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A THESIS ON CREDIT CARD AND LOAN ASSESSMENT OF AXIS BANK

BY: SUNNY MITTAL ROLL NO: 11/FMS/MBA/055 Submitted in partial fulfillment of MBA program at Faculty of Management Studies, MRIU, Faridabad

A THESIS ON CREDIT CARD AND LOAN ASSESSMENT OF AXIS BANK

BY: SUNNY MITTAL COURSE: MASTERS OF BUSINESS ADMINISTRATION

A report submitted in partial fulfillment of The requirements of THE MBA PROGRAM at Faculty of Management Studies, MRIU, Faridabad.

Title and Synopsis Approval Form The MBA Program (batch, 2011-13)

(Please fill in Capital Letters) Enrollment No. Name of the Student Semester III 1. Electives 2. 3. 4. Name of the Faculty Supervisor Functional Area Rationale for Proposed Research Project (min. 500 words) (Enclose Separate sheets): The student should write about the relevance of the topic in current business environment, placement opportunities based on the topic under study, its relation to the electives chosen by the student, etc. Semester IV 5. 6. 7. 8.

Date:

Signature of the Student

CERTIFICATE This is to certify that the Final project titled ___________________________________ ______________________________________________________________________submitte d for partial fulfillment of the MBA program (Faculty of Management Studies, Manav Rachna International University), during Semester IV, embodies original work done by me.

Signature of the Student Name (in Capitals) : _______________________________________________________ ______ Enroll Number : _______________________________________________________ _____

Signature of the Faculty Supervisor Name (in Capitals) Designation Signature of the Director : :

SHILPA ARORA ASSISTANT PROFESSOR

ACKNOWLEDGEMENT

FOR ANY SUCCESSFUL WORK, IT OWES ITS THANKS TOO MANY

Summer training is one of the most vital and active part of the curriculum of management studies.Hard work, knowledge,positive attitude and dedication all are necessary to do any task successfully but one ingredient which is veryimportant than others and at times more important than others is co-operation &guidance of experts and experienced persons.

Firstly I would like to extend my heartfelt gratitude to Mr. Rajesh gupta , the branch manager for his guidance throughout project.Without his support and co-operation I would have failed in my endeavours.

I empathetically express the regards and gratitude towards my speculative guide Mrs. SHILPA ARORA for his expert and invaluable guidance, constant encouragement and constructive criticism to accomplish such labourious work timely and perfectly.

I avail the opportunity to thanks Mr. VINAY ARORA who helped me to ease my burden of work and extending their helping hands during my project.

I would also like to thanks all the staff of AXIS BANK for their invaluable suggestion and cooperation to complete my project successfully.

CONTENTS

Serial No. 1 2

Particular Executive Summary Banking In India: Overview Nationalized Bank In India Private Sector bank In India

Page No. 7 8 10 11 13 15 15 16 17 18 19 21 24 24 25 26 26 27 27 28 29 30

About AXIS Bank Retail Banking Corporate Banking Financial Performance

Easy Credit Card Variants Pricing Process Documentation

Loan Assessment 1. Home Loan Documentation Interest Rate 2. Personal Loan Normal Salaried Individual Salaried Professional Salaried Doctor Documentation

Interest Grid 3. Auto Loan Category Grid Salaried Employee Self Employed Partnership Private and public limited company Documentation Interest Rate 4. Agriculture Loan Commodity financing) Kisan Power Direct Financing to Farmers for Cattle Loans through Dairies/ Cooperatives Direct Financing to Farmer Under Contract Farming 5. Education Loan 6 7 Abbreviations and Acronyms (Glossary) Appendix Power-(Warehouse Receipt

31 31 31 32 33 34 35 36 38 39 40 43 52

56 60 62 65

Executive Summary: Introduction: Axis bank is one of the fastest growing banks in India and has extremely competitive and profitable banking franchise. Axis bank is the first new generation private sector bank to be established in India under the overall reform programme initiated by Government of India in 1991.Axis bank started its operation from 1994.

Objective: The main objective of this project is to: Understand how banking activities actually takes place. To gain an insight and in depth knowledge about banking products. To know how the other services provided by bank to its customer. To learn about corporate banking culture in India.

Research Methodology: The method adopted to carry out this report was based on both the primary and secondary sources. Primary sources: Interaction with the existing employees and deputy manager. Personal interaction with the customers visiting to the bank.

Secondary sources: Manuals of the bank. Websites Journals Circulars Annual Report 8

Learning and Conclusions: It was a great opportunity to gain an insight about various activities that takes place in the bank. I came to know what banking is all about. About AXIS Bank. The kind of products and services are provided by AXIS Bank. This project increased my confidence level and it was a great opportunity to learn about corporate culture and etiquettes.

Banking In India: Overview: Banking in India originated in the first decade of 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, both of which are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the "The Bank of Bengal" in Calcutta in June 1806. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras. The presidency banks were established under charters from the British East India Company. They merged in 1925 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India. For many years the Presidency banks acted as quasi-central banks, as did their successors. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers.

RESERVE BANK OF INDIA Central Bank and supreme monetary authority Scheduled Banks Cooperativ
e Urban Cooperatives State Cooperatives Public Sector

Non Scheduled Banks Commerci al


Private Sector Foreign Banks

Other Nationalized Banks

SBI & Associates

Regional Rural Banks

Early History: The first fully Indian owned bank was the Allahabad Bank, established in 1865. However, at the end of late-18th century, there were hardly any banks in India in the modern sense of the term. The American Civil War stopped the supply of cotton to Lancashire from the Confederate States. Promoters opened banks to finance trading in Indian cotton. With large exposure to speculative ventures, most of the banks opened in India during that period failed. The depositors lost money and lost interest in keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century. Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and Pondicherry, then a French colony, followed. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking centre.

The Bank of Bengal, which later became the State Bank of India: Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial 10

and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities. The presidency banks dominated banking in India. There were also some exchange banks and a number of Indian joint stock banks. All these banks operated in different segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock banks were generally undercapitalized and lacked the experience and maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon to observe, "In respect of banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments."

Nationalized Banks in India: Banking System in India is dominated by nationalized banks. The nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the then prime minister. The major objective behind nationalization was to spread banking infrastructure in rural areas and make available cheap finance to Indian farmers. Fourteen banks were nationalized in 1969. Before 1969, State Bank of India (SBI) was the only public sector bank in India. SBI was nationalized in 1955 under the SBI Act of 1955. The second phase of nationalization of Indian banks took place in the year 1980. Seven more banks were nationalized with deposits over 200 crores. List of Public Sector Banks in India is as follows: Allahabad Bank State Bank of Indore UCO Bank United Bank of India s Andhra Bank Canara Bank State Bank of India (SBI) State Bank of Mysore Union Bank of India Vijay Bank Bank of Baroda Central Bank of India 11

Private Banks in India: All the banks in India were earlier private banks. They were founded in the pre-independence era to cater to the banking needs of the people. But after nationalization of banks in 1969 public sector banks came to occupy dominant role in the banking structure. Private sector banking in India received a fillip in 1994 when Reserve Bank of India encouraged setting up of private banks as part of its policy of liberalization of the Indian Banking Industry. Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. Private Banks have played a major role in the development of Indian banking industry. They have made banking more efficient and customer friendly. In the process they have jolted public sector banks out of complacency and forced them to become more competitive.

List of Private Sector Banks in India is as follows: Bank of Rajasthan Axis Bank Centurion Bank of Punjab Federal Bank ICICI Bank IndusInd Bank Jammu & Kashmir Bank Karur Vysya Bank Bharat Overseas Bank Catholic Syrian Bank Dhanalakshmi Bank HDFC Bank IDBI Bank ING Vysya Bank Karnataka Bank Kotak Mahindra Bank

SBI Commercial and International Bank South Indian Bank United Western Bank YES Bank

12

13

About AXIS: Start on 1994 On July 2007 UTI Bank rebrand as Axis Bank Promoters: Unit Trust of India (UTI) Life Insurance Corporation (LIC) General Insurance Corporation (GIC) National Insurance Company Limited New India Assurance Company Limited The Oriented Insurance Company Limited United India Insurance Company Limited

Capitalization: 359 crores Public Holding = 57.60%

Registered Office: Ahmadabad Central Office: Mumbai Total Branches: ATM: 3595 Bank Strengths: Retail Banking Corporate Banking 14 827

Directors: Shri N.C. Singhal Shri J.R. Varma Dr. R.H. Patil Smt. Rama Bijapurkar Shri R.B.L. Vaish Auditors: M/s. S. R. Batliboi & Co. Auditors Chartered Accountants Director Director Director Director Director

Registrar and Share Transfer Agent: M/s. Karvy Computershare Private Limited Competitors: Private Sector competitors: HDFC, ICICI Public Sector competitors: SBI, PNB Profile: Axis Bank is one of the fastest growing banks in the country and has an extremely competitive and profitable banking franchise evidenced by: Comprehensive portfolio of banking services includes Corporate Credit, Retail Banking, Business Banking, Capital Markets, Treasury and International Banking. The Position as on 31st March 2009 was as under: Balance Sheet Size Total Deposits Net Advances Investments Capital Adequacy Ratio Rs 1, 47,722 crore Rs 1, 17,374 crore Rs 81,557 crore Rs 46,330 crores 13.69% % 15

Axis Bank has in place a sound technological platform: Sound technological platform with centralized database and operations enabling 24*7*365 Anywhere Banking, in order to render the best customer service to its 5.5 million customer base. Mission and Values: Customer Service and Product Innovation tuned to diverse needs of individual and corporate clientele. Continuous technology up gradation while maintaining human values. Progressive globalization and achieving international standards. Efficiency and effectiveness built on ethical practices. Customer Satisfaction through providing quality service effectively and efficiently. "Smile, it enhances your face value" is a service quality stressed on Periodic Customer Service Audits. Maximization of Stakeholder value. Success through Teamwork, Integrity and People.

Retail Banking: The Bank continued with its thrust on customer segmentation in the retail liabilities business to spearhead growth during the financial year 2008-09. Savings Bank deposits grew to Rs. 25,822 crores on 31st March 2009 from Rs. 19,982 crores as on 31st March 2008 showing a year on year growth of 29%. Corporate Banking: The Business Banking Department (Erstwhile Institutional Business Department) was set up in the year 2000, with the objective of having a special cell to serve the institutional and corporate clientele of the Bank. Business Banking initiatives revolve around transaction banking services to garner Business Current Accounts, Cash Management Service mandates, Government Business - Collection & Payment Services. As a natural corollary, scope of the business was extended this year to Business loans for Small Businesses so that all product and services to small business enterprises are comprehensively made available.

16

The Department presently focuses on the four broad areas through the respective Business Groups, as under: Business Current Accounts, Business Assets, Cash Management Services, Government Business Corporate Credit: Current Account deposits grew by 24% yoy, from Rs. 20,045 crores as at end March08 to Rs. 24,822 crores as at end March09. The daily average Current Account balances over the year grew by 24% yoy. The Corporate Credit portfolio of the Bank comprising advances to large and midcorporates grew by 68.33% to Rs. 29,026 crores from Rs. 17,244 crores a year ago. This includes advances at overseas branches amounting to Rs. 5,381 crores (equivalent to USD 134 million) comprising in main the portfolio of Indian corporates and their subsidiaries, as also trade finance. Credit exposures are taken based on risk analyses and mitigation measures, with proposals being subjected to critical scrutiny by the Bank's Risk Department. Efforts are made to constantly upgrade the skills required for faster turnaround of credit proposals and structuring of financial products. In addition to working capital loans, the Bank also takes long-term exposures to infrastructure and manufacturing projects set up by reputed industry groups. Relationship groups in the Bank are organised with an industry sector focus for better evaluation of specified risks. The credit policy of the Bank has also put in place ceilings on exposures to various industries with a view to containing concentration risk and facilitating portfolio diversification. Financial Performance: Profit after tax up 69% to Rs.1, 815.36 crores. Net Interest Income up 43% to Rs.3686.21 crores. Other Income up 61% to Rs.2,896.88 crores. Fee Income up 64% to Rs.2,447.35 crores Deposits up 34% to Rs.1,17,374 crores. Demand Deposits up 37% to Rs.50644 Crores. Advances up 61.79% to Rs.81,557 crores . Retail Assets up 18% to Rs.16,052 crores. Network of branches and extension counters increased from 827. Total number of ATMs 3595. Net NPA ratio as a percentage of net customer assets down to 0.35% 0.36% from 0.36 % 17

Easy Credit Card: What is Easy Credit Card? A Credit Card that is... Easy for customers to get! Easy for us to sell! Why is it Easy for the Customer? Flexible Credit Limit (Up to 80% of the FD amount) High Cash Withdrawal Facility Minimum Documentation (No Income Proof/KYC required) Fast Delivery of the Card Substantially Lower Interest Rate of 1.95% p.m. Guaranteed Approval Free Credit Period of 20-50 days Comprehensive Insurance Attractive Reward Points Other benefits of a regular credit card

Easier than Other Modes of Payment: Easier than Other Credit Cards Guaranteed Approval No Income Proof required Lower interest rate Credit Limit of choice Higher Cash withdrawal facility

Easier than Debit Cards Interest free credit period of up to 50 days Higher Insurance Packag 18

Easier than O/D against FD Interest free credit period of up to 50 days Reward Points Complimentary Insurance Record of transactions

Easier than Cash Convenience of Plastic

Complimentary Insurance Reward Points Record of transactions

Variants: Available in three variants: Easy Platinum Premium (In sourcing locations only)

Easy Platinum Easy Gold

Pricing:

Type

Joining Fee

Annual Fee

Annual Fee Waiver for Year 2

Platinum Premium Customer Spends 5,000 1,000 > Rs.2,00,000 in Year 1

19

Platinum

1,000

500

Customer Spends > Rs.2,00,000 in Year 1

100 Gold Nil (Two onwards) Years

Customer Spends > Rs. 50,000 in One Year

* Annual Fee can be adjusted against Reward Points

Easy Platinum Premium: Platinum Comprehensive Insurance Cover

Fuel savings of 2.5% at All Petrol Pumps Attractive Rewards Program Free Espirit watch worth Rs.6,000Attractive

Platinum Preferential Features Chip Card for Additional Security

Complimentary Priority Pass Membership International Concierge Services Exciting shopping offers

20

Platinum Standard Features Low Interest Rate of 1.95% p.m. Credit Limit of Choice High Cash Withdrawal Limit of 40% of Credit Limit Balance Transfer Options

Easy Platinum: Comprehensive Insurance Cover Fuel savings of 2.5%at ALL Petrol Pumps Attractive Rewards Program

Platinum Preferential Features: Chip Card for Additional Security Complimentary Priority Pass Membership International Concierge Services Exciting shopping offers

Standard Features: Low Interest Rate of 1.95% p.m. Credit Limit of Choice High Cash Withdrawal Limit of 40% of Credit Limit Balance Transfer Options

Easy Gold: Comprehensive Insurance Cover Fuel savings of 2.5%at ALL Petrol Pumps Attractive Rewards Program 21

Standard Features: Low Interest Rate of 1.95% p.m. Credit Limit of Choice High Cash Withdrawal Limit of 40% of Credit Limit Balance Transfer Options

Process Simplified: Step 1 Crdit Card Application Form Letter of Lien Addendum to Credit Card Application No Form Draft Letter Step 2 Only One Single Application Form

Double KYC

No

Separate KYC for Easy Credit Card

Step 3

FD receipt to remain with the customer FD retained at the branch No Only photocopy to be attached Lien marked centrally on Finacle Step 4 Customer signature on form to be verified by Branch heads No 22 Customer signature to be verified by Branch head/ BSO/BSM

Step 5 Sent to customer in Courier serviceable Card dispatched to Branch No areas Sent to branch in Courier non-

serviceable areas

Application Processing- Existing FD Customers: Application Pickup Easy Credit Card App Form filled Copy of FD receipt attached No Additional Documents

At Branch Application Signed-off by Branch head/ BSO / BSM Lien Stamp on FD by any Branch officialOriginal returned to customer

CC-APU Centralized Lien marking Data Entry , Card & Limit Setup No CIBIL, No FV, No TV

Dispatch Direct to customer in Courier serviceable areas To branch in Courier non-serviceable areas

23

Application Processing -New FD Customers: Application Pickup Easy Credit Card App Form filled FD Form filled with KYC & PAN only by BDE/Any Branch Staff

At Branch Sign-off by Branch head/ BSO/ BSM

CPU-Mumbai FD Data Entry FD Account No. entered on Easy Card Application Form

CC-APU Centralized Lien marking Data Entry , Card & Limit Setup No CIBIL, No FV, No TV

Dispatch FD & Card dispatched together Direct to customer in Courier serviceable areas To branch in Courier non-serviceable areas

Documentation: Existing FD Customers: Easy Card Application Form 24

Photocopy of FD Certificate with Notification of Lien as follows: Lien marked for Issuance of Easy Credit Card To be written, signed & stamped by any Branch Official on the front side of the FD receipt FD Certificate with notification returned to customer Most Important Document (MID)

New FD Customers: Easy Card Application Form Duly Completed FD Application Form (ONLY by BDE/Any Branch Staff) Most Important Document (MID)

Loan Assessment: Types of Loans Home loan Personal Loan Auto loan Agriculture Loan Education Loan

Home Loan:

Criteria

Salaried Individual

Professionals

Self

Employed

Individuals

Min. (Years)

work

exp 2 (3 if current employment <1 year) 25

Min net income (Rs.)

15000pm

1.50 lacs pa

Min

Max

age

>24

<= at

than loan >24 ~ <= 65 at loan termination

(Years)

superannuation termination

Min ~ Max Tenor (Months)

Maximum 240

Maximum 240

Maximum 240

Maximum LTV

80%

Clubbing of Income

Allowed for spouse only

Pre payment penalty

NIL

Processing fee

1% of loan amt + 10.30% Service Tax as applicable

Other Products / Variants Takeover of existing HL from other (Balance Allowed

financier Transfer)

Refinance Option

Allowed for properties purchased in last 6 months

Documents required for Home Loan: Proof of Identity, Signature & Age: Passport Voter's Card Driving Licens 26

Proof of Residence: Ration Card Passport Latest Electricity Bill Latest Telephone Bill Proof of Income: Latest 3 salary slip showing all deductions IT Returns Computation of income Balance Sheet and P/L A/c for the last 2 years certified by a C.A.

Bank Statement: Last 6 months where salary/income is credited

Proof of Qualification: Degree / Diploma - proof of professional qualification

Interest Rate: Home loan amount Up to Rs. 30 Lacks Above Rs. 30 Lacks Applicable rate of interest 9.00% p.a 9.50% p.a.

Other terms & conditions: The property should be located within 50 Km radius of nearest Branch/RAC. Properties under HUF, Properties inherited under Hindu succession act, Godowns, Factories & Hospitals, Cinema Halls, Restaurants, Banquet Halls, and Schools will not be financed under the scheme. 27

For Purchase of Residential Plots within Municipal / Government approved layouts only. Agricultural land, commercial plots, properties under HUF, properties inherited under Hindu succession act, plots under litigation and acquisition by Public authorities will not be financed under plot loan scheme. Loan against property (LAP) will be offered only against fully constructed properties.

Personal Loan: For Salaried Individual:

Criteria Interest rate as per category Min. work exp (years) Min net income (Rs. p.m.)

Salaried Individual Normal As per category grid 2 15,000

Min ~ Max age

> 21 & < superannuation at loan termination

Min ~ Max loan amt (Rs.)

1.25- 15 lakes (1.25 lakes loan is only available for customers having salary power relationship)

Min ~ Max Tenor (months)

12 ~ 60 (For CAT C and D employees maximum tenor is 48 months) Optional Cat A & B - Last 3 months

Security/Collateral/Guarantor

Banking relationships Cat C & D - Last 6 months 28

Phone Processing fee

landline / mobile / WLL mandatory 2% of loan amt Max loan =(Net monthly income - obligations) x

Eligibility calculation

Multiplier. Multiplier varies from 5 to 13 depending upon tenure.

Residence

Present residence => 6 months Salaried Individual Prof (MBA, Engineer, Architect, CA, CS, ICWA) As per category grid 2 15,000

Criteria

Interest rate as per category Min. work exp (years) Min net income (Rs. p.m.)

Min ~ Max age

> 21 & < superannuation at loan termination

Min ~ Max loan amt (Rs.)

1.25 - 15 lakhs

(1.25 lakh loan is only available for

customers having salary power relationship)

Min ~ Max Tenor (months)

12 ~ 60

Security/Collateral/Guarantor

Optional

Cat A & B - Last 3 months Banking relationships Cat C & D - Last 6 months Phone landline / mobile / WLL mandatory

29

Processing fee

2% of loan amt Max loan =(Net monthly income - obligations) x

Eligibility calculation

Multiplier. Multiplier varies from 5 to 15 depending upon tenure.

Residence

Present residence => 6 months

Degree / Diploma - proof of professional qualification Criteria Salaried Doctors Doctor in Cat B/C/D at a min of MBBS/BDS/ MS/MD = Cat B rate 3 15,000 (gross) >24 and <65 at loan termination

Interest rate as per category

Min. work exp (years) Min net income (Rs. p.m.) Min ~ Max age

Min ~ Max loan amt (Rs.)

1.25 - 15 lakhs

(1.25 lakh loan is only available for

customers having salary power relationship)

Min ~ Max Tenor (months)

12 ~ 60

Security/Collateral/Guarantor Banking relationships Phone Processing fee

Optional Last 6 months landline / mobile / WLL mandatory 2% of loan amt

30

Max loan = (Gross monthly salary - obligations) x Eligibility calculation Multiplier. Multiplier varies from 5 to 15 depending upon tenure.

Residence

Present residence => 6 months

Degree, Registration with respective state medical Proof of Qualification councils Or Dentists Association.

Documentation:

Documents Required Passport/ Voter's Card/ Driving License/ PAN card & Photograph. Latest bill of landline/ mobile/ WLL stating name of borrower or address of borrower. Ration Card/ Passport/ Latest Electricity Bill/ Latest Telephone Bill/ Latest Credit Card Bill. Latest salary slip showing all deductions and Last 2 years Form 16 along with current dated salary certificate

Proof of Identity, Signature & Age

Proof of Telephone Bill

Proof of Residence

Proof of Income

Bank Statement / Pass Book where salary is Credited

Cat A & B - Last 3 months, Cat C & D - Last 6 months

Interest Rate Grid: Personal Loans ROI (only Fixed)

31

Salaried - Cat A

15.00%

Salaried - Cat B

17.00%

Salaried - Cat C Salaried - Cat D

19.00% 21.00%

Auto Loan:

Category Grid

Category A

Maruti 800, Omni Van, Matiz

(Upto 5 lakh) Category B Alto, Wagner, I10, spark, Swift, Indica Vista, Palio, Getz, a-star, Zen

(Upto 10 lakh) Category C Swift Dezire, Verna, Esteem, Honda City, Acent, Verna, Fista, Indigo CS, Optra, Scorpio,Logan

32

Category D

(More Than 10 Lakh) Safari, Corela, Endeavour, Optiva, Skoda,

Criteria

Salaried

Age

Min 21 Years At Sanction To Maximum 58 Years At The Time Of Loan Maturity

Loan Amount

Minimum Rs. 100,000

Tenure

1 - 7 Yrs

LTV

Up To 85% Of On Road Price*

Income Norms

Gross Salary Of Rs. 1 Lac P.A. For Cat A/B Cars & Rs 2 Lacs P.A. For Cat C/D Cars

Work-Experience

Minimum 2 Years Of Total Employment

Landline / WLL Phone At Residence. In Case No Phone At Telephone Resident Post-paid Mobile Connection With Resident Address Required.

Foreclosure

4% + Principal Outstanding

33

Minimum Of Rs 2500 For Cat A Cars, Rs. 3000 For Cat B & C Processing Fee Cars And Rs 3500 For Cat D Cars (Plus Upto 1% Of The Loan Amount At The Discretion Of The Branch Manager)

Eligibility Calculation

3 Times Of Annual Gross Or 30 Times Of Avg Net Salary Of 3 Months. EMI Must Not Exceed 50% Of Net Salary

Criteria

Self-Employed

Age

Min 21 Years At Sanction To Maximum 65 Years At The Time Of Loan Maturity

Loan Amount

Minimum Rs. 100,000

Tenure

1 - 7 Yrs

LTV

Up To 85% Of On Road Price*

Income Norms

Gross Income Of Rs. 60,000 P.A. For Cat A/B Cars & Rs 1 Lac P.A. For Cat C/D Cars (Gross Income : N.P After Tax & Depreciation)

Work-Experience

Minimum 3 Years In Business

Landline / WLL Phone At Residence. In Case No Phone At Telephone Residence Postpaid Mobile Connection With Residence Address Required.

Foreclosure

4% + Principal Outstanding

34

Minimum Of Rs 2500 For Cat A Cars, Rs. 3000 For Cat B & C Cars Processing Fee And Rs 3500 For Cat D Cars (Plus Upto 1% Of The Loan Amount At The Discretion Of The Branch Manager)

Eligibility Calculation

6 Times Gross Income P.A. (Gross Income = Net Profit + 50% Of Depreciation For The Last Financial Year.)

Criteria

Partnership Firms Min 21 Years At Sanction To Maximum 58 Years At The Time Of Loan Maturity For Loan Executing Partner.

Age

Loan Amount

Minimum Rs. 100,000

Tenure

1 - 7 Year

LTV

Up To 85% Of On Road Price

Gross Income Of Rs. 60,000 P.A. For Cat A/B Cars & Rs 1 Lac P.A. Income Norms For Cat C/D Cars (Gross Income: N.P After Tax & Depreciation). Min Turnover Of Rs 4.5 Lacs

Work-Experience

Minimum 3 Years In Business

Landline / WLL Phone At Resident. & Office For Loan Executing Telephone Partner. In Case No Phone At Resident, Post-Paid Mobile Connection With Resident. Address Is Required

Foreclosure

4% + Principal Outstanding

35

Minimum Of Rs 2500 For Cat A Cars, Rs. 3000 For Cat B & C Cars Processing Fee And Rs 3500 For Cat D Cars (Plus Upto 1% Of The Loan Amount At The Discretion Of The Branch Manager)

6 Times Gross Income P.A. (Gross Income = Share In Profit + Eligibility Calculation Salary + Interest On Capital + 50% Of Depreciation For The Last Financial Year) (To The Extent Of His Share In Partnership)

Criteria

Private & Public Ltd. Companies

Age

Min 21 years at sanction to Maximum 65 years at the time of loan maturity for the loan executing director/authorized signatory

Loan amount

Minimum Rs. 100,000

Tenure

1 - 5 yrs

LTV

Up to 85% of On road price*

Income Norms

Min Turnover of Rs. 2 Crore and Minimum Net Profit of Rs 50 Lacs. (No Cash Loss in the last 2 yrs)

Work-experience

Minimum 3 years in business

Landline / WLL phone at Resident & Office for loan executing Telephone director/authorized signatory. In case no phone at Resident, postpaid mobile connection with Resident Address is required

36

Foreclosure

4% + principal outstanding

Minimum of Rs 2500 for CAT A cars, Rs. 3000 for Cat B & C Cars Processing Fee and Rs 3500 for Cat D cars (plus upto 1% of the loan amount at the discretion of the Branch Manager)

Eligibility calculation

6 times Avg. Net Profit of the Last 2 Years

Documents required: For Salaried: Passport / Voters Card / Driving License with Photograph/ PAN card Latest salary slip showing all deductions AND Latest Form Proof of Income 16 / Income Tax Return (Form 16 FYE March should be available June onwards)

Proof of Identity

Address

Proof

(of

the Ration Card/Latest Electricity Bill/Latest Telephone Bill/Passport/Latest Credit Card Bill/ Driving License Passport copy/ Driving License with Photograph/ Bankers Verification NA

residing city)

Signature Verification

Additional Document

For Self-Employed: Passport / Voters Card / Driving License with Photograph/ PAN card Latest Income Tax Return and Computation of income

Proof of Identity

Proof of Income

37

Ad Ration Card/Latest Electricity Bill/Latest Telephone dress Proof (of the residing Bill/Passport/Latest Credit Card Bill/ Driving License city) Passport copy/ Driving License with Photograph/ Bankers Verification Declaration from Proprietor

Signature Verification

Additional Document

For Partnership Firms:

Copy of Partnership Deed & the following documents required Proof of Identity for the loan executing partner: Passport / Voters Card / Driving License with Photograph/ PAN card

Proof of Income

Audited Balance Sheet, Profit & Loss Account for last 2 years along with the latest 2 Income Tax Returns

Address

Proof

(of

the Telephone Bill/Electricity Bill/ Shop & Establishment Act Certificate/ SSI Registered Certificate/ Sales Tax Certificate Bankers Verification Authority letter signed by all partners

residing city) Signature Verification Additional Documentation

For Private & Public Ltd. Companies: 38

Copy of Memorandum & Articles of Association & the Proof of Identity following documents required for the loan executing director/authorized signatory. Passport / Voters Card / Driving License with Photograph/ PAN card

Proof of Income

Last 2 Years Audited Financials Telephone Bill/Electricity Bill/ Shop & Establishment Act Certificate/SSI Registered Certificate/ Sales Tax

Address

Proof

(of

the

residing city)

Certificate/PAN No. Bankers Verification List of Directors, Share Holding pattern, Copy of Board Resolution

Signature Verification

Additional Documentation

On Road Price = Ex Showroom rate + Insurance + Road Tax + Registration charges

Interest Rate Grid: Interest Rate Grid (Direct Branch Source)

Car Category

Upto 35 months

36 - 60 months

60 84 months

Cat A

13.00%

12.00%

13.50%

Cat B

13.00%

11.50%

13.50%

Cat C

13.00%

11.50%

13.50%

Cat D

13.00%

11.00%

13.50%

39

Interest Rate Grid (Dealer/DSA sourcing)

Car Category

Upto 35 months

36 - 60 months

60 84 months

Cat A

14.50%

13.25%

15.50%

Cat B

14.50%

12.50%

15.50%

Cat C

14.50%

12.00%

15.50%

CAT D

14.50%

11.75%

15.50%

Agricultural Loan: Financing farmers against pledge of warehouse or cold storage receipts: Facility Limit: Ceiling of Rs. 5.0 lac per farmer Nature of Facility: Loan against the pledge of warehouse and/ or cold storage receipts

Eligibility for Farmers: Original depositors of the receipts. The borrower to undertake that he is a farmer and also to provide a declaration to the effect that he/she is not defaulter to any Bank/Financial Institution

Designated Warehouse: CWC/SWC Warehouses Private warehouses/Cold storages/Godowns with a minimum storage capacity of 100 MT

40

Value of Loan: Value of the loan = Value of commodity minus commodity specific margin amount

Rate of Interest: BPLR- 4.75%; at present 15.25 % p.a. payable with the principal repayment. Margin: Min 40%. Tenure of the Loan: The maximum tenure of each loan shall be 12 months. Valuation: The value of the commodity as security shall be the lower of the following: Value of goods as reflected in the warehouse receipt. Value of the goods based on the average price prevailing in the nearest mandi on the day previous to the date of disbursement. Price provided by the Commodity Business Group, Central Office from time to time for various commodities

Insurance: The stocks pledged to the Bank should be insured adequately with Bank clause. Security Up to Rs. 200,000: Primary-: Pledge of warehouse receipts duly endorsed in Banks favour Security over Rs. 200,000: Primary-: Pledge of warehouse receipts duly endorsed in Banks favour, Collateral-: Third party Guarantee 41

Disbursement: The individual borrower availing this facility will have to open an account at the concerned local branch (the account can be opened under SBSPL category wherein the average balance requirement is Rs. 1000/-). The amount will disbursed by crediting the account of the borrower, at the concerned branch. Selection of the Warehouse/Cold Storage: The warehouse/cold storage has to have adequate facilities (like aeration, pest control, loading and unloading facilities, electricity, security, etc.) to allow for the storage of the produce with minimum loss in quality and quantity. It is suggested that branches may give preference to the warehouses accredited by National Commodity and Derivative Exchange, India (NCDEX) who provide warehouse receipts to the farmers in dematerialized form. Security from Warehouse Owner/Manager: Have to sign M&C agreement with Bank to buy or arrange for the sale of the stock in case of default of farmer Letter of guarantee/comfort letter is to be obtain (in absence of the letter of guarantee). Monitoring & M&C Agent Charges: M&C agent has to monitor the security. The quality and quantity report has to be sent to the branch on a monthly basis. Normally 1% of the loan amount. However, branches can pay maximum 1.5% of the loan amount wherever required. Other Conditions: Post dated cheques to be collected from borrowers Repayment: Bullet repayment along with interest on due date. Pre-payment Charges: 2% (if loan is repaid within one month. Otherwise nil) 42

Processing Fee: 40% of the loan sanctioned

Documents to be executed by the Borrower: DP Note DP delivery letter Letter of waiver Pledge Agreement Warehouse receipt

Documents to be executed by the M&C Agent: Management and Collection Agreement: To be finalized in consultation with the Law Department Event of Default: In the event of default of a borrower, M&C agent should arrange for buyers/buy back of the stock. The Bank shall be entitled to sell the pledged goods either through the M&C agent/ public auction/private sale/through any commodity exchange and adjust the sale proceeds against the amount outstanding from the borrower. The price at which the pledged commodity is sold by the Bank is final and binding on the borrower. However, in case the proceeds from such a sale are not sufficient to satisfy the amount outstanding in full, the Bank will be entitled to recover the shortfall from borrower. Registers to be maintained: Registers to be maintained by the branch: Loan application cum disposal register Price, Stock and Margin recovery register Insurance due date register

43

Branches would keep the above mentioned registers in physical form or in a excel sheet in the system. The records should be updated at the stipulated time and hard copies be preserved in a separate file. Registers to be filled in by M&C agent: Stock and margin register

Kisan Power Scheme: Purpose Production Credit i.e. for meeting cost of crop cultivation/allied agricultural activities. Investment Loan for meeting any investment need, other than production expenses, that can improve borrowers farm productivity i.e. purchase of agricultural equipments, land levelling, land development, vehicles etc. Consumption Loan for meeting consumption needs Financing of all allied agricultural activities except the following is eligible under Kisan PowerNo tractor /trailer shall be financed under the Kisan Power Scheme. Poultry shall not be financed under Kisan Power Scheme

Eligibility: Any individual who is a major Owner Cultivators Tenant Cultivators and Share Croppers may be financed selectively. Minimum landholding should be two acres of cultivable land. Landholding has to be supported by land documents like 7/12 extract, Patta, chitta, Adangal (confirming ownership, crop pattern) etc. Joint holding (single or multiple locations) up to five persons are permitted. In case the borrower is more than 60 years of age, a co-borrower is mandatory. The co-borrower should be a family member / relative of the Borrower.

44

Radius of Operation: Radius of operation restricted to 50 km from the Branch. However, VPAF may allow financing select cases under the scheme beyond 50 kms and upto 75 kms, provided the distance will not come in the way of effective follow up and recovery.

Nature of Facility: Term loan Consumption Loan and Investment Loan Cash credit Production Credit

Amount of Loan: Overall Limit: Minimum: Maximum: Individual Components: Facility Investment Loan Min Limit 25001/ Max Limit 24,74,999/Rs. 25001/Rs. 25,00,000/-

Production Credit*

25,001/

25,00,000/-

Consumption Loan

50,000/

5,00,000/Punjab,

For

States

of &

Rajasthan

Haryana and 3,00,000/- For all other states

45

Assessment/Fixation of Limit: Overall Limit The overall loan amount/ credit limit will be fixed on the basis of 5 times annual farm income or 70% of the value of collateral security whichever is less subject to maximum of Rs. 25,00,000/Production Credit For any Kisan Power account, Production Credit is a must. While calculating Production Credit Limit, scale of finance should be the basis of assessment, which is decided every year by District level Technical committee (DLTC). The Production Credit Limit can be maximum upto 150% of the amount of Scale of Finance advised by DLTC. Crop insurance premium may be debited to

production credit, but the outstanding should be within limit. In other words the disbursement needs to be net of crop insurance premium. Production Credit Limit may be extended for leased land also, subject to the terms and conditions on security/guarantee etc. Consumption Loan The Consumption Loan amount should not be more than 3 times of annual farm income, and subject to the security criteria, within the upper cap of Rs. 5 lacs/3 lacs as the case may be. The assessment of consumption requirement is to be based on the written declaration of the applicant, and 100% of the declared amount would be allowed subject to maximum limits specified. Investment Loan For purchase of Two/Three/Four Wheelers used for carrying farm goods or Farm Machinery-: In such cases, the branches shall ensure that the price of the two/three/four wheelers or machinery should be equal to or less than the MRP (maximum ex showroom price, which includes all the state level taxes, but excludes the registration fee, road tax and insurance)

46

published by the manufacturer. The actual cost of registration, road tax and insurance can be financed. In case of vehicles, the Banks interest is to be noted in the RC book and the vehicles are to be insured under a comprehensive insurance policy. Along with invoice receipt, RC book copy, a photograph of the vehicle and the Borrower standing nearby is to be obtained and kept on record. This may be obtained within 45 days of disbursement. Our charge on the vehicle should be explicitly mentioned on the vehicle. In respect of development works like deepening/drilling of wells, construction of pump house/sheds/cattle sheds etc, the estimates made by the farmers themselves can be accepted, provided the cost does not exceed more than 20% of the unit cost approved for that activity/purpose in that region by NABARD. Security: Up to Rs. 50000/Primary: Hypothecation of crops and other assets Collateral : Nil Over Rs. 50000/Primary : Hypothecation of crops and other assets

Collateral: Mortgage/ Charge of land owned by the prospective borrower upto 140% (1.4 times) of the amount of loan as per State laws. Margin: Investment Loan for creation of assets and allied activities (except vehicles) 25%

Investment Loan for vehicles

30%

47

Nil. The labour input by the farmer is Production Credit considered as the margin. Hence no separate cash margin is insisted for crop loans. NIL

Consumption Loan

Rate of Interest: For consumption loans: Amount Loan from Rs 50,000 upto Rs 2,00,000 Loan from Rs 2,00,001 upto Rs 5,00,000 Interest Rate BPLR 1.50% BPLR 1%

For all other loans -: Amount Limit up to Rs. 50,000 Loan from Rs 50,001 upto Rs 2,00,000 Loan from Rs 2,00,001 upto Rs 5,00,000 Interest Rate BPLR 3.50% BPLR 3% BPLR 2%

Processing Fee: Fee @ 0.50% for production credit and 1.00% for Investment Loan and Consumption Loan. Subject to a minimum of Rs.500/-. Service tax is to be recovered at the applicable rate. Sanctioning Authority may at their discretion allow reduction/waiver are free to recover a higher processing fees on selective basis.

48

Crop Insurance: The production credit is to be covered under National Agricultural Insurance Scheme (NAIS) provided by the Agriculture Insurance Company of India Ltd (AICIL). Zonal Offices/Advances cells are authorised to waive this requirement. Branches to debit actual crop insurance premium from production credit account (CCAGR). However, no overdrawing should be allowed. It is to be ensured that the disbursement is made after keeping sufficient balance for debit of all future insurance premiums.

Accident Insurance: All KCC holders shall be covered under Personal Accident Insurance upto Rs.50, 000/- as per the extant guidelines of Kisan Credit card scheme. This is done under a master policy with Bajaj Alliance General Insurance Co Ltd by Central Office and the premium amount of Rs. 15 will be incurred by the Bank. Also, in case of a claim (due to accidental death, partial disability or total disability), branches should take up the matter with Bank Assurance Cell in Retail Banking department at CO for an early claim settlement. The proceeds of insurance are to be credited to CCAGR account of the borrower.

Insurance of Assets: All the securities (Building, equipment and Vehicles) created out of the loan or otherwise are to be insured for full value. Branches may take the help of our insurance advisers for this purpose.

Disbursement: Wherever cash disbursement is to be made (in case of Production credit/Investment Loan or Consumption Loan), the funds should be credited to the operative (SB/CC) account of the borrower and should be withdrawn through cheque leaf.

49

Investment Loan Investment loan is to be disbursed in one or more instalments depending upon the progress of work. In case of Investment loan for purchase of implements/ equipments/vehicles, the borrower should be asked to deposit the margin money with the Bank, and the disbursement is given to the dealer/manufacturer/supplier directly by DD/ Pay order along with margin. In case the implement/ equipment is already purchased by the Borrower, disbursement is permitted after inspection by the Banks official and after getting the stamped receipt and invoice. These purchases should not be older than 75 days. Cash disbursement may be made for purchase of animals, construction of farm shed etc. and the relative receipt is to be obtained within 45 days of disbursement. The labour component in Investment loan can be released in cash after getting written request cum declaration from the Borrower. Repayment: Production Credit Annual review and renewal in every three years. Branches should encourage Borrowers to bring the sale proceeds of their agricultural produce to their CCAGR a/c .

Consumption Loan and Investment Loan All the investment loans (except horticulture projects) and consumption loan should be repayable within a maximum period of 5 years. Repayment period up to 7 years is permitted in case of horticultural projects which is inclusive of moratorium period upto maximum of 3 years. Sanctioning authorities to ensure that projects having sufficient cash generation in the residual loan period (I.e. total period minus moratorium period) to ensure repayments only are considered. A suitable moratorium may be allowed upto maximum of 2 years in case of Investment Loan (except horticulture projects and vehicle loans). The instalments should be monthly/quarterly/Half yearly/yearly depending on harvesting of crop and other income sources like dairy, salary, other employment etc.

50

Penal Interest: 2% p.a. on overdue amount. Documentation: Borrower: Demand Promissory Note for Production Credit Letter of waiver cum DP Note delivery letter for Production Credit Loan cum hypothecation Document ACD 1. Simple (Registered) Mortgage - ACD 2 / Equitable Mortgage (ACD-4A & 4B). Duly signed PDCs along with covering letter Duplicate copy of the sanction letter duly signed by the borrower/s and guarantor/s. A letter addressed to the Village Revenue Officer advising him to record the charge of the Bank for the amount of the loan on the land records with him. Guarantor: Deed of Guarantee - ACD 3. Additional Documentation for Vehicles Power of Attorney for registering the vehicle in favour of one of the joint accountholders in case there are more than one borrowers A letter of authority to the Bank for effecting disbursement of the loan directly to the dealer. RTO forms no.26, 29,30,34,35

MIS and Monitoring: Monthly Control Returns to be submitted by the branches/Cluster Heads to Advances Cell/Zonal Office for reporting advances. Appraisal and Sanction: Application for Kisan Power should be obtained from the proposed borrowers and also the guarantor in the prescribed format. Branches need to offer comments in the proposal on the value of the main security, collateral security, i.e. value of the land being mortgaged to the bank and the basis of calculation of limit to the farmer. The agriculture officers/branch staffs identified to deal with the scheme is to travel to each of the individual centres to meet the applicants, verify 51

the details and put up the proposal for sanction to the Branch Head/Cluster Head. The recommending and the sanctioning authority should sign the proposal.

Pre sanction Visit: The focus of visit should be on an evaluation of the income stream of the borrower, and a comprehensive assessment of credit needs taking into account track record, credibility, capability, as well as technical viability of the existing and proposed activities. Short-term credit needs of the farmer should include all requirements directly and indirectly related to production, post harvest and household expenses. Repayment capacity should be assessed on the basis of aggregate household income from all sources including crop production and ancillary activities. The following details should be observed during farm inspection: Necessity of the development/s proposed to be undertaken. The crops cultivated and suitability of the crops proposed after the development Past experience in the activity In case of Investment Loan, it should be ensured that the land on which the developments are proposed is available as security. Additional guidelines for Vehicles: Margin payment should be made to the Bank and under no circumstances, the Borrower should be allowed to pay directly to the dealer and produce a receipt. Registration of vehicles and

Stamped receipt from dealers for the cost of the vehicle financed by us should be obtained. Our charge on the vehicle should be explicitly mentioned.

Registers to be maintained: Loan Application Receipt cum Disposal Register Mortgage Register Document Execution Register 52

Recovery: Sanctioning authority to designate an officer (In the cluster HQ/ Stand alone branch) for recoveries. He should monitor the accounts regularly and initiate action, whenever required. Branches may seek help of outsourced agencies for recovery. The appointment of outsourced agency shall be sanctioned by VPAF after doing a cost benefit analysis.

Direct Financing to Farmers for Cattle Loans through Dairies/ Cooperatives: Facility: Term Loan Purpose: Purchasing Milch animal Construction of shed for keeping cattle.

Extent of Finance: The extent of finance shall be 85% of the cost of animals/ shed constructed. The borrowers own contribution shall be to the extent of minimum 15% of the total cost of cattle purchased/shed constructed. The minimum indicative costs can be found out from the State Level Unit Cost Committee of NABARD. Amount: Minimum Amount: Rs. 30,000 Maximum Amount: Rs. 2,00,000 *The cost per cattle is assumed to be around Rs. 18,000-19,000. As per the eligibility criteria borrower has to purchase a minimum of two milch cattle from loan amount hence, the minimum availment should be around Rs. 30,000 keeping a margin of 15 % by farmer.

Age: Any major individual pursuing dairy farming activity. 53

Eligibility Criteria: Farmer should have a record of supplying minimum 10 litres of milk per day on an average for at least one year with the Village Dairy Cooperative Society.

Margin: 15 % of value of cattle to be purchased and/or shed to be constructed.

Rating: The score sheet for agricultural advances may be used for the purpose. The farmer with a rating of A1 and A2 may be considered for the loan.

Tenor: Maximum period of Four Years from the first transaction of disbursement to borrower with a maximum moratorium period of 3 months before start of principal repayment.

M&C Commission: The Dairy will be paid 0.5% of the loan amount as commission for acting as an M&C agent for the Bank. Documentation: Hypothecation cum Term Loan Agreement. Guarantee from Village Dairy Cooperative Society format is being finalized in consultation with Law Dept. Personal Guarantee from member of dairy coop society or third party. Letter addressed by Borrower to Sponsor and Sponsor to Bank. Letter of comfort/Guarantee from Dairy/Milk Union M&C Agency agreement between the Dairy and the Bank. 54

Repayment: The repayment will be made through escrow mechanism with a maximum moratorium of 3 months. Thereafter, the loan is to be repaid in maximum 4 years in monthly installments.

The pricing will be irrespective of the rating: Loan Amount Rs. 30,000-2,00,000 Above Rs. 2,00,000 Rate of interest: Penal interest: 2.00% p.a. on the overdue interest and installments Rate BPLR-3% BPLR-3.5%

Prepayment Charges: In case of prepayment of loan within one year from the disbursement: 2% of the amount prepaid. Security: Primary: Hypothecation of cattle financed by the Bank and other movable assets. Collateral: Letter of Comfort/Guarantee by the Union against the loan Guarantee from Village Dairy Cooperative Society/Personal Guarantee. In case the loan amount exceeds Rs. 1 lakh the same would be further secured by noting of the Banks charge on the land records of the borrower or create a mortgage of land in favour of the Bank.

Insurance: Cattle/Shed will be comprehensively Insured with the beneficiary clause as UTI Bank Ltd. The premium payable is added in the cost of the project. 55

Processing Fee: 0.5% of the total loan amount

Other Terms and Conditions: In case guarantee is not available from Village Dairy cooperative, a guarantee from a person within the group or a guarantee from a third person acceptable to the Bank should be obtained. The personal guarantee has to be obtained from a guarantor should own his/her own tractor/own at least 2 acres of irrigated land/4 acres of dry land employed in government, semi government employment in the category of Scale III and above or working with any reputed private sector undertakings at a respectable positions Running own business and having assets with a market value equal to the amount of the loan. The Branch will reserve the right to reject any loan application based on its own appraisal, having right to conduct inspections without any prior notice. In case the Borrower stops supplying milk to the Union the entire loan amount shall be repayable in lump sum/ recalled.

Score Sheet for Dairy/Milk Union: Parameters Score Positive PAT for past 3 years: 5 Positive PAT for 2 years out of 3 years: 3 Negative PAT for for 2 years and above out of past 3 years: 0 Scoring

Financial Dairy/Union

Performance

of

56

Less than 7 days: 5 Milk Payment cycle More than 7 and Upto 15 days: 3 More than 15 days: 0 Extension Services available through Dairy/ Milk Union: Cattle Feed Veterinary service Artificial Insemination

All three services provided: 5 Two out of three services provided: 3 One service provided: 2 Not provided: 0

Above 60%: 5 Average capacity utilisation of Milk Processing Plant over past 3 years Between 60%-45%: 3 Less than 45%: 0 More than 10 litres: 5

Average daily milk supplied per farmer member over

current Between 5-10 litres: 3 Less than 5 litres: 0

financial year

Collateral Security available from Guarantee or cash margin: 5 Union Letter of Comfort: 3

Direct Financing to Farmers under Contract Farming: Contract farming can be defined as an agreement between farmers and processing and/or marketing firms for the production and supply of agricultural products under forward agreements, frequently at predetermined prices. The arrangement also invariably involves the purchaser in providing a degree of production support through. The basis of such arrangements is a commitment on the part of the farmer to provide a specific commodity in quantities and at 57

Quality standards determined by the purchaser and a commitment on the part of the company to support the farmers production and to purchase the commodity. The intensity of the contractual arrangement varies according to the depth and complexity of the provisions in each of the following three areas: Market provision: The grower and buyer agree to terms and conditions for the future sale and purchase of a crop or livestock product; Resource provision: In conjunction with the marketing arrangements the buyer agrees to supply selected inputs, including the inputs required for land preparation and technical advice; Management specifications: The grower agrees to follow recommended production methods, inputs regimes and cultivation and harvesting specifications. Parties to the contract farming financing: Farmer Bank Sponsor Sponsor can act as management and Collection agent to undertake the following functions: Identification and screening of borrowers. Completing application form and other formalities like getting extracts of land records, no due certificate etc. of the proposed borrowers. Recommending the Bank for loan. Getting security documents executed by the borrower after sanction from the Bank and forwarding the same to the Bank. Paying the amount to the farmer disbursed by the Bank. Getting stamped receipt from the borrowers in token of having received the amount of loan and p0ass on to the Bank.
After the supply is over, sending to the Bank the entire proceeds payable to the farmer. In case amount payable to farmer by the sponsor is less than loan outstanding, to recover the balance amount from the farmer and remit to the Bank against the loan out standings.

Submitting the monthly MIS.

58

Eligibility Criteria: Cultivable fertile land of 3 acre and above. It has to be supported by land documents like Patta, chitta, adangal, 7/12, 8/A extract (confirming ownership, crop pattern etc) etc.

Rating: The individual account will not be rated in view of the structure of the scheme and comfort available from Sponsor.

Sanctioning and Disbursement of Loan: Bank and the sponsor based upon the scale of finance as decided by the DLCC of the lead Bank or a mutually agreed upon scale will be arrived upon by the Bank and the sponsor. The disbursement of loans will be effected to the credit of current a/c to be opened by the sponsor with our Bank exclusively for the said purpose. In order to make the disbursement to the farmers who are located at different centres, the sponsor will open a current account with any other local bank, again exclusively for making disbursement of loans to the farmers. The sponsor will also arrange to obtain a stamped receipt from the farmer borrowers in token of having received the amount of loan. The agriculture extension officers of sponsor will identify the individual farmers and complete all the documentation formalities as prescribed by the Bank. After the satisfaction of our branch personnel about the completion of documentation formalities, our branch will issue a consolidated cheque favouring the sponsors dedicated current account with our bank. Sponsor will arrange to provide us the transactions details of the loan disbursement account on a monthly basis certified by a Charted Accountant.

59

Amount: Depending on scale of finance as decided by the DLCC of the lead Bank per acre of land; or what is mutually agreed upon by the Bank and the sponsor, as the case may be.

Rate of Interest: 7.00%-12.00% per year. Payable half yearly depending on case to case basis. Tenor: Duration of the crop plus two months Security: Hypothecation of crop. Letter of Guarantee / Comfort letter (in absence of the letter of guarantee) from the sponsor

Collateral Security: Nil

Insurance: Wherever available the crop should be insured with standard bank clause. Processing Fees: Nil Disbursement: The agriculture extension officers of sponsor will identify the individual farmers and complete all the documentation formalities as prescribed by the Bank. Sponsor will forward our branch, the individual applications for the loan along with the required documents as detailed in the scheme. After the satisfaction of our branch personnel about the completion of documentation formalities, our branch will issue a consolidated cheque favouring the sponsors dedicated current account with our bank.

60

The sponsor will arrange to obtain a stamped receipt from the farmer borrower in token of having received the amount of loan and pass on to the Bank. Sponsor will arrange to provide us the transactions details of the loan disbursement account on a monthly basis certified by a Charted Accountant.

Repayment: After the supply is over, sponsor shall send to the Bank the entire proceeds payable to the farmer. The bank will make balance payment to the farmer after deducting their crop loan dues. In case amount payable to farmer by the sponsor is less than loan outstanding, sponsor will recover the balance amount from the farmer and remit to the Bank against the loan out standings. Our branch would conduct inspection on a half-yearly basis or as decided by the Bank to verify the crop. Our branch would also verify the books of accounts of the sponsor at half yearly interval to verify the disbursal of loan as per the scheme. Also, if required an external auditor would be appointed to audit the accounts.

Other Terms: Sponsor will sign M & C agency agreement with the Bank.

Education Loan:

Axis Bank's Study Power aims to provide financial support to deserving students for pursuing higher professional or technical education in India and abroad. The loan would be provided to students who have obtained admission to career-oriented courses eg, medicine, engineering, management etc., either at the graduate or post-graduate level.

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Quantum of loan: The quantum of finance under the scheme is capped at Rs.10 lacs for studies in India and RS 20

Lacs for studies abroad, which cover tuition fees, hostel charges (if any), cost of books, etc. The minimum amount of loan would be RS 50000.

Margin: No margin for loans upto Rs 4 lacs. For loans above Rs 4 lacs, 5% margin for studies within India and 15% for higher studies overseas.

Rate of interest: Interest rates linked to PLR.

Role: The parent(s) or guardian of the student would be treated as a co-applicant of the loan. His or her role would be, necessarily, like the primary debtor.

Security: Third party guarantee and/or collateral security may be asked for in appropriate cases.

Additional Security: Assignment of LIC Policy in favour of the Bank for the sum assured being at least 100% of the loan amount. The policy is kept alive during the currency of the loan. To ensure this, the annual premium may be include in the computation of the loan requirement, along with the tuition fees and other recurring charges. Further, the future income of the student needs to be assigned in favour of the Bank for meeting the instalment obligations.

62

Disbursement: The loan will be disbursed in full or in suitable instalments taking into account the requirement of funds and/or fee schedule as assessed by the Bank directly to the educational institution or vendor of books or equipment or instruments.

Abbreviations and Acronyms (Glossary): Bank: RBI BIS BCBS NABARD DICGC ECGC : : : : : Reserve Bank of India Bank of International Settlement Basel committee on Banking Supervisory Practices National Bank of Agriculture and Rural Development : Deposit Insurance and Credit Guarantee Corporation

Export Credit Guarantee Corporation

Delivery Channels: SOL PIN POS VbV WWW : : : : : Service Out-let Personal Identification Number Point of Sale Verified by Visa (Secured Internet Payment System) World Wide Web

63

Overseas Investor: FII NRI PIO FDI OCB : : : : : Foreign Institutional Investor Non Resident Indians Persons of Indian Origin Foreign Direct Investor Overseas Corporate Body

Fixed Deposit: STD MIC QIC RIC Interest: LIBOR MIBOR : : London Inter Bank Offered Rate Mumbai Inter Bank Offered Rate : : : : Short Term Deposit Monthly Income Certificate Quarterly Income Certificate Re-Investment Certificate

Payment and Settlement System: IDRBT INFINET SFMS RTGS NEFT : : : : : Institute for Development and Research in Banking Technology Indian Financial Network Structured Financial messaging Solution Real Time Gross Settlement (System) National Electronic Fund Transfer (System) 64

IFSC SEFT ECS SWIFT

: : : :

Indian Financial System Code Special Electronic Fund Transfer Electronic Fund Transfer Society for World Wide Inter Bank Financial Telecommunication (Network)

MICR

Magnetic Ink Character Recognition

Regulators: AMFI IRDA SEBI CBIL : : : : The Association of Mutual Funds in India Insurance Regulatory and Development Authority Security and Exchange Board of India Credit Information bureau (India) Ltd.

Investment: SLR ALM ALCO REPO ADR : : : : : Statutory Liquidity Ratio Assets liability Management Assets Liability Committee Reverse Purchase Order American Depository Receipt

General: BPLR FCNR : : Benchmark Prime landing Rate Foreign Currency Non Resident 65

NRE NRO FEMA FERA FEDAI

: : : : :

Non Resident External Non Resident Ordinary Foreign Exchange Management Act, 1999 Foreign Exchange Regulation Act, 1973 Foreign Exchange Dealers Association of India To Take Public Complaints against the Public Authorities

Ombudsman :

FATE

Financial Action Task Force

FIU-IND CAR CRAR GAAP NPA GRACE

: : : : : :

Financial Intelligence Unit India Capital Adequacy Ratio Capital to Risk-Weighted Assets Ratio Generally Accepted Accounting Principles Non Performing Assets Ground Rules and Codes of Ethics

Appendix www.axisbank.com Journals Circulars Annual Report

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