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Study Material

for

Promotion Exercise
(Updated upto 26.02.2014)

(For Promotion from JMG I to MMG II & MMG II to MMG III)





A Compilation
By

Training Centre, Bareilly

(Under the guidance of Baroda Academy, Ahmedabad)







FACULTY

Mr. P. K. Singh Chief Manager
Mr. Sudhir Kumar Sr. Manager
Mr. Somnath Singh Sr. Manager





(For Internal use only)


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INDEX
Sl.No. Subject

Page No.
1 AWARENESS ABOUT OUR BANK 3

2 EMERGING TRENDS IN BANKING 15

3 LEGAL & STATUTORY PROVISIONS 18
4 RETAIL BANKING & THIRD PARTY PRODUCTS

26
5 ROLE OF TECHNOLOGY IN BANK 35

6 RURAL/AGRI. BANKING 51

7 SME BANKING 76

8 WHOLESALE BANKING 97

9 DFB, INTERNATIONAL OPS. & TREASURY

132
10 RISK MANAGEMENT 158

11 RECOVERY & NPA MANAGEMENT 166
12 HUMAN RESOURCE MANAGEMENT 180

13 RETAIL ASSET PRODUCTS: AT A GLANCE 185

Disclaimer: Though all efforts have been made to incorporate latest and correct
information of the related topics but in case of any doubt please refer book of
instructions, reference books and circulars of the bank. This booklet is focusing
mainly the written promotion exam. within the bank looking the previous trends and
should not be considered as instruction manual.
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AWARENESS ABOUT OUR BANK

Brief History:

Bank of Baroda is having a long, eventful and glorious history of more than 105
years. HH Sir, Maharaj Sayajirao-III founded the Bank on 20
th
July 1908 with
paid up capital of Rs. 10 Lac
In 1919, the Bank crossed the state frontiers and set up Mumbai Main Office
In the year 1935, Bank became a scheduled Bank
The first safe deposit lockers were provided at Baroda in 1939
At the time of independence in 1947, Bank of Baroda was a regional bank with 48
branches
Bank of Baroda was nationalized by Govt. of India on 19
th
July 1969 along with other 13
Banks (Total 14 Banks were nationalized in 1969)

As many as 10 banks have been merged with Bank of Baroda during its journey so far:

Hind Bank Ltd (1958)
New Citizen Bank of India Ltd (1961)
Surat Banking Corporation (1963)
Tamil Nadu Central Bank (1964)
Umbergaon People Bank (1964)
Traders Bank Limited (1988)
Bareilly Corporation Bank Ltd (1998)
Benares State Bank Ltd (2002)
South Gujarat Local Area Bank Ltd (2004)
Memon Co-operative Bank Ltd. (2011)

Board Of Directors

1. Shri S.S.Mundra : Chairman & Managing Director
2. I) Shri P. Srinivas : Executive Director
II) Shri Ranjan Dhawan : Executive Director
III) Shri Bhuvanchandra
B. Joshi
: Executive Director
3. Dr. K.P. Krishnan : Director - Govt. Nominee
4. Shri Sudarshan Sen : Director - RBI Nominee
5. Shri Maulin Vaishnav : Director
6. Shri Vinil Kumar Saxena : Director
7. Shri S. S. Bhandari : Director
8. Shri Rajib Sekhar Sahoo : Director

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Mission Statement :

To be a top ranking National Bank of International Standards committed to
augmenting stake holders' value through concern, care and competence.

Logo Baroda Sun :

Bank introduced the existing logo Baroda Sun w.e.f 6th June, 2005.
It comprises double B letter forms that hold the rays of the rising Sun, we call
this as Baroda Sun. The sun is a representation of what our bank stands for. It
is a symbol of dynamism and optimism.
The sun is the single most powerful source of light and energy. Its far reaching
rays dispel darkness to illuminate everything they touch.
The single colour, compelling vermillion palette indicates hope and energy and
indicates that at Bank of Baroda, we seek to be the source that will help all our
stakeholders realise their goals.
To our customer, we seek to be a one stop, reliable partner who will help them to
address different financial needs. To our employees, we offer rewarding careers
and to our investors and business partners, maximum return on their investment.

Project NAVNIRMAAN Baroda Next :

A comprehensive transformation programme called NAVNIRMAAN was
launched by our Bank for its domestic operations on 22 June 2009.
The Bank has partnered with Mc Kinsey & Company for this programme
It is centered on our customers and our employees
It has two core elements
1. Business Process Re-engineering (BPR)
2. Organization Restructuring (OR).

BPR (Business Process Re-engineering) Main Objectives
Improvement in branch productivity on sales
Best-in-class service levels for customer delight
Redesign of front & back office processes & roles to reduce turnaround time
Reduction in operating costs

Organization restructuring Main Objectives
Appropriate organization structure and systems to support BPR and be in line with
future business plans, at corporate, zonal and regional offices & at branches
Sustainability of change program through capability building.

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Navnirmaan having 5 key elements:
1. Simplified systems and processes at branches and other offices
2. World-class back offices to support branch operations
3. Alternate Channel usage
4. Redefined organization structure and roles
5. Training to Barodians for new roles

Baroda Next Branch :
Bank has launched the Baroda Next line of branches with a modular design, clear front/back
office separation, comfortable customer waiting area, suitable front line automation and
dedicated sales and service teams at all metro and urban centers.

Baroda Next Branch would focus on:-
Redefining roles of employees to improve customer experience and
perform sales activities
Centralizing non-customer facing activities
Streamlining customer flow and redesigning branch format
Automating certain front-line activities & alternate channel migration
Implementing a robust performance management system


Reporting Structure For Baroda Next Branches


Development /Repositioning under Navnirmaan project (As on 31.12.2013):

Project Navnirmaan has altogether -18- initiatives covering both Business Process
Re-engineering and Organization Re-structuring, aimed at transforming the Banks
branches into a sales and service centers through sustained Centralization to make
possible Sales growth, superior customer experience and alternate channel
migration.


Branch Head
Sales & Service
Head
Relationship
Manager
Customer
Service
Representative
Branch Host
Operation Head
Universal Teller
Branch Back
Office Personnel
Credit Head Forex Head
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The most important initiatives are:-
Conversion of all metro and urban branches into Baroda Next

Creation of automated and lean Back Offices like:

A. City Back Office (CBO): The CBOs deal with centralized upload of clearing
transactions both inward and outward as well as government collections and ECS
transactions.
[Automated cheque processing introduced at Mumbai, Surat and Ahmedabad]


B. Regional Back Office (RBO): The RBO deals with centralized processing of
account opening forms (AOF) and centralized processing of issuance of
Personalized Cheque Books (PCB), issuance of Debit Card and Baroda Connect to
our customers. Total no. of RBO as on 31-12-2013 was 12
C. Urban Retail Loan Factory [URLF]: Centralized Retail Loan Processing centre
with specialized sales and processing officers. It works on assembly line principle.
As on 31-12-2013 Bank had 45 RLFs
D. SMELF: Centralized SME (Small and Medium Enterprise) Loan Processing centre
with specialized sales and processing officers. It works on assembly line principle.
As on 31-12-2013 Bank had 52 SMELFs
E. City Sales Office (CSO): CSO has been created at every Regions to extend sales
support to city Branches and exploring the new business in the market. The sales
officer attached with CSO works as Relationship Managers for our existing and
potential customers like, Institutional, Govt. Offices, Hospitals, Corporate etc.

Some Other Important Initiative Under NAVNIRMAAN:
Branch Front end Automation: The Queue Management System (QMS) &
Cheque Deposit Machine (CDS) machines are being installed at identified
branches
Credit centralization pilot (RLF/SMELF): The Retail and SME credit
centralization pilot is under progress at the Loan Factories in Baroda
Mid Corporate Vertical: Separate Mid-corporate vertical has been created
and 15 Mid-corporate branches have been opened
Roll out of enterprise-wide Sales Accountability Model Sales Operating
Model
e-Lobbies were launched in 30 locations. These lobbies operate 24X7 providing
facilities for cash withdrawal, cash deposit, cheque deposit, pass book printing and
phone banking. This facility is known as Non Stop Banking

Bank's present BPLR 14.50 % (wef. 09.02.2013)

Base Rate : 10.25 % (wef. 09.02.2013)
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Major technology Initiatives:

First PSB to receive Corporate Governance Rating (CGR-2)
Banks entire domestic, overseas and RRB framework is CBS-compliant.
All domestic branches are migrated on MPLS network. New branches are directly
opened in MPLS network.
Bank has IT facilities for online/offline account opening through Business
Correspondents under Financial Inclusion.
Banks retail & corporate customers enjoy several facilities under its Internet Banking
Delivery Channel. The SMS alerts & RTGS/NEFT transactions are also implemented in
the Internet Banking Portal.
Bank has implemented Internet Banking in 13 of its overseas territories.
To provide safe online banking services to its customers & protect them from phishing
attacks, Bank has implemented a Fraud Management Solution. SMS alerts facility is
also provided to customers.
Bank has implemented the RapidFunds2India solution in all its major territories.
Banks Mobile Banking (Baroda M-Connect) provides various facilities to its customers
National Unified USSD Platform is also enabled through Mobile Banking. Account
transfers through IMPS are also made available through Mobile Banking.
Internet Payment Gateway has been implemented to facilitate e-commerce
transactions in multi-currencies across the globe.
E-tax payments through ATMs are also facilitated and Mobile ATMs are introduced in
several cities.
Bank has set up two Contact Centres in Lucknow & Baroda to fast response to the
customer queries & grievances.
Cash Management Solution is implemented to provide operational support to customers
ALM.
Anti-Money Laundering (AML) has been implemented in India and 23 of Banks overseas
territories.
Online Trading has been implemented in India.
Bank has implemented an Integrated Global Treasury Solution in its major territories
like U.K., UAE, Bahamas, Bahrain, Hong Kong, Singapore, Belgium, USA and India to
achieve reduced cost of operations & better fund mgmt.
Bank has a centralised SWIFT system for India & its 23 overseas territories.
Cheque Truncation System (CTS) implemented in important centres like Bhopal, Baroda,
Surat, Indore, Rajkot, Bhavnagar, Pune, etc
ACPC (Automated Cheque Processing Centre) for centralised Inward/Outward
clearing has been implemented in Mumbai, Surat and Ahmedabad.
Travel Card in foreign currency is introduced.
HRNes- A centralised database of employees for facilitating promotion, selection
exercise and automating HR policies with transparency is implemented.
Payroll- A centralised online mechanism for salary payment of employees and leave
maintenance has also been implemented.
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Online application for SME Loan enabled along-with Housing Loan, Education and Auto
Loan. Online tracking of those applications has also been enabled.
Bank has built a State-of-the-Art Data Centre conforming to Uptime Institute Tier-3
standard & a Disaster Recovery Site in different seismic zones to ensure uninterrupted
banking services delivery to customers.
Launching of Baroda Gift Card
Introduced Visa Platinum Premium Debit Card
Launched Maestro Debit card
HR Shared Services (HRCPC)
Launching of Career Portal of the bank
Account Number Portability of SB, CA & TD account started within the bank
Online Recurring Deposit Account opening with Standing Instruction enabled through E-
Banking i.e. Baroda Connect
Bunch Note Acceptor (BNA) implementation for account based
Non Personalized Debit Card has been launched
Introduction of EMV based two high end Debit Cards i.e. Rupay Platinum & Visa Platinum

Branch Network:

Domestic Branches as on 17
th
Feb, 2014
Metro Urban Semi-Urban Rural Total
964 826 1240 1691 4721 (with over 59
million customers
globally)
Overseas Branches/ Offices 101 in 24 Countries (Excl. India)
Total ATMs 5121 (As on 31-12-2013)
Subsidiaries (Domestic):
Nainital Bank Ltd., BOBCARDS Ltd., BOB Capital Market Ltd.

Associates (Domestic):
Baroda Pioneer Asset Management Company Ltd
IndiaFirst Life Insurance Company Limited
Baroda Uttar Pradesh Gramin Bank, Head Office - Raebareli
Baroda Rajasthan Khetriya Gramin Bank, Head Office - Ajmer
Baroda Gujarat Gramin Bank, Head Office - Bharuch



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Subsidiaries (Overseas):
Bank of Baroda (Botswana) Ltd.
Bank of Baroda (Kenya) Ltd.
Bank of Baroda (Uganda) Ltd.
Bank of Baroda (Guyana) Ltd.
Bank of Baroda (UK) Ltd.
Bank of Baroda (Tanzania) Ltd
Bank of Baroda (Trinidad & Tobago) Ltd.
Bank of Baroda (Ghana) Ltd.

Representative Offices (Overseas)
Bank of Baroda (Thailand)

Associate (Overseas)
Indo-Zambia Bank Ltd.(Lusaka)

Composite Loan factories

Bank has moved towards a further innovative step to establish a Composite Loan
Factory at Mangalore, where a prospective as well as our existing borrower can avail
SME and/or Retail loan under one umbrella.

Gen-Next Branches

To respond to the needs of the changing demographic profile of the country, the
bank has been endeavoring to customize delivery channels especially for youth
segment. As a part of these efforts, the bank has set up innovative Gen- Next
branches dedicated to youth and young IT professionals at certain places.
The branch will have youth specific products and will function as a model for fusion
of Hi-tech and High-touch Banking.
The Branch is offering following liabilities and assets products to the customers:


PRODUCT NAME Facility Type Amount Remark
Gen Next Junior Saving Account for
children up to 18
years
Min Average QAB is Rs 500/- Charges for non-
maintenance Rs
50/- per quarter
Gen Next Lifestyle Term Loan
(Combo Pack)
1.For F & F/New Consumer
Durables Rs 2 Lac
2.New Vehicle (4 wheeler) Rs 6
Lac, Two wheeler Rs 1 Lac
3 Old four wheeler (Not more

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than 3 years old) Rs 4 Lac
4 New modern gadget Rs 1 Lac
(Aggregate loan amount should
not be more than Rs 8 Lac)
Gen Next Power

OD Facility
(This is special saving
Deposit product
having an in built
feature of overdraft
5 times of net take home
monthly salary subject to
Min Rs 50,000/-
Max Rs 2.00/- Lac

Gen Next Suvidha Recurring Deposit


Global Syndication Center & IMBC

1. Banks Global Syndication center at London was set up in 2000. With a view to tap the
growing business opportunities in the Middle East and South East Asia Region, bank
has set up few more Regional Syndication Centres in abroad.

2. The Bank has started a specialized outfit- International Merchant Banking Cell (IMBC)
at International Div. Mumbai to service the ever growing demand from Indian
Corporates for funds from International markets. IMBC is also active in funding
Merger & Acquisitions of domestic and overseas companies by Indian Corporates. The
IMBC will arrange for syndicated loans, Bonds, FCCBs etc. And investment banking and
advisory services.

Wealth Management Services

Our Bank as part of customer centric measure initiated Wealth Management Services to
provided our HNI and affluent customer a complete financial solution at one stop. The
service has enabled our customers to buy various investment products through our
branches and is positioning our Bank as One Stop Financial Super Market.

Under Wealth Management Services currently we are offering 3
rd
party products in
Bancassurance, Mutual Fund, e-Trading etc. under tie up arrangement with various
partners.

Segment Name of Tie-up Partner Products
Life Insurance IndiaFirst Life Insurance Co. Ltd.
(Joint Venture Co. of the Bank)
Unit Linked Insurance Plan
Term Insurance Plan
Endowment Plan
Group Insurance Plan etc.
Credit Life Plan
General National Insurance Co. Ltd. Baroda Health co-branded
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Insurance medi-insurance products for
hospitalization expenses
Insurance covered for assets
such as vehicle, business &
industries, live stock etc. from
various risks.
Mutual Fund Baroda Pioneer Mutual Fund (Joint
venture Co. of the Bank)
Growth/Equity Scheme
Income / Debt Scheme
Balance Fund
Money Market or Liquid
Fund
Gilt Fund
Index Fund
Tax Saving Scheme
Fixed Maturity Plan
UTI Mutual Fund
Birla Sunlife Mutual Fund
Reliance Mutual Fund
Sundaram BNP Paribas
Franklin Templeton Investments
Kotak Mahindra Mutual Fund
IDFC Mutual Fund


Role of Branch manager in the changing Environments:

1. Branch Managers are required to develop regularly in the area of Sale/Marketing and
Risk management
2. From largely transaction processing and inward looking role to marketing, customer
orientation and business development role.
3. Branch manager has to emerge as a role model for other staff members at the branch
to develop an effective marketing and sales team.
4. To motivate and develop the team members on regular basis for qualitative and
quantitative augmentation of business

e-Payment of Taxes Enabling Non-Customers and Non-Baroda Connect Customers :

There is a special Menu in Finacle called CA118 for e-payment of Direct tax payment
module. This Menu has the following features:
1. Only Direct Taxes (Income Tax etc.) can be paid through e-mode. For payment
of taxes other than this earlier utility shall continue to be used.
2. Finacle Passwords shall be used by the makers-checkers.
3. The tax shall be remitted on verification. Before the verification,
modification/deletion can be undertaken.
4. No change is possible from the back-end once the verification of transaction has
been done.
5. If the verification of tax payments is not done till 19.50 hrs the transaction
shall get deleted automatically.
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6. The name fetched from the NSDL for particular PAN with challan entered by
the maker should be verified at the time of verification by the supervisor.

Advantages to Customer:-
Hassle free Tax Remittance for customers and non - customers
No formalities-Registration , login ID,PW etc
Online check of PAN / TAN / Assessee code
Confirm immediate Tax payment Challan
Instant cyber receipt/counter foil with CIN, Payt. details , Name of the branch
Counter foil can be regenerated
Tax payment for any commissionerate available
On line Tax payment by branch on behalf of any individual , corporate etc
No limit on amount
Free of cost

Advantages to Bank / Branch:-
Rs. 12/- per challan revenue
Opportunity to canvass new business from Non customer

Contact Centre Facility:

Bank has introduced a new delivery channel the Contact Centre(call centre) for delivery
of banking services through TOLL FREE PHONE. The numbers are 1800 22 33 44 or
1800 102 44 55. Now, Banks customers and members of general public can call the
Banks Contact Centre and seek information on their accounts, request for banking
services, enquire on banks products, interest rates, etc.

Following services can be availed
Issuance of a cheque book
Enquiry about products and services
Account Enquiry Balance, Transaction, Statement of A/c, Amount in Clearing etc.
Hot-listing of ATM cards
Stop payment marking / un-marking
Request for issuance of debit card
Request for re-generation of debit card PIN
Support for e-banking users like Re-generation of Baroda Connect Passwords
Re-generation of mobile banking password
On-line (paperless) TPIN generation facility

Benefits to the Customers/:
Most convenient delivery channel
Services are available from 8 am to 8 pm
365 days a year, (excluding Independence Day and Republic Day)
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Free of Cost. Toll Free Number and hence No Cost
TWO Toll Free Numbers are available to ensure uninterrupted service
Customers are not required to visit branch for various services.
Emergency Services Debit Card Hot-listing is easy, simple, authentic
All service requests are supported by Docket Number, for further enquiry.
Professionally managed and Technology driven services
Request for regeneration of Baroda Connect Password

ASBA (Application Supported by Blocked Amount)
ASBA is a process developed by the Securities and Exchange Board of India (SEBI) for
applying to IPO. In ASBA, an IPO applicant's account doesn't get debited until shares
are allotted. Qualified Institutional Buyers (QIBs) are not allowed to participate in
IPOs through ASBA facility.
ASBA process facilitates retail individual investors bidding at cut-off, with single
option, to apply through Self Certified Syndicate Banks (SCSBs), in which the investors
have bank accounts. SCSBs are those banks which satisfy the conditions laid by SEBI.
SCSBs would accept the applications, verify the application, block the fund to the
extent of bid payment amount, upload the details in the web based bidding system of
NSE, unblock once basis of allotment is finalized and transfer the amount for allotted
shares, to the issuer.
ASBA means Application Supported by Blocked Amount. ASBA is an application
containing an authorisation to block the application money in the bank account, for
subscribing to an issue. If an investor is applying through ASBA, his application money
shall be debited from the bank account only if his/her application is selected for
allotment after the basis of allotment is finalized, or the issue is withdrawn / failed.
It is a supplementary process of applying in Initial Public Offers (IPO), right issues and
Follow on public offers (FPO) made through book building route and co-exists with the
current process of using cheque as a mode of payment and submitting applications.

Business Figures: At a glance (Rs. in Crore)
Parameter 31.03.2013 31.12.2013
Total Global Business 8,02,069 8,56,218
Total Global Deposit 4,73,883 5,03,772
Total Global Advances 3,28,186 3,52,446
Net Profit 4,480.72 1,048
Gross NPA (%) 2.40 3.32
Net NPA (%) 1.28 1.88
ROAA (%) 0.90 0.80
CAR (%) 13.30 12.01
Global NIM (%) 2.66 2.37
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Business Policy Guidelines (Domestic) - 2013-2014:
Motto of Business Policy is BACK TO BASICS
B for - Business growth (to increase the market share)
A for - Asset Quality (to be kept high)
S for - Solvency & Liquidity (to be maintained through proper ALM)
I for - Innovation (to be the key differentiator)
C for - Customer Centricity (to be the key driver)
S for - Systems & Procedures (to be continuously updated to support above pillars)


15

EMERGING TRENDS IN BANKING

Regulatory Ratio at a Glance:

CRR (Sec 42, RBI Act): 4.00%, of net demand and time liabilities, to ensure liquidity and
solvency to be kept with RBI.

SLR (Sec 24 , B. R. Act): 23.00%, Cash in hand, Gold owned by bank, Balance with RBI/SBI
and Investment in unencumbered approved government securities.

Bank Rate: 9.00 %, Rate at which RBI lends to Banks/FIs.

Repo Rate: 8.00 %, Injection of liquidity by RBI.

Reverse Repo Rate: 7.00 %, Absorption of liquidity by RBI.

Licensing of New Banks in the Private Sector
Bimal Jalan panel constituted by RBI is scrutinizing applications for new bank licences
NEW LENDER GUIDELINES:
RBI said successful applicants have a year to set up a bank.
The new banks must make a stock market listing within three years.
It said the aspirants will have to set up non-operative financial-holding companies
(NOFHC), which should hold a minimum 40 per cent of the equity capital in the bank.
This has to be reduced to 20 per cent within 10 years and 15 per cent in 12 years from
the date of start of business. An NOFHC will be registered as a non-banking financial
company with RBI and will be governed separately.
At least half the directors at such holding companies shouldnt be connected to the
founder groups, RBI said. Entities, groups should have a record of sound credentials
and integrity, be financially sound with a successful track record of 10 years.
The minimum equity capital required for setting up a bank under the new rules is Rs 500
crore. Foreign shareholding shouldnt exceed 49 per cent in the first five years.
The new banks must open at least a fourth of its branches in rural areas a condition,
many experts said, almost impossible to achieve.
Damodaran committee recommendations on Customer Service:

The Committee, headed by former SEBI chairman M Damodaran, was set up by the central
bank to look into the issues of customer services and evaluate the existing system of
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grievance redressal mechanism prevalent in banks, its structure and efficacy and
recommend measures for expeditious resolution of complaints.
The Reserve Bank of India (RBI) has accepted 88 out of the 230 recommendations made
by the Damodaran committee on customer services. Sources say that the 88
recommendations, where bankers had consensus, include recommendations such as banks
should sell standalone financial products and not bundle it with any other product, have
been accepted by the RBI. Some pending recommendations such as not imposing pre-
penalty on foreclosure of home loan and suggestions made on mobile and internet banking,
RBI will have a discussion with IBA.

Transaction through other Banks ATM

As per the guidelines of RBI, the customer maintaining Saving Bank A/c may withdraw the
money from any Banks ATM, 5 times with ceiling of Rs.10000 per transaction during any
calendar month without any charge. Now, even balance enquiry also considered as a
transaction (towards max.5 free transaction). But for such transactions certain charge
has been prescribed by RBI which is to be paid by the Customers Bank to the Bank whose
ATM is being used. Also, this facility is available free of cost to only Saving bank a/c
holders and other a/c holders may enjoy this facility @Rs20 per transaction.

Dealing with Dishonoured Cheque:

As part of Customer Service guidelines, RBI has framed following Rules to be followed by
banks, in case of dishonour of cheques:

Returning of dishonoured cheques- These instruments should be dispatched to the
customer promptly without delay, in any case within 24 hours.

Procedure for return/ dispatch of dishonoured cheques

(i) The paying bank should return such cheques presented through clearing houses strictly
as per the return discipline prescribed for respective clearing house in terms of
Uniform Regulations and Rules for Bankers Clearing Houses.
(ii) In relation to cheques presented direct to the paying bank for settlement of
transaction by way of transfer between two accounts with that bank, it should return
such dishonoured cheques to payees/ holders immediately.
(iii) Cheques dishonoured for want of funds in respect of all accounts should be returned
along with a memo indicating therein the reason for dishonour as insufficient funds.




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Dealing with incidence of frequent dishonour

Dishonour of Cheques for above Rs.1 crore

As per our Banks Policy on Dishonour of cheques, the event of dishonour of a cheque
valuing Rs.1 cr and above drawn on a particular account of the drawer on 4 occasions during
the financial year for want of sufficient funds in the account, no fresh cheque book would
be issued. The bank may also consider for closure of the current a/c at its discretion.
However, in respect of advances accounts such as cash credit or overdraft account, the
need for continuance of these credit facilities and the cheque facility relating to these
a/c should be reviewed by appropriate authority higher than the sanctioning authority.


Dishonour of Cheques for below Rs.1 crore

Under the same policy in case of dishonor of cheques on a particular account of the drawer on
6 occasions during the financial year for want of sufficient funds in the account, it has been
advised to stipulate a condition for operation of accounts with cheque book facility that in the
event of dishonor of a cheque valuing less than Rs.1.00 crore drawn , no fresh cheques book
would be issued. The branch may also consider closure of the account at its discretion.

Moreover in respect of advances accounts such as cash credit account, overdraft account, the
need for continuance or otherwise of these credit facilities and the cheque facility relating to
those accounts where cheques valuing below Rs.1 crore and drawn on a particular account of a
drawer are returned on 6 occasions during the financial year for want of sufficient funds in
the account is to be reviewed by appropriate authority higher than the sanctioning authority.
Accordingly such information should be incorporated in the credit / review proposal giving
details of cheques returned, reasons, action taken etc. along with this provision of policy and
RBI guidelines for suitable action by sanctioning Authority.




18

LEGAL & STATUTORY PROVISIONS

Credit Information Bureau (India) Limited (CIBIL)

1. Credit Information Bureau (I) Ltd was set-up in January 2001, as a joint venture.
2. CIBIL is a composite Credit Bureau, which caters to both commercial and consumer
segments. The Consumer Credit Bureau covers credit availed by individuals while the
Commercial Credit Bureau covers credit availed by non-individuals such as partnership
firms, proprietary concerns, private and public limited companies, etc.
3. CIBIL is established with a primary purpose of information sharing between Banks and
Financial Institutions for curbing the undesired growth of NPA.
4. Banks are required to provide periodical information to CIBIL in the prescribed format.
It helps in compilation of credit information, accessible to member banks to improve
quality of credit proposals, better credit management and Credit dissemination
function
6. Banks, FIs, SFCs, NBFCs, Housing Finance Companies and Credit Card Companies are
Members of CIBIL
7. CIBIL- Access to consumer credit information:

NEW 10 digit User-Id of any branch / Office will be as under:

CIBIL User Id : BN0503XXXX
Where XXXX denotes respective Branchs own 4 digit Sol Id.
User-Id will be identical for Consumer & Commercial. However, the passwords will be
different.
Rs 50/- for Consumer Report
Rs 900/- for Commercial Report
Bank has put the Home Loan portfolio on Dynamic monitoring of CIBIL and will
receive trigger/ enquiries from the activity w.e.f 18.11.2013 which will be communicated to
Branches through their Regional Authority

Branches will get data of existing standard Home Loan borrowers who have approached other
Banks for Home Loan, Personal Loan Auto Loan, Education Loan, Business Loan, Property Loan,
Over Draft and Commercial Vehicle. In case of NPA Home Loan borrowers Branches will get
information on enquires with other Banks for all type of loans.

Know Your Customer (KYC) Guidelines
The objective of KYC/AML/CFT guidelines is to prevent banks from being used,
intentionally or unintentionally, by criminal elements for money laundering or terrorist
activities. KYC procedures also enable banks to know/understand their customers and
their financial dealings better which in turn help them manage their risks prudently.


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Key elements of KYC Policy:
Customer Acceptance Policy
Customer Identification Procedures
Monitoring of Transactions
Risk Management

Customer Acceptance Policy

Must ensure that explicit guidelines are in place on the following aspects of customer
relationship in the bank:

No account is opened in anonymous or fictitious/benami name
Customer are cotegorised as low, medium and high risk based on clearly defined parameters
Required documents and other information must be collected relating to different types of
customers in line with the perceived risk.
Necessary checks before opening a new account profile for each new customer based on
risk categorisation

(1) Customer Identification Banks to obtain all necessary information to establish the
identity of each new customer based on disclosures by customers themselves. The
easy means would be documents such as passport, driving license, Armed Forces ID
cards, Income Tax PAN card, Aadhaar Card, ID card issued by Government of India,
State Government accompanied by signature verification and photographs would help
to establish the identity of the person opening the account. Towards this, the
following additional details need to be collected while opening the account.

Employment details such as job specifications, name and address of the employer,
length of service etc.
Provide details about source of income and annual income.
Details of assets owned such as house, vehicle etc.

(2) For identification of an individual / corporate - The identification to be through an
introductory reference from the existing account holder / a person known to the bank
or on the basis of documents provided by the customer. Board of Directors to put in
place adequate policies to establish procedure to verify bonafide identification.

(3) Ceiling and Monitoring of Cash Transactions Banks are required to issue TCs/ DDs/
MTs and TTs for Rs.50000 and above only by debit to the customers account or
against cheques and not against cash. Further the applicants are required to furnish
PAN on application for Rs.50000 and above. A close-watch to be kept on cash
withdrawal and deposits for Rs.10 lacs and above in deposit, cash credit or overdraft
accounts and keep record of details of these large cash transactions in a separate
register.
20


Finance ministry has recognized the Aadhar number issued by UIDAI as an officially
valid document to satisfy the KYC norms for opening of accounts. Recently, bank has also
issued a circular that at the time of opening of accounts the requirement of introduction
may be waived.

Bank has introduced a new menu option FINDCUST for identification of multiple customer
IDs for elimination and merger to single customer ID(UCIC)

Acceptance of e-KYC as a Valid Process for KYC Verification.

Bank has decided to accept e-KYC service launched by UIDAI as a valid process for
KYC verification in consultation with Unique Identification Authority of India (UIDAI). The
information authenticated and transferred by UIDAI containing demographic details and
photograph as a result of e-KYC process shall be treated as sufficient proof of Identify and
Address of the client.

Anti Money Laundering

It is conversion of money, which is illegally obtained, so as to make it appear to
originate from a legitimate source. The main objective of the Act is:
1. To prevent, combat and control money laundering.
2. To confiscate and seize the property obtained from the laundered money.
3. To deal with any other issue connected with money laundering in India.

There are three independent steps or stages in Money Laundering -- Placement,
Layering and Integration

A) Placement - physical disposal of bulk cash proceeds derived from illegal activity
B) Layering - process of separation of illicit proceeds from their source by creating
complex layers of financial transactions it conceals the audit trail.
C) Integration re-injection of laundered proceeds back to the economy

Punishment: Whoever commits the offence of money laundering shall be punished with
the rigorous punishment for a term not less than 3 years but which may
extend to 7 yrs and shall also liable to fine, which may extend to Rs.5
lacs.

Citizens Charter

Citizen Charter gives the customers right as well as their demands on service from
the bank. Citizens charter covers the following:

21

1. Business hours to be prominently displayed at the branches.
2. Counters to remain attended to during business hours.
3. Space for customers in banking hall to be kept clean and tidy with proper seating
arrangements.
4. Branch premises to be kept clean and hygienic.
5. Time norms for common Banking transactions to be displayed prominently in the
Banking Hall.
6. At large branches May I Help You counters to be located for customers
convenience.
7. Commencement of working hours of Bank staff to be 15 minutes before
commencement of Banking hours.
8. Banks name board to be clean and visible with suitable lighting arrangements.
9. Branch authoritys name and designation to be displayed on Name Plate.
10. Name, address, telephone number and fax numbers of Regional and Zonal
Authorities to be displayed in Banking Hall.
11. Customers Suggestions to be invited for better customer services.

Banking OMBUDSMAN Scheme:

1. Reserve Bank of India has announced the Banking Ombudsman Scheme, 1995 under
section 35 of Banking Regulation Act 1934. It was revised w.e.f. 14.6.2002 , which
has been further revised on 01.01.2006
2. The Ombudsman has the authority to look into the complaint in the following areas;
Any complaint relating to Banking services.
Refer the complaint to concerned bank and try to facilitate redressal or
settlement by agreement between the bank and aggrieved party.
If complaint is not settled by agreement within the period of one month, pass an
award after listening to both the parties.
In the event Bank is unable to comply with the Award for any reason whatsoever,
the Bank shall file a review petition within one month from the date of receipt of
copy of award.
Any dispute between banks or bank and its constituents may be referred to for
arbitration provided disputed claim does not exceed Rs. 10 lakhs.
The time limit for award is fixed as six months from the date of first hearing.

3. For approaching to OMBUDSMAN for banking complaints following are the
conditions
Bank has rejected the complaint and/or no reply within one month.
A period of 1 year has not elapsed after bank had rejected the representation.
It is not subject matter already settled by Ombudsman.
It is not pending with any court.
4. All Commercial banks, RRBs and Schedule Primary Cooperative Banks are covered.
22

5. The appeal against the Award can be filed within 30 days to the Appellate
Authority (DGM RBI).


Consumer Protection Act (COPRA)

1. COPRA was initially enacted during 1986 and implemented w.e.f. 15.4.1987. The
purpose of this act was to enable the consumers to enforce his right as a
consumer through simple legal procedures. Further, on 17th December 2002, an
amendment Act 2002 has been passed and implemented w.e.f. 15th March, the
consumer day.
2. The act covers, all goods services including banking, insurance, transportation,
electricity, processing etc.
3. Any consumer individually or jointly, consumer organisation can file complaint within
-2- years from the date of cause of action preferably within 3 months.
4. Legal heirs/ can continue as complaints of unfair trade practice or restrictive
trade practices against servive provider and charging of prices for the goods in
excess of the prices displayed.
5. Definition of complaint amended to include complaints of unfair trade practices or
restrictive trade practices against service provider, failure to disclose final
results of scheme of gifts & prizes amt. Prescribed fee payable on every complaint
as court fees - no fees earlier
6. A person availing services for commercial purpose will not be a consumer under the
act.
7. The authority or jurisdiction are;
a) District forum for a complaint up to Rs. 20 lakhs.
b) State Commission up to Rs. 100 lakhs.
c) National Commission above Rs. 100 lakhs.
8. Complaints Appeals against the orders of district forum can be entertained
only if 50 % amt awarded or Rs.25000/- 35000/- & 50000/ whichever is less
is deposited for District, State & National commission respectively.

Banking code and Standards Boards of India (BCSBI)

A comprehensive Bankers Fair Practice Code prepared by Indian bank Association
has been used, as a bench mark standard by the BCSBI. The code provides
protection to the customers on day-to-day basis on banking operations.
This is a voluntary code, which sets minimum standards of Banking practices to be
followed by banks when attending to customers. It has the following objectives
1. Promote good and fair banking practices by setting minimum standards,
2. Increase transparency
3. To encourage financial institutions to achieve higher operating standards,
4. Promote cordial and fair relationship between bank and customer,
23

5. Bring confidence in the banking system,
6. This code is applicable to almost all services of banks.

Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act 2002 (SARFAESI Act 2002)

In India the enactment of SARFAESI Act 2002 enabled lending agencies (secured
creditors) to foreclose and sell underlying assets without court intervention to recover
the secured debt. For the purpose of the Act, Minimum Scale IV officer is designated as
Authorized Officer for the purpose of enforcement of security interest under the Act
to realize / recover banks dues in case of a NPA-account.

1. In case of default, the Authorized Officers can write to the borrower [section 13
(2)] to repay secured debts within 60 days from the date of notice. Possession
notice to be given under Sec 13(4).
2. In the course of enforcement of security interests by the bank as Secured
Creditor, all costs, charges and direct & incidental expenses thereto, property
incurred shall be recoverable from the borrower and money received by the bank
as secured creditor shall first be appropriated towards meeting this expenses
and thereafter for discharge of the banks secured debts.
3. In case of number of secured creditor being more than 1, the above said rights
shall be exercised only when 60% or more (in value terms) secured creditors
agree to exercise of the rights;
4. The Record Date shall be the date agreed upon by the secured creditors
representing not less than 60% of the amount outstanding;
5. If dues of secured creditors are not fully settled / recovered out of / from sale
proceeds of secured assets, secured creditors may file an application in DRT or in
a competent court;
6. The secured creditor shall be entitled to proceed against the guarantors or sell
pledged assets without first taking any of the measures or possession & sale of
the borrowers / the guarantors assets.
7. Followings are not covered under the Act: Pledge of moveable and lien on any
goods and security. Aircraft; Vessels; Hire purchase/lease, etc.; Any Security
interest not exceeding Rs.1 lacs; Agri. land.

Recent changes under the act in 2012:
Banks and ARC are allowed to convert any part of the debt of the defaulting company
into equity. Such a conversion would imply that lenders or ARC can be an equity holder
rather than a creditor of the company.
It also allows banks to bid for any immovable property they have put out for auction
themselves, if they do not receive any bid during the auction. Also, bank is free to sell
these properties to a new bidder at a later date to clear off the debt completely.
24

Bank can file the reply of objection raised by borrower within 15 days instead of 7
days.

Assets Reconstruction Company:

1. The SARFAESI Act permits an ARC to commence operations with a minimum net owned
funds of Rs.2 crores. ARC is required capital adequacy ration of 15%.
2. ARC can acquire financial assets by way of simple agreement from the banks/FIs
subject to some terms and conditions or by issuance of bonds and debentures to the
originating Banks/FIs. All rights of lender vest in ARC after acquiring the assets and
become party to all the contracts/deeds /agreement, etc.
3. An ARC can undertake (i) enforcement of security interest (ii) takeover or change of
management of the borrower (iii) undertake sale or lease of the borrowers' business
and (iv) enter into settlements and reschedule the debt

Base rate for Bank loans:

RBI has advised Banks to switch over from Bench mark Prime lending rate to Base rate
system wef July 1, 2010.
Criteria for determination of Base Rate: While each bank may decide its own base
rate, some of the criterio that could go in to determination of Base rate are
(i) Cost of Deposits
(ii) Adjustment for negative carry in respect of CRR & SLR.
(iii) Unallocated overhead cost for banks such as aggregate employee compensation
relating to administrative functions in corporate office, directors and auditors
fee, legal and premises expenses, depreciation, cost of printing and stationery,
expenses incurred on communication and advertising, IT spending and cost incurred
towards deposit insurance and
(iv) Profit margin

Since the Base rate will be the minimum rate for all commercial loans, banks are not
permitted to resort to any lending below the Base rate except some special categories
like
(i) Short Term agricultural loans.
(ii) Export credit, where interest concessions are granted by GOI
(iii) Loans granted to a corporate, post restructuring.
(iv) Loans under DRI scheme.
(v) Advance against Banks own term deposit receipts.
(vi) Loan granted to Banks own employees.



25


Grievance Redressal Policy of our Bank:

Aim / Objective
This policy document aims at minimizing instances of customer complaints and grievances
through proper service delivery and review mechanism and to ensure prompt redressal of
customer complaints and grievances. The review mechanism helps in identifying
shortcomings in product features and service delivery. The banks policy on grievance
redressal follows the under noted principles.
Customers be treated fairly at all times
Complaints raised by customers are dealt with courtesy and on time
Customers are fully informed of avenues to escalate their complaints/grievances within
the organization and their rights to alternative remedy, if they are not fully satisfied
with the response of the bank to their complaints.
Bank will treat all complaints efficiently and fairly as they can damage the banks
reputation and business if handled otherwise.
The bank employees must work in good faith and without prejudice to the interests of
the customer.

In order to make banks redressal mechanism more meaningful and effective, a structured
system has been built up towards such end. This system ensures that the redressal sought
is just and fair within the given frame-work of rules and regulation. The policy document
would be made available at all branches. All the employees of the Bank will be made aware
about the Complaint handling process

Framework
The customer complaint arises due to:
A. The attitudinal aspects in dealing with customers
B. Inadequacy of the functions/arrangements made available to the customers or gaps in
standards of services expected and actual services rendered.



26

RETAIL BANKING & THIRD PARTY PRODUCTS

Retail Banking:

Retail banking is characterized by three M,
(1) Multiple products,
(2) Multiple delivery channel and
(3) Multiple customer groups.

Basically, there are three important segments of Retail banking
(1) Deposits products,
(2) Loan products, and
(3) Other service products

Why Retail Business?

Growing competition & diminishing margins in corporate financing.
Potential area for return on fund deployment.
Corporate objective: To increase outstanding Retail credit by 27.98% or to 41,400
crs. at the end of 31.03.2014
Branches to generate maximum leads and forward to RLF
Opportunity to cross-sell more products & services
To counter stiff competition prevailing in the market
Less risk exposure

Customer Motivations
Retail Loan Campaign from 01.02.2014 to 31.03.2014 for Baroda Home Loan,
Baroda Auto Loan & Baroda Traders Loan.

Our bank has launched the campaign for Baroda Home Loan, Baroda Auto Loan & Baroda
Traders Loan from 01.02.2014 to 31.03.2014 with 100% waiver of Unified processing
charges on Baroda Home loans (including Home Improvement Loan & AAA) and Car Loans &
50% waiver of processing charges on Baroda Traders Loans (Applicable to all loans
sanctioned till 31.03.14 and disbursed upto 10.04.14 under) 50% waiver of processing
charges on Baroda Traders Loan is also applicable to accounts reviewing with
enhancement,but for enhanced portion only.

Staff Motivations

PPF CAMPAIGN
ln order to promote the opening of large number of PPF Accounts this year our Chairman &
Managing Director has again approved a new and improved Cash incentive linked Campaign
27

for opening of PPF Accounts in the authorized branches Pan lndia during the period
starting from 1st January, 2014 to 31st March, 2014.

Each staff member, whether from an authorized/ un-authorised branch or administrative
office, shall be eligible to receive a cash incentive of Rs. 25/- per account, in case he/she
has canvassed a minimum 5 new PPF accounts. The incentive will increase to Rs. 30/- per
PPF account if staff member canvasses 15 or more PPF accounts during the campaign
period.

Retail Lending Continuation of various Incentive Schemes.
Bank has introduced the following incentive schemes for driving growth in Retail Lending.

1. Payment of incentives to staff members against the Home Loan leads directed by
them and converted into real business.

Incentive will be paid for Home Loan application above Rs.10 Lac &upto Rs.50 Lac at the
rate of Rs.2500/- per application and Rs.5000/- per Home Loan for Home Loan application
above Rs.50 Lac against the leads directed by the staff members and where Home Loan is
sanctioned and disbursed by the Bank.

2. Payment of service charges to Approved Builders against the Home Loan leads
directed by them and converted into real business.

Builders will be paid service charges, which should not exceed 0.25% of the Home loan
amount for every case directed to the Bank or Rs.25000/- whichever is lower subject to
sanction and disbursement of Home Loan by the Bank.

3. Payment of pay out / service charges to all Car Dealers & their Sales Executives.

- Payment of pay out to all Car Dealers at the rate of 1% of Car Loan amount
disbursed against the leads directed by them and converted in to real business.
- Payment of service charges of Rs.1000/- per Car Loan, to the Sales Executives of
Car Dealers against the leads directed by them and converted in to real business.

The Schemes are initially launched upto 30.09.2013. However, now it has been
decided to continue the incentive schemes as under.
Payment of incentives to staff members against the Home Loan leads directed by
them and converted into real business - will continue upto 31.03.2014
Payment of service charges to Approved Builders against the Home Loan leads
directed by them and converted into real business will continue on ongoing basis
till further instructions.
28

Payment of pay out / service charges to all Car Dealers & their Sales Executives -
will continue on ongoing basis till further instructions.

Capital Gain Account Scheme, 1988:

1. The exemption provided under the section pertain to long term capital gain arising on
sale of residential property and investment of such gains in another residential
property. As per law this investment must be made within 2 years for purchase & and
three years for construction.
2. In case, after the sale of property, a person is not able to find property of his choice,
the amount of capital gain shall be kept under this scheme till investment.
3. Two types of accounts can be opened under this scheme:
(a) Deposit A- deposits made under this account would be in the form of savings bank
deposits and
(b) Deposit B- deposits made under this account would be in the form of term deposits,
with an option to retain the deposit as cumulative or non-cumulative. Deposits may be
made as a single lump sum amount or in instalments at any time on or before
furnishing the return on income
4. Withdrawals under savings can be made from time to time. A declaration in form C
giving details of purpose is required. Form D shall also be required.
5. Helps to avail of tax exemptions from capital gains, tax exemption available under
section 54(f) (4) of the Income Tax Act.
6. Nomination facility available.

UTI Mutual Fund (UTI) MF:
1. On 1
st
March, 2006 MoU signed between our Bank and UTI Asset Management Co.
for selling of UTI-MF products through our 100 identified branches across the
country in first phase.
2. Centers selected are such where UTI-MF is also having its office
3. Our Bank has since obtained AMFI registration no. 35783 which is to be
incorporated on all the application forms.
4. The selling of UTI Mutual Fund is yet another stream whereby more than 26
millions of BoB customers will get an opportunity to invest in various schemes of
UTI Mutual Fund closer to their doorsteps in the branches where they do their
business transactions.

Birla Sun Life Mutual Fund

1. Birla Sun Life Mutual Fund tied up with us for distributing its MF Products.
2. For distribution of Birla MF's products, the Bank has identified 100 branches across
the country, to start with. This will be extended to many more branches in due
course.
29

3. Under the Agreement, Bank of Baroda will offer the entire Birla MF's products across
the Bank's selected branches.
4. In its drive towards providing greater customer convenience, the Bank will continue to
enlarge its basket of products - both its own as also third party, leveraging its vast
branch infrastructure."

Baroda First Wealth Pack:

Benefit Proposition Baroda First Wealth Pack:

Particulars Benefits To Customer Benefits to Bank
Baroda First Savings
Bank Account (with
inbuilt feature of
availability of group
Insurance cover)
Availability of many add-on
facilities in the form of
freebees. Added Unique in
built facility of coverage
under group Insurance
Scheme on nominal Insu.
Premium
Broaden Customer Base.
Possibility of cross sell, up sell.
Increase in Low cost deposits
base.
Baroda First Regular
Deposit Account
( annual Installment
for 10 years)
Investment in High Yielding
Rec. Deposit.
No risk of Interest rate
fluctuations
No TDS deducted at source
as per present rules.
Bank will get long lasting
relationship with customer at
least for -10- years.
Help increasing Recurring
Deposit base i.e. long term
resources for the Bank
India First Smart
save Plan (ULIP)
Insurance Coverage as
per ULIP plan.
Market based Wealth
creation
Broad basing Business portfolio.
Commission on Insurance
premium payable to Insurer
thereby adding to Non Interest
Income of the Bank

Customer will Invest every year Baroda First
Wealth Pack-
Silver
Rs.25000
Baroda First
Wealth
Pack- Gold
Rs.50000
Baroda First
Wealth
Pack-
Platinum
Rs.100000
Baroda First Regular Deposit A/c (R.D.
Installment for 10 yrs)
Annual
Installment of
Rs. 10,000/-
Annual
Installment
of
Rs. 20,000/-
Annual
Installment
of Rs.
50,000/-
Baroda First Savings Bank Account (with
inbuilt feature of availability of group
Rs. 2250/ Rs. 4,900/- Rs. 8,100/
30

Insurance cover)
India First Smart save Plan (ULIP)* Rs. 12,000/ Rs. 24,000/- Rs. 40,000/
Payment of Group Term Insu. premium
(incl. of Service Tax)
Rs. 750/ Rs1,100/- Rs. 1,900/
Sum Insured under Group Term
Insurance (Age group 18 to 55 Years)
2 lacs 3 lacs 5 lacs
*Sum assured under IndiaFirst Smart
Save
Plan (age group 18-50 yrs)
2 lacs 3 lacs 5 lacs
*Sum assured under IndiaFirst Smart
Save
Plan (age group 51-55 yrs)
2 lacs 2.64 lacs 4.40 lacs
Total Insurance Cover (ULIP+ Group Term
Insurance ) for 18-50 yrs aged Customer
4 lacs 6 lacs 10 lacs
Total Insurance Cover (ULIP+ Group Term
Insurance ) for 51-55 yrs aged Customer
4 lacs 5.64 lacs 9.40 lacs

Baroda Health" (Medi-claim Insurance Policy)

1. This is in collaboration with National Insurance Co Ltd. for Banks Account holders
w.e.f 23rd February 2006.
2. It is a co-branded product to provide value added services to our customers and
available at all our branches across the country.
3. It is a Group Medical Insurance Scheme, takes care of the hospitalisation expenses
upto the amount of sum insured. This policy is available only to account holders of our
Bank.
4. Insurance coverage i.e. sum assured may range from Rs 50.000/ to Rs 5.00 lacs per
family of 1+3, consisting of policyholder, spouse and 2 dependent children up to the
amount insured.
5. A member or all the members in insured family can avail hospitalisation benefits
during the policy period, to the extent of aggregate sum not exceeding the sum
insured.
6. It provide covers in respect of any illness / disease, accidental injury and/ or any
ailment., any surgery that is required in respect of any disease or accident that has
occurred during the policy period, Pre-existing diseases covered after three
consecutive continuous claims free policy years in respect of all diseases provided
there was no hospitalization for pre-existing ailments during such three years of
insurance
7. Policyholders are eligible for Income Tax exemption under section 80 D as per Income
Tax Rules.
31

8. Cost of Health check up is allowed @ 1% of sum insured after completion of 3rd year
continuous claim free years of Policy.

Baroda Bachat Mitra

OD facility in Saving Bank Account.
Min. FDR amount Rs. 10000/- & in multiple of Rs. 1000/- for 12 to 120 Months.
OD- 80 % of FD amount with Min. Rs. 8000/- & Max. Rs. 100000/-
Pledge of FDR duly discharged.
Processing/Documentation-NIL
ROI- 1.00% above FDR rate with Min. Rs.25/- per month.
Cheque Book, Nomination Facility available.

Baroda Centenary Savings Account
Auto sweep amount will be in multiple of Rs.5000/- in excess of threshold limit of Rs.
10000/- [default setting, looking to customer needs, liberty to fix higher than Rs.
5000/-, in multiple of Rs. 1000/-]
Reverse sweep in multiple of Rs.5000/- liberty to fix higher amount than Rs.5000/-, in
multiple of 5000/-
Tenure of the SDR will be max. 180 days.
Free collection of outstation chqs but postage charges will be recovered, Free Debit
Card, Free Cheque Book facility, Free Standing Instruction & welcome Kit.
Immediate credit of outstation chqs upto Rs.25000/

Baroda Premium Current Account
Free internet Banking, on line payment of Excise duty & Service Tax, Bank Statement
by E-mail, Free personal accidental insurance with credit card , Free Credit Card ( For
First Year ) Maximum to 2 Partners or 2 Directors, Balance Certificate, Signature
verification, Auto payroll & Unlimited no. of cheque leaves.
Rs.75000 QAB to be maintained.
50% concession in remittances & collection of out station cheques. Waiver in case Car
Loans are in the name of Proprietor, Firm and Company, Also NIL folio charges.
Auto/Reverse Sweep facility, in multiple of Rs.25000 in excess of minimum balance, for
15-45 days.
Immediate credit of out station cheques o/s max Rs.50000/- at any time.
20% on locker rent if locker rent is paid in advance for three years and above in lump
sum.
32

Baroda Premium Current Account- Privilege
Free remittances & collection of out station cheques, internet Banking, on line payment
of Excise duty & Service Tax, Bank Statement by E-mail, Free personal accidental
insurance with credit card, Free Credit Card (For First Year) Maximum to 2 Partners
or 2 Directors, Balance Certificate, Signature verification, Auto payroll & Unlimited no.
of cheque leaves. Waiver in case Car Loans are in the name of Proprietor, Firm and
Company, NO folio charges.
Rs.2,50,000/- QAB to be maintained.
Auto/Reverse Sweep facility, in multiple of Rs.25000 in excess of minimum balance for
15-91 days.
Immediate credit of out station cheques o/s max Rs.150000/- at any time.

Baroda Jeevan Suraksha
Min. Rs. 1000/-, Min. balance Rs. 1000 on daily basis. Minimum balance charges
Rs.100+ST per quarter
Adm. Charge @10% of prem. amt collected shall be reimbursed by IFLI to our bank.
Life Insurance covers from India First Life Insurance co. Ltd. Up to an amount of Rs.5
lac (Min. Rs.1 lac & thereafter in multiples of 1 lac) on payment of premium at cost of
customer.
Auto sweep over Rs.5000 in multiples of Rs.5000, reverse sweep in multiples of
Rs.1000/- on LIFO pattern.
Free Debit card/internet banking & BOB Card Silver for first year with accident
insurance cover of Rs.1 lac(BOBCD ltd)
Immediate credit of outstation cheques up to Rs.15000/-
Free SI
Baroda Pensioner Saving Bank A/c
Pensioners & BOB staff pensioners are also eligible
A/c opening by Min- Rs.5/-, Min. Balance Rs. 3000/- on daily basis, if not Min, balance
charge Rs. 100 + ST per quarter
Auto sweep beyond Rs.3000 to Short deposit of 180 days in multiples of Rs. 1000,
Reverse sweep in multiples of Rs.1000/- on LIFO pattern.
Free transfer of funds through DD/BC up to max. of Rs. 1.00 lac per month.
Free coll. of outstation cheques/ DD.

33


Baroda Samraddhi HYearly / Quarterly Recurring Deposit Scheme

Individuals as well as Non Individuals are eligible for opening of Account.
Banks Normal Term Deposit interest rates are applicable
Depositor will have to choose Installment Amount, Installment frequency (Quarterly or
Half Yearly) and No. of Installments to be deposited (Tenure of Account) .
Quarterly Recurring Deposit can be opened with minimum Rs500/- (further in multiple
of Rs 100) and Half Yearly Recurring Deposit scheme with minimum amount of Rs 1000
(further in multiple of Rs 100).
Minimum tenure of the account shall be 36 months and maximum 120 months.
NO TDS shall be deducted on Interest payments
Loan/ Overdraft facility upto 95% of outstanding credit balance at Interest rate
1.00% over deposit rate shall be available.
Penal Interest, Premature Payment and other norms as per usual
Monthly Recurring Deposits scheme shall be applicable.


Baroda Double Dhamaka Fixed Deposit Scheme
Launched w.e.f. 25.02.2013 keeping in view that there is a big group of depositors having
sufficient long term surplus fund, who desire to earn good return on their Investments. If
such Investors are offered option to double their funds in minimum period of time by
offering special rate of interest, they can be easily persuaded to park their funds with us
and thus Bank may fetch substantial retail term deposit under this bracket.
A Term Deposit Product wherein Depositor gets more than double of his initial deposit
amount, after a period of 7 Years 8 Months and 18 Days for Residents & Non- Residents
and 7 Years 3 Months and 24 Days for Senior Citizen
Minimum deposit amount -Rs 5,000/- (and further in multiple of Rs. 1000/-)
Maximum deposit amount -Less than Rs. 1.00 Crore

Maturity Value -On Due date Rs. 1000/- shall accumulate into Rs. 2001/-

offers a very attractive interest rate of 9.10% p.a. which is one of the best offering as
on date .





34


Domestic Term Deposits for Senior Citizens:

Additional interest of 0.50% on domestic term deposits of less than Rs.1 crore from
Senior Citizens for all maturities in terms of latest circular (No. BCC: BR: 98/225
dated August 17, 2006)

Retired Staff members who are Senior Citizens resident in India, branches are
authorized to pay additional interest of 1.50% per annum (i.e. 1% a normal staff
privilege plus 0.50% as a benefit to Senior Citizen) on their fresh term deposits and
renewals of existing Term Deposits of less than Rs.1 crore for maturities from 15
days to 10 years. (No. BCC: BR: 100/4 dated 1
st
January2008).

*Rate of Interest will be depending on tenure & paid as per Banks guidelines from
time to time. Revise interest rates payable on term deposits & NRO deposits up to
Rs. One crore, applicable to the renewal of existing deposits and acceptance of fresh
deposits, with effect from 14.09.2011



35

ROLE OF TECHNOLOGY IN BANK

e-Business Products of our bank

1. ATMcumDebit Cards
2. Baroda Connect
3. Baroda Phone Banking
4. ONLINE RTGS / NEFT (through Baroda-Connect)
5. Baroda e-payment Gateways
6. Baroda m-Connect
7. Baroda Gift Card
8. Baroda Travel Easy Card
8. Baroda Rupay Card / Baroda BKCC Rupay Card

ATM-cum-Debit Card
Comparison of various Debit cards
Visa
Classic

Maestro

RuPay

Combi Gold

Platinum

Income
Eligibilit
y
All
customers
who are
eligible to
operate
the
account
individuall
All
customers
who are
eligible to
operate
the
account
individuall
All
customers
who are
eligible to
operate
the
account
individuall
Annual income >
Rs.3,00,000/-.
Current Account
holders with
average monthly
balance of
Rs.50,000/- or
more (previous
twelve months
Annual income >
Rs.5,00,000 /
HNI / NRI
customers.
Current Account
holders with
average monthly
balance of
Rs.1,00,000/-
or more (previous
twelve months
LOGO

VISA

MAESTRO

RUPAY

MASTER
VISA

ATM
Withdra
wal limit
(Daily)

Rs.25000

Rs.25000

Rs.25000

Rs.50000

Rs.100000

Purchas
e limit
at POS
(Daily)
Rs. 50000

Rs. 50000

Rs. 50000

Rs. 100000

Rs. 200000

36


Annual
Fee

NIL

NIL

NIL

NIL

Rs. 150
(Waived after
reaching a
threshold
spending of
Rs.12,000/- in
POS/ e-
commerce in a
calendar year)
No of
withdra
wals
per
day in
ATM

4

4

4

10 10
Card
Renewa
l

After 10
years

After 10
years

After 10
years

After 10 years

After 3 years


Issuance of Non-Personalised Debit Card
As a part of our constant endeavor to leverage technology by offering new
products and services to our customers, our bank has taken another customer
centric initiative to introduce the facility of issuing Non-Personalised Debit Cards
of all 3 variants namely Visa Electron, Maestro and RuPay Classic.
Card limits are same in all variants on lines of current limits of Personalised Debit
Cards (Visa Classic):
i. ATM withdrawal limit: Rs 25,000/- per day.
ii. Purchase limit at POS/e-commerce: Rs 50,000/- per day.
iii. No of Cash Withdrawals allowed per day will be 4 for Visa Electron/RuPay
Classic and 5 for Maestro Debit Card.

Key features of RuPay/VISA Platinum EMV Chip

They are International Chip Debit Card.
These variants are premium category of Debit Card and have higher per day
limits at ATM/POS.
37

Cash withdrawal limit is up to Rs 1,00,000/- per day from an ATM with maximum
limit of Rs 15,000/- per transaction on our ATM & Rs 10,000/- per transaction on
other Banks ATM and purchase limit of Rs 2,00,000/- per day at POS.
The customer will be able to withdraw Cash from an ATM in Foreign currency up
to the equivalent of Rs 1,00,000/- per day. Similarly, the maximum per day
purchase limit at POS in Foreign Currency will be equivalent of Rs 2,00,000/-.
Maximum number of cash withdrawals allowed per day from an ATM is TEN and
there is no limit for number of POS/e-commerce transaction up to Rs 2,00,000/-
per day.
Can be used for e-Commerce transactions wherever RuPay and VISA Cards are
accepted. Both variants have PIN and CVV value. CVV is an important feature for
Debit Card transactions on the internet. CVV stands for Card Verification Value.
It is the last three digits printed separately after the card number in the
signature band on the back of the card.
Validity period of these debit cards is five years from month of issue.

Baroda Connect

Baroda Connect, an internet banking product of our Bank, is the very important
alternate delivery channel (ADC). This also facilitates the customers to enjoy various
banking services from their door step (home / shop/ company) or anywhere having
internet connectivity, hence, in limited sense, we may call it as Mini Extension Counter
of the Bank. In todays buyers market, where Customer is the King and each and every
service industry including banking, are hovering around the centre point CUSTOMERS,
such a unique service is extremely desired by the customers at large, especially by Gen-
Next customers and it also proves the concept of internet as www (win-win-win
situation for the Customers, Bank & Employees). Considering the same of prime
importance, our Bank has come out with a mega project Navnirmaan, which is going to
be beneficial to all the three, in one way or, other.

Benefit to the Customers:
1. 27x7x365 access (even no effect of Sundays, Holidays & Strikes)
2. Time Saving
3. Substitute of Q-culture
4. Transparency & Trust
5. Available in other territories
6. Remittances to/from other Banks
7. Transfer of funds within Bank at no cost (without Inter-SOL Charges)
8. Various ancillary services viz. e-pay, e-ticketing, utility bills payment
9. Various other facilities at free of cost
10. Special limit for Transfer of funds within Bank may be considered

38

Benefit to the Employees:
1. Time saving as vouchers are not coming to the branches concerned for processing
2. Operating Risk Mitigation upto some extent as transaction is being done by
customers
Benefit to the Bank:
1. Cost effective
2. Additional services for retention & accretion of Gen-Next customers
3. Image of the Bank as Techno-savvy
4. Facilitate the Bank to upgrade / diversify the range of e-banking services

Unique Features of Baroda Connect:

In todays intensive banking scenario, almost all banks are providing internet banking
facility and services provided, are also more or less same. But, our Baroda Connect is
having two very unique features first, transaction of future date can be scheduled
well before and second, multiple-users can be set in any Corporate User A/c.

Banking system thrives on customers stake / confidence reposed, hence, a safe &
qualitative customer service provided by the Bank is the pre-requisite for placing itself
as preferred position in the market. Unfortunately, in recent past, some sort of illegal
practices (phishing, vishing, mishing, smishing) by unauthorized persons came into
picture. Hence, for enjoying safe, comfortable and trustworthy internet banking by our
customers/users, our Bank has taken following initiatives:--

Awareness message on Home Page from phishing, vishing, mishing etc. attacks.
Awareness creation by the branches to their users through various methods.
Provision of Virtual Keyboard for entering Sign-on password.
Provision of two different passwords - for Sign-on & for Transaction.
Additional safety measure by disabling Transaction Password if not used for 90 days,
so that chances of misuse due to unvigilant actions of customers could be eliminated.
Sending SMS about transactions, on registered mobile phone to facilitate the users
for early access of genuineness of transactions.
Daily / Weekly ceiling on transaction amount so that any unauthorized person cannot
make big damage to our users at once and subsequently, genuineness of transaction
can be established by the user, through receiving SMS and if it is unauthorized,
necessary steps may be taken at the earliest.
Third party / Inter-bank fund transfer only after Registration by the user.
Fraud Management Services (FMS) has been implemented as additional safety
measure.
OTP Facility is providing additional safety.


39

Services offered to Retail Customers
Balance enquiry in Operative account, Deposit accounts and Loan accounts.
Stop payments of cheques
Tax Deduction Enquiry
Account summary summary of all operative, deposit and loan accounts
Fund transfer to Self / linked account and Third party fund transfer.
Request for cheque book, fixed deposit renewal, Switch Mailing address, account
opening for CBS and e-banking.
Profile customer can change his profile and change his password.
Activity history Customer can get details of all the activities carried out by bank.
Modeling Customer can model deposit / loan schemes of the bank and know about
likely maturity value, if he invests or likely EMI if he takes loan, etc.
ASBA facility
School Fee options
Bill payment option
Facility of IMPS for instant Inter/Intra Bank fund transfer through Baroda Connect .
Online Fixed Deposit Facility

Services offered to Corporate Customers
All facilities mentioned under Retail Customers
Approvals For corporate customers, there can be involvement of multiple users
for transfer of funds / payment of bills, etc and Baroda connect allows multiple
users to log in and initiate / approve the transactions, as per powers delegated by
the corporate to their users.
Trade Finance queries relating to Import/Export, Inland Trade, B.G., Forward
Contract.
Direct Salary upload facility.
ASBA facility
Facility of IMPS for instant Inter/Intra Bank fund transfer through Baroda
Connect.

Limit for transactions
Retail customers can have max.5 transactions/day. But in case of Corporate customers,
there will not be any restrictions on the Number of Transactions per day. The limit for
corporate customer can be increased on the request of the customer and
recommendation of the concerned branch.
(Amt. in Rs.)
Retail Corporate
Self linked
A/c
Third party
fund transfer

Self fund
transfer
Third party
fund
transfer

40

Per transaction Unlimited 50,000 5,00,000 50,000
Daily limit Unlimited 100,000 10,00,000 1,00,000
Weekly limit Unlimited 4,00,000 40,00,000 4,00,000
Monthly limit Unlimited 10,00,000 1,00,00,00
0
10,00,000
Yearly limit Unlimited 60,00,000 6,00,00,00
0
60,00,000

Baroda Easy Pay
"Baroda easy Pay" is an electronic bill presentment and payment service launched by the
Bank in association with "Bill Desk", a well-known technology and payment service
company. It is transaction based internet banking service for customers of Mumbai CBS
branches. This service is providing two types of services to the customers
1. Bill Pay Presentment Type Biller
2. Direct Pay Payment Type Biller.

Advantages to Customers
No more visits, queues and waiting at branch
Facility is available on 24x7 basis
Can make payment from anywhere
Ease of operation and convenience
Can pay utility bills on behalf of the individual, firm or company
Instant Cyber Receipts for the payment made
Can View past payments at any point of time
Baroda easy Pay Service is free of charge

Bank of Baroda Online Trading (OLT)

Our bank has launched Baroda etrade an on-line trading facility in July 2012 in
association with BOBCAPS Ltd. our subsidiary. OLT is the state-of-the-art on-line
securities trading platform for the Banks customers. The on-line trading platform Baroda
e-trade is powered by a robust trading engine coupled with a comprehensive suite of
products and services. Since it comes with an in-built configuration with proactive
approach towards customer service, we aim to provide a constantly delightful trading
experience to our customers through this product.
Any customer or non-customer, who wants to avail of OLT would be required to have/open
the following 3 accounts.
Bank account, i.e., Savings Bank/Current Account with any of the branches of the
Bank,
Demat account with any of the Depository designated branches of the Bank, and
Trading Account with BOBCAPS.

41

BarodaRemitXpress

In keeping with the Banks goal of emerging as a true international bank of India, the
Bank has launched an Online International Money Transfer Service
BarodaRemitXpress. This product is a unique and robust online remittance solution
from USA, UK and Eurozone. This online service is bank-neutral, thus not requiring the
senders and the recipients to have a bank account with us.
This product is unique as it provides

Desktop-to-Doorstep Solution
Convenience customer can use any bank in the U.S., U.K. and EURO ZONE
Cheaper than an International Wire Transfer
Significantly cheaper than a money-transfer agent
Quicker than an international check
24x7 Customer Service
Global Security Standards - 128-bit encryption
Online Funds Tracker
Free Personalized Message
Minimum 50 USD, GBP & EURO and Maximum 5000 USD, GBP & EURO

Different Pay modes form sending money to India
US - Online Money Transfer
UK - CIP (Customer Initiated Payment)
EURO - Local Wire
Customer can send money from over 12,000 US banks and all UK & EURO ZONE banks.
Beneficiary will receive Indian Rupee funds in the form of a Demand Draft. Times of
Money is Bank of Baroda's alliance partner for the Baroda Remit Xpress service.

Biometric Cards /ATM

Biometric cards authorize transactions based on the customers biological attributes. It
could range from fingerprints to voice to iris of the eyes. It is especially useful for
those who are illiterate or not familiar with the language used by the ATM to conduct
transactions. For example, in case of a fingerprint; a fingerprint does the job of a
Personal Identification Number (PIN) which is a unique number that each customer has
to punch in the ATM to conduct any transaction. Instead of typing the number the
person has to merely press his / her finger (usually the thumb) in the slot provided for
fingerprint identification.

The biometric ATM card typically contains a smart chip, which carries biometric
information, personal details as well as the photograph of the account holder. Biometric
ATM works on identification of finger prints supported by voice prompting in local
42

language. The key features of biometric ATM are use of finger impression in place of
PIN, voice output for people who cannot read, colour codes available for different
amounts, fixed amount facility, no keyboard etc.
Our banks first biometric ATM was installed at Gandevi, Gujarat.

Cheque Truncation

A working group under the chairmanship of Shri D Burman had recommended the
concept of Cheque truncation to replace the physical movement of cheque by the image
of the cheque. Truncation is the process of stopping the flow of the physical cheque
issued by a drawer to the drawee branch. The physical instrument will be truncated at
some point en-route to the drawee branch and an electronic image of the cheque would
be sent to the drawee branch along with the relevant information like the MICR fields,
date of presentation, presenting banks etc. Thus with the implementation of cheque
truncation, the need to move the physical instruments across branches would not be
required, except in exceptional circumstances. This would effectively reduce the time
required for payment of cheques, the associated cost of transit and delay in
processing, etc., thus speeding up the process of collection or realization of the
cheques.

Benefits
Faster clearing cycle
Better reconciliation / verification process
Better Customer Service & Enhanced Customer Window
T+ 0 for Local Clearing and T + 1 for inter-city clearing.
Elimination of Float. Incentive to shift to Credit Push payments.
The jurisdiction of Clearing House can be extended to the entire country. No
Geographical Dependence
Operational Efficiency will benefit the bottom lines of banks. Local Clearing activity
is a high cost no revenue activity.
Minimizes Transaction Costs.
Reduces operational risk by securing the transmission route.

IFS Code
Indian Financial System Code (IFSC) is an alpha numeric code designed to uniquely
identify the bank-branches in India. This is 11 digit code with first 4 characters
representing the banks code, the next character reserved as control character
(Presently 0 (ZER0)appears in the fifth position) and remaining 6 characters to identify
the branch. IFSC No. for branches of our Bank is BARB0XXXXXX where XXXXXX is
for Branch Alpha. But if the alpha code is less than 6 characters, it should be padded by
X after the alpha i.e. if the branch alpha of our Mount Abu branch is ABU then the
IFSC code of this branch will be BARB0ABUXXX.
43


NEFT
National Electronic Funds Transfer (NEFT) system is a nationwide funds transfer
system to facilitate transfer of funds from any bank branch to any other bank branch.
The system uses the concept of Centralised accounting system and the bank's account,
which is sending or receiving the funds transfer instructions, gets operated at one
centre, viz. Mumbai only.
There is no value limit for individual transactions. NEFT is settled in 12 batches with
first batch starting at 0800 on weekdays and in five batches with first batch starting
at 0800 on Saturdays

How it is different from RTGS?
1) NEFT is a domestic electronic payment system (except Nepal) whereas RTGS allows
remittance from abroad also.
2) Minimum Amount in RTGS is Rs. 2 lac whereas in NEFT starts from Rs.1/- .
3) NEFT transactions are processed in a batch (12 in a normal day and 6 on Saturday)
whereas RTGS transactions are processed on Real Time basis.
4) NEFT transaction can be done by cash also whereas RTGS can be done account to
account.
5) In NEFT if there is incorrect a/c no. amount gets bounce back to remitting branch
whereas in RTGS it remains with the receiving branch.
6) NEFT transaction can be done by cash (i.e. non customers can also avail the benefit
of NEFT by depositing cash up to Rs.50000/-) whereas RTGS can be done account to
account only.

Real Time Gross Settlement (RTGS)
The acronym RTGS stands for Real Time Gross Settlement. An RTGS Payment
system is one in which payments instructions between banks are processed and
settled individually and continuously throughout the day .
This is in contrast to the net settlements, where payment instructions are processed
throughout the day but inter-bank settlements takes place only afterwards. Payment
instructions processed on a continuous or REAL TIME basis and settled on a GROSS
or individual basis without netting the debits against credits.
Settlement in REAL TIME means payment transaction is not subjected to any
waiting period. GROSS Settlement means the transaction is settled on one to one
basis without bunching with any other transaction.
Payment so effected are final and irrevocable
Settlement is done in the books of the RBI
Minimum amount for RTGS transaction is Rs.2 lac and there is no maximum limit for
transaction.
RTGS can be used for Inter Bank as well as Intra Bank transfers.
44

IFSC code is required for RTGS transaction and now, it has been mandatory to remit
the amount of Rs.10 Lac and above through RTGS/NEFT.

Timings Monday to Friday
Customer Transactions R41: 0900 hrs to 1630 hrs
Inter Bank Transactions R42: 0900 hrs to 1800 hrs
Timings Saturday
Customer Transactions R41: 0900 hrs to 1330 hrs
Inter Bank Transactions R42: 0900 hrs to 1500 hrs

ASCROM
ASCROM stands for Asset Classification and Credit Monitoring.
ASCROM is user-friendly software for creating Comprehensive Data Base of
Advance accounts at all levels.
It enables Recording details to implement BASEL-II (Standardised Approach) as well
as facility of data submission to CIBIL.

Features of ASCROM system
Early Warning Reports The system identifies Potential NPAs 3- months in advance
along with the Critical Amount Due (CADU)
Critical Amount Default (CAD) The system identifies the Critical Amount in Default
(CAD) in NPAs which must be recovered to upgrade the account to standard
category.
Automatic Asset Classification and computations of provisions as per RBI norms.
Reports like DSB, BSR (1A & 1B), Lead Bank Returns; Priority Sector returns can be
generated.
Asset Classification Reports in several combinations can be generated.
NPA Movement Reports for region, state, industry, sector, and activity or in its
combination is available.
Provides strong base for risk mgt. and data warehousing initiative of the Bank.
Once the account is upgraded in ASCROM, the same can be upgraded in FINACLE
through BOBMEAC .

Baroda Rapid Funds2India:

1.The product is introduced to provide easy and hassle-free money transfer service to
Individuals-NRIs/PIOs & Corporates (for remitting salary payments to their
employees) to remit the fund in India from UK, UAE and Oman Mauritius, Seychelles,
Botswana, HongKong, Fiji, Ghana, Kenya, Guyana, South Africa, Tanzania, Uganda and
Trinidad & Tobago.
45

2. Where the accounts of the beneficiaries of remittances are maintained with other
banks' branches in India, which are RTGS/NEFT-linked, the credits are effected
within 24 hours.
3. Instant credit to the beneficiary's account with Bank of Baroda branches in India
under the CBS network.
4. Trade related payments are not allowed.
5. No minimum/maximum amount for money transfer.
6. Using RTGS platform if beneficiary has account with other bank.
7. Free remittance if both the remitter & beneficiary are maintaining a/c with us.

Digital signature:

The digital signature is an encryption and decryption process allowing both the
positive identification of the author of an electronic message (Who wrote the
message?) and verification of integrity of the message (Has the message been
tampered with during transmission?).
Encryption is the transformation of information from readable form into some
readable form.
Decryption is the reverse of encryption; it's the transformation of encrypted data
back into some intelligible form.

Electronic banking Channels
ATMs
Debit transfers (utility payments)
Credit transfers (corporate payouts)
Electronic Clearing System
Point of Sales
Home Banking/ PC banking
Internet banking/ Anywhere banking
Tele-banking/ Mobile banking
Baroda Cash Management Services

Information Technology Act 2000:
An Act to provide legal recognition for transactions carried out by means of electronic
data interchange and other means of electronic communication, commonly referred to
as "electronic commerce", which involve the use of alternatives to paper-based
methods of communication and storage of information. The Information Technology
(IT) Act 2000 aims to provide a legal and regulatory framework for Promotion of e-
Commerce and e-Governance. IT Act 2000 was enacted on 7th June 2000 and was
notified in the official gazette on 17th October 2000. The Act is applicable to whole
India.
46

The major provisions contained in the IT Act,2000:
Electronic contracts will be legally valid
Legal recognition of digital signatures
Digital signature to be effected by use of asymmetric crypto system & hash
function
Security procedure for electronic records and digital signature
Appointment of Certifying Authorities and Controller of Certifying Authorities,
including recognition of foreign Certifying Authorities
Controller to act as repository of all digital signature certificates
Certifying authorities to get License to issue digital signature certificates
Various types of computer crimes defined & stringent penalties provided under
Act
Appointment of Adjudicating Officer for holding inquiries under the Act
Establishment of Cyber Appellate Tribunal under the Act
Appeal from order of Adjudicating Officer to Cyber Appellate Tribunal and not to
any Civil Court
Appeal from order of Cyber Appellate Tribunal to High Court
Act to apply for offences or contravention committed outside India
Power of police officers and other officers to enter into any public place and
search and arrest without warrant
Constitution of Cyber Regulations Advisory Committee who will advice the Central
Government and Controller

MICR

Magnetic Ink Character Recognition technology is very popular world wide and in this
system, the instrument such as cheque, draft, pay order, gift cheque, traveler cheque
etc. can be read directly without the need for transcribing the data on punch cards or
paper tapes.

The information is printed on the instrument with special ink, which is made up of
magnetic material. On insertion of instrument in the machine, the printed information
is magnetized and read by the machine.
The MICR system is beneficial as the chances of error are minimized, transfer of
funds becomes faster, clearing becomes easy and burden of manual work is reduced.


47


Introduction of NetCAST utility
Reasons behind introduction of Netcast Utility
The time taken for download of some reports is long due to slow response of erver
especially during peak hours.
The user generating/downloading some reports is locked for a long time which
hampers other jobs besides the involvement of man-hours at the branch.
Sometimes the report server is not available to the branch due to various reasons
and few report generation menu are also not available at Finacle Live server. In such
cases, branches are unable to generate some urgent reports in case of need.
Sometimes, branches forget/fail to download some periodic reports like ALMAN
which cannot then be re-generated after the due date. This results into no
compilation /discrepancy of data at branch level.

Considering the above, a new utility called NetCAST has been created to generate
some specified reports for all the CBS branches at centralised location and distribute
the same to respective CBS branches for onward download /access at their end as per
their requirement.

NetCAST is a utility for centralized generation of reports/downloads and distribution
of the same to the respective CBS Branches. It addresses the issues related to report
generation activity besides saving considerable amount of man hours involved at the
branch level.

Mobile Banking:
Our bank offers Baroda M Connect, the mobile banking facility to its customers.
Baroda M-Connect is a robust and safe banking utility on customers mobile phone,
enabling the customer to perform a series of banking transactions. Customer can also
link other accounts held in the Bank and transact business on them. Much beyond
banking,customer will also be able to do transactions like bills payment, air-ticketing,
movie-ticketing,recharging the mobile phones, etc. Bank has decided to offer this
service absolutely FREE to its customers. To use M-Connect, customer either pays for
internet usage time or for the smssent during the usage.
Customers can start using Baroda M-Connect facility in three simple steps:

1. Registration through ATM or through Branch
2. Downloading of an Application Software for M-Connect
3. Activation of M-Connect
Baroda M-Connect offers a variety of services to customers. The basic services can be
grouped as
a. Account enquiry and funds transfer
b. Service requests
c. Payment services and ticketing
48

d. Other services

Baroda M-Connect IMPS funds transfer using Account Number & IFSC
Bank has started extending fund transfer facility using Immediate Mobile Payment
Service (IMPS) using Account No. and IFSC as well through using MMID(Mobile money
Identifier 7 digit No.)and mobile no.
Baroda M Coneect customers can avail basic mobile banking services through
USSD(Unstructured Supplementary Services Data)
Transaction limit: Banks are now permitted by RBI to offer this online service to their
customers with the ceiling decided by individual bank but through SMS it is only upto
Rs.5000.

Technology and Security Standard: Transactions up to Rs.1000/- can be facilitated by
banks without end-to-end encryption. The risk aspects involved in such transactions
may be addressed by the banks through adequate security measures. Some banks have
developed their own software for providing mobile banking facility but for providing
safer facility, a mobile handset should be enabled with any established support system
like, Jawa, Windows, Blackberry, I phone, Brew etc.

Baroda e-payment Gateway
Internet Payment Gateway (IPG) is payment and settlement infrastructure which a
merchant uses to collect payment from their customer for online sale of products or
services. IPG shields the business unit from complex technical infrastructure required
for e-commerce business. It provides necessary access to payment system including
Interchange agencies like Master/Visa, card issuing bank, settlement bank etc.
It is essential for retailers who have an online presence and are interested in selling
their products over Internet. IPG is sate & ensures encryption of sensitive card
information during secured transmission between customer, merchant and payment
processors.

How it works?
Operations team is setup to enroll suitable merchants, provide assistance in
configuring secured access, arrange for day-to-day processing & settlement with
Master Card/Visa and carry out associated reconciliation
Software installed at merchant site, will enable them to track transactions and
generate reports at their end
Merchant will get payment on the next working day in their designated account
Facilitate our merchants to securely accept payment, for their online/web based sale,
using Credit/Debit cards
Accept Master Card/Visa credit/debit card issued by any institution
Merchant instantly gets confirmation of the receipt of payment. Based on that,
goods/services can be delivered to consumer
49

Implemented latest industry standard security features viz. Verified by Visa, Master
Card Secure Code, two factor authentication, 128 bit SSL, continuous monitoring of
server for vulnerability etc.

Benefits of Baroda e-Gateway for customers
Merchant is shielded from installing and maintaining complex payment gateway
technology and interacting with payment systems.
Payment is received on the next working day in merchant designated account.
Merchant can view/print their transactions.
Simple interface with banks system. If needed, support would be provided to
configure the access.
Consumer is assured of safety of their card details/usage. In addition, they get
convenience of purchasing goods/services from the comfort of their home/office.
Round the clock, hassle free service. Create a tech savvy image for merchant.

Opportunities
Fast and emerging market in India, so branches should generate max. leads.
Few numbers of entrants in the payment gateway sector.
Flexible price structure that can be improved on the basis of transaction volume and
business association.
Ability to move into new market segments that offer better profits.

Baroda Cash Management System (BCMS)
Cash Management Services is a software application (Cash@Will) that facilitates
management of customer funds, particularly, of corporate customers. Corporate
customers with large volumes of transactions are the target group for BCMS. Baroda
Cash Management Services also facilitates Internet Based Transactions.
Operational Model of BCMS is consisting of 3 tiers as listed below:-
1. Data Centre
2. Central Operational Hub (COH)
3. Identified BCMS Branches / City Back Office / Service Branches

BCMS has three fund management modules, viz., Collection, Payment & Liquidity
Management and a front-end interface available to the customer through the Internet.

Collection Module The Collection Module handles all inflow of funds in customers
accounts, which can be by way of -
Cash Deposit
Proceeds of local cheques
Proceeds of outstation Cheques

Payment Module This module handles the outflow of funds by way of -
Direct Debit Instructions (DDI)
50

ECS ECS-debit
ECS ECS credit
Issuance of DD / BC
Payment through RTGS / NEFT
Issuance of DW

Liquidity Management Module This module facilitates sweeping of funds from various
accounts of the customers and pooling them in a single account called Concentration
Account. The funds available in this account help the customers in online decision
making. The Liquidity Management Module also facilitates funding of various accounts
as per the requirement of the customers out of the balance available in the
Concentration account. The Liquidity Management Module facilitates both sweep-in and
sweep-out from the Concentration account.
Post dated Cheque Collection
Invoice management

Green Initiative
Government of india has advised the banks to maximise the use of online/ADCs platform
under green initiative.


51

RURAL/AGRI. BANKING

As per our banks business segmentation, Rural / Agri. Business segment will
constitute the following:
Direct agriculture & Indirect agriculture, irrespective of area categorisation
Micro finance (SHGs etc.), irrespective of area categorisation
RRBs sponsored by our bank, irrespective of area categorisation
All other banking business (Asset & Liability) i.e. SME & Retail segment business at
semi urban & rural branches.

Financial Inclusion Plan

In the first phase, Govt. instructed to the banks to cover all the villages with the
banking facilities having population more than 2000 which was to be completed by 2012.

For this, individual bank was empowered to decide about the model for rolling-out FIP
in their allocated area. At present, approx. 99.6% of total unbanked villages have been
covered under F.I. having population over 2000 and now, RBI has instructed the SLBCs
to chalk out the road map for the unbanked villages having population less than 2000.
The bank has also implemented Financial Inclusion Plan for providing banking services in
the un-banked / under-banked 20,000 villages having population of 2,000 and above
during the first phase. The banking services have been provided to these villages
through information and communication technology based models like smart cards,
micro ATMs, mobile vans and brick & mortar branches, wherever feasible.

Moreover, under Roadmap for provision of banking outlets in villages with population
less than 2000, our bank has advised all the Financial Inclusion link branches to ask
concerned BCs and KIOSK operators/VLEs to visit periodically to their allotted sub
service area villages on pre announced days and time to cover 100% Service Area
villages.

The basic approach of financial Inclusion is based on the fundamental principle of 5As
of ensuring Adequacy and Availability of financial services to all sections of the society
through the formal financial system covering savings, credit, remittance, insurance, etc.
and, at the same time, increasing Awareness of such services and ensuring Affordability
and Accessibility of the appropriate financial products through a combination of
conventional and alternative delivery channels and technology enabled services and
processes.

Importance & Scope of FIP:
Huge potential at the Bottom of the Pyramid
Innovative and effective ways of delivery of financial products
52

Poor are bankable and Creditworthy
Financing the poor is not poor financing
Bank of Baroda has been in the forefront in financing the poor
Financial Inclusion is a business opportunity
Skill building Efforts
A new Alternate Delivery Channel
Life-line of future banking in rural areas

Steps taken by the Bank to Promote Financial Inclusion:
No Frill Savings Bank account with limited OD facility
RD account with Money Back facility
Baroda General Credit Card ( Any Purpose Credit upto Rs 25000/-)
Baroda Kisan Credit Card (All purpose credit to farmers)
Micro Insurance product one time premium for life coverage for 5 & 10 years for
different sum insured
A remittance product
Introduced relaxed KYC norms as per RBI guidelines
Issuance of ATM/Debit Card to financial Inclusion customers(Savings Bank Scheme
SB150)

Business Correspondent (BC) Model
BCs from the local area will be engaged
They will be provided with hand held devices having facility for enrolments and
transactions with bio-metric authentication using smart cards.
Authorised to collect and disburse cash.
The system will be integrated with the Core Banking Solution (CBS)
RBI has now allowed BC appointed by one bank can also work for other banks and it
will not only facilitate the business continuity but also reduce the cost of operation
further
Our bank has devised an incentive scheme for BCs for canvassing business.

Mobile Vans- Mobile vans with systems having connectivity moving in a cluster of
villages.
Bio-metric ATMs- Establishing Bio-metric ATMS, Fixed as well as mobile.

Ultra Small Branches
Ultra Small Branches have established by the bank for effective coverage under
Financial Inclusion.
It can be established between the base branch and BC locations so as to support to
about 8-10 BC units at a reasonable distance of 3-4 Km.
USB is brick & mortar unit of floor area of 100-200 sq.ft., from where banking
facilities will be provided to people and nearest branch from which it will be
53

attached, officer of link branch will visit once in a week to the USB just like earlier
concept of Satellite Branch.

Launch of BoB- Kiosks under financial inclusion initiative
Presently we are covering financial inclusion villages through three models such as
Smart Card based BC model, Mobile Van model and Brick & Mortar branch model. All
these models have unique features and own merits. As a part of continual development in
financial inclusion, our bank has introduced one more model Kiosk Banking which is web
based application that can be accessed through desktop or laptop. This is card less
solution so that time period required for printing and distribution of smart card can be
eliminated and customer can start operating the account immediately from date of
opening of account. Transactions processing is based on centralized biometric
authentication on real time basis. This model is very useful to increase our reach into
the villages as well as implementation of Urban Financial Inclusion at urban and semi-
urban locations.

Bank has already entered into an agreement with the CSC e-Governance India Services
Ltd., which is SPV for the purpose launched by Department of Information and Tech.,
Government of India to appoint their Common Services Centers (CSCs) as Business
Correspondents.

Linking of customerss Aadhaar number with their bank account

The government of India has decided to transfer direct payments to the bank
accounts of the beneficiaries under various government programmes such as
MGNREGA wages, fertilizer subsidy, scholarship, LPG subsidy etc through Electronic
Benefit Transfer (EBT). In addition to the other platforms like NEFT, RTGS etc. , the
govt. of India has given emphasis to roll out subsidies/direct cash transfers also on
the basis of Aadhar /UID number of the resident.
The Aadhar number of the customer can be linked in existing account as well as for the
new accounts through menu option APBSLN.

Launch of new product Baroda Swabhimaan Suraksha a Micro-Insurance product
under financial inclusion

It is a group life insurance policy issued by IndiaFirst Life insurance Company made
available to the FI deposit customers and also to those who avail credit facility including
inbuilt overdraft facility in SB Account. Sum Assured under the policy will range from `
5000 to 50,000 for a minimum of 5 years. The customer would pay one time premium
for a period of 5 years at the rate of Rs. 20.99 per 1000 for a period of 5 years .
Nomination facility allowed on insurance policy issued under this scheme.
NPS Lite can be used as a pension product under financial inclusion drive and bank has
launched an Incentive Scheme for registering new subscribers for Swavalamban
54

Scheme under NPS Lite.The Cash incentive will be payable to Business Correspondents,
Business Facilitators, SHGs/NGOs/Associations etc. and staff members.

Baroda Kisan Group Loan Scheme (Joint Liability Group):
1. A joint liability group is an informal group comprising 4 to 10 individuals coming
together for the purpose of availing bank loan either singly or through group
mechanism, against mutual guarantees.
2. The JLG members are to engage in similar type of activities like crop production
and must trust each other.
3. The members should live in the same neighborhoods or in the same village and
must be from the same socio economic background and environment.
4. The members should be engaged in agricultural activity for a continuous period
of not less than 1 year in the area of operation of the branch.
5. The group member should not be a defaulter of any other formal financial
institution.
6. The member to open an individual No frill account. However with mutual consent
the group can open and maintain SB account in the name of Group.
7. The JLG would prepare a credit plan for individual members and aggregate credit
plan for the group to be submitted to the bank.
8. The max. loan amount per member not to exceed Rs.50000 and for group Rs. 5
lacs.
9. The credit need assessment of individual members will be based on the crop to
be cultivated, available land and capacity also. However this is only with the
mutual consent of the members.
10. The credit facility to the JLG will be assessed by way of production / investment
credit in the form of BKCC.
11. Personal accident insurance for Rs.50000/- to one borrower per account.
12. Crop insurance available for notified crops

Baroda Kisan Credit Card:
1. The purpose of BKCC is to provide adequate and timely credit for the
comprehensive credit requirement of farmers under single window concept for
their cultivation and development as well as consumption needs.
2. All farmers, registered share croppers and tenant farmers cultivating crops for
a period not less than 5 years, individual tenant farmers and share croppers
cultivating land on lease basis at least for a period of 3 years are eligible for
BKCC.

55

3. Baroda Kisan Credit Card will consist of Production Line of Credit as well as
Investment Line of Credit. Under the production line of credit requirements of
farmers in terms of production loan for various crops, maintenance of
tractor/farm implements, allied activities like dairy, poultry, annual repairs, fuel,
cost of feed, etc., consumption needs, Working capital requirement for allied
activities, non farm sector activities and finance against storage
receipts/produce marketing loans are taken into account in the following manner:

Sr.
NO.
Requirement Quantum/Remark
01.
production loans for raising
various crops
Based on scale of finance
02.
Maintenance of tractor/farm
implements, allied
activities like dairy, poultry,
annual repairs, fuel, cost of
feed, etc
To the extent of 15% of the crop
production expenses limit
03.
The consumption needs To the extent of 15% / 25% / 35% of the
Crop Production expenses limit, depending
upon the category*of borrower subject to
a maximum of Rs.50000/-per card
04.
Working capital for Allied
activities
As per actual assessment of credit needs
as per our usual norms
05.
Working capital for Non farm
sector activities
As per actual assessment of credit needs
as per our usual norms
06.
Farm Produce Marketing Loan As per actual assessment of credit needs
as per our usual norms Maximum Rs. 50
lacs

*Various categories:
BKCC Green: New & existing agril. Borrowers dealing with us since last 3 years
BKCC Silver:Agril. Borrowers having satisfactory conducted borrowal account
relationship with us for more than 3 years and upto 5 years

BKCC Gold: Regular agril. Borrowers dealing and maintaining satisfactory account with us
for the period exceeding5 years having excellent repayment record

Under Investment line of credit, credit facilities for agriculture activities
(Investment related) , farm development ,allied activities , loans for off farm
activities/needs of farmer like personal loans including purchase of consumer durables,
housing subject to maximum of Rs. 1.00 lac as well as loans for redemption of loan
availed from Non Institutional lenders are considered.
56


However, quantum of loan under investment LOC is restricted to 6 times of net annual
income or 3 times of total annual farm receipt /crop value plus other annual income (3
times of annual net income) from allied activities, Non Farm Activities, salary, rent, etc.
or, 75% of value of land plus 100 % of face value of securities like, Banks FDR, NSC,
KVP, LIC policies, whichever is lower.

1) A concession in rate of interest on investment line of credit at the rate of 0.25%
and 0.50% can be considered to agriculture borrowers who is dealing with us for a
period of above 3 and upto 5 years (BKCC Silver card holder) and more than 5
years (BKCC Gold card holder) respectively with good track record. No concession
to new as well as existing borrowers having less than 3 years dealing (BKCC Green
card holder) with us. But this concession in rate of interest will not be clubbed with
any other concession including subvention.
2) Total limit under BKCC can be granted as per DLP of concerned authority.
3) For regular production line of credit, no margin to be fixed if it is on the basis of
scale of finance. On investment line of credit the margin is as per our individual
scheme as prescribed and it can be reduced to 10% by the sanctioning authority.
4) Credit balance under BKCC will fetch interest rate as applicable to Savings bank
deposit.
5) The validity of the card has been increased from 3 year to 5 years subject to
renewal after 12 months. The cash withdrawal facility in case of production credit
account is extended by the issuing branch only.
6) The Baroda Kisan Credit card has 10 characters/digits (first 6 characters being
alpha code of the branch and last four digits being serial number of the card). The
card also bears borrowers signature, signature of issuing branch head with
specimen number.
7) Bank has introduces personal accident policy for BKCC holders and branch to
ensure that all BKCC holders are covered under the said policy.
8) Personal accident insurance for Rs.50000/- to one borrower per account.
9) Crop insurance available for notified crops.
10) Baroda BKCC RuPay Card can be issued in existing regular accounts and all new BKCC
borrowers.

Facility of the Line of Credit / Notional limit under BKCC:

At present the crop loan component in form of production credit under BKCC is given as
a Cash Credit facility for a period of 5 years, which is subject to review every year. The
limit is computed on the basis of total land holding of the farmer, cropping pattern
adopted by him during a particular season and approved scale of finance for the crops
grown. Thus the limit available changes whenever there is a change in any of the factors
mentioned above. It is observed that the farmers and branches are generally aversed to
increase the limit due to the workload / cost involved in execution of fresh documents,
57

preparation of fresh proposals etc. This is ultimately adversely affecting the increased
off take and thereby the growth in outstanding level of crop loans. This also ends up in
providing inadequate crop loan to farmers.

To overcome this problem, bank has decided to provide the facility of the Line of Credit
/ Notional limit wherein the farmers actual requirement worked out on the basis of
cropping pattern and land area, can be increased by maximum 50% at the time of
sanction of the facility. Though this limit will be valid for a 5 years period, the drawing
power/eligible limit for each year shall be arrived based on the area of cultivation and
scale of finance for the proposed cropping pattern for that year.

This shall obviate the need for fresh sanction and documentation for 5 years thereby
helping the farmer to avail increased credit as per the prevailing scale of finance and
also in reducing the workload at the branches. This in turn will also expected to
encourage the farmer to undertake improved cultivation practices and bring more
farmers into our fold due to the inbuilt advantage of hassle-free facility of
enhancement of the limits.

Rashtriya Krishi Bima Yojna

1. The scheme has been formulated by GIC and administered in all the states including
union territories.
2. All the farmers irrespective of their land holding are covered under the scheme.
3. The scheme is compulsory for farmers availing crop loans. However, it is optional for non
loanee farmers.
4. There is no restriction on total sum insured.
5. All the crops including coarse crops, pulses, oil seeds and cash crops, sugarcane, potato
and cotton are covered under the scheme.
6. Premium rate varies form 1.5% to 3.5% depending upon the types of crops.
7. Small and marginal farmers will be provided with subsidy in premium amount.
8. Claim will be on the basis of threshold yield in particular area.

Baroda Kisan RuPay Card

Our Bank has introduced Baroda Kisan RuPay Card in pursuit to offer better banking
facilities to farmers who avail production credit under Baroda Kisan Credit Card
from our Bank. The card meets the requirements of BKCC customers to use
alternate delivery channels like ATMs for cash withdrawal and also POS at
merchant outlets for purchase of Agriculture Inputs such as seeds, fertilizers
and pesticides etc.



58








Business Facilitator Model Business Correspondent model
BF should be used to provide only non-
financial support services.

The following services can be provided by
the Business Facilitators to the bank:
Identification of borrowers as per KYC
norms and fitment of activities. However,
the branches are ultimately responsible
for adherence to the KYC norms. Hence,
they have to ensure that KYC norms are
scrupulously followed while opening loan
accounts.
Collection & preliminary processing of
loan applications including verification of
primary information / data
Creating awareness about loans and
liability products
Education and advice on managing money
and debt counseling
Processing and Submission of applications
to banks
Promotion and nurturing of Self Help
Groups / Joint Liability Groups
Post-sanction monitoring
Monitoring and handholding of Self Help
Groups / Joint Liability Groups / Credit
Groups /Others
Follow-up for recovery
In addition to activities listed under the
Business Facilitator Model, the scope of
activities to be undertaken by the
Business Correspondents will include
1. Disbursal of small value credit,
2. Recovery of principal / collection of
interest
3. Collection of small value deposits
4. Sale of micro insurance / mutual fund
products / pension products / other third
party products and
5. Receipt and delivery of small value
remittances / other payment instruments

The activities to be undertaken by the B.C.
would be within the normal course of the
bank's banking business, but conducted
through the entities indicated above at
places other than the bank premises.
RBI has decided to increase the maximum
distance criteria (distance between the
place of business of a B.C. / B.F. and the
base branch) for the operation of the
Business Correspondent/ Business
Facilitator for rural, SU and urban areas
from the existing 15 KMs to 30 KMs.

Flow of credit to agriculture sector (Vyas Committe recommendations)
1. Bank should make efforts to increase their disbursement to Small and Marginal
farmers to 40% of their direct agriculture advances under special agriculture
credit plan by March, 2007. For this purpose small and marginal farmers means,
59

farmers who are holding non-irrigated land up to 5 acres or 2.5 acres of
irrigated land.
2. Banks to enter into the tie up arrangement with manufacturers of tractors and
other farm machineries.
3. The application form should be simplified and in regional language. It should
contain a comprehensive check list of information to be furnished to avail the
credit facility.
4. To sanction composite cash credit limit to farmers.
5. Relaxation in margin & security norms.
6. Timely sanction of the credit facility in cost effective manner.
7. A separate flexible revolving limit to be considered to small borrowers of
production or investment loans, which will take care of consumption need of the
farmers.

Self Help Groups
Self Help Groups fulfilling the following criteria would broadly be eligible:
The Group should be in existence for at least six months
The Group should have actively promoted the savings habit
Groups could be formal (registered) or informal (unregistered)
Membership of the group could be between 10 to 20 persons
If membership exceeds 20, the SHG should be registered
The sanction Savings-cum-overdraft limit is sanctioned for the amount, which a group
will be entitled to have in the ratio maximum upto 1:10 for the projected savings of
ensuing five years. However, disbursement (Drawing Power/DP) would be permitted
after six months, based on actual corpus fund including SHGs savings as above and
thereafter reviewed each year in the ratio of corpus fund including savings as
prescribed above and accordingly DP be fixed time to time.

Discretionary Lending Powers
The finance to SHGs is considered as a clean loan facility and the Branch Managers are
considering the facility under their powers for granting such facilities in order to
ensure quick disposal of application for credit linkage of SHGs at Branch level itself. It
has been decided to enhance the lending powers of Branch Managers as under:
(Rs in lacs)
Scale of Branch Manager Revised powers for SHG
Bank linkage
JMG Scale - I 1.50
MMG Scale- II 2.50
MMG Scale-III 5.00



60


Procedure for opening an S.B. account of SHG with the Bank

Resolution from the SHG.
Copy of the rules and regulations of the SHG.
Authorisation from the SHG (Operating Instructions.
KYC norms.

Processes for Credit-linkage of SHG by the Bank
Opening of S/B Account for the SHG
Resolution from the SHG
Authorisation from the SHG
Copy of the rules and regulations of the SHG
Conduct of internal lending by the SHG
Assessment of SHGs
Sanction of Credit Facility to the SHG

Corpus / savings of the group includes following:
Groups balance in the SB A/c.
Amount held as cash with the authorized persons.
Amount internally lent amongst the members.
Amount received as interest on the loans.
Any other contributions received by the group like grants, donation, etc.

What are the advantages to the banks for banking with SHGs?
Advantages to the banks for banking with SHGs are following:
a. Transaction costs are reduced
b. Increase in the deposit base
c. Very little cost for appraisal and monitoring of the loan
d. Increase in the social base in rural area
e. Financial Services at door steps
f. NPA Reducing
g. Social Agenda / Corporate Social Responsibility
h. No subsidy Dependence Syndrome

Simplifying KYC norms for Self Help Groups (SHGs)
KYC verification of all the members of SHG need not be done while opening the
savings bank account of the SHG and KYC verification of all the office bearers would
suffice. As regards KYC verification at the time of credit linking of SHGs, it is clarified
that since KYC would have already been verified while opening the savings bank account
and the account continues to be in operation and is to be used for credit linkage, no
separate KYC verification of the members or the office bearers is necessary.

61

REVISED GUIDELINES FOR PRIORITY SECTOR CLASSIFICATION:

Target for the Priority sector Lending
Priority Sector credit should be minimum 40 % for Domestic commercial banks /
Foreign banks with 20 and above branches & 32 % for Foreign banks with less than 20
branches , of their Adjusted Net Bank Credit (ANBC) or credit equivalent amount of
Off-Balance sheet exposure whichever is higher of previous financial years (as on 31st
March).
Adjusted Net Bank Credit (ANBC):

For the purpose of priority sector lending, ANBC denotes the outstanding Bank Credit
in India minus bills rediscounted with RBI and other approved Financial Institutions
plus permitted non SLR investments in Held to Maturity (HTM) category plus
investments in other categories, which are eligible to be treated as part of priority
sector lending (eg. investments in securitised assets).

Different Components of P/S Lending

The following categories of advances as mentioned below would be included in the
Priority Sector Lending.
Agriculture (Direct/Indirect)
Micro & Small Enterprises (Direct/Indirect Finance)
Educational Loans
Housing Loans
Export Credit
Others
Within the overall main lending target of 40 per cent of Adjusted Net Bank Credit
(ANBC) or equivalent amount of Off-Balance sheet exposure, it should be ensured that:

Total agriculture:
18 percent of ANBC or credit equivalent amount of Off-Balance Sheet Exposure,
whichever is higher. Of this, indirect lending in excess of 4.5% of ANBC or credit
equivalent amount of Off-Balance Sheet Exposure, whichever is higher, will not be
reckoned for computing achievement under 18 percent target. However, all agricultural
loans under the categories 'direct' and 'indirect' will be reckoned in computing
achievement under the overall priority sector target of 40 percent of ANBC or credit
equivalent amount of Off-Balance Sheet Exposure, whichever is higher.

Micro & Small Enterprises (MSE)
(i) Advances to micro and small enterprises sector will be reckoned in computing
achievement under the overall priority sector target of 40 percent of ANBC or credit
equivalent amount of Off-Balance Sheet Exposure, whichever is higher.
62

(ii) 40 percent of total advances to micro and small enterprises sector should go to
Micro (manufacturing) enterprises having investment in plant and machinery up to 10
lakh and micro (service) enterprises having investment in equipment up to Rs 4 lakh;
(ii) 20 percent of total advances to micro and small enterprises sector should go to
Micro (manufacturing) enterprises with investment in plant and machinery above Rs 10
lakh and up to Rs 25 lakh, and micro (service) enterprises with investment in equipment
above Rs 4 lakh and up to Rs 10 lakh

Particulars In case of Mfg. sector,
original investment in P &
M
In case of Service sector(Loan
upto Rs.1.00 cr), original
investment in Equipments
Micro
Enterprises
Upto Rs.25 lacs Upto Rs.10 lacs
Small
Enterprises
Above Rs.25 lacs and upto
Rs.500 lacs
Above Rs.10 lacs and upto
Rs.200 lacs

Loans for food and agro processing will be classified under Micro and Small
Enterprises, provided the units satisfy investments criteria prescribed for Micro
and Small Enterprises, as provided in MSMED Act, 2006.

Education Loan Study in India up to Rs.10 lacs and Study abroad up to Rs.20
lacs
Housing Loans - Upto Rs.25 lac in Metro and Rs.15 lac in other centres, for
constructions of houses. For EWS, Rs.5 lac per dwelling unit (irrespective of area
) will qualify for P.S. classification. Loans for repair and renovations up to Rs. 2
lac in Rural and Semi Urban Area and upto Rs. 5 lacs in Urban Areas.
Export Credit : Export Credit extended by foreign banks with less than 20
branches will be reckoned for priority sector target achievement.

As regards the domestic banks and foreign banks with 20 and above branches,
export credit is not a separate category under priority sector.
Others :
Loans, not exceeding Rs 50,000 per borrower provided directly by banks to
individuals and their SHG/JLG, Overdrafts, up to Rs 50,000 (per account),
granted against 'no-frills' / basic banking / savings accounts provided the
borrowers household annual income in rural areas does not exceed Rs
60,000/- and for non-rural areas it should not exceed Rs 1,20,000/-.
Loans to distressed persons not exceeding Rs 50,000 per borrower to prepay
their debt to non-institutional lenders.
Loans outstanding under loans for general purposes under General Credit
Cards (GCC). If the loans under GCC are sanctioned to Micro and Small
63

Enterprises, such loans should be classified under respective categories of
MSE.
Loans sanctioned to State Sponsored Organisations for SC/ST for the
specific purpose of purchase and supply of inputs to and/or the marketing of
the outputs of the beneficiaries of these organizations.
Loans sanctioned by banks directly to individuals for setting up off-grid solar
and other off-grid renewable energy solutions for households.
Weaker section:

In order to ensure proper attention in the matter of allocation of credit to following
preferred sector, (known as WEAKER SECTION as per the recommendations of Shri
Krishnaswami Committee) RBI has stipulated that 25 % of Priority Sector advances i.e.
10 % of ANBC / Credit equivalent of Off-balance sheet exposure whichever is higher.

Following types of finance are included under Weaker Section finance:

Small and Marginal Farmers: Farmers with landholding of up to 1 hectare is considered
as Marginal Farmers. Farmers with a landholding of more than 1 hectare but less than 2
hectares are considered as Small Farmers. For the purpose of priority sector loans
small and marginal farmers include landless agricultural labourers, tenant farmers, oral
lessees and share-croppers, whose share of landholding is within above limits prescribed
for Small and Marginal Farmer.

Artisans, village and Cottage industries where individual credit requirement does not
exceed Rs.50000/-.

Beneficiaries of (SGSY) Swarna Jayanti Gram Swarojgar Yojna now National Rural
Livelihood Mission (NRLM); (SJSRY) Swarna Jayanti Shahari Rojgar Yojna, (SLRS)
Scheme for Liberation and Rehabilitation of Manual Scavengers, (DRI) Differential
Rate of Interest etc.

Advances to SC/ST beneficiaries.

Advance to Self Help Groups,

Loans to distress farmers indebted to non-institutional lenders,

Loans to distressed persons other than farmers not exceeding Rs 50,000 per borrower
to prepay their debt to non-institutional lenders;

Loans to individual women beneficiaries upto Rs 50,000 per borrower;


64

DRI Advances.

The scheme is introduced in July 1972 with a view to give benefit of bank finance to
weaker sections of the society.

Eligibility: An individual who is engaged in agriculture and /or allied activities collect
or process forest products, collect fodder to be sold to farmers, SC/ST, etc. and
whose family income from all sources should not exceed Rs. 24000/- p.a. in Urban
/Semi urban area and Rs. 18000/- p.a. in Rural.
He/She should not hold land more than one acre irrigated land and 2.5 acres in case of
non irrigated land.( This does not apply to SC/ST Cases), should not employ workers on
regular basis, SHG members who fulfill above criteria can be considered under DRI
Scheme, any handicapped person.

Limit: - Composite loan limit Rs.15000/- and Rs.20000/- in case of Housing Loan
(raised from Rs. 6500/- BCC:BR:99/211 dt. 03.07.2007)

Margin:- NIL. Rate of Interest 4% p.a.

Repayment:-:Generally -60- months.


Micro Loan Factory

The Micro Loan Factory has a mobile van with facilities and all related stationeries/
documents in SHG financing. It is manned by officers who are duly authorized to
sanction and disburse loans up to Rs.25,000 to SHG on the spot and at their
doorsteps. At present our bank is having 2 micro loan factories at Rae Bareilly and
Sultanpur (U.P)

CONTRACT FARMING

Definition: Cultivation of crops by the farmers under a buyback arrangement with an
agency engaged in trading and/or processing.

Types:
1. Procurement contract
2. Partial contract
3. Total contract




65


Advantages for farmers :

1. Even Small farmers can grow high value crops
2. Can avail benefit of high tech support
3. Less production credit will require
4. Least post harvest loss
5. Price & Marketing risks are minimised

Advantages to Firms :

1. Can get produce as per specific requirement
2. Assured and uninterrupted supply
3. Time saving
4. Less marketing investments

Advantages for Banks :

1. Better recovery
2. Cross selling of products
3. Deposits from farmers

Strategies to enhance Agriculture Portfolio

To increase Crop loans by financing to new as well as existing finance by
assessing as per latest scale of finance and also offering Line of credit /
Notional Limit.
Financing agri. term loan mainly farm machineries like Four-wheeler to farmers,
Combined harvester/ power tiller, drip /sprinkler irrigation sets, tractor,
horticulture & plantation crops.
Direct agri. finance to NRIs upto Rs.5.00 lac on the basis of Power of Attorney
Take-over of agri. Advances upto Rs.5.00 lac falling under BMs Power.
Financing General Credit Card (Indirect Ag.)
Identifying thrust branches for Agri. financing
More SHG Linkages as our Bank permits to go to 1:10 ratio of group corpus.
Finance to Agri-clinics & Agri-Business Centres
Finance under comprehensive scheme against Warehouse receipt.
Finance to Joint Liability Groups (JLGs)
Financing production and investment requirements for allied activities.
Loans to distressed farmers indebted to non-institutional lenders
66

Loans granted for post-harvest activities such as spraying, weeding, harvesting,
grading, sorting, processing and transporting.
Finance against gold ornaments/jewellaries.

AGRI-CLINICS & AGRI-BUSINESS

Agriclinics : Agriclinics are envisaged to provide expert services and advice to
farmers on cropping practices, technology dissemination, crop protection from pests &
diseases, market trends and prices of various crops in the markets and also clinical
services for animal health etc. which would enhance productivity of crops / animals.

Agribusiness Centres: Agribusiness Centres are envisaged to provide input supply,
farm equipments on hire and other services.

Objectives
To supplement the efforts of government extension system
To make available supplementary sources of input supply and services to needy
farmers
To provide gainful employment to agriculture graduates in new emerging areas in
agricultural sector.

ELIGIBILITY: Graduates of agriculture, horticulture, animal husbandry, forestry,
dairy, veterinary, poultry farming, pisciculture and other allied activities.
Project cost and coverage :
Either individually or jointly/group basis.
Individual -max. Limit Rs.20 lacs
Group - max . Limit.Rs.100 lacs.
Group number - max. 5, out of which 1 may be a management graduate with
qualification & experience.

MARGIN
Upto 5 lacs - no margin
Above 5 lacs - 15 %

Rate of interest
As applicable to agri. Advances

Subsidy : 36 % (44% for SC/ST, women) of project cost

67

Repayment : 5 to 10 years with grace period of max 2 years.


Baroda Grameen Paramarsh Kendra:
It is an innovative idea towards Corporate Social Responsibility, showing Banks passion
for for agriculture and rural development and to serve the common man.
In the past, the Bank has taken a number of initiatives such as opening of specialized
outlets of Gram Vikas Kendras (GVKs) and Multi Service Agencies (MSAs). Baroda
Swarojgar Vikas Sansthan (BSVS) is another initiative for capacity building by
providing appropriate training for skill upgradation to unemployed youth and women
for their gainful employment.

Concept
For the rural community, especially for the farmers, there is a big Knowledge Gap in
financial literacy, better farming practices, technology adoption, diversification of
opportunities, market linked prices, value addition services offered by various
institutions, women empowerment and also for employment opportunities for rural
youth. In addition to this, the deficiencies/ ignorance about credit related repayment
during distress situations call for credit counseling.
With a view to assist the rural community, the Bank has conceptualised Baroda
Grameen Paramarsh Kendra (BGPK) and its implementation by the dedicated team,
which would build the confidence of the rural people.

Activities to be covered:
Financial Education and Financial Inclusion
Information sharing and problem solving on technical issues
Credit counseling
Synergy and liaison with other organizations and development activities


Farmers Club Programme

Objectives:
Farmers Clubs have been organised by our bank in the Service Area Villages with the
sole objective of improving the recovery climate for rural lending and creating better
awareness about loan and deposit products with the ultimate aim of building a Rural
Credit Portfolio on a sound scale.Farmers Club are intended to basically propagate the
following five principles of Development through Credit.
a. Credit must be used in accordance with the most suitable methods of science and
technology.
b. The terms and conditions of credit must be fully respected.
c. Work must be done with skill so as to increase production and productivity.
d. A part of the additional income created by credit, must be saved.
68

e. Loan installments must be repaid in time and regularly so as to recycle credit.

Benefits to the Branch :
The formation of Farmers Club lead to better Banker-Borrower relationship in the
area.
Mobilisation of deposits.
Increase in the credit flow and diversification of lending.
Generation of new business avenues.
Increase in loan recovery rate and decline in non-performing assets.
Reduction in transaction costs of financial institutions/Banks.
Socio Economic Development of the village.
A win-win situation both for the Banker and the borrower.
The Farmers Club has also been instrumental in certain social welfare measures like
arranging free eye check-up camp. Animal Health Care Camp, Mass vaccination camp,
community works like roads, check-dams, afforestation etc.

Prime Ministers Employment Generation Programme (PMEGP)
To bring in transparency and accountability in implementation in the PMEGP scheme,
KVIC has developed online e-tracking system for tracking PMEGP applications. An
applicant can view status of his /her application online at any point of time and the
system will also give details of time taken at each point of activity and also furnish
reasons in case of rejection of application at any stage.
The guidelines are summarized as under :
The scheme will be implemented through KVIC, KVIB and DICs.
KVIC will be the nodal agency at National level for implementation of the scheme.
The scheme will be implemented through KVIC field offices and KVIBs in the rural
areas of the country and through DICs in both rural and urban areas.
Quantum and Nature of Financial Assistance

Categories of beneficiaries under PMEGP Beneficiarys
contribution
(of project
cost)
Rate of Subsidy
(of project cost)
Area (location of project/unit) Urban Rural
General Category 10% 15% 25%
Special (including SC / ST / BC/ Minorities/
Women, Ex-servicemen, Physically handicapped,
NER, Hill and Border areas etc.
5% 25% 35%




69

Notes:
1. The maximum cost of the project/unit admissible under manufacturing sector is Rs. 25
lakh.
2. The maximum cost of the project/unit admissible under business/service sector is Rs.
10 lakh.
3. The balance amount of the total project cost i.e. net of beneficiarys contribution and
amount of subsidy will be provided by Banks as term loan.

Eligibility Conditions of Beneficiaries :
i. Any individual, above 18 years of age.
ii. There will be no income ceiling for assistance for setting up projects under PMEGP.
iii. For setting up of project costing above Rs.10 lakh in the manufacturing sector and
above Rs. 5 lakh in the business /service sector, beneficiaries should possess at
least VIII std. pass educational qualification.
iv. Assistance under the Scheme is available only for new projects sanctioned
specifically under the PMEGP.
v. SHG (including those belonging to BPL provided that they have not availed benefits
under any other Scheme) are also eligible for assistance under PMEGP.
vi. Only one person from one family is eligible for obtaining financial assistance for
setting up of projects under PMEGP. The family includes self and spouse.

The Bank will sanction 90% of the project cost in case of General Category of
beneficiary/institution and 95% in case of special category of the beneficiary /
institution, and disburse full amount suitably for setting up of the project.
Bank will finance Capital Expenditure in the form of Term Loan and Working
Capital in the form of cash credit. Project can also be financed by the Bank in
the form of Composite Loan consisting of Capital Expenditure and Working
Capital.
The amount of Bank Credit will be ranging between 60-75% of the total project
cost after deducting 15-35% of margin money (subsidy) and owners contribution
of 10% from beneficiaries belonging to general category and 5% from
beneficiaries belonging to special categories.
Working Capital component should be utilized in such a way that at one point of
stage it touches 100% limit of Cash Credit within three years of lock in period of
Margin Money and not less than 75% utilization of the sanctioned limit. If it does
not touch aforesaid limit, proportionate amount of the Margin Money (subsidy) is
to be recovered by the Bank/Financial Institution and refunded to the KVIC at
the end of the third year.




70


Rate of interest and repayment schedule

Banks will charge applicable rate of interest on the facilities granted. Repayment
schedule may range between 3 to 7 years after an initial moratorium as may be
stipulated in the sanction.
Bank has to obtain an undertaking from the beneficiary before the release of bank
finance that, in the event of objection (recorded and communicated in writing) by
KVIC/KVIB/State DIC, the beneficiary will refund the Margin Money (subsidy) kept in
the TDR or released to him after three years period. During this period, no interest
will be paid on the TDR and no interest will be charged on loan to the corresponding
amount of TDR.

Priority Sector Loan against Gold ornaments / jewellery Scheme

Purpose: Agriculture or others

Eligibility:
1. Applicant must be true owner of gold / gold & silver jewellery / gold coins
2. Should be local resident
3. Must have a savings a/c

Loan limit : Rs3.00 lacs, but it should be need based or advance value of gold or
75.00% of the appraised value by the assayer whichever is lower among the three &
loan amount exceeding Rs.3.00 lac (Max. Rs.10.00 lac) attracts margin of 35%.
In case of Silver ornaments, max. loan of Rs.3.00 lac can be granted with margin of
50%.

Present Adv. value of 22carat gold =Rs.2010 & Rs.2195(If gold is less than 22
carat & 24 carat purity respectively, deduction for each carat is Rs.92).
A preferential treatment of hallmarked gold jewellery/ornaments, it has been
proposed to allow additional advance value of Rs.50.00 per gram for gold jewellery of
18 carat or more purity.

Period Max. 12 m

Assayers
1. to be identified by branch and approved by R.O.
2. to give min security deposit of Rs.5000.
3. must be changed every 2years
The assayer may be paid a commission of 50 paise per every Rs.100 net assayed value
of gold jewellery/ornaments or silver jewellery with a minimum of Rs.25 and a maximum
of Rs.350 per assaying.
71

Data Centre has defined Gold as security in Finacle for each carat from 14 carat to 24
carat.


Scheme for financing to farmers for purchase of four Wheeler

Parameter Prescribed norms
Type of Facility Term Loan
Purpose For purchase of new/used four wheeler including jeep, SUV,
station wagon etc. for using in their farm management activities.
Used vehicle should not be more than 3 years old.
Eligibility/
Beneficiary
Farmers having family income sufficient to repay the loan.
Farmers with minimum land holding of 4 acres perennially
irrigated land or 8 acres of seasonally irrigated lands.
The Zonal Head is authorized to reduce the land holding criteria
by 50% i.e.up to 2 acres for perennially irrigated lands and 4
acres of seasonally irrigated lands, on merits.
Age Minimum 21 years
MaximumUp to 65 years as on the date of availment of facility.
If the age of landholder exceeds 60 years, in such case the son
to be made co-borrower
Banking
Relationship
Applicant should be our existing BKCC customer.
Maximum loan
Amount
New Vehicle : Rs.15.00 lac.
Old Vehicle : Rs. 10.00 lac.
Margin New vehicles : 15%
Used vehicle : 40%
Interest Rate 2.75% above Base Rate i.e.13.50% at present.
Repayment Period New vehicles : 84 months
Second hand vehicles : 48 months.
Loan repayment will be synchronized with the income generation
from the farm activities. The due dates to be fixed taking in to
account the time taken for receipt of sale proceeds of the crop.
The instalments may be fixed on half yearly/ yearly basis based
on cropping pattern.

Baroda Kisan Tatkaal Loan
Purpose:
An instant credit for farming community to meet the emergent funds
requirements for Agriculture and domestic purposes during off season.


72

Eligibility:
Individual Farmers/Joint borrowers who are existing Baroda Kisan Card (BKCC)
Holders having satisfactory track record of at least three years.

Type of Loan:
Term Loan repayable in 3-5 years.

Maximum Loan amount:
Rs.50000/- or 50% of existing BKCC limit (drawing power under Line of Credit)
whichever is lower. While deciding the loan amount, repayment capacity of the
borrower to be ascertained.

Security:
Existing security under BKCC to be extended. The existing norms of no collateral
security up to Rs.1lac to be followed if combined limit is within Rs.1 lac.

Repayment:
Half-yearly / yearly installments depending upon the income generation.


Scheme for Installation of Photo-voltaic Pumping System for Small Irrigation
Projects

Objective:--
To utilize the solar energy for water pumping and support irrigation schemes under
Agriculture.
To provide sustainable economic activity to farmers in non-electrified or under
electrified rural areas.

Eligibility: ---
All persons/SHGs/JLGs/Small & Marginal Farmers engaged in cultivation of crops as
owners of land or permanent tenants or lease-holders non electrified or under
electrified rural areas..

Possible water sources: Pits, pen dug wells, medium tube wells, doggies, tanks, farm
ponds and surface water from canals and rivers.
Nature of Facility: -- Term Loan

Project Cost: Project Cost as decided / approved by PAC of MNRE/NABARD. Ranges
from Rs.308320 to Rs.767200 depending on the models (Model -1 to Model-IV)

Margin: - Minimum 60% including subsidy available from Central & State Govts.
Capital Subsidy
73

1) The Ministry of New & Renewable Energy under JNNSM programme provides subsidy
for off grid solar applications (solar Water pumping) @ 30% of capital cost.
2) Additional subsidy could be provided by the State Government.
3) It should be noted that the scheme is financially viable only with subsidy of
60%.Hence the additional subsidy/margin contribution to be ensured from the state
govt/beneficiary.

Repayment The loan will be repayable in - 10 - years with one year grace period. The
beneficiary may repay the loan installment with interest earlier than the period if he so
desires.

Classification:--Priority Sector (Direct Agriculture)

Finance against Warehouse / Storage Receipt:

Types of Warehouse/storage receipts eligible to be financed:
01. Warehouse Receipts issued by State/Central Warehouses upto the limits prescribed
under the Scheme.
02. Warehouse/Storage Receipts under tie up arrangement with Collateral Managers
upto the limit prescribed under the scheme.
03. Warehouse Receipts issued by private registered Warehouses approved by
concerned Zonal Head upto individual limits of Rs.50.00 lakhs per farmer.
04. Negotiable Warehouse Receipts issued by Warehouses approved by Warehousing
Development and Regulatory Authority (WDRA) upto the limits prescribed under
the scheme.
(All the three types of Warehouse receipt at point no. 1, 2 or 3 may or may not
be negotiable warehouse receipt issued by warehouses approved by WDRA to issue
negotiable Warehouse Receipts)

Eligibility: Individual farmers who have produced the farm produce in their own farms,
Food grain traders, Millers & Arthias who store agri produce stocks in the Warehouses.

Loan Amount: For farmers: Maximum Rs.50.00 lakhs
For Others: Maximum Rs.5.00 crores. (However for private Godowns approved by
WDRA, the maximum loan amount of Rs.2.00 crores only be considered by the Branches
subject to the discretionary lending power of the sanctioning authority. For limit above
Rs.2.00 crores upto Rs.5.00 crores, activity clearance from the Regional Head be
obtained)

Margin: Minimum of 25%.In case of tie up arrangement with Collateral Managers: 25%
or as prescribed by Collateral Managers, whichever is higher. (The margin should be
increased if there is volatility of price for a particular commodity).

74

Nature of Facility: In case of Farmers: Demand Loan.
For others :Cash Credit (Pledge)
Rate of Interest:
For individual farmers upto Rs.50.00 lakhs: Base Rate+1.00% i.e. 11.25% at present. All
Others: Base Rate+2.00% i.e. 12.25% at present. For negotiable Warehouse Receipts
issued by approved Warehouses, a concession of 0.25% on the above rate is approved
i.e. for negotiable warehouse receipt, the rate of interest will be Base Rate+1.75% i.e.
12.00% p.a. at present.

Unified Processing charges: 50% of the applicable charges.

Commitment Charges: NIL

Other charges will be as per the extant guidelines.

Tenor: Maximum 12 months.

Agri. LAPS

Lending Automation Process System (LAPS) is a centralized web enabled software
aiming at increasing the efficiency of credit decisions by automating the lending
process. We were already using this module in Retail Lending but now, bank has rolled
out its Agri. Lending module, which is really a milestone in the area of rural/agriculture
finance due to various obvious reasons. At present, 17 agri. Finance schemes can be
processed through it.
Benefits of Agri. LAPS to the branches:
1. Quicker loan processing
2. Standard and uniform approach in loan processing
3. Documents can be printed.
4. Application & Sanction letter can be printed in vernacular language also.
5. Review and renewal of advances can be done
6. Help in avoiding the repetitive work thereby saving precious time.
7. Centralized database remains available with the bank
8. Conforms to four eye principle
9. Adds to customer satisfaction
10.Utilities like generation of PSR statement , Loan application received register and
security register are inbuilt in the system.

INVESTMENT CREDIT CAMPAIGN FOR AGRICULTURE:2013-14
FROM 01/10/2013 TO 31/03/2014

Investment Credit Campaign for Agriculture 2013-14 is proposed to be launched on
01/10/2013 and will continue upto 31/03/2014. The focus during the campaign will be to
75

finance activities like development of irrigation potential, farm mechanization, financing
construction of green houses/polyhouses etc, plantation / horticulture, allied activities
such as dairy farming, poultry, and construction of rural godown/cold storage etc.

Bank has decided to provide cash incentives to staff members generating leads.
Incentives will be paid for any investment loan in agriculture sanctioned and disbursed
by the Bank against the leads generated by the staff members as below:
Loan amount above Rs.10 lacs & upto Rs.25 lacs at the rate of Rs.1500/- per such
application.
Loan amount above Rs.25 lacs and upto Rs.50 lacs at the rate of Rs.2500/- per
such application.
Loan amount above Rs.50 lacs at the rate of Rs.3000/ per such application.

76

SME BANKING

How SME sector is defined by our Bank ?

1. Our bank has expanded the coverage of the SMEs well beyond the RBI definitions of
SME, All banking business (Assets & Liabilities) with companies / entities with
annual gross sales turnover / income upto Rs. 150 crore is to be covered under ambit
of SME for our internal purpose for promotion of business across these segments.
However for reporting purpose the statutory definition is to be followed.
2. For our internal purpose SME sector will consist of Professionals, Traders, Micro &
Small Enterprises and Medium enterprises as defined by the RBI, clubs, trusts with
large investable assets and all other entities (non-individuals) with their annual
turnover upto Rs. 150 crores.
3. The entities falling under revised guidelines of our bank for SMEs will be governed
by loan policy guidelines as applicable to C & I.

Definition of SME Sector (As per ammended MSMED Act 2006)

The MSMED Act classified SME units into two categories :

Micro, Small and Medium Enterprises

Particulars In case of Mfg.
Enterprises, original
investment in Plant and
Machineries
In case of Service
Sector Enterprises,
original investment in
Equipments
Classification
Micro
Enterprises
Upto Rs.25 lacs Upto Rs.10 lacs Priority Sector
Advance
Small
Enterprises
Above Rs.25 lacs and
upto Rs.500 lacs
Above Rs.10 lacs and
upto Rs.200 lacs
Priority Sector
Advance
Medium
Enterprises
Above Rs.500 lacs and
upto Rs.1000 lacs
Above Rs.200 lacs and
upto Rs.500 lacs
Non- Priority
Sector Advance.

Credit Rating (SMERA, NSIC-CRISIL) in case of SMEs (but not qualify for Basel
II norms of Capital Adequacy

Internal credit rating as per new credit rating model will be continued, as hitherto. In
addition to this, the credit rating by external agencies like SMERA, NSIC-CRISIL etc.
is compulsory in all Medium Enterprises accounts going for expansion and fresh
sanction involving exposure above Rs.500 lacs. SMERA Rating is not mandatory for SSI
units. However, rating of the SSI units is preferred.

77

Disposal of loan applications OF SME Borrowers
Upto Rs.2.00 lacs :2 weeks
Above Rs.2.00 lacs: 4 weeks
At SME Factories: - within 14 days in no TEV required
- 21 days if TEV is required.

Working Capital Assessment for SMEs

A. Assessment of WC finance upto limit of Rs. 5 crs. should be done on turn
over method as recommended by Nayak Committee ( 20% of the
projected turn over method) or Ist method of lending as recommended by
Tondon committee, whichever is higher.
B. WC limits above Rs. 5 crs is to assessed as per PBF method of lending.

Credit Rating:
A. Credit Rating in advances a/c from amount Rs.2 lac to Rs. 200 lac should be done
as per format prescribed in our circulat BCC/BR/101/194 dated 13.07.2009.
B. Credit Rating in advances a/c from amount above Rs.200 lac should be done
though BOBRAM module.

Margin:
(a) For Term Loan
Margin requirement in Term Loan Appraisal:
i. In case of Factory Land & Buildings - overall margin of 30%
ii. In case of Plant & Machinery and Equipment - 25%

In exceptional cases, finance for 2
nd
hand machinery may be considered with a minimum
margin of 40% at the discretion of the Sanctioning Authority.
(b) For Working Capital
25% uniform margin is proposed on stocks and receivables.
The next higher authority is authorized to reduce margin maximum by 5% in
deserving cases in respect of Land & Building & Plant & Machineries &
Equipments/Current Assets.
If deviation is proposed beyond 5 %, ED / CMD is authorized for the same.

BRANCHES TO BE DESIGNATED AS SME BRANCHES

At present 72 branches are designated as Specialized SME branches. These branches
are expected to have 60% of their lending to SME sector. Based on ASCROM data, all
branches having more than 60% of their lending to SME Sector will be identified and
the branches having 60% of their loan portfolio to SME Sector for 2 consecutive
78

quarters will be designated as SME 189branches. Designated SME branches will focus
on SME lending. These branches will be authorised to collect taxes etc.
(Source: Loan Policy,2012)


SME PRODUCTS
BARODA SME LOAN PACK

S.N. Parameters Particulars
1

Eligibility All commercial Enterprises, i.e.S&M enterprises, and
other entities(including service sector) with sales
turnover upto Rs. 150 crores exclusively banking
with us. New borrowers if desirous of having sole
banking arrangement with us.
2

Purpose W.C as well as capital expenditure related to
borrowers business
3

Composite Limit 4.5 times of borrowers tangible net worth as per
last audited B/S or Rs 5.00 crores whichever is
lower. assessment as per Nayak Committee
4

Delivery of Product Fund based and non fund based as per the borrowers
requirements, within overall composite limit
sanctioned
5

Margin 25% on all the facilities
6

ROI As per credit rating
7








8

Security








Other Conditions
Exclusive charge on the assets of the enterprise.
Personal Guarantee of all promoter directors Charge
on the unencumbered personal properties of the
partners, promoter directors.
Wherever applicable IIIrd party guarantee in case
of credit line is above 100.00 lacs.
Any other collateral for the credit line above Rs
25.00 lac to maintain asset coverage ratio above 1.25
Minimum Financial Ratio:
Current ratio 1.20 , D/E ratio 3:1
Assets coverage ratio 1.25
79


OVERDRAFT AGAINST LAND & BUILDING

S.N. Parameters Particulars
1

Nature of Facility Overdraft
2

Purpose To meet fund based Working capital requirements
To augment long term Margin requirements
3

Limit Minimum Rs 25 lac for Rural/ SU /U branches
Maximum Rs.50 lac for Rural, Rs 200 lac for SU &
Rs 500.00 lac for Urban branches
4

Eligibility Proprietorship, partnership firms, Pvt / Public Ltd
Company engaged in Manufacturing and/or service
sector of any commodity goods.
1. Satisfactory credit rating (BOB-6 and above).
2. SMEs established in the line of business for a
minimum period of 2 years and financed/proposed to
be financed under sole banking.
3. In case of new Mfg/Service sector units(other than
Retail Trade), facility may be considered if unit is
established by our existing customers having
satisfactory track record and the same is set up
from their own sources.
4. Mfg and Service Sector units (other than Retail
Trade) having less than two years establishment may
be considered with the prior approval of one
authority higher than the Sanctioning authority.
5. In case of take-over of accounts in addition to the
Product norms, the norms prescribed in Dom. Loan
Policy 2012/SME Policy 2009 should be complied
with.
6

Margin 40% of the Market Value of the property Mortgaged.
Regional Head may reduce to 35%.
7

Period 12 Months
8

ROI As per Banks extant guidelines
Note: ROI is not linked with credit rating. But credit
rating is to be done as per banks policy.
9

Sanctioning
Authority
As per discretionary lending policy
80

10 Method of
Assessment
Manufacturing sector:
As per Nayak Committee recommendations viz, Min
20% of accepted turnover, or, under PBF method,
whichever is higher.
Service sector:
20% of projected gross receipts subject to
verification of ST returns of previous years/ quarters
in case the enterprise is not under audit.
Note: Drawal for working capital (Fund based and non
fund based) should not exceed advance value of
L&B/sanctioned limit whichever is lower.
11 Financial Ratios Cur. Ratio SE-1.17 ME-1.20 SMEs(Expanded) 1.33
DE Ratio (Existing Accounts) TTL: 3:1 TOL-4.5:1
DE Ratio (Take over A/cs) TTL: 3:1 (SE-4:1)TOL-4.5:1
Assets Coverage Ratio 1.50
12 Other Conditions Stock/book debt statement to be obtained on half
yearly basis.
Facility under the scheme and as well as under usual
scheme not to be considered simultaneously.
Existing borrowers can get their facilities
transferred to OD against Fixed Assets after
compliance of terms and conditions.




81

BARODA LAGHU UDHYAMI CRDIT CARD (BLUCC)

S.N. Parameters Particulars
1

Purpose To Provide hassle-free credit facilities to Small Business Units,
Retail Traders, Artisans, Village Industries, Small Scale Industrial
Units and Tiny Units, Professional and self employed etc.
2

Eligible
Borrowers
All existing customers in the categories of Small Business, Retail
Trade, Artisans, Village Industries, Prof.& Self Employed persons
etc having satisfactory track record / dealing with the bank for last
3 years.
3

Limit Maximum upto Rs 10 lac per borrower
4

Assessment of
Limit
For Small Business, Retail Traders:
20% of annual Turnover declared for tax purposes or, last 12 months
turnover in the operative account Whichever is higher (Where sales
tax returns are not available, turnover in the a/c in the last 2 years
may be taken into consideration
For Professional & self Employed Persons:
Limit equal to 50% of their gross annual income as per IT return
For SSI including tiny sector:
Based on Nayak committee recommendations.
5

Period / Validity The limit fixed under the scheme will be valid for a period of three
years subject to internal annual review based on the conduct /
operations of the account.
6

Interest @ PLR or as advised from time to time
7

Security Hypothecation of stock in trade, receivables, machinery, office
equipment etc
8

Margin 25%
9

Insurance May not be insisted for limits upto Rs 25000/-



82

BARODA ARTISANS CREDIT CARD (BACC)
Parameters Particulars
1


Purpose To Provide adequate and timely assistance to the artisans to meet
their credit requirements both investment needs as well as
working capital in a flexible and cost effective manner. The
scheme is implemented in R & SU areas.
2

Eligible Borrowers All artisans involved in production / manufacturing process.
Preference given to artisans registered with Development
Commissioner (Handicrafts), Thrust on cluster of artisans joining
SHGs. Beneficiaries of other Govt Spo Loan Schemes will NOT be
eligible for coverage under BACC scheme.
3 Limit Maximum Rs 2 lacs per borrower
4

Fixation of Credit On the basis of W.C.+ Cost of tools & equipments required for
carrying out mfg process on the basis of Nayak committee
recommendations (20% of anticipated T/O).
5

Period Max 3 years subject to annual review
6

Margin For Limits upto Rs. 25000/- : No Margin
For Limits above Rs. 25000/-
but up to Rs. 2 lacs : 15% to 25% Margin
7

Security Hypothecation of assets financed under the scheme.
9

ROI As per RBI norms for advance / loans upto RS 2.00 lacs
10 Insurance For Limits upto Rs 25000 may be waived.
For beyond Rs 25000 banks extant guidelines to be followed.
11 Group Insurance Beneficiaries registered with the Development Commissioner
(Handicrafts) would be eligible for the Group Insurance Scheme
Premium Govt: Beneficiaries=60:40 or mutually agreed between
the parties


83

SME SHORT TERM LOANS

S.N. Parameters Particulars
1

Purpose To meet genuine businesss temporary shortfall / mismatch in liquidity.
2

Enterprises
Group
Small and Medium sized Corporate, Business and Trading Houses (incl.
partnership firm)
3

Eligibility 1. Satisfactory credit rating for the last three years (BOB-4 & above)
2. Accounts with continuous decline in credit rating will not be eligible.
3. Satisfactory financial performance in terms of sales / turnover &
profits. Negative variance, if any, should not be more than 10%.
4. Satisfactory dealing and no major inspection/ audit irregularities.
4

Amount of
Loan
Upto 25%of the FB Working Capital Limits for BOB-1, BOB-2 & BOB-3
rated a/cs & Upto 20% of the FB Working Capital Limits for BOB-4
rated a/cs, subject to a minimum of Rs 10 lacs and maximum of Rs 250
lacs
5

Security First Charge or extension of existing first charge / Equitable mortgage
of fixed assets of the company / firm, ensuring that there is a min.
asset cover of 1.25
Extension of Charge on Current Assets for the additional facility
ensuring that adequate DP is available.
Extension of all existing guarantees of Directors / Third Party
Guarantee to cover the additional facility
6

Period Not exceeding 180 days (min 90 days)


84

SME MEDIUM TERM LOANS

S.N. Parameters Particulars
1 Purpose To augment enterprises Working Capital gap and to help in
improvement of current ratio and also for meeting genuine
business requirements. The facility will be available for repayment
of secured and unsecured loans of other banks or institutions, but
purpose related to the enterprises activity.
2 Enterprises
Group
Small and Medium sized Corporates, Business and Trading Houses
(including partnership firm)
3 Eligibility
Criteria
1. Satisfactory credit rating for the last three years (BOB-4 and
above).
2. Accounts with continuous decline in credit rating will not be
eligible.
3. Satisfactory financial performance in terms of sales / turnover
and profits. Negative variance, if any, should not be more than
10%.
4. Satisfactory dealing and no major inspection/ audit
irregularities.
5. D/E Ratio should not be higher than 4.5:1 and TTL and equity
ratio should not be more than 3:1.
6. Average DSCR should not be less than 1.75:1
4 Loan
Amount
Upto 25%of the FB Working Capital Limits for BOB-1, BOB-2 &
BOB-3 rated a/cs & Upto 20% of the FB Working Capital Limits
for BOB-4 rated a/cs, subject to a minimum of Rs 25 lacs and
maximum of Rs 500 lacs
5 Security First Charge or extension of existing first charge / Equitable
mortgage of fixed assets of the company / firm, ensuring that
there is a min. asset cover of 1.25
6 Period of
Loan
Not exceeding 36 months, to be repaid equal quarterly or half-
yearly installments
7 Penalty Repayment penalty of 1%, if loans prepaid with in 24 months of
drawdown.
8 Time Limit
for
Decision
Upto Branch power -5 working days, Beyond Branch power- 10
working days


85

BARODA SME GOLD CARD
S.
N.
Parameter
s
Particulars
1 Purpose To provide hassle - free, borrowers emergent requirements and
temporary mismatch in liquidity arising out of delayed payment
buyers, tax payment, execution of bulk-orders etc
2 Enterprise
s Criteria
Accounts in Standard Category for last 2 years, with Obligor
Credit Rating of BOB4 above and enjoying Working Capital
limits of Rs. 25 lacs and the above.
Accounts having sole banking arrangement with our Bank.
In case of Take over of A./c, no deviation will be allowed
3 Rate of
Interest
As applicable for regular Cash Credit facility depending upon
applicable credit rating.
4 Security Charge on current assets, extension of charge on fixed assets
if stipulated for Cash Credit
Personal Guarantee of Directors
Collateral Security as available to other facilities.
5 Quantum
of Loan
10% of the assessed MPBF by way of Working Capital Facility.
6 Margin NIL
7 Period 12 months to be allowed on 4 occasions during the year for a
maximum period of 2 months on each occasion. However, there
should be a min. gap of 15 days between two drawals.


86

Baroda Vidyasthali Loan

S.N. Parameters Particulars
1 Objective Baroda Vidyasthali Loan is a special scheme for financing
Educational Institutions.
2 PURPOSE

Construction / expansion / renovation / modernization of
education institute.
Purchase of instruments for imparting education/training.
Land cost not more than 20% of project cost subject to
undertaking to complete the building construction within two
years.
Overdraft to meet short term requirement on the basis of cash
budget subject to the institution is profit making and do not
have any liability of other bank.
3 ELIGIBILITY

Educational institutions, Schools, Colleges and other education
bodies running education activities
Note : HUF are not eligible.
4 LIMIT Minimum Rs.25 lacs
Maximum Rs.1000 lacs
5 SECURITY Equitable mortgage of Land & Building (not agricultural land), if it
is restricted by the affiliating authority, alternatively, other
property in the name of promoters/institute may be obtained.
Hypothecation of Instruments & Equipment acquired out of the
loan and other assets of the Educational Institution.
Personal guarantees of the Promoters of the Institution.
6 MARGIN 25% of the cost of the project / all the facilities
7 Method of
Assessment
For working capital Against fee collection for one semester with
25% margin. Assessment on cash budget system. OD should be
liquidated within 6 months, max. 2 times in a yr.
8 REPAYMENT
PERIOD
Maximum 84 months including moratorium period of 2 year,
depending upon the cash flow.
9 Other
Conditions
TEV may not be required irrespective of project cost.
Disbursement of the loan- direct to the suppliers of equipments, in
other case
CA / Architects certificate after inspection as per banks
guidelines.
Credit rating of the account to be carried out as per banks extant
guidelines and the borrowers with credit rating of BOB-6 and
above only to be financed.
Minimum Security Coverage should not be less than 125%.
Ratio: CR-1.17(in case of OD), D/E-3:1, DSCR(Av)-1.75

87

Baroda Arogyadham Loan
S.N. Parameters Particulars
1 Objective Baroda Arogyadham is a special scheme for financing Medical
Institutions.
2 PURPOSE

Setting up of new Nursing Home/Hospital including Pathological
Laboratory
Expansion/renovation/modernization of existing Nursing Home/
Hospital including Pathological Laboratory.
Purchase of medical diagnostic equipments as also office
equipments, viz. computers, ACs, office furniture, etc.
Purchase of ambulance
To meet working capital requirements.
Construction of rest house, staff quarters
3 ELIGIBILIT
Y

SMEs as per regulatory and expanded definition. However, the
main Promoters should have requisite qualification in any branch of
medical science from a recognized University and should have
minimum 2 years of work experience.

4
LIMIT Rural Centres - Rs. 50 Lac
Semi-Urban Centres - Rs. 6 crores
Urban & Metro Centres - Rs. 12 crores
Notes :
Working Capital limits upto 10% of the annual sale or gross income,
subject to 20% of the above ceiling limits in case of borrowers
requiring both Term Loan and working capital facilities.
In case of borrowers requiring only working capital limit, 20% of
the above ceiling limit.
5 SECURITY Term Loan
1. Mortgage of Land & Building/ Premises of Nursing Home/
Hospital.
2. Personal Guarantees of Promoters. (Will not be applicable in
cases covered under CGTMSE)
3. Hypo. of equipments and instruments arising out of loan.
4. Extension of charge in case of existing nursing home/hospital
going for modernization/ expansion/ renovation.
Working Capital
1. Hypo of medicines, receivables and other chargeable current
assets.
2. Ext. of charge on fixed assets, both movable and immovable.
6 MARGIN 25%
7 RATE OF
INTT
As per credit rating of the borrower.

8 REPAYMENT
PERIOD
35 months to 84 months including moratorium depending upon the
cash flow.
88

9 Other
Conditions
TEV may not be required irrespective of project cost.
Disbursement of the loan- direct to the suppliers of equipments, in
other case
CA / Architects certificate after inspection as per banks
guidelines.
Credit rating of the account to be carried out as per banks extant
guidelines and the borrowers with credit rating of BOB-6 and
above only to be financed.
Minimum Security Coverage should not be less than 125%.
Ratio: D/E (TTL/TNW) -3:1, DSCR(Av)-1.75, Op. Profit Margin
Min.10%, Min. Interest Coverage - 2


89

CREDIT GUARANTEE SCHEME OF CGTMSE
Sr No Parameters Particulars
01 Purpose and Limit To provide collateral free loans upto Rs. 100 lacs to
Micro & Small Enterprises ( both in the manufacturing
sector as well as in the Service Sector
02 Eligibility Micro & Small Enterprises ( both in the Manufacturing
Sector as well as in the Service Sector except
Educational institutions, Finance to SHGs
03 Nature of Credit
Facilities
Term Loan and / or Working Capital / Non Fund Based
facility like LC, Guarantee etc.
04 Rate of Interest As applicable to SME sector
05 Security Current / Fixed Assets of the unit. No Collateral / Third
Party Guarantee
06 Guarantee Cover 75%, however credit facility upto Rs. 5 lacs, coverage is
increased to 85%.
07 Guarantee Fee and
ASF
One time guarantee fee @ 1.50% and annual Service Fee
of 0.75%
08 Sharing of Guarantee
fee and Annual
Service Charge
50 : 50 upto credit limit upto Rs. 50 lacs
Above Rs. 50 lacs upto Rs. 100 lacs, the entire fee should
be recovered from the borrower



90

Baroda Weavers Credit Card (BWCC)

ELIGIBILITY
All weavers and ancillary workers involved in weaving activities (including new borrowers
who are otherwise eligible for credit facilities for carrying out the proposed activities
under any of the existing bank schemes) would be eligible. All existing weaver borrowers
of the bank enjoying credit facilities and having satisfactory dealings with the bank will
also be eligible to avail credit facilities under the scheme for a period of three years .

ISSUE OF CARDS
The beneficiaries under the scheme will be issued with a Photo Weaver Credit Card (WCC)
indicating sanctioned limit and validity period of credit facility.

FIXATION OF CREDIT LIMIT

The maximum limit to individual weavers will be up to Rs. 2/- lacs. The limit is expected to
be utilized as a revolving cash credit and will provide for any number of drawals and
repayment within the limit.
However,repayment schedule will be fixed for the portion of loan availed for the purchase
of tools and equipments based on repayment capacity up to 84 months. The limit
sanctioned would normally have a validity of three years with review every 12 months.

MARGIN
Normally, no margin will be required for limits up to Rs. 25,000/-.The limit above
Rs.25000/- to Rs.2.00 lacs will have margin of 20%.

VALIDITY/RENEWAL OF LIMIT
The Credit Card would normally be valid for 3 years subject to an annual review.
No unified processing and Documentation charges to be charged as the maximum limit is
up to Rs.2/- lacs. No fees will be charged at the time of review/renewal of card.

SECURITY
The limits sanctioned will be secured by way of primary charge over the assets financed.
No collateral security is to be stipulated. As far as possible all the accounts to be covered
under CGTMSE. However, the requirement of a credit guarantee cover from CGTMSE
should not be a pre-condition for issuance of a Weaver Credit Card.

Insurance
Insurance cover of the assets financed to be obtained under the scheme as per the extant
guidelines.

RATE OF INTEREST: As per the extant guidelines of the bank.


91


Scheme for Financing of ATMs / Cash Dispensers:

Eligibility Vendors who have been awarded contract for
installation of ATMs /CDs by the PSBs
Nature of Facility i. Term Loan and/or
ii. Overdraft
iii. Bank Guarantee

Purpose i. To meet cost of machine & other equipments and
installation thereof;
ii. To meet operations/ maintenance cost including
network charges, security, cash management etc,
iii. To furnish guarantee for performance of contract
and/or to secure the order;

Amount of Facility Term Loan: 75% of the cost of Machine and cost of
preparation and erection of the site under transaction
cost model.
Overdraft: 75% of the maintenance cost for the
operating cycle.
Bank Guarantee: As per requirement.

Margin 25% to be contributed/maintained at each stage of
disbursement.
Cash Margin on Bank Guarantee : Min 25%

Disbursement i) Disbursement shall be made in stages as per
installation schedule and progress of the project.
ii) Payment of ATMs /CDs /Other equipments to be
made directly to the suppliers;
iii) Payment of expenses on installation / erection etc
may preferably be made to the contractors.
iv) Disbursement under Overdraft Facility may be
regulated according to number of ATMs installed as
per installation schedule.

Security i) Hypothecation of ATMs /Cash Dispensers (excluding
cash maintained therein which shall be exclusive
property of sponsor bank) and other equipments;
ii) Assignment of receivables;
iii) Corporate Guarantee of the parent company in case
of borrower being subsidiary company/ SPV;
iv) Personal Guarantee of the Director(s);
92

Sanctioning authority may consider obtaining any other
suitable collateral security in the form of immovable
property of borrower/ parent company/ third party and/or

personal guarantee of third
parties.

Period Loan: 60 months (including maximum moratorium
period of 6 months) subject to review after 12 months.
However, since installations will be spread in three
years, separate loan accounts may be maintained for
installations in each half year and period of 60 months
may be counted from first disbursement of each such
loan. Moratorium and commencement of repayment
may also be worked out accordingly.
Overdraft : 12 months; subject to review thereafter.
Bank Guarantee : 12 months; subject to review
thereafter. The maximum period for issue of guarantee

under the facility shall not exceed the expiry period
of
the contract plus three months.

Repayment To be repayment within the maximum period of the loan

in monthly installments starting after the
moratorium
period. However, interest to be serviced on monthly
basis.

Rate of Interest Base Rate + Spread as per credit rating of the borrower.

Fee and Charges Upfront fee, documentation charges, inspection charges
as per Banks extant guidelines on service charges from

time to
time.
Sanctioning Authority may define and stipulate
ESCROW charges (ranging from Rs.10,000 p.a. to
Rs.50,000 p.a.) considering the work involved e.g.
number of consortium members etc.

This finance will be the part of Service sector and classification will be
SME/Mid Corp/Large Corporate.
93

Baroda MSME Capex card--Baroda MSME Capex Loan
It is observed that capex requirements of borrowal units are generally of emergent needs and
are being met by diversion of working capital funds and/or to avoid time to be taken for
sanction by appropriate authority, borrower approaches other Banks/NBFCs and in the
process we loose the business. Therefore Board at its meeting held on 05.04.2013 has
approved New Product for SME, the details of which are as under.

Eligibility
MSME borrowers (Regulatory) and SME (Expanded) rated BOB-5 and above.
The manufacturing/service sector units should have been established in the line of
activity for a minimum period two years, Account running with satisfactory dealings for Last
one year & above and No adverse features are reported in conduct of account.

Purpose
The loan to be considered for the following capital expenditure related with the regular
business activity:
Replacement of old machinery.
Purchase of balancing equipments
Modernization.
Investment in Research and Development.
Installation of captive power plants and Upgradation of technology.
Alteration in lay out of factory/office.
Acquisition of software, hardware, and tools, jigs, fixtures etc. forming part of
Plant & Machinery.
Purchase of cars, passenger cars for staff and other vehicles for use of
business purpose.

Limit
15% of Plant & Machinery for MSME (Mfg.) and 25% for Services sector
outstanding as per last Audited Balance Sheet or 10% of the working capital whichever is
higher based on DSCR and subject to cap -
Baroda MSME Capex card : Min. 25 lacs and Max Rs.5.00 Crore.
Baroda MSME Capex Loan: Min 25 lacs and Max Rs. 2.00 Crore.
Average Gross DSCR inclusive of the repayment liability under the proposed STL
should not be less than 1.75. In any year it should not be less than 1 for MSE Borrowers and
1.25 for Medium & SME Expanded Borrowers.
The facility to be made available as Fund Based / or Non-Fund Based Limits (i.e.
including establishment of LCs) ensuring that aggregate exposure does not exceed the overall
limit.

Margin
Land & Building-30%
Plant & Machinery-25%
94

The next higher authority not less than Regional Manger is authorized to reduce the
Margin by 5% in deserving cases.

Repayment
3 to 7 years including the moratorium period.

Operational Issues:
Baroda MSME Capex card Baroda MSME Capex Loan

When to sanction
At the time of sanction/ Renewal of facilities Where Capex card limit has not been
considered (and not rejected) at the time of Regular sanction - instantly as per need
Competent Authority having financial powers to sanction the aggregate of the regular
credit limits and the proposed Capex Card Having financial powers to sanction the proposed
Capex Loan without considering/ excluding the regular credit limits. With 25% additional
discretionary lending powers.

Assessment/Justification
No separate assessment / special justification is required for TL for sanction along
with regular facilities However proper justification may be obtained before disbursement.
At the time of sanction

Frequency of Sanction
The facility may be sanctioned at the time of each review/renewal of working capital
limits, based on a fresh assessment. As per need, but total not exceeding the
prescribed limits

Security -
Primary -first charge on the specific assets reated out of the Bank finance.
First charge on the specific assets created out of the Bank finance.

Collateral Security
As per sanctioned terms. Guarantee/ Extension of charge on securities under regular
facilities.
CGTMSE cover As applicable, Branch should prefer cover for exposure up to 100 lacs. As
applicable, Branch should prefer cover for exposure up to 100 lacs.

Documentation
The Security documents/extension of charge/ E.M. to be obtained before the
disbursement of Actual Term Loan.
OR
If so requested with regular documents/ extension of charge under guidance of Legal cell.
95

The Security documents/extension of charge/ E.M. to be obtained before the
disbursement of Actual Term Loan

Commitment Charges
NIL

TEV Study
As per sanctioned terms Not required/ Exempted.

Interest/Other Charges
As applicable. As per terms of sanctions.
As applicable. Regional Heads may allow concession not exceeding being permitted in
sanctioned facilities.
PSR As per norms
Insurance /other issues As per policy norms

SCHEME FOR PROFESSIONALS
Eligibility Professionals in any discipline viz .Doctors,Engineers, Architects,
Interior Designers,Photographers, Financial Consultants
(CA/ICWA/CS), Advocates, Dentists and specialized qualified service
providers.Proprietorship / Partnership/ Pvt/ Public. Ltd. Companies
Purpose Working Capital Requirement
Purchase of equipments, Expanding/RenovatingBusiness
premises.
Non-fund based facilities ( Bank Guarantee and
Letter of Credit)
Nature of
Facility
Term Loan/Demand Loan/Cash Credit/non-fund based
facilities.
Limit Minimum Rs. 10.00 lacs
Maximum Rs. 5.00 Crores
Repayment Maximum 84 installments including moratorium
period. Interest to be served every month.
Method of
Assessment
For working capital facility: As per First Method
of Lending or 20% of turnover whichever is higher
for limits up to Rs.500.00 lacs,
TL/DL for purchase of land & building/Plant and
Machinery taking into consideration margin of 20%
for plant and machinery and 25% for land and
building repayable in 7 years (including
moratorium), based on the cash flow projections.
Margin For Cash Credit :
25% against stocks & Book Debts up to 90 days only
For Term Loan/Demand Loan :
96

25% on land and building
20% on Plant and Machinery
35% on second hand Plant & Machinery
For non-fund based limits :
Cash Margin on guarantee and L/C facility 20% minimum.


97

WHOLESALE BANKING

Wholesale Banking Business:

As a part of Business Transformation initiatives the bank is repositioning as Multi
Specialist Bank. Bank has defined wholesale banking in following two parts:
1. Large Corporates: The Companies with annual sales turnover of above Rs. 500 crore.
2. Mid Corporates: Companies with annual sales turnover of over Rs. 150 crore and upto
Rs. 500 crore.
These segmentations facilitated to bring new large corporate whose sales turn-over
is very high but do not have any limits or are enjoying very small limits with the bank.
Existing CFS branches are functioning as Wholesale Banking Branch where the
large/mid corporate accounts of other branches in the city are being parked.

Advantages:
1. To increase the existing client base by canvassing new Corporate accounts and to get
optimum share.
2. To increase the penetration by increasing the number of products used by clients.
3. To increase fee based income business.
4. To have a special focused attention over Large and Mid corporate customers.

Mid corporate Branch:

OBJECTIVES:
1) To set up dedicated Mid Corporate Branches in important cities/centres in the country
to tap the potential that this sector offers.
3) To set up a Mid Corporate Banking segment within the Wholesale Banking Group at
Corporate Office to provide the necessary drive support to achieve the above
objectives.

BANKS INTERNAL EXPOSURE CLASSIFICATION

DEFINITION :
1) All entities i.e. Corporates, Partnership firms, Sole Prop. Firms, Trusts, Corporations
etc, having a Gross Turnover (Sales) of over Rs 500/- Crores as per the last Audited
Balance Sheet or Previous Financial Year would be classified as Large Corporate
Borrowers.
2) All entities i.e. Corporates, Partnership firms, Sole Prop. Firms, Trusts, Corporations
etc having a Gross Turnover of over Rs 150/- crores and upto Rs 500/- crores as per
the last Audited Balance Sheet or Previous Financial Year would be classified as Mid
Corporate Borrowers.
98

3) All entities i.e. Corporates, Partnership firms, Sole Prop. Firms,Trusts, Corporations etc
having a Gross Turnover of upto Rs 150/- Crores as per the last Audited Balance Sheet
or Previous Financial Year would be classified as SME borrowers.
4) All entities i.e. Corporates, Partnership firms, Sole Prop. Firms, Trusts, Corporations
etc that satisfy the Investment in Plant and Machinery criteria as per Regulatory
Definition would also be classified as SME borrowers.
5) Entities that have Gross Sales of less than Rs 450/- Crores as per Last Audited Balance
Sheet but have a Projected Gross Sales of over Rs 600/- Crores for the current year
shall be classified as Mid Corporate only. The status will be reviewed after reviewing
the Actual Gross Sales for the projected year based on Audited Financials. Similar
situation would prevail in respect of SME borrowers also i.e. borrowers with Actual
Gross Sales of Rs. 125 cr and projected gross sales of Rs.200 cr will be classified as
SME only and will be reviewed based on Actual Sales on receipt of Audited Balance
Sheet for projected period.
6) In respect of New Projects whether Manufacturing, Services, Infrastructure etc Total
Project Cost would determine the Classification as under :
i) Other than Real Estate Projects
a. Project Cost < Rs. 100cr. SME
b. Project Cost=>Rs.100cr. but <Rs.500cr. Mid Corporate
c. Project Cost =>Rs.500 cr Large Corporate
ii) Real Estate Projects
a. Project Cost < Rs. 50 crs SME
b. Project Cost =>Rs.50 cr but <Rs.250 crs. Mid Corporate
c. Project Cost =>Rs.250 cr Large Corporate

Loans and Advances - Loan Policy 2012
1. No loan to willful defaulter of our bank or other bank or Financial Institutes.
2. As per BR Act 1949, no loan against the security of Banks own shares.
3. Without prior approval of the Board or without the knowledge of the Board, no loans
and advances should be granted to Directors (including Chairman & Managing Director)
and relatives of directors of our Bank, other banks, Scheduled Co-operative Banks,
Subsidiaries/Trustees of Mutual Funds/ Venture Capital Funds set up by the Bank/
Other Banks. However, loan upto limit of less than Rs. 25 lakhs can be sanction by the
competent authority subject to reporting to Board. Loans & advances aggregating to Rs.
25 lacs and above are to be sanctioned by the MCB.
4. No loan to be granted against partly paid shares.
5. Credit to following activities are covered under Selective Credit Control- Buffer
stock of Sugar with sugar Mills, unreleased stock of sugar with sugar mills
representing levy sugar and free sale sugar.
6. Maximum period of term loan should not exceed 15 years except under scheme
specific say housing loan and infrastructure loans.
7. Rating is applicable to all borrowers having credit limit of Rs. 2 lakh and above.
However, for lending proposal for Rs. 25 lakhs and above(In case of C&I ) & above
99

Rs.200.00Lacs (In case of MSME) are to be rated as per new credit rating models
(CRISIL).
8. Bank may entertain fresh exposure (in case of new borrowers) only with minimum
of not less than BBB (Moderate Safety) or BOB6/MSMEBOB6 as acceptable
grade.

Secured /Unsecured Advances:
Security means all tangible security charged to the Bank. Unsecured advance means the
realisable value of the security as assessed is not more than 10% ab-initio, of the
outstanding funded and non funded exposures. RBI has since withdrawn ceiling on
maximum exposure by way of unsecured guarantees and advances. However, as a
prudent policy bank has decided to restrict as under:- The domestic outstanding
unsecured guarantee plus the total of domestic outstanding unsecured advances in
terms of definition of unsecured exposure of RBI as stated above should not exceed 30
percent total domestic outstanding advances.

Activity Clearance & Agreement in Principle:
Under the following activities, proposal for fresh/increase in exposure are subject to
Activity Clearance from corporate centre even though proposals fall under the powers of
Branch/ Region/ Zonal Heads

Leasing, Hire-Purchase, Non-Banking Finance Companies (other than Central/ State
Govt. NBFCs),
Capital Market (other than advances against shares to individuals),
Financing of Film Making (Sanctioning authority rests with CMD/ED only within
their delegated powers)
Bridge Loan.
Financing of Educational Institute
Aviation
Infrastructure-Power
Infrastructure-Roads
Infrastructure-Telecom
IT & ITES
Securitisation / Through Deed of Assignment.

However, in following cases the activity clearance may be accorded by Zonal Head for all
proposals falling under the power of Regional Heads irrespective of substantive rank of
Zonal Head
Plantation (excluding tea, coffee and rubber plantations, common horticulture crops,
Jatropha, spices, medicinal plants, essential oils/ Aromatic plants),
Manufacturing & Trading of Liquor,
Vegetable Oil, Vanaspati
100

Cinema Halls, Theatres/ Auditoriums/ Amusement Parks, Marriage
Halls(Kalyanamandapams).
Advances to Hotels/ Resorts.
Real Estate for Commercial Activities but excluding Retail Loans, Priority Sector
Advances
Fresh/incremental exposure to Diamond industry.
Advances to Co-operative Banks

Fair Practices Code for Lenders:

RBI has advised all Banks and Financial Institutions to adopt the Fair Practices Code duly
approved by their respective Boards. Accordingly our bank has adopted the code in a
transparent manner as under:
1. Branches to provide standardise application forms free of cost along with the schedule
of fees and charges at free of cost. This includes upfront fee, process fee,
prepayment penalty, rate of interest etc.
2. Receipt of completed application forms will be duly acknowledged.
3. All loan applications to be disposed off within a period of 4 weeks from the date of
receipt, which is complete in all respect.
4. In case of rejection of the loan application, the same would be conveyed in writing to
the applicant.
4. Each and every application must be properly assessed including stipulation of margin,
security as per the Banks guidelines. The sanction must be advised along with terms
and conditions to the borrower and acceptance thereof must be kept on record.
5. Copy of loan documents, will be made available to the applicant on specific request.
7. Disbursement of loan is to be made immediately on compliance of terms and conditions
sanction. Any change in terms and conditions including change in rate of interest be
advised to the borrower.
8. Post disbursement supervision, particularly in respect of loans upto Rs.2 lacs, would be
constructive with a view to taking care of any genuine difficulties of the borrower.
9. Before taking any additional security / recalling/ accelerate repayment etc the bank
would give reasonable notice to the borrower.
10. All securities pertaining to the loan would be released on receipt of full and final
payment of the loans subject to any legitimate right or lien and set off for any other
claim that the bank may have against the borrowers. While exercising such right
borrower would be given a proper notice.
11. In case of transfer of borrowal accounts, either at the request from borrower or bank
/ FIs, the banks consent shall be conveyed within 21 days from the date of receipt of
such request.
12. In case of complaints, branches shall immediately take up the matter for redressal and
report to Region/ Zonal office within 7 days from the date of receipt of such
complaint who would take all necessary steps to redress and resolve the
grievance/dispute, within a maximum period of 30 days.
101


Time limit for Credit Decision:
From the date of receipt of completed application form/information etc.
(A) For Priority Sector Lending:
Upto Rs. 25000 - Within 2 weeks
Limit above Rs. 25000 Branch / RO&ZO/BCC - within 4 weeks/45 days/90days
Same guidelines for Export Credit, Retail (if not specific as per the scheme).

In case of SME :
Upto Rs.2.00 lacs : 2 weeks
Above Rs.2.00 lacs: 4 weeks
At SME Factories : within 14 days if no TEV
required & -21-days if TEV study is required

(B) Other than Priority sector / Retail / SME Lending:
1) at branch level within 10 days from the date of submission of full information,
2) at Regional / Zonal office level within -7- days from the date of receipt of completed
proposal/information from branch.
3) at Zonal Manager within 7 days from the date of receipt of completed
proposal/information from branch.
4) at GM at BCC within -15- days from the date of receipt of full information from
Zone/Brs.
5) ED/CMD - within -7 days from the date of receipt of full information.
CFS/IFS branches will have to forward their proposal directly to BCC with a copy to
Zonal Office and Zonal office will have to offer their views/comments within 15 days to
BCC.

Discretionary Lending Powers:
1. For exercising DLP the tangible security (Primary and Collateral) charged to the bank, is
to be taken into account to decide secured and unsecured advances.
2. Other than export credit proposal, all authorities upto the level of DGM shall have
discretionary powers as under (based on credit rating of the borrowers):
a. Latest Credit rating as per new rating models (not more than one year old) as per CRISIL
rating BOB-1,BOB-2, and BOB-3, the DLP will be 125 % of the normal powers.
b. Latest Credit rating as per new rating models ( not more than one year old), as per
CRISIL rating BOB-4,BOB-5, & BOB-6, the DLP will be 100 % of the normal powers.
c. Latest Credit rating as per new rating models ( not more than one year old) , as per
CRISIL rating BOB-7, BOB-8, BOB-9 & BOB-10, the DLP will be 75 % of the normal
powers.
d. The lending powers of the General Managers shall be irrespective of the credit rating of
the borrower- customers.
e. For new borrowers approaching first time, to be rated as BOB6 for the purpose of
sanctioning powers
102

f. As regard accounts under old rating models (i.e. exposure less than Rs. 25 lacs) the DLP
will be 100% of normal powers for A+, A & B+ rated accounts and 75% of normal powers
for accounts rated below B+.

Annual Cap for discretionary lending power
Following advances are excluded from the annual cap limit:
a. Advances to staff members under the specific schemes for the banks staff only.
b. Advances against our own deposits and securities such as NSCs / KVPs / LIC Policies /
Relief Bond/ IVPs etc.
c. Advances under Govt. Sponsored programme and to weaker sections
d. Review (including review with decrease in limit) of accounts at the existing level.
e. In case of review with increase only existing limit is excluded whereas increased portion
will be counted for cap limit.
f. However, sanction of retail loans to the Proprietor/Partners/Directors of a firm/
company stands de-linked from per party/group discretionary lending powers.

This provision of annual cap will not be applicable to GMs, the in-charge and second
line officers of Central Processing Cells (CPCs) of Retail Lending / Urban Retail Loan
Factory and SME Loan Factory.

Financial Ratios for Credit Appraisal:
In our loan policy following Ratios are considered as bench mark

1. Current Ratio 1.33:1 (1.20 for Medium Enterprises and 1.17 for Micro & small enterprises)
2. Debt Equity ratio 3:1 (Total term Liab/TNW). TDE= Total outside laib/TNW is 4.5:1
3. FA coverage Ratios = 1:1 (Net FA/Term Liab) SSI/SME Not below 1.25
4. DSCR average 1.75 however in any year it should not be less than 1.25 (For Micro & Small
enterprises it should not be less than 1.00 in any year)
5. The above ratios are indicative and deviations can be considered by the sanctioning
authority on case to case basis, depending on industry, specific problems of unit, etc.
6. An Interest Coverage Ratio of 5 may be considered satisfactory.

Pricing of the loan
Pricing of Loans is quite crucial for banks business. Bank follows a transparent pricing
policy and is also guided by RBI on Government directed/ sponsored lending.
As per extant guidelines, the pricing has been de-linked from credit rating in respect of
advances (fund based) over Rs.2 lacs but less than Rs.25 lacs and the pricing is based on
pre-determined spread irrespective of the credit rating.
For loans of Rs.25 lacs and above pricing continues to be determined by the rating of the
borrower with appropriate spread.
The credit rating in respect of the borrower enjoying credit facilities above Rs.2 lacs
but less than Rs.25 lacs shall continue, even though the pricing is de-linked, for
determining the credit risk perception.
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Verification of documents:
Advances accounts with aggregate limit of above Rs. 2.00 crore (Funded plus Non-Funded)
would be verified by the Banks Law Officer posted in the respective Zone/ Region and
the documents relating to Advance Accounts with aggregate of Rs. 10 lacs and above but
up to and inclusive of Rs. 2.00 crore shall be verified by the Banks identified Advocate /
Lawyer other than the one who has given the Title Opinion / Non-Encumbrance
Certificate (NEC) / Report in respect of mortgage(s) in the account.

Further, as per Circular No. BCC:WB:POL:F30:99/4511 dated 11
th
August 2007, it has been
approved by our higher authorities that in respect of following Zones, documents verification
in respect of credit limits between Rs.1 crore and Rs.5 crore can be got done from empanelled
advocate/s of the bank, provided original documents at some stage have been vetted by Zonal
Legal Dept./Law officer of the bank.

1) North Zone 2) Greater Mumbai Zone 3) Southern Zone 4) Eastern Zone 5) Gujarat
Operations 6) Mah. & Goa Zone and 7) Rajasthan Zone.

Notwithstanding what is mentioned above, all documents pertaining to consortium accounts
have to be necessarily got verified from Corporate Legal Dept./Zonal Legal Dept./Law Officer
of Bank.

It may be noted that the documents shall be verified by the Banks identified panel
Advocate/ Lawyer other than the one who has given the Title Opinion/Non-
Encumbrance Certificate (NEC)/ Report in respect of mortgage(s) in the account.

Legal Audit
In response to RBI guidelines, A system of periodical Legal audit of title deeds and
other loan documents in respect of all credit exposure of Rs.5.00 Crore & above is
introduced for all existing as well as new accounts.

In addition to existing practice of verification of documents, Re-verification of title
deed as to their genuineness with relevant authorities along with verification of
other loan documents will be carried out within a period of 05years from the date of
such first verification of title deeds/ documents and for every block of five years
thereafter till the loan is settled in full.

The re-verification will be carried out by the Banks empanelled advocate.

Regular Review
Credit facilities sanctioned to borrowers are subjected to annual review (except LABOD, staff
loans and the accounts where facilities sanctioned are for a period less than one year etc.) as
per the prevailing guidelines. However in case of borrowal accounts enjoying credit facilities of
104

Rs.10 Crores and above, where the credit rating is BOB-7 or below, the account should be
reviewed on half-yearly basis.. The accounts are required to be reviewed on or before the due
date.

Branches have been advised vide Circular No. BCC:BR:100:14 dated 14.01.2008 to review
advances accounts with limit upto Rs. 20 lacs for facilities enjoyed by borrowers in
trading activities, Micro & Small Enterprises, borrowers in rural area, borrowers having
only term loan accounts, financed under government sponsored programme, borrowers
enjoying only guarantee facility, etc, pending receipt of audited financial statements,
provided the conduct of the account is satisfactory (Source: Loan Policy 2012)

Short Review / Status Note:
The bank has also the practice of Short Review / Status Note, which is done when it is
not possible to carry out a comprehensive Regular Review of the account within the
stipulated period pending receipt of certain particulars/ information or where the
account is placed under special monitoring, etc.

We continue to deal with the matter as under:-
Consecutive Short Reviews shall be restricted to two with a maximum period of six months for
each short review. But in exceptional cases, status review can be done in respect of accounts
marked for strict monitoring or for recovery. Relaxation is also provided to restructured
accounts and accounts under rehabilitation where for a variety of reasons only, Short Reviews
may have to be done till such time the unit/account becomes normal and healthy.

Inspection of Securities
Periodicity of the inspection of securities to be carried out is as under: -
Prime securities charges for working capital as per BOBRAM rating:

Latest Credit Rating for BOB 1, BOB 2, BOB 3 (A+ as per old rating model)
Half-yearly basis.
Latest Credit Rating of BOB -4 and BOB 5 (A as per old rating model)
Quarterly basis.
Latest Credit Rating BOB 6 & Below (B+ & below as per old rating model)
Bi-monthly.
Fixed Assets (Charged against Demand/Term Loan/DPG)
Half-yearly i.e. as of January and July
Under consortium arrangement (Exchange of inspection reports / information
with other banks to be ensured.)
As per periodicity fixed by the consortium.

Inspection of Collateral Securities
The inspection of collateral securities to be carried out preferably on annual basis for all
types of facilities i.e. Funded as well as Non-Funded.
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Bridge Loans
RBI has permitted Banks to sanction bridge loans to companies for a period not exceeding
one year against expected equity flows/issues. Such loans would be included within the
ceiling of 40% of consolidated net worth as on March 31 of the previous year prescribed
for the Banks total exposure, including both fund based and non fund based exposure to
capital market in all forms.

Banks can also extend bridge loans against the expected proceeds of Non-Convertible
Debentures, External Commercial Borrowings, Global Depository Receipts and/or funds in
the nature of Foreign Direct Investments, provided the banks are satisfied that the
borrowing company has already made firm arrangements for raising the aforesaid
resources/funds.
Keeping in view the RBI guidelines, Bank has devised the following guidelines:
Such loans to be considered only at our Corporate Centre, for Corporates who are
banking with us with satisfactory track records.
Such Bridge Lending should be used for the purpose for which the issue
(debenture/ECB/Equity etc.,) is proposed and not for any other purpose.
The amount of individual Bridge Loan shall not exceed 75% of the amount called-up on
the shares minus any other similar bridge lending, interim finance availed or to be
availed.
Repayment period upto a maximum of one year.

CRISIL Rating Models
Management of Credit Risk determines the asset quality of the Bank. An effective way
to mitigate credit risk is to have robust credit rating system in place.

Bank has introduced Basel II compliant credit risk rating models of M/s CRISIL. The
rating models are based on two-dimensional rating methodologies specified under Basel II
requirements wherein 4 types of risks viz. industry risk, business risk, financial risk and
management quality risk are assessed pertaining to characteristics on an
obligor(borrower) while facilities proposed/sanctioned to a borrower are assessed
separately under second dimension of rating i.e. Facility Rating

The Credit rating can (i) Identify potential risk in a particular asset.(ii) Allow a bank to
maintain healthy Asset Quality (iii) Impart flexibility in pricing assets to meet the
required risk return parameters as per the banks strategy and credit policy.

CRISIL Rating Models for commercial advances are based on two dimensional rating
methodology specified under Basel II Accord requirements

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Eleven models for Credit Risk rating of all commercial advances i.e. existing as well as new
with exposure of Rs.25 lacs and above (FB+NFB) for implementation have been introduced
by our Bank.

These Models involves three types of ratings-
Obligor Rating(PD)
Facility Risk Rating(LGD)
Composite Rating(EL)

Obligor (borrower) Rating for credit worthiness indicating the Probability of Default
(PD). The obligor rating is indicative of creditworthiness of an obligor or the Probability
of Default(PD) and it is based on the assessment of past; and projected cash flows of the
company. Obligor rating grades range from BOB 1 to BOB 10.

Facility Rating:-It involves assessment of the security coverage for a given facility and
indicates the Loss Given Default (LGD) for a particular facility. Facility Rating is
dependent upon the type of facility and securities charged to the bank against the
facility.

Facility rating grade ranges from FR 1 to FR 8

Composite Rating (CR 1 to CR 10) It is matrix of PD and LGD and indicates the Expected
Loss in case the facility is defaulted. The composite rating is worked out automatically by
software based on the matrix of Obligor Grade and Facility Rating Grade

Composite rating grade ranges from CR 1 to CR 10. Bank has accepted BOB 6 as the cut
off point for the acceptance of an obligor based on obligor rating carried out as the
applicable model

Issuance of NO Objection Certificate:
In respect of borrowers seeking fresh/additional finance from other bank/FI:

- In case of accounts falling upto the powers of General Manager, the NOC may be
given by the authorities under whose powers the concerned account falls.
- For all other cases, Chairman & Managing Director/Executive Director
- In respect of advance accounts sanctioned by authorities at the level of Executive
Directors and above (i.e. Executive Director, Chairman and Managing Director and
Management Committee of Board) General Managers have been authorised /
delegated, authority to modify, allow concessions in certain specific terms of
sanction.



107


Methods adopted in Bank of Baroda for assessing F.B. Working Capital finance
PBF-I PBF-II PBF-III PBF-IV
For Working Capital
limits over Rs 2.00
lac and up to Rs.2 cr
to non-SME
borrowers and up to
Rs.5 cr to SME-
borrowers
For Working
Capital limits over
Rs 2.00 Crs and up
to Rs 5.00 crore to
non-SME
Borrowers
For Working Capital
limits over Rs 5.00
crore, and up to Rs
10.00 crore to all
Borrowers
For Working Capital
limits over Rs 10.00
crore, to all Borrowers
Turnover method

Borrowers Margin
5% *

Bank Finance
20% *

* of projected
annual turnover or
the finance as per
1st method of
lending (i.e.,
operative cycle
basis), whichever is
higher.


Turnover basis

Borrowers Margin
6.25% *

Bank Finance
18.75% *

* of projected
annual turnover or
the finance as per
method 2nd
method of lending
(i.e., operative
cycle basis),
whichever is
higher.


Asset Holding
Method
i.e., NWC is to be
higher of actual
amount or 25% of
Total Current
Assets (2nd method
) and balance amount
in Working Capital
Gap may be financed
by the bank
provided, inter-alia,
(a) current ratio is
not less than 1.33;
and (b) DER is
acceptable.
Cash Flow basis
where 100% of cash
deficit from
operations is financed
provided, interalia, (a)
current ratio is not
less than 1.33; and (b)
DER is acceptable and
the cash surplus in
non-business
operations and in
Balance Sheet items is
not genuinely available
to fund cash deficit in
business operations.

- The following categories of borrowers / activities are covered by separate individual
guidelines for assessing Working Capital finance: -
NBFCs.
Construction companies.
Tea Companies.
Ship-breaking Companies.
Diamond Industry.
Sugar, Gur and Khandsari Industries.
Software companies.
Any other activity, which may be advised from time to time.

The methodology, followed under the Asset basis, emphasizes, inter-alia, that the current
ratio of the borrowing unit should not be less than 1.33:1 or the actual current ratio
108

whichever is higher. This benchmarking of current ratio at 1.33:1 ensures the borrowers
stake at a minimum of 25%. However, the actual current ratio, wherever higher than
1.33:1, may be allowed to slip-back up to 1.33:1 in the following circumstances:
(a) Without the banks concurrence / consent:
i. Temporary transport bottlenecks deterring sales;
ii Cancellation of purchase orders (leading to piling up of stock but necessitating
retirement of liabilities on raw material purchased on credit);
iii Prudent bulk or economic size procurement of stock-in-trade on credit;
iv Abnormal rise in purchase price of stock-in-trade.
(b) With the banks concurrence / consent:
i. Diversification, expansion, modernization, take-over, acquisitions, merger etc.
ii Rehabilitation of sick units.

PENAL Interest and ADDITIONAL Interest:
1. Penal interest to be charged for non compliance of terms conditions etc.
2. Additional interest to be charged over and above applicable/ regular interest for any
adhoc credit facilities, disbursement of credit facilities pending compliance of certain
terms and conditions.
3. Penal interest and additional interest put together should not exceed 2% p.a.
4. Export facilities is exempted from the purview of penal and additional interest.
5. Priority sector lending up to Rs. 25000/-is also exempted from the guidelines of penal
and additional interest. DRI advances.
6. Waiver/ relaxation of penal interest for non-compliance of terms other than default of
interest/ instalment payments.
a. Zonal Heads, are authorized to waive/relax levy of penal/ additional interest in
respect of accounts falling upto the powers of Regional Managers.
b. GMs (including GMs as Zonal Head) are authorised to waive / relax levy of penal
/additional interest in all other cases.

Advances to accounts where HUF is a partner
1. No credit facility to be granted to a firm where the HUF is a partner.
2. In case of existing accounts where one or more HUF is/are partners, branches shall
obtain letters of consent from the major members of the HUF declaring themselves as
partners of the firm and also to ensure than total number of partners in that firm not
to exceed 20-.
3. Alternatively partnership firm can also decide to carry out reconstitution of the firm by
inducting one or more adult members of HUF as partners.
4. Any of the above changes taking place must be brought to the notice of the guarantor.
5. While doing so, fresh set of documents shall be obtained from all the partners and
guarantors.
6. LAD confirming the previous date balance by the existing partners and guarantors
7. No HUF property shall be obtained as security for any facilities given to any other
individual person, partnership firm and/or any corporate accounts unless and otherwise
109

the Karta and/all major co-parceners of HUF shall claim that offering of such joint
family property is only for the benefits of the HUF and that the guardians of minor
co-parceners shall also indicate the same.

Compliance of terms and conditions and disbursement of credit facilities:
Before disbursement either fresh or increased in limit the followings needs to be ensured:
1. Full compliance of terms and conditions unless some specific exemptions
2. Documents to be vetted as per banks guidelines.
3. Borrowers must have obtained necessary licensee / permission clearance etc. from the
competent authority.
4. Pre disbursement inspection/site visit is made.
5. Creation of charge over Security
i. Filling of Charges with ROC in case of Limited Company
ii. Registration with CERSAI in respect of all the mortgages.

Advances falling under the power of the Branch Manager: it will be the duty of
the BM to ensure above compliance and necessary noting in the prescribed format
to be made.
Advances account falling beyond the powers of BM: he/she has to verify and
confirm that above aspects are complied with and obtain a letter in the form of
prior approval before making any disbursement from the next higher authorities.
As under:
i. Brs. headed upto MMG-III clearance by DRM or RM (where DRM is not posted)
ii. Brs. Headed by Chief Managers by DRM in the rank of AGM or Regional head
in the rank of AGM and above otherwise Zonal Head
iii. Brs. Headed by AGM: by Regional Head in the rank of DGM or zonal Head where
the Regional Head is in AGM rank
iv. CFS brs. : GM/DGM at Zonal Office can authorize the disbursement..

Personal Guarantee of Promoters/Directors:
1. In case of all new advances to Pvt Ltd. Co (Other than Exporters) personal guarantee of
all promoters and Directors (other than nominee and professional directors) are to be
obtained.
2. In case of all new advances to Public Ltd. Co (Other than Exporters) personal guarantee
of all promoters and Directors who are exercising control or having significant
influence and hold equity share of the company in sole or joint name or in associate
concern, group etc are to be obtained. Now it has been decided to left out this matter
to the sanctioning authority.
3. However in case of consortium/multiple advance where all other member banks are not
insisting on personal guarantee of promoters and Directors, our bank may also not
insist on such guarantee considering large business interests.


110


GUIDELINES FOR TAKE OVER OF THE LOAN ACCOUNT FROM OTHER BANK:
Bank provides the operating units to take over accounts from other FI s/Banks keeping in
view the foremost objective of canvassing only good quality accounts. The following
financial and Non financial aspects are however to be followed:

Non-Financial:
a) Accounts of profit-making (i.e. net profit before tax) concerns only as per last audited
balance sheet.
b) Accounts with existing lenders should be under the category of Standard Assets
c) Satisfactory report from the existing bank/FI and/or satisfactory conduct of account
as per latest statement of accounts.
d) External Rating in respect of credit proposal with exposure above Rs.5 Crore by an
approved credit rating agencies should not be below BBB & equivalent
e) Take-over accounts are to be rated as under:-
As per BOBRAM credit rating model (CRISIL), minimum BOB6 obligor rating grade for
all exposures of Rs. 25 lacs and above, other than MSME exposures. For MSME
exposures, this rating model is applicable for accounts having exposure of above Rs. 2
crore.
As per New Scoring Card Type model for MSME accounts of Rs.25 lac and above up to
Rs.2 crore subject to minimum MSMEBOB 6 rating (Circular No. BCC:BR:101:194 dated
13.07.2009)
f) Take-over accounts (retails) are to be rated as per the applicable scoring model
subject to minimum grade as per the scoring model.
g) There should not have been any reschedulement / restructuring in the account during
last two years.
h) All other existing norms, guidelines as applicable to borrowal accounts are to be
scrupulously followed.
Financial(other than Retail & SME Regulatory & Expended)
a. Current Ratio : Min. 1.33.
b. TOL/ TNW : Max. 4.5:1
c. Debt Equity Ratio (TTL/TNW) : Max: 3:1
d. Debt Service Coverage Ratio : Min 1.75 in case of Term Loan
(Average DSCR to be calculated for entire repayment period).

Authority for Take-over
1. Proposal for takeover under the powers of Chief Manager and above: -
Proposals under the powers of Chief Manager and above no prior clearance from next
higher authority is required for takeover.
Delegated authorities under banks discretionary lending powers may consider takeover
cases within their powers.
111


2. Proposal for takeover under the powers of below Chief Manager: -
Prior approval of next higher authority i.e. Regional Manager is required for takeover.
After obtaining prior clearance as above, delegated authorities may consider the
proposals as per their discretionary lending powers.
In case of take-over of retail loan, approval from Regional Manager/Zonal Manager
is not required.

Take-over of Retail Loan Accounts
Take over accounts are to be rated as per the applicable scoring model subject to
securing minimum investment grade for the specific produce.
I. Accounts with existing lenders should be under the category of Standard Assets.
There should not have been any reschedulement/restructuring in the account
during the last two years.
II. In case of traders loan, accounts should be profit-making and with minimum of
Current Ratio 1.17 and maximum Debt Equity Ratio of 6.1
III. All existing norms, guidelines as applicable to borrowal accounts are to be
scrupulously followed

Further, it has been decided to introduce the following additional measures in non-financial
aspects of takeover norm:

I. Concession in RoI / charges should be extended to Taken over Accounts, only in
extremely deserving cases with specific reasons recorded in writing by the Competent
Sanctioning Authority.
II. No credit facility should be taken over by a Bank from other Bank where any of its
Executive Director or Chairman & Managing Director has worked earlier.

Validity of sanction for Credit facilities:
1. Branches to ensure that credit facility is disbursed within the stipulated time frame
fixed for the same. The facility should not be allowed without referring to the
sanctioning authority giving full reasons/justifications and confirming that there is no
adverse changes have been taken place in the means of the party, financials and line of
the business during the intervening period.
2. Guidelines for validity of the sanction:
i. Priority sector advances maximum six months
ii. All other advances- maximum four months

Release of existing security/ Guarantee in advances account:
1. Wherever a request is made by a borrower for release of a security including
personal guarantee whereby dilution of security is taking place, the sanctioning
authority should refer such requests to the next higher authority for prior
112

approval for release of security/guarantee with proper justification, even though
the advance falls under the powers of the concerned sanctioning authority.
2. The immediate higher authority to whom a request for release of existing
security/guarantee is referred may, at his discretion, accede to the request
keeping proper record of such authorization.
3. The sanctioning authority may authorize release of mortgage of an existing
property against creation of mortgage of another property if the market value of
the new property is at least equal to the current market value of the property
proposed to be released. In such cases, the actual discharge of the mortgage
should be affected only after the mortgage of the new property created. This
guidelines will be applicable to GM and below.

Levy of Commitment Charges on Unutilised W.C. facility:

It is observed that despite sanction of adequate working capital facility, borrowers are
raising fund at lower rate from the market through various money market instruments.
This is being done by earmarking the working capital facility. The result is poor utilisation
of working capital sanctioned limit.

To monitor borrowers to utilize sanctioned working capital facilities and for effective
deployment of resources, the bank has decided to levy commitment charges in case of non-
utilisation / under utilization of working capital limits for advances accounts with fund based
working capital limits of Rs. 10 Crore (Ten Crore) and above. Commitment charges are to be
levied on quarterly basis at following rates:-
a) Where average utilization is upto 60% of the limit or as indicated in QIS statement, no
commitment charges to be recovered separately.
b) Where the average utilization is below 60% of the limit or as indicated in QIS statement,
commitment charges to be recovered @ 0.50% p.a. (Plus Service tax)
c) In case of Line of Credit, the average utilization of non-fund facility can also be
counted as utilization for arriving the overall under utilization.

Changes in company law:

Ministry of Corporate Affairs, Govt. of India has issued few notifications related to changes
in the Companies Act, 2013. There are changes in existing provisions of Law inter-alia
relating to borrowing powers by the Companies, which are as under:
- Term Undertaking and Substantially whole of the undertaking have been defined
under the New Act. Undertaking shall mean an undertaking in which the
investment of the Company exceeds 20% of its net worth as per the audited
balance sheet of the preceding financial year or an undertaking which generates
20% of the total income of the company during the previous financial year.
Substantially whole of the Undertaking in any financial year shall mean 20% or
113

more of the value of the undertaking as per the audited balance sheet of the
preceding financial year.
- In case the total borrowings of any company, whether private or public, exceeds
the aggregate of its paid up share capital and free reserves, apart from temporary
loans , for sale, lease, disposal of its undertaking, including mortgage, Company
shall be required to pass Special Resolution u/s 180 of 2013 Act.
- Copies of the special Resolution passed by the company, certified true by the
Director / Company Secretary, should be obtained and kept on records
besides certificate from Statutory Auditor of the company that total borrowings
by the company, including present borrowings, are within the limit specified in the
said special Resolution.

Purchase/Discount/Negotiation of Bills under other bank Letter of Credit:
As per the revised guidelines of the Reserve Bank of India, of their borrower
constituents who have been sanctioned regular credit facility by the banks.
Bank shall not extend funded or non funded facilities to non constituent borrowers.
Bank shall open Letters of Credit and purchase/discount/negotiate bills under LCs only
in respect of genuine commercial and trade transactions of borrower constituents who
enjoy regular credit facilities.
In cases where negotiation of bills drawn under LC is restricted to a particular bank,
and the beneficiary of the LC is not a constituent of that bank, the bank concerned may
negotiate such an LC, subject to the condition that the proceeds will be remitted to the
regular banker of the beneficiary. However, the prohibition regarding negotiation of
unrestricted LCs of non-constituents will continue to be in force.
The bank may negotiate bills drawn under LCs, on with recourse or without recourse
basis, as per their discretion and based on their perception about the credit worthiness
of the LC issuing bank. However, the restriction on purchase/ discount of other bills
(the bills drawn otherwise than under LC) on 'without recourse' basis will continue to be
in force.
Bills purchased/discounted/negotiated under LC (where the payment to the beneficiary
is not made under reserve) will be treated as an exposure on the LC issuing bank and
not on the borrower for the capital adequacy purpose. All clean negotiations as
indicated above will be assigned the risk weight as applicable to inter bank exposure,
for capital adequacy purposes. In Documentary Bill purchased/discounted/negotiated
under Prime Bank LC, which has been accepted for payment by the LC issuing
Bank/Drawee Bank and confirmation of due date of the bill has been received, would not
be reckoned as exposure on borrower. Such exposure will be treated as exposure on LC
issuing Bank/Drawee Bank and branches have to ensure that such exposure is noted in
the exposure limit on such bank fixed as per POLICY ON EXPOSURE LIMITS ON
COUNTERPARTY BANKS.
Bank shall rediscount only usance bills of other banks. However bank shall not re-
discount bills discounted by NBFCs except those arising from sale of light commercial
vehicles and two/three wheelers.
114

The Bank shall scrupulously follow the other stipulations of RBI regarding safe
custody of LC forms, discounting of bills of Services Sector (to be treated as
unsecured advance) etc.

Loans and Advances against Share debentures etc.
1. No loan to be granted against partly paid shares.
2. No loan to be granted to partnership/proprietorship against primary security of
shares and debentures.
3. Loans against security of shares, convertible bonds, convertible debentures and units
of equity oriented mutual funds to individuals would not exceed the limit of Rs.10 lakh
per individual from banking system if the securities are held in physical form and Rs.
20 lakh per individual from banking system if the securities are held in demat form.
4. A uniform margin of 50% shall generally be maintained on advances against shares. A
minimum cash margin of 25% within the overall 50% ceiling shall be maintained in
respect of guarantees issued by the bank for capital market operations.
5. As per section 19(2) of the Banking Regulation Act 1949, no banking company shall
hold share in any company whether as pledgee or mortgagee or absolute owner, of an
amount exceeding 30% of the paid up share capital of that company or 30% of its own
paid up share capital and reserves, whichever is less.
6. This limit is to be observed while granting any advances against shares, underwriting
an issue of shares or acquiring any shares for investment or even in lieu of debt of any
company.
7. Bank and their subsidy should not undertake financing of Badla transactions
8. List of approved shares & debentures will be advised periodically by CO For any
addition following criteria will be adopted
(a) quoted in major stock exchange
(b) company must have declared dividend for last 3 years
(c) market price should not have fallen below face value any time during last 3 yrs

9. The aggregate exposure of a bank to the capital markets in all forms (both fund based and
nonfund based) would not exceed 40 per cent of its Net Worth as on March 31 of the previous
year.

Safety Net Scheme:
1. Often merchant banker assume large exposures by way of commitments to buy the
relative securities from the original investors at any time during a stipulated period at
a price determined at the time of issue irrespective of the market price.
2. In some cases such schemes were offered without any request from the company
whose issues are supported under the schemes.
3. RBI has advised to banks/subsidiaries to refrain from such Safety Net facilities.



115


REJECTION OF LOAN APPLICATIONS:
1. Credit proposals falling beyond the powers of BM shall not be rejected at the branch
level.
2. The authority empowered to sanction the credit proposal may reject such application.
3. A monthly statement for rejection of applications by the BM to be submitted to the
Regional office.

PSR (Post Sanction Reporting):
Bank follows a Post Sanction Reporting System replacing the erstwhile Post Sanction Scrutiny.
The features are:
- Covers all sanctions and credit decisions viz., Fresh / Increase / Renewal / Rejection
/ Adhoc / Excess / Modifications / Waivers / restructuring / rescheduling etc.,
excluding sanction of staff advances, LABOD (i.e. post sanction reporting of LABOD
and staff loans is not required).
- Broad parameters relating to sanction are only examined by the PSR authority
whereas the sanctioning authority shall take care of all procedural details on credit
appraisal, adequacy of security, documentation etc.,
- Observations of PSR authority are to be attended immediately, which shall also
serve as guide to the sanctioning authority for future.
- Disbursement of credit facility/ies is not to be withheld merely for want of
observations of the competent authority on PSR.

A. PSR reporting is required to be submitted on monthly basis to PSR Authority

Branches in Area Sanction Threshold
(FB+NFB) Other than Retail,
Excluding LABOD &
Staff Loan
Retail
Metro & Urban Rs.25 Lakhs Rs. 5 Lakhs
Semi Urban & Rural Rs.10 Lakhs Rs.5 Lakhs

B. Where Copies of Credit Proposals are to be submitted PSR authority within
3 days of sanction along with Appraisal Note, latest financials with
necessary comments by the sanctioning authority, latest credit rating
sheet, gist of major adverse features and noncompliance of stipulated
terms and conditions and the sanctioning authoritys comments thereon.

Branches in Area Sanction Threshold
(FB+NFB) Other than Retail,
Excluding LABOD &
Staff Loan
Retail
Metro & Urban Above Rs.25 Lakhs Above Rs. 5 Lakhs
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Semi Urban & Rural Above Rs.10 Lakhs Above Rs.5 Lakhs

The PSR authority is required to clear the proposal from PSR angle within a period of 30-
days from the date of receipt of proposal. If the PSR authority has not made any observation
within the said period, it will be presumed that the PSR authority has no observation to make
and the proposal is cleared from PSR angle.

COMMERCIAL PAPERS
1. Commercial paper is introduced in India in the year 1990 by RBI as per the
recommendations Voghul Committee to enable high rated corporate customers to
diversify their source of short term finance.
2. Commercial paper is a short term money market instrument issued as a usance
unsecured promissory note which is freely negotiable through endorsement and
delivery. It is privately placed at a discounted rate to face value as decided by the
issuing company.
3. Any company whose
a) tangible net worth is not less than Rs. 4 crores as per latest audited balance sheet,
b) has been sanctioned funded working capital finance by the bank.
c) account / s has been classified as standard. In case of consortium lending, the
assets classification with all the member banks should be standard.
d) minimum credit rating as per CRISIL - P2, ICRA - A-2, or equivalent rating by other
agency.
4. Minimum maturity period 07 days and maximum up to one year.
5. Minimum amount of the CP would be Rs. 25 lacs and in multiple of Rs. 5 lacs maximum up
to 100% of Funded working capital finance including bill finance.
6. The total amount should be raised within a period of two weeks from the date of issue
open.
7. Can be issued to any individuals, corporate bodies and also to NRIs on non repatriable
and non transferable basis.
8. Banks and FIs have the flexibility to provide for rollover of the working capital limit at
their individual judgment and discretion.
9. Every issue of CP is to be reported to IECD of RBI within 3 days from the closure of
the issue.
10. After implementation of Base rate system, a many big corporates including banks / FIs
are raising shrt-term funds by issuing CPs, hence, interest rate under CP has increased
considerably.

Yield on advances
1. Yield on advances means the amount of total income received by the bank/branch out of
the total operations of the borrower with the branch as compared to fund based limit
utilized.
2. Yield = (Interest Recd. + Exchange, Commissions and other income + Notional income of
deposit) / Avg. Fund Based limit utilised
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3. Notional income means interest at notional rate of interest as advised by the bank on all
the deposits of the borrower. The present guidelines is that interest @ 8% on 50% of
the average deposits maintained by the borrower during the year is to be considered.
4. It has further decided that whenever borrower enjoys FCNR Loans the same should be
ignored for the purpose of computation of yield. The calculation of yield should be
based only on deployment of Rupee funds and interest received thereon. However,
amount of interest received on FCNR loans by the branches must be mentioned as foot
note in the yield sheet.

Guidelines for TOD
TODs to be granted only on rare occasions to meet temporary and unforeseen
contingencies
No TOD to be allowed in accounts other than current accounts of the Customer
No TOD to be allowed during first 6 months of operation of the account. However
Bank may also consider sanction of TOD after 3 months of operation, if the
account is Premium / Premium Privilege current accounts
TODs not to be granted in accounts where cheques have been returned for
financial reasons, where cheques deposited by customers are returned frequently,
minimum balance is not maintained, turnover is not satisfactory and/or TODs
granted in the past, were not adjusted in time
Branches headed by officer in JMG Scale-I and MMG Scale-II, are not allowed
to grant TODs but Rural Branches headed by officer in MMG Scale-III and above
are authorised to allow TOD.
TOD can be allowed upto 25% average monthly turnover in the account.
TOD may be given twice a month subject to maximum period of 15 days
altogether. TOD may be sanctioned 10 times within a financial year subject to
maximum 15 days in a month(twice in a month)
TOD should not be granted in anticipation of sanction of regular limits and should
not be converted into demand loans or any other credit facilities.
Granting of TOD in one account for the purpose of adjusting an advance
outstanding in another related account is prohibited.
TODs should not be granted to the parties enjoying separate cash credit facility
also from the branch.

DAUE (Drawing Against Uncleared Effects)
Drawing against uncleared effects:-
1. No DAUE is to be allowed/sanctioned in newly opened accounts for first -6- months.
2. Not more than 25 % of the amount of instruments or discretionary lending powers
whichever is lower.
3. The facility should be considered/ recommended depending upon the relationship with
the customers, yield on advances, average credit balance in the account etc.
4. Operations in the account must be satisfactory no instances of return of inward or
outward cheque.
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Other Guidelines:
1. No adhoc to be considered in the newly opened account for a period of -12- months by
the branch head
2. Request for adhoc/ excess may be considered only in reviewed accounts with credit
rating not less than BBB, B+, BOB6 . In all other cases reference should be made to
R.O.
3. Delegated authority may grant secured non fund based limit in excess of lending powers
for NFB against proportionate reduction in fund based limit.

LINE OF CREDIT
Line of Credit system offers flexibility to clients to switch over between the various
working capital facilities sanctioned with relative ease as per their needs compared to the
prevalent system of restricting the usage of funds within the maximum limits available
within the facility only. This system will essentially facilitate medium/large business units
in efficient management of their borrowing requirements within the sanctioned Line of
Credit facility.


1. Bank of Baroda is a first runner in introduction of this novel product called Line of
Credit. Under this LOC borrower has been sanctioned an outer limit within which he
has full flexibility to switch over from fund based to non fund based limit and vice a
versa for procurement of current assets.
2. This is to be implemented for all borrowers where the banks exposure by way of
working capital finance ( Funded and non Funded) is of Rs. 1 crore and above. The
conduct of the account must be satisfactory and there is no major adverse features.
3. Under LOC, instead of separate limit for CC stock, Book Debt and DA letter of credit, a
combined limit for CC (Stock) & ( Book Debt) - Cum- DA L/C may be considered with a
sub limit for DA L/C .
4. Margin will be decided separately on case to case basis / facility to facility basis.
5. While calculating the drawing power for Cash Credit facility, deduct the value of
accepted bills under DA L/C from the stock value. On retirement of Advance bill by
debiting CC account the drawing power reinstated i.e. overall DP will cover the
outstanding under CC facilities and DA L/C.
6. Following facilities are not covered by LOC:
(a) DP L/C for procurement of raw materials.
(b) DP & DA L/C for procurement of capital goods
(c) Performance guarantee and guarantee issued in connection with fulfillment of export
obligations.
(d) Financial Guarantees issued in lieu of security deposit and earnest money deposit.
The Line of Credit as a product is innovative and the branches should make every effort
to canvass and make it the Unique Selling Proposition (USP) of the bank.

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PARKING OF LIMITS / SUB-LIMITS AT THE BRANCHES
1. Reveiw of the account to be done by base branch.
2. Drawing power will be advised by the base branch to transferee branch on regular basis.
3. Advising position to the base branch by the transferee branch on last friday of the
month.
4. Advising base branch immediately about irregularities in the conduct of the account
with transferee branch. Turnover in the account also to the base branch.
5. Responsibility is cast on the transferee branch to advice the details of the account on
monthly basis to base branch, it will be the responsibility of the transferee branch to
have up dated information also.

LOAN SYNDICATION
1. In the year 1993 the Shetty Committee had recommended the syndication of credit as
an alternative to consortium lending.
2. Syndication of credit is an agreement between two or more bankers/lending institutes
to provide credit facility/ies to a single borrower using one common loan documents.
3. The borrower who intend to raise long term resources through this method give a
mandate to lead manager to arrange for the credit on his behalf. The memorandum
spells out the terms of the proposed credit.
4. On the basis of the memorandum, the lead manager will offer an opportunity to lenders
to lend to prospective borrower as per the terms of memorandum.
5. If the proposal is acceptable to the banks/ lending institute, they will convey their
acceptance. On receipt of acceptance/ offer from the lenders, the lead manager will
negotiate the terms of syndication such as, cost burden, sharing pattern of debt,
recovery, other income and other business etc.
6. There after, loan agreement is signed by all the participating lenders.

SECURITISATION OF LOAN
1. Securitisation is a process by which the future income or receivables (loans) of an
organization are converted into debt instrument say bond and then sold.
2. Under securitisation lending institutes transfer the loans granted by them to investor
s/ purchaser of the loans through an intermediary by packaging them in the form of
securities which are usually termed as pass through certificate.
3. The SPV (Special Purpose Vehicle) raises the fund from the investor and pass on to the
originator. On due date the payment by SPV to the investors are funded by the cash
flow from the underlying assets during the life of the transaction. The assets
themselves will be the security for investments but will be managed by the originator.
4.The securitisation may be backed by movable assets or by mortgages backed assets. The
PTC will be backed by assets or backed by mortgage.
5.The PTC will have slight lower rate of interest than the loan granted and that will be the
profit of PTC issuer.
6. Securitisation can be against movable assets which is known as backed by assets and
against immovable assets known as backed by mortgage
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7. By securitisation lender can liquidate its assets before its maturity.
8. The PTC will be traded in security market . e.g. NHB will purchase housing loan of LIC
Housing Finance. Can bank Housing finance Ltd. , purchases housing loan granted by
canara bank.
9. Securitisation helps to financing bank/ lenders in following ways
a. Transfer its credit risk or other risk associated with the assets.
b. Create liquidity and room for fresh financing.
10 For example: The lender who has financed for long term projects and want to improve
immediate cash flow position and get liquid funds against the above security. The
lender will sell the above pool of loans to an institute called the SPV. The SPV now
converts the above pool of assets into small bundles that are called PTC (pass through
certificate). These PTCs are collaterised / backed by the above underlying security.

FACTORING
1. In India the concept of factoring is introduced during 1991 as per the recommendation
of Shri Kalyansundram committee..
2. Factoring is a continuous arrangement in which receivables created out of sale of goods
or services are sold to an agency known as factor. This arrangement is called
factoring.
3. The factoring is an arrangement for management of receivable, maintaining the sales or
receivables ledgers, submitting sales accounts , collection of debt etc. This will be with
recourse or without recourse, but in India without recourse is not permitted.
4. Under this arrangement , as soon as the invoice is submitted to the factor, the factor
will pay say 85% of invoice to the seller. In turn factor will collects dues on due date
from the customer, purchaser. The balance payment will be paid to the seller on
recovering from the purchaser.
5. The factor will recover finance charges for funds prepaid to the seller against the
invoice. They are also recovering service charges for management of receivable also.
6. The advantages of factoring are that practically sales become cash sales and liquidity of
the seller will be maintained resulting into efficient management of working capital
finance.
7. There are various types of factoring, Recourse factoring, Full service non recourse,
maturity factoring
8. Advantages: Manufacturer or seller will relieved from the responsibility of credit
collection, recovery, administration etc and can focused on selling and marketing
9. The liquidity position will be improved and will give better current ratio

FORFEITING
1. Forfeiting in India is approved by RBI in the year 1992 and it is to be provided by an
International forfeiting agency with EXIM bank or any other A.D.
2. When an exporter transfers his right to receive payment in favour of a forfeiture, the
transaction is called forfeiting. Thus, forfeiting is a method of discounting of
international trade receivables on a without recourse basis.
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3. Three elements of cost are involved in forfeiting ; discount rate or rate of interest
commitment fee and option fee.
4. The credit is extended by exporter from 180 days to -7- years under forfeiting.
5. It is not only tool for financing but also an important risk management tools.
6. It offers an opportunity to do business where ECGC does not offer a cover.

VENTURE CAPITAL FUND
1. Sometimes an entrepreneur who is having a new idea , relatively untried technology,
desires to implement the project but they are lacking in business experience and
finance to shape their ideas. Moreover due to inherent risk, common investor will not
come forward to invest in the project.
2. At that time venture capital fund provides finance to high-risk, high technology
ventures which are usually promoted by qualified entrepreneurs. Thus, venture capital
is a source of funds used to finance new proposals / ideas involving new technology or
products which are risky but with a potential of high returns. Venture capital is a
source of funds used to finance new proposals/ideas involving new technology or
products which are risky but may provide high returns
3. Financial assistance will be by way of (a) Participating in equity capital with or without
buy back by the company, (b) Long term loans, (c) Conditional loan with option to
convert a part/full loan to equity and (d) Managerial and marketing support through
participative management.
4. It can be provided as start-up capital but at a later stage finance is provided to help
the company to raise public offer also.
5. In India, IFCI, IDBI, SBI capital venture Fund, etc. are the major sponsor for venture
capital Fund or Company.
6. As per Govt. Guidelines, the minimum size of VCC or VCF would be Rs. 10 crores.
7. They may raise the fund also from public provided the promoters contribution should
not be less than 40% of the capital.
8. Total assistance to a unit should not exceed Rs. 10 crores.
9. The entrepreneurs should be relatively new , professionally, technically qualified having
a new untried technology , lacking in adequate resources to finance the project are to
be considered.
10. Investment made by bank in venture capital will be classified as Priority sector lending.

Sensitivity Analysis:
1. While considering project finance a credit officer should carry out future risk inherent
due to some adverse circumstances which may affect the profitability or cash inflow
and out flow during the life of the project. Thus, sensitivity analysis means an
examination of the effect on the project profitability estimates due to variations in
the forecast of cash flow predictions / projections.
2. Mainly four factors; Sales, cost of raw material, cost of Power and Fuel and interest are
to be considered. As per banks guidelines 10% negative variance in sales and
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simultaneously, 5% positive variance on all cost aspects are to be considered to know
the sensitivity of the project.
3. After doing the sensitivity analysis, revised DSCR and cash flow DSCR are to be worked
out to derive conclusion about the sensitivity analysis.
4. The concept of margin on safety is also a part of sensitivity analysis where in variance in
sales as compared to BEP sale is studied.
5. Sensitivity analysis can be taken-up for comparison of different projects (assuming
mutually exclusive and looking apparently worthwhile in terms of return in the basic
workings)

Infrastructure Finance:
1. Any credit facility provided to a borrower company engaged in ; developing or operating
and maintaining or developing, operating and maintaining any infrastructure facility is
falling under the definition of infrastructure lending.
2. As per RBI, definition of infrastructure would include sectors, such as, power, roads,
highways, bridges, ports, airports, rail system, water supply, irrigation, sanitation and
sewerage system, telecommunication, housing, industrial park or any other public
facility of a similar nature as may be notified by CBDT in the Gazette from time to
time. The relaxation in "group exposure" norm would be available only in respect of four
sectors, viz., roads, power, telecommunication and ports.
3. There are two types of financing options: (a)Private sponsor participation and (b)
Structured financing operations
4. The participation of private sponsors in infrastructure development at progressively
diminishing levels is depicted as under:
BOO = Build-Own and Operate,
BOOT = Build Own Operates and Transfer,
BOT = Build - Operate and Transfer,
BOLT = Build - Operate Lease and Transfer,
DBO = Develop - Build- Operate

Structured Financing Option:
This is a concept relating to Infrastructure lending. The structuring of debt and equity is
a crucial aspect in funding of any infrastructure project. Generally, the project sponsor
may not like other share holders to have recourse to the assets of the project. Besides
this the companies setting up infrastructure projects have only the prospect of a future
earnings stream to collateralize their borrowings.A key issues while structuring
appropriate financing instruments do not yield the expected returns. The structured
financing options assume two forms:

Non recourse financing: Under this option the debt instrument is secured by the cash-
flows generated by the project or the collateral value of the specified assets financed by
the instrument under consideration. In case of default the debt holders recourse would
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be limited to the underlying assets only and not extend to general reserves and assets of
the company.
Limited recourse financing: Under this variant, in addition to project assets, the parent
company attaches other assets/ revenue stream for servicing the instrument to improve
its credit worthiness. Securitisation is one of the method.

Take-out financing:
1. Take-out financing is a method of providing finance for longer duration projects say 15
years or more by banks, particularly in infrastructure lending.
2. Take out financing structure is designed to avoid maturity mismatch of assets and
liability due to the infrastructure financing/ longer duration projects.
3. Under the arrangement, banks financing to the infrastructure project will have an
arrangement with IDFC (Infrastructure Finance development Corporation) or any other
financial institution for transferring to the latter the out standing in their books on pre
determined fixed period/pricing.
4. It allows bankers to lend for infrastructure with the freedom to decide the lending
period and risk profile. When the period end the bank can exit and IDFC will take out
the obligation and charge a fee as per the commitment at the point of sanction, to take
out the entire outstanding loan or part of the loan to the bank after an agreed period
say five years. The credit risk on the project will be appraised by the bank concerned
and not by the IDFC.
5. IDFC and SBI have devised different take out financing structures to suit the
requirements of various banks, addressing issues such as liquidity assets-liability
mismatches, limited availability of project appraisal skills etc. They have also developed
a Model Agreement that can be considered for use as a document for the purpose.


Trust and Retention Agreement (TRA):
1. TRA mechanism is a common feature of infrastructure financing. It seeks to protect
the project lenders against the credit risk of default by insulating the cash flows of
the project company.
2. This is done through shifting the control over future cash flows from the hands of the
borrowers to an independent agent called TRA agent duly mandated by the lenders. This
is then allocated in a predetermined manner to various requirements including debt
service obligation. After meeting all the requirement residual cash flow will be available
to the project company. Thus, the lender will have a security of cash flow in addition to
the assets of the company.
3. Under this arrangement the lenders, the borrower and the TRA agent enter into a tri-
partite agreement directed to deposit all cash inflow in a single designated account with
TRA agent.
4. The lenders in consultation with the borrowers draw up a detailed mandate for the TRA
agent as to periodical transfer and utilization of funds available with TRA agent. For
example it spell out appropriation as under:
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(a) All operation and maintenance expenses of the project,
(b) Monthly dues/accruals of net principal and interest to lenders,
(c) A debt service reserve equal to say, six months dues which could also be backed by a
letter of credit to be arranged by the sponsors of the project company,
(d) A cash reserve equal to four months operating expenses,
5. After meeting all above either through cash flow or through L/C the residual funds if
any, would be available to the company by the TRA. TRA is thus a version of No Lien
account on which the lending bank does not exercise right of Lien.

FIXED, FLOATING CHARGE & PARI-PASU CHARGE
1. A Fixed charge is one which is created on some specific property of the company like
land and building etc. against which the finance is extended. The owner can not deal
with this property without the consent of the lending institution
2. Floating charge: A charge on all the property of the company which is continuously
changing. However, despite charge thereon, company can sell or otherwise dispose off
the property. The floating charge can be converted into fixed charge and all the assets
existing as on the date of crystallisation will be covered by this charge.
3. Pari-pasu Charge: When a company has availed credit facilities from more than one
bank on the same security / ies with a condition that the charge on the security will be
on equal footing ( right basis) in proportion to the amount they have advanced,such
charge is called pari-pasu charge. In case of consortium finance or multiple banking
facilities, a charge on the same security is given to more than one lender this is called
the pari-pasu charge.

SECOND CHARGE
1. Second charge means the assets on which we want to create our charge are already
charged to other financing institutions. The financing institution will have first charge on
the same assets and in case of default after making payment of dues of the FI, the
residual amount will be made available to the bank who is holding the charge.
2. Generally second charge is created on fixed assets of the company such as land building,
plant and machinery.
3. Generally bank do not prefer to have second charge.
4. The procedure for creation of second charge is under:
a. No Objection Certificate from the institute having first charge is to be obtained.
b. Our second charge in case of company is to be registered with the ROC.
c. However, it is to be noted that when we are holding the first charge on the assets
authority to create second charge by other lending institution does not fall under the
power of the branch.

INTERNAL RATE OF RETURN:
It is a discounted rate where projected cost and projected benefits are equal to zero.
Uses of IRR :-
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(a) A project is acceptable when the IRR > the expected rate of return or market rate
of return
(b) A project is acceptable when the IRR > the cost of capital.
(c) Higher the IRR, better the project.

INTEREST COVERAGE RATIO
Interest Coverage Ratio indicates the number of times a firm's income in an accounting
period can pay off (cover) the interest on term debt during the same period. Since it
measures the ability to pay interest-due from the earnings of the firm, this ratio is used
in computing the firm's borrowing capacity and in assessing the risk of servicing of debt.
Formula: Earnings before Interest and Tax (EBIT) / Interest expense.

The higher the Interest Coverage Ratio, more secure the Bank is in respect of the
interest servicing ability of the borrower. An Interest Coverage Ratio of 5 may be
considered satisfactory. The sanctioning authority may consider lower interest coverage
ratio depending upon the nature of project / Industry after recording the reasons for
the same.

ADVANCE BILL AND BILLS PAST DUE ACCOUNTS
Advance Bill account:
When documents received under Letter of Credit issued by our branch is presented for
payment/ reimbursement by the negotiating bank, L/C issuing branch is suppose to make
payment/ reimbursement if terms and conditions are strictly complied with.
The payment will always be made through debit of G/L Advance Bill account even though
balance in the customer account permits debit. Subsequently this entry is to be
reversed.
In case of Import Bill under L/C, the party is suppose to retire the bill within 10 days
otherwise the bill will be treated as overdue and fetch higher rate of interest of 2%
over the applicable rate as above.

Bill Past Due Account:
In case of Guarantee issued by our branch, beneficiary has a right to invoke the
guarantee as and when default is committed. The issuing bank/ branch will make
immediate payment to the beneficiary by debiting G/L Bill past due account.
Even in case of Bills purchased remains overdue for a longer period, the entry is to be
reversed to the debit of this bills past due account with permission of RO.
The amount then to be recovered from customer as mentioned in case of A.B.

FUND FLOW STATEMENT:
1. Fund Flow statement depicts the various sources of the fund and their uses. It is a
statement of inflow and outflow of the fund during a specific period.
2. Inflow and out flow of the fund can be noticed by increase or decrease in assets and
liabilities. If assets are increasing it is an application and if it is decreasing it is source
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of fund. Likewise, If liabilities are decreasing it is an application and if it is increasing it
is source of fund.
3. To carry out fund flow analysis one should have an idea about the long term sources and
short term sources as well as uses of the fund.
Liabilities are the sources of the fund and assets are the uses of the fund.
4. From financing bankers point of view it is always advisable that
LTS - LTU = +Ve
STS - STU = - Ve
Liab - Assets = 0
If above equation/result is reversed which represent diversion of short term fund to long
term use.

CASH FLOW STATEMENT
1. Cash Flow is a statement which depicts changes in cash position from one period to
another period as against the changes in total funds. This indicates how much cash is
generated at the end of financial year. This will give an idea about the
increase/decrease in liquid position of the borrower.
2. The cash flow is prepared as per AS-3 of ICAI. For listed Compnies and other
borrowers where the annual turnover is exceeding Rs. 50crore it is a statutory
requirement.
3. The sources of cash are PAT, Depreciation, sale of assets, gains form sale of fixed
assets, increase in capital or other liabilities, decrease in assets. The uses of cash are
loss, decrease in liabilities, dividend payment personal drawing etc.
4. Cash flow statement helps the management for short term liquidity planning.

DEBT SERVICE COVERAGE RATIO:
1. While granting loans banker to satisfy about the repaying capacity of the applicant
2. The DSCR indicates repayment capacity and adequacy of repayment period.
3. The acceptable DSCR is 1.75 But it is not necessary that DSCR of each year should be
1.5 to 2 but to work out average DSCR for the entire term loan repayment period, which
should be within the stipulated ceiling.
4. DSCR is helpful to work out the repayment period and initial moratorium. Larger DSCR
indicates units ability to pay more than its commitments. Repayment period may be
curtailed or vise a versa

BEP = Break Even Point:
1. BEP indicates No Profit and No Loss situation i.e. Sales of the Unit is equal to Cost of
Unit sold .
2. BEP means, Sales Revenue = Cost of Units Sold .
3. Therefore, Profit = Sales > BEP and Loss = Sales < BEP
4. BEP in Rupees: = (Fixed Cost / Contribution ) X sales. Here, Contribution means sales
value - Variable cost.
5. Cash BEP = {(FC - Depreciation & non cash charges) / Contribution } x sales
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6. BEP decides the level of production in order to achieve desired profit
7. BEP analysis is useful to know the Viability Study of Sick Units.
8. The BEP concept has certain limitations also.
a. It is assumed that Variable Cost and Sales vary proportionately. This may not true all
the time.
b. In long run, fixed cost may not be fixed. It is true in short term.

Margin of Safety:
1. MOS describes the tolerance level of the units. The difference between projected
Sales and BEP Sales in terms of actual sales is MOS. Lower the BEP, higher will be the
MOS. But this should be studied in connection with correctness of estimated profit and
loss figures and BEP.
2. MOS gives and idea about the cushion available in case of deviation in cost of production
and sales estimation.
3. Margin on Safety indicates up to how much variance in Sales will sustain by the Unit.
Where the MOS is low, the possibility of unit coming to loss is high and higher the MOS
greater the safety.
4 The project with low MOS and high break even is not preferable.

FINANCIAL GUARANTEE:
Many times Bank issue guarantee in respect of constituents financial liabilities wherein
purely monitoring obligation of the customers are involved. In lieu of such financial
commitment , Bank issues guarantee which is known as "Financial Guarantee".
Following are the some of financial guarantee.
Guarantee in lieu of Sales tax, custom duty, Excise duty, Earnest money deposit, tender
money deposit, favouring court authorities etc.
Advance Payment or mobilisation of advances. In case of contract work, contractors have
been provided with advance money or raw materials etc. To perform the Contracts this is
called mobilisation advance. In case of default in repayment of advance/ cost of raw
materials due to non performance of the contract, the beneficiary can invoke the
guarantee.
Bid Bond Guarantee, this is in case of export in a global tender, Guarantee issued in lieu
of tender/earnest money deposit to be submitted with the tender/ bid is known as Bid
Bond Guarantee.
Retention Money Guarantee: In case of contracts, there is a clause of retains certain
percentage of contract value for specific period to ensure proper performance of the
work. In lieu of which Bank guarantee is also issued and retention money is released by
the deptt.
However it is to be noted that guarantee for export obligation is not a financial
guarantee.



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PERFORMANCE GUARANTEE:
1. Performance guarantee guarantee the satisfactory performance of the work allotted to
the contract as per agreed terms and conditions.
2. The purpose of performance guarantee is to fix the financial responsibility in the event
of default or failure on the part of the customer to perform the obligation undertaken
by him
3. In such guarantee Bank does not undertake such specific performance. The Bank will be
liable to pay a sum not exceeding the guaranteed amount.
4. While issuing such performance guarantee, branches should ensure technical, managerial
and financial aspects of the borrower / contract. Reasonable cash margin and charge on
collateral securities to be obtained.
5. This type of guarantee is generally asked for in case of (a) Turn Key Project and (b)
Performance of machinery/ equipment supplied. (3) Government Contract works.

DEFERRED PAYMENT GUARANTEE:
1. The guarantee is issued at the request of customers for purchase of capital equipment
on long term credit from the supplier.
2. This guarantee, guaranteed the payment of due installment and interest in deferred
manner over a specific period of time. So guarantee amount should inclusive of principal
and interest thereon.
3. DPG is a non fund based facility. However for the purpose of sanctioning/ processing
etc. the guarantee is to be treated as Fund based only. It is to be issued by the Branch
Manager as per Discretionary Lending Power of fund base facilities
4. This guarantee should be considered in line with guidelines for Term Loan.


SHIPPING GUARANTEE
1. Shipping Guarantee is issued in favour of shipping company/ agent when the goods
arrived at port of destination but shipping documents are yet not received i.e. to take
delivery of goods without delivery of shipping documents such as Bill of Lading.
2. The guarantee is to be issued at 100% cash margin, where the bill is routed through the
Bank.
3. An undertaking from the customer to be obtained that the borrower will honour the
bill irrespective of discrepancy, if any with the terms of L/C.

Real Estate Sector:
Real Estate Sector includes (1) Residential Mortgage (2) Commercial Real Estate and (3)
Investment in Mortgage Backed Securities (MBS) and other securities exposures.
(1)Residential Mortgage means finance against the mortgage of residential property which
is occupied by the borrower or is rented.
129

(2)Commercial real Estate means lending secured by mortgage on real estates ( office
buildings, retail space, multi-purpose commercial premises, multi- family residential
building, multi-tenanted commercial premises, individual or warehouse space, hotels,
land acquisition, development and construction etc.) This also includes Non Fund Based
Exposure also.
(3) Investment in Mortgaged Based securities and other securities exposures in
Residential and commercial real estate sector.
(4)Fund based and non-fund based exposures on National Housing Bank and Housing
Finance Companies (HFCs) which is considered as Indirect Exposure.
Ratio at a glance :
RATIO FORMULA INDICATION
Current Ratio Current Assets /
Current Liabilities
Ability to meet current liabilities.
Higher the ratio better the
liquidity
Shortfall indicates diversion of
short term fund.
1.5 to 2 is desirable
Quick Ratio Quick Assets /
Current Liabilities
OR
C.A.-Inventory
C. Liab.-Bank Borrowing.
Availability of Liquid resources to
meet current liabilities.
1 is desirable
Solvency Ratio Net Tangible assets /
Total Outside Liabilities
Ability to repay debt from own
assets on long term basis.
Higher the ratio better the
solvency.
Debt-Equity Ratio DE(TOL/TNW)= Total Outside
Liab. /
Tangible Net worth
DE(TTL/TNW) = Term Liab /
Tangible. N. W.
Coverage of outside liabilities to
own fund. Lower the ratio higher
the safety. As per loan policy,
DE(TTL/TNW) 3:1 &
DE(TOL/TNW) 4.5 :1,
Assets
Coverage
Ratio
Net Fixed Assets Extent to which FA covers Term
Liabilities.
More than 1 is desirable.
Term Liability
Debt-Service
Coverage Ratio
PAT + Depri. + Int. on Loan

Instal. of TL + Int. on Loan
Debt Servicing Ability
To work out repayment schedule.
is desirable.
Average 1.75 & min.1.00(For Micro
& Small enterprises), 1.25(Others)
in any year.
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Debtor turnover
Ratio (No of Days)
Average O/S Debtors x 365

Credit Sales
Credit policy of the unit/ firm.
Average Period of the credit
extended.
Creditor T/Over
Ratio (No.of days)
Average O/S Creditors x 365

Credit Purchase
Ability to get goods on credit.
Ability to repay
Assets turnover
ratio.
Net Sales

Net Operating Assets
Efficient use of assets
Net Operating Assets means FA +
CA + Non CA- Investments.
Must have increasing trend.
Gross Profit Margin Gross profit X 100

Net Sales
Margin available after meeting
manufacturing cost. Efficiency of
Production and Pricing.
Net profit Margin Net Profit After tax X 100

Net Sales
Net Profit margin on business.
Overall efficiency of the unit.
Dividend per shares Total distributable profit to
Equity holders

No of equity shares
Total dividend payable to per
shares
Return on
Investment
Profit before Int.& Tax

Net Operating assets
Measure the business
performance.
Inter firm comparison.
Return on
Investment
. Return . x 100

Capital employed
Return means PAT + Interest on
long term debt + Prov. For tax
Int. div on non trade investment
+ non trading adjustment
Price earning Ratio Market Price of the share

Earning Per share
Price earning on present market
value.

PAT = Profit After Tax, FA = Fixed Assets, BEP = Break Even Points, MOS = Margin
of Safety.

MCA21
Project of Ministry of Company Affairs for e-governance
- Online Filing of Charges by companies through e-Forms. The Ministry of Company
Affairs, Government of India is implementing a major e-Governance initiative known
as MCA21. This project envisages introduction of secure electronic filing (e-Filing)
for all services provided by the Registrar of Companies including incorporation of a
company, annual filing, registration of charges and other event-based filings.

131

New Credit Product Corporate Loan Facility
Key Features:
Nature of facility Term Loan
Eligibility Existing Borrowers with 3 years satisfactory track record with
our Bank.
Existing Borrowers with Internal Credit rating of BOB -5
& above and External Credit rating of BBB and above. (BB &
below rated borrows are not eligible) External Credit Rating
is mandatory.
New Borrowers with existing (and satisfactory) group
relationship are also eligible provided the internal credit rating
is BOB-4 & above and external credit rating of A and
above.
The account should not have been restructured in the last -3- years
period.
Quantum of Finance Minimum :Rs 10 crore
Note: In principle approval to be obtained from BCC for extending
any corporate loan.
Repayment Repayment period not to exceed 10 years or the useful life of the
fixed assets under cover, whichever is earlier.
The repayment schedule may be flexible (quarterly/half yearly),
Uneven or bullet repayments also be permitted, if the cash
accruals so justify.

New Product Baroda Channel Financing
Key Features:
Facility Drawee Bill finance for suppliers
Drawee Bill Finance or Overdraft /Cash Credit facility for dealers.
Eligibility To ensure that integrated financial and commercial solution is available to the
entire supply and distribution chain, which would ensure the health of the firm
financed by the bank. The dealers to be covered under the scheme would be
referred by the Sponsoring Corporate. Though due weightage shall be given to the
recommendation of the sponsoring corporate Bank shall take a decision based on
merits of each case. Sponsoring Corporate can be a Manufacturing Unit,
Wholesale dealer of goods or a provider of Services. Existing/new borrowers with
Credit Rating of BOB-6 and above.
Proprietorship, partnership concerns, private limited companies.
1. Facilities to suppliers/dealers would be extended based on the referral of the
Sponsoring Corporate.
2. Sponsoring corporates referral letter to state that their past dealings with the
suppliers/dealers are satisfactory. No prior period of association to be
prescribed.
Limit Min.-Rs.25.00 Lacs
Max.-Rs.10.00 Crores
132

DFB, INTERNATIONAL OPS. & TREASURY

NRI BUSINESS:

NRI customers are very important source for resource mobilization and pitching
other retail asset products as well as wealth management products. Keeping in view
our international presence, we should work efficiently and strategically to enhance
our share in this business segment. Some suggestive steps to facilitate & attract
NRI customers:---
A list of countries where our presence is, should be displayed
o in each & every branch ( Rural may be excluded).
o in ATM cabin for awareness of customer as well as non-customers
o at each international airports / terminals in India
Centralized system - for sending statements to our NRI customers (through CBS)
and also contact us for NRIs on homepage of the Bank (to seek
suggestions/feedback/grievances, if any).
Target to Forex department should be allocated at least in turnover /
commission, as on date, it is more or less working like after sale-service wing of
Credit Deparment (other than IBBs). So, lead should also be generated by Forex
deptt for export finance and then joint effort of credit & Forex officers may be
there for tapping the business.
Second-line should be ensured in Forex deptt.
Refresher training on Elementary Domestic Foreign Business may be given to
employees.
Priority Circle Concept: Bank should establish the priority circle for NRIs within
the branch at potential Centre.
NRI Helpdesk: A dedicated NRI Helpdesk should be established at Bank-level to
catering to the needs of NRIs in availing various facilities of the Bank.
Special Passbook / Cheque book: Names of Countries where we are, should be
printed on back page of special passbook / cheque book provided to customers,
which will remind our customer about our worldwide presence.
NRI Meet: NRI meet should be organized at identified Centres to create
awareness among the NRIs / People.
Sponsoring NRI Conference: NRI Conference organized by State/Central
Government or, any other institutions should be sponsored / co-sponsored by our
Bank to create awareness and to create Image of the Bank before NRIs / People.


FEMA (Foreign Exchange Management Act-1999).

All transactions in foreign exchange are governed by Foreign Exchange Management Act-
1999.
133

The friendly FEMA came into effect from 1
st
June 2000 replacing the stringent and
draconian FERA of 1973 (Revised in 1993). The object of FERA was to conserve the foreign
exchange resources. The objective of enactment of FEMA, on the other hand, is to manage
foreign exchange resources and facilitate external trade and payments for promoting the
orderly development and maintenance of foreign exchange market in India.

Extra-territorial jurisdiction of FERA is retained in FEMA
The difference between FERA and FEMA can be summarized as under: -
Feature FERA FEMA
1. No. of Sections 81 sections 49 sections
2. Features Presumptions of Mens Rea and
Abatements
Presumptions of Mens Rea and
Abatements excluded
3. Definition of
Terms

Capital/Current transactions,
Person,
Service etc. not defined
These transactions/terms are well
defined
4. Concept of
Authorized
Person
Concept authorized to ADs and
AMCs
Concept of authorized person-
widened to include banks,
moneychangers, off shore-banking
units etc.
5. Definition of
Resident
Resident/Non-Resident definition
different from that in Income Tax
Act
This definition is in harmony with
Income Tax Act
6. Nature of
Offence

Violations are criminal offences
punishable with imprisonment
Violations are civil offences
punishable with monetary penalties
7. Provision of
Arrest

Sweeping powers to officer of ED
to arrest a person alleged to have
committed offence under the
contract
Powers to arrest and imprisonment
is prescribed only when one fails to
pay monetary penalty
8. Amt. of
Monetary
Penalty
Could be as much as five times the
amount involved
Decreased to three times the
amount involved in the transaction
9. Right of
Impeded
Person to take
assistance
Impeded person did not have the
right to take legal assistance of
Lawyer or Chartered Accountant
Impeded person has a right to take
legal assistance of Lawyer or
Chartered Accountant
10. Power of
Police Officer
/ ED
Sweeping powers Restricted powers

Definition of Non Resident Indian (NRI)
134

Regulation 2 of FEMA notification No. 13 dated May 3, 2000 Person resident outside
India who is a Citizen of India or is a Person of Indian Origin.
a) A person resident outside India who is a Citizen of India i.e.
i) Indian Residents stay abroad for more than 182 days in the preceding financial year
ii) Indian citizens who proceed abroad for employment or for carrying on any business or
vocation or for any other purpose in circumstances indicating indefinite period of
stay outside India.
iii) Indian citizen working abroad on assignment with Foreign Government/Government
Agencies/International / Multilateral Agencies like United Nations Organisation
(UNO), UNICEF, FAO, World Bank, International Monetary Fund etc.
iv) Officials of the Central and State Government and Public Sector Undertakings
deputed abroad on temporary assignments or posted to their offices (including
diplomatic missions) abroad except those situated in Nepal and Bhutan.

b) Person of Indian Origin means a citizen of any country other than Bangladesh or
Pakistan, if
i) he or she at any time held an Indian passport or
ii) he or either of his parents or any of his grandparents was a citizen of India by virtue
of Constitution of India or the Citizenship Act 1955 or
iii) the person is a spouse of an Indian citizen or a person referred to in i & ii above.
c) Indian Students studying abroad
In terms of FEMA regulations Indian students studying abroad can be treated as
Non Resident Indians having regard to the circumstances stated as under
i) their stay abroad for more than 182 days in the preceding financial year and
ii) their intention to stay outside India for an uncertain period when they go abroad for
their studies
Accordingly, students going abroad for studies are treated as Non- Resident Indians
and are eligible for all the facilities available to NRI under FEMA.

For the purpose of Investment in India in immovable property, a person of Indian origin
means an Individual (other than a citizen of Bangladesh, Pakistan and Sri Lanka)

Persons of following categories will not be considered as NRI:

i) Indians who go abroad for the purpose of
a) tourism
b) pursuing research
c) undertaking business promotion.
d) to receive training
e) obtaining medical treatment.
participating in sports or cultural activities.

ii) Indians or Persons of Indian origin residing in Nepal/Bhutan /Pakistan/Bangladesh.
135


iii) Crew members working for shipping/airlines companies posted in India and those
companies whose registered offices are in India.

NON RESIDENT DEPOSIT (NRE/NRO/FCNR(B)/RLFCD)/FCLR/RFC:
Features of NRE Deposit in INR:
Current / Saving / Term Deposit Accounts
Eligibility : Any NRI (except Bangladesh/Pakistan nationality which requires RBI prior
approval)
Eligible Credits : Proceeds of remittance from Overseas to India/From other NRE,
FCNR (B). Transfer from NRO A/C (USD one million per financial year subject to
deduction of applicable tax)

Permitted Debits: Local Payments, Remittances outside India, Transfer to NRE / FCNR(B)
Accounts of the account holder or any other person eligible to maintain such account,
Investment in Shares / Securities / Commercial Paper of an Indian Company or for purchase of
Immovable Property in India provided such investment / purchase is covered by the regulations
made, or the general / special permission granted, by the RBI, any other transaction if covered
under general or special permission granted by RBI.

Tenure of Time Deposit : Min. 1 Year; Max. 10 Year
Repartiability: Fully Repartiable
Joint Accounts : Allowed with other NRI. Resident close relative may also become joint
account holder with operational instructions Former or Survivor
Loan against Term Deposit : Up to any amount subject to advance value of Term Deposit.
Premature Withdrawal : Allowed. No interest is paid if the deposit is withdrawn before
one year of deposit.
Tax Exemption ; Interest earned is exempted from TDS.
Other Facilities : International Debit Card, Internet Banking (Baroda Connect), Account
operation allowed for local payments through Power of Attorney.


There is a Centralised Processing for opening NRE/NRO Savings Bank Accounts for
applications sponsored by our UAE, Kenya and Uganda territories.



Feature of NRO A/Cs in INR:
Current/Saving/Term Deposit Accounts
Eligibility: Any NR (except Pakistan nationality which requires RBI prior approval)
Banks are now permitted to open NRO account of individual/s of Bangladesh
nationality without the approval of the Reserve Bank subject to the following
conditions: The branch should satisfy by verifying and obtaining a copy of the
documents that the proposed account holder/s is/are residing outside India for an
uncertain period.
136

The Branch concerned should satisfy itself that the individual is holding valid visa and
valid residential permit issued by Foreigner Registration Office (FRO) / Foreigner
Regional Registration Office (FRRO) concerned
Eligible Credits: Some local credits as permiteed under FEMA, Proceeds of remittance
from overseas to India, From other NRE, FCNR(B), and other NRO A/Cs
Permitted Debits: All local payments in Rupees, Remittance outside India of current
income like rent, dividend, pension, interest, etc.
Repatriability : Rapatriable upto USD 1 million per financial year out of balance held in
A/c. subject to payments of tax and production of C.A. certificate.
Loan Against Term Deposit : Permitted without any limit (As per Advance value of the
deposit)
Joint Accounts : Allowed with other NRIs and local residents also.
Premature Withdrawal: Allowed, Rules applicable as per Resident Deposits.
Tax : TDS is levied at present @ 30% + surcharge on interest earned, Concession if any
is subject to double tax avoidance agreement with certain countries.
Other Facilities : International Debit Card, Internet Banking (Baroda Connect), Account
operation allowed for local payments through Power of Attorney.

FCNR (B) Time Deposit:
Term Deposit accounts in USD, GBP, EUR, JPY, CAD, AUD.
Eligibility : Any NRI (except Bangladesh/Pakistan nationality which requires RBI prior
approval)
Eligible Credits : Proceeds of remittance from overseas to India in foreign currency,
transfer from NRE a/c and conversion in foreign currency.
Tenure of Deposit : Min. 1 Year to Max. 5 Years
Repatriability : Fully Repatriable
Joint Accounts : Allowed with other NRI. Resident close relative may also become joint
account holder with operational instruction Former or Survivor
Loan Against Term Deposit: Up to any amount subject to advance value of Term Deposit
Premature Withdrawal : Allowed. No interest is paid if the deposit is withdrawn before
one year of deposit
Tax Exemption ; Interest earned is exempted from TDS
Other facilities : Opening of new A/C/Payment/Transfer is done through centralised
FCNR Back office using Finacle menu option HFCNR

Rupee Linked Foreign Currency Deposit (RLFCD):
A high yielding deposit product with inbuilt feature to protect depositors from exchange risk
A/C is maintained in USD, GBP, EUR, JPY, CAD, AUD
Minimum amount of deposit is USD 10,000 or its equivalent. Maximum amount of deposit
can be upto any amount
Period of deposit is one year fixed
Applicable rate of interest is the same as the rate of interest given under FCNR (B)
deposit for the period of one year in respective currency
137

A forward contract of one year is executed at the time of opening the deposit account
on the principal amount to enhance the yield out of the forward premium in order to
protect the depositors from exchange risk
On maturity, the deposit will be converted in to INR at the contracted rate and will be
credited to NRE or NRO a/c as per depositor instruction
Foreign Currency Linked Rupee Deposits (FCLR) Scheme
This deposit plan offers the dual advantage and benefits of both NRE Rupee Deposits and
FCNR Deposits. Moreover, since the maturity value is determined in foreign currency at the
time of application, the risk of losing money due to a fall in the exchange rate is eliminated.
Features:
Option to keep the deposit receipt free of cost in Bank's safe custody.
Intimation of due dates enables the depositor to plan finance portfolio.
Automatic Renewal on due date for similar period at the prevailing rate of interest in
the absence of fresh instructions to ensure that money grows timely.
Acceptance and execution of Standing Instructions.
Addition and Deletion of name of account holders is permitted.
Secrecy / confidentiality of transactions and accounts are maintained.
Money stays secure with the bank.
Provides for easy liquidity and convertibility.
Provision for nomination.

Baroda Premium NRE SB Account:
A premium saving bank account specially designed for valued NRIs customer.
Average quarterly balance required to be maintained is INR 50,000.00
Free remittance facility if beneficiary maintains account at any of branch in India
No charges for collection of cheque drawn on self a/c / travel cheques / Currency notes
surrendered during personal visit
Demand draft / Bankers cheque issued free of any charges Cheque book facility
available free of cost
Preferential Exchange Rate for conversion

Baroda Double Dhamaka NRE Term Deposit Scheme for NRIs: As per the prevailing
rate of interest the principal amount is doubled in a given period under RIRD scheme.


BARODA DOUBLE DHAMAKA NRE TERM DEPOSIT SCHEME

Feature Particulars
Scheme Code TD 258 Under NRE Term deposit
Product Specification Term Deposit Product wherein NRI depositor
gets more than double of his initial deposit
amount after a period of 7 years, 8 months and
18 days.
Eligibility and Target Group NRI individual in his own name
NRIs jointly by more than one
individual.
138

NRIs jointly with resident with mode of
operation as Former or Survivors
NRI Minor of age 10 and above on
terms laid down by the Bank.
Account in the name of minor with their
father/mother as guardian
Minimum Deposit Amount Minimum Amount of Deposit Rs 5000/- (further
amount in multiples of Rs 1000/-)
Period 7 years 8 months and 18 days
Rate of Interest 9.10 % p.a. (subject to change from time to
time)

Payment of Interest As per RIRD Scheme for NRE Term Deposits
Maturity Value On due date Rs.1000/- shall accumulate into
Rs.2001/-
Maximum Deposit Amount Less than Rs.1.00 crore
Tax TAX Free Interest
Repatriability Principal and interest accrued is FULLY
Repatriable
Pre-mature repayment Permitted with usual penalty clause. However,
no interest shall be payable In case pre-mature
payment is requested before completion of 12
months
Nomination Allowed
Auto Renewal No auto renewal is envisaged under the
scheme
Additional Rate of Interest to Senior Citizens
and Staff/Ex-Staff
NIL
Availability of Loan/Overdraft Permitted up to 95% of outstanding balance at
rate of interest 1.5% over the deposit rate with
monthly rests for loan to self, 2% over the
deposit or Base Rate plus 3.50%, whichever is
higher in case of loan to third party (Non-
Resident or Resident)

Resident Foreign Currency Account - for NRIs returning to India for settling in
India

Our Bank offers remunerative deposits for NRIs returning to India with the intention of
permanently settling down. NRIs can also open RFC account with the ASSETS brought by
them on return as well as their foreign assets held abroad at any future date in case they
desire so. Their present NRI accounts will be re classified and called RFC accounts while the
continuity of the deposit will be maintained till maturity date of the deposit.






139

Foreign Currency Accounts For Residents:
Exchange Earners' Foreign Currency (EEFC) Accounts:-

1. All categories of foreign exchange earners are allowed to credit up to 100 per cent of
their foreign exchange earnings to their EEFC Accounts with authorized dealers in
India subject to the condition that the sum total of the accruals in the account during a
calendar month should be converted into rupees on before the last day of the
succeeding calendar month. This account shall be maintained only in the form of non-
interest bearing current account. No credit facilities, either fund-based or non-fund
based, shall be permitted against the security of balances held in EEFC accounts by the
AD Category I banks
2. Funds held in EEFC account can be utilized for all permissible current account
transactions and also for approved capital account transactions as specified by the
extant Rules/Regulations/ Notifications/ Directives issued by the Government/RBI
from time to time.
RFC (Domestic) Account:
1. A person resident in India can open, hold and maintain with an authorized dealer in India,
a Resident Foreign Currency (Domestic) Account, out of foreign exchange acquired in
the form of currency notes, Bank notes and travelers cheques from any of the sources
like, payment for services rendered abroad, as honorarium, gift, services rendered in
settlement of any lawful obligation from any person not resident in India proceeds of
export of goods and/or services, royalty, honorarium, etc., gifts received from close
relatives (as defined in the Companies Act) and repatriated to India through normal
banking channels by resident individuals.
2. The account shall be maintained in the form of Current Account and shall not bear any
interest. There is no ceiling on the balances in the account.
External Commercial Borrowings:
External Commercial Borrowings (ECB) refer to commercial loans in the form of bank
loans, buyers credit, suppliers credit, securitized instruments (e.g. floating rate notes
and fixed rate bonds, non-convertible, optionally convertible or partially convertible
preference shares) availed of from non-resident lenders in Foreign Currency with a
minimum average maturity of 3 years.

(a) Automatic Route : ECB under Automatic Route do not require approval of Government of
India / RBI. Corporates, housing finance companies, NBFCs, are eligible to raise ECB. However,
individuals, trusts, and non profit making organizations are not eligible. ( However Non-
Government Organizations (NGOs) engaged in micro finance activities are eligible to raise
ECB.) Units located in SEZ can raise ECB for their own requirements only.

(b) Approval Route: Cases falling outside the purview of Automatic route with minimum
average maturity of 5 years.
140


Amount and Maturity:The maximum amount of ECB which can be raised by a corporate other
than those in the hotel, hospital and software sectors is USD 750 million or its equivalent
during a financial year.

a. Corporates in the services sector viz. hotels, hospitals and software sector are allowed to
avail of ECB up to USD 200 million or its equivalent in a financial year for meeting foreign
currency and/ or Rupee capital expenditure for permissible end-uses. The proceeds of the
ECBs should not be used for acquisition of land
b. ECB up to USD 20 million or its equivalent in a financial year with minimum average maturity
of three years.
c. ECB above USD 20 million or equivalent and up to USD 750 million or its equivalent with a
minimum average maturity of five years.
d. NGOs engaged in micro finance activities and Micro Finance Institutions (MFIs) can raise
ECB up to USD 10 million or its equivalent during a financial year. Designated AD bank has
to ensure that at the time of drawdown the forex exposure of the borrower is fully
hedged.
FCCB ( Foreign currency convertible Bond):
Foreign Currency Convertible Bonds (FCCBs) means, a bond issued by an Indian company
expressed in foreign currency, and the principal and interest in respect of which is payable in
foreign currency. Further, the bonds are required to be issued in accordance with the scheme
viz., "Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) Scheme, 1993, and subscribed by a non-resident in foreign currency and
convertible into ordinary shares of the issuing company in any manner, either in whole, or in
part, on the basis of any equity related warrants attached to debt instruments. The policy for
ECB is also applicable to Foreign Currency Convertible Bonds. The issue of FCCBs are also
required to adhere to the provisions of FEMA Notifications, as amended from time to time.

1. FCCB is a hybrid instrument issued outside the country that offers option to investors
to convert it into equity at a predetermined price. This is a cheaper source of fiance
to Indian companies.
2. The bond holder can enjoy the regular interest payment. Further they can avail price
appreciation once the bonds are converted into equity.

All-in-cost ceilings in respect of ECB:

All-in-cost includes rate of interest, other fees and expenses in foreign currency except
commitment fee, pre-payment fee, and fees payable in Indian Rupees. Moreover, the payment
of withholding tax in Indian Rupees is excluded for calculating the all-in-cost. The current
ceilings are as below:

141

Minimum Average Maturity Period All-in-cost Ceilings over 6 month LIBOR*
Three years and up to five years 350 basis points
More than five years 500 basis points
*LIBOR for the respective currency of borrowing or applicable benchmark.

Uniform Customs & Practices for Documentary Credits (UCPDC):

These are universally recognized set of rules governing Letter of Credits. The rules are
published in the form of Brochure by the International Chamber of Commerce. These rules are
binding on all parties. The latest publication is known as ICC 600 and adopted with effect from
July 1, 2007.

Documentary Credit

Letter of Credit is a definite undertaking issued by a bank, on behalf of the buyers
(importer), to the seller (exporter), to pay for goods and/or services, provided that the
seller presents documents which comply fully with the terms and conditions of the
documentary credit.

There are three formal contractual relationships in the use of documentary credits as
means of payment and these are:-

The contractual relationship between the buyer and seller as evidenced by the terms
of the sale contract.
The contractual relationship between the buyer and the buyers bank, which agrees to
issue the documentary credit on behalf of the buyer.
The contractual relationship between the buyers bank and the beneficiary of the
documentary credit who is the seller/exporter of the goods.

PARTIES TO A DOCUMENTARY CREDIT

1. APPLICANT: He is also known as the Importer or Buyer of the goods.
2. ISSUING BANK: Usually the applicants banker, which issues a letter of credit.
Issuing Bank is ultimately responsible for payment under the letter
of credit.
3 ADVISING BANK:A correspondent of the issuing bank who is able to authenticate
the LC message before advising the same to the beneficiary.
The advice to the beneficiary is without any undertaking or liability on the part of
the advising bank.
4. CONFIRMING BANK: Same role as advising bank (usually one and the same bank)
except that the confirming bank provides an undertaking to the beneficiary that,
notwithstanding any occurrence (war, bankruptcy of the Issuing Bank etc.), they will
142

pay, accept or negotiate documents presented in conformity with the terms and
conditions of letter of credit.
5. BENEFICIARY: He is an exporter or seller of the goods.

REVOLVING LETTER OF CREDIT

A Letter of Credit issued for a specific amount within which series of BP or BN are
purchased/ negotiated. The limit will be automatically reinstated on retirement of earlier
bill purchased or negotiated, is called Revolving Letter of Credit.
Bank should recover the commission on each reinstatement.
In case of Revolving L/C's aggregate turnover of bills under the L/C within the validity
period of L/C in addition to a suitable limit for single transaction should be specified.

RED CLAUSE AND GREEN CLAUSE LETTER OF CREDIT

Red clause Letter of credit which authorize the bank to provides finance to exporter at
the pre-shipment stage which is known as packing credit finance. The credit facility
granted under such letter of credit is to be liquidated by purchase or negotiation of Bills
under the L/C.
Green Clause letter of Credit is one which authorize the bank to grant further finance to
exporter for storage of goods in the name of bank, payment of dockyard, port and insurance
charges etc. Before the shipment is taking place. Green Clause L/C is only an extension of Red
Clause Letter of Credit.


STAND - BY LETTER OF CREDIT

In certain countries where issuance of guarantee is prohibited, banks are issuing stand by
L/C. This L/C guaranteed the payment in the event of failure of the opener to perform
the contractual obligations.
Stand-by credit is one which provides for tendering of documents relating to transactions
between the buyer and seller at the counter of the issuing bank for settlement of
transactions in case of failure of the buyer. The stand by L/C also provides for availing
finance by the seller or exporter from the bank, before the transactions are settled.

BACK TO BACK LETTER OF CREDIT

On many occasion, it may happen that the beneficiary of letter of credit has to procure
raw materials or finished goods etc. from various suppliers. He will request his banker to
issue letter of credit in favour of these suppliers on the basis of letter of credit he is
having.
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The letter of credit issued in favour of the local or other suppliers as above is called back
to back letter of credit. The terms and conditions of such back to back L/C should be in
conformity with the original letter of credit.

TRANSFERABLE CREDIT

When a letter of credit authorise to transfer the credit to the second beneficiary at the
request of first beneficiary to the extent of amount and quantity of goods. This is called
transferable credit.
This credit can be transferred once only. This means that second beneficiary cannot
transfer the portion allotted to him to next supplier.

Exchange Rate Mechanism:
a. Direct quotations:
Under a system of Direct Quotations, the exchange rates are quoted where the unit(s) of
foreign currency remains constant, whereas the home currency units fluctuates : i.e.
USD 1 = Rs. 61.65

b. Indirect Quotations:
Under a system of Indirect Quotations, the exchange rates are quoted where the unit(s)
of home currency remains constant against variable units of foreign currency. i.e. Rs.
100/- = USD 1.62

In India we follow the direct method of quoting exchange rates since August 1993.

Types of Rates:
(i) Cash / Ready: When the deal is entered into and its settlement is done on the very
same day then it is known as Cash / Ready Rate. (T + 0)
(II) TOM: When the deal is entered into but the settlement is done on the next working
day then it is known as TOM. (T + 1)
(iii) Spot Rate : Where the cash settlement is to take place after two working days from
the date of contract. It is termed as "SPOT RATE." (T + 2)
(iv) FORWARD RATES: All exchange rates quoted, where the cash settlement is to take
place after the spot rate are termed as "FORWARD RATES" (T + > 2). Forward Rates
are generally quoted as a margin against the spot rate for currency concerned. The
margin may represent either "PREMIUM" or "DISCOUNT".

Premium: Premium is a value of exchange in excess of spot rate. In relation to forward
exchange rate, it means that the currency is dearer for future delivery than for the spot
delivery i.e. currency is dearer for forward purchase than the spot purchase.

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Discount: Discount is a value of exchange below spot rate. In relation to forward exchange
rate, it means that the currency is cheaper for future delivery than for the spot delivery
i.e. cheaper for forward purchase than the spot purchase.

LIBOR (London Inter-Bank Offered Rate):
LIBOR is a daily reference rate based on the interest rates at which banks offer to lend
funds to other banks in the London inter-bank market.

LIBOR is published by the British Bankers Association (BBA) shortly after 11:00 A.M London
time , every day, and is a filtered average of inter-bank deposit rates offered by designated
contributor banks, for maturities ranging from overnight to one year.

SWIFT
Society for Worldwide Interbank Financial Telecommunication is a co operative society
created under Belgian law and having its corporate office at Brussels. It operates computer
guided communication system to rationalize international payment transfers in a secured
system driven environment. Only authorized officials can access and decode the data /
information / message.

Categories of AD branches:

Category A: Offices and branches maintaining independent foreign currency
accounts (NOSTRO A/C) with overseas correspondents / branches in their own
names. Specialized Integrated Treasury Branch (SITB) Mumbai is the only Category
A Branch.

Category B: Offices and branches not maintaining independent foreign currency
accounts but having powers of operating on the accounts maintained abroad by their
A category branch.

Category C: All other offices and branches handling foreign exchange business
through other offices or branches in category A or B, but not having powers to
operate on the accounts maintained by their head / principle offices.


INCOTERMS 2010 w.e.f 01.01.2011

INCOTERMS means International Commercial Terms. These are trade terms commonly
used in commercial contracts. INCOTERMS are now separated into 2 Groups. Group 1
terms applicable to all modes of transport and Group 2 terms only applicable to sea and
inland waterway transport.

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In all there are a total of 11 INCOTERMS instead of 13 used earlier, with 2 new
additions, DAP and DAT and 4 deletions viz. DAF, DDU, DEQ and DES.
The expanded form of the 11 INCOTERMS 2010 are:

Applicable for all modes of transport:
EXW : Ex Works
FCA : Free Carrier
CPT : Carriage Paid To
CIP : Carriage and Insurance Paid
DAT : Delivered At Terminal
DAP : Delivered At Place
DDP : Delivered Duty Paid

Only applicable for sea and inland waterway transport:
FAS : Free Alongside Ship
FOB : Free on Board
CFR : Cost and Freight
CIF : Cost, Insurance and Freight

ACCOUNTING ARRANGEMENTS:

NOSTRO ACCOUNT (OUR ACCOUNT): means our account with a bank or branch abroad.
They are the current accounts of the bank with their correspondents / branches in
foreign centers in their currencies.

VOSTRO ACCOUNT (YOUR ACCOUNT): means foreign banks or branchs account with
us in Indian Rupees.

LORO ACCOUNT: Entries passed to the account of a third bank are said to be for
LORO account, e.g., a remittance made by one bank to another for account of a third
bank may be sent by the remitter for credit of a LORO a/c (bank), meaning their
account with you

Foreign Exchange Facilities for Resident Indians
Foreign Exchange can be released to undertake a range of miscellaneous non trade
current account transactions for the following activities:

1. Private Visits:
Up to USD 10000 or its equivalent thereof in one financial year (1
st
April to 31
st

March) for one or more private visits to any country (except Nepal & Bhutan)
2. Business Visits and travel for international conference/seminar/ training
Up to USD 25000 or its equivalent thereof in one financial year per visit.
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3. Employment/emigration
Up to USD 100,000 or its equivalent thereof in one financial year. The amount also
includes processing/assessment fees for overseas job applications /emigration
consultancy fees.
4. Medical treatment
Up to an amount of USD 100,000 or its equivalent in one financial year. For amount
exceeding the above limit, estimate from the doctor in India or hospital/doctor
abroad, is required to be submitted. A person who has fallen sick after proceeding
abroad may also be released foreign exchange for medical treatment outside India
5. Education abroad
Up to USD 1,00,000 or the estimate from the institution abroad per academic year,
whichever is higher.

Notes:
Out of the overall foreign exchange being sold to a traveller, exchange in the form of foreign
currency notes and coins may be sold up to the limit indicated below:
Travellers proceeding to countries other than Iraq, Libya, Islamic Republic of Iran,
Russian Federation and other Republics of Commonwealth of Independent States - not
exceeding USD 3000 or its equivalent.
Travellers proceeding to Iraq or Libya - not exceeding USD 5000 or its equivalent
Travellers proceeding to Islamic Republic of Iran, Russian Federation and other
Republics of Commonwealth of Independent States - full exchange may be released.

Documents for releasing Foreign Exchange

Passport & VISA
A2 form (Not required up to USD 25,000 simple letter)
Self declaration stating that the total amount of foreign exchange purchased in India
during the financial year including this application is within the limit prescribed by RBI
for the purpose.



Period of surrender of foreign exchange:
General permission is available to any resident individual to surrender received / realised
/ unspent / unused foreign exchange to an Authorised Person within a period of 180 days
from the date of receipt / realisation / purchase / acquisition / date of return of the
traveller, as the case may be.
However, a returning traveller is permitted to retain with him, foreign currency travellers
cheques and currency notes up to an aggregate amount of USD 2000 and foreign coins
without any ceiling beyond 180 days.


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Liberalized Remittance Scheme for resident individuals
The Reserve Bank of India had announced a Liberalized Remittance Scheme for resident
individuals to remit up to USD 75,000 per financial year for any permitted current or
capital account transactions or a combination of both. The facility under the Scheme is in
addition to those already available for private travel, business travel, studies, medical
treatment, etc.

Highlights of the scheme:
Remittance under this scheme is on a gross basis.

The facility is available to all the resident individuals including minors.

Remittances under the facility can be consolidated in respect of family members
subject to the individual family members complying with the terms and conditions of
the Scheme.

Remittances under the Scheme can be used for purchasing objects of art subject to
the provisions of other applicable laws such as the extant Foreign Trade Policy of the
Government of India.

Remittance against gifts and donations cannot be made separately and have to be made
under the Scheme only and therefore no separate limits for gift and donation are
available.

The Scheme can also be used for remittance of funds for acquisition of ESOPs in
addition to acquisition of ESOPs linked to ADR/GDR and acquisition of qualification
shares.

A resident individual can invest in units of Mutual Funds, Venture Funds, un rated debt
securities, promissory notes, etc under this Scheme. Further, the resident can invest
in such securities out of the bank account opened abroad under the Scheme.

It is mandatory to have PAN number to make remittances under the Scheme.

Resident individuals are permitted to make remittances for acquiring immovable property
within the annual limit of USD 75000 for already contracted cases, i.e. only for those
contracts which were entered into on or before the date i.e., August 14, 2013.

After August 14, 2013 remittance under scheme for acquiring immovable property is not
allowed.


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Gift and donation by a Resident individual:

Limit of USD 75000 per calendar year under the Liberalised Remittance Scheme would
also include remittances towards gift and donation by a resident individual. Accordingly,
under the Scheme, any resident individual, if he so desires, may remit the entire limit of
USD 75,000 in one financial year as gift to a person residing outside India or as donation
to a charitable/educational/ religious/cultural organization outside India. Remittances
exceeding the limit will require prior permission from the Reserve Bank of India.

Import of foreign exchange into India
A person on arrival in India, has to make a declaration to the Custom Authorities at the
Airport in the Currency Declaration Form (CDF) where the aggregate value of the foreign
exchange in the form of currency notes, bank notes or travellers cheques exceed
USD 10,000 (US Dollars ten thousand) or its equivalent and/or the aggregate value of
foreign currency notes (cash portion) exceed USD 5,000 (US Dollars five thousand) or its
equivalent.

Baroda TravelEasy Card
Our Bank has launched a foreign currency pre-paid card viz. Baroda TravelEasy Card.
These cards have to be issued to resident Indians and are usable abroad for ATM cash
withdrawal and making merchant payments at physical/online stores from the loaded currency
Salient features of Baroda TravelEasy Card:
Issued in USD, EUR & GBP
Minimum load value - USD $200 /EURO 150/ GBP 150
Maximum load value - as per FEMA guidelines based on the purpose of visit
Activation within 24 hours of purchase
Travelers are relieved of the risk of carrying cash & travelers cheque during foreign
visits
Fees/charges are lower than applicable charges on domestic debit/credit cards used
abroad
Cards are valid for -3- years. In this period, the card can be reloaded
Cardholder will have access to 24x7 Customer Care team as well as secured online
portal for viewing their card balance and transaction details Accounting, reconciliation
and customer support shall be provided by the Operations team, based at e-Business
Department, in collaboration with the service provider
KYC, AML/CFT requirement are as per RBI guidelines
Cards cannot be used in India, Nepal & Bhutan

GOLD CARD SCHEME FOR EXPORTERS

Eligibility
1. All exporters, including those in small and medium sectors, having a good track
record and credit worthiness as per credit rating of the bank
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2. The account should be Standard continuously for three years and should not be
in the caution list of ECGC or RBI.
3. Export firms making losses for the past three years or having overdue export bills
in excess of 10% of the current years' turnover are not eligible for Gold Card.

Limits:
1. Based on the usual appraisal of credit needs for exports appropriate limits both
for Pre-Shipment/ Post Shipment will be sanctioned for a period of three years
subject to annual review of account.
2. A stand by limit of not less than 20 percent of the assessed limit may be
additionally granted for facilitating urgent credit needs of Gold Card Holder
Exporter for executing sudden orders.
3. Norms for inventory may be relaxed in case of unanticipated export orders, taking
into account the size and nature of the export order.

Concession in Rate of Interest:
0.25 % concession on applicable Interest Rate for Export Credit to the Gold Card
Holder Exporter

Concession in Other Charges:
10% concession will be given to the cardholders in commission and exchange.
Tenor:
The Gold Card will be issued for a period of three years and will be renewed for a
further period of 3 years unless any adverse/ irregularities are noticed, subject to
annual review of the account.

Other Features:
* Preference will be given for grant of PCFC.
* Premium on ECGC policy for Pre Shipment Finance will be borne by the Bank and not
recovered from the Gold Card Holder Exporter.
* Gold Cardholders, on the basis of their track record of timely realization of export
bills, will be considered for issuance of foreign currency credit cards for meeting
urgent payment obligations, etc. in future.
* The loan application of such export clients will be processed within expeditiously

FCNR(B) LOANS

The foreign currency denominated loans in India are granted against the foreign
currency funds. Banks are having FCNR (B) Deposit and other Foreign Currency
deposit accounts like RFC, EEFC and other FC accounts. The loans given from these
FCNR deposit funds are commonly known as FCNR (B) loans.
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BOB with a wide global presence has a large base of NRI customers/ depositors.
Therefore, BOB has a large resource base of FCNR (B) deposits and is in a position to
offer the Foreign Currency Loans in India under FCNR (B) Scheme at very
competitive rates.

Advantages of FCNR (B) loans:
At times, it may entail lesser interest cost vis--vis Rupee borrowings. The borrower
is not required to go to the International market for raising the funds as foreign
currency funds are made available in India reducing the cost of raising such funds.

Features
Corporate can raise FCNR (B) loans from the Banks who are authorized dealers. BOB
grants FCNR (B) Loans through its Position Maintaining Offices at Mumbai, i.e. SITB
Mumbai

The Indian corporate/ firms are allowed to raise the funds through foreign currency
loans at the selected Indian branches within the prevailing policy guidelines of the
Bank/ RBI.

Purpose
Corporate is allowed to obtain foreign currency denominated loans in India under the
above scheme for the following purposes: -

1. For meeting working capital requirements in Indian Rupees.
2. By way of pre-shipment advances/post shipment advances to the exporters.
3. Import of raw materials.
4. Import of capital goods.
5. Purchase of indigenous machinery.
6. Repayment of the existing Rupee Term Loan.
7. Repayment of any existing ECBs with the permission from RBI, Govt. of India.

The loan can be granted after proper assessment and sanction of working capital
requirements/ Maximum Permissible Bank Finance (MPBF). The borrowers should
have natural hedge to cover themselves from exchange risk, which are required to be
borne by them. The exporters can avail this facility by way of pre-shipment credit as
well as post shipment credit in foreign currency. All other terms applicable to such
type of Rupee advances shall also be applicable to foreign currency advances.





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Buyers Credit

Buyers Credit is a financing arrangement under which a lending bank in the suppliers
country lends directly to the buyer or to a bank in the buyers country to enable the
buyer to make payments.

Benefits to the Bank:

Good Income and self liquidating
Higher returns with greater safety
Better risk coverage
Better utilization of our resources overseas
Visibility and image creation
Relationship building and customer satisfaction

Benefits to Corporates

Extremely competitive pricing & Service
Interest rate linked with LIBOR increases stability
Need not to go overseas market as our bank arranges for everything through
Overseas presence
No payment of withholding tax, if availed from our foreign branches
(Foreign Banks are subject to withholding tax)
Better risk coverage by various hedging options
Less formalities

Suppliers Credit
Suppliers credit is a financing arrangement under which a supplier agrees to accept
deferred payment terms from the buyer. Supplier avails funds by discounting or selling
the bills of exchange or promissory notes so created with the bank in its own country.

PRE-SHIPMENT EXPORT CREDIT
Pre-shipment / Packing Credit' means any loan or advance granted or any other credit
provided by a bank to an exporter for financing the purchase, processing, manufacturing
or packing of goods prior to shipment / working capital expenses towards rendering of
services on the basis of irrevocable letter of credit opened in his favour by an overseas
buyer or a confirmed order for the export of goods / services from India or any other
evidence of an order for export from India having been placed on the exporter.



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Period of Advance

(i) The period for which a packing credit advance may be given by a bank will be operating
cycle or maximum period of 180 days and depending upon the circumstances of the
individual case, such as the time required for procuring, manufacturing or processing
(where necessary) and shipping the relative goods / rendering of services. It is
primarily for the banks to decide the period for which a packing credit advance may
be given, having regard to the various relevant factors so that the period is sufficient
to enable the exporter to ship the goods / render the services.

(ii) If pre-shipment advances are not adjusted by submission of export documents within
360 days from the date of advance, the advances will cease to qualify for concessive
rate of interest to the exporter ab initio.

Disbursement of Packing Credit should be made on FOB vale of LC/Export Order.

Liquidation of Pre-shipment Credit:

Pre-shipment credit is to be liquidated by the purchase of export bills received from
abroad in respect of goods exported / services rendered. Further, subject to mutual
agreement between the exporter and the banker it can also be repaid out of balances in
Exchange Earners Foreign Currency Account (EEFC A/C) as also from proceeds of any
other unfinanced (collection) bills or lastly from Rupee resources if no export takes place.

POST-SHIPMENT EXPORT CREDIT

'Post-shipment Credit' means any loan or advance granted or any other credit provided by
a bank to an exporter of goods / services from India after shipment of goods / rendering
of services.

Types of Post-shipment Credits:
Post-shipment advance can mainly take the form of -
(i) Export bills purchased/discounted/negotiated.
(ii) Advances against bills for collection.
(iii) Advances against duty drawback receivable from Government.


Liquidation of Post-shipment Credit:

Post-shipment credit is to be liquidated by the proceeds of export bills received from
abroad in respect of goods exported / services rendered. Further, subject to mutual
agreement between the exporter and the banker it can also be repaid / prepaid out of
balances in Exchange Earners Foreign Currency Account (EEFC A/C) as also from
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proceeds of any other unfinanced (collection) bills. Such adjusted export bills should
however continue to be followed up for realization of the export proceeds and will
continue to be reported in the XOS statement.

Normal Transit Period: Bills in Foreign Currencies ( Demand / Sight Bill) 25 days

Crystallization of overdue Export Bill (Purchased/Discounted/Negotiated): Crystallization of
Overdue Export Bills is done on 30
th
day after the expiry of the Normal Transit Period /
Notional Due Date.
For crystallization into Rupee liability, the Authorised Dealer shall apply its TT selling rate of
exchange. The amount recoverable, thereafter, shall be the crystallized Rupee amount along
with interest and charges, if any.

Diamond Dollar Account :

Firms and companies dealing in purchase/sale of rough or cut and polished diamonds are
permitted to open and transact their business through Diamond Dollar Accounts provided,
they have a satisfactory track record of at least three years in import or export of
diamonds have an average annual turnover of Rs. 3 crores or above during preceding three
licensing years (licensing year is from April to March)
Eligible firms and companies may be allowed to open not more than 5 Diamond Dollar
Accounts with their Bank.

EXPORT DECLARATION FORM (EDF):
RBI has simplified the existing GR/PP forms used for declaration of exports of Goods and
a common form called Export Declaration Form (EDF) has been devised to declare all
types of export of goods from Non-EDI ports. The EDF will replace the existing GR/PP form
used for declaration of export of Goods.

Deemed Exports
Projects aided by bilateral or multilateral agencies/funds (world bank, IBRD, IDA). Under
deemed export goods will not cross the boundary of the India but will be supplied to Govt.
aided projects and the remittance in the form of foreign exchange will be received into
the India. Export Finance to such projects can also be considered by way of pre-
shipment/post shipment credit.


Terms for money market:
1. HTM = Held to maturity, securities which are not meant for sale and shall be kept till
maturity date
2. HFT = Held for trading, securities acquired with the intention to trade by taking
advantage of the short term price/interest rate movement are classified as HFT.
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3. AFS-Available for sale: The securities which do not fall under the above two categories
will be under this category.
4. Coupon rate = The rate which is displayed on the instrument and fixed at the time of
issuance.

What do you understand by Derivatives?

It is a financial contract value (spot rate) of which is derived from another financial
products/commodity called underlying (that may be stock, foreign currency, commodity
etc.) Forward contract in forex business is a best example of derivatives.
The basic object of the derivative is to hedge the risk. Future, forwards, options, swaps
are the common instruments of derivatives.

A derivative is an instrument / contract whose value depends on the values of other
underlying instrument / contract.
These variables may be :
Stock Prices
Exchange rates
Interest rates
Functions of Derivatives :
Derivatives shift the risk from the buyer of the derivative product to the seller and as
such are very effective risk management tools.
Derivatives improve the liquidity of the underlying instrument.
Derivatives perform an important economic function viz. price discovery.
They provide better avenues for raising money.
They contribute substantially to increasing the depth of the markets.

Share of Exchange Profit
Treasury Branch passes share of profit on exchange transaction done by Authorised
Branches on half yearly basis i.e. March to August and September to February. This is
passed on to the branches during first fortnight of September and March every year.

FORWARD CONTRACT

A forward foreign exchange transaction is one which is executed today at a rate agreed
today but settlement takes place at an agreed future date.
The contract is negotiated directly by the buyer and seller. It is an OTC (over the
counter ) product
No money exchanges between the parties when it is contracted and the actual
conversion / settlement takes place at agreed rates at future maturity date.
Both the parties are obliged to fulfill their contractual terms.


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Cancellation of Forward Contract

Cancellation of forward contracts before the maturity date may be at the discretion of bank.

Purchase contracts shall be cancelled at T.T. selling rate of the contracting
Sale contracts shall be cancelled at T.T. buying rate
In the absence of any instructions from the customer a contract which has matured
shall be cancelled by the bank on the 3rd working day after the maturity date
Fixed Forward Contract and Option Forward Contract
In a fixed forward contract, the transaction will have to be completed on the specified
future date.
In Option Forward Contract, the option period of delivery in future should be specified
and should not exceed a period of one calendar month.

Forward Rate Agreements (An interest rate derivative)
1. A Forward Rate Agreement is a contract between two parties by which they agree to
settle between them the interest differential on a notional principal on a future
settlement date for a specified future period.
2. Further, as the commitment is only to settle the interest differential, the credit risk
with the counter party is minimal.
3. FRAs can be used effectively to lock in interest rates and thus manage the gaps
between rate sensitive assets and liabilities of the balance sheet. Thus they are very
useful in Asset Liability Management.
4. FRAs could easily replicate cash market transactions with a lower capital requirement
and can also improve the liquidity of the underlying cash markets.


Interest Rate Swaps :
An Interest Rate Swap is invariably an over the counter contract. It is a contact between
two parties who agree to exchange interest payments on a notional principal at pre-agreed
intervals of time for a given maturity. Mostly, Interest payments are based on a fixed
rate on the one side and a floating rate on the other.

Options :
1. An Option contract is essentially a contract between two parties wherein one party buys
the right to sell or buy a given underlying at a future date at a pre-agreed price and
the other sells this right. Obviously, this means options are basically forward contracts
on rights. In other words, they are simply insurance products against adverse
movements in the market prices.
2. The right to buy an underlying is called a Call Option and the right to sell the underlying
is called the Put option.
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3. The option which can be exercised by the buyer only on the date of maturity is called an
European Option.
4. American Option is the Option which can be exercised on any working day before the
maturity or on the maturity date.

Interest Rate Options :
Interest Rate Options are fundamentally of two types, the Cap and the Floor. A Cap is an
interest rate option in which, the buyer of the option, with the intention of locking
himself to a ceiling in interest costs for his borrowing, reserves the right to receive the
difference in interest rate on a notional principal in case the interest rate on the
underlying borrowing goes higher than the ceiling he has chosen at pre-agreed periodic
intervals for a given time maturity.
It may be noted here that a CAP is nothing but a series of Call options on Interest Rate.


LAF - REPO and Reverse REPO :

1. RBI has w.e.f. 05.06.2000 has introduced LAF Liquidity Adjustment facility as
recommended by Narsimhan Committee. The purpose of LAF is to provide short-term
liquidity support to Banks in India. The rate for LAF is REPO (Repurchase Option) for
injection of liquidity and Reverse REPO for absorption of liquidity. The minimum amount
is Rs.5 crores and thereafter in multiple of Rs. 5 crores.
2. A financing arrangement used primarily in the Govt. security markets whereby a dealer
or other holder of the security sells the securities to a lender and agrees to
repurchase the same at an agreed future date at an agreed price is called Repo
transaction when viewed from the sellers perception. It is reverse repo for the
suppliers of fund who are purchasing such security.


MARKET INTEREST RATE
The interest rate, or discount rate, or yield to maturity is an interest rate which changes
constantly depending on various factors like demand/supply of the Financial asset, future
economic outlook etc.

FACE VALUE
The principal value of the Bond, which is printed on the bond and which is fixed
throughout the bonds life.


COUPON RATE
The fixed rate of interest which is printed on the Bond certificate is called Coupon rate.
Coupon rates are contractual rates that cannot be changed after the bond is issued.

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YIELD TO MATURITY
This term popularly known as YTM connotes redemption yield and is very useful for
Treasury Managers whose investment horizon is long term. YTM can be interpreted as
the bonds average compounded rate of return if the bond is bought at the current asked
price and held until it matures and the face value is repaid. That is, YTM can be defined
as the discount rate that equates present value of all cash flows to the present market
price of the Bond. Future cash flows includes interest and capital gain/loss.

MARK TO MARKET (REVALUATION):
1. RBI has directed all the banks in India in valuing their investment portfolio at market
rates. Valuation of securities at market rates is known as marking to market.
2. This process of valuation of the portfolio exposes the Bank to the market risk and
forces the treasury to take suitable steps to hedge such risk. For example if the value
of the securities in the portfolio have depreciated, as per the prevailing market rates,
the profitability and thereby the networth of the bank also gets adversely affected.
3. Conversely, if there is an appreciation, which are unrealised gains, cannot be taken to
profits of the Bank. However RBI issues guidelines on valuation norms from time to
time. As per the latest guidelines, not less than 70% of the portfolio of the Banks in
India should be marked to market.
3. This portion of portfolio which is marked to market is termed as Current category
while the remaining portion which is not marked to market is termed as Permanent
category. RBI has indicated that it is moving towards directing the Banks to mark
100% of their portfolio to market.
4. This will ensure that Banks Capital base could withstand any eventuality of high
volatility in the value of its portfolio at a later date, say when the Capital account
convertibility comes.













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RISK MANAGEMENT
What is Risk?

Risk is a probability of loss, may be direct or indirect. Direct loss may be relating to loss of
capital or earning whereas indirect loss may be loss of business. Thus, risk means probability
of loss of earning, capital or business.
For example:
In case of non-payment of dues bank will suffer a loss, in case of compromise loss of earning
(waiver) or loss of capital in case of write off.
Frauds committed by either employees or outsiders results into loss of business.

What is Risk Management?
The four letters RISK indicates that risk is an unexpected event or incident, which needs
to be identified, measured monitored and control.
R = Rare (Unexpected)
I = Incident (Outcome)
S = Selection (Identification)
K = Knocking (measuring, monitoring, controlling)
Thus, the risk management is a sum of (1) Risk identification (2) Risk measurement (3) Risk
monitoring and (4) Risk control with a view to maximize Risk Adjusted Return on Capital
Employed = (RAROCE).
Different Types of Risks?
Broadly speaking the risk can be divided into four main categories.
(1) Market Risk (2) Operational Risk (3) Credit Risk and (4) Country Risk

Market Risk
The risk of losses in and off balance sheet positions arising from adverse movement
of market variables. Market risk may be relating to:
Liquidity Risk: Potential inability of a bank to meets its repayment obligations in a
timely and cost effective manner e.g. Mismatch of deposits and assets.
Interest Rate Risk: Risk due to change in market interest rate, which might
adversely affect the banks financial position. The NIM will reduce. This depends on
types of assets such as fixed or floating rate, quantum of advance etc.
Foreign Exchange Risk: Risk due to upward/downward movement in exchange rate
when there is an open position, either spot or forward or both in an individual
currency.
Commodity Price Risk: The price fluctuation in commodity, which are charged to the
bank as security etc. by way of hypothecation and /or pledge.
Equity Price Risk is a loss in value of the banks equity investments and or equity
derivatives, arising out of change in equity price. Price fluctuation in stock market
where bank has invested fund.


159

OPERATION RISK:

It is a risk relating to direct or indirect losses arising out of inadequate or failure of
people, process, system, business, management and/or external factors. Generally, any
risk not categorized as market or credit risk is called operational risk.
6. Broadly speaking operational risk covers following:

(1) People (2) Process (3) Management (4) System (5) Business and (6) External.

COUNTRY RISK:

Country Risk is the possibility that a Country will be unable to service or repay its debts
foreign lenders in a timely manner. Country Risk is the risk arising while dealing with other
countries such as sovereign risk, political risk, transfer risk, currency risk, cross border
transactions, defaulter country risk etc.

WHAT IS CREDIT RISK?

Credit risk is a risk of potential loss arising out of inability or un-willingness of a customer
or counter party to meet its commitments in relation to lending. Hedging, settlement and
other financial transactions. Thus, credit risk may be relating to;

Direct lending: Default risk, (non-payment of instalment and interest by the loanee),
portfolio risk.

Off Balance Sheet items: Counter party risk-Invocation of Guarantee or crystallization of
L/C liability for which dues have not been paid or denied by
the counter party.

Treasury Operations: Forward Contract obligations, Credit Derivatives etc. On due date
the party is refusing/ denying the payment/ delivery.

Security transaction: The counter party may not effect fund settlement/ security
settlement.

Counter Party Risk:When there are two or more contracts entered into and liabilities are
depending upon happening of certain events and the party on whose behalf we have taken
exposure express his inability to pay out is called counter party risk.

Portfolio Risk : is also called Credit Concentration Risk. This arises due to failure of
particular segment/activity where the bank is having substantial exposure. To mitigate
such risk there are sectoral exposure, single /group exposure ceiling, activity ceiling etc.

160

Defaulter Risk there is one contract only i.e. between bank and borrower, may be due to
unwillingness or inability of the borrower.

TOOLS FOR CREDIT RISK MANAGEMENT:
Credit is considered as core business activity of banking which results into profit.
Therefore, it is necessary to increase the credit portfolio and also to mitigate the risk
relating to credit. Following are the tools available for risk assessment and monitoring:

Operations in the account
Stock Statements
QIS/QMR
Review of account and financial statements
ASCROM and PSR
Audit & inspections: concurrent audit, annual audit, Stock audit, periodical
inspection, ZIC inspection, etc.
Discretionary Lending power and Cap
Exposure ceiling- Single, Group, and activity exposure.
Insurance and Credit rating
Secured & unsecured

CREDIT RATING METHODOLOGY

The BOBRAM Risk Rating Models for Commercial Advances are based on two dimensional
rating methodology specified under Basel -II Accord requirements. The credit risk rating
process as per BOBRAM Rating Models involves three types of ratings for each credit
facility
1. Obligor (Borrower) Rating -for credit worthiness indicating the Probability of
Default (PD)
2. Facility Rating -representing the Loss Given Default (LGD) and
3. Composite Rating -which is indicative of the Expected Loss (EL)

OBLIGOR (BORROWER) RATING
The obligor (Borrower) rating is indicative of creditworthiness of an obligor or the
Probability of Default (PD) and it is based on the assessment of past and projected cash
flows of the company.

For assessment of an obligor, the rating structure consists of evaluation by way of four
modules viz. 1) Industry Risk, 2) Business Risk, 3) Financial Risk and 4) Management
Quality.




161


Obligor (Borrower) Rating Grades:
Obligor Rating Grades range from BOB-1 to BOB-10. However depending upon the model
used, the rating grades ranging from BOB-1 to BOB-10 or BOB-3 to BOB-10 or BOB-6 to
BOB 10.

FACILITY RATING
Facility Rating involves assessment of the security coverage for a given facility and
indicates the Loss Given Default (LGD) for a particular facility. Facilities proposed/
sanctioned to a company are assessed separately under this dimension of rating.
Facility Rating (FR) Grades:
Facility Rating grades range from FR-1 to FR-8.

COMPOSITE RATING
The Composite Rating (CR) which is the matrix or the combination of PD and LGD;
indicates the Expected Loss in case the facility is defaulted. The Composite Rating is
worked out automatically by the software based on the matrix of Obligor (Borrower)
Grade (BOB Rating) and Facility Rating Grade (FR).

Composite Rating Grades:
Composite rating grade ranges from CR-1 to CR-10.
CUT-OFF GRADE FOR ACCEPTANCE
Bank has accepted BOB-6 as the cut-off point for the acceptance of an obligor
(borrower) based on Obligor (Borrower) rating carried out as per the applicable model.
The rating models have been grouped in three categories for the purpose of specifying
cutoff point for the acceptance of an obligor (borrower) as per details mentioned
hereunder:

PRICING
The composite Rating or the Combined Rating (CR-1 to CR-10) is computed on the basis
of matrix of Obligor Rating for credit worthiness and the Facility Rating representing
the expected loss in case of default.

Difference between Internal Audit & Risk Based Internal Audit

Internal Audit Risk Based Internal Audit
Transaction based. No risk
assessment. 100% transaction testing
Risk based. Level of transaction
testing depends on risk
assessment.
Process identical for each
branch/unit.
Process differs according to risk
assessment.
Periodicity linked to rating. Periodicity linked to risk
162

assessment.
Backward looking - focus on historical
accounts, past performance and
compliance because of lack of risk
focus.
Forward looking - suggestions for
risk mitigation.
Inadequate optimization of audit
resources.
Effective optimization of audit
resources.
No direct linkage to supervisory
process.
Essential for regulatory Risk
Based Supervision.



Risk Management approaches

As per RBI guidelines the foreign banks operating in India and the Indian banks having
operational presence outside India are required to migrate to the Standardized
Approach for Credit Risk and the Basic Indicator Approach for Operational Risk with
effect from March 31, 2008. All other Schedule Commercial banks are encouraged to
migrate to these approaches under Basel-II in alignment with them. RBI has also
specified that banks would have to maintain a minimum Tier-I ratio of 6 %, while
continuing to maintain CAR of 9 %.

As regard the Market Risk, under Basel-II also, the banks will continue to follow the
Standardised-Duration Method as already adopted under the Basel-I framework and
maintain capital charge for market risk on securities included in the Held for Trading
(HFT) and Available for Sale (AFS) categories, open position of Gold - Forex-
Derivatives .
With regard to pillar 2, the banks have been advised to put in place an Internal Capital
adequacy Assessment Process (ICAAP), with approval of their Board. Banks will
formalize their capital adequacy assessment process in alignment with their business
plans and performance budgeting system. This together with the adoption of Risk
Based Supervision would enable factoring in the pillar-II requirements under Basel-II.

To deal with the different Risks, Basel-II suggests the following approaches

1. Credit Risk
a) Standardised Approach
b) Foundation Internal Rating Based (FIRB) Approach
c) Advanced Internal Rating Based (IRB) Approach
2. Market Risk
a) Standardized Approach (Maturity Method)
b) Standardized Approach (Duration Method)
163

c) Internal Models method
3. Operational Risk
a) Basic Indicator Approach
b) Standardised Approach
c) Advanced Measurement Approach

Standardised Approach to Credit Risk
Under the Standardized Approach, banks credit portfolio have been grouped into various
class types like Domestic and Foreign Sovereign, Banks, Corporate, Public Sector entities,
Regulatory Retail portfolio etc. The bank will allocate risk weight to fund and non-fund
based assets, depending on the quality of assets as reflected in the risk rating secured by
the borrower from External Credit rating institutions.
For example AAA rated account will have risk weight of 20%, while the A rated accounts
will have risk weight of 50%, BBB rated account will have risk weight of 100% and so on.
Off Balance Sheet items will be converted to credit risk exposure by multiplying with
Credit Conversion Factor from 0% to 100%. Risk weight of 100% may entail a capital
charge of 9%, risk weight of 50% may entail a capital charge of 4.5% and a risk weight of
20% may entail a capital charge of 1.8% etc.

Credit Conversion Factor (CCF)
The off balance sheet items have to converted to credit risk exposure by multiplying with
Credit Conversion Factor. BaselII standardized approach has prescribed CCFs of 0% to
100 % for different types of Off Balance Sheet Items.

Credit Risk Mitigation (CRM) Techniques
1. Collateralised Transactions - Certain securities are eligible to be considered for Basel-
II purpose. The securities may be either prime securities or collateral securities like
cash margin, Banks own deposit, NSC, Indira Vikas Patras & Kisan Vikas Patra, LIC
policies, Gold, etc i.e. cash or near cash securities are considered as security for Basel-
II purpose. In respect of Standard Assets Basel-II does not recognize land and
building, Plant and Machinery as Collateral for risk mitigation purposes.
2. On Balance Sheet netting - It is confined to loans / advances and deposits, where
banks have legally enforceable netting arrangement, involving specific lien with proof
documentation. Loans and advances are treated as exposure and deposits as collateral.
Exposure may be offset against eligible collateral credit.
3. Guarantees - The eligible guarantors are Sovereign, sovereign entities, ECGC, PSEs,
Banks, Primary Dealers with a lower risk weight than the counter party (borrower),
other entities rated AA or better External Credit

Rating Agencies approved by RBI
Domestic - CARE, CRISIL, ICRA, FITCH & BRIPL (Brickwork Rating India Pvt. Ltd.)
Foreign Standard & Poor, Moodys & FITCH

164

Basic Indicator Approach (BIA)
Under this approach, banks must hold capital for operational risk equal to the average over
the previous three years of a fixed percentage (denoted alpha, in the formula below) of
positive annual gross income. If annual gross income is negative or zero, it should be
excluded while calculating the average. It can be expressed as below;
K= (GI 1.3*a)/3
Where K = Capital Charge under Basic Indicator Approach
GI- Gross Income (annual), where positive, over the previous three years.
a - 15% as per Basel-II accord.

Internal Capital Adequacy Assessment Process (ICAAP)
ICAAP comprises of all banks procedures and measures to ensure the appropriate
identification and measurement of risks, appropriate level of Internal Capital in relation to
banks risk profile and applications and further development of suitable risk management
systems, comprehensive strategies and procedures for continuous evaluation and regular
review, composition and distribution of internal capital which is considered adequate to
cover current risk and any future risk in both quantitative and qualitative terms.


Risks to be captured in Pillar II:

1. Credit Concentration Risk Concentration Risk may be used in a broader sense to
include concentration by sector, Concentration by Industry, geographical location and
concentration of risk mitigant measures.
2. Country Risk The exposure to various countries are in terms of rating categories as
specified by the ECGC guidelines on Country Risk Management in terms of percentage to
Tier 1 and Tier 2 Capital.
3. Interest Rate Risk in the Banking Book Interest Rate Risk is taken to be the
current or prospective risk to both the earning and capital of the bank arising from
adverse movements in interest rates. In the context of Pillar 2, this is to be estimated
for only, given that the interest rate risk in the trading book is already covered under
Pillar 1 market risk regulation.
4. Liquidity Risk - Liquidity Risk occurs when an institution is unable to fulfil its
commitment in time when commitment falls due. The liquidity risk for the bank will be
monitored and measured as per the ALM Policy. It is not mandatory to maintain capital
for liquidity risk.
5. Reputation Risk - Reputation risk is the current or prospective indirect risk to earnings
and capital from adverse perception of the image of the bank on the part of customers,
shareholders and regulator. Reputation risk may originate in lack of compliance with
industry service standards and regulatory standards, failure to deliver on commitments,
lack of customer friendly service and fair market practices, a service style that does not
harmonize with customer expectation.
165

6. Business and Strategic risk - Business risk means current or prospective risk to
earnings and capital arising from changes in the business environment and from adverse
business decisions.

Basel III Capital Accord

Reserve Bank of India has issued guidelines based on Basel II reforms on capital
regulation applicable to banks operating in india. The Basel III capital regulation has been
implemented from 1
st
April 2013 in india phases and it will be fully implemented as on
31.03.2018.



Minimum total capital requirement under Basel III
Regulatory Capital As % Of RWA (Risk
Weighted Asset)
(i) Minimum common equity Tier I Ratio 5.50
(ii) Capital conservation Buffer (comprised of
common equity)
2.50
(iii) Minimum common equity Tier 1 Ratio plus capital
conservation buffer (i+ii)
8.00
(iv) Additional Tier I capital 1.50
(V) Minimum Tier I capital(i+iv) 7.00
(vi) Tier 2 capital 2.00
(vii) Minimum total capital ratio (MTC){(v)+(vi)} 9.00
(viii) Minimum total capital ratio plus capital
conservation buffer[(vii)+(ii)]

11.50




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CREDIT MONITORING, RECOVERY & NPA MANAGEMENT

Bank has laid down following guidelines on credit monitoring & its reporting:

Post Sanction Reporting (PSR):

All sanctions and credit decisions viz., Fresh / Increase /Renewal / Rejection / Adhoc / Excess
/ Modifications / Waivers /restructuring / rescheduling etc., excluding sanction of staff
advances, LABOD.

All Sanctions in respect of Fund-Based and Non Fund-Based credit limits (excluding LABOD &
Staff Loans) are to be reported to PSR Authority on monthly basis in the prescribed format,
for sanctions up to Rs. 10 lacs, in case of rural and semi urban branches and upto Rs 25 lac in
case of Metro and Urban branches (Rs. 5 lacs for Retail Loans) .

Copies of Credit Proposals with Fund Based and Non Fund Based sanctioned limit aggregating
above Rs. 10 lacs in case of rural and semi urban branches and above Rs 25 lacs in case of
Metro and Urban branches (retail loans above Rs. 5 lacs) should be forwarded to PSR authority
within 3 days of sanction along with Appraisal Note.

Special Mention Accounts:

The following types of accounts in standard category shall be brought under special
mention a/cs:
i. Irregularity in the account for 30 days
ii. Non-compliance of terms & conditions for 30 days
iii. No turn over in working Capital account for 30 days

Willful Defaulters : A willful defaulter is one who has adequate resources, cash flow, net
worth to pay the dues, but deliberately does not pay or siphons fund to the detriment of
the unit, misrepresent, falsifies the records or conducts fraudulent transactions.

Stock/Book Debt Audit:
Annual Stock/Book Debt Audit (i.e. covering the period 1st April to 31st March every
year) is to be carried out in all accounts having fund- based working capital limits
(including DA LC limit) of over Rs. 5.00 crores with our Bank.

The Stock Audit/Book Debt Audit may be conducted at more frequent intervals (i.e. more
than once a year) if deemed necessary by the Bank.

Empanelled Chartered Accountants / C.A. firms conduct Stock/Book Debt audit.

167




Monthly Monitoring Report:
Web based centralized solution (Cremon) for credit monitoring reports for advances
accounts with FB and NFB exposure of Rs 10 cr. and above has been introduced. Hence
submission of MMRs in word format for advances account of Rs 10 cr. and above has been
discontinued.

Zonal Manager monitors all advance accounts above Rs.5 crore to Rs.10 crore (FB+NFB)
based on the MMR received through Regional Office. The Zone will submit copies of the
MMRs of these accounts to BCC for further monitoring.(i.e. by 25th of each month).

Regional Manager monitors all accounts above Rs.1 crore to Rs.5 crores (FB+NFB) based
on MMRs received from branches. Regional Office submits copies of the MMRs of these
accounts to Zonal Office for further monitoring.

Branch Manager to monitor accounts of Rs.1 crore and below.

Accounts causing concern:

Regional Offices are to submit a summary report in the prescribed format on advance
accounts causing concern:
With exposure of above Rs. 1 Crore to Rs. 5 Crore along with copy of MMRs to BCC with a
copy to Zonal Office at monthly interval, within 7 days of reporting date of MMR (i.e.
before 22
nd
of each month).
With exposure of above Rs. 25 Lac to Rs. 1 Crore along with copy of quarterly monitoring
report (QMR) to BCC with a copy to Zonal Office at quarterly interval, within 7 days of
reporting dates of QMR which are 15th March, 15th June,15th September and 15th
December.

Inspection of Securities
Periodicity of the inspection of securities to be carried out is as under: -
Prime securities charges for working capital as per BOBRAM rating:

Latest Credit Rating for BOB 1, BOB 2, BOB 3 (A+ as per old rating model)
Half-yearly basis.
Latest Credit Rating of BOB -4 and BOB 5 (A as per old rating model)
Quarterly basis.
Latest Credit Rating BOB 6 & Below (B+ & below as per old rating model)
Bi-monthly.
Fixed Assets (Charged against Demand/Term Loan/DPG)
168

Half-yearly i.e. as of January and July
Under consortium arrangement (Exchange of inspection reports / information
with other banks to be ensured.)
As per periodicity fixed by the consortium
Credit Audit & Guidelines:

As per the recommendations of Narang Committee, RBI has advised all banks to have
monitoring mechanism for large advances soon after the sanction.

The credit audit is required to be carried out within 3 to 6 months from the date of sanction/
review
Cut off limit for the account -
(i) Existing accounts with FB + NFB limit of Rs. 10 crores and above,
(ii) Fresh sanction including increase/ adhoc with limit Rs. 5 crores and above
(iii) 5% of the accounts of the Region on random basis with sanction limit of Rs. 1
crores and above but below Rs. 10 crores.

Exit policy for high risk borrowers:

Policy to identify the borrowers accounts at the right time for exit. The early warning signals,
market report, Govt. policies etc. are to be studied to identify the account for exit.

Regular Review:
Credit facilities sanctioned to borrowers are subjected to annual review (except LABOD, staff
loans and the accounts where facilities sanctioned are for a period less than one year etc.)

The credit facilities of Rs.10 crores and above and where the credit rating of the account is
BOB-7 or below the account should be reviewed on half-yearly basis.

Short Review/Status Note:
Short Review / Status Note, which is done when it is not possible to carry out a comprehensive
Regular Review of the account within the stipulated period pending receipt of certain
particulars/ information or where the account is placed under special monitoring, etc.

Consecutive Short Reviews shall be restricted to two with a maximum period of six months
for each short review.

IRAC NORMS

The reform process initiated by RBI based on the recommendations of Narsimham
Committee has brought about many changes in the Indian Financial System. As a part of
the economic reforms, the norms relating to the capital adequacy, income recognition,
169

assets classification and provisioning have been further strengthened to match the
international standards

NPA DEFINITION
When any asset ceases to generate income for the bank
A non-performing asset (NPA) is defined as a credit facility in respect of which
the interest and / or instalment of principal has remained overdue or, out of
order for a specified period of time i.e. 90 days.

CLASSIFICATION OF ADVANCE
Loan
Cash Credit / Overdraft
Bills Purchased / Discounted
Other Accounts

IDENTIFICATION OF NPA

LOAN
Where interest and / or instalment of principal has remained overdue for more than 90
days, it becomes NPA
CASH CREDIT / OVERDRAFT
Where account has remained Out of order for 90 days as on date of balance sheet.
BILLS PURCHASED / DISCOUNTED
Any facility which has remained overdue and unpaid for more than 90 days
OTHER FACILITIES
If any amount receivable under the facility has remained overdue for more than 90
days.
SPECIAL PROVISION FOR AGRICULTURE
Norms applicable only after end of one crop season in respect of long duration crop
Norms applicable only after end of two crop seasons in respect of short duration crop
Does not cover activity allied to agriculture where normal norms are applicable

GOVERNMENT GUARANTEED ADVANCES
Guarantee of the Central Government though overdue may be treated as NPA only
when the Central Government repudiates its guarantee when invoked. However, not
applicable for income recognition.
State Government guaranteed advances will become NPA, if interest and / or
instalment of principal or any other amount due to the bank remains overdue for more
than 90 days.

EXEMPTED CATEGORY
Treated as performing even though interest or instalments in following accounts have
not been paid for more than 90 days
170

Advances against banks own term deposits, NSCs, IVP, KVP, Surrender value of LIC
policies
Staff loans
Provided debit balance in account is less than the market / surrender value of the
securities in all above cases.

ASSET CLASSIFICATION
STANDARD
All performing assets will be classified as Standard.
SUB-STANDARD
A sub standard asset is one, which has been classified as an NPA for a period not
exceeding 12 months
DOUBTFUL
A doubtful asset is one which has remained NPA for a period exceeding 12 months.
LOSS ASSETS
Assets which are classified as Loss by the Banks Internal/External Auditors or where
securities, personal worth etc. are practically zero or less than 10% of the
outstanding amount.

PROVISIONING NORMS:
NPA Category Secured portion of
loan outstanding
Unsecured portion of
loan outstanding
Sub Standard 15% 25%
Doubtful:
Up to one year 25% 100%
One to three years 40% 100%
More than three
years
100% 100%
Loss assets 100% 100%

Provisioning Requirement on Standard Assets

Agriculture & SME where it is 0.25%
Commercial Real estate(CRE) 1.00%,
Commercial Real Estate Residential Housing Sector (CRE RH) 0.75%
Teaser home loans 2%
Restructured advances 2.75% & 3.50 % with effect from 31 March 2014.
Povision required on all other standard advances except above: 0.40%


Floating Provision: If any institution makes additional provision, over and above the level
prescribed in IRAC norms of RBI, it is termed as Floating Provision. Floating provisions
171

means, provision not against any particular account but on the entire portfolio of
advances or investments. Floating provisions can be treated as a part of the Tier II
capital within the overall ceiling of 1.25 % of the total risk weighted assets.
Alternatively it can be netted from the gross npas to reach at disclosure of Net NPAs.
Floating provisions once made can not be reversed back to Profit & Loss Account.

Provision Coverage Ratio:

Provision coverage ratio is the ratio of provisions to gross NPA and indicates the extent
of funds, a lender keeps aside to cover loan losses. It is also called as Loan Loss
Coverage Ratio, which is mandatory as per RBI to maintain at least 70% of its Gross
NPA. This ceiling has been withdrawn now.

SANKALP - 6

SALIENT FEATURES
Date of Launching: 01.10.2013 up to 31.03.2014
Scheme is incentive linked
A/cs with outstanding balance upto and inclusive of Rs.25 lac
Accounts Covered:
a. NPA accounts as on 31.03.2012 and classified as Doubtful / Loss category as on
31.03.2013.
b. PWO account outstanding as on 31 March, 2013
c. Written off accounts as on 31.03.2013

Following accounts shall not be considered under this Scheme:
Staffs Accounts
Sub Standard Accounts, if any
Accounts classified as NPA after 31.03.2013

SPECIAL POWERS FOR BRANCH HEADS IN JMG/S I & MMG/SII:
Authority General Powers Revised Powers* under
this scheme

Branch Managers in
Scale I
Rs 0.50 Lacs Rs 0.75 Lacs
Branch Managers in
Scale II
Rs 0.75 Lacs Rs 1.50 Lacs
(* For Sacrifice including write off & waiver as per recovery policy)

Norms for Risk based inspection/verification of stock & B.Ds:

172

Prime Securities charged for WC
limits
Periodicity
Latest Credit Rating is AAA or BOB1 to
BOB3 as per CRISIL
Half Yearly
Latest Credit Rating is AA & A or BOB4 &
BOB5 as per CRISIL
Quarterly

Latest Credit Rating is BBB or BOB-6 &
Below as per CRISIL
Bi-Monthly
Fixed Assets charged against Loans Half yearly (Jan & July)
Consortium Accounts As fixed by Consortium
Inspection of Collateral securities Annually
Retail Loans: Housing Loan
Overdraft Against Property
Two wheelers / Car loan
Traders Loan & Profess. Loans
On every disbursement &
thereafter once in -3- years.
On disbursement & then
annually
Once in a year and the gap
between two inspection should
not be less than 10 months


Reschedulement:
1. Under reschedulement pattern of debt repayment obligation will be changed from
EMI to ballooning or descending schedule.
2. In reschedulement no change in repayment period, no increase in our exposure, no
change in the nature of credit facility/ies, no sanction of additional /fresh limit even
within the existing exposure.
3. All Standard, Sub Standard and doubtful accounts can be considered for
reschedulement.
4. All Senior Branch Managers and Sr. Manager (Credit) can consider for a period of six
months in case of proposal falling under their powers.
5. This is to be considered by the Regional Authority after satisfying the needs for
reschedulement.

Rephasement: Rescheduling with increase in repayment period.

Restructuring:
Restructuring can be considered in following ways:
(1) Changing existing repayment period of the debt.
(2) Changing outstanding exposure of the bank
(3) Changing the nature and quantum of existing credit facilities
(4) Sanctioning of fresh credit facility or additional facility

173

Thus restructuring involves, rephasement of loan installments, waiver of penal interest,
considering FITL, converting irregular portion into WCDL/WCTL, fresh/additional loans,
working capital limits.

Corporate Debt Restructuring:

Objective
The objective of CDR is to ensure timely and transparent mechanism for restructuring
the corporate debts of viable entities facing problems, outside purview of
BIFR/DRT/other legal proceedings, for the benefit of all concerned.

Three tier structure:-

CDR is a non-statutory mechanism consisting three tier viz:-

CDR Standing forum and its core group
CDR Empowered Group
CDR Cell

CDR Core Group is carved out of the CDR Standing Forum to assist the Standing Forum
in convening the meetings and taking decisions relating to policy, on behalf of Standing
Forum.

CDR Standing Forum and the CDR Empowered Group are assisted by a CDR Cell in all
their functions. The CDR Cell makes the initial scrutiny of the proposals received from
borrowers/lenders, by calling for proposed rehabilitation plan and other information and
puts up the matter before the CDR Empowered Group, etc. within the ambit of
guidelines.

Eligibility:-
Multiple banking/syndication/consortium
O/s exposure Rs. 10 crore and above with Banks/FIs
Should not be willful defaulter
No fraud
Standard and Sub-Standard Accounts If the accounts is classified as Standard or
Sub-Standard by 90% of the lenders in their books, the same could be treated as
Standard or Sub-Standard to become eligible for CDR
Doubtful Accounts Consent by minimum of 75% of the creditors (by value) and 60%
creditors (by number) for such restructuring is required.
Suit filed cases Consent by minimum of 75% of the creditors (by value) and 60%
creditors (by number) for such restructuring is required.
174

BIFR cases can also be considered on case to case basis after obtaining approval of
BFIR before implementation of CDR package

Reference to CDR could be triggered by (i) any or more or the secured creditors who
have minimum 20% share in either working capital or term finance or (ii) by the
concerned corporate, if supported by a bank or financial institution having stake as in (i)
above.

Legal Basis of CDR

CDR is a not statutory mechanism. it is a voluntary system based on Debtor Creditor
Agreement (DCA) and Inter Creditor Agreement (ICA)

DCA & ICA shall provide legal basis to CDR mechanism

The debtors shall have to accede to DCA, either at the time of original loan
documentation or at the time of reference to CDR Cell.

ICA would be legally binding agreement amongst the Creditors whereby creditors
would commit themselves to abide by the various elements of CDR system

If 75% of creditors by value and 60% by number agree to a restructuring package of
an existing debt the same would be binding on remaining creditors.

Revised Guidelines on Corporate Debt Restructuring
Based on the recommendations made by the Special Group constituted in September
2004 to review the corporate debt restructuring (CDR) scheme and also the feedback
received on the revised draft guidelines circulated amongst banks for comments, the
scheme has been modified as below:

The coverage of the scheme has been extended to include entities with outstanding
exposure of Rs.10 crore or more.
With a view to making, decision making more equitable, the support of 60 per cent of
creditors by number in addition to the support of 75 per cent of creditors by value,
is required.
The core group to be given the discretion in dealing with willful defaulters in cases,
other than those involving frauds or diversion of funds with malafide intentions.
Restoration of asset classification prevailing on the date of reference to the CDR
Cell to be linked to implementation of the CDR package within four months from the
date of approval of the package.
175

Regulatory concession in asset classification and provisioning to be restricted to the
first restructuring where the package also has to meet norms relating to turn-around
period and minimum sacrifice and funds infusion by promoters.
Convergence in the methodology for computation of economic sacrifice among banks
and financial institutions (FIs).
Reserve Banks role limited to providing broad guidelines for CDR mechanism.
Disclosures in the balance sheet to be enhanced for providing greater transparency.
Additional finance requirement by both term lenders and working capital lenders, to
be shared on pro-rata basis.
One time settlement to be allowed as a part of the CDR mechanism to make the exit
option more flexible.
Non-SLR instruments acquired while funding interest or in lieu of outstanding
principal to be subjected to regulatory treatment and valuation.
Early Alert System

Reserve Bank of India has issued broad guidelines on preventing slippage to npas by
recognizing the problems early and corrective measures to restructure the accounts
after an objective assessment of the viability of the unit and promoter's intention (and
his stake). The following features may be treated as early warning signals

1. Delay in submission of stock statement / other control statements / financial
statements.
2. Return of cheques issued by the borrower.
3. Devolvement of DPG instalments and non-payment within a reasonable period.
4. Frequent devolvement of lcs and non-payment within a reasonable period.
5. Frequent invocation of bgs and non-payment within a reasonable period.
6. Return of bills / cheques discounted.
7. Non-payment of bills discounted or under collection.
8. Poor financial performance in terms of declining sales and profits, cash losses, net
losses and erosion of net worth etc.
9. Incomplete doc. In terms of creation/registration of charge / mortgage etc.
10. Non-compliance of terms and conditions of sanction.

Lok Adalat

The Lok Adalats are established under the Legal Services Authority Act. It is a loan
recovery redressal mechanism where the banks organize a camp for recovery in one
place under the aegis of Civil Court and DRT as well. A spot settlement of recovery is
made after hearing the case of bank and borrower and the underlying securities. It is
176

the version of a small court set up to settle the recovery disputes of borrowers. It is a
cheap method of enforcing recovery. Lok Adalat can:

1. Take evidence.
2. Call for any Public Documents from any Public office or court.
3. Advantages of Lok Adalats
4. There is no court fee involved when fresh disputes are referred to it.
5. It can take cognizance of any existing suit in the court as well as look into and
adjudicate upon fresh disputes.
6. If no settlement is arrived at, the parties can continue with court proceedings.
7. The decrees by Lok Adalats are as good as a decree passed by civil court and are
binding on the parties.
8. No appeal lies against the decree passed by Lok Adalats as the matters are settled
through negotiation and mutual consent of the parties.

The ceiling amount for coverage under Lok Adalat is Rs. 20 lacs. All NPA accounts, both
suit filed and others, which are in Doubtful and Loss category, can be included for
reference to the Lok Adalats. Cases pertaining to Non-compoundable offence / offences
are not taken up by Lok Adalat.


Prudential Write-off (PWO)
Prudential write off is generally resorted to by the bank in respect of following
advances accounts where suits have been filed unless specifically exempted by Corporate
Centre, Mumbai.

1. Loss asset with 100 % cover by way of Provision, Interest Suspense, DICGC / ECGC
claim received, amount held in Suit Filed Sundry Deposit account etc.
2. Doubtful 3 categories and is covered by 85 % or more by Provision, Interest Suspense,
DICGC / ECGC claim received, amount held in Suit Filed Sundry Deposit account etc.
(except tangible security available) in the accounts of the bank. A decision on PWO will
always be taken by Corporate Centre, Mumbai.
Prudential Write off of the following accounts should not be done

1. TODs in current account and BOBCARD TODs and adhoc / one time BP/BD.
2. Accounts where frauds have been reported.
3. Quick mortality accounts (NPA within one year of sanction / disbursement)
4. Staff accounts (if any) and staff related / guaranteed accounts.
5. Advances accounts such as Cash Credit, Demand Loan, Term Loan etc. Along with TOD
in current account / SB account, BOBCARD TOD etc. (unless the TOD / BOBCARD
TOD is recovered).


177



Debt Restructuring for SMEs

Eligibility criteria: These guidelines would be applicable to the following entities, which
are viable or potentially viable

1. All non-corporate smes irrespective of the level of dues to banks.
2. All corporate smes, which are enjoying banking facilities from a single bank,
irrespective of the level of dues to the bank.
3. All corporate smes, which have funded and non-funded outstanding up to Rs.10 crores
under multiple / consortium banking arrangement.
Accounts involving willful default, fraud and malfeasance will not be eligible for
restructuring under these guidelines.
Accounts classified by banks as Loss Assets will not be eligible for restructuring.
In respect of BIFR cases banks should ensure completion of all formalities in seeking
approval from BIFR before implementing the package.

Viability criteria
Banks may decide on the acceptable viability benchmark, consistent with the unit
becoming viable in 7 years and the repayment period for restructured debt not
exceeding 10 years.

Additional finance
Additional finance, if any, may be treated as standard asset in all accounts viz;
standard, sub-standard, and doubtful accounts, up to a period of one year after the date
when first payment of interest or of principal, whichever is earlier, falls due under the
approved restructuring package. If the restructured asset does not qualify for
upgradation at the end of the above period, additional finance shall be pla ced in the
same asset classification category as the restructured debt.

Upgradation of restructured accounts
The sub-standard / doubtful accounts, which have been subjected to restructuring,
whether in respect of principal instalment or interest, by whatever modality, would be
eligible to be upgraded to the standard category after the specified period, i.e., a period
of one year after the date when first payment of interest or of principal, whichever is
earlier, falls due under the rescheduled terms, subject to satisfactory performance
during the period.

Asset classification status
During the specified one-year period, the asset classification status of rescheduled
accounts will not deteriorate if satisfactory performance of the account is
demonstrated during the period. In case, however, the satisfactory performance during
178

the one year period is not evidenced, the asset classification of the restructured
account would be governed as per the applicable prudential norms with reference to the
pre-restructuring payment schedule.

STAND STILL CLAUSE .

This is a legally binding agreement under CDR mechanism wherein both the party Debtor
and Creditor agreed not to initiate legal action during the stand still period as agreed
between them may be 90 days or 180 days.
Further during this stand still period borrower agrees that validity of the document will
stand extended for the said stand still period.
He also undertake that he will not resign from the directorship of the company and will
not approach to any other authority for relief concession etc.

Cut Back Arrangement

1. A borrowers account may have become NPA due to un-serviced interest, L.C.
devolvement, excess allowed to meet statutory dues, wages, insurance premium etc.
Or reduction in drawing power. Any credit coming into the account will be
appropriated completely towards the over-dues.
2. The borrower under such circumstances opens a current account with another bank
and routes all sales proceeds through that account. As a consequence the bank not
only fails to recover its legitimate dues but also faces the problem of erosion of
security. Under this circumstance, the bank can consider allowing operations, on
merits, till a revival package is prepared and sanctioned or an acceptable
compromise proposal is submitted by the borrower, upto sanctioned amount or
outstanding with a suitable cut-back, say, ranging from 5 to 10% (or more) of the
credits in the account to reduce/wipe-out the excess/overdues in the account.
3. All Regional Managers can consider allowing operations in the account upto
sanctioned limit or the outstanding with suitable cut back arrangement which would
eventually lead to reduction in the outstanding in the account.

Hand Holding:
Under hand holding operations the small units will be permitted to draw funds from
their cash credit account upto the amount equal to the amount of sale proceeds
deposited in the account. This will facilitate the smooth running of the business.
Once the implementation of rehabilitation package is finalized during the first six
months such hand holding operations are stiupulated/permitted.




179


Right of Recompense:
1. This is the Right available to the creditor to recover the amount of interest and
installment sacrificed while accepting a rehabilitation proposal after the unit has
been revived fully.
2. This is only a Right and it is left to the option of the individual Banks/Financial
Institutions etc. Whether to exercise this right or not. However, branches should
incorporate this clause in the package and in case of any difficulty refer the
matter to Corporate Centre.

Appropriation of recovery in NPA accounts
Non suitfiled NPA accounts:
(1) Principal (2) Un applied interest
Suit filed NPA accounts:
After crediting amount lying in SFSD account (1) Principal (2) Un applied interest
NPA where suit is decreed:
(1) Cost of recovery as per decree order (2) accrued interest and (3) principal
amount.


180

Human Resource Management

Baroda-Manipal School of Banking:
Baroda - Manipal School of Banking has been set up jointly by Bank of Baroda and Manipal
group. The school has been set up to first train prospective candidates in Banking and
Finance before their embarking on a Banking career with Bank of Baroda. The students are
selected through a rigorous selection process and given a systematic training in various
areas of Banking and management disciplines in order to make them ready Bankers by the
time they finish the programme.
The thrust of the training is to impart functional knowledge on general management and
specialized knowledge on Banking related topics and subjects. Participants are put through
a rigorous on-campus curriculum spread over 9 months and 3 trimesters which emphasizes
on application of knowledge and overall development of personality. Training at the school
will be supplemented with practical training in Various Branches of Bank of Baroda through
a focused 3 - month internship period.

Project SPARSH Human Touch for Business Excellence

Project SPARSH is a focused HR project undertaken by Bank by taking services of The
Boston Consulting Group (BCG) to revamp its existing HR processes, structures and
policies and create an integrated HR framework .Under Project SPARSH, bank covers the
following aspects:

Manpower
Training and development
Incentives to staff
Talent management and
Performance management.


HR Shared Services (HRCPC)

Under Project SPARSH, HRCPC has been set up at Vadodara where all the PSR activities,
various benefit claims, TE bills of unit head, medical bills, LTC/LFC bill claims, Festival
Advance, staff loans etc. are being processed. Looking to the feedback & experience, bank
may establish few more units. This initiative will at one hand create the expert hands and on
the other hand, it will further improve the satisfaction level of employees.

Career Portal
181

Bank has recently launched a Career Portal in the public domain of internet
(www.bankofbaroda.com, ; career) with an objective to make the new generation people
acquainted about the place of our bank in the market, competitive advantage of the bank from
the angle of business growth as well as career opportunities. It will also attract the new
generation people to be associated with our bank.

Career Path Policy
Bank has recently come out with a detailed guidelines for the areer progression of the
officers with following objectives:
Relevant exposure to be provided to the officers for their all round grooming
Required exposures to meet the promotion guidelines
Adequate opportunities for career progression
HR Audit

HR Audit is a structured mechanism to review the compliance of various service
rules/ regulations governing Human resources in various grade/ scales. It also
monitors compliance of statutory labour Law requirements. Moreover, verification/
scrutiny of sundry charges & P/L expenses ensures stoppage of misutilisation of
funds. HR Audit also enforces discipline and punctuality at the Branch/ Office
level.

An HR audit is like an annual health check-up. It plays a vital role in instilling a
sense of confidence in management of Human Resources related issues in the Bank.
HR Audit is a cost-effective way to reduce risk of liability and realize potential
cost savings incurred in misinterpretation of rules/ regulations.

PASAS
In light of our objective of moving towards Total Performance, we need to set in
place an efficient performance appraisal system for all Award Staff. Accordingly,
a Performance Appraisal System for Award Staff has been formulated and
introduced.

Objectives for introducing PASAS are as under:
To promote a performance oriented culture
To identify good performers.
To identify Talent amongst employees
To improve upon strengths and areas of improvement
To identify Training Needs of employees
To match job roles of employees with aptitude of individuals during Job
Rotation exercise
To identify employees for proper placements
Effective utilisation of aptitude and potential.
182


The following staffs are covered under the PASAS:
All Clerical Staff (including those having combined designations and also all
those drawing any Special Pay)
All Subordinate Staff (including staff having combined designations or drawing
any Special Pay or Full Time/ Part Time Sweepers)
Performance Appraisal Process :
The performance appraisal shall be 3-tiered :
Self Appraisal by the individual employee (This is optional)

First review by Reviewing Authority (RA).
Second and Final Review by Final Reviewing Authority (FRA).
It is now imperative that each one of us strives to move towards Total Performance.
Performance of each and every employee is extremely significant and, therefore
PASAS deserves fullest attention.
Baroda Sujhav
In the context of technology driven business changes, Staff Suggestions Scheme was
reviewed and revised Scheme titled as Baroda Sujhav is implemented from July
2004.The Scheme is applicable to all employees including regular part time employees
drawing scale wages. The objective of the Scheme is to encourage the ideation process
amongst staff members to offer innovative suggestions which are in tune with Banks
priorities and concerns and Customer Service-its effectiveness. The Scheme also
encourages staff members to give their suggestions on the banks Business
transformation Process. The Baroda Sujhav Committee is constituted for considering
awards/prizes under the Scheme. Quarterly Awards includes first cash prize of
Rs.10000, Second cash prize of Rs.5000 and third cash prize of Rs.3000/- , all along
with Certificate of Appreciation. Apart from quarterly awards, there is annual prize of
gold coin with banks emblem and concerned employees name engraved on it along with
certificate of Appreciation for the most outstanding suggestion of the year.
PARAMARSH
It is the endeavor of the Bank to address employees concerns on pro-active basis.
Bank has provided several welfare measures for employees and their dependents,
which take care of variety of exigencies.
Growing complexities of life, more particularly in big cities and metros are adding
pressures on personal life of people, which has adverse impact on his family, and also
the work life.
Sometimes many people develop habits like excessive smoking, gambling, drinking or
any other habit that deviates them from the mainstream of social life.
The organizational transformation envisages providing not only a healthy work-life
but also a satisfying personal and social life to employees.
PARAMARSH the psychological counseling centre where services of a professional
counselor would be available at the centre and employees can avail counseling service
183

free of charge, for resolving their psychological problems / worries which may be
disturbing their personal life.
Initially services are available to all employees of BCC, Mumbai and to all employees
of all other branches and offices in Mumbai.
HRnes

Bank of Baroda is a pioneer in the banking industry in establishing professional HR
systems and effectively harnessing it to the advantage of the organization as well as its
people. "hrnes" covers the entire gamut of human resources management function in the
Bank currently being performed and also includes many new sub-functions.

Objectives of HRNes

To put a cost effective and time saving (through leveraging of technology) system by
creating a Central Database which widely facilitates decision making related to almost
all major HR areas
To automate manual HR Processes like Roster, Pay Fixation, Seniority, Calculation of
salary, PF and loan deductions.
To overcome limitations of Manual System.
To facilitate Uniform application of rules.
Plugging Revenue Leakage.
To provide functionality of self Service.
To facilitate online applications for request transfer, grievance redressal, promotions,
selection, asset liability statement, income tax declaration, overseas assignment, faculty
selection etc.
To monitor HR processes through alerts.

The system comprises of four broad modules encompassing different functions:

Oracle Core HR module, covering all current HR processes in the Bank from Recruitment
to Retirement;
Fluous Payroll module, covering Salary, payments of various benefits, perks, welfare
schemes, terminal benefits, leave, Loans etc.
Oracle Learning Management module which includes training administration & e-learning
Employee Self-Service Module

It is a centralized web-enabled package with global data, at central server; Utilization
of single database for integrated decision making; The Central core of HR data would
bring data authenticity, real time information flow and would remove data multiplicity /
duplication and would ultimately improve quality of HR administration for business and
HR people.


184

BENEFITS TO THE EMPLOYEES:

Taking HR nearer to employees;
Transparency in HR administration;
Speedier HR responsiveness to employee-related issues;
Employees can view their own personal data, salary slip, IT calculation, online application
for leave, LFC, promotions & other HR processes etc.;
Accurate calculation of pay components, fixation of pay, settlement of claims & other
benefits, perks etc.;
Speedier processing of benefits to employees through the system;
Can support development and training activities;
Can develop competency framework;
Can develop profiles of high performing individuals;
Learning opportunities can be at their place and pace and managed more easily through
e-learning so as to propel learning activities of the employees;
Employees can participate in online tests for their promotion/overseas selection etc,
Can eliminate redundant data entry cycles & can improve data accuracy and immediacy

Annual Performance Appraisal Review

As per Govt. of India directives, for adoption of uniform employee appraisal practices
across the banking industry, our Employee Performance Management System (EPMS)
has been replaced by Annual Performance Appraisal Review (APAR) from financial year
2011-12.

Three authorities are there in this system- Reporting, Reviewing & Accepting
Authority.
Reporting Authority should be minimum one Scale higher than the Appraisee &
Reviewing Authority should be minimum one Scale higher than the Reporting
Authority. Accepting authority should be one grade above the reviewing Authority
Place for self appraisal is there.

Training need for self development of appraisee to be mentioned.

On submission of APR form to concerned reporting authority, an acknowledgment
copy is being given to reviewee.
Each appraisee is required to submit his/her completed form to Reporting Authority
within 15 days from the close of period of review, i.e latest by 15
th
April.
Reviewing authority to complete the review within 45 days from the close of the period
of review, i.e latest by 15
th
of May & Accepting Authority by 30
th
May.

185

Retail Loan products of our Bank at a glance

BARODA HOME LOAN
PURPOSE:
Purchasing of new residential house / flat and construction of new dwelling unit.
Purchase of old dwelling unit (not more than 25 years old). Beyond 25 years Regional
Head permission required subject to ascertaining structural soundness / residual life
of the building (5 yrs more than the repayment period).
Purchase of plot of land, subject to construction thereon within 3 years or upto the
period allowed by Development Authority (whichever is earlier) from the date of
purchase of plot.
Repayment of loan already availed from any other Bank / HFCs and /or other sources,
provided documentary evidences are produced.
For houses / flats constructed / purchased (not prior to 24 months) from own sources.
Loan for purchase / construction of second house can be considered who secure HL-1
to HL 3 risks rating under home loan rating model. [ Reimbursement of cost of plot is
not admissible under the scheme ]

ELIGIBILITY:

All individuals singly or jointly
Principal applicant must be employed minimum for three (03) years.
Minimum Age Principal Borrower 21 yrs and Co-borrower - 18 yrs

Maximum age:
Salaried Persons:
(i) Maximum age is 70 years. i.e., the age by which the Loan should be fully repaid,
subject to availability of sufficient regular and continuous source of income for
servicing the loan repayment, Provided Son/ Daughter/ Spouse who is a legal heir and
preferably below 50 years of age, with sufficient income for servicing the loan
repayment joins as coborrower/Guarantor
(OR)
(ii) if borrower pledges FDRs / NSCs / Govt. Security etc. of adequate value to ensure
Continuity of income for repayment of loan installment with interest if sanctioning
authority is satisfied about the same

If not fulfilling the above criteria (i) or (ii), age of the borrower plus repayment period should
not be beyond retirement age.
c) Maximum age can be considered upto 70 years, also in case of salaried persons drawing
pension, subject to the condition that 40% of the pension is sufficient to pay EMI. In case EMI
exceeds
40% of the pension, the borrower to deposit adequate amount in the loan account so as to
reduce the outstanding amount of loan to the extent it can be serviced by 40% of the pension.
186


Others (Non-salaried/self-employed/professionals/agriculturists etc.):
Maximum age is 70 years. i.e., the age by which the Loan should be fully repaid,
subject to availability of sufficient regular and continuous source of income for
servicing the loan repayment, provided
(i) Son/ Daughter/ Spouse who is a legal heir and preferably below 50 years of age, with
sufficient income for servicing the loan repayment joins as Co-Borrower/Guarantor.
(OR)
(ii) if borrower pledges FDRs / NSCs / Govt. Security etc. of adequate value to ensure
continuity of income for repayment of loan installment with interest if sanctioning authority is
satisfied about the same.
If not fulfilling the above criteria (i) or (ii), age of the borrower plus repayment period should
not exceed 65 years

Housing Loan to HUF is not to be considered as it is not meant for family business
of HUF.

LIMIT:
Maximum Amount of Loan
Rs. 300/- Lacs for Urban & Metro branches
Rs. 100/- Lacs for Rural & Semi-Urban branches
For extension: Rs 10/- Lacs.
Total amount of the loan sanctioned including that for extension should not Exceed Rs
300/- Lacs for Urban & Metro branches and Rs100/- Lacs for Rural & Semi-Urban
branches.

INCOME CRITERIA:
SOURCE INCOME CRITERIA

Salaried
Up to Rs. 20,000/= 36 times of monthly gross income
More than Rs. 20,000/
and up to Rs. 1 lac
48 times of monthly gross income
More than Rs. 1 lac 54 times of monthly gross income
Other than Salaried Persons 5 times of average ( last 3 years ) annual
income (Depreciation to be considered for
computing eligibility subject to certain
conditions )
REPAYING CAPACITY:

Total deductions including proposed EMI should be as below :
(i) In case of Salaried Persons :

Monthly Income (Bracket) Total Deductions not to exceed
187

( including proposed EMI )
Up to Rs. 20,000/- 40%
Rs. 20,000/- and up to Rs.
50,000/-
50%
Rs. 50,000/- 60%

(ii) In case of Others :
Annual Income Total Deductions not to exceed
( including proposed EMI )
Up to Rs. 2,40,000/- 50%
Rs. 2,40,000/- and up to Rs. 12
lacs
60%
Rs. 12 lacs 70%

MARGIN:

Loan Amount Purpose Margin
Up to
Rs. 20 Lac
Purchase of Plot 10%
House / Flat already constructed
from own resources
10%
All other cases 10%
Above Rs 20 Lac up to
Rs 75 Lac

Purchase of Plot 20%
House / Flat already constructed
from own resources
20%
All other cases 20%
Above Rs 75 Lac

Purchase of Plot 25%
House / Flat already constructed
from own resources
25%
All other cases 25%

Loan to Value (LTV) Ratio:
In view of the revised RBI guidelines, Bank has modified the Loan to Value (LTV) Ratio w.e.f.
15.09.2013 as under:

Home Loans upto Rs 20 Lacs : 90 %
Above Rs 20 Lacs upto Rs 75 Lacs : 80%
Above Rs 75 Lacs : 75%
Stamp duty, registration charges, other documentation charges and other expenses like Life
Insurance premium etc. in the cost of house property should not be included to calculate Loan
to Value (LTV)


188

REPAYMENT:
Maximum repayment period is -30- years, including moratorium period
Maximum moratorium shall be -36- months as under:
18- months moratorium period for under construction Houses and Building upto 7th floor,
thereafter -6- months additional moratorium per floor subject to maximum of -36-
months
Or
One month after completion of house/ taking possession of flat/house, whichever is earlier.

RISK RATING:

All Home Loan applications are subject to Risk rating. Credit rating to be done as per Home Loan Model
under Retail Rating Models. Total marks are 168 and the cutoff is set at 96 (Investment Grade HL-8)

Unique selling Points of our home loan product:
Sanction within 6 days.
On line application may be submitted.
Free personal accident insurance.
Life Insurance cover is also available on payment of premium that can also be financed.
Competitive rate of interest i.e. at Base Rate across the board
Top-up loan (AAA) can be availed 5 times during loan period.
Purchase of house/flat or construction made from own sources may also be covered
under home loan provided it is not prior to 24 months
Maximum repayment of 30 yrs, and moratorium of 36 months (18 month moratorium
period for under construction Houses and Building upto 7th Floor and thereafter -6-
months additional moratorium per floor subject to a maximum moratorium of -36-
months).
Concession of rate of interest 0.50% to home loan borrowers for loan for consumer
durables and 0.25% in car loan.
Maximum age is increased to 70 years i.e. the age by which the Home Loan should be fully
repaid, subject to availability of sufficient regular and continuous source of income for
servicing the loan repayment, provided Son /Daughter /Spouse who is a legal heir and
preferably below 50 years of age, with sufficient income for servicing the loan repayment
joins as Co- Borrower/Guarantor.


189

BARODA HOME LOAN TO NRIs /PIOs / Overseas Citizen of India (OCI)

PURPOSE:

Purchase of new residential house / flat
Construction of new dwelling unit
Purchase of old dwelling unit ( not more than 15 years old )
Purchase of plot of land, subject to the condition that a house will be constructed
thereon within -3- years from the date of purchase of plot.
Repayment of loan already availed from any other Bank / HFC
For repair / renovation / extension of existing house
For purchasing / constructing second house / flat for the purpose of self occupation.
Loan shall be considered for residential properties situated in India only.



ELIGIBILITY:

Non Resident Indians (NRIs) holding Indian passport or Persons of Indian origin (PIOs)
holding foreign passport, singly or jointly.
For this purpose person of Indian Origin means an individual ( not being a citizen of
Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or
Bhutan ) if
He at any time held Indian Passport or
He or either of his parents or any of his grandparents was a citizen of India by
virtue of the constitution of India or the Citizenship Act 1955, or
The person is a spouse of an Indian citizen or a person referred to in sub clause
(a) or (b) above.
Principal applicant should be having a regular job abroad in a reputed Indian / foreign
company, organization or government department holding a valid job contract / work
permit for the minimum past 2 years,
Must be employed / self-employed or having a business unit and staying abroad at least
for 2 years.
Must have minimum gross annual income equivalent to Rs. 5 lacs per annum.

AGE:

Minimum age must be 21 years. However, the minimum age of co-borrower can be 18
years.
Age of the borrower plus repayment period should not be beyond retirement age or 65
years whichever is earlier.


190


LIMIT & MARGIN:

For determining total cost of the house, the cost of car parking place / area located in
the same building / compound / society can be considered. However, it should be noted
that such car parking area should be specific, identifiable and incorporated in the sale
agreement / allotment letter.

PARTICULARS MINIMUM MAXIMUM
Purchase new / old house /
construction
Rs. 5 lacs Rs. 300 lacs for
metro/urban branches
Rs 100 lacs for
SU/Rural Branches
For repairs / renovations /
extensions
Rs. 1 lac Rs. 25 lacs
For purchase of plot of land - Rs. 50 lacs

INCOME CRITERIA:

SOURCE INCOME CRITERIA

Salaried
Up to Rs. 20,000/= 36 times of monthly gross income
More than Rs. 20,000/=
and up to Rs. 1 lac
48 times of monthly gross income
More than Rs. 1 lac 54 times of monthly gross income
Other than Salaried Persons 4 times of average ( last 2 years ) annual
income

Repayment Period: Maximum 15 years including moratorium.

Moratorium Period: For construction of new house - one month after completion of the house
subject to maximum period of 12 months from the date of first disbursement
For purchase of new/ old house/ flat - one month after taking possession subject to maximum
of 3 months from the date of first disbursement.
In case of repairs/ renovation/ extension, repayment to commence one month after completion
of renovation/ extension / repair work subject to maximum moratorium period up to 6 months.




191

BARODA HOME IMPROVEMENT LOAN

Purpose:
For repair / renovation / improvement / extension of existing house.
Purchase of furniture / fixture / furnishing / other gadgets such as fans, geysers, air
conditioners, water filters, air purifiers, heaters, desert coolers, etc.

To our existing Home Loan borrowers new borrowers, borrowers who have availed Home Loans
from other Bank/HFC

The House should not be older than 35 yeas. Residual life of the house may be minimum
repayment period plus 5 years to be certified by approved architect/valuer vis--vis total
repayment period of the loan

Age: Minimum age - 21 years.
Maximum age of the borrower + repayment period should not be beyond retirement for salaried
person and 65 years in case of others.
(HUF, NRIs, Staff members are not eligible)

Principal applicant must have consistent and stable source of income minimum for last -3- years.

Take over of existing Loans for repair/renovation/improvement taken from other Banks/HFCs.
Maximum Amount of Loan: Rs 10.00 Lacs
with the provision that the loan component for furniture / fixture / fittings / other
gadgets should not exceed Rs 5.00 Lacs

Salaried persons: -2- times of gross annual income

Other than salaried persons i.e, professionals/self employed/business persons
-3- times of net annual income (average of last three years) plus depreciation claimed in
individual capacity and not by the business unit. This may be verified from income tax return
and statement of income and expenditure.


192

Baroda Additional Assured Advance (AAA):

Baroda Additional Assured Advance (AAA) product under Retail Lending was basically devised
for our existing Home Loan Borrowers to provide hassle free finance to them for their various
emergent needs (other than speculative purpose). The facility is granted against the security of
extension of Equitable Mortgage of House Property already mortgaged to secure Home Loan
and the facility can be availed up to a maximum of 5 times during the entire tenure of Home
Loan

Purpose of loan Any purpose excluding speculative or illegal purpose
Eligibility All Existing Home Loan Borrowers including NRIs /PIOs, Staff and
Ex-staff Members (availed home loan under public scheme as well as
Staff Housing Loans) whose conduct of the account is good and the
account is classified Standard
There is no adverse feature / Auditor's/Inspecting Officer's
remarks in existing Housing Loan a/c
The facility can also be considered when an account is taken over
from other banks/HFCs
Loan Limit Minimum Rs 1/- Lac
Maximum Rs 200/- Lacs
Or
75% of Residual Value of House Property after deducting 150% of
outstanding loan amount of Existing Home Loan whichever is lower.
Margin 25% of Residual Value of House Property after deducting 150% of
outstanding loan amount of Existing Home Loan
Repayment
Period
As per request of the borrower subject to repayment capacity. However the
maximum period should not be more than the remaining period of Home Loan
Maximum age Age of borrower + tenure of AAA Loan should not exceed 70 years, in
synchronizing with Home Loan.
Rate of
Interest
1.50% over Base Rate i.e. 11.75% at present with monthly rests.


193

BARODA AUTO LOAN

Purpose of loan For purchase of New Car / Old Car (not more than 3 Years) for
private use.
For Installation of CNG/LPG Gas kit in four wheelers (New vehicle/
old vehicle not more than 5 years) and owned by individuals
Take over of existing Car Loans from other Banks.
For purchase of Two wheeler
Eligibility Salaried Employees
Businessmen, Professionals, Farmers,
Directors of Private/Public Ltd Co.
Proprietors of firms, Partners of partnership firms
High Networth Individuals (HNIs): Individuals with minimum salary of
Rs 1.25 Lacs per month and carry home salary should be at least 40%
(inclusive of proposed deductions) OR with annual income of Rs15/-
Lacs in case of business persons/farmers
Corporates with minimum Tangible Networth of atleast 10 times of
the Loan requested.
Age Minimum : 21 Years
Maximum :
a) Salaried Persons Present Age plus Repayment period should not exceed
retirement age
b) Others Present age plus repayment period should not exceed 65 years
Maximum Loan
Limit
For HNIs/ Corporates : Rs 100 Lacs
For Others:
For New Vehicle : Rs 15.00 Lac
For Old vehicle : Rs 10.00 Lac
For Eco friendly Gas Kit : Rs 0.25 lac
Subject to:
24 times of gross monthly income for salaried persons
3 times of gross annual income (average of last 2 years) for others

For Two wheeler:
Rs 1.00 Lac or 5 times of gross monthly income whichever is lower

For Takeover of Car Loan: Outstanding balance in the existing account or
85% of cost of the vehicle (on Road Price), whichever is lower.
Margin Loans upto Rs 15.00 Lac : 15% on On Road Price
Loan above Rs 15.00 Lac : 20% on On Road Price
(On Road price includes Invoice Price, Road Tax, Cost of Registration and
Insurance)
Old Vehicle : 40% of Agreed Sale Price
194

Gas Kit : 15%
Two wheeler : 10% on invoice value
Maximum age Income Level (For all segment
of
people)
Total deduction not to exceed
Up to Rs20,000/- p.m. 50% of Gross Monthly Income
> Rs 20,000/- and up to
Rs 1,00,000/-
60% of Gross Monthly Income
>Rs1,00,000/- 70% of Gross Monthly Income
Rate of
Interest
Car Loan: Base Rate + 0.25% irrespective of tenure w.e.f. 01.07.2013
Two Wheeler: Base Rate + 4.00%
Repayment New cars : Maximum 84 months
Old cars : Maximum 36 months
Gas kit : 24 months (if loan is sanctioned only for Gas Kit)
Take over : Total repayment period with our Bank plus the period of
loan already lapsed with existing Bank should not exceed 84 months
Two Wheeler : Maximum 60 EMIs



195

BARODA EDUCATION LOAN -
The additional concession 1% in interest for servicing interest debited during repayment
holiday for Loans sanctioned till 30.09.2013. (Not available to new Loans sanctioned
w.e.f 01.10.2013)

0.50 % (w.e.f. 01.10.2013) Concession in rate of interest to loans sanctioned for the
benefit of girl students. (prior to 01.10.2013 concession was 1.00%)

(i) BARODA VIDYA

Target Group Parents of Students pursuing school education from Nursery to
Class XII.
Eligibility Should be a Resident Indian.
Student should have secured admission to a Recognized school
/ Highschool / Jr. College (including CBSE / ICSE / State Board)
for any of the following courses
1. Stage I : Nursery to V th STD.
2. Stage II: VI th to VIII th STD.
3. Stage III:IX th to XII th STD
4. Evening courses of institutes approved by State/ Central Govt.
No minimum qualifying marks
Loan to be granted in the name of father/mother of the student
Coverage of
expenses for
Fee payable to college / school
Examination / Library / Laboratory fee.
Fee and other charges payable to hostel
Purchase of books /equipments/ instruments/ uniforms.
Personal Computers/Laptops wherever required.
Caution deposit / building fund / refundable deposit supported by
Institution bills / receipts.
Cost of external coaching /tuition is not to be considered
Maximum Loan
Limit
Maximum Rs 4.00 Lac
Margin NIL
Rate of
Interest
Base Rate + 2.50 % p.a.
0.50 % concession (w.e.f. 01.10.2013) in rate of interest to loans sanctioned
for the benefit of girl students. (prior to 01.10.2013 concession was 1.00%)
No Penal interest.
Repayment
Period
Loan for each yearly sub limit is repayable in 12 equal monthly
installments. First installment to be due 12 months after first
disbursement of each ears loan component .
Interest to be serviced as and when applied during the moratorium
period
196

Option to repay the loan after moratorium by way of EMI is also
available
Security No security
In case the loan is given for purchase of computer the same is to
be hypothecated to the Bank.
Classification
of Advances
Priority Sector
Discretionary
Lending Power
DLPs of Clean advance



BARODA EDUCATION LOAN - (ii) BARODA GYAN

Target Group Students pursuing Graduation, Post Graduation, Professional and other
courses in India.
Eligibility Should be Resident Indian.
Should have secured admission in recognized institution for approved
courses by UGC/Govt. /AICTE through Entrance Test/Merit Based selection
process after completion of HSC (10 plus 2 or equivalent)
Coverage of
expenses for
Fee payable to college/Institution/University/school/hostel.
Examination / Library / Laboratory fee.
Hostel fees / charges.
Purchase of books / equipments / instruments / uniforms.
Caution deposit, Building fund / refundable deposit supported
by institution bills/ receipts, subject to condition that the amount
does not exceed 10% of the total tuition fees for the entire course.
Purchase of Personal Computer / Laptop - essential for completion of
the course.
Insurance premium for student borrower
Any other expenses required to complete the course like study
tours, project works, thesis, etc.
Cost of external coaching / tuition is not to be considered.
For admission taken under Management Quota Seats, considered
under the scheme, fees as approved by the State Government/
Government approved regulatory body for payment seats will be
taken, subject to viability of repayment.
Maximum Loan
Limit
Maximum Rs 10 Lac
Margin Up to Rs 4 Lac NIL
Above Rs 4 Lac 5%
197

Rate of
Interest
Up to Rs.7.50 Lacs : Base Rate + 2.50 % p.a.
Above Rs.7.50 lacs: Base Rate + 1.75 % p.a.
Simple interest to be charged at monthly rests during the
repayment holiday/moratorium period.
0.50 % (w.e.f. 01.10.2013) Concession in rate of interest to
loans sanctioned for the benefit of girl students. (prior to
01.10.2013 concession was 1.00%)
Penal interest @ 2% p.a. on overdue amount, if the loan
amount exceeds Rs.4/- lacs.
Servicing of interest during the moratorium period till
commencement of repayment is optional for students. The
accrued interest during the repayment holiday period to be
added to the principal and repayment in Equated Monthly
Instalment (EMI) be fixed.
Moratorium
period
Course period + 1 year, or 6 months after getting job, whichever is earlier.
Repayment
Period
The loan is repayable in maximum 10 15 years after the above period as
under:
For loans upto Rs.7.50 lac : Maximum -120- installments
For Loans above Rs.7.50 lac : Maximum -180- installments
If the student is not able to complete the course within the scheduled
time, extension of time for completion of course may be permitted for a
maximum period of 2 years. If the student is not able to complete the
course for reasons beyond his control, sanctioning authority may at his
discretion consider such extensions as may be deemed necessary to
complete the course.
In case of above extension, moratorium period will stand extended
accordingly.
Security Up to Rs. 4.00 Lacs: Co-obligation of parent. No Security.
Above Rs. 4.00 Lacs and up to Rs. 7.50 lacs:
Collateral in the form of a suitable third party guarantee along with
assignment of future income.
Above Rs.7.5 lacs :
Tangible collateral security equal to 100% of the loan amount along with
assignment of future income of the student for payment of installments.
Classification
of Advances
Priority Sector (Upto Rs. 10.00 Lacs)
Discretionary
Lending Power
For Loans upto Rs.7.50 Lacs, where no tangible securities are available,
DLPs of Clean advance



198


BARODA EDUCATION LOAN - (iii) BARODA SCHOLAR

Target Group Students going abroad for Professional / Technical studies
Eligibility Should be an Indian National.
Secured admission to professional / technical courses Abroad
through Entrance Test / Merit Based Selection process
Coverage of
expenses for
Fee payable to college/Institution/University / hostel / Mess charges.
Examination / Library / Laboratory fee.
Purchase of books / equipments / instruments / uniforms.
Personal Computers/Laptops wherever required.
Caution deposit, Building fund / refundable deposit supported by institution
bills/ receipts, subject to condition that the amount does not exceed 10%
of
the total tuition fees for the entire course.
Purchase of computers if essential for completion of the course.
Insurance premium for student borrower.
Any other expenses required to complete the course like study
tours, project works, thesis, etc.
Travel expenses / passage money.
Cost of external coaching / tuition is not to be considered.
Maximum Loan
Limit
Maximum Rs 20 Lac
Margin Up to Rs 4 Lac NIL
Above Rs 4 Lac 15%
Rate of
Interest
Upto Rs.7.50 lacs : Base Rate + 2.50 %
Above Rs.7.50 Lacs : Base Rate + 1.75 %
0.50 % (w.e.f. 01.10.2013) Concession in rate of interest to loans
sanctioned for the benefit of girl students.
(prior to 01.10.2013 concession was 1.00%)
The additional concession 1% in interest for servicing interest debited
during repayment holiday for Loans sanctioned till 30.09.2013. (Not
available to new Loans sanctioned w.e.f. 01.10.2013)
Moratorium
period
Course period + 1 year, or 6 months after getting job, whichever is earlier.
Repayment
Period
The loan is repayable in maximum 10 15 years after the above period as
under:
For loans upto Rs.7.50 lac : Maximum -120- installments
For Loans above Rs.7.50 lac : Maximum -180- installments
If the student is not able to complete the course within the scheduled
time, extension of time for completion of course may be permitted for a
maximum period of 2 years. If the student is not able to complete the
199

course for reasons beyond his control, sanctioning authority may at his
discretion consider such extensions as may be deemed necessary to
complete the course.
In case of above extention, moratorium period will stand extended
accordingly.
Security Up to Rs. 4.00 Lacs: Co-obligation of parent. No Security.

Above Rs. 4.00 Lacs and up to Rs. 7.50 lacs:
Collateral in the form of a suitable third party guarantee along with
assignment of future income.
Above Rs.7.5 lacs :
Tangible collateral security equal to 100% of the loan amount along with
assignment of future income of the student for payment of installments.
Classification
of Advances
Priority Sector (Upto Rs. 10.00 Lacs for study in india & Rs.20/-lac for study
abroad)
Discretionary
Lending Power
For Loans upto Rs.7.50 Lacs, where no tangible securities are available, DLPs
of Clean advance
Freebies Drafts in foreign currencies drawn on our branches / subsidiaries required in
favour of college/University /Student will be issued free of exchange /
commission.



200

BARODA TRADERS LOAN :
Nature of
Facility
Overdraft or Loan
Purpose Working capital requirements.

Development of shop (e.g. purchase of equipment, P.C., air-conditioner,
furniture etc. but not for purchase of shop), for need based
requirements subject to a maximum of 25% of the working capital
limit sanctioned.

Non-fund based facilities within the limits assessed based on value of
securities (i.e. Bank Guarantee and Letter of Credit).
Eligibility Individuals, Proprietorship & Partnership Firms, Private Limited
Companies and Registered Cooperative societies engaged in trade of
any commodity/goods in physical form required by the community and
trading in them is not prohibited by law or opposed to public interest.
(HUF & Public Limited Companies are not eligible).
Dealers in Silver / Gold jewelers against the jewellery, but not
against bullion/ raw gold.
The business units should have been established in the line of
business for minimum period of- 2-years.
Trading units established by our existing customers with satisfactory
dealings or their close relatives, even if these are established for
less than -2- years.
Trading units of non-customers having less than -2- years
establishment with the prior approval of Regional Head.
Limit Minimum: Rs. 25,000/-
Maximum:
I. For Rural & Semi urban Branches Rs.300 Lacs
II. For Urban & Metro Branches Rs 400 Lac

Assessment of working capital limit:
The credit limit is to be considered as under:
20% of the projected/Accepted sales
OR
Advance value of collateral assets to be charged, whichever is lower.

Assessment of loan for Shop Development:
Need based finance to be considered as per requirements subject to a
maximum of 25% of the working capital limit sanctioned (within overall limit
assessed based on value of security).
Margin 40% on realizable market value as per recent valuation report of
201

immovable property.
If the property is purchased within last three years, the registered
value to be accepted as the market value.
10% on Banks own FDRs.
15% on the surrender value of Life Insurance Policies, NSCs,
Government Bonds etc.
Rate of
Interest
Base Rate + 3.00%
Period 12 months subject to annual review.
Repayment Loan - Maximum 60 EMI (depending on repayment capacity).
Commitment
charge
0.50% p.a. for utilization of limits below 75% (on quarterly average Basis) of
sanctioned limit in case the Limit sanctioned is Rs.500 lacs and above
Security Tangible collateral securities in the form of mortgage of land (not
agricultural land) and building.
Property to be mortgaged to be ONLY in the name of Borrower,
Proprietor, Partner, Director or their close relatives.
Property standing in the name of third party can also be accepted,
provided:
a) Owner of property offers personal guarantee, and
b) The credit facility is for Rs. 1 lac and above.
Credit Rating Fresh advance can be granted only to the applicants securing minimum
credit rating of BTL-6 under the new Credit Rating Model applicable
for limits upto Rs.200 lacs hosted on LAPS.
Facilities of more than Rs.200 lacs shall be rated on BOBRAM.
Take over
Norms
The operating units may take over good quality accounts from other Banks
subject to complying with non-financial norms laid down in Domestic Loan
Policy.

The entity must also satisfy following financial norms:
Current Ratio : Minimum 1.17:1
Debt Equity Ratio : Maximum 6:1
Other
Provisions
Stock statement to be obtained once a year i.e. as of last day of February,
by 10th of March every year.


202

BARODA TRADERS GOLD CARD SCHEME
Nature of
Facility
Overdraft
Eligibility Individuals, Proprietorship & Partnership Firms, Private Limited Companies
and Registered Co-operative Societies engaged in trade of any
commodity/goods and have been sanctioned overdraft facility under Baroda
Traders Loan Scheme above
Rs 25 Lacs and fulfilling the following criteria;
1. Existing account in Standard Asset Category for last 2 years
2. No major inspection irregularity in the account
Credit Rating Minimum BTL 4 for limit up to Rs 200/- Lacs including proposed limit under
Baroda Traders Gold Card.
Obligor Rating of minimum BOB-4 for limit above Rs 200/- Lacs.
Purpose To meet the emergent working capital requirement arising due to peak
season requirements, delayed payments by debtors, for tax payment, etc.
Limit 20% of the sanctioned Baroda Trader Limit
OR
70 % of realizable market value of immovable property (including realizable
market value set aside for sanctioning of regular Baroda Traders Limit),
whichever is lower.
Security Extension of equitable mortgage of property/ies mortgaged
Rate of
Interest
50 bps over applicable ROI to Baroda Traders Loan Overdraft facility
Period 12 Months - to be allowed on 3 occasions in a year for a maximum period of 2
months on each occasion. However, there should be gap of 1 month between
two drawls




203

BARODA MORTGAGE LOAN:
Purpose For any purpose except for financial speculation of any type.

(Proposals from persons involved in Real Estate Developments, Property
Dealers/Brokers, Share/Stock Brokers and Persons engaged in speculative
activities should not be considered.
Eligibility Individuals
Salaried Employees/ Professional, Self Employed & Others, who are
income tax assesses for a minimum of last 3 years.
Minimum Gross annual income : Rs. 60,000/-

NRIs
Must be holding a valid job contract /work permit for minimum past 2
years or employed / self-employed or having a business unit and
staying abroad at least for 2 years.
Minimum gross annual income: Rs 5 lacs.
Existing staff members are not eligible.
Age Minimum - 21 years
Maximum - 60 years
(The customer age + Loan tenure should not exceed retirement age for
salaried class & 65 years for NRIs & others)
Type of Facility Term Loan/ Demand Loan/ Overdraft
In case of Overdraft, minimum annual turnover in the account should
be at least 25% of the limit.
NRIs will be granted Term Loan/Demand Loan only.
( NRIs are not eligible for Overdraft facility)
Limit (a) Minimum : Rs. 1.00 Lacs
(b) Maximum:
For Rural Branches : Rs.10.00 Lacs
For other Branches : Rs. 300.00 Lacs.
Loan to professional : Rs.100.00 Lacs
(Subject to income criteria, repayment capacity and advance value of the
property offered as security)
Income Criteria Salaried Class: 36 times of Gross Monthly income.
Other Individuals: 5 times of Average (last three years) annual
income.
In case of Loan to Professional: 25% of Average annual Business
Turnover /Professional receipt for last -3- years.
(Income of all the joint owners of the property who are co-borrowers can be
clubbed.The facility can be considered against property to be mortgaged in
the personal name of borrower or his/her close relatives viz. spouse,
parents, son,daughter, brother, sister, brothers wife who should stand as a
204

co-borrower.)
Rate of
Interest
Base rate + 3.25%
(Penal interest 2% p.a. on overdue amount)
Margin 50% of the Distress Sale Value of the immovable property to be mortgaged.
Personal
Guarantee
Up to Rs 10 Lacs: Personal Guarantee may not be insisted upon.
Over Rs.10 Lacs: Third party guarantee of an individual having
adequate worth.
Repayment
Period
Term Loan : Maximum 84 Months in Equated Monthly Installments (EMI)
Overdrafts : 12 months subject to annual review
Moratorium period: Maximum 3 months.

In case of Overdrafts:
Minimum annual turnover in the account should be at least 25% of the
limit.
Wherever it is observed at the time of review that stipulation of
annual turnover is not complied with, the limit should be reduced
annually as under:
Maximum period of overdraft: 10 years.
Reduction in operative limit proportionately by end of each year,
synchronizing with review of the account.
Alternatively it may be explored the possibility of converting the
overdraft facility into term loan and fix EMI for recovery of the
balance amount.
Valuation of
Property
In case of properties acquired within last -3- years, amount of registered
sale deed should be taken as value of property.
(In such cases fresh valuation may be dispensed with if the sanctioning
authority is satisfied with registered value).
Lending Powers Sanctioning authorities upto Grade/Scale III are authorized to
sanction Facilities upto Rs. 25.00 Lacs only.
Sanctioning authorities in Grade/Scale IV and above are authorized
to exercise their normal DLPs for sanction.
Activity
Clearance
Activity Clearance for Sanctions under this product is required to be
obtained from Regional Heads for facilities upto Rs.3 Crores and for
facilities beyond Rs.3 Crores Zonal Heads are authorized to grant
Activity clearance.
Retail Loan Factories have been kept out of purview of activity
clearance.



205

Baroda Premium Personal Loan
(New Personal Loan Scheme for Salaried Employees w.e.f. 01.11.2013.)
Purpose For any purpose other than speculation
Eligible
Borrowers
Permanent confirmed employees of Central/State Govt.
Autonomous Bodies /Public/ Joint sector undertakings,
Reputed Limited Co. / MNCs and Reputed Universities/Colleges
/Schools/Educational Institutions/Research In with minimum one year of
confirmed service.

(Employees of Proprietorship, Partnership firms and Pvt. Ltd.
companies are not eligible)
(Employees maintaining any Salary linked Loan/ Overdraft accounts with
any Bank are not eligible for this Scheme)
The Scheme is based on the concept of CHECK OFF.
Check-Off: The process by which the salary disbursing authority
undertakes to deduct loan installments from the salary of the borrower
and remits the same to the Bank for credit of the Loan account.
Account
Relationship
With our Bank for at least 6 months and the Branch Head is satisfied with
the conduct of the account. (OR)
With any other Bank for at least 6 months. (Original
statement of account for last 6 months to be obtained,
verified and satisfied upon by the conduct of the account)
Age Minimum: 21 years
Maximum: Age of Borrower plus repayment period should not exceed
retirement age.
CHECK OFF

(Stipulations
for Category -
A
& Category B)
CATEGORY- A (with Check Off)

Satisfying stipulations I (AND) II as per below:
l. The salary disbursing authority undertakes to deduct loan
installments from the salary of the borrower and remits the same to Bank
for credit to the Loan account Or the employer pays the borrowers
salary into the employees Savings /Current Account with our Bank.

ll. (a) The borrower gives an irrevocable Standing Instruction (SI)/
instruction for
auto Recovery for payment of the loan instalments from his
aforesaid
account with the SI/Auto Recovery being synchronized with the
date of
credit of salary in the borrowers Savings/Current Account
(AND)
(b) Undertaking from the employer to inform the Bank if and
206

when there is a transfer or severance due to borrowers resignation,
retirement, death
etc. (AND)
(c) Undertaking from the employer to obtain a NOC from the Bank
before
settling the dues of the borrower on resignation, retirement,
death etc.
CATEGORY- B (without Check Off)

Satisfying stipulations I (OR) II as per below:

I. (a) The employer pays the borrowers salary into his
Savings/Current Account with our Bank (AND)
(b) The borrower gives an irrevocable Standing Instruction (SI)/
Instruction for auto Recovery for payment of the loan installments from
his aforesaid account with the SI/Auto Recovery being synchronized with
the date of credit of salary in the borrowers Savings/Current Account.
(AND)
(c) Undertaking from the employer to obtain a NOC from the Bank
before settling the dues of the borrower on resignation, retirement,
death etc.
(OR)
II. (a) Conditions I(a) & (b) are not fulfilled but the borrower
provides ECS mandate for recovery of monthly installments and if other
eligibility criteria are fulfilled. (AND)
(b) Undertaking from the employer to obtain a NOC from the Bank
before settling the dues of the borrower on resignation, retirement,
death etc.
Minimum Net
Monthly
Income
(NMI)
For Category- A: Minimum Net Monthly Income (NMI) of the employee
should be
Rs 10,000/-

For Category- B: Minimum Net Monthly Income (NMI) of the employee
should be
Rs 15,000/-
Loan Amount For Category- A:
Rs 10.00 Lacs or 24 times of Net Monthly Income (NMI) whichever is
lower.
For Category- B:
Rs 5.00 Lacs or 24 times of Net Monthly Income (NMI) whichever is lower.
Rate of
Interest
For Category- A:
Base Rate +3.00% i.e, 13.25% at present
207


For Category- B:
Base Rate + 4.00% i.e, 14.25% at present
Repayment
Period
Maximum -84- months in Equated Monthly Installments
Credit Rating Clean Loan Model should be used. Cut off score is 30 and Investment
Grade is CL7 & above.



208

SOME OTHER RETAIL LOAN PRODUCTS

PRODUCT Eligible Amount Margin Repayment
Loan to consumer
Durable/PC/Laptop
5 times of GMI
or Max Rs 1 Lac
Which ever is
lower
For Consumer
Durable 10%
For PC/Laptop
25%
60 EMI Base Rate +
4.50%
Personal Loan 6 times of
GMI Max Rs 2
Lac
36 EMI Base Rate +
4.50%
Pension Loan
(Civil)
10 times of
monthly pension
Max Rs 1 Lac
36 EMI Base Rate +
4.50%
Defence Pensioner 20 times of
monthly
pension; Max
Rs 2 Lac
whichever is
lower
60 EMI Base Rate +
4.50%
Loan to Doctors Min Rs 50,000
Max: R/SU Rs
15 lac
(of which
working capital
Rs 1 Lac)
U/Metro Rs 50
Lac
(of which
working capital
Rs 3 Lac)

Upto Rs 5 Lac
25%
Above Rs 5 Lac
15% of cost of
project
Working capital -
Nil
Loan 60
EMI
Up to Rs 2
Lac
BR + 3.00%
Above Rs 2
Lac
BR + 2.50%
Baroda Ashray
(For Senior
citizens, Age 60
yrs. Joint
borrower spouse
not below 55 yrs
Max Rs 100 Lac 20% on Present
market value
15 Years.
May be
extended
till survival
of
borrowers.
Life
expectancy
taken as 80
yrs
Base Rate +
1.75%
Loan Against 60% of rent EMI, for Base Rate +
209

Future Rent
receivable
(Non Commercial
real Estate)
due(Net of
TDS, advance
rent, SD) &
receivable
subject to min
Rs 25 lac
For Landlord
of Bank of
Baroda
Premises: No
Min Limit
Max Rs 200 Cr
(Single)
Rs 250 cr
(group)
Max 10 yrs
or
unexpired
certain of
lease
period,
which ever
is less
3.25 %
Loan Against
Future Rent
receivable
( Commercial real
Estate)
CRE- 55% of
rent (net of
TDS, advance
rent, security
deposit), due
and receivable,
for the
unexpired
certain period
of lease and
uncertain
period of lease
(optional
period)
Max Rs 200 Cr
(Single)
Rs 250 cr
(group)

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