consideration as and when received. Rejection of application from MSEs for fresh limit /enhancement of existing limits should not be done without the approval of competent authority by GBB, PLP and MCC. Sanction of reduced limits should be reported to the next higher authority immediately with full details for review and confirmation. The reason for rejection should be communicated in writing to the borrower within the period stipulated for disposal in line with stipulation mentioned in the Fair Practice Lenders Code. e) Capturing of Leads through PNB LenS: Branches /Offices have to ensure that all the leads received through various channel, i.e., online or offline shall be entered in PNB LenS invariably. After capturing of leads, lead reference number is generated. SMS and e-mail are sent to the applicant mentioning lead reference number for further reference. For tracking of application by the applicant, the system will send SMS and e-mail to the customer at following stages: At the time of generation of Lead Complete documents are received at GBB At the time of sanctioning of the proposal At the time of rejection of the proposal At the time of opening of loan account in Finacle Further, applicant can also on-board their proposal on PSB 59 minutes portal through Bank specific URL https://www.psbloansin59minutes.com/pnb and Lead generated through this portal is moved to PNB LenS for its further processing. f) PNB Pride: Bank has introduced an Application – “PNB Pride” with a view to enhance the monitoring mechanism and Lead Management through the field functionaries. Digital Banking Division vide its Circular No. 12/2021 dated 09.02.2021 has communicated the guidelines on “PNB Pride” Application. g) Further, applicant can also apply for any Government sponsored scheme through Jansamarth portal launched by Government of India. This portal is integrated with PNB Lens for faster disposal of application. Security Norms a) Branches are mandated not to accept collateral security in the case of loans up to ₹10 lakh extended to units in the MSE sector. It is also advised to extend collateral free loans up to ₹10 lakh to all units financed under the PMEGPs. b) CGTMSE has increased the ceiling of guarantee coverage for retail and wholesale trade from ₹200.00 lakh to ₹500.00 lakh and also the extent of guarantee coverage and annual guarantee fee shall be at par with other activities. c) If the credit facility is proposed to be covered under CGTMSE coverage, respective Sanctioning Authority is empowered to cover eligible loans under CGTMSE guarantee coverage, on merits of the case. Centre for Learning and Innovation Page | 24 d) In case of MSME borrowers, which are above ₹10.00 lakh and are not secured under CGTMSE cover /Credit Guarantee Fund Scheme for Stand-Up India Loans (CGFSIL)/ any other guarantee coverage schemes/ where credit guarantee cover is not available, Bank should obtain the collaterals as per the Bank’s guidelines on collateral security policy/ Specific product Scheme guidelines. e) CGTMSE has introduced a new “Hybrid Security” product allowing guarantee cover for the portion of credit facility not covered by collateral security. In the partial collateral security model, the Bank is 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 ₹500 lakh, can be covered under Credit Guarantee Scheme of CGTMSE. CGTMSE will, however, have pari-pasu charge on the primary security as well as on the collateral security for the credit facility. In such partial collateral model, the collateral coverage for the uncovered credit facility shall be obtained. f) In case of hybrid security model, irrespective of loan amount, respective Sanctioning Authority shall have discretion to cover credit exposure under CGTMSE, on merits of the case. Government Initiative to promote MSMEs Initiative Implementing Remark Agency PM SVANidhi Ministry of Housing Scheme targets to benefit over 50 lakh street vendors, who had and Urban Affairs been vending on or before 24.03.2020 in urban areas. The scheme has been launched by the Bank on 04.07.2020 MUDRA Loans Department of Launched on 08th April 2015, WC facility is sanctioned for a Financial Services, period of 3 years. However, the account is reviewed on yearly Ministry of Finance basis and is renewed on every 3 years Standup India Scheme has been launched on 5th April, 2016, to facilitate bank Scheme loans above ₹10 Lakh and upto ₹100 Lakh to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a greenfield (New) enterprise PMEGP Khadi and Village The maximum cost of project eligible for margin money subsidy Industries under manufacturing sector ₹ 50.00 Lakh and for Commission (KVIC) business/service sector the limit is ₹20.00 Lakh. PM Vishwakarma Ministry of MSME Credit support to the artisans or craftsperson Scheme Restructuring of MSME Advances and Framework for Revival & Rehabilitation (FRR) In order to provide a simpler and faster mechanism to address the stress in MSME accounts and their revival, the Ministry of Micro, Small and Medium Enterprises, Government of India, vide their Gazette Notification dated May 29, 2015 notified a ‘Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises’. The framework aims at preserving viable MSMEs that are affected by certain internal and external factors and minimize the losses to the creditors and other stakeholders through an orderly and coordinated restructuring mechanism. IRMD L&A circular no. 175 dated 24.11.2022 as updated from time to time may be referred for detailed guidelines. Centre for Learning and Innovation Page | 25  MSME LOAN UP TO ₹10 Lakh Points to Remember: Loan application should be complete in all respects and is accompanied by documents as per ‘Check List’ provided. Complete Loan Application with all supporting documents (duly signed by prospective borrower) should be obtained on the prescribed format. Loan application Format prescribed for Mudra Loan (MSME Circular no. 34/20): ▪ For Loans upto ₹ 50000/ - Annexure A ▪ Above ₹ 50000/ to ₹10.00 Lakh - Annexure B For MSE loan up to ₹10 lakh ‘No collateral’ security to be obtained/ask for. However loan shall be invariably cover under CGTMSE guarantee cover Indicative Check List (with Application) SN Details Yes/No 1 Proof of identity - Self certified copy of Voter’s ID card / Driving License / PAN Card / Aadhar Card/Passport. Photos (two copies) of Proprietor/ Partners/ Directors 2 Proof of Residence - Recent telephone bill, electricity bill, property tax receipt (not older than 2 months), Voter’s ID card, Aadhar Card & Passport of Proprietor/Partners/Directors. 3 Proof of SC/ST/OBC/Minority. 4 Proof of Identity/Address of the Business Enterprise -Copies of relevant licenses/registration certificates/other documents pertaining to the ownership, identity and address of business unit. In case of Partnership Firm – Copy of Partnership deed (should be registered with Registrar of Firms ; In case of company copy of MOA, AOA etc 5 Statement of accounts (for the last six months), from the existing banker, if any. 6 Last Five years balance sheets of the units along with income tax/sales tax return etc. (Applicable for all cases from ₹ 2 Lacs and above). Self-attested Balance Sheet / P&L to be obtained in applicable cases. However, Audited Balance Sheet / P&L shall be obtained, only when it is applicable on the customer. If the borrower is not filling IT return, then there is no requirement of submission of Income Tax return details. An undertaking from the borrower in this regard shall be obtained and keep on record 7 Projected balance sheets for one year in case of working capital limits and for the period of the loan in case of term loan (Applicable for all cases from ₹2 Lacs and above). 8 Sales achieved during the current financial year up to the date of submission of application (up to previous quarter). 9 Project report (for the proposed project) containing details of technical & economic Centre for Learning and Innovation Page | 26  viability. 10 Udyam Registration Number (URN) (mandatory for getting guarantee coverage under Credit Guarantee scheme. However the certificate issued on Udyam Assist Portal (UAP) to Informal Micro Enterprises (IMEs) shall be treated at par with Udyam Registration Certificate) 11 Name of Supplier / details of machinery / price of machinery and / or items to be purchased alongwith Quotation of Machinery / other items to be purchased 12 Rent Agreement (if business premises on rent) and necessary clearance/ approval etc. such as clearance from pollution control board, if applicable 13 All photo copies of the documents should be self-certified. Genuineness/authenticity of the same should be ensured with online verification, verification with original, visit, & other pre sanction due diligences A register should be maintained at branch wherein the date of receipt, sanction/rejection/disbursement with reasons thereof etc., should be recorded for all the Applications received by the Branches for their consideration as and when received Rejection of application for fresh limit/enhancement of existing limits should not be done without the approval of next higher authority (Circle Head) Pre Sanction visit should be ensured at business site, residence in terms of IRMd LA circular 41/22 and visit report should be held in record Applicant should not be defaulter in any Bank/Financial institution. CIR/s (both consumer and commercial ) to be generated and scrutinized in terms of IRMD LA circular 12/23 All accounts with sanctioned limits of ₹2 lakh and below are exempted from Scoring (PNB Score SME/ PNB Score). For loan above ₹ 2.00 Lakh scoring is to be done on appropriate score model ((PNB Score SME/ PNB Score). For Exercising Loaning power at GBB Level for Fresh Loan :- For Loans under Govt. Sponsored scheme (eg. PMEGP PNB SME Score should be above 40 scheme, etc.) where Capital subsidy/ Interest subsidy/ concession, etc., is available For Others Non Govt. Sponsored schemes PNB SME Score should be above 52 Genuineness/ credentials of the supplier/ dealer must be ascertained before disbursing the loan amount. Projections /projected sales should be realistic, justified and achievable based on past experience/past performance. The accepted growth rate should be in conformity with the past trend Disbursement should be commenced after the stipulated funds are brought in by the borrower. A condition to this effect should be stipulated in the sanction. Capacity of the promoter/resourcefulness of the borrower should be analyzed Pre Disbursement Compliance (PDC) must be ensured before disbursement Centre for Learning and Innovation Page | 27  MSME LOAN ABOVE ₹10 Lakh and upto ₹100.00 Lakh Loan under this segment falls under the discretionary power of PLPs. Needless to mention that after sanctioning of any credit facility by PLP, Post Sanction activities begins at Branches. Indicative activities to be done by branches after sanction are as under: a. Compliance of Sanction Terms b. Documentation c. Pre-Disbursement Compliance (PDC) d. Account opening and recovery of charges e. Disbursement Note and precautions to be taken before disbursement. f. Visit as per terms and condition of sanction g. DP calculation for CC / understanding margin for Term Loan h. Monitoring of transactions Targeted Scheme under this Segment: 1. PNB Trade Growth 2. PNB GST Express MSME LOAN ABOVE ₹100.00 Lakh Loan under this segment falls under the discretionary power of MCCs. Needless to mention that after sanctioning of any credit facility by MCC, Post Sanction activities begins at CMC cell of MCC. Indicative activities of CMC after sanction are same as mentioned at para a to h Further compliance of following guidelines begins with this segment: 1. Benchmark Ratio 2. PNB SAJAG 2.0 3. Rating under PNB Trac 4. Submission of Annual Accounts audited by Chartered Accountants 5. Conducting LRM/ Credit Audit in case of Takeover account (₹1.00 Crore & above) 6. Two Legal Opinion/NEC (₹1.00 Crore & above) 7. Vetting of Loan Documents (₹2.00 Crore & above) 8. Review of Standalone term Loan (Except Retail): (₹2.00 Crore & above) 9. Legal Entity Identifier (LEI): (₹5.00 Crore & above) 10. Stock Audit (₹5.00 Crore & above) 11. Legal Audit (₹5.00 Crore & above) Targeted Scheme under this Segment: 1. PNB GST Express 2. PNB Prime Plus Centre for Learning and Innovation Page | 28  Understanding Working Capital Requirement of The Borrower Meeting and understanding the requirements of the borrower is the first most important step of lending. There may be several scenarios, like the probable borrower may be already a customer of our bank, may be a customer of other bank or may be new to the Bank. If the person is already a customer of any bank, then he/she may have been sanctioned working capital limit or only term loan or may be both along with other facilities. If not having any exposure, then, it is sometimes tough to understand and assess the correct requirement. Basic things that MCC will require for taking a decision on any loan are: i. Complete latest Sanction letter of previous Bank from where we are going to takeover the facilities. ii. Constitutional documents including KYCs of individual Directors/Partners/etc. iii. Financial papers that include previous 3-year balance sheets with audit reports (in case of existing unit), latest available provisional balance sheet upto last month, balance sheet upto 31st march of current financial year and projected balance sheet for next financial year. iv. IP papers of the primary and collateral offered by the borrower: required for deriving the coverage of that particular loan under schematic lending to provide benefit of ROI/concession in upfront and processing charges/etc. METHODS OF LENDING -Working Capital Facilities a. Following systems to be followed for assessment of working capital requirements of the borrowers: i. Simplified method linked with turnover ii. Working capital Assessment for Micro & Small Enterprises iii. Traditional Method i.e., MPBF System iv. Cash Budget System v. Assessed Bank Finance (ABF) based on Projected Financial Method b. Further, HOCAC-II & above is empowered to accept any methodology including MPBF, Assessed Bank Finance (ABF), Cash Budget and Cash deficit/Cash flow mismatch for assessment of working capital requirement, as per specific business model & operational requirements of the borrower c. Loan System for Delivery of Bank Credit As per the guidelines, in respect of borrowers having aggregate fund based working capital limit of ₹150 Crore and above from the banking system, a minimum level of ‘loan component’ of 60% needs to be maintained from 01.07.2019. The eligible accounts are to be identified by accessing information from CRILC database, Credit Information reports, etc Centre for Learning and Innovation Page | 29  5. DEALING WITH LOAN APPLICATIONS APPLICATIONS Field functionaries are advised to meticulously comply with the instructions with regard to expeditious handling of loan proposals as under: a. Field functionaries are advised to make use of the appropriate formats of loan application. b. Branches should give an acknowledgement of the loan application forms received from the applicants. Thereafter a definite date is to be intimated for discussion/clarification, if considered necessary. c. All Credit lead pertaining to all modules/schemes (Retail, Agriculture, MSME, MUDRA, Corporate & Staff loans) irrespective of amount/customization shall be mandatorily entered in PNB Lens through Lead Master. d. The leads of proposal above ₹ 25 crore & Schemes not configured in LenS can be marked as “Sanctioned Manually” in field “Status of Application” at lead page alongwith capturing additional details like Date of Sanction, Amount of Sanction, Account Number and Sanctioning Authority. e. The process of lead creation, document upload, report generation & tracking of leads is placed as Annexure of MPD Circular no.06/2022 dated 07.03.2022 and 07/2022 dated 22.03.2022 Loan Application Forms Scheme/Sector Application Form No. PNB Trade Growth Scheme PNB 1303 Application For MSME For Loans Up To ₹1.00 Crore PNB 1166 Loan Application Mudra Sishu PNB 1166B Loan Application Mudra PNB 1166 A MSME Application Form for Credit Facilities above ₹1.00 Cr and upto PNB-1016 ₹2.00 Cr MSME Application Form for Credit Facilities of over ₹2 Crore PNB-1017 Renewal Application: IRMD LA Circular 174/22 Dt. 22.11.2022 Appendix-II For All type of forms, documents including Other Loan Applications refer following path: PNB Knowledge Centre → Knowledge Repository → FORMS → Form Format → ALL Centre for Learning and Innovation Page | 30 TAT FOR LOAN APPLICATION Proposals under Consortium Arrangement Maximum time period prescribed for formal disposal of loan proposals provided application/ Proposals are received together with required details/information supported by requisite financial and operating statements: *Export Proposals Other Gold Card Other Exporters Proposals Holders Proposals for sanction of Fresh/ enhanced credit 25 Days 45 Days 60 Days limits Proposals for renewal of existing credit limits 15 Days 30 Days 45 Days Proposals for sanction of Adhoc facilities 07 Days 15 Days 30 Days *Same timeframe is applicable for export credit/loan proposals under sole banking arrangement. For detailed guidelines, circular issued on the subject by IBD, HO for export proposals and by Corporate Credit Division, HO for other proposals from time to time m