oriental bank of commerce project udbhav bank of commerce – project udbhav guiding document for...

MSME Guiding Document version 1.0 | Confidential |

Oriental Bank of Commerce –

Project Udbhav

Guiding document for MSME

Vertical

Oriental Bank of Commerce

MSME Guiding Document version 1.0 | Confidential

Contents 1. Glossary of terms ...................................................................................................................... 4

2. Scope of the guiding document ................................................................................................ 5

3. Overview of the overall organization structure ........................................................................ 6

3.1. Principles of the design ......................................................................................................... 6

3.1.1. Clusters ................................................................................................................................. 6

3.1.2. Cluster Monitoring Offices (CMOs) ....................................................................................... 7

3.2. Organization structure ........................................................................................................... 8

4. Overview of structure, processes and roles in MSME vertical ............................................. 14

4.1. Organization structure and roles ......................................................................................... 14

4.1.1. Head Office ......................................................................................................................... 14

4.1.2. Cluster Monitoring Office (CMO) ........................................................................................ 15

4.1.3. Cluster ................................................................................................................................. 16

4.1.4. Role of branches with respect to MSME vertical ................................................................ 18

4.2. Process work-flow in MSME vertical ................................................................................... 19

4.2.1. Sourcing .............................................................................................................................. 19

4.2.2. Processing........................................................................................................................... 20

4.2.3. Sanctioning ......................................................................................................................... 23

4.2.4. Execution of the sanction .................................................................................................... 24

4.2.5. Disbursement ...................................................................................................................... 25

4.2.6. Post Sanction ...................................................................................................................... 27

4.2.7. Collection and Monitoring ................................................................................................... 28

4.2.8. Account Closure .................................................................................................................. 30

4.2.9. Reporting System ............................................................................................................... 31

4.2.10. Collection of Charges .......................................................................................................... 31

4.2.11. Processing of service requests post disbursement ............................................................ 31

4.2.12. Deviations............................................................................................................................ 32

4.2.13. OGC/OKGC above branch limits and other agriculture loans ........................................... 32

4.3. Comparison of existing and proposed role ......................................................................... 33

4.4. Touchpoints for the customer and external linkages .......................................................... 34



4.5. Role Description .................................................................................................................. 35

4.5.1. Cluster Head ....................................................................................................................... 35

4.5.2. Relationship Manager ......................................................................................................... 36

4.5.3. Sales ................................................................................................................................... 37

4.5.4. Operations ........................................................................................................................... 38

4.5.5. Cluster Monitoring Head ..................................................................................................... 39

4.5.6. Operations and Collections Manager ................................................................................. 40

5. 30-day roll-out plan .................................................................................................................. 41

6. Frequently Asked Questions (FAQs) ...................................................................................... 43

7. Notes ............................................................................................ Error! Bookmark not defined.



1. Glossary of terms

Abbreviation Full form

ASF Annual Service Fee

BCC Branch Certificate of Compliance

CERSAI Central Registry of Securitization Asset Reconstruction and Security

CGTMSE Credit Guarantee Fund Trust For Micro and Small Enterprises

CIR Credit Information Report

CMO Cluster Monitoring Office

CRG Customer Relations Group

DP Drawing Power

ECS Electronic Clearing Service

JLA Joint Lending Arrangements

LC Letter of Credit

LRM Loan Review Mechanism

MOR Monitoring Officer’s Report

NACH National Automated Clearing House

NOC No Objection Certificate

OSV Original Seen and Verified

QIS Quarterly Information System

RBS Risk Based Supervision

RI Regional Inspectorate



2. Scope of the guiding document

This guiding document is intended as an interim pre-read document for the

workshop on July 4, 2016, and describes the new organization structure and

operating model for the MSME vertical. The new organization structure and

operating model for the organization will be rolled out for Wave 1 branches

effective July 11 2016.This document has been developed by BCG, Team

Udbhav and the MSME vertical.

The document maps the activities required to be undertaken for lending a

commercial loan, to the new organization structure detailing the different

stakeholders across the workflow. Kindly read this document in conjunction with

the Advance Manual (Volume 1, 2 and 3) and the Loan Policy Document and any

other amendments as released by the bank.

The document begins with an overall explanation of the new vertical organization

structure and introduces two new business units viz. Cluster Monitoring Office

(CMO) and Clusters, in place of the erstwhile geography based Regional Office

(RO) structure. In addition, this section also covers a brief description of all the

verticals in the organization.

The next section details out the organization structure of the MSME vertical and

different roles at HO, CMO and cluster level. The section details the process flow

to highlight new role boundaries and handoffs. Dependencies on other

departments have also been highlighted. The Key Responsibility Areas (KRAs) of

the new roles introduced at different levels in the vertical are detailed along with

their KPIs.

The penultimate section has an indicative list of activities spread over the first 30

days for employees in their new roles to facilitate easy transition. This is followed

by the last section, which lists answers to a few frequently asked questions.

In addition to this guiding document, following documents will be circulated

separately

Mapping of branches to clusters

Mapping of clusters to CMOs

Delegation of authority



3. Overview of the overall organization structure

3.1. Principles of the design

The bank’s new organization structure is based on the principle of functional

specialization instead of geography driven approach. In the new structure, two

new entities – Clusters and Cluster Monitoring Offices (CMOs) are introduced

and Regional Office structure has been discontinued. The new operating unit

structure is outlined in the figure below.

Fig 1: New organization structure based on vertical functions

3.1.1. Clusters

Clusters will take over business vertical specific activities from branches.

For example, in case of MSME lending business, clusters will be

responsible for sourcing leads from non-branch customers; processing,

sanctioning and monitoring of loans.

Branches will now be responsible for sourcing business from walk-in

customers and coordinating with clusters on a few operational activities

such as loan agreement execution and day-to-day transaction support

1,754 branches, called Udbhav Branches, are mapped to clusters though

there is no reporting line between branches and clusters.

There are 81 distinct clusters each for MSME, Retail Assets Group,



Customer Relations Group (CRG) and Recovery verticals

There are 34 clusters each for Information Technology (IT), and ADC &

COPEC verticals

3.1.2. Cluster Monitoring Offices (CMOs)

CMOs monitor clusters for respective verticals, and drive CMO-level

business and relationships

CMOs do not have any sanctioning authority; all sanctioning to happen at

either branches, clusters or head office depending on delegation of powers

Clusters in each vertical are mapped to CMOs for the vertical and there is

no overall CMO Head

CMO Head for Branch Banking vertical will be responsible for coordination

across different verticals for cross-sell, relationship management and HR

meetings

10 CMOs are created across India:

Fig 2:Cluster Monitoring Offices spread across India

o Eastern and Central UP (Uttar Pradesh)

o Eastern India

o Haryana

o NCR



o Punjab & HP (Himachal Pradesh)

o Punjab & JK (Jammu and Kashmir)

o Rajasthan & MP (Madhya Pradesh)

o Southern India

o UP & UK (Uttar Pradesh and Uttarakhand)

o Western India

3.2. Organization structure

New organization structure constitutes of 22 verticals:

Business functions

o Large Corporate business (LCB)

o Mid Corporate business (MCB)

o Retail Assets Group (RAG)

o Customer Relations Group (CRG)

o MSME

o Agriculture and RD&PS

o Branch Business

o Resolution, Recovery and Law

o Treasury, IBD and MBD

o Classic Branches (detailed subsequently)

Support functions

o Project Udbhav

o IT

o Services, Security and Rajbhasa

o ADC and COPEC

o Human Resources

o Learning

Control Functions

o Inspection and Control

o Risk Management

o Compliance and RBS

o CS&P and MIS

o CFO and Accounts

o SLBC and Central Government



Fig 3: New organization consists of 22 groups

Each of the verticals is to have a clearly defined role and team. Salient

activities of these verticals are outlined below:

Large Corporate business (LCB), this vertical is responsible for:

o Driving advances more than Rs. 50 Cr

o Handling business from 5 core LCB branches, which work directly with

HO, and LCB business from other branches

o 5 core branches include - Hyderabad, Jubilee Hills (SOL 1110);

Chennai, RK Salai (SOL 1043); Mumbai, LCB (SOL 902); Kolkata, LCB

(SOL 171) and New Delhi, E-block Connaught Place (SOL 7)

Mid Corporate business (MCB), this vertical is responsible for:

o Driving advances above Rs. 10 Cr. and up to Rs. 50 Cr.

o Handling business from 42 core branches, which work directly with HO,

and MCB business from other branches

Retail Assets Group (RAG), this vertical is responsible for:

o Driving and monitoring retail advances through 81 clusters formed

across the country

o Sourcing from tie-ups such as dealers, builders, etc.

Customer Relations Group (CRG), this vertical is responsible for:

o Driving institutional CASA business such as state government,



societies, salary accounts, etc.

o Driving cross-sell advances and fee products to institutional CASA

customers

o Managing local relationships through 81 clusters

o Conducting Publicity and PR activities

Micro, Small and Medium Enterprises (MSME), this vertical is responsible

for:

o Driving commercial loans up to Rs. 10 Cr., through 81 clusters across

India

o Processing of LCB and MCB files in non-LCB / MCB branch locations

o Processing and sanctioning commercial Agriculture and RD&PS loans

such as food processing units

o Processing and sanctioning retail agriculture loans (e.g. OGC, OKGC)

beyond the sanctioning powers of the branches

o The scope of this vertical may not include priority sector lending as per

the RBI definition; the scope is defined in terms of loan value

Agriculture and RD&PS, this vertical is responsible for:

o Handling retail agriculture advances such as OGC, OKGC, etc.

o Agriculture loan officers are co-located with MSME cluster

Branch Business, this vertical is responsible for:

o Driving retail CASA, Third Party Product (TPP) sales and managing

support operations such as currency chest, CASA account opening

back-office, customer care, complaints, DEAF, etc.

o Prospecting advances customers and referring to respective verticals

Resolution, Recovery and Law, this vertical is responsible for:

o Driving NPA recovery and resolution across all verticals

o Managing legal proceedings in NPA cases

Treasury, IBD and MBD (operations), this vertical is responsible for:

o Maintaining SLR, CRR, Investments and Fund Management

o Handling treasury dealing room operations

o Handling forex policy formulation, forex operations and forex support to

branches

Classic branches:

o 545 branches are not mapped to vertical clusters, due to distance and

small size constraints, and function independently under Classic

Branches vertical

o These branches and vertical continue to function as per the old system

and focus on all advances and deposits business based in their

geographical location, reporting to 10 CMOs they are mapped to



o Such branches constitute less than 15% of the bank’s business

Fig 4: Business group consists of 10 verticals

Fig 5: Support group consists of 6 verticals



Fig 6: Control group consists of 6 verticals

Fig 7: Summary of all 22 verticals in the new structure



4. Overview of structure, processes and roles in MSME vertical

4.1. Organization structure and roles

MSME vertical drives commercial loans up to Rs. 10 Cr., through 81 clusters

across India. The scope of this vertical may not include priority sector lending

as per the RBI definition. The scope is defined in terms of loan value.

Additionally MSME vertical processes LCB and MCB files flowing from non-

LCB / MCB branch locations. This also includes commercial agriculture and

RD&PS loans such as food processing units.

MSME vertical also processes and sanctions retail agriculture loans (e.g.

OGC, OKGC) beyond the sanctioning powers of the branches.

The following schematic gives an overview of the MSME vertical organization

structure.

Fig 8: Overview of MSME organization structure

4.1.1. Head Office

The figure below illustrates the overall structure at HO–



Fig 9: Overview of MSME organization structure at HO

GM-MSME at head office responsible for driving overall business and

growth of this segment for OBC

o Monitor and co-ordinate with Cluster Monitoring Head of MSME

Head of Product and Strategy at head office responsible for -

o Designing new products/schemes

o Creating strategy, design and implementation of new initiatives

o Conducting competitive benchmarking

o Managing credit policy along with risk management

o Conducting IT requirement analysis

Head of Credit at head office responsible for -

o Processing cases escalated to HO e.g. deviations, restricted area files

o Processing proposals less than Rs. 10 Cr for MCB, LCB accounts

4.1.2. Cluster Monitoring Office (CMO)

The following figure illustrates the overall structure at a CMO -



Fig 10: Overview of MSME organization structure at cluster monitoring office

MSME Head (DGM) posted at CMO responsible for driving overall growth

of MSME business and target setting for clusters. Sourcing prospective

MCB and LCB customers will also be an additional responsibility entrusted

to the CMO Head. The Cluster Monitoring Head (MSME) shall work in

coordination with the Cluster Monitoring Head (Branch Business) to

allocate and monitor targets of branches with respect to MSME portfolio

Operations and Collections Manager at CMO responsible for -

o Liaising with other verticals e.g. Inspection and Control, Risk

Management

o Monitoring collections at each cluster

4.1.3. Cluster

The following figure illustrates the overall structure at a cluster -

MSME Cluster Head (AGM) posted at cluster office responsible for driving

overall MSME growth at the cluster and sanctioning credit proposals

One/two sales officers responsible for sourcing MSME leads

Processing team consisting of officers of Scale-II/III/IV responsible for

doing all pre-sanction formalities, preparation of process notes and small

ticket loan sanction(if required)



Operation team consisting of officers of Scale-I/II responsible for post-

sanction formalities, disbursement

Fig 11: Overview of teams within a typical MSME cluster

The figure above summarizes various roles within the cluster. Detailed

responsibilities of cluster constituents are described below -

Cluster Head

Strategize and plan to achieve projected MSME targets

Manage cluster performance and overall credit quality of portfolio

Pursue important leads along with sales team to drive overall growth

Sanction/renew/review credit facilities flowing through cluster

Monitor teams working under him i.e. sales team, relationship managers

and operations team

Restructuring cases of MSME credit facilities up to assigned delegated

power of cluster head

Attend meetings of consortium accounts / multiple banking accounts / Joint

Lending Agreement (JLA) / syndication accounts if any within the cluster.



Sales Team

Generate / source leads within geographical area assigned to cluster -

make telephone calls, in-person visits and presentations to existing and

prospective customers

Research sources for developing prospective customers and determine

potential

Conduct initial prospecting and customer meetings

Identify advantages of OBC products over competitors

Operationalize tie-ups with corporate for financing ancillaries

Participate in trade shows and conventions

Relationship Manager (RM)

Scrutinize sourced proposals (from branch/cluster)

Conduct pre-sanction visit, due diligence, verification of securities

Generate Credit Information Reports and internal ratings

Obtain valuation report and Non-Encumbrance Certificate(NEC)/ legal

opinion from empanelled professionals/ agencies

Prepare LF-81, LF-82A, LF-82as the case may be(credit appraisal note)

RM (CM)to sanction renewal cases less than Rs. 1 Cr. (if required)

Maintain records of sanction/rejection of proposals

Prepare process notes for restructuring under the delegated power of

cluster head

Cross-sell of retail assets, institutional CASA, TPP. Provide leads to

respective cluster office

Operations Team

Execution/vetting of documents (co-ordination with branch) and ensuring

compliance of terms & conditions of sanction – BCC, MOR, QIS

Loan account opening and disbursement

Post-sanction formalities e.g. ensure end use of funds, post-sanction visits

Audit support and rectification

Feeding Stock statements in Finacle

Marking Drawing Power

Allowing over limit against clearing

4.1.4. Role of branches with respect to MSME vertical

Branches shall be responsible for sourcing MSME business from walk-in

customers and referrals. The branches shall discuss the requirements of



the customer and explain the product features to prospective borrowers.

The branches will collect loan application forms and other related

documents as per the list for the particular scheme/product and forward

the same to the relationship manager. While forwarding the credit

proposal, the branch shall ensure that the application form is duly filled in

and accompanied by all related documents as per scheme guidelines.

The branch shall verify the KYC documents with original documents and

stamp OSV. Ensuring compliance of KYC norms shall be responsibility of

the branch.

Branches shall not reject any credit proposal because of any

deviation/relaxation sought by the prospective borrower from the extant

guidelines. The MSME cluster shall deal the request for

deviation/relaxation.

The relationship manager shall communicate the sanction to the branch.

Branches shall continue to service routine transactions such as cash

deposit, cheque and statement generation. However, all other services

requested like renewals, enhancements, partial disbursement, issuance of

NOC shall be forwarded by the branch to the relationship manager.

All the MUDRA Loans, PMEGP, Start up India, Stand up India and other

Government sponsored cases shall be dealt at MSME Cluster office.

OD to PMJDY in eligible PMJDY accounts shall be dealt at MSME Cluster

office only.

4.2. Process work-flow in MSME vertical

4.2.1. Sourcing

Sourcing of MSME business shall be done by branches (walk-in) or cluster

sales officer/s (outbound leads). The branch/ cluster sale officer/s shall

discuss requirements of funding/required credit facilities of the customer

and explain the product features of the applicable scheme to the

prospective borrowers.

After having the proposal discussion with the customer, the branch/cluster-

sales officer/s shall collect all the required documents for sanction of credit

facilities and get the application form (LF1, LF4) duly filled by the

customer. The same shall be fed in the Proposal Tracking System(PTS)

and the performance will be tracked on this.

If the cluster sales team is involved in getting the final application filled

along with the supporting documents then the credit will be given to the

cluster sales team.



The same is true for walk-in customers at branch where the branch

manager will get credit only if the application and documents are submitted

by the branch manager. If more documents are required during

processing, the final submitter will be responsible for arranging the same

The branch/ cluster sale officer/s shall verify the KYC documents with the

original documents and stamp OSV. Compliance of KYC norms shall be

responsibility of the Branch/ Cluster Sale officer/s

The Branch/ Cluster Sale officer/s shall submit the duly filled application

form along with the documents and checklist to cluster office

The following figure summarizes the key steps in the sourcing process -

Fig 12: MSME loan process flow – Sourcing

4.2.2. Processing

Fig 13: MSME loan process flow – Processing



The figure above summarizes the key steps during processing of the note

which is also detailed below -

The RM at the cluster office shall acknowledge the application received

from the Branch/Cluster Sales officer/s and scrutinize the loan application

form for ensuring that the documents are complete in all respects.

In case any document is missing, information incomplete or any other

discrepancy - RM shall collect relevant missing information/ documents

from the Branch/ Cluster Sale officer/s who has submitted the proposal

RM shall check Credit Information Report (CIR) provided by the Credit

Information Companies (CICs)

In case of mortgage backed credit facilities, the RM shall search the details

of the property proposed to be mortgaged on the CERSAI portal for

ensuring that the property is free from all encumbrances.

Further, the RM shall carry out in-depth study of the property documents

like title deeds/allotment letter/leasehold letters etc. and entrust the job of

issuance of Non-Encumbrance Certificate (NEC)/Legal Opinion and

Valuation Report to the Advocate and Valuer respectively on the panel of

the cluster

o The cluster shall have at least seven or eight empanelled advocates

and similar number of valuers approved by CMO / cluster office on its

panel to issue NEC and Valuation Report. The assigned advocate and



valuer will be required to visit the cluster to collect papers and submit

the report thereafter. The advocate will be required to submit the NEC

within four working days. Similarly, the valuer will have to submit the

valuation report as per the bank prescribed format within two working

days from collection of papers from the cluster

The RM will carry out pre-sanction visit(s), run a due diligence and shall

verify the property for its marketability and realizable value. During the

visit, the RM will ascertain the sale price/realizable value of similar

house/flat/plot from the market/ nearby areas and shall ensure that the

value of property as assessed by the valuer is in accordance with the rates

prevailing in the area

o As there are a number of frauds taking place because of forged title

deeds/stamp papers, the RM shall exercise utmost care to mitigate

frauds. The RM shall ensure meticulous compliance of all guidelines

issued by the bank for prevention of frauds.

The RM will carry out/initiate an Internal Credit Risk Rating in IMAC of the

borrower and shall forward the same to the RMD vertical at the respective

cluster monitoring office.

After having conducted legal formalities, verified realizable value of

property, personal verification and credit-worthiness of prospective

borrower, the RM will prepare a credit process note (LF 81, LF 82A, LF 82)

on the basis of guidelines issued by the bank and place the same along

with his views/ recommendation before the sanctioning authority for

sanction / rejection of proposal. For Mudra loans, refer circular No. HO:RD

& PS:48:2015-16:453 and other amendments issued by the bank

Any ad-hoc limit requested by the client from time to time shall be taken

care by the RM at cluster (Refer Para 11 of Loan Policy and subsequent

amendments)

All consortium / multiple banking meetings shall be attended either by

cluster head or RM

The cluster head shall look after day to day requirements of over limit,

cheque purchase, allowing over limit in co-ordination with respective RMs.

RMs shall be responsible for pre-sanction visits, internal ratings, credit

appraisals and recommend the same for sanction to cluster head (same

role as for a fresh proposal)

MCB business from non-MCB branch locations will be processed by the

MSME cluster. For such cases, MSME cluster will process the note and

send it to MCB vertical at HO for sanctioning.

For LCB proposals in non-LCB locations, it will be first directed to a LCB



branch or a MCB branch if it falls within the same city geographical area

else it will be processed by the MSME cluster and then sent to LCB

vertical at HO for sanctioning

4.2.3. Sanctioning

The sanctioning authority i.e. Cluster Head (AGM) or RM (CM) shall

scrutinize the process note and accordingly approve/reject the credit

proposal depending upon the merits of the case. The senior most RM will

have the power to sanction renewal cases of up to Rs. 1 Cr. In case of

credit proposals falling beyond the delegation of authority of the

sanctioning authority at the cluster office i.e. restructuring cases/

deviations/ concessions / group accounts, the credit proposal shall be sent

to vertical head at HO of MSME.

The Risk Manager from Risk Management vertical situated at cluster

monitoring office shall sanction the Internal Credit Risk Rating of the

borrower in the system

The following figure summarizes the process flow during sanctioning -

Fig 14: MSME loan process flow – Sanctioning

On approval by the sanctioning authority, sanction/rejection letter shall be



issued to the branch/cluster operations team/RM. The RM shall

subsequently communicate the terms of sanction to the borrower

The RM shall send the sanction letter to the disbursing branch and inform

the operation officers at the cluster and also provide a checklist of loaning

documents to be executed from the borrower

The RM is also responsible for renewal, enhancement of working capital

facilities and review of term loans. They shall compile the proposal for

renewal/ enhancement/review and collect all the required documents from

the customer and conduct KYC, due diligence, visits, and submit the

renewal/enhancement/review proposal to cluster for sanction

Execution of the sanction

The following figure summarizes the process flow during execution of

documents -

Fig 15: MSME loan process flow – Execution

On receipt of the sanction letter, the branch/RM shall contact the customer

and request him/her to visit the branch for completion of documentation

formalities and disbursement of credit facility thereafter. If the customer is

required to bring additional documents, he/ she will be informed

accordingly by branch/RM.



The cluster operations team shall prepare and send the complete set of

documents (after duly filling in all the required information in the

documents) to be executed by the borrower at the branch. The set of

documents being sent to the branch office shall be accompanied by a

covering letter specifically delineating the details of all the documents to be

executed by the borrower and instructions to branch manager for

signatures, document collection, etc. Cluster operations team shall visit the

branch if need be.

The cluster operations team should ensure that all pre-disbursement

conditions have been complied with.

The branch shall obtain ECS/NACH/Standing Instructions mandate from

the customer at the time of execution of the documents.

In case of mortgage backed credit facilities, the mortgage shall be created

at the branch and the mortgage register (Recital of Title Deeds) shall be

maintained by the branch. Before creation of the mortgage, cluster

operations shall check on the Central Registry (CERSAI) that the property

being mortgaged is free from all encumbrances.

The registration of security interest pertaining to immovable, movable and

intangible assets on Central Registry (CERSAI) shall be done by the

cluster operations team subsequent to creation of charge on the security

If the documents are to be vetted by Local Legal Counsel then the branch

shall get loan documents vetted from the appropriate authority in co-

ordination with cluster operations. (For Vetting Circular

No.HO/RMD/21/2016-17/241 Dated 30.06.2016).

The vetting of loan documents is the also the accountability of cluster

operations if the documents are to be vetted by Legal Retainer / Legal

Officer. Subsequently the branch shall send the original loan

documents/property documents, CERSAI report, copy of recital register of

the Title Deeds and vetting certificate to the cluster office for storage. The

cluster operations team shall be responsible for the safe custody of the

documents

4.2.4. Disbursement

The cluster operations team shall open the loan account in CRISMAC

(within 1 working day) system after ensuring that the documents have

been duly executed and vetted

Branch shall make disbursement in line with the instructions provided by

the cluster operations team. In cases that involve multiple partial

disbursements, the borrower shall make a request to the RM along with



the relevant information/papers. The RM shall in turn forward the request

for partial disbursement to cluster operation. After scrutinizing the request

for partial disbursement, operations in consultation with RM shall direct the

branch to make the partial disbursement.

The operation team shall open the Loan account after entering in to the

Sol of the respective branch.

Loan shall be disbursed at the branch as per instruction given by operation

team of MSME. Two vouchers shall be prepared by the Branch original

shall be sent to cluster office (which shall be kept with loaning documents)

and duplicate copy of the same shall be kept in the branch along with

vouchers.

Loans shall be booked in branch SOLs. If a branch has sourced the

proposal then the loan shall be booked in the same branch. If the proposal

is sourced by cluster sales team then the loan shall be booked in the

branch of customer’s choice within the cluster

The following figure summarizes key activities during disbursement and post

sanction-

Fig 16: MSME loan process flow – Disbursement, Post Sanction



4.2.5. Post Sanction

The operations team shall ensure that the asset financed by the Bank (if

any) is adequately insured. The operations team shall also obtain the

insurance certificate and ensure that the details with regard to insurance

are fed into the system (Finacle).

The operations team shall prepare the Branch Certificate of Compliance

(BCC) which shall be cleared by the sanctioning authority (Refer Para 15.3

of Loan Policy)

The operations team shall be responsible for carrying out post sanction

visits as per the bank’s extant guidelines (Refer Para 15.4 of Loan Policy)

RM, in close co-ordination with the operations team, shall ensure overall

health of the account (Refer Para 16 of Loan Policy) and rectify all audit

observations observed by different auditors

The cluster operations team in co-ordination with the branch shall ensure

that the Balance Confirmation/Letter of Revival has been obtained as per

the bank’s extant guidelines

Cluster operations shall be responsible for all post-sanction formalities

which includes monitoring end use of funds / post-sanction visits/

monitoring of conduct of accounts etc.(Refer Para 15,15.4 of Loan Policy)

under the guidance of the RM

The Operations team shall prepare MOR (Refer Para 15.7 of Loan

Policy)and compile QIS (Refer Para 15.8 of Loan Policy) whenever

required

The Operations team shall prepare monthly statements e.g. generation of

STM-41 and shall send to the respective cluster monitoring office

As per sanction terms, all the original invoices / bills / receipts shall be

obtained by cluster operations and be kept on record

Cluster operations shall feed Stock statements in the system (Finacle) to

allow DP

Cluster operations shall enter CERSAI before release of the sanctioned

credit facility

Cluster operations shall also be responsible for Charge with ROC (Refer

Advances Manual-II)

Wherever further disbursement is required by the borrower, the request

will be either received by the cluster operations team / or at the respective

branch.

Cluster operations shall conduct Stock audits (Refer Para 15.9 of Loan

Policy)



All other audits shall also be conducted by operations in co-ordination with

the audit team. Observations of these audit reports shall also get rectified

by operations

Sharing of information on quarterly basis in case of consortium / multiple

banking cases shall be the responsibility of operations team at cluster

(Refer Para 13.5 of Loan Policy)

LRM of all eligible accounts shall be conducted by the

Inspection team at cluster monitoring office and observation(s) of the same

shall be rectified by the operations team at cluster (Refer Para 12.10 of

Loan Policy)

CGTMSE guarantee coverage, sending ASF and correspondence

thereafter shall be the responsibility of the operations team

Bill purchased under LC shall be dealt by cluster head(along with

respective RM)

All non-forex non-fund business shall also be dealt by cluster operations

e.g. opening of BGs / LCs as under:-

If any request of LCs / BGs received at the branch the same

shall be immediately sent to cluster office along with the

guarantee bonds.

All the loaning documents, if any shall be obtained at Branch as

per the instruction given by the cluster office.

After opening of BGs in the system the original Bond /

documents of BGs shall be directly sent to beneficiary and other

copy of the same shall be sent to respective departments as well

as applicant as per system in-vouge. However in case of LCs

the same be fed in through SFMS.

The confirmation of BGs shall be done at CMO-MSME and

confirmation of LCs shall be done through SFMS.

All the required registers i.e. Insurance register, D.P. register, Limitation

register, documents register, higher officials visit register shall be

maintained at the cluster office

4.2.6. Collection and Monitoring

The following figure summarizes key activities during disbursement and post

sanction-

Fig 17: MSME loan process flow – Monitoring



Operations team shall monitor accounts and shall track all borrowal

accounts to ensure that repayment is being made as per schedule (Refer

Para 16 of Loan Policy)

RM shall contact borrowers whose accounts are classified as SMA-0, 1

and 2 and persuade them for regularization. RM shall contact the customer

through phone call, overdue notice and personal visit

The operations team shall be responsible for handing over the borrowal

account to the Cluster Office-Recovery, Resolution & Law Head as and

when the account is classified as a Non-Performing Asset (NPA)

The following figure detail so the responsibilities during monitoring and

collections -



Fig 18: MSME loan process flow – Monitoring, Collections

4.2.7. Account Closure

The following figure details the account closure process -

Fig 19: MSME loan process flow – Account closure



Request for closure of the credit facility shall be received and processed

by the cluster operations team. The loan account in the system shall be

closed and ‘No-Objection Certificate (NOC)’ be issued to the borrowers. In

case of mortgage backed credit facilities, the credit facility shall be closed

and cluster operations shall co-ordinate handover of the original property

documents with the branch

4.2.8. Reporting System

Credit proposals sanctioned by the cluster shall be reported in the monthly

statement of Regular Advances Sanctioned i.e. STM-41 by operations

team

4.2.9. Collection of Charges

The operations team shall be responsible for recovery of the charges for

checking Central Registry (CERSAI) at the time of creation of mortgage

and registration of Security Interest pertaining to the immovable, movable

and intangible assets

All other charges shall be recovered by the Branch but the same shall be

ensured by the operations team

4.2.10. Processing of service requests post disbursement

The branches shall provide all information with respect to the specific



credit facility including statement of account, interest certificate etc. to the

borrower

Fig 20: MSME loan process flow – On-going activities

4.2.11. Deviations

In case of high value loans/deviations/ restricted area that do not fall under

the delegation of authority of cluster head, credit proposals shall be sent to

Head Office at MSME. Takeover of any credit facility from a different bank

shall be guided by bank/RBI takeover guidelines (Circular No.

HO/RMD/57/2014-15/655 dated 13.11.2014)

4.2.12. OGC/OKGC above branch limits and other agriculture loans

Agriculture officer co-located at MSME cluster shall be responsible for

processing. The officer shall place the proposal for sanction either to the

CM (for loans < Rs.1 Cr.) or to the cluster head



4.3. Comparison of existing and proposed role

The following table summarizes key differences with the existing process –

S. No Activity Existing Stakeholder Proposed Stakeholder

1. Sales/Marketing Branch Sales Team(outbound)/

Branch(walk-in)

2. Pre-sanction due diligence, internal rating

Branch Relationship Manager at

MSME cluster office

3. Preparation of credit process note

Branch Relationship Manager at

MSME cluster office

4. Loan account opening Branch Operations at MSME

cluster office

5. Compliance of all sanction terms

Branch Operations at MSME

cluster office

6. Documentation Branch Operations at MSME

cluster office

7. Vetting of documents, preparation of BCC


cluster office

8. Account closure Branch Operations at MSME

cluster office

9. Conducting audits and rectification


cluster office

10.

Recovery process e.g. serving of SARFAESI notices, attending DRT, Lok Adalat etc.

Branch Recovery vertical



4.4. Touch points for the customer and external linkages

The customer will liaise with the branch and RM during the loan lifecycle.

Fig 21: Customer touch points in the new process

The following figure illustrates linkages to other verticals for MSME

Fig 22: External linkages to other verticals



4.5. Role Description

The following section should be read in conjunction with the process flow.

4.5.1. Cluster Head

Review Authority: Cluster Monitoring Head, MSME

Direct Reports: Operations Team, Sales Team and Relationship Managers

Key Responsibility Areas


Individual

Driving MSME business at cluster

Formulate cluster strategy and annual operating plan e.g. target setting of RMs

Sanction loans routed through the cluster in a timely manner

Manage overall operating and credit risks: o Pre-emptively identify and manage risks and define

mitigation approach o Escalate exceptions in a timely manner e.g. deviations

Supervision Monitor cluster team for smooth functioning

Monitor performance of the cluster and productivity of its resources

Key Performance Metrics

Metrics Units

B ud

ge

ta ry

Yield on advances %



Non-interest income %

% GNPA %

Fresh slippage % of accounts, % of value

Growth in advances %

Value of loans originated Rs.

Value of loans sanctioned Rs.

Disbursement to sanction ratio Number

Regularization of SMA by accounts and value % of accounts, % of value

No

n-

bu

dg

eta

ry Proposals disbursed within defined TAT Number

# of meetings per sales person Number

4.5.2. Relationship Manager

Review Authority: Cluster Head, MSME



Individual

End to end ownership of MSME accounts

Conduct pre-sanction visit, due diligence, verification of securities etc.

Obtain valuation report and NEC/ legal opinion from the empaneled professionals / agencies

Prepare LF-81, LF-82A, LF-82 (credit appraisal note)

RM (Scale 4) to sanction loans (if required)

Cross-sell of retail asset, institutional CASA, TPP

All renewals/ enhancements/ reviews requests

Follow-up on SMA accounts


Metrics Units

Bu

dg

eta

ry Yield on advances %


% GNPA %









No

n-

bu

dg

eta

ry

Proposals disbursed within defined TAT Number

4.5.3. Sales




Individual

Generate/source leads within geographical area assigned to cluster - make telephone calls, in-person visits and presentations to existing and prospective customers

Research sources for developing prospective customers and determine potential

Conduct initial prospecting and customer meetings

Identify advantages of OBC products over competitors

Operationalize tie-ups with corporate for financing ancillaries

Participate in trade shows and conventions


Metrics Units

Bu

dg

eta

ry

Value of loans originated

Rs.

No

n-

bu

dg

eta

ry

# of meetings per sales person Number

# of months for which monthly target is achieved Number



4.5.4. Operations




Individual

Execution/vetting of documents (co-ordination with branch) and ensuring compliance of terms & conditions of sanction – BCC, MOR, QIS

Loan account opening and disbursement

Post-sanction formalities e.g. ensure end use of funds, post-sanction visits

Audit support and rectification

Feed stock statements in system

Mark Drawing Power

Allowing over limit against clearing Send monthly statements like STM-41 to CMO

Opening of LC/BG

Maintaining documents at cluster office


Metrics Units

Bu

dg

eta

ry


No

n-

bu

dg

eta

ry

Proposals disbursed within defined TAT

Number



4.5.5. Cluster Monitoring Head

Review Authority: GM Head Office, MSME

Direct Reports: Cluster Heads, Operations and Collections Manager



Individual

Drive MSME strategy of the bank for the CMO

Drive MSME business within clusters assigned; set targets for each cluster head

Scout for MSME / MCB/LCB leads within area assigned

Conduct meetings with key accounts within cluster (with cluster head)

Manage operating and credit risks: o Pre-emptively identify and manage risks and define mitigation

approach

Monitor SMAs

Supervision

Monitor sanctions conducted at clusters as per bank policies

Overall performance of the territory and the productivity of cluster heads

Conduct training sessions for cluster heads and relationship managers


Metrics Units

Bu

dg

eta

ry

Yield on advances %


% GNPA %







No

n-

bu

dg

eta

ry

Proposals disbursed within defined TAT Number



4.5.6. Operations and Collections Manager

Review Authority: Head, Cluster Monitoring Office, MSME



Individual Liaise with other verticals for operations e.g. Inspection and Control,

Risk Management etc.

Monitor collections within assigned clusters

Supervision NA


Metrics Units

Bu

dg

eta

ry

% GNPA %




5. 30-day roll-out plan

The following figures denote the key activities to be conducted by various

stakeholders over the first 30 days post roll out e.g. all accounts with value

greater than Rs. 50 Lakh to be closed within first 30 days

Fig 23: Key activities as part of roll out plan at HO



Fig 24: Key activities as part of roll out plan at CMO

Fig 25: Key activities as part of roll out plan at Cluster



6. Frequently Asked Questions (FAQs)

Q1) What will be the procedure for Stock Audit / MOR / BCC / LRM

compilation and closure?

The procedure is as shown below:

Stock Audit shall be allocated by the cluster monitoring office and

conducted by the operations team at the cluster and the same shall be

closed post recommendation from the sanctioning authority

MOR is prepared by the operations team and submitted to RM/processing

officer and the same shall be placed before the sanctioning authority for

closure

BCC shall be prepared by the operations team and submitted to

sanctioning authority for clearance

LRM is conducted by I&C vertical at the cluster monitoring office in eligible

credit accounts and the observations of the same shall be rectified by the

operations team

Q2) Where will enhancement in accounts take place for cases where

credit rating is below benchmark level?

Enhancement in accounts where credit rating is below the benchmark level

shall be dealt by MSME department at HO.

Q3) Where will deviations in takeover cases for MSME accounts up to

Rs.10 Crore be looked into?

The deviation in take over cases for MSME cases up to Rs.10 Crore shall be

dealt by MSME department at HO.

Q4) Who will obtain Annexure B1 and B2 in the NEC for mortgage

backed loans?

The RM at the cluster office will be entrusted with the same

Q5) Where will the mortgage register be kept?

Mortgage register is to be kept at the branch with a copy sent to the cluster

office along with other documents

Q6) Who will attend meetings for consortium/ multiple banking

proposals?

The meeting shall be attended by the cluster head along with the respective

RM



Q7) Who is responsible for TOD/against clearing in the new structure?

Against clearing will be allowed in branches whereas discretionary power of

over limit/ ad hoc limit shall rest with the cluster office according to delegation

of powers.

Q8) Where will LCs/BGs at 100% margin be issued?

Issuance of LCs/BGs at 100% margin will be shifted to the cluster.

Q9) Where will loan documents be executed?

Loan documents will be executed at the branch as per the instructions from

the RM/Operations at the cluster office. Branch manager will execute the

document on behalf of the bank as per instruction letter from the cluster

Q10) Who will take care of SLBC/DLCC/BLBC functions and meetings by

district authorities?

The following authorities will take care of this function based on their location:

Cluster Monitoring Head Branch Business

Cluster Head Branch Business

Senior most branch manager in the city

Q11) Who will attend court in case a summon is served on the bank?

The following authorities will take care of this function based on their location:

Cluster Monitoring Head Branch Business

Cluster Head Branch Business

Senior most branch manager in the city

Or

Concerned branch manager on which summon is served

Q12) Who will be the Member Lending Institution (MLI) for CGTMSE?

MSME cluster will be the MLI

Q13) How will inland LC/BG be handled in the new system?

Inland LC/BG shall be sanctioned/issued by the cluster office MSME however



the branch will sign the covering letter and Guarantee Bond (if required) on

the terms that LC/BG has been opened in Finacle by the cluster.

Q14) How will forex LC/BG be handled in the new system?

The AD branch will issue the Forex LC/BG.

Q15) Who will issue the solvency certificate?

MSME cluster will issue the solvency certificate

Q16) How will STM 41,41A, 41B, 41C be handled in the new system?

They will be sent as shown below -

Udbhav branches to Cluster Monitoring Head Branch Business

Classic branches to Cluster Monitoring Head Classic

RAG, MSME Clusters to their Cluster Monitoring Head

MCB to MCB HO

LCB to LCB HO

However since there is no sanctioning power at CMO-MSME hence the

41C of RAG / MSME / Mid Corporate / Large Corporate shall be dealt /

action confirmation at respective department at HO.

Q17) What will be the detailed process be for preparation and clearance

of BCC?

Preparation of BCC by respective processing officer and clearance by

sanctioning authority is shown in the table below –

Preparation Clearance

Classic Branch Loan Officer BM

MCB/LCB Loan Officer MCB/LCB HO

Cluster* Processing Officer

Cluster Head*

Classic Branch Branch Loan Officer

Cluster Monitoring Head Classic Branch

*The BCC of Mid Corporate / Large Corporate accounts shall be cleared at

respective department at HO, only processing of these credit facility shall be

done at CO-MSME.

Q18) How will re-structuring (CDR / SDR) be taken care of in the new

operating model?

In standard accounts, the respective sanctioning authority up to their



delegated sanctioning power will do restructuring and thereafter the file shall

be transferred to Recovery & Resolution department.

Q19) Who will do vetting for different limits?

The documents will be vetted by -

Particulars Documents vetted by

Limits up to Rs1 Cr. Local panel legal counsel

Limits >Rs 1 Cr. and up to Rs 5 Cr.

Legal Retainers of cluster

Limits >Rs 5 Cr Law officer of the bank

Q20) Who will do vetting in take over accounts?

Vetting in case of takeover accounts will be done by -

Particulars Documents vetted by

Limits up to Rs 1 Cr. Legal Retainers of cluster

Limits >Rs 1 Cr. Law officer of the bank

Q21) Which facilities will be exempt from vetting?

The following facilities will be exempt from vetting –

1.1. Loans to staff members (under Staff or General Loans Schemes) which are not secured by immovable property (ies). 1.2. Loan against self-Deposit to an individual. 1.3. Loan against Third Party Deposit to an individual where the Deposit Receipt is also in the name of an individual. 1.4. Loan to individuals against Shares/Bonds /Debentures /Mutual funds, NSC, LIC Policy and other Government securities.



1.5. Purchase of Government cheques, Pay orders, bank draft issued by Scheduled Commercial Banks. 1.6. Occasional cheques purchase and withdrawal against un-cleared instruments/cheques in case of non-borrowal accounts. (In case of borrowal accounts, Occasional cheques purchase and withdrawal against un-cleared instruments/cheques is done within Over Limit and no documentation is done in case of Over Limit.) 1.7. Credit facilities up to ` 10.00 Lacs sanctioned under Government Sponsored Schemes. 1.8. Oriental Green Card (OGC) up to ` 10.00 Lacs.

1.9. Credit facilities covered under Mudra Scheme. 1.10. Credit facilities up to ` 10.00 Lacs sanctioned under Retail Credit

Schemes which are not secured by immovable property (ies).