Sorry Mr. SSG, you can not say this is NPA.  If the credits in that account during the last quarter is sufficient to serve interest and other charges charged by the bank, then it is ok.  May be subject to one condition that the borrower should file the stock statement and other statement like book debts etc to confirm that the borrower has the drawing power.  No transaction in the account does not confirm that there is no sales effected by the borrower.  In my opinion, this account can not be an NPA.

oh  my  god 

My  first report  to my dear collegues   ssg & suarabh in particular

State Bank  of Travancore

Comments

1)  Financials   Viz   Balance sheet   ( they call it Y S A -   Year end statement of accounts ) 

  P N L  ( profit & loss a/c)   were clumsy    -  Figures  not in comma style   -   Too detailed and ran  in to pages  to prevent focused attention.   

2) Audit report  Format  -      Departure from  standard format -   Included  certified informations  making audit more onerous

3)  Nobody knows what the system does - Very goodshelter for Staff & management .  Poor auditor he curses his fate     

4)   They have a addon software  C C D P ( CREDIT DATA PROCESSING )  which was finally locked on 7 th April 2015 by noon - Yet they wanted  Final Audit reports by 10th

5)  Auditors who give MOC are problem makers as is understoood  and publicised - Fortunately or unfortunately I happend to be such an auditor

6)  Some  Auditors  consider  it as a sin to  give  M O C  (   Cats feel so secure  with closed eyes while it licks milk )

7)   Few  auditors  who are  too  gentle were literally weeping  who had to   yield to the pressure from H/O  

7)  Generally  locals are lazy and irresponsible   but those outsiders were seemingly more  responsible

8)  I had the company of a  very young C A  (local)   we  were together and  forced the AGM /DGM level  officers to vist the branches we audited.    For us   Nil  MOC was a sin  .  Yet we feel  we should have done  more

God  Knows  whether  I would be given good branches hence forth -  Yet  I am firm  to lick milk EVEN IF IT IS HEAVENLY with  open eyes so long there is eye sight given to me

All  the best

Its a pleasure for all of us to see you back Hareesh ji.

From your comments it looks that you had a terrible experience with SBT.

Other members are also requested to share their comments/views on their SBA 2014-15.

SSG,s  query regardig   d/p limit of an O/D   a/c   

First  we have to understand the purpose for which  the O/D  was  sanctioned   -   Was it for business purpose  to finance current assests  ( stock /receivables )   In that case  primary security is stock / receivables   . D/P has to be necessarily calculated on the basis of the primary security .   These are the genral practices followed

Now  I can not understand  how collateral   had come  in for D/P  calculation .    D/P  is always  associated with current asssets which are floating in nature   tht is changing during the course of buness   . It is in relation to cash credits /od ( business )

I doubt whether the stated loan is really a  busines o/d    .     It could be a loan given on the security of some property . In that case it would be margin   and  not D/P  calculation .  The proceeeds of the loan may be used for business purpose

Now a days there  various loan products   and we need to understatnd them  as to purpose , security ,tenure ,eligibilty other terms etc etc   . Any loan  sanctioned at  Branch  would communicated to  regionalor other office in the form of a memo . confirmation  by such office is reasonable toassure that  the norms are generally complied

We  need not  get confused between  margin  for a security  and Drawing power   . Terminologies must be through

Mr  Ashish's   Query  -  SSG's  comment   -  Sathianarayanji's  remark

Interest and  other charges were serviced by the borrower  and credits in the a/c  were suffficient to cover the same ------   Technically   not an NPA

No  further credit  in the a/c  is indicative  of   either 

1)   No signiificant business activity  

2)   If business was done   proceeds were diverted

either of the above was   certain to have  happened

In case of  no business   examination of the stock statement assumes importance

D/P  should have been arrived at based on  latest  stock statement - not older bymore  than  3  months   - If this is not complied  a/c can be termed out of order  and hence NPA

Even when a stock stament is available  (    normally   taken by  the bank  for technical compiancee)   What is suggested is to go through the  preceeding stock statements - if the  same items are repeated  in terms of qty  and value  these could be the case of  unsalable /  obsolete stock Similarly  Trade receivables if any  are reccuring   for morre than 3 months  it would not be available for D/P calculation --- Thus  it would be possible to establish whether the  a/c was over drawn for a continous period of  90 days   to judge  whether NPA or not

We are handling live cases  (  and not answering any examiination     Young minds are still haunted by  Exam phobia . )  lot of evidences are likely  which may corroborate  and your conclusion has to be supported by sharp and irrefutable reasons   

Saurabh's  problem with  ATM   baance not in multiple of 100/

We had to certify  ATM  balances  and we observed Rs 50/ notes now  made available in ATM

There was a format  for certification  

The procedure followed was

1)  ATM  machine generated  statement of  physical cash was taken  on 31/03/2015   say 4 pm / 5pm

2)  MIS  genrates  another statement in the  format prescribed  wherin the physical balance is fed / wriiten 

3)  The report now shows   GL  balance ( ATMS operated by branch and cash put in by Branch alone )   and  physical  as above

There were variation in all cases  and the explanations  given by one branch contradicted that given by other branch . 

Hence we certified the report with remark that  discrepancies not explained to our satisfaction

Thus  saved time .    If we go on asking they would  spoil one full day on that  and hence  the above was followed

Have the banks started paying the audit fee for SBA 2014-15?

Union Bank of India has come up with the list of its Statutory Branch Auditors for 2014-15.

Mr. Hareesh,  for classifying an account as NPA, if the available stock statement is older than 6 months.  If the stock statement available is less than 3 months old, the account is regular and for NPA classification, the account should be irregular for 90 days.  This irregularity period starts from the date of stock statement crossing 3 months old.  Hence 3+3, 6 months older stock statement is permissible.

Sathianarayananji's post regarding stock statement warns every one of us to go back to the books and explore for a through understanding of the basics   .  Any how I have not done this in the recent past  , yet  I find myself eager to reply (   after seeing it now almost 2 months later ) 

When stock statements are not available continously for the latest 3 months  (where monthly stock statements are insisted ,  in certain  cases   quarterly  stock statements may be insisted  particularly for small borrower A/C ) it would impair the  drawing power in the account  for such period ( ie the period for which it is used to set the D/P)  and accordingly any amount outstanding in the account can be deemed to be overdrawn . Thus it falls into  NPA  category . 

Normally stock statements obtained from the borrower as on the last day of a month is used by banks to fix the D/P for the next month . Thus March 31st  statements are used for fixing the D/P of  following April ,  Feb 28th / 29th  statement for following March , Jan 31st statement for following Feb  & Dec 31st statement for for following January and so on .   Thus even in the case of a lenient approach / view  non availability four months stock statement  from  December  to March would be enough for NPA classification . 

Stock statements are normally required to be submitted latest by 7 to 10 days of the following month  and in case of  multiple locations or branches   certain banks allow up to 20th day of the following month .

Thus if  Dec . Jan , Feb  statements are not available ( exclude March)  it would be enough to hold the A/c  as without  adequate drawing power during Jan , Feb & March and an N P A if any balance is  drawn and outstanding .

Pl post your comments on  new   S B A 2016  

Finally RBI has come up with the list of Statutory Branch Auditors recommended for appointment in Public Sector Banks - 2014-15.

https://rbi.org.in/scriptts/bs_viewcontent.aspx?Id=2814

Allocation of Branches to Statutory Branch Auditors approved for Appointment in Public Sector Banks for the year 2014-15.

https://rbi.org.in/scriptts/bs_viewcontent.aspx?Id=2216

2. Andhra Bank