Executive Summary

The report includes a reflection on the work done during the two-month summer internship at
the business banking division of ICICI Bank. This report succinctly summarised and
successfully illustrated the lessons learnt from working as a finance intern.

My project title is “Analysis of Renewal Process and How to Improve it”.

A well-known private bank in India, ICICI Bank serves both large corporations and small and
medium-sized businesses. According to observations, MSMEs are the new growth engine of
India and are essential in the current period of economic development. They continuously
encourage the nation's infrastructure growth and technical advancement, which has sparked
the nation's total modernization.

I learned about the renewal process, and how the whole procedure of the renewal operates
during my internship. Through this two-month internship, I gained knowledge about how
businesses are categorized based on their turnovers and how the renewal process is one of the
key elements for existing bank clients.

As I became familiar with the process, I identified the limitations of the renewal process and
gave some recommendations and suggestions on how to improve the process and reduce the
time consumed from the start of the procedure till sanctioning.

Along with learning and gaining knowledge of how the companies process their working
capital limits, I also worked on market scoping during my internship, which helped me
understand how important it is and how market research is done and its significance.
ABOUT THE COMPANY
ICICI”Bank Limited is a worldwide financial services firm, founded on 5 th January 1994,
based in Mumbai, Maharashtra. Regarding assets, it is the second-largest bank in India and
the third-largest in market capitalization. It provides a wide range of banking products and
financial services to corporate and retail clients through several delivery channels as well as
through subsidiaries with expertise in investment banking, life and non-life insurance,
venture capital, and asset management. ICICI is India's one of the largest private-sector banks
in market capitalization and assets. In India, the bank has 6,495 branches and 16,650 ATMs,
with a presence in 18 countries. On the initiative of the World Bank, the Indian government,
and members of the business community, (ICICI) was founded in 1955 as a development
financial organization to offer medium- and long-term project financing to Indian companies.
A diversified financial services organization, ICICI Bank Limited (the Bank) and its
subsidiaries, joint ventures, and partners (collectively, the organization) offer a
comprehensive variety of banking and financial services, including:”
VISION:
To”build a solid reputation as a trustworthy provider of financial services and consequently
create long-term value for all of our shareholders.”

MISSION:
By”using a risk-calibrated strategy, to boost the company's core operational profit:

 Creating value for the customers.

 collaborating to deliver a seamless experience to satisfy client needs.
 Proper risk-calibrated management.”

MILESTONES AT ICICI:
 TDICI,”India's first venture capital firm, was founded in 1988.
 ICICI Ltd was the first business in India's banking sector to issue GDR in 1996.
 Through issuing American depository shares, ICICI becomes the first Indian business
to be listed on the New York Stock Exchange (NYSE).
 In the year 2000, The shares of ICICI BANK were the first commercial bank in India
to be listed on the NYSE.”
WORKING CAPITAL LIMIT:
Working”capital refers to the financial resources available to a company for its day-to-day
operations. It refers to the difference between current liabilities and assets for a business.
Working capital, put simply, is the sum of money available to a business to meet its
immediate operating demands.
Current assets typically include cash, accounts receivable (amounts owed by customers),
inventory (goods ready for sale), and short-term investments. Current liabilities include
accounts payable (amounts owed to suppliers), accrued expenses, and short-term debt.
Working capital is crucial for a company's operations as it enables the purchase of inventory,
payment of salaries and wages, and fulfilment of other short-term obligations. Adequate
working capital ensures the smooth functioning of a business and allows it to take advantage
of growth opportunities, respond to unexpected expenses, and meet financial obligations
promptly.
A positive working capital indicates that a company has enough current assets to cover its
current liabilities. This is generally considered favourable as it signifies the company's ability
to meet short-term obligations without relying heavily on external financing. Conversely, a
negative working capital indicates that a company's current liabilities exceed its current
assets, which may indicate financial difficulties and the need for additional funding.
Managing working capital effectively involves optimizing the balance between current assets
and liabilities. This can be achieved through measures such as improving inventory
management, optimizing accounts receivable collection, negotiating favourable payment
terms with suppliers, and monitoring cash flow closely.
Companies need to maintain a healthy level of working capital based on their industry,
business model, and specific circumstances. Insufficient working capital can lead to liquidity
problems and hinder a company's operations, while excessive working capital may indicate
inefficient use of resources and missed investment opportunities.
Working capital limits refer to the maximum amount of funds that a company can borrow
from a financial institution to meet its short-term operational needs. Factors such as the
nature of the business, its operating cycle, and the volume of its current assets and liabilities
determine the company's working capital requirements, on which the company sets these
limits.
The working capital limit is typically expressed as a specific amount or a percentage of the
company's current assets, such as accounts receivable and inventory. Financial institutions
assess the company's creditworthiness and evaluate its financial statements, cash flow
projections, and business plans before setting the working capital limit.
Having a working capital limit allows a company to manage its cash flow effectively and
meet its day-to-day operational expenses, such as purchasing inventory, paying salaries, and
covering overhead costs. It allows the company to borrow funds when needed, ensuring
smooth operations during periods of low cash flow or unexpected expenses.
It's important to note that working capital limits are subject to periodic review and can be
adjusted by the financial institution based on the company's financial performance and
creditworthiness.”

RENEWAL PROCESS:
Companies require funds to operate their day–to–day operations, and hence these funds are
termed working capital. A Bank sanctions the working capital limits for various businesses
for a period of 12 months, which are subject to renewal every year. It is a review of the
company’s working, operations, and performance. As the performance and growth of the
businesses are volatile. Limits provided can be fund based and non-fund-based. Different
types of financial services provided are Cash Credit, Overdraft, Letter of Credit, and Bank
Guarantee; some of these limits are revolving. Renewals can be:

a. Plain Renewal: The sanctioned limit for renewal is the same as that of the previous
year, as the performance of the business can be considered constant.
b. Renewal with Enhancement: When the sanctioned limit is enhanced, increased from
the limit of the previous year, it is known as “enhancement” and it is done when the
business is growing and there is an uptrend in their revenues and performance.
c. Renewal with Reduction: When the sanctioned limits are reduced, they are termed
as renewal with reduction and there are a few reasons for the reduction, mainly if
there is a downtrend in the performance of the company and the revenues and
profitability decrease or when the limit is divided between banks.

Depending on a case-to-case basis, there can be loans which are secured against higher
collateral and some are secured against comparatively lesser collateral leading to different
kinds of assessments.
THE PROCEDURE FOR RENEWAL:

Documents from
the Customer

Note Preparations

Credit Appraisal

OK Not OK

Discussion &
Justifications

Sanction

Docs Executed by
the Customer

Update in the
System

Renewal Complete

 Documents required by the customer:

The most time-engaging part of the entire process is when the business department asks for a
list of documents from the customers. The list of various common documents required for the
renewal process is as follows:
Sr. No. Type of Documents Required
Document
Financial Current Year Performance
1.
Document Latest Net worth Certificate of all promoters & guarantors
Tax Audit report of last 3 years i.e., FY 2020, 2021 and 2022
(3CA/3CB forms)
Monthly GST returns for last year/VAT Returns/ Service Tax
2. GST Documents Returns/ 26AS/ER-1 (whichever is applicable).
Advance Tax Receipts/challans for current year performance
Income Tax Return of the company and Guarantors for the
last 3 years
Bank Statements of all the banks for the last 12 months for all
3. Bank Documents
the accounts maintained
Legal & Annexure I as per RBI format, OFAC declaration
4. Regulatory Annexure III (Due diligence report for FY 2021/FY2022)
requirements
5. Business Stock Statement for the last 12 months
Ecosystems UFCE for the previous 2 quarters
Order book details – Details of the current orders in hand /
expected orders and order copies – Sales for the Provisional
year and Current period performance validation. The current
status of the projected on the letterhead of the company
List of top 5 customers and suppliers for last two financials
years along with contact details, dependency on
sales/purchases, Products sold/ purchased
Party-wise Ageing of Debtors as on the last date of the
Balance Sheet (also for all quarters) along with current status
(<90 days, <180 days and >180 days)
Latest External Rating Report
Import Export Certificate, If any
Signed CMA of Projected Financials for 2 years
Latest Sanction Letters of other banks including Channel
finance, Commercial Vehicle loans, Vehicle loans and other
 business loans with detailed terms and conditions and
sanction letter of ECLGS facility availed by the borrower
Physical performance in terms of Installed capacity, Capacity
utilized, the quantity produced/purchased, quantity sold,
average realization per unit for the last 3 years & current
period
Documents Physical performance in terms of Installed capacity, Capacity
specific to utilized, quantity produced/purchased, quantity sold, average
6.
Manufacturing realization per unit for last 3 years & current period.
Companies
(The document checklist is as per the policy of the bank.)

 Note Preparations:
Note preparations are the most important step in the renewal process. All the details and
analysis of the renewal case (company) are mentioned and also for any changes in the
projections, and provisional financials from the audited, as the company gets 180 days to
provide the audited documents, till then provisional documents are used. However, the
companies get about 180 days to provide the bank with the audited financial documents, till
which the provisional documents are used; the deviation of the data in the provisional should
not be more than 5%-10% from the audited documents. Note preparations act as an appraisal
report for the company that needs a working capital loan, which is submitted to the credit
team; and once the credit team analyses the case for all the risk factors and approves it, the
case goes forward for sanctioning.

 Credit Appraisal:
Credit Appraisal is the step in which the case is transferred from the business team to the
credit team, where they do an in-depth and detailed analysis of the case where all the risks are
considered. When all the criteria are met and all the checks and examinations are passed, then
the case is sanctioned.
However, the credit team raises any issue or query related to the case to the business team,
who in turn contacts the client for justifications for those queries and responds to the credit
team. The Credit Appraisal Process:

Credit Assessment
 Review

Appraisal Justifications (if

Procedure needed)

Modify

Sanctioning
Authority

Updating the
system

Disbursement

The main task of the credit team is the assessment of the various financials provided by the
company and cross-checking them for validations from a second source e.g., sales, and
revenue are validated from different documents and the bank as well, like TDS certificates
and form 26 AS. Also, a general search is done about the company to ensure that there is no
conspiracy against the company, nor any legal disputes and to obtain details regarding the
business of the customer and the profile of the customer is also looked upon. They also
determine the creditworthiness of the company by ensuring that they have not defaulted on
any of their payments.
The team also assesses the collateral and type, whether it is hard collateral e.g., property,
automobiles, equipment, etc. or/and securities consisting of fixed deposits, policies (e.g., LIC
policies) or even equity. Along with this are the sales growth of the company’s business,
profitability and expenses, the capacity of its financials, the assessment of the assets and the
borrowings of the company, and its equity and liabilities. The analysis of CMA helps the
credit team determine the sanctioned limit. Fund-based services and non-fund-based services
have different processes. Also, any projections provided by the company should be backed by
some supporting (e.g., work orders).
If any downtrend or negative growth is observed in the performance or revenue, the team
discusses with the client about the issue to obtain justifications for all the queries. Along with
analysis of the audited financials and discussing with the customer about the same. The
monitoring and analysis of the accounts are done on the central level which automatically
maintains the track record of all the accounts.
As mentioned, for small exposure, which is backed by high collateral or renewal cases, it is
important to have a list of various documents and their relevance. In such cases, the least
relevant documents can be avoided.

 Sanction:
Once the credit team gives the green signal to the case, they transfer it to the sanctioning team
along with recommendations in the form of remarks updated by the credit team. If required,
the sanctioning team proposes new sanctioning limits. Sanctioning authorities are defined
based on the sanctioning limits. Also, compliance checks are done, if any compliances are
pending or if there are any new compliances along with different terms and conditions.

 Documents executed by the Customer:

After sanctioning, the audited provisional documents are to be submitted by the customer
within the mentioned time frame, along with any pending or new compliances and additional
justifications (the deviation of data in audited should not be more than 5%-10% to that of the
provisional documents submitted).

 Updation in the System:

After sanctioning the renewal of the case, it is made sure that all the details are updated in the
system, which takes place in real-time. This is the final step of the whole renewal process.
Renewal cases with low exposure take approximately 2-3 weeks whereas, the cases with
higher exposure might take about 1-2 months.

LIMITATIONS:
 1. Major delay in the renewal process occurs in obtaining the document from the
customer, as they do not provide us with all the necessary documents at once and need
continuous follow-up. Hence, the major challenge is the timely documentation.
2. The business team collects all the documents and transfers the case to the credit team,
who then starts examining and analysing it. This process increases the time
consumption for completion of the renewal.
3. Any doubts or queries raised by the credit team are taken up with the customer
through the business team and hence, the justification and discussion are conveyed to
the credit team again via the business team which eventually utilizes a lot of time.
4. As the process is very detailed and in-depth analysis is done, it eventually consumes a
lot of time, hence increasing the turn-around time (TAT). All the cases go through a
comprehensive assessment increasing the time taken.
5. The entire process for the renewal is system-oriented. As the employees use heavy
software and platforms for these cases, they face a lot of technical glitches, network
issues, and system crashes due to the heavy load on the software.

RECOMMENDATIONS:
1. Constant and continuous monitoring of the portfolio would make the process simpler
as the main focus of the assessment will not pile up during the expiry of the renewal
but the focus would be throughout and hence it will help reduce the time and
workload required for the analysis of the case.
2. Another way could be by establishing a new checklist consisting of a few major
criteria, which would help determine and analyse the health of the case. And when all
these criteria from the checklist are met and correct, then the case can move forward
in an automated process, reducing the turnaround time of the case and making the
process easier. However, if any issue or doubt is found in either of the major criteria,
the case can be sent for a detailed and comprehensive examination.
3. The credit team can perform some of the basic checks internally simultaneously while
the case is with the business team, rather than conducting them at a later stage when
the case is transferred to the credit team after the accumulation of all the documents
by the business team. This will help determine the position of the case before itself.
The basic checks include CIBIL checks, stock statement checks, the trend of revenue
and profits, etc.
4. Also, we can start the renewal process well in advance, say 30-45 days before the
expiry of the case. This will help reduce the complete workload of the process during
the expiry and would make it simpler, decreasing the pressure on the team.
5. As the same business team and credit teamwork on the fresh cases along with the
renewal cases, dedicated teams can be introduced for fresh cases and the renewal
cases, where a team can work on fresh cases and a team can work on renewal cases
simultaneously reducing the working load on the team and would help improve
efficiency; hence reducing the time consumption.
6. A new tool can be developed in collaboration with the Ministry of Company Affairs
(MCA) for private limited companies, where we can obtain a majority of important
documents from a single source. Here, the companies register and submit their
financial documents, tax documents and also KYC documents of the company.
Therefore, this would help us in accumulating the major documents and the delay in
receiving them from the customer could be avoided.
7. A new software can be developed for the improvement of the process of renewal
where the software would have two faces, one between the client and the relationship
manager and the other between the relationship manager and the credit team.
However, the client would be able to view only one side of the software where he/she
can upload the necessary documents and view the progress of their renewal which
would help determine the reason behind the delay also client would be able to track
which documents are pending from their end. They will not be allowed any other
operations for security purposes. And the other face, which would be at the back end
and will not be visible to the client, the credit team will be able to work
simultaneously, minimizing the delay. The relationship manager would be acting as a
bridge. And the platform would also have a chat feature where any query could be
communicated simultaneously, reducing the number of phone calls. It would also
work as a library for various documents needed in the future, making cross-
verification easier, and reducing the scope of human errors and unnecessary delays.
Also, to view the progress there would be a status checklist showing as  Verified/
Ongoing Verification. And the portal would be accessible through laptops and mobile
phones as well.
8. Along with all these recommendations, understanding the importance and relevance
of all the various documents and complying with them is essential. And performing
proper and accurate document checks and other different checks, without making any
errors would reduce the utilization of time which can be saved. And also keep the
communications between the teams and the customer clear and apt. All this would
help make the process efficient and smoother.
MARKET SCOPING:
As I worked on an analysis of the renewal process and tried to identify recommendations on
how to improve them, I also worked on market scoping to identify new potential customers.
Market scoping was done for companies with turnover in the range of 250-750 Cr. in Pune.
Areas of Bhosari, Chinchwad, Pimpri, Chakan, etc. in the Pune Region were majorly
searched and filtered out and approximately 56 companies were filtered out which were
private limited companies in nature.

No. of Companies
40
30
30
20
8
10 4 4 3
1 1 1 2 1 2 1 1 1 1 1 1 1 2 1 2 1 1
0

In the following diagram, it can be seen from out of 71 companies filtered out, 30 companies
were from the Bhosari area, 8 from Chakan, 4 from Hadapsar and so on. These areas are
MIDC regions of which I visited Chinchwad and Bhosari MIDC to get a list of companies.
We were able to find a Reference and Direction Industrial Industry which had several
companies registered for Pune.
The following bar graph shows the turnover frequency of the 71 companies that were
collected and filtered out. The maximum number of companies was in the range of 120-220
Cr and there were 2 companies with a maximum turnover of 720 Cr.

This helped us to identify potential customers in the area.

LEARNINGS:
I was able to comprehend numerous areas of accounting and finance practically during two
months of internship. I learned:
 How renewal is done in ICICI Bank.
 How to assist the team in the renewal process.
 How to identify various financial documents.
 How to communicate with the customer and the team effectively.
 How to identify new customers.
 Understanding the financial sector.
 Specific rules, procedures and the jargon of the industry.
 How to conduct market research and do market scoping.
REFERENCES:
1. https://www.icicibank.com/
2. https://www.icicibank.com/aboutus/history.page?#toptitle
3. https://en.wikipedia.org/wiki/ICICI_Bank
4. http://content.alterra.wur.nl/webdocs/internet/aew/thesis/
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