Critical Examination of

Appraisal and Monitoring

of Borrowers Accounts
By
Shri. P. R. Kulkarni
Managing Director
Fluent Consultants Pvt. Ltd., Pune

P. R.Kulkarni, Managing Director,

Fluent Consultants Pvt.Ltd., Pune

Safety of Loan / Advance

Money lent by the bank must be safe,

secured and should come back with
interest as stipulated.
If the money are not safe and secured or
does not come back as agreed, the legal
recourse can be adopted successfully and
amounts can be received.
P. R.Kulkarni, Managing Director, Fluent
Consultants Pvt.Ltd., Pune

Safety How achieved

Pre-sanction appraisal to determine

bankability of each loan proposal
Post-sanction control to ensure proper
documentation, follow-up and
supervision

P. R.Kulkarni, Managing Director, Fluent

Consultants Pvt.Ltd., Pune

Pre-sanction appraisal
Aspects for consideration

Loan application banks prescribed

application for borrower and guarantor
Project report, if applicable
Financial papers
Asset-liability details of borrower and
guarantor
P. R.Kulkarni, Managing Director, Fluent
Consultants Pvt.Ltd., Pune

Pre-sanction appraisal
Aspects for consideration

Title to the securities offered

Information collected during discussions
with borrower and guarantor
Site visit observations
Information collected from references
P. R.Kulkarni, Managing Director, Fluent
Consultants Pvt.Ltd., Pune

Pre-sanction appraisal
Aspects for consideration

Market reports about borrower and

guarantor
Market reports about borrowers line of
activity
Confidential reports called bankers
Loan policy of the bank
RBI directives, if any
P. R.Kulkarni, Managing Director, Fluent
Consultants Pvt.Ltd., Pune

Pre-sanction appraisal
Interview of the Borrower

The missing links of information can be obtained,

both for borrower and guarantor
Trade / business knowledge of the borrower can be
ascertained
Business acumen and financial standing can be
ascertained
Entrepreneurship characteristics such as
commitment, drive and energy, goal setting, problem
solving skills and risk taking capacity can be judged
P. R.Kulkarni, Managing Director, Fluent
Consultants Pvt.Ltd., Pune

Pre-sanction appraisal
CAT principle

Consistency
Adequacy
Transparency
P. R.Kulkarni, Managing Director, Fluent
Consultants Pvt.Ltd., Pune

Security

Type of property movable, immovable,

bank deposit, actionable claim
Whether title is clear, marketable for
immovable property
If stock is paid for movable
Type of charge to be created mortgage,
hypothecation, lien, assignment
Who will create charge only owner
P. R.Kulkarni, Managing Director, Fluent
Consultants Pvt.Ltd., Pune

What process note should contain

Details of borrower
Details of business / activity
Financial analysis
Details of security
Details of guarantor
Visit / interview details
Overall opinion about the loan proposal
Recommendations
P. R.Kulkarni, Managing Director, Fluent
Consultants Pvt.Ltd., Pune

10

Credit Decision

Credit decision is based on the judgment of

the person.
The judgment is partially subjective and
partly objective.
Careful analysis of all the factors is required
Loan sanction letter / advice should be
carefully prepared incorporating all terms and
conditions
P. R.Kulkarni, Managing Director, Fluent
Consultants Pvt.Ltd., Pune

11

Monitoring the loan account

Monitoring starts immediately after sanction

and acceptance of sanction terms by the
borrower and guarantor
Monitoring is at pre-disbursal stage and then
at post-disbursal stage
No loan becomes bad overnight

P. R.Kulkarni, Managing Director, Fluent

Consultants Pvt.Ltd., Pune

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Pre-disbursal Monitoring

Compliance to sanction terms

Proper documentation including charging of
security
Noting of charge
Insurance of security with bank clause
Disbursement conditions /modalities

P. R.Kulkarni, Managing Director, Fluent

Consultants Pvt.Ltd., Pune

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Operational Monitoring

Nature of operations
Debit credit nature
Stock statement submission and its
verification
Security whether intact
Insurance renewal
Documents continuation from limitation point
Contd.
P. R.Kulkarni, Managing Director, Fluent
Consultants Pvt.Ltd., Pune

14

Operational Monitoring

Drawing power availability

Excess drawing
Return of cheques
Total turn over
Conduct of business as projected
Interest / EMI payment
Consistency in operations
Contd. ..

P. R.Kulkarni, Managing Director, Fluent

Consultants Pvt.Ltd., Pune

15

Operational Monitoring

NPA as per prudential norms

NPA account overdrawn, no security,
operations stopped, DP not available
Monitoring gives danger signals
immediately

P. R.Kulkarni, Managing Director, Fluent

Consultants Pvt.Ltd., Pune

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Thank you
Lecture and presentation by
P. P. Kulkarni
Managing Director
Fluent Consultants Pvt. Ltd., Pune
P. R.Kulkarni, Managing Director, Fluent
Consultants Pvt.Ltd., Pune

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