Loan Rule and Loan Policy

LOAN RULES

(Approved at the Board meeting held on 19.06.2011)

1.	Unsecured loan / advance Up to Rs. 1,00,000/- term loan / OD limit
2.	The following types of secured loans can be considered :
i)	Consumer Durables - Loan for consumer durables such as Computers, TV, VCR, AC etc up to 80% of the cost or Rs. 1,00,000/- whichever is less. Loan amount to be disbursed direct to the vendor/supplier after taking the margin money. Advance payment will not be allowed. Loan will be recovered in 48 equal monthly instalments. At least one surety from a regular paymaster member of the Bank is required. Item to be purchased will remain hypothecated to the Bank. 5% of the loan is taken as security for giving post loan disbursement papers. This amount will be returned immediately on receipt of papers.
ii)	Vehicle Loans - Up to 90% of the cost of the new vehicle. Maximum repayable installments 60 for LMV and 80 for HMV. At least one surety from a regular paymaster member of the Bank. Loan will be paid direct to the vendor/supplier/dealer. The loan will be considered on the performa invoice in favour of the member. Margin money and loan processing charges will be taken. Name of the bank will be written on the RC and the vehicle will be insured jointly with the bank during the continuation of the loan. Security – Hypothecation of vehicle in favour of the Bank. For the purchase of second hand HMVs and LMVs up to three years old model, loan up to 70% of the value for three years old model and up to 75% of the value for 2 years old model and up to 80% of the value for one year old model. For private vehicles max. loan repayment period will be 60 months. Repayment period for second hand LMVs will be 60 – age of the vehicle and for HMVs 80 – age of the vehicle. Advance payment up to 25% of the cost is allowed subject to providing satisfactory proof. For total transport loans above Rs. 20/- lacs, collateral security may be required. In case of mortgage of property as security, coverage can be taken up to 100% of the valuation.
iii)	OD limits - OD limit upto Rs. 1.00 lac to be sanctioned against the security of stock and minimum one surety from house owner / govt. servant member. This OD limit to be given to shopkeepers and other small businessmen who maintains regular stock. In all other cases collateral security is required. ODL is considered up to 60% of the value of the stock or up to 40% to 60% of the market value of the property as per the parameters given below or 25% of the turnover, whichever is the least. Quarterly stock statements to be received regularly. Stock and property to be insured separately and jointly with the bank. Annual accounts for all OD limits above Rs. 1 lac are required but for limits above Rs. 3/- lacs, these should be certified from a Chartered Accountant. Unsecured OD limit up to Rs. 1 lac will be sanctioned for one year and thereafter to be renewed on yearly basis. Limits secured through property can be renewed up to three years and to be reviewed every year and in case of any deficiency, non-transaction limit can be reduced / cancelled.
iv)	Loan for plant and machinery - If the loan has to be for the purchase of new machinery, proforma invoice to be provided and loan limit will be 70% of the cost or Rs. 1.5 lacs whichever is less without collateral security but with one or two house owner/govt. surety(ies). Above Rs. 1.5 lacs with collateral security of property duly evaluated from the approved valuer and with search report from approved advocate. In case of old machinery the valuation of machinery from the approved valuer required. The loan limit for old machinery shall be 50% of the value. For loans up to Rs. 1.5 lacs security will be hypothecation of machinery. For old plant and machinery security will be hypothecation of machinery and mortgage of property. Joint insurance of machinery and property required separately.
v)	Housing loans - For house purchase and house construction the following requirements to be fulfilled. a. Housing Loan for building construction : i) In cases where the applicant owns a plot/land and approaches the bank for a credit facility to construct a house, a copy of the sanctioned plan by competent authority in the name of member applying for such credit facility must be obtained before sanctioning the home loan. ii) An affidavit-cum-undertaking must be obtained from the member applying for such credit facility that he shall not violate the sanctioned plan, construction shall be strictly as per the sanctioned plan and it shall be the sole responsibility of the executants to obtain completion certificate within 3 months of completion of construction, failing which the Bank shall have the power and the authority to recall the entire loan with interest, costs and other usual bank charges. iii) An Architect appointed by the bank must also certify at various stages of construction of building that the construction of the building is strictly as per sanctioned plan and shall also certify at a particular point of time that the completion certificate of the building issued by the competent authority has been obtained. b. Housing Loan for purchase of constructed property/built up property: i) In cases where the member approaches the bank for a credit facility to purchase a built up house/flat, it should be mandatory for him to declare by way of an affidavit-cum-undertaking that the built up property has been constructed as per the sanctioned plan and/or building bye-laws and as far as possible has a completion certificate also. ii) An Architect appointed by the Bank must also certify before disbursement of the loan that the built up property is strictly as per sanctioned plan and/or building bye-laws. c. No loan will be given in respect of those properties which fall in the category of unauthorized colonies unless and until they have been regularized and development and other charges paid. d. No loan should also be given in respect of properties meant for residential use but which the member intends to use for commercial purposes and declares so while applying for loan. e. i) After construction/purchasing two photographs of the house duly signed by the member. ii) Location plan duly signed by the member (self made to show the exact location). Note : Wherever property is proposed to be given as security for any type of loan/advance, two photographs duly signed and location plan has to be given invariably. The maximum limit of housing loan is Rs. 50 lacs or as decided by RBI from time to time. Maximum repayment period 180 months. For repairs and renovation maximum limit will be Rs. 2/- lacs. In case loan for purchase of DDA flat mortgage permission in favour of bank is invariably required and the payment to be made direct to the DDA. In case of loan for construction of house a physical verification of the plot is done and thereafter the loan is sanctioned by the Board of Directors/Loan Committee and it is released in max. three instalments. Each instalment is released after physical verification.
vi)	Education loan - Up to Rs. 3 lacs to be given against the personal surety of two government employees. Insurance of life for minimum equal to the loan amount. Policy to be assigned to the Bank. Premium to be paid annually to keep it alive. On the contrary, Bank will get it renewed and the premium to be debited to loan. However, if for this loan also collateral security is given, personal surety and life insurance conditions to be waived. Loan above Rs. 3 lacs to be given against the collateral security of property. The limit is upto Rs. 10 lacs in India and up to Rs. 20 lacs abroad. Repayment in 60 EMI within six months after completion of the course or getting employment whichever is earlier. Loan for regular professional courses from recognized institutions. No margin money. Interest to be paid every month on the released instalment. Member can also start payment of EMI (of full loan) immediately after taking loan.
vii)	Real Estate loan - Up to Rs. 50 lacs against collateral security of property other than the property under construction. No loan will be given against the mortgage of the property under construction.
viii)	Loan against deposits Up to 90% of the deposits.
ix)	Loan against NSC/KVP/IVP/LIC Up to 75% of the face value in case of NSC/KVP/IVP and in the case of LIC policy 75% of the surrender value.

Limit of maximum security cover for loan against the mortgage of property

will be as given below :

S.no.	Nature of property	Ownership	Limit of loan
1.	Sale Deed / Conveyance Deed / Relinquish Deed / Partition Deed	Self / spouse	First loan up to 50% of the value of the property thereafter 60% of the value of the property
2.	Sale Deed / Conveyance Deed / Relinquish Deed	Father / mother / son / daughter	First loan up to 40% of the value of the property and thereafter 50% of the value of the property
3.	Sale Deed / Conveyance Deed / Relinquish Deed / Partition Deed	Brother or any other person	Up to 40% of the value of the property
4.	Registered Agreement to Sell with Regd. GPA along with previous chain, if any	Only member or spouse	Up to 40% of the value of the property with max. Rs. 10/- lacs.
5.	Property situated outside Delhi	-do-	Up to 40% of the value

Note : BOD / Loan Committee will have power to variate considering the merit of the case.

For loans/advances of Rs. 25/- lacs to Rs. 50/- lacs two valuations and one search report from the

valuers on the approved panel of the Bank. For loans/advances above Rs. 50/- lacs two search

reports and two valuations. Charges for second valuation and second search report to be borne by

the Bank. These two valuations have to be done before the sanction of loan.

Maximum repayment period for term loan will be 180 months.

Combined general and DCG loans can be sanctioned up to max. Rs 1.75 lacs.

1% rebate to regular paymaster members.

If a member resides in NCR and employed on regular basis in Delhi then for hypothecation loans he

will have to provide surety from a government servant employed in Delhi or having his own residential

house in Delhi.

Members taking loan against the mortgage of property situated outside Delhi will have to give undertaking

that in case for non payment legal action under SARFAESI Act 2002 was taken, he will bear all the

expenses.

10.

For general loan above Rs 75000/- two latest ITRs or two latest salary certificates would be required.

11.

On TOD/overdrawn dr. balances in current account 5% additional intt. to be charged.

12.

To see cash flow position for loans of Rs. 20 lacs and above saving or current account statement for the

last 12 months to be given.

13.

The member who received loan against the mortgage of property will have to give undertaking that he

will not give the entire premises on rent.

14.

New member immediately after enrolment will be eligible for maximum two loans. One loan can be

either Surety Loan / DCG loan and the second transport loans or another hypothecation loans. The

third loan will be considered only after a period of six months after seeing the repayment position

during the six months. However, if a member provides property as security this restriction will not be

there.

15.

For transport loans, registration of vehicle has to be done invariably in Delhi. If a member wants to get

the vehicle registered in NCR, he will have to provide collateral security of property at Delhi.

16.

The processing charges will be 0.3% of the loan/advance subject to max. Rs 15000/-.

17.

The share linkage will be 2.5% for secured loan and 5% for unsecured loans.

18.

The SDM linkage will be similar to share money with the condition that the minimum SDM will be

Rs 5000/- and maximum Rs 25000/-. However, a member at his own can deposit more amount in

SDM with the condition that SDM cannot be withdrawable. This amount will be given only on

resignation.

19.

Loan against SDM up to 90% can be sanctioned with 2% higher rate of interest.

20.

If loan request of the member is not considered the reason thereof will be conveyed to him.

21.

In joint loans compliance to SM and CD ratio will have to be done only in one account.

22.

More than one secured loan within the overall MCL of the member and within security coverage from

the property and with separate EMIs can be availed within the repaying capacity. A member will be

entitled for max. four loans and one ODL at one time.

23.

Against the security of one property maximum three loans can be considered.

24.

On one property maximum three loans can be considered.

25.

Loan to a defaulter member who is debarred for loan for a specific period will be considered only by

the Board.

26.

Loan sanctioning power of LSC and LC will be as given below :

LSC : Up to Rs 10 lacs (total)

LC : Up to Rs 1/- crore (total)

27.

Loan can be considered by the Board against the mortgage of a vacant plot.

28.

The power to mortgage rented property will lie only with the Board.

29.

Only income of spouse can be clubbed for repaying capacity. If property is jointly owned then income

of co-owner can be clubbed.

30.

The following will be holiday period :

i) Transport loans 2 months

ii) Housing loans 3 months

iii) Business loans 2 months

iv) Education loans 6 months after the completion of the

study or getting employment, whichever is

earlier.

v) Loan for Coop.Group 12 months or taking over the possession

Housing Flats whichever is earlier

vi) DDA Self finance flats - do -

31.

The CMs and BMs will have power to sanction bill purchase or TOD up to 10% of the sanctioned

limit or Rs 1/- lac whichever is the minimum for maximum six days. The Board can increase this

power for the convenience of the account holder.

32.

BOD will have power to make departure from the rules in exceptional circumstances.

33.

Sanctioned loans have to be taken by the members within 60 days of the sanction. Thereafter up to

90 days, re-validation will be permitted on written request. After 90 days the sanction to be cancelled

and fresh application to be given for loan.

LOAN POLICY

(Approved at the Board meeting held on 19.06.2011)

The following loan facilities will be available to the members:

1. Unsecured loans (surety loans and bill purchase within the limit prescribed by RBI or Board)

2. Secured Loans (within the max. limit wherever prescribed by RBI or Board)

i) Housing loans

ii) Transport, Business, DCG, Plant and Machinery loans

iii) OD limits in current accounts

iv) Real estate loans

v) Education loans

vi) Loans against deposits

vii) Loans against NSC, IVP, KVP, LIC policies

3. Loan sanctioning authorities

i) Board

ii) Loan Committee

iii) Loan Sub-Committee

Loan Committee, Loan Sub-Committee will sanction loans up to the power delegated by the Board.

4. A member interested to take loan has to apply on the prescribed form duly filled in along with all papers

required to be attached.

5. Each and every loan request will be examined at three stages. At stage one BM will provide the necessary

information on the credit appraisal form and will give his comments/observations. Thereafter it will be examined by Member Secretary of the Loan Sub-Committee

/ Loan Committee on the basis of the information provided in the credit appraisal form/loan application along with comments/observations

of BM before placing at the sanctioning Committees. Loans of higher amount will be examined by CEO or some other official authorized by the Board before placing at the loan Committee and Board. Physical verification of property, stock will be done by Area Director accompanied by BM/DM or any other official.

6. CEO/ Other authorized official / Member Secretaries of the Loan Committees will put up a statement of eligibility of loan with other observations / analysis, if any.

7. All mortgaged properties will be verified once in two years and report to this effect will be written on the register maintained for this purpose. At the time of ODL renewal also physical verification of the properties will be done, if the earlier done was more than six months old.

8. The maximum credit limit of a member will be determined by the Board annually as per the guidelines of RBI after finalization of the Balance Sheet.

9. The maximum repayment period of loan will be decided by the Board subject to RBI guidelines.

10. The rates of interest on loan will be decided by the Board of Directors from time to time or as per the directive of RBI. The penal interest will be charged on the overdue amount @ 3% pa. However, on unauthorized debit balance in OD limits it can be higher as decided by the Board. These rates of interest will be displayed on the notice boards in the branches.

11. Power to give rebate in loan and other dues will be vested in BOD. However, Board can delegate some power to the “Loan Committee” and “Grievance and Settlement Committee”.

12. Every unsecured loan will be given against the surety of one or more regular paymaster members and limit for standing sureties will be decided by the BOD from time to time. However, normally for loan against the security of property owned by the applicant loanee member, personal surety will not be required.

13. At the time of applying for loan/advance the member should not carry any overdue in the existing loans taken by him and there should not be any unauthorized debit balance in the current account being maintained by him. In case the loanee member has stood surety to the loan of any member who carries overdue in loan/advance then at the time of release of the loan to the member sureties will have to clear the entire overdue amount.

14. Processing charges will be taken as per the rates decided by the Board from time to time which will also be conveyed to the loanee member in advance.

15. Revaluation of property will be accepted after two years of the previous valuation.

16. For valuation and search report a panel of valuers and advocates will be approved and made known to the members. Composition of these panels will be reviewed every year. The fee to be charged will also be fixed by the Board.

17. The unsecured loans will be given as per RBI stipulations. Diversification of loans will be made to avoid concentration in one segment. It will be ensured that major percentage of loans should be against tangible security.

18. Wherever required end-use verification will be done within one month after the release of loan or as decided at the time of sanctioning the loans. Road worthiness of vehicles will be done once in two years for regular paymaster members and every year for others.

19. In case of default the following actions can be taken against the defaulting member:

i) To initiate arbitration proceedings.

ii) To file case under section 138 of Negotiable Instruments Act

iii) To file case under SARFAESI Act.

These actions will be taken as per the guidelines laid in the recovery policy.

20. The CEO, CMs and BMs will have power to discount govt./semi govt./autonomous bodies bills and to give short term TOD as per the power delegated to them by the Board.

21. No loan will be given against the security of gold and against shares of the members.

22. The Board will prescribe parameters to judge repaying capacity of a member on the basis of reliability of source of income and other aspects.

23. No loan to member of the Board will be given except loan against his own deposits.

24. The percentage of security coverage of property will be decided by the Board from time to time.

25. The holiday period will be decided by the Board from time to time.

26. The defaulter members whose dues were recovered either through action under SARFAESI Act or through Office of RCS will not be eligible for any loan up to five years from the date of clearance of loan. He will also be debarred from standing surety for the same period. Thereafter the Board can consider request for loan.

27. The defaulter member on whom arbitration case is filed but he clears the dues during arbitration case under process will be debarred for loan and for standing surety for one year after full repayment.

28. If a member is found to have submitted false information to get loan, he will be debarred from loan for a period of five years.

29. Defaulters except mentioned at 26, 27 and 28 above will be eligible for loan after six months.

30. Half percent rebate in interest to members belonging to SC/ST category.

31. The Board may give powers to CEO and other officials for giving temporary TOD and bill purchase for a specific period.

32. When there is a very quick mortality of an advance within the first 12 months of taking the loan the reason thereof to be specifically examined and remedial steps to be decided to avoid any such re-occurrence in future. In case some laxity was found in the required follow-up the BM/other concerned officials will be held accountable.

33. In all transport loans and other secured loans if required, end use verification will be done through a visit to the business place of the loanee member and a report to this effect to be kept in the file.

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