TECHNICAL /PRUDENTIALWRITE OFF Technical /prudential write offof loansand advancesis done_to eliminate the assets from Bank'sbooks, Thismethodisresorted to only in case of— a, Loans and advances where the prospec! /probabily of recovery s veryremote and b. 100% provision against such loans and advances has already been provided This processis followed with a view to = a. Clean up Bank's Balance Sheet b. Reduce the Gross NPA c. Reduce Bank's capital requirement Although the assets are eliminated from Bank's Balance Sheet, the claim of Bank from the defaulting borrowers’ remains and the recovery process continues. Atpresentthe whole process of maintenance oftechnical prudential written offaccounts is being done manually procedurally, Under CBSenvironment, finacle’ offers facility to maintain written off Loans and Advances in the system. All the branches are advisedto follow the revised procedure for maintenance of Written ~ off accounts through system as detailed below. Procedure for Write off Once alist for wie offs approved by HORO or alist is ready for write of as per bankcircular, branch needs to follow some procedure in CBS system. Types of WRITE OFF related process as follows. WRITE OFF OF TERM LOAN(LAAscheme) WRITE OFF OFODICC (ODA& CCA scheme) ‘SHOWING WRITE OFF OF PRE-CBS SHADOWBALANCES WRITE OFF OF PRE-CBS WRITE OFF AMT MIGRATED IN OFFICE A/C RECOVERY OF WRITE OFF A/C WITHOUT COMPROMISE RECOVERY OF WRITE OFF A/C WITH COMPROMISE EXCESS RECOVERY IN WRITE OFF AIC CLOSURE OF WRITTEN OFF AC RECONCILITION OF SHADOWAIC INCBS¢ WRITE OFF OF TERM LOAN (LAA scheme type On receipt of list of term loan accounts to be written off from Head office, the branch will follow the procedures as follows— a) If there was any provision to charge interest in speciic NPA account (selected for write of) and credit of intrest ‘Suspense Account (Liability, its tobe reversed and the folowing entries are to be passed through menuopton TM The following accounting entiesare o be passed for hose accounts — Menu Option: TM Debit: Interest Suspense Alc 102425701 Credit = Respective Loan Ac (Credit Flow 1D of loan will be COLNP) b) Modify he account and capitalize the entire outstanding interest and other demands through Menu option ~ ‘ACM Menu Option (CM press Enter Function ‘and press Fa Ac ID : Puthere Loan Account Number and press F4 On pressing Fé following screen will appear Option Code E and press Fa On pressing Fa following screen will appearRephasement? press Tab Key Capitalize Int Flag? :Y press Tab Key Remarks : Write Remarks as * Rephased as per Board Resolution/HO/RO order Dated...........” ‘nd press F4 On pressing F4 cursor blinks at Flow I, willbe as itis and prass Tab key Nos: Put here (No of instalment) press tab key Flow stat Date: Next Date (eg. If modification date is 2403-2014 then the flow start date wll be 25-03-2014) Press Tab key Flow Amount : Puthere the amount which is approved for write off. And press F4 On pressing Fé the following screen will appearsin case of El accounts Put and press F4 On pressing Fé following screen will appears ‘Menu oplion SE BaSentoek AseRt Commi RreVce NEMRG® Wham! EckGHOUNS POI NestBhe List a Press 40to Committe modifications end ifany exceptions appears press F4 to Accept any exceptions Verity the Modifcations wth another USER before going for next Steps, ) Transfer the GL Subhead of the term loan account (rom existing GL Subhead to an separate Asset contra GL ‘Subhead for written off accounts) To Transfer the Existing GL sub Head to 84004 (Written Off Loan Account) use menu option MAPD (Mark Accounts asPast DuelNon Acerue) Menu Option : MAPDpress Enter On pressing Enter Following Screen Will appears “Mecw Opto MATE 44 raraini GermunLach Accan! Ourwril races Mestac Warn! Bachyvourd Ne ID : Puthere the Loan Account Number which isto be writen off and press Tab Five imes Transfetee GL Sub Head: 84001 and press Tab keytwice Int, Collection Flag !Npress Fé Wisc opten aro: tienen eeveenLlecl Adeaot emmiPrevRae NedRie| Whadmi /Badkwound) PreVBi KGSEiKD Press F4 , If any exceptions appears press FA to accept On pressing F4 Print Option will Appears Filitbyputing ForelBackground :F PrintRequired = :N ‘nd pressF10t0 Commit User can see the Past Due Accounts Transfer Status Report through the Menu option PR d) Now, for writing-off the balance in the loan account, the user will invoke -Menu option COLA ( Charge off / Reversal of Loan Account) Menu Option :COLAznd press F& On pressing Fé following screen will pearramen rns (PRETS CORNER Function ‘and Press Tab Key Ne. id ithe Loan Account Number to be written-off. Press Tab Key Reason Code itthe Reason Code and press F4 (User can select appropriate Reason Code bypressing F2 fom the lst) (following Reasons Codes are available) On pressing Fé aftr filluip of Reason Code fllowing screen will appearSystem will generate the following enties : Debit = Bad Debt Written off (Asse!) = (Ne No105700101) Credit: Witen off Loan Payable account- (Ne No:103400101) PressF40to Committhe transaction On pressing F10 transaction ID will displayed in Posted Stage as shown inthe below screen , Note down the transaction ID This Transaction ID should be Verified through TM menu by another USER. WRITE OFF OF ODICC (ODA & CCA scheme) For maintenance of written off Cash Credit /Overdraft accounts the branches will follow the within noted procedure If there was any provision to charge interest in spacific NPA account (selected for write off and credit of lnerest Suspense Account (Liability, the following accounting entries are tobe passed for those accounts — Menu opton =: TM Debit: + Interest Suspense Ne 102425701 Credit : Respective CCIOD account (Open a Term Loan Aecount with the following parameters Menu Option — : OAAC press enterMem Option CASS 4 Tranermit Semtentock Accent Commit Provlec NestRiec WhoAm! Backsround Prevtike MoHtBIKD Function _: (Not eto) press Tab keyor Fa Custid Putthe Customer ID of te account to be writen off Scheme Code: LAPWO press F& On pressing F4fellowing sereen will appears ae ae In this above screen filup the following fields Mode of Operation: Puthere the operation Code as itis ofthe account o be writen offpress F& Location Code : Puthere the location Code as ist ofthe account tobe writen off press F& Remarks TECWO as per Board resolution No... dtDD-MM-YYYY" ApplRetiD + Putthe Account ID of he accounto be writen offhere and press F4 On pressing F4 following sereen will appears | Warsi Seiaonlok Ascact Commit PreiRes MeaRes Whoan! Eackircund rami Nedin® Fill up the following fields In ths above screen Pa talement : SpressF4 Despaich Mode :Npress Fa (On pressing Fé the following soreen will appears‘Men Son 9S a ERNE ARERR ain RAR Hine WH eGR In this screen cursor will blink at Option Code ,Delete G put S and press Fa In this screen Following field to be entered + Amountto be written off {ban Pod lithsDay) 200 Mont poss Fa ey Credit File No, : Putthe Account No to be written off and press F4 ‘On pressing F4 cursor will blink at Option Code Delete S put E for Repayment Schedule and press F4 1 Flow Id : PRDEM Nos :1 (One) Flow Start Date = Date following the date of account opening Flow Freq :M / 127/P (27 is the following date) Flow Amount : Amount to be Written Off IntDmd Date = Date following the date of account opening InfFreq EMEP 127iP (27 is the following date) On pressing F4 cursor will blink at Option Code ,Delele E put Vfor Mise Details and press F4ensnten” 0" ania seat conn Pave Fillup six fields as shown in the above screen ,values will be as of the corresponding CC/OD account 'V' Mise details (Fields are Sector Code, Sub Sector Code, Occupation Code, Purpose of Advance, Nature of Advance and Free ode 3) On pressing F4 cursor will blink at Option Code DeleteVputI for Int Details and press F& Press F4 ‘And finally press F10 to Commit On pressing F10 Anewaccount Number will be generated as shown inthe screen belowVerify the newly open account trough menu option OAACAU through another USER Now, the erstalized amount to be written offs to be transferred ffom the CCIOD to the corresponding Term Loan account opened as below through menu option TM, Menu Option :1™M Menu Option A ihoAM! Backaround PrevBik NlexiBIk List Explodes Back Menu Keys Logout Customize Function iA Alc ID. + Newly opened Term Loan Account corresponding to written off CCIOD Ne ‘Amount : Amount o be Witten of Enter the type of Part Transaction : ‘D'-Debit Enter transaction Particulars as. “Xfer From of CC/OD” RefNo, : The corresponding written off aecount number of CC/OD should be noted down in this field ‘as shown in the screen above, ‘Afer field up all these fields press F4 now Put“DISB" on Flow Code and press FA. Now fillup the Credit transaction Particulars as shown in the screen beloworw option TA a oS Ab ID : Putthe corresponding written off account number of CC/OD here ‘Amount : Amountto be Written off Enter the type of Part Transaction : “C'-Credit Enter transaction Particulars as: " Xfer to WO Ac ID < Newly opened Term Loan Account> Remarks TWO BRNO.21 DTD26-09-2013 (ie. Technical Wite off as per Board Resolution No.21 Dated:26-09-2013) RefNo : Puthere the ‘And finlly press F40 to generate the transaction ld Verity the transaction by another USER After transfer of crystallized balance, if the outstanding balance in CC/OD account is zero, then close the account through the Menu Option-'CAAC’ Before going fr closer ofthe respective CCIOD account Unreeze the Account through menu option AFSM ‘And same iso be verifed by another USER through the same Menu Option, Now go for closed the respective written off accountnumber of CC/OD through the Menu option CAC with a remarks as shown below, The sameis tobe verifed by another user through menu option CAACAU. Now, the new Term Loan account opened under Scheme Code = LAPWO will be marked as NPA through Menu = MNPA ,SASCL and modify the asset as loss asset (002 and 250) through menu option ‘MEAC’. The NPA code should be identical wit the code for the corresponding CCIOD account fom where the balance has been transferred. Transfer the GL Subhead of the term loan account (from existing GL Subhead to an separate Asset contra GL ‘Subhead for written off accounts) To Transfer the Existing GL sub Head to 84004 (Written Off Loan Account) use menu option MAPD (Mark Accounts asPast DueNon Accrue) Menu Option :MAPD press Enter On pressing Enter Following Screen Wil appearsMansionion |MAPO 4 rane Geteantch Assan! Commit Pretec Mmae heAm! astarsund Ab ID : Puthere the Loan Account Number which is to be written off and press Tab Five times Transferee GL Sub Head : 84001 and press Tab key vice Int. Collection Flag: Npress F4 Press FA , If any exceptions appears press F to accept On pressing F4 Print Option will Appears Fill iby putting ForefBackground: F Print Required :N And press F40to Commit User can see the Past Due Aocounts Transfer Status Report through the Menu option PR ‘Now, for writing-off the balancein theloan account, the user will invoke -Menu option COLA ( Charge off / Reversal of Loan Account) Menu Option :COLAznd press F& On pressing Fé following screen will appeareg mere errs a TY Function : Cand Press Tab Key Alc. Id “PuheLomn dacount Nbr rten-of Press Tab Key. Reason Code _: Putthe Reason Code and press F4 (User can select appropriate Reason Code by pressing F2 fiom thelist) (following Reasons Codes are available) (On pressing Fé after filLup of Reason Code following screen will appear“jasissaooses qseesgoagn0a7 — on rT System will generate the following enties Debit : Bad Debt Written off (Asset) = (Nc No.105700101) Credit Witten off Loan Payable account - (Ae No.103400101), PressF40to Committhe transaction On pressingF 10 transaction ID will displayed in Posted Stage as shown in the below screen Note down the transaction ID Tran iD Tran. Date Transact costed Press 105700101) The outstanding debit balance in the writenoff term loan accounts will appear under a separate asset conta GL Subhead meant for written off account - "Mitten off Loan receivable (Contra Asse!) (GL Subhead~84001) The credit balance in ‘Wilten off Loan payable account (Account Number - 103400101) appears under a separate liability contra GL subhead meent fr Written off Loan payable (Contra Liability) (GL Subhead -34001). Procedure for Migration of existing Written off Accounts to CBS System ‘+ SHOWING WRITE OFF OF PRE-CBS SHADOW BALANCES Where technical wite off was done before CBS, the shadow balances were omitted fom GL and GLB ofbranches in pre-CBS time. As a resull,no figures ofshadow balances were migrated in Finacle, Onlybranch ismaintaining a shadow register (Hard copy) ora lis. In his circumstance ifabranch decides to show the pre-CBS shadow balances in Finacle then the branch can proceed as follows = Step 1: Create a Customer ID through CUMM menu. The details of customer will be as same as Shadow ale recorded in shadow register or list. Step 2: pen account peed dom procedure under WRITE OFF OF ODICC[ODAB CCA scheme) bow. Step 3: Funding ofthe accountis to be done through Menu='TM’ (Flow Code~‘DISB' for debit to New Loan account)Debit New Term Loan Aecount Outstanding balance in witen offaccount) Credit. Bad Debt Written off (Asset) ‘Solid>105700101 Stop 4: Now, the new Term Loan accauntopened under Scheme Code=LAPWO will bmarked as NPA through Menu. 'MEAC’. The NPA code should be code related to Loss Asset, Step 5: Transfer the GL Subhead of the term loan account (from existing GL Subhead toan separate Asset contra GL Subhead {for written off accounts) Through Menu option MAPD. Menu Option :/MAPD' (Account ID~ Account Number to be written ~off) Transferee GL Subhead 84001 Int. Collection Flag :N ‘Step ‘Now, for writing-off the balance in the loan account, the user will invoke — MenuOption :COLA Function :¢ Account ID : Account Number to be written off, Reason Code Press F2 and select the appropriate code and commit (press 10) The system will generated the following accounting entries — Debit Bad Debt Witten off (Asset) = T05700T0T Credit | Written Off Loan payable account = 103400107 Atransaction ID will be displayed Note down the transaction ID and press F3. This Transaction ID should be verified by another USER through Menu Option TM . WRITEOFF OF PRE-CBSWRITE OFF AMT MIGRATED IN OFFICE A/C In this case, in pre-CBS period, Branch started the technica write of process or compromise settementprocessand the amount was not omitted fom branch GL /GLB. This amount was migrated directly io Bad Debt Witten off alc ether in 105700101 orin-105700102. Procedure of write ofin this case is same as SHOWING WRITE OFF OF PRE. (GBS SHADOW BALANCESfFOM slep 1 fo Step 5, Only in Step 3 the oredit alo will be either in 105700104 or in 105700102. Recovery in Written off accounts Recoveryin written off accounts will be made byinvoking Menu Option :RACO Function :C Arc ID : Written off Loan Account Number (‘For TermLoan A/o- Put the same Account ID which was writen Of and For CC/OD Alo- put Newly opened Written off Account No. ) Transaction Type: T (Transfer) /C (Cash) Recovery Amt : Amount deposited Source Alc ID: In case of Transfer Transaction, the accountto be DebitedNotice to User- (Recovery in written off account cannot be made through Menu option ~'TM) Then the system will generale the following entiies — Debit : Operative Alcin case of Transfer Transaction ofTeller Alcin case ofCash Transaction Credit Witten offloan account Debit Written off Loan payable account _ (Ne No.103400101) Credit Bad Debt written off realized (Income) (Ae No 106602701) ‘transaction ID willbe displayed [Note down the transaction ID and press F4 This Transaction ID should be verified by another USER through Menu Option TM ¢ Incase recovery is more than the outstanding balance in the account ~ Step 4 ‘Amount equal fo outstanding balance inthe writen off account willbe received through Menu-RACO Step 2 The balance amount (Recovery—Outstanding balance) willbe credited to P&L anceut traugh Menu TM. The accounting enkies vil be as folows ~ Debit Cash / operative account of the borrower Credit Intereston TL Wie off Excess Amount account (Income) ~ 106005199 Notice to User~The entries related to recovery in excess of outstanding balance in written off account can only be made by Dy. Branch Head / Branch Head (Minimum Work class ~350) * — Closure of Written off accounts ‘a, Onrecovery of outstanding debitbalance along ith uptodate interest in writen off account, he accountwill be closed following procedure for normal closure ofterm loan account under ‘fnacle’, Menu=‘CAAC’, b. Ifthe ful and inal setlementof a written off accounts atived at through compromise setlement, the following procedure will be followed for closure of account ~ ‘* Compromise amount is less than the outstanding balance: The below recovery wil be made through Menu option- RACO Debit] Cash] Operative ale ofoustorner ‘Amount Paid By Borrower/Guarantor Credit | Witten off oan account The remaining outstanding balance will be wiped outthrough Menu="TM’ as follows — Debit | Written off Loanpayable account] 103400T0T Credit | Witten offloan account HO approval reference Noistobe flledin remarksfield of TM Notice to User-The entries related to wiping out the remaining outstanding balance in written off account can only be made by Dy. Branch Head / Branch Head (Minimum Work class ~350)(On passing the above erties, the outstanding balance in the written off account will be zero and the account will be closed following procedure for normal closure of term loan account under ‘finacle’. Menu=CAAC. Compromise amount is more than the outstanding balance: ‘Step ‘Amount equal o outstanding balance in the written off account will be received through Menu—‘RACO’. Step 2: The balance amount (Recovery - Outstanding balance) will be credited to P&L account through Menu TM, The accounting entries will be as follows— Debit ‘ash J operative accountofihe borrower Credit __| Intereston TL While off Excess Recovery Amount Ale (Income) | 100005199 Notice to User~The entries related to recovery in excess of outstanding balance in written off account can only be made by Dy. Branch Head /Branch Head (Minimum Work class ~350) (On passing the above enties, the outstanding balance in the written off account will be zero and the account will be closed following procedure for normal closure ofterm loan account under ‘inacle’, Menu-CAAC, Compromise amount is equal to the outstanding balance: Step 1: Amount equal to outstanding balance in the writen off account will be received through Menu-‘RACO’. (On passing the above enties, he outstanding balance in the writen off account will be zoo and the account will be closed following procedure for normal closure ofterm loan account under ‘fnacle’. Menu-CAAC. . Reconciliation of Shadow Register Balance Branch should ensure that at any point of me the balance outstanding under GL subhead 84001 (Wien off Loan Receivable) should tally with GL subhead 34001 (Witten off Loan Payable) Reporting of Written off accounts Report Remarks The outstanding balance in writin off accounts and Willen off Loan payable GLB account will appear as Liability/ Asset contra entries under the head ‘Other. Contras’ Ral Week) The outstanding balance in wiifen off accounts will appear as additional eekly information and ill notbe refected under contra assets /labillies Bok Debi Statement Tre wilten oF accounts will noteppearin Book Dabt The outstanding balancein wilten of accounls and Writen off Loan payable Balance Sheet ccountwillrot appear in Balance Sheet Related Scheme‘ST_] _ SchemeDescription ‘Scheme Code GL Subhead T Witten of Loan Focount TPN TOOT Related Menu SI] Purpose Menu T | Marking accountpastdue MAPD Wilting off offoan accounts OU % | Recovery aller writien off (recovery in shadow regisler) RACO 7 | Transaction Mainfonance—When recovery is morethan oulstandingbalancein | TW written off account 3 | OpaningotAccount- Opening /Veriicaton OAACTORACAU S Tosure of Account—Closure/ Verification BAC TCRACAT 7 | Modification offecount-Rephasement 7M & | MisFocountMaintenance MNPA | System Asset Classoation ‘SASCL TO | Modify Efectve Asset Classification MEAC TT | AocountFreezs Status Maintenance DFSM Related Account ST] _ Description ofthe Account ‘Account Number T | Bad Debt Witten of (Asset) TOSTOUTOT 2 | _ Wilten Of Loan payable account(ContraLiabiliyy SaID> TOSAOOIOT 3 Interest on TL Write Off Excess Recovery Amount Nc (Income) “ 16005799 4 | __ Interest Suspense Account Liabiliyy SOD TO2AZETOT 5 | _ Bad Debi Whiten Off Realized (income) SOID> TOSEVZTOT