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    Loans and Advances Management

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    SONIYA SINHA
    The document discusses advances management and loan procedures at Indian Overseas Bank. It provides background on the bank's founding in 1937 and being the first public sector bank to offer mobile banking. The core of the document outlines the loan sanctioning process, including a borrower submitting a proposal that the bank verifies by assessing credibility, purpose, and collateral. It also details financial analysis of borrowers, credit risk assessment, and non-performing asset treatment procedures. Key recommendations include thorough upfront analysis using tools like the Z-score model and ongoing follow-up after loans enter the special mention account phase.

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    Download as PDF or read online from Scribd

    Loans and Advances Management

    Uploaded by

    SONIYA SINHA
    2K views18 pages
    The document discusses advances management and loan procedures at Indian Overseas Bank. It provides background on the bank's founding in 1937 and being the first public sector bank to offer mobile banking. The core of the document outlines the loan sanctioning process, including a borrower submitting a proposal that the bank verifies by assessing credibility, purpose, and collateral. It also details financial analysis of borrowers, credit risk assessment, and non-performing asset treatment procedures. Key recommendations include thorough upfront analysis using tools like the Z-score model and ongoing follow-up after loans enter the special mention account phase.

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    A presentation on the summer internship program topic: loans and advance management

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    The document discusses advances management and loan procedures at Indian Overseas Bank. It provides background on the bank's founding in 1937 and being the first public sector bank to offer mobile banking. The core of the document outlines the loan sanctioning process, including a borrower submitting a proposal that the bank verifies by assessing credibility, purpose, and collateral. It also details financial analysis of borrowers, credit risk assessment, and non-performing asset treatment procedures. Key recommendations include thorough upfront analysis using tools like the Z-score model and ongoing follow-up after loans enter the special mention account phase.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF or read online from Scribd
    Download as pdf
    2K views18 pages

    Loans and Advances Management

    Uploaded by

    SONIYA SINHA
    The document discusses advances management and loan procedures at Indian Overseas Bank. It provides background on the bank's founding in 1937 and being the first public sector bank to offer mobile banking. The core of the document outlines the loan sanctioning process, including a borrower submitting a proposal that the bank verifies by assessing credibility, purpose, and collateral. It also details financial analysis of borrowers, credit risk assessment, and non-performing asset treatment procedures. Key recommendations include thorough upfront analysis using tools like the Z-score model and ongoing follow-up after loans enter the special mention account phase.

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    ADVANCES MANAGEMENT

    INDIAN OVERSEAS BANK

    sinhasoniya87@yahoo.com
    INDIAN BANKING INDUSTRY

    BANK REFORMS
    1991
    NATIONALIZATION
    1969-1991

    EARLY PHASE
    1786-1969

    sinhasoniya87@yahoo.com
    INDIAN OVERSEAS BANK

     FOUNDED ON FEBRUARY 10, 1937

     1st BANK TO ESTABLISH


    OPERATIONS OVERSEAS

     1st PSB TO START MOBILE BANKING

     ‘AA’ RATING BY CRISIL IN 2000

     RANKED AS BEST PUBLIC


    SECTOR BANK IN 2007

    sinhasoniya87@yahoo.com
    LOANS AND ADVANCES

    The ideal advance is one that is granted to a ‘reliable’


    customer for a legal purpose where he has enough
    experience for efficient utilization of the amount and
    repays the amount within a given time frame as per the
    agreement

    sinhasoniya87@yahoo.com
    PROCEDURE FOR SANCTION

    LENDER
    • comes up with a (BANK) • verifies the
    loan proposal proposal
    • collateral • verifies the • either approves
    security purpose of loan (final sanction)
    • financial details • assess the or rejects
    credibility of
    BORROWER
    borrower REGIONAL
    OFFICE

    sinhasoniya87@yahoo.com
    FINANCIAL ANALYSIS

    • PROFITABILITY
    ASSESSMENT • STABILITY
    OF: • SOLVENCY
    • LIQUIDITY

    • BALANCE SHEET
    VERIFICATION • INCOME STATEMENTS
    • INCOME TAX RETURNS
    OF:

    sinhasoniya87@yahoo.com
    CASE ANALYSIS: XYZ INFOTECH
    The borrower is into business since 1992, his
    existing branch of NIIT is working successfully.
    NIIT has offered him for opening a new unit
    at Kharagpur and he has paid more than Rs
    10,00,000 as advance for starting the same. The
    borrower is one of the very old and regular
    client of the bank and needs another Rs.
    20,00,000 as loan from the bank to start this
    new set up

    sinhasoniya87@yahoo.com
    XYZ INFOTECH
    • March, 07 -- 7.01
    • March, 08 – 7.57 In Rs, Lacs
    TNW • March, 09 – 11.87
    • March, 10 -- 16.77

    • March, 07 -- 0.26
    • March, 08 -- 21
    • March, 09 -- 30
    NET SALES • March, 10 -- 40

    • March, 07 -- 0.56
    • March, 08 -- 1.63
    • March, 09 -- 2.69
    NWC • March, 10 -- 4.83

    sinhasoniya87@yahoo.com
    XYZ INFOTECH
    DER: TOTAL DEBT
    Details of Ratios TOTAL EQUITY
    3
    2.5 DSCR: N. OPERATING Inc.
    T. DEBT SERVICE
    2
    1.5  CR: CURRENT ASSETS
    CURRENT LIABILITIES
    1
    0.5
    0
    MARCH, 07 MARCH, 08 MARCH, 09 MARCH, 10
    DE 2.83 2.7 1.39 1.78
    DSCR 1.4 1.53 1.91 2.12
    CR 1.55 1.59 1.42 1.56

    sinhasoniya87@yahoo.com
    XYZ INFOTECH
    MULTIPLE DISCRIMINANT ANALYSIS: Z SCORE

    Z= 0.012X1 + 0.014X2 + 0.033X3 + 0.006X4 + 0.010X5 where


    Z = discriminant function score of the firm
    X1= net working capital/total assets (%)
    X2= retained earnings/total assets (%)
    X3= EBIT/total assets (%)
    X4= market value of total equity/book value of debt (%)
    X5= sales/total assets (times)

    sinhasoniya87@yahoo.com
    XYZ INFOTECH
    Z SCORE
    3
    2.73
    2.5

    2 2.12

    1.5

    1 1.08

    0.5

    0
    2008 2009 2010

    sinhasoniya87@yahoo.com
    XYZ INFOTECH
    ASSESSMENT OF MPBF FOR CC A/c
    IN Rs. LACS

    • March, 07 -- 0.56
    NWC • March, 08 -- 1.63
    • March, 09 -- 2.69
    • March, 10 -- 4.83

    NWC CONSIDERED AS 3.00


    MPBF = 25% of Sales – 5% as margin or 25% of Sales - NWC
    (whichever is lower)

    sinhasoniya87@yahoo.com
    XYZ INFOTECH
    COLLATERAL/ TERM LOAN
    GUARANTEE

    MARGIN MONEY

    CREDIT RATING

    TERMS & REPAYMENT


    SCHEDULE

    DOCUMENTATION & FIANL


    SANCTION

    sinhasoniya87@yahoo.com
    FURTHER PROCEDURE
    STANDARD
    ACCOUNT

    FOLLOW UP
    &
    MONITORING
    NON • SUBSTANDARD ASSET
    •
    PERFOMING DOUBTFUL ASSET
    ASSET • LOSS ASSET

    sinhasoniya87@yahoo.com
    TREATMENT OF N PA

    BANK UPGRADATION
    PROCEEDINGS OF ACCOUNT
    • LEGAL NOTICE • RENEWAL
    • SARFESI ACT • RECOVERY
    2002 • RESTRUCTURING
    • FILING OF SUIT
    • WRITE OFF

    * SARFESI: SECURITISATION AND RECONSTRUCTION OF


    FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY
    INTEREST ACT
    sinhasoniya87@yahoo.com
    PREVENTIVE MEASURES

    IMPACT EXTERNAL INTERNAL


    MEASURES MEASURES

    • DRAIN ON • RELEASE OF • DECLARATION


    PROFIT DEFAULTER’s OF SMA
    • EFFECT ON LIST • RISK
    CAPITAL • FORMATION ASSESSMENT
    ADEQUACY OF CIBIL • FOLLOW UP

    sinhasoniya87@yahoo.com
    RECOMMENDATIONS

     THOROUGH STUDY OF CASE IN PRELIMINARY


    PHASE

     ESTIMATION OF BANKRUPTCY APPLYING Z SCORE

    FOLLOW UP SINCE DECLARATION OF SMA

    sinhasoniya87@yahoo.com
    THANK YOU

    Presented By
    Soniya Sinha

    sinhasoniya87@yahoo.com

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