credit audit format-people

7/31/2019 Credit Audit Format-people

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REPORT ON CREDIT AUDIT

Name of the Branch NARAYANAGUDA

Name of the Officer conducting Credit Audit KVSRY & ASSOCIATES

CHARTERED ACCOUNTANTSDate of Credit Audit 15/06/2012

Date of Report

No. of days taken

(Wherever amounts are furnished,It should be in (Lakhs)

PART A : PROFILE OF THE BORROWER

I a) Name and address of the borrower M/S PEOPLE COMBINE BENGALURUKNOWLEDGE INSTUTIONS PRIVATE

LIMITED

#126, Navanirman Nagar, Road No 71,

Jubilee Hills, Hyderabad 500033.

Group

b) Constitution

PRIVATE LIMITED COMPANY

c) Private / Public / Joint Sector

PRIVATE SECTOR

d) Line of Activity

EDUCATIONAL INSTITUTION

e) Name/s of Proprietor / Partners /

Directors and their Net worth

As on: 31/10/2010

Mr. T. Naga Prasad

23.94

Mr. Y.V.Raja Sekhar Babu

20.84

f) Names of Guarantors and their Net

worth

As on 31/03/2010

Mr. T. Naga Prasad

23.94

Mr. Y.V. Rajasekhar Babu

20.84

People Combine Educational Initiative

15.74

People Combine Business Initiatives Ltd

13.65

Oakridge Educational Society-1.83


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g) Details of last sanction / renewal

Sanctioning Authority

Date of Sanction

29/06/2011

Head Office, Credit Division Chennai

Board / MC / CMD / ED / GM(HO) / CH /

BM

29/06/2011

h)

Classification of asset:

As on: 31/03/2011

STD / SUB / D1 / D2 / D3 / LA

STANDARD

i) Credit Rating

As on: 2011

CRAA+

II Financing Pattern

a) Sole Banking, Multiple Banking or

Consortium Sole Baking

b) If Under Consortium NO

1) Name of the Leader Bank

2) Our Banks share as % to total

exposure

Amount (Rs. in Lakhs)

FB : Rs.

NFB : Rs.

III a. Prudential Exposure Norms(Rs. in lakhs)

Individual Group

Fund Based 35.45

Non-Fund Based

b. Actual Exposure Existing ProposedCompany

Group Company

Group

Fund Based 12.00 12.00 59.51 94.96

Non-Fund Based

Individual Group

Exposure Vs. Risk Weight: MitigationMechanism

Name of the Group

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IV Position of the Account ason

(Rs. in lakhs)

Sl.

No.

Facility Limit Drawin

g Limit

Balance as

on23/06/2012

Excess /

overdueif any

Excess /

Overduesince *

Margin

1 TL 3545.00 3545.00 2000.00 ---- ----- 34%

* Number of days remaining overdue be indicated.

Interest Income :

Non Interest Income :

Conduct of accounts: - Comments on Excess / adhoc permission clearance of the same / overdues

with age and comments thereon:

V A Effectiveness of Credit Appraisaland Monitoring: - Points to be

looked into for appraisals.

Descriptive comments

i. -- Latest date of assets / liabilities

statements obtained from theborrowers / guarantors / changes in

Net worth

31/03/2012 No Changes in Net worth

ii. -- Adequacy of the value of liquid

assets indicated in the statement to

take care of future capital requirement

of the unit in case of private limited

company / partnership concern

proprietorship concerns has been

looked into

Liquid assets as on 31/03/2012 is

3,99,34,632

iii. -- Whether IT / WT assessmentorders / returns filed are obtained from

the borrowers / guarantors and looked

into for any significant variance and

incorporated in the appraisal note.

iv. -- Whether the name of the partners /

proprietor / directors appearing in the

defaulter list of ECGC / RBI have been

commented and does it have any

impact on business

List Not Available

v. -- Status of compliance of statutoryrequirements like obtention of

clearance from Pollution Board,

adhering to Effluent Disposal Norms

NA

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etc.

vi. -- Comments on whether sanctions are

made by the delegated authority and

excess / adhoc if any permitted have

approval from the respective

authorities.

No Adhoc

V A Contd.

vii. Whether the Proprietors / Partners /

Directors of borrower entity or their

relative is a director in our bank / any

other scheduled banks / co-operative

bank.

NO

If so, whether sanctioned by the Board NAviii. Take over accounts (If applicable)

a. Whether in compliance with the bank

policy i.e.

-- Bench mark stipulated for take over

vis--vis the actual

No

b. -- Availability of status report from the

transferor bank / report on quality of

the asset and the conduct of the

account with them

No

V B Effectiveness of Credit Appraisaland Monitoring : - Performance

Appraisal

i. Evaluation / Comments on

Managements efficiency and

capability made by the branch

ii. Comments / evaluation on Last 2

years performance i.e.

a. -- Estimates vis--vis achievements 2010-2011 2011-2012

b. -- Net Sales 21.28 26.93

c. -- Operating Profit 1.89 4.05

d. -- Other Income 0.00 15.51

e. -- Net Profit after Tax 1.75 1.39

f -- Cash Profit 4.27 12.67

g. -- Installments falling due in the next

year Nil

iii. If the achievements were below 90%of the estimates, reasons for the same

(like, market scenario, unexpectedchanges industry specific and unit

specific etc.)

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V B Contd.

iv. Abnormal variations if any in

estimated / projected performance

which have been made in the appraisal

memorandum

No

v. Evaluation on the financial ratios forthe last 2 years and comments thereon

offered by the branch and the

stipulated improvement in the near

future. Comments / compliance with

reference to the Bench Mark on

a.

-- TOL / TNW

2010-2011 2011-2012

0.54 0.14

b. -- Current Ratio 1.98 1.99

c. -- Interest Coverage Ratio --- ---d. -- DSCR --- ---

e. -- Turnover Ratio --- ---

f. Cash Profit 12.67

i. -- Net Profit 1.39

ii. -- Depreciation 0.13

iii. -- Non cash expenses charged to P&L. ---

vi. Interlocking of funds in sister / allied

concerns if any, have been noticed /

commented in the appraisal by the

branch and further comments of the

credit auditor. Any diversion of short

term funds to long term uses within the

system also should be commented.

NO

vii. Comments on the qualifying remarks

of the auditors in the balance sheet and

its impact in the ratios / Credit risk

made by the branch in the appraisal

and further comments of the CreditAuditor

V B Contd.viii. Companys dues towards statutory

liabilities viz., IT / ST / PF / ESI /

Excise duty / Customs Duty

ix. Method of Working Capital

Assessment (i.e. Turnover Method /

STBC Method / Cash Budget Method /MBPF Method) applied

MBPF Method

x. Comments on adverse features such as

non routing the sale proceeds through

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the account, overdues, devolvement,

frequent excess etc., have been

whether brought out in the appraisal

memorandum by the branch and

comments of the credit auditor thereon

All the transactions are not routing

through the account

xi. Peer group comparison / inter firm

comparison made in the appraisal Comments on the areas compared and

the quality of comparison

Bank didnt made any peer groupComparison

xii. Are there proper justification forincreased sales (Volume / value) and

Profits

xiii. Is the profit / profitability projected is

in tune with past actual and reasoning

for enhanced profit if % of NP to sale

is increasing.xiv. Any adverse features (like defaults /

overdues / diversion) closure of

business units / hiving off etc.

No adverse features

xv. Availability of NWC to meet margin

requirement stipulated.

xvi. Comments on Type of facilities

recommended / sanctioned / adequate

chargeable current assets available net

of margin

V B Contd.

xvii

.

Total Time Taken for sanction 5.5 months for sanction of loan

a. Date of Branch Proposal 17/11/2011

b. Date of Sanction 29/06/2011

xvii

i

Capital Market Perception

a. -- Companyb. -- Industry Education Institution

xix. Obtaining Confidential reports on the

borrowers / co-obligants / guarantors /

associate concerns / Drawees of bills

from other Banks etc. wherever

required

NA

VI Documentation obtained:

i. -- Whether the loan documents are

kept in force Documents are not kept in force

ii. -- Whether documentation iscompleted as per terms of sanction

including Joint documentation, First

Charge / second Charge creation,

Documentation is completed as per terms

& conditions of Sanction letter.

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obtention of latest search report,

Obtention of Valuation certificates for

prime and collateral securities

Market value of Primary & Collateral

Security is 31.66 crores

iii. -- If not, impact on the non

availability of the securities due to non

compliance of the terms of sanction

(i.e. secured terms remaining asunsecured advance) documentation

COMMENTS.

iv. -- Receipt of approval from the

competent authority for non

compliance / waiver permitted

wherever required

v. -- Adequacy of insurance cover for

prime and collateral securities

Insurance isnt Available

VII

.

Compliance of Sanction Terms NIL

i. -- List of Terms of sanction not

complied with and whether brought to

the notice of the competent authorities.

ii. -- Reasons therefor

iii. -- Obtention of approval of the

competent authority with date of

approval

iv. -- Impact on the quality of assets /security / mitigative measures

available to the Bank.

VII

I.

Compliance of Regulatory / loan

policies of the Bank

NIL

i. Exposure Norms / Individual group

ii. Capital market exposure

iii. Norms for lending / Loan Delivery

Systemiv. Bills Culture norms

v. Rate of Interest charged

IX Credit Risk Assessment

i. -- Model Applied Large Corporate

ii. -- Latest year for which rating is done Rating is done in the year 2011

iii.

Comments on evaluation of

Financial Risk

Industry RiskBusiness risk

Factored for credit risk rating of the

borrower account as per the

SCORE GRADE

5.42 V

4.12 VII

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prescription of the model 7.04 III

iv. -- Migration of the rating Whether

looked into to take appropriate action.

X A Detection of early Warning Signals

(effectiveness of monitoring byCMO)

NA

i. -- Regular and timely submission of

periodical feed back statements

stipulated for review of performance

and capturing of warning signals i.e.

submission of stock statements,

MSOD / QIS / Balance Sheet etc.

a. -- Whether DP is arrived excluding

trade creditors / advances from

suppliersb. -- Whether quarterly operative limits

are fixed based on QIS II.

ii. Quality of review done by the

branch i.e.

a. -- Comparing the performance with

estimates

b. -- Evaluating the reasons for shortfall

in actual performance with

justification for continuation of the

limits at the existing level in spite ofshortfall in the actual performance

iv. Identification of warning signals

such as NA

a. -- Liquidity constraints due to

accumulation of slow moving / non

moving stocks / large overdue

receivables / doubtful of recovery /

failure of buyers to make payments /

diversion of funds within the system

and outside the system

b. -- Fall in the production / sales

c. -- Labour Problem

X A Contd.

d. -- Large sundry creditors

disproportionate to production level /

estimated

NO

e. -- Other market borrowings raised at

high cost without the permission of theBank NO

f. -- Overdues with other Banks / F Is if

any NO

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g. -- Frequent excess permitted NO

h. -- Frequent cheque returns inward and

outward

NO

v. -- Whether Identification as SMA is

made on timely basis and reported to

HO : Credit Department and CreditRisk Management Department

This account doesnt fall under SMA listtill now

vi. Effectiveness of action taken on timely

basis for maintaining the quality of the

account and inter-action with the

promoter / partner / proprietor

NA

vii. Comments on the effectiveness of

scrutiny of the Book debts / bills

discounted and further follow up.

For eg.

NIL

a. -- Items referred in the bill are relatingto the end products which the borrower

is manufacturing / dealing for which

we have financed

b. -- Price Quoted If below the present

market rate, whether the profitability

will be affected has been discussed

with borrower

c. -- Ageing analysis of Bills / Book

Debts

d. -- Effectiveness of scrutiny of the billsto ensure about the genuineness of

transaction

e. Follow up with the collecting banker /

drawee for realisation without delay.

X B Comments on FX Business handled (ifapplicable), Overdue PCs, Overdue

Post shipment bills, devolved LCs etc.

Whether these irregularities are

occurring very frequently or as a stray

incident. Evaluation done by the

branches for the above and actiontaken. Availability of ECGC cover /

Policy / ECGC approval wherever

needed.

NIL

X C Stock Audit (If applicable):

Comments on

i. -- Compliance with the frequency

stipulated and actual periodicity

NA

ii. -- Quality of stock auditor report

Conforming to the proforma suggested

by Head Office Covering all aspects

NA

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iii. -- Critical observations of Stock audit

inspection regarding working of the

unit

NA

iv. -- Action of the branch with regard to

Any adverse remarks which would

deteriorate the DP and the accounting

procedure etc.

NA

v. -- Closure of the Audit Report

Whether done within the stipulated

period.

NA

X D Comments on Consortiumworking

NA

i. -- Frequency of consortium meeting

held vis--vis sanction terms / receipt

of minutes and action taken report onthe suggestion / decision taken

ii. -- Inspection / Checking of securities

is being followed or not Give latest

date

iii. -- Regular submission of DP on

periodically done by the leader

Indicate latest date.

If not received, how the branch is

monitoring the actual drawings vis--

vis the DP to be furnished.iv. -- Exchange of information among the

members whether done regularly

v. Comments on compliance /

observations of RBI / Statutory /

Concurrent Auditors / Internal

Inspection

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X E Signals of Potential Credit RiskPerceived from day to day banking

operations

i. -- Devolvement of LCs / Invocation ofBGs

Details Previous

Year (Rs. in

lakhs)

Curren

t Year

(Rs. in

lakhs)LC BG LC B

G

No. of LCs /BGsestablished /issued

Amt.

No. of LCs /BGs devol-

ved / Invo-ked

Amt.

NIL

Comments

ii. Inland Bills / Export Bills Details PreviousYear

(Rs. in lakhs)

Curren

t Year

(Rs. inlakhs)

IB FB IB FB

No. of Bills dis-

coun-ted

Amt.

No. of Bills re-

turned unpaid

Amt.

NIL

Comments

iii. Irregularities in the account

iv. Reporting of irregularities anddevolvement of LC bills and obtention

of confirmation

X E Contd.

v. Overdues to F Is, Banks & Others andstatutory dues

vi. Routing of transactions and forexbusiness through the account Details Previous Year (Rs. in lakhs) CurrentYear(Rs. in

lakhs)

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Gross

Sales

Credit

Summat

ion

Forex

Busines

s as per

B/S

Forex

business

as per

branch

books

NILs

Comments

vii. Diversion of short-term funds for long-term uses, if any, noticed in the funds

flow statement

XI Qualitative comments on creditskills i.e. any major changes in

global scenario / Policy of

Government affecting the unit.

i. -- Capability to identify the critical

risk factor and to suggest mitigativefactors on timely basis

ii. -- Knowledge of branch officials on

credit appraisal process and conversant

with the various policy guidelines of

the Bank / RBI

iii. -- Analytical ability of the branch

officials as seen in the appraisal

iv. -- Training given / to be given on

credit and Credit Risk Managementarea.

XII

.

Final Views of the Officer

conducting credit audit

The potential problem of the unit may

run into in the next 1 year / Business

opportunity available to bank /

borrower

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Signature

Name :

Designation :

Placement :

Date :

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