|
|
RBI/2008-2009/183
DBOD No. BP. BC.46/ 08.12.001/2008-09September
19, 2008
The Chairman & Managing Directors /Chief Executive Officers
of All Scheduled Commercial Banks (excluding RRBs and LABs)
Dear Sir,
Lending under Consortium
Arrangement/Multiple Banking Arrangements
As you are aware, various regulatory
prescriptions regarding conduct of consortium / multiple banking /
syndicate arrangements were withdrawn by Reserve Bank of India in October
1996 with a view to introducing flexibility in the credit delivery system
and to facilitate smooth flow of credit. However, Central Vigilance
Commission, Government of India, in the light of frauds involving
consortium/multiple banking arrangements which have taken place recently,
has expressed concerns on the working of Consortium Lending and Multiple
Banking Arrangements in the banking system. The Commission has attributed
the incidence of frauds mainly to the lack of effective sharing of
information about the credit history and the conduct of the account of the
borrowers among various banks.
2 . The matter has been examined by us in
consultation with the Indian Banks Association who are of the opinion that
there is need for improving the sharing/dissemination of information among
the banks about the status of the borrowers enjoying credit facilities
from more than one bank. Accordingly, the banks are encouraged to
strengthen their information back-up about the borrowers enjoying credit
facilities from multiple banks as under:
At the time of granting fresh facilities, banks may obtain
declaration from the borrowers about the credit facilities already
enjoyed by them from other banks in Annex 1. In
the case of existing lenders, all the banks may seek a declaration from
their existing borrowers availing sanctioned limits of Rs.5.00 crore and
above or wherever, it is in their knowledge that their borrowers are
availing credit facilities from other banks, and introduce a system of
exchange of information with other banks as indicated above.
Subsequently, banks should exchange information about the
conduct of the borrowers' accounts with other banks in the format given
in Annex II at least at quarterly intervals.
Obtain regular certification by a professional, preferably
a Company Secretary, regarding compliance of various statutory
prescriptions that are in vogue, as per specimen given in
Annex III.
Make greater use of credit reports available from CIBIL.
The banks should incorporate suitable clauses in the loan
agreements in future (at the time of next renewal in the case of
existing facilities) regarding exchange of credit information so as to
address confidentiality issues.
Yours faithfully,
(Prashant Saran)
Chief General Manager-in-Charge
ANNEX I
MINIMUM INFORMATION TO BE DECLARED BY
BORROWEING ENTITIES TO BANKS WHILE APPROACHING FOR FINANCE UNDER MULTIPLE
BANKING ARRANGEMENTS
A. Details of borrowing arrangements from
other banks (institution wise)
|
I. Name and address of bank/institution
|
|
|
II. Purpose for which borrowed
|
|
|
III. Limit sanctioned (full details to
be given, e.g. working capital / demand loan/ term loan / short term
loan)/ foreign currency loan, corporate loan / line of credit /
Channel financing contingent facilities like LC, BG, DPG (I & F)
etc. Also, state L/C bills discounting/project wise finance availed)
|
|
|
IV. Date of sanction
|
|
|
V. Present outstanding
|
|
|
VI. Overdues position, if any
|
|
|
VII. Repayment terms (for demand loans,
term loans, corporate loans, project -
wise finance) |
|
|
VIII. Security offered (complete
details of
security both primary and collateral
including specific cash flows assigned
to project wise finance/loan raised &
personal/ corporate guarantee, to be
furnished)
|
|
|
IX. Requests for facilities which are
under
process
|
|
[The information to be given for domestic and
overseas borrowings from commercial banks, Financial Institutions and
NBFCs]
B. Miscellaneous Details
|
i. CPs raised during the year and
current outstanding
|
|
|
ii. Details of financing outside
banking
system e.g. L/C Bills discounting
|
|
iii. Main and
allied activities with
locations |
|
| iv. Territory
of sales and market share |
|
v. Details of
financial aspects incl.
DSCR Projections wherever
applicable as per requirement of bank –
Imp. Financial covenants, if any,
agreed to/accepted with other lenders. |
|
vi. CID A/cs,
within/outside financing
Banks, being operated, if any |
|
vii. Demands by
statutory authorities/
current status thereof |
|
| viii. Pending
litigations |
|
ix. A
declaration authorizing the bank
to share information with other
financing banks |
|
ANNEX II
REVISED FORMAT UNDER MULTIPLE BANKING
ARRANGEMENT
CREDIT INFORMATION EXCHANGE
| PART I (BIO
DATA) |
I. Borrowing
party's name and
address |
|
| II.
Constitution |
|
| III. Names of
Directors / Partners |
|
| IV. Business
activity
|
|
|
V. Names of other financing Banksp |
|
| VI. Net worth
of Directors/Partners |
|
| VII. Group
affiliation, if any |
|
| VIII. Date on
associate concerns, if banking with the same bank |
|
| IX. Changes in
shareholding and management from the previous report, if any |
|
| PART II
(FINANCIAL) |
| I. IRAC
Classification |
|
| II. Internal
Credit rating with narration |
|
| III. External
Credit rating, if any |
|
IV. Latest
available Annual Report
of the borrower |
As on
--------------- |
| PART III
(EXPOSURE DETAILS) |
I. Type of
credit facilities, e.g.
working capital loan / demand
loan / term loan / short term
loan / foreign currency loan,
corporate loan / line of credit /
Channel financing, contingent
facilities like LC, BG & DPG
(I & F) etc. Also, state L/C
bills discounting / project wise
finance availed). |
|
| II. Purpose of
loan |
|
III. Date of
loan facilities
(including temporary facilities) |
|
| IV. Amount
sanctioned (facilitywise) |
|
| V. Balance
outstanding (facilitywise) |
|
| VI. Repayment
terms |
|
VII. Security offered
- Primary
- Collateral
- Personal / Corporate Guarantees
- Extent of control over cash flow
|
|
VIII. Defaults
in term commitments/
lease rentals / others |
|
IX. Any other
special information
like court cases, statutory
dues, major defaults, adverse
internal / external audit
observations . |
|
| PART IV
(EXPERIENCE)(*) |
I. Conduct of
funded facilities
(based on cash management/
tendency to overdraw) |
|
II. Conduct of
contingent
facilities (based on payment
history) |
|
III. Compliance
with financial
covenants |
|
IV. Company's
internal systems &
procedures |
|
| V. Quality of
management |
|
| VI. Overall
Assessment |
|
(The above to be rated as good, satisfactory or below par
only)
(*) Broad guidelines for incorporating comments under this head is
furnished in the next page.
BROAD GUIDELINES FOR INCORPORATING COMMENTS
UNDER PART IV
(EXPERIENCE) OF THE CREDIT INFORMATION REPORT
| |
GOOD |
SATISFACTORY |
BELOW PAR |
I. Conduct
of funded
facilities |
|
|
|
- Overdrawings (No. of times)
|
Upto 4 times |
5 to 6 times |
Above 6 times |
- Average period of adjustment
|
Within 1 month |
Within 2 months |
Beyond 2 months |
- Extent of overdrawings (% of limit)
|
Upto 10% |
10 to 20% |
Above 20% |
II. Conduct
of contingent
facilities |
|
|
|
|
|
Upto 2 times |
3 to 4 times |
Above 4 times |
- Average period of adjustment
|
Within 1 week |
Within 2 weeks |
Beyond 2 weeks |
III.
Compliance with
financial covenants |
|
|
|
- Stock statement / Financial data
|
Timely |
Delay upto 15
days |
Delay over 15
days |
|
|
Prompt |
Delay upto 2
months |
Delay over 2
months |
| IV.
Company's internal systems and procedures |
|
|
|
|
|
Adequate
systems are in place |
Adequate
systems are in place but not adhered |
Adequate
systems are not in place |
|
|
- do - |
- do - |
- do - |
|
|
- do - |
- do - |
- do - |
|
|
- do - |
- do - |
- do - |
| V. Quality
of management |
|
|
|
|
|
Reliable |
Nothing adverse |
Cannot be
categorized in previous columns |
- Expertise Competence/ Commitments
|
Professional &
visionary |
Have necessary
experience |
-do- |
|
|
Timely |
Executions /
|
-do- |
ANNEX– III
Part : I
|
DILIGENCE REPORT
To,
The Manager,
___________________ (Name of the Bank)
I/We have examined the registers,
records, books and papers of ____________ Limited (the Company) as
required to be maintained under the Companies Act, 1956 (the Act) and
the rules made thereunder , the provisions of various statutes,
wherever applicable, the provisions contained in the Memorandum and
Articles of Association of the Company as well as the provisions
contained in the Listing Agreement/s, if any, entered into by the
Company with the recognized stock exchange/s, as may be applicable for
the half year ended on ____________ . In my/our opinion and to the
best of my/our information and according to the examination carried
out by me/us and explanations furnished to me/us by the Company, its
officers and agents. I/We report that in respect of the aforesaid
period:
the management of the Company is carried out by the
Board of Directors comprising the following persons :
During the period under review the
following changes took place :
the shareholding pattern of the company is as under :
During the period under review the
following changes took place :
the company has altered the following provisions of
(i) the Memorandum of Association
during the period under review and has complied with the
provisions of the Act.
(ii) the following Articles of
Association during the period under review and has complied with
the provisions of the Act.
the company has during the period under review,
entered into the following transactions with business entities in
which directors are interested.
the company has during the period under review,
advanced loans, given guarantees and provided securities amounting
to Rs. ____________ to its directors and/or persons or firms or
companies in which directors are interested.
the Company has during the period under review, made
loans and investments; or given guarantees or provided securities to
other business entities as under:
the amount borrowed by the Company from directors,
members, public, financial institutions, banks and others during the
period under review is/are within the borrowing limits of the
Company. The break up of the company's borrowings are as under:
the Company has during the period under review, not
defaulted in the repayment of any public deposits or unsecured loans
and the Company or its Directors are not under the Defaulter's list
of Reserve Bank of India or in the Specific Approval List of ECGC.
the Company has during the period under review,
created, modified or satisfied charges on the assets of the company
as under:
the Forex exposure and Overseas Borrowings of the
company are as under'
the Company has issued, offered and allotted all the
securities to the persons entitled thereto and has also issued
letters, coupons, warrants and certificates thereof to the concerned
persons and also redeemed its preference shares/debentures and
bought back its shares (wherever applicable) in compliance with the
specified procedures and within the stipulated time.
the Company has insured all its secured assets.
the Company has complied with the terms and
conditions, set forth by the lending institution at the time of
availing the facility and also during the currency of the loan and
has utilized the funds for the purposes for which these were
borrowed.
the Company has declared and paid dividends to its
shareholders as per the provisions of the Companies Act, 1956.
the Company has insured fully all its assets.
the Company / Directors are not in the willful
defaulters' list of RBI.
the Company / Directors are not in the Specific
Approval List of ECGC.
the Company has paid all its Statutory dues and that
there are no arrears.
the Company has complied with the terms and
conditions, set forth by the lending institution at the time of
availing any facility and also during the currency of the loan.
the Company has used the funds for the purpose for
which it borrowed.
the Company has declared and paid dividends to its
shareholders, as per the provisions of the Companies Act.
the Company has complied with the provisions
stipulated in Section 372 A of the Companies Act in respect of its
Inter Corporate loans and Investments.
the Company has complied with the applicable and
mandatory Accounting Standards issued by the Institute of Chartered
Accountants of India.
the Company has credited and paid to the Investor
Education and Protection Fund all the unpaid dividends and other
amounts required to be so credited.
a list of prosecutions initiated against or show cause
notices received by the Company for alleged offences under the Act
and also the fines and penalties or any other punishment imposed on
the Company in such cases is attached.
the Company has complied with the various clauses of
the Listing Agreement, if applicable.
the Company has deposited both Employees' and
Employer's contribution to Provident Fund with the prescribed
authorities.
Note : The qualification,
reservation or adverse remarks, if any, may be stated
at the relevant place(s).
Place:
Date:
Signature:
Name of
Company Secretary:
C.P. No.: |
Part II
|
CERTIFICATIONS OF BORROWAL COMPANIES
BY CHARTERED ACCOUNTANTS / COMPANY SECRETARIES
Terms of reference for stock audit are to be spelt out
clearly by the Banks, so that the Chartered Accountants can give
focused attention to such areas.
End-use verification of funds lent, if certified by
Statutory Auditors, will be a good comfort to the Banks.
As Banks quite often deal with unlisted companies,
disclosure requirements for such companies above a specific turnover
may be made akin to those for listed companies, viz. consolidated
balance sheet, segmental reporting etc. Information on large
shareholding also will be useful.
Further, the following additional certification either
from Chartered Accountant or Company Secretary may also be thought
of :-
(a) Company Directors not figuring in
defaulters list (RBI/ECGC)/willful defaulters list etc.)
(b) Details of litigation above a
specified cut off limit.
(c) A specific certificate, probably
from the Company Secretary, regarding compliance with Sec. 372 (a)
of the Companies Act.
(d) Details of creation/
modification/ satisfaction of charges on the assets of the
company, position regarding insurance, show cause notices
received, finds and penalties awarded.
As regards rotation of Auditors, for the sake of
operational convenience, it is suggested they may be changed once
every 5 years instead of every 3 years.
In order to avoid concentration, group companies may
have different Statutory / Internal Auditors in case group turnover
exceeds Rs.100 crores.
|
Go to "RBI
Update - 2008" Listings
|
|
