Internal document

Details :
Process Loan against security ( LAS)
Date 11/11/2021
Version VER 4/LAS/ 1121
Product LAS

Pt. 1. Delinquency Criteria:

Delinquency Criteria Equity / Equity Oriented Debt

Mutual Funds Collateral
Margin >15% >2%
Over Utilization / Non Servicing of Interest >= 1 DPD >= 1 DPD

Pt. 2. Communications to delinquent borrowers:

LAS NOC OSD to share list of delinquent borrowers basis which dunning letters and pre-
sale notices to be served by the Central Communications Collections Team as per DPD’s
(days past due) defined below for overdue accounts due to over utilization / non
servicing of interest:

Pt. 2.1 Collaterals (Equity Shares / Equity MF / Debt MF /Bonds / Insurance)

DPD Notice / Letter intimation

31 – 45 1st Dunning letter
46 – 60 2nd Dunning letter
> 60 Pre-sale warning notice

Pt. 3. Collection process for delinquent accounts:

Pt.3.1 For Overdraft (Over Utilisation / Interest Non – Servicing) for Equity Shares /
Equity MF / Debt MF / Bonds/ Insurance - DPD (days past due) Action

DPD Action
> 30 Phone call – Collections
Dunning letter – Central Communications Collections
Team

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46 – 60 Dunning letter – Central Communications Collections
Team Collections
=> 65 1. Pre-sale warning notice to be issued to Customer –
Central Communications Collections Team
2. Initiate sale of securities for the unresolved POT
NPA accounts allocated in Bkt 3 (61-90) as applicable
to the respective collateral.
3. Intimate only those borrowers about the sale where
the securities sold are Equity Shares – Central
Communications Collections Team

Pt. 3.2 For Overdraft (Margin % breach):

The below action will supersede in case of breach of Margin % irrespective of DPD

Margin / Excess % Action

>15% - < =25% in case of Equity
>2% - < =3% in case of Debt
>25% in case of Equity
>3% in case of Debt
Dunning letter – Central Communications
Collections Team
1. Pre-sale warning notice to be issued to
Customer – Central Communications
Collections Team
2. Initiate the securities sale as applicable to
the respective collateral for the unresolved
accounts
3. Intimate only those borrower’s about the
sale where the securities sold are Equity
Shares – Central Communications
Collections Team

Pt. 3.3 For Non-Renewed cases:

Liquidation of collateral shall be initiated basis:

DPD: Norms as defined above

OR
LTV: Equity : > 75% LTV whichever is earlier
Debt : > 95% LTV whichever is earlier

Pt. 4 Approval Matrix:

Forced Sale / Hold Sale of Securities Collection Head

Sale of securities - deviations Collection Head

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Pt. 5 Process for Liquidation of securities Excess Overdrawn / MTM % Breach:

After issuance of the pre-sale notice and expiry of the pre-sale notice period, collections
shall initiate the sale of securities / surrender of the Insurance policy to the extent of
maintaining margin / excess overdrawn requirement for the unresolved cases as per the
methodology of calculation given below:

Pt. 5.1.a Methodology of Calculations:

(i) Total Excess Overdrawn Amount or MTM Breach Amount

(ii) The Total Sale value to be determined by considering the Pt. (i) and the number of
times the value of securities need to be sold. (as per table below)
(iii) Buffer @ 10% to be added to the total sale value arrived at in Pt.(ii) to compensate for
brokerage, taxes, market volatility etc.

Portfolio Value DP / Limit Security Margin No. of Times (Sale)

100 25 75 1.33
100 40 60 1.67
100 50 50 2.00
100 60 40 2.50
100 70 30 3.33
100 80 20 5.00
100 85 15 6.67
100 90 10 10.00
100 95 5 20.00

Pt. 5.1.b Order of selection of securities for liquidation:

Once the total sale value has been determined, adequate value of securities to be identified
for liquidation shall be selected in the following order (as per table appended below) :

Order Of Selection Collateral Type Form

1 Shares Demat
2 Mutual Fund Demat
3 Mutual Fund Physical
4 Debt Fund Demat
5 Debt Fund Physical
6 Bonds Demat
7 Bonds Physical
8 Insurance Physical

In case, the delinquent borrower holds multiple scrips in a particular type of collateral,
selection shall be done of the scrips with the highest price first and then select scrips

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with lower price and in the case of insurance the surrender value of the policies shall be
considered.
Pt. 5.2 Liquidation of Securities - Interest has not been serviced
For recovery of non-servicing of the interest through sale of securities,
(i) the total sale value to be determined considering the actual interest amount which
has not been serviced
(ii) additional 5% Buffer of the sale value.
(iii) Pt.5.1.b to be followed for selection of securities for liquidation.

Pt. 5.3 Liquidation of Securities – For Non Renewed Cases

(i) The total sale value to be determined considering the actual utilization amount.
(ii) additional 5% Buffer of the sale value.
(iii) Pt.5.1.b to be followed for selection of securities for liquidation.

Pt. 6. Instructions for liquidation of securities:

Post approval from CH, collections would give instructions on email to LAS NOC OSD
for liquidation of securities with particulars of borrower, security and quantity of security
to be liquidated

Pt. 7. Surrender of Insurance policy process:

Sr. No Process Steps Responsibility Tentative TAT

1 Request to be sent to LAS NOC OSD for surrender of insurance Collections T+0
policies post approval from appropriate authority within
Collections.
2 Confirmation to be provided by LAS NOC OSD on mail to LAS NOC OSD
collections - Original assigned policies are in custody of YBL T+0

3 Initiate retrieval of original insurance policy from central archive LAS NOC OSD
T+ 1
4 Post retrieval but prior to dispatch of insurance policies to RA Ops LAS NOC OSD
Location, LAS NOC OSD to check with collections if any customer T+ 6
has regularized his account and hold dispatch of such regularized
accounts.
5 To issue surrender letter in favor of Insurance Company along with LAS NOC OSD
original retrieved insurance policies and other documentation, if T+ 6
required by Insurance Company to be dispatched to RA Ops
Location team of the concerned branches and share details of
dispatch on mail to all concerned stakeholders (i.e. Collections team
at Head Office, Collections team of respective location, RA Ops
Location and Relationship team)
(Surrender letter formats applicable as per Insurance company are
available with OSD and the same are signed off by Authorized
Signatory of OSD)
6 RA Ops Location team to acknowledge receipt of the original RA Ops
policies on mail to all concerned stakeholders (i.e. Collections team Location T+ 8
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at Head Office, Collections team of respective location, LAS NOC
OSD and Relationship team) and store in local branch vault for safe
keeping prior to handover to collections team.
7 Prior to collection of the original insurance policies from RA Ops Collections/RA
Location, collections to check if any accounts are regularised, if yes, Ops Location
collections to hold surrender of the insurance policies and instruct T+9
RA Ops Location to return such policies back to the Central OSD for
safe keeping in central archive.
8 If accounts are still not regularised, Collections to collect the entire T+ 10
documentation set received from LAS NOC OSD team alongwith
the original insurance policies from the RA Ops Location team for
onward submission of the same to the concerned insurance
company. Collection team to acknowledge the receipt of the original
policies and documentation set from RA Ops Location team on mail
to all concerned stakeholders ((i.e. Collections team
at Head Office, LAS NOC OSD, RA Ops Location and Relationship
team).
On submission of insurance policy, Collections (location) should
collect the acknowledgement from the Insurance Company and
share the scan copy with all the stakeholders and send original copy
of acknowledgement for central storage to Collections (Central
team).
In case of non-receipt of acknowledgement, such exception should
be approved by Collections Head and stored for future reference.
9 LAS NOC OSD team to acknowledge receipt of the original policies LAS NOC OSD
of regularized accounts on mail to all stakeholders (i.e. Collections T+ 11
team at Head Office, Collections team of respective location, RA
Ops Location and Relationship team)
10 In case of receipt of the surrender payment cheque, same will be Collections
banked in LAS sundry account # 1.899.1852. Collection shall
provide confirmation to LAS NOC OSD
the details of policy no and amount credited towards surrender of
the policy. (Letter format to include sundry account details to avoid
rejection)
11 Policies to be withdrawn from the LAS account of the Customer, LAS NOC OSD
drop the limit and give the credit in customer LAS overdraft
account.
12 In case of non-collection of Insurance policies by Location collection RA Ops
team from RA Ops Location within 30 days; such policies shall be Location
returned to LAS NOC OSD
13 Collections shall maintain the MIS to track the insurance. Collections

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