credit audit format-people
TRANSCRIPT
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REPORT ON CREDIT AUDIT
Name of the Branch NARAYANAGUDA
Name of the Officer conducting Credit Audit KVSRY & ASSOCIATES
CHARTERED ACCOUNTANTSDate of Credit Audit 15/06/2012
Date of Report
No. of days taken
(Wherever amounts are furnished,It should be in (Lakhs)
PART A : PROFILE OF THE BORROWER
I a) Name and address of the borrower M/S PEOPLE COMBINE BENGALURUKNOWLEDGE INSTUTIONS PRIVATE
LIMITED
#126, Navanirman Nagar, Road No 71,
Jubilee Hills, Hyderabad 500033.
Group
b) Constitution
PRIVATE LIMITED COMPANY
c) Private / Public / Joint Sector
PRIVATE SECTOR
d) Line of Activity
EDUCATIONAL INSTITUTION
e) Name/s of Proprietor / Partners /
Directors and their Net worth
As on: 31/10/2010
Mr. T. Naga Prasad
23.94
Mr. Y.V.Raja Sekhar Babu
20.84
f) Names of Guarantors and their Net
worth
As on 31/03/2010
Mr. T. Naga Prasad
23.94
Mr. Y.V. Rajasekhar Babu
20.84
People Combine Educational Initiative
15.74
People Combine Business Initiatives Ltd
13.65
Oakridge Educational Society-1.83
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g) Details of last sanction / renewal
Sanctioning Authority
Date of Sanction
29/06/2011
Head Office, Credit Division Chennai
Board / MC / CMD / ED / GM(HO) / CH /
BM
29/06/2011
h)
Classification of asset:
As on: 31/03/2011
STD / SUB / D1 / D2 / D3 / LA
STANDARD
i) Credit Rating
As on: 2011
CRAA+
II Financing Pattern
a) Sole Banking, Multiple Banking or
Consortium Sole Baking
b) If Under Consortium NO
1) Name of the Leader Bank
2) Our Banks share as % to total
exposure
Amount (Rs. in Lakhs)
FB : Rs.
NFB : Rs.
III a. Prudential Exposure Norms(Rs. in lakhs)
Individual Group
Fund Based 35.45
Non-Fund Based
b. Actual Exposure Existing ProposedCompany
Group Company
Group
Fund Based 12.00 12.00 59.51 94.96
Non-Fund Based
Individual Group
Exposure Vs. Risk Weight: MitigationMechanism
Name of the Group
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IV Position of the Account ason
(Rs. in lakhs)
Sl.
No.
Facility Limit Drawin
g Limit
Balance as
on23/06/2012
Excess /
overdueif any
Excess /
Overduesince *
Margin
1 TL 3545.00 3545.00 2000.00 ---- ----- 34%
* Number of days remaining overdue be indicated.
Interest Income :
Non Interest Income :
Conduct of accounts: - Comments on Excess / adhoc permission clearance of the same / overdues
with age and comments thereon:
V A Effectiveness of Credit Appraisaland Monitoring: - Points to be
looked into for appraisals.
Descriptive comments
i. -- Latest date of assets / liabilities
statements obtained from theborrowers / guarantors / changes in
Net worth
31/03/2012 No Changes in Net worth
ii. -- Adequacy of the value of liquid
assets indicated in the statement to
take care of future capital requirement
of the unit in case of private limited
company / partnership concern
proprietorship concerns has been
looked into
Liquid assets as on 31/03/2012 is
3,99,34,632
iii. -- Whether IT / WT assessmentorders / returns filed are obtained from
the borrowers / guarantors and looked
into for any significant variance and
incorporated in the appraisal note.
iv. -- Whether the name of the partners /
proprietor / directors appearing in the
defaulter list of ECGC / RBI have been
commented and does it have any
impact on business
List Not Available
v. -- Status of compliance of statutoryrequirements like obtention of
clearance from Pollution Board,
adhering to Effluent Disposal Norms
NA
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etc.
vi. -- Comments on whether sanctions are
made by the delegated authority and
excess / adhoc if any permitted have
approval from the respective
authorities.
No Adhoc
V A Contd.
vii. Whether the Proprietors / Partners /
Directors of borrower entity or their
relative is a director in our bank / any
other scheduled banks / co-operative
bank.
NO
If so, whether sanctioned by the Board NAviii. Take over accounts (If applicable)
a. Whether in compliance with the bank
policy i.e.
-- Bench mark stipulated for take over
vis--vis the actual
No
b. -- Availability of status report from the
transferor bank / report on quality of
the asset and the conduct of the
account with them
No
V B Effectiveness of Credit Appraisaland Monitoring : - Performance
Appraisal
i. Evaluation / Comments on
Managements efficiency and
capability made by the branch
ii. Comments / evaluation on Last 2
years performance i.e.
a. -- Estimates vis--vis achievements 2010-2011 2011-2012
b. -- Net Sales 21.28 26.93
c. -- Operating Profit 1.89 4.05
d. -- Other Income 0.00 15.51
e. -- Net Profit after Tax 1.75 1.39
f -- Cash Profit 4.27 12.67
g. -- Installments falling due in the next
year Nil
iii. If the achievements were below 90%of the estimates, reasons for the same
(like, market scenario, unexpectedchanges industry specific and unit
specific etc.)
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V B Contd.
iv. Abnormal variations if any in
estimated / projected performance
which have been made in the appraisal
memorandum
No
v. Evaluation on the financial ratios forthe last 2 years and comments thereon
offered by the branch and the
stipulated improvement in the near
future. Comments / compliance with
reference to the Bench Mark on
a.
-- TOL / TNW
2010-2011 2011-2012
0.54 0.14
b. -- Current Ratio 1.98 1.99
c. -- Interest Coverage Ratio --- ---d. -- DSCR --- ---
e. -- Turnover Ratio --- ---
f. Cash Profit 12.67
i. -- Net Profit 1.39
ii. -- Depreciation 0.13
iii. -- Non cash expenses charged to P&L. ---
vi. Interlocking of funds in sister / allied
concerns if any, have been noticed /
commented in the appraisal by the
branch and further comments of the
credit auditor. Any diversion of short
term funds to long term uses within the
system also should be commented.
NO
vii. Comments on the qualifying remarks
of the auditors in the balance sheet and
its impact in the ratios / Credit risk
made by the branch in the appraisal
and further comments of the CreditAuditor
V B Contd.viii. Companys dues towards statutory
liabilities viz., IT / ST / PF / ESI /
Excise duty / Customs Duty
ix. Method of Working Capital
Assessment (i.e. Turnover Method /
STBC Method / Cash Budget Method /MBPF Method) applied
MBPF Method
x. Comments on adverse features such as
non routing the sale proceeds through
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the account, overdues, devolvement,
frequent excess etc., have been
whether brought out in the appraisal
memorandum by the branch and
comments of the credit auditor thereon
All the transactions are not routing
through the account
xi. Peer group comparison / inter firm
comparison made in the appraisal Comments on the areas compared and
the quality of comparison
Bank didnt made any peer groupComparison
xii. Are there proper justification forincreased sales (Volume / value) and
Profits
xiii. Is the profit / profitability projected is
in tune with past actual and reasoning
for enhanced profit if % of NP to sale
is increasing.xiv. Any adverse features (like defaults /
overdues / diversion) closure of
business units / hiving off etc.
No adverse features
xv. Availability of NWC to meet margin
requirement stipulated.
xvi. Comments on Type of facilities
recommended / sanctioned / adequate
chargeable current assets available net
of margin
V B Contd.
xvii
.
Total Time Taken for sanction 5.5 months for sanction of loan
a. Date of Branch Proposal 17/11/2011
b. Date of Sanction 29/06/2011
xvii
i
Capital Market Perception
a. -- Companyb. -- Industry Education Institution
xix. Obtaining Confidential reports on the
borrowers / co-obligants / guarantors /
associate concerns / Drawees of bills
from other Banks etc. wherever
required
NA
VI Documentation obtained:
i. -- Whether the loan documents are
kept in force Documents are not kept in force
ii. -- Whether documentation iscompleted as per terms of sanction
including Joint documentation, First
Charge / second Charge creation,
Documentation is completed as per terms
& conditions of Sanction letter.
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obtention of latest search report,
Obtention of Valuation certificates for
prime and collateral securities
Market value of Primary & Collateral
Security is 31.66 crores
iii. -- If not, impact on the non
availability of the securities due to non
compliance of the terms of sanction
(i.e. secured terms remaining asunsecured advance) documentation
COMMENTS.
iv. -- Receipt of approval from the
competent authority for non
compliance / waiver permitted
wherever required
v. -- Adequacy of insurance cover for
prime and collateral securities
Insurance isnt Available
VII
.
Compliance of Sanction Terms NIL
i. -- List of Terms of sanction not
complied with and whether brought to
the notice of the competent authorities.
ii. -- Reasons therefor
iii. -- Obtention of approval of the
competent authority with date of
approval
iv. -- Impact on the quality of assets /security / mitigative measures
available to the Bank.
VII
I.
Compliance of Regulatory / loan
policies of the Bank
NIL
i. Exposure Norms / Individual group
ii. Capital market exposure
iii. Norms for lending / Loan Delivery
Systemiv. Bills Culture norms
v. Rate of Interest charged
IX Credit Risk Assessment
i. -- Model Applied Large Corporate
ii. -- Latest year for which rating is done Rating is done in the year 2011
iii.
Comments on evaluation of
Financial Risk
Industry RiskBusiness risk
Factored for credit risk rating of the
borrower account as per the
SCORE GRADE
5.42 V
4.12 VII
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prescription of the model 7.04 III
iv. -- Migration of the rating Whether
looked into to take appropriate action.
X A Detection of early Warning Signals
(effectiveness of monitoring byCMO)
NA
i. -- Regular and timely submission of
periodical feed back statements
stipulated for review of performance
and capturing of warning signals i.e.
submission of stock statements,
MSOD / QIS / Balance Sheet etc.
a. -- Whether DP is arrived excluding
trade creditors / advances from
suppliersb. -- Whether quarterly operative limits
are fixed based on QIS II.
ii. Quality of review done by the
branch i.e.
a. -- Comparing the performance with
estimates
b. -- Evaluating the reasons for shortfall
in actual performance with
justification for continuation of the
limits at the existing level in spite ofshortfall in the actual performance
iv. Identification of warning signals
such as NA
a. -- Liquidity constraints due to
accumulation of slow moving / non
moving stocks / large overdue
receivables / doubtful of recovery /
failure of buyers to make payments /
diversion of funds within the system
and outside the system
b. -- Fall in the production / sales
c. -- Labour Problem
X A Contd.
d. -- Large sundry creditors
disproportionate to production level /
estimated
NO
e. -- Other market borrowings raised at
high cost without the permission of theBank NO
f. -- Overdues with other Banks / F Is if
any NO
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g. -- Frequent excess permitted NO
h. -- Frequent cheque returns inward and
outward
NO
v. -- Whether Identification as SMA is
made on timely basis and reported to
HO : Credit Department and CreditRisk Management Department
This account doesnt fall under SMA listtill now
vi. Effectiveness of action taken on timely
basis for maintaining the quality of the
account and inter-action with the
promoter / partner / proprietor
NA
vii. Comments on the effectiveness of
scrutiny of the Book debts / bills
discounted and further follow up.
For eg.
NIL
a. -- Items referred in the bill are relatingto the end products which the borrower
is manufacturing / dealing for which
we have financed
b. -- Price Quoted If below the present
market rate, whether the profitability
will be affected has been discussed
with borrower
c. -- Ageing analysis of Bills / Book
Debts
d. -- Effectiveness of scrutiny of the billsto ensure about the genuineness of
transaction
e. Follow up with the collecting banker /
drawee for realisation without delay.
X B Comments on FX Business handled (ifapplicable), Overdue PCs, Overdue
Post shipment bills, devolved LCs etc.
Whether these irregularities are
occurring very frequently or as a stray
incident. Evaluation done by the
branches for the above and actiontaken. Availability of ECGC cover /
Policy / ECGC approval wherever
needed.
NIL
X C Stock Audit (If applicable):
Comments on
i. -- Compliance with the frequency
stipulated and actual periodicity
NA
ii. -- Quality of stock auditor report
Conforming to the proforma suggested
by Head Office Covering all aspects
NA
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iii. -- Critical observations of Stock audit
inspection regarding working of the
unit
NA
iv. -- Action of the branch with regard to
Any adverse remarks which would
deteriorate the DP and the accounting
procedure etc.
NA
v. -- Closure of the Audit Report
Whether done within the stipulated
period.
NA
X D Comments on Consortiumworking
NA
i. -- Frequency of consortium meeting
held vis--vis sanction terms / receipt
of minutes and action taken report onthe suggestion / decision taken
ii. -- Inspection / Checking of securities
is being followed or not Give latest
date
iii. -- Regular submission of DP on
periodically done by the leader
Indicate latest date.
If not received, how the branch is
monitoring the actual drawings vis--
vis the DP to be furnished.iv. -- Exchange of information among the
members whether done regularly
v. Comments on compliance /
observations of RBI / Statutory /
Concurrent Auditors / Internal
Inspection
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X E Signals of Potential Credit RiskPerceived from day to day banking
operations
i. -- Devolvement of LCs / Invocation ofBGs
Details Previous
Year (Rs. in
lakhs)
Curren
t Year
(Rs. in
lakhs)LC BG LC B
G
No. of LCs /BGsestablished /issued
Amt.
No. of LCs /BGs devol-
ved / Invo-ked
Amt.
NIL
Comments
ii. Inland Bills / Export Bills Details PreviousYear
(Rs. in lakhs)
Curren
t Year
(Rs. inlakhs)
IB FB IB FB
No. of Bills dis-
coun-ted
Amt.
No. of Bills re-
turned unpaid
Amt.
NIL
Comments
iii. Irregularities in the account
iv. Reporting of irregularities anddevolvement of LC bills and obtention
of confirmation
X E Contd.
v. Overdues to F Is, Banks & Others andstatutory dues
vi. Routing of transactions and forexbusiness through the account Details Previous Year (Rs. in lakhs) CurrentYear(Rs. in
lakhs)
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Gross
Sales
Credit
Summat
ion
Forex
Busines
s as per
B/S
Forex
business
as per
branch
books
NILs
Comments
vii. Diversion of short-term funds for long-term uses, if any, noticed in the funds
flow statement
XI Qualitative comments on creditskills i.e. any major changes in
global scenario / Policy of
Government affecting the unit.
i. -- Capability to identify the critical
risk factor and to suggest mitigativefactors on timely basis
ii. -- Knowledge of branch officials on
credit appraisal process and conversant
with the various policy guidelines of
the Bank / RBI
iii. -- Analytical ability of the branch
officials as seen in the appraisal
iv. -- Training given / to be given on
credit and Credit Risk Managementarea.
XII
.
Final Views of the Officer
conducting credit audit
The potential problem of the unit may
run into in the next 1 year / Business
opportunity available to bank /
borrower
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Signature
Name :
Designation :
Placement :
Date :
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