Lesson-12 on Credit

Question: What is the allowable maximum no. of rescheduling for a customer?

Answer:

3 (three) times. If the loan becomes default after third rescheduling, the borrower will be treated as a habitual loan defaulter and the bank shall not consider for further loan rescheduling.

Question: What are the rules for depositing Down payment for rescheduling of loan?

Answer:

(i)    The borrower has to pay down payment at a time.

(ii)  If the borrower gives cheque, pay order or any other instrument against down payment, the bank must ensure encashment of such instrument before processing of rescheduling case.

Note:

Any previous payment from time to time shall not be treated as down payment.

Question: What is the role of Bank’s Credit Committee for rescheduling of loan?

Answer:

(i)         Rescheduling of any loan must be justified in written statement by the bank’s Credit Committee.

(ii)       The statement must give reasons why the rescheduling is beneficial to the long-run profitability and capital adequacy of the bank, including the factors that cause the Credit Committee to believe that the loan will ultimately be repaid in full.

(iii)     The statement must also explain the impact of this rescheduling on the bank’s liquidity position and the needs of other customers.

Question: What are the rules for treating a loan as Special Mention Account (SMA)?

Answer:

A Continuous loan, Demand loan or a Term Loan which will remain overdue for a period of 02 (two) months or more, will be put into the "Special Mention Account(SMA)".

Related post