Alexander Mejía

5.3 LOAN SANCTIONED PROCESS:

The Documents, Terms & Conditions Require Being For Application For Various Types Of Loans For

Sanctioning:-1) Borrower & guarantors should be shareholder account holder of the bank.

2) Reason for the loan & income certificate of the Borrower & guarantors

3) Xerox copy of Reshan Card / Home bill / Electricity Bill / Phone bill for address proof.

4) Photo id of the borrower and guarantors which Includes Election Card/PAN Card/Driving

5) Balance sheet and Profit & Loss statement order for Previous three years of the business.

6) Stock statement, furniture, Machinery, shop papers if He is giving it as security.

7) Two photos of both borrower and guarantors.

8) For additional security 1) LIC policy 2) Other banks cheques

9) If amount of loan is than 1, 00,000 then the borrower should have additional shares at 5.0 % of the loan amount. If he doesn’t have it then he has to purchase it.

In case of house /Flat /Shops /Plot there are some extra documents required as:

• Plot purchase copy

• Ownership city survey 7/12 document original.

• Original agreement copy between & builder.

• To be complete.

• Stamp paper according to demand condition.

Loan procedure of The Dhanshri Multi-State Co-operative Society Bank Ltd

Why people take loan from bank? The answer for this question is very loan & the best answer for this question can be given by the banker only. People take loan for their personal need, because they don’t have money spend to satisfy their needs and wants etc.

The reason of the loan can be anything. By categorizing these reasons the bank introduces the various types of loan into the market.

All the files for the loan proposal comes to the head office of the Bank.At the Head Office in every month the bank conduct two meeting of board directors where the files are decided to sanction or

Every file comes to the head office with the report of the manager. Because bank manager knows very well that how is the transaction of that applicant on his account.

Then the file goes to the Loan Manager at Head Office for his report on that report. Every

one gives their own view on the basis of the applicant’s transaction & on the basis of document which is submitted by the applicant.

After the report the file is placed in to the Director’s Meeting on 5^th or 21^st of every month in which board of directors decides that which file should be sanctioned and which is not to be sanctioned. After the meeting all the unsanctioned files is sent to the respective with all document which was previously submitted by the applicant & the sanctioned files remains in the Head Office in the Loan Department for the further provisions

Then bank takes the signature of the person to whom the loan is sanctioned along with his two guarantors. The bank takes the signature of their own sanctioned form on which it is written that the borrower and the guarantors are liable to pay the amount of loan. The bank also takes the signature of the borrower on three debit voucher. Debit voucher and Credit voucher is used for internal transaction of the bank. Bank also takes the signature on another four documents that are

• 1) Promissory Note

• 2) Loan Agreement

• 3) Lien & Set Off

• 4) Letter of Guarantee

After that bank ask for the original papers of the property which is to be given as security.

If the borrower had given the LIC policy then bank assigns it in bank’s favours. So that if the borrower will fail to pay that loan amount of the bank then the bank can recover it from LIC policy by giving it to the LIC Company. The bank always gives loan to the borrower up to 75% to 80% of the total security which is given by the borrower.

After the completion of all the document and signature the file goes to the branch manager for the signature on the Sanctioned Letter. Once the signature is done then the bank staffs open the loan account of the borrower and transfer the amount of the loan to the Saving, Current, Cash Credit or any other account of the borrower.

5.4 Loan Recovery Procedure:

This is the more significant section of the whole bank as people here are having more work. This is so because, the Bank has 3.44% NPA (Non Performing Asset) and it is harmful to the banks business, as the name implies this section deals with the recovery of loan.

Researcher study the loan recovery procedure, each bank has its own procedure of recovery it includes policy adopted by bank for its recovery. Each and every bank tries to recover its money as early as possible so banks take observation and also strict supervision from borrowers. If bank fails to recover the money in time then it is adversely impacted on banks reputation, so to reduce upcoming problems recovery is necessary.

‘Recovery procedure’ includes

• Importance of recovery of loan

• Provision of bank as per category of borrower

• Recovery of loan to its doubtful borrower.

• Recovery of loan before its maturity period.