STAFF ACCOUNTABILITY AND THE POST-SANCTION PROCESS By Viswash Godbole

STAFF ACCOUNTABILITY AND THE POST-SANCTION PROCESS

Introduction: Of late, I am coming across numerous cases where officers are coming into trouble for lapses in the handling of advances which have gone bad – staff accountability studies are being carried out with greater thoroughness and our colleagues are getting hauled up even for unrelated lapses i.e. for mistakes which have had nothing to do with the failure of the advances.

I think it is high time something was done to help the situation. This write-up is a small effort in that direction.

First, I shall explain why I am focusing on advances rather than on any other area of banking.

2. What is the probability that an officer who handles an advance will have to submit an explanation when the advance goes bad ?  It is very high.  This is because the probability of any advance going bad is quite high. If you don’t believe me, please look at your Advances portfolio three years ago and check up the status of the same advances today – you will find that a large number of those advances have turned NPA.

The likelihood of your advance going bad are certainly much higher than that of your passing a forged cheque  or accepting a counterfeit note, which may happen once or twice in your entire assignment at the related desk; also in the Bank’s system, staff accountability is examined in the case of every single advance which turns NPA.

  Consequently, the chances of an officer handling advances being asked an explanation (for an NPA) are much higher than for an officer working in another area such as Accounts or Cash. Such being the situation, how shall we protect ourselves from the adverse consequences of an accountability study ?

3.   Before we go ahead, I would insist that all officers handling advances should make one very important assumption –

THE ADVANCE BEING HANDLED BY ME TODAY IS GOING TO BECOME AN NPA AND ALL ACTIONS TAKEN (OR NOT TAKEN) BY ME IN CONNECTION WITH THIS ADVANCE ARE GOING TO BE QUESTIONED ONE DAY.

Am I being unduly cynical ? I think not.

Please look at paragraph 2 above. Now let us proceed to the main subject matter i.e. how to protect ourselves while dealing with advances.

3.1  For the purpose of our discussion, we may first consider the various stages in the handling of an advance starting from the time the Bank first comes into contact with the prospective borrower viz. the following:

i. Introduction of the intending borrower to the Bank

ii. Appraisal and assessment of his request for credit facilities and submission of proposal to the sanctioning authorities, including preparation of opinion reports, valuation of securities offered and TIR of properties offered for mortgage.

iii. Sanction of the credit facilities

iv. Pre-disbursal formalities such as documentation, mortgage, registration of charge with RoC and with Sub-Registrar etc.

v. Post-disbursal tasks i.e. periodical inspection, calculation of drawing power, analysis of periodical statements from borrowers, obtaining fresh opinion reports, fresh valuations of securities etc.

In the cases of renewal/enhancement of credit facilities granted to units which are already on our books, Step i. would not be there. But the other steps would be there with appropriate changes. The same is the case with accounts which are placed under restructuring.

My experience indicates that most of the lapses for which explanations are asked or disciplinary action initiated in credit-related cases, pertain to the last two stages, which can be called ‘post-sanction processes’.

I have endeavoured to address these issues through write-ups on the subject. But I do feel that such write-ups would be out of place in a Group like the present one, which is concerned more with what is to be done AFTER disciplinary action against an officer gets initiated and not so much with preventive measures.

Those of you who are interested in these write-ups may email me on my personal ID viz.

vw_godbole@yahoo.co.in




30 Important Points Before You Take Charge Of Bank Branch Or Seat ---By Sri Rsghavendra Rao

With fast retirements come fast promotions. These days scale I to II or II to III service period is reduced to 2 years in many banks. In such a short span of time youngsters don’t get much exposure and in many cases officers spend their 2-3 years in one seat only.

In many worst cases which I know new officers spend 1-2 years in cash. When they get promoted they face many issues either handling the branch or a particular seat. Officers fear to take charge of loans seat as they don’t have that much a exposure their seniors who took 5-7 years to take a single promotion.

Managers or officers become personally liable for any lapses of previous incumbent if they don’t report the matter in their joining report or in initial stages of their charge. Now here I present you your rescue points which you should take while taking charge or handling any particular seat.

All officers must read this article from point to point as you may face problems later in your career. 30 important points before you take charge of bank branch or seat -

1) Security items – the very first thing you should check is security items register. Check all Cheque books, FDRs, Demand Drafts. This security must tally with your system reports.

2) Cash balances- physical cash is another important item. Ideally you should check opening cash. Also check ATM cash or any bait money.

3) Check GLB Slip – the first thing you should ask whenever you enter a new branch is GLB slip. Check it head to head. You can easily figure out some discrepancies from GLB itself and ask the present incumbent. You can easily check sundry entries, Remittances, DNR, suspense entries etc.

4) Check loan files – checking all loan files is not possible. At least check previous one year loan files. Check outgoing incumbent has signed all the loan files. You don’t need to see files before that as inspection/ audit must have taken place before that and auditors or inspectors must have audited files earlier. Meticulously check securities attached like LIC policies , FDRs, bonds, original land registry  papers etc. also check that sanction letter are dully signed by the incumbent.

5) Check gold coins/ ornaments- gold coins must be check and gold ornaments of the customers must be checked with joint custodians and another staff officer.

6) All keys of the branch – keys of strong room, cash safe, main gate, grill, ATM room or any other safe present in the branch should be checked without fail.

7) Duplicate Keys- sealed Duplicate keys of the branch which is generally present in another branch should be checked thoroughly and any discrepancy should be reported.

8) furniture & fixture- furniture and fixture of the branch should be checked and must tally with GLB also check the depreciation register.  Depreciation and reserve must tally with the GLB slip. Also take a broader look at items listed in F&F are present in the branch.

9) FDRs opened but not printed- take a note of FDRs that are opened but not printed. Make sure you got them signed by the outgoing incumbent.

10) TDS challans properly filled- take a look at quarterly TDS challans. Check whether they are filled or not as income tax deptt imposes interest on non filling. There’re last dated for filling quarterly TDS challans.

11) KYC compliance – make sure that all accounts are KYC compiled. Most banks offer non KYC reports in the system. Take out that report and make all the Non KYC accounts KYC complied before taking charge.

12) Registers to be checked- most of the banks have many important registers in the branch check whether they are maintained or not –
a) Complaint register.
b) MDP register.
c) No dues register.
d) OBC register.
e) Voucher register.
f) Cash Register.
g) Sundry Register.
h) ATM register.
g) Furniture & Fixture Register.
h) Depreciation register.
g) Inventory movement register.
h) Key movement register.
i) NPA register.
j) Recovery Register
k) Stock Register.
l) Loan security items register.
m) Office order register.
n) Insurance register.
o) Nomination register.
p) 15G-15H register.
q) Title Deed register.

13) NPA status- NPA accounts and written off accounts status should be reported in joining report.

14) Pending credit proposals- pending credit proposals must be taken note of. And action should be initiated at the earliest. If proposals are large then meeting with parties is also a good idea.

15) Claims with CGTMSE- any claims pending with CGTMSE must be noted and necessary follow up should be started.

16) SARFAESI status- any account in which SARFAESI has been initiatedshould be noted and status of sace sould be noted.

17)  Temporary OD running – All temporary OD must be adjusted within time period of incumbent. Report should be generated of TODs and necessary action should be taken.

18) Expired Documents – take out report of all expired documents during the period of outgoing incumbent and effort should be made to renew all the expired documents before taking the charge.

19) Customer complaints – all pending customer complaints must be attended with utmost priority and outgoing incumbent should be asked to resolve the complaints which were generated during his tenure.

20) Branch security items- all items related to branch security must be assessed like fire equipments, burglar alarms, license of arm guard, CCTV etc.

21) Vigilance/ Inspection reports- you should check the latest inspection/ vigilance report and check whether proper reply/ comments of outgoing incumbent has been taken or not. Check whether queries of inspection report have been removed or not.

22)  Examining last 3-4 months sanctions minutely- last 3-4 months sanctions are to be examined minutely or say very carefully.

23) Check whether registration of equitable mortgage with CERSAI/ revenue authorities has been done or not by the outgoing incumbent.

24) Sometimes Insurance Register is not updated and assets charged to the bank, whether as principal security or as collateral, are not insured for “FULL VALUE”.

25) For larger amount loans say above Rs. 10 lacs check whether Ist stage vetting and second stage vetting is done or not. If not then get it done.

26) Bank guarantee issued are duly signed by two officials jointly, one of whom must be the Branch Manager and Manager or Branch Manager and Second Man.

27) Certified copy of the title deed offered as security is obtained from the Sub-registrar office and the same is compared with the original documents deposited for creating mortgage, by the bank lawyer/ bank officials

28) A register is maintained at the branch, wherein the date of receipt, sanction/rejection/disbursement with reasons therefore, etc. are recorded. The register is made available to all inspecting agencies.

29) CIBIL exercise is being done in loans and advances of Rs 1 lac and above. Direct report from CIBIL is being generated and CIBIL detection and updating checking is being conducted.

30) Checking and signing of all the reports generated by the system, particularly, the Exceptional reports, day book, long book and reporting of deviations.

Though I have tried to cover each and every aspect before someone take charge of a branch or seat but still suggestions of experienced folks are appreciated and may guide newly appointed branch in charges.