concurrent auditing

8/3/2019 Concurrent Auditing

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[CONCURRENT AUDITING

Concurrent auditing

By

Ashwini d

BNMIT, MBA 3rdSEM

1BG10MBAO7

Introduction

1 | B. N. M. INSTITUTE OF TECHNOLOGY (BNMIT)


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Concurrent auditing

BACKGROUND

RBI directed all the banks to introduce system of concurrent audit for the first time

in 1993 base don the recommendations of Ghosh committee on frauds and

malpractices in Banks.

Subsequently, a working group headed by Mr. Jilani, CMD of Punjab National

Bank, recommended some improvements in the system of concurrent audit in the

Banks. Thereafter, RBI issued fresh guidelines vide its circular dated 14th August

1996 to make the system of concurrent audit in the Banks more effective .RBI

issued another circular on 12th August 1997 in connection with enlargement of

scope of concurrent audit to cover FOREX transactions.

Introduction

CONCURRENT Auditing :

Concurrent Audit is an examination which is contemporaneous with occurrence of

transaction or is carried out as near there-to as possible. It attempts to shorten the

Interval between a transaction and its examination by an independent person not

Involved in its documentation. There is an emphasis in favour of substantive

checking in key areas rather than just checking. This audit is essentially a

management process integral to the establishment of sound internal accounting

Functions and effective controls and setting the tone for a Vigilant Internal Auditto preclude the incidence of serious errors and fraudulent manipulations.

SCOPE OF CONCURRENT auditing:

A concurrent auditor may not sit in judgment of the decisions taken by branch

officials. The auditor will necessarily have to see whether the transactions or



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decisions are within the policy parameters laid down by the Bank, they do not

violate the instructions or policy prescriptions of the RBI and that they are within

the delegated authority.

Concurrent audit system is regarded as part of Banks Early Warning System to

ensure timely detection of irregularities and lapses, which helps in preventing

fraudulent transactions at branches.

The scope of the concurrent audit is wide enough to cover major fraud-prone areas

like handling of cash, deposits, safe custody of securities, investments, overdue

bills, exercise of discretionary powers, sundry and suspense accounts, inter branch

reconciliation, clearing differences, foreign exchange business including Nostro

accounts, Off-balance sheet items like LCs and guarantees, treasury functions,

government business, customer service and credit card business.

Concurrent auditor is required to check that:

Transactions are properly recorded documented and vouched. Spot rectification of

the irregularities and implementation of system and procedure of the bank. To

perform this job effectively and efficiently he must be aware of the latest

guidelines issued by the bank as well as RBI. He should also be well versed with

the functioning of different departments at the branch.

MAIN OBJECTIVES OF CONCURRENT AUDIT :

To alert the management with reporting of early warning signals so that The

bank management shall take necessary steps in time to protect the Banks assets.

To supplement the efforts of the Bank in carrying out the simultaneous Internal

check of the transactions and other verifications and also Compliance with the laid



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down procedures. In concurrent audit importanceis given to checking high risk

transaction having large financial implications as opposed to transactions involving

small amounts.

To locate irregularities, if any, in respect of major identified areas of Branch

working on an ongoing basis.

To detect serious / major irregularities in documentation, security, etc. early and

to ensure timely rectification

To check the fraud prone areas in branch functioning and to verify whether the

fraud prevention measures put in place by the Bank.

PROCEDURAL ASPECTS OF CONCURRENT AUDIT

The bank, based on the guidelines from RBI, has framed a policy for concurrent

audit of theselected branches of the bank. Administrative control over Concurrent

auditors is to be exercisedby respective Zonal Inspectorates.

Areas required to be covered under concurrent audit

Concurrent Auditors are required to check the entire working of the branch

covering 100%Transactions.

COMMENCEMENT OF CONCURRENT AUDIT:

Concurrent audit shall be commenced during the same month of the audit

commencement report shall be sent by both the internal and external concurrent

auditors on the same day of commencement to Zonal Inspectorate by fax / e mail.

Commencement day functions in branches other than FD:

Concurrent auditors shall present their Letter of Authority to the branch in charge

on the date of commencement of concurrent audit. This LOA shall be carried with



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them in person daily and to be produced on demand by the branch officials.

The following activities are to be carried out on the date of commencement:

01. Checking of cash balance in double lock and single lock and tallying withDaybook. Detailed verification of all pieces of 1000, 500,100 and 50 rupee

denominations and test check of other denominations. Cut notes to be checked in

detail and comment on the cut note holdings by the branch and whether any

impounded note or burnt note or half value note etc is kept along with the cut

note bunch.

02. Checking of cash balance in both on site and off site ATMs attached to thebranch.

03. Checking of foreign currency notes and travellers cheques in the branches.

Internal and External auditors shall verify the Foreign Money Accounting Head

vis--vis Foreign Money Register and satisfy that there were no extraneous debits

during the month.

04. Position of undelivered debits cards whether kept inside cupboards or in the

open trays.

05. Verify whether the authorized persons are holding the cash keys; whether the

branch manager is having permission to handover the First key to others and

whether the said permission is in force;

06. Verify security items with the balancing book and control register; Ensure that

no security item is kept outside the cupboard. ; verify the single lock box

containing security items for day to day use. Verify whether monthly balancing of

high value securities is done

07. Check whether UPS room and Server Room are kept locked.

08. Verify staff punctuality and check attendance register.



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KYC NORMS

It means KNOW YOUR CUSTOMERS

Know Your Customer (KYC) is the due diligence and bank regulation that

financial institutions and other regulated companies must perform to identify their

clients and ascertain relevant information pertinent to doing financial business with

them. In the USA, KYC is typically a policy implemented to conform to a

customer identification program mandated under the Bank Secrecy Act and USA

PATRIOT Act. Know your customer policies are becoming increasingly important

globally to prevent identity theft fraud, money laundering and terrorist

financing.Beyond name matching, a key aspect of KYC controls is to monitor

transactions of a customer against their recorded profile, history on the customers

account(s) and with peers.

Banks doing KYC monitoring for anti-money laundering (AML) and checks

relating to combating the financing of terrorism (CFT) increasingly use specialized

transaction monitoring software, particularly names analysis software and trend

monitoring software. The generated alerts identify unusual activity which is then

subject to due diligence or enhanced due diligence (EDD) processes that use

internal and external sources of information on the subject, including the internet.

This helps to determine whether a transaction or activity is suspicious and requires

reporting to the authorities. In the US, it would require Suspicious Activity

Reporting (SAR) filing to Financial Crimes Enforcement Network (Fin CEN). In

the UK, it would require a report to Serious Organized Crime Agency (SOCA). In

Canada KYC is monitored and managed by the Financial Transactions and Reports

Analysis Centre of Canada also known as FINTRAC

KYC has different connotations and the definition above is from an AML/CFT

perspective.



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Know Your Customer processes are also employed by regular companies of all

sizes, for the purpose of ensuring their proposed agents', consultants' or

distributors' anti-bribery compliance. Banks, insurers and export credit agencies are

increasingly demanding that customers provide detailed anti-corruption due

diligence information, to verify their probity and integrity.

Cash :-

Daily cash transactions with particular reference to any abnormal receipts and

payments. Proper accounting of inward and outward cash remittances. Proper

accounting of Currency Chest transactions, its prompt reporting to the RBI.

Expenses incurrent by cash payment involving sizeable amount.

Deposits :-

Check the transactions about deposits received and paid. Conduct percentage check

of interest paid on deposits including calculation of interest on large deposits.

Check new accounts opened particularly current accounts. Verify operations in

new current/SB accounts in the initial periods to see whether there are any unusual

operations.

Deposits of Bank Concurrent Audit

The main source of bank finance is the deposits accepted from public. To cater to

the needs of various types of customers, banks offer different types of accounts

with various facilities attached to these accounts. The Bank accounts are broadlyclassified into the following categories:

(i) Savings Deposit

(ii) Current Deposit

(iii) Fixed Deposit

(iv) KDR



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(v) Recurring Deposit etc.

(vi) NNND A/C

A) Savings Deposit Account

The Savings Deposit Accounts is opened to attract small savings of the public.

The number of withdrawals per year is restricted. A Savings Deposit cannot be

opened normally by any trading or business concern, whether it may be

individual, or partnership concern, etc. A bank may open savings deposit

account for the primary cooperative credit society which is financed by that

Bank, companies incorporated under Section 25 of the Companies Act, 1956;

cooperative societies, philanthropic associations and institutions which areexempt from payment of income-tax with the prior permission of the RBI. No

overdraft is allowed on Savings Account.

B) Fixed Deposit Account

Fixed Deposits are the funds kept by the public with the Bank, which are not

required immediately and are repayable on the expiry of term of the deposits.

The period of deposits may vary from 15 days to 5 years or even more than 5

years. The rate of interest varies depending on the period the deposit is kept.

Sometimes large value deposits are given special rate of interest

by the banks.

Classification of Deposits of Bank Concurrent Audit

For the purposes of the disclosures in the Balance Sheet, the RBI classifies the

deposits accepted by Bank into following categories, namely:

I. Demand Deposits

II. Savings Bank Deposits

III. Term Deposits



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I. Demand Deposits

(i) From Banks

(ii) From Others

Includes all Bank deposits repayable on demand. Includes all demand deposits of

the non-Bank sector. Credit balances in overdrafts, cash credit accounts, deposits

payable at call, overdue deposits, inoperative current accounts, matured term

deposits, and cash certificates, certificates of deposits, etc. are to be included under

this category.

II. Savings Bank Deposits Includes all savings Bank deposits

(including inoperative savings Bank accounts)

III. Term Deposits

(i) From Banks

(ii) From Others

Includes all types of Bank deposits repayable after a specified term. Includes all

types of deposits of the non-Bank sector repayable after a specified term. Fixed

deposits, cumulative and recurring deposits, cash certificates, certificates ofdeposits, annuity deposits, and deposits mobilized under various schemes, ordinary

staff deposits, foreign currency non-resident deposit accounts, etc. are to be

included under this category.

Verification Norms - Deposits:

1. SB Deposits:

Test check interest payments of Rs.500/- and above. Where all interest payments

are below Rs.500/- interest payment of higher amounts out of them may be

checked and where both categories are there, a combination of both may be

adopted. Test check TOD interest collected with interest collected subsidiary in

computer. Test check all types of Service Charges applicable to SB Accounts



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2. Current Deposit:

Test check of TOD interest collected with interest collected subsidiary Test

check half-yearly service charges and other types of Service Charges applicable to

Current Account.

3. Term Deposits:-

Test check of Accounts closed before maturity, recovery / payment of interest on

account of such closure and credits / debits to interest paid subsidiary. Test check

maturity value calculations in all types of term deposit accounts.

4. NNND Deposits:-

Test check of closure before maturity / on Maturity and interest debited to

Sundry Deposits with actual payment to the depositor and recovery of

differential interest and its credit to interest paid account. Test check recovery of

Commission wherever applicable and credit to Commission Subsidiary. Test check

debit to NNND interest provision in Sundry Deposit and comment. Any abnormal

transactions may be verified in detail. Closure before maturity and payment of

interest after a gap of few days subsequent to closure of account may be verified if

such cases are many. IO to verify such transactions in depth.

5. Further IO has to necessarily to verify the following:-

Required provisions have been made correctly.

Interest provisions made during earlier quarters have been promptly

reversed.

Correct program has been run for application of interest/calculation of interest

provision.

Comparison of cost of deposit and yield on advances with the previous half-

year/previous year and analyzing the reasons for abnormal variations, if any.



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Advances of Bank Concurrent Audit

The lending of funds to customers is the main business of a banking company. A

bank earns income from the interest and discount, etc. arising out of the funds lent

by it. The lending of funds has inherent-risks, i.e. the loan or advance may go bad.

Banks therefore follow prudential lending principles as prescribed by the Reserve

Bank of India while lending the funds in order to reduce the associated risks.

Various Forms of Credit

The advances made by banks are normally in the following forms:

i) Cash Credit

ii) Overdraft

iii) Loans

Cash Credit of Bank concurrent Audit

Cash credit is an arrangement between a bank and the customer by which money is

advanced against hypothecation of stocks in trade and a bond of credit by one or

more sureties. The borrower can reduce the debit balance by paying back surplusavailable with him. The interest is charged on the total amount utilized. Cash credit

is normally sanctioned by the bank for a period of one year and is generally

renewed if the account is operated satisfactorily. The cash credit is generally

secured by tangible assets. The borrower need not withdraw the whole amount and

may withdraw the funds as and when required. The maximum amount sanctioned

depends on the working capital requirements of the borrower. The interest charged

(now monthly) on the outstanding debit amount to the debit of the borrowers

account.

Overdraft

The overdraft is a facility given by a bank to meet temporary needs of the



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borrower. An overdraft facility is usually sanctioned against security, shares, stock,

bonds, fixed deposit receipt, life insurance policy (surrender value) etc.

VERIFICATION OF ADVANCES :

Verify that loans and advances have been sanctioned as per standing

guidelines of the bank. (i.e. after due scrutiny and at the appropriate level),

Verify whether the sanctions are in accordance with delegated authority.

Verify that securities and documents have been received and properly

charged/ registered.

Verify that post disbursement supervision and follow up is proper such as

receipt of stock statements, installments, renewal of limits etc.

Verify whether there is any misutilisation of the loans and whether there are

instances indicative of diversion of funds.

Check whether the letters of credit issued by the branch are within the

delegated power and ensure that they are for genuine trade transactions.

Check the bank guarantees issued, whether they have been properly worded

and recorded in the

Register of the bank and that whether they have been promptly renewed on

the due dates.

Verify proper follow up of overdue bills of exchange.

Verify whether the submission of claims to DICGC and ECGC is in time.

Verify that instances of exceeding discretionary powers have been promptly

reported to controlling/Head Office by the branch and have been got

confirmed or ratified at the required level.

Verify the frequency and genuiness of such exercise of authority beyond the

discretionary powers by the concerned officials.

Verify the CREDIT RATING done by the branch & ensure interest rates

charged are as per the Credit Rating allotted to the account.



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LOANS AGAINST HYPOTHECATION OF VEHICLES -

DIRECT FINANCE

CHECK WHETHER

1. Loans sanctioned are within the delegated powers.

2. Cost of the vehicle is remitted directly to the supplier along with margin

by obtaining letter of authority from the borrower.

3. Original invoices, stamped receipts and borrower's acknowledgement for

having received the vehicle in good condition, are available with loan

papers.

4. valuation certificate for second hand vehicles is obtained in the prescribed

format from a qualified Automobile Engineer and other norms such as

age, margin etc.

5. Banks lien is noted in RC Book and copy of RC book is obtained.

6. The vehicle is registered in the name of one of the partners and loan papers

are signed by all the partners , ( applicable to partnership firms )

7. RC Book and vehicle are verified / inspected periodically and recorded. In

case of accounts in default check whether RC is verified once in a year

and the vehicle is inspected once in twelve(12) months.

8. In case of vehicles not plying within the area of operation of the branch,

arrangements have been made with the branch nearer to the place wherethe

vehicle is plying, for periodical verification / inspection of RC /Vehicle. If

yes, check whether such verification reports are received regularly.

9. Insurance policy with Bank clause is available.

10. Ownership transfer forms, blank and signed have been obtained in

duplicate.

11.Processing charges collected as per guidelines

LOANS AGAINST HYPOTHECATION OF VEHICLES - INDIRECT



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FINANCE

CHECK WHETHER

i.All required loan papers have been obtained and documents executed by the

hirers lodged by the dealers with the Bank.

ii.Acknowledgement by the hirer is held with loan papers.

iii.blank transfer forms , duly signed by the owner and financiers are available

iv.a)irrevocable mandates addressed by the borrower to the hirer to pay all

installments directly to the Bank has been obtained.

b) Such mandates, in duplicate, were sent to hirers by registered post and

copy, duly signed by them is available with loan papers.

c) There is effective / adequate follow-up in case of non-receipt of copy of

Mandates, or, installments.

cases relating to difficulty in getting the Financier's lien cancelled and noting

the Bank's lien in RC Book have been referred to the Sanctioning

Authority for waiver of the same, provided all other documents including

required RTA forms are obtained from the Financier/Hire purchaser, on thebasis of which Bank can sell transfer the vehicle.

processing charges / upfront fee have been collected.

EMPLOYEES LOANS

Overdraft / Loans:

Check whether -

a) Limit / loan against approved securities like NSC, LIC, Shares / Debentures

etc. are backed by sanction from appropriate authority.

b) Rate of interest and margin are as per current guidelines.

c) Penal interest on overdrawing,( due to periodical debiting of interest and



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non - recovery of interests on loans ) has been collected.

d) Branch has adhered to other conditions applicable to loans / advances against

NSC, LIC, Shares / Debentures for customers.

e) The limit against shares is maintained separately and shares are held in

demoted form as per procedures.

f) ROI stipulated for loans beyond concessional limit to both workmen &

Officer employees are as applicable to Loans to individuals - secured ".

g) If an employee has more than one running limits, cheque book facility is

restricted to one OD account only. (BPC on adv emp. Updated upto 31-07-07)

Salary is being credited to clean OD

h) Overdrawn / irregular a/cs are reported to HRM section, Circle Office, As per

Appx.11 of BPC on Adv. to Employees.

i) in respect of loan accounts transferred from one branch to another, interest for

the broken period till the date of opening of account in the transferee branch is

to be calculated manually and debited to loan account/accumulated product is

entered in the system, as the case may be.

HOUSING LOANS:

Check whether -

01 a) all the sanction terms have been complied with and all loan papers

obtained correctly and completely .

b) Relevant procedures regarding legal scrutiny, equitable mortgage transaction,

Urban Land Ceiling Regulations, obtention of EC etc., are complied with

02 certificates of loan papers obtained have been forwarded to the sanctioning



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authority along with checklist for EMT.

03 property tax paid receipt (on first assessment of tax) and undertaking letter for

waiver of production of further tax paid receipts are obtained

04 appropriate pledge letter for collateral securities such as, LIC policies, deposits

and other approved securities is obtained

05 building is adequately insured with Bank clause

06 a) In the event of death of the employee during the service existing interest

rate will be charged till the ostensible date of retirement.

b) In case any legal heir of the deceased is employed by the Bank on

compassionate grounds, monthly repayment should be made by the legal heir

within the stipulated period.

c) In the event of resignation etc., clearance of HL liability or continuation - to be

decided before relief from the Bank.

d) For continuation of liability beyond the date of resignation interest is to becharged at the rate applicable to customers.

e) Charging of existing rate of interest will be permitted under the following

circumstances :

i) Entire liability including interest is not cleared from the terminal benefits.

ii) Mandate is given to clear the liability from the terminal benefits.

iii) Delay in releasing the terminal benefits should be of technical nature

and there should not be any fault on the part of the employee.

11. In respect of HL on paripassu charge with LIC Housing Finance Ltd., branch

has adhered to guidelines thereof



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12. The accounts have been clubbed in accordance with guidelines

13. Availability of stage wise inspection report and completion report is to be

ensured.

14. Interest table to be verified. Print out to be kept with loan papers.

* SPOT INSPECTION AS PER NORMS TO BE CONDUCTED AND

CONSTRUCTION AS PER APPROVED PLAN TO BE ENSURED.

CANARA CASH

Check whether

- The financing branch is an identified branch for granting loans against shares.

- Units coming under tax saving equity schemes are financed.

a) Loans granted are against approved shares/debentures/bonds/Units ofUTI etc

and Canbank Mutual Fund and the borrowers are well introduced, credit-worthy

and respectable?

b) Loans/advances can be granted against securities standing in the names of third

parties. Such third party should however be a close relative i.e., spouse, father,

mother etc.

c) Non-residents and employees of our Bank are not eligible under this scheme.

However loans can be granted to spouse of our employee working in some

other organization on the co-obligation/guarantee ofour employees by next higher

authority.



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d) Quantum - Not exceeding Rs.5.00 lakhs per individual. In the case of Demat

shares up to Rs 20 lakhs.

e) Margin - (i) 50% on the market value of shares, and debentures, 30%in the

case of PSU bonds.

(ii) 50% on the NAV or the market value (whichever is less) on units of

UTI/CBMF.

f) Processing charges - as per norms.

g) Repayment - Single transaction loans repayable a period of 60 months or OD

limits can be considered. However it should be ensured that the liability does not

outstand beyond the maturity date of units if any. Incase repayment is fixed in

installments the same may be fixed as per theEMI chart.

h) Substitution/part release of the securities may be permitted for not more than

10 times during the currency of the loan. Appropriate fee is collected. Also letter

in NF 850 is to be obtained.

i) Co-obligation/guarantee may be stipulated/waived by the Sanctioning

Authority.

j) Any relaxation in eligibility criteria/terms/conditions other than ROI/margin

and those which fall under RBI guidelines may be permitted by the next higher

authorities.

k) In cases where loans are granted against third party security, AOD/AOS are

to be obtained as per rules.

CANARA MOBILE

1) For two wheelers eligibility, quantum and processing charges as per Can carry

scheme (scheme since discontinued)



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2) Loans granted are under fixed rate of interest only fixed rate to bereset at every

3 years.

3) Separate hypothecation agreement NF 928 is obtained or existing NF 722

incorporating additional clause as per Cir 137/2001 obtained.

4) The loan granted for purchase of second vehicle is as per guidelines.

5) Staff members and NRI s are not eligible

6) Branch has no powers to sanction second loan during the pendency of 1st loan

CANARA PENSION:

Check whether

a) Any loan has been granted to pensioners who are already having anyclean loan

liability.

b) Loans are within the normal delegated powers of the branch to sanction clean

loans.

c) Particulars of loan has been noted in the pension register

d) Irrevocable mandate has been obtained as per manual of RL

CANARA MORTGAGE

Check whether

1. The loans are considered for genuine needs of the borrower against thesecurity

of the EMT? (Not for speculative purposes).

2. the property to be financed is in the place where the loan is availed Quantum,

margin, eligibility, ROI

3. Valuation of property is done by our banks approved valuer? Whether the



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inspection of the property (proposed to be mortgaged) are being carriedout by

the branch.

4. LSR is approved as per the guidelines

5. EMT has been created before disbursement of the loan?

6. Personal guarantee is specifically waived by the sanctioning authority or is

obtained wherever stipulated?

7. The branch has ensured about the availability of adequate cash flow for

servicing the periodical installments? Verify the proof of income namely ITAO,

salary certificate etc.,

8. In case the property of the close relatives of the borrower is accepted,

whether the owner of the property is made as co-borrower/guarantor of the

loan ?

9. The loans is classified as non-priority.

10. Overdue in Can mortgage loan accounts have been reported.

11. Sanction is accorded by Circle Head and above only

CANARA RENT (Financing against rent receivables)

CHECK WHETHER

1. The purpose, eligibility, quantum, margin, ROI of the loan are as per scheme 2.

Inspection of the property let out/to be let out has been carried out by the branch

before disbursement of loan.

3. The guidelines relating to inspection of property (both leased/proposed to be

mortgaged) establishing its clear and marketable title based on LSR, its valuation

by our approved valuer who should be qualified Chartered Engineer, creation of

EMT thereon etc., are strictly adhered to by the Branch.



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4. Tripartite agreement or notarized power of attorney has been obtained and

whether lease deed has been registered, wherever stipulated.

5. The existing guidelines for documentation and creation of mortgage are adhered

to.

CANARA BUDGET

EXISTING CANBUDGET , CANTRAVEL AND CANTECH SCHEMES

ARE MERGED WITH CANARA BUDGET SCHEME

CHECK WHETHER:

1. The borrower is a confirmed employee.

2. Minimum NTH salary is 40% after meeting the EMI.

3. NTH salary after meeting the EMI is not less than Rs 7500 wherever salary is

maintained and Rs 10000 wherever salary mandate is obtained.

4. Pass sheets of the bank account for the past six months are verified wherever

PDCs are obtained.

5. Suitable coobligant is obtained.

6. The branch has assessed the repayment capacity of the borrower by calling for

information about other liabilities (clean as well as secured)? If the party is

already having clean liabilities, it must be ensured that the total of all clean loans

outstanding at any point of time do not exceed the total eligible quantum underthis Scheme.

7. The applicant is dealing with our Bank or applicant's salary is credited to the

account with us? Whether mandate from borrower for deducting installment from

salary and remitting the same directly to bank is lodged with the employer and

copy available.



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8. Non salaried class also eligible for loan under this scheme (HO Cir

no.316/2008).

LOANS TO TEACHERS

CHECK WHETHER

1. Scheme guidelines are followed as per norms

2. Loans are granted to confirmed regular teaching staff/non teaching staff whose

salary is credited to the financing branch.

3. undertaking from the educational institution is obtained not to shift the salary

account without NOC from the branch4. repayments are by salary deduction or through salary account (PDCs/ cash

remittance should not be accepted for repayment)

5. Letter from the branch addressed to the salary disbursing authority requesting

them to inform the branch in case of termination/transfer etc is available.

6. NTH after meeting the proposed EMI is 30 % of gross pay.

7. Maximum repayment period permitted is 48 months.

8. suitable co obligation is obtained

9. any other clean loans are permitted to the same borrower against norms (can

be permitted by DGM of circle)

EDUCATION LOANS

CHECK WHETHER:

1) Capitation fee loans are granted under Education Loans which is prohibited

2) Are the stipulations regarding eligibility, quantum, margin, security,

repayment holiday, repayment period and other conditions stipulated from time to

time complied with

3) Security, margin, repayment capacity is reckoned as family as a unit in case of



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more than one loan is granted to the different members of the same family.

4) Loan quantum for caution deposit is restricted to 10 % of the total tuition fee of

the entire course.

5) Loan facility is extended to students pursuing their studies in affiliated

universities/ autonomous colleges ONLY (others can be permitted by AGM at

RO/CO)

6) Joint documents are obtained either from spouse/parent/parents in law in

respect of married persons.

7) Co obligation of employees is obtained in respect of loans to close relatives of

employees.

8) Loans are granted to borrowers residing near the branch.

9) Security and margin norms are adhered in case of top up loans as per CIR

107/08

10) In respect of loans for studies abroad, security stipulations are complied with,when loan has been considered for the eligible courses as per CIR 107/08

BRINSP 1302

11) Where the student is a minor:

a) Is the loan granted only to the parent/guardian and undertaking letter obtained

from the minor on attaining majority?

12) Bank guarantee issued under Educational Loan Scheme is as per the terms of

the scheme

13) Repayment holiday, repayment period and commencement of repayment are

correctly stipulated.

14) Mode of charging interest during repayment holiday and afterwards is as per



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norms.

15) Yearly progress reports/ course completion certificate/ employment details are

obtained.

16) Repayment of loan is postponed till the date of completion of higher course

when no loan has been availed for higher studies.

17) Necessary permission has been obtained from Circle Head in case of

modifications/relaxations in security norms.

18) In case of Rural/Semi-Urban Branches, whether Service Area norms have

been adhered to while financing ELs?

19) Upfront fee is collected in the form of refundable deposit in case of studies

abroad. BRINSP 4009

20) EMI amount is informed to the borrower immediately on completion of the

course BRINSP 1319

21) Branch has submitted confirmation as at December to RO/CO adhering to theguidelines as per CIR 255/04 & 328/07.

22) Degree/Diploma courses in Teachers Training course/Nursing course/B.Ed.,

course (Cir no.300/2008).

CANARA JEEVAN

CHECK WHETHER:

1) Loans are granted to residents owning house or flat in their name BRINSP

1012

2) Spouse is a joint borrower irrespective of title deed



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3) First applicant is above 60 years old and the joint applicant is more than 55

years

4) Commercial property is taken as security against norms. BRINSP 1302

5) The quantum of loan is assessed depending upon the market value and residual

life of the property as per norms

6) Option for periodical payments are interchanged against norms

7) Lump sum payment is made to meet special requirements as per the scheme

guidelines

8) Fixed rate of interest is charged and reset every 3 years.

9) Loan is granted for the eligible purposes

10) Valuation is obtained once in 3 years and revision in loan amount is made

On the basis of reduction of value of the property BRINSP 1226

11) Sanction by circle head only.

12) All the properties taken as security to the loans under the scheme are

compulsorily inspected by the IO

13) Tax paid receipt, ITAO and life certificate are obtained annually BRINSP

123514) IT clearance certificate is obtained before sanction of loan

15) Further ECs are obtained once in 3 years BRINSP 1233

16) Pension account is maintained with us in respect of pensioner borrowers

17) Foreclosure norms are applied in case of default.

18) Documents as per annexure V is obtained and the will executed by the

Borrower in favour of the bank is registered BRINSP 1201

CREDIT CARDS ( CANARA CARDS )

Check whether

1) Branch has retained photo copy of application for its records.

2) A). Loss of card reported by card holder/stale card surrendered if any

informed/forwarded to CBD HO by telex / telegram / FAX / telephone on the



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same day of receipt of information. In case of loss of Canaracard-Visa whether

copy of the FIR lodged by Card Holder with the Police is forwarded.

B. returned cards destroyed beyond usage and certificate sent to the Card Division

along with request letter of the card holder for cancellation.

3) Branch has collected appropriate charges and obtained unstamped letter-cum-

indemnity for duplicate cards, if any, issued.

4) Following have been ensured in respect of cards issued to NRIs:

a) Possession of Indian Passports.

b) Undertaking to surrender the cards when they cease to be Indian passport

holders.

c) SB account with a minimum balance of Rs.10000/- for at least one year.

5) Board resolution authorizing designated officers to avail the credit card and

specifying the limits is obtained in respect of cards issued to corporate.

If reimbursing branch, check whether

1) The branch is designated by Canaracard Division to make reimbursement to the

particular ME?

2) The particulars viz., code no., floor limit, the rate of commission fixed for theME etc are noted in a separate register

3) a) Branch has ensured that card is not hot listed and transaction is within the

floor limit of ME before reimbursing the amount to ME

b) Reimbursement against hand written charge slips with undertaking letter has

been extended selectively.

4) a) Branch has reimbursed the amount to MEs promptly against Bank copy of

charge slips duly ensuring that the summation sheet is filled in all respects and

signed by the ME.

b) Prescribed letter has been obtained from ME where reimbursement of charge

slips which are more than 30 days.

5) BAR raised by the branch is only for actual amount paid to the MEs.

6) ME discount rates are reduced to as under:



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Canaracard 2%}

VISA 2%}

Housing Keeping:

Check that the maintenance and balancing of accounts ledgers and registers

including clean cash is proper.

Check reconciliation of entries outstanding in the inter branch suspense account

(IBSA) and inter bank accounts, Suspense account Sundry Creditors Account,

DPWA account, Payment made on account of other branches (POAB) account

etc. Ensure early adjustment of large value entries.

Carry out a percentage check of calculations of interest, discount, commission

and exchange.

Check whether debits in income account have been permitted by the competent

authorities.

Check the transactions of staff accounts. In case of difference in clearing there is

a tendency to book it in an intermediary suspense account (DNR A/C) instead of

locating the difference. Examine the day book to verify as to how the differences

in clearing have been adjusted. Such instances should be reported to Head Office

in case the difference persists.

Detection and prevention of revenue leakages through close examination of

income and expenditure heads.

Check cheques returned/bills returned register and look into reasons for return of

those instruments.

Checking of inward and outward remittances (DDs, MTs and TTs)

NPA management.



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Check that the early warning signals in the account are being picked up and

immediate remedial actions including marking the account as SMA is being

done.

Check the follow up being carried out by the branch towards recovery.

Check that proper record of Technical write Off accounts is maintained.

STATIONERY

Whether items of stationery are properly recorded and tallied with Balance of

Stock of Stationery?

Whether security forms in use remain during office hours in the custoy of

authorized persons as per laid down norms and kept in safe in the strong room

after closing hours?

Whether details of surplus/obsolete stationery items including MICR/NON-

MICR cheque books etc. been given to ZO/HO Stationery Department seeking

instructions for disposal

Whether any SCRA relating to Stationery supplied is pending with the branch?

FURNITURE & FIXTURES (FF) (1129)

Whether furniture items are numbered?

Whether they tally with furniture and fixtures register maintained for the purpose?

Whether F.F. Balances tally with G.L.?

Whether the sign board is properly displayed ?

Whether lease deed of bank premises executed or not?

Whether lease deed of the bank premises is in force ?

Whether rent is being paid regulary?

Whether appropriate steps taken to renew the lease. If it has already expired or

going to expire shortly?

Whether payment of taxes and ground rent is being made in time?

(This is applicable for bank owned premises or in case of rented premises



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where payment of taxes is the liability of the work).

Whether communication with regard to insurance of furniture and fixture items

has been received from H.O. Accounts Department and kept on record?

Whether details of obsolete and broken furniture and other items given to ZO

seeking instructions for disposal?

Whether vehicles allotted to branch are insured?

Whether cost of all the vehicles is duly recorded in books?

CASH MANAGEMENT (1101)

110101. Have you satisfied that correct assessment of daily cash requirements is made

by the BM ?

110102. Have you verified that minimum cash balance is maintained by the branch for

daily transactions?

110103. Have you satisfied that proper utilization of cashier manpower including paying

cashiers is made for sorting and bundling of notes denomination-wise ?

110104. Are you satisfied that the cashier staff has full days job and that hey attend andleave the office according to scheduled working hours ?

110105. Are you satisfied that the branch is depositing surplus cash (if not otherwise

disposed of) with the nearest branch/currency chest/RBI/SBI etc. (Inspectors should

furnish

figures of average cash holding on fortnightly basis as against the Retention Limit fixed

for the

branch since the date of last inspection as per Annexure VIII)?

110106. Have you verified that entries relating to remittance in transit are reversed within

the prescribed period ? List of entries outstanding for more than 10 days should be

furnished as

per Annexure 1 (e)

110107. Whether adequate escort is provided for transit cash remittances in accordance



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with HO Security Department Circular No.1/93 dated 16.03.1993?

110108. Does the branch furnish weekly statement to ZO in respect of cash movement as

per HO Accounts Deptt. Circulatory letter No. 15/93 dt.09.06.1993 ?

110109. Whether cash remittance and cash drawn registers maintained ?

110110. Miscellaneous

16

PETTY CASH, POSTAGE, TELEGRAM, STAMPS IN (1102)

HAND/EMBOSSED STAMPS ETC.

110201. Whether balances in petty cash, postage and stamps in hand as on the date

of inspection tally with GL.?

110202. Have you physically counted the adhesive stamps and stamp papers/forms

and tallied with balances in GL ?

110203. Have you verified that the branch maintains adequate stock of stamp forms?

110204. Whether proper register is maintained by the branch in this regard ?

110205. Have you physically verified all the unused/unissued cheque books/draft books,

MC books, FDR Books and other security forms with the record and found that no

security formis missing (in case of any shortage, inspecting officer must inform ZO/HO(I) with the

following

details). Have you further verified that all security items are kept under the joint custody

of BM

and second man and are also released jointly to prevent fraud?

ROLES AND RESPONSIBILITIES OF OFFICERS AT DIFFERENT TIERS



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6.1. Concurrent Auditor

01.

The Concurrent auditor shall commence the concurrent audit of the branch

during the month to which it pertains.

02.

The concurrent auditor shall prepare the jotting sheets in duplicate on daily

basis with continuous serial numbers. The running serial number shall

continue for 3 months only viz. April to June/ July to Sep / Oct to Dec/Jan

to March. Each page of jotting sheets / Executive Summary / Quarterly

Concurrent Audit report / Annexures / Part B Report / Special Report shall

be signed by the concerned Concurrent Auditor without fail.

03.

Original jotting sheets shall be handed over to the Nodal Officer of the

branch against acknowledgement. The duplicate copy shall be retained by

the Concurrent Auditor.

04.

Part B items, if any, are also to be recorded in the jotting sheets with

running serial number. Part B report (with unrectified remarks) shall be

prepared and be annexed to the monthly Executive Summary/Quarterly

Concurrent Audit Report.



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05.

In respect ofSpecial report, the concurrent auditor should adhere to the

extant guidelines as per ITIO 24/09 dated 16 07 09. It is necessary that

the concurrent auditor has to discuss the matter with the Branch in-

Charge, without divulging the fact that Special Report is being submitted.

Report is to be sent to the CO, ZI and Inspection Wing immediately

without any delay. Such reports are to be fully elaborated and supported

with necessary evidence/ proof.

06.

The branch officials shall rectify the observations then and there. The

concurrent auditor shall guide the branch officials for maximum spot

rectification. Wherever the remarks are rectified, the concerned branch

official shall round off the remarks and affix his initials against eachrounded off remark.

07.

Correctness of all the replies pertaining to Part A need not be verified by

the concurrent auditor. Depending on the seriousness of the remark, he

can verify compliance. However, the concurrent auditor should select

serious remarks for verification of compliance, during the half yearly

Quality Audit.



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08.

The responsibility of attending to the observations and correctness of

replies to the observations is the responsibility of the branch only.

09.

In respect of Part B observations, wherever rectification is reported by the

branch, the concurrent auditor should call for the evidence, verify the

compliance & satisfy himself before treating such remarks as complied

with.

10.

While completing the concurrent audit of any month, the concurrent

auditor should call for the jotting sheets and verify the rectified/unrectified

observations. Based on the above, the concurrent auditor shall preparean Executive Summary on his observations in triplicate in the structured

format covering all the serious irregularities / critical points / Early Warning

Signals / persisting irregularities (along with Annexure 10, in the case of

forex designated branches). He shall handover one copy to the branch

and send the remaining copies to IF Section, CO and Zonal Inspectorate

respectively on or before 5th of the succeeding month.

11.

Wherever rectification process is tardy, concurrent auditor should discuss

the matter with branch in charge and take up the matter with CO/ Z.I. by

way of e mail/letter, wherever necessary.



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12.

At the end of the third month (i.e end of June, Sep, Dec and March), all

the unrectified Part A observations of three months shall be consolidated

and brought in the Quarterly Concurrent Audit Report format in the

respective rows/ columns. Wherever the space provided is not sufficient,

the concurrent auditor may record the details in supporting sheets. All the

unrectified Part B observations shall be furnished in Annexure 12 (as free

style report) to the quarterly Concurrent Audit report. Pending remarks of

the previous quarter should be furnished in Annexure 13.

13.

The concurrent auditor shall collect the original jotting sheets of all the

three months from the branch and send the same to I.F. Section, Circle

Office along with the quarterly concurrent audit report.

14.

The concurrent auditor should ensure handing over of the Monthly

Executive Summary / Quarterly Concurrent Audit report to the Branch in

any case not later than 5th of the succeeding month and despatch copies

to ZI & IF Section of the CO, so as to reach them on or before 7th of thesucceeding month.

15.

Separate guidelines regarding closure of concurrent audit reports are



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being issued to the branches/Circle Offices/Zonal Inspectorates.

16.

I S Audit areas should also be verified by the concurrent auditor in the

specified format.