documentation rbi

8/6/2019 Documentation Rbi

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DOCUMENTATIONDOCUMENTATION

PRESENTED BYVAIJAPURKAR C.G.



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TOPICS TO BE COVEREDWHY DOCUMENTS ?DEFINITION OF DOCUMENTS.OBJECT OF DOCUMENTATION.

IMPORTANCE OF DOCUMENTS.TYPES OF DOCUMENT.PURPOSE OF DOCUMENTATION.Secured Advances

Modes of Creating ChargeADMISSIBILITY OF DOCUMENTS AS ANEVIDENCE.



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WHY DOCUMENTS ?To protect from willful defaulters.

To establish RIGHT & OBLIGATIONEVIDENCE of transactions.



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Difference between documents& instruments

The Section 2 (14) of the Indian Stamp Act, 1899calls the first-type of document as instrument.According to it ³the document by which anyRight or Liability purports to be created,

transferred, extended, limited, extinguished or recorded is called as an instrument.´Thus, the bonds, conveyances, leases, mortgages,agreements, D.P.Notes, bills of exchange can beconsidered as instruments and they are requiredto be stamped according to the law.The Second ± Type (above ) of documents neednot be stamped i.e. Statement of account,Voucher, stock-statement, Notice of recall, letter or application of customer etc.



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FIND OUT DOCUMENT &

INSTRUMENTShare certificateAccount openingformCheque book.Office order.

Circulars.

Debit vouchers.Pass-book / statementof account.Fixed deposit receipt.DP Note.

HP Deed.



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DEFINITION OF DOCUMENTSec 3(18 ) of General clauses Act,1897³Document should include any matter writing or

express upon any substance by means of letter,figures or marks or more than one of theremeans, which is intended to be used for the

purpose of recording that matter´.

Sec. 3 of Indian Evidence Act 187 2.³Any deed or writing or inscription that furnishesevidence´



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OBJECT OF

DOCUMENTATIONAcknowledgement of debt by Borrower.To sue the Borrower Clarity of contract.To realized the security charges

Audit purpose



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IMPORTANCE OFDOCUMENTATION FOR

BANKERSIdentification of Borrower.Identification of security

Creation of charge on securitySettlement of terms & conditionsPeriod of LimitationEvidence of TransactionPrevention of fresh charge on securityFiling of suit & enforcing claims.Safety of Banks fund.



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PURPOSE OF

DOCUMENTATIONLegal capacity to execute the documents.In the prescribe form of the Bank Properly StampedProperly witnessed if required.

Registration of documents.



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TYPES OF DOCUMENTSAuxiliary Document-Supplementary tomain documentPrimary document- right to recover theamountSecurity Document- charging propertyComposite Document-vehicle loanagreement



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Secured Advances :

Cardinal principle of sound banking is toensure safety of funds lent by banker to hiscustomers.

The banker therefore relies on primarily onthe 3 C¶s of borrower.

Secured advances are those advances which

provide absolute safety to the banker in meansof charge created on the tangible assets of the

borrower in favor of the banker.



Mo des of creating charge :- Lien -

Section 171 of the Indian Contract Actconfers the right of general lien on the

banker.

The banker is empowered to secure allsecurities of the customers, in result of the general balance due from him.

The ownership of stock securing is nottransferred from the customer to the

banker.



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N egative Lien :

The borrower gives a declaration to the banker that his assets mentioned therein are free fromany charge or encumbrance.

He also gives an undertaking that he shall notcreate any charge or dispose them off without

permission of the banker.

The borrower cannot dispose of the assets or create any charge there on without the consent of the banker.



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P LEDGE :

Sec. 17 2 of the Indian Contract Act ± 187 2 defines pledge as µbailment of goods as securityfor payment of debt or performance of a promise.

The person who offer security is called ± PLEDGER To whom it is offered is called ± PLEDGEE



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HYPOTH ECA TION :

Which is another method of creating charge over the movable assets, neither ownership nor

possession of goods is transferred to the creditors

but an equitable charge is created in favour of thelatter.

The banks retain in the possession of the borrower, who bind himself under an agreement,to give the possessions of the goods to the

banker, where the banks require to do.



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M ORT GAGE :

Sec. 5 8 of the transfer of property Act 188 2 definesmortgage as ± The transfer of an interest in specific immovable

property for the purpose of securing the payment of money, advanced or to be advanced by way of loans,

an existing or future debt, or the performance of anengagement which may give rise to a pecuniaryliability.

In this case transfer is called³ M ORT GAG OR´

Transferee is called ± ³ M ORT GAGEE ´

Principle money & Int. thereon is called ± ³ M ORT GAGE M ON E Y´

Instrument is called ± ³ M ORT GAGE

DEED ´.



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F OR M S O F M ORT GAGE :

Simple Mortgage

Mortgage by condition sale

Usufructury Mortgage

English Mortgage

Mortgage by deposit of title deed

or equitable mortgage

Anomalous mortgage



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ADMISSIBILITY OF DOCUMENTSAS AN EVIDENCE

Wording-Printed form,ink,single sitting.Stamping-Instruments are stamped,a)Adhesive,b )Special Adhesive impressedstamps.

Execution-Type of borrower, Minor,illiterate, HUFAttestation- Assignment,mortgage,willRegistration- 4 months mortage, 30 daysregistrationLimitation- 3 years from death of

borrower,member,nominal member,1 2 yearsimmovable propertyDocument Execution register.



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Nature OF Documents to be

obtained from borrower Constitution of Borrower ±Individual,joint,sole

proprietor,firm,trust,society.

Nature of advance ± term loan,cash-credit,demand loan,TOD.

Nature of security ±Tangible,intangible,personal.

Type of charge ± pledge,hypothecation,mortgage.



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GOOD APPRAISAL + BADDOCUMENTATION = BAD ASSETS.

BAD APPRAISAL + GOODDOCUMENTATION = BAD ASSETS.

GOOD APPRAISAL +GOODDOCUMENTATION =GOOD OR

STRONG ASSETS.



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SCHDULED OF STAMPDUTY IN MAHARASHTRA

(w.e.f. 7. 5 .2005 )Affidavit- 100.00

Indemnity Bond - 200.00Power of Attorney ± 100.00Redemption deed ± 200.00Bank Guarantee ± 100.00

Counter Guarantee ± 300.00



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THANK YOU

FOR PATIENT LISTENING