CREDIT MONITORING

R.KANCHANAMALA
EX FACULTY
IIBF

INDIAN INSTITUTE OF BANKING & FINANCE

Session Objectives
 What is credit monitoring
 Why Credit monitoring
 Tools for Monitoring- on site/off site
 Pre disbursement/post disbursement monitoring
 Early warning signals
 Red flagging of accounts
 Fraud risk Management in credit
 Resolution of Stressed Assets
What is Credit
monitoring?
Credit Monitoring

 Credit monitoring can be

defined as a supervision of a
loan account on an ongoing
basis keeping a continuous
watch/vigil over the functioning
of a borrowal unit to confirm
that it conform to the various
assumptions made at the time
of last sanction/renewal.
 Why
Credit monitoring?
Objectives of Credit Monitoring

 Ensure delivery of credit after complying with laid down

procedures and stipulated conditions.
 Continuous monitoring of advances accounts as regards conduct of
account, regular payment of interest, instalments and other dues.
 Regular follow up to ensure that advanced assets remain in
standard category.
 Identify early warning signals.
 Take corrective steps to nourish back the account to healthy state.
 Endeavour for upgradation of identified weak accounts
 Containment of slippages
 When
Credit monitoring?
 DIFFERENT STAGES OF CREDIT MONITORING

 STAGE I - CREDIT MONITORING AFTER SANCTION AND PRE-

DISBURSEMENT.

 STAGE II – CREDIT MONITORING DURING DISBURSEMENT

 STAGE III - CREDIT MONITORING AFTER DISBURSEMENT

 CREDIT MONITORING PRE-DISBURSEMENT.
 CONVEYING THE SANCTION
 ANY CHANGE SUBSEQUENT TO SANCTION?
 OBTENTION OF SATISFACTORY CREDIT REPORTS FROM EXISTING LENDERS
AND OTHER AGENCIES LIKE D&B, CIBIL
 LEGAL OPINION
 VALUATION REPORT
 OBTAINING QUOTATIONS/INVOICES ETC
 INSPECTION OF COLLATERAL SECURITIES
 PRE-DISBURSEMENT INSPECTION (Especially if no inspection is done
earlier)
 DOCUMENTATION/Joint Documentation
 CREDIT MONITORING PRE-DISBURSEMENT
 Legal Opinion- Points

o Empanelment after due diligence,

o Prescribed format for report, Report without any qualification

 Valuation Reports – Points

o Empaneled valuers,
o Declaration from valuers (Not Relative/associated),
o Better to see the property,
o Sometimes two valuations required, Large Account/ large
plants like- Mines & Minerals etc - Specialist valuer capable to
value-
CREDIT MONITORING PRE-DISBURSEMENT-
Contd.
 OBTAINING QUOTATIONS/INVOICES ETC-
o Due Diligence,
o Who is supplier,
o Supplies in the past,
o Competent to supply,
o Genuine quotations,
o Duly signed quotations
o Invoices should carry GST details if applicable
CREDIT MONITORING PRE-DISBURSEMENT-
Contd.

 INSPECTION OF COLLATERAL SECURITIES-

o Go independently,
o Verify details from Legal report,
o Verify boundaries/ Survey numbers,
o Free access
 CREDIT MONITORING PRE-
DISBURSEMENT- Contd.
 DOCUMENTATION/JOINT DOCUMENTATION- Points
o Correct selection of documents- Appropriate to
borrower/facilities,
o Signatures of borrower on each page,
o Same ink,
o Pari-passu charge,
o CERSAI Registration,
o RTO Hypothecation etc
o Periodical renewal of documents.
CREDIT MONITORING DURING DISBURSEMENT

 Validity ofsanction
 Credit Audit
 Induction of margin by the borrower
 Obtaining paripassu letter
 Releasing the loan
 Inspection
 LIE report
 Educating the borrower
 CREDIT MONITORING AFTER DISBURSEMENT
 Brick by brick
 On site Tools
 Inspection of fixed assets/inventory and receivables
 Inspection of books
 Interaction with borrowers/their employees
 Performance assessment by verification of per unit
selling price/raw material prices with the projection
made.
 Order book position
 Stock audit
 LIE report in case of Project Financing
 Nomination in Board of Directors.
OFF SITE TOOLS

 Conduct of account
 QIS & MSOD – compare actual performance with
projections
 Audited Financials
 Stock & Receivables statement
 Market reports/interaction with competitors
 Flash reports for out of order accounts
 Various inputs received from Data centre/warehouse
 MONITORING AFTER DISBURSEMENT

 Compliance of sanction terms and conditions

 Recovering charges
 Insuring the assets
 Completing credit guarantee formalities, if any
 Mark renewal date
 Registration Of Charges/Obtention of fresh
search report
CREDIT MONITORING AFTER DISBURSEMENT
 OBTAINING REPORTS AND RETURNS
 RECEIVABLES STATEMENT
 MSOD (MMR)
 QIS (FFR)
 INSPECTION REPORTS
 CONSORTIUM MEETING MINUTES
 FINANCIAL STATEMENTS
 STOCK STATEMENT
 STOCK AUDIT
 CREDIT AUDIT & LOAN REVIEW MECHANISM(CALRM)
 MONITORING AFTER DISBURSEMENT

 MONITORING THROUGH LEDGER ACCOUNT

OPERATIONS
 Monitoring through Account Operations

 Ledger is mirror of all activities

 Unrelated transactions
 Excess drawings
 Penal interest to be charged
 Diversion of funds
 Cheques returned
 Suspicious transactions
 Abnormal transactions
 T/O More/Less from consortium share
 MONITORING AFTER DISBURSEMENT

 INSURANCE
 Adequate
 Timely
 Timely renewal
 Bank clause
 MONITORING AFTER DISBURSEMENT

 Inadequate insurance!
 CREDIT MONITORING AFTER DISBURSEMENT

 INSPECTION OF SECURITIES
Physical Verification of Vehicles

The following to be verified

 Registration number, make, chassis number and engine number.
 Position of Insurance and its validity
 Position of payment of taxes
 Position of permit and its renewal
 Driving license and its validity
 Whether bank’s name painted on the vehicle
 Whether bank’s name is entered in the registration certificate of RTO
 General condition of the vehicle.
Inspection..Points to note
 Inspection to be done at stipulated intervals.
 Verification of bank’s internal records before going for inspection including
previous inspection report.
 Inventory control system employed by the borrower to be studied.
 Whether consistent and accepted accounting principles are adopted.
 Stocks declared in the stock statement to be verified with actual stocks
and records.
 Receipts and invoices etc should be verified to ascertain the value of
goods
 Overdue debtors to be verified to ascertain the reliability thereof.
 Whether borrower is meeting statutory liabilities.
 To check labour relationship.
 Conditions of the machines, whether in working condition to be examined.
 Credit Monitoring – Term Loan Financing
 Fixed Assets /Project Finance Monitoring :
 Implementation Stage
 Periodical visit
 Lender engineer report/PERT Chart (prog Evaluation review Chart
Technique)
 Architecture report
 CA certificate in respect of (i) infusion of margin and (ii) End use of funds
---Nominee Director on the Board of assisted units
 Post Implementation Stage
 Asset Verification
 Capacity utilisation
 Insurance
 Maintenance of plant
 Follow up For Recovery of Instalments / interest
 CREDIT MONITORING AFTER DISBURSEMENT

MONITORING BY CONTROLLING OFFICES

 ANNUAL REVIEW/ RENEWAL
 Internal audit report/special audit report/CALRM(credit audit&Loan
review mechanism) report
 Statutory audit report
 RBI inspection report
 Consortium minutes meetings
 Stock audit report
 Visit by officials from controlling office to Branches
 END-USE OF FUNDS

End-use • Obtaining CA’s certification

• Due diligence on the part
can be of lenders
ensured • Strengthen Bank’s internal
controls/credit risk
by management system
ILLUSTRATIVE MEASURES FOR MONITORING AND ENSURING END-USE OF FUNDS

Meaningful scrutiny of quarterly progress reports/operating statements/

balance sheets of the borrowers

Regular inspection of borrowers’ assets charged to the lenders as security

Periodical scrutiny of borrowers’ books of accounts and the no-lien accounts

maintained with other banks

Periodical visits to the assisted units

System of periodical stock audit, in case of working capital finance

Periodical comprehensive management audit of the ‘Credit’ function of the

lenders
 MONITORING AFTER DISBURSEMENT
Identifying Special Mention Accounts (SMA)
SMA-0
 Principal or interest payment not overdue for more than
30 days but account showing signs of incipient stress
SMA-1
 Principal or interest payment overdue between 31-60
days
SMA-2
 Principal or interest payment overdue between 61-90
days
Reporting requirements
 As part of the framework for Revitalising Distressed assets in the
Economy during Feb’14 , Reserve Bank of India has set up a
Central Repository of Information on Large Credits (CRILC) to
collect, store, and disseminate credit data to lenders.
 Banks are required to report credit information, including
classification of an account as SMA to CRILC on all borrowers having
aggregate fund-based and non-fund based exposure (including
ECBs) of Rs.5 crore and above.
 Banks have put in place proper Management Information and
Reporting system so that any account having principal or interest
overdue for more than 60 days gets reported as SMA - 2 on 61st day
itself.
Reporting in CRILC
 Lenders shall report credit information, including
classification of an account as SMA to Central Repository
of Information on Large Credits (CRILC) on all borrower
entities having aggregate exposure of Rs. 50 million and
above with them. The CRILC-Main Report is be required
to be submitted on a monthly basis effective April 1,
2018.
 In addition, the lenders shall report to CRILC, all
borrower entities in default (with aggregate exposure of
Rs. 50 million and above), on a weekly basis, at the
close of business on every Friday, or the preceding
working day if Friday happens to be a holiday.
 THE FLAGS

Red Flag
• A set of circumstances that are unusual/abnormal.
• Point towards something extraordinary happening needing further investigation.
• 43 Early warning Signals included in RBI Master Directions
Examples of Red Flags
• Frequent change of Auditors
• Use of different Audit Firms
• Absence of segregation of duties
• Sudden losses
• All is well (Too good to be true) feeling
• Missing/Altered Documents
• Disorganised ways
• Flamboyant lifestyle
 EARLY WARNING SIGNALS
1. Bouncing of high value cheques.
2. Frequent change in the scope of the project to be undertaken by
the borrower.
3. Foreign bills remaining outstanding with the bank for a long time
and tendency for bills to remain overdue.
4. Delay observed in payment of outstanding dues.
5. Frequent invocation of BGs and devolvement of LCs.
6. Under insured or over insured inventory.
7. Dispute on title of collateral securities.
8. Funds coming from other banks to liquidate the outstanding loan
amount unless in normal course.
 EARLY WARNING SIGNALS
11. Request received from the borrower to postpone the inspection of the
godown for flimsy reasons.
12. Funding of the interest by sanctioning additional facilities.
13. Exclusivecollateral charged to a number of lenders without NOC of
existing charge holders.
14. Concealment ofcertain vital documents like master agreement,
insurance coverage.
15. Floating front / associate companies by investing borrowed money.
16. Critical issues highlighted in the stock audit report.
17. Liabilities appearing in ROC search report, not reported by the borrower
in its annual report.
18. Frequent request for general purpose loans.
19. Frequent ad hoc sanctions .
 EARLY WARNING SIGNALS
21. Not routing of sales proceeds through consortium I member bank/ lenders to
the company.
22. LCsissued for local trade/related party transactions without underlying
trade transaction.
23. High value RTGS payment to unrelated parties.
24. Heavy cash withdrawal in loan accounts.
25. Non production of original bills for verification upon request.
26. Significant movementsin inventory, disproportionately differing vis-a-vis
change in the turnover.
27. Significant movementsin receivables, disproportionately differing vis-à-vis
change in the turnover and/or increase in ageing of the receivables.
28. Disproportionate change in other current assets.
29. Significant increase in working capital borrowing as percentage of turnover.
30. Increase in
Fixed Assets, without corresponding increase in long term
sources (when project is implemented).
 EARLY WARNING SIGNALS
31. Increase in borrowings, despite huge cash and cash equivalents in the borrower's
balance sheet.
32. Frequent change in accounting period and/or accounting policies.
33. Costing of the project which is in wide variance with standard cost of installation of
the project.
34. Claims not acknowledged as debt high.
35. Substantial increase in unbilled revenue year after year.
36. Large number of transactions with inter-connected companies and large outstanding
from such companies.
37. Substantial related party transactions.
38. Material discrepancies in the annual report.
39. Significant inconsistencies within the annual report (between various sections).
40. Poor disclosure of materially adverse information and no qualification by the
statutory auditors.
41. Raid by Income tax /sales tax/ central excise duty officials.
42. Significant reduction in the stake of promoter /director or increase in the
encumbered shares of promoter/director.
43. Resignation of the key personnel and frequent changes in the management.
 EARLY WARNING SIGNALS
& RED FLAGGED ACCOUNTS
Red Flagged Account (RFA)
• A Loan Account where a suspicion of fraudulent
activity is thrown up by the presence of one or more
Early Warning Signals (EWS).
• These signals should immediately put the bank on
alert regarding a weakness or wrong doing which
may ultimately turn out to be fraudulent.
• A bank cannot afford to ignore such EWS but must
instead use them as a trigger to launch a detailed
investigation into a RFA.
 RED FLAGGING OF ACCOUNTS
 The concept of a Red Flagged Account (RFA) is introduced by RBI as an important step in
fraud risk control.
 A RFA is one where a suspicion of fraudulent activity is thrown up by the presence of one or
more Early Warning Signals (EWS).
 Threshold for EWS and RFA is an exposure of Rs.50 crs or more at the level of a bank
irrespective of the lending arrangement (whether solo banking, multiple banking or
consortium).
 The officer responsible for the operations in the account, to report any manifestation of the
EWS promptly to the Fraud Monitoring Group (FMG) or any other group constituted by the
bank for the purpose immediately. The FMG will take a call on whether an account in which
EWS are observed should be classified as a RFA or not within a month of the EWS being
noticed.
 In case the account is classified as a RFA, the FMG will stipulate the nature and level of
further investigations or remedial measures necessary to protect the bank’s interest within a
stipulated time which cannot exceed six months. At the end of this time line, which cannot
be more than six months, banks would either lift the RFA status or classify the account as a
fraud.
 All accounts beyond Rs.50 crs classified as RFA or ‘Frauds’ must also be reported on the CRILC
data platform together with the dates on which the accounts were classified as such.
 Unit inspection exercise
 Mr Naresh, the Manager of Station Road
branch of a bank had conducted
inspection of factory premises of M/S ABC
Engineering Industries, engaged in
manufacturing tins, financed by his bank.
 Highlights of the observations during
inspection are as under: -
 1. No shortage of stocks was found on
verification.
 2. The production activities were in
full swing and stocks more than assessed
level (as assessed in appraisal note) was
available on the spot.
 3. Scrap of about 10% of stock in
weight was lying on the back side of unit.
 4. Rejected items from the customers
of about 5 % -10% of production the stock
were kept.

 5.Large stock of tins that the unit
made was available and the stock of
lids, used to close the tins, was very
low.
 6. Sales turnover tallied with the
credit summations in the account.
 7. production superintendent was
new and his two predecessors, whom
Mr Naresh met on previous visits,
have changed jobs.
 8. He could not meet the partners
as they were not available and it was
told that partners do not visit the
factory often as their residence is far
away from the unit and visit quarterly
 9. Operations in the accounts
were satisfactory and no devolvement
of L/C or guarantees was observed.
 Discuss and find out early warning
signals, if any, based on the
observations of the inspection
 Diversion &Siphoning of Funds
Diversion of Funds: The term ‘diversion of funds’, should be
construed to include any one of the undernoted occurrences:
 (a) utilisation of short-term working capital funds for long-term
purposes not in conformity with the terms of sanction;
 (b) deploying borrowed funds for purposes/activities or creation of
assets other than those for which the loan was sanctioned;
 (c) transferring borrowed funds to the subsidiaries/Group
companies or other corporates by whatever modalities;
 (d) routing of funds through any bank other than the lender bank
or members of consortium without prior permission of the lender;
 (e) investment in other companies by way of acquiring
equities/debt instruments without approval of lenders;
 (f) shortfall in deployment of funds vis-à-vis the amounts
disbursed/drawn and the difference not being accounted for.

42
 Siphoning of Funds: The term ‘siphoning of funds’,
should be construed to occur if any funds borrowed
from banks/FIs are utilised for purposes unrelated to
the operations of the borrower, to the detriment of the
financial health of the entity or of the lender. The
decision as to whether a particular instance amounts to
siphoning of funds would have to be a judgment of the
lenders based on objective facts and circumstances of
the case

43
 Who is a Non Cooperative Borrower
 With a view to discouraging borrowers/defaulters from being
unreasonable and non-cooperative with lenders in their bonafide
resolution/recovery efforts, banks may classify such borrowers as
non-cooperative borrowers.
 As per RBI Circular Dated 22nd Dec 2014, A Non-Cooperative Borrower is
one -
 who does not engage constructively with his lender by defaulting in
timely repayment of dues while having ability to pay,
 thwarting lenders’ efforts for recovery of their dues by not providing
necessary information sought,
 denying access to assets financed / collateral securities,
 obstructing sale of securities, etc.
 Thus, a non-cooperative borrower is a defaulter who deliberately
stone walls legitimate efforts of the lenders to recover their dues.
 Identification & Reporting – Processes Involved
 Noticing indicators of Non-cooperation at field level
 Submission of Status Note alongwith relevant documents by field
functionaries to higher office
 Discussion on the status notes & facts of the case in the Committee
of Executives (COE) headed by Executive Director
 Issuing Show Cause Notice to borrowers found non-cooperative
 Going through the submissions of borrowers and allowing them
Personal Hearing before the COE
 Review of the Decision of the COE regarding classification of a
borrower as non-cooperative by the Review Committee headed by
MD & CEO
 Quarterly submission of information on Non-Cooperative borrowers
in CRILC Main Return within 21 days from the close of the relevant
quarter. Non reporting entails penal provisions.
WILFUL DEFAULTERS
 The default in payment as per agreed terms could be intentional or due to the reasons
beyond the control of the borrower. The intentional default is referred to as wilful
default. As per RBI guidelines, a ‘wilful default’ would be deemed to have occurred if
any of the following events is noted:
 (a) The unit has defaulted in meeting its payment/repayment obligations to the lender
even when it has the capacity to honour the said obligations.
 (b) The unit has defaulted in meeting its payment/repayment obligations to the lender
and has not utilised the finance from the lender for the specific purposes for which
finance was availed of but has diverted the funds for other purposes.
 (c) The unit has defaulted in meeting its payment/repayment obligations to the lender
and has siphoned off the funds so that the funds have not been utilised for the specific
purpose for which finance was availed of, nor are the funds available with the unit in the
form of other assets.
 (d) The unit has defaulted in meeting its payment/repayment obligations to the lender
and has also disposed off or removed the movable fixed assets or immovable property
given by him or it for the purpose of securing a term loan without the knowledge of the
bank/lender. .
46
 Implications – Penal Measures
 No additional facilities should be granted by any bank / FI to
the listed wilful defaulters.
 Such companies (including their entrepreneurs/promoters)
where banks/FIs have identified siphoning/diversion of funds,
misrepresentation, falsification of accounts and fraudulent
transactions, should be debarred from institutional finance
from the SCBs/FIs/NBFCs, for floating new ventures for a period
of 5 years from the date of removal of their name from the list
of wilful defaulters as published/disseminated by RBI/CICs.
 The legal process, wherever warranted, against the borrowers /
guarantors and foreclosure for recovery of dues to be initiated
expeditiously.
 Wherever possible, the banks and FIs should adopt a proactive
approach for a change of management of the wilfully defaulting
borrower unit.
 Fraud- Reasons Internal
Internal
 Negligence
 Complacency
 Casual Attitude
 Lack of Knowledge
 Non adherence to systems & procedures
 Excess work pressure

INDIAN INSTITUTE OF BANKING & FINANCE

 Frauds- Reasons- External

 External Reasons
 Lack of fear of law
 Poor Conviction rate
 Tardy legal system
 Money defrauded is used for lavish life style,
terrorism, money laundering, political
patronage etc

INDIAN INSTITUTE OF BANKING & FINANCE

 Advances
 Verification of documents
 Verification of income tax/salary
 Fake balance sheet
 Unrealistic projections
 Pre sanction inspection
 Fake title deeds
 Bills fraud- kite flying
 LC fraud
 Fake invoice /supplier
 Inflated invoice
 Impersonation
 Fake statement of account
 Fake NOC of banks
 RBI defaulters list
INDIAN INSTITUTE OF BANKING & FINANCE
 Housing loans

 Fake title deeds

 Fake income certificate
 Fake NOC of builder/ Society
 Fake bank account details
 Loan against same property from different
banks
 CIBIL/Equifax report

INDIAN INSTITUTE OF BANKING & FINANCE

 Vehicle loans

 Fake proforma invoice – sub dealer

 Fake bank account
 Handing over pay order to borrower
 RC book fake
 Fake receipts / bills
 VAHAN <Registration Number> and send the
same to 7738299899

INDIAN INSTITUTE OF BANKING & FINANCE

 REGULATORY REQUIREMENT
Classification and Reporting of Frauds
 Enable banks to detect and report frauds early
 Timely investigative actions by agencies to bring culprits to
book
 Examine staff accountability and take suitable action
 Put in place effective fraud risk management system
 Faster dissemination of information about fraudsters in the
financial system
 Both at CEO level, audit committee of board level
consciousness about fraud prevention
 Banks should report fraud in FMR 1 within 21 days of
detection of fraud (3 weeks)
 Bank to designate a suitable GM rank official to monitor the
submission of returns
INDIAN INSTITUTE OF BANKING & FINANCE
 Guidelines- Continue
 Cash shortages above 10,000 to be reported as fraud including ATM
 Cash shortages above 5000 detected by auditor/inspector/management
if not reported by cashier or concerned person on same day
 Central Fraud Registry (CFR)
 CFR formed based on FMR reporting by banks
 Central data base can be accessed by all banks with userid /pw
 Apart from individual reporting a monthly certificate to be made to RBI
 Where central investigative agencies have taken suo-moto action FMR to
be filed by banks
 Where fraud amount is more than 5 cr a Flash report to be filed within a
week of detection /notice
 Periodic FMR updates also to be filed

INDIAN INSTITUTE OF BANKING & FINANCE

 Guidelines- Continue
 All frauds above 1 lacs to be reported to board /Audit
committee of board promptly for consideration and disposal
 There should be a quarterly review of frauds in the bank by
a committee of all important departments
 Root cause analysis of each fraud should be discussed to
evolve suitable remedies in future
 Annual review report to be submitted to board
 Special committee of board to be constituted for monitoring
fraud above 10 million (1cr) with MD/CEO and other ACB
members
 Committee should meet a periodic intervals depending upon
number of cases and as and when fraud of 1 cr is reported
 Committee to follow up all such cases, reasons, staff
accountability, systems, procedure, prevention in future ,
following up with CBI/Police

INDIAN INSTITUTE OF BANKING & FINANCE

 Prudential Frame work on Stressed
Assets- Revised June 2019
 The revised prudential framework on stressed assets issued by RBI on
June 7 2019 has widened the scope of applicability to include NBFC-(ND
SI) and NBFCs (deposit taking) and small finance banks
 Lenders shall undertake a prima facie review of the borrower account within 30
days from default( review period) and may also decide on the resolution strategy
including the nature of the resolution plan, the approach for implementation of
RP. The lenders may also choose to initiate legal proceedings for insolvency or
recovery.
 The lenders may also choose to initiate legal proceedings for insolvency or
recovery.
 If RP is to be implemented, all lenders shall enter into an inter-creditor
agreement (ICA) .The ICA shall provide that any decision agreed by lenders
representing 75 per cent by value of total outstanding credit facilities (fund
based as well non-fund based) and 60 per cent of lenders by number shall be
binding upon all the lenders
Resolution Plan for stressed assets ( other than MSME)….

 RP may involve any action / plan / reorganization including, but not limited
to, regularisation of the account by payment of all over dues by the
borrower entity, sale of the exposures to other entities / investors, change
in ownership and restructuring .
 RPs involving restructuring / change in ownership in respect of accounts
where the aggregate exposure of lenders is ₹100 crore and above, shall
require independent credit evaluation (ICE) of the residual debt by credit
rating agencies (CRAs) specifically authorized by the Reserve Bank for this
purpose.
 While accounts with aggregate exposure of ₹500 crore and above shall
require two such ICEs, others shall require one ICE. Only such RPs which
receive a credit opinion of RP4 or better for the residual debt from one or
two CRAs, as the case may be, shall be considered for implementation.
 ICE give opinion on RP as RP-1 to RP-7 . RP-4 & better is considered for
implementation .
Implementation Conditions for RP
 A RP in respect of borrower entities to whom the lenders continue
to have credit exposure, shall be deemed to be ‘implemented’ only
if the following conditions are met:
 a. the borrower entity is no longer in default with any of the
lenders;
 b. if the resolution involves restructuring; then
 i. all related documentation, including execution of necessary
agreements between lenders and borrower / creation of security
charge / perfection of securities are completed by all lenders; and
 ii. the new capital structure and/or changes in the terms of
conditions of the existing loans get duly reflected in the books of
all the lenders and the borrower.
Delayed Implementation of Resolution Plan
 Where a viable RP in respect of a borrower is not implemented within the
timelines given below, all lenders shall make additional provisions as
under:
Additional provisions to be made as a
Timeline for implementation of % of total outstanding (funded+non-
viable RP funded), if RP not implemented within
the timeline
180 days from the end of Review
20%
Period

365 days from the commencement 15% (i.e. total additional provisioning of
of Review Period 35%)
ANY QUESTIONS?

THANK YOU

R.KANCHANAMALA

MOB:+91 7045660165

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