SASTRA AND LAW

DISCLAIMER

Though every effort has been made to incorporate latest

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guidelines in the contents for ready reference of the users, this
chapter is not a substitute to Bank’s circulars/ guidelines and
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regulatory directives/ advisories. It might be possible that the
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latest guidelines get updated in this chapter with a time lag.

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If the readers find any error/omission/obsolescence, please

bring it to notice [email protected] for necessary
rectification.
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Any suggestion for improvement of the contents is

welcome.
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Updated Up to: -10.06.2024

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 TABLE OF CONTENTS

Sl. No Particulars Page No

1 Policy for Income Recognition, Asset Classification , 3
Provisioning and related aspects (IRAC NORMS)
2 Policy for Consolidated Guidelines on SARFAESI Action 17
(SARFAESI Act 2002)
3 Policy on Wilful Defaulters 39
4 Policy For Recovery and Management of NPA (OTS) 48
5 OTS in Credit Cards 69
6 Guidelines for Seizure and Sale of Vehicles 73
7 Policy for Transfer of Stressed Loans to ARC/Permitted 76
Transferees
8 Ways and Strategies to Improve Management of NPA 90
9 Policy on Engagement of Recovery Agency 101

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10 Policy on Engagement of Supporting Agency 108
11 Policy on Engagement of Detective Agency 111
12 Resolution of NPA through Lok Adalat 113
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13
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Guidelines on Recovery Cases through DRT/Civil Suit 116
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14 Policy on Forensic Audit 123

15 NPA Resolution through Mission Gandhigiri 127
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16 Model Scheme and SOP for Look Out Notice 129

17 Invocation of pledged Shares/sale of shares 133
18 Policy on Collection of Dues & Repossession of Security 135
PNB M-Touch – Mobile App & Web Application
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19 138
20 SASTRA Vertical – Vertical for Recovery & Resolution of 139
NPA Accounts
21 Time Bound Recovery Actions 147
22 Updated OTS Portal- Consolidated Guidelines 152
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23 Policy on Engagement of BC Agents 153

24 Recovery through RIGHT OF LIEN/ SET-OFF 157
25 Special OTS policy – For the year 2024-25 158
26 Handling NPA IN CBS 165
27 Express One Time Settlement (e-OTS) Process 190
28 Quick Mortality of Loan Acconts 199
29 LAW Matters 201

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 1. POLICY FOR INCOME RECOGNITION, ASSET
CLASSIFICATION, PROVISIONING & RELATED ASPECTS
(IRAC NORMS)
(SASTRA Division Circular No.32/2023)
In line with the international practices and as per the recommendations made by the
Committee on the Financial System (Chairman Shri M. Narasimham), the Reserve
Bank of India has introduced, in a phased manner, prudential norms for income
recognition, asset classification and provisioning for the advances portfolio of the
banks so as to move towards greater consistency and transparency in the published
accounts.
RBI has advised banks to ensure that while granting loans and advances, realistic
repayment schedules may be fixed on the basis of cash flows with borrowers. This
would go a long way to facilitate prompt repayment by the borrowers and thus improve
the record of recovery in advances.

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A. NON PERFORMING ASSETS
An asset, including a leased asset, becomes Non-Performing when it ceases to
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generate income for the bank.
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 A non-performing asset (NPA) is a loan or an advance where:-

o Interest and/ or instalment of principal remains overdue for a period of more
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than 90 days in respect of a term loan,

o The account remains ‘out of order’ in respect of an Overdraft/Cash Credit
(OD/CC),
o The bill remains overdue for a period of more than 90 days in the case of
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bills purchased and discounted,

o The instalment of principal or interest thereon remains overdue for two crop
seasons for short duration crops,
o The instalment of principal or interest thereon remains overdue for one crop
season for long duration crops,
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o The amount of liquidity facility remains outstanding for more than 90 days,
in respect of a securitisation transaction undertaken in terms of the RBI
(Securitisation of Standard Assets) Directions, 2021.
o In respect of derivative transactions, the overdue receivables representing
positive mark-to-market value of a derivative contract, if these remain
unpaid for a period of 90 days from the specified due date for payment.
‘Out of Order’ status

o A CC/OD account shall be treated as ‘out of order’ if:-

1. The outstanding balance in the CC/OD account remains
continuously in excess of the sanctioned limit/drawing power for 90
days, or
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 2. The outstanding balance in the CC/OD account is less than the
sanctioned limit/drawing power but there are no credits continuously
for 90 days, or the outstanding balance in the CC/OD account is less
than the sanctioned limit/drawing power but credits are not enough to
cover the interest debited during the previous 90 days period
(‘Previous 90 days period’ shall be inclusive of the day for which the
day-end process is being run).
 ‘Overdue’ Status:- Any amount due to the bank under any credit facility is
‘overdue’ if it is not paid on the due date fixed by the bank. The borrower
accounts shall be flagged as overdue by the banks as part of their day-end
processes for the due date, irrespective of the time of running such processes.
B. INCOME RECOGNITION
 The policy of income recognition is based on record of recovery and objectivity
rather than on any subjective considerations. As per guidelines income
from non-performing assets is not recognized on accrual basis but is

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booked as income only when it is actually realised. Therefore the
branches should not charge and take to income account interest on any NPA.
This will apply to Govt. guaranteed accounts also.
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 Interest on advances against term deposits, NSCs, IVPs, KVPs and Life
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Policies may be taken to income account on the due date, provided adequate
margin is available in the accounts. For the purpose of calculating the margin,
value of security should be taken as under:-
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o In case of advances against Term Deposit in the nature of recurring

and reinvestment deposits, the principal and interest accrued thereon
shall be taken into account.
o In case of advances against LIC policies, the latest surrender value of
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the policy may be taken into account.

o In case of advances against NSCs eligible for surrender, IVPs and
KVPs the interest accrued on the value of security should be taken into
account.
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 Branches should not take to income any fees/ commission and any similar
income on non-performing assets until it is actually realised. Similarly
charges/expenses/insurance etc. on such a Borrowal account should not be
debited to the Borrower’s account unless recovered, the same need to be
recorded in the Memoranda Account after charging to Bank’s Revenue.
 In cases of loans where moratorium has been granted for repayment of
interest, income may be recognised on accrual basis for accounts which
continue to be classified as ‘standard’.
Reversal of Income
 If any advance, including bills purchased and discounted, becomes NPA, the
entire interest accrued and credited to income account in the past periods,

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 should be reversed if the same is not realized and stop further application of
interest. This will apply to Government guaranteed accounts also.
Clarification: The exercise of De-Recognized Interest has been automated in our
bank. The same is done by the CBS system itself. Further, as the classification of
NPA is being done on daily basis, the De-Recognizing of Interest is also being
done for account classified as NPA on daily basis and not at the close of the
year/half-year/Quarter. This amount will be recorded separately in Memorandum
Account. Interest on advance guaranteed by Central Government irrespective of its
asset’s classification status is not to be taken to income account unless the interest
has been actually realized.
 If loans with moratorium on payment of interest (permitted at the time of sanction
of the loan) become NPA after the moratorium period is over, the capitalized
interest, if any, corresponding to the interest accrued during such moratorium
period need not be reversed.

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Appropriation of Partial Recoveries

 RBI has advised that in the absence of a clear agreement between the bank
and the borrower for appropriation of recoveries in NPAs, (i.e. towards principal
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or interest due), banks should adopt an accounting principle and exercise the
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right of appropriation of recoveries in a uniform and consistent manner.

 Our Bank’s Board approved policy in this regard is as under:
Appropriation of Recoveries in NPA accounts (irrespective of the mode / status
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/ stage of recovery actions) shall be regulated in the following order of priority:

o Expenditure/Out of Pocket Expenses incurred for Recovery (earlier
recorded in Memorandum Dues)
o Thereafter towards the interest irregularities/accrued interest.
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o Principal irregularities i.e. NPA outstanding in the account.

Clarification:- In case of borrowers who are having multiple accounts - On receiving
recovery in one account system appropriates recovery towards Expenditure,
Recorded Interest and Principal outstanding of same account. Further, surplus
recovery amount, if any, takes care of Expenditure, Recorded Interest and Principal
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outstanding of another account for same Customer.

Treatment in Cash Credit- NPA accounts with tagging facility:

Debits in Cash Credit - NPA account with tagging facility can be allowed dependent
upon extent of tagging permitted by appropriate authority. The proceeds received
through tagging arrangement would also be utilized in the following order:-
o Expenditure/Out of pocket Expenses incurred for recovery.
o Recognition of Recorded Interest.
o Principal outstanding balance in Working Capital Facility till it is brought
within the DP/Limit (Whichever is lower)
o Instalments in arrear in Term Loan Account

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 C. ASSET CLASSIFICATION
RBI has advised that all Non-Performing Assets need to be classified into following 3
categories based on the period for which the asset has remained Non-Performing
and the realisability of the dues.
 Sub-standard Assets : A sub-standard asset is one, which has remained
NPA for a period less than or equal to 12 months; such an asset will have
well defined credit weaknesses that jeopardize liquidation of the debt and are
characterized by the distinct possibility that the bank will sustain some loss, if
deficiencies are not corrected.
 Doubtful Assets: An asset is classified as doubtful if it remained in the sub-
standard category for 12 months. A loan classified as doubtful has all the
weaknesses inherent in assets that were classified as sub-standard with the
added characteristic that the weaknesses make collection or liquidation in full,
on the basis of currently known facts, conditions and values, highly
questionable and improbable.

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 Loss Assets A loss asset is one where loss has been identified by the bank
or internal or external auditors or the RBI Inspectors but the amount has not
been written off wholly. In other words, such an asset is considered
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uncollectible and of such little value that its continuance as a bankable asset
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is not warranted although there may be some salvage or recovery value.

Functionaries responsible for correct classification
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OFFICE DEFINITION
Branch Office Responsible for recovery in NPA accounts with Balance O/s up to
Rs.10.00 Lakh. (Borrower wise)
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Circle SASTRA Circle SASTRA Office: Recovery and resolution of NPA

Centre borrowers having aggregate balance outstanding above Rs.10
lakhs (Borrower wise)
Zonal SASTRA NPA Accounts of the Branches at ZO location centre with
Centre Balance O/s above Rs.10.00 Cr (Borrower wise) & NCLT
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accounts. They will also monitor the Circle SASTRA & will be
reporting office of Circle SASTRA.
SASTRA Responsible for overall management of the NPA portfolio of the
Division bank

Channels to settle doubts:

LEVEL SEEKING AUTHORITY TO MAXIMUM TIME PERIOD

CLARIFICATION SETTLE THE DOUBTS
Branch Heads of AGM/ CM of Circle Within 48 hours of
Branches -upto Rs 10 lac Office references received.
Above 10 lac to 10 Cr – Zonal SASTRA Within 3 days of reference
Circle SASTRA received.
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Above 10 Cr –Circle SASTRA Division, HO Within 3 days of reference
SASTRA/Zonal SASTRA received.

Availability of security or net worth of borrower/guarantor should not be taken into

account for the purpose of treating an advance as NPA.
Accounts with temporary deficiencies:-
The classification of an asset as NPA should be based on the record of recovery.
Branches need not classify an account as NPA merely due to the existence of some
deficiencies which are temporary in nature such as non-availability of adequate
drawing power based on the latest available stock statement, balance outstanding
exceeding the limit temporarily, non-submission of stock statements and non-renewal
of the limits on the due date etc. In case of such deficiencies please be guided by the
rules given below:-
a) Branches should ensure that drawings in the working capital accounts are covered

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by the adequacy of current assets, since current assets are first appropriated in times
of distress. Drawing power is required to be calculated/arrived at based on the stock
statement which is current. However, considering the practical difficulties of large
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borrowers, stock statements relied upon by the banks for determining drawing power
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should not be older than three months. The outstanding in the account based on
drawing power calculated from stock statements older than three months, would be
deemed as irregular.
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b) A working capital borrowal account will become NPA if such irregular drawings are
permitted in the account for a continuous period of 90 days even though the unit may
be working or the borrower’s financial position is satisfactory.
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The above guidelines are explained below with the help of an illustration:

S. No Periodicity of Last Stock Date on Which Date on Which

Submission of Stock Statement Account Turns Account Turns
Statement Submitted as Irregular (In NPA (In case
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on case of Non of Non

Submission of Submission of
Next Stock Next Stock
Statement) i.e. Statement) i.e.
after 3 months 90 days after 3
months
1 Monthly 31.03.2022 01.07.2022 29.09.2022

c) Regular and adhoc credit limits need to be reviewed / regularised not later than
three months from the due date/date of adhoc sanction. In case of constraints such as
non-availability of financial statements and other data from the borrowers, the branch
should furnish evidence to show that renewal / review of credit limits is already on and
would be completed soon. In any case, delay beyond six months is not considered
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desirable as a general discipline. Hence, an account where the regular/ adhoc credit
limits have not been reviewed / renewed within 180 days from the due date/date of
adhoc sanction will be treated as NPA.

Upgradation of loan accounts classified as NPAs:-

The loan accounts classified as NPAs may be upgraded as ‘standard’ asset only if
entire arrears of interest and principal are paid by the borrower. In case of borrowers
having more than one credit facility from a bank, loan accounts shall be upgraded from
NPA to standard asset category only upon repayment of entire arrears of interest and
principal pertaining to all the credit facilities.

Regularization of Account by Balance Sheet Date:-

If the accounts of the borrowers have been regularized before the balance sheet date
by repayment of overdue amounts through genuine sources (and not by sanction of
additional facilities or transfer of funds between accounts) the accounts need not be
treated as NPA The asset classification of borrowal accounts where a solitary or a few
credits are recorded before the balance sheet date should be handled with care and

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without scope for subjectivity. Where the account indicates inherent weakness on the
basis of the data available, the account should be deemed as NPA. In other genuine
cases, the branches/circle SASTRA/zonal SASTRA must furnish satisfactory evidence
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to the Statutory Auditors/ Inspecting Officers about the manner of regularization of the
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account to eliminate doubts on their performing status.
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Asset Classification to be borrower-wise and not facility-wise.

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Commonality of a Collateral Security has no role in determining the Asset

Classification. Therefore accounts of different borrowers have to be examined
on the basis of their respective records of recovery.
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Advances under consortium arrangements

Asset classification of accounts under consortium should be based on the record of
recovery of the individual member banks and other aspects having a bearing on the
recoverability of the advances. Where the remittances by the borrower under
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consortium lending arrangements are pooled with one bank and/or where the bank
receiving remittances is not parting with the share of other member banks, the account
will be treated as not serviced in the books of the other member banks and therefore,
be treated as NPA. The banks participating in the consortium should, therefore,
arrange to get their share of recovery transferred from the lead bank or get an express
consent from the lead bank for the transfer of their share of recovery, to ensure proper
asset classification in their respective books.

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Accounts where there is erosion in the value of security/frauds committed by
borrowers
In respect of accounts where there are potential threats for recovery on account of
erosion in the value of security or non-availability of security and existence of other
factors such as frauds committed by borrowers it will not be prudent that such
accounts should go through various stages of asset classification. In cases of such
serious credit impairment, the asset should be straightaway classified as doubtful or
loss asset as appropriate:
a) Erosion in the value of security can be reckoned as significant when the
realisable value of the security is less than 50 per cent of the value assessed by the
bank or accepted by RBI at the time of last inspection, as the case may be. Such
NPAs may be straightaway classified under doubtful category and provisioning should
be made as applicable to doubtful category.
b) If the realizable value of the security, as assessed by the bank’s approved

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valuers/RBI is less than 10% of the outstanding in the borrowal accounts, the
existence of security should be ignored and the asset should be straightaway
classified as loss asset and accordingly provision should be made by bank.
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Advances to Primary Agricultural Credit Societies (PACS)/Farmers’ Service
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Societies (FSS) ceded to Commercial Banks

In respect of agricultural advances, as well as advances for other purposes granted
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by banks to PACS / FSS ceded to Commercial Banks under the on-lending system,
only that particular credit facility granted to a Primary Agricultural Credit Society
(PACS) / Farmers Service Societies (FSS) which is in default for a period of two crop
seasons in case of short duration crop & one crop season in case of long duration
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crop, as the case may be, after it has become overdue, will be classified as NPA and
not all the credit facilities sanctioned to a PACS/FSS. However, other direct loans and
advances, if any, granted by the bank to the member borrower of a PACS/FSS outside
the on-lending arrangement will become NPA even if one of the credit facilities
granted to the same borrower becomes NPA
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Advances against FDR/NSCs/KVP/IVP/LIP-

Advances against Term Deposits, NSCs eligible for surrender, Indira Vikas Patras,
Kisan Vikas Patras and Life Insurance Policies, need not be treated as NPAs provided
adequate margin is available in the accounts.
Advances to Staff members, under Staff Welfare Scheme-
In respect of Housing/Car loans or similar advances granted to staff members where
interest is payable after recovery of principal, interest need not be considered as
`overdue' from the first quarter onwards. Such loans/advances should be classified as
NPA only when there is default in repayment of installment of principal or payment of
interest on due date of payment.

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Agriculture Advances
A loan granted for short duration crops will be treated as NPA, if the installment of
principal or interest thereon remains overdue for two crop seasons. A loan granted for
long duration crops will be treated as NPA, if the installment of principal or interest
thereon remains overdue for one crop season.
In order to comply with RBI’s guidelines for exclusion of Agricultural advances
governed by crop season-based asset classification from SMA classification, a revised
approach of monitoring of irregular crop-based agriculture advances has been
formulated so that these accounts do not slip to NPA all of a sudden. Details of
revised monitoring system is tabulated as under:-

For Crop based CC/OD:

IrrgularitiesSub- Crop Period Basis for Classification
Categories (Overdue period)
Short Term Crop
CBR-0 1-364 days
CBR-1 365-546 days

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CBR-2 547-729 days
Long Term Crop
CBR-0 1-364 days
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CBR-1 11 365-546 days
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CBR-2 547-729 days

For Crop based TL/DL:

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Irrgularities Sub- Crop Period Basis for Classification

Categories (Overdue period from
the date of
Instalment/Interest due
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date)
Short Term Crop
CBR-0 1-364 days
CBR-1 365-546 days
CBR-2 547-729 days
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Long Term Crop

CBR-0 1-182 days
CBR-1 183-364 days
CBR-2 365-547 days

Kisan Credit Cards

The KCC facility being essentially in the nature of Cash Credit accommodation for
agricultural purposes, the prudential norms as applicable to Cash Credit facilities
would apply to the KCC accounts. In other words, the Kisan Credit Card Account
would be deemed to be a Non Performing Asset (NPA) if it remains out of order for a
period of two crop seasons /one crop season (as the case may be).
A KCC account will be treated as out of order in the following circumstances:

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a) There are no credits in the account continuously for two crop seasons/one crop
season (as the case may be) as on the date of balance sheet.

b) The outstanding remains continuously in excess of the limit for two crop
seasons/one crop season (as the case may be) as on the date of balance sheet.

c) The credits in the account are not sufficient even to cover the interest debited in
respect of the account for two crop seasons/one crop season (as the case may be).

Note: However, to become eligible for the relaxed rate of interest of 7% and for
Additional Incentive Subvention under Subvention Scheme of Govt of India, each debit
entry should be adjusted within a maximum period of 12 month.

Government guaranteed advances

The credit facility backed by the Central Government Guarantee though overdue
may be treated as NPA only when the Government repudiates its guarantee

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when invoked. This exemption from classification of Government guaranteed
advances as NPA is not for the purpose of recognition of income. Accordingly
Central Govt. guaranteed advance, if become overdue, be classified as Standard
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asset (Govt Guaranteed) (unless Govt. repudiate its guarantee when invoked) though
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interest on such advance is not to be taken to income account if it is not realised.
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 The requirement of invocation of guarantee has been delinked for deciding the
asset classification and provisioning requirements in respect of State
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Government guaranteed exposures.

 With effect from the year ending March 31, 2006 State Government
guaranteed advances and investments in State Government guaranteed
securities would attract asset classification and provisioning norms if interest
and/or principal or any other amount due to the bank remains overdue for more
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than 90 days.

D.PRUDENTIAL NORMS/GUIDELINES ON PROVISIONING

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The primary responsibility for making adequate provisions for any diminution in the
value of loan assets, investment or other assets is that of the bank. The assessment
made by the inspecting officer of the RBI is furnished to the bank to assist the bank
management and the statutory auditors in taking a decision in regard to making
adequate and necessary provisions in terms of prudential guidelines.
Accordingly, bank has to keep adequate provisions for any diminution in the value of
loan assets, investment or other assets. Responsibility of the Field Recovery Warrier,
Circle Sastra / Branch is to ensure that proper data is fed into CBS records particularly
with reference to Date of NPA, Value of Security, and Special categories of the Assets
etc. to enable the CBS to correctly classify the NPA accounts and calculate the
provisions

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D.1. Loss Assets
If loss assets are permitted to remain in the books for any reason, 100% of the
outstanding should be provided for.
D.2. Doubtful Assets
100 % of the extent to which the advance is not covered by the realisable value of the
security to which the bank has a valid recourse and the realisable value is estimated
on a realistic basis.
In regard to the secured portion, provision may be made on the following basis:
Period for which the advance has Provision requirement (%)
remained in ‘doubtful’ category
Up to one year DB-1 25%
One to three years DB-2 40%
More than three years DB-3 100%

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(Accounts which are in Doubtful category (DB-3) and where 100% Provisions
have been made merely due to ageing need not to be classified as Loss.)
D.3. Sub-standard
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A general provision of 15 percent on total outstanding should be made without

making any allowance for ECGC guarantee cover and securities available.
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The ‘unsecured exposures’ which are identified as ‘substandard’ would attract

additional provision of 10 per cent, i.e., a total of 25 percent on the outstanding
balance.
D.4. Standard Assets
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S.No Category of standard asset Rate of

Provisioning
a Direct Advances to agricultural and Small & Micro 0.25%
Sectors (**)
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b Advances to Commercial Real Estate (CRE) 1.00%

sector
c Advances to Commercial Real Estate – 0.75%
Residential Housing Sector (CRE - RH)
d Housing loan granted at ‘Teaser Rates 2.00%
e Restructured advances – As per restructure
guidelines
f Advances restructured and classified as standard 5%
g All other loans and advances not included in ‘a’ to 0.40%
f

It is clarified that Medium Enterprises shall attract 0.40% provisions.

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The provisions on standard assets should not be reckoned for arriving at net NPAs.

D.5 Guidelines for Provisions under Special Circumstances:

Advances against deposits/specific instruments: Advances against term deposits,
NSCs eligible for surrender, IVPs, KVPs, gold ornaments,government & other
securities and life insurance policies would attract provisioning requirements as
applicable to their asset classification status.

D.6 Advances covered by ECGC/ DICGC guarantee

In the case of advances classified as doubtful guaranteed by DICGC/ECGC, provision
should be made only for the balance in excess of the amount guaranteed by these
Corporations.
Example In Lacs
Outstanding Balance 4.00 Outstanding Balance 4.00

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ECGC cover 50% Less Value of Security 1.50
NPA Status DBII Unsecured Balance 2.50
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Value of Security Held 1.50 11
Less ECGC Cover 1.25
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Net Unsecured Balance 1.25

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PROVISION
100% Unsecured Portion 1.25
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40% Secured Portion (DB-II) 0.60

Total 1.85
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D.7 Advance covered by Credit Guarantee Trust for Micro & Small Enterprises
(CGTMSE) and Credit Risk Guarantee Fund Trust for Low Income Housing
(CRGFTLIH) guarantee

In case the advance covered by CGTMSE guarantee becomes non-performing, no

provision need be made towards the guaranteed portion. The amount outstanding in
excess of the guaranteed portion should be provided for as per the extant guidelines
on provisioning for non-performing advances

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Example:-
Outstanding Balance Rs. 10 lakhs
CGTMSE/CRGFTLIH Cover 75% of the amount outstanding or 75% of the
unsecured amount or Rs.37.50 lakh, whichever is the least
Period for which the advance has remained doubtful More than 2 years remained
doubtful (say as on March 31, 2022)
Value of security held Rs. 1.50 lakhs
In Lacs
Outstanding Balance 10.00
Less Value of Security 1.50
Unsecured Balance 8.50

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Less CGTMSE Cover (75%) 6.38
Net Unsecured Balance 2.12
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100% Unsecured Portion
11 2.12
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40% Secured Portion (DB-II) 0.60

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Total 2.72

D.8 Provisioning for country risk

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Banks shall make provisions, with effect from the year ending March 31, 2003, on the net funded
country exposures on a graded scale ranging from 0.25 to 100 percent according to the risk categories
mentioned below. To begin with, banks shall make provisions as per the following schedule

Risk category ECGC Classification Provisioning Requirement (per cent)

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Insignificant A1 0.25
Low A2 0.25
Moderate B1 5
High B2 20
Very high C1 25
Restricted C2 100
Off-credit D 100

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D.9 Provisioning Coverage Ratio
Provisioning Coverage Ratio (PCR) is essentially the ratio of provisioning to gross
nonperforming assets and indicates the extent of funds a bank has kept aside to cover
loan losses. Bank should augment their provisioning cushions consisting of specific
provisions against NPAs as well as floating provisions, and ensure that their total
provisioning coverage ratio, including floating provisions, is not less than 70 per cent.
Accordingly, banks were advised to achieve this norm not later than end September
2010.
General Clarifications/Guidelines
 Pari-passu/second charge on all block assets should be treated as security.
While calculating our share, availability of security to cover our exposure &
share in security of the 1st charge holder should be assessed.
 Surplus security available in one facility of an account should be considered in
another facility of the same borrower where there is shortfall.

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 In case of primary security, value of security should be taken on the basis of the
latest stock report. In case the stock report is not available/ old, bank official
should inspect the stock physically, after drawing a stock report where
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signature of borrower/ borrower’s authorised signatory is obtained and fair
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value be arrived at.
 Net means of borrowers and guarantors are not to be included as security.
 In NPA accounts (except where operations are allowed under tagging
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arrangement & accounts covered under Credit Guarantee scheme) expenses

like Insurance Premium, Stamp Duty, Legal Expenses, Emoluments paid to the
Godown Keeper or such other expenses incurred for safeguarding the interest
of the bank should not be debited to the concerned NPA account. Instead, such
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expenses should be charged to revenue and recorded in the NPA Memoranda

Account.
 While initiating Recovery Actions viz. SARFAESI/DRT Claim etc. it is the
Memorandum Dues (i.e. including Penal Interest) that have to be taken
cognizance of and claimed.
15

 Whenever any payment through cheque is collected in any NPA account,

except where operation is being allowed, the credit entry pertaining to such
payment should only be credited after realization of the cheque. (Till realization,
such credit be kept in ‘Sundry’ account). Collection of any cheque/Transfer
Instruments in NPA accounts is strictly prohibited.
 Allocated Limit cannot be allowed to be continued/ parked at a branch other
than the parent branch, without the prior written permission of the Controlling
Authorities. Parent branch should call back the allocated limit from the Service
Branch immediately after account gets classified as NPA.

15 | P a g e
Wilful Defaulters and Non-Cooperative Borrowers
The provisioning in respect of existing loans/exposures of banks to companies having
director/s (other than nominee directors of government/financial institutions brought on
board at the time of distress), whose name/s appear more than once in the list of wilful
defaulters, will be 5% in cases of standard accounts; if such account is classified as
NPA, it will attract accelerated provisioning is as under -
Asset Classification Period as NPA Provisioning (%)

Sub-standard (secured) Upto 6 months 15

6 months to 1 year 25
Sub-standard Upto 6 months 25
(unsecured ab- initio) 6 months to 1 year 40
Doubtful I 40
2nd year (secured portion)
100

:57
(unsecured portion)
Doubtful II 100
3rd & 4th year
for both secured
24 7
Doubtful III
11
5th year onwards
and unsecured
100
-20 66
-06 134

Provisioning requirements for credit card

Provisioning requirements for credit card receivables will be as per RBI guidelines
which are presently as follows
5

Sr.No. Nature of asset Rate of Provisioning

1 Standard asset Applicable rate (0.40% at present)
2 Sub-standard asset 25%
3 Loss asset 100%
15

*****

16 | P a g e
 2. Policy for CONSOLIDATED GUIDELINES ON SARFAESI ACTION
(SARFAESI Act 2002)
(Sastra Div Cir no 09/2024)

Govt. of India promulgated the Securitization and Reconstruction of Financial

Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and also
notified the Security Interest (Enforcement) Rules 2002 with the object of quicker
resolution of non-performing assets of the banks/FIs. The Security Interest
(Enforcement) Rules 2002 prescribe the manner of exercise of rights of secured
creditors under the SARFAESI Act.

In order to enforce provisions of SARFAESI Act, Bank has been framing various
guidelines like granting permission for initiation of SARFAESI action, formation of
Committees for fixation of Reserve Price and taking SARFAESI action to the logical

:57
end, within the ambit of the Act.

It is a well-established fact that SARFAESI Act can be used as an efficient tool for
24 7
expeditious resolution of NPAs. However, its efficacy is dependent on the chain of
11
actions initiated one after the other.
-20 66

In the Work Flow Chart of SARFAESI Action an attempt has been made to briefly
-06 134

describe the procedure and the various steps involved in the SARFAESI action from
the inception till its logical end along-with the well-defined timelines to be adhered
to strictly at Branch level as well as at SASTRA Centre level. However, the
present Work Flow Chart is not intended to be a substitute of the detailed operative
5

guidelines and SARFAESI Manual, which will continue to be referred as reference

material.

T Date – Date on which account slipped into NPA

D Date – Date on which account gets transferred to SASTRA Centres (Standard date
15

after 30 days of classification of an account under NPA category)

E Date – Day on which 60 days from date of delivery of notice u/s 13(2) have been
completed.

17 | P a g e
Actions Under SARFAESI Act Timeline For
Initiating Steps
Under
SARFAESI Act

An account becomes NPA

Prepare SI-2 (SARFAESI Manual). Get administrative sanction T+2 Days

for Recall and taking SARFAESI Action, which lies with Branch
Head irrespective of scale.
Issue 60 Days’ “Notice under Section 13(2)” of SARFAESI Act- T+10 Days
cum-Recall Notice/Invocation of Guarantee as per format
revised SI-4 for borrowers and revised SI-4A for guarantors.\

Notice served: Notice un-served: By T+17 Days

In the ordinary Within a reasonable period, say of 7

:57
course, service of days or so, if service of notices on
notices is effected all/some of the borrowers who have
within a reasonable created security interest is found to be
24 7
period, say 7 days or
11
not effected, fresh steps be taken for
-20 66

so. Check and ensure service / Substituted Service by

that notice stands affixation of 13(2) Notice where
served on all the borrower /mortgagor ordinarily resides
-06 134

borrowers who have or carries on business and also by

created security publication in two newspapers, one of
interest. Proof of which should be in vernacular
sending notices, language. Authorized Officer to satisfy
5

(Postal Receipts, AD that service is complete. Proof of

Cards, POD, etc. be sending notices, (Postal Receipts,
kept on records). Notices received back (without opening
Notice can also be /tearing them), AD Cards, POD, and
15

served through hand publications in the newspapers etc. be

delivery. kept on records.)

Representation by the borrower under Section 13(3A) BY D+47 Days

In case borrowers submit representation/raise objections under
Section 13(3A), suitable reply to be submitted by Authorized
Officer within maximum mandatory time limit of 15 days from
the date of receipt of representation from the borrowers,
{preferably within the 60 days period of having issued Notice
under Section 13 (2)}.

18 | P a g e
 STEPS AFTER SECTION 13 (2) NOTICE

Engagement of Supporting Agency and its role All these steps

For pre-take over examination of identified secured assets, to be
taking over possession, obtaining assistance of DM/CMM for simultaneously
taking over possession, acting as custodian, providing security completed by
for protection and preservation of assets taken in possession D+47
and assisting bank for sale of assets. Days

If required, supporting agency may be engaged for additional All these steps
Support. Letter to the Supporting Agency to be issued by to be
Authorized Officer as to its engagement and simultaneously
specificservices/support it has to render to Authorized Officer, completed by
as per D+47
Policy guidelines pertaining to Supporting Agencies. Days

:57
Supporting agency to make pre possession survey and submit
report. The report be examined as to what precautions and
steps need to be taken for possession. If everything is found
24 7
in order, Authorized Officer to proceed for further action. In
11
Consortium/Multiple Banking Accounts consent of 60% of the
-20 66

secured creditors need to be taken before taking possession

/other measures u/s 13(4) of SARFAESI Act.
-06 134

Issuance of notice u/s 13(4) & taking over of possession On E Date =

If after completion of 60 days from the date of delivery of notice Date on
u/s 13(2), borrower fails to clear the dues, issue notice u/s which 60 days
13(4) of SARFAESI Act and proceed for taking symbolic from
possession. It is to be ensured that the representation, if date of delivery
5

any, received is duly replied. Check that there is no stay of

granted by DRT/ Court/High Court. Court orders notice u/s 13(2)
received at any stage are to be honoured after examining have
its intent & directions. been completed
15

Possession Day Possession Day (Immovables) On E Days

(Movables) 1) Take Possession of immovable
1) Take possession of property by delivering Possession
movables. Notice to the borrower.
2) Prepare (2) Simultaneously affix such Publication by
Panchnama form Possession Notice on the outer door or E+3 Days
revised SI - at such conspicuous place of the
7A/7B/7C/7D property.
3) Prepare inventory (3) Prepare inventory as per format (SI
under rule 4(2) as per -9- SARFAESI Manual).
format (SI -8). In terms of Govt. of India
(4) Deliver a copy of notification dated 03.11.2016, All
19 | P a g e
inventory (SI-8- notices under new sub rule (2 B) of
SARFAESI Manual) Rule 4
to the person entitled “All notices under these rules may also
to receive the same. be served upon the borrower through
However, in case of electronic mode of service in addition
refusal to give to the modes specified under Rule 3.
acknowledgement, (4) Deliver a copy of Possession
send it by Regd.Post Notice and inventory (SI-9) to the
AD/Speed person entitled to receive the same.
Post/Courier etc However, in case of refusal to give
(5)Take Valuer with acknowledgement, send it by
you for valuation as it Regd.Post AD/Speed Post/Courier etc
would obviate delay (5)Publication of Possession Notice
in getting valuation of As per Rule 8(2), for immovable
movables. properties it is mandatory to get the
“Possession Notice” which may be
suitably modified as circumstances

:57
warrant published in the two leading
newspapers within 7 days out of which,
one in vernacular language having
24 7
sufficient circulation in the locality.
11
(i) Form SI-10- Possession Notice for
-20 66

a single NPA A/c (may be multiple

properties)
(ii) Form SI-10A- Possession Notice
-06 134

for multiple NPA A/cs and related to

one Authorized Officer.
(iii) Form SI-10B- Possession Notice
for multiple NPA A/cs and related to
5

more than one Authorized Officer.

(6)Take Valuer with you for valuation
as it would obviate delay in getting
valuation of secured assets.
15

Valuation of secured assets By E Days

• Obtain Valuation Report from Board Approved Valuer at the
time of taking symbolic possession
• (No need to wait for actual possession of immovable secured
assets)
Actual physical possession not delivered voluntarily/ File DM/CMM
resisted by borrower application by
If there is resistance in delivering actual possession: E+5 Days
• Filing of application before DM/CMM for taking possession u/s
14 of SARFAESI Act.
• When application is allowed, possession be taken as per
orders of the DM/CMM. The District Magistrate/Chief
Metropolitan Magistrate will pass suitable orders for taking

20 | P a g e
possession of the secured assets within a period of 30 days

Fixation of Reserve Price of secured assets (movables & By E+7 Days

immovables)
Authorized Officer to send recommendations to COCESI along
with valuation reports and get fixed the Reserve Price and the
mode of sale. COCESI to finalize the Reserve Price maximum
within 2 days.

Movables Immovables Issue of Notice of

Issue “Notice for Issue “Notice for intended Sale intended Sale and
intended Sale by by Auction/Tender” of 30 Days Publication by
Auction/Tender” of 30 (Form SI-13). E+10
Days Issue Public Notice Days
Issue Public Notice (Proclamation of Sale)
(Proclamation of Sale) Serve notice of intended sale by Day of Auction
Serve notice of Auction/Tender SI-13 sale by E+10 Days

:57
intended sale by Auction/Tender and Proclamation
Auction/Tender SI-13 and of Sale SI-14 /Invitation for Tender
Proclamation of Sale SI- -form SI-24 on the Borrower
24 7
14 /Invitation for Tender - /Mortgagor and guarantors.
11
form SI-24 on the Proclamation of Sale Notice (SI-
-20 66

Borrower and guarantors. 14)/ Invitation for Tender -form SI-

Publish Public Notice 24 is to be affixed on
-06 134

(Proclamation of Sale the conspicuous part of the

SI-14) /Invitation for property to be sold/auctioned.
Tender -form SI-24, in the Publish Public Notice
two leading newspapers, (Proclamation of Sale SI-14)/
out of which, one in Invitation for Tender -form SI-24 in
5

vernacular language the two leading newspapers, out of

having sufficient which, one in vernacular language
circulation in the locality. having sufficient circulation in the
There should be locality.
minimum 30 days gap There should be minimum 30
15

(Expiry of 30 days) days gap (Expiry of 30 days)

between the date of between the date of publication
publication and the date and the date of Auction or date of
of Auction or date of opening the tenders.
opening the tenders.
If sale is by inviting tenders, as soon as publication is made in the newspaper,
keep ready the Tender Form (SI-25) along with Annexure of Terms &Conditions
which is to be submitted by the Tenderer/Bidder duly signed with EMD in a sealed
cover accompanying a covering letter –Form-SI-26. Check up that there is no stay
granted by DRT/ Court/High Court. Court orders received at any stage are to be
honoured.
Auction Process (Manual Tender Process On the
Auction) Tenders be opened at the prefixed

21 | P a g e
 Auction be held at the place, place, time and on the day date
time and on the day mentioned mentioned in Public Notice in as per the
in Public Notice. the presence of bidders. Sale Notice
Earnest Money Deposit: Get Recording of Tenders. All the
EMD from the Tenders received from
Participants/Bidders as notified individual bidders be recorded
in the Public Notice (Generally on the Bid- Sheet on the format
10% of the reserve price). No SI-19. Each bid be checked up
bidder, whose bid is below that Terms &Conditions Form
Reserve Price, be allowed to (SI-25) of Tender is duly
participate. accepted and signed by bidder
Acceptance of Terms and is accompanied with EMD.
&Conditions by Bidders-Form SI Take care that bidder/participant
-18 A. Before commencement of has not changed any condition
bid, read out terms of sale to of tender. Sort out the eligible
bidders and obtain signatures in bids.
token of acceptance of these As Terms &Conditions Form

:57
terms and conditions. (SI-25) duly signed have already
been submitted there is no need
Recording of Bids After to take Form SI 18 A.
24 7
completing all the above However,
11 before
formalities, start inviting inter se commencement of bid. read out
-20 66

bids from the bidders. All the Terms &Conditions of sale to

bids received from individual bidders.
bidders be recorded on the Bid- Recording of Bids: Decide the
-06 134

Sheet on the format SI-19. tenderer which has made the

When the auction reaches at highest bid.
the climax, where no bidder is
ready to increase the bid as In case inter se bidding is
5

against the highest bid received, contemplated as per terms of

the second highest bidder be tender terms, inter se bidding
asked whether he wants to from the bidders be called and
increase the bid and on refusal, these bids be recorded.
the fact be recorded and his Where no bidder is ready to
15

signature be obtained. Similarly, increase the bid as against the

all the bids received from highest bid received, the second
individual bidders be recorded highest bidder be asked
on the Bid- Sheet (Form SI-19) whether he wants to increase
and their signatures be the bid and on refusal, the fact
obtained. Highest bidder be be recorded and his signature
declared as successful be obtained. Similarly, all the
bidder. bids received from individual
bidders be recorded on the Bid-
Initial deposit: The successful Sheet (Form SI-19) and their
Highest Bidder is required to signatures be obtained. Highest
make initial deposit of 25% bidder be declared as
immediately of the bid /sale successful bidder.

22 | P a g e
amount after adjusting the EMD.
Balance 75% is to be paid within Initial deposit: The successful
15 days. Highest Bidder is required to
make initial deposit of 25%
Get Bio-data of the Highest immediately i.e. as per Govt.
Bidder’s per format SI- 20. notification dated 03.11.2016
On getting initial deposit, on the same day or not later
communication of acceptance of than the next working day, of
bid be given to the Highest the bid /sale amount after
Bidder as per format-SI-21. adjusting the EMD. Balance
75% is to be paid within 15 days
In case of Immovable, Move of confirmation of sale by
to Circle Office (Committee of secured creditor or such
Officers) immediately but not extended period as may be
later than 15 days, to get agreed upon in writing
confirmation of sale from them between the purchaser and
as a Secured Creditor. And this the secured creditor, in any

:57
confirmation of sale be case not exceeding 3 months.
communicated to the Highest
Bidder as per format-SI-22. No Get Bio-data of the Highest
24 7
confirmation of sale of Bidder as per format SI- 20.
11
Secured Creditor is required
-20 66

in case of sale of movables. On getting initial deposit,

Execution of Agreement to communication of acceptance of
Sell: be executed with the bid be given to the Highest
-06 134

purchaser as per format SI-23. Bidder as per format-SI-21.

Balance bid amount of 75% is In case of Immovable, Move
received within time of 15 days to Circle Office (Committee of
as per Terms &Conditions of the Officers) immediately but not
5

auction. later than 15 days, to get

confirmation of sale from them
as a Secured Creditor. And this
confirmation of sale be
communicated to the Highest
15

Bidder as per format-SI-22. No

confirmation of sale of
Secured Creditor is required
in case of sale of movables.
Execution of Agreement to
Sell: be executed with the
purchaser as per format SI-23.
Balance bid amount of 75% is
received within time of 15 days
as per Terms &Conditions of the
Tender.
Certificate of sale be issued (when sale price is received in full and asset sold is
delivered.) Form SI-15/ or SI 16 for Movables and Form 17 for Immovables.

23 | P a g e
Appropriation of sale proceeds
• All the costs, charges and expenses incurred for SARFAESI action which inter-
alia include postage, publication, watch & ward,
• Insurance, godown charges, fees of supporting agency need to be recovered.
• Care must be taken that sale expenses are to be appropriated first from the sale
proceeds. The balance proceeds of the sale be credited in the NPA account for
unrealized interest, then for liquidation of Principal bank dues as per extant bank
guidelines on Appropriation of recovery in NPA accounts circulated by SASTRA
Division time to time. The residue/balance amount shall be paid to the person
entitled thereto.
SARFAESI ACTION CONCLUDES

DISPLAY OF INFORMATION
(Sastra Division circular No 14/2024 dated 12.03.2024)

:57
As a part of the move towards greater transparency, it has been decided that the
Regulated Entities (REs) of the Reserve Bank which are secured creditors as per the
24 7
11
Securitisation and Reconstruction of Financial Assets and Enforcement of Security
-20 66

Interest (SARFAESI) Act, 2002, shall display information in respect of the borrowers
whose secured assets have been taken into possession by the REs under the Act.
-06 134

REs shall upload this information on their website in the format as prescribed in the
Annex, and the list shall be updated on monthly basis.

HO: SASTRA Division through HO: ITD shall upload this information on Bank’s
Corporate Website in RBI prescribed format.
5

It is advised that.

1. Under no Circumstances, the property be published in Newspaper for Auction

before displaying the property on Bank’s Website (pnbindia.in) under “Secured
15

Assets under Possession”

https://www.pnbindia.in/SecuredAssetsUnderPossession.html.

2. Information to be updated regularly about the secured assets for which possession
has been taken under the provisions(13(4)) of SARFAESI Act, 2002 on SAMARTH
Portal and provide the updated information to HO SASTRA as on month end within 7
days on next month.

3. Till updation of data in SAMARTH portal information is being called manually which
will be dispensed after 31-03-2024. Information for April 2024 will be generated from
the SAMARTH portal, therefor updation in SAMARTH portal is mandatory.

24 | P a g e
4. Accuracy of data is core requirement thus proper scrutiny be carried out before
submission of information to HO SASTRA. RBI may levy penalty in case security
information is not provided for updation on website and security is put to auction.

5. All Secured Assets including Stocks, Plant, Machinery, Land, Building, Home, Flats,
Vehicle etc. for which possession has been taken under the provisions(13(4))
SARFAESI Act, 2002 needs to be reported for display at Secured Assets under
possession( https://www.pnbindia.in/SecuredAssetsUnderPossession.html )

6. All secured assets taken in possession(Symbolic or Physical) under the provisions

of SARFAESI Act, 2002 to be reported for display on Bank’s Website under “Secured
Assets under Possession”

7. If any security being auctioned by DRT under the provisions of SARFAESI Act,
2002 the same should also be reported.

8. If information regarding security being put on auction is not available on website

:57
under (https://www.pnbindia.in/SecuredAssetsUnderPossession.html) matter be
immediately taken up with HO SASTRA at [email protected] to get the same
updated on website before putting the security on auction.
24 7
11
-20 66

ALLOTMENT OF PUBLICATION WORK IN NEWSPAPERS FOR RECOVERY IN

NPA ACCOUNTS UNDER SARFAESI ACT
-06 134

(Sastra Division circular no 11/2022 dated 30.03.2022)

5

All concerned officials are advised that after selection of the newspapers in which the
publications have to be made, minimum three quotations should be invited from the
nearby advertising agencies and work should be allotted to the advertising agency
quoting lowest rates for publication of advertisement in the selected newspapers. This
exercise should be done on regular basis.
15

The expenses incurred for publication or other expenses under SARFAESI Act or in
other recovery related matters shall be debited under the head “Expenditure -
Recovery Related Expenses -1142607” and shall be recorded in memoranda dues for
record and recovery from the sale proceeds of secured assets or from borrower.

25 | P a g e
SARFAESI Act : CONSOLIDATION OF IMPORTANT ASPECTS-
 AUTHORIZED OFFICER: The Rule 2 (a) of the Security Interest (Enforcement)
Rules 2002 defines the “Authorized Officer” as:
“An officer not less than a Chief Manager of a public sector bank or equivalent,
as specified by the Board of Directors or Board of Trustees of the secured
creditor or any other person or authority exercising powers of superintendence,
direction and control of the business or affairs of the secured creditor, as the
case may be, to exercise the rights of a secured creditor under the Ordinance”.

(As the account has to be transferred to SASTRA Centre after 30 days during
which it is mandated that SARFAESI Action is to be initiated by branch itself, the
following guidelines may be continued; however, once account is transferred to
the SASTRA vertical, responsibility of the SARFAESI Action will be of the
SASTRA vertical).

:57
 DEMAND NOTICE UNDER SECTION 13 (2) OF SARFAESI Act:
The first step toward initiation of SARFAESI action is to issue Demand Notice
u/s 13(2) of SARFAESI Act upon the borrower/s or guarantor/s and/or
24 7
11
mortgagors who have created security interest over the secured assets in favor
of the Bank.
-20 66

 SERVICE OF DEMAND NOTICE:

-06 134

As per procedure prescribed under Rule 3 (1) of The Security Interest

(Enforcement) Rules, 2002, service of demand notice is to be made by
delivering, or transmitting it, either by:
5

(i) Registered post with acknowledgement due, addressed to the borrower

or his agent empowered to accept the service OR
(ii) Speed Post OR
(iii) Courier OR
(iv) Hand Delivery (added vide Govt. Notification dated 03.11.16) OR
15

(i) Any other means of transmission of documents, like fax message or

electronic mail service

For the completion of the first step of service of demand notice, and to thwart
borrowers’ tactics, there is need to ensure that these notices are:

 Addressed properly
 Sent on all the available addresses and
 More particularly at the most current addresses of the borrower / guarantor /
mortgagor
 Simultaneously by more than one mode i.e by Registered/Courier/E-mail etc.

26 | P a g e
Tracking of Messages/Notices sent by Registered Post / Speed post:
Normally in the ordinary course of things, when notices are sent by Registered
Post/Speed Post (Acknowledgement Due), service of notices is effected within a
reasonable period of 7 days or so.

Tracking of Messages/Notices sent by Electronic Mail Service (E-mail)

As per Rule 3 of Security Interest Enforcement Rules 2002, the Demand Notice can
also be sent through Electronic Mail Service (E-Mail). Therefore wherever E-mail
addresses of the obligants are available, it is advisable to send Notice under Section
13(2) to them by E-Mail also.
REPLY TO BORROWER’S REPRESENTATION / OBJECTIONS UNDER SECTION
13 (3A) OF SARFAESI ACT.
When Demand Notice u/s 13(2) of SARFAESI Act is served upon the borrower/s or
guarantor/s and/or mortgagors, they may make a representation/ raise objections in

:57
writing in response to the Demand Notice under Section 13(2) of SAEFAESI Act
issued by the Bank.
24 7
11
-20 66

If, on receipt of the demand notice, the borrower/s or guarantor/s and/or mortgagors
make representation or raise any objection, the secured creditor is required to
-06 134

consider such representation in terms of provisions of Section 13 (3A) of SARFAESI

Act, and if the secured creditor comes to the conclusion that such representation/
objections are not acceptable or tenable, the reasons for non-acceptance shall be
communicated to the borrower/guarantor/mortgagor/objector within 15 days of receipt
5

of such representation/ objections by the secured creditor.

It be noted that delay caused beyond 15 days for reply to such
representation/objections would give a ground to the borrowers to challenge and
frustrate SARFAESI action of the Bank in the DRT/Court.
15

POSSESSION OF SECURED ASSETS

i) Pre-possession Survey
Before proceeding for taking possession, pre-possession survey of concerned
properties be made to ascertain present status and verify details of the same.
The concerned officials should visit the site with supporting agency (if engaged)
in four wheeler with banners of Bank.

27 | P a g e
 ii) Symbolic Possession of Secured Assets
Where immovable property is in occupancy of the borrower/guarantor/mortgagor or
some other person on his behalf or with person/s claiming under a title created,
subsequent to mortgage in favour of the bank, the secured creditor is entitled to get
vacant possession and if possession is not willingly given, to remove such person who
refuses to vacate the same. Hence keeping in view the circumstances, if vacant
possession cannot be immediately obtained, possession notice, be got affixed on the
property and a copy thereof be also given (by hand or post) to the
borrower/guarantor/mortgagor, as the case may be. Such a possession is termed as
Symbolic Possession. In symbolic possession, the actual physical possession remains
with the owner/occupant as the case may be and still bank can either move the court
of the DM/CMM for getting physical possession or can sell the property on “as is
where is basis.”

In case occupancy of the property by a tenant or any other person is legal and the

:57
immovable property is put to sale, the possession that can be given to the purchaser
is only by symbolic possession by affixing a copy of the Certificate of Sale on some
conspicuous place of the property and proclaiming to the occupants by beat of drum
or other customary modes that the interest of the borrower/guarantor/mortgagor has
24 7
been transferred to the purchaser.
11
-20 66

iii Physical Possession of secured Assets

-06 134

Upon expiry of 60 days period of notice issued under Section 13 (2) of SARFAESI Act,
application be invariably filed with DM / CMM to take physical possession
simultaneously with issuance of 13 (4) notice.
5

iv. Sending of notice to borrower enclosing Panchnama

As per new sub-rule 2A added in Rule 4 of Security Interest Enforcement Rules,

2002 vide Notification dated 03.11.2016, the borrower is to be intimated by a notice
enclosing the Panchnama & inventory. Further, vide Notification dated 03.11.2016,
15

following words have been added after first para of format of Panchnama.
“The borrower’s attention is invited to provisions of sub-section (8) of section 13 of the
Act, in respect of time available to redeem the secured assets.”

It is further provided that all the notices may be served upon the borrower through
electronic mode of service, in addition to mode provided under Rule 3 of Security
Interest Enforcement Rules, 2002 (mentioned in para 4 above).

28 | P a g e
  FIXATION OF RESERVE PRICE AND CONFIRMATION OF SALE:

COMPETENT AUTHORITY For Fixation of Reserve Price

and Confirmation of Sale of
Individual IP/ Plant & Machinery
in NPA account (Realizable
Value in Rs. Crores)
Circle SASTRA Committee (Headed by CM) Upto Rs 2.00 Cr
Circle SASTRA Committee (Headed by AGM Upto Rs 4.00 Cr
Circle Office Compromise Committee Upto Rs 6.00 Cr
(Headed by AGM)
Circle Office Compromise Committee Upto Rs. 8.00 Cr
(Headed by DGM)
Zonal SASTRA Committee (Headed by AGM) Upto Rs. 8.00 Cr
Zonal SASTRA Committee (Headed by DGM) Upto Rs. 10.00 Cr

:57
Zonal SASTRA Committee (Headed by GM) Upto Rs. 15.00 Cr
Zonal office Compromise Committee (Headed Above Rs. 8.00 Cr/10.00 Cr/15.00
by CGM/GM) Cr – For cases of Zonal SASTRA
24 7
11 Centre headed by AGM/DGM/GM
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respectively
-06 134

 Guidelines for fixing Reserve Price

Above mentioned Committees, while fixing the reserve price may also fix the period
(maximum six months) within which the sale of the secured asset should be
5

conducted. If the sale does not take place within the period fixed by the above
mentioned Committees, if need be, the matter will again be referred by Circle SASTRA
Head/Zonal SASTRA Head to the respective Committee, for their concurrence.

If due to non-response of bidders, fall in the price etc., the reserve price is to be
downwardly revised, then powers for reduction in Reserve Price fixed on the basis
15

of valuation report not older than one year, shall be as under:-

For accounts under the purview of Circle SASTRA Centre:-

Reduction in Reserve Price Competent Authority

First reduction upto 10% in the reserve price fixed Circle SASTRA Committee
on the basis of recent (CSCO)
Further second reduction upto 10% in Circle Office Compromise
the reserve price of last failed e-auction Committee (COCC)
Further third reduction upto 10% in the Zonal SASTRA Committee
reserve price of last failed e-auction (ZSCO)
Further fourth reduction upto 10% in Zonal Office Compromise
the reserve price of last failed e-auction Committee (ZOCC)
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For accounts under the purview of Zonal SASTRA Centre:-
Reduction in Reserve Price Competent Authority
First reduction upto 10% in the reserve price fixed Zonal SASTRA Committee
on the basis of recent valuation (ZSCO)
Further second reduction upto 10% in
the reserve price of last failed e-auction
Further third reduction upto 10% in the Zonal Office Compromise
reserve price of last failed e-auction Committee (ZOCC)
Further fourth reduction upto 10% in
the reserve price of last failed e-auction

Reduction in reserve price will be given in slab of maximum 10%, however, in certain
cases, where more than 10% reduction in reserve price is required due to various
factors, such proposal for reduction in reserve price shall be considered by ZOCC only
based on the merits of the case.

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SALE OF SECURED ASSETS:
In terms of second schedule to Income Tax Act 1961, sale is prohibited on holidays.
24 7
11
Modes of sale of movable as well as immovable secured assets
In terms of Rule 6 (1) & 8 (5) of Security Interest (Enforcement) Rules, 2002, the
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movable as well as immovable secured assets can be sold by any of the following
methods:
-06 134

(a) By obtaining quotations from the parties / persons dealing with similar secured
assets or otherwise interested in buying the such assets; or
(b) By inviting tenders from the public; or
(c) By holding public auction including e-auction mode; or
5

(d) By private treaty

Sale notice

Before effecting sale (save and except in case of movable property subject to speedy
or natural decay or expense for custody exceeds its value), the borrower shall be
15

given 30 days’ notice for the intended sale as per SI–13 of SARFAESI Manual.

Sale of Immovable Assets

(a) Time period for payment of 25% of the amount of sale

Rule 9(3) of the Security Interest (Enforcement) Rules, 2002 has been amended vide
Govt. Notification dated 03.11.16 and states that:
“On every sale of immovable property, the purchaser shall immediately i.e on the
same day or not later than next working day, as the case may be, pay a deposit of
twenty five percent of the amount of the sale price, which is inclusive of earnest
money deposited, if any, to the Authorized Officer conducting the sale and in default of
such deposit, the property shall be sold again.”

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(b) Time period for payment of balance amount:
Amendments have been made by the Govt. of India in Rule 9(4) of the Security
Interest (Enforcement) Rules, 2002 and the revised Rule 9(4) provides that:
“The balance amount (i.e. 75%) of the purchase price payable shall be paid by the
purchaser to the Authorized Officer on or before the fifteenth day from date of
confirmation of sale of the immovable property or such extended period as may be
agreed upon in writing between the purchaser and the secured creditor, in any case
not exceeding three months”.Power for allowing such extended time period (above
15 days) shall be vested with the committee authorized for ‘Confirmation of Sale’.

(c) Forfeiture of deposit amount

Following amendments have been made in Rule 9(5) of the Security Interest
(Enforcement) Rules, 2002, and the revised guidelines are given below:
“In default of payment within the period mentioned in sub rule (4), the deposit shall be
forfeited to the secured creditor and the property shall be resold and the defaulting
purchaser shall forfeit all claims to the property or to any part of the sum for which it

:57
may be subsequently sold.
Once amount is forfeited by the Authorized officer and informed to Auction
purchaser, amount forfeited has to be credited to new head “Income Auction-
EMD-Forfeited Account 2062504” and not to the Borrower’s account.
24 7
11
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(d) Confirmation of Sale & Issue of Sale Certificate:

On payment of initial deposit i.e. 25% of sale consideration, the sale shall be
confirmed. Confirmation of sale shall be recorded and conveyed to the highest bidder.
-06 134

The steps needs to be taken immediately for getting the sale confirmed from the
secured creditor i.e. Committee of Officers and confirmation be conveyed to the
highest bidder. Draft of recording of confirmation of sale is given in Appendix B- Form
SI – 22 of SARFAESI Manual.
5

In terms of the Rules as notified, confirmation of sale is necessary only in respect of

sale of immovable assets. Sale of immovable property is to be got confirmed (Form SI-
22 of SARFAESI Manual) by the Authorized Officer from the Secured Creditor i.e
Committee of Officers (constitution of the committee is given in the following paras).
15

Further, in terms of Rule 9 (6) of Security Interest (Enforcement), 2002:

“On confirmation of sale by the secured creditor (Committee of Officers) and if the
terms of payment have been complied with, the Authorized Officer exercising the
power of sale shall issue a “Certificate of Sale” of the immovable property in favour of
the purchaser.” (Form SI-17 of the SARFAESI Manual)

TDS related guidelines to be adhered for sale above Rs.50 Lacs.

e) Non Confirmation of sale by Secured Creditor

In case it is found by the Committee of Officers that sale is not to be confirmed, the
reasons for not confirming the sale be recorded in the minutes of the meeting and
should be immediately conveyed to the purchaser and initial deposit be returned.

31 | P a g e
 f) Cancellation of Sale & Refund of Sale Amount
If due to any genuine reason, i.e., defect in SARFAESI Process, defect in title, etc., or
based on court order (stay/cancellation, etc.), the sale requires to be cancelled and
sale amount to be refunded, then competent authority for taking decision for
cancellation of sale & refund of sale amount (with or without interest) shall be as
under:

NPA Account under purview of Competent Authority for cancellation of sale

& refund of sale amount (with or without
interest)
Branch/ CSC/ ZSC Zonal Office Compromise Committee (ZOCC)

In cases of Accounts admitted under IBC (CIRP/Liquidation), the competent authority to

refund such amount shall be as under:

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Competent Authority Amount to be refunded
HOCAC-I Upto Rs. 100 Cr.
HOCAC-II Above Rs. 100 Cr. upto Rs. 300 Cr
24 7
HOCAC-III
11
Full Power
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While taking such decisions, the legal opinion from Law Officer posted at ZS/ZO: Law
Division should be taken into consideration and, if required, opinion from HO: Law
-06 134

Division may be obtained. Interest on refund amount in pursuance of Court orders or

due to any genuine reason, if any, to be paid by debiting the expenditure head –
“Interest paid on ordinary FD - 1010101”.
5

 NPA ACCOUNTS UNDER MULTIPLE / CONSORTIUM LENDING

In case of financing by more than one secured creditor (Multiple Banking) or joint
financing by several Secured creditors (consortium advances), SARFAESI Act vide
15

Section 13(9) lays down that no Secured creditor shall be entitled to exercise any or
all of the rights as conferred by Section 13(4) of the Act, unless exercise of such rights
is agreed upon by Secured creditors representing 60% in value.

 As a prudent measure it is always desirable that the Leader Bank initiates action
under SARFAESI Act on behalf of all the consortium members.
 Immediately after an account becomes NPA, as a proactive measure, the
Branches irrespective of our share in the lending should press for convening the
Consortium/Joint Lenders Meet even in cases where we may not be the leader
and/or formal consortium may not exist like in case of Multiple Banking.
 In case of large consortiums/multiple consortiums/cross charging of securities in
Associated & Allied concerns/Multiple Banking etc a Core Committee of 4-5 Banks
be formed to handle day to day affairs and to develop a common

32 | P a g e
 consensus/approach towards recovery and a leader be elected for this Core
Committee.
 Before giving our consent to support such Recovery Measures, a prior mandate from
the competent authority is mandatory and is of great importance to quicken the pace
of Recoveries.
 For taking SARFAESI Action in all such accounts, the leader bank be authorized by
all the member banks for taking all actions for recovery of dues of all consortium
members as prescribed in the Act. The leader has to take all actions for and on
behalf of all member banks in accordance with the provisions of the SARFAESI Act.

STRATEGIES FOR SUCCESSFUL SALE PROCESS UNDER SARFEASI ACT –

IMPORTANT ASPECTS

Under the SARFAESI Act when we go for sale of secured assets, the aim is to
secure maximum price for the assets to be sold. Effective methods of sale
of the secured assets are:
 Public Auction including auction through e-auction mode and

:57
 Inviting Tenders

In pursuit of free, fair and transparent auctions Ministry of Finance directed the
24 7
11
Banks to adopt the Electronic medium for conducting auctions also known by
the name “E-Auctions”. However, to improve the success rate of even e-
-20 66

auctions, we need to initiate certain steps, which are given below:


-06 134

Valuation of secured assets- Valuation Report relied upon should NOT be

more than a year old.

 Fixation of Reserve Price- This is the most important factor to decide the
5

success rate of E-Auctions. Arealistic Reserve Price will always improve the
chances of successful sale process.

 Publicity- In the current scenario, publicity plays a vital role to make an E-

Auction a successful event. Publicity can be bifurcated mainly into two parts:
15

1.As per statutory/regulatory guidelines and

2.General practices for fetching better quotes/price

SALE OF IMMOVABLE SECURED ASSETS THROUGH PRIVATE TREATY

Sale through private treaty should generally be resorted to, only when the other more
transparent methods of public auctions/quotations/tenders fail to produce desired
results. As per Bank’s extant guidelines, minimum number of attempts of sale of
immovable secured assets through other more transparent methods, depending upon
the assessed value/reserve price fixed for the secured assets, is reiterated below:

 1 such attempt is prescribed for assets with a value up to Rs.1 crore.

33 | P a g e
 2 such attempts are prescribed for assets with a value more than Rs. 1 crore.

Zonal SASTRA Committee (ZSCO) shall be empowered to allow Sale through Private
Treaty for NPA accounts having balance o/s upto Rs. 10.00 Cr.

Zonal Office Compromise Committee (ZOCC) shall be empowered to allow Sale

through Private Treaty for NPA accounts having balance o/s above Rs. 10.00 Cr.

Generally, the sale of immovable assets through private treaty should not be
considered below the reserve price of last failed e-auction, however, in exceptional
circumstances, the cases where amount recoverable through private treaty is less
than the reserve price of last failed e-auction, permission for Sale through Private
Treaty to be obtained from HOCAC-I, irrespective of outstanding in NPA account.

Central Government through notification dated 03.11.2016 published in the Gazette on

04.11.16 has made certain amendments in the Security Interest Enforcement Rules,

:57
2002 which have been circulated through Law Division Circular no. 5/2016 dated
16.11.2016. 24 7
Major amendments related to Sale of properties through Private Treaty are given
11
below based on the clarification given by Law Division vide their letter dated 01.05.17:
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While settling terms of sale of secured assets by the Bank by method other than
public auction/public tender, consent of the borrower is not necessary.
-06 134

In terms of Sub-Rule 2 of Rule 6 & Sub-Rule 6 of Rule 8, the Authorized Officer is

invariably required to serve to the borrower a notice of 30 days for sale of
movable as well as immovable properties. As such in conformity to the judgement
5

passed by the Hon’ble Supreme Court, the Bank is under obligation to put the
borrower on notice before sale of secured assets.

It may be added further that if sale of such secured assets is being effected either by
inviting tender from public/by holding public auction, the secured creditor shall be
15

under obligation to cause a public notice of 30 days by publication in two newspapers.

FAILURE/ CANCELLATION OF SALE PROCESS

In terms of Govt. gazette notification dated 03.11.16, a new para has been
introduced after the provision of Rule 6 {sub rule(2)} of “The Security Interest
(Enforcement) Rule, 2002”, which deals with the failure of sale processes, which
states as under:

“Provided further that if sale of immovable property by any one of the methods
specified under sub rule (1) fails and the sale is required to be conducted again, the
Authorized Officer shall serve, affix and publish notice of sale of not less than
fifteen days to the borrower for any subsequent sale.”

34 | P a g e
Similarly amendment has been made in Rule 9 {sub rule (1)} and the revised
guidelines are given below:

“No sale of immovable property under these rules, in first instance (new
amendment) shall take place before the expiry of thirty days from the date on which
the public notice of sale is published in the newspapers as referred to in the proviso
to Sub Rule (6) of Rule 8 or notice of sale has been served to the borrower.

(New para added vide Govt. of India notification dated 03.11.16)

Provided further that if the sale of immovable property by any one of the methods (i.e
quotations or tenders or public auction or private treaty) specified by Sub rule (5) of
Rule (8) fails and sale is required to be conducted again, the authorized officer shall
serve, affix and publish notice of sale of not less than fifteen days to the borrower, for
any subsequent sale.

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STAY AGAINST SARFAESI ACT 24 7
We come across several cases where stay is granted by the DRTs/Courts against the
11
SARFAESI Action initiated by the Bank, on some ground or the other. Thus there is
-20 66

always a need to analyze on case to case basis and remedial measures be adopted
for vacation of the stay.
-06 134

Note:-While putting the properties for auction, ensure that no stay

order/instruction/other condition by judicial/quasi-judicial authorities etc is operational
& in force.
5

(SASTRA DIVISION CIRCULAR NO. 03 /2024)

15

35 | P a g e
Given below is the list of some of such instances where stay has been granted
on account of various reasons and remedial measures there against:

S.no Reasons for Stay Remedial Measures

1 Section 13(2) and other Notices Authorized Officer must ensure that
under SARFAESI Act are sent Section 13(2) Notices are sent through
by UPC or ordinary post or Registered Post (acknowledgement
improper service of such due)/Speed Post/Hand Delivery and got
Notices is furnished in the served through as per the prescribed
Court/DRT. guidelines mentioned in the SARFAESI
Act. In case the acknowledgment of
service is not received by the Authorized
Officer, steps must be initiated for tracking
the same from Indian Post internet site
(http://www.indiapost.gov.in/), as given in

:57
this Circular.
2 Representations received under It must be ensured that a proper reply is
Section 13(3A) made by the submitted within 15 days and guidelines
24 7
borrowers/co- 11 mentioned in this Circular are complied
borrowers/guarantors in the with.
-20 66

DRTs/Courts against the action Possession Notice should not be issued

initiated by the Bank under the without or prior to giving reply to the
-06 134

SARFAESI Act, are not representation of the borrower

responded/replied by the bank,
in the prescribed time frame of
15 days and/or in an
appropriate manner.
5

3 As per Rule 8 of the Security Compliance of Rule 8 of Security Interest

Interest (Enforcement Rules) must be ensured. Further, for submission
2002, in case of possession of of the proofs for having Symbolic/Actual
immovable properties, the Possession, photographs must be taken
15

possession is taken by affixing from close as well as far angles, so as to

Possession Notice as per cover optimum area of the required
Appendix-IV by affixing it on the area/asset showing picture of the
outer door or conspicuous Borrower/his representative / Witnesses /
place of the property. However, Authorized/Other Bank Officer. Possibility
proof submitted in the shape of may be explored for capturing the details
photographs give a very closed through Videography.
view of the door of the property,
not establishing conclusively
that the possession has been
taken of the property in
question.

36 | P a g e
4 Copy of the Possession Notice Subsequent to taking of the possession of
is not delivered to the the secured assets, copy of the
borrower/mortgagor and proof Possession Notice be delivered to the
of sending such copy to them is borrower/mortgagor against receipt and in
not furnished in the DRT/Court case of refusal the same may be recorded
and/or improper recording of and copy of the Possession Notice be sent
the proof for having possession. through Registered Post
(Acknowledgement Due)/Speed Post and
further, in terms of amendments in the
Security Interest (Enforcement) Rules
introduced through notification dated
03.11.16, all notices under these rules
may also be served upon the borrower
through electronic mode of service

5 Not adhering to the prescribed Time line of 7 days and of publication of

time limits for publication of possession notice in two newspapers,

:57
Possession Notice in the two must be strictly adhered to.
Newspapers within 7 days 24 7
6 30 days’ Notice is not issued to As the borrower/mortgagor has a right of
11
the borrower/mortgagor for redemption, therefore, 30 days’ Notice as
-20 66

holding of Auction/Sale. per prescribed format (SI-13 of the

SARFAESI Manual) must be issued to the
-06 134

borrower/mortgagor for holding of Auction

/Sale

7 In case of NPA accounts of In case of Educational Institutions,

Educational Institutions, plea is possession may preferably be taken when
5

taken that any action initiated their academic sessions are off/vacation
under SARFAESI Act may ruin period and applications may be filed for
the career of the students etc. granting orders to the defaulting borrowers,
for depositing of the fees deposited by the
students, with the concerned bank
15

8 While filing the appeal against In case any

the SARFAESI action initiated OTS/Compromise/Restructuring Proposal
by the Bank, plea is taken by has been received from the borrower, the
the borrowers that an same must be processed without any
OTS/Compromise/Restructuring delay and the decision in that regard be
etc. Proposal is pending with immediately conveyed to the borrower so
the bank. that no stay is granted on such grounds

37 | P a g e
UPLOADING AUCTION NOTICES ON WEBSITE

As per extant guidelines of the Bank, under the SARFAESI Act, Auction Notices are
required to be uploaded on following websites, besides publication in two newspapers
immediately after publication (i.e. on the date of publication)

(i) www.pnbindia.in (Regulatory Disclosure): Bank’s website

(ii) Https://eprocure.gov.in/epublish/app. :The Indian Government Website

(iii) www.ibapi.in: IBA portal for e-auctions in case of immovable properties being
used by all PSBs

(IV) https://etender.pnbnet.in:8443/banks/detail/pnb/MTQy: PNB’s portal for E-

auctions in case of movable properties
*********

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24 7
11
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5
15

38 | P a g e
 3.POLICY FOR WILFUL DEFAULTERS
(SASTRA Div Cir no 31/2024)

INTRODUCTION

The bank’s policy on wilful defaulters is aimed at putting in place a system to

disseminate credit information pertaining to Wilful defaulters to caution other banks
and financial institutions to ensure that further Finance is not made available to them
in terms of RBI guidelines.

NPA borrowers of Rs.25.00 lac and above are eligible to be classified as Wilful
Borrowers.

Banks and FIs started submitting information in the prescribed format to the Reserve
Bank of India, as on 31st of March and 30th of September every year, the details of

:57
the non-suit filed borrowal accounts which were classified as doubtful and loss
accounts by them with outstanding (both funded and non-funded) aggregating Rs.1
crore and above.
24 7
11
-20 66
The data on defaulters so received from banks/FIs, as mentioned above, was
circulated in a consolidated form by RBI to the banks and FIs as on 31st of March and
30th of September every year, for their confidential use.
-06 134

Banks/FIs to submit the information of Wilful Defaulters of Rs.25.00 lac and above on
monthly basis to the four Credit Information Companies.
5

In order to enable that information relating to Wilful Defaulters is available to banks on

real time basis, RBI vide its Master Circular No. DBOD No.CID.BC.22/20.16.003/2015-
16 dated 01.07.2015, has advised the Banks/FIs to submit the information of Wilful
Defaulters of Rs. 25 lac and above on monthly basis to the four Credit Information
Companies.
15

PURPOSE
To put in place a system to disseminate credit information pertaining to Wilful
defaulters for cautioning banks and financial institutions so as to ensure that further
Bank Finance is not made available to them.

DEFINITION OF WILFUL DEFAULT

A „Wilful Default‟ would be deemed to have occurred, if any of the following events is
noted:

39 | P a g e
  The unit has defaulted in meeting its payment / repayment obligations to the
lender even when it has the capacity to honour the said obligations.

 The unit has defaulted in meeting its payment / repayment obligations to the
lender and has not utilised the finance from the lender for the specific
purposes for which finance was availed of but has diverted the funds for
other purposes Such as :-

 Utilization of short-term working capital funds for long-term purposes not in

conformity with the terms of sanction;

 Deploying borrowed Funds for purposes / activities or creation of assets other

than those for which the loan was sanctioned

 Transferring borrowed funds to the subsidiaries / Group companies or other

Corporates by whatever modalities;

:57
 Routing of funds through any bank other than the lender bank or members of
consortium without prior permission of the lender;
24 7
11
 Investment in other companies by way of acquiring equities / debt instruments
-20 66

without approval of lenders;

-06 134

 The unit has defaulted in meeting its payment / repayment obligations to the
lender and has siphoned off the funds so that the funds have not been
utilised for the specific purpose for which finance was availed of, nor are the
funds available with the unit in the form of other assets e.g.: Not depositing of
5

sale proceeds and receivables in the account are instances of siphoning

off funds.
 The unit has defaulted in meeting its payment / repayment obligations to the
lender and has also disposed off or removed the movable fixed assets or
immovable property given for the purpose of securing a term loan without the
15

knowledge of the bank /lender (Unauthorized Disposal of Charged Assets)

DEFINITION OF ‘LENDER’ and ‘UNIT’

Lender: The term “lender” appearing in the circular covers all banks/FIs to which any
amount is due, provided it is arising on account of any banking transaction, including
off balance sheet transactions such as derivatives, guarantee and Letter of Credit.

Unit: The term “unit” includes individuals, juristic persons and all other forms of
business enterprises, whether incorporated or not. In case of business enterprises
(other than companies), banks/FIs may also report (in the Director column) the names
of those persons who are in charge and responsible for the management of the affairs
of the business enterprise.
40 | P a g e
IDENTIFICATION OF WILFUL DEFAULTERS

The decision to report the names of Borrowers as Wilful Defaulters, who have
defaulted in the repayment of loans will be taken after carrying out following
procedure.

Cut off Limits

Guidelines relating to “Wilful Defaulters” would be applicable to all non-performing

borrowal accounts with outstanding (funded facilities and such non-funded facilities
which are converted into funded facilities) aggregating Rs.25 lac and above, where
“wilful default” is identified by the Bank

Identification of Events of Wilful Default:

:57
Immediately on transfer of an account after NPA to Circle SASTRA Centre/Zonal
SASTRA Centre, Circle SASTRA Centre/ Zonal SASTRA Centre are advised to
examine and identify any event of “Wilful Default” which seems to have occurred as
24 7
defined herein-above.
11
-20 66

Identification of persons who are Wilful Defaulters

The term ‘unit’ defined herein above has to be taken to include individuals, juristic
-06 134

persons and all other forms of business enterprises, whether incorporated or not. In
case of business enterprises (other than companies), banks/FIs may also report (in
the Director column) the names of those persons who are in charge and responsible
for the management of the affairs of the business enterprise. Such as:-
5

i. Individual Borrower(s)
ii. Karta of HUF
iii. Partners/Sole Proprietor/ Trustees etc. in individual capacity
15

iv. Promoter directors of the Company

v. Whole Time Director
vi. Directors of Company, (at the time when incident of Wilful Default
happened).
vii. Present Directors
viii. Independent Directors
ix. Nominee Directors

(The above list is only indicative and not exhaustive)

As regard a non-promoter/non-whole time director, it should be kept in mind that

Section 2(60) of the Companies Act, 2013 defines an officer who is in default to mean

41 | P a g e
only the following:

(i) Whole Time Director

(ii) Where there is no key managerial personnel, such director or directors

as specified by the Board in this behalf and who has or have given his
or their consent in writing to the Board to such specification, or all the
directors, if no director is so specified.

(iii) Every director, in respect of a contravention of any of the provisions of

this Act, who is aware of such contravention by virtue of the receipt by
him of any proceedings of the Board or participation in such
proceedings and who has not objected to the same, or where such
contravention had taken place with his consent or connivance.

Therefore, except in very rare case, a non-whole time director should not be
considered as a wilful defaulter unless it is conclusively established that

:57
I. He was aware of the fact of wilful default by the borrower by virtue of any
proceedings recorded in the Minutes of the Board or a Committee of the Board and
24 7
11
has not recorded his objection to the same in the Minutes, or,
-20 66

II. The wilful default had taken place with his consent or connivance.
-06 134

The above exception will however not apply to a promoter director even if not a
whole time director.
Guarantees furnished by Group Companies, Individuals and Non-group
5

companies:
While dealing with “wilful default” of a single borrowing company in a Group, the Bank
should consider the track record of the individual company, with reference to its
repayment performance to its lenders. However, in cases guarantees furnished by the
companies within the Group on behalf of the wilfully defaulting units are not honored
15

when invoked by the Bank, such Group companies should also be reckoned as wilful
defaulters
In terms of Section 128 of the Indian Contract Act, 1872, the liability of the surety is
co-extensive with that of the principal debtor unless it is otherwise provided by the
contract. Therefore, when a default is made in making repayment by the principal
debtor, the banker will be able to proceed against the guarantor/surety even without
exhausting the remedies against the principal debtor.

As such, where a banker has made a claim on the guarantor on account of the default
made by the principal debtor, the liability of the guarantor is immediate. In case, the
said guarantor refuses to comply with the demand made by the creditor/banker,
despite having sufficient means to make payment of the dues, such guarantor would
also be treated as a wilful defaulter.

42 | P a g e
RBI has clarified that this (declaring the guarantors as wilful defaulter) would apply
only prospectively i.e w.e.f. September 9, 2014 and not to cases where guarantees
were taken prior to RBI circular September 9, 2014. Banks/FIs may ensure that this
position is made known to all prospective guarantors at the time of accepting
guarantees.

Therefore, in view of the above clarification given by RBI, it is to be noted that:-

I. In case of Guarantors, they can be declared Wilful Defaulters only when

demand is made on them and despite having sufficient means they refuse to
comply with the demand of the bank.

II. These guidelines in respect of Individual, Group Companies and Non- Group
Companies guarantors would apply prospectively i.e. w.e.f. September 9, 2014.
In the already classified NPA accounts prior to the RBI circular, Guarantors

:57
cannot be declared as wilful defaulters
24 7
III. That the bank has put on notice of such a condition to the guarantor at the time
11
of accepting the guarantee. IRMD, HO, New Delhi, has issued detailed
-20 66

guidelines vide its LA Circular prescribing the modified format of the Guarantee
Deed /Agreement to be obtained from the guarantors incorporating the
clauses/conditions as prescribed by RBI that in default guarantor can be
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declared as Wilful Defaulter. Therefore, Circle SASTRA Centre / Zonal

SASTRA Centre to check and ensure that modified Guarantee Deed
/Agreement is held on record.
15 5

43 | P a g e
 PROCESS/ WORKFLOW FOR DECLARING BORROWER/ GUARANTOR
AS WILFUL DEFAULTERS

Step 1 Identification of wilful default on person/entity within (D+5) Days i.e. within
5 days of account transferred to Sastra Centre.

Step 2 Issuance of 10 Days’ notice to Rectify Default (Ann I of Circular) with in D+

8 days.
Examine the representation of borrower if any and suitable reply maximum
within 7 days’ time bringing out the factual position leading to event of Wilful
Default. Watch whether the default is rectified or not.
Step 3 If default is not rectified, send Proposal (as per Annexure-II) to ZSC along
with recommendations supported by requisite evidence/ documents. Such
proposals after due examination by CSH/ ZSH be forwarded to HO along
with recommendation for placing it before Committee on Wilful Defaulters

:57
headed by ED. If the account falls under ZSC then proposal will be
submitted directly by ZSC to Head Office within D+ 30 days.
24 7
Step 4
11
Placing the proposal before The Committee on Wilful Defaulters thereof by
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Head Office along with decision of CSC/ZSC within D+ 38 days.

Step 5 Show Cause Notice- Consequent upon receiving the proposal as
aforesaid, committee shall issue 15 days Show Cause Notice (As per
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Annexure- III) by Registered AD/Speed Post within 3 days through

concerned ZSC/CSC within D+ 44 days.
Step 6 Representation by the Borrower/ Proposed Defaulter – If any
representation is received from the borrower/proposed defaulter, submit
5

the representation along with Para-wise comments and

recommendations of ZSC to Recovery Division, Head Office for placing
the matter before The Committeewithin D+ 70 days

Step 7 Notice for personal hearing by The Committee-

Serve Notice (As per Annexure IV) for personal hearing by The
15

Committee through registered AD post within 2 days on receiving

communication of the date fixed for personal hearing from the Recovery
Division, Head Office.

Ensure to serve Notice and proof thereof be submitted to Recovery Division,

Head Office.
Time line: D+ 72 days.

Step 8 Meeting of The Committee and personal hearing of borrower-

-Sastra Division, Head Office will place the matter before The Committee.

-The C o m m i t t e e w i l l give a personal hearing to such

borrowers/proposed defaulters who have made representation and its
decision shall be served upto the borrower/proposed defaulters who will be
44 | P a g e
 given an opportunity to submit their representation to the Review Committee
within 15 days.Time line: D+ 87 days.
Step 9 Decision of the Review Committee—
The decision/ order of The Committee will be placed before the Review
Committee for approval.

•On approval of decision/order by the Review Committee on Wilful

Defaulters declaring the Borrower/Proposed Defaulter as Wilful Defaulter,
the decision would be communicated to the said Borrower/ Defaulter
within 3 days through concerned ZSC.
Time line for step 9: By D+ 105 days
Step Submission of Information of publication –
10 CSC/ZSC would submit information to the SASTRA Division, Head Office
as per prescribed format (AnnexureV) reporting to CICs.

Step When default is identified, simultaneously following measures be

:57
11 taken:
•Foreclosure of mortgaged properties
•Recovery Suits/SARFAESI Actions
24 7
•Criminal Proceedings wherever necessary
11
•Removal of Director/Promoter, who is a Wilful Defaulter, in case loan
-20 66

documents incorporate such clause that borrower company shall not

induct a person who is a Promoter/Director of a Wilful Default Company.
-06 134

REPORTING TO CREDIT INFORMATION COMPANIES

5

Banks /FIs are required to submit the list of suit-filed accounts and non-suit filed
accounts of Wilful Defaulters of Rs.25 lac and above on monthly or more frequent
basis to all the four Credit Information Companies. This would enable such information
to be available to the Banks/FIs on a real time basis.
RBI has clarified that banks need not report cases-
15

(i) Where outstanding falls below Rs.25 lac and

(ii) In respect of cases where Bank has agreed for compromise settlement and
the borrower has fully paid the compromise amount.
(iii) Further, based on clarification received from RBI in the matter, it is advised
that in identified/reported cases of Wilful defaulters where outstanding
amount has come down below Rs.25 lac on account of write off and not due
to settlement/recovery from the borrower, the Zonal SASTRA Centres
should still report the name of the borrower in the list of wilful defaulters as
per the extant system. The outstanding amount existing before writing off of
dues should be reported in the list of Wilful defaults and in no case, the
reported amount should be below Rs. 25 lac.

45 | P a g e
Reporting Guarantors as Wilful Defaulters to CICs
While reporting instances of wilful default In respect of guarantors, banks/ FIs may
include “Guar” in brackets i.e. (Guar) against the name of the guarantor and report
the same in the Director column.

AVAILABILITY OF NAMES OF WILFUL DEFAULTERS

A. The list of wilful defaulters of our Bank is uploaded on the Bank’s website and can
be viewed through link https://www.pnbindia.in/wilful-defaulters.html in order to
ascertain whether the name of prospective borrower/guarantor appears in the list of
wilful defaulters of our Bank.
B. In order to ascertain whether a particular borrower/guarantor appears in the list of
wilful defaulter/ defaulter in any of the Banks, field functionaries may visit the following
links.
S. No Particular Web link
1 Suit Filed wilful defaulter/ defaulter https://suit.cibil.com/

:57
for all Banks
2 Non Suit Filed wilful defaulter/ https://www.cibil.com/nonsuitfiledcases/
defaulter for all Banks
24 7
11
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-06 134

Policy on publication of photographs of the Wilful Defaulters

Circle SASTRA Centres/Zonal SASTRA Centres may consider publishing the
photographs of Wilful Defaulters only, with outstanding of Rs.25 lacs and above in the
5

Newspapers, covering the area where the borrower resides. For publication of
photographs in the newspapers, the administrative sanction will be given by the
concerned Circle SASTRA Head in case account pertains to Circle SASTRA Centre
and by Zonal SASTRA Head in case account pertains to Zonal SASTRA Centre.
15

Concerned offices must ensure that they have exhausted all conciliatory methods to
recover the dues and they must maintain record/documentary proofs of such methods
adopted to avoid any complaint in the future.

Publication of Show Cause Notices/Order of Identification/Order of Review

Committees
Show Cause Notice (SCN) OR order of identification/review committee issued in the
entire process of declaring concerned borrower/ promoter/ whole-time director/
guarantor/ partner & related persons, etc., as wilful defaulter which requires to be
delivered to the concerned individuals will be sent through Registered AD/Speed
46 | P a g e
Post. If SCN or order is undelivered/ unserved, then Bank may publish the said notice
OR order in at least 1 newspaper having circulation at the place of residence of the
concerned person. For accounts which are under the purview of Circle SASTRA,
Circle SASTRA Head to approve the publication. For accounts under the purview of
Zonal SASTRA, Zonal SASTRA Head to approve the publication.
Once notice is published, copy of the publication be kept at respective Circle SASTRA
and Zonal SASTRA for their record under intimation to SASTRA Division, HO
To facilitate the field staff, drafts of the notices, to be sent to the wilful defaulters
(borrower/guarantor) and advertisement to be published in the newspapers, are
given as Annexures, vide SASTRA Division Circulars which may be suitably
amended as per requirement

:57
24 7 *******

11
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-06 134
5
15

47 | P a g e
 4. Policy For Recovery and Management of NPA (OTS)
(Sastra Division Cir No 09/2024)

Compromise settlement refers to a negotiated settlement under which Bank

endeavors to recover maximum amount in a minimum time with minimum
expenses. Normally under a Negotiated Settlement, a borrower offers to pay and the
Bank agrees to accept in full and final settlement of its dues an amount less than the
total amount due to Bank under the relative contract.
ELIGIBILITY CRITERIA for OTS under General Policy

All Borrowal/ Loan accounts identified as NPA in terms of extant RBI guidelines will be
eligible for compromise/negotiated settlement/one time settlement and/ or write off
only after 3 months from its date of slippage to NPA. Further, SARFAESI Action
should have been initiated in the account (wherever applicable) & at least ONE

:57
auction should have been conducted except exceptional circumstances for
proposal falling under the power of upto ZOCC.
24 7
Relevant/Material Date
11
-20 66

In the above background, the date on which account was transferred to Protested
Advances Category or the date of NPA, whichever is earlier shall be the
-06 134

Relevant/Material Date for calculation of Recoverable Dues.

CALCULATION OF RECOVERABLE DUES

5

Recoverable Dues shall be calculated w.e.f. the date of NPA on the Book outstanding
as existing on the date of NPA (inclusive of SI/DI reversed subsequently) duly
adjusted for recoveries/further debits in the account, ignoring the interest, if any
credited/debited in the account after the date of NPA, on simple basis on daily
reducing balance @ 1 Year MCLR as prevailing on the date of receipt of OTS
15

Proposal from the Borrower. This will be done in all cases irrespective of the fact
whether recovery was appropriated towards income/ reduction in outstanding/
recovery of expenditure out of pocket expenses. The interest/ charges, if any debited
to the account after classification of account as NPA be netted off from the
recoverable interest to give effect to the correct calculation of simple interest.

However, for NPAs under Direct Agriculture Advances (known as Farm Credit
advances- PSFID Circular 46/2021 dated 15.06.21) with balance outstanding up to
Rs.10 lacs (including KCC but excluding Tractor Loans) recoverable dues shall be
calculated with interest @6% simple from the date of classification of the account as
NPA.

48 | P a g e
VALUATION OF SECURITIES
Proper distinction has to be made between Market Value and Realizable Value of the
securities while considering/recommending OTS proposals. Valuation Report should
indicate Realizable Value in addition to the Market Value, in terms of the
guidelines circulated by IRMD in respect of Valuation of Properties.
Any major variation in value of property (ies) at the time of considering the OTS/ Write
off compared to its valuation at the time of original/ last sanction or at the time of
making provisions should be critically examined.
VALIDITY/PERIODICITY OF VALUATION REPORTS

General Guidelines

In all cases of OTS as well as auction, Branch Manager of concerned Branch

Office/Circle SASTRA Officials/Zonal SASTRA Officials (for NPA accounts under their
purview) are required to visit the asset and prepare their visit report on the basis of

:57
information gathered from nearby property dealers and neighbours of such assets and
the same shall be kept on record in prescribed format (Annexure-59).
24 7
However, in respect of all NPA accounts, valuation of property(ies) and other details
11
should be as recent as possible but not more than 1 year old to assess the proposals
-20 66

with more justice. If fresh valuation is to be obtained before expiry of one year from the
date of last valuation report then higher of the two valuation will be considered for the
period upto 1 year from the date of last valuation report.
-06 134

Further, in exceptional cases of natural calamities like flood, earthquake, etc., if

valuation is to be obtained before expiry of 1 year; proposals of OTS/compromise
settlements as well as sale of assets (fixation of RP) falling upto the power of Zonal
5

SASTRA Committee, shall be considered by next higher authority.

Wherever Properties are valued Above Rs. 5 Cr

Wherever realizable value of property is valued at Rs. 5 crore or above (RV) at any
15

stage, minimum two independent latest Valuation Reports from Bank’s Board
approved valuers of Category A or B shall be obtained. If, RV in both such valuation
arrived at is less than Rs. 5 Cr, during last sanction or present valuation, then in
subsequent valuations, 2nd valuation is not required.

Further, where the value of charged Plant & Machinery is Rs. 50 crore & above,
branches shall get valuation of such P&M done from minimum two Valuers/Chartered
Engineer on the Bank’s Board approved panel.

Variation in Valuation Reports

While considering an OTS/Compromise proposal etc.:

49 | P a g e
In case the difference in valuation is less than 25%, the average value may be taken.

In case the difference in valuations is more than 25% or variation between valuation at
the time of last sanction and current RV is more than 25% (nearest average value),
3rd valuation may be got done from the valuer who had conducted valuation of such
securities at the time of last sanction of credit facility subject to valuer is still on Bank’s
Board approved panel. If such original valuer is not on Bank’s panel then 3rd valuation
may be got done by a valuer in category A (Approved by the Bank’s Board) and
average of the nearest two valuation reports shall be taken into consideration.

Wherever Properties are valued below Rs. 5 Cr

As directed by the Board in its meeting dated 29.11.2023, in respect of all NPA
accounts where Realizable Value (RV) at the time of last sanction and current RV are
less than Rs.5.00 crore, if variation between the two valuations, i.e., at the time of last
sanction & current RV is more than 50%, reasons for variation be analysed and placed
on record. Further, a fresh independent valuation from Bank’s Board approved valuer

:57
be obtained and higher of those two latest valuations shall be taken into consideration.

However, before exercising such option, it must be ensured that the Valuers have
24 7
11
used similar methods/techniques/underlying assumptions before preparing the
Valuation Report.
-20 66

Further, Kindly note that land and the building charged to the Bank be separately
mentioned in the OTS proposals wherever the values of properties are mentioned”
-06 134

Method for calculation of Net Present Value of Realizable Value of Charged

Primary/Collateral Securities net of cost of realization (NPVRV)
5

At the time of settlement of account, NPVRV is to be calculated on the Realizable

Value by discounting with number of years i.e. time taken for realization of security by
applying the discounting rate equivalent to 1 Year MCLR. Further, for realisation of
secured assets, the Bank may have to incur some expenses and also the sale takes
time. As such, the Net Present Value of the Realizable Value of Securities net of cost
of realization (NPVRV) shall be calculated as under:
15

(a) R.V./ [1 + r/100]n

R.V. = Realizable Value of charged primary/collateral securities r =
Prevailing 1 Year MCLR
n = No. of Years for realization of securities based on the complexity of the
case
(b) From the amount calculated as (a) above, estimated cost of realization of
the securities be deducted and the same shall be taken as 1% of the
realisable value of security.
(c ) Net Present Value of Realizable Value of Charged Securities net of cost of
realization (NPVRV) = (a) – (b)

50 | P a g e
Expected Period of Realization

For reckoning no. of years for realization of charged securities, undernoted

assumptions may be considered, however, Competent Authority while considering the
OTS Proposal may decide to take higher/lower period on case to case basis with
justifications:

For Movable Assets (Plant & Machinery, Stocks, Book Debts etc.)

Circumstances Expected Period

for realization
Movable Assets – No Litigation 1 Year
Movable Assets – Under Litigation/Stay etc 2 Years

For Immovable Properties

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Circumstances Expected
Period for
realization
24 7
Immovable Properties – No litigation11 2Years
More than 1 year old stay against SARFAESI Action and/or 3 Years
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SARFAESI action initiated and IPs put on auction but auction

failed as no bidder came forward
-06 134

Attachment of IP by Sale Tax / Income Tax / Other Revenue 3 Years

Authority (If there is no priority charge)
IP not demarcated/Undivided Share mortgaged/no 3 Years
independent Access
5

Agriculture Property/ Property which is not eligible for sale 4 Years

under SARFAESI
IPs having old/multiple tenancy/multiple suits and / or dispute 4 Years
about validity / enforceability of the mortgage/charge
In case of any legal complication in enforcement of security 4 Years
15

(e.g. death of owner of the mortgaged IP etc.)

IPs owned by Trusts/Society/Educational Institutions 5 Years
IPs owned by Sugar Industry 5 Years

The circumstances mentioned above are illustrative only and not exhaustive and the
expected period of realization of immovable properties shall be taken at 2 to 5 years
based on circumstances in individual case. The maximum realization period shall be 5
years.

Where 2 or more Bids under SARFAESI have failed, the last Reserve Price or NPVRV
as above, whichever is lower, shall be accepted as NPVRV. However, valuation
should not be more than 1 year old.

51 | P a g e
In Consortium/Multiple Banking Accounts, Bank’s share in NPVRV adopted by
Consortium/Joint Lenders shall be accepted as NPVRV.

For accounts admitted under NCLT, in case valuation reports up to one year old are
not available on record, then the average fair value of the Company got conducted by
RP/Liquidator may be considered for calculation of NPVRV.

Under Direct Agricultural Advances with balance o/s of up to Rs.10 lac the realizable
value of Primary/ Collateral security will exclude the Agricultural land offered as
security. However, security available other than agricultural land shall be taken into
consideration for arriving at the NPVRV as hitherto for.

Further, the process of discounting the value of securities is not applicable to the liquid
securities available with the Bank in the Borrowal accounts.

RECKONING VALUE OF CHARGED ASSETS

:57
Nature of Asset Value to be reckoned for calculation of NPVRV
24 7
Liquid Security Current Value/ Surrender Value
11
like FDRs/NSCs/ IVPs/
-20 66

Insurance Policy, etc.

Plant & Machinery Realizable Value (as per Bank’s Board approved Valuer)
Realizable Value (as per Bank’s Board approved Valuer)
-06 134

Industrial Shed &

Structure
Immovable Properties Realizable Value (as per Bank’s Board approved Valuer)
Pledged Shares In case of listed shares, the value of shares available in an
5

account to be added to the NPVRV at the current market

price (closing market price of shares on the previous day
of marking the proposal before HOCC/SAC).
In case of unlisted shares, the value of shares available in
an account may be treated as Nil where latest available
Balance Sheet is older than 3 years and above
15

Stocks/ Value of Stock & Book Debts/Other Current Assets as per

Receivables (Book Stock Statement/ Valuation Report/ Stock Audit Report/
Debts)/Other Current Balance Sheet/CA certified stock statement/latest stock
Assets verification report (Whichever is latest).

MINIMUM INDICATIVE OTS AMOUNT

Minimum indicative OTS amount will be arrived at as under:

Situation Minimum Indicative OTS Amount

1. Where NPVRV > Recoverable Recoverable Dues.
52 | P a g e
 Dues
2. Where NPVRV < Recoverable Dues NPVRV of the securities
but more than Book Outstanding

3. Where NPVRV < less than Book NPVRV of the securities*

Outstanding

4. Where NPVRV is Zero Whatever maximum can be recovered*

The basis for negotiation shall always be Memoranda Dues and should aim at
recovering maximum share of the same.

*The cases where NPVRV is less than the book outstanding or Zero and Book
Outstanding is more than Rs. 10.00 Cr, then before considering OTS Proposal,
Detective Agency should be engaged (If previously not engaged) and the assets

:57
traced out by Detective Agency should be taken into cognizance during negotiation/
approval of OTS, however, HOCAC-III & Management Committee shall have full
powers to waive this condition on case to case basis based on proper justification.
24 7
11
However, Minimum Indicative OTS Amount in case of Direct Agricultural Advances
-20 66

(now known as Farm Credit advances-PSFID circular 69/2018 dated 11.12.18)

having balance outstanding up to Rs. 10 lacs, will be as under where NPVRV (so
calculated as mentioned in above table ) is less than Book Outstanding:-
-06 134

o Sub-Std NPAs: Minimum 50% of Book O/s

o Doubtful NPAs: Minimum 40% of Book O/s
5

In such direct agricultural advances also, with balance outstanding up to Rs. 10 lacs, if
NPVRV is zero, the guidelines mentioned in above table at Situation .No 4 will be
applicable (whatever maximum can be recovered). However, the negotiation should
always be for Memoranda Dues and aim should be to recover the maximum
15

amount.

Minimum Indicative Amount is only for Bank’s internal use and under no
circumstances should be made known to the borrower or their representatives.

Relaxation Cases (When the borrower is not able to pay indicative OTS amount)

If the borrower, under compelling circumstances, is unable to pay the minimum

indicative OTS amount, the best possible offer involving higher sacrifice, depending
upon merits and attendant circumstances of individual case, can be considered by the
next higher authority.
53 | P a g e
Powers to consider OTS in Willful Default/Frauds (RBI Reported)/Criminal action
cases shall be as under:-

Bank’s commercial decision to accept OTS offer/recovery of entire outstanding

amount shall have no bearing whatsoever on the ongoing criminal cases/investigation
being carried out by the CBI/Police and the same shall proceed as per law. However,
any settlement agreed upon in Fraud Reported accounts where fraud amount involved
is Rs 300 lacs and above be reported to CBI without fail, both at the time of approval
AND in case of failure.

OTS proposals in respect of debtors classified as Wilful Default/Frauds (RBI reported)

shall be placed before the MC for approval (for loans originally sanctioned upto the
level of HOCAC-III). However, loans originally sanctioned by MC, proposal for
compromise settlement/OTS shall be placed before the Board through MC.

All cases of OTS/compromise settlements with respect to Criminal Action Cases/Wilful

:57
Default & fraud (RBI reported) approved at the level of HOCAC-II/HOCAC-III/MC shall
be put up to the Board on quarterly basis for information.
24 7
The criminal cases filed under Section 138 of Negotiable Instrument Act shall not be
11
governed by these guidelines and OTS proposals in such cases shall be dealt in
-20 66

normal course as per vested powers.

-06 134

It shall be ensured that the staff accountability has been initiated before
considering OTS and finalized before considering Write off in such accounts
involving Willful Default/Borrowal Frauds/Criminal action, otherwise the same shall be
treated as a Relaxation case.
5

OTS/WRITE OFF IN STAFF ACCOUNTS

The OTS/ Write off proposals in accounts where an existing or ex-staff is a
borrower/guarantor shall be considered by an authority not below the level of
HOCAC-I subject to delegated powers. However, this clause will not be applicable
15

in case credit facilities were sanctioned, where staff has become a

borrower/guarantor/co-obligant, after retirement/ resignation from the services of the
Bank.

COMPETENT AUTHORITY FOR DISCHARGE OF LIABILITY/ RELEASE OF

CHARGE ON MORTGAGED PROPERTY OR PLANT AND MACHINARY

LIMIT LAST SANCTIONED BY COMPETENT AUTHORITY

Committees below ZOCAC ZOCC headed by GM/CGM
ZOCAC headed by GM HOCAC-I
ZOCAC headed by CGM & HOCAC-I HOCAC-II
HOCAC-II HOCAC-III

54 | P a g e
HOCAC-III MC (for loans originally sanctioned by
HOCAC-III, proposal shall be approved
by MC.)
Management Committee (MC) Board

Further, in exceptional circumstances, proposals for Discharge of liability/ release of

charge on secured assets for amount below present market value may be considered
by HOCAC-II (for the limits last sanctioned upto HOCAC-I{except Wilful Default/Fraud
cases}) and above, based on the merits of the case.

OTS IN SARFAESI CASES

Accounts, where after serving notice under Section 13(2) of SARFAESI Act and
subsequent actions under SARFEASI Act but before the actual sale/auction of assets,
the obligants approach the Bank with an OTS offer and/or with partial
settlement/recoveries by release of charge over mortgaged properties/ hypothecated
goods/ assets under Negative Lien and such proposals are considered favourably by

:57
the competent authority, supplementary agreement with the borrower to keep further
actions in abeyance and letter of consent from the guarantor shall be obtained.Before
considering an OTS offer in such cases, Competent Authority shall ensure the
24 7
probability of the successful implementation of the OTS offer, insist on substantial
11
upfront and shorter repayment schedules, to avoid a ploy by such recalcitrant
-20 66

borrowers to use the route of OTS to gain further time.

OTS THROUGH DEBT-ASSET SWAP & ACQUISITION THROUGH SELF-BIDDING

-06 134

In some of the OTS proposals, the obligants offer some immoveable property in part
or full satisfaction of the OTS amount. There are cases where bank’s dues are
collaterally secured by mortgage of properties and the properties are located in prime
5

areas and are saleable, especially residential/ commercial flats. The party, though
having sufficient properties, yet due to liquidity crunch or depressed real estate
market, is unable to immediately repay the bank’s dues in full. Even they are unable to
arrange funds for OTS and they offer IPs in part or in full consideration of OTS
amount. If the bank deems it fit to go in for the offer looking to utility of the
15

concerned property for bank’s use or otherwise, then a combined proposal can
be considered for settlement of account through OTS or otherwise on one hand
and for purchase of such property at market competitive rates on the other
hand.

Acquisition through Self-Bidding

In the process of execution of decrees/enforcement of security interest under
SARFAESI Act through auction of land and properties, at times bidders do not come
forward with offers or bid amount is very low in comparison to market value due to
various reasons including vested interests and in such situations, at times it is felt that
bank should offer bid in the auction through self-Bidding.

55 | P a g e
DOWN PAYMENT/ UPFRONT PAYMENT

OTS cases without upfront are generally not entertained, therefore efforts should be
made to get upfront as under:-

Sr. No Details of OTS Offer Upfront Amount

1 OTS Offer up to Rs. 10 lacs Upfront 20%
2 OTS offer more than Rs. 10 lacs up to Rs. 50 lacs Upfront 15%
3 OTS offer more than Rs. 50 lacs Upfront 10%

Even in such cases, where it is considered that upfront amount is difficult to be

insisted in advance (reasons to be recorded specifically), minimum amount to be
deposited shall be insisted upon before considering the OTS proposal.
A separate account has been got opened at all SOLs titled ‘Sundry
NPA/SARFAESI/Auction related’, 317118A for deposit of all credits related to recovery
in NPAs (OTS, Auction amount etc)

:57
PAYMENT TERMS OF OTS AMOUNT.

As the name indicates ‘One Time Settlement,’ obviously acceptance of negotiated

24 7
11
amount as one time down payment is preferable way of settlement compared to
-20 66

payment in installments.

Cases where the OTS amount is to be paid beyond a period of 3 months from the
-06 134

date of conveying approval, and/ or payment in installments, future interest on

the settlement amount to be charged at least:

a) FOR FULL PAYMENT OF OTS WITHIN 12 MONTHS OF APPROVAL: @

5

prevailing MCLR (1-year) at the time of approval of OTS + 1% on simple basis on

reducing balance from the date of conveying approval in writing to the borrower
by the branch.

b) FOR FULL PAYMENT OF OTS FOR MORE THAN 12 MONTHS OF APPROVAL:

15

@ prevailing MCLR (1-year) at the time of approval of OTS + 2% on simple basis

on reducing balance from the date of conveying approval in writing to the
borrower by the branch

However, HOCAC-I and above may consider proposal falling under their respective
powers at lower interest rates. Further, the cases where OTS amount is payable/or
is paid within three months from the date of settlement borrowers be allowed to
pay OTS amount without any interest.

EXTENSION OF TIME PERIOD FOR PAYMENT OF OTS AMOUNT

At a times, due to some unforeseen circumstances, the borrower may find it difficult to
pay as per the repayment schedule like not able to sell IPs. In such genuine cases,
powers to extend time period for OTS shall be as under:
56 | P a g e
Without further Sacrifice:
Extension of time period beyond the originally stipulated due date of payment for OTS
amount in already approved OTS cases without any further sacrifice can be
considered by SAME sanctioning authority, subject to the following:-
Maximum period extendable (over and above the original repayment period- in
months)

i. Circle SASTRA Committee/COCC-CM : 6 Months

ii. Circle Office Compromise Committee: 12 Months
iii. Zonal SASTRA Committee : 15 Months
iv. Zonal Office Compromise Committee: 18 months
v. HOCAC-I : 24 months
vi. HOCAC-II: Full powers –for the cases upto HOCAC –II
vii. HOCAC-III: Full powers for the cases falling upto HOCAC-III Level, MC &
Board sanctioned cases (except Wilful Default/Fraud cases).

:57
With Further Sacrifice:
Extension of Time period with further sacrifice would constitute only those cases
24 7
where further sacrifice would mean any relaxation in interest payment from the already
11
approved amount. No relaxation in principal OTS amount will be considered.
-20 66

Extension of Time Period with further sacrifices i.e. without/partial payment of interest
shall be placed to the next higher authority starting from Zonal SASTRA Committee
-06 134

(ZSCO) for approval as per revised Decision Level- Powers based on total sacrifice in
the OTS subject to the following:- Maximum period extendable (over and above the
original repayment period- in months)
i. ZSCO for the cases of CSC & COCC/COCC-CM for the cases under Branch: 3
5

months
ii. Zonal Office Compromise Committee: 6 months
iii. HOCAC-I: 9 months
iv. HOCAC-II: Full powers
v. HOCAC-III: Full powers
15

vi. Management Committee: Full Powers

vii. Board-Full Powers

Format for taking approval of extension of time period for payment of OTS
amount is attached in the Policy circular.

Further, Proposals sanctioned by HOCAC Level II HOCAC Level III or Management

Committee shall be considered by respective Sanctioning Authority within delegated
powers.

Failed declared OTS cases may also be revived in terms of these guidelines subject to
no amendments in already approved terms and conditions except sacrifice in interest.

57 | P a g e
In the cases, where proposal for extension of time period for payment of OTS amount
(with/without further sacrifice) offered by the party and valuation report is more than 3-
year old, then before considering the proposal for extension of time period, fresh
valuation should be obtained and it should be incorporated in the OTS proposal for
taking consideration of the fresh valuation favorably in Bank’s interest at the time of
taking decision for extension of time period.
The extension of OTS should not be permitted as a matter of routine. The specific
reason for extension be incorporated in the proposal. At the time of considering
extension, upfront amount as per policy should be obtained.

REJECTION OF PROPOSALS

 The applications/offers received at the branches by Branch Heads/ Field

Recovery Warriors proposing a specific OTS offer, after due negotiations in
terms of these guidelines be examined by the Branch Heads/Field Recovery
Warriors expeditiously and depending upon the merits of the case, the proposal
for acceptance/ rejection, as the case may be, shall be placed to the approving

:57
authority maximum within 15 days. However, in case any offer is received for
NPA accounts more than Rs.10.00 lacs, same to be sent to Circle SASTRA
Centre for its consideration.

24 7
11
If the approving/recommending authority feels that the offer is on lower side,
then further negotiations may be held within a time bound programme (say not
-20 66

exceeding one month) and a final view to sanction/ recommend/ reject the
proposal should be taken with directions for further action and such suggested
-06 134

actions be closely monitored.

 For NPA accounts with balance outstanding upto Rs.10.00 lacs, Branch
Manager to be competent authority for rejection of proposal. For NPA accounts
with balance outstanding of more than Rs 10.00 lacs, rejecting authority will be
5

as given below:-

 Circle SASTRA Head for proposals under the power of Circle

SASTRA Committee and Circle Office Compromise Committee.
 Zonal SASTRA Head for proposals under the power of Zonal
SASTRA Committee and Zonal Office Compromise Committee.
15

 CGM (SASTRA) for proposals under the HO Powers. The rejections

done at field level shall be submitted to HO once in a month for post
facto information.

FAILURE OF OTS

For issuance of notice of failure of OTS, respective authorities will be as under:-

OTS SANCTIONED BY AUTHORITY FOR ISSUANCE OF

NOTICE OF FAILURE OF OTS
Branch Head/COCC ( Upto Rs.10.00 Lacs) Branch Head
ZOCC/HO Power( Upto Rs.10.00 Lacs) Circle Head
For cases handled by CSC/ZSC
58 | P a g e
Circle SASTRA Committee/ Circle Office Circle SASTRA Head
Compromise Committee/ HO Power
Zonal SASTRA Committee/ Zonal Office Zonal SASTRA Head
Compromise Committee/ HO Power

The failure should be notified to the party maximum within 7 working days after giving
due notice.

SETTLEMENT OF CGTMSE COVERED ACCOUNTS

Minimum Indicative settlement in eligible CGTMSE Covered NPA accounts shall be

calculated as under

Cases where CGTMSE Claim received in the account:

Minimum indicative settlement amount derived in such cases shall not be less

:57
than the amount of CGTMSE claim received. Further, while arriving at the principal
outstanding amount, CGTMSE claim amount credited in the account shall be added
back to the Principal amount outstanding at the time of settlement.
24 7
11
Cases where CGTMSE Claim rejected in the account:
-20 66

In case the claim has been rejected / declined by CGTMSE, the minimum indicative
-06 134

settlement amount shall be as per General Settlement Scheme of the Bank.

Cases where CGTMSE Claim not yet lodged/ or lodged but not yet settled:

In such cases, the minimum indicative settlement amount under General Settlement
5

Scheme shall not be less than 75% of total CGTMSE claim eligible amount based on
the extent of guarantee for the respective accounts.

Cases covered under Hybrid Securities product of CGTMSE:

15

Cases where only some facilities are covered under CGTMSE and others are not
covered, the minimum Indicative Settlement amount in such cases shall be derived as
under:

Status of Claim Minimum Indicative Amount

Amount

Claim amount received Sum of Claim amount received (For Facility covered
under CGTMSE scheme) + Minimum Indicative amount
as per General Settlement Scheme (For facility not
covered under CGTMSE)

Claim not yet Sum of 75% of Total CGTMSE Claim amount (For
59 | P a g e
filed/received Facility covered under CGTMSE scheme) + Minimum
Indicative amount as per General Settlement Scheme
(For facility not covered under CGTMSE)

In CGTMSE covered cases one clause containing ―Final NOC will be issued after
taking concurrence from CGTMSE‖ should be incorporated in the OTS sanction letter.
Any recovery made in the accounts, where CGTMSE claim already received, should
be remitted to CGTMSE after deduction of legal and other expenses made for
recovery. CO/ZO to ensure that the recovery details are updated in the CGTMSE
portal.

After full recovery as per OTS sanction, 2nd claim to be lodged with CGTMSE
indicating claim particulars, like ref no. recovery details as remitted to CGTMSE and
amount be claimed towards 2nd installment. After receipt of 2nd installment from
CGTMSE, the amount is to be credited in the loan account. Thereafter, the account
may be closed as per laid down procedure and final NOC be handed over to borrower.

:57
GUIDELINES W.R.T OTS/SETTLEMENT IN NPA ACCOUNTS THROUGH SPECIAL
24 7
SETTLEMENT SCHEMES OF STATE/CENTRAL GOVERNMENT
11
-20 66

In case Central Government OR any State Government brings out a notification with
regards to a Special Settlement Scheme for a particular category/ categories of NPA
-06 134

Borrowers, in which NPA Borrowers of our Bank are also eligible, and settlement is
being proposed in bulk through common/segment wise formula, then power to
approve the settlement will be as under: -
 Where sacrifice amount involved per account is upto existing OTS
guidelines
5

Sl. No Approving Authority as per existing Approving Authority for Special

guidelines Settlement Schemes of
State/Central Government
1 CSCO/COCC/ ZSCO ZOCC
2 ZOCC/ HOCAC-I HOCAC-II
15

3 HOCAC-II & HOCAC-III HOCAC-III

4 Management Committee Management Committee

 Where sacrifice amount involved per account is higher than existing OTS
guidelines (irrespective of approving authority)
o For Special Settlement Schemes of State/Central Government where
sacrifice amount involved per account is higher than existing OTS
guidelines, then Management Committee will have the power to
approve the contours of the scheme in bulk and convey approval to
respective Zonal offices.

HEAD OFFICE SETTLEMENT ADVISORY COMMITTEE (HOSAC)

60 | P a g e
Board has prescribed that all OTS cases falling under the powers of MD & CEO (now
HOCAC Level III) and Executive Director (now HOCAC Level II) shall also be routed
through the HOSAC of the Bank.
The Committee may consist of (i) one retired High Court Judge, (ii) one eminent/
reputed person (iii) Chief General Manager (SASTRA) (iv) other two Chief General
Managers/General Managers (other than GM-SASTRA), shall be nominated by the
MD & CEO for a period of twelve months by rotation. General Manager (SASTRA) -
Domain will be the Member Convener. Names of the retired High Court Judge and
eminent/ reputed person shall be approved by the Management Committee of the
Bank and the same be informed to the Board thereafter.”

Cases to be considered by Head Office Settlement Advisory Committee

(HOSAC) shall be as under:

i). OTS proposals envisaging sacrifice of more than Rs.75.00 lac under General
guidelines.
ii). All OTS cases falling under the power of Board/ Management Committee/ HOCAC

:57
Level I/HOCAC Level II/HOCAC Level III.
iii). Write off proposals for taking final decision to write off Rs.100/- in already written
off accounts under the powers of MC/Board/ HOCAC Level I/ HOCAC Level II /
24 7
HOCAC Level III. 11
iv). Proposals involving Debt-Asset swap as part of OTS, irrespective of the amount of
-20 66

sacrifice involved.
v). Proposals involving write off Non-Performing Investments.
vi). Proposals for release of guarantors/obligants/release of IP, where loan limits have
-06 134

been sanctioned at Head office level.

vii). OTS Proposals in respect of Public Sector Undertakings/ Govt. Guaranteed
accounts/ irrespective of the amount of sacrifice involved.
viii). OTS proposals falling in the powers of HOCAC Level II/HOCAC Level
5

III/MC/Board relating to wilful default / Fraud / cases where Bank or other agencies
like Police/ CBI have initiated criminal action.
ix). Proposals for assignment of Debt to third party/ARCs falling in powers of HOCAC
Level II/HOCAC Level III/MC/Board.
x). Proposals relating to sale of NPAs to ARCs/FIs/Other Banks/NBFCs etc.
15

xi). All proposals which fall in the powers of HOCAC Level II/HOCAC Level
III/MC/Board even if not listed above

GUIDELINES FOR REMOVAL OF SETTLED STATUS FROM CIRS ON ACCOUNT

OF DEPOSIT OF REMAINING DUES BY THE BORROWER AFTER OTS

“For cases earlier closed by OTS and reported to CICs and now borrower is
approaching bank to pay the remaining dues for removal of settled status from CIRS,
Branch/Circle SASTRA Centre/Zonal SASTRA Centre (The office which handled the
OTS Proposal earlier) will ask borrower to deposit the Recoupment amount as under:-

61 | P a g e
Sacrifice taken from Memoranda Dues at the time of sanction of OTS + simple
interest @ [current MCLR (1 year) + 2%] from the date of sanction of OTS till
payment of such recoupment amount.

On deposit of the Recoupment amount by the borrower, the respective office will take
up the matter with HO: MISD through respective Controlling Office for removal of
settled status from CIRs. However, for the cases of Zonal SASTRA
Centres/ELCBs/LCBs, they will take up the matter directly with HO: MISD”
Recoupment amount, shall be credited to the Head “Realization in Written-off
accounts - 2111001”

 DECISION LEVEL POWERS

The Powers delegated to various Committees to approve Compromise

Settlements/OTS at Circle/Zone and Head Office level are as follows with subject to
power of sacrifice:

:57
BALANCE O/S UP TO RS. 10 LAKH AS ON DATE OF RECEIPT OF OTS
PROPOSAL 24 7
Limit last sanctioned by 11 Sanctioning Authority subject to power
of sacrifice
-20 66

Upto Scale - III Circle Office Compromise Committee

headed by CM (COCC-CM)
PLP Segment Head/PLP Head/PLP- Circle Office Compromise Committee
-06 134

CAC/CH-CAC (Scale-IV) or equivalent headed by Circle Head (AGM/DGM)

authorities
PLP Head/PLP-CAC/MCC-CAC/CH-CAC Circle Office Compromise Committee
(Scale-V) or equivalent authorities headed by Circle Head (DGM).
5

However, in cases where Circle Head is

AGM then in such cases OTS approving
authority will be Zonal Office Compromise
Committee headed by GM/CGM.
CH-CAC (DGM) / ZOCAC-I headed by Zonal Office Compromise Committee
15

DGM or equivalent authorities. headed by GM/CGM

LCB/e-LCB & ZOCAC headed by GM HOCAC-I
ZOCAC headed by CGM HOCAC-II
All the cases of OTS with respect to MC for loans originally sanctioned upto the
debtors classified as Wilful default/Fraud level of HOCAC-III, proposal for
(RBI reported) compromise settlement/OTS shall be
approved by MC.
However, loans originally sanctioned by
MC, proposal for compromise
settlement/OTS shall be approved by the
Board through MC.

Note:

62 | P a g e
 For NPA accounts upto Rs. 10.00 Lakh falling under Branch Purview –
Competent Authority for considering waiver of Legal action shall be Circle
Head.
 All the compromise proposals/OTS of NPAs having O/s upto Rs. 10 lakh
shall be recommended by the concerned Branch Manager.
BALANCE O/S ABOVE RS. 10 LAKH AS ON DATE OF RECEIPT OF OTS
PROPOSAL

Limit last sanctioned by Sanctioning Authority subject to power

of sacrifice
Upto Scale - III Circle SASTRA Committee (CSCO)
headed by CM/AGM as Circle SASTRA
Head

PLP Segment Head/PLP Head/PLP- Circle SASTRA Committee (CSCO)

CAC/CH-CAC (Scale-IV) or equivalent headed by AGM as Circle SASTRA Head.

:57
authorities However, in cases where Circle SASTRA
is headed by CM, OTS approving authority
will be Circle Office Compromise
Committee headed by Circle Head
24 7
11 (AGM/DGM).
-20 66

PLP Head/PLP-CAC/MCC-CAC/CH-CAC Circle Office Compromise Committee

(Scale-V) or equivalent authorities headed by Circle Head (DGM).
However, in cases where Circle is headed
-06 134

by AGM, OTS approving authority will be

Zonal SASTRA Committee Headed by
DGM/GM.
If, Zonal SASTRA is also headed by AGM
5

or below, OTS approving authority will be

Zonal Office Compromise Committee
headed by GM/CGM.
ZOCAC-I headed by DGM/CH-CAC Zonal SASTRA Committee Headed by
headed by DGM or equivalent authorities GM.
If, Zonal SASTRA is also headed by DGM
15

or below then in such cases OTS

approving authority will be Zonal Office
Compromise Committee headed by
GM/CGM.
LCB/e-LCB & ZOCAC headed by GM HOCAC-I
ZOCAC headed by CGM HOCAC-II
HOCAC-I HOCAC-II
HOCAC-II HOCAC-III
HOCAC-III MC (for loans originally sanctioned by
HOCAC-III, proposal for compromise
settlement/OTS shall be approved by MC.)
MC Board
All the cases of OTS with respect to MC for loans originally sanctioned upto the

63 | P a g e
debtors classified as Wilful default/Fraud level of HOCAC-III, proposal for
(RBI reported) compromise settlement/OTS shall be
approved by MC.
However, loans originally sanctioned by
MC, proposal for compromise
settlement/OTS shall be approved by the
Board through MC.

 No power delegated at Branch Level to approve compromise settlement/OTS as well

as sacrifice in General OTS Policy.
 Any official who was part of sanctioning the loan (as individual or part of a
committee) shall not be part of the approving the proposal for compromise settlement
of the same loan account, in any capacity. Such cases will be placed to next higher
authority.

Powers delegated to various Committees to approve sacrifice at Circle/Zone and

Head Office level are as follows:-

:57
(Rs. in Lakhs)

Committee Sacrifice being debit Sacrifice Waiver of ***Waiver

24 7
to bank revenue/
11 being debit to legal action of appeal
Waiver of RI/ PI/ bank revenue/ in terms of
-20 66

legal & other Waiver of RI/ recoverable

expenses on PI/ legal & dues
entering into other
-06 134

OTS/negotiated expenses on
settlement including **Write off of
actual writtenoff bad debts/
accounts. * loss assets
5

CSCO Headed by 25 15 15 15
CM as Circle
SASTRA Head &
Circle Office
Compromise
15

Committee
Headed by Chief
Manager (COCC-
CM)
CSCO Headed by 70 40 40 40
AGM as Circle
SASTRA Head
COCC headed by 100 70 70 70
AGM as CH
COCC headed by 150 100 100 80
DGM as CH
ZSCO headed by 150 100 100 80
AGM

64 | P a g e
 ZSCO headed by 200 120 120 120
DGM
ZSCO headed by 250 130 130 130
GM
ZOCC headed by 300 150 150 FULL
GM
ZOCC headed by 350 170 170 FULL
CGM
HOCAC Level I 400 200 200 FULL
HOCAC Level II 700 300 300 FULL
HOCAC Level III 1000 500 500 FULL
MC/ Board FULL FULL FULL FULL

*Competent Authority to consider OTS Proposal in Willful Default/Frauds (RBI

Reported) & Criminal action cases shall not be below Board & HOCAC Level-II
respectively and powers to consider OTS in such cases shall be exercised as
mentioned in above table.

:57
**Powers for write off shall be kept in abeyance and can be exercised only in terms
of Para- “Write Off Of NPAs” given in same policy.
24 7
11
***This is the amount of sacrifice which bank shall forego if appeal is not filed and is to
-20 66
be arrived at by calculating amount recoverable in terms of prayer made to the Court
vis-à-vis amount recoverable in terms of judgment/ decree awarded by the Court.
-06 134

Recovery of Delayed Period Interest on OTS approved cases should be credited

to “Income: Recovery in Written Off A/cs” instead of “Income: Interest on
Advances”.
5

Note:
1. Sacrifice is the difference between OTS Offered amount and recoverable
dues.
2. Recoverable Dues means balance outstanding as on the date of NPA
including amount of DI/SI reversed, if any, plus legal and other charges plus
simple interest @ 1 Year MCLR on daily reducing balance since date of NPA to
15

end of last quarter. However, Recoverable Dues in Written Off Accounts shall
be calculated as per guidelines mentioned in the Circular.

 Various Committee’s at Zonal office/ Circle Office and Zonal SASTRA Centres/
Circle SASTRA Centres –
In view of the revamped SASTRA Vertical, following Committees have been formed at
Zone and Circle level respectively:-
S.no. Name of the Composition of the Committee CONVENOR
Committee
1. Zonal Office a. Zonal Head (CGM/GM)- HEAD AGM/CM/SM of
Compromise b. Dy. Zonal Head (GM/DGM) Zonal Office (To be
nominated by Zonal
65 | P a g e
 Committee c. Zonal SASTRA Head Head)
(ZOCC) d. Dy. Zonal SASTRA Head (R R
NCLT)
2 Zonal SASTRA a. Zonal SASTRA Head- HEAD CM/SM/Manager of
Committee b. Dy. Zonal SASTRA Head (R R Zonal SASTRA
(ZSCO) NCLT) Centre (To be
c. Dy. Zonal SASTRA Head nominated by Zonal
(Monitoring) SASTRA Head)
d. Law Officer (Wherever posted)
OR
One more officer nominated by
Zonal SASTRA Head.
3 Circle Office a. Circle Head (HEAD) CM/SM/Manager of
Compromise b. Dy. Circle Head Circle Office (To be
Committee c. Circle SASTRA Head nominated by Circle
(COCC) d. Dy. Circle SASTRA Head Head)

:57
4 Circle SASTRA a. Circle SASTRA Head-HEAD SM/Manager of
24 7
Committee
(CSCO)
11
b. Dy. Circle SASTRA Head
c. Field Recovery Warrior Head
Circle SASTRA
Centre (To be
-20 66

d. Law Officer (Wherever posted) nominated by Circle

OR SASTRA Head)
-06 134

One more officer nominated by

Circle SASTRA Head.
5 Circle Office Chief Manager of Circle Office SM/Manager of
Compromise nominated by Circle Head Circle Office (To be
5

Committee nominated by Circle

Three Officers of Scale III/II of
Headed by Circle Office Head)
Chief Manager
(COCC-CM)
The minimum quorum for the above committee’s will be 3 members with the
15

attendance of the Head of the Committee being mandatory.

 Guidelines for Formation of Committees for Approval of OTS/ Write Off/Waiver
of Legal Action/Appeal etc.- General Guidelines at HO level and Branch level
All the proposals for OTS / Negotiated Settlement/ write-off of dues/ Waiver of legal
action/ Appeal would be considered by the respective authorities if duly recommended
by the committee (comprising of 3 members) constituted for various decision levels as
under:-
DECISION LEVEL AMENDED CONSITUTION OF COMMITTEE
HOCC
Head Board/ Management (i) Chief General Manager – HO

66 | P a g e
Office Committee/ HOCAC SASTRA Division – Head of the
Level III/ HOCAC Level Committee
II/ HOCAC Level I (ii) Other two Chief General Managers/
General Managers to be nominated
on rotational basis for a period of 12
months by MD & CEO.
(iii) General Manager (Domain) – HO
SASTRA Division – (Convener)
Nominations for the Committee should be
done by designation of the concerned and not
by the name of officials
HOSAC
Board/ Management (i) One Retired High Court Judge
Committee/ HOCAC
(ii) One eminent/reputed person. Name

:57
Level III/ HOCAC Level
of retired High Court Judge and
II/ HOCAC Level I
eminent/reputed person shall be
approved by the Management
24 7
11 Committee and same be informed to
-20 66

the Board thereafter.

(iii) Chief General Manager – HO
-06 134

SASTRA Division
(iv) Other two Chief General
Managers/General Managers to be
5

nominated on rotational basis for a

period of 12 months by MD & CEO.
General Manager (Domain) – HO SASTRA
Division – (Convener)
15

Nominations for the Committee should be

done by designation of the concerned and not
by the name of officials

 REPORTING OF APPROVALS AND MONITORING OF APPROVED OTS

S.no.
Minutes of Appraisal To be placed for Post Facto
Committee/ Authority Scrutiny To
1 Branch/Circle Office Compromise Circle Office Compromise Committee
Committee headed by Chief
67 | P a g e
 Manager (COCC-CM)
Circle SASTRA Committee Zonal SASTRA Committee
Circle Office Compromise Zonal Office Compromise Committee
Committee/ Zonal SASTRA
Committee
2 Zonal Office Compromise HOCAC Level II
Committee
3 HOCAC Level I HOCAC Level II
4 HOCAC Level II Board/MC
5 HOCAC Level III Board/MC

:57
Simplified word OTS Format for approval of settlement proposals under General
OTS Scheme for NPA Accounts upto Rs 1.00 lac, Above Rs.1.00 Lacs to 10 Lacs
24 7
and above Rs.10.00 Lacs are also available in special links at Knowledge Park
11
-20 66

To monitor the receipt and disposal of OTS proposals / applications, a register shall be
-06 134

maintained at the Branches/CSC/CO/ZSC/ZO/HO giving therein the date of receipt of

proposals, name of the party, Book Outstanding, OTS amount etc. and date of its
disposal. Decision on OTS proposals should be taken expeditiously but maximum
within 15 days for proposals up to ZOCC/HOCAC-I level and within 30 days for
5

proposals under the power of HOCAC-II & above from the date of receipt of the
proposals. The same shall be monitored by respective authorities at
CSC/CO/ZSC/ZO/HO.
********
15

68 | P a g e
 5. One Time Settlement (OTS): in Credit Card
(BARM (CCD) Cir No.02/2023 dated 29.04.2023)

Credit card outstanding is a clean advance i.e. not backed by any security. In order to
reduce NPA, all out efforts must be made as per Bank’s guidelines. OTS is an
effective tool of recovery and be explored on merits of the case.

 Coverage under OTS policy for NPA Credit Cards.

(i) All Credit Card accounts identified as NPA in terms of extant RBI guidelines
are eligible for compromise/negotiated settlement/one-time settlement, only
after 3 months from its date of slippage into NPA.
(ii) (ii) The OTS cases approved but failed due to non- payment of remaining
OTS offer amount, the entire outstanding dues of such cases will also be
eligible for consideration of OTS afresh.
(Staff NPA Credit Card are not covered under this Scheme.)

:57
 Guidelines for OTS in Percolated NPA Credit Cards:

S.No Scenario Guidelines For OTS

24 7
1 Both Credit Card and other
11
OTS will be considered for the combined
-20 66

loan account are NPA due exposure of Credit Card & other borrowal
to non-payment of dues or accounts. The OTS amount arrived will be
-06 134

any other reason. cumulative of applicable Credit Card settlement

amount and amount payable for other borrowal
accounts as per SASTRA Division guidelines.
The sanctioning authority to consider the
settlement for combined exposure will be as per
5

SASTRA Division in its OTS policy guidelines.

2 Credit Card having no OTS of other NPA borrowal accounts (on
default but classified as standalone basis) will be considered as per
NPA due to percolation SASTRA Division OTS guidelines
effect of other borrowal
15

account.
3 Other borrowal accounts If there are no default/irregularities in other
having no borrowal accounts, but are in NPA category due
default/irregularities but to percolation of credit card, in such cases OTS in
classified as NPA due to NPA Credit Card account may be considered on
percolation effect of NPA standalone basis as per extant guidelines of HO:
Credit Card. BARM Division (Credit Card Department)

 Calculation of Memoranda dues

Memoranda dues are total amount due in Credit Card as per Memoranda records. In
OTS proposals, the memoranda dues will be considered as per the last bill generated
69 | P a g e
from the date of deposit of token amount/upfront amount of the OTS offer.
 Settlement Formula:
Efforts will be made to recover entire Memoranda dues. Based on memoranda
balance, indicative OTS amount arrived at, is as given below:-

(i) For card accounts where memoranda balance is up to Rs.50000/-

Age of NPA Indicative OTS Amount
Up to 6 months Ledger balance + 25% of finance charges, service charges,
etc. after transfer to NPA
Above 6 months Ledger balance

(ii) For card accounts where memoranda balance is above Rs.50000/-

Age of NPA Indicative OTS Amount

Up to 6 months Ledger balance + 50% of finance charges, service charges,
etc. after transfer to NPA
Above 6 months to 1 Ledger balance + 25% of finance charges, service charges,

:57
year etc. after transfer to NPA
Above 1 Year Ledger balance
24 7
11
(Ledger Balance: Outstanding amount as on date of NPA (after reversal of DI) less
-20 66

recovery made after dates of NPA to date of settlement.)

Payment Terms of OTS Amount in Credit Card

-06 134

 Acceptance of OTS amount as one time down payment should be preferred

compared to payment in instalments.
 To consider the OTS offer, minimum 10% of OTS offered amount is to be made
5

up front with the request for OTS.

 However, the cases where OTS amount is payable/or is paid within three
months from the date of settlement Cardholder may be allowed to pay OTS
amount without any interest.
15

 In exceptional cases where the Cardholder fails to pay the total OTS offer
amount within stipulated time i.e., 3 months in such cases, the request of
Cardholder for extension of OTS payment period will be placed to AGM (HO:
BARM-CREDIT CARD DEPARTMENT) for consideration which will be
extended upto 12 months (maximum 2 times), interest in such cases to be
charged as under: -

 For full payment of OTS within 12 months of approval : Prevailing MCLR (1-year)
at the time of approval of OTS + 1% on simple basis on reducing balance from the
date of conveying approval in writing to the Cardholder.

 Failure of OTS: In case card holder fails to pay the dues as per terms of OTS,
the entire concessions allowed will stand withdrawn and the total outstanding
70 | P a g e
 will become Memoranda. This condition shall be conveyed to the cardholder in
sanction of OTS.

Updation of CIC’s record of Cardholder closed under OTS

Upon closure of NPA Credit Card under OTS, the same is updated with CICs
as ‘settled’. In these ‘settled’ Credit Card accounts several references are
received from the Cardholders requesting for updation of their CIC’s record as
‘normal closure’ instead of closed as ‘settled’ with payment of amount. The
Credit Cards which are closed under OTS and now the Cardholder are
requesting to update their CIC’s record as ‘normal closure’ instead of closed as
‘settled’. To deal with such cases, the guidelines are as under: -

The request of the Cardholders for updation of their Credit Card record with
CIBIL & other CICs (which are closed under OTS) will be considered upon
deposit of full sacrificed amount + simple Interest @ 18% p.a. along with

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applicable GST, from the date of closure of Credit Card till the date of
approval given by Bank for considering the request to close the Credit Card as
normal closure instead of closed as settled.
24 7
11
The Cardholder will have to make full payment within 30 days from date of
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approval (sacrificed amount + interest & applicable GST as mentioned above)

in the account as conveyed through the approval letter.
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Details of Account to deposit the approved amount:

Account Number: 0153002100566267
Name of the account: Imprest Account BARM (Credit Card Department)
5

IFSC Code: PUNB0015300

Recovery through Recovery Agents/Agencies:

The NPA Credit Card accounts which are difficult to recover may be allocated by the
15

respective Circles through Bank approved Recovery Agents/Agencies in line with

policy guidelines circulated by HO: SASTRA DIVISION with following two exceptions:
i. Identification of eligible Credit Card accounts.
ii. Payment of commission payable to Recovery Agencies/Agents.

Eligible Accounts:
Following Credit Card accounts will be eligible for recovery through Recovery
Agents/Agencies:
(a) All NPA accounts (whether non-suit filed, suit filed or decreed),
(b) All written off accounts except accounts where compromises have been approved
including those settled in Lok Adalat etc

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Allocation of Credit Card Accounts to Recovery Agencies/Agents:
For recovery of credit card dues & resolution of account through OTS, Circle Offices
will allocate NPA Credit Card accounts to Recovery Agents/Agencies which are
classified as NPA up-to the previous quarter.

COMMISSION

Age of NPA Commission payable to Recovery Agency(ies)

Up to 1 Year 15% of amount recovered or Rs 25000/-
whichever is lower
Above 1 Year Up to 2 Years 20% of amount recovered or Rs 25000/-
whichever is lower
Above 2 Year Up to 3 Years 30% of amount recovered or Rs 25000/-
whichever is lower
Above 3 Year 40% of amount recovered or Rs 25000/-

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whichever is lower

Competent Authority to sanction proposals of OTS:

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11
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SACRIFICE AMOUNT SANCTIONING AUTHORITY FOR INFORMATION

Upto Rs.4.00 Lacs ** COCC ZOCC
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Above Rs.4.00 Lacs ZOCC HOCAC - I

Full Sacrifice Amount i. DGM/AGM HO:BARM HOCAC – I
without any Ceiling CREDIT CARD
ii.AGM-HO:SASTRA Division
5

iii. AGM-HO :Credit Division

iv.CM-HO:BARM CREDIT
CARD
(Quorum of any three
members)
The committee members will be other than the members of
15

Recommending/approving OTS committee

*Memoranda Balance = Total amount due i.e. Ledger balance + finance charges
+ late payment charges+ other charges.
**Sacrifice Amount = Memoranda Balance – OTS amount

No OTS will be done below the Ledger Balance.

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 6. Guidelines for Seizure and Sale of Vehicles (including tractors) of
defaulterBorrowers
(SASTRA Division Circular No. 09/2024,08/2023)
.
A sizeable amount of NPAs under the segment of below Rs.10 lac is locked up in
vehicle loans particularly Tractor advances. Besides, a large number of vehicle /
tractor loans are running irregular and are likely to slip to NPAs, if immediate
corrective action is not taken.

 In cases of deliberate default, at times effective recovery measures need to be taken

so as to enforce our security interests including seizure of tractors, cars, trucks and
other vehicles, taking physical possession and realizing its value by sale for credit to
the borrower’s loan account as per the covenants of the contract / provisions of
law.

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 Covenants of the Loan Agreements : The covenants underlying the contract
between the Bank and the borrower are clearly laid down as follow

 As per terms of various agreements, like Priority Sector Term Loan Agreement
24 7
11
(PNB – 639), Letter of Hypothecation (PNB – 504), Hypothecation Agreement
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(PNB – 1041) as well as term loan agreements of e-OBC &e-UNI, the bank
has a right to demand, have possession of and sell charged securities in case
of default by borrower.
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But, in the interest of Natural justice, Bank should not initiate any legal or other
recovery measures including repossession of the security without giving due
notice in writing. It is to be ensured that all reasonable care is taken for
5

ensuring the safety and security of the property after taking custody, in the
ordinary course of the business; and that the entire process is fair and
transparent.

Keeping in view the above aspects, with a view to impart thrust for
15

recovery of Bank’s dues in irregular and NPA vehicle loans (including

Tractor advances), following procedure is to be followed by Branch
Manager for repossession and disposal of the security of vehicle
including Tractors.
 Branches/CSC shall resort to repossession of security only for the purpose of
realization of its dues in default as the last resort.
 In addition to the usual / normal recovery reminders / notices / efforts, a 15 days’
notice calling upon the borrower to remedy the default shall be given (with copy to
guarantor/s) in writing in local vernacular language stating that in the event of failure
on the part of the borrower / guarantor to do so within the prescribed time, the bank
shall be entitled to seize the vehicle and proceed for selling it to recover its dues as
per terms of the loan agreements and in consonance with the law.

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 In case the default persists, another possession-cum-sale notice of 10 days shall
be given to borrower / guarantors in writing in local vernacular language intimating
the date of taking over possession of the vehicle / tractor.
 The borrower shall be at liberty to repay bank’s dues on any day before the date
fixed for sale and get back possession of his vehicle. In such an eventuality further
action of sale shall be stopped.
 Estimated price of vehicle shall be ascertained and notified to the borrower
/guarantor, and on the notified date for sale, the vehicle shall be sold by Public
Auction/Tender/Quotations and/or through a private contract at the sole discretion
of the bank in a fair and transparent manner, where borrower will also be advised to
be present.
Valuation of Seized Vehicles

For sale of vehicle, estimated value may be obtained from Surveyor and
estimated value given by Surveyor shall be fixed as Reserve Price.

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In case auction fails once, then for the subsequent auction,Circle Office
Compromise Committee (For the cases under purview of Branch)/Circle SASTRA
Committee (CSCO) as a onetime exercise, reserve price may be fixed at 10%
24 7
lower than the last reserve price.11
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If auction fails for 2nd time also, then Zonal Office Compromise Committee (For
the cases under purview of Branch)/Zonal SASTRA Committee (ZSCO) may at its
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discretion, revise reserve price by giving further discount for the subsequent
auctions. However, in no case valuation obtained from surveyor should be
older than one year.
5

Proceeds of sale, net of expenses incurred in this regard, shall be promptly credited
to borrower’s loan account towards liquidation.
 For taking possession and /or for sale, the BM/Circle SASTRA Head may
require services of a suitable Agency. Circle Head (For the cases under
purview of Branch)/Circle SASTRA Headsmay shortlist suitable Agencies out of
15

the panels of approved Recovery Agencies/Seizure Agencies.

 Intimation to Police authorities can be sent for information only, though it is not
mandatory.
 In case the borrower refuses to sign the paper/possession memo, copy of same
be sent to the borrower through Registered Post (Acknowledgement Due) when
bank repossess the vehicle.
 On repossession of the vehicle by the Bank, immediate information be also
provided to the local Police Authorities, intimating time and place when the
vehicle was repossessed.
 After seizure of the vehicle, prompt and quick steps shall be taken to dispose
off /sell the vehicle but in any case not exceeding 60 days from the date of
seizure, failing which the vehicle / tractor may be restored back to the borrower.

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After turning a Vehicle loan into NPA, either the value mentioned in the
valuation report obtained from the Surveyor or value mentioned in the Insurance
Policy should be entered into the CBS so that correct provisioning in NPA
vehicle loan accounts may be done by the system.
The following fee structure has been approved for these Seizure & Disposal Agents:

S. SERVICE FEE PAYABLE

N. RENDERED
1 Seizure and Maximum Rs.2000/- for two wheeler, 3000 for three
transporting the wheeler, 8000 for car, jeep, Van, SUV, LCV, Tractor &
vehicle to a nearby Trailers and 10000 for HCV, JCB, Tipper, buses, Lorry.
godown
2 Acting as custodian Maximum Rs.50/- for two wheeler, 100 for three
of vehicle / wheeler,car, jeep, Van, SUV, LCV, Tractor & Trailers
StorageCharges(per and 125 for HCV, JCB, Tipper, buses, Lorryfor a

:57
day per vehicle) maximum periodof 60 days of seizure of vehicle
No parking charges will be payable beyond 60 days
of seizure of vehicles.
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11
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3 Sale of vehicle 5% of amount realized within 30 days.

4% of amt realized within 31st to 60 days.
3% of amt realized after 60 days.
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The incentive/commission % shall be calculated on

lower of sale price or total dues and shall be subject
to maximum of Rs. 25,000/-
4 Recovery without 5% of amount recovered subject to maximum of Rs.
5

seizure/sale of 25,000/-
vehicle/ Tractor

The specimens of Performa for all the notices are available as Annexure in the
Sastra DivisionCircular 42/2023.
15

Fee for Valuation of Vehicle by surveyers is as under:-

Category of Vehicles Maximum fee payable in Rs.

2 Wheeler 350.00

3 Wheeler 500.00

Car/Light Commercial Vehicle 600.00

Tractors/Heavy Commercial Vehicles/Earth Moving 750.00

Vehicles etc

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 7. Policy For Transfer of Stressed Loans to Asset Reconstruction
Companies (ARCs)/Permitted Transferees including Portfolio
Transfers
(SASTRA DIVISION Circular No 23/2024)
POLICY
 Objectives

 It helps in resolution of NPAs by transfer / sale and also Non Performing

Investments (NPIs) in case of sale to other Banks/FIs/NBFCs.
 It helps in swiftly realizing as much of total dues as possible depending upon
valuation of underlying security interest. In case of a running business the
realization shall be based upon its economic potential, which ordinarily should
be more than its liquidation value

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 It reduces expenditure on NPA maintenance (legal expenditure, follow-up
requirements etc.) and releases resources for core operations.
 It sends signals that the Bank is serious in resolution of NPAs, even by off-
24 7
loading them.
11
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 It helps in creating an active and vibrant market for NPA/ Restructured debt
papers.
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 It helps in developing a healthy secondary market for NPAs/NPIs.

 Scope
 This policy is applicable to transfer / sale of financial assets by the Bank to
Securitization Companies / Reconstruction Companies, under the Securitization
5

and Reconstruction of Financial Assets & Enforcement of Security Interest Act,

2002(SARFAESI Act)/Other Banks/FIs/NBFCs (excluding RRBs), including
portfolio sale.
 The policy shall comply with the guidelines issued by RBI from time to time and
shall be transparent and fair.
15

 A financial asset may be transferred to Securitization Company /

Reconstruction Company on outright sale basis under Sections 5(1) (a) and
5(1) (b), or Agency basis under Section 10(1) of the SARFAESI Act.

 Entities to whom the stressed loan may be transferred

In general, banks shall transfer stressed loans, including bilateral sales, only to
permitted transferees and ARCs.
i) Asset Reconstruction Companies (ARCs) Asset Reconstruction Companies
registered with the Reserve Bank of India under Section 3 of SARFAESI 2002.
ii) Permitted Transferees:
(a)Scheduled Commercial Banks;
(b) All India Financial Institutions (NABARD, NHB, EXIM Bank,SIDBI, NaBFIB);
76 | P a g e
 (c) Small Finance Banks; and
(d) All Non-Banking Finance Companies (NBFCs) including Housing Finance
Companies (HFCs).

iii) Eligibility of the ARCs for Bilateral Transfer

Asset Reconstruction Companies (ARCs) shall not acquire financial assets from
the following on a bilateral basis, whatever may be the consideration:
a) a bank / financial institution which is the sponsor of the ARC;
b) a bank / financial institution which is either a lender to the ARC or a
subscriber to the fund, if any, raised by the ARC for its operations;
c) an entity in the group to which the ARC belongs.

 Eligibility criteria for accounts to be placed for transfer

To Asset Reconstruction Companies (ARCs) Stressed Loans which are in

default i.e. accounts classified as SMA or NPA are permitted to be transferred to

:57
ARCs. This shall include loan exposure classified as fraud as on the date of
transfer provided that the responsibilities of the Bank with respect to continuous
reporting, monitoring, filing of complaints with law enforcement agencies and
24 7
11
proceedings related to such complaints shall also be transferred to the ARC.
-20 66

The transfer of such loan exposures to an ARC, however, does not absolve the
bank from fixing the staff accountability as required under the extant instructions
on frauds. However, before considering transfer of stressed loan classified as
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fraud, the complaint should be filed with concerned Investigating Agency.

To Permitted Transferees
5

A Non-Performing Asset (NPA) in the books of the Bank.

Additional Sub-Category of accounts permitted for transfer

I. Wilful Defaulters II. Written Off accounts III. A financial asset in respect of
15

which any case is pending before Court/DRT etc. IV. All the financial assets due
from a single debtor shall be considered for transfer. Similarly, financial assets
having linkages to the same collateral/ common security shall be considered for
transfer simultaneously. Both fund and non-fund based financial assets may be
included in the list of assets for transfer. V. Retail NPAs of homogeneous nature
may also be transferred on portfolio basis to ARCs/permitted transferees. VI.
Account backed by Govt. Guarantees - Such cases may also be considered for
transfer, subject to approval by the Board.

Additional Stipulation
Preferably one auction under SARFAESI (wherever possible) should have been
held before placing the account for transfer to ARC. However, for accounts
under consortium/ multiple banking there may be certain exceptional
77 | P a g e
 circumstances, where it is not possible to put the properties on auction under
SARFAESI.
 Authority/Delegation of Powers for identification of accounts to be placed
for transfer/ final decision on transfer process/ threshold limit for review of
NPAs
Identification and approval of accounts to be placed for transfer
The Identification of accounts for transfer will be carried out by HO: SASTRA Division
in the June Quarter (after finalization of Bank’s annual accounts) every year and the
same will be got approved by Management Committee of Board (MC). Further, if need
arises, additional list may be got approved by MC on quarterly basis.
Important Note:
HO SASTRA Division will get the list of accounts approved from the MC and convey
the names of accounts to the respective Zonal SASTRA Centres (further ZSCs will
appraise the concerned Circle SASTRA Centres), which will not be shared with any

:57
ARC/Prospective Buyer. Subsequent to in-principal approval of identification of
accounts from MC, Head Office Asset Sale Committee (HOASC) may approve
account(s) from such approved list of identified accounts, on case to case basis for
24 7
11
sharing with ARCs. HO: SASTRA Division after approval of HOASC shall share the
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names of accounts with ARCs. Further, Non-Disclosure Agreement (NDA) shall be

ensured.
-06 134

Zonal SASTRA Centres will submit the PIMs and other information in prescribed
format for fixation of reserve price proposal being placed to Head Office Asset Sale
Committee (HOASC) w.r.t. those accounts which are to be placed in the immediate
ensuing transfer process and selected/advised by the Head Office.
5

 Competent Authority for final decision on transfer process:

Final decisions with regard to transfer of accounts shall be taken by the Management
Committee of Board (MC).
Threshold limit for review of NPAs
15

All NPA accounts with balance outstanding of Rs.100 Crores & above will be reviewed
with documented rationale and placed to the Management Committee for identification
of accounts which may be offered to the ARCs/ permitted transferees during the year.
In case of NPA accounts with balance outstanding less than Rs.100 Crores, the Bank
may identify the accounts on case to case basis.
 Ascertaining Valuation of Assets
The objectives of the valuation are essentially to: a. arrive at Net Present Value of
Realizable Value of Charged Primary/ Collateral Securities net of cost of realization
(NPVRV) of the assets; b. provide a basis for fixation of Reserve Price, evaluation and
acceptance of offer of ARCs/permitted transferees for transfer of assets.

78 | P a g e
Latest Valuation Report should not be older than 1 year, as on the date of fixation of
reserve price by HOASC.However, as on date of submission of PIM to the intending
buyer, the Valuation Report should not be older than 15 months. Further, in case the
transfer price is fixed at Memorandum dues, this requirement will not be applicable.
 Valuation from Two Valuer
In case the value of the Property/ P&M is above Rs. 1 Crore as per last valuation, then
two valuations from Bank’s empanelled valuer shall be obtained.
In case exposure of account being transferred (without netting for provisions), singly,
jointly or severally is Rs.100 crore or more (though the value of the Property/P&M is
below Rs.1 Crore as per last valuation), then also two valuations from Bank’s
empanelled valuer shall be obtained.
For the cases where last value of the Property/ P&M is upto Rs.1 Crore and If variation
between the market value mentioned in the last valuation & current market value is
more than 25% of the former valuation, then 2nd valuation be carried out from Bank’s

:57
empanelled valuer and higher value has to be considered while calculating NPVRV.
Subsequent valuation should be assigned to the empanelled valuer other than the
24 7
11
valuer who has conducted the previous valuation, which will be as under:-
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Category of Valuers Value of property for assignment of

Valuation Work
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A No limit
B Upto ₹50 crores
C Upto ₹5 crores
5

 Ascertaining Pricing –Net Present Value of Realizable Value of Charged

Primary/ Collateral Securities net of cost of realization (NPVRV)
15

Presently, Bank is considering/using the valuations of the charged assets given by the
empanelled valuers. Hence, at the time of transfer of stressed loan to ARCs/
Permitted Transferees, NPVRV is to be calculated on the Realizable Value by
discounting with number of years i.e. time taken for realization of security by applying
the discounting rate equivalent to 1 Year MCLR. Further, for realisation of secured
assets, the Bank may have to incur some expenses and also the sale takes time. As
such, the Net Present Value of the Realizable Value of Securities net of cost of
realization (NPVRV) shall be calculated as under:
A R.V./ [1 + r/100]n
R.V. = Realizable Value of charged primary/ collateral securities
r = Prevailing 1 Year MCLR subject to a floor of the contracted interest rate

79 | P a g e
 charged
n = No. of Years for realization of securities based on the complexity of the
case
B From the amount calculated as (a) above, estimated cost of realization of
the securities be deducted i.e. the estimated cost of realisation to be
spread, on pro-rata basis, over the expected period for realisation, and
each year’s cash outflow on account of this cost be also discounted to its
present value.
c Net Present Value of Realizable Value of Charged Securities net of cost of
realization (NPVRV) = (a) – (b)

Reckoning Value of Charged Assets

The value of the Charged asset will be reckoned as under:-

:57
Nature of Asset Value to be reckoned for calculation of
NPVRV
24 7
11
Liquid Security like FDRs/NSCs/ Current Value/ Surrender Value
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IVPs/ Insurance Policy etc

Plant & Machinery Realizable Value (as per Bank’s approved
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Valuer)
Industrial Shed & Structure Realizable Value (as per Bank’s approved
Valuer)
5

Immovable Properties Realizable Value (as per Bank’s approved

Valuer)
Pledged Shares In case of listed shares, then the value of
shares available in an account, to be added to
15

the NPVRV, at the current market price, In case

of unlisted shares, then the value of shares
available in an account may be treated as Nil
Stocks/Receivables (Book Debts)/Other Current Assets
If available Stock Statement/ 50% of the declared Value of Stock & Book
Valuation Report/ Stock Audit Debts/Other Current Assets as per Stock
Report/ Balance Sheet is not Statement/ Valuation Report/ Stock Audit
older than 6 Months Report/ Balance Sheet (Whichever is latest)
If available Stock Statement/ 33% of the declared Value of Stock & Book
Valuation Report/ Stock Audit Debts/ Other Current Assets as per Stock

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Report/ Balance Sheet is older Statement/ Valuation Report/ Stock Audit
than 6 Months upto 1 year old Report/ Balance Sheet (Whichever is latest)
If Stock Statement/ Valuation Nil value of Stock & Book Debts/ Other Current
Report/ Stock Audit Report/ Assets may be considered.
Balance Sheet upto 1 year old
not available
Discount rate
Discount rate for calculating NPVRV shall be used at Prevailing 1 Year MCLR or
Contracted Interest Rate excluding Penal Interest/Charges (Whichever is higher),
which was applicable at the time of last sanction (renew/review/enhancement)
available on record before account turned NPA.
Expected Period of Realization (Discounting Period)
For reckoning no. of years for realization of charged securities, undernoted

:57
assumptions are considered, however, Competent Authority, while fixing the
reserve price for transfer of NPA to ARCs/ Permitted Transferees, may decide to
take higher/lower period on case to case basis with justifications.
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11
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For Movable Assets (Plant & Machinery, Stocks, Book Debts etc.)
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Circumstances Expected Period

for realization
(Discounting
Period)
5

Movable Assets – No Litigation 1 Year

Movable Assets – Under Litigation/ Stay etc 2 Year
For Immovable Properties
15

Immovable Properties – No litigation 2 Year

More than 1 year old stay against SARFAESI Action and/ or 3 Year
SARFAESI action initiated and IPs put on auction but auction
failed as no bidder came forward.
Attachment of IP by Sale Tax/ Income Tax / Other Revenue 3 Year
Authority (If there is no priority charge)
IP not demarcated/Undivided Share mortgaged/ no 3 Year
independent Access
Agriculture Property/ Property which is not eligible for sale 4Year

81 | P a g e
 under SARFAESI
IPs having old/multiple tenancy/ multiple suits and / or dispute 4 Year
about validity / enforceability of the mortgage/charge
In case of any legal complication in enforcement of security 4 Year
(e.g. death of owner of the mortgaged IP etc.)
IPs owned by Trusts/Society/ Educational Institutions 5 Years
IPs owned by Sugar Industry 5 Years

The circumstances mentioned above are illustrative only and not exhaustive and the
expected period of realization of immovable properties shall be taken at 2 to 5 years
based on circumstances in individual case. The maximum realization/ discounting
period shall be 5 years.

:57
*Detective Agency should be engaged (If previously not engaged) before initiating
transfer process and the attachable unencumbered assets traced out by Detective
Agency should be taken into cognizance while fixing reserve price, however, the said
24 7
11
requirement may be waived by HOCAC-III while permitting initiation of transfer
-20 66

process with rationale for permitting waiver of condition of Detective Agency.

Reserve Price shall generally not be lower than the NPVRV calculated as per format
-06 134

given in the policy. However, in exceptional circumstances, HOCAC-III while

permitting initiation of transfer process based on the recommendations of HO:
SASTRA Division, may fix the reserve price below NPVRV with justifications to be
incorporated in the note based on the recommendations received from the ZSCO and
5

CSCO and the same is recommended by HOASC.

 Formation of Asset Sale Committee at Head Office:-
i. CGM (SASTRA Division) (Chairperson)
15

ii. CGM/GM (Treasury)

iii. CGM (Credit Division) & CGM of the concerned HO Division, in case of transfer of
SMA accounts.
iv. GM (SASTRA Division) – handling the account. In case more than one account is
placed before HOASC and same are handled by separate GMs, then respective GM
will be member of the committee.
Note
(i) An authority who has sanctioned the loan (Individual Capacity)/ Head of the
Committee shall not be the member of the Asset Sale Committee considering transfer
of the concerned stressed loan. However, in case CGM (SASTRA) happens to be the

82 | P a g e
 loan sanctioning authority (individual capacity)/Head of the Committee, then Senior
Most GM (SASTRA) will chair the Committee for the particular agenda item.
(ii) MD & CEO will have full powers to modify constitution of the Asset Sale
Committee.
Quorum: Minimum Quorum of HOASC shall be three members including CGM
(SASTRA) and at least 1 GM from SASTRA Division and 1 GM from other Divisions.

 Important aspects associated with fixation of Reserve Price

The Reserve Price for the account(s) placed for the transfer, will be disclosed to the
ARCs/permitted transferees etc. before sending invitation to them to start the Due
Diligence exercise along-with the PIMs, Management Fee, Cash Incentive etc.
Separate Reserve Price may be fixed for transfer of stressed loans on

:57
(a) 100% cash basis and
(b) Other than 100% cash basis i.e. Cash:SR basis
24 7
11
To evaluate the bid on Cash cum SR basis, the value of SRs is to be discounted by
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30% to arrive at cash equivalent of SRs and the same be added to the cash
component to arrive at the present total value of bid. The equivalence of the bid on
Cash cum SR structure and on full cash basis is to be determined by this method as
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well. In case bids are received at the minimum reserve price fixed in both the cases,
the bid at 100% cash basis will be preferred.
 Delegation of powers for giving permission to start the Transfer Process
5

The powers for permitting initiation of transfer of identified financial assets to

ARCs/Permitted Transferees will be vested with HOCAC-III.
 Submission of the proposals to HOSAC (Head Office Settlement Advisory
Committee) for recommendations to Management Committee (MC)
15

After receiving bids and selecting highest successful bidder, the Transfer Proposal will
be placed to the HOSAC (Head Office Settlement Advisory Committee). The HOSAC
shall examine the offers/bids vis-à-vis Reserve Price of financial asset to be sold and
will make its final recommendations to the Management Committee.
 Submission of the proposals to Management Committee (MC) for final
approval.
After approval of the transfer proposal by HOSAC, the Transfer Proposal will be
placed to the Management Committee (MC) for final approval. Management
Committee (MC) shall be the only Competent Authority to approve the transfer of
stressed loans irrespective of amount outstanding/ transfer price.

83 | P a g e
 Withdrawal of accounts from the Transfer Process- Authority & Criteria
The powers for withdrawal of the account due to any reason, e.g. non-availability of
the latest valuation report, OTS/Compromise Offer received from the borrower/co-
borrower, any regulatory/legal requirement/restriction etc. from transfer process shall
be vested with CGM (SASTRA)/Senior Most GM (SASTRA) (in absence of CGM,
SASTRA) present in the Office. Any such cases, where withdrawal of account from
transfer process has been permitted by CGM (SASTRA)/GM (SASTRA) (in absence of
CGM, SASTRA), will be placed to HOCAC-III for information.
In case, the borrower clears total dues including expenses incurred or payable for
selling the asset to the ARCs/permitted transferees at any time before finalization of
the transfer process, the financial asset shall not be transferred and no further steps
shall be taken for transfer.
Further, in case obligant(s) and co obligant(s) come forwards, for OTS, before
finalization of transfer process by the proposed buyer(s), the concerned account may

:57
be withdrawn from the transfer process considering account specific merits, provided:
The minimum offer of OTS shall be as under:
24 7
Where Outstanding is 11 Percentage
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Upto Rs.10 lacs 115% of Reserve Price

More than Rs.10 lacs and upto Rs.50 lacs 110% of Reserve Price
-06 134

More than Rs.50 lacs 105% of Reserve Price

And
5

The party deposits 50% cash as upfront money immediately and remaining within 3
months of approval of OTS.
 Reduction in Reserve Price for transfer, in case no bid is received.
In case transfer of any asset through bidding process fails due to non-receipt of
15

bid, HOASC may permit to fix the reserve price of that asset by reducing the
earlier reserve price up to 10% on each occasion (maximum 3 times), on
recommendations of the ZSCO, for its subsequent transfer through fresh bidding
process based on the merits on case to case basis. However, in case of this
reduction, the entire process of obtaining permission from HOCAC-III, bidding
process and approval from HOSAC & MC shall be followed as per the policy
guidelines.

OPERATIONAL GUIDELINES

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  Submission of Preliminary Information Memorandum (PIM) & other relevant
documents/information
For identified accounts, respective Circle SASTRA Centre/Zonal SASTRA Centre will
prepare Preliminary Information Memorandum (PIM) as per the format given and
submit recommendations of Circle SASTRA Committee (CSCO)/Zonal SASTRA
Committee (ZSCO) along with reserve price to HO: SASTRA Division for placing the
account for transfer. The following documents shall be submitted by respective
CSC/ZSC:-
(i) PIM- Preliminary Information Memorandum (Basic Information about the
account) including CERSAI-ID & ROC.
(ii) Annexure-NPVRV- (Calculation of NPVRV as per Transfer of assets Policy)
(iii) Copy of the latest valuation report of the securities.
(iv) (iv) Annexure - Circle SASTRA/Zonal SASTRA Certificate

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 Public Notice/Sending Invitation to Prospective Buyer
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After getting the permission from HOCAC-III, HO: SASTRA Division will send invitation
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to ARCs/permitted transferees. The invitation is to be sent to minimum 5

ARCs/permitted transferees in order to get better offers. Proper record be maintained
at HO: SASTRA Division Level for having sent the invitation to at-least 5 prospective
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buyers.Further, at the time of commencement of transfer process (i.e., when

invitations are being sent through mail to ARCs/permitted transferees, whose e-mail
ids are available), the invitation will also be placed on the Bank’s website. SASTRA
5

Division will also place an advertisement in two leading English language newspapers
(one must be a financial newspaper) to give an open public offer; to have wider reach
and fetch better transfer price. While placing the invitation on the Bank’s website, list
of accounts, which are being offered for that particular transfer process and not the
complete list got approved from the MC, will also be up-loaded.
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 Arranging due diligence by the interested bidders:

Legal Due Diligence Exercise (LDDE) and Financial Due Diligence Exercise (FDDE) in
respect of the assets for exposing any potential/commercial fall outs arising out of the
intending transfer shall be undertaken or shall be got carried out by the intending
purchaser i.e. ARCs/permitted transferees. The Bank may also get, if deemed
necessary, DDE carried out by the consultant to be approved by the MD&CEO/ED to
enable the bank for working out NPRV and fixation of Reserve Price.
The interested bidders may contact the respective ZSCs and inform tentative dates to
start the DDE which involves (i) Financial Due Diligence Exercise (FDDE) and (ii)
Legal Due Diligence Exercise (LDDE).
 Timeline for Due-Diligence
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Prospective buyer/acquirers, who have submitted EOI and executed NDA will be
facilitated to conduct duediligence. Time period for duediligence from the last date of
submission of EOI is as under:
a) For Standalone Cases (Sole/Consortium):
Outstanding Balance Time Period for Due Diligence
Upto Rs. 250 Cr 14 days
Above Rs. 250 Cr 21 days

b) For Consortium Cases, where lead Bank is PNB:

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Outstanding Balance Time Period for Due Diligence
Upto Rs. 500 Cr 14 days
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Above Rs. 500 Cr
11 21 days
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 Documentation with interested bidders for participating in bidding process

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After evaluation of the expression of interest received from the interested bidders, HO:
SASTRA Division will send invitation letters to them to purchase the accounts and to
submit the following documents up to a pre-determined/fixed date:
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(i) Letter of acceptance of all the technical terms and conditions (On Company’s
Letter head)
(ii) Non-Disclosure Agreement (The Stamp duty on Non-Disclosure Agreement to
be payable as per the duty applicable in the state where NDA is being signed)
15

In the case of ARCs having Certificate of registration from the RBI, their Memorandum
& Articles of Association already contain the relevant clauses, permitting them to
purchase accounts. However, in case of transferee(s) other than ARCs, they will be
required to submit following documents in addition to the above two items:
(i) Certificate of incorporation
(ii) Memorandum & Articles of Association containing the relevant extract
permitting them to purchase the accounts.
A Non-Disclosure Agreement (Annexure-XIII) shall be executed at Head Office by the
intending buyers i.e. ARCs/permitted transferees. This Agreement will remain valid for
5 years.

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 Bidding Process
The bidding process will be conducted on PNB’s E-auction Portal in the
following manner:
 The User ID & Password for bidding on E-auction Portal will be given to the
prospective bidder, who have submitted EOI along with NDA & technical term
of Bid.
 On a pre-decided date & time, e-auction will be conducted on PNB’s E-auction
Portal with minimum bid price being fixed at reserve price.
 In the E-bidding Process, if only one bid is received, then keeping this bid as
base bid and if more than one bid is received, then keeping H1 as base-bid,
Swiss Challenge method will be employed by calling bids again through
Eauction. If during Swiss Challenge Process, no counter bid is received against
base bid, the base bidder will be declared as highest bidder and highest bid
obtained will be placed for approval of Management Committee with
recommendations of HOSAC.

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Bid received more than Memoranda Dues
The excess amount received over & above memoranda dues may be credited,
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proportionately to the respective heads of “Income Interest on Loan and
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Advances”, say Income Intt. on CC/ term Loan etc. In case, the excess amount
is to be returned subsequently due to e.g DRT/Court orders or any other
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eventuality, the same head may be debited to refund the excess amount
recovered.
In case an account is offered for transfer on Cash: SR structure and the highest bid
submitted by one ARC (at any stage) is more than 150% of the 2nd highest bid, the
5

highest bidder will be asked to submit proposed plan for resolution of the account
along with tentative timeline for redemption of SRs. The reply submitted will be made
part of the proposal placed by the Division to HOSAC & Management Committee.
HO SASTRA Division will issue letters to the successful bidder(s) and categorically
15

mention that the final transfer will take place only after approval by the competent
Head Office Committee.
Bank has a right to reject any/all the offers without assigning any reason.
 Issuance of letter of acceptance to the proposed buyer & deposit of cash
component by buyer
On receipt of the approval from the Management Committee (MC), the approval/ letter
of acceptance will be conveyed by the HO SASTRA Division to the concerned
successful bidder/proposed buyer, and also to ZSC, which in turn will inform the Circle
SASTRA Centre, if NPA account falls under the purview of Circle SASTRA Centre.

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The final successful bidder will also submit acceptance letter to the Head Office
SASTRA Division and will deposit the Cash component within 15 days from the date
of acceptance. In case further time is required, the same shall be permitted by
Management Committee on case to case basis.
 Documentation for assignment and Handing over of Documents/files to
proposed buyer
The ARCs/permitted transferees (as Purchaser) shall execute the requisite
documentation (including assignment agreement) for completion of transfer. The draft
of Assignment Agreement shall be based on two Model Assignment Agreement i.e.
one with the Power of Attorney and 2nd one without Power of Attorney, as applicable.
Since the Assignment Agreement is in line with the IBA Model Agreement, no change
is permitted, without taking consent from the Bank. Any amendments proposed by the
ARC/Buyer, will be duly vetted by the Head Office Law Division.
All charges relating to Stamp Duty, Registration etc. shall be borne by the purchasing

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ARCs/permitted transferees.
 In case of Transfer to ARCs on partial cash component
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A copy of the accepted proposal by MC will also be simultaneously sent to the Bank’s
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Treasury Division for preparation of documents for the Trust to be formed by the ARC,
if required i.e. when the transfer has been finalized partially on cash and rest on SRs
basis.
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On a pre-decided date by the ARC and Bank, the Treasury Division will send the
remittance to the Trust in lieu of the Security Receipts issued and from the Trust, total
amount of transfer consideration will be credited in the loan account, as per the
5

approved terms and conditions. ZSC to confirm the date of adjustment of accounts
transferred, to the Head Office SASTRA Division.
Once the account has been closed after transfer to the ARCs/Other Buyers, the
necessary documents/files should be handed over to them within 15 days by the
15

concerned Circle SASTRA Centre/Zonal SASTRA Centre. Concerned Zonal SASTRA

Centre should ensure that there is no dispute in any such matters.
 Statement of Account and Memoranda Register
A copy of the statement of account as prepared in the ledger as well as in the
memoranda register, duly certified as per Banker’s Book Evidence Act be furnished to
the ARCs/permitted transferee as Purchaser. Further, statement of account as well as
memoranda register be preserved and shall not be destroyed.

 Documents relating to Credit facilities

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An inventory of all the documents relating to the account be made out, kept in seriatim
and in a presentable manner. One set of copies should be kept safe with the
concerned Circle SASTRA Centre/Zonal SASTRA Centre. When documents are
delivered to Purchaser i.e. ARC/permitted transferee along-with or after execution of
assignment agreement, a receipt on the inventory prepared be obtained and the same
be kept on record.
 Transfer Consideration (Cash/Cash:SR) for the Stressed Loans
For ARCs
As per RBI’s Master Circular - Asset Reconstruction Companies - RBI/2022-23/03
DOR.SIG.FIN.REC 1/26.03.001/ 2022-23, dated April 01, 2022 (Updated as on
October 14, 2022), the clause related Investment in SRs issued by the trusts floated
by ARC is mentioned as under:-
Investment in SRs issued by the trusts floated by ARC

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ARCs shall, by transferring funds, invest in the SRs at a minimum of either 15% of the
transferors’ investment in the SRs or 2.5% of the total SRs issued, whichever is
higher, of each class of SRs issued by them under each scheme on an ongoing basis
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till the redemption of all the SRs issued under such scheme.
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For transferee(s) other than ARCs

Transfer to permitted transferees other than ARCs will be made only on cash basis.
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The entire transfer consideration should be received not later than at the time of
transfer of loans, and the loan can be taken out of the books of the selling Bank
only on receipt of the entire transfer consideration. The selling bank shall ensure
that no transfer of stressed loan is made at a contingent price whereby in the event
5

of shortfall in the realization of the agreed price by the purchasing banks, the selling
banks would have to bear a part of the shortfall.
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*****

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 8. WAYS & STRATEGIES TO IMPROVE MANAGEMENT OF
NPAs(SASTRA Division Circular No-09/2024,32/2023)

SEGMENT-A- MONITORING & IDENTIFICATION OF NPAs

IRACP (Income Recognition, Asset Classification & Provisioning) Norms:

Based on the latest regulatory guidelines issued by Reserve Bank of India, the
guidelines on Income Recognition, Asset Classification and Provisioning are
circulated by HO: SASTRA Division from time to time.These guidelines are to
be meticulously followed by all concerned.

Functionaries Responsible
Functionaries responsible for proper Asset Classification/Provisioning in Loan

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Accounts are:
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OFFICE
11 DEFINITION
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Branch Office Responsible for recovery in NPA accounts with

Balance O/s up to Rs 10.00 Lakh. (Borrower
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wise)
Circle SASTRA Centre Circle SASTRA Office: Recovery and resolution
of NPA borrowers having aggregate balance
5

outstanding above Rs 10 lakhs (Borrower wise).

Zonal SASTRA Centre NPA Accounts of the Branches at ZO location
centre with Balance O/s above Rs10.00 Cr
(Borrower wise) & NCLT accounts. They will also
monitor the Circle SASTRA & will be reporting
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office of Circle SASTRA.

SASTRA Division Responsible for overall management of the NPA
portfolio of the bank.

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 Channel to settle doubts in asset Classification due to any reason:
Level seeking Authority to settle Maximum Time period
clarification the doubts
Branch Heads of AGM/ CM of Circle Within 48 hours of
Branches -upto Rs 10 Office references received.
lac
Above 10 lac to 10 Cr – Zonal SASTRA Within 3 days of reference
Circle SASTRA received.
Above 10 Cr –Circle SASTRA Division, Within 3 days of reference
SASTRA/Zonal HO received.
SASTRA

Ascertainment of Interest not Realized (DI)-

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When a credit facility is classified for the first time as NPA interest accrued & credited
to the income account in the past periods, which has not been realized is ascertained
and same has to be reversed and credited back in the respective account itself at the
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close of the year/half-year/Quarter at the branch level by debiting Profit & Loss
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Account with following particulars:

“Unrecovered Interest reversed and recorded in Memoranda A/c”
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In respect of NPAs, fees, commission and similar income that have accrued, ceases to
accrue in the current period, has to be reversed with respect of past periods, if
uncollected, as above.
5

Order of Appropriation of Recoveries in NPAs-

Mode of appropriation of recovery in order of priority be amended as below: a)
Recoveries in NPA accounts (irrespective of the mode / status / stage of recovery
actions) shall be appropriated in the following order of priority except for the cases
15

covered under below mentioned points (b) & (c):

i. Expenditure/Out of Pocket Expenses incurred for Recovery, including
under SARFAESI Action (Recorded in Memorandum Dues);
ii. Thereafter towards the unrealised/accrued interest.
iii. Principal irregularities i.e. NPA outstanding in the account. Any
exceptions to the above may be considered by HOCAC-III (for proposals
falling under the powers of various committee’s upto HOCAC-III) &
Management Committee for proposals under its vested powers.

a) However, in case of Compromise and Resolution/Settlement through

NCLT, recovery shall be appropriated as per the terms of respective
compromise/resolution settlement.
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 b) In case of suit filed/decreed accounts, recovery shall be appropriated
as under:-
• As per the directives of the concerned Court.
• In the absence of specific directives from the Court, as mentioned at
point (a) above.

Monitoring & Review of NPA Accounts- Fresh slippage

The most important step in resolving/reducing NPAs is close, intensive and
prompt monitoring of accounts so as to evolve Accounts Specific Resolution
Strategies.

Category of NPAs Monitoring Periodicity of

Authority Review
NPAs with outstanding balance of more than MD & CEO As & when*

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Rs. 300.00 Crore
NPAs with outstanding balance of more than ED As & when*
Rs. 50.00 Crores, up to Rs.300.00 Crores
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NPAs with outstanding balance of more than CGM, SASTRA As & when
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Rs. 20.00 Crore, up to Rs.50.00 Crore Division
NPAs with outstanding balance of more than GM, SASTRA As & when*
Rs. 5.00 Crore, up to Rs.20.00 Crore. Division
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NPAs with outstanding balance of more than Zonal SASTRA As & when*
Rs. 1.00 Cr, up to Rs.5.00 Crore. Head
NPAs with outstanding balance of more than Circle SASTRA As & when*
Rs.10.00 lac, up to Rs.1.00 Cr Head
5

NPAs with outstanding balance of more than Circle Head As & when*
Rs.1.00 lac, up to Rs.10.00 Lacs

For fresh slippage status notes placed to ED/MD & CEO- Status of incomplete/non-
15

complied Action points suggested in the account be placed to CGM, SASTRA on

quarterly basis. In case all action points have been complied with, the same be placed
once for an account and then further progress be monitored by respective Monitoring
Desks at SASTRA, HO
In case any action point remains incomplete/non-complied for more than 2 quarters,
the said status be placed to Domain ED

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 SEGMENT-B- SPEEDING UP THE PACE OF RECOVERIES
Despite taking all possible measures in terms of Bank’s above guidelines to keep the
accounts in standard category, some accounts slip to NPA category on accounts of
following two parameters:
• Financial Parameters
• Non-Financial Parameters
Once the account becomes NPA, SARFAESI action be immediately taken in the
eligible cases.
Up-gradation Through Tagging Arrangements-
There may be cases where in an NPA account, unit/business is working and there are
cash flows. However, the level of operation is not adequate for repayment of the entire
dues. In such cases, one of the strategy to resolve the NPA account is to allow
tagging arrangement till finalization of restructuring/ compromise proposals and/or for
upgradation of the account.

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Powers to allow need based Tagging have been delegated as follows:
Competent Authority Balance Outstanding in NPA Tagging %
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Account
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CSCO headed by CM Up to Rs. 5.00 Crore Minimum 15%

CSCO headed by AGM Up to Rs. 10.00 Crore Minimum 15%
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ZSCO headed by AGM Up to Rs. 15.00 Crore Minimum 10%

ZSCO headed by DGM Up to Rs. 30.00 Crore Minimum 10%
5

ZSCO headed by GM Up to Rs. 50.00 Crore Minimum 10%

ZOCC headed by Above Minimum – 3%,
GM/CGM Rs.15Cr/Rs.30Cr./Rs.50 Cr- however, in case of
For cases of Zonal SASTRA Consortium Accounts,
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Centre headed by case below 3%

AGM/DGM/GM respectively. tagging may be
considered as per the
decision of
Consortium.

HOCAC-I Above Below 3% tagging is

Rs.15Cr/Rs.30Cr./Rs.50 Cr- to be considered by
For cases of Zonal SASTRA HOCAC-I.
Centre headed by
AGM/DGM/GM respectively.

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Accounting System (Appropriation of credits) in NPAs with Tagging
Arrangement-
 Even in case of recoveries through tagging arrangement, the chain of
appropriation will remain same, as in case of other NPA accounts.

Viability of Tagging Arrangement-

 Analysis of future cash flows and expected credits available through tagging
vis-à-vis overdues would be done to ascertain the viability of up-gradation and
accordingly a specified time period be spelt out in the sanction for upgradation
of accounts.
Securities
 There should be no dilution in securities and all other aspects relating to
security i.e. receipt of inventory and inspection thereof shall be as per extant

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guidelines of the Bank.
Operations in the account
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
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After approval of the Tagging Arrangement by the Competent Authority, Debits
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in the CC/ Operative a/c, for the balance amount after deduction of tagged
amount, shall be allowed by the Branch strictly as per the sanction.
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Period of Tagging Arrangement

 Tagging Arrangement should be allowed for maximum period of six months and
within this time, a comprehensive view on further course of action for
5

upgradation/ resolution of account should be ensured.

 Endeavor should be made that there is no extension in Tagging Arrangement
beyond six months. However, in genuine cases like restructuring under
consideration/delay due to ongoing TEV study/pending decision of Consortium/
MBA Members, Substantial/ Continuous reduction in outstanding by tagging
15

etc, further extension of maximum 6 months may be allowed by same

sanctioning authority based on merits of the case and proper justification
having allowed extension of tagging arrangement should be recorded in the
proposal.
 In exceptional circumstances, further extension beyond 12 months may be
allowed not below the level of ZOCC (For the cases where tagging allowed
upto ZSCO level), however, for the cases where tagging allowed by ZOCC &
HOCAC-I, further extension beyond 12 months shall be allowed not below the
level of HOCAC-I.
Termination of Tagging Arrangement

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 As and when, Bank has decided to terminate the tagging arrangement/ not to
further extend tagging arrangement, recovery actions should be
initiated/resumed immediately.
Up-gradation through Restructuring/ Change in Management-
 At present, The Prudential Framework for Resolution of Stressed Assets is
conveyed vide IRMD LA Circular 67/2019 & IRMD LA Circular 107/2020 and
Policy & Framework For Resolution of Stressed Assets is guided by IRMD LA
Circular 175/2022.
 On account of modification in the organizational structure conveyed by MPD
Circular No 13/2020, following changes shall be adopted for resolution of NPA
under RBI’s Prudential Framework for Resolution of Stressed Assets:

i. The Powers at Zonal SASTRA Committee (ZSCO) shall be exercised as under:

Nature of Facilities Zonal SASTRA Committee

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(ZSCO)
Exposure Ceiling:
Aggregate Commitment to borrower (Pre 10.00
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Restructuring or Post Restructuring,
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Whichever is higher)
Out of which:
Unsecured Fund 2.50
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Relief & Concessions Ceilings:

Reduction in rate of interest for existing Up to 1 Yr MCLR + 2.75%
exposure
Reduction in rate of interest for additional Up to 1 Yr MCLR + 2.75%
5

exposure
Reduction of rate of interest on FITL Up to 1 Yr MCLR + 1.75%
Reduction of rate of interest on WCT Up to 1 Yr MCLR + 1.75%
Waiver of Penal Interest (For amount due Full Powers
prior to date of restructuring)
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Waiver of processing charges and upfront Full Powers

fees
Reduction in margin. However a minimum By 15%
margin of 15% may be ensured except in
those cases/ sectors where prevailing
guidelines permit lower margins. In such
cases/ sectors, no further reduction in
margin may be permitted. Normal margin
shall have to be built up within 3 years

ii.The Powers given above to ZSCO are subject to following restrictions:

 Restructuring of account within one year of first sanction / enhancement of
WC / sanction of any new facility shall be approved by next higher authority.
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  For considering FITL/WCTL facilities, the competent authority shall exercise
their vested loaning powers for unsecured fund based advances.
 These authorities shall not be competent for approving conversion of debt into
equity / debt instrument / hybrid instruments.
 These authorities shall not be competent for approving sacrifice to the
principle debt component.
iii. The Matters beyond the Powers of ZSCO shall be exercised by ZOCAC I /
ZOCAC II / HOCAC I / HOCAC II / HOCAC III / MC / Board as per extant IRMD
Guidelines. Powers at LCB or ELCB Heads, if any, allowed by IRMD guidelines
shall continue for the accounts which have not been transferred to CSC/ZSC.
iv. The above guidelines shall not be applicable for the MSME & the restructuring of
MSME shall be guided by the policies and powers issued by MSME Division, HO
time to time.
v. All other guidelines shall be as per IRMD Circulars issued time to time.

The NPA Accounts which have been restructured under IRMD LA Circular

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49/2018 or IRMD LA Circular 67/2019 or IRMD LA Circular 175/2022 and
resolution plan is implemented successfully, and presently under ‘Monitoring
Period’ or ‘Specified Period’ as defined under above IRMD Circulars, shall not be
24 7
11
transferred to Circle SASTRA Centre / Zonal SASTRA Centre in terms of MPD
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Circular No 13/2020.

The said accounts will be transferred to Circle SASTRA Centre / Zonal SASTRA
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Centre only after, resolution plan implemented as above is treated & decided as
failed. For removal of doubt, the resolution plan so implemented shall be treated
as failed, if the account remains ineligible for upgradation at the end of ‘Specified
Period or Monitoring Period, as applicable’ due to failure of any of the conditions
5

set out in said IRMD Circulars

NPA A/cs under Consortium/Multiple Banking Arrangement

15

 In case of consortium advances, where our bank is Lead Bank or the 2nd
largest participating bank, meeting would be attended by (i) Zonal SASTRA
Head/Dy. Zonal SASTRA Head (R R NCLT) – In case NPA account under
purview of Zonal SASTRA Centre (ii) Circle SASTRA Head & Zonal SASTRA
Head/Dy. Zonal SASTRA Head (R R NCLT) - In case NPA account under
purview of Circle SASTRA Centre.

 Where the Bank is neither the Lead Bank nor the 2nd largest participating bank,
the meeting to be attended by (i) Dy. Zonal SASTRA Head (R R NCLT) - In
case NPA account under purview of Zonal SASTRA Centre (ii) Circle SASTRA
Head/Dy. Circle SASTRA Head - In case NPA account under purview of Circle
SASTRA Centre.
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 An official who is participating in the consortium meetings should be well versed
with the history of the account. The officer attending consortium meetings
should do necessary ground work like preparation of notes etc. before
attending the meeting.

 CSC/ZSC should obtain/provide in principle approval/mandate from the

competent authority in advance on the Agenda item.

 Consortium meetings should be held regularly.

 On receiving the minutes of the meetings, ZSH/CSH/representative who

attended the meeting should ensure that Bank’s viewpoint has been adequately
and properly incorporated. If not, the matter should be taken up immediately
with the Lead Bank.

 In order to have effective participation in Joint Lenders Meet convened by the

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respective lead bank/FI in respect of High Value NPA A/cs (say having
outstanding of Rs.25 crore & above) a a Senior Level functionary from
SASTRA Division should also be attending such meetings. Further it should be
24 7
ensured that such meetings are attended by Zonal SASTRA Head/Circle
11
SASTRA Head himself also.
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Therefore, it should be ensured that Agenda Notice along with Background

Papers and specific views/recommendations of the Circle SASTRA Head/
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Zonal SASTRA Head are sent to the competent authority (in case of
outstanding above Rs.25 crore to SASTRA Division, HO also in advance to
enable to take in principle approval to provide a mandate while attending the
meeting on the stand to be taken in such consortium/Jt. Lender Meetings.
5

 Immediately after an account becomes NPA, as a proactive measure, the

Branches irrespective of our share in the lending should press for convening
the Consortium/Joint Lenders Meet even in cases where we may not be the
leader and/or formal consortium may not exist like in case of Multiple Banking.
15

Where ever we are the leader and/or major shareholder, CSC/ZSC should suo-
motto convene such meetings, with a view to discuss ways and means of
bringing back the Account to normalcy and/or taking further recovery measures.

 Obviously the initial efforts/actions should aim at helping the borrower to come
out of genuine business difficulties and help him draw out a plan for up-
gradation of the accounts through Tagging arrangements, Rescheduling/
Restructuring/ Rehabilitation etc. either through CDR mechanism or otherwise.

 A specific mandate from the competent authority to support or not to

support such plans should be obtained in advance, based on the merits
of the case. If normalcy cannot be brought out in near future, a common
consensus needs to be developed in a time bound manner for initiating

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 measures viz Restructuring/CDR, SARFAESI Action, Filing Recovery Suit with
DRT, exploring negotiated settlement, declaring them as Wilful Defaulters, filing
of FIRs/Criminal complaints declaring the account as Fraud.

Insolvency & Bankruptcy Code-2016

This Act has come into force and functional regulations have been made
effective with effect from 01.12.2016 and National Company Law Tribunals
(NCLTs) have been bestowed with the powers to act as the adjudicating
authority for corporate persons. The Insolvency Resolution process will be
carried by Insolvency Resolution Professionals (IRPs) who are registered
with Insolvency and Bankruptcy Board of India.

Engagement of Recovery Agencies

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Guidelines for engagement of Recovery Agencies are circulated from time to
time by SASTRA Division, which must be meticulously complied with. NPA
accounts (whether non-suit filed, suit filed or decreed) with outstanding uptoRs.
24 7
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10 lac are eligible under the scheme. Moreover, written off accounts can also
be entrusted to Recovery Agencies to effect recovery. The progress of the
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Recovery Agencies is periodically reviewed at CSC/ZSC level and shall be

reviewed by the Board on annual basis. There is a need to implement the
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scheme with greater vigour and proper planning. It should also be ensured that
optimum number and proper mix of accounts is allotted to each Recovery
Agent and their bills are settled promptly.
5

Engagement of Resolution Agents

In order to overcome the difficulties being faced in the field, guidelines on
Engagement of Securitization/ Reconstruction Companies (SC/RCs)/ Firms/
companies other than SC/RCs/Retired bank (PNB) Employees as Resolution
Agent are being circulated by SASTRA Division, which must be meticulously
15

complied with. Wherever required, the filed officials to utilize the professional
services of Resolution Agents (which include Asset Reconstructions
Companies, Other Firms and PNB Retired Employees) for tackling high
value NPAs.
Engagement of Supporting Agencies
As per provisions of the SARFAESI Act, apart from the appointment of ‘Valuers’
for taking assistance to enforce the security interest, bank may also avail
outsource various types of services from approved Supporting Agencies.

Engagement of Detective/ Investigating Agencies

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 Presently, Bank has been utilizing services of the Recovery Agencies,
Resolution Agents & Supporting Agencies for resolution of NPAs. However,
efficacy of these Agencies is dependent on the following two important factors:
 Borrowers/Co-Borrowers/ Guarantors are traceable
 The securities if any, are known

Securitization and Reconstruction of Financial Assets & Enforcement of

Securities Interest Act-2002 (SARFAESI-2002)
SARFAESI Act is an enduring tool for expeditious resolution of NPAs but its success
is dependent on the fact that one action follows the other till it is taken to the logical
end.

Wherever, conciliatory methods of recoveries fail to evoke positive response from the
obstinate borrowers, notices under SARFAESI Act must be immediately served, in the
eligible cases. This action should not be kept in abeyance merely on account of the
false promises made by the borrowers. They must be given a time bound schedule for

:57
depositing the overdue amount, failing which the action must be initiated.

POWERS FOR KEEPING ENFORCEMENT OF SARFAESI ACTION IN ABEYANCE

24 7
11
 For accounts under the purview of Circle SASTRA Centre – Zonal SASTRA
-20 66

Committee.
 For accounts under the purview of Zonal SASTRA Centre – Zonal Office
Compromise Committee.
-06 134

E-Auction Portal –As per extant guidelines of the Bank, under the SARFAESI Act,
Auction Notices are required to be uploaded on following websites, besides
publication in two newspapers immediately after publication (i.e. on the date of
5

publication)

(i) www.pnbindia.in (Regulatory Disclosure) (Bank’s website)

(ii) https://eprocure.gov.in/epublish/app.(The Indian Government Website)
(iii) www.ibapi.in (IBA portal for e-auctions in case of immovable properties
15

being used by all PSBs)

(iv) https://etender.pnbnet.in:8443/banks/detail/pnb/MTQy:(PNB’s portal for E-
auctions in case of movable properties)

E-BIKRAY Portal

 To provide a common platform to display details of properties to be auctioned

online by Banks, Indian Banks Association (IBA) under the overarching policy
of the Department of Financial Services (DFS), Ministry of Finance, has
developed a portal named “E-Bikray”. The link of the said portal is
https://ibapi.in (Indian Banks Auction Properties Information).

99 | P a g e
  The main purpose of this portal is to provide a centralized platform for all Public
Sector Banks to upload and display their securities to be auctioned under
SARFAESI Act, 2002 (including IPs, Plant & Machinery, etc). The portal will
give prospective buyers a common platform to search for properties to be
auctioned, as per various search parameters. Necessary guidelines on E-Bikray
Portal have been circulated through SASTRA Division Circular No. 24/2020
dated 07.04.2020 and 57/2023.

Recovery through LokAdalats

LokAdalat is an important tool for resolution of NPAs upto Rs.20 lacs as every award
made by LokAdalat shall be final and binding on all the parties to the dispute and no
appeal shall lie to any court against the Award.

Safeguard regarding limitation period

Pendency of matters with the LokAdalat in non-suit filed cases does not save

:57
limitation. Therefore, care must be taken for filing suits within the limitation period, if
need be. 24 7
Recovery Camps/ RinMuktiShivirs 11
-20 66

 For faster and quicker resolution of NPAs, besides taking legal actions and/or
enforcing the charged securities under SARFAESI or otherwise, establishing a
-06 134

one to one dialogue with such defaulting/NPA borrowers with a view to explore
the possibilities of OTS/ Negotiated Settlement/ Compromise on mutually
acceptable terms, is perceived to be an effective and useful tool.

 “Recovery Camps/RinMuktiShivirs”
5

Therefore, particularly for

Agriculture/Retail Loans in Small/Mid Cap NPAs (i.e. accounts with balance
below Rs.10 lacs) are to be conducted periodically in an effective and
structured manner after doing proper spade work so as to explore the
possibilities of OTS with a view to Maximize the Recoveries in Minimum Time.
15

 Every month each circle should endeavor to hold at-least 3-4 Mega Recovery
Camps/RinMuktiShivirs in each quarter by clustering 9-10 branches at one
camp, where Circle Head and/or his Deputy (concerned AGM/CM) should
personally be present to accord on the spot approvals of OTS, preferably with
immediate payments. ZMs may also participate in such RinMuktiShivirs for
better results.

*****

100 | P a g e
 15 5
-06 134
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24 7
11
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101 | P a g e
 9. Policy for Engagement of Recovery Agency/ Resolution Agents
(Sastra Division Cir no 27/2024)
Objective
The scheme aims to significantly supplement efforts of Branch/CSC/ZSC officials in
recovering bank’s dues in NPAs under doubtful and loss category including written off
accounts.

Eligibility criteria for allocation of accounts to Recovery Agencies/Resolution

Agents:-
All NPA accounts under Doubtful and Loss category (whether non-suit filed, suit filed
or decreed) and also all written off accounts shall be covered by the scheme except
accounts where compromises have been approved (including those reached at in Lok
Adalats) and have not been treated as failed.

Allocation of eligible NPA accounts shall be done as under:-

Recovery Agencies – Ledger Outstanding Upto Rs.10 lacs

:57
Resolution Agents –
(i) Asset Reconstruction Companies (ARCs)
(ii) Firms/Companies (other than ARCs)
24 7
(iii) Retired PSB Employees
11
-20 66

Criteria for allocation of accounts to three different categories of Resolution Agents will
be as under:
-06 134

(i) Asset Reconstruction Companies (ARCs) - Ledger outstanding of Rs.1

Crore and above upto Rs.5 Crores subject to sum of o/s balance of all NPA
accounts allocated should not exceed Rs.25 Crores, at any point of time.
(ii) Other Firms (Firms/Companies other than ARCs) - Ledger outstanding of
5

above Rs.10 lacs upto Rs.1 Crores subject to sum of o/s balance of all NPA
accounts allocated should not exceed Rs.5 Crores, at any point of time.
(iii) Ex-Employees of PSBs - Ledger outstanding above Rs.10 lacs upto Rs.1
crores, subject to sum of o/s balance of all NPA accounts allocated should
not exceed Rs.5 Crores at any point of time and also subject to the
15

condition that retired employees be not given such accounts for resolution
which they handled while in service.

Eligibility Criteria for Empanelment of Recovery Agencies

Only agencies (companies, corporations, firms, NBFCs, etc.) with sufficient means/
resources/ field experience will be considered for empanelment. Minimum experience
of three (3) years in the field of Recovery with any Bank/ FI/NBFC is preferable.
Multiple Recovery Agencies of same key person/group/proprietor/directors/
partners/Authorised signatory/ Company/allied associates shall not be empanelled,
i.e., only one Agency can be empanelled for one key person/ group/ proprietor/
directors/ partners/ authorised Signatory/ Company/ allied associates at a Zone level.

102 | P a g e
Eligibility Criteria for ARCs, Ex-Employees of PSBs and Firms (For allocation of
NPA Accounts above Rs 10.00 lacs)

ARCs Other Firms Ex-Employees of PSBs

The Asset A Firm/Company Retired Bank employees of Public Sector
Reconstruction promoted by and/or Banks/ Private Sector Banks (including
Companies employing Voluntarily Retired Employees) having
(ARCs) which professional satisfactory past service record in Public
have obtained person/persons like Sector Banks/ Private Sector Banks and
the certificate of Chartered Accountant experience of minimum 15 years or more
registration from /Company Secretary / in the Bank provided there is no major
RBI under Cost Accountant etc penalty (vigilance & nonvigilance) &
Section 3 of the and / or honourably minor penalty (vigilance) imposed by the
SARFAESI Act retired Senior Bank during entire service period and no
and having Executives of the minor (non-vigilance) imposed by the
Object Clause of Banks (not less than Bank during the last five years of service,
Memorandum of DGM/GM) with will be eligible for empanelment. Further,

:57
Association minimum 3 years’ there should not be any case pending
permitting them experience in the against him/her in CBI or before any
to act as resolution of NPAs. Court of Law. However, preference be
24 7
Resolution Agent
for the bank. Firms/Companies
11 given to ex-employees
(Amalgamated Entity).
of PNB
-20 66

not having 3 years’ Keeping in view the high standards under

experience but having the norms of Corporate Governance,
-06 134

professionals with following terms and conditions will be

minimum 3 applicable, while engaging Ex-
years’experience will Employees of PSBs/Pvt. Sector Banks as
also be eligible. Resolution Agents on behalf of the bank.
5

Condition-1
Retired employees of Amalgamated
Bank who have worked in the last 5
years of their service in the Head Office
SASTRA Division/ Recovery Sections at
Zonal Office/Circle Office and/or in
15

ARMBs, Zonal SASTRA Centre/ Circle

SASTRA Centre, subject to a cooling
period of 1 year between the retirement
date and date of their engagement as
Resolution Agent. Retired employees of
other Public Sector Banks/ Private Sector
Banks will have to submit an undertaking,
as per Annexure-6, obtained from local
controlling office of the Bank (Zonal
Office, Circle Office and Divisional HQ)
where they are residing OR were posted
before retirement. Ex-Employees of
Public Sector Banks/ Private Sector
103 | P a g e
 Banks will apply to local Zonal Office of
their place of permanent residence.
Condition-2
There will be no bar on Maximum age of
the retired employees, working as
Resolution Agent of the Bank; however,
after attaining the age of 65 years,
performance of the retired employee will
be reviewed by the Zonal Office
Committee for Empanelment of
Outsourcing Agencies (ZOCEOA) and on
finding the same as satisfactory, the
tenure of engagement may be extended
for subsequent period of 2 years on each
review. This will be applicable to the
existing retired employees also, who are
working as Resolution Agents. Retired

:57
employees be not given such accounts
for resolution which they handled while in
service, i.e., the accounts which were
24 7
11 either sanctioned by them or their
operations were handled by them during
-20 66

their stay in that particular branch.

.
-06 134

Multiple Resolution Agent of same key person/group/proprietor/directors/

partners/Authorised signatory/ Company/allied associates shall not be empanelled,
i.e., only one Agency can be empanelled for one key person/ group/ proprietor/
directors/ partners/ authorised Signatory/ Company/ allied associates at a Zone level.
5

EMPANELMENT OF RECOVERY AGENCIES/ RESOLUTION AGENTS

Recovery Agencies& Resolution Agents (Other Firms) -Concerned Zonal Manager

shall invite applications from Recovery Agencies for empanelment, once in a year.
15

However, application received during the year may also be considered by ZO

Committee i.e. ZOCEOA, based on the merits of the case and fulfillment of the
eligibility criteria as per Bank’s extant guidelines.

Resolution Agents (ARCs / Ex-Employees of PSBs) – Head Office, SASTRA

Division shall invite applications from Asset Reconstruction Companies (ARCs) &
honorably retired bank employees of PSBs (Ex-Employees of PSBs) for empanelment
as Resolution Agents.

Competent Authority for Empanelment of Recovery Agencies, Resolution

Agents.
Competent Authority for Empanelment of Recovery Agencies & Resolution Agents
(Other Firms) Zonal Office Committee for Empanelment of Outsourcing Agencies

104 | P a g e
(ZOCEOA) comprising of following members:-

a. Zonal Manager – Head of the Committee

b. Dy. Zonal Manager
c. Zonal SASTRA Head
d. Asst. Gen. Manager/ Chief Manager of Zonal Office (As nominated by
Zonal Manager) – Convener

shall interview the applicants and shall be the Competent Authority to approve
empanelment of the Recovery Agencies & Resolution Agents (Other Firms) and
any decision in this regard would be final.

Competent Authority of Empanelment of ARCs as Resolution Agents

Executive Director (Domain) shall be the competent Authority for empanelment of
ARCs as Resolution Agents, based on the recommendation of already constituted
“Head Office Empanelment Committee at Head Office (HOEC)” comprising
members of Head Office Compromise Committee. Executive Director (Domain)

:57
shall be the competent Authority for allocation of NPAs under Retail Loans on
portfolio basis. 24 7
11
Competent Authority of Empanelment of Ex- Employees of PSBs as Resolution
Agents:
-20 66

Up to scale-V of HO Level Committee comprising of following members:-

-06 134

PNB and other (i) CGM-SATSRA Division

PSB/Pvt Bank (ii) GM-SASTRA Division (Domain)
(Any Scale) (iii) GM – HRDD
(iv) GM-IAD
5

Scale VI, VII & Executive Director (Domain) and Executive Director (HRD)
VIII based on the recommendation of HO Level Committee
comprising of following members:-
(i) CGM-SATSRA Division
(ii) GM-SASTRA Division (Domain)
(iii) GM – HRDD
15

(iv) GM-IAD

Involvement of Recovery Agencies during negotiations with Borrowers

Branches/CSC/ZSC should generally involve the Recovery Agents to participate
during settlement discussions with the borrowers. In fact, presence of Recovery
Agents who are responsible for follow-up with the borrowers is beneficial for
settlement through negotiations and can result into higher settlement. This facilitates
to integrate the efforts of the Recovery/ Resolution Agents and Bank officials and
avoids any communication gap.

Parting of documents to the Recovery Agencies is not permitted under any

circumstances.

105 | P a g e
The Agency shall furnish to the Bank’s Circle Office (In case of Recovery Agents) &
Zonal Office (In case of Resolution Agents), a Bank guarantee for an amount of Rs.
1,00,000/-.

Allocation of job/accounts to Recovery Agencies/Resolution Agents

Allocation of accounts and issuance of Job Card (as per Annexure-5) is to be made as
under:-

For Accounts up to Rs.10. Lacs Branch Head

ARCs Other Firms PSB Retired Employees

Rs.1 Cr. Zonal Rs.10 Circle 10 Lacs to Clerical Circle
–Rs.5 Cr Manager lacsto Sastra Rs.25 lac Staff Sastra
Rs.50 lacs Head Head
Above Zonal Above Rs. Scale-
Rs.50 lacs Sastra 10 lac I,II& III

:57
upto Head toRs.50
Rs.1.00 Cr lacs
Retail loan portfolio Above Rs. Scale IV Zonal
on Circle SASTRA 10 lacs & Scale-V Sastra
24 7
Centre-wise basis
11 upto Head
-20 66

Rs.75 lacs
Above Rs. Scale-VI Zonal
10 lacs and Manager
-06 134

upto Rs.1 above

Cr
Circle SASTRA Head to ensure reporting of allocation of account to empanelled
Resolution Agent to Zonal SASTRA Head.
5

Allocation process be completed within 15 days from the date of allotment of Recovery
Agency/Resolution Agent for the concerned Branches/ Circle SASTRA Centres/Zonal
SASTRA Centres.As far as possible all eligible accounts be allocated to the
Recovery Agencies.
15

Job Card :-The Branch will specifically issue a Job Card to the person working on
behalf of Recovery Agency for NPA accounts upto Rs. 10.00 lacs and Circle SASTRA
Centre/Zonal SASTRA Centre to the person working on behalf of Resolution Agents
for NPA accounts under their purview, containing particulars of the accounts allotted to
him for recovery, giving brief details of the borrower, dues and security available as
per Annexure-9.

Withdrawal of accounts
The allocating authority may consider withdrawing allocated accounts from said
agencies after 6 (six) months of allocation extendable to 12 months, in case no
effective result is yielded by them. Further, accounts be re-shuffled periodically. For
Accounts allotted by Head office, Zonal SASTRA Centre to send status update after 6
months in case allocation is to be extended. For withdrawal, a Withdrawal Notice must

106 | P a g e
be invariably sent by the Branch/Circle SASTRA Centre/Zonal SASTRA Centre to the
Recovery Agency/Resolution Agents and kept in the records of the respective offices
to avoid any disputes/ complications/payments in the future.

Commission payable to Recovery Agencies is as under:-

For NPA accounts upto Rs 10.00 lacs

Age of NPA Commission payable on amount of Recovery

Upto 3 years 5.00%
Above 3 years upto 5 years 7.50%
Above 5 years 10.00%

:57
Resolution Agent -For NPA’s above Rs 10.00 lacs upto Rs. 5.00 Crores

Commission to be paid to Resolution Agents (ARCs, Other Firms & Ex-Employees of

24 7
11
PSBs) subject to the ceiling as given below:
-20 66

Age of NPA Commission payable on amount of recovery

Where Present Market Where Present Market
Value of charged Value of charged
-06 134

Securities is more than Securities is less than the

the Principal Outstanding Principal Outstanding
Upto 3 years 3 5
Above 3 years upto 5 4 6
5

years
Above 5 years upto 7 5 7
years
Beyond 7 years 8 10
15

Note: A consolidated commission of 5% of recovery shall be payable to the ARCs for resolution of
Retail Loans under NPAs entrusted to them on portfolio basis

Competent Authority for payment and settlement of disputes:

Competent Authority for Payment of Commission to Recovery Agencies

Invoice will be raised by Recovery Agency to respective Circle Offices for payment of
commission regarding recovery made in accounts of the respective Branches. After
receipt of the bill from Recovery Agency, Circle Office to get the bill verified from
respective Branches under their jurisdiction. After verification of the bill, the payment
of commission to Recovery Agency will be made by respective Circle Office.

107 | P a g e
Competent Authority for Payment of Commission to Resolution Agents
Circle SASTRA Head/Zonal SASTRA Head must satisfy about genuineness of the
case and then only pay the amount of commission and not merely on the ground that
the account has been allocated to the Resolution Agents. Circle SASTRA Head (for
accounts under the purview of Circle SASTRA Centre) and Zonal SASTRA Head (for
accounts under the purview of Zonal SASTRA Centre) will be the competent authority
to finalize the bill/claim submitted by the Resolution Agents and its payment, based on
their record of recoveries and as per the Bank’s extant guidelines..

In case of any dispute, the following authorities may take final decision for
settlement of disputes, considering facts of the case:-

NPA accounts under purview of Competent Authority

Branch Circle Head
Circle Sastra Head Zonal Sastra Head
Zonal Sastra Head Zonal Head

:57
Expenditure Heads for payment of Fees/Commission
24 7
11
-20 66

S. N. GL Code Purpose of Use

1 1142702 Payment of Commission to Recovery Agencies
2 1142710 Payment of Commission to Resolution Agents
-06 134

3 1142703 Payment of Fees to Supporting Agencies

4 1142732 Payment of Fees to Detective Agencies
5 1142731 Payment of Commission to CBCs for Recovery in NPA,
SMA-II & CBR-2 Accounts
5

All India Zone /Circle wise list of Recovery Agencies, Resolution Agents are available
in Sastra Division Cirulars and before allotment of the work, name must be checked in
the updated list of blacklisted agencies, circulated vide Sastra division circulars time to
15

time.

********

108 | P a g e
 10. POLICY ON ENGAGEMENT OF SUPPORTING AGENCIES
UNDER SARFAESI ACT 2002
(Sastra Division Cir no 27/2024)
The Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act (SARFAESI Act) - 2002 provides for enforcement of security
interest for realization of dues without the intervention of Courts or Tribunals.

Provisions of SARFAESI Act

Section 13 of Chapter III of SARFAESI Actdeals with enforcement of security interest.
Sub-Section 4 of Section 13 stipulates that in case the borrower fails to discharge his
liability in full within the period of 60 days from the date of notice to pay up, the
secured creditor may take recourse to following measures to recover his secured debt.

I. Take possession of the secured assets of the borrower including the right to
transfer by way of lease, assignment or sale

II. Take over management of the business of the borrower including the right to

:57
transfer by way of lease, assignment or sale for realizing the secured assets,

III. Appoint any person to manage the secured assets the possession of which has
24 7
11
been taken over by the secured creditor.
-20 66

Nature of services required from Supporting Agencies

I. Pre-take over examination of identified units/assets including survey.
-06 134

II. Facilitating the Bank in seizure of securities/taking possession of movable and

immovable assets.
III. To provide security for preservation and protection of assets taken in
possession.
5

IV. To act as Custodian of secured assets.

V. Obtaining assistance of District Magistrate/Metropolitan Magistrate for taking
over possession of securities. For this services of an advocate from Bank’s
panel may be utilized.
VI. Assisting the Bank for sale of assets taken in possession through auction or
otherwise.
15

Authority for empanelment of Supporting Agencies

Concerned Zonal Manager shall invite applications from Supporting Agencies, once in
a year and Zonal Office Committee for Empanelment of Outsourcing Agencies
(ZOCEOA) will be the competent authority for empanelment of a Supporting Agency.
However, application received during the year may also be considered by ZO
Committee i.e. ZOCEOA, based on the merits of the case and fulfillment of the
eligibility criteria as per Bank’s extant guidelines.

The duration of empanelment of Supporting Agencies shall be for a period of three (3)
years subject to annual review by Zonal Office Committee for Empanelment of
Outsourcing Agencies (ZOCEOA) & satisfactory performance.

109 | P a g e
Authority for engagement of Supporting Agencies

For Branches-NPA accounts upto Rs.10 Lacs:- Circle Head have full powers for
engagement of empanelled Supporting Agencies for assignment of task to them.

For SASTRA: Circle SASTRA Head/ Zonal SASTRA Head have full powers for
engagement of empanelled Supporting Agencies for assignment of task.

The Authorized Officer (for Branches as nominated by circle head and CSC/ZSC shall
assign the task/issue work order to the Supporting Agencies on panel, by issuing a
letter as per draft given in Annexure-9 of the circular. In the letter, nature of task
assigned shall be categorically mentioned including amount of fee payable after
accomplishment of task successfully, to obviate the possibility of complaints for
non/less payment of fees.

Withdrawal of account from a Supporting Agency

:57
Allocating authority may consider withdrawing allocated accounts from said agencies
after 6(six) months of allocation with further provisions of the two extension, each 6
24 7
months, subject to maximum period of 18 months.
11
Since allocation/assignment of task to the Supporting Agency is done by the
-20 66

Authorized Officer, in case a Supporting Agency fails to perform the assigned task
allotted to them, a Withdrawl Notice must be invariably sent by the Authorized Officer
to that Supporting Agency, under intimation to the Circle Office/Zonal Sastra Head
-06 134

must be kept in records by Branches/Circle sastra office/Authorized Officer to avoid

any disputes/complications in the future.

Utilization of services of Property Dealers / Real Estate Agencies for sale of

5

secured assets
In case a Property Dealer/ Real Estate Agency, who although is not working as
empanelled Supporting Agency on behalf of the Bank, but brings a buyer for a
property/any other secured asset, put on sale by the Bank, commission of 1% of the
total sale price subject to a maximum of Rs.10 lacs shall be payable to the
15

dealer/agency by the bank. However, in exceptional cases, ZOCC may consider

payment of fee @1% of the sale price subject to a maximum of Rs.50 lacs. Further,
HOCAC-I may consider payment of fee beyond Rs.50 lacs, on the basis of the
recommendations of ZOCC & justifications.

Payment of fees to the Supporting Agencies will be payable after deduction of GST,
as per details given in the circular.

Commission is to be paid by the branches to the debit of Expenditure:Outsourcing of

Financial Services-Supporting Agencies {P & L- GL Report Code 11427 (Account No.
<solid>1142703) as mentioned in sastra Division Circular no.54/22 dated 27.09.2022.
The expenditure incurred shall be part of the memoranda dues.

110 | P a g e
In case where supporting agencies have played a proactive role in recovering bank’s
dues through OTS or otherwise (normal recoveries) after taking possession under the
Act but there is no sale of assets, Circle Head/Zonal Sastra Head may approve fee to
the Agency at the rate of 50% of normal fee (i.e. fee payable for sale of asset) with the
ceiling of Rs.1,50,000/- (one lac fifty thousand only) and payable to debit Expenditure:
Outsourcing of Financial Services-Supporting Agencies {P & L- GL Report Code
11427 (Account No. <Solid>11427103). The expenditure incurred shall be part of the
memoranda dues.

It must be ensured that a Supporting Agency is not paid commission for the activities
already under taken e.g in an NPA account, commission has been paid for Pre-
takeover examination and takingSymbolic Possession. After a period of time the
same/any other Agency is engaged for taking Physical possession then the amount of
commission will be difference between the two i.eAmount of commission for pre-
takeover examination and Physical possession LESS Amount of commission for pre-

:57
takeover examination and Symbolic possession.

Monitoring/review of the scheme

24 7
11
Monthly review meetings shall be held with the engaged Supporting Agencies by the
-20 66

Branch/ Circle SASTRA Centre (For their respective allocated accounts) and quarterly
review meetings shall be held with the engaged Supporting Agencies at Circle Offices
level (For allocated NPA accounts upto Rs. 10 lacs) and at Zonal SASTRA Level (For
-06 134

allocated NPA accounts under purview of Circle SASTRA Centre/ Zonal SASTRA
Centre), to review the progress in the task/job entrusted to them.
5

Bank has right to terminate the empanelment of Recovery Agencies/Resolution

Agents/Supporting Agencies & Detective Agencies at any time without
assigning any reason subject to approval of Authority, who has empanelled the
various agencies.
15

All India Zone /Circle wise list of Recovery Agencies, Resolution Agents are available
in Sastra Division Circulars and before allotment of the work, name must be checked
in the updated list of blacklisted agencies, circulated vide Sastra division circulars time
to time.

***********

111 | P a g e
 11.Policy on Engagement of Detective Agencies
(Sastra Division Cir no 27/2024)
Objective
The policy aims to significantly supplement efforts of the field officials in recovering
bank’s dues in NPA accounts by utilizing services of the Detective Agencies. It
includes
 Locate the borrower(s)/ co-borrower(s)/ guarantor(s)/ mortgagor(s), including
their’s legal heirs.
 Ascertain latest information about their present address/ occupation, business.
 Confirm present state of ownership of the secured assets by personal
visit(s)/market report, duly confirmed by the documents.

Eligibility criteria for allocation of accounts to Detective Agencies

All NPA accounts under any category i.e Sub-Standard, Doubtful and Loss category
(whether non-suit filed, suit filed or decreed) shall be covered by the Policy in which
engagement of detective agency is deemed appropriate, as per the requirement.

:57
Zonal Office Committee for Empanelment of Outsourcing Agencies (ZOCEOA) will be
the competent authority to empanel any Detective Agency If any Detective agency
approaches for empanelment under PAN India basis then the HOEC is competent
24 7
authority for approval of the same.
11
-20 66

Circle Sastra Head& Zonal Sastra Headwill be the competent authority to assign any
task to the Detective Agency for accounts managed by them.Circle Sastra Head &
-06 134

Zonal Sastra Head must ensure that while assigning any task, a letter must be given
to the Detective Agency clearly stating the nature of task and the fees which will be
payable for that task, to avoid any dispute/complaint at a later stage.
5

Time Frame for submission of reports by the Detective Agency

A time frame of maximum 30 days will be allowed to the Agency for submission of
report. However, in emergent circumstances, further extension of 15 days (total Time
frame will be of 45 days) may be permitted by the Zonal Sastra Head,keeping in view
complexity of the case.In case of non-submission of report in time then penalty
shall also be charged.
15

Periodical review meetings shall be held with the Detective Agencies by the
CSC/ZSC, to review the status of accounts entrusted to them.

Competent Authority for payment of fees

CSH/ZSH will be the competent authority to finalize the bill/claim on appropriate rates
(as per Bank’s extant guidelines), submitted by the Detective Agencies and its
payment.

Fee of the same is as under:

S.N. Nature Of Task Assigned Fee Payable

1 On receipt of information about whereabouts of Rs. 7,500/- per person
112 | P a g e
 themissing/absconding borrower / guarantor subject to maximum fee
/co-borrower/Director etc. subject to production of Rs. 30,000/- under this
of documentary proof/evidence. category, per account.
2 For locating properties other than details of Rs. 20,000/- for each
whichare available in Bank’s records, which property located, subject
may lead toattachment of the same along-with to maximum fee of Rs.
the documentary proof. 1.00 lacs under
(All the properties in one title deed to be thiscategory per account.
considered as one property)
3 For providing any other information, which may Rs. 2,500/- per piece of
be helpful for recovery of Bank’s dues e.g Information, with
informationabout other businesses, credit maximum amount of
facilities from otherbanks, accounts with other Rs.20,000/- per account.
banks including verification of present position
of properties as per Bank’s records, subject to
production of documentary proof/evidence.
4 Payment of reasonable out of pocket expenses may also be sanctioned

:57
subject to maximum of Rs.10,000/- per account. Circe Headwill be the
competent Authority to take a decision for payment of such out of pocket
expenses. The Detective Agency to give details of visits/proof of
24 7
5
expenditure. 11
In case the Detective Agency fails to For Major Cities Delhi,
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trace the borrower/guarantor etc. Mumbai, Chennai, Kolkata,

Hyderabad, Ahmedabad,
Bangalore, Pune & Surat -
-06 134

Maximum fee of Rs. 5,000/-

per account can be paid.
For Other Cities - Maximum
fee of Rs. 3,000/- per
5

account can be paid

6 In case the Detective Agency fails to For Major Cities Delhi,
trace the property. Mumbai, Chennai, Kolkata,
Hyderabad, Ahmedabad,
Bangalore, Pune & Surat -
Maximum fee of Rs.
15

15,000/- per account.

For Other Cities - Maximum
fee of Rs. 10,000/- per
account.

The above rates are inclusive of all taxes, whatsoever may be applicable.
The fees will be paid by the branches to the debit of Expenditure: Outsourcing of
Financial Services-Supporting Agencies {P & L- GL Report Code 11427 (Account
No. <solid>1142732)

Panel of Detective Agencies shall be valid for 3 years [subject to annual review by
Zonal Office Committee for Empanelment of Outsourcing Agencies (ZOCEOA)]

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 12.RESOLUTION OF NPA THROUGH LOK ADALAT
(SASTRA Division 09/2024)

OTS THROUGH LOK ADALAT

LokAdalats have been established generally at the District level under the provisions
of “The Legal Services Authorities Act, 1987”. These LokAdalats provide an easy and
cost effective platform for disposal of large number of cases.
Every award of the LokAdalat is deemed to be a decree of a Civil Court and no appeal
can be made against the award made by the LokAdalats. In case of non-compliance
of terms of award by the concerned party, it can be executed like a decree. Every
award made by the LokAdalat shall be final and binding on all the parties to the

:57
dispute, and no appeal shall lie to any court against the award. Where a compromise
or settlement has been arrived at, by a LokAdalat in a case referred to it, the court fee
paid in such cases shall be refunded in the manner provided under the Court Fees
24 7
Act, 1870. 11
-20 66

All NPA accounts, both suit filed and others, can be considered for reference to
LokAdalats for settlement. For coverage under LokAdalat the claim amount
should not exceed Rs. 20.00 lac. In non suit filed NPA, where compromise may take
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place, the dates may be fixed, for such, Lok Adalat normally provide enough time and
the matter that may be taken up in such Lok Adalat. Lok Adalat cases, therefore, shall
be examined in advance by the concerned Committee/s within their vested powers to
5

mandate the ‘range’ within which compromise can be considered. Negotiated

settlement at the Lok Adalat can be reached by the official so mandated within the
‘range’ authorized in tune with these policy guidelines
LokAdalats are also being conducted by various DRTs. Such LokAdalats in DRT
matters are not being conducted in terms of the Legal Services Authorities Act. These
15

provide an avenue to arrive at mutually acceptable amicable settlements. If settlement

is arrived at, it shall be ensured that a memo of compromise is filed before DRT and
consent adjudication order is obtained.

Committee System
LokAdalat cases shall be examined in advance by the Compromise Committees
formed at various levels (in tune with the NPA Policy guidelines) to arrive at a “range”
within which compromise can be considered in a given case.
The decision regarding waiver can be considered by the competent authority keeping
in view the sacrifice involved in compromise/negotiated settlement under the General
Guidelines.

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Sanctioning authority and /or one of the senior members of the Compromise
Committee in Circle Office/CSC with a proper mandate from the sanctioning authority,
should attend the LokAdalat.
For the purpose of obtaining a Mandate and deciding a Range, a process note as per
Enclosure-12 be prepared and approval obtained from the Competent Authority.
Down payment of compromise amount arrived at is preferred. However, depending on
the merits of each case and considering the total amount and financial condition of the
debtor/s, monthly/ quarterly instalments (maximum upto 2 years) may be agreed with
the default clause providing for the failure of the compromise in case of non-deposit of
OTS amount as per terms of award. We should agree with such conditions at the
LokAdalat in accordance with the policy guidelines on OTS.
Future interest may be agreed to as per General Guidelines for settlement of NPAs
through Negotiated settlement
Execution of Award of LokAdalat

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If amount of claim is less than Rs. 10 lacs (after adjustment of payments, if any,
received), Bank has to file Execution Petition before the court from where the court
24 7
has referred the case to LokAdalat. 11
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In non-suit filed cases, the Execution Petition is to be filed in the court having the
jurisdiction in the matter.
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Recovery through LokAdalats

LokAdalat is an important tool for resolution of NPAs upto Rs.20 lacs as every award
made by LokAdalat shall be final and binding on all the parties to the dispute and no
5

appeal shall lie to any court against the Award.

All NPA accounts, both suit filed and others, can be considered for reference to
LokAdalats for settlement.
15

Powers of LokAdalats
The LokAdalat for the purpose of holding any determination under the Act, have the
same powers as are vested in a civil court under the code of civil procedure, 1908
while trying a suit in respect of the following matters :

 The summoning and enforcing the attendance of any witness and examining
him on oath.
 The discovery and production of any document.
 The reception of evidence on affidavits.
 The requisitioning of any public record or document or copy of such record or
 Document from any court or office and
 Such other matters as may be prescribed.

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Jurisdiction of LokAdalats
LokAdalats have jurisdiction to determine and to arrive at a compromise or settlement
between the parties to a dispute:
 Any case pending before any court or
 Any matter which is falling within the jurisdiction of, and is not brought before,
any court for which the LokAdalat is organized.
Court shall refer the cases to the Lok Adalat:
 If the parties to the litigation agree or
 One of the parties thereof makes an application to the court for referring the
case to the LokAdalat for settlement and if such court is prima facie satisfied
that there are chances of such settlement or
 The court is satisfied that the matter is an appropriate one to be taken
cognizance by the LokAdalat.

:57
Cases that cannot be taken up
 The offences which are compoundable under any law cannot be brought within
the purview of LokAdalat.
24 7
 It has no authority of its own to pass judgments.
11
-20 66

Safeguard regarding limitation period

Pendency of matters with the LokAdalat in non-suit filed cases does not save
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limitation. Therefore, care must be taken for filing suits within the limitation period, if
need be.

Reporting & Monitoring

5

Settlements arrived at, under the aegis of LokAdalat, shall be placed before
competent authority at the end of each quarter for information and the same would be
put up for post facto scrutiny in usual manner.
15

**************

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 13.GUIDELINES ON RECOVERY CASES THROUGH DRT/CIVIL
COURT
(LAW DIVISION CIR NO 3/2023)

With respect to Bank’s disputes to recover its dues from its borrowers, filing of
Suit/Original Application before the Court/DRT is a legal recourse available to the
Bank. Further, bank may also explore the legal recourse of initiating Corporate
Insolvency Resolution Process under Insolvency & Bankruptcy Code against its
corporate borrowers where the amount of default is more than Rs.1 lakh. Proper
filing, contesting and follow up of litigation is required so as to effect quick recovery.

:57
Success of litigation depends largely on how effectively each case is dealt with.
The present legal system enables the Banks to recover its dues with the help of
various enactments such as:
24 7
11
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a) Agricultural Credit Acts have been enacted by various States for recovery of
dues in respect of advances relating to agricultural and allied activities.
b) For recoverable amount Rs.20 lacs and above, recovery suit is to be filed
-06 134

before Debt Recovery Tribunals under the Recovery of Debts Due to

Banks and Financial Institutions Act, 1993.
c) For recoverable amount between Rs.3 lakh and uptoRs.20 Lakh, recovery suit
can be filed before the Civil Courts, in terms of Civil Procedure Code, or before
5

the Commercial Court under ‘Commercial Courts, Commercial Division and

Commercial Appellate Division of High Courts Act, 2015’, as the case may be in
consultation with the law officer posted at the respective Circle Office/ARMB.
d) For recoverable amount of less than Rs.3 lakh, recovery suit is to be filed
15

before the Civil Courts, in terms of Civil Procedure Code.

e) SARFAESI Act provides for recovery action against the secured assets by the
Authorised Officers of the Bank.
f) Bank can also avail the services/benefit of Lok adalat.
g) Where circumstances so require, Bank can resort to initiating Corporate
Insolvency Resolution Process against corporate borrowers under Insolvency &
Bankruptcy Code.
h) Criminal proceedings (FIR/Complaint) including complaint under Section 138 of
Negotiable Instruments Act can be filed, wherever necessary.
i) Guidelines for filing and follow-up of suits/OAs before Civil Courts/Commercial
Court/DRTs are detailed hereunder.

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Preliminary steps for filing of recovery application/suit before debt recovery
tribunal (DRT)/court
Before filing a Suit/Original Application (OA), it should be examined whether the
securities available in the account are enforceable under SARFAESI Act. In case of
Corporate Debtors, the possibility of initiation of Corporate Insolvency Resolution
Process (CIRP) under Insolvency & Bankruptcy Code (IBC) may also be explored
Simultaneous action under SARFAESI Act as well as before Civil Court/DRT is legally
possible.
Wherever the pledged goods are available, efforts be made for disposal of these
goods before filing of suit.
Any delay in filing of suit, after sanction, may result in depletion/disposal of securities.

:57
Therefore, Suit/Original Application be filed without any delay.
Draft OAs/Plaints to be filed before DRT/Court, are to be vetted and got approved, on
the basis of Brief for Filing Suit (as per Attachment “G”), giving complete facts of the
24 7
11
account along with copies of loaning documents, where the amount claimed is :-
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1. Upto 5 Crores – At Circle SASTRA/Circle Office as the case may be

2. More than Rs. 5 Crore and upto 10 Crores – At Zonal SASTRA/Zonal Office as
-06 134

the case may be.

3. More than Rs. 10 Crore – At Law Division, Head Office.
5

In order to obtain immediate relief, in the suits/ applications filed before Courts/DRTs,
steps have to be taken to obtain interim reliefs like Injunction Orders, Attachment
before Judgement (i.e ABJ) of the assets etc. Interim Relief can also be prayed for
direction for preparation of inventory and appointment of Receiver/Local
Commissioner etc., wherever warranted
15

Claim of Penal Interest

Interest debited to a/c can be capitalized & thus form part of Principal sum.

Penal interest cannot be capitalized meaning thereby that penal interest cannot be
compounded.

Banks are to make an averment in the plaint that interest/compound interest has been
charged at such rates, and capitalized at such periodical rests , as are permitted, and
do not run counter to, the directives of the Reserve Bank of India.

Debit entries relating to interest in the statement of account shall also set out the rate
of interest and the period for which interest is charged.

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If the Court is prima-facie satisfied about the entries and even if a dispute is raised in
that regard, the onus would be on the Borrower to show why the amount of debit
balance claimed as principal sum cannot be so accepted and adjudged.
The Principal sum actually advanced coupled with interest on periodical rests so
capitalized is capable of being adjudged as Principal sum, on the date of filing of the
suit.

Pendentelite and post decree interest needs to be claimed on the Principal sum
(amount of suit) as per documents.

Calculation of Suit Amount as on Date of Filing of Suit

Balance as on the date of NPA ………
Add: Other charges, if any (Subsequent to the date of NPA) ………
Add: Interest from date of NPA to the date of filing of suit …………

:57
Penal interest from the date of NPA to the date of suit without compounding……….
Total claim ………..
24 7
11
-20 66

Filing and follow-up of recovery application/suit before DRT / Civil Court

A copy of model draft application and check list can be given to the dealing advocate,
-06 134

if necessary, so that he/she can draft the OA in compliance with the requirements.
BRIEF OVERVIEW OF VARIOUS STAGES & STEPS TO BE TAKEN FOR
PROCEEDINGS BEFORE DRT/ CIVIL COURT/COMMERCIAL COURT
5

Before DRT
The recovery process is initiated by filing an application commonly known as Original
Application (OA) before the Registrar of the concerned Debt Recovery Tribunal (DRT).
15

DRT is headed by a Presiding Officer (PO).

DRT issues summons in the names of defendants and the services of summons are
required to be made upon each of the defendant. On service of summons, the
defendant is required to file reply within 30 days or further time granted.

In case the defendant sets up a counter claim against the bank in the written
statement, reply to the same should be filed before the next hearing to avoid delay on
this ground.

A copy of the OA, along with copy of documents and other Annexure(s), attached with
OA, is required to be served on each of the defendants together with the summons

119 | P a g e
issued by DRT. The practice prevailing in a particular DRT be checked up and the
requirement be complied with.

If bank desires to obtain an Injunction, Stay or Attachment Before Judgement (ABJ) in

respect of any assets, separate application with Affidavit needs to be moved before
the DRT, making out a ground that the defendants are about to dispose of the
property in question. For this purpose, the Dealing Advocate be provided the details of
assets which are to be got attached or against which Injunction/Stay is sought for.

On getting Summons, within 30 days, the defendants have to file their reply. The
number of adjournments to be given to the parties has been curtailed and maximum
adjournments will be three per person and in case there are more than three persons,
maximum adjournments shall not exceed six.

After filing of the written statement by the defendants, the evidence of the parties are
taken by way of affidavit. In DRT proceedings, generally cross examination is not
allowed unless specific cause is shown for summoning the witnesses for cross

:57
examination.

After completion of pleadings, the Presiding Officer (PO) of DRT fixes the matter for
24 7
final hearing/arguments. Hearing of OAs filed will be held on day-to-day basis. PO
11
passes Final Order and Recovery Certificate (RC) is issued to RO (Recovery Officer)
-20 66

of DRT to affect the recovery of the amount of debt as specified in the RC.

In case the matter is resolved between the parties, at any stage, before the final order
-06 134

is passed, by way of OTS etc., the court fee paid by the bank may be refunded to the
bank at such rate as shall be decided by the Government.

Before Civil Court

5

The proceedings before Civil Court commence by filing of plaint along with the
documents relied upon. The defendant appears and files written statement within 30
days from the date of service of Summons. Evidence by both sides has to be
adduced. Cross-examination is allowed as a matter of right.
15

Service of summons may be made by Speed Post, by Courier Services, as approved

by the High Court or by any other means of transmission of documents (including fax
message or electronic mail service) as may be provided by the rule framed by the
respective High Court.

The limitation period available for filing application for final decree is three years from
the date of expiry of the time specified in the preliminary decree.

BEFORE COMMERCIAL COURT

A suit, which does not contemplate any urgent interim relief under the Commercial
Courts Act, 2015, shall not be instituted unless the plaintiff exhausts the remedy of

120 | P a g e
pre-institution mediation in accordance with such manner and procedure as may be
prescribed by rules made by the Central Government.

The process of mediation shall be completed within a period of three months from the
date of application made by the plaintiff. Provided that the period of mediation may be
extended for a further period of two months with the consent of the parties and such
period shall not be computed for the purpose of limitation under the Limitation Act,
1963.

The settlement arrived at through mediation shall have the same status and effect as if
it is an arbitral award on agreed terms under sub-section (4) of section 30 of the
Arbitration and Conciliation Act, 1996.

The provisions of the Code of Civil Procedure, 1908, shall, in their application to any
suit in respect of a commercial dispute, stand amended in the manner as specified in
the Schedule to the Commercial Courts Act, 2015. The Commercial Division and
Commercial Court shall follow the provisions of the Code of Civil Procedure, 1908 (5

:57
of 1908), as stated in the Schedule thereto.

No civil revision application or petition shall be entertained against any interlocutory

24 7
order of a Commercial Court, including an order on the issue of jurisdiction, and any
11
such challenge, subject to the provisions of section 13 of the Act, shall be raised only
-20 66

in an appeal against the decree of the Commercial Court.

Expeditious disposal of DRT/Court cases

-06 134

The most time consuming part in the whole process of a case is service of summons
upon the defendants. If summons are not served in 2-3 attempts, the same be got
served by way of publication in Daily Newspaper as per the order of DRT/Court.
5

Appointment of Receiver

DRT/Court may appoint a Receiver for protection, management and preservation of

properties.It is DRT/Court’s discretion to appoint a Receiver. If possible, the
15

concerned dealing official can get himself or any other Panel Advocate of the Bank
Appointed as Receiver.

When the Bank offers its own Officers as Receivers, Bank may not claim any amount
as remuneration. However, it may pray for payment of Out-of Pocket expenses
including TA/DA to be paid to the Officer / Receiver or any other personnel engaged to
assist the Receiver, as cost to be deductible from the sale proceeds or other
recoveries made.

Execution of Decrees/Recovery Certificates

The very purpose of filing suit/DRT application is recovery of amount due to the Bank.
Recovery is possible only when the Decrees/Recovery Certificates (RCs) are

121 | P a g e
executed promptly and diligently. Decrees/RCs can be executed by sale of securities
and other attachable assets of the judgment debtors.

Special focus be given to those Decrees/RCs which are pending for over 3 years.
Circle Offices shall take up such matters with special attention so as to ensure
recovery without further loss of time.

DELETION OF UNNECESSARY DEFENDANTS ARRAYED IN CASES FILED

AGAINST THE BANK

It is observed that in the cases which are filed against Bank, various
officers/authorities of the Bank right from CMD/ED are made as defendants. Bank is a
Body Corporate and can sue and be sued in its name in view of Sub-Section 4 of
Section 3 of Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970.
The authorities of the Bank are not required to be arrayed as defendants in a
suit/complaint/other proceedings against the Bank. In such situation, after obtaining

:57
the sanction for defending the litigation from the Competent Authority, application
under Order 1 Rule 10(2) of Code of Civil Procedure may be moved for deletion
of/striking off all unnecessary parties from the list of defendants. The application shall
24 7
give the reasoning, as above, so as to enable the court to pass necessary orders.
11
-20 66

COMMISSIONER OF PAYMENT MATTERS

Sometimes, Govt. nationalizes/acquires Companies. In such an event, in terms of the

-06 134

relevant Nationalization Act, it appoints Commissioner of Payment (COP) to adjudicate

& settle the claims of the creditors. Where COP is appointed by the Government, after
acquisition of a company, the claim on behalf of bank be lodged with the COP
immediately as per the notification published. The matter be pursued with COP for
5

early settlement of claim & necessary supporting evidence be furnished as per

requirements.

LEGAL POSITION IN CASES WHERE A COMPANY IS IN LIQUIDATION / FILING

PROOF OF CLAIM BEFORE LIQUIDATOR
15

When a Company is “wound up” under Companies Act 1956, or an order of liquidation
is passed under IBC, a Liquidator takes control of the assets of the company, realise
the assets and distribute the sale proceeds as per the law. Liquidator has the right to
represent the company under liquidation in all the proceedings. Therefore, in case a
liquidator is appointed, it is necessary to implead him in the DRT or Civil Court
proceedings. Where action under SARFAESI Act is taken, notice under Section 13(2)
be served on Liquidator.

Compromise approved by Bank and Recoveries made in Pending cases

Whenever any compromise is entered into or recovery is made, it should be informed

to the Dealing Advocate in writing and requisite steps be taken for filing of Memo of

122 | P a g e
Compromise and to obtain consent decree etc. If full & final satisfaction is reached as
per compromise terms, satisfaction should be got recorded before PO, DRT and/or
Recovery Officer, as the case may be.

Correct Statement of account, duly certified as required by Banker’s book evidence

act, be filed while filing statement of account in DRT/Civil Court to avoid delays.

Filling of certificate proceedings will not save the limitation period for filing of suit for
recovery of bank Dues before the Civil Court / DRT. Instructions of Priority Sector &
Lead Bank Division, H.O. in respect of waivement of Legal action or other aspects
regarding certificate proceedings issued from time to time be followed.

WITHDRAWAL OF CASES FILED BEFORE DRT/CIVIL COURT/ HIGH COURT IN

COMPROMISED ACCOUNTS
It is observed that once an account is adjusted, due to compromise or otherwise,
neither the dealing advocates nor the bank officials attend the Courts/DRTs. Many

:57
DRTs, in the recent past, have brought such cases to our notice. This puts the bank in
a very embarrassing position. The authorities have taken very serious view on such
communication being received from various DRTs/ Courts.
24 7
11
-20 66

In order to avoid such eventualities, it be ensured that whenever an account gets

adjusted due to compromise or otherwise, the dealing advocate be immediately
informed about the factual position and he be instructed to inform the DRT/Court
-06 134

accordingly. The matter be followed up with the advocate till the matter is closed and
proof of closure is obtained.
FILING OF CAVEAT
5

If there is an apprehension that the borrower/guarantor may approach

DRT/DRAT/High Court by filing SA/appeal against an action under SARFAESI Act,
bank can file caveat before the Tribunal/Court and a notice to this effect is to be sent
to the person concerned. The caveat may be filed at any stage i.e. while giving notice
u/s 13(2) SARFAESI Act and before initiating action u/s 13(4) SARFAESI Act and also
15

before initiating the sale process.

Caveat may be filed in cases otherwise then recovery/SARFAESI cases wherein there
is apprehension that other party may move to court/ file appeal and get exparte stay.
ATTENDANCE IN COURTS
Incumbents Incharge of the branches are advised to ensure that the summons
received from the courts are properly attended to and the dealing clerk or an officer
(who is able to answer the queries raised by the Hon’ble Judge) is deputed to the
court and the documents filed in the court are authenticated duly certified by the Bank
In view of further instructions received from Ministry of Finance, our Bank has
also instructed to all BM’s, Circle/ Zonal Sastra centers to file all the litigation
123 | P a g e
before DRT only by way of e-filing through e-DRT portal only. (Sastra 38/2021)

14. FORENSIC AUDIT POLICY- IMPORTANT GUIDELINES

(Sastra Div Cir No 43/2018, 25/2020 & FRMD CIR 35/2023)
The framework on Forensic Audit is circulated by the Fraud Risk Management
Division (FRMD) vide FRMD Circular no. 35/2023. The said policy contains the
scope and process of conducting Forensic Audit in the account
Applicability of Forensic Audit Policy:
Investigation through Forensic Audit would be applicable in following accounts:

:57
i. Accounts classified in SMA 02 or NPA category with exposure of ₹50.00 crore
or more irrespective of the lending arrangement (whether solo banking,
24 7
multiple banking or consortium) on case to case basis. Accounts which are in
11
SMA 02 category for temporary period due to liquidity crunch or otherwise
-20 66

should not be considered for forensic audit if other parameters have no

negative features.
-06 134

ii. Red flagged loan (RFA) accounts with exposure of ₹50.00 crore or more (solo/
consortium) on case to case basis.
iii. Other exceptional cases where Bank feels the need of forensic audit.
5

Accounts which are subjected to forensic audit for examination of fraud angle shall
be placed before the respective committee. Based on available facts and information,
the committee shall take a view on RFA classification.
15

Procedure to seek permission to conduct Forensic Audit

 While seeking permission to conduct forensic audit in “Other than Red Flagged
Accounts (RFAs)” with exposures of Rs.50 crore & above, Zonal Office
Committee (not any official in the individual capacity) will send
recommendations to Head Office Recovery Division, to be placed in the Head
Office Committee for consideration.
 Once Head Office permits to conduct the forensic audit in an account, final
allocation of task to a particular forensic auditor, will be done by the respective
ZO.
Eligible cases where Forensic Audit is not being conducted

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For RFAs with exposure of Rs. 50 crore & above, if Zonal Office decides not to
conduct forensic audit, a report be sent along-with the justifications to:
(i) Head Office: SASTRA Division for NPA accounts (as per Annexure-3 of this
circular) and
(ii) Head Office: SASTRA(CRMD) for non-NPA accounts

With the advent of the Insolvency & Bankruptcy Code, 2016, a large number of Big
Borrowal NPA Accounts have been referred to NCLT for resolution. When matter is
taken up with field offices, for their views and recommendations on Fraud Angle w.r.t
NPA Accounts of Rs 50.00 crores above, the reply received for majority of NPA
accounts, (which have either been referred to or admitted with NCLT) is that
Resolution Professional (RP) has to conduct Forensic Audit in the account, as part of
the Corporate Insolvency Resolution Process (CIRP), hence, any view on Fraud angle
will be taken by COC, subsequent to the completion of Forensic Audit.

:57
The matter was taken up with Law Division, HO who have informed that the audit
which the RP has to mandatorily carry out as part of the CIRP process is a
Transaction Audit and not Forensic Audit. The contours of the Transaction Audit
24 7
are defined as under:
11
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The Transactions Audit under IBC, 2016:

The IBC, 2016 in its pursuit to provide provisions for fair & transparent corporate
5

resolution proceeding (CIRP), has empowered the Liquidator or the Resolution

Professional to examine the transactions of the Corporate Debtors to the extent of
time limit of 2 years where some related party is found involved in the transaction and
that of 1 year where other person other than a related party is involved. If the liquidator
or the Resolution Professional is of the opinion that the Corporate Debtor has at a
15

given time, has made any transaction which falls under the following categories, they
may make an application to the respective NCLT (Adjudicating Authority) to pass the
appropriate order including but not limited to, declaring such transaction void and
reverse the effect of such transaction:
 Preferential Transactions (Sec. 43)
 Undervalued Transactions (Sec. 45)
 Transactions defrauding creditors (Sec. 49)
 Extortionate Credit Transactions (Sec. 50); and
 Fraudulent or wrongful trading (Sec.66)

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It is further to add that audit required under the said provisions, is specific and
restrictive to the review of related transactions and not comprehensive as being
carried out under Forensic Audit.

PANEL OF FORENSIC AUDITORS

IBA empanels and publishes list of Forensic Auditors after due consideration and
deliberation on all the factors of the applicants like forensic audit experience, staff
expertise, tools available, assignments on forensic audits completed, existing
empanelment with banks / government agencies, geographical reach etc. The list of
IBA empanelled Forensic Auditors, circulated by SASTRA Division as and when

:57
issued by IBA, shall prevail for our Bank. The services of the auditors empanelled in
IBA list is to be utilized for allotment of accounts for conduct of forensic audit. The
other terms and conditions for allocation of task shall be as per Bank’s guidelines
24 7
11
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Latest list of IBA empanelled Forensic Auditors under both categories i.e Exposure of
Rs 50 crores & below and Exposure of above Rs 50.00 crores has been circulated
vide SASTRA Division Circular issued from time to time.
-06 134

The scope of Forensic Audit

Capacity to pay: Examine as to if the borrower has defaulted in meeting its payment
/repayment obligations to the bank even when it has the capacity to honour the same.
5

Money trail & End use of funds financed by the Bank/lenders.

Diversion of funds: Diversion of funds on the part of borrower would be construed in
any of the undernoted occurrences:
15

 Utilization of short term working capital funds for long term purposes not in
conformity with the terms of sanction
 Deploying borrowed funds for purposes/activities or creation of assets other
than those for which the loan was sanctioned.
 Transferring borrowed funds to the subsidiaries/group companies or other
Corporate by whatever modalities.
 Routing of funds through any bank other than the lender bank or members of
consortium without prior permission of the bank/lenders.
 Investment in other companies by way of acquiring equities/debt instruments
without approval of lenders.
 Shortfall in deployment of funds vis-à-vis the amounts disbursed/drawn and the
difference not being accounted for.

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Siphoning of funds: Siphoning of funds on the part of borrower would be construed
to occur if any funds borrowed from bank are utilized for purposes un-related to the
operations in the account of the borrower and to the detriment of the financial health of
the entity and/or the lender.
Capital Structure: Tracing the source of contribution by promoters by analysing
equity/debt infused by promoters/partners.
Abnormal trade transactions: Commenting on transactions of substantial amount,
which seem not to be normal trade transactions at arm’s length.
Sales: Verifying revenue from operations including checking sale order, invoices and
controls in billing process. The focus should be on inflated turnover / fictitious sales
and / or Sales on Return (SOR) basis where profit has been booked and sales
returned in the subsequent accounting period leading to writing off of stocks / debtors
and reversal of booked profits. The sustainability of sales in future years should be co-
related with Technical and Viability (TEV) study

:57
Escrow / Trust & retention Account (TRA): Commenting on adherence to escrow /
Trust & Retention Account (TRA) arrangements made with various banks. Details of
all transactions with banks outside the consortium / other than nominated account.
24 7
11
Concentrating transactions : Sole customer, sole supplier, major transactions with
-20 66

related parties / group companies, analysis of relationship in two-way deals with the
same party or indirect payments made by customers of the borrower to the vendors of
-06 134

borrower.
*************
15 5

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 15. NPA RESOLUTION THROUGH MISSION GANDHIGIRI
(SASTRA DIVISION CIRCULAR NO. 27/2017)

Importance of Gandhigiri
Gandhigiri is no longer a neologism in India, to express tenets of Gandhian
philosophy. It is a universal truth that Gandhigiri, which is a silent and non-
violent expression of right and lawful thinking, has proved to be an effective tool
to bring wrong doers on right path. The cardinal principle will be to “name &
shame” the defaulting borrowers without saying a word but through more
visibility.

Applicability of the scheme

The concept will be implemented on Pan India basis, covering all districts,
depending upon location of the borrower’s

:57
office/shop/residence/factory/business activity location etc.
Nature of Work
 The employees selected to implement Mission Gandhigiri will be provided with
24 7
11
bags and a Jeep/Car etc. by the Circle Office, carrying banners with Bank’s
-20 66

name & Logo (on maroon background with yellow paint) in vogue . On banner
following words are to be painted:
“PNB Recovery Team- Bank on wheels to recover bad loans”
-06 134

 All the employees in the recovery team, will wear sleeveless jackets in maroon
color with PNB Logo in yellow color and slogan “PNB Recovery Team”
which will be supplied directly by the Corporate Communication Division to the
5

Circles. Further, each employee will be carrying placards with following slogans
which may be translated into vernacular language as per the requirement.
“Repay PNB loan to secure a peaceful sleep at night”
“PNB KaKarzChukayen, Samaj Mein IzzatPayen”
15

 The employees will sit/stand with placards silently in front of the

office/shop/factory/business location of the borrower. Duration and periodicity of
the silent dhrana will be decided by the Circle Head, depending upon the
requirement and results achieved.
 Circle Heads to ensure to form Recovery Teams comprising of minimum 4
employees in each team. For formation of teams, the Circle Heads may also
utilize services of their Agricultural Officers, if required. The Team may be
headed by an Officer, preferably, a Chief Manager.

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 Selection criteria for employees under Mission Gandhigiri-
 Employees, irrespective of cadre, will be identified by the Circle Head, based
on the feedback from the branches under their jurisdiction, satisfying preferably
following criteria:
o Employees who have more inclination for field job and are willing to be
mobile
o Aptitude for recovery in NPA accounts
o Knowledge of the local area/local language

Selection criteria for NPA accounts

 Although Circle Heads may select any NPA account but it is desirable that
those accounts are selected where other recovery methods e.g SARFAESI
notices, personal contacts, OTS attempts, sale of secured assets etc. have
failed to produce desired results. So to start the process, preference be given to
the Doubtful accounts having sufficient securities and/or where business

:57
activity is still continuing.

Monitoring of the scheme

24 7

11
Circle Heads to depute selected employees to the different locations and
-20 66

assess the outcome which will be purely on the basis of recoveries effected in
the NPA accounts through Gandhigiri. Circle Heads to constantly oversee the
“Mission Gandhigiri” and submit progress on monthly basis to their Zonal
-06 134

offices. Further, Zonal Office will submit Circle-wise progress to HO: Recovery
Division on quarterly basis on the following format starting from June, 2017
onwards:
5

Sno. Circle No. of No. of Partial NPA

Officers Borrowers Recoveries Accounts
Used for covered made through adjusted/
Mission Mission upgraded
Gandhigiri Gandhigiri
15

No Amount No Amount

Zonal Managers/Circle Heads to create necessary hype through media (pamphlets,

posters, jingles, news items, TV channels etc.) so that the borrowers are under
pressure to repay.

*******

129 | P a g e
16.Model Scheme and Standard Operating Procedure(SOP) for Making
Request for Issuance of Look Out Circular (LOC)
(Sastra Division Cir no 06/2023)
The purpose of the policy is to list down the Standard Operating Procedure to be
followed by the Bank for making request for issuance of Look Out circular against any
person. Ministry of Home Affairs (MHA) vide OM No 25016/10/2017-Imm dated
12.10.2018, has empowered Heads of Public Sector Banks to issue requests for
opening Look out Circulars (LOCs). Hence, Bank can make use of this power to stop
defaulting promoters of large value NPA accounts from travelling OR moving abroad
to escape any legal or punitive action initiated by Banks/enforcement agencies.

Based on the guidelines issued by Ministry of Finance vide office memorandum no.
F.No6/3/2018-B.O-II, dated 04.10.2018, Office Memorandum issued by Ministry of
Home Affairs (Foreigners Division) No 25016/31/2010 dated 27.10.2010 and Broad

:57
Parameters defined by IBA, the procedural guidelines/SOP to be followed for issuing
request for opening LOCs, is as under :-
Definitions
24 7
11
The definitions used hereinafter in this circular are as follows:
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The Person means an individual person in relation to whom a request for LOC isbeing
made.
-06 134

The Entity means any entity, of which the Person is a proprietor/partner/director/

managing director/ chairmanor where the Person is in a position to control such entity
by ownership or otherwise.
5

Indicative Basis and Trigger for making of request for issuance ofLOC:
Request for issuance of LOC has to be facts based and is to be made carefully
andjudiciously.
15

Such request has to be based on objective parameters supported byevidence.

Request for issuance of LOC in relation to the Person may be made by a Bank subject
to all of the (A), (B)and (C)
(A) The Person or the Entity is a borrower or guarantor of ourBank.
(B) There is an apprehension that the Person is likely to flee out of India based on any
reliable information, suchasone or more of the following-
 Detective/ intelligence report/ forensic auditreport;
 Personal behaviour of thePerson;
 Conduct of account with any bank of the Person or theEntity;

130 | P a g e
  There being a criminal case registered with Police, CBI, ED or any other
investigation agency against the Person or against theEntity;
 The Person or the Entity in default for any amount to anybank;
 In terms of guidelines issued by the Reserve Bank ofIndia,
i. Fraud is (or is in the process of being) reported in any of the transactions
of or dealings with any bank of the Person or the Entity.
ii. The Person or the Entity is (or is in the process of being) declared as
Wilful Defaulter: or (As defined by SASTRA Division Policy Circular on
Wilful Defaulter and Action There Against)
iii. The Person or the Entity is (or is in the process of being) identified as
Non- Cooperative Borrower. (As defined by L & A Policy Circular on
Non-Cooperative Borrower)
(The list above is illustrative and not exhaustive)
(C) The Person and all the Entities taken together have combined loan
outstanding (fund based and non- fund based) of not less than Rs.50 crores

:57
from the banking system.
24 7
11
Responsibility Sharing for Request for Issuance ofLOC
-20 66

Responsibility for request for issuance of LOC in respect of the Person will be
asfollows:
-06 134

In Consortium accounts:
On the PSB, when such PSB is the leader of the consortium; and
On the PSB, though not a leader, holding the biggest share or exposure amongst the
5

PSB members of such consortium.

In Multiple Banking Accounts:
The PSB with largest exposure among PSB members of multiple lending
arrangement.
15

In Sole Banking Accounts:

The PSB which has exposure on the Person or the Entity
Any PSB not being responsible under the above mentioned points may also
make a request for issuance of LOC subject to meeting the other parameters
under thiscircular.

Procedure to Be Followed for Request of Issuance ofLOC

Detection of Trigger Points:
The trigger points may be detected at any level in the Bank i.e. Branch, Circle Office,
Zonal office and Head Office.
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As the authority for issuing request for opening an LOC is MD & CEO, SASTRA
Division, HO will initiate the process based on the recommendations of Zonal Sastra
Committee.Where the account is maintained at Circle Sastra Centre than proposal
shall be forwarded by Circle Sastra to Zonal Sastra for onward submission to HO.The
Zonal Sastra Centre/Sastra Head to also ensure that minimum 3 out of 5 of the
following details are provided w.r.t. the person against whom Look Out Circular is to
beissued:-
A. Name
B. Parentage
C. Exact Date ofBirth
D. Valid Passport Details
E. ClearPhotograph

Once recommendations are received at SASTRA Division, HO, respective Zonal office
desk at HO will place the proposal to Committee for Preliminary Examination of

:57
Look Out Circular at HO comprising of thefollowing:
a) CGM- SASTRA (Recovery).
24 7
11
b) CGM (Credit) OR CGM- CRMD. At least1
-20 66

c) GM-SASTRA (Recovery). Domain

d) DGM-SASTRA (Recovery). Domain
-06 134

e) DGM- Law
In the absence of CGM Senior most GM will be the member of the committee.
5

Once the proposal is recommended by the above committee, the same will be placed
to MD & CEO through domain ExecutiveDirector.
Upon receiving the consent of MD & CEO, the Performa for Issuance of Look Out
Circular (As given in MHA OM No. 25016/31/2010-Imm dated 27.10.2010), along with
15

the forwarding letter duly signed by the Nodal officer of the Bank for issuing LOC will
be delivered to Deputy Director, Bureau of Immigration (BOI), East Block- VIII, R.K.
Puram, New Delhi-110066 (Telefax: 011-26192883, email: [email protected])

Bank at its discretion may appoint maximum Two Nodal officers. Names of both
officers will be approved by MD & CEO. The order of priority for the two nodal officers
will be as under:

Based on designation of the nominated nodal officers, the senior official will be the
Main Nodal officer and in his absence, the 2nd nodal officer will perform the said
duties. Both Nodal officers will be responsible in case of any discrepancy observed

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In case of consortium accounts, if an LOC is issued based on the request made by our
Bank, respective Zonal Sastra Centre to subsequently send necessary communication
to all lenders in this regard.

Reporting andMonitoring
As per DFS instructions communicated vide e-mail dated 01.03.2019, data on request
for opening ofLOCs made by the Bank is to be submitted on fortnightly basis
[email protected]
As per Foreigners Division (Immigration Section), Ministry of Home Affairs,
Government of India OM NO. 25016/10/2017-Imm (Pt.) dated 22.02.2021–
“6 (J) The LOC opened shall remain in force until and unless a deletion request is
received by BOI from the Originator itself. No LOC shall be deleted automatically.

:57
Originating Agency must keep reviewing the LOCs opened at its behest on quarterly
and annual basis and submit the proposals to delete the LOC, if any, immediately after
such a review. The BOI should contact the LOC Originators through normal channels
24 7
as well as through the online portal. In all cases where the person against whom LOC
11
has been opened is no longer wanted by the Originating Agency or by Competent
-20 66

Court, the LOC deletion request must be conveyed to BOI immediately so that liberty
of the individual is not jeopardized”.
-06 134

Hence, in view of the above guidelines, HO: SASTRA Division will place a note
containing details of all running LOCs to the Committee for Preliminary Examination of
Look Out Circular on quarterly basis for review and after such review, if a call has
been taken for deletion of any LOC, the same shall be conveyed to BOI through Nodal
5

Officer after taking approval of MD&CEO through domain Executive Director. For such
periodic review, views of respective Zonal SASTRA Committee will be sought.
Further, in case of modification/ deletion is required in the issued LOC based on the
orders given by Hon’ble Court, then the proposal for modification/ deletion of LOC
15

shall be placed to MD&CEO through domain Executive Director by HO: SASTRA

Division. The recommendations of Committee for Preliminary Examination of Look out
Circular shall not be required in such cases.

DFS vide their letter under reference also informed that MHA has now emphasized
that the documents related to LOCs are classified in nature and such classified
documents are not to be disclosed to any individuals. Therefore, in order to preserve
the sancity/purpose of such classified documents, MHA has requested that directions
be issued to banks to not share LOCs issued by Bureau of Immigration (BOI) with
anyone. MHA has further advised that when asked by Courts, banks may furnish only
the LOC request that they had sent to BOI. The same may not be shared with anyone

133 | P a g e
except the Court. In addition to sharing with Court (when asked by the Court), clients
may only be informed through a separate letter that the Bank has requested for LOC
issuance against the client.
******

17. INVOCATION OF PLEDGE OF SHARES / SALE OF PLEDGED

SHARES IN NPA ACCOUNTS – NEED FOR TAKING URGENT STEPS
(SASTRA Division Circular No.09/2024)
In a number of loan accounts, the promoters / guarantors / other persons, pledge
shares of substantial value held by them either in the borrower company or in any
other company, in favour of Bank as collateral security. Pledged shares being easily
saleable liquid security should be enforced at first instance after classification of
account as NPA. However, it is observed that pledge of shares is not invoked
immediately after classification of account as NPA. Such non-invocation of pledge in
time, not only results in uncalled for delays in recovery of bank’s dues, but also results

:57
in loss to Bank as value of pledged shares often falls drastically with the passage of
time on account of various reasons such as adverse changes in the net worth position
24 7
of the companies / loss of reputation consequent to NPA tag etc.
11
-20 66

Pledged shares are either in physical form or in dematerialized form. The detailed
procedure for invocation of pledge of shares in both the forms has been provided
under Annexure 8 to Loans & Advances Circular No. 66/2014 dated 16.06.2014.
-06 134

The applicable instructions contained in above circular, as modified from time to time,
be meticulously followed.
As per Loans & Advances Circular No. 122/2018 dated 05.12.2018 the facility of
5

advance against security of shares in physical form was discontinued and all the
related guidelines stand withdrawn. It was further advised that wherever any advance
has been allowed against securities of shares in physical form, immediate steps
should be taken to get them dematerialized. In view of the said guidelines, all field
offices are advised to ensure that any pledged shares in NPA accounts, which were in
15

physical form have been got dematerialized accordingly.

Further, in case the pledged shares are of a listed company, the same are to be
sold through concerned stock exchange. In such cases, assistance of Treasury
Division, Mumbai, may be taken. In case the pledged shares are of unlisted
company/ies, Bank may proceed for sale of pledged shares by inviting
quotations from public through newspapers / Bank’s web site etc.
A draft format of the Notice to be issued to the pledgers (Annexure–XIII of this
circular) as well as the notice to be published in the newspaper/s inviting quotations
for sale of shares (Annexure–XIV of this circular), as aforesaid, are attached
herewith. These draft notices be used after confirming the factual position vis-a-vis the

134 | P a g e
shares pledged. The notices may be suitably modified at yours keeping in view the
facts of the matter
In all the cases where Bank is having security by way of pledge of shares, steps for
invocation of pledge / sale of pledged shares need to be taken immediately upon
classification of account as NPA to expedite recovery of Bank’s dues. Keeping in view
the above, all field functionaries are advised as under:-
Keeping in view the above, all field functionaries are advised as under:-
I. In case our Bank is sole lender, the steps for invocation of pledge / sale of
pledged shares be initiated immediately and in all eventuality, not later than a
week from the classification of the account as NPA.
II. In case of consortium accounts where our Bank is leader, the consortium
meeting be immediately called after slipping of account to NPA to initiate steps
to invoke pledge of shares / sale ofpledged shares.

:57
III. In case of consortium accounts where PNB is not the lead bank, the lead bank
be requested to call consortium meeting immediately upon classification of
such account as NPA for initiating steps to invoke pledge of shares / sale
24 7
ofpledged shares. 11
-20 66

The steps initiated for invocation of pledge / sale of pledged shares be taken to
logical end withouttime gaps.
-06 134

*******
15 5

135 | P a g e
 18. Policy on Collection of Dues & Repossession of Security
(Sastra Division Circular no 09/2024)
Introduction
The debt collection policy of the Bank is built around dignity and respect to
customers. Bank will not follow policies that are unduly coercive in collection of dues.
The policy is built on courtesy, fair treatment and persuasion. The Bank believes in
following fair practices with regard to collection of dues and repossession of security
and thereby fostering customer confidence and long-term relationship.
The repayment schedule for any loan sanctioned by the Bank will be fixed taking into
account the paying capacity and cash flow pattern. The Bank will explain to you
upfront the method of calculation of interest and how the Equated Monthly
Installments (EMI) or payments through any other mode of repayment will be
appropriated against interest and principal due from you. The Bank would expect you
to adhere to the repayment schedule agreed to and approach the Bank for assistance

:57
and guidance in case of genuine difficulty in meeting repayment obligations.
Bank’s security repossession policy aims at recovery of dues in the event of default
and is not aimed at whimsical deprivation of the property. The security repossession
24 7
11
procedure would be set in motion only after all attempts by the Bank to discuss with
-20 66

you the ways and means to overcome the financial hurdles have failed. The policy
recognizes fairness and transparency in repossession, valuation and realization of
-06 134

security. All the practices adopted by the Bank for follow up and recovery of dues and
repossession of security will be inconsonance with the law.
General Guidelines
5

All the members of the staff or any person authorized to represent our Bank in
collection or/and security repossession would follow the guidelines set out below:
i. You would be contacted ordinarily at the place of your choice and in the absence of
any specified place, at the place of your residence and if unavailable at your
residence, at the place of business/occupation.
15

ii. Identity and authority of persons authorized to represent Bank for follow up and
recovery of dues would be made known to you at the first instance. The Bank staff or
any persons authorized to represent the Bank in collection of dues or / and security
repossession will identify himself / herself and display the authority letter issued by the
Bank upon request.
iii. The Bank would respect your privacy.
iv. The Bank is committed to ensure that all written and verbal communication with
you will be in simple business language and Bank will adopt civil manners for
interaction with borrowers.

136 | P a g e
v. Normally the Bank’s representatives will contact you between 0700 hrs and 1900
hrs, unless the special circumstance of your business or occupation requires the Bank
to contact at a different time. vi. Your request to avoid calls at a particular time or at a
particular place would be honored as far as possible.
vii. The Bank will document the efforts made for the recovery of dues and the copies
of communication sent to you, if any, will be kept on record.
viii. All assistance will be given to resolve disputes or differences regarding dues in a
mutually acceptable and in an orderly manner. ix. Inappropriate occasions such as
bereavement in the family or such other calamitous occasions will be avoided for
making calls / visits to collect dues.
Giving notice to the borrowers
While written communications, telephonic reminders or visits by the Bank’s
representatives to your place or residence will be used as loan follow up measures,
the Bank will not initiate any legal or other recovery measures including repossession

:57
of the security without giving due notice in writing. The notice shall be given by
Registered Post with Acknowledgement Due. Any genuine difficulties
expressed/disputes raised by you will be considered. However, where the Bank has
24 7
11
reasons to believe that you are avoiding acknowledgement, it will follow all such
-20 66

procedures as required under law for recovery / repossession of security

Repossession of security
-06 134

Repossession of security is aimed at recovery of dues and not to deprive you of the
property. The recovery process through repossession of security will involve
repossession, valuation of security and realization of security through appropriate
5

means. All these would be carried out in a fair and transparent manner. Repossession
will be done only after issuing the notice as detailed above. Due process of law will be
followed while taking repossession of the property. The Bank will take all reasonable
care for ensuring the safety and security of the property after taking custody, in the
ordinary course of the business and necessary cost will be charged to you.
15

Valuation and sale of property

Valuation and sale of property repossessed by the Bank will be carried out as per law
and in a fair and transparent manner. The Bank will have right to recover from the
borrower the balance due if any, after sale of property. Excess amount if any, obtained
on sale of property will be returned to you after meeting all the related expenses,
provided the Bank is not having any other claims against you.
In the case of hypothecated assets after taking possession if no payment is
forthcoming, a Sale Notice of 7 days’ time to respond will be sent to you. Thereafter
the Bank will arrange for the sale of the hypothecated assets in such a manner as
deemed fit by the Bank. In respect of cases under SARFAESI Act as per the
provisions of the Act, 30 days’ notice of sale will be sent. When public auction or by

137 | P a g e
tender is envisaged, the same will be published in two leading newspapers, out of
which one is in local vernacular paper.
Opportunity for the borrower to take back the security
As indicated earlier in the policy document, the Bank will resort to repossession of
security only for purpose of realization of its dues as the last resort and not with
intention of depriving you of the property. Accordingly the Bank will be willing to
consider handing over possession of property to you any time after repossession and
before sale transaction of the property takes place, provided the Bank dues are
cleared in full. If satisfied with the genuineness of your inability to pay the loan
installments as per the schedule which resulted in the repossession of security, the
Bank may consider handing over the property after receiving the installments in
arrears. However, this would be subject to the Bank being convinced of the
arrangement made by you to ensure timely repayment of remaining installments in
future. If the amounts are repaid, either as stipulated by the Bank or dues settled as
agreed to by the Bank, possession of seized assets will be handed back to you/person

:57
concerned within 7 days after date of permission from competent authority of the Bank
or court/DRT concerned if recovery proceedings are filed and pending before such
forums.
24 7
Engagement of Recovery Agents
11
-20 66

The Bank may utilize the services of Recovery Agents for collection of dues and
repossession of securities. Recovery Agents will be appointed as per regulatory
-06 134

guidelines issued in this regard. In this respect:

(a) The name and address of all the Recovery Agents on the Bank’s approved panel
will be placed on the Bank’s website for information of all the concerned.
5

(b) Recovery Agents from the approved panel only will be engaged by the Bank.
(c) In case Bank engages service of such recovery/enforcement/seizure agent for any
recovery case, the identity of the agent will be disclosed to you.
15

(d) The Recovery Agents engaged by the Bank will be required to follow a code of
conduct covering their dealings with you.

+++++++

138 | P a g e
19. PNB M-Touch–Mobile App & Web Application for monitoring of
NPA Accounts(Sastra Division Circular No. 28/2020)
A Digital Web Application & Mobile App (M-Touch) has been developed to capture the
records of all field visits made by the Branch Officials for recovery in NPA accounts.

The Mobile App & Web Application is linked to our existing monitoring mechanism to
access the NPA data with functionalities to upload the visit details on real time basis
and to download the reports by controlling offices.

Objective of the Application is to strengthen the system of monitoring and maintaining

proper records of field visits of Officials to the Borrower / Guarantor’s office / residence
for recovery in NPA accounts. It will help the Branch Officials in recovery and ZO / CO
Officials for real time monitoring of field visits made by BO Officials.

Benefit of this application for the Bank

 Details of NPA accounts can be accessed through Mobile App anytime /

:57
anywhere.
 User will have calling facility to the mobile no.(s) listed in A/c details
 Search Record Functionality via Name, Cust id & account number for
24 7
submission of visit report.
11
 Creation of trail of visits.
-20 66

 Real-time monitoring of visit details for NPA accounts.

 System generated MIS mentioning visits done/to be done by SAMV officials.
-06 134

Types of MIS are as under:-

 Account Wise Details
 Account Wise Details By NPA Date
 Account Wise Details By Outstanding Amount
5

 Date Wise Details of Visit

 Promise Date Wise Details of Visit

Account Wise Details of No Visit IN XX Days


15

Account Wise Details of No Visit

 Date Wise Action Report
 CUSTOMER - Account Details By Pin Code
 CUSTOMER - Details of Visit History by Customer Id
 CUSTOMER - Details of Visit History by Account Number

For ready reference user Manual for M-Touch Mobile & Web Application is given in
Sastra Division Cir no 28/2020.
+++++++

139 | P a g e
 20. SASTRA Vertical- Vertical for Recovery & Resolution of NPA
Accounts.

(MPD CIRCULAR NO. 13/2020,4/2022& Sastra Division Cir No. 10/2022.12/2024)

The new SASTRA Vertical structure focuses on recovery of NPA through branches
and 2 types of structures equipped with skilled staff having separate verticals for
Recovery and follow up in NPA Accounts with Balance outstanding above Rs 10.00
Lakh by Circle Sastra Centre and NPA accounts with Balance outstanding above Rs
10.00 Crore by Zonal Sastra Centre.
The responsibility of upgradation, recovery & resolution in NPA accounts shall be as
under:
For NPA Accounts uptoRs 10.00 Lakh (Borrower-wise), all responsibilities rest with

:57
the Branches.
There may be some accounts below Rs 10 lakh, where Immovable Property is
mortgaged and SARFAESI actions are required to be taken and Authorized Officer
24 7
11
(Scale IV) is not available in respective branches, Circle Head should designate Scale
-20 66

IV officers (from Circle Office or nearby Scale IV Branch) for all kind of recovery
actions wherever the Authorized Officer (Scale IV) is required as per law.
-06 134

Circle SASTRA Centre will be the reporting and monitoring authority for the
same.
Branches will be responsible for updation of information and day to day CBS
5

operations related to the NPA accounts, including keeping limitation/ insurance alive
for NPA account having balance outstanding up to Rs.10 Lakh.
Any restructuring in the NPA account having balance outstanding up to Rs. 10 Lakh
will be assessed/ carried out by Branch/ Circle Office /PLP within delegated powers as
per bank’s guidelines.
15

For NPA Accounts above Rs 10.00 Lakh, all responsibilities including maintenance
and updation of information of NPA accounts in CBS rest with the Circle SASTRA
Centre.
For accounts above Rs 10.00 Crore, all responsibilities including maintenance and
updation of information of NPA accounts in CBS rest with Zonal SASTRA Centres
wherever they are located, otherwise these accounts are to be dealt by the Circle
SASTRA Centre, at other locations.
The NPA account in CBS will continue to remain at their base branches. All the routine
operations will continue at the base branch only.

140 | P a g e
However, Circle SASTRA will be empowered to update certain fields in CBS in NPA
accounts at the existing Sol-IDs. The officials working in the SASTRA Centres will be
provided the CBS functionality for smooth functioning of their day-to-day operations.
Zonal SASTRA Centres
Zonal SASTRA centres are the controlling as well as functioning tier for recovery &
resolution. The centre shall be the reporting tier for Circle SASTRA Centres and will
function in parallel to Zonal Offices, by directly reporting to Head Office as an
independent office for all purposes.
All NPA accounts with Balance outstanding above Rs 10.00 Crore and NCLT
cases will be directly handled by Zonal SASTRA Centres, without any
involvement of Circle SASTRA centres.
All the NPA accounts in the Circle above Rs.10 Lakh shall be handled by Circle
SASTRA Centre directly. Each Circle SASTRA centre shall report to Zonal SASTRA
centre and will function parallel to Circle Office.

:57
Files of all the NPA accounts having exposure of above Rs.10.00 Lakh shall be
transferred to the Circle SASTRA Centre, which are presently in General Branches/
24 7
MCBs/ LCBs/ ARMBs/ SAMBs/ ELCBs etc. 11
-20 66

However, the balance outstanding of the account shall remain in the concerned
branch SOL for true depiction of performance of Branch.
-06 134

Objective of SASTRA Centres

Focused Recovery, Resolution and Management of high value NPA accounts with
Balance outstanding above Rs. 10.00 Lakh.
5

Segregation of roles & responsibilities of officers on the basis of skills and expertise as
per EASE guidelines.
SASTRA verticals will result in reduced TAT, improved decision making and
transparency.
15

Development of expertise in Resolution and Recovery of High value NPA accounts.

Rationalization of decision making layer for proposals related to NPA recovery/
resolution.
Transfer of Files from Credit Vertical/ Branches to SASTRA Vertical & vice-versa
Any account after slippage to NPA to be transferred to the respective SASTRA Centre
after 30 Days from the date of NPA.
For accounts uptoRs. 10 Lakh full responsibility of recovery in NPA accounts
(Borrower wise) hasnow been assigned to the branches. (MPD 4/2022)

141 | P a g e
However, if the Business Branch Head/ Vertical Head expects the account to be
upgraded in near time or wants to retain the account for a longer tenure due to some
operational reason then permission from the competent authority will be obtained as
under:

S No Office Competent authority

1 General Banking Branch Circle Head

2 MCC Zonal Manager

3 ELCB/LCB GM SASTRA - HO

Updation of information and day to day CBS operations related to the NPA accounts,
including keeping limitation/ insurance alive, are to be done by the Centres for account
having balance o/s above Rs. 10 Lakh (Borrower-wise).
SOL-ID of the NPA Accounts will not change, however the officials working in the

:57
SASTRA Centres will be facilitated with the CBS functionality for proper maintenance
of those NPA Accounts.
Recovery leading to upgradation:
24 7
11
-20 66

All such accounts which have been upgraded by way of recovery of financial
dues/resolution including restructuring, etc., these accounts shall be shifted to
respective linked GBB/CBB/MCC/LCB/ELCB, etc., within 15 days from the date of
-06 134

upgradation, so that timely renewal/review in the account shall be done as per extant
Bank guidelines.

In those accounts where financial dues have been recovered however A/c is not
5

upgraded due to non-renewal/review and the file is lying with CS/ZS, such files shall
also be transferred to respective linked GBB/CBB/MCC/LCB/ELCB, etc., immediately
but not later than 7 days. Further, Renewal/Review in such accounts shall be done by
linked GBB/CBB/MCC/LCB/ELCB, etc., in terms of loaning power vested upon them
as per extant bank guidelines.
15

Recovery in account, though account is not getting upgraded:

All such accounts where outstanding balance gets reduced during normal course of
recovery and based on outstanding balance if the A/c falls under the purview of lower
office (i.e., CS/GBB for Zonal Sastra accounts and GBB for Circle Sastra accounts),
these accounts shall continue to be handled by the existing CS/ZS irrespective of
change in exposure (i.e., Increase/Decrease) till the logical conclusion, i.e., A/c shall
be closed. Thus, despite any change in outstanding/exposure, borrower files shall not
be transferred to lower office.

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Structure of SASTRA Centre is as under:
HEAD OFFICE (SASTRA DIVISION)
ZONAL OFFICE ----------- ZONAL SASTRA
CIRCLE OFFICE ----------- CIRCLE SASTRA
BRANCH ----------- FIELD RECOVERY WARRIORS
Zonal SASTRA Head (DGM/AGM)
1. Dy. Zonal SASTRA Head (R R & NCLT)
a) Recovery Officers
b) Resolution & NCLT Officers
2. Dy. Zonal SASTRA Head (Monitoring)
a) Recovery Monitors

:57
b) MIS & Establishment
3 Law Officer
24 7
11
-20 66

Circle SASTRA Head (AGM/CM)

1. Dy. Circle SASTRA Head (Recovery)
-06 134

a) Recovery Officers
b) Resolution & NCLT Officers
5

2. Field Recovery Warrior Incharge

a) Field Recovery Warriors
b) MIS & Establishment
3. Law Officer
15

Indicative Roles & Responsibilities in Recovery

1) Branch Offices:
 Report to Circle Head
 Branch Head to be responsible for overall recovery in NPA accounts uptoRs.
10.00 Lakh (Borrower-wise)
 Branch Head is responsible for Updation of information and day to day CBS
operations related to the NPA accounts, including keeping limitation/ insurance
alive for NPA account having balance outstanding up to Rs. 10 Lakh (Borrower-
wise).

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  Branch shall also issue a recall notice, legal notice, letter to guarantors for
invocation of guarantee, notice u/s13 (2) of SARFAESI act (wherever
applicable) in all eligible accounts uptoRs. 10 Lakh as well as above Rs.10.00
Lacs and if Authorized Officer (Scale IV) is not available in respective branches,
Circle Head should designate Scale IV officers as authorized officer for cluster
of branches.
 Branches shall also report the account for CGTMSE coverage, after marking
the account NPA and before transferring the account to SASTRA Vertical.
However, the claim shall be lodged by Circle/ Zonal SASTRA Vertical.

While transferring the file SOL ID of the account will not be changed, however
branch has to ensure feeding of MIS detail code in the account.
Circle SASTRA Centre
a) Field recovery Warrior (FRW)-

:57
 Field Recovery Warriors (FRW) shall act as nodal recovery officers for all NPA
accounts of the allocated Branches. He/ She shall assist Branches/ Circle
SASTRA/ Zonal SASTRA for initiating recovery actions (SARFAESI Action, Suit
24 7
11
filing at DRT/Civil Court etc.), setting up of recovery & OTS camps, Attending
-20 66

Lok Adalat etc., coordinating with recovery agency/BC agents and regular
follow up for NPA accounts. He/she shall be responsible for providing support
-06 134

for recovery for all NPA accounts of the allocated Branches irrespective of
amount. FRW shall continue to report to Circle SASTRA as per existing
arrangement. The branches to FRW will be assigned by Circle SASTRA Head
as per concentration of NPA at respective branches.
5

 Further, recovery in accounts above Rs.10 lakh requires various actions (such
as possession of property) where SASTRA Centre may require support from
respective Branch as well as Circle Office. To ensure that all support required
for recovery shall available to SASTRA Centre, Circle Head shall be
15

responsible for providing all the manpower and logistics support to SASTRA
Centre for loan accounts handled by them. On the same lines Lok Adalats,
Recovery Camps, OTS Camps etc. required to be organized and participation
in these camps is required jointly by SASTRA Centre, Circle Office, Zonal
Office and Branches, Circle Head shall be responsible for coordination among
all for the required participation.
 Circle SASTRA Office:
 Files of all NPA accounts above Rs.10.00 Lakh and uptoRs10.00 Crore will be
shifted to the Circle SASTRA Centre wherever the Zonal SASTRA Centre is
situated.

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  For other centres, all accounts above Rs.10 lakhs with no upper limit will be
shifted to the Circle SASTRA Centre after 30 days of slippage of account into
NPA.
 For the first 30 days, all Recovery actions mandated in the SOP for Timely
Initiation of Recovery Actions will be undertaken by the Branch/ MCC/
LCB/ ELCB.
 Files will only be transferred on conditions that all actions given in the SOP
have been initiated with issuance of 60 days’ Notice u/s 13(2) of SARFAESI Act
being mandatory, wherever applicable
 NPA Accounts Allocation in the circle will be allocated to dedicated officers at
Circle SASTRA.
 Preferably around 100 accounts (Borrower wise) be allocated to one officer.
 Circle SASTRA Centre to have dedicated staff for dealing with all kinds of MIS
and Statements.
 All officers handling group of accounts will also be responsible for maintaining

:57
up to date status notes of NPA accounts handled by them.
 Circle SASTRA Centre can appoint Recovery agency, detective agency,
24 7
resolution agency, supporting agency from the approved panel list of SASTRA
11
Division circular.
-20 66

Circle office
-06 134

 Circle offices are responsible for sanction of OTS proposal falling under their
power as per SASTRA Division Circulars, received from CIRCLE SASTRA
centres.

5

Circle offices are responsible for the recovery of NPA account having balance
outstanding up to Rs. 10.00 Lakh.
 Circle office will provide various approvals/mandates required by Circle
SASTRA as per bank’s existing guidelines to initiate recovery proceedings till
SASTRA Division reviews & aligns the guidelines as per new SASTRA Vertical
15

Structure.

 Process flow at Circle office for all the proposals/ sanctions and
approvals related to NPA will be as under:-

Approving Authority Process Flow Proposals

1 Within vested power of Circle SASTRA Head Circle SASTRA Head
2 Within vested power of Circle Office Circle SASTRA Centre ->
Committee Circle Office Committee
3 Above the Power of Circle office, within the Circle SASTRA Centre ->

145 | P a g e
 vested power of Zonal SASTRA Centre: Zonal SASTRA Head
4 Above the Power of Zonal SASTRA Centre, Circle SASTRA Centre ->
within vested power of Zonal Office Zonal SASTRA Centre ->
Committee Zonal Office Committee
5 Above the power of Zonal Office Committee Circle SASTRA Centre ->
Zonal SASTRA Centre ->
Head Office Committee

Zonal SASTRA Centre

 Part-I Recovery
 Zonal SASTRA Centre wherever located will have overall responsibility for
Recovery in the NPA accounts with Balance Outstanding above Rs.10.00 Crore
(Borrower-wise) and all other accounts under NCLT.

:57
 Accounts shall be allotted to dedicated Recovery/ Resolution officers at Zonal
SASTRA Centre.
 Preferably 50 accounts to be allocated to each officer.
24 7
11
 Zonal SASTRA Centre can appoint Recovery agency, detective agency,
-20 66

resolution agency, supporting agency from the approved panel list of SASTRA
Division circular.
-06 134

 Zonal SASTRA Centre to also have a nodal officer for NCLT matters and
matters related to Restructuring of NPA Accounts irrespective of any exposure.
5

 PART-II Monitoring
15

 Zonal SASTRA Centre will be responsible for overall monitoring of Circle

SASTRA Centres and for ensuring that Recovery Actions are initiated in time
for all NPA accounts.
 Zonal SASTRA Centre to have dedicated staff for dealing with all kinds of MIS
and Statements.
 Zonal SASTRA will be responsible for submitting the same to HO.

Zonal office
 Zonal Offices are responsible for sanction of OTS proposals falling under their
power, received from ZO SASTRA centres.
 Zonal Office will monitor recovery of Circle Offices.
146 | P a g e
  Zonal Office will provide various approvals/mandates required by Circle
SASTRA Centre & Zonal SASTRA Centre as per bank’s existing guidelines to
initiate recovery proceedings till SASTRA Division reviews the guidelines as per
new SASTRA Vertical Structure.

 Process flow at Zonal office for all the proposals/ sanctions and
approvals related to NPA will be as under:-

Approving Authority Process Flow of proposals

1 Within vested power of Zonal Office Zonal SASTRA Centre -> Zonal
Committee Office Committee
2 Above the power of Zonal Office Zonal SASTRA Centre -> Head
Committee Office Committee

:57
The Circle Office and Zonal Office will continue to give sanctions and approvals within
their vested powers, as mentioned above, till the SASTRA Division reviews the
guidelines and powers as per the new SASTRA Vertical Structure.
24 7
11 *******
-20 66
-06 134
5
15

147 | P a g e
 21. TIME BOUND RECOVERY ACTIONS -SOP

(MPD CIRCULAR NO. 13/2020 Dated 18-07-2020& SASTRA DIV Cir.No.5/2021)

STANDARD OPERATING PROCEDURE (SOP) ALONG WITH TIMELINES FOR

INITIATION OF RECOVERY ACTIONS IN FRESHLY SLIPPED NPA ACCOUNTS.
Actions to be initiated by the branch before the transfer of the NPA account to
the SASTRA Centre.
Timely Initiation of Recovery Actions Time Line

:57
(On or
before)
24 7
11
Issue of recall notice to all the borrowers/ co-borrowers/ issuance of (T+2) Days
letter of invocation of guarantee to the guarantors. The borrowers/
-20 66

co-borrowers/ guarantors will be asked to resolve their account within

7 days from the date of letter.
-06 134

Ensure and check the delivery of the Recall Notice/ Invocation of

guarantee.
Personal meeting with the defaulting borrower/guarantor/co-borrower (T+ 6) Days
5

be held.
Realization/Appropriation of proceeds of Financial Assets: e.g. (T+10) days
FDR/Other Bank Deposits/Cash Margin/LIC Policies and other liquid
securities etc.
15

Issue notice under Section 13(2) under SARFAESI Act, in the eligible (T+10) Days
cases. After issuance of 13(2), ensure acknowledgement of the
same within a week’s time. In case acknowledgement is not
received, substitution service of 13(2) be done through paper
publication immediately.
Examining the position ofSecured assets/ drawing CRILC reports. (T+12) days
Visit of unit be organized to ascertain the working level of the unit, (T+12) days
stock position etc.
Last stock statement be analyzed and debtors of the party be (T+12) days
contacted regarding deposit of sale proceeds with Bank to get valid

148 | P a g e
discharge.
Based on the visit report to the unit premises and other attending (T+15 ) Days
factors, BO/CO/ZO to examine quick mortality aspect and in eligible
cases, approvals for filing FIR be obtained.

For accounts with Balance more than Rs 50.00 Crores, necessary (T+15) days
action for examination of fraud angle and Forensic Audit be initiated
strictly in accordance with FRMD Circular No. 02/2021 dated
05.01.2021 – Policy for Fraud Risk Management and Investigation
Functions (FRMIF) and FRMD Circular No. 03.2021 dated
05.01.2021.
Note: These actions once initiated should be taken to their logical
conclusion.
Submission of status notes to appropriate reporting authority (T+20 ) Days

:57
(CSC/ZSC/HO) depending on the outstanding of the NPA account.
Report marking of NPA account through Circle office on CGTMSE
portal.
24 7
11
-20 66

While submission of status note, if Branch expects the account to be (T+20) Days
regularized in a very short period of time through Restructuring or by
any other means. The permission to retain the NPA account at the
-06 134

parent branch is to be taken by the competent authority (as

mentioned in S No. 4 of Operations Guide of MPD Circular No.
13/2020 dated 18.07.2020)
5

Continuous monitoring of the operations of the defaulting company. (T+30 ) Days

In case unit is operational, matter be taken up with the defaulting
company for deposit of sale proceeds.

It must be ensured that limitation and insurance is available against (T+30 ) Days
15

the borrower and/or guarantor.

After 15 Days from the Date of NPA, the Branch to prepare the files (T+30 ) Days
and keep the documents (photocopy)/ correspondence as given in
the Branch Opening Guide and make a detailed checklist of the files
and documents being provided during the file transfer.
Anticipated actions: 14

Actions to be initiated by the SASTRA Centre, once the account transferred to

the SASTRA Centre:

149 | P a g e
The SASTRA Centre Head will allot a set of NPA accounts to the D Date
Recovery Officers ( In case of file transfer to the Zonal SASTRA Centre
the above task of Receiving of Files, Data Mining and preparation of a Draft
Recovery Action Plan will be carried out by the Recovery Officer at Zonal
SASTRA Centre to whom the account gets allotted)

Recovery Officers to ensure that the files are being transferred as D+7 Days
per the instructions mentioned in the SASTRA Centre Opening
Guide.
In case of any kind of non-compliance, the same to be reported to
the SASTRA Centre Head in written before acknowledging the
transfer of files.
The CR’s of borrower’s and guarantors be cross-checked for any D+7 Days
attachable assets. In case of need, service of Detective Agencies be
engaged.

:57
Apart from the Status note, Checklist provided by the Branch, the D+7 Days
Recovery Officers are required to give specific attention to every set
of photocopy of the loan documents and Mortgage documents. They
24 7
11
are required to be flagged, mark the information which they think,
-20 66

would be required in future during the recovery proceedings.

Once the Recovery Action Plan gets approved by the SASTRA D+7Days
-06 134

Head, the Recovery Officer will initiate all the Recovery Measures
simultaneously. SOPs of different recovery measures are appended
in this Operations guide, however it is always advisable to go through
Circulars available in the Knowledge Centre website and keep
5

oneself updated regularly.

Post-dated cheques be presented for clearance in case of retail loan D+7Days
accounts and other such accounts where PDCs are available. In
case of cheques being returned unpaid, case under section 138 of NI
15

Act be filed.
In eligible cases with A/c Balance Rs 25.00 Lakh and above, Events D+8Days
of Wilful Default to be examined and if the Wilful default is identified
then notice as per Annexure-I of Wilful Default be issued.
CIBIL report of obligants be drawn. If the report does not show D+10Days
proprietors/ partners/guarantors as defaulters, matter be taken up
with MISD, HO for rectification.
Submit the Annexure II of Wilful Default along with a copy of D+20 Days
Annexure I to the Zonal SASTRA Centre for onward submission to
SASTRA Division, Head Office.

150 | P a g e
Any representation received to be replied within 7 days from the date
of receipt.
Meetings be held with panel advocates for filing of DRT suit. Further, D+25Days
meetings with Supporting Agencies be also held for planning out
actions related to symbolic/physical possession.
Administrative sanction to be taken before filing of Recovery Suit D+30Days
from the competent authority.
Pre-Possession Notice (Form SI-6 of SARFAESI Manual) In case D+47Days or
service of notice is found to be complete and representation u/s whenever 60
13(3A), if any received, stands duly replied, issue “Notice to deliver days over
possession of secured assets” (Form SI- 6) giving reasonable time to from date of
hand over possession of secured assets. (Although issue of Notice to delivery of
deliver possession, is not a legal requirement as per SARFAESI Act) notice u/s
13(2) of

:57
SARFAESI =
24 7 E Days.

Publish notice within stipulated time i.e. within 7 days of taking E+7Days
11
symbolic possession.
-20 66

Issue notice u/s 13(4) of SARFAESI Act and take Symbolic E+10Days
possession simultaneously. File caveat by DRT (if necessary).
-06 134

Valuation to be got done by the Empanelled valuer at the time of E+10 Days
taking symbolic possession.
5

File suit in the DRT/Court including Attachment Before Judgment E+13 Days
Application (ABJ) and passport impounding.
Option of Resolution under the ambit of NCLT be also looked into E+13 Days
and move for permission to the ZONAL SASTRA Centre However,
before filing the petition in NCLT, the following aspect be looked
15

into:- ❖ It is to be ensured that all liquid securities such as FDR /

KVP / NSC etc pledged to the Bank either as security or as margin
money, where bank has right of set off are appropriated against the
irregularities persisting in the account before the account is admitted
for CIRP.

❖ Ensue that DRT suit is filed before admission of case into NCLT.
In the absence of any previous notice, a demand notice of the
amount due with a reasonable period, minimum 14 days, must be
given to the Corporate Debtors.

❖ The bank can initiate CIRP against Corporate Guarantors &

151 | P a g e
Personal Guarantors as well besides the Corporate Debtor. Thus,
notice should be given to such Corporate Guarantors/ Personal
Guarantors also, if the Bank intends to initiate action against such
guarantors.
After obtaining the valuation of the security within 7 days’ time, the E +14 Days
paper publication of Sale notice giving the NPA borrower 30 days’
time for resolution of account to be published in two daily local
newspapers, at least one of which should be in vernacular language.
Move application to DM for permission of physical possession E+15 Days
simultaneously.
Bank to move for physical possession of mortgaged property, after E+40 Days
taking due permission.
E Auction to be conducted. E +45 Days

:57
Once all the above recovery measures are initiated in a NPA E+45 Days
accounts, the SASTRA Centres should focus on exploring the
possibility of the resolution of the account through OTS. Frequent
24 7
11
Meetings with those NPA Borrowers, and Gandhigiri to be conducted
-20 66

on their residential and official addresses.

-06 134

Anticipated actions: 22

*****
15 5

152 | P a g e
 22. UPDATED OTS PORTAL-CONSOLIDATED GUIDELINES
(Sastra Division Circular NO. 37/2021 Dated 28-07-2021)

To comply with the EASE Agenda and to develop a seamless approach towards the
entire process of receipt, processing, approval and monitoring of OTS, an updated
online OTS Portal has been launched by the Bank.

OTS MODULE

SASTRA Portal is having five different modules for monitoring of recovery actions i.e.

:57
OTS, SARFAESI, DRT, NCLT and Wilful Default.
Out of these five modules, the OTS Module is having following main features:-
 End to End processing of OTS applications from the stage of receipt of OTS
24 7
11
application and till its final approval and payment.
 Fetching of Outstanding Balances & other data from EDW.
-20 66

 Provides list of accounts eligible for settlement.

 Automatic identification of approving authority as per Recovery Policy
-06 134

Guidelines.
 Real time tracking of Pending/Approved OTS Proposals.
 Uploading of Documents related to settlement proposals.
5

Important Documents related to settlement proposals such as Valuation

Reports/Borrower’s application/Detective Agency Report/Visit Report/Balance
Sheet/Minutes of Settlement Committee etc. can be uploaded in the OTS System.

OTS Proposal can be created at four levels in the OTS Portal as per new vertical
structure. Details of same are given as under:
15

S.N Level Users with ‘Maker’ Users with ‘Checker’

Role Role
1 Branch Yes Yes
2 Circle Office ---- Yes
3 Zonal Office ---- Yes
4 Field Recovery Warriors Yes -----
5 Circle Sastra Centres Yes Yes
6 Zonal Sastra Centres Yes Yes

153 | P a g e
For details for this portal,Please refer Sastra Div. Circulars no 37/2021 dated
28.07.2021, where in complete workflow,manual and FAQs of OTS portal with
Screen shots are available for guidance.

*******

23. POLICY ON ENGAGING CORPORATE BCs/BC AGENTS FOR RECOVERY IN

NPAs AND SMA-II ACCOUNTS
(Sastra Division Circular NO. 26/2024,44/2023)
Objective

The scheme aims to significantly supplement and enhance efforts of branch officials in
recovering bank’s dues and substantial reduction in number of NPAs in Agri / MSME/
Retail NPAs under Sub-standard, doubtful and loss category up to Rs.10 lac as well

:57
as SMA-II & Crop based Agriculture loans sub-classified as CBR-2 and written off
accounts. 24 7
Eligibility criteria for allocation of accounts to CBCs/BCAs
11
-20 66

All NPA accounts (Agri/ MSME/ Retail) under Sub-Standard, Doubtful and Loss
category (excluding suit filed/decreed accounts and accounts for which recovery
action under SARFAESI Act has been initiated) with ledger outstanding not exceeding
-06 134

Rs.10 lacs and also all written off accounts shall be covered by the scheme except
accounts where compromises have been approved (including those reached in Lok
Adalats) and have not been treated as failed.
All accounts under SMA-II & Crop based Agriculture loans sub-classified as CBR2
5

with limit (In cases of CC/OD/under disbursement TL)/ ledger outstanding (in case of
TL & other accounts) upto Rs. 10 lac may also be allocated to CBC/BC agents for
recovering the overdues in those accounts.

Engagement of CBCs/BC for recovery

15

Bank is already having agreement with different Corporate Business Correspondents

(CBCs) for functioning as BC agent and as per RBI Master Circular for Business
Correspondents (BC), BCs are empowered to act as recovery agents of the bank. A
separate agreement or an addendum duly vetted by HO: Law Division must be
executed with the Corporate BCs at HO: FI (Financial Inclusion) Division for the
purpose of “Recovery through CBC/BC Agents” covering all aspects of recovery
through CBC/ BCA which needs to be executed before work is assigned to CBC/ BCA.

Corporate BC Agents will submit the list of the IIBF certified BC agents(i.e., Certificate
Examination for Business Correspondents & Certificate Examination for Debt Recovery Agents) to
respective Circle Offices along with copy of IIBF Certificate. A Committee comprising
of Circle Head (Head of the Committee), Dy. Circle Head & Circle SASTRA Head (with

154 | P a g e
minimum quorum of 2 members with the attendance of Circle Head being mandatory)
will approve the list of IIBF certified BC agents from already selected BC agents
fulfilling eligibility criteria & after conducting due-diligence as defined in Policy on
Business Correspondent circulated by HO: FI Division for recovery in NPA and SMA-II
accounts & Crop based Agriculture loans sub-classified as CBR-2.

After approval of the list, the Circle Head will circulate the list of IIBF certified BC
Agents to all the Branches under their jurisdiction for utilizing the service of BC Agents
for Recovery in NPA & SMA-II Accounts & Crop based Agriculture loans sub-classified
as CBR-2. Branch will ensure to allocate the task of recovery to only IIBF certified BC
agents. The list of IIBF certified BC Agents to be utilized for recovery may be updated
twice in year, i.e., in the month of December & June every year.

CBC/BC agent to ensure that basic customer service at the BC location is not
hampered due to recovery work.

Allocation of accounts toCBC/BC Agents

:57
Allocation of Accounts:- 24 7
For NPA Accounts 11
Branch Heads to allocate eligible NPA accounts to CBC/BC Agents on quarterly basis.
-20 66

For SMA-II Accounts & Crop based Agriculture loans sub-classified as CBR- 2
Branch Heads to allocate eligible SMA-II accounts & Crop based Agriculture loans
-06 134

sub-classified as CBR-2, to CBC/BC Agents on monthly basis.

Suit filed and decreed accounts will not be allocated to CBC/BC agents for
recovery purpose. Similarly, CBC/BC agents will also not be allocated loan accounts
5

where notice under Section 13(2) and 13(4) under SARFAESI Act has been issued.
Such accounts will not be in the purview of recovery by CBC/BC agents.

The Branch will specifically issue a Job Card (as per Annexure-2) to the CBC/BC
Agents containing particulars of the accounts allotted to him for recovery, giving brief
15

details of the borrower, over dues and security available as per Annexure-2. Further, it
should also be ensured that normal recoveries by the branches in such accounts are
not included in the recovery made by the Agencies.

Branches shall also inform Circle Office the details of accounts allocated to a
particular BCA.
Services of BC Agents, who brought the leads shall not be used for recovery of
same loan.

Withdrawal of accounts from CBC/BC Agents

Branch Head may consider withdrawing of allocated accounts from CBC/BC Agents
after 6 (six) months of allocation, in case there is no effective result relating to

155 | P a g e
recovery of dues. For this, a Withdrawal Notice must be invariably sent by the Branch
to the CBC/BC Agent and its copy be sent to the Circle Office to avoid any
disputes/complications regarding payment of recovery commission in the future.

In respect of SMA-II accounts & Crop based Agriculture loans sub-classified as

CBR - 2 allocated to CBC/BCA, the same will be deemed withdrawn as and when the
account is regularized.

Mode of settlement & Code of Commitment of CBC/BC Agents

Recovery of dues may be made in lump-sum or through installments.
CBC/BC Agent shall not accept cash or any cheque/draft in his name. He may deposit
cash in the loan account of the customer only when he is able to provide an
electronically printed receipt to the customer as acknowledgement.

Commission payable to CBCs for onward payment to BC Agents

For NPA accounts (non-suit filed & Written off Accounts):

:57
Age of NPA Commission payable on amount of recovery*
Upto 1 year 3.00 %
24 7
11
-20 66

Above 1 year up to 3 years 5.00 %

Above 3 year up to 5 years 7.50 %
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Beyond 5 years 10.00 %

*Note: If the account allocated to CBC/BC Agent settled through OTS due to their
5

efforts and OTS amount is recovered as per terms & condition of OTS, then
commission will be paid to CBC 50% of the above prescribed commission rates

For SMA-II accounts &Crop based Agriculture loans sub-classified as CBR-2

15

Category of Advance Commission payable on recovery of

irregular amount
SMA – II & Crop based Agriculture loans 2.50 %
sub-classified as CBR-2

Competent Authority for payment and settlement of disputes

Invoice will be raised by CBCs to respective Circle Offices for payment of commission
regarding recovery made in accounts of the respective Branches. After receipt of the
bill from CBCs, Circle Office to get the Branch wise bill verified from respective
Branches under their jurisdiction. After verification of the bill, the payment of
commission to CBC will be made by respective Circle Office. Circle Head shall ensure

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that commission on recovery will be paid to Corporate BC only for onward distribution
to BC Agent.

In case of any dispute, Circle Head will be the final authority to decide the case.

Commission is to be paid by the Respective Circle Offices to the debit of Expenditure:

Outsourcing of Financial Services {P & L- GL Report Code 11427 sub-head (Account
No. 1142731) - Payment of Commission for Recovery by CBC/BC Agent}.

The services of recovery through CBCs/BC Agents shall be covered under the Internal
Ombudsman Scheme of the Bank circulated by Customer Care Centre.

Training for BC Agents working under CBCs for recovery

Corporate BC will ensure that proper training is imparted to BC Agents for necessary
certificate by IIBF as per RBI directive and CBCs will also ensure that all BC agents
are mandatorily certified by IIBF, for recovery in NPA and SMA-II accounts& Crop

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based Agriculture loans sub-classified as CBR-2.

Corporate BC will be fully responsible for the conduct of BC Agents while pursuing
24 7
recovery in Borrowal accounts. 11
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Bank has right to terminate the empanelment of CBCs at any time without assigning
any reason, in case CBC is involved in mis-appropriation of the fund, fraudulent
activity, misuse of bank materials, forgery and/or any action detrimental to the interest
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of the bank, subject to approval of Authority, who has empanelled the various
agencies.
5

HO: Financial Inclusion Division has executed the Service Level Agreement
(SLA) with 20 Corporate BC Agents for recovery in NPA and SMA-II Accounts &
Crop Based Agriculture Loans Sub-Classified as CBR-2, details of which is
circulated vide SASTRA Circular No. 44/2023.
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24. APPROPRIATION OF DEPOSITs TO LINKED NPAs UNDER RIGHT OF
LIEN/ SET-OFF
(SASTRA Div. Cir. No. 26/2021)

One of the effective tool for recovery is Right of Lien/Set-off under which Bank has a

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right of lien/set-off of amounts deposited by the party in any account towards their
overdue loan liabilities is one of the important tool of recovery.
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11
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Following reports are available in the system through which list of NPA linked deposit
accounts may be generated:-
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1.On daily basis branch can peruse report at path - <solid>-->Morning checking --
>DMS-->GENERATED_BY_HO--> npa_accnt_<solid>_<date>_<numeric report
no>.rpt
5

2. Another report of the same is available EDW--SASTRA Folder--NPA linked

deposit accounts.

All Branches/Respective Offices are advised to generate the above reports on daily
15

basis and take necessary action for appropriation of ELIGIBLE credits available in
SB/CA/TD accounts to related NPAs after complying the required formalities and due
procedure of right of lien/set-off.

It is to note that credits under Kisaam Samman Nidhi can’t be appropriated

towards NPAs. Care must be taken to avoid appropriation of such credits.
Ministry of Finance Letter dtd 19.02.2020 provides as under:

“Under no circumstances, the money transferred from PM-KISAN Scheme

should be adjusted against any outstanding loan. This money is meant for
specific purpose and cannot be made available for loan adjustment.”

It is incumbent upon the incharge of the Branches/Circle SASTRA Centres to

appropriate available eligible fund in linked deposit account to adjust in relevant NPA
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account within 48 hours. Any withdrawal by the Borrower due to negligence will
tantamount to disciplinary action as per extant bank guidelines.

*******

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 25. SPECIAL OTS SCHEME FOR FY 2024-25
NON DISCRIMINATORY AND NONDISCRETIONARY SPECIAL OTS SCHEME-
FOR NPA ACCOUNTS UPTO Rs 5.00 CRORES
(Sastra Division Cir No 21/2024)

In order to reduce the mounting NPA accounts in small segment categories, a Non-
Discriminatory and Non-Discretionary Special OTS Scheme FY 2024-25 - For NPA
accounts upto Rs.5.00 Crores as on 31.03.2024 was approved by the Board in its
meeting held on 27.02.2024.

The scheme will be applicable w.e.f. 01st April 2024 and remain in force upto
31st March 2025. Further, All Sub-Standard NPA Accounts will not eligible in this
Special OTS Scheme.

Salient Features:

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 The scheme will be applicable w.e.f. 01st April 2024 and remain in force upto
31st March 2025.
 Scheme is Non-Discriminatory and Non-Discretionary in nature.
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 Eligibility to be determined as per IRAC status of the account as on 31.03.2024
11
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and balance outstanding as on 31.03.2024.

Eligibility Criteria:
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All NPA accounts under Doubtful- I, Doubtful-II, Doubtful III, LOSS category (including
Technical Write-off accounts) with with principal outstanding (also termed as balance
outstanding) up to Rs. 5.00 crore as on 31.03.2024 shall be eligible under this
5

Scheme. The eligible accounts shall also include the following:-

 Cases pending before Courts / DRTs. However, in those cases, wherein, Bank
had commenced recovery proceedings under a judicial forum and the same is
pending before such judicial forum, any settlement arrived at with the borrower
shall be subject to obtaining a consent decree from the concerned judicial
15

authorities.
 Cases where Bank has initiated the action under Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act
(SARFAESI-2002) will also be eligible.
 Eligible accounts referred for Revenue Recovery action under State Recovery
Laws will also be eligible, subject to requisite charges, if any payable, being
recovered separately and remitted to the State Authorities.
 Cases where OTS was earlier approved but not implemented and has already
been declared failed on or before 31.03.2024, will be eligible.
 Accounts under Consortium or Multiple Banking Arrangements will also be
eligible to be covered under the scheme.
 Units where rehabilitation / restructuring have failed as on 31.03.2024 are
eligible.
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  Clean Overdraft in Saving Bank and Current Account including overdraft
granted under PMJDY which are classified as NPA.
 Agriculture NPA accounts upto Rs.10.00 Lakh under DB-I category.

Cases not eligible to be covered under the Scheme:-

 All Sub-Standard NPA Accounts are not eligible under this scheme.
 Fraud (RBI Reported)/Wilful Default/Criminal Action Cases.
 Central Govt. /State Govt. guaranteed accounts.
 Units under rehabilitation/restructuring (Already approved and under
implementation).
 Cases admitted in NCLT under Insolvency and Bankruptcy Code, 2016.
 Loan against Gold/Jewellery and other liquid securities e.g. LIC/NSCs/ KVPs
etc.
 Staff Accounts.
 NPA accounts where bank has already entered into a compromise/ settlement
and settlement is in force as on 31.03.2024.

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 OTS in actual written off accounts will not be covered in this scheme and OTS
in such cases shall be considered as per “Special guidelines for OTS in Written
off Accounts” as per General OTS Scheme circulated by SASTRA Division.
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11
However, TWO (Technically Write Off) accounts will be covered in the scheme.
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 All the NPA Accounts having Balance Outstanding above Rs.50.00 lakh upto
Rs.5.00 Crore as on 31.03.2024, where Market value of Securities is more than
100% of Balance Outstanding as on date of receipt of proposal, such cases
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shall not be covered under this Special OTS Scheme and shall be dealt as per
guidelines mentioned in the Policy on Recovery & Management of NPA.

Sanctioning AuthorityDelegation of power for approval of OTS rests with an

5

authority (individual or committee, as the case may be) which is at least one level
higher in hierarchy than the authority vested with power to sanction the
credit/investment exposure as well as one level higher in hierarchy than the last
sanctioning authority:
15

Sl. Limit last Sanctioning Authority

No sanctioned by
1 Upto Scale-III Circle SASTRA Committee (CSCO) headed by
CM/AGM as Circle SASTRA Head
2 PLP Segment Circle SASTRA Committee (CSCO) headed by AGM as
Head/PLP Circle SASTRA Head.
Head/PLP-CAC
However, in cases where Circle SASTRA headed by CM
(Scale-IV) or
then in such cases OTS approving authority will be
equivalent
Circle Office Compromise Committee headed by Circle
authorities
Head (AGM/DGM).

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3 PLP Head/PLP- Circle Office Compromise Committee headed by Circle
CAC/MCCCAC/CH- Head (DGM).
CAC (Scale-V) or
However, in cases where Circle is headed by AGM then
equivalent
in such cases OTS approving authority will be Zonal
authorities
SASTRA Committee Headed by DGM/GM.
If, Zonal SASTRA is also headed by AGM or below then
in such cases OTS approving authority will be Zonal
Office Compromise Committee headed by GM/CGM.
4 ZOCAC-I headed Zonal SASTRA Committee Headed by GM. If, Zonal
by DGM/CH-CAC SASTRA is also headed by DGM or below then in such
headed by DGM or cases OTS approving authority will be Zonal Office
equivalent Compromise Committee headed by GM/CGM.
authorities
5 LCB/e-LCB & HOCAC-I

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ZOCAC headed by
GM
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6 ZOCAC headed by HOCAC-II
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CGM
7 HOCAC-I HOCAC-II
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8 HOCAC-II HOCAC-III
9 HOCAC-III MC/Board (for loans originally sanctioned by HOCAC-III,
proposal for compromise settlement/OTS shall be
5

approved by MC. However, MC chaired by MD&CEO,

cannot sanction OTS in such loans which were
sanctioned by HOCAC-III chaired by MD&CEO himself.
Such cases will fall under the power of Board.)
15

10 MC BOARD

 All the compromise proposals/OTS of NPAs having O/s upto Rs.10 lakh will be
recommended by the concerned Branch Manager.
 Any official who was part of sanctioning the loan (as individual or part of a
committee) shall not be part of approving authority for the proposal of
compromise settlement/OTS of the same loan account, in any capacity. Such
proposals shall be considered by next higher authority.
 Cases falling under power of Board will be routed through MC.

Note:
In respect of eligible Quick Mortality cases having balance outstanding upto Rs. 3.00
Cr, such cases shall be considered by ZOCC (Zonal Office Compromise Committee).

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In respect of eligible Quick Mortality cases having balance outstanding more than Rs.
3.00 Cr and upto Rs. 5.00 Cr, such cases shall be considered by HOCAC-I.

Settlement Amount

For Eligible Doubtful & Loss NPA Accounts

(1) For Eligible NPA Accounts with Balance Outstanding upto Rs.10 Lakh

Asset classification OTS amount (% of outstanding as on date of receipt of

as on 31.03.2023 proposal)

Agriculture NPA Housing Loan, NPA Accounts

Accounts ODHL & other than
Mortgage Loan Agriculture,
Housing Loan,
ODHL & Mortgage

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Loan
DB-I 65% 80% 70%
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DB-II 55%
11 70% 60%
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DB-III 45% 60% 50%

(NPA age upto
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5Years)
DB-III 35% 50% 40%
(NPA age >5Years
5

upto 10 years)
DB-III 30% 40% 35%
(NPA age >10
years)
15

LOSS 25% 30% 30%

Claim received from CGFMU & credited in the loan account is not to be added back in
the balance outstanding, while computing OTS amount.

(2) For eligible accounts with balance o/s above Rs.10.00 Lakhs and upto
Rs.5.00 Cr

Sl. IRAC Classification as on OTS Amount for Secured OTS Amount for
No 31.03.2023 portion of outstanding Unsecured portion
(Market Value of Primary + of outstanding
Collateral Security

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1 DB I 80% 50%
DB II 75 % 50%
DB III 70% 40%
2 LOSS 70% 25%

*Where Market value of Securities is more than 100% of Balance Outstanding as on

date of receipt of proposal, such cases shall not be covered under this Special OTS
Scheme and shall be dealt as per guidelines mentioned in the Policy on Recovery &
Management of NPA.

Note:  Legal expenses, Insurance Charges, charges for Revenue Authority

(Recovery Certificate filed A/c’s) and all other debited/ recorded expenses incurred
(excluding commission/fee paid to recovery agencies/resolution agents/supporting
agencies for mobilizing OTS as per Board approved policy)by the bank are to be

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recovered in full over and above the OTS amount. However, DI/SI/RI is not required to
be added to the book outstanding for the purpose of calculation of OTS amount.

Eligible Guarantee Cover/Claim Amount (CGTMSE/CGFSEL/CGSSI, etc.) shall be

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treated as security/secured portion along with other securities held in the
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account.

In respect of NPA accounts where claims under CGTMSE/CGFSEL/CGSSI etc.

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schemes have been received and credited to the account, the credit/entry of
CGTMSE/CGFSEL/CGSSI etc. claim received, be ignored i.e. credit received on
account of CGTMSE/CGFSEL/CGSSI claim received, be added back to the ledger
outstanding, while computing the OTS amount.
5

Normally claim received in case of ECGC accounts is kept in separate account.

However, in accounts where ECGC claim is credited, then while arriving at the
balance outstanding, ECGC claim settled amount credited in the account has to be
added back to the outstanding balance to calculate settlement amount.
15

If any account eligible under this scheme is considered under General OTS Scheme,
all terms and conditions of the OTS shall be applicable as per General OTS Policy
circulated by SASTRA Division.

Valuation of securities

Market Value of the Securities as per last valuation report which should not be older
than 1 year is to be considered.

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If fresh valuation is to be obtained before expiry of one year from the date of last
valuation report then higher of the two valuation will be considered for the period upto
1 year from the date of last valuation report.

Wherever market value (MV) of property is valued at Rs.5 crore or above at any stage,
minimum two independent latest Valuation Reports from Bank’s Board approved
valuers of Category A or B shall be obtained. If MV in both such valuation arrived at is
less than Rs.5 Cr, during last sanction or present valuation, then in subsequent
valuations, 2nd valuation is not required.

Cases where two valuations are obtained and difference is more than 25%, higher of
the two valuations be considered. Further, where difference is upto 25%, average of
the two valuations be considered.

In case of Plant & Machinery, Market Value as per last valuation report (Valuation
Report should not be older than 1 years) shall be considered while computing security
coverage.

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Valuation of stocks shall be considered on the basis of last stock statement submitted
by the borrower OR as per BM assessment during the last visit which should not be
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more than one month old and valuations be compared with the last stock statements,
11
wherever available, submitted by the borrower.
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If variation between the market value of Immovable Properties & Plant & Machinery at
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the time of last sanction & current market value is more than 25% of the former
valuation, then proper justification should be incorporated in the OTS Proposal.
Further, variation between the market valueof Immovable Properties & Plant &
Machinery at the time of last sanction & current market value is 50% or more, OTS
proposals falling upto the power of Zonal SASTRA Committee, will be considered by
5

next higher authority.

Terms of Payment

Upfront amount of minimum 20% of the OTS amount (for NPA accounts with balance
15

upto Rs 25.00 lacs) and 15% of the OTS amount (for NPA accounts with balance
outstanding more than Rs 25.00 lacs upto Rs 5.00 crores) is to be deposited along
with OTS offer in writing.

Upfront amount deposited with the Bank shall be appropriated in the account before
conveying the approval to the Borrower.

Party to be impressed upon to deposit OTS amount within 3 months of approval of

OTS.

In case the entire OTS amount, as per the terms finalized in the sanction, is paid
within 3 months of conveying approval to the borrower, no interest will be charged.
However, simple interest @ MCLR for one-year (applicable on the date of sanction)

165 | P a g e
plus 1% on reducing balance basis will be charged where OTS amount is paid beyond
3 months, effective from the date of Conveying approval to the Borrower.

In case any borrower fails to pay OTS amount, respective sanctioning authority may
consider extension of time period upto aggregate of 6 months from the date of
conveying approval. However, in exceptional circumstances, if borrower approaches
for further extension beyond 6 months from the date of conveying approval, then the
following Committee may consider extension of time period for payment of OTS
amount beyond 6 months till 12 months from the date of conveying approval of original
(first) sanction.

OTS Sanctioned By Competent Authority

Branch Head Circle Office Compromise Committee
(COCC)
Circle SASTRA Committee (CSCO) Zonal SASTRA Committee (ZSCO)
Zonal SASTRA Committee (ZSCO) Zonal SASTRA Committee (ZSCO

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Zonal Office Compromise Committee Zonal Office Compromise Committee
(ZOCC) (ZOCC)
HOCAC-I HOCAC-I
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In case borrower proposes to pay OTS in installments then default in payment
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of one installment shall render the OTS as failed.

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In all those cases, where OTS is approved and CGTMSE claim has been received
and credited in the borrowal account, CGTMSE to be informed, in terms of the extant
guidelines. Recoveries made in the account from the borrower be proportionately
remitted to CGTMSE as per the extant guidelines. Further, second claim shall be
5

lodged simultaneously with CGTMSE after approval of OTS as per guidelines

circulated by MSME Division and account shall be closed after receipt of credit of
second claim from CGTMSE.

In those cases wherein insurance claim or any other claim on third parties is received
after the sanction of the account under the Special OTS Scheme, the amount of
15

sacrifice be appropriated from the claim amount and the remaining amount, if any, be
credited to the borrower’s account.

In case of multiple accounts of a borrower, eligibility will be determined borrower wise

and not account wise.

In case of group accounts, efforts be made to settle the group accounts together, but
coverage under the scheme will be borrower-wise.

In case multiple accounts of the same borrower (or different borrowers) have common
security (ies) AND not all accounts are eligible under the scheme, then also OTS may
be considered in the eligible accounts. However, release of charge on the common
security (ies) will be done only when the other loans are resolved/paid off etc.
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 Further, a simplified format for approval of cases under Special OTS Scheme in
NPA accounts upto Rs. 1.00 Lac and above Rs.1.00 lacs to 5 cr has also been
annexed with the captioned Circular.

26. HANDLING NPA IN CBS

Various CBS menus & Report and its process flow in Finacle 10 is as under:-

MONITORINGOFOVERDUE ACCOUNTSBEFOREBECOMINGNPA-

CBS provides comprehensive mechanism for monitoring, follow up and record

maintenance of the irregular and NPA Accounts.

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A number of reports are available in CBS which can be used to monitor Loan accounts
so that timely remedial action can be taken to avoid them from slippage into NPA
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category.
11
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 Daily Outstanding of Loan accounts- PNBRPT- 3/7a

 Advance Intimation letter in loan a/cs for instalment due- PNBRPT-3/23
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 Next instalment due within next 91 days- PNBRPT- 3/34

 HLAOPI menu option- To check the loan accounts Overdue position
 HLAODR menu option- Term Loan account overdue reminders can be generated
and sent to borrower
5

 LETGEN Menu- Letter generation for overdue loan accounts, can be generated
and sent to borrowers

Using LETGEN menu option following screen will appear-

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5

Letter Code List of Reminders that can be generated using menu option
LETGEN:
LET01 FIRST LETTER TO BORROWER
15

RRMB1 1st REGI. REMINDER TO BORROWER

RRMB2 2nd REGI. REMINDER TO BORROWER
RRMB3 3rd REGI. REMINDER TO BORROWER
RCFLE FILING OF RECOVERY CERTIFICATE
RECAL ADVANCE RECALLED
RRMG1 1st REGI. REMINDER TO GUARANTOR
RRMG2 2nd REGI. REMINDER TO GUARANTOR
TLCON TELE. CONTACT - BORROWER(S)/GUARANTOR(S)
PRCON PERSONAL CONTACT-BORROWER(S)/GUARANTOR(S)
LGNTC LEGAL NOTICE TO BORROWER(S)/GUARANTOR(S)
SUITF SUIT FILED AGNST BORROWER(S)/GUARANTOR(S)

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 RGRMB SUBSEQUENT REGI. REMINDER TO BORROWER(S)
RGRMG SUBSEQUENT REGI. REMINDER TO GUARANTOR(S)

After selecting the notice type, the user has to fill up the Notice date, and Remarks
column and will click on Submit button.
 It will generate a letter for the borrower as per standard format of the bank,
which can be sent to the borrowers.
Whenever required, follow up action taken report can be generated from the system
using menu options:

 PNBRPT- 3/44 A- Report of Follow‐up Notice Issued for loan account by Sol
between given dates

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5
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169 | P a g e
  PROCESS FLOW FOR ASSET CLASSIFICATION THROUGH CBS SYSTEM
Step wise process flow is as under:
1. The SASCL batch job for all the branches will be run from Data Centre, HO-ITD on the
separate set-up like MIS server after close of all the branches.

2. All the accounts will be classified in the following category :

Loans other than revolving facilities

 Standard Accounts – where no irregularity is observed

 SMA0 – where irregularity is one day to 30 days.
 SMA1 – where irregularity is 31 to 60 days
 SMA2 – where irregularity is 61 to 90 days.

Loans in the nature of revolving facilities like cash credit / overdraft

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SMA Sub-categories The basis for classification – Outstanding balance remains
continuously in excess of the sanctioned limit or drawing power,
whichever is lower, for a period of :
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SMA-0
11
Not applicable in CC.
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SMA-1 More than 30 days and upto 60 days

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SMA-2 More than 60 days and upto 90 days

 Degraded Accounts – where irregularity period crossed 90 days.

5

 NPA accounts – All existing NPA accounts

3. All the accounts along with classification/Reason of Classification and many

other information will be stored under separate Table in the Finacle system.
15

4. After classification of data, the Classification Table will be placed in the live
environment.

5. At the time of Day-end of the branches, system will pick all those accounts
which are degraded on the day and automatically mark NPA in the system.

6. De-recognition of interest will be done by the system for all those accounts
which were marked on that day.

7. All the accounts with classification status and classification Reason will be
available with branches and a report can be generated through menu option PNBRPT-
28/9 and from EDW Report.

170 | P a g e
  All freshly classified NPA accounts will be marked in CBS system during day end
process and report of the same is available at the backend of DB user.

 All DI transactions will be passed for freshly marked NPA accounts on the date of
marking itself by system and no manual transaction is to be passed.

Menu option NPAD: ADDING NPA ACCOUNT DETAILS IN CBS

Select the function : Add

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5

Select Entity Type from - Account, Foreign Bill Purchased, Inland bill purchased,
Guarantee, Letter of Credit

Enter Entity ID and press GO.

15

171 | P a g e
 NEXT SCREEN WILL APPEAR AS UNDER: -
Enter the details in Mandatory Fields and press Submit

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And system prompts message “Record Added Successfully”

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5
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  Menu OPTION : HNPACR for Transactions in NPA accounts

All credit transactions in NPA accounts will be done through HNPACR menu. If there is
recovery in NPA account, the branch user is required to invoke menu option HNPACR.
On invocation below screen will appear:

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Select the function Recovery and press GO button, the following screen will be
appear.
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5
15

Enter the NPA account number, System will populate the details of accounts along
with Total Outstanding, RI, DI, Charges etc. required to be recovered.

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  User has to select Recovery from, Recovery Reason and Debit Type
1. Recovery From:
a. Customer - Recovery received from Customer.
b. Other – Recovery received from other source (lying in Office account)
c. Write-off – Amount to be credited for the purpose of write-off the account.
2. Recovery Reason:

a. In case of ‘Recovery From’ is selected as ‘Customer’ following options

can be selected :

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5
15

In case of ‘Recovery From’ is selected as ‘Other’ following options can be selected

:

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 :57
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5

After selecting the appropriate recovery mode click on submit button and
system will generate the transaction no. and user has to verify the same.
15

175 | P a g e
  Menu HNPACR with function ‘I’ to know amount required for upgradation.

As per RBI’s directions, process of marking of NPA as well as the process of upgradation
of accounts is to be automatize. Accordingly Bank has centralized the process
automatically by the system as batch job at day-end of the branches.

On invoking function “I” following screen will appear

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After inserting account no and clicking on ‘Go” following screen will appear.
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5
15

The field Total Overdue mentioned above shall show the amount required for
upgradation. The value in this field is appears on following logic:

TL/DL Overdue demands as per unsatisfied Flow IDs of

Principal/interest/charges etc+ recorded charges+RI/DI

Outstanding above Limit/DP + recorded charges

CC/OD OR
DI/RI + recorded charges;
Whichever is higher
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  Menu HNPACR with function ‘T’ (Trial upgrade).
To ascertain if any account is eligible for upgradation at day end, functionality ‘Trial
upgrade’ has been customized in system

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After inserting account number and clicking on GO button following screen will
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appear:
11
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5
15

Existing NPA outstanding comprising ledger balance, DI/RI, recorded charges,

overdue principal, total overdue etc. shall be visible.
Now to click on ‘Submit’ button
The message will appear, if account will be upgrading at day end else the reason of
non-upgradation shall display in red colour.

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Branches after finding the reason, as to why the account will not be upgraded, may carry

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out necessary correction. The system prompts reasons (financial and non/financial) one
by one. If all the reasons are resolved, system shall prompt message that account will be
upgraded at dayend.
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The check points are taken care by the system at customer level. System will upgrade all
accounts in single customer ID at one go, validating each account. The check points
placed are broadly as under:-
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1. Financial irregularity (within DP/Limit)

2. Overdue stock report
3. Overdue renewal
5

4. NCLT/OTS/NOTUP flags
5. Technically written off
6. Suit filed/decreed
7. Fraud marked
8. No irregularity in credit card
15

A validation has been placed in system, that if the user selects the reason ‘OTS’
in menu HNPACR while crediting the amount, system shall prompt the message
to fill value in ’Free Code 5’ as ‘OTS’ if the same is not updated. If reason is
selected as ‘Revenue Loss’ or ‘Reversal of RI/DI’, the system shall check the
valid value in free code 5 as ‘OTS’ or ‘ARC’ or ‘NOTUP’. Without updation in free
code 5, user will not be able to move further.

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  MENU OPTION -COWO for Adding the details of waiver of legal action and
written off /compromised accounts/OTS inCBS

Invoke Menu Option COWO (NPA Account Write-Off and Compromise Details)
 Select Function code ‘A’
 Enter account number
 Press Go

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The following screen will appear for waivement of legal action function
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 Enter the relevant details.

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5

Click on
Yes for
15

WLA

Click on yes for entering OTS details and

other details as shown in next page

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Mode of settlement is to be selected from the following options:
User has to select option ‘OTH- Others’ for the Compromise and OTS cases.

 Enter all the other details and

press submit.
 Record added successfully.
Menu option: NPACHRG - For keeping record of CHARGES IN NPA ACCOUNTS
After transferring the account into NPA no charges has to be debited from the NPA
account rather Expenditure Head- “Miscellaneous Expenditure-Recovery Related
Expenses” -<solid>1142607 is to be debited using menu option- EXTM

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5

Invoke menu NPACHRG

15

 Function –A
 Enter Loan account number
 Select option CHARGE
 Enter the amount and Charge particulars
 Submit

Next screen will appear as under:-

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Press on submit to record the charges.

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Likewise, we can choose the option waive and recover the charges instead of
charge. (Kindly note that this menu is for added the record only)
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5
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  Menu Option RSAM: For RESTRUCTURING OF ACCOUNTS

Menu Option- RSAM is to be used for maintenance of Restructured account

 Function- ‘A’
 Enter account number
 Press GO

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Following screen will appear as under:-
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5
15

 Enter the relevant details and select the Restruct Reason as applicable out of- “N”-
Natural Calamities, “P”-Prior Approval from RBI and “O”- Other reason, “M” –
MSME Restructuring

 Press submit and message prompt Record added successfully.

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  Menu option INNPREAC- FOR RECOVERY FROM INOPERATIVE ACCOUNT

For recovery from inoperative account system does not allow HLASPAY so if the
customer’s SF account is inoperative and amount is available for appropriation in loan
account, then use menu option- INNPAREC for recovery

Function- R

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Click on submit button and system will create the transaction.

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5
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  MENU OPTION HTACBSH- TRANSFER BETWEEN GL SUBHEADS

 The basic purpose for changing the GL Subheads is to create MIS

 In case of recovery of all overdue amount system will not upgrade the account
automatically from the backend.
 If suit is filed in NPA account then GL Subhead needs to be changed from
NPA to NPA Suit filed accounts.
 Further when Suit filed account is decreed then GL-subhead needs to be
changed from NPA Suit filed to NPA Decreed Subhead.

 INVOKE MENU – HTACBSH and select Function - T (Transfer)

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5
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Select the relevant GL Subhead from the selection page and click on ‘GO’

After this the suit filed account will not reflect in limitation expired list.

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ASSET CLASSIFICATION – Menu Option ‘NPACBAL’

To enquire the asset code and classification date of NPA account, such as Substandard,
Doubtful and Loss account, and Reason of NPA, Date of NPA, Date of DB1 Use menu
option- ‘NPACBAL’ For Inquiring Various Information About NPA & STANDARD
ACCOUNTS such as

1. All information of menu HNPACR (Ledger balance, RI/DI, recorded charges, NPA
balance, recoverable dues)
2. Asset Class, Reason of NPA, Date of NPA, Date of DB1
3. Subsidy Balance, ECGC balance
4. FITL flag, Wilful Defaulter Flag, Fraud Flag, GECL flag, Free code 5
5. Regulatory Provision, Additional Provision (non-resolution, Auditor, other)
6. Tangible Security, Account level, Node level (Numbers and Amount)
7. If NPA due to percolation main account number
8. Last 90 days’ interest debited and credits in CC/OD account

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The codes shown on the screen are:
001- Standard
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002- Sub Standard
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003- Doubtful
004- Loss
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Screen shot of menu option NPACBAL is as under: -

Screen 1 – introduction screen Branch to selection function as ‘I’, Account No. and insert
account number as below:
15 5

In case of CC/OD if user wish to see debit interest in last 90 days and credits, the radio
button of ‘Yes’ be clicked
On further clicking ‘Go’ button system will show the details of account. The bottom of the
screen will be appearing as under: i.e.
DIFFERENCE (CREDIT-DEBIT)
NORMAL CREDIT

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If no radio button is selected, system will select default value as ‘No’ for the field
‘DEBIT/CREDIT 90 Days’.
On further clicking the position of the account will be appearing as per following Screen.

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5
15

All flags and values are visible in screen as mentioned above at preceding page such as
Asset Class, Reason of NPA, Date of NPA, Date of DB1 etc.

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  Menu option – APPROREV
The order of appropriation of recovery in NPAs has been modified in order of Charges,
Interest and Principal.
As per operating procedure, the credits in NPAs are identified based on the reasons
picked by the user at the time of affording credit in NPA.
The committee approved vesting of powers at different level to approve reversal of
wrong appropriation in NPAs.
The powers to approve reversal of appropriation of recovery towards interest
income/other income shall be as under:
One menu “APPROREV” has been customized by ITD for reversing wrong
appropriation of recovery in NPAs.
 Menu option –NPARST
The process of upgradation of NPAs has been centralized and is undertaken

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automatically by the system at day-end of the branches.To restrict any account from
upgradation to standard category, codes ‘OTS’/’NOTUP’ have been customized.
These codes are entered in free code 5 of particular account(s). Moreover some
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account level checks (e.g. fraud flag, suitfiled/decreed GL Codes, NCLT flags etc)
have also been customized to stop any account from automatically upgradation.
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 Many times branches couldn’t mark concerned flag (OTS/NOTUP) inadvertently

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and accounts stood upgraded due to recovery like upfront amount of OTS or
crediting whole amount in one account of a borrower, instead of splitting it into
different accounts. These accounts are required to be downgraded again by
menu option NPARST.
5

 Sometimes Branches updates value in Free Code 5 (OTS/NOTUP/ARC) but

didn’t invoke menu NPARST. The account remains in standard category with
inconsistency. If these accounts at any stage downgrades to NPA, will never
upgrade due to prefilled values in free code 5.
To overcome the problem, workflow in menu NPARST is as under:
15

a) While invoking the menu ‘NPRST’ user will find one drop down for picking correct
value in free code 5, where OTS/NOTUP/ARC will be visible.
b) User to pick correct value for free code 5. All other fields are as it is. Branch
incumbent (user work class 100) will verify menu NPARST.
c) At day end, the accounts will downgrade in pre-upgrade asset class with pre-
upgrade NPA date.
d) The recorded interest taken to income at the time of upgradation and interest (if
any) debited in account during standard category, will again be reverted by the system
to recorded interest, debiting income.
e) Validation has been placed in system to restrict User to fill value
‘OTS/NOTUP/ARC’ in free code 5 in Standard category accounts.

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  Menu option –WILDEF for capturing the record of willful defaulter.
Branches may enter the information in respect of director(s) declared wilful defaulter
only after confirmation from reliable sources after due identification of director.
On invoking menu WILDEF, following screen will appear. Branch to select ‘Add’
function from drop down list and insert Cust Id of Company in cust id field.

On clicking ‘Go’ button, following screen will appear

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5
15

Please note that accelerated provision has to be made only if same director appears
more than once in list of willful defaulter. Therefore, till ascertaining the same, ‘No’ has
to be selected in field ‘Accelerated Provision’. ‘Yes’ be selected if 2nd entry of willful
defaulter is being done in system for same director.

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On clicking ‘Submit’ button, following message will appear

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Branch to verify record. The record can be cancelled before verification.
 Menu option – REUPGR for upgrade in restructure accounts.
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To capture the status of compliance of conditions applicable on restructured NPAs, a
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new menu ‘REUPGR’ has been customized.

The menu records the compliance of terms/conditions required for upgradation of any
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restructured NPA accounts under RBI 07 June 2019 Circular.

By invoking menu “REUPGR” and entering necessary information such as function
code as A and Cust. id in the filed click on go button the following screen will appear.
15 5

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 By clicking on submit button, system will automatically assess the eligibility for
upgradation of said restructured NPA account.

AUTOMATIC UPGRADATION OF NPAs

As per RBI’s directions, the bank is going to automatize the process of automatic
upgradation of NPAs. The process will be set as batch job at the day end of the
branch. Following check has been placed for upgrading any account from NPA to
performing:

 The account is not marked fraud.

 The account is not written off/technically written off.
 The account is not suit filed/decreed account.
 The account is not under NCLT.
 There is no financial irregularity in the account and other accounts in same

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customer id.
 The outstanding is within DP and Limit.
 No Stock report should be due as on up gradation date.
 The renewal is not overdue.
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Following two codes have been got customized, which may be entered in Free Code 5
on MIS tab:
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 NOTUP – Account not to be auto upgraded

 OTS – OTS or compromise account
5

ITD will be pushing, the list of accounts upgraded from NPA to performing category on
preceding day on daily basis to morning checking report of the branch at following paths:
For Branches Morning checking report  /Up gradation Date-wise report.
CLOSURE OF NPA – MENU ‘NPACLS’
15

The Bank has adopted new policy of appropriation of recoveries in NPAs from
01.04.2020.
As per new policy the order of appropriation of recovery in NPAs has been changed from
Charges, Principal and interest to Charges, Interest and Principal.
Accordingly, to adopt new policy, new office accounts [5929902 to 5929908] have been
opened in the system
Now the system keeps the DI/recorded interest debited in NPA to new office accounts,
which are netted while arriving net NPA outstanding.
ITD has come up with solution in form of one menu ‘NPACLS’. The menu is able to cater
various requirements in a batch at one go. It
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 Picks the recovery parked in borrowers account/sundry account and credits to
borrower’s account.
 Pick the revenue loss parked in Sundries account and credits to borrower’s
account.
 Transfers the interest parked in recorded interest heads to borrower’s account.
 Transfer any credit left in the borrower’s account after netting of above three
transactions with balance, to income head.
 Closes the borrower’s NPA account.

 Menu option – ‘RIREV’ – REVERSAL OF RECORDED INTEREST

Now a days, there are many cases, where an NPA is resolved, but the account
has to be kept in books for nominal value (say Rs.100/-) or on Zero balance,
pending recovery action against guarantors, outstanding NFBs, etc. Such
accounts generally fall in control and monitoring area of Circle SASTRA or Zonal
SASTRA and use to get RI waived.

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To keep these accounts on nominal outstanding or Zero balance, whole RI
amount has to be reversed. To get the RI reversed, Branches use to get head(s)
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opened and reverse the amount from RI to sundries account and thereafter to
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concerned NPA account selecting reason ‘Reversal of RI/DI’ through menu

HNPACR. The TAT of the process is high and continuous monitoring has to be
kept to get the whole process completed on the same day.
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To overcome the same, one menu ‘RIREV’ has been customized. The access to
menu has been provided to ‘SV’ users of Circle SASTRA/Zonal SASTRA sols.
5

Now ‘SV’ user will be able to reverse whole RI amount to the main account
through this menu.

The broad validations placed in menu are as under:-

15

 It will work in NPA accounts only.

 SV user to invoke menu ‘HCCS’ where such reversal has to be done.
 Part amount of RI/DI can’t be reversed. Whole RI balance can be reversed to
principal account.
 Interest run in the account should be upto date (BOD minus 1 day)

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  Menu Option-TAGGING

With respect to tagging, data was being collected manually where tagging has been
approved. Also, since there has been no flag in system, the appropriation of recovery
in NPAs too remained a concern as the system has been taking into account all the
credits to square off recorded interest and subsequent release of funds after tagging,
leads to increase in NPA

To overcome this problem, one menu ‘TAGGING’ has been customized in the system.
The system will provide MIS and will also take care the eligible amount for
appropriation of recovery in NPAs out of total recovery.

Please note that the menu ‘TAGGING’ will neither pass any voucher, nor it will
mark lien on the credit proceeds in NPAs to appropriate. The same be taken
care manually.

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All the accounts, where tagging has been approved, be entered in this menu to
facilitate correct MIS and correct appropriation of recovery in NPAs.
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******
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5
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 27. EXPRESS ONE TIME SETTLEMENT (e-OTS) PROCESS
(Sastra Division Cir No 19/2024 dated 28.03.2024)

EXPRESS ONE TIME SETTLEMENT PROCESS (E-OTS) :

e-OTS is an end-to-end digital settlement approval process for NPA Accounts having
outstanding balance up to Rs.10.00 Lakh eligible as per SOTS policy of the Bank.
Eligible Borrowers can automatically pay pre-calculated OTS amount through 24 x 7
available digital channels without visiting Bank’s Branch and can generate sanction
letter in online mode. Further, No-Dues certificate can also be generated on full
payment of OTS amount.
E-OTS DIGITAL JOURNEY:
Customer can apply for e-OTS through website https://eots.mypnb.in.
Link for e-OTS application is also available on two platforms viz.:

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 PNB official Website (https://www.pnbindia.in) under Online Servicese-
OTS
 PNB One Mobile Application under More Options Digital Loans Section
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e-OTS. 11
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PRE-REQUIREMENTS OF E-OTS PROCESS

a) Mobile Number should be registered under ALERTS Menu
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b) OTS Flag: - Customer can apply for e-OTS only in cases where OTS flag is “Y”
in the report which has been customized in EDW>SASTRA>e-OTS vide Report
Number eOTS-001-‘List of e-OTS Eligible Accounts’
5

SCOPE OF E-OTS PROCESS:

Express One Time Settlement Process (e-OTS) shall cover NPA Borrowers having
outstanding Balance up to Rs. 10.00 lakh as per Post MOC Data of 31.03.2024,
eligibility criteria of Bank’s SOTS Guidelines and eligibility filters, applicable as per e-
OTS digital journey process. NPA Borrower Accounts not eligible under e-OTS
15

Process are mentioned as under:

 All NPA accounts of a Borrower having Balance Outstanding (Principal Amount)
up to Rs. 1,000/- as on 31.03.2024 or as on date.
 All Substandard NPA Accounts..
 Fraud (RBI Reported) Cases wherein Free Code Field No. 9 in Finacle has
been updated as “XXXXX”, “YYYYY” & “ZZZZZ”.
 Wilful Defaulter/Criminal Action Cases.
 Central Govt. /State Govt. guaranteed accounts.
 Loan against Gold/Jewellery and other liquid securities e.g. LIC/NSCs/ KVPs
etc.
 Cases admitted in NCLT under Insolvency and Bankruptcy Code, 2016.

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  Cases under CGSSI (Credit Guarantee Scheme for Stand-up India).
 NPA Accounts covered under GECL
 NPA accounts where bank has already entered into a compromise/ settlement
and settlement is in force as on 31.03.2024.
 Units under rehabilitation/restructuring (Already approved and under
implementation).
 Cases wherein the Borrower/Guarantor/Co-borrower/any other affected party
has filed a counter-claim/case against the Bank.
 Cases where margin against un-devolved non-Funded facility is less than 100%
as on date.
 Actual written off accounts.
 Quick Mortality accounts.
 ECGC Covered NPA Accounts.
 Staff Accounts.
 NPA Accounts having Central/State Government Guarantee.


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Cases wherein there is Subsidy account/Fixed Deposit is outstanding.
 NPA accounts which are having flag as Debit, Credit or Total Freeze.
 NPA Pool Accounts
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 11
Borrower-wise accounts which are NPA due to Credit Card default.

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Standalone saving and current accounts (other than PMJDY), where no loan
account is outstanding in the same customer ID.
 Cases where Scheme Type is BIA, FBA, PCA
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 Education Loan accounts where interest is not capitalized to Principal

outstanding.
 Cases where Borrower name includes the words such as Died, Death,
Deceased, Dead, Expired etc.
5

SANCTIONING AUTHORITY
15

Sanctioning authority for e-OTS will be as per SOTS Policy in force and proposals
having Last sanctioning authority up to only “Scale V or equivalent” will be processed
through e-OTS. All proposals with last sanctioning authority higher than “Scale V or
equivalent” will be rejected by the system and these cases would be handled through
SASTRA Portal.

Delegation of power for approval of OTS rests with an authority (Committee), which is
at least one level higher in hierarchy than the authority vested with power to sanction
the credit/investment exposure as well as one level higher in hierarchy than the last
sanctioning authority as below:-

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 LAST SANCTIONED SANCTIONING AUTHORITY
BY
Upto Scale III Circle SASTRA Committee (CSCO) headed by CM/AGM
as Circle SASTRA Head.

PLP Segment Circle SASTRA Committee (CSCO) headed by AGM as

head/PLP Circle SASTRA Head.
Head/PLP- However, in cases where Circle SASTRA is headed by
CAC(Scale IV) or CM then in such cases OTS approving authority will be
equivalent authorities Circle Office Compromise Committee headed by Circle
Head (AGM/DGM)
PLP Head/ PLP- Circle Office Compromise Committee headed by Circle
CAC/ MCC-CAC/ Head (DGM)
CH-CAC (Scale V) or However, in cases where circle is headed by AGM then in
equivalent authorities such cases OTS approving authority will be Zonal

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SASTRA Committee headed by DGM/GM
If Zonal SASTRA is also headed by AGM or below then in
such cases OTS approving authority will be Zonal Office
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Compromise Committee headed by GM/CGM
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PROPOSAL FLOW
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SANCTIONING AUTHORITY PROPOSAL FLOW

Within vested power of Circle SASTRA Branch Maker Branch Head
5

Committee (Checker)Circle SASTRA Committee

Above the Power of Circle SASTRA Branch Maker Branch Head
Centre, Within vested power of Circle (Checker)Circle SASTRA Committee
Office Compromise Committee Circle Office Compromise
Committee
Above the Power of Circle Office, within Branch Maker Branch Head
15

the vested power of Zonal SASTRA (Checker)Circle SASTRA Committee

Committee Zonal SASTRA Committee
Above the Power of Zonal SASTRA Branch Maker Branch Head
Centre, within the vested power of Zonal (Checker)Circle SASTRA Committee
Office Compromise Committee Zonal SASTRA Committee
Zonal Office Compromise
Committee

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STEPS OF E-OTS DIGITAL JOURNEY
STEPS STEP DETAILS
Step- 1 Borrower will visit https://eots.mypnb.inand will login to portal using
credentials(Customer ID, Loan Account No., PAN No., Aadhaar No). and
validate himself/herself through OTP delivered on Mobile No. registered with
the Bank.
Eligible Borrower can also visit branch where loan account is being
maintained to apply under e-OTS. Branch Official will visit the e-OTS Portal
through link available at PNB SSO under Recovery. Customer will authorize
the Branch Official to apply for e-OTS on his behalf by sharing the
confirmation code generated and delivered on his registered Mobile No.
Step- 2 After verification through OTP, eligible Borrower will click on Login button and
then details of Borrower’s all eligible NPA Accounts shall be displayed on the
screen along with Balance outstanding and OTS amount.
Step- 3 Before proceeding for payment, borrower will enter the bank account details in

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which upfront amount will be refunded in case OTS proposal is rejected.
Step- 4 After accepting terms and conditions of e-OTS, Borrower will click Upfront
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Amount button, as shown on the screen and portal will redirect the Borrower
to the payment page.
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Borrower will also have an option to pay more than minimum Upfront amount.
To enable it, borrower will enter the desired payment amount which should be
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greater than Minimum Upfront Amount and up to Full OTS amount.

Step- 5 On the Payment Aggregator’s page, Borrower will pay the OTS amount
through available digital channels or through PNB Branches through menu
5

option EOTSCASH.
Step- 6 On successful payment of upfront amount, that amount will be parked in
account 516500317118G in case of online payment and 516500317118H in
case of payment through menu option EOTSCASH until approval/rejection of
e-OTS Proposal.
15

Step- 7 On receipt of proposal, the same will be recommended by the branch under
maker/checker concept for approval by the competent authority.
Step- 8 On approval of proposal, the upfront amount will be credited to customer’s
account and on rejection, amount will be transferred to HO:SASTRA in
Account No. 9762002200000451 for further refund to customer.
Step- 9 Concerned Branch and Circle SASTRA will be intimated through automated
email on receipt of proposal and it will be processed through e-OTS portal link
available in PNB SSO.

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Step-10 After approval of e-OTS, sanction letter can be generated online. No-Dues
Certificate shall be generated after closure of accounts in CBS, if full OTS
amount is paid. In case, any remaining amount is to be paid, borrower can do
the transaction through e-OTS portal to complete the process.

ROLE OF BRANCHES:
 Branches will regularly generate the list of eligible NPA accounts under e-
OTS Process from EDW and will check the accounts shown as eligible for e-
OTS process. If such NPA accounts are not eligible, then appropriate
parameter of ineligibility shall be updated through EOTS Custom Menu
configured in CBS for exclusion of such cases from the purview of e-OTS.
 Mobile Numbers registered in the ALERTS Menu shall be used for validation
of Borrower’s Identity in the e-OTS Process as such Branches will update the
Mobile numbers as per Bank’s extant guidelines.
 Entry of recoverable charges (paid earlier) should be done in the CBS

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through NPACHRG menu for recovery of the same. Presently, System has
been enabled to record these charges during payment through EXTM Menu
in NPACHRG. Charges recorded in NPACHRG will be automatically added in
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the final OTS Amount.
11

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Entry of Revenue Certificate (RC) Charges as per State Revenue Act or any
other State/Central Government Charges will be done through EOTS Menu
as these charges shall be added in the Final OTS Amount.
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 Update NCLT Cases status in NCLT Menu option in CBS for exclusion of
such cases.
PAYMENT OF OTS AMOUNT:
5

 Branches will also guide the eligible Borrowers that after the payment of
upfront amount, the balance OTS amount shall also be paid only through
channels available on the e-OTS Portal, otherwise the digital journey of e-
OTS process will not be completed and No-Dues Certificate shall not be
generated through online mode.
15

 However, if Borrower subsequently deposits the balance OTS amount

through Branch, the same would be accepted and before crediting the
same in the Borrower’s respective NPA Accounts, following steps shall
be taken by the Branches:
o First, refer e-OTS sanction letter provided by the borrower and cross-
check the same with details available in the e-OTS portal.
o Check “OTS” flag in free code field no. 5 in CBS (which was populated
by the system on approval of e-OTS)
o In such cases, if the repayment period is more than 90 days and final
repayment date is within 6 months from the e-OTS approval date, then
applicable interest as per SOTS Guidelines shall also be claimed from
the Borrower.

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  Branches will manually claim revenue loss in such cases as per Bank’s
existing practice. No-Dues Certificate shall be issued to the Borrower after
closure of NPA account.
Accuracy of Data in CBS system is the foremost requirement for e-OTS. If
any discrepancy arises due to wrong data available in the CBS, the same
shall be attributed to the Branch
BC AGENTS & RECOVERY AGENCIES:
 Eligible NPA Borrowers can be allocated to Business Correspondents (BC)
Agents and Recovery Agencies as per Bank’s extant policy guidelines.
 Services of BC Agents & Recovery Agencies shall be availed in garnering
maximum settlements under e-OTS Process by allocating the eligible
accounts to them.
 Branches to ensure that guidelines regarding allocation of accounts to BC
Agents and Recovery Agencies are duly followed and review as per extant
guidelines to avoid any dispute on payment of commission.

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 If an OTS proposal has been garnered with the efforts of BC Agent/Recovery
Agent in the allocated NPA accounts of a borrower, then Agent must ensure
that his Unique Code is captured while initiating e-OTS. After capturing code,
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agent details will be also displayed on the screen after login.
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 Before making OTS payment, an undertaking shown on the screen will be

accepted where in BC Agent and Recovery Agents will confirm that accounts
have been allocated to them and in case of any dispute, Bank will have the
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rights to recover commission from BC Agent/CBC/Recovery Agent.

 Circle Office will ensure timely payment of commission to CBCs after
verifying that eOTS settlement has been done in the allotted accounts.
5

E-OTS MIS REPORTS

Following reports will be generated through e-OTS portal under Report tab:
15

S. No. Description
1 Transaction Master Report
2 Account Transaction Master Report
3 Revenue Loss Transaction Master Report
4 e-OTS Consolidated Report
5 e-OTS Visitor Report
6 e-OTS Status Wise Report (Acc. Wise)

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WORKING OF E-OTS PROCESS
Based on certain pre-defined rules as per Special OTS guidelines, eligible NPA
accounts are filtered by ACoE Division along with OTS Flag “Y” or “N” and placed at
table maintained at CBS from which data is being fetched by e-OTS Portal.
If some eligible accounts are showing OTS Flag “N” in the report, reason(s) for OTS
flag being “N” has also been provided in the report, data cleaning for such records
shall be done in CBS for making these accounts eligible.
To determine further eligibility under e-OTS process and to calculate OTS amount in
special cases such as CGTMSE/CGFEL & RC identified accounts, the OTS flag of
such accounts will initially be “N” till some required data is entered by the Branches
through Custom Menu “EOTS” configured in CBS
By default, OTS Flag is “No” in the following cases:
S.N. Reasons for OTS Flag as “No”

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1 RC Identified Cases
2 Restructured cases marked in CBS up to 31.03.2024
24 7
3
11
CGTMSE Cases where Guarantee Code is CGTSI
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4 CGFSEL Cases where Guarantee Code is CGFEL

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Note: If Borrower’s one account is having OTS Flag as “N” due to applied filters, then
it’s all accounts shall have OTS Flag as “N”.
5

Updation of e-OTS Master Table in CBS: e-OTS eligible NPA accounts

are being updated in the e-OTS Master Table in CBS on T+1 Basis. The
eligible NPA accounts in this Table having OTS Flag “Y” can initiate e-OTS
process from e-OTS portal. Any correction made in CBS will be visible on
T+1 day in e-OTS Portal.
15

Customized ‘E-OTS’ Menu in CBS: For calculation of OTS amount in

CGTMSE/CGFSEL accounts and making an account eligible/ineligible
under e-OTS process, a special menu “EOTS” has been customized in
CBS to take required data inputs on following parameters, which are
otherwise not identifiable/customizable in the existing CBS system.
IMPORTANT POINTS RELATED TO CUSTOM MENU EOTS:
‘EOTS’ menu shall be freezed for all those cases where in Borrower has initiated
OTS Process on the e-OTS Portal and has successfully deposited the upfront/full
OTS Amount.

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OTS Flag shall not be marked as “Yes” until all exceptions are complied for that
particular borrower as such user has to mark all fields in EOTS custom menu,
Borrower may be ineligible due to some other reasons also.

SASTRA PORTAL AND E-OTS PORTAL INTERLINKING:

Database of e-OTS Portal and SASTRA Portal shall be inter-connected and OTS
proposals initiated on the SASTRA Portal cannot be initiated on the e-OTS Portal
and vice versa.Further, all pending OTS cases on SASTRA Portal shall not be
available on the e-OTS Portal.
CREDIT OF PAYMENT AMOUNT, REVENUE LOSS AND ACCOUNT CLOSURE:
OTS amount payment and related transactions: -
Two methods are available to deposit OTS amount through e-OTS Portal:
• Online payment through payment aggregator ‘Worldline e-payments India
Pvt. Limited’.

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• Through Menu option EOTSCASH at PNB Branch. (Detailed SOP provided
at Annexure II)
24 7
11
In case where upfront amount has been received through Online Mode, it will be
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parked in No Lien account ‘516500317118G’ and if Upfront Amount has been

received through menu option “EOTSCASH” it will be parked in No Lien account
‘516500317118H’ until final decision of e-OTS proposal (if OTS not sanctioned
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within 30 days’, customer can claim refund of upfront amount through e-OTS
Portal). On approval of e-OTS proposal amount will be transferred to customer
account automatically.
5

For cases settled under e-OTS process through online mode, the OTS amount
(other than upfront amount) shall be credited immediately in all the eligible NPA
accounts of the borrower in CBS, wherever successful payment flag has been
received from the payment aggregator.
In cases where transaction status is received as “Pending” from Payment
15

Aggregator, customer will not be allowed to initiate another transaction until status of
previous transaction is known and OTS amount will be credited in the account as
per e-OTS transaction flow defined above if success flag is delivered later.
In case of failure of transaction but money has been deducted from Borrower’s
account (from which OTS payment was done), borrower should be refrained from
initiating transaction again and should contact his/her bank from which payment was
initiated for the process of refund.
On successful payment of part/full OTS Amount, the Free Code field 5 under MIS
Details tab(CBS) shall be captured with value “OTS” automatically in that NPA
account.

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Revenue Loss Transactions:
After payment of full OTS amount by the borrower and reflection of the same in
his/her NPA Account, revenue loss entry shall be generated automatically by the e-
OTS Portal.
Account Closure:
In all the cases where revenue loss has been received after payment of OTS amount
in full, Branches shall close the NPA Account invariably in CBS through NPACLS
Command. Reports regarding ‘Accounts pending for closure’ are available in e-OTS
Portal

e-OTS Helpdesk:
To provide support to field functionaries under Express One Time Settlement process,
a dedicated team at SASTRA Division, War Room shall be available to resolve

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queries and in case of any e-OTS issue, the same may be raised at [email protected].
Since e-OTS is an IT Based solution. In case of any discrepancy is found in the OTS
amount, the same be brought to the notice of the Head Office through above
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mentioned email id immediately.
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5
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 28. QUICK MORTALITY IN LOAN ACCOUNTS
(SASTRA Division Circular No. 28/2024)

DEFINITION OF QUICK MORTALITY

As a general consideration, “Mortality” of a loan account occurs with its slippage to
Non-Performing Asset (NPA) category.
Quick Mortality Cases are defined as under:-
 Without Moratorium: The loan account/ facility where ‘mortality’ takes place
within one year of its initial sanction.
 With Moratorium: In case of term loans, where repayment / moratorium period
has been permitted or Commercial Operation Date (COD) is fixed, and / or
moratorium period / COD is extended by the Appropriate Authority within

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permissible guidelines, for this purpose, the period of 1 year shall be reckoned
from the date, first instalment is due for repayment after the moratorium / COD /
extended moratorium or COD.

24 7
An account may not be classified under Quick Mortality if it has slipped to NPA
11
within one year of initial sanction / takeover / disbursement as a result of
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‘percolation’ by CBS System. ‘Percolation’ is a situation in Asset Classification

process where a particular loan account has no feature of degradation of its
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asset class from Standard to NPA, but it slips to NPA as other account of the
same customer has been classified as NPA.
 NPA within one year due to Natural Calamity, or Death of Borrower shall not be
treated as Quick Mortality.
5

IDENTIFICATION OF AN ACCOUNT AS A QUICK MORTALITY CASE

IDENTIFICATION AUTHORITY:
15

AMOUNT SANCTIONED COMPETENT AUTHORITY FOR IDENTIFICATION

OF THE ACCOUNT AS QMC
Upto Rs 1.00 crore Circle Head
Above Rs.1.00 Crore and Zonal Manager
upto Rs.10.00 crore
Above Rs.10.00 crore GM, HO CRMD

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The exercise of identification & declaration of an account as a case of Quick Mortality
will be done on monthly basis based on incidences of fresh slippage of accounts to
NPA category.
Once an account is identified as QMC, distinct marking is to be made in CBS system
by the Circle Offices/ Zonal Offices/HO CRMD to that effect.
Authority for marking of Quick Mortality cases in CBS is as under:-
AMOUNT SANCTIONED COMPETENT Competent level for
AUTHORITY FOR marking of accounts as
IDENTIFICATION OF THE QMC in CBS (through
ACCOUNT AS QMC Menu Option ‘QMC’)
Upto Rs 1.00 crore Circle Head Circle Office
Above Rs.1.00 Crore and Zonal Manager Zonal Office
upto Rs.10.00 crore

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Above Rs.10.00 crore GM, HO CRMD
24 7 HO CRMD

MONITORING OF QUICK MORTALITY ACCOUNTS

11
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Every account which has been identified as QMC, is to be monitored with an objective
of safeguarding the interest of the Bank and containing further deterioration in asset
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quality. Prompt remedial actions are to be taken for recovery, detection of fraud, if any,
and finalization of staff side action.
5

Levels/Competent Authority for monitoring of Quick Mortality Cases:

Aggregate Sanctioned Limit Competent Authority
Upto Rs. 10 Lakh Circle Head
15

Above Rs10 lac to Rs. 1.00 Crore Circle Sastra Head

Above Rs. 1.00 Crore up to Rs. 10.00 Crore Zonal Sastra Head
Above Rs. 10.00 crore GM (SASTRA)

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 29. LAW MATTERS
(Law Division Circular No. 03/2023)
While dealing with NPA accounts various law related aspects have to be taken care
of. Some of these are covered hereunder:-
FINANCIAL POWERS RELATING TO LAW MATTERS
In Lacs
S.N. SUBJECT BO CSC CO ZSC/ ZO HO
LCB
1. To sanction filing / NIL 1000 200 FULL FULL FULL
defending suits in the name 0
of the Bank such as a)
Monetary Suits; b)
Application to Tribunals;

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c)Recovery proceedings; &
d)Appeals/Revision/Review
2 To sanction filing/defending FULL FULL FUL FULL FULL FULL
24 7
in the name of the bank
11 L
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other suits relating to

criminal actions* and
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complaints before District

Consumer Forum
3 To sanction filing/defending 5** FULL FUL FULL FULL FULL
in the name of the bank in L
5

matters u/s 138 of NI Act*

*This does not include lodgment of FIR in borrowal/non-borrowal accounts/matters
which is to be exercised at the CO/HO level.
15

** Bifurcation for the Branch Level:-

I II II IV/V/VI
1 2 3 5
4 To sanction filing/ defending in the name of the Bank in other matters such
as –
4a Reference to arbitration, NIL NIL FUL NIL FULL FULL
writs, complaints before L
State Commission / National
Commission, CCI, Company
Law Board, Special Leave

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 Petition & all other legal
proceeding
4b b) Appeal/revision/ review NIL NIL FUL FULL FULL FULL
against orders mentioned at L
4(a).

 Decision for non-filing of appeal/revision/review under item 4(b) shall imply

sanctioning of payment in compliance of the decree/order/award/decision
as per its terms including interest, costs, compensation, penalty or any
other amount ordered to be paid, if any. Decision for non-filing of
appeal/revision/Review shall be taken only at the level of AGM and above
at the Circle Office.
 If the matter pertains to Zonal / Head Office Level, Decision for non-filing of
appeal/revision/review shall be taken by respective committee at Zonal
Office/ Head Office.
 Decision for non-filing of appeal/ revision /review for consumer courts cases

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and making payment in compliance of the decree /order/award/decision as
per its terms including interest, costs, compensation, penalty or any other
amount ordered to be paid, if any, shall be taken by committee as
24 7
11
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BO CO ZOCAC HOCAC-I HOCAC-II

COMM.
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NIL Upto 5.00 Above 5.00 & upto Above 10.00 & FULL
10.00 upto 20.00
mentioned below:-
5

SUBJECT BO CSC CO ZSC/ ZO HO

LCB
15

5 To sanction engagement of NIL 1000 200 FULL FULL FULL

advocates /solicitors from 0
the approved panel.
6 To sanction payment of fees FULL FULL FUL FULL FULL FULL
on approved rates to L
advocates /solicitors from
the approved panel per
reference after getting
approval from competent
authority mentioned at Sl.
No. 5

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 7 To sanction engagement of NIL NIL NIL FULL FULL FULL
Advocates/ solicitors, other
than from approved panel
on approved rates
8 To sanction payment to NIL FULL FUL FULL FULL FULL
Advocates/ Solicitors other L
than from approved panel
on approved rates after
getting approval from
competent authority
mentioned at Sl. 7
9 To sanction engagement & payment of fee or rate of fee to Advocates/
Solicitors from approved panel or outside, beyond approved rates (I.e. other
than approved rates):-

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9a Per case on consolidated NIL 0.50 1.00 2.00 FULL FULL
basis
9b Per hearing/per day basis NIL 0.20 0.25 0.50 FULL FULL
24 7
11
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9c Per opinion/ consultation/ 0.10* 0.20 0.25 0.50 FULL FULL

conference
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*Bifurcation for Branch Level:-

I II II IV/V/VI
0.1 0.2 0.3 0.10
5

9d Per settlement, preparation/ 0.10* 0.10 0.15 0.25 FULL FULL

drafting of documents/
appeals/ revision / pleadings
or petition
15

*Bifurcation for Branch Level:-

I II II IV/V/VI
0.2 0.3 0.5 0.10

10 To sanction misc. legal 0.15* 0.30 0.40 0.50 FULL FULL

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 expenses & other expenses
relating to litigations per
reference

*Bifurcation for Branch Level:-

I II II IV/V/VI
0.5 0.8 0.10 0.15
11 To sanction purchase of Law NIL 0.25 0.40 0.50 FULL FULL
books/periodicals, computer
media based books
/periodicals per half year

The discretionary powers mentioned hereinabove (for part A, B & C), shall be

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exercised by respective offices through the committee mentioned below:-
24 7
S.NO OFFICE
11
DETAIL OF COMMITTEE
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1 Branch 1. Branch Incumbent – Incharge

Office 2. Second Man
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Quorum – 2
2 Circle 1. Circle Head
Office 2. Second Man
3. Chief Manager to be nominated by Circle Head
5

4. Law Officer (in case no Law Officer is posted then, person

incharge of Recovery matters in Circle office.
Quorum – 3, with Circle Head as mandatory member
3 CSC 1. Circle SASTRA Head
2. Second Man
15

3. Chief Manager to be nominated by Circle SASTRA Head

4. Law Officer (in case no Law Officer is posted then, person
incharge of Recovery matters in Circle SASTRA.
Quorum – 3, with CSC Head as mandatory member.
4 Zonal 1. Zonal Head
Offices 2. Second Man
3. AGM to be nominated by Zonal Head
4. Law Officer (in case no Law Officer is posted then, person
incharge of Recovery matters in Zonal office.
Quorum – 3, with Zonal Head as mandatory member

5 ZSC/ 1. Zonal SASTRA Head/Branch Incumbent of LCB or ELCB

LCB/ 2. Second Man

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 ELCB 3. CM to be nominated by Zonal SASTRA Head/ Branch
Incumbent of LCB or ELCB
4. Law Officer (in case no Law Officer is posted then, person
incharge of Recovery matters in Zonal SASTRA and person
incharge of Credit Matters in LCB or ELCB).
Quorum – 3, with ZSC Head as mandatory member
6 Head Committee to be formed in respective Divisions. CGM or GM
Office of the concerned division shall head the committee along with
Divisions following other members of the division: -
a) DGM and/or AGM
b) Chief Manager
c) Dealing official of the matter.
Quorum – 3, with CGM or GM as mandatory member.

General Instructions

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 For the purpose of Item No.1, the amount outstanding including recorded
interest up to the date of the proposal shall be the criteria. Plaint has to be
24 7
11
signed by such officer of Branch/Circle SASTRA/ Zonal SASTRA (as the case
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may be) who is having valid power of attorney or authority letter issued by
Bank. All such accounts where amount outstanding is below Rs. 10.00 lakhs,
suits shall be filed by concerned Branch office only. Officer who is vetting the
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plaint shall not sign the plaint.

 For Item Nos. 1 to 9, powers be exercised on per case /per reference basis.
 For Item No.11, Law Officer (irrespective of scale) posted at the Circle
Office/Circle SASTRA and in other offices may exercise powers up to an
5

amount of Rs. 5000/- per half year.

 Sanction under Sr. No. 1, 2, 3 & 4 by competent authority implies sanction
a) To file interlocutory applications as may be necessary in the respective
matters.
15

b) To incur necessary expenses on court fees, process fee, professional fee of

advocate as per above power chart on approved rates and substituted service
by publication in newspapers and any other expenses fixed under law or rule of
the court/authority in respect of the legal proceedings including interlocutory
applications.
 Approved rates mean rates as prescribed in the Bank’s Schedule of Fees – a)
Powers delegated in respect of sanction of fees shall carry with it, power to
sanction clerkage not more than 10% of the fee, when charged. b) Powers to
sanction expenses, if the same is included in the counsel’s fee bill shall be
exercised by the same authority sanctioning Counsel’s fees provided
sanctioning of expenses falls within his powers.

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  Powers exercised by higher authority in the power chart will include ‘powers to
confirm’ any power exercised over and above the vested powers by the officers
lower to them.
 Powers vested with various categories of Officers will be exercised on per
reference basis.
 Powers be exercised as per Grade/Scale of an Officer and not as per category
of branch/ office.

SCHEDULE OF FEES OF ADVOCATES

A. FEES PAYABLE TO ADVOCATES IN CIVIL MATTERS
Recovery Suit/OA – by or against the bank
CLAIM AMOUNT IN RECOVERY SUIT/ FEES PAYABLE
ORIGINAL APPLICATION

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Upto Rs. 1,00,000/- Rs. 5,000/-
Over Rs. 1,00,000/- upto Rs. 5 Lac Rs. 10,000/-
24 7
11
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Over Rs. 5 Lac upto Rs. 10 Lac Rs. 15,000/-
Over Rs. 10 Lac upto Rs. 20 lac Rs. 25,000/-
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Over Rs. 20 lac upto Rs. 50 Lac Rs. 25,000/- + 0.20% above Rs. 20 lacs
Over Rs. 50 lacs upto Rs. 1Crore Rs. 31,000/- + 0.20% above Rs. 50 lacs
Over Rs. 1 Crore upto Rs. 10 Crore Rs. 41,000/- for Rs. 1 Crore and Rs.
5

1000/- for every addition of Rs. 1 Crore.

Over Rs. 10 Crore upto Rs. 50 Crore Rs. 50,000/- for Rs. 10 Crore and
0.005% above Rs. 10 Crore
15

Over Rs. 50 Crore upto Rs. 100 Crore Rs. 70,000/- for Rs. 50 Crore + 0.003%
above Rs. 50 Crore
Above Rs. 100 Crores above Rs. 50 Crore Above Rs. 100
Crores Rs. 85,000/- + 0.002% over Rs.
100 Crores subject to Rs. 1,10,000/-
(Maximum)

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Filing of applications for interim reliefs like appointment of Receiver
/Commissioner, ABJ, Injunction etc
10% of the fee payable in the recovery Suit/ OA, payable only on disposal of the
application

Appeal against Decree or Final Order in suit/OA

Same fee as payable for recovery suits/OA

Review/Revision of Judgment /order

One Fourth (1/4th) of the fee payable in recovery suit/OA subject to minimum of
Rs. 5000/-

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Appeal against orders, other than final order/decree, in the Suit/OA.
24 7
1/4th of the fee payable in recovery suit/OA subject to minimum of Rs. 5000/-
11
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Defending litigation under SARFAESI Act

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Defending appeal U/s 17 of SARFAESI ½ of the fee payable for Recovery

Act before DRT/DRAT against order of Suit/OA as mentioned in Para A (i),
DRT subject to minimum of Rs. 10000/-
5

Drafting reply to If the merit of the case warrants

Representation/objections raised by the assistance of a legal counsel, then
borrower to the notice U/s 13(2) of services may be utilized paying fees
SARFAESI Act or against measures maximum of Rs. 2500/- depending
taken by the bank in terms of Section upon the quantum, of subject, work &
15

13(4) of SARFAESI Act. labour involved

Causing appearance as witness at the Rs. 1000/- per reference/ appearance.
time of taking Possession, breaking However, in cases where the time
lockers or like exercises. consumed is much longer, the higher
fees may be considered subject to
maximum of Rs. 2000/-
Application before Metropolitan Other Cities Rs. 6000/- per
Magistrate/DM seeking assistance for application
taking Physical possession U/S 14 of
Metro Cities Rs. 10,000/- per
SARFAESI Act
application

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Liquidation matter, including transfer matter from High Court to NCLT U/s434 of
Companies Act.
Maximum fee payable is Rs. 20,000/-

Issuing Legal Notices for Bank including notice U/s 138 of NI Act/ U/s 25 of
Payments & Settlement System Act, 2007
Amount Involved Professional Fees
UptoRs. 2 lakh Rs. 600/- consolidated.
Above Rs. 2 lakh & upto Rs. 10 lakhs Rs. 800/- consolidated.
Above Rs. 10 lakhs & upto Rs. 20 lakhs Rs. 1,000/- consolidated
Above Rs. 20 lakhs & upto Rs. 1 Cr. Rs. 1,500/- consolidated

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Above Rs. 1 Cr. 24 7 Rs. 3,000/- consolidated

Filing of Caveat Application

11
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Before DRT/District Court Rs. 2000/-

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Before High Court /DRAT Rs. 3500/-

Before Supreme Court/NCLAT/National Commission Rs. 7000/-
5

For service of summons of court / Dasti Service

Rs. 2000/- per person/property (Metro) and in other Cities Rs. 1000/- per person/
property
15

STAGES OF PAYMENT.
In suits/OA, fees be paid to the advocate in three stages.
 First stage - 1/3rd of the fees to be paid after the recovery application is drafted and
filed in DRT.
 Second stage - 1/3rd of the fees to be paid after filing/adducing of evidence.

 Third stage – Balance 1/3rd of the fees to be paid after the case is finally decided &
the certified copy of the final order is obtained.

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 B. FEES PAYABLE TO ADVOCATES IN CRIMINAL MATTERS

a) Criminal Complaints, including complaints U/s 138 of NI Act & matters U/s
25 of Payments & Settlement System Act, 2007,filed by/or against the
Bank:
Amount Involved Fees Payable
Up to Rs. 10 lakhs Up to Rs. 8,000/-
Above 10 lakhs to 1.00 Crore Up to Rs. 15,000/-
Above Rs. 1 Crore Up to Rs. 20,000/-

b) Drafting of FIR
Respective Authorities Fees Payable
Rs. 2500

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In case, FIR to be filed before local Police/SHO
In case, FIR to be filed before CBI/SFIO/SOG/EOW Rs. 5000
24 7
11
c) Protest/Appeal filed by the Bank against dismissal of Criminal complaints
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Fee payable is Rs. 10000/-

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C. CLERKAGE AND OUT OF POCKET EXPENSES

10% of the fees prescribed hereinabove will be paid to advocates as clerkage. Out of
5

pocket expenses will be paid on actual basis.

FINANCIAL POWERS FOR MISCELLANEOUS EXPENDITURE RELATED TO

15

ONLY RECOVERY MATTERS (SASTRA 09/2024)

Over a period of time, it has been noted that there are some expenses which are not
mentioned in any of the Bank’s existing policies and/or so high, that they are not
covered under any guidelines in vogue. In recovery matters, for all types of expenses
(excluding financial powers for Law Matters) for which there are no separate existing
guidelines, which may include the above mentioned cases also, the powers will be
vested with the different authorities, as given below:

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S.NO. COMPETENT AUTHORITY MAXIMUM LIMIT OF EXPENSES* PER
BORROWER (NOT PER ACCOUNT)
1 Circle SASTRA Head (CM) Upto Rs 2.00 lacs
Circle SASTRA Head Upto Rs. 3.00 lacs
(AGM)
2 Circle SASTRA Committee Above Rs. 2.00 lacs upto Rs. 6.00 lacs
(Headed by CM)
Circle SASTRA Committee Above Rs. 3.00 lacs upto Rs.10.00 lacs
(Headed by AGM)
3 Zonal SASTRA Committee Upto Rs. 25.00 lacs (For accounts under
(Headed by AGM) Zonal SASTRA Purview and beyond the
vested powers of CSCO)

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Zonal SASTRA Committee Upto Rs. 50.00 lacs (For accounts under
(Headed by DGM) Zonal SASTRA Purview and beyond the
24 7
11 vested powers of CSCO)
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4 Zonal office Compromise Upto Rs. 1.00 crore (Beyond the vested
Committee powers of ZSCO)
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5 HOCAC-II Above 1 crore (full powers)

*Expenses which are not covered under any of the Bank’s extant policies issued by different HO
5

divisions from time to time.

Proper record of such expenses be maintained, which will be part of the memoranda
dues and thus will be recoverable from the borrower and in case of recoveries similar
treatment will be applicable as is, in other types of expenditure.
15

Expenditure Head
Since the expenditure so incurred/required to be incurred is not of normal routine, an
Expenditure SGL Head- “Miscellaneous Expenditure-Recovery Related Expenses” -
1142607 has been opened in CBS. However, it must be ensured that a proper record
of such expenses is maintained at the branch/circle/zonal level, as the case may be.

213 | P a g e
 MISCELLANEOUS

Zonal SASTRA / Circle SASTRA officials are advised to ensure proper monitoring of
all cases pending before NCLT/NCLAT and no request for seeking Adjournment to
be made, without obtaining prior approval from Competent Authority. Zonal
SASTRA/Circle SASTRA Heads are advised to instruct the Bank’s Legal Councils to
attend the hearing fully prepared. All Law Officers at Zonal SASTRA/Circle SASTRA
to ensure attending hearings (wherever possible). Further Law Officers have to take
regular updates from Bank’s Legal counsel, about the case proceedings and update
the Zonal SASTRA/Circle SASTRA Head immediately.
******

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