document ationsbioabhopal.org/el_book2019/el_pdf/documengtation.pdf · the security documents,...
TRANSCRIPT
556
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DOCUMENTATION
Stamp Paper : Validity Period : The Supreme Court recently observed that the Indian Stamp Act
nowhere prescribes any expiry date for use of stamp paper : e-Cir/L/CCFO/Audit/58/2009-10.
The stipulation of the period of six months prescribed in Section 54 ibid is only for the purpose of
seeking refund of the value of unused stamp paper, and not for the use of stamp paper to use it
within six months.
Special Adhesive Stamps : Cancellation : In M.P., these stamps (irrespective of their value)should be duly cancelled at the time or before execution of the douments, by the Branch Manager
ONLY (including the temporary BM) and not by Manager of Division/Accountant : SIB/CL/40/
1984, SIB/83/1984.
The executants may also cancel them (in M.P.) : AGR/25/1979.
Understamped P.N./B.E./A.D. : All the documents attracting stamp duty should be
adequately and correctly stamped before or at the time of execution : Sec. 17; Rohini
v/s Fernandez (AIR 1956 Bombay 421).
Unstamped/insufficiently stamped promissory note, bill of exchange, acknowledgement of
debt are inadmissible in evidence before a court of law. They are absolutely void (invalid) ab
initio (since beginning) and unenforceable/inadmissible in evidence even on payment of usual
duty and penalty either u/s 35 or by resorting to Sec. 42 of the Act. These cannot form the
basis of the suit. A suit filed on the strength of such a document fails in law. The omission
cannot be condoned.
Any evidence of such a document is barred under Sec. 91 of Indian Evidence Act.
Understamped Doc. : Penalty : Other documents (i.e., other than those against item No.
6 above) if unstamped/understamped may be admitted in evidence at the Court’s discretionon payment of penalty which may be at the maximum ten times the shortfall/duty payable
(in addition to the usual stamp duty or shortfall payable). Minimum Penalty - Rs. 5/- (Sec.
35). Penalty for admitting an unstamped receipt : Re. 1/-.
Unstamped Receipts : It is the responsibility of the employee to obtain stamped receipts,
where necessary, failing which the cost of the revenue stamps is required to be borne by
him.
If a bill submitted by an employee is found to consist of unstamped receipts, such receipts
do not qualify for payment : Staff/32/1989.
Stamp Duty : Revision in M.P. : In those accounts where security documents were obtained
subsequent to the date of revision but these were stamped according to the pre-existing
rates of stamp duty, then the documents already obtained were to be sent to the local stamp
557
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authorities for adjudication of proper stamp duty and payment of deficit/insufficient/balance
of stamp duty, under Section 31 of the Stamp Act, within one month from the date of
execution or the first execution of the document.
In case this course was not possible, then fresh documents, wherever possible, were to be
obtained, duly stamped, in accordance with the provisions of the amended Stamp Act
applicable thereto, subject to the usual safeguards to ascertain that there were no intervening
charges or encumbrances.
Stamp Duty : w.e.f. 01.03.2004 : Detailed in CIRFO/BO/CL/32/2004-05.
Stamp Duty on Bill of Exchange, Bill of Lading, Debentures, Letter of Credit, Policy of Insurance,
Promissory Notes, Proxy, Transfer of Shares : detailed in CIRFO/BO/CL/32/2004-05.
If a bill of lading is drawn in parts, the proper stamp therefor must be borne by each one of the
set.
Letter of Credit : One rupee.
Stamp Duty in M.P. : Changes : w.e.f. 17, 20-09-2004 : CIRCO/ADV/CL/172/2004-05.
E.M., Hypo. in M.P. : Stamp Duty : If a loan is secured among others, by Equitable Mortgage,
and stamp duty on E.M. has been duly paid, even then additional duty is payable on
hypothecation agreements, etc. : CIRCO/ADV/CL/240/2004-05.
Guarantee Agreement : Stamp Duty : In MP, guarantee agreement if executed by a person
other than an agriculturist, attracts stamp duty of Rs. 250/- : CCFO/ADV/CL/211/2005-06.
Hyp. Deed : Stamp Duty : In M.P., the Hypothecation deed forming part of mortgage deed gets
exemption from stamp duty if executed by a bhumiswami in favour of the Bank for securing loans
for agricultural purposes and if the land involved does not exceed 10 hectares : CCFO/ADV/CL/
83/2006-07.
Loan Agreement : Copy : Not furnishing a copy of loan agreement or enclosures quoted in the
loan agreement to the borrower is an unfair practice and this could lead to dispute between the
Bank and the borrower with regard to the terms and conditions on which the loan is grated :
CCFO/ADV/CL/182/2007-08.
RBI has advised that the Bank should invariably furnish a copy of the loan agreement, along with
a copy each of all enclosures quoted in the loan agreement, to all Borrowers at the time of
sanction/disbursement of loans : CCFO/ADV/CL/222/2007-08.
The operating offices should obtain Customer’s acknowledgement in the format, placed at
Annexure-I of CCFO/ADV/CL/222/2007-08, evidencing that the copies of the documents have
been delivered to him.
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LETTERS OF INDEMNITY :
STAMP DUTY
Letters of Indemnity, etc. : Extant instructions reiterated : CIRDO/OP&SP/SP/16/
2000-01.
Stamp Duty : Letters of Indemnity in respect of lost demand drafts, term deposit receipts
and safe custody receipts (COS-103R, COS-104 and COS-137 respectively) require to be
stamped as indemnity bonds if they are attested; if unattested, they need only to be stamped
as agreements.
A Letter of Indemnity need not ordinarily be attested, provided the executant attends the
Bank personally or his signature is on record with the Bank.
Unstamped Ind. : The instructions for obtaining an Unstamped Letter of Indemnity for
issue of Duplicate Drafts of small amounts in form COS-103R, from general customers
have been withdrawn.
Now, stamped Letter of Indemnity for payment of balance in the Deceased Constituent's
account without production of Legal Representation in form COS-540 should be obtained
(irrespective of the amount involved).
Bank’s Staff : The staff members are also required to execute stamped letter of indemnity
in form COS-103R by affixing of appropriate stamp duty. Partially relaxed for drafts below
Rs. 50,000/- (detailed separately).
Dup. Bk. Ch. : Indemnity for issue of Duplicate Banker's Cheque (COS-538) is also required
to be stamped as an agreement.
The instructions contained above are applicable to the drafts and banker's cheques even ifthey become 'STALE'.
Govt. Depts. : An unstamped letter of indemnity should be obtained only if the executant is
exempt from payment of stamp duty, viz. a Government Department, etc.
Exemption : There is no change in the extant procedure for issue of duplicate drafts in the
following cases which do not involve obtention of stamped letter of indemnity :
a) Bills : When proceeds of bills are remitted to the lodger by means of drafts : and when
such instruments are lost in transit by the postal authorities.
b) Collection A/cs : of LIC and other organisations representing periodic transfer of
funds.
c) Duplicate Drafts : favouring Collecting Banks representing proceeds of collections
received from them.
Mischief : Obtention of an unstamped agreement is treated as 'MISCHIEF' under Sections
43 and 62 of the Stamp Act and is punishable.
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DOCUMENTATION :
ARRANGEMENT LETTERS, TERMS/CONDITIONS
ARRANGEMENT LETTER
Arr. Letter : The arrangement letter (detailing the terms and conditions of the sanction) should be
clear, definite and unambiguous, The optional covenants may be tailored, depending upon the
needs of each case.
Stamping : The present practice of not stamping the arrangement letter should be continued
(unless specifically provided for as in the case of SME documents : CCFO/ADV/CL/166/
2005-06) : SIB/39/1978. (The relative security documents are already stamped. The
arrangement letter may not be necessary to support a civil suit for recovery of Bank dues.)
Secu. Doc. : The acknowledged copy of A.L., duly acknowledged both by the borrower and
the guarantors, in their proper capacity, should be clubbed with the relative security documents.
A photocopy thereof should be kept in the current file of the unit for quick references.
System : To ensure against errors in compliance with terms and conditions, the following
system may be followed (CCO/CPP/CL/21/1996-97, CIRCO/CPPC/MISC/CL/92/2000-01) :
• Terms/Conditions : The system of listing the standard terms and conditions (e.g. primary
and collateral securities, interest, etc.) in one particular section of the proposal continues.
• Post-disbursement Fulfilment : Wherever some of the conditions are proposed to be
fulfilled after disbursement of a facility, this should be so spelt.
• Listing : The officials appraising/assessing the proposal should ensure that other terms
and conditions mentioned in the various sections of a proposal (e.g. infusion of additional
capital, enhancing securities by way of property/guarantee, verification of sources and
expenditure in a project under implementation, etc.) are recaptured and listed separately
at the end of proposal.
Here again, pre-disbursement and post-disbursement conditions should be indicated
clearly.
• Terms/Conditions : The terms and conditions stipulated by the controllers, including the
sanctioning authority, should be specified as pre-disbursement condition or post-disbursement
condition, as applicable.
The sanction letter to the branch should list these conditions in clear/unambiguous
terms.
• Other Observations : recorded by the controllers/sanctioning authority, not specified
as conditions, are required to be advised to the branch in the letter as guidelines to the
branch on the conduct of the advance sanctioned.
DOCUMENTATION : TERMS/CONDITIONS
Precautions : (The practice of releasing the sanctioned limits to the borrowers before
obtention of the related security documents is irregular and fraught with grave risks to the
Bank.)
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Before the release of any credit facilities (new/enhancement), branches should ensure that
the security documents, complete in all respects, are duly obtained : CPP/C&I/BSG/35/
1997-98.
In genuine cases, where it is considered necessary to make a deviation in this regard and
it is proposed to complete certain formalities subsequent to the release of the facility, priorapproval of the sanctioning authority should invariably be obtained (such instances may
arise in cases where obtaining documents related to third-party guarantee, creation of
mortgage, etc. is sought to be deferred).
The terms and conditions required to be complied with at pre-disbursement stage and post-
disbursement stage, should be spelt out distinctly.
Doc. : Lapses : Any violation/lapse in complying with terms of sanction before disbursement
of loans is viewed seriously and dealt with sternly : CIRCO/CPPC/MISC/CL/92/2000-01.
A message be sent down the line that the lapses in documentation viz. non-creation of mortgage,
non-obtention of guarantee/corporate guarantee, etc., would be viewed seriously : CIRCO/ADV/
CL/12 & 22/2003-04.
Standard Covenants : Review : A flexible approach, while prescribing the set of covenants, is
now being put in place, to balance market demands and credit quality requirements of the Bank :
CCFO/ADV/CL/240/2006-07.
Adv. : UCC : Introduction of an Unconditional Cancellability Clause in Loan Documents : Format
enclosed to e-Cir/201 /2008-09.
If any borrower is unwilling to accept this clause, he should be clearly advised (in writing and
against acknowledgement) that he will have to bear the cost of capital on unutilised limits, and nowaiver of such charges will be permitted.
Branches advancing agricultural gold loans should ensure that collateral available (gold) for the
advance is properly entered in the Core Banking System : e-Cir/245/2008-09.
Terms and Conditions : Post-Sanction Approval for Modifications : in terms/conditions : Modified
Authority Structure : CCFO/ADV/CL/291/2006-07.
While granting any type of loan, the applicable terms and conditions should be meticulouslycomplied with, and that there should not be any laxity in documentation : CCFO/ADV/CL/129/
2007-08.
Loan Doc. : Cancellability Clause : Basel-II : RBI Guidelines dated 1st July 2010 on Basel-II :
New Capital Adequacy Framework (NCAF) : Introduction of an Unconditional Cancellability Clause
in the Loan Documents : e-Cir/567/2010-11.
The Bank has recently introduced a clause in the loan documents, which make the sanctioned
limits ‘Unconditionally Cancellable’ and also provides for automatic cancellation due to deterioration
in the borrowers’ credit worthiness. Cancellable means ‘liable to be cancelled’, but it does not
mean that the limits are to be actually cancelled in the System. However, the Bank will reserve
the right to do so : e-Cir/621/2011-12.
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Arrangement Letter : Frequent Dishonour of Cheques and Failed ECS : e-Cir/728/2010-11.
With a view to enforcing financial discipline among the borrowers availing cash credit and overdraft
accounts from our Bank, please ensure to incorporate undernoted clause as additional standard
covenant, which will form a part of the sanction letter/arrangement letter of the loan sanctioned :
“During the currency of the Credit facility, the Bank will have the option of calling up the advance
and also withdraw cheque facility in terms of the Bank’s policy on dishonour of cheque, in case
incidence of frequent dishonour of cheque/failed ECS (debit) due to insufficient funds is observed
in the account. For details, please refer to the policy on dishonour of cheque displayed at
www.sbi.co.in”.
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REGISTRATION OF CHARGES/DOCUMENTS
MOTOR VEHICLES ACT, 1988
Registration : Sec. 51 of M.V. Act (old) and Section 31 of the new Act deal with the registration
of the Bank’s charge (over the vehicle hypothecated to the Bank) with the concerned R.T.A.
Further Details : Furnished separately.
INDIAN REGISTRATION ACT, 1908
Object : The object of the Registration Act is to save the people from being duped. It facilitates
the proving of facts beyond any doubt.
Registration of Documents : Section 17 of the Registration Act deals with the documents
of which registration is compulsory. For example, gift deed, mortgage deed, lease deed (for
any term exceeding 1 year), etc. All registered documents are presumed to be duly executed.
Registration of Mortgages* : Sec. 23 of the Act deals with the Registration of mortgages of
Rs. 100/- or more (within 4 months from the date of creation).
Regn. of Equi. Mort. : in M.P., etc. : detailed separately.
M.P.K.U.P.T.P.U. (BANKS) ADHINIYAM, 1972
Copies of Mortgage Deed : Copies of Mortgage deed (AB-3), or Declaration in Form V (in
M.P.) is forwarded to the Sub-Registrar of Assurances (within the local limits of whose
jurisdiction the whole or any part of land or immovable property charged or mortgaged is
situated), for registration, within the stipulated period of 30 days (from the date of execution
of such document), by Registered Post (and not by local delivery). Care : 30 days (not one
month).
Intimation of charge/mortgage is sent to concerned Tehsildar also under M.P. Krishi Udhar
Pravartan Tatha Prakirn Upbandha (Banks) Adhiniyam, 1972.•
* Section 59 of the Transfer of Property Act also deals with registration of the mortgages.
• The legislation has been introduced on the recommendations of the Talwar Committee.
Based on the recommendations of the Expert Group (Talwar Committee - 1970), on the lines of the Model
Bill, all the major States have passed legislation as State Recovery Acts for expediting recovery of
agricultural loans.
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REGISTRATION OF CHARGES/DOCUMENTS
COMPANIES ACT, 1956
• Registration of Charge : (i) Sec. 125 (1) of the Act deals with the registration of the
Bank’s floating charges - detailed in Sec. 125, including equitable mortgage [S.B.I. v/s
Vishwaniryat 1987 (2) Kerala L.T. – 317], second charge (C&I/83/1990-91) and bank
guarantees - over the assets of a company (public/private), within a period of 30 days of
creation of charge (i.e., the date of security documents†) : Es berger v/s Capital and
Countries Bank (1913) 2 Ch. 366.
For this purpose, New Form No. 8 and 13, signed by the borrowing company and the
lending banker both, is filed, along with the prescribed filing fees‡ and copies of the
relative security documents, with the concerned Registrar of Companies (of that State
where the Registered Office of the company is situated), within the prescribed period of
30 days of creation of the charge. This new form has replaced old form Nos. 8 and 14
(C&I/75/1982).
ii) No time-limit is fixed for actual registration of the charge by the Registrar after the
request is received by him : Bank of Maharashtra Ltd. v/s Official Liquidator, Mysore
1973 Comp. Cases; C.K. Siva Sankara v/s Kerala Financial Corporation and others
(1980 Comp. Cases 817).
iii) Sec. 125 and 141 (B) also do not fix any time-limit for the actual registration of the
charge by the Registrar. Recently, the related procedure has been simplified (detailed
below).
iv) If the charges are filed within the prescribed period and if no deficiencies are pointed
out by the Registrar, the charge is deemed to have been registered, though it has
in fact not been registered : S.B.I. v/s Depro Food Ltd. & Others (1988) 64 Comp.
Cas 375 (P&H).
v) The particulars of charges may be filed for registration either by the borrowing
company or the lending banker : Sec. 134.
vi) The particulars regarding appointment of Receiver or Manager should also be filed
by the bank within the prescribed period : Sec. 137.
• Additional Limits/Modifications : In the case of additional limits or modification
(changes in terms and conditions) of the charge already registered, modification of
charge should be filed for registration by form 8 (revised) and form 13, within 30 days of
such modification : Sec. 135, CPP/C&I/4/1997-98.
• Certificate of Registration : (i) The certificate issued by the Registrar (on the duplicate
of form 8) under Section 132 (for the charge/modification of charge registered) must be
carefully preserved at the branch records as it is the conclusive proof of the registration
of charge (it serves as a public notice also). It clearly shows that all the statutory
requirements of the Companies Act as to the registration have been duly complied with,
and that the charge was valid. (But the banker should not rely on the ruling blindly.)
† No such registration is necessary in the case of other categories of borrowers (i.e., individuals,
proprietorship/partnership firms/JHFs, etc. : non-corporate borrowers).
‡ Detailed in Schedule X of the Companies Act [it depends upon the nominal (authorised) share capital of
a company]. A copy of the relative money receipt should be submitted to the lending banker.
564
Adv - 564
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ii) The obtention of this certificate should be duly followed up : SBI v/s Haryana
Rubber Industries Pvt. Ltd. & Others (1986) Co. Cases p. 472. Any lapse in respect
of non-registration of charge might invite staff accountability : SIB/CL/29/1988.
iii) As per Section 126 ibid, any person is deemed to have the notice of the charge on
the assets of a company from the DATE OF REGISTRATION and NOT from the
date of creation of the charge.
iv) A company is also required to maintain a Register of Charges at its registered
office : Sec. 143.
• Delay in Registration : If the prescribed particulars of a charge (or, any modification of
a charge) are not filed for registration within the stipulated period of 30 days, and if the
extension of 30 days* (extended from the earlier period of 7 days : w.e.f. 15-06-1988) is
not granted by the concerned Registrar (at his discretion), the Bank loses its validcharge† (and the debt becomes clean/unsecured but not irrecoverable).
Thereafter (i.e., after 60 days), the Bank may approach Company Law Board, who is
empowered to further extend the period for filing the charge in deserving cases and
condoning the delay : Sec. 141 of Companies Act. (Sec. 637-B empowers the Central
Govt. to condone further delay in cases of genuine hardship).‡
• Liquidation of Advances : In the case of liquidation of the advances in full, the registered
charge should be cancelled by sending Memorandum of Satisfaction of the charge
(signed by the company) to the Registrar, within 30 days of payment or satisfaction in
full of charge. Form No. 17 is filed for this purpose, along with Form No. 13 : Sec. 138.
This intimation can be given by the company without any supporting letter from the
financial institutions if it is not available : Company Law Board, Northern Region in
reference to Swaraj Majda Ltd., 1992, 73 Comp Cas 569 : IIBJ April-June 1992.
• Search : A search should be made in the Registrar’s Office by an Officer of the Bank
(or, a company secretary in service : C&I/47/1991-92) immediately before and afterthe creation of charge (to ensure priority of the Bank’s charge over the security offered).
(With a view to ensuring that verification of charges/searches of the records with the
Registrar of Companies are carried out at periodical intervals as laid down and to ensure
uniformity of practice), the services of company secretaries in practice should be utilised
if and when considered necessary for carrying out searches and obtaining search/status
reports in respect of advances granted to all corporate borrowers.
The charges incurred in this connection should be recovered from the borrowers : C&I/
47/1991-92.
* On payment of such additional fee not exceeding ten times the amount of fee specified in Schedule X
(as the Registrar may determine).
Delays in filing Form-8 : absence of follow-up on the part of the Bank/unit; delay in replying to Registrar's
queries by the company : SIB/CL/29/1988.
† i.e., the charge becomes void against the liquidator (in the case of winding up of the company)/other
creditor : Capital Finance Co. v/s Stockes, 1968, 3 All ER 625. However, the company cannot repudiate
its liability on this ground.
‡ The provisions of Sec. 141 and 637(B) are very cumbersome and time-consuming. Therefore, the
banker should not rely on these provisions. (An application of a negligent creditor cannot be said to be
one made in good faith. Moreover, law favours the vigilant/diligent, not the indolent).
565
Adv - 565
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• Periodical Searches : These should be carried out in the books of the Registrar before
renewal of limits, filing of civil suits, etc. (to ensure that no charge other than the one
favouring the lending bank has been created and got registered).
Charges Not Requiring Registration :
• Pledge : Pledge of goods (both L & K and FT), shares, Government securities held by
the company : Sec. 125 (as pledge is a specific charge on the assets of the borrowing
company).
• Advances against Term Deposits : Shree Meenakshi Mills v/s Registrar of Companies
(1965) 1 Comp L.J. 266.
• Reduction in Interest Rates : C&I/91/1978, SIB/CL/53/1985, C&I/9/1987.
• Negative Lien (Non-possessory lien) : AIR 1955, Bom. 419 (as it does not amount to
a charge).
• Ancillary Agreements : SIB/24/1977.
• Court Decrees : A charge which arises by operation of law, a court decree or by an
order of the court.
e-Filing of Forms :
R.O.C. : e-filing of Forms : For Creation/Modification/Satisfaction of Charges : Branches should
adopt the measures detailed in CCFO/ADV/CL/3/2006-07 for commencing the e-filing for registration
of charges with ROC, as documents in physical form for filing of charges are not accepted now.
The following officers in the Bank are designated as Registration Authorities (RA) under IDRBT
Certifying authority : CCFO/ADV/CL/59, 61/2006-07 :
For Branches under Circles (NBG) : Assistant General Manager (ITS).
For CAG/MCG Branches : Deputy General Manager (Payment System Group).
R.O.C. : e-Filing : for Creation/Modification/Satisfaction of Charges in ROC Portal : Nomination of
Nodal Officer : Additional Instructions : Detailed in e-Cir/1173/2013-14.
R.O.C. : e-filing of Forms : Branches should adopt the measures detailed in CCFO/ADV/CL/3/
2006-07 for commencing the e-filing for registration of charges with ROC, as documents in physical
form for filing of charges are not accepted now.
R.O.C. : e-Filing of Forms : The Registration Authority in SBI for Branches in NBG (National
Banking Group) has been re-designated as DGM (Payment System Group).
R.O.C., New Delhi : Registrar of Companies, N. Delhi : It deals with cases of foreign companies.
Registration of Charges with ROC : Registration/modification/satisfaction of the charge are filed
with the Registrar through the electronic filing which bears the Digital signature of the company
representative as well as that of the authorized signatory from the Bank/financial institution. The
use of Digital signature has been mandated (to ensure that the security and integrity of documents
filed with the Registry) : e-Cir/1140/2012-13.
Each AGM (ITS) from the Circles has been nominated as nodal officer for role check for the Bank.
566
Adv - 566
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C. I. B. I. L.
CIBIL : Credit Information Bureau (India) Ltd. : Consents : CIRCO/ADV/CL/202/2003-04 :
• Obtention of Consents of Borrowers/Guarantors : Branches should adhere to the RBI
directive in respect of SIB/AGL segments and ensure that consents are obtained before
disbursement in the prescribed format from borrowers/guarantors in respect of new loans
and in respect of existing loans.
RBI directions in regard to obtention of consents are mandatory.
• Obtention of Consents from Borrowers and Guarantors : Branches should speed up the
process of obtention of consents in respect of the remaining accounts : CIRCO/ADV/CL/
82/2004-05.
• The branches should ensure timely submission of periodical data to CIBIL through the
controllers : CIRCO/ADV/CL/277/2004-05.
If the compliance in this regard remains unsatisfactory, RBI would be constrained to
examine other penal measures on the concerned banks.
• Submission of Advances Data to CIBIL : Mandatory Data Requirements : w.e.f. 1st May
2005 : CCFO/ADV/CL/23/2005-06.
CIBIL List : Deletion of Borrower’s Name : The Branches/Operating Offices should immediatelyadvise CIBIL the names of the borrowers who have cleared their dues in full so as to enable them
to withdraw the names as per BCSBI guidance note. A copy of this letter should be endorsed to
the borrower for his information : CCFO/ADV/CL/280/2007-08.
CIBIL : Access to Own Credit Report : In terms of the RBI instructions, operating offices/branches/
processing centers are required to ensure strict compliance of the provision of Section 21 of the
Credit Information (Regulations) Act, 2005 and furnish to the applicant a copy of the credit
information obtained by it from the Credit Institution Company (in our case, the CIBIL). RBI, in
the Credit Information Companies Regulations, 2006, framed under the Act, has prescribed in
Regulation 12 (3) the maximum fees of Rs. 50/- for the purpose : e-Circular/373/2009-10.
CIBIL : Records : Updation of CIBIL records by banks and strengthening the internal machinery
for customer grievances redressal : Branches should ensure that CIBIL records are updated
periodically as and when loans are repaid/amounts written off/charges reversed : e-Cir/593/
2009-10.
A copy of this letter should be forwarded to the borrower for his information.
CIBIL Reports : Small Amounts : In case of an existing housing loan borrower who proposes to
avail of car loan, the discretion has been given to sanctioning authority to consider the cases
relating to credit card dispute like charges for late payment, finance charges, interest charges,
etc. up to Rs. 5,000/- only. A Simple declaration from borrower should be taken in such cases.
In all other car loan proposals, discretion has been given to sanctioning authority up to
Rs. 3,000/- for issues relating to credit card dispute like charges for late payment, finance
charges, interest charges, etc. A simple declaration from borrower should be taken in such
cases : e-Cir/118/2010-11.
567
Adv - 567
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H. SULAIMAN (SBIOA)
CIBIL, DIN : Submission of credit data to Reserve Bank of India (RBI) and Credit Information
Bureau of India Ltd. (CIBIL) : Inclusion of Director Identification Number (DIN) : e-Cir/616/2010-11.
CIBIL : Data Reporting : Updation of CIBIL Records and strengthening the internal machinery for
Customer Grievances Redressal : e-Cir/617/2010-11.
CIBIL CIR : Guidelines on Dealing with Credit Information Reports : e-Cir/676/2010-11.
CIBIL Database : The data base with CIBIL and other CICs are necessarily to be accessed for all
loans under all segments (through LOS or by pulling down the consumer or commercial reports)
as a part of pre-sanction process. As such, operating units are advised to access the data with
CIBIL and other CICs as a diligent way of loan processing and also as a prudent measure to
prevent frauds : e-Cir/1209/2012-13.
CIBIL Reports : Ombudsmen : e-Cir/133/2010-11 :
i) As the settlement under BO Scheme specifically tries to promote a conciliatory approach to
resolution of customer grievances, there should not be any further demand for payment of
residual amount over and above the amount agreed to in settlement/compromise meetings.
ii) Under fair business practices (lender’s liability) and code of commitment to customers, the
settlement to be implemented in letter and spirit by modifying CIBIL records properly and
recovery proceedings are called to halt.
iii) No-due certificates to be issued in all cases resolved through Banking Ombudsmen’s
intervention within a week of reaching such settlement in the presence of Banking
Ombudsmen.
Documentation : CICs : Submission of Credit Information to Credit Information Companies (CICs) :
The CIC Act provides statutory backing for sharing of credit information by Credit Institutions with
Credit Information Companies subject to conditions stipulated therein. Therefore, with CIC Act
coming into force, the “consent clause” has become redudant and hence the consent of the
borrower need not be insisted upon now : e-Cir/461/2013-14.
568
Adv - 568
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H. SULAIMAN (SBIOA)
DOCUMENTATION : FORM A, A-1, A-2
Advances to borrowers who are not the sole owners of the security (in physical form :
CIRDO/OP&SP/7/2005-06).
The following guarantee agreements executed by the holders of the securities (stamped as
guarantee agreement) are obtained (Cir. 7/1965, P&SB/CL/10/1995-96) :
Holder(s) of Borrower(s)/Holder(s) Agreement Form toSecurity of Jt. Loan a/c be taken
X X+Y A
X+Y X A-1
X+Y+Z X+Y+M A-1
X B A-2
X+Y M+N A-2
For advances granted to partnership firms against the securities belonging to the partners,
Form A is obtained : Cir. No. 320/1963.
The security should be delivered to the Bank by the borrowers, along with security delivery
letter, on a date subsequent to the date of agreement : Cir. 7/1965.
Detailed Memorandum containing instructions regarding execution of Form A, A-1, A-2 :
enclosed to CIRCO/CPPC/P&SB/CL/21/2000-01.
569
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H. SULAIMAN (SBIOA)
SIMPLIFIED SME DOCUMENTATION
(W.E.F. 01-08-2005)
Effective Date : The Bank introduced the revised/simplified set of documents for the SME Sector
w.e.f. 01st August 2005 : CCFO/ADV/CL/105,166/2005-06.
Earlier Accounts : For the earlier accounts, the new set of documents is to be obtained at the
time of enhancement of credit limits/reconstitution of firm, etc. But in those States where stamp
duty is payable ad valorem, the borrowers may express their reservation against executing
fresh documents because of the cost involved. In such cases, old set of documents may be
continued, but for the enhanced portion, the branches are to obtain the ‘Agreement of Loan-cum-
Hypothecation’ (SME-2) and the ‘Link Letter’ (SME-12).
Details of Documents : The new set has, in all, only 13 documents which are grouped under 7
categories as under :
1. Initial Documents :
SME-1 Letter of Arrangment (stamped as an agreement : CCFO/ADV/CL/166/2005-06.)
SME-2 Agreement of Loan-cum-Hypothecation
SME-2A Letter furnishing the particulars of assets acquired after the execution of SME-2
SME-3 Guarantee Agreement.
2. Supplemental Document :
SME-4 Supplemental Agreement of Loan-cum-Hypothecation.
3. Documents/Recital for Creation of Equitable Mortgage :
SME-5 Memorandum for recording creation of mortgage by deposit of title deeds
SME-6 Letter of confirmation for extension of mortgage by deposit of title deeds.
4. Documents/Recital for Extension of Equitable Mortgage :
SME-7 Memorandum for recording extension of mortgage by deposit of title deeds
SME-8 Letter of confirmation for extension of mortgage by deposit of title deeds.
5. Documentation for Creation/Extension of Regd. Mortgage :
SME-9 Deed of Mortgage
SME-10 Deed of further charge.
6. Complementary Documents :
SME-11 Revival Letter
SME-12 Link Letter.
7. Miscellaneous Documents :
SME-13 Title Investigation Report (in the revised format and not on SME-13).
Stamp Duty : On SME Documents : in the States of M.P. and Chhatisgarh : detailed in CCFO/
ADV/CL/166/ 2005-06.
570
Adv - 570
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SME Documents : SME-I : It is required to be stampted as an agreement : CCFO/ADV/CL/166/
2005-06.
Documentation : e-DFS : Electronic Dealer Financing Scheme : e-Cir/157/2010-11 :
1) Applicable SME documents.
2) An agreement for availing the Electronic Dealer Financing Scheme (e-DFS) to be signed
by the Dealer, given in e-Cir/157/2010-11.
Doc. : Upgraded e-Trade SBI : Branches/TFCPC should, henceforth, obtain common one-time
Agreement-cum-Indemnity documents for NFB limits at the time of sanction/release of such
limits, format of which is enclosed to e-Cir/900/2011-12.
System-generated LC/BG application form may be obtained subsequently as hitherto, along with
other necessary documents. However, modified LC application form like for BG hitherto, is no
longer required to be stamped.
ME Loan Documents : Inspection : The Inspecting Officials are now required to verify documents
by visiting SMECCC on a pre-appointed date, once or twice, instead of placing demands on
Relationship Manager (ME - Medium Enterprises) for making the documents available at the
auditee branch for verification : e-Cir/971/2011-12.
571
Adv - 571
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H. SULAIMAN (SBIOA)
SCHEME OF REVISED C&I DOCUMENTS : AN OVERVIEW
(‘C’ SERIES DOCUMENTS)
C&I Doc. : Pledge Document : Wherever our charge on the assets of the unit is secured by the
hypothecation document C2/C2A, pledge document C3/C3A need not be obtained additionally :
CCFO/ADV/CL/146/2006-07.
“C” Series Documents : “C” series of Documents were introduced in 1985. Subsequently,
“Cancellability” clause, “CIBIL” clause, Certificate for “End-use” of funds and Wilful Defaulters,
were added. The above-mentioned clauses are required to be appended to the Arrangement
Letter as well as to the “C” Series documents, at appropriate places : e-Cir/1081/2011-12.
‘C’ Series Doc. : Modifications : The ‘C’ series documents have been modified in order to include
the derivative exposures in the documents. The revised ‘C’ series documents are enclosed to e-
Cir/388/2013-14.
572
Adv - 572
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H. SULAIMAN (SBIOA)
SECURITY DOCUMENTS
FOR AGRICULTURAL ADVANCES
• Agreement for Hypothecation (revised format : CIRCO/ADV/CL/259/2004-05) : AB-1.
• Deed of Guarantee : AB-2.
• Mortgage Deed : AB-3.
AB-3A for mortgaging the land belonging to the guarantor.
• Revival Letter-I : AB-4 : signed by the borrower.
Revival Letter-II : AB-5 : signed by the guarantor.
Revival Letter I - A : Obtained from the borrower where additional limits or
enhancements are sanctioned : CIRCO/CPPC/AGR-1/2000-01.
Revival Letter II - A : Obtained from the guarantor where additional limits or
enhancements are sanctioned : CIRCO/CPPC/AGR-1/2000-01.
• Demand notice for crop loan - for the borrower : AB - 6 (Unstamped).
• Letter given by the borrower to the Bank for conversion of ACC to ATL : AB - 7 (Unstamped).
• Agreement of rescheduling of Term Loans : AB - 7 - A (to be signed by borrower and
guarantor).
• Document for AGL loans for transport vehicles (AGM/AGR/16/1993-94).
• Supplementary documents for enhanced limits/additional loans (both working capital
and term loans) : enclosed to CIRCO/CPPC/AGR/01/2000-01.
• Agri. Adv. : Documents : The document AB-1 (Simplified Hypothecation Agreement)
and arrangement letter have since been simplified during 2004-05 (for Agriculture Crop
Loans and Term Loans for limits up to Rs. 1 Lac) : CIRCO/ADV/CL/259/2004-05.
Specimens enclosed to CIRCO/ADV/CL/259/2004-05.
• Agri Adv. : Hypothecation Agreement (AB-1) : Kisan Credit Card Scheme : The clause
detailed in e-Cir/546/2013-14 has been incorporated in the Hypothecation Agreement
(AB-1). The amended format of AB-1 is enclosed to e-Cir/546/2013-14.
• AGL Adv. : Stamp Duty in M.P. : W.e.f. 25.09.2006 : Clarifications : In supersession of the
instructions contained in CCFO/ADV/CL/186/2006-07, the instructions detailed in CCFO/
ADV/CL/261/2006-07 have been issued.
Modifications in CCFO/ADV/CL/261/2006-07 : CCFO/ADV/CL/412/2006-07.
• KCC : Stamp Duty : Madhya Pradesh Govt. has remitted the stamp duty (w.e.f. 05.09.2005)
chargeable on every instrument executed by an agriculturist in favour of banks for securing
loans under the Kisan Credit Card Scheme : CCFO/ADV/CL/211/2005-06.
• Stamp Duty in M.P. : SHGs : The documents execued by the Self-Help Group in favour of
Banks for securing loans up to Rs. 10 Lac for economic development of Group members
under NABARD-sponsored scheme do not attract any stamp duty in M.P. : CCFO/ADV/
CL/260/2006-07.
573
Adv - 573
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REVIVAL LETTERS FOR DIFF. TYPES OF ADVANCES
Purpose : The revival letters extend the period of limitation (detailed under ‘Indian Limitation
Act’ in this Chapter) for a further period of 3 years from the date of signing/execution. These
automatically revive the securities, agreements, obligations and charges, including pledge
hypothecation, mortgage, etc.
1. Revival Letters (w.e.f. 13-08-2002) - Rs. 2 (revenue stamps) : CIRDO/LAW/CL/3/2002-03.
2. Balance Confirmation (revised - Rs. 2 (revenue stamps) : CIRDO/LAW/CL/3/2002-03.
format : S&P/36/1994-95)
3. Undertaking to pay Time-Barred
Debts - Rs. 100/- (stamped as an agreement : SIB/82/1985).
Balance Confirmation Certi. : Revised Format : (Consequent upon the introduction of
IRAC norms, it has become necessary to separately record the amount of interest liability
accrued but not debited to an account, in the balance confirmation certificate in respect of
N.P.As. - other than those classified as Recalled Assets, so that the correct position is
reflected therein and there is no room for contesting the amount of interest overdue to the
Bank at a later date.)
The Bank has, therefore, modified the earlier balance confirmation certificate (COS-48) to
correctly reflect the liability position of N.P.As. (to meet the statutory audit/legal requirements).
The revised format is enclosed to S&P/36/1994-95.
Govt.-guaranteed Advances : The revival letters should be obtained sufficiently in advance
in all govt-guaranteed advances where guarantees are expiring : CPP/C&I/CL/126/1997-98.
Revival Letters : ‘P’ Segment , AGL Seg. TLs : Imp. Clarification :
The Bank recently decided to (CCFO/ADV/CL/219/2007-08), e-Cir/06/2008-09 :
a) Dispense with obtention of Revival Letters and Balance Confirmation Letters in case of Term
Loan accounts in Personal Segment & AGL Segment, which are repaid regularly and are
standard assets, and
b) Not to make demand on the guarantor(s) unless it is decided to call up the loan and file civil
suit or initiate any legal action.
(If a demand is made on the guarantor and the loan is regularied by the borrower, then the Bank
is required to obtain a fresh guarantee from the guarantor.)
Term Loans : Revival Letters : A delay in remittance of the monthly/quarterly instalment should
not be taken as a default provided such instalment is repaid before the next instalment falls due.
Reminder for the defaulted instalment should be sent to the borrower only : e-Cir/1011/2012-13.
TLs : Revival Letters : Reminder for the defaulted instalment should be sent to the borrower only.
Care has to be taken in such cases not to recall the advance and not to demand from the
guarantor so as to avoid triggering of limitation period : e-Cir/1011/2012-13.
TLs : Revivals Letter : The Bank has recently decided to (i) dispense with obtention of Revival
Letters and Balance Confirmation Letters in respect of all Term Loan accounts which are repaid
regularly and are classified as Standard Assets, and (ii) not to make demand on the guarantor(s)
574
Adv - 574
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unless it is decided to call up the loan and file civil suit or initiate any legal action, irrespective of
the business segment, under which the credit facilities have been extended : e-Cir/1011/2012-
13.s
DIFFERENT TYPES OF REVIVAL LETTERS*
Stamp Duty : exigible on Revival Letters is now Rs. 2/- (Revenue Stamps : Cir. No. 88/
1982, GEN/CL/197/1991), i.e., that exigible in Acknowledgement of Debt [e.g. balance
confirmation in form COS-48 (revised)] : Cir. No. 65/1982. Balance confirmations [in COS-48
(revised)] should be obtained in addition to revival letters.
• Where D.P. Notes are obtained along with Hypothecation/Pledge Agreement :
COS-157 : Revival Letter Form I : Signed by the maker of a D.P. Note made in COS-228.
COS-158 : Revival Letter Form II : Signed by the endorser of a D.P. Note made in COS-228.
COS-159 : Revival Letter Form III : Signed by the maker of a D.P. Note made in COS-229.
The form-III is used when the D.P. Note is made in favour of the Bank itself.
These forms are sent to the executants by Registered A.D. Post, under cover of COS-
156.
• Where Advances are supported by Pledge or Hypothecation Agreement without aD.P. Note :
For documents executed prior to 01.08.2005 :
A revival letter as per annexure 10/L or 11/B of SIB Codified Instructions Book is obtained.
This applies to Form C General/Modified also, as per the opinion given by the Bank’s solicitors
(C&I/16/1977).
• Gold Loans :
Revival letter in form COS-159 is obtained from gold loan borrowers also (Circular No. 4/
1985, STAFF/98/1987). The account need not be closed and re-opened.
• Term Loans :
For documents executed prior to 01.08.2005 :
Revival letter is obtained in the prescribed proforma (enclosed to Circular No. SIB/13/
1981 and C&I/34/1983). It should be signed by the borrower/guarantor for the amount
outstanding (including overdue instalments) and interest well before the expiry of 3 years.
The period of limitation is 3 years from each instalment falling due and on default.
However, it is always desirable and advisable to obtain revival letter within a period of 3
years from the date of the term loan documents : CIRCO/CPPC/MISC/CL/60/2000-01.
• DIR Advances :
1. Where D.P. Note is taken : in usual forms COS-157, 158, 159.
2. Where D.P. Note is not taken : in annexure 9/D of SIB Codified Instructions Book.
It is not necessary from the guarantor*.
* As the guarantor's liability in terms of guarantee agreement arises only in the event of default by the
borrower (i.e., from the date of demand/invocation by the lending banker).
575
Adv - 575
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• Composite Loans (SIB) under S.G.S.Y. :
In the format enclosed to SIB/CL/116/1986, suitably modified.
• Composite Loans under P.M.R.Y., etc. :
In the format enclosed to SIB Circular No. 45/1984 (suitably modified).
Group Loans under SGSY : Enclosed to CIRCO/CPPC/SIB/CL/1/2000-01.
The revival letter is required to be executed by the borrowers in the same manner as the
original loan documents have been signed.
• Agricultural Banking :
AB-4 : Revival Letter-I : Signed by the borrower.
AB-5 : Revival Letter-II : Signed by the guarantor.
Revival Letter I-A : Obtained from the borrower where additional limits or
enhancements are sanctioned : CIRCO/CPPC/AGR-1/2000-01.
Revival Letter II-A : Obtained from the guarantor where additional limits or
enhancements are sanctioned : CIRCO/CPPC/AGR-1/2000-01.
• SSI Revised Documentation :
For documents executed prior to 01.08.2005 :
In the case of simplified documents, D.P. Notes are not required to be obtained.
However, revival letter of General Agreement/Supplemental General Agreements both,
as per Annexure 9/L is obtained from SSI unit to keep our hypothecation charge alive.
• C&I Revised Documentation :
In form C-6.
C&I Revised Doc. : Revival Letter : The obtention of revival letter, i.e., C6 cannot be dispensed
with on the ground that supplementary documents such as C1A & C2A have been obtained;
these can only be used as a fall back mechanism to help the Bank in cases where
inadvertently revival letters have not been obtained : CCFO/ADV/CL/149/2006-07.
•. S.M.E. Documents :
In form SME-11.
•. Revival Letters : Vernacular Language : Additions : The paragraph detailed vide ABD
Cir. 4/1993-94 should be added at the bottom of the revival letter printed/written in
English language, under proper authentication by executant : SIB/SSI/Cir. 7/1993-94.
Alternatively, revival letters may be obtained in the same local language in which the
original documents executed by the borrowers have been translated. (To eliminate
occasions where borrowers plead before the court of law that they have signed the
documents without knowing their contents.)
* A mere acknowledgement does not fulfil the requirements of Sec. 25(3).
576
Adv - 576
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TIME-BARRED DEBTS
Documents : Diarising : D.P. notes and security documents should be properly diarised
for revival failing which the official concerned is held accountable for the lapse : AGM/
AGR/18/1995-96, P&SB/CL/27/1995-96.
1. Time-Barred (Statute-Barred) D.P. Notes :
D.P. Notes Delivery Letter in Annexure 14/L of SIB Codified Instructions Book is obtained
in cases where a fresh D.P. Note (for the original loan amount, or the present
outstandings, whichever is more) is obtained in substitution of time-barred D.P. Note
(SIB/112/1976).
The actual date of execution of fresh D.P. Note should be mentioned on it (and not the
date of expiry of the original D.P. Note).
In terms of Sec. 25(3) of Contract Act, an agreement* to pay a time-barred debt is a
valid contract. It is not necessary to obtain fresh set of other security documents.
2. Time-Barred ODs, CCs and TLs :
A letter from the borrower(s) and the guarantor(s) undertaking to pay the time-barred
debt (TL/CC/OD) is obtained in the revised format (enclosed to SIB/CL/28/1986).
It is applicable to agricultural advances also (DM/AGR/25/1986).
It is stamped as an agreement (SIB/CL/82/1985, C&I/87/1985).
3. Debt-acknowledging-cum-Linking letter : Grant of additional limit or enhancement
in the existing credit facility (Cir. No. 73/1983) :
Supplementary set of documents for the amount by which the existing limit is enhanced,
is obtained. Along with it, a linking letter is also required to be obtained executed by the
borrower and the guarantor, stating that the said supplementary set of documents is in
addition to and not in substitution of the documents executed earlier.
The Bank has evolved a Debt-acknowledging-cum-Linking letter (liable to be stamped
as an acknowledgement). This serves as a revival letter covering the whole limit, including
enhancements, thus avoiding obtention of revival letter for documents executed earlier
separately.
The period of limitation begins to run, only from the date of execution of linking letter,
subject of course to its being within time on such date.
577
Adv - 577
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H. SULAIMAN (SBIOA)
DEATH OF A BORROWER :
FORMALITIES TO BE COMPLETED
The legal position of the Bank vis-a-vis the legal heir(s) and the guarantor(s) is as under : AGR/38/
1977 :
In the event of the death of a borrower, the liability to discharge the debt devolves upon all the legal
heirs who inherit the estate of the deceased to the extent of the assets inherited. It is, therefore,
essential to approach all the legal heirs for recovery and to serve a notice on all of them and also
guarantor(s), if any, calling up the loan and requiring them to pay the same within a reasonable
period, say 15 days or less, depending upon the validity period of documents. In majority of
cases, full payment, for obvious reasons, will not be forthcoming. It has, therefore, to be exam-
ined whether it is considered safe to grant time to the heirs. In cases where it is considered safe
to do so, the undernoted procedure should be adopted.
a) In case of crop loans, since the period of loan is short, an undertaking from all legal heirs,
as per the specified draft (ANNEXURE-18) to be obtained provided guarantor(s), if any, also
agrees/agree to this arrangement and allow the old account to continue.
b) In case of term loans, the liability of the deceased borrower should be transferred in the
personal names of the legal heirs as soon as possible. In such an event, fresh documents
should be obtained and debt cleared by debiting fresh loan account of the heirs. This amounts
to grant of fresh loan to legal heirs after completion of all the usual formalities and utilising the
loan amount to discharge the old debt. In the meantime, an undertaking mentioned herein-
above should immediately be obtained.
Where it is not considered safe to give time to legal heirs or no such request is forthcoming from
them, legal action should be initiated against all the major legal heirs and guarantor(s), if any, for
recovery of the loan amount after obtaining permission from the controlling Authorities. Recourse
against the property mortgaged/hypothecated, if any, is also available through the court of law.
Doc. : Death of Guarantor : Procedure to be followed : Detailed in e-Cir/96/2012-13.