Business Loans

Policy

**This policy is subject to change by BFL on periodical basis. Please refer to your relationship
manager for latest policy updates
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Policy Norms: Customer Segmentation

Basis our risk policy, customers are segmented into different categories :

 SUPER WOW
 WOW
 WOW-LITE
 NORMAL

(Super Wow >>Wow >>Wow Lite>> Normal)

The differentiation allows waivers in the policy and documentation for higher
segmented customers, as they feature less probability of EMI bounce.

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Types of customers

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Self Employed Non Professionals are business profiles which do not have professional
degree to support their business profiles. As compared to Self Employed Professionals, the
businesses are little complex with varied transactions.

SENP Profiles normally can be segmented into 3 categories :

MANUFACTURERS :

 These profiles are noted by the manufacturing units where they process raw materials to get
finished goods.
 The profile is noted by machinery setups to process the goods
 The financial statements are designated with labor costs, debtors and creditors
 The margins are the business are high as goods are processed into new products
 These profiles file VAT returns on periodical basis to note the amount of taxation applicable
to them.
TRADERS :
 These profiles are noted by the godowns, storage space and inventory where products are
traded without any value addition.
 The profile is noted by huge inventories and storage space
 The financial statements are designated with debtors, creditors and inventory.
 The margins are the business are low as compared to manufacturers.
 These profiles file VAT returns on periodical basis to note the amount of taxation applicable
to them.

SERVICE PROVIDERS :
 These profiles are noted by the specialized individuals who provide support services like
maintenance.
 The margins vary from service to service The financial statements are designated with
service receipts with low cost of goods purchased.
 These profiles file service tax returns on periodical basis to note the amount of taxation
applicable to them.
 Basic Features of
Unsecured Business Loans
 No security or collateral taken against loan
 Comparatively small ticket size loans maximum up to 45 lakhs
 Assessment done basis financials of business to check on repayment capacity of individual
 Short term Loans maximum up to 5 years
 Comparatively high risk as no collateral is taken, hence high ROI charged on these loans
 Basically taken by businesses to meet short term requirements like working capital gaps due to
debtors and creditors cycle
 Preapproved loan offers
 Part prepayment facility
 Foreclosure facility
 Flexi facility
 Online account access
 Customized insurance protection cover schemes
 NIL charges for loan statement, repayment schedules and interest and principal statements
Common MCP checks
DEMOGRAPHIC CHECKS
• Business profile of customer – Manufacturer/ Trader/ Service

• Business vintage – Minimum business experience of 5 years is required as per policy

• Company profile – Proprietorship/ Partnership/ Private Limited/ Individual

• Ownership proof – At least one owned property (office/ residence) at the location.

• Age of applicant – More than 21 years, maximum of 66 years at maturity of loan

• Any political connection – no political connection is allowed as per policy

• Fixed asset base – list of all owned properties – to check net worth of customer

• References - Blogs/ Newspapers publications/ other connections/ Linked in profiles – for more detailed
profiling of the customer.
FINANCIAL CHECKS
• Turnover / Receipts (Prof profiles) / PBT/ Income details of last 2 years

 No financial loss ((Dep+ PAT) < 0) making company can be given loan
 Dip in TO/ Profit not to be more than 20%
 Minimum TO required 1 Cr – Mfg. / 1.5 Cr (for others)

• Sources of income – Professional/ rental/ other company associations. – this is not an MCP criteria, but
need to be checked to estimate cash inflow/ working capital gap for the customer.

• Actual / Estimated source of income – including cash earnings – Most of the income tax returns in India as
per trends are deflated to show low income and prevent tax implications. The business model should be
understood for the customer to cover this gap.

• Availability of financial documents

 All financial documents to be certified by CA

 The income tax returns of the last 2 years should have sufficient gap w.r.t date of filing.
 The financial submitted by the customer for loan processing should be same as given to income tax
dept. If customer has revised his financial in ITR, copy of revised financials to be taken.
FINANCIAL CHECKS
• History of previous loans and bank relationships – CC Limits/ Mortgage Loans.

• Other investments/ insurances. This should be checked. If customer is not sufficiently covered on his
financial obligations, the same need to be suggested through cross-sell products

• Future Financial planning – to be checked through discussion.

• Total obligations served by applicant – chance to consolidate the debt

Policy norms

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Policy Norms: MCP Parameters
Parameters Policy Norms
Customer profile Only SENP
Property Ownership Either of residence or office to be owned at any of BFL locations.

Age Minimum: 21 years; Maximum: 66 years (at loan maturity)

Business Vintage < 3 years not allowed to be sourced

Location Nature of Business Minimum Turnover
Top 15 Trader 3 Crs
Manufacturing and Services 1.5 Crs
Others Any 1 Crs

With effect from 2nd Nov’16, For Top 15 Markets, sourcing under Turnover Band of 1 to 3 Crs
are allowed under Top 3 segments (Super Wow, Wow and Wow Lite)
for sourcing with below norms:
Turnover (Current
Year) Locations Business Capping
Mumbai Monthly Business to be capped at 2 Crs
Bangalore, Hyderabad, Ahmedabad, Chennai, Monthly business to be capped at 20% of
Kolkata, Chandigarh, Ludhiana & Pune location volume levels
Surat, Jaipur & Nagpur Monthly business to be capped at 20% of
location volume levels

Maximum funding to Trader profile under T/O 1-3 Crs to be restricted at 12 lacs
irrespective of loan amount stamping
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Policy Norms: MCP Parameters
Parameters
> 35% Dip in TO
Net Worth
> 25% dip in (Net Profit as captured in
DSS + Depreciation)
Audited Financials
Policy Norms
> 35 % dip in current year TO not allowed for sourcing
Negative Net worth not allowed.
25 % dip in Cash Profits (Net Profit as captured in DSS + Depreciation)
not allowed
Both year financials to be audited.
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Policy Norms: Income Programs

Parameter Super Wow Wow Wow Lite Normal/LSO

Minimum Loan
• 3 lacs
Amount

Maximum Loan • Prime & Growth locations: 45 lacs

Amount • Emerging locations: 25 lacs

Tenor Capping

• Disbursement and repayment to be made in firm account only.

Co-applicant
• In case, same is in Individual account, relationship proof between firm and individual is required.

Only 1 (Primary Financial co-applicant)

CIBIL CIBIL Score of 0/-1 is allowed under Income program W.E.F. 16th Jan 2017 for specific locations only
with below mentioned conditions:
 OD/CC utilization is <=95%
 Minimum OD/CC Limit of the applicant needs to be Rs. 6 Lacs.

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Policy Norms: Income Programs

Constitution Norms
Partnership/ Private Partner/ Director who is managing the business should be the Primary
Primary Ltd. Public Ltd/ LLP Financial applicant
Financial co-
Proprietorship Proprietor to be Primary Financial co-applicant
applicant
Exception to above :
In case of Proprietorship firm, where wife is Applicant, husband to be
taken as Primary Financial applicant and wife as co-applicant.

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Policy Norms – Income Program

Parameter Super Wow Wow Wow Lite Normal/LSO

Commercial CIBIL Not to be done

CIBIL for Other

To be done if KYC popped up by system for partner/director All Co-Applicants
Partner/Directors

Nil EMI bounce allowed in available banking (technical 1 EMI bounce allowed in available banking (technical bounce
EMI bounce
bounce to be ignored) to be ignored)

No inward bounce allowed. ACM can take call with

Inward Cheque
deviation, after getting proper justification. (technical <= 5% allowed in available banking
Bounce
bounce to be ignored)

 OD/CC limit as mentioned in sanction letter/bank statement is the available limit.

OD/CC utilization
 OD/CC utilization > 100% not allowed under Income Program, No Deviation allowed for the same.

Clubbing of financials for proprietorship/entity is allowed within immediate family member’s firms which are in same
line of business (Manufacturer/Trader/Services).
Clubbing (Loan  Clubbing only allowed on audited financials.
Structure)  Immediate family = Self/parents/spouse/Son/Daughter-in-law/Real Brothers
 Where clubbing is done proprietor/partner of second entity will be added as co applicant at credit stage, along with
the entity.
Maximum customer level obligations allowed is 35% of Turnover of current audited year. i.e. (EMI *12) cannot be
Max obligations
greater than 35% of the turnover
 Emerging markets are all the Tier II/spoke locations which have not completed 18 month/12 months.
 Once these markets complete 18 months/12 months, they are to be treated as other Tier II cities post
Emerging Market
communication received from Risk team.
 Location Cap- 25 lacs
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Policy Norms : Top up
Customer will be eligible for Top up post completing following MOB as per tenure:

Tenure (in months) MOB

Up to 12 9
> 12 up to 24 12
>24 15

Additional Conditions:

 Internal closure not allowed, exception to this at BH level.

 Loan to be booked as Parallel loan only and at a time only 2 Parallel loans are allowed per customer.
 If a customer already has 2 loans running parallel and has come for a 3rd time funding, one of the first 2 loans
needs to be closed for disbursement of 3rd loan. This is applicable to all Business Loans Programs.
 In case of foreclosure, cooling period of 3 months will be applicable. Exception to this at BH.
 BFL Loan not to be obligated, since we are calculating over all exposure.

New set of financials will be required in following conditions –

I. Customer with Normal and LSO category.

II. For 3rd exposure, i.e. 2nd top up i.e. no financials are required for 1st top up, same will be given basis financials
available with BFL.
III. For 1st Top up, old financials will be copied, only fresh CIBIL to run and updated EMI obligations to be captured,
segmentation to re run. Total Exposure will be the stamped amount.
IV. If the latest case has been underwritten > 12 months.

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Documentation Norms

Category SW W WL N/LSO

Balance Sheet Balance Sheet 1st Page Balance sheet with Annexure

Profit & Loss Profit & Loss 1st Page Profit & Loss with annexure

1 month 2 months

3 months banking required for selected locations:

Banking 3 months
Cochin/Coimbatore/Delhi/Aurangabad/Bhopal
/Indore/ Rajkot/Surat/Ahmedabad/Baroda/
Jalgaon / Tirupur/ Nagpur

Audit Report Not required Audit report, 3CD/ 3CB

Total of Banking Total of Banking credits >= 70% of Turn Over and
NA
Credits 70% of EMI through banking to be documented

Service tax
Latest 1 quarter Service tax challan/return to be taken
return

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Group Exposure norms

 Exposure for group companies to be capped at Rs. 45 Lacs.

 There should be cooling period of 10 months for taking additional exposure in group.
 Group exposure is not allowed in Emerging Markets, (Applicable from 25th Feb’16)

Group Companies are defined as Companies / Partnerships which have:

 the same main director / main partner

 the main director or Partner / major shareholder are spouses or
 the same major shareholder (major shareholder holding shares >=25 % in each company) or
 the same operating address.

Group Exposure norms would also apply

 To Proprietorship concerns where spouses or son or unmarried daughter or brother or unmarried sister or father or
mother are proprietors of two different concerns.
 Individuals who have a proprietary concern and has a >=25 % share in Partnership firm / Companies.
 Entities which have interconnected holdings. For ex: Proprietor A holds >=25% share in a company along with B
who also holds >=25% share in this company and B is a >= 25% stake holding partner in a partnership firm along
with C. In such a case total exposure to the Proprietorship firm, Pvt Ltd company and Partnership firm cannot
exceed group exposure norms as capped above.

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Not to be Sourced profiles (NTS)
Sr. No. Profile
1 Politicians/Politically exposed Persons
2 Advocates
3 Police & their immediate Relatives (Parents, Spouse, Sibling, Children)
4 DSA/Sub DSA/Agent Emp
5 Financiers/Chit-fund/Nidhi/Plantation Time-share Com
6 Exclusive Bar/Permit Room/Liquor Wine-shop Owners
7 Astrologers & Marriage Consultants
8 Press & Media Journalists
9 Artists from film industry
10 Collection Agencies - Owners & Agents
11 Security Agencies supplying armed guards
12 Shared Accommodation/Paying Guest/Hostel/Sublet Accommodations
13 Commission Agents (without separate off set up)/Lottery Agents/RTO Brokers/ Used Car Dealers
14 Home Boutiques with no showroom set-up
15 Cyber-cafes/Video parlors Owners
16 Brick Kiln manufacturers
17 Gyms & Health Clubs
18 Plantations
19 Owners of Multilevel marketing companies
20 Car brokers
21 Real Estate brokers & developers
22 Foreign nationals
23 Share brokers / Employees of stock broking organizations
24 RTO Agents
25 STD/ISD/PCO Booth Owners

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Not to be Sourced profiles (NTS) continue..
Sr. No. Profile
26 Cable TV Owners
27 Verification Agency Owners
28 Mess Owners
29 Home Tutors/Tuitions/Education Institute
30 Driving Schools
31 Beauty Parlors
32 Builders
33 Any profile related to Aviation Industry
34 Travel Agent (non IATA approved)
35 Jewelers
36 Shipping and allied activities
37 Telecom Sector
38 Contractors (Govt.)
39 Garment showrooms profile in Delhi
40 Coal Traders- applicable for D2C businesses.
41 Single brand mobile handset dealers
42 Non Branded Edible Oil
43 Transporters, C&F, Logistics
44 Mining & Quarrying
45 Skin Care /Beauty Treatment / Hair Loss Treatment Clinic
46 Physiotherapist (without professional qualification)

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 Income Tax Return
based Product: Policy Norms

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ITR – Policy Norms

Parameters Policy Norms

Minimum loan amount 5 lacs

Maximum loan amount 10 lacs

 >=750, no cases to be processed for score <750

 Customer with 0/-1 CIBIL score and No repayment history to be restricted
CIBIL Score to 5 lacs
 Credit card, TW & Gold loan history not to be considered as repayment
history for CIBIL

Minimum Income from Business

and Profession of both year as 3 lacs
declared in ITR

Customer should be new to BFL, should not have availed any loan from BFL (CD
Eligible customer
& PLCS are allowed)

Business Vintage 5 years

PD Norms Physical PD

Tenor 12 to 36 months
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ITR – Policy Norms

Parameters Policy Norms

1. Average of last two-year income, ITR income of CY to be more than or equal to PY income.
2. Minimum gap between two ITR to be 6 months and maximum 18 months.
3. Latest ITR to be filed at least a quarter earlier than the loan application date.
4. ITR verification to be mandatory.
Additional Norms 5. No dip in Income as per ITR in last 2 years.
6. 3 months’ bank statement (Entity) to be documented.
7. Physical PD by ACM to be mandatory at office and CPV to be done at residence.
8. Other policy norms to continue, as per current BL policy.
9. Maximum loan amount cap - Rs.10 lacs.

Locations Norms

 Minimum ITR Income from Business &

Profession for CY to be Rs. 3 lacs and Rs.
2.25 lacs for PY
Ranchi/Hazaribag/Deogarh
 Minimum Ownership should be 10 years
Additional Location
i.e. either Resi or Office should be
Norms
owned for last 10 years

Asansol/Alwar/Ajmer/
Deoghar/Dhanbad/Guwahati/
Ottappalam/Thiruvalla/Tirur/Ranchi/
Rourkela/Sagar/Solan/Sriganganagar/Valsad
 Minimum Income from Business &
Profession to Rs. 2.5 lacs for both years
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 Repayment Track Record
based Product : Policy Norms

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RTR – Policy Norms

Parameters Policy Norms

Profile SENP Only

Minimum & Maximum

Basis calculator stamped amount, no deviation on same
loan amount
Customer should be new to BFL, should not have availed any loan from BFL (CD & PLCS
Eligible customer
customer are allowed)
>700, no deviation allowed on same.
CIBIL score
For loan amount >10 lacs, CIBIL should be >=750
Highest of AL/HL/PL/BL/LAP (Live or Closed) repayment tracks appearing
Repayment tracks
in CIBIL to be entered in RTR calculator.
3 months’ bank statement (Entity) from where BFL EMI is going to be paid.
Banking
No additional bank statement required

Business Vintage 5 years

Maximum Tenor 36 months

MOB norms No minimum MOB norms for live or closed loans

PD Norms Physical PD

Frequency of loan availed No fresh Unsecured loans (PL/BL) in recent 6 months

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RTR – Policy Norms

Parameters Policy Norms

1. Loan to be given in Individual name. entity to be taken as co-applicant.

2. Only KYC & Board Resolution/NOC (if applicable) to be documented. No other
document like CC letter/P&L etc to be taken.
Additional Norms 3. Only those loan to be considered where customer is applicant/co-applicant.
Guarantor not to be considered.
4. Only those loans (AL/PL/BL/HL/LAP) specifically mentioned under in customer’s CIBIL
to be considered.

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