Credit investigation report a) Branches have to prepare a credit investigation report, in order to avoid undesirable consequences at a later stage

and also improve the quality of credit dispensation. b) Credit investigation report should be a part of credit proposal. The proforma of the said credit investigation

report is furnished in the annexure. c) Branches have to conduct a detail credit investigation on the suggested guidelines as per the format and invariably submit the credit investigation report duly completed in all respects while forwarding the proposal ,whether it is a new or renewal proposal.

Branches must take note of the following guidelines in this regard. Wherever a proposal is to be considered based only on the merits of flagship concern of the group , than such report should also be complied in respect of the subject flag-ship concern besides the applicant company.

 In regard to the proposal falling beyond the power of RO ,the branch should ensure participation/involvement of RO in completion of this report. The credit investigation report should accompany

all the proposal with fund based limit above Rs.25 Lakhs or non fund based limit of above Rs.50 lakhs. The party may be suitably kept informed that the completion of this report is one of the requirements in the connection the processing for consideration of the proposal.

c. The branch should obtain a copy of the latest sanction letter issued by existing Bankers to the party and the terms of sanction should be studied in detail . Wherever necessary , comments on the observation lapses occurred in following the

term sanction should be detailed. Further, any important factors like founding of interest ,re schedulement of installment are any other terms and conditions stipulated should be highlighted as they would highlight adverse feature of the party.

 The branches should also obtain a cop[y of the statement of accounts for the latest 6 months period and study. The Branch should provide remark on availment of continuous excess drawings , return of cheques ,scarce operation . non-payment of interest or any other

adverse features observed etc. Personal enquiry should be conducted by our bank,s officials with the responsible official of party,s present/other Banker and enquiries made with a view to elicit information on the conduct of the account etc.

 Minimum three customer/creditors should be interviewed and opinion complied. Care should be taken in selection of customers creditor who shall be representative in character. Discrete enquiries should be made regarding quality of the product,

payment terms, period of overdues if any, mentioned clearly in the report. The enquiries should be aimed to ascertain specifically the status of trading of the applicant and to know their capability to meet their commitments in time.

 The Branch should make enquiries with concerns engaged in the similar line activity to know the market trend. Further any inter corporate loans availed by the company. The position regarding payment of taxes/duties may be ascertained from the notes to the balance

sheet of the firm furnished by chartered accountants of the firm. This may also be found out by verifying the relevant sources like Tax return , Orders , excise challan, invoices etc . and also by personal enquiry from market sources.

In depth observation may be made as to: Whether the unit is working in full swing; Number of shifts,number of employees; Any obsolete stocks finished goods with the unit; Machinery-imported or indigenous or obsolete or status of working(age and

condition of the machinery installed); Information on power,water,pollution control etc; Information on industrial relation;marketing strategy. Credit files Branches have to maintain separate credit compulsorily in the case of accounts with limits of Rs.50 lakhs and

above(fund based/non based). For all other accounts also it is preferable to maintain such files for quick access of all information related to the credit. A Credit file provides an important sources material for Loan supervision .It is also a critical source of information for internal

reviews, external audit and examination by the regulatory authorities. CONTENTS OF CREDIT FILE The credit file should provide all information pertaining to a credit decision and thereafter regarding credit follow-up and supervision. The credit file has to be maintained separately and should not

be used filing day-to-day correspondence. The recommended contents a credit file are as follows: Basic information report on the borrower Milestones of the borrowing unit Competitive analysis of the borrower Credit investigation report

Credit approval memorandum Financial Statements Copy of Sanction Communication Security Documentation List Dossier of the sequence of events in the account Collateral valuation report Summary of QIS reports

Latest Ledger [age supervision Report and limit summary Visit Reports Half yearly Credit Rating of the Borrower Quarterly risk classification Press clippings and industry analysis appearing in News paper/Journals

Minutes of latest consortium meeting Customer profitability Summary of inspection/audit observations Remedial Strategy and Action plan in case of accounts classified as A2,A3,B,C OR D thus credit file provides all the relevant information regarding the

present status of the loan account ,as well as the basis for taking a credit decision in the past, along with the covenants and collateral supporting the credit decision. This file is useful especially to: The credit officer ,authority it is a valuable for monitoring the account.

The controlling authority it provides concise information regarding the background and the current status of the account. The regulatory authorities it provides a summary for performing an Audit.