Adv 160

MAIN :
ADV-160/2012-13
SUB :
NPA-13
DT.
CORPORATE OFFICE
RECOVERY DEPARTMENT
FILE
30-03-2013
M- 2
S- 208
SUB: RECOVERY POLICY 2013-14

The extant Recovery Policy 2012-13 was approved by the Board on 04 04 2012 and
communicated through all branch Circular No. ADV/06 /2013-14 dated 12.04.2012.
Taking into account the dynamics of change in the area of NPA Management,
guidelines given by Government of India and Reserve Bank of India and considering
the feed-back provided by field level functionaries, the Policy guidelines and norms
prescribed therein have been revisited. The revised Recovery Policy for FY 2013-14
has been approved by our Board on 16 03 2013. The Recovery Policy is annexed.
In order to facilitate field level functionaries to take quick decision, the Recovery Policy
guidelines and the Discretionary powers vested with them have been liberalized so as
to effectively negotiate with the borrowers and conclude the OTS on the spot. The
new recovery policy is oriented towards giving more flexibility and advantage to
Branch Managers and Zonal Managers. Salient features are furnished in Annexure I.
The new Recovery Policy is classified broadly under two categories, viz.
a) OTS Policy for Book Balance up to Rs 10 lakhs; {covering all Borrowal accounts
(including MSEs) where book balance is not more than Rs 10 lakhs and total dues
(including MOI/MLE/MOX) not exceeding Rs 40 lakhs} except some exempted
categories.
b) General OTS Policy, covering all other categories of NPA accounts including MSE
accounts.
Under the OTS Policy up to Rs 10 lakhs, Discretionary Powers for all Sanctioning
authorities starting from Branch Managers in Scale-I have been enhanced so as to
ensure expeditious recovery.
Under General OTS Policy, focus is given on recovery of at least NPV of the available
security, in compliance with RBI guidelines. Additional guidelines have been provided
for calculation of NPV and computation of MRA has been simplified.
Hence, all Branches/Zonal Offices are advised to peruse the Recovery Policy
document thoroughly and make themselves familiar with various norms and yardsticks
required to be complied with while considering compromise settlements. In compliance
with the revised Policy guidelines, please ensure improved recovery and reduced NPA
level.
Prevailing market conditions and present NPA scenario, call for concerted swift action.
Avenues of recovery are abundant. Tapping them warrants meticulous planning and
proper implementation. Restructuring and upgradation of assets should be taken up
on a war footing and within a time frame, right from the beginning of the new fiscal.
Complying with the guidelines provided in the new Recovery Policy 2013-14,
C:\Documents and Settings\Administrator\Desktop\CIC CIR 2012-13\M2 ADV\WORD\ADV_160.doc
1
prospects of recovery through OTS should be explored and OTS proposals are
studied/expedited/sanctioned and recovered within a set timeline. SARFAESI / DRT
proceedings should be hastened and the amounts blocked in NPAs are unearthed and
put into productive purpose. The OTS Policy is now made available right from the
beginning of the new financial year so as to ensure its effective implementation and
the resultant recovery throughout the year.
Several communications have already been issued by the Corporate Office sensitizing
the field level functionaries to be pro-active in preventing slippage of assets and
ensuring better asset quality. Guidelines given under Recovery Policy provide useful
weapon to the Branches to address their stressed assets and improve their recovery
performance. Among the various strategies to arrive at better solution, the art of
negotiation with the borrowers assumes greater significance. The parameters / norms
indicated in the policy are the minimum consideration. Endeavor should be to optimize
/ maximize the recovery using the negotiations skills. Recovery Policy is a helpful tool
to arrive at an improved/ negotiated settlement and thereby to scale up recovery.
Guided by the new recovery policy parameters, Branches/Zonal Offices are urged
upon to take all out measures, including the following, to improve recovery and contain
the NPAs:
Inculcate the spirit / habit of repayment on the borrowers right from day one
of disbursal of any advance at your Branch/Zone.
Contact / Pursue with the borrowers for immediate/time-bound recovery;
Through repeated contacts/personal visits, the Mind-set of the borrowers

should be attuned towards repayment of dues to the Bank.
Motivate and assign targets to Zonal /Branch Recovery Team to ensure

recovery with definite time-frame, right from April 2013 onwards.
Follow up relentlessly and monitor all the recovery measures.
Conduct ABC Analysis of your NPA portfolio (A-Immediate Recovery;

B-Recovery within a definite time-frame; C-Distant Recovery) and ensure
appropriate Action Plan is carried out.
Identify accounts recoverable before Q1, Q2, Q3 and Q4 (31 03 2014) and
focus greater attention on these identified accounts.
Implement Account-wise Action Plan;
Hold regular Recovery Camps.
Organize more Lok Adalath & settle maximum NPA accounts.
Settle NPAs through OTS/Recovery Policy and Recover the OTS amount
within a definite timeline
Be Alert on early warning signals and ensure swift action
Resolve /Recover the overdues at SMA-1 & SMA-2 stage itself
Take up Rephasement/Restructuring on time
Recover /upgrade all fresh NPAs of March 2013.

2
Focus on High value NPAs of your Branch/Zone and Accelerate Recovery
Ascertain particulars of Non-EM properties by utilizing the Private Detective

Agencies (PDA), RTI Act, etc and attach the properties & bring them to sale
Ensure timely SARFAESI proceedings
Enforce Decree and Recovery Certificate (RCs) without any time lag.
Achieve NPA Recovery Target consistently on weekly/monthly basis.
Data Cleaning: Ensure error-free data inputs on Repayment schedule,

holiday period, IB Code, Sector Code and ensure correctness for Devolved
LCs / Defaulted Guarantees;
Ensure total Data integrity towards100% system driven identification of

NPAs and for smooth sailing on Auto-flagging.
Ensure One BorrowerOne CIF approach; Correct Duplicate CIF, if any;
Update Review/Renewal Date /Stock Statement Date.
Ensure borrower-wise asset-classification One Borrower-One Asset

Class-irrespective of the number of credit facilities, the borrower is availing.
For all NPA Accounts, Update (in CBS) Security Value with Realizable
Value of securities, ie Forced Sale Value OR Distressed Sale Value, instead
of Market Value.
Apportion Security value among all credit facilities of the same borrower;
instead of providing the entire value of the security in one facility and
keeping the other facilities as unsecured with Zero value security.
Ensure updating of all NPA Recovery/AUC Recovery in BB-MIS- Template 502
Branches/Zonal Offices are advised to ensure meticulous compliance to the above

Action Points and the guidelines provided in the Recovery Policy 2013-14 towards
scaling up Recovery and containing the slippages.
Please go through the Recovery Policy 2013-14 thoroughly, discuss with your
Quality Circle threadbare and utilize the simplified / liberalized Policy guidelines to
the fullest extent towards achieving optimum recovery and consistent growth for
the Branch/Zone/Bank.
(K MALATHY)
GENERAL MANAGER (R&L)
Encl: Annexure I Highlights of the Recovery Policy 2013-14
Annexure II Recovery Policy Document

3
Annexure I to Circular No. 160/2012-13 DT 30 03 2013
HIGH LIGHTS OF RECOVERY POLICY 2013-14

Norms prescribed for MRA computation in the Policy for One Time
Settlement
The new Policy 2013-14 has entirely two different yardsticks for computing MRA
as follows:
1. All borrowal accounts (including MSEs) where Book Balance is not more
than Rs.10.00 lakhs and with total dues (including actual MOI/MLE/MOX)
not exceeding Rs.40.00 lakhs. This will be known as OTS Policy for
Book Balance Upto Rs.10.00 lakhs
2. All Other Category of advances including MSE accounts. This will be
known as GENERAL OTS POLICY

Discretionary Powers will be different under the above two policies.
(A) OTS Policy for Book Balance Upto Rs.10.00 lakhs

This OTS Policy is applicable to
i.
All NPA Accounts which were classified as NPA on or prior to

31.03.2013.
ii.
All fresh NPAs identified from 01.04.2013.
iii. Where the present outstanding Book Balance per borrower {total of
book balances in all accounts (excluding Tractor / Combined Harvester
/ Farm Mechanisation Loans) in the name of the same borrower} is not
more than Rs.10.00 lakhs and
Total Dues including MOI/MLE/MOX in all these accounts does not
exceed Rs.40.00 lakhs as at end of the quarter in which OTS proposal
is taken up / submitted for sanction.
iv. NPAs of Farm Mechanisation Loans namely Tractor Loans, Combined
Harvester Loans etc. in the name of a borrower to be considered
independently, besides other eligible loans as at (iii) above. However,
total book balances in all such Farm Mechanisation Loans should not
exceed Rs.10.00 lakhs per borrower and total dues including
MOI/MLE/MOX should not exceed Rs.40.00 lakhs.

4
M.R.A. (In respect of NPAs with Book Balance Upto Rs.10 lakhs with
Total Dues upto Rs.40 lakhs)
Asset Class
Sr.
MRA in case of
SubNo.
Doubtful
Loss
Standard
(A) In respect of all eligible
NPA accounts
mentioned above where
total of Book Balances is 80% of Book 60% of Book 50% of Book
upto Rs.2.00 lakhs.
Balance
Balance
Balance
(B)
In respect of all other

eligible accounts where
total of book balances is
above Rs.2.00 lakhs and
upto Rs.10.00 lakhs:
SubStandard
Doubtful
B1
All Agricultural & MSE

Advances (both secured &
unsecured)
100% of
75% of Book
Book Balance Balance
B2
All other Advances:
SubStandard
Book Balance
+ Interest at
Base Rate
(Simple) (as
on 01 04 13)
from Cut-Off
date.
100% Book
Balance
a)
b)
c)
Where Distress Sale

Value (DSV) of
available securities, if
any, is more than the
Total Dues i.e. Book
Balance + MOI +
MLE/MOX.
Where DSV of
Book Balance but
less than Total Dues
as above.
Where DSV of
any, is less than
Book Balance and all
unsecured advances.
Doubtful
Loss
60% of Book
Balance
Loss
Only 100% of 90% of Book

90% of Book
Balance
100% of
75% of Book
80% of Book
Balance
60% Book
Balance
Final Compromise Amount :

Final Compromise Amount that can be sanctioned under the OTS Policy for
NPAs upto Rs.10 lakhs, is MRA as arrived at above plus the amount of
MLE/MOX/future law charges if any.

5
Note: If different accounts of the same borrower are falling under different
category as above, the MRA for each account should be calculated separately
based on the settlement formula indicated for each category as above and total
MRA for the borrower as a whole should be arrived at.
Compromise Settlement should be for the borrower as a whole i.e. it is not
envisaged that compromise could be considered for only in respect of some of the
accounts of the same borrower and allow other accounts to continue.
MRA is Minimum:
The guidelines under the OTS Policy for Book Balance Upto Rs.10.00 lakhs are
designed to help faster recovery of NPA dues. In respect of agricultural advances
and advances where agricultural lands have been taken as security, the
enforcement of security is to be through DRT / Courts only. Therefore, in deciding
upon the OTS amount in such cases (Agri&MSE upto Rs 10 lakhs), stipulating
OTS amount to be not less than NPV of securities has not been made as
condition.
However, as the above MRA amount indicated is the minimum, keeping the
Banks interest as paramount, Branch/ Zonal Office should strive to recover
maximum possible amount from the parties, depending on the merits of the
individual accounts and availability / enforceability of securities / net worth of the
borrower / guarantor/s. Branch / ZO should endeavour to conclude OTS
amount which is not less than the NPV of securities also.
In respect of the small value Agriculture & MSE loans upto book balance of Rs 10
lakhs, the NPV of securities is not reckoned and MRA only is insisted upon.
However, Branch/ZO are advised to keep in view the realizable value of available
security, if any, while negotiating for OTS to get maximum possible amount over
and above MRA.
Sanctioning Authority:
For exercising discretionary power for sanctioning / approving the OTS under this
Policy, the amount of Write-Off permitted alone is to be taken into account. (As a
cap has already been fixed for eligibility criteria, viz. Total dues not exceeding
Rs.40.00 lakhs, the sacrifice by way of Waiver is not stipulated for discretionary
powers. However, while communicating OTS sanction to the parties, branches
should ensure that total amount of sacrifice viz. actual Waiver of MOI/MLE/MOX
as per CBS / Books alone are informed to the parties besides Write-Off, if any,
allowed.)

6
Sanctioning
Authority
ZLCC (GM/ZM)
ZLCC(DGM/ZM)
ZLCC(AGM/ZM)
Scale VI BMs
Scale V BMs
Scale IV BMs
Scale III BMs
Scale II BMs
Scale I BMs
(Rs. in lakhs)
Maximum Sacrifice by
way of Write-Off
permissible per OTS
case
6.25
6.25
6.25
5.00
4.00
2.00
1.50
1.00
0.50
Note: The discretionary power mentioned is Write-Off amount only irrespective of

sacrifice by way of waiver of MOI/MLE/MOX amount.
Sanctioning Authority: Branch Managers are vested with powers for sanction of
OTS in cases conforming to above norms except in the case of loans sanctioned
by himself / herself earlier and such accounts shall have to be referred to the next
higher authority.
(B)
General OTS Policy:

For arriving at Minimum Recoverable Amount (MRA) under General OTS
Policy the following steps are to be gone through:
(I)
First calculate INTEREST COMPONENT as follows:

Ascertain Cut-Off Date (COD viz. the date from which interest ceased to be
charged in the account) and ascertain total amount due as on the Cut-Off
Date.
Calculate Interest Component (interest amount) on the amount due from
the COD till end of the quarter in which the OTS is sanctioned / proposed in
the account by applying:
i.
BASE RATE at Quarterly Compounding, if the account is non-suit

filed or suit filed but not-decreed one.
ii.
Card Rate at Quarterly Compounding, if Card Rate as per

sanction is less than Base Rate.
iii. ROI (compound or simple) as allowed by DRT / Court in the

decree/RC in the case of decreed accounts where the Bank has
decided not to prefer appeal against the ROI allowed in the decree /

7
RC. Interest amount either at the decreed rate or at Base Rate

quarterly compounding whichever amount is lower should be taken
as Interest Component.
a)Debits and Credits made to the accounts subsequent to the
COD should be taken into account and value-dated.
Base Rate mentioned here is the Base Rate as on 01.04.2013.
(II)
Next calculate NOTIONAL DUES as follows:

1
Book Balance as on the date of OTS

negotiation
Interest Component calculated as above
Actual outstanding MLE / MOX

Law Charges, if any
Notional Dues
&
Future
D = (A + B + C)
The actual amount of OTS proposed by the branch / ZO should be

compared with the above Notional Dues to arrive at sacrifice for
determining the sanctioning authority.
(III) Classify the Dues as Secured / Partly Secured / Unsecured by comparing
Realisable Value (RV) or Distressed Sale Value (DSV) or Forced Sale Value
(FSV) of Securities with the above Notional Dues (ND).
a) If RV/DSV/FSV is greater than the ND, the advance should be treated as
secured.
b) If RV/DSV/FSV is lesser than ND but more than 50% of the ND, then the
advance to be treated as partly secured.
c) If RV/DSV/FSV is lesser than 50% of the ND, then the advance should be
treated as unsecured.
(IV)
Concession on Interest Component:

The concession allowed by the Bank out of the above Interest Component
will decide the MRA. Bank is ready to allow a portion of Interest
Component as concession which is prescribed as a percentage of the
Interest Component and that portion of the interest component will be
deducted from the Notional Dues for arriving MRA. The percentage is
different for different categories of advances as follows:

8
Category of Advance / Asset Classification
A.1
A.2
Agricultural Advances (Direct / Indirect /

Allied Activities) (Advances to Coffee / Tea /
Rubber Plantations to be excluded here.)
Substandard and Doubtful (D-1) Assets
Doubtful (D2, D3) and Loss Assets
%age of Interest
Component to be
deducted from
Notional Dues for
arriving MRA
Fully Partly
Unse
Secure Secur
cured
d
ed
20%
30%
50%
40%
50%
100%
Micro and Small Enterprises
B.1
20%
30%
50%
B.2
40%
50%
60%
15%
30%
20%
40%
30%
50%
All other types of advances
C.1
C.2

Doubtful (D2, D3) Assets and Loss Assets
Note: Percentage indicated above are only for calculating reduction in the
amount of Compound Interest calculated for Notional Dues. That portion
of interest amount should be deducted from the Notional Dues to arrive at
MRA.
Minimum Recoverable Amount (MRA) will be:
1
Book Balance as on the date of OTS negotiation
Add: Interest Component calculated as above
Add: MLE / MOX / Future Law Charges
Notional Dues
Less: Interest Concession Allowed as % age of B i.e.
5.
(x% x B)
6.
MRA

9
D = (A + B + C)
E
D minus E
(Rs. in lakhs)
Sanctioning Authority
Committees:
Management
Committee
Credit Approval
Committee
COLCC (ED)
COLCC(GM) at
Corporate Office
ZLCC (GM/ZM)
ZLCC (DGM/ZM)
ZLCC (AGM/ZM)
ZLCC at ARM Zone
Branch Managers:
Scale VI BMs
Scale V BMs
Scale IV BMs
Scale III BMs
Scale II BMs
Scale I BMs
Existing
Discretionary
powers
upto 31 03 2013
Of which
Sacrifice
write off
Revised Powers
w.e.f. 01.04.2013
Sacrifice
Of which
write off
Full
Power
200.00
Full
Power
200.00
Full
Power
200.00
Full
Power
200.00
100.00
50.00
100.00
25.00
125.00
75.00
125.00
35.00
50.00
30.00
10.00
--
25.00
15.00
4.00
--
70.00
40.00
30.00
30.00
25.00
15.00
15.00
15.00
30.00
10.00
5.00
4.00
3.00
2.00
10.00
4.00
2.00
----
30.00
10.00
5.00
4.00
3.00
2.00
10.00
4.00
2.00
----
The above highlights of the Policy norms are in respect of computation of MRA
only. For all guidelines and norms, including MRA computation and discretionary
power for sanction, please be guided by the Policy Document only.
_______

10
RECOVERY POLICY 2013-14 INDEX

Para
No.
Subject
Page
No.
Chapter 1 - INTRODUCTION
1.1
1.2
1.3
1.4
1.5
Introduction
Income Recognition, Asset Classification & Provisioning
Prevention of occurrence of NPAs
Objectives of Loan Recovery Policy
Recovery Strategies
1
1
2
2
3
Chapter 2 NEGOTIATED SETTLEMENT

2.1
2.2
Aims of Negotiated Settlement Policy

Guiding Principles in OTS / Compromise / Negotiated Settlement
5
5
Chapter 3 VALUATION OF SECURITY ASSETS

3.1
3.2
3.3
3.4
3.5.1
3.5.2
3.5.3
3.6
Valuation of Assets
Valuation Report less than one year old
Valuation in respect of properties valued upto Rs.5.00 lacs
Valuation in respect of properties valued more than Rs.50.00 lacs
Net Present Value (NPV) RBIs directives
Realisable Value of securities for the purpose of OTS
Calculation of Net Present Value of Securities Factor Chart
Visit by Team of Officials
8
8
8
8
9
9
10
11
Chapter 4 Minimum Recoverable Amount

4.1
4.2
4.3
MRA Description
MRA As per previous Recovery Policy 2012-13
MRA Changes proposed
13
13
13
5.1
5.2
5.3
5.4
5.5
5.6
5.7.1
5.7.2
5.7.8
5.8
5.9
5.10
5.11
5.12
5.13
5.14
5.15
5.16.1
Chapter 5 OTS Policy for Book Balance Upto Rs.10.00 lacs

Applicability of the Policy
Coverage of the Policy
Cases to be considered at Branches & Zonal Offices
Cases to be considered only at Corporate Office
OTS in respect of Self-liquidating Securities
OTS in respect of Lok Adalat Settled Cases
Settlement Formula (MRA) - for Book Balances upto Rs.10.00 lacs
Final Compromise Amount
MRA is Minimum
Security Value
Appropriation of Subsidy
No Refund of Recoveries Already Made
Authorities to sanction OTS under the Policy
Deviations Permitted
Restriction to Full Write-Off
Write-Off Amount restricted to Provision Amount available
Acceptance of OTS by borrowers
Upfront Amount
15
15
16
16
16
16
17
18
18
18
19
19
19
20
20
20
20
20

11
5.16.2
5.16.3
5.16.4
5.17
5.18
5.19
5.20
Period for Payment of OTS amount sanctioned

Failure to Pay
Revival / Revalidation / Extension of Time
Staff Accountability
Option to Borrowers to avail OTS under General OTS Policy
Reporting
Submission of Write-Off Claims
20
21
21
21
21
21
21
Chapter 6 General OTS Policy

6.1
6.2.1
6.2.2
6.3
6.4
6.5
6.6.1
6.6.2
6.6.3
6.7
6.7.1
6.7.2
6.7.3
6.8
6.9
6.10
6.11
6.12
6.13
6.14
6.15
Eligibility
Accounts to be considered only at Corporate Office
OTS in Fresh NPAs of the Current Year viz. 2013-14
Minimum Recoverable Amount Changes Made
Calculation of Interest Component Amount
Calculation of Notional Dues
Classification of Dues as Secured / Partly Secured / Unsecured
Where Security Value to be taken as NIL
Where obtaining of fresh valuation not necessary
Minimum Recoverable Amount
Concession on Interest Component
Computation of Minimum Recoverable Amount
MRA is only Minimum Indicative Amount
Relaxations Permitted
Final Compromise Amount should be
Discretionary Powers for Sanction of OTS under General Policy
Restrictions on Exercise of Delegated Powers
Deviation from Norms Who can authorize
Waiver of Penal Interest Only
Recovery of Home Loans
Fresh NPAs of 2013-14 Authorisation to Zonal Managers
22
22
22
22
23
23
24
24
24
25
25
26
26
26
27
27
28
28
28
29
30
Chapter 7 Other OTS Related Issues

7.1.1
7.1.2
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
7.10
7.11
7.12
7.13
7.14
7.15
7.16
7.17
Release of Part of Securities / Non-Promoter / Third Party

Guarantors
Authorities to approve the release
Assignment of Debts under OTS
Terms and Conditions to be stipulated in the OTS Sanctions
OTS in accounts with Non-fund Based outstanding dues
Group Accounts
Terms of Payment
Ascertaining Source of Funds for Settlement under Compromise
Extension of Time for Payment of OTS amount
Write-Off of Entire Dues in Accounts / Recovery in Written Off a/cs
Waiver of Legal Action
Recovery of OTS amount as per sanction terms
Suit Filed / Decreed Accounts
BIFR Referred Accounts
Staff Related Accounts
BOT NRR Accounts
Retrieval of Provision
Release of Securities on Payment of OTS Amount

12
31
32
33
33
34
35
35
35
35
36
38
38
38
38
39
39
39
39
7.18
7.20
7.21
7.22
Release of Securities where liabilities exist in Group Accounts

Guidelines to be followed after sanction of Compromise Proposal
Submission / Reimbursement of Write-Off Claims
CAUTION
40
40
42
42
Chapter 8 Committees for Recovery

8.1
8.2
8.3
8.4
9.1
9.2
9.3
9.3.3
9.4.1
9.4.2
9.5
9.6
9.7
9.8
9.9
Settlement Advisory Committee

Committee of General Managers
Asset Sales Committee
Asset Recovery Committee
Chapter 9 Other Recovery Issues
Purchase of Security Properties by the Bank in Auctions
Accounts under Willful Defaults
Fraudulent Borrowers
Government Guidelines in dealing with Fraud involved cases
Resolutions of NPAs involving PIL / CBI Cases
OTS in Fraud involved cases
Security Value and Provisioning
Appropriation of Recoveries in NPA accounts
Sharing of Recoveries under SARFAESI actions in Consortium
cases
Authority to decide issues in OTS Policy
Authority to authorize Discretionary Powers under OTS Policies
43
43
44
44
45
47
48
48
49
49
50
50
51
52
52
Chapter 10 Miscellaneous
10.1
10.2.1
10.2.2
10.2.3
10.2.4
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
Reporting System
Proposal Formats
Time Frame in submission of proposals
Certificate for Compliance of RBI guidelines
Certificate of Closure of Account
Definition of Terms Used in the Policy
Staff Lapses
Extension of Further Loans in Compromise Settled Accounts
Provisioning in respect NPA accounts
Extension of Policy Guidelines on Creation of Utilisation of Floating
Provisions
Extension of Policy Guidelines on Collection of Dues and
Repossession of Securities
Extension of Policy Guidelines for Sale of NPAs
Policy on Restructuring of Accounts & Rehabilitation of Sick Units
Applicability of All Guidelines of RBI
Authority to Approve Interpretation
Indian Bank Model Code for Collection of Dues and Repossession
of Securities (CDRS Code)
Appointment of Recovery Agents in SARFAESI proceedings and
other Recovery Process
Appointment of ARCs as Recovery Agents for Recovery of Loss
Agents
SARFAESI Action to expedite Recovery
Amendments to SARFAESI Act

13
53
53
53
53
53
54
55
55
56
56
56
57
57
57
57
58
60
61
61
61
A
ANNEXURE I - ADV 160/2012-13 DT. 30.03.2013 ON RECOVERY POLICY 2013-14
RECOVERY POLICY 2013-14

Chapter 1
Introduction
1.1
INTRODUCTION:
Non Performing Assets, Stressed Assets, Bad Loans one may call
them by any name they are simply a drag on the concerned Banks
profitability. They impact the profit in two ways. First, the Bank is not able
to recognize interest income in respect of these assets. In addition, the
Bank is required to make prescribed provisioning amount ranging from 25%
to 100% of such NPAs from out of interest-income hard-earned by it from
other good performing assets.
Besides impacting the profitability, large NPA position of the B ank affects its
balance sheet and present uncomfortable indices.
Thus, occurrence of these assets is to be avoided at any cost in the first
place by effective monitoring of performing assets. But, once they have
occurred and the accounts slipped into NPA, concerted efforts need to be
taken expeditiously for resolving the NPAs through all the channels for
recovery.
Negotiated Settlement or Compromise Settlement or One Time Settlement
has been found to be one of the quickest and easiest routes to resolve and
recover our dues in most of such NPAs. Though this route of recovery
results in sacrificing part of the Banks legitimate dues, the time value of
money plays a crucial part in deciding upon this course of action, besides
spending on legal complications.
Thus, keeping in view the importance of negotiated settlement in our Banks
efforts to resolve large portion of the non-performing assets and in order to
facilitate our field level officials to be apprised of themselves about the
Banks approved policy guidelines as well as the discretionary powers
vested to them while negotiating / concluding compromise settlement with
borrowers, the present simplified compromise policy for the year 2013-14
has been formulated.
1.2
INCOME RECOGNITION, ASSET CLASSIFICATION & PROVISIONING:

The system of Asset Classification and Provisioning is well established in
the Bank. In compliance with Government/RBI guidelines, the identification
of NPA is now system driven (CBS). In tune with RBI guidelines on income
recognition, asset classification (IRAC) and provisioning, in our Bank, Zonal
Managers will certify the correctness of Asset Classification to Corporate
Office irrespective of the amount, at the time of annual closing of accounts
and quarterly review of the accounts.
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Borrowal accounts with outstanding up to Rs.10 lakhs have to be closely

monitored from the level of SMA-1 by Zonal Offices and accounts with
outstanding above Rs.10 lakhs by Corporate Office. Reasons for the
slippage of the accounts to SMA category have to be discussed by the
Standard Assets Monitoring Committee besides taking corrective steps
immediately and issuing directions for rectification of deficiencies /
irregularities by the Branches. Zonal Offices should ensure that steps are
taken by the branches to rectify the irregularities identified during the
monitoring process without any loss of time and eliminate the tendency to
delay or postpone the identification of NPAs. Recovery teams / Branches
have to be proactive in taking up resolution of NPAs expeditiously.
1.3
PREVENTION IS BETTER THAN CURE:

It is prudent to prevent the slippage so as to save time, labour and cost.
Following Action Points to be pursued to prevent slippage in Asset Quality:
Thorough credit appraisal and stringent compliance with sanction
terms, adherence to documentation, security creation procedures and
disbursal of loan ensuring end-use,
Effective follow up / monitoring of the borrowal accounts through
collection of regular periodical returns,
Regular recovery of periodical interest and instalments as and when
they fall due,
Keeping strict surveillance of borrowal accounts / securities charged
and initiating corrective measures on catching early warning signals,
Getting alerted at trigger points / movement in Special Mention
Accounts (SMA) category and take quick / appropriate action.
Prompt recovery of critical amount to avoid slippage.
Rephasement / Restructuring of Standard Advances wherever
applicable, within the ambit of Banks Policy.
Timely revival / rehabilitation of sick or potentially sick and viable
units.
Corporate Debt restructuring (wherever feasible).
1.4
OBJECTIVES OF LOAN RECOVERY POLICY:
1.4.1
Reduction in NPA Level: To reduce the level of NPAs by upgradation /

recovery through a host of measures some of which are delineated below:
Persistent contact / follow up with the borrowers for recovery.
Enforcement of SARFAESI Act 2002 and recovery by selling the
properties within 120 - 130 days of issuing notice under section 13(2) of
the Act.
Suits filed in appropriate Civil Courts / DRTs to be closely followed up to
ensure full recovery within a maximum period of 12 - 24 months.
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Invoking provisions of Revenue Recovery Act, wherever applicable /

available.
Referring the cases to Lok Adalats / DRT Lok Adalats for settlement
through conciliation.
Settlement through Compromise, as it is litigation-free and, hence, time
efficient.
Execution of decrees immediately on obtaining money decree or final
decree in case of secured advances.
1.4.2
Upgrading the existing NPAs by improving the quality of assets:

Upgrade the accounts by recovering the critical / overdue amount.
Rephasement / Restructuring / Rehabilitation of accounts wherever
possible / justified, within the ambit of Banks Policy.
Recovery of amount as per approved scheme in respect of BIFR/CDR
accounts.
1.5
RECOVERY STRATEGIES:
1.5.1
Depending upon local conditions, branches have to adopt appropriate

strategies for recovery of the balance in NPA accounts. Some of them are:-:
Persuasion / personal contacts with the borrower / guarantors, as there is
no substitute for personal contacts.
Seizure and disposal of securities through enforcement of SARFAESI
Act 2002 in chronic cases, within 120 - 130 days of issuing notice under
section 13(2) of the Act.
Engage Detectives/Recovery Agents for identifying/locating nonmortgaged properties owned by the borrowers/guarantors and attach
them before judgement also.
Settlement through compromise, which is the most time efficient tool for
resolving NPA. However, the amount of OTS should be acceptable in
terms of the Banks approved Policy guidelines.
Prefer claim with ECGC/CGTMSE/Insurance Claims etc., as may be
applicable, without delay and pursue it for settlement.
1.5.2
Legal Action: Legal action is resorted to for recovery of the dues and
branches have to appreciate that the action is not an end in itself. The
following are the steps that Branches have to resort towards recovery
through legal action:
i.
ii.
Serving of legal notices

Filing of suit / initiating proceedings under Revenue Recovery Act /
Referring to Debt Recovery Tribunals / Lok Adalats.
iii. Obtaining interim orders from the Court / DRT like appointment of court
receiver, obtaining injunction order, seeking attachment of assets
owned by Judgement Debtors (JDs) etc.,
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iv. Filing of appeals wherever necessary;

v. Execution of decrees
vi. In mortgage suits, within three years of obtaining preliminary decree,
application for final decree has to be filed.
vii. Seeking declaration of Assets by Judgement Debtors (JDs) through
orders of the Presiding Officers of DRT/Court, wherever security
coverage is inadequate.
viii. Getting the defaulting JDs arrested in case of non payment of decreed
account, by executing RCs.
ix. Filing Insolvency Petition (IP) against Certified Debtors (CD) for
compelling them to come out with payment offer.
x. Initiating Criminal proceedings wherever necessary
xi. Deploying Recovery Agents in cases where their deployment is
justified. Guidelines on utilisation of Recovery Agents and CDRS code
stipulated in Cir.No. ADV.10 / 2008-09 dated 28.04.2009 shall be
followed scrupulously.
To cut down the delay in getting decree specially in cases where security
cover is inadequate or non-existent, branches should file summary suit, with
the permission of ZM, obtain decree quickly and thereafter proceed to attach
non-EM properties or Salary or other movables so as to force repayment.
However, branches have to ascertain the provisions available in their State
as it is not uniform throughout the country.
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Chapter 2
Negotiated Settlement
2.
NEGOTIATED SETTLEMENT:
2.1
Negotiated Settlement policy guidelines aim at the following:

a) Quickest recovery of maximum possible dues keeping the sacrifice
minimum.
b) Making the field level officials to be aware of Banks approved guidelines
in negotiating and concluding compromise settlements.
c) Determining the minimum recoverable compromise amount based on
security available and the present paying capacity of the borrower at
stipulated rates of return.
d) Laying due emphasis on recovery of at least the NPV of realizable value
of securities in compliance with RBI guidelines, in accounts where
securities are available.
e) Putting in place simplified norms for compromise settlement for NPA
accounts under the small borrowers category (dues below Rs.10 lakhs).
f) Minimizing the Sacrifice and Maximising Recovery.
2.2
Guiding Principles in OTS / Compromise / Negotiated Settlements:

Compromise / Negotiated settlements may be considered in an account
where exiting from the account by accepting a reasonable sacrifice is a
better option than to continue with the legal battles for uncertain period and
for an uncertain result. A bird in hand is worth two in the bush should be
the guiding principle.
In all cases where the advance is secured by tangible assets, the economics
of the compromise proposal should be determined in such a manner that it is
always advantageous to the Bank.
2.2.1
Justification for Compromise: Compromise proposals should be

supported by / substantiated with justification as to the need for and the
circumstances that has led to opting for compromise mode of recovery
should highlighted and discussed in detail. Factors attributable for OTS
option are failure of unit due to commercial or technical reasons,
Government policies affecting functioning of the unit, Court Orders, death of
principal promoter, non-availability / loss / depletion of securities etc.
2.2.2
Minimum OTS Amount: There should be a well defined / described

minimum amount of OTS below which the Bank would not generally
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entertain any OTS negotiation. Such amount arrived at as per prescribed

methodology should be the minimum and one should endeavour to conclude
OTS much above such minimum amount using ones own negotiating skill.
2.2.3
Security Value and NPV of securities: While recommending the

compromise proposals, the adequacy / marketability or otherwise of NPV of
realisable value of available primary and/or collateral securities, net worth of
borrower / guarantor at the time of compromise settlement shall be taken
into account. Besides, age of the borrowal account, amount of provision
held, amount of claims (net amount) settled by the ECGC/DICGC/CGTMSE,
documentation defects such as non-creation of charge, time involved in the
ongoing legal proceedings, the interest rates charged etc. should also be
taken into consideration, analysed and specified in the proposal to enable
the Bank to consider any sacrifice in the account.
2.2.4
Avoidance of Write-Off: Aim should be to avoid write off even a part of

principal dues / book balance.
2.2.5
Benefits of Compromise: In concluding OTS, benefits expected to accrue

to the Bank by considering the compromise proposal should be taken into
consideration and highlighted. Generally following benefits from negotiated
settlements should be highlighted:
i.
Impact on Profit and Loss Account and Balance Sheet,

Amount recovered over and above book balance is recognition of
income while the amount of provisions which could be retrieved is
positive contribution to Banks bottomline,
Recovery of book balance / principal dues is reduction of NPA
position of the Bank and improves the balance sheet position.
ii.
Yield / Effective rate of interest i.e. the amount of MOI recovery by the
OTS to the Principal dues recovered.
iii.
Net Present Value / Discounted Cash Flow for the total dues
recoverable.
2.2.6
Upfront Payment: In respect of all OTS proposals, particularly the high

value proposals of Rs.10.00 lakhs and above, the OTS offer should be
accompanied by a minimum upfront amount of 10% of the OTS offered from
the Borrower so as to commit him / her to the proposal. The upfront amount
may be kept in an interest bearing NO LIEN account with the Bank.
2.2.7
Staff Accountability Aspect: Compromise proposals can be considered in

accounts where staff lapses have been identified and where Staff
Accountability exercise / staff action is yet to be completed / concluded.
However, Staff Accountability exercise should have been undertaken in
each case and lapses identified should be reported in the Compromise
Proposals together with details of action initiated against the persons
responsible for the lapses. It is necessary that generally a decision on staff
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lapses is taken immediately when an account becomes NPA. Copies of

Staff Accountability Report, even in cases where no lapse has been
identified, should be submitted alongwith compromise proposal with remarks
of the Branch Manager and Zonal Manager.
2.2.8
Government Guaranteed Accounts: Generally, when the Government

Guarantee is available, any sacrifice should be resisted. Non Performing
Accounts in which government guarantees are held by the Bank may be
considered for compromise settlement with due justification.
2.2.9
In short, the Recovery Policy aims at:

Recovering the Book Balance along with Memorandum of Legal
Expenses (MLE) and maximum amount of undebited interest (MOI)
through negotiated settlement.
While considering compromise proposals, due emphasis should be given
to the benefits that accrue to the Bank by way of income, retrieval of
provision held, yield and effective rate of return on the NPA, income
accrual by way of recycling, besides impact on the capital adequacy
requirements.
Providing a methodology to arrive at Minimum Acceptable Amount of
OTS for deciding the quantum of compromise amount,
Arriving at NPV of the realisable value of securities (primary/collateral)
charged to the Bank and net worth of the borrower/guarantor at the time
of compromise settlement,
Timely disposal of OTS proposals as any delay/reluctance may cost the
Bank substantial money apart from loss of opportunity.
2.2.10 Parties to negotiate with: Compromise may be negotiated with:

1. Principal Borrower/s,
2. Guarantor/s either for partial payment or for full settlement,
3. Parent Company,
4. Other interested parties like drawees of bills, legal heirs, purchaser of
charged assets of the Bank, etc.
2.2.11 Seriousness on the part of parties about OTS: Parties offering OTS
should be serious and willing to settle the dues under OTS. Negotiating
OTS should not be allowed as a ploy on the part of the borrower / guarantor
to delay Banks recovery action. Serious and sincere OTS negotiations
should conclude within a short time. Branch Manager should ascertain and
find out keenness of the parties about OTS and their ability to mobilze funds
to pay up the settled amount and proceed further. Otherwise it will be
waste of time and energy.
2.2.12 Rejection of Compromise Proposals: No compromise proposal should
be rejected at the Branch Managers level. It should be referred to the next
higher authority or to the sanctioning authority concerned for decision.
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Chapter 3
Valuation of Security Assets

3
VALUATION OF SECURITIES:
3.1
Valuation of assets: All properties / assets charged should be valued

properly by Banks approved panel engineers / valuers at the time of One
Time Settlement, to enable the Bank to negotiate for maximum and higher
amounts.
3.2
Valuation Report less than one year: The extant guidelines on valuation
of securities in the case of NPAs stipulate that Sanctioning Authorities while
considering Compromise Settlements should ensure that the valuation of
securities is not more than one year old. In view of escalation in real estate
valuation, field level functionaries have been advised to obtain latest
valuation (with Realisable value of securities) on receipt of OTS proposal,
3.3
Valuation in respect of properties valued upto Rs.5.00 lakhs: Branch

Managers valuation of properties charged to the Bank is acceptable up to
value of Rs.5.00 lakhs, even if approved valuers report is not there.
However, in respect of properties over Rs.5 lakhs valuation by Banks
approved valuer to be obtained.
3.4
Valuation in respect of properties valued more than Rs.50.00 lakhs

Wherever the value of (individual) immovable property is more than Rs.50
lakhs at the time of OTS / Release of property / proceeding on sale of
property under SARFAESI, two independent valuations to be obtained. The
revaluation shall be done by approved Valuers other than the Valuer who
gave the previous valuation. This will help to check any overvaluation /
undervaluation of properties. Branch Managers should not be merely guided
by the valuation done by Engineers, but make local enquiry / enquiries with
Sub-Registrars Office for cross verifying that the valuation done is not
grossly different from the market / government guideline value. As the OTS
amount depends mainly upon the value of securities, extreme care should
be taken by the Branch Managers who should visit the properties before
considering OTS or submitting OTS proposal.
a. The present condition of securities should be verified before OTS
proposals are submitted by inspection of assets by Branch Officials.
b. Realisable value of securities in respect of fixed assets like land and
building, plant and machinery and vehicles under charge to the Bank will
be based on the following:
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Government guidelines/ registration valuation to be certified by approved

engineer OR
Realisable value given by approved Engineer taking into account (i)
Location, (ii) nature of security, (iii) age / size/ volume of security. (iv)
possession status like tenancy / freehold / accessibility, (v) condition of
security, (vi) marketability / availability of buyers, (vii) statutory dues to
the Government on the security OR
Assessed market value (by branch manager after making local enquiries
in the locality during the visit for inspection of security)
Realisable Value of securities should be given separately for Land,
Building, Plant & Machinery, in OTS Proposal, along with values as per
old valuation.
Conduct of annual stock audit by external agencies: Guidelines as
stipulated in the Loan Policy / Credit Risk Management Policy 2013-14
should be followed scrupulously.
3.5.
Net Present Value (NPV)
3.5.1
RBIs directives on Compromise Settlement:

Reserve Bank of India, vide their circular dated 04.10.2007, advised that
Banks, during compromise settlements, should ensure that OTS amount
should generally not be less than the Net Present Value (NPV) of the
realizable value of available securities. The NPV of realizable value of
available securities should be assessed objectively.
Where the Bank has enforceable securities, the compromise / OTS amount
should not be generally less than the NPV of realizable value of securities.
Thus, if in any case OTS proposed to be accepted is less than the NPV of
securities, the reason therefor should be clearly spelt out. The reasons
should be genuine and shall stand up to scrutiny for justification.
NPV of realizable value of available securities has to be compared with that
of minimum acceptable compromise amount (i.e. MRA) as per Banks norms
as well as with the OTS amount offered. Efforts should be made for
maximizing recovery and OTS amount should not be less than both the
minimum acceptable compromise amount (MRA) as well as the NPV of
securities.
3.5.2
Realisable Value of Securities for the purpose of OTS:

It is our experience that branches / ZO find certain difficulties in adopting
uniform methods for calculating NPV of securities. It requires to be clarified
as follows and further calculation for arriving NPV of securities are to be
made easier / simpler at the branch level when they take up negotiation.
i.
NPV of securities is to be computed only on Realisable Value of the

securities and not on Market Value. Wherever, Engineers Valuation
Reports (EVR) specifically give Realisable Value (RV), Distressed Sale
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Value (DSV) or Forced Sale Value (FSV), same may be taken as

Realisable Value for computation of NPV.
ii.
If no such RV/DSV/FSV is specifically given in the EVR or other

valuation reports, branches may reduce the Market Value (by
maximum 20% depending on easy saleability of the asset) to arrive at
Realisable Value.
iii. Presently, in computing NPV of securities, 2.5 to 5% is reduced in the

first place from the Realisable Value before computing NPV. As the
valuers generally reduce 20 25% from the market value to arrive at
RV/DSV/FSV to take care of selling the assets immediately, we need
not again reduce the value from RV/DSV/FSV by another 5%.
Hence the following may be followed:
1. Realisable Value (RV) or Distressed Sale Value (DSV) or Forced Sale
Value (FSV) as given by the Valuer in the Valuation Report should be
reckoned as the Realisable Value of Securities.
2. If two valuation reports have been obtained from two different valuers,
higher of the two values given by the different valuers should be
reckoned.
3. Since selling expenses generally gets factored in when the Valuer gives
the RV/DSV/FSV, no further reduction need to be allowed for selling
expenses.
4. Above values as given by the Banks approved valuers may be taken into
consideration in the case of immovable properties and plant and
machineries.
5. If there are disposable / saleable stocks hypothecated to the Bank still
available to the Bank as security, 50% of the value of the stocks may be
taken as its realizable value depending upon (a) nature of stocks
(perishable / non-perishable), (b) quality of stocks, (c) age of stocks (d)
easy marketability of the stocks.
3.5.3
Calculation of Net Present Value of Securities:

Net Present value is arrived at based on future cash flows. It factors the
time taken for realizing a particular amount.
It is the present value of
amount/s that may be recovered at a future date/s. Assuming that the likely
time that may be required to realise the value of security is two years, the
NPV of that asset/s today will be less than the realisable value. It is arrived
at by discounting the Realisable Value of the available security and is
calculated by applying a discounting rate with quarterly compounding.
i.
For arriving at NPV of the realizable value of the available securities,

branches have to calculate the NPV by applying the discount rate. The
rate to be applied is the Base Rate of Interest of the Bank as on 1st
April of the financial year. (Base Rate is 10.20% as on 01 04 2013)
ii. The discounting factor for finding out NPV of future amount at different
discounting rates is shown in a separate table given below. The
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Realisable Value of Securities should be divided by the factor for the

specific discount rate for the specific number of years.
iii. The number of years to be applied is the time taken for realisation of
securities which depends upon case history, legal status, nature of
litigation, etc. The number of year / time limit for this purpose should
not exceed for:
House / Residential Properties / Plots in cities & towns
House / Residential Properties / Plots in villages
Other assets / properties eligible under SARFAESI auction
Agricultural Lands where suit is decreed
Agricultural Lands where suit is not decreed
1 year
2 years
2 years
2 years
4 years
Where there are different types of securities available in the same borrowal
account, NPV for each type should be calculated by applying the relevant
discounting factor for the relevant year and sum of the different NPVs to be
compared with the OTS amount.
FACTOR FOR ARRIVING NPV

Period
Discount Rate applied

10.00%
10.20%
10.25%
10.50%
10.75%
11.00%
11.50%
12.00%
12.50%
1 Year
1.1038
1.1060
1.1065
1.1092
1.1119
1.1146
1.1201
1.1255
1.1310
2 Year
1.2184
1.2232
1.2243
1.2303
1.2363
1.2424
1.2545
1.2668
1.2791
3 Year
1.3449
1.3528
1.3547
1.3647
1.3747
1.3848
1.4051
1.4258
1.4467
4 Year
1.4845
1.4961
1.4990
1.5137
1.5286
1.5435
1.5738
1.6047
1.6362
5 Year
1.6386
1.6547
1.6587
1.6790
1.6996
1.7204
1.7628
1.8061
1.8505
6 Year
1.8087
1.8300
1.8354
1.8624
1.8898
1.9176
1.9744
2.0328
2.0928
7 Year
1.9965
2.2039
2.0308
2.0658
2.1013
2.1374
2.2114
2.2879
2.3670
8 Year
2.2038
2.2384
2.2472
2.2914
2.3364
2.3824
2.4769
2.5751
2.6770
To get Net Present Value, divide the Realisable Value by the above factor.
3.5.4
While recommending compromise proposals, adequacy or otherwise of NPV

of realizable value of available primary / collateral securities, net worth of
borrower /guarantor at the time of compromise settlement shall be taken into
account. Besides, age of the borrowal account, amount of provision held,
amount of claims (net amount) settled by the ECGC/DICGC/CGTMSE,
marketability of securities, documentation defects such as non-creation of
charge, time involved in the ongoing legal proceedings, the interest rates
charged etc. should also be taken into consideration, analysed and specified
in the proposal to enable the Bank to consider any sacrifice in the account.
3.6
Visit by Team of Officials: Wherever OTS recommendations of the Branch

/ ZO is to accept lesser amount than the Realisable Value of the property as
per the valuation report, same must be accompanied by a report of a
Committee consisting of the Branch Manager, Loan Officer of the Branch
and a representative from Zonal office about the condition of the property
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and the need to accept a lesser amount and the report of the committee be
placed to SAC and Sanctioning Authorities.
However, submission of the visit report is not required in respect of the
following categories:
In respect of all NPA accounts, where the book balance is upto Rs.10.00
lakhs and / or where the total outstanding is less than Rs.50.00 lakhs
Where the security is an agricultural land.
In respect of the above exempted categories, field level functionaries are
advised to continue to be guided by the valuation report furnished by the
independent valuers while finalizing the OTS amount.
Branch / Z.O. are to ensure realizing better value for the assets charged to
the Bank as security while considering OTS proposals.
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Chapter 4
Minimum Recoverable Amount

4.1
(MRA)
In the previous Compromise Policies till the year 2012-13, the benchmark
compromise / OTS amount was described as Minimum Recoverable Amount
(MRA) and the methodologies to compute the amount were different for
different categories of advances.
It is the amount which the Bank would insist as the minimum for accepting a
Compromise Settlement from the borrower / guarantors etc. Actual OTS
amount finally agreed to by the Bank would be anything more than the MRA
mentioned above.
In the current Recovery Policy 2013-14 also, the said benchmark
amount of OTS will be called as Minimum Recoverable Amount (MRA).
4.2
Previous Recovery Policy 2012-13 required:

A. Computation of Actual Total Dues as per books taking normal ROI for
calculating MOI figures at quarterly compounding.
B. Computation of Total Dues at BPLR simple from the date of NPA for:
Deciding the category in which the account falls for determining
MRA basis. (i.e. whether upto Rs.2.00 lakhs or Rs.2.00 lakhs to
Rs.10.00 lakhs or Above Rs.10.00 lakhs)
Deciding sanctioning authority / discretionary powers.
C. Computation of MRA with relevant ROI at quarterly compounding:
BPLR 2 if secured and BPLR-4 if unsecured.
4.3
In this new Policy 2013-14, the two different calculations at (B) and (C)
above are eliminated and made to one single calculation with BASE RATE
COMPOUNDED QUARTERLY to decide both Discretionary Powers as
well as Minimum Recoverable Amount (MRA) in respect of General OTS
Policy. No such interest calculation is necessary in respect OTS for
accounts with Book Balance upto Rs.10.00 lakhs.
4.4
The Actual Total Dues at applicable rate will be already available in the
books / CBS system which will be relevant only for communicating with the
borrower and, ultimately, for closure of the account
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4.5
Further, the new Policy 2013-14 has entirely two different yardsticks for
computing MRA as follows:
1. All borrowal accounts (including MSEs) where Book Balance is not
more than Rs.10.00 lakhs and with total dues (including actual
MOI/MLE/MOX) not exceeding Rs.40.00 lakhs. This will be known as
OTS Policy for Book Balance Upto Rs.10.00 lakhs

2. All Other Category of advances including MSE accounts. This will be
known as GENERAL OTS POLICY
Discretionary Powers will be different under the above two policies.
4.6
The above two different policy guidelines are applicable for computation of
the minimum amount of OTS i.e. MRA. Discretionary Powers for sanction
of OTS under these two different policies and eligibility criteria are
specifically indicated thereunder. All other norms and guidelines as provided
elsewhere in the Recovery Policy will be applicable to both the above two
categories unless otherwise stated.
4.7
IMPORTANT:
4.7.1
The Methodology / Settlement Formula adopted for computing MRA under

the two different OTS policies are different. All officials / field level
functionaries should apprise themselves of the different methods and ensure
correct application of the settlement formula while arriving at MRA under the
respective policy.
4.7.2
MRA is only an indicative Minimum Recoverable Amount and all efforts

should be made to achieve compromise amount well above this minimum.
This information is only for internal use of the Banks officials while
negotiating for compromise amount. For communicating with the borrowers
and others like courts etc., Total Actual Dues computed with interest at
normal / card rate as per sanction terms and with penal interest, MLE/MOX
alone should be used.
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Chapter 5
OTS Policy for Book Balance Upto Rs.10.00 lakhs

5.1
Applicability:
This OTS Policy is applicable to
i.
All NPA Accounts which were classified as NPA on or prior

to 31.03.2013.
ii. All fresh NPAs identified from 01.04.2013.

iii. Where the present outstanding Book Balance per borrower
{total of book balances in all accounts (excluding Tractor /
Combined Harvester / Farm Mechanisation Loans) in the
name of the same borrower} is not more than Rs.10.00 lakhs
and
Total Dues including MOI/MLE/MOX in all these accounts
does not exceed Rs.40.00 lakhs as at end of the quarter in
which OTS proposal is taken up / submitted for sanction.
iv. NPAs of Farm Mechanisation Loans namely Tractor Loans,
Combined Harvester Loans etc. in the name of a borrower to
be considered independently, besides other eligible loans as
at (iii) above. However, total book balances in all such Farm
Mechanisation Loans should not exceed Rs.10.00 lakhs per
borrower and total dues including MOI/MLE/MOX should not
exceed Rs.40.00 lakhs.
5.2
Coverage:
5.2.1
Date of NPA of the accounts should be prior to 01.04.2013 i.e the account
should have become NPA as on or prior to 31.03.2013 including accounts
flagged as NPA for March 2013 on subsequent dates through MOCs by
Statutory Auditors / through directions issued by Corporate Office.
In case of fresh NPAs of the year 2013-14, OTS proposal under this OTS
for Book Balance upto Rs.10.00 lakhs Policy may be considered by Zonal
Managers based on merits. ZM should satisfy himself that due recovery
actions have been resorted to in these fresh NPAs but no recovery could be
made and / or recovery through OTS will yield better result.
5.2.2
As on the date of OTS negotiation under this Policy, the total book balance
in the accounts of the borrower as mentioned above should not exceed
Rs.10.00 lakhs (net of Interest reversal ie. Net of INCA/UIPA) and total dues
including normal MOI/MLE/MOX should not exceed Rs.40.00 lakhs as at
end of the current quarter in which the OTS is considered.
Page No. 15
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5.3
OTS to be considered at Branches and Zonal Offices:

Compromise Settlement under this OTS Policy for Book Balance Upto
Rs.10.00 lakhs can be considered by sanctioning authorities at branches
and Zonal Offices as per Discretionary Powers shown under this Policy
(Para No.5.11) in respect of all NPAs except.
(a) the specified cases in Para 5.4 where OTS can be considered only at
Corporate Office level and
(b) Fresh NPAs of 2013-14 which can be considered only at Zonal
Office level.
5.4
OTS to be considered only at Corporate Office:

OTS under this Policy in respect of the following accounts can be
considered only by Corporate Office level:
i.
Staff Accounts / Staff Related Accounts. (At the level of

COLCC(ED) and above depending upon the sacrifice involved for
the Discretionary Powers under General OTS Policy.)
ii.
Cases involving Frauds / Malfeasance / Wilful default / CBI / PIL

(By MCB irrespective of sacrifice amount.)
iii. Government Guaranteed Accounts (By MCB).
5.5
OTS in respect of Self-Liquidating Securities:

No OTS can be considered in the cases which are backed by self liquidating
securities like FDRs, Jewels, NSC/KVP/IVPs, LIC Policies etc. Surplus, if
any left after adjusting the concerned loan accounts, should be appropriated
towards other NPA accounts, if any, of the same party.
If there are shortfall after adjustment of the proceeds as above, in such of
those cases, OTS can be considered in the accounts treating the account as
unsecured for the balance amount.
If securities charged in these accounts turn out to be fake or fraud is
involved, OTS in such cases should be taken up for consideration by MCB.
5.6
OTS in respect of Lok Adalat settled cases:

OTS can also be considered in respect of Lok Adalat settled accounts / OTS
already sanctioned accounts, where the settled amount has not been fully
paid.
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5.7
Settlement Formula / MRA under OTS Policy for Book Balance Upto
Rs.10.00 lakhs:
5.7.1
In case of compromise settlement under this OTS Policy in the above

eligible accounts, the Minimum Recoverable Amount (MRA) will be as
follows:
M.R.A. (In respect of NPAs with Book Balance Upto Rs.10 lakhs with Total Dues upto Rs.40
lakhs)
Asset Class
Sr.
MRA in case of
SubNo.
Doubtful
Loss
Standard
(A) In respect of all NPA
accounts mentioned at
5.1 above where total of
Book Balances is upto
80% of Book
60% of Book
50% of Book
Rs.2.00 lakhs.
Balance
Balance
Balance
(B)
In respect of all other NPA

accounts where total of
book balances is above
Rs.2.00 lakhs and upto
Rs.10.00 lakhs:
B1
All Agricultural & MSE

Advances (both secured &
unsecured)
B2
All other Advances:

a)
Where Distress Sale
Value (DSV) of
Total Dues i.e. Book
Balance + MOI +
MLE/MOX.
b)
Where DSV of
Book Balance but less
than Total Dues as
above.
c)
Where DSV of
any, is less than Book
Balance and all
unsecured advances.
SubStandard
Doubtful
Loss
100% of Book
Balance
75% of Book
Balance
60% of Book
Balance
Book Balance
+ Interest at
Base Rate
(Simple) (as
on 01 04 13)
from Cut-Off
date.
100% Book
Balance
Only 100% of
Book Balance
90% of Book
Balance
90% of Book
Balance
80% of Book
Balance
100% of Book
Balance
75% of Book
Balance
60% Book
Balance
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5.7.2.
Final Compromise Amount :

Final Compromise Amount that can be sanctioned under the OTS Policy
for NPAs upto Rs 10 lakhs, is MRA as arrived at above (A) plus the
amount of MLE/MOX/future law charges if any.
Note: If different accounts of the same borrower are falling under different
category as above, the MRA for each account should be calculated separately
based on the settlement formula indicated for each category as above and total
MRA for the borrower as a whole should be arrived at.
Compromise Settlement should be for the borrower as a whole i.e. it is not
envisaged that compromise could be considered for only in respect of some of the
accounts of the same borrower and allow other accounts to continue.
5.7.3.
MRA is Minimum:
The guidelines under the OTS Policy for Book Balance Upto Rs.10.00
lakhs are designed to help faster recovery of NPA dues. In respect of
agricultural advances and advances where agricultural lands have been
taken as security, the realization of security property is to be through DRT /
Courts only. Therefore, in deciding upon the OTS amount in such cases
(Agri & MSE upto Rs 10 lakhs), stipulating OTS amount to be not less than
NPV of securities has not been made as condition.
However, as the above MRA amount indicated is the minimum, keeping the
Banks interest as paramount, Branch/ Zonal Office should strive to recover
maximum possible amount from the parties, depending on the merits of the
individual accounts and availability / enforceability of securities / net worth
of the borrower / guarantor/s. Branch / ZO should endeavour to
conclude OTS amount which is not less than the NPV of securities
also.
In respect of the small value Agriculture & MSE loans upto book balance of
Rs 10 lakhs, the NPV of securities is not reckoned and MRA only is insisted
upon. However, Branch/ZO are advised to keep in view the realizable
value of available security, if any, while negotiating for OTS to get
maximum possible amount over and above MRA.
Minimum Sacrifice and Maximum RecoveryMINISAC-MAXRECshould
be the avowed objective in any OTS negotiation.
5.8
Security Value:
To ascertain secured or unsecured nature of the advance as mentioned
above, the valuation report of the securities / VAOs certificate etc. should
not be more than one year old.
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5.9.
Appropriation of Subsidy:
Extant guidelines issued from time to time shall be followed while
appropriating the subsidy under Government sponsored Schemes. The
book balance for the purpose of OTS will be book balance Net of the
subsidy eligible for appropriation and kept separately.
5.10
No Refund of Recoveries already made:

MRA is to be arrived at based on the Book Balance outstanding on the date
of OTS negotiation. Under no circumstances, refund of any amount
already recovered shall be made to the borrower on account of
concessions now offered.
5.11
Sanctioning Authority:
For exercising discretionary power for sanctioning / approving the OTS
under this Policy, the amount of Write-Off permitted alone is to be taken
into account. (As a cap has already been fixed for eligibility criteria, viz.
Total dues not exceeding Rs.40.00 lakhs, the sacrifice by way of Waiver is
not stipulated for discretionary powers. However, while communicating
OTS sanction to the parties, branches should ensure that total amount of
sacrifice viz. actual Waiver of MOI/MLE/MOX as per CBS / Books alone is
informed to the parties besides Write-Off, if any, allowed.)
ZLCC (GM/ZM)
ZLCC(DGM/ZM)
ZLCC(AGM/ZM)
Scale VI BMs
Scale V BMs
Scale IV BMs
Scale III BMs
Scale II BMs
Scale I BMs
(Rs. in lakhs)
Maximum Sacrifice by
way of Write-Off
permissible per OTS case
6.25
6.25
6.25
5.00
4.00
2.00
1.50
1.00
0.50
Note: The discretionary power mentioned is Write-Off amount only

irrespective of sacrifice by way of waiver of MOI/MLE/MOX amount.
Sanctioning Authority: Branch Managers are vested with powers for
sanction of OTS in cases conforming to above norms except in the case of
loans sanctioned by himself / herself earlier and such accounts shall have
to be referred to the next higher authority.
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5.12
Deviations:
In very exceptional cases, proposals involving deviations from the
stipulated norms in respect of MRA resulting in OTS amount being lesser
than the MRA can be considered by ZLCC (ZM). In such cases further
reduction in MRA may be allowed upto a maximum of 25% of the MRA
subject to the Write-Off Discretionary Powers mentioned as the limiting
factor. It is clarified that the additional reduction of 25% is on the MRA
already computed and not further on the Book Balance.
OTS in accounts where the write-off amount could not be contained within
the discretionary powers of the ZLCC(ZM) shall not be entertained. Either
the cases may be taken up under General OTS Policy or further recovery
action to be pursued.
5.13
Restrictions:
Write-Off Power allowed in this Policy under Discretionary Power can
be applied only for OTS proposals and not for Full Write-Off of
accounts. For such cases and Part Release of Securities, the
proposal should be considered only under the General OTS Policy
2013-14 as provided therein.
5.14
Write off amount restricted to NPA provision amount available:

All proposals falling under the purview of this Policy can be considered by
Branch Managers irrespective of Scale within the given discretionary
powers, provided the write off amount should not exceed the available
provision at the time of consideration of the OTS. OTS proposals involving
write-off amount exceeding provisions should be considered only by ZLCC
within their discretionary powers.
5.15
Acceptance of OTS:
Branch should obtain acceptance of OTS sanction within seven days.
5.16
Time for Payment of OTS amount:
5.16.1
Upfront Amount: At the time of negotiation of OTS with the borrower,

branch should obtain offer letter and atleast 10% of the OTS amount as
Upfront amount to be kept in interest bearing No-Lien Account.
Upon
issue of sanction letter and acceptance of OTS sanctioned, the upfront
amount should be appropriated to the accounts towards OTS payment.
5.16.2
Payment Period: Concessionary norms under this Policy is allowed to

expedite early recovery. Hence, branches should try to recover the entire
OTS amount within a period of 30 days in the normal course.
In
Page No. 20
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exceptional and deserving cases, OTS payment period may be allowed

upto 90 days without further interest provided atleast 25% of the OTS
amount (including upfront amount) is paid within 10 days from date of
acceptance.
5.16.3
Failure to Pay: In the event of failure of the parties to honour the OTS
sanction after its acceptance by them, the OTS will be cancelled. Any
amount including upfront amount remitted by the parties towards the OTS
payment should not be refunded and should be appropriated to the total
dues of the parties and further recovery action should be taken to recover
the entire dues.
Cancellation of OTS sanctioned already as well as
appropriation of amounts as above should be intimated to the concerned
parties in writing.
5.16.4
Revival / Revalidation / Extension of Time: Generally, revival /

revalidation of OTS should not be entertained once sanction lapses or is
cancelled. If the borrower / party comes forward to pay in the subsequent
period within 12 months from the date of communication of sanction,
extension of time for payment may be allowed under the OTS already
sanctioned with interest @ Base Rate + 2% Compounded Quarterly from
the date of sanction till payment. However, the entire OTS amount should
be paid within 12 months from the date of communication of the original
OTS sanction. Such permission can be accorded by the Branch Manager
himself and extension allowed should be reported to the sanctioning
authority who originally sanctioned the OTS under this Policy.
5.17
Staff Accountability:
Branches should examine staff accountability and ensure that appropriate
action is taken in case of accountability.
5.18
Option for Favourable OTS:

Compromise Settlement under the General OTS Policy 2013-14, if it is
favourable to the borrower than the OTS Policy for Book Balance Upto
Rs.10.00 lakhs, may be allowed to any borrower as per the guidelines of
that policy.
5.19
Reporting:
Branches should report all sanctions made under the Scheme to Zonal
Managers in the prescribed format on monthly basis alongwith copies of
OTS proposals processed by them containing their OTS sanction details.
Zonal Managers should submit summary of the OTS sanctioned by the
branches in their Zone to CO: Recovery on monthly basis. Also ZO to
submit details of OTS sanctioned by ZO to CO:Recovery on monthly basis
5.20
Submission of Write Off Claims:

Branches / ZOs should follow up OTS sanctioned and ensure that all write
off claims in respect of OTS settled and closed accounts should be
submitted as detailed in Para 7.21.
Page No. 21
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Chapter 6
General OTS Policy

6.1
Eligibility:
NPA accounts which were classified as NPA as on or prior to 31.03.2013
including accounts flagged as NPA for March 2013 on subsequent dates
through MOCs by Statutory Auditors / through directions issued by
Corporate Office.
Accounts eligible to be considered under OTS Policy for Book Balance
Upto Rs.10.00 lakhs, but could not be considered under it for valid
reasons, may also be considered under this General OTS Policy provided
reasons therefor is satisfactorily explained.
6.2.1
Accounts to be considered under the General OTS Policy only at

Corporate Office:
a. All accounts where fraud is involved / reported as fraud (MCB),
b. Staff loans and staff related loans (COLCC(ED) & above),
c. Cases reported as wilful defaulters (MCB).
d. Government Guaranteed Accounts (MCB)
6.2.2
Fresh NPAs of the Current Year viz. 2013-14.

Branches shall not consider OTS proposals in the case of fresh NPAs of
2013-14. However, Zonal Manager / ZLCC and above can consider OTS in
NPAs of the current year also, within the powers delegated to them, under
this Policy after ensuring that due recovery actions have been resorted to in
these fresh NPAs but no recovery could be made and / or recovery through
OTS will yield better result.
6.3
Minimum Recoverable Amount:

In the previous Recovery Policy 2012-13, Minimum Recoverable Amount
(MRA) in respect of loans above Rs.10.00 lakhs, was arrived after
calculating interest from the NPA date at rates as follows:
(a) BPLR-2% (quarterly compounding) if the advance is secured.
(b) BPLR-4% (quarterly
unsecured.
compounding)
if
the
advance
is
(Where Card Rate is less than BPLR, then Card Rate or minimum of 8%
CQ to be applied. For the Micro and Small Enterprise category, Simple
Interest at a rate lesser than BPLR was allowed.)
Page No. 22
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With a view to simplify computation of Minimum Recoverable Amount

(MRA) and avoid multiple computations, in this new General OTS Policy
the following steps are to be gone through:
6.4
(I) First calculate INTEREST COMPONENT as follows:

Ascertain Cut-Off Date (COD viz. the date from which interest ceased to be
charged in the account) and ascertain total amount due as on the COD.
Calculate interest component (interest amount) on the amount due from
the COD till end of the quarter in which the OTS is sanctioned / proposed in
the account by applying:
i.
BASE RATE at Quarterly Compounding, if the account is non-suit

filed or suit filed but not-decreed one.
ii.
Card Rate at Quarterly Compounding, if Card Rate as per

sanction is less than Base Rate.
iii. Rate Of Interest(ROI) (compound or simple) as allowed by DRT

/ Court in the decree/RC in the case of decreed accounts where the
Bank has decided not to prefer appeal against the ROI allowed in
the decree / RC. Interest amount either at the decreed rate or at
Base Rate quarterly compounding whichever amount is lower
should be taken as Interest Component.
a)Debits and Credits made to the accounts subsequent to the
COD should be taken into account and value-dated.
b)Base Rate mentioned here is the Base Rate as on 01.04.2013
(ie. 10.20%).
6.5
(II) Next calculate NOTIONAL DUES as follows:

1
Book Balance as on the date of OTS

negotiation
Interest Component calculated as above
Actual outstanding MLE / MOX

Law Charges, if any
Notional Dues
&
Future
D = (A + B + C)
The actual amount of OTS proposed by the branch / ZO should be

compared with the above Notional Dues to arrive at sacrifice for
determining the sanctioning authority.
Modification with regard to arrival of Notional Dues linking it to Base Rate
Quarterly Compounding (QC) as above is solely for our exercise to
determine (a) the MRA and (b) the authority for exercising the powers for
sanction of OTS / write off / waiver of unapplied interest.
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For all other purposes, like negotiation with the NPA borrowers, furnishing
particulars in the compromise proposals, conveying OTS sanctions to
Borrowers, Court Authorities etc., the Actual Total Dues shall be calculated
and furnished as per the existing practice which shall mean the amount
outstanding as on the Cut-Off Date together with unapplied interest
calculated at contract rate (QC or Simple as per sanction ticket terms), as
applicable from time to time, inclusive of penal interest or as per court
order, if decreed, plus legal and other expenses recoverable.
6.6
(III) Classify the Dues as Secured / Partly Secured / Unsecured:
6.6.1
For the specific purpose of applying the concession in Interest Component

for deciding MRA, secured nature of the outstanding dues is to be decided
based on the following definition:
1. Valuation reports should be obtained as provided elsewhere in this
Policy in Chapter 3.
2. For determining whether an advance is secured or not, Realisable
Value (RV) or Distressed Sale Value (DSV) or Forced Sale Value
(FSV) as given by the Valuer should be reckoned.
3. If two valuation reports have been obtained, higher of the two values
given by the different valuers should be reckoned.
4. Compare the RV/DSV/FSV with the Notional Dues (ND) arrived above.
a) If RV/DSV/FSV is greater than the ND, the advance should be
treated as secured.
b) If RV/DSV/FSV is lesser than ND but more than 50% of the ND,
then the advance to be treated as partly secured.
c) If RV/DSV/FSV is lesser than 50% of the ND, then the advance
should be treated as unsecured.
6.6.2
Where the security value may be taken as NIL:

If, in respect of any specific asset / property, there were deficiencies in
creation of security / documentation or fraud was committed in it which has
resulted in loss of securities or impossibility in enforcing the security or
subsequent developments has resulted in our not being able to enforce the
security and bring it to sale, then the value of that particular asset / property
security should be treated as NIL or reduced to the extent it is warranted.
Legal opinion clearly stating that Bank will not be able to enforce the
security either fully or partly, as the case may be, should be obtained and
submitted with the proposal.
Staff Accountability should have been
thoroughly studied in such cases.
6.6.3
Where obtaining of fresh valuation not necessary:

Where the RV/DSV/FSV as per the available valuation report is more than
present Actual Total Dues (viz. the present book balance plus actual upto
date MOI as per books / CBS plus MLE/MOX),then obtaining of fresh EVR
need not be insisted upon. However, wherever the sanctioning authority
feels it is necessary to obtain fresh valuation, same to be obtained.
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6.7
(IV) Computation of MRA.

In arriving at Compromise Settlement, the Bank will be ready to forego a
portion of the above Interest Component which has already been
computed for arriving at Notional Dues.
The said Interest Component itself has been arrived at lesser ROI at Base
Rate only or at ROI as per decree (as against the normal ROI Card Rate
which would be higher than the Base Rate / BPLR).
In addition to the above, the Bank is further prepared to forego a portion of
such interest amount while arriving at a compromise / one time settlement.
The concession now extended to the borrower is substantial and should
entice any reluctant borrower to come forward to settle the dues under
compromise. It should also help field level officials to negotiate for better
compromise amount and conclude with ease and confidence.
6.7.1
Concession on Interest Component:

The concession allowed by the Bank out of the above Interest Component
will decide the MRA. Bank is ready to allow a portion of Interest
Component as concession which is prescribed as a percentage of the
Interest Component and that portion of the interest component will be
deducted from the Notional Dues for arriving MRA. The percentage is
different for different categories of advances as follows:
Category of Advance / Asset Classification
%age of Interest
Component to be
deducted from Notional
Dues for arriving MRA
Fully
Partly Unsecu
Secured Secured
red
A.1
A.2
Agricultural Advances (Direct / Indirect /

Allied Activities) (Advances to Coffee / Tea /
Rubber Plantations to be excluded here.)
20%
40%
30%
50%
50%
100%
B
B.1
B.2
Micro and Small Enterprises

20%
40%
30%
50%
50%
60%
C
C.1
C.2
All other types of advances

Doubtful (D2, D3) Assets and Loss Assets
15%
30%
20%
40%
30%
50%
Note: Percentage indicated above are only for calculating reduction in the
amount of Compound Interest calculated for Notional Dues. That portion of
interest amount should be deducted from the Notional Dues to arrive at MRA.
Page No. 25
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6.7.2
Minimum Recoverable Amount (MRA) will be:

1
Book Balance as on the date of OTS negotiation
Add: Interest Component calculated as above
Add: MLE / MOX / Future Law Charges
4
5.
Notional Dues
D = (A + B + C)
Less: Interest Concession Allowed as % age of B i.e. ( % X B)
Rate of Interest Concession as per 6.7.1. multiplied by Book

Balance @ S.No.2 above)
6.
MRA
6.7.3
E
D minus E
MRA is only Minimum Indicative Amount

The norms for arriving at the MRA or the sacrifice to be accepted are only
indicative. It is for the Branch Managers/Zonal Managers to skillfully
negotiate for maximum / higher amounts taking into account the NPV of
realisable value of available securities, net worth of the borrower/ guarantor,
other available enabling circumstances, etc.
6.8
Relaxations:
In all the above cases, the OTS amount accepted should not be less than
the NPV of realizable value of securities as described at Para No. 3.5 in
Chapter 3 of the Recovery Policy.
However, following relaxations may be allowed in the case of fully secured
advances only:
i.
MSE Advances: OTS amount may be considered as follows:

a)
b)
c)
ii.
Where 75% of NPV of (realizable value of) securities is higher

than MRA, then atleast 75% of the NPV of securities should
be recovered.
Where 75% of NPV of (realizable value of ) securities is lower
than MRA, then atleast 75% of the NPV of the securities.
In both the above cases, 75% of the NPV of realizable value of
securities should be recovered.
NPA as on or prior to 31.03.2005: In the case of accounts where the

date of NPA is as on or prior to 31.03.2005, the OTS amount may be
MRA or 75% of NPV of securities whichever is lower.
iii. Agricultural Advances: In Agricultural Borrowal accounts, where

agricultural land is obtained as security and where there are genuine
constraints in realizing NPV of such securities by disposing them off,
branches may accept MRA or NPV of securities whichever is lower.
Page No. 26
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6.9
Compromise Amount:
Final Compromise Amount that can be sanctioned should not be less than
both:
Minimum Recoverable Amount (MRA) as arrived in Para at Sr. No.6.7.2
NPV of securities as per Para at Sr. No. 6.8.
Wherever NPV of realizable value of securities is more than the Total Dues,
then the NPV reckoning is restricted to the Total Dues.
Note: For computation of MRA by applying interest concession, the dues are
classified into Secured, Partly-Secured and Unsecured. If the RV/DSV/FSV
is less than 50% of the Notional Dues, the dues are treated as unsecured.
This unsecured classification is only for deciding the interest concession
percentage. However, even in this Unsecured cases, the OTS amount
should be compared with the NPV of available securities and the OTS
amount should not be less than the MRA and the NPV of securities.
6.10
Discretionary Powers for sanction of OTS under General OTS Policy

(Rs. in lakhs)
Revised Powers
Existing
w.e.f. 01.04.13
Of which
Of which
Sacrifice
Sacrifice
write off
write off
Committees:
Full Power Full Power Full Power Full Power
Management Committee
Credit Approval Committee
200.00
200.00
200.00
200.00
COLCC (ED)
100.00
100.00
125.00
125.00
COLCC(GM) at Corporate
50.00
25.00
75.00
35.00
Office
ZLCC (GM/ZM)
50.00
25.00
70.00
25.00
ZLCC (DGM/ZM)
30.00
15.00
40.00
15.00
ZLCC (AGM/ZM)
10.00
4.00
30.00
15.00
ZLCC at ARM Zone
--30.00
15.00
Branch Managers:
Scale VI BMs
30.00
10.00
30.00
10.00
Scale V BMs
10.00
4.00
10.00
4.00
Scale IV BMs
5.00
2.00
5.00
2.00
Scale III BMs
4.00
-4.00
-Scale II BMs
3.00
-3.00
-Scale I BMs
2.00
-2.00
--
Page No. 27
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6.11
Exercise of Delegated Powers:

a) The authority exercising the above powers should not use such
discretion in respect of loans sanctioned by himself / herself earlier and
such accounts will have to be referred to the next higher authority.
b) Where OTS is being considered by ZLCC / COLCC, individuals, who
had previously sanctioned the loan or any other advances to the
concerned borrower either as branch manager or in any other capacity,
should not participate in the Committee Meeting considering that
compromise proposal.
c) If for such reason any proposal could not be considered by the
respective Committee at all, then it should be referred to next higher
authority.
d) While exercising their discretion, it should be kept in mind that the write
off component in the sacrifice is kept at the barest minimum, as Write
Off affects the Profit and Loss Account of the Bank.
e) Branch Managers in Scale I, II & III can allow only waiver and not any
write off in respect of OTS proposals under General OTS Policy.
Proposals involving write off should be referred by them to their Z.O.
f) Treatment of sacrifice of MLE/MOX: Consequent upon discontinuance
of Law charges a/c and introduction of notional account viz.,
Memorandum of Legal Expenses (MLE), the element of sacrifice of MLE
/ MOX should be treated as waiver and not write-off.
6.12
Deviation from Norms:

No relaxation in the prescribed norms viz. accepting OTS less than MRA or
the permitted level of NPV of securities is to be allowed at branch level.
In genuine and meritorious cases, proposal with OTS amount less than
MRA as stipulated in this Policy guidelines may be considered by the ZLCC
upto a maximum of 10% of the MRA, if the resultant sacrifice including
write-off falls within the discretionary powers mentioned for the concerned
ZLCC. However, the condition regarding NPV of securities should not be
violated and the OTS amount should not be less than the NPV of securities.
Proposal involving relaxation of any norms including MRA (other than the
one specifically permitted above) and the permitted level of NPV of
securities should be referred to Corporate Office and may be considered at
the level of COLCC(ED) and above depending upon discretionary powers.
6.13
Waiver of Penal Interest only:

In the case of NPAs, if any borrower offers to clear the dues in full subject
to the Bank waiving only the penal-interest-part of the MOI, such waiver
may be permitted subject to the borrower paying atleast 10% of the dues
immediately and the balance amount within a period of 30 days.
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Failure to pay the dues within 30 days will result in cancellation of the
waiver and Bank will have to proceed to recover full amount. Any amount
already appropriated should not be refunded.
Proper offer / acceptance letter from the parties should be obtained and
approval letter should be issued by the Bank stipulating the condition.
Waiver of Penal Interest in such cases may be permitted by Zonal
Managers without any ceiling in actual amount of Penal Interest.
In such cases, no formal OTS proposal need to be submitted. Request
letter of the party alongwith BMs recommendation letter (furnishing bare
details of the account, balance outstanding, securities, alongwith quantum
of Penal Interest to be waived) will suffice.
6.14
RECOVERY OF HOME LOANS:

i.
Based on MCBs guidelines in respect of Home Loan given in the past,

the previous Recovery Policy guidelines stipulated that the minimum
amount to be recovered should be the interest and principal due. In
case the amount of offer was lower than the amount due, then approval
of Corporate Office was to be obtained. Further, ZMs and above were
authorized to consider OTS in Home Loans within their discretionary
powers if no write off was involved and the OTS amount was not less
than NPV of realizable value of securities. For the purpose of arriving
write off portion, balance outstanding under MLE plus future law
charges, if any, was to be included with the book balance. In case,
the proposal involved write-off, it was to be referred to Corporate Office.
ii. Now, OTS in Home Loans are treated at par with other loans and can
be considered by the various sanctioning authorities within their
discretionary powers as prescribed.
The condition as to the OTS
amount should not be less than NPV of securities, wherever stipulated,
should not be violated.
iii. In respect of Home Loan borrowal accounts which are classified as
fraudulent, Zonal Office shall verify the status and if the EM created with
our Bank is prior in point of time, we should proceed against the
properties. If there are claims from other Banks on the same property,
enforceability of EM should be verified and appropriate action shall be
taken for recovery of our dues. In the case of Home Loans, which are
classified as fraudulent, the proposal for settlement should
continue to be referred to Corporate Office for consideration at
MCB / Board.
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6.15
Coverage of fresh NPAs under OTS Policy and Authorisation to Zonal

Manager:
OTS policy provisions are permitted to be applied only in respect of NPAs
outstanding as at the end of previous Financial year ie. (31st March 2013).
However, considering the number of small loan fresh NPAs and Bank
resorting to system based identification of NPAs, once an account is
identified as NPA, OTS policy provisions can be applied even in the case of
fresh NPAs. Hence,
a) Zonal Managers are authorized to consider OTS in respect of Fresh
NPAs flagged during the current fiscal also (FY 2013-14), in
addition to the NPAs at the beginning of the year (31 03 2013).
ZMs will be exercising powers in this regard, judiciously after
ensuring that due recovery proceedings were taken but without
much success and it is found that OTS will yield better result.
ZM should also ensure that the prescribed action for lapses if any,
attributed to staff, quick mortality accounts, etc. are taken within the
prescribed timeline.
b) Branch Managers can consider OTS for NPA accounts
outstanding as on 31st March 13 only.
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Chapter 7
Other OTS Related Issues

7.1.1
PARTIAL REPAYMENT OF DUES AND RELEASE OF SECURITIES / RELEASE OF NONPROMOTER / THIRD PARTY GUARANTORS WHERE THERE IS NO OTS:
The Appropriate Authority is generally empowered to release the
securities only where there is total settlement through Compromise.
Whenever offers for part payment of realisable value of security held and
/ or release of guarantors are received, such proposals are considered
for the following reasons:
o Guarantors opting out of the account / firm etc,
o Old age of the owner of the property / guarantor / mortgagor
o For settlement of the property among the family members and
partners,
o Dispute over the title of the property, other legal disputes etc,
among the guarantor (s), partner (s),
o Borrower / Mortgagor intending to sell part of the securities and
reduce the liabilities.
Though withholding of securities belonging to third party may bring
pressure on the borrower, in case of non-payment, Bank may have to
ultimately sell the property for realizing its dues. As sale by the Bank is
fraught with the risk of not realizing market value besides the indefinite
delay before which we can see the color of the money, it is prudent on
the part of the Bank to release the security at the appropriate time in
meritorious cases after recovering not less than Realisable Value of the
securities.
Proposal for release of securities / guarantors should be submitted in the
same way and in the same format prescribed for submission of OTS
proposals. Two latest valuation reports should be obtained from two
different panel engineers. There should not be variation between the two
values by more than 5-10%. If the variation is more than 10% same
should be got clarified by the valuers. The higher value of the two should
be taken into account for release of assets / properties.
Any substantial fall in the value of properties / assets sought to be
released from its previous valuations at the time of sanction should be
examined thoroughly and it should be ensured that the latest values are
realistic taking into account the market conditions and other relevant
circumstances.
Similarly, for release of third party guarantors, the latest net worth of the
individual / party should be ascertained by obtaining latest credentials /
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AL statements etc. Any substantial fall in the net worth of the guarantor
sought to be released from its previous net worth at the time of sanction
should be examined thoroughly and it should be ensured that the net
worth is realistic taking into account current status of assets of the
individual and other relevant circumstances.
For releasing a specific asset / property, amount not less than the
Realisable Value / Distress Sale Value / Forced Sale Value of the asset
(not the NPV of the asset), should be recovered towards the Total Dues
in the account.
As regards releasing of third party guarantor the amount that should be
recovered for such release should be decided taking into account the Net
Worth of the concerned individual guarantor and other relevant
circumstances / issues justifying the amount so accepted.
Where part release of security alongwith personal guarantee of the
owner / mortgagor of the property is sought both need to be considered
independently.
It should be made clear that, after receipt of specified amount against
release of specified security asset / guarantor, the Bank will continue with
recovery action in respect of other securities available with the Bank and
against remaining guarantors for recovery of its balance Total Dues.
While considering release of part of securities as above, it should be
examined whether the remaining securities are worth ones to continue
with and would cover the balance liabilities. Acceptance of the proposal
should not result in the Bank being left with worthless securities /
guarantors and being not able to enforce the remaining securities and /
or recover further in the account. In such cases, instead of releasing the
specific securities / guarantors, effort should be made to negotiate for
compromise settlement for recovery of the Total Dues.
A decision in
the matter may have to be taken judiciously.
7.1.2
Authorities for Part Release of Securities / guarantees in the absence

of OTS:
Proposals for release of securities and / or third party guarantee in NPA
accounts in the absence of OTS should be referred to next higher authority
than the authority under whose power the credit facility was last sanctioned /
renewed. Such next higher sanctioning authority is authorized to approve /
permit part release of securities and / or third party guarantees based on
merit of each cases under the guidelines prescribed above.
In the case of limits sanctioned by ED/COLCC(ED), CMD/(CAC) and MCB,
the proposals should be referred to CAC which is authorized to approve
release of securities / guarantees based upon merit in such accounts.
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7.2
ASSIGNMENT OF DEBTS UNDER OTS PROPOSALS:

a)Sometimes OTS proposals are received wherein borrowers arrange for
payment of OTS amount through financiers / ARCs / Banks / etc., and
request Bank to assign the debt in favor of the financiers / ARCs / Banks
etc. In normal course, Bank recovers the OTS amount and issues No
Due Certificate and also file satisfaction memo with DRT / ROC.
b)However, in case of assignment of debt, Bank has to assign the debt
along with available securities in favour of the financiers with the consent
of the borrower.
c) In cases where consent of the borrower is not available for assigning the
debt to a third party, such proposals may be put up to Corporate Office.
Since assignment of debt without the consent of the borrower is likely to
be challenged, reference to Corporate Office may be done only in
exceptional cases.
d)Discretionary powers to deal with such proposals: Proposals involving
assignment of debt will be considered at Corporate Office only at the
level of COLCC(ED) and above depending upon the discretionary
powers.
e)Obviously such proposals have to be without recourse basis and without
any liability towards counter claims, if any. Extant guidelines on OTS
regarding applicable interest rate, MRA etc. shall apply.
f) Details of assignment, assignee, should be ascertained in the first place
and draft Deed of Assignment should be got approved by CO/Legal
Dept. before sanction of OTS / Assignment.
7.3
Terms and Conditions stipulated in the OTS communication to include:

a) Period within which the Borrower and guarantors should give acceptance
of OTS sanction.
b) Appropriation of Upfront amount immediately on acceptance.
c) Period within which the remaining OTS amount to be paid indicating
whether interest is to be charged for the specified period of payment and,
if to be charged, the ROI.
d) Automatic cancellation of OTS sanction in the event of non-fulfillment of
the conditions. Wherever a OTS sanction happens to be cancelled due
to default or non-compliance of sanctioned terms, the OTS sanction will
stand automatically cancelled and remittances, if any made by the
parties under the OTS sanction, will stand appropriated towards recovery
of total dues as if there was no one time settlement and the Bank will
proceed with all available legal course to recover its entire dues
e) Unconditional withdrawal of suits / counter claims etc., made by the
borrowers / guarantors against the Bank.
f) In the case of suit filed but not decreed cases, a condition to be
stipulated for filing of Joint Memo of Compromise in the DRT/Court and
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for obtaining of Consent Decree with Default Clause that, in the event of
default to make payment as per the agreed terms, the Bank is entitled to
recover the entire dues as per the suit claim. (Branch / ZO should, in the
first place, discuss with the borrower and obtain his concurrence that he
would agree to such condition if the compromise is sanctioned by the
Bank. This may not be insisted upon if payment term is short i.e. within a
month. Obtaining Consent Decree helps the Bank for pursuing with suits
/ DRT cases in the concerned account if the borrower fails to honour the
OTS. Bank can straight away go ahead to execute the decree / RC for
the suit claim and bring the securities to sale through DRT. After filing
the Memo, branch should closely pursue to obtain Consent Decree from
the Court / DRT without delay.)
g) In respect of non-suit filed accounts, documents should be kept alive by
obtaining periodical renewal letters till full payment of settlement amount
is received.
h) Branch should endeavour to obtain post-dated cheques for the OTS
amounts / instalments.
i) In respect of accounts under consortium, the OTS offer made to our
Bank should not be less than what has been offered to other members.
j) In case of fraudulent accounts or accounts where criminal cases are
pending, a condition to be included that the settlement will not have any
bearing whatsoever on the ongoing criminal cases / proceedings, if any,
pending in the court against the persons connected with the account.
Also the guidelines contained in Para No. 7.20 should be followed.
7.4
OTS in accounts with Non-Fund Based (NFB) outstanding dues:

Compromise amount is arrived at based on crystallized actual fund based
dues of the borrower alongwith uncharged interests (MOI), MLE, MOX only.
If there are expired guarantees issued by the Bank, steps must be
immediately taken to get the guarantees cancelled and reverse the entries in
the Books. HO guidelines in this regard to be strictly followed.
In accounts where there are still outstanding unexpired guarantees issued
by the Bank or there are other Non-Fund based liabilities still pending, 100%
cash margin covering the entire expected / possible liability arising out of the
outstanding non-fund based guarantees/LCs/Forward Covers, etc., should
be obtained. Such amount may be refunded to the borrower if no liability
devolves on us and as and when the concerned liabilities are reversed in the
Banks books.
In the absence of 100% cash margin, securities charged / third party
guarantees for the non-fund based dues should be released only after
adjustment / reversal of the NFB liabilities.
If the guarantee / LC was originally issued as unsecured one, then 100%
cash margin should be insisted upon.
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7.5
Group Accounts:
The total sacrifice by way of waiver/write off made in all the group accounts
under General OTS Policy should be computed to find out the authority to
whom the relevant proposal has to be referred.
7.6
TERMS OF PAYMENT:
Normally, efforts should be made to recover the amount agreed within a
maximum period of 90 days from the date of communication of sanction.
Where, for reasons satisfactory to the Bank, the amount has to be paid in
instalments over a period of time it should not exceed 12 months payable in
monthly / quarterly/half yearly installments. The sanctioning authority may
decide on this depending upon the merits of each case together with interest
at the Base Rate + 2% (Quarterly Compound) from the date of settlement up
to the date of final payment.
7.7
Source of funds for settlement under Compromise:

Sanctioning authorities should satisfy themselves as to the source of
payment of the amount under compromise, if granted.
Before entering into compromise settlement, the sources from which the
borrower/guarantors will raise funds particularly in cases of settlement in
instalments are to be identified and obtain it in writing from the borrower /
offeror of the OTS.
Where funds are to be raised by disposal of fixed assets the entire sale
proceeds by way of lump sum payment must be insisted upon. In case the
amount by way of disposal of assets is not sufficient for full settlement,
proper installments should be fixed depending on the other sources of
borrower / guarantor (s) for the remaining amount.
7.8
EXTENSION OF TIME FOR PAYMENT OF OTS:
7.8.1
Extension of OTS many times is mostly found to be a futile exercise as

borrowers tend to be lax in payment by taking the extensions for granted.
This results in wastage of precious time of the Bank in recovery in the
account.
7.8.2
Hence, branches shall take effective steps to recover the OTS money in
time without necessitating repeated extensions.
7.8.3
However in case of genuine reasons, the sanctioning authorities from the

level of ZLCC (ZM) and above may grant extension of time for payment,
provided the waiver/sacrifice recalculated upon the date of extended period
falls within its powers.
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7.8.4
In case of sanction accorded by Corporate Office, ZLCC may grant

extension of time up to 12 months from the date of communication of the
sanction to the borrower with interest at Base Rate plus 2% Q.C. (Base Rate
as on April 1st of the year is 10.20%), from the date of communicating the
OTS sanction, till final payment. In such cases, the entire OTS amount with
interest for the extended period should be recovered within a total period of
12 months from the date of communication.
7.8.5
In the above cases, wherever extension of time is sought without any

interest or extension is sought with or without interest beyond 12 months
and upto 24 months, the request should be forwarded to Corporate Office
and be considered as follows:
If interest sacrifice for the extended period is upto Rs.100.00 lakhs,

COLCC(ED) is empowered to consider such extension.
If such sacrifice is more than Rs.100.00 lakhs and is upto Rs.200.00
lakhs, CAC is empowered to consider such extension.
If such sacrifice is more than Rs.200.00 lakhs, the proposal should be
referred to MCB only.
Proposal for extension of time as above need not be referred to Committee

of General Managers and / or Settlement Advisory Committee for approval.
7.8.6
Extension of time beyond 24 (twenty four) months need not be considered

and the compromise sanction is to be treated as cancelled and to be
renegotiated.
7.9
WRITE OFF AND ACCELERATION OF RECOVERY IN WRITTEN OFF

ACCOUNTS:
7.9.1
Exercise of write off of NPA accounts: In order to weed out the unremunerative NPA accounts and to pave way for the field level functionaries
to devote more time for Business development, the exercise of write off is
undertaken after critically analyzing the chances of recovery in all the NPA
accounts. The accounts can be written off only after exhausting all avenues
of recovery through normal course / by legal means / through OTS etc. The
exercise of write off has to be undertaken on merits of each case after
considering various factors like low / nil income generation, capacity of the
borrower / guarantor to pay the dues, availability / state of the securities etc.
7.9.2
Therefore, Write-off option shall have to be used only as a last resort when,
i. The account is classified as doubtful or loss asset.
ii. There are no securities available or there is nil / nominal salvage
value of securities.
iii. Net worth of the borrower / guarantor is nil or nominal.
iv. The borrower/guarantor is not traceable after reasonable enquiries.
v. The borrower / guarantor has no source of income.
vi. Full provision has been made.
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vii. Branch Manager / ZM is satisfied that there is absolutely no

possibility of recovery and carrying the account in the books of the
Bank will not serve any meaningful purpose and it would only add to
the costs to the Bank.
viii. In case of suit filed accounts - if there is no use of continuing the suit
and the amount cannot be recovered even if the suit is decreed.
ix. All available avenues for recovery have been exhausted.
x. Individuals who originally sanctioned the loan in any capacity in the
past, should not exercise the full write-off powers in the same
account in any capacity - Either as Branch Manager or as member of
the Committee sanctioning the write-off.
7.9.3
The authority vested with powers under General OTS Policy for Write Off
can exercise such powers in respect of all NPA accounts requiring write off,
subject to overall powers for sacrifice delegated to them, if the write off
amount is fully covered by the provision made in the account.
However, such write off should be reported to the next higher authority
immediately.
7.9.4
Zonal Managers and above can consider write off, where the write off
amount exceeds the available provision, subject to obtaining budgetary
allocation from the Executive Director/Chairman & Managing Director for
such write off, over and above the provision already held. This should be
resorted to in exceptional cases only. In the normal course, the Z.M. should
ensure that adequate provisioning has been made in all such accounts
under IRAC norms before the exercise of write off is taken up.
7.9.5
COLCC(ED) and CAC can consider write off in all cases, irrespective of
whether provision is fully available or not.
7.9.6
The powers for write off can be for full or partial write off and whether eligible
guarantee (CGTMSE / DICGC/ECGC) cover is available or not.
7.9.7
Recovery in written off accounts: Sanctioning authorities at the time of

permitting write off shall stipulate a condition in the sanction letters that
recovery efforts should be pursued in the written off accounts on an ongoing
manner. The Board also has directed endeavor should be to recover as
much as possible in the written off accounts. The recovery in written off
accounts is being emphasized taking in to consideration the following;
Borrower / guarantor would have revived income generating activity so
that the branch can strive for recovery ;
Borrower / guarantor would have returned to their native place / place of
business so that recovery efforts could be pursued;
Pursuance of recovery through the legal heirs / close relatives of the
borrower / guarantor ;
Realization through residual value of assets left if any, which has been
charged to the Bank;
Identifying other assets of the borrower / guarantor not charged to the
Bank at a later date subsequent to write off;
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Pursuing for recovery from assets acquired / inherited by the borrower /

guarantor subsequent to write off ;
Improvement in the position of Net Worth of the borrower / guarantor;
Identifying / locating the borrower / guarantor and finding their present
address with the help of Village Presidents / Govt. Officials / Previous
Managers, staff members / Recovery Agent etc.,
However the guidelines as above are not applicable to accounts / amount
that are written off as per Government guidelines (eg. Agricultural Debt
Waiver and Debt Relief Scheme 2008)
GOI, MOF directed Banks that they should undertake recovery of NPA
ruthlessly and every quarter at least 20% of all written off accounts as well
as accounts where 100% provision has been made, should be recovered.
Branches to appreciate the importance of this directive and take steps for
accelerating recovery in such accounts.
7.10
Waiver of legal action:

The power of waiver of legal action can be exercised by Zonal Managers
and above up to the limit of write off powers delegated to them under the
General OTS Policy. This write-off power can not be exercised by BMs for
permitting Waiver of Legal Action.
7.11
Recovery of OTS amount as per sanction terms:

Management Committee of Board while reviewing the compromise
proposals sanctioned, directed to recover the amount agreed as per terms of
sanction and in cases where repayments are not forthcoming, to
communicate the cancellation of OTS promptly and to proceed with legal
action intensively. Hence Zonal Offices / Branches should ensure that legal
action / action under SARFAESI Act is initiated immediately without any loss
of time on failure of the borrower to comply with OTS sanction terms.
7.12
Suit Filed/Decreed Accounts:

Compromise / negotiated settlement can be considered under the existing
Banks Policy in respect of all NPA accounts irrespective of asset
classification and whether suit filed or non-suit filed or decreed or recovery
certificate obtained
7.13
BIFR Accounts:
OTS in respect of Industrial Units under the purview of BIFR may be
considered at the rates of interest as stipulated by the BIFR as part of the
rehabilitation package. Where BIFR does not prescribe such
interest/amount, the guidelines under this Recovery Policy are applicable.
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7.14
Staff Related Accounts:

In staff related accounts, when the accounts are guaranteed by the staff, no
OTS can be considered by Branches / Zonal Offices. Sanctioning Authorities
COLCC(ED) and CAC can consider OTS even in cases where staff has
given guarantee on a case to case basis within the discretionary power.
In cases where there is no guarantee by Staff, then OTS for such accounts
can be considered by the ZLCC (all ZMs) and above within their delegated
powers.
For this purpose, Staff Related Accounts are as per definition given in the
Loan Policy / Credit Risk Policy.
7.15
BOT NRR Accounts:

All Sanctioning Authorities can consider OTS proposals for BOT NRR
accounts also within their delegated powers.
7.16
Retrieval of Provision:
Provision made in the accounts where OTS has been sanctioned will be
retrieved to the extent of recoveries as per guidelines, during the period in
which the recovery has been booked.
7.17
RELEASE OF SECURITIES UNDER OTS:
7.17.1 While submitting / considering OTS proposals in any particular account, the
existence of other direct / indirect liabilities, extension of securities charged,
common guarantors, group liabilities, DRT/Court directions (if any related to
the borrowal account or securities held by the Bank) and all other relevant
issues should be completely brought up and discussed. Same should be
thoroughly factored into and appropriate conditions should be stipulated in
the OTS sanction itself regarding release of securities / guarantors /
progressive release of securities etc.
7.17.2 On payment of OTS dues and on compliance of all terms and conditions as
per the OTS sanction, Branch Manager can release the relevant securities
charged to the Bank as per sanction terms irrespective of OTS sanction by
any higher authorities.
7.17.4 Board directed that care has to be taken while releasing securities in
accounts where part payment of OTS or repayment of loan is being made
for ensuring that the balance amount outstanding is covered adequately and
release of security does not in anyway hamper / mar recovery prospects of
the balance amount of NPA.
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7.18
Release of Securities where liabilities exist in Group Accounts:

Release of securities in accounts where compromise is sanctioned and
having Group / Associate accounts may be considered without correlating to
other accounts, if such other group accounts are regular and in order in all
aspects, if no extension of securities has been stipulated or obtained, as the
assessment of credit risk and credit needs ought to have been made on the
merits of each case. Further, recommending authorities should examine this
in toto at the time of recommending the compromise proposal to the
sanctioning authority, so as to avoid any complications later, in this regard.
A] OTS proposal / sanction involving payment of OTS amount by sale of
securities or by raising funds against the securities:
Securities to be released by the OTS sanctioning authority.
B] OTS proposal / sanction involving payment of OTS amount from sources
other than [A] above:
The securities should be retained if legally retainable for the group
accounts.
C] Availability of surplus of the sale proceeds of the securities after payment
of the OTS amount in the OTS sanctioned account:
The surplus amount should be appropriated to the liabilities in other
group accounts if legally permissible.
7.19
Branches should ensure strict compliance to terms and conditions of

sanction for release of securities and NOT to deviate without prior approval
of sanctioning authority.
7.20
GUIDELINES TO BE FOLLOWED AFTER SANCTION OF COMPROMISE

PROPOSAL:
1. Monitoring Committee at Zonal level headed by the Zonal Manager shall
review, every month, and initiate remedial action on
a)Compromise proposals pending sanction / follow up done ;
b)Sanctioned proposals not yet paid and follow up thereof ;
c) identification of new accounts to bring under the compromise mode
for recovery and measures taken; and
d)Complaints / representations / grievances of the borrowers, if any in
disposal of their compromise offers.
2. The securities charged to the Bank should not be released until the entire
compromise amount is received with interest stipulated thereon.
However, Zonal Managers may take decision regarding part release of
securities as given earlier.
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3. In case of disposal of fixed assets, remittance of entire sale proceeds

should be insisted upon towards adjustment of liability. Commitment
letters from the prospective buyers for direct payment to the Bank have
to be obtained in this regard.
4. A letter should be addressed to the borrowers/ guarantors/ mortgagors
on the lines of the proforma in respect of non suit filed accounts
(Annexure-2) and suit filed accounts (Annexure-3) on receipt of the
sanction from the concerned authorities.
5. Any communication to the borrower/guarantor/mortgagors in respect of
suit filed accounts, shall be super scribed WITHOUT PREJUDICE TO
THE CLAIM/ RIGHT OF THE BANK UNDER THE O.S./ O.A. / T.A. No. /
Decree awarded in the Court concerned. In the case of action initiated
under SARFAESI Act, the communication shall be super scribed
Without prejudice to the rights available to the Bank under the
SARFAESI Act.
6. Any communication to the borrower/guarantor/mortgagors in respect of
non-suit filed accounts shall be super scribed "WITHOUT PREJUDICE
TO THE RIGHTS OF THE BANK".
7. Satisfaction memo to be filed seeking permission of the Court to
withdraw the suit / EP filed, after compromise amount is recovered in full.
The developments in OTS sanction / payment / default should be kept
informed to the dealing advocate/Court/DRT.
8. In case where a decree is yet to be passed and where compromise
amount has been agreed to be paid in installments, a prayer for a
consent decree under the joint memo specifying therein the terms of
compromise may be filed in the appropriate Court, with default clause ie.,
such a joint memo and the decree to be obtained must have a suitable
clause to the effect that in case of default by the borrower to comply with
the terms of compromise/ consent decree, the Bank is entitled to the
claim as per the plaint and remission granted under the compromise will
be withdrawn, while the decree would become executable without further
reference to the borrower / guarantor. The joint memo should be signed
by all borrowers / guarantors / mortgagers and should be cleared / vetted
by CO: Legal Department.
9. In respect of suit filed accounts , wherever compromise settlement has
been entered into or settled , refund of court fee as applicable, ( to be
ascertained in consultation with the concerned lawyers ) is to be obtained
and credited to the Banks Income account.
10. If the compromise terms are not fulfilled as agreed / sanctioned , unless
time for payment is extended by the competent authority, the
compromise sanction shall be treated as null and void and it must be
made clear to borrowers / guarantors that the total dues are payable to
the Bank and the OTS sanctioned stands cancelled. Such a letter should
be issued in writing immediately on the expiry of the period or violation of
any of the terms of OTS.
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11. Wherever after settlement, a certificate on closure of account/s is

requested, such certificate is to be issued, only after adjustment in full of
the liability, duly indicating the fact of the compromise having been
accepted by the Bank and adjustment of the account, involving sacrifice
by the Bank.
12. Receipt of further payment after lapse of the OTS / Award / Compromise
Decree: Whenever an OTS is communicated it should necessarily
contain a clause indicating the time frame within which the OTS is
payable. It should be clearly mentioned therein that failure to repay the
OTS amount within the stipulated time will automatically cancel the OTS
without any further notice in writing. However, if the OTS is not paid as
per time line indicated, a letter should be sent to the party in writing
informing him / her that the OTS sanctioned in the account stands
cancelled due to non-compliance of the terms and conditions and calling
upon them to repay the entire amount outstanding in the books as per
loan documents or as per decree/Recovery Certificate (in view of the
default clause incorporated).
13. Any remittances made by the NPA borrowers beyond the stipulated day
should not be accepted unconditionally. While accepting payments,
branches shall mention in the main & counter foil of the challan as well
as in the letter that the acceptance is without prejudice to our rights in the
suits pending against them and / or as per loan documents. This is being
suggested as Courts interpret such unconditional acceptance as
acceptance of the Bank for extending the OTS. Appropriation of such
payments to the loan account should be done only with the explicit
permission from the authority who has sanctioned the OTS.
7.21
Submission / Reimbursement of Write Off Claims:

Wherever OTS involves write off of part of book balances or in the case of
Full Write off of accounts, branches should submit Write Off claims in the
prescribed forms to the Zonal Office, immediately on closure of the account.
Write off claims should be submitted every week in respect of accounts
closed during that week.
Zonal Office should, after verifying the details, should reimburse the write off
claims to the branches and submit their consolidated Write-Off claims to the
Corporate Office / Recovery Department for reimbursement.
Zonal Office should submit their claims to the C.O. in respect of all
reimbursements made to the branches in a particular month within seven
days from the end of that particular month.
7.22
CAUTION:
Any correspondence with our NPA borrowers should be avoided to the
extent possible. Branches should also avoid giving any counter offer
in writing as such a letter is also being produced in the courts
subsequently. Strictly ensure the above while handling OTS proposal
as the Courts tend to take a view which is helping the borrowers.
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Chapter 8
Committees For Recovery

8.1
SETTLEMENT ADVISORY COMMITTEE:
8.1.1
A committee named "Settlement Advisory Committee" (SAC) is set up at

Corporate Office for considering all the proposals for Compromise, Release
of security, Sale of Assets to ARCs / Banks etc., that fall under the
Sanctioning Powers of COLCC(ED) / CAC / MCB conforming to the
norms. The committee, which has a retired judge of High Court as
Chairman, a retired Senior Banker and two / three General Managers of the
Bank with a quorum of 3, is functioning since 1997. Presence of the
Chairman is a must for SAC meeting. The compromise proposals falling
under the power of above sanctioning authorities are considered /
recommended by this committee based on the recommendations of
Committee of General Managers (CGM).
However, the following types of proposals will be placed directly to the
above three sanctioning authorities with the recommendation of CGM:- .
a) Full write off proposals where there is no recovery;
b) compromise proposals in NPA accounts with a Book balance of less
than Rs.10 lakhs and without write off;
c) Proposals for Release of security, where the NPV of security is
upto Rs 25 lakhs and/or NPAs with book balance upto Rs 10 lakhs
where no write off is involved.
8.1.2
Settlement Advisory Committee (SAC) meeting through Circulation:

Generally SAC meetings are convened at monthly intervals. However, in
instances where proposals are needed to be cleared urgently, Board has
approved the proposal of holding / conducting SAC meeting through
circulation with a view to quicken the process of Recovery in exceptional
cases. On approval, the proposal should be placed to the Sanctioning
Authority as in other cases.
8.2
COMMITTEE OF GENERAL MANAGERS (CGM):
8.2.1
Committee of General Managers (CGM) is formed at Corporate Office

comprising of General Managers and Deputy General Managers posted at
Corporate Office with the quorum being 3. The Committee considers and
recommends to SAC proposals for OTS, Release of Security, Sale of
Assets to ARCs / Banks etc. falling under the powers of COLCC(GM),
COLCC(ED), CAC and MCB.
However, proposals as mentioned at 8.1.1 a), b) & c) above will be placed
directly to the appropriate sanctioning authority with the recommendation of
CGM.
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GM (Recovery) will be the Chairperson of the CGM and other members of

the Committee will be decided by the Chairman and Managing Director.
It should be ensured that other than the Chairperson, the same members
should not be on both the CGM as well as on COLCC(GM).
8.3
ASSETS SALES COMMITTEE

Assets Sales Committee (ASC) has been constituted with General
Managers at Corporate Office (with a quorum of three and with GM (R&L)
as the Chairperson and Permanent Member) to consider and recommend
sale of assets viz. borrowal accounts which have been classified as NPAs
to Securitization Companies / Asset Reconstruction Companies / Other FIs
and Banks either under assignment or otherwise.
8.4
ASSETS RECOVERY COMMITTEE

Assets Recovery Committee (ARC) has been constituted with General
Managers at Corporate Office (with a quorum of three and with GM(R&L)
as the Chairperson and Permanent Member) to consider and recommend
participation in bids and purchase of properties brought for sale by Bank
under various recovery actions.
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Chapter 9
Other Recovery Issues

9.1
PURCHASE OF PROPERTIES CHARGED TO THE BANK BY PARTICIPATING

IN AUCTION UNDER EITHER SARFAESI OR DRT OR OTHER COURTS:
9.1.1
It is not a rare instance where the Bank has to face the constraint of selling
charged assets when there is no bidder at the Reserve Price or no one is
participating in the auction either under DRT or SARFAESI. At times we
have to be on guard to defeat the nefarious designs of persons forming a
cartel so as to knock down the price or scuttle the sale itself. At times
borrowers also discourage/ threaten the intending bidders. With a view to
ensure that such a constraint is not blocking the way towards realization of
dues and thwart the attempts to defeat the sale, our Bank is participating
selectively in auction of properties and bidding for properties, where initial
auction held was not successful despite all efforts taken by the Bank for
marketing the sale. In this regard, the following developments may please
be noted:
9.1.2
Government of India has come out with an amendment to SARFAESI Act

as well as DRT Act vide Notification dt. 04.01.13 titled The
Enforcement of Security Interest and Recovery of Debts Law
(Amendment) Act, 2012 which has come into force w.e.f. 15.1.13.
Now, under Section 13 of SARFAESI Act new sub-sections have been
added 5A, 5B & 5C, as per which where the sale of an immovable
property under SARFAESI is postponed for want of bid or the amount
quoted has been less than Reserve Price, it has been specifically
provided that Bank / Secured Creditor may bid for the property at any
subsequent sale.
Where the Bank / Secured Creditor so participates in the bidding and is
declared to be the purchaser of the immovable property / security, the
purchase price shall be adjusted towards the amount of claim of the
Bank for which such an action has been taken.
Sec. 9 of Banking Regulation Act deals with treating the assets so bid in
auction by the Bank / Secured Creditor as Non Banking Asset.
CO/Legal Department Circular ADV-144/2012-13 dt. 26.02.13 may please
be referred to.
9.1.3
Purchase of properties charged to the Bank by participating in Auction will

be considered at Corporate Office only from the level of General Manager
(R&L) / ED / Chairman and Managing Director depending upon the value of
the property, based on the recommendations of Zonal Manager and Asset
Recovery Committee at Corporate Office.
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Whenever the Bank intends to participate in such auctions, the following

procedures are to be followed:
1. Permission should be obtained to participate and bid in auction from the
Authorized Officer under SARFAESI proceedings / or Recovery Officer
(RO) of DRT as may be the case.
2. Borrower/ owners have to be informed (by the Branch) in advance of the
Banks intention to participate in the sale proposed under SARFAESI.
3. Branch also to give notice to the AO/RO of our intention to participate in
the auction and this option to be exercised selectively.
4. Branch/Zonal Office to confirm that (a) building has been put up with
necessary approved plans and (b) title of the mortgagor is valid.
5. Fresh valuation of the properties to be obtained from the approved
valuers of Income Tax, along with 3 or 4 photos.
6. Zonal Manager to visit the property personally for ascertaining the
desirability of purchase and inform the purpose for which the property
can be used either for its own use or resale later.
7. If it is for resale, adequate margin has to be ensured by the branches /
Zonal Offices which would take care of litigations, fluctuation in the
price line, etc. Generally if the Bank has to participate, the upset price
should be at least 30% less than market value of the property as the
margin is required to take care of fluctuation in price level, time line
required to realize money, possible litigation, etc. As the Bank
participates only in third or fourth auction the upset price will be lower by
30%.. Thus a minimum margin of 30% should be available between
market value and Reserve Price fixed which means that during second
or third auction only such a proposal (for Banks participation in auction)
can be considered.
9.1.4
As regarding disposal of the property which has not been acquired by the
Bank for its own use, the following to be noted:
In terms of section 9 of Banking Regulation Act, 1949, ..no Banking
company shall hold any immovable property howsoever acquired, except
such as is required for its own use, for any period exceeding seven years
from the acquisition thereof or any extension of such period as in this
section provided and such property shall be disposed within such period
or extended period as the case may be:
Hence, care should be taken to comply with the above provisions of the
Banking Regulation Act in respect of properties which were obtained not for
Banks own use and steps to be taken to dispose of such properties within
the prescribed time period or extended time period.
9.1.5
Delineating the authority: Such proposals for participation in auction through

SARFAESI / DRT / other Courts may be considered at the level of General
Manager (R&L) to Chairman and Managing Director depending upon the
value of the property in question.
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Bid Amount
COLCC (GM)
Up to Rs.50.00 lakhs
COLCC (ED)
> Rs.50.00 up to Rs.100.00 lakhs
CAC
>Rs.100.00 lakhs
9.1.6
Proposal for purchase and participation in bids will continue to be

considered at Corporate office only. All the proposals will be routed through
an Asset Recovery Committee constituted at Corporate Office.
9.2
ACCOUNTS UNDER WILFUL DEFAULT:
9.2.1
As per RBI guidelines, stringent measures are required to be initiated

against the Wilful Defaulters. However the issue of compromise settlement
in such cases of wilful defaults / frauds was examined by RBI and RBI has
advised Banks through Indian Banks Association that compromise
settlement with wilful defaulters / fraudulent borrowers can be entered into
without prejudice to the criminal case against the borrower. Such cases of
compromise settlement should be approved by MCB / Board of the Bank as
per the guidelines. (IBA letter no.C&I / Misc/1435 dated May 14, 2007)
9.2.2
Therefore OTS to wilful defaulters / fraudulent borrowers should be referred

to Corporate Office to be considered at the level of MCB / Board. MRA
should be calculated on the same lines as in the case of other accounts as
detailed above, in the case of wilful defaulters also.
9.2.3
Wilful defaulters are defined by RBI as under:

A wilful default would be deemed to have occurred if any of the following
events is noted:a) The unit has defaulted in meeting its payment/repayment obligations to
the lender even when it has the capacity to honour the said obligations.
b) The unit has defaulted in meeting its payment/repayment obligations of
the lender and has not utilized the finance from the lender for the specific
purposes for which finance was availed of but has diverted the funds for
other purposes.
c) 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 utilized for the specific purpose for which finance was availed of,
nor are the funds available with the unit in the form of other assets.
d) The Unit has defaulted in meeting its payment/repayment obligation to
the lender and has also disposed of or removed the movable fixed
assets or immovable property given by him or it for the purpose of
securing a term loan without the knowledge of the Bank/lender
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Branches / Zonal Offices have to report the accounts where the default is on
account of any or all the reasons outlined above, for reporting to RBI. In
respect of other defaulters, if the branches do not have any conclusive
evidence of wilful default, such of those accounts need not be treated under
the category of wilful default.
9.3
Fraudulent borrowers:
9.3.1
Such of those cases which are reported as frauds to RBI through CO:
Vigilance Department should only be classified under the appropriate
category and full provision made.
9.3.2
As per existing Banks policy, NPA Accounts where irregularities have been
committed by the borrowers also can be considered for OTS. This is with a
view to avoid blocking of Banks funds in such accounts, while action under
the laws of the land can be continued.
9.3.3
Guidelines from Government of India on fraud cases:

Government of India, Ministry of Finance, Department of Financial Services,
issued the following guidelines and advised that all PSBs/RRBs should set
up a specialized team in every zone for recovery in case of frauds:
(a) It is felt that in cases of frauds in Banks, the level of recovery is not
satisfactory. As Banks deal with depositors money and their capital also
comes from tax payers contribution, it is essential that Banks make all
efforts in a timely manner to protect depositors money involved in fraud
cases.
(b) It is imperative on the part of the Banks to accord highest priority on the
recovery of the money involved in fraud cases, apart from reporting it to the
concerned authorities as per RBI guidelines. Timely action in recovery is
also very crucial.
(c) Therefore, Banks should set up a specialized team in every zone for
recovery. On reporting of fraud, such a team should make on the spot visit/
report at the site of the fraud within 24 hours. The team should take all
possible action to recover the fullest amount involved in the fraud. The team
should take in its possession all movable and immovable assets and
available documents from the defaulting borrowers by taking necessary
approval from the appropriate legal authorities.
Necessary guidelines have already been issued to all Zones of our Bank for
compliance with the Government guidelines. Zones have been advised to
form a specialized team (consisting of a minimum of three members) in the
Zonal Office for recovery in case of frauds. Officers in Vigilance, Credit and
Recovery departments in Zonal Office are to be inducted as members of the
Special Team, which will be headed by the Second-in-command of the
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Zone. The team should play a crucial role in recovery of fraud cases, by
ensuring the role and functions as detailed in the above Government
guidelines (para C above) and periodically (every month) report the progress
to Zonal Manager.
9.4
Resolution of NPA Accounts involving Criminal Cases:
9.4.1
OTS in PIL/CBI Cases: Only in respect of NPA accounts pertaining to

PIL/CBI investigation cases, the subject is to be referred to MC. Resolution
of NPAs pertaining to other criminal / ordinary police cases which are not
reported to RBI by CO: Inspection / Vigilance Department are to be dealt
with at the appropriate level in line with the powers delegated for
OTS/Sacrifice.
9.4.2
OTS in cases classified as fraud where criminal action initiated either

through Police or CBI or other Agencies:
In all such accounts, the OTS sanctioning Authority will be MCB only.
However, recovery either through normal channel or through negotiated
settlement even in such accounts should not be delayed / denied, as
recovery of NPA has to be given due importance, while pursuing criminal
action simultaneously. However, IBA has advised Banks (vide letter
No..Legal/Cir/655 dt 08 06 2009) that the following clauses are
incorporated:a)If there is any case where a person has obtained loan from the Bank by
making fraudulent representation or otherwise committing any fraud, as
far as possible, efforts should be made to recover the entire amount of
the loan. This is necessary to ensure that the person committing fraud
is not allowed to benefit from commission of such fraudulent acts.
b)Inspite of the above basic policy requirement, there will be cases where it
is not possible to recover the full amount and the borrower is coming
forward to offer settlement. While negotiating the offer, it must be made
clear that recovery of the loan taken by the borrower and the criminal
action for the fraud committed by him are two separate and distinct
matters. It should be clarified at the outset that if the settlement proposal
as given by the borrower is accepted, such settlement will relate only to
the recovery proceedings and shall not in any way affect the criminal
action.
c) It is the practice of the Bank to record the terms and conditions of the
settlement in a consent letter to be obtained from the Court or DRT. In
such consent orders, a specific clause should be incorporated stating
that the settlement agreed between the parties shall not in any way affect
or be construed as settlement of ongoing criminal cases/proceedings
pending in the Court against the borrowers.
d)The officers/employees who are required to appear as witnesses in the
criminal proceedings should be advised that although the Bank has
accepted the settlement proposal given by the borrower, there is no
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settlement in regard to the criminal proceedings initiated against the

borrower. Such Officer or employee should be advised to make this
position clear when he is examined as a witness in the criminal
proceedings.
9.5
Security Value and Provisioning:

As per IRAC guidelines prescribed by RBI, provisioning in the case of
Doubtful assets shall be made after taking into consideration the value of
securities available. RBI, during the Annual Financial Inspection, verify the
same and divergence of provision observed if any is being pointed out in
the report. Hence with a view to addressing the issue, branches shall furnish
only the present realisable value of securities against the Securities column
when the account is identified as NPA, instead of furnishing the original
valuation or any other value/Market Value which cannot be realised.
As per IRAC norms, collaterals such as immovable properties charged in
favour of the Bank should be valued once in three years.
9.6
APPROPRIATION OF RECOVERIES IN NPA A/CS:
9.6.1
Uniform Accounting policy for appropriation of amount recovered:

In the absence of a clear agreement between the Bank and the borrower for
the purpose of appropriation of recoveries in NPAs (i.e. towards principal or
interest due), the Bank will adopt a uniform accounting Policy and exercise
the right of appropriation of recoveries in a uniform and consistent manner
as follows:
Any Recovery should be first appropriated to Book Balance (Principal)
and then to Unpaid Legal Expenses (MLE), Unpaid Other Expenses
(MOX) and thereafter to Unpaid Interest (MOI).
9.6.2
The above uniform accounting procedure should be adopted for all modes of
recovery, including normal mode, Compromise, SARFAESI and both for
suit-filed and non-suit filed accounts.
(When (i) recovery proceeds to be appropriated are in excess of the book
balance and
(ii) further recovery is expected in such NPA A/c, (out of
further recovery proceedings), appropriation may be done by retaining a
minimum Book Balance of Rs 1000/- in the NPA A/c. This will facilitate the
branch to keep the account alive (instead of keeping the a/c with Zero
balance) and pursue with further proceedings towards recovery of remaining
dues under MLE/MOX/MOI. The minimum book balance should also be
recovered at the time of closure of the account.
In case of sale of properties, unless the full sale amount is realized, the part
payment should not normally be appropriated to loan account, to ward off
difficulties in case the sale failed.
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9.7
Sharing of Recovery from sale of assets by Invocation of SARFAESI

Act among Member Banks under Consortium Arrangement:
9.7.1
As per the SARFAESI Act, any secured lender is not entitled to exercise the
power of enforcement of Securities under Section 13 (4) of the Act unless
Secured Creditors representing not less than 60% in value of the amount
outstanding (the total amount due to be payable) agree/consent for such
action under Section 13 (9) of the Act. This consent is required only at the
stage of taking possession and further proceedings and not at the stage of
issuance of Demand Notice.
CO/Legal Departments Circular No. ADV/144/2012-13 dtd. 26.2.2013 may
please be referred to.
9.7.2
Under consortium arrangement, the Securities are charged between the

Member Banks according to the pattern of finance either as Working Capital
or Term Loan or both. Generally, the exposure of Commercial Banks is for
the working capital, with the term lending institutions (FIs) extending finance
for acquiring Fixed Assets. The charge on assets are also under the same
pattern, ie., the Banks/FIs extending finance for fixed assets get the first
charge on all fixed assets and Banks extending working capital finance get
first charge on current assets and second charge on Fixed Assets.
9.7.3
In normal Recovery Proceedings, the 2nd Charge holders get only residual
value, if any after complete settlement of dues to the 1st Charge Holders.
However, in the case of recovery under SARFAESI Act, as consent of 2nd
charge holder is also required, the 1st Charge Holder / 2nd Charge holder
under consortium have started following the practice of apportioning the sale
proceeds in the ratio of 80:20, ie 80% of the recovery to 1st Charge holders
and 20% to the 2nd Charge Holders. All the FIs and Banks have now
accepted this as general sharing pattern .This arrangement is beneficial to
2nd charge holders. Generally, when action is taken under SARFAESI jointly
by Banks, the current assets may not fetch much value where as the
recovery through Fixed Assets may be substantial.
9.7.4
Sometimes when such sharing is done with first charge holders on sale
proceeds of fixed assets, they also demand a share in sale proceeds of
current assets. Therefore, present Policy provides for similar sharing pattern
of 80:20 among the first and second charge holders in the sale proceeds of
Current Assets / Fixed assets.
9.7.5
Bankers are to give their consent for initiating action under SARFAESI Act
as also the sharing pattern. In order to expedite the decision in such cases
and in line with the practice followed by the Banks, the policy provides the
following guidelines:
a)Bank will decide generally to accept the sharing pattern of 80:20 (80% for
first charge holders and 20% for second charge holders) in case of sale of
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assets (under SARFAESI) in a consortium arrangement where we hold (a)

2nd Charge on Fixed Assets (b) 1st charge on current assets.
b)General Manager (R&L) is empowered to approve acceptance of the
sharing pattern of 80:20 or a better ratio favouring the Bank, in the
consortium accounts where we hold 2nd Charge on Fixed Assets and / or
first charge on current assets and if assets are sold through auction under
SARFAESI Act.
c) ED / CMD are empowered to accept a sharing pattern in deviation of the
above sharing pattern of 80:20.
9.8
CMD / ED are empowered to take appropriate decision on any issue that

may arise while implementing the OTS Policy.
9.9
CMD is empowered to authorize Higher Discretionary Power for sanctioning

of OTS to various sanctioning authorities under two OTS Policies.
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Chapter 10
Miscellaneous
10
REPORTING SYSTEM:
10.1
Field level functionaries should report sanction of compromises (waiver /

write off) in REC Form 1 to the next higher authority every month.
10.1.1
OTS sanctions made by Branches have to be reported to the Zonal Offices

before 5th of the succeeding month as hitherto for scrutiny and verification
whether the delegated powers have been exercised in accordance with
guidelines of the policy.
10.1.2
OTS sanctions made by Zonal Managers shall have to be reported on

monthly basis to Corporate Office for placing to the Executive Director.
Similarly OTS sanctions made by General Manger (Recovery) at Corporate
Office shall also have to be placed to the Executive Director for information
and record. Compliance of the compromise settlement is to be reported to
the sanctioning authority. (REC Form 2)
10.1.3
The higher authorities should review the waiver/ write off granted and
ensure recovery as per the negotiated terms. A Register on the lines of
proforma is to be maintained for scrutiny by officials inspecting the Branch /
higher officials during the branch visit (REC Form 3)
10.2
SUBMISSION OF PROPOSALS:
10.2.1
Compromise Proposal Format: A simplified format as per Annexure I for

proposals under OTS Policy for Book Balance upto Rs.10.00 lakhs and as
per Annexure II for proposals under General OTS Policy
10.2.2
Time Frame: Branch should forward the compromise proposal to the next
higher authorities within 7 working days from the date it is received with full
particulars, with its views / recommendations taking into account the
deliberations if any, in the joint meeting with the Zonal Manager and the
borrower. Zonal Managers should convey their decision on the proposal /
submit their recommendations to the Corporate Office, within 7 working
days of receipt of proposal at their end.
10.2.3
Certificate on Compliance to RBI guidelines:- In compliance with RBI

directions, the officer/authority sanctioning a compromise/one time
settlement should append a certificate stating that the compromise
settlements are in conformity with the RBI guidelines. Branches/Zonal
Offices are to ensure that this certificate is appended while
submitting/sanctioning OTS proposals.
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10.2.4
Issue of Certificate on closure of account: Wherever after settlement, a

certificate on closure of accounts is requested, such certificate is to be
issued only after adjustment in full and final settlement of the liability, duly
indicating the fact of the compromise having been accepted by the Bank
and adjustment of the account, involving sacrifice by the Bank
(ANNEXURE-7). In case of written off account, No Due Certificate should
not be issued unless the dues are paid / settled subsequently.
10.3
DEFINITION OF THE TERMS USED IN THE POLICY:
10.3.1
Actual Total Dues:

Actual Total Dues shall mean the amount outstanding as on the Cut Off
Date (date from which interest income is not recognized on accrual basis)
together with unapplied interest (calculated at contracted rate, as applicable
from time to time , compounded quarterly, inclusive of penal interest or as
per court order, if decreed). Recoveries credited to the account and debits
made to the account should be taken into account and value-dated.
Actual Total Dues = Ledger Outstanding (BOOK BALANCE) + Law
Charges (MLE) + MOX + MOI + penal Interest.
10.3.2
Notional Dues:
Dues arrived under General OTS Policy for the purpose of calculating
Minimum Recoverable Amount as described in Para at Sr. No. 6.5
10.3.3
Cut Off Date:

The date from which loan asset is not earning any interest or application of
Interest to loan account is stopped.
It is observed at the time of processing compromise proposals at Corporate
Office that calculation of interest for the purpose of MRA / Interest
Component from the cut off date has not been properly computed in some
cases. Cut off date refers to the date from which loan asset is not earning
any interest or application of interest to loan account is stopped. In other
words it refers to the date from which interest income is not recognised on
accrual basis & only a record of such interest due is maintained as
Memorandum of Interest (MOI) account. For instance, if the MOI account
is maintained since 31.03.2010 with unrealised interest from 30.09.2009,
the cut off date will be 30.09.2009 and for arriving quantum of compromise
amount / sacrifice the applicable interest rate as the case may be, is to be
calculated from 30.09.2009 only.
10.3.4
Net Worth: Net Worth of the borrower / guarantor is the worth of the
borrower /guarantor minus the borrowings / outstanding other than that of
Bank borrowings from verifiable source as on a date very close to the date
of submission of the compromise proposal by the branch. In the case of a
limited company, the net worth shall be the paid up capital + accumulated
reserves minus accumulated losses in the Profit and Loss Account as given
in the Balance Sheet as at a recent date. Branches must insist for
submission of latest A&L when borrower is offering for OTS.
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10.3.5
Base Rate on Advances referred in the Recovery Policy for computation

of Interest Component forming part of Notional Dues shall be the Base
Rate prevailing at the beginning of the current financial year ie 1st April.
(Base Rate as on 01 04 2013 is 10.20%)
10.4
STAFF LAPSES/ EXAMINATION OF STAFF ACCOUNTABILITY:Determination of staff accountability in borrowal accounts which have
turned non-performing will be subject to guidelines issued by the Corporate
Office from time to time. Salient features on Examination of Staff
Accountability are reproduced hereunder:
(1)
Staff Accountability study should be taken up as soon as an account

deteriorates and becomes a non performing asset.
(2) The study should be completed and attendant action of calling for the
explanation of the official, if warranted, shall be done within 45 days
from the date on which the asset turned non-performing.
(3) Staff Accountability report as per the appropriate format depending on
the quantum of exposure should be submitted by the branches within
one month from the date on which the account turned non performing.
(4) Zonal Offices shall send to CO: Recovery Department at the end of
each quarter a progress report on staff accountability study and to
Chief Vigilance Officer a report on details of specified NPAs / Quick
Mortality accounts which have turned non-performing during the
quarter.
Zonal Offices will maintain records of all stressed accounts where staff
accountability study has been conducted. Zonal Offices will report to CO:
Recovery Department on a quarterly basis individual details of all accounts
with exposure of Rs. 10 lakhs and above taken up for staff accountability
study besides furnishing a consolidated progress achieved for all fresh NPA
accounts.
For detailed guidelines All Branch Cir No. ADMIN. 60/2010-11 dated
24.12.2010
(M-8 S-807) (INS/AUDIT-69) and latest (M-8) circular
ADMIN 95/2012-13 dt 30 03 2013) issued by CO: Inspection Dept, shall be
referred and complied with.
The exercise will enable us to attend to lapses if any, and rectify them so as
to upgrade the impaired assets as well as improve recoverability in fresh
NPAs identified besides, facilitating in arresting / minimising the incidence
of fresh NPAs.
10.5
EXTENSION OF FURTHER LOANS IN COMPROMISE SETTLED

ACCOUNTS:
In regard to accounts sanctioned by Branches, ZLCC & COLCC (GM)
where compromise settlements have been entered into for realization of
entire dues under OTS, the functional General Managers at CO of
respective Credit Departments (like Credit Division, MSME, RBD, PBD etc.)
Page No. 55
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may decide on a case to case basis on sanction of further facilities in their

operational area, irrespective of the authority who sanctioned OTS in such
accounts. For accounts sanctioned by COLCC (ED), CAC and MCB, CMD
is authorized to take a decision in this regard.
10.6
Provisioning of NPAs:
RBI guidelines on general provisioning as per IRAC norms vis- a-vis actual
practice followed by our Bank as of now are reproduced hereunder:
General
guidelines
of RBI
Asset
Category
Sub
standard
Doubtful
General Provision
Unsecured
exposure **
Unsecured Portion
Secured Portion:
D1(upto 1 yr)
D2 (1-3 yrs)
D3(>3 yrs)
15%
25%
100%
Existing
system
followed by
the Bank
Effective
Date
Uniform 25%
irrespective of 01.07.11
security status
100%
25%
25%
01.07.11
40%
40%
01.07.11
100%
100%
Loss
100%
100%
Unsecured exposure is an exposure where the realisable value of security
is not more than 10 percent, ab-initio of the outstanding exposure.
Exposure shall include all funded and non-funded exposures (including
underwriting and similar commitments).
RBI norms permit Banks to make additional provisions for NPAs at higher
than prescribed rates. The decision of making provision over and above the
general regulatory norm was taken by the Bank, over a period of time so as
to build up reserves against possible loss. Such a reserve is being built
while the market conditions are conducive and financials are strong.
10.7
Extension of Policy guidelines on Creation and Utilisation of Floating

Provision:
The Policy guidelines on Creation and Utilisation of Floating Provision as
approved by Board on 02 12 2008 and reviewed on 07 01 2012 & 04 04
2012 is extended for a further period of one year upto 31 03 2014.
10.8
Extension of Policy guidelines on Collection of Dues and

Repossession of Security for further period of one year upto 31 03
2014.
The Policy guidelines on Collection of Dues and Repossession of Security
as approved by Board is extended for a further period of one year upto 31
03 2014.
Page No. 56
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10.9
Extension of Policy guidelines for sale of NPAs:

a) The Policy guidelines on sale of financial assets to Securitisation
Companies (SC) and Reconstruction Companies(RCs) and
b) Policy guidelines on purchase/sale of non performing financial assets
Banks and NBFCs, as approved by Board on 10 03 2005 and 02 09
2005 respectively, with all updates (including the concept of NPV) in
terms of the Master circulars(IRAC) issued by RBI from time to time,
latest being on 01 07 2012, will continue to be adhered to by the Bank
10.10
Policy on Restructuring of Accounts & Rehabilitation of Sick Units:

Policy on Restructuring is covered under Loan Policy based on RBI
guidelines and circulated to branches on approval by the Board.
As for rehabilitation / restructuring of accounts coming under the BIFR /
CDR purview, BIFR / AAIFR Benches and CDR Cell will issue required
guidelines on case to case basis and detailed Draft Rehabilitation Schemes
are formulated by Operating Agencies appointed by the BIFR Benches and
CDR Cells. Bank will continue to be guided by such statutory bodies while
dealing with sick units.
10.11
Others:
Any guideline issued by RBI / Government of India received in the course
of the year with regard to NPA will also be suitably incorporated with the
approval by the Board and will form part of the Recovery Policy.
10.12
Authority to approve Interpretation:

ED/CMD will be the Appropriate Authority to provide any further guidelines /
interpretation of the Recovery Policy now proposed for FY 2013-14.
*****************
Page No. 57
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10-13: Indian Bank Model Code for Collection of Dues and Repossession of
Securities (CDRS Code)
Preamble:The Debt Collection Policy is built around dignity and respect to the
customers and will follow fair practices in collection of dues and repossession of
securities, thereby fostering customer confidence and long term relationship. Bank
will not follow policies that are unduly harsh in collection of dues.
The repayment schedule will take into consideration the paying capacity / cash flow
pattern of the borrower. The borrowers will be explained upfront about the method of
calculation of interest, the EMI calculation, repayment pattern and modes of
appropriation. Necessary guidance can be obtained from the Branches in case of
genuine difficulty in repayment.
Security Repossession policy is aimed at recovery of dues in the event of default and
not whimsical deprivation of property. The procedures / steps adopted will be fair
and transparent and in consonance with the Laws.
General guidelines:The staff or any person authorised to represent the Bank in
collection of dues/ repossession of securities will identify themselves to the
borrowers in the first instance and produce the authority letter issued by the Bank
upon request.
The Customer / borrowers will be contacted at the place of their choice or at the
place of their residence / business / occupation.
The privacy of the borrowers / customers will be respected and normally the Banks
representatives will contact them between 07.00 hrs and 19.00 hrs, unless special
circumstances require the Bank to contact at different time. The borrowers request
to avoid calls / visits at a particular time / place will be honoured as far as possible.
Inappropriate occasions such as marriage, bereavement in the family etc. will be
avoided for making calls/visits.
The written and verbal communication on behalf of the Bank will be in simple
business language and the Bank will adopt civil manners during the interactions with
the borrowers.
Bank will document the efforts made for recovery of dues and copies of the
communications sent to the borrowers will be kept on record.
All assistance will be given to resolve the disputes / differences in a mutually
acceptable and orderly manner.
Notice to the borrowers:Written communications, telephonic reminders or visits by
the Banks representatives to the borrowers place or residence will be used as a
loan follow up measure.
A prior written notice will be given before resorting to legal or other recovery
measures including re-possession of securites. In the said notice, it may be
stipulated that the borrower / guarantor / mortgagor ought to make repayment within
one week of issuing notice failing which further recovery action will be initiated.
Bank will follow all procedures as required under Law for recovery / repossession of
securities.
In accounts / cases which are entrusted to Recovery Agents, keeping in tune with
principles of natural justice, a notice will be sent to the borrower / guarantor /
Page No. 58
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mortgagor informing that as the borrower has failed to repay the dues, the portfolio of
recovery of dues in the account have been entrusted to Recovery Agents specifying
their names, who would be assisting the Bank in effecting recovery.
In the notice to be issued to the borrower/mortgagor it may be indicated that Bank
will take steps to retrieve / obtain back the documents from Court / DRT and within
seven days of receipt of title deeds from Court / DRT, the same will be handed over
to borrower / mortgagor.
Re-possession of securities:Bank will issue a notice prior to sale in accordance with
law and principles of Natural Justice.
Repossession of security will involve three steps viz., repossession, valuation of
security and realization of security by appropriate means. A prior notice will be
issued before resorting to repossession and due process of law will be followed while
taking repossession.
After taking custody of the property, Bank will take reasonable care to ensure its
safety and security, in the ordinary course of business.
While taking repossession, the inventory and panchnama shall be drawn, duly
witnessed and a copy shall be furnished to the customer / borrower.
The Bankers hold a right to continue to hold / retain the securities even after
adjustment of the specific loan dues for which the security has been offered, towards
general balance due to the Banker from the said borrower. This right is termed as
Bankers general lien. The Bankers general lien and its implications thereof are
contained in the loan documents which are obtained at the time of availing the loan.
In the notice to be issued to the borrower / mortgagor under CDRS code, the
following clause may be added.
Bank will take steps to retrieve/ obtain back the documents from Court / DRT and
within 7 days of receipt of title deeds from Court / DRT, the same will be handed over
to borrower/ mortgagor. In accounts which are non suit filed after ascertaining that
there is no direct or indirect liability of the said borrower with the Bank, the title
deeds/ securities will be handed over back to the borrower / mortgagor within 7 days
but not exceeding a time span of one month.
Valuation and sale of property:Valuation of the property will be obtained by the Bank
and thereafter sale will be conducted in a fair and transparent manner.
Excess amount received through sale of property, over and above the amount due to
the Bank and other expenses will be returned to the borrower, provided, Bank does
not have any other claims against the customer/borrower.
Bank will have right to recover from the borrower, the balance due if any, after sale
of the property.
Opportunity to the borrower to redeem the property: Any time after repossession but
before concluding sale of the property, if the borrower clears the Bank dues in full,
Bank may consider handing over the possession back to the borrower, if there are
no other constraints on / commitments to the Bank. Such a decision will be taken by
the Bank on a case to case basis based on merits.
Likewise, if the Bank is convinced about the genuineness of borrowers inability to
pay the loan instalments as per schedule, Bank may consider handing over the
Page No. 59
A
property back to the borrower/customer after receiving the instalments in arrears, if

there are no financial or other commitments by the borrower to the Bank and based
on merits of each case. This would be subject to Bank being convinced of the
arrangements made by the borrower to ensure timely repayments of instalments in
future.
Grievance Redressal procedures:The grievance redressal procedure / guidelines are
already ported in the Banks website. The Grievance Redressal measures and
procedures are elaborately dealt with under the Policy on complaint / grievance
redressal.
Zonal Offices and Branches are advised to give publicity to this policy and features
of the code.
***********************************************************************************************
10.14 Appointment of Recovery Agents in SARFAESI proceedings and other
Recovery Process:
The need of the hour is to maximise recovery by using the combination of various
tools like SARFAESI, Lok Adalat, DRT/ Civil Court, Arbitration etc.
Under
SARFAESI Act, the Authorised Officer is at liberty to make use of the services of
specialised agencies (Recovery Agents) in activities like taking possession, drawing
inventory, making security arrangements, effecting sale etc. Furthermore, even in
other process of recovery like in the suit filing process, for the purpose of identifying
other assets, to co-ordinate / liaison with Government Agencies, Municipal
authorities, the Registration authorities, Recovery Officer of DRT, Officials of the
Court etc., the services of Recovery Agents would be of immense help.
By utilizing the services of Recovery Agents, the Bank is facilitated with professional
expertise in various fields and there will be focused attention in effecting recovery.
The main criteria for selection of Recovery Agents are:
1. The Recovery Agent recommended has to satisfy the KYC norms.
2. Recovery Agent identified should be Private / Public Limited companies or
Partnership firms.
3. The Zonal Manager to call the Key Managerial Personnel of the Recovery Agents
identified, for a personal meeting and assess on key parameters like track record,
availability of infrastructure facilities, trained manpower availability etc. and send
their rating to Office for empanelment with specific recommendations of Zonal
Manager.
The fee structure payable to RAs is revised and informed to the branches by a
separate circular.
An agreement is entered into between the Bank and the Recovery Agents broadly
defining the scope of the work to be performed by the Recovery Agent, terms of the
offer, the obligations of the Recovery Agents and the Bank. The agreement has
covered the requirement of adherence to CDRS code, maintenance of confidentiality
and providing records of RA for audit and other guidelines issued by RBI.
Page No. 60
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Board had on 24 01 2011 approved the proposal to engage the services of retired
Bank personnel for recovery of loans assigned to ARCs. By virtue of Service Level
Agreement (SLA) executed, ARC requested the Bank to carry on the recovery
process initiated for a fee of 10%. Out of the fee levied, Bank was authorized to pay
a recovery incentive of 3% for recovery in secured advances and 5% on the amount
of unsecured loans recovered. The process will be continued till further direction.
10.15.Appointment of ARCs as Recovery Agents for Recovery of Loss Agents:

Board at their meeting held on 29.9.2012 approved appointment of ARCs as
Recovery Agents towards resolution of Loss Assets on commercial terms as per
guidelines issued by the Government of India, Ministry of Finance.
This
arrangement will continue till further directions.
10.16. SARFAESI Action to expedite recovery: Vital Dos and Donts are
furnished in All Branch Circular of our CO:Legal Department vide ADV:107/2012-13
dated 03 12 2012, for the guidance of branches and Authorised Officers.
10.17. Amendments to SARFAESI Act _ The enforcement of Security Interest and

Recovery of Debts Law(Amendment: Act 2012 Branches/Zonal Offices are to be
guided by our CO:Legal Department All Branch circular ADV:144/2012-13 dated 26
02 2013.
Page No. 61
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ANNEXURE II - ADV 160/2012-13 DT. 30.03.2013 ON RECOVERY POLICY 2013-14
______________________Br.
ANNEXURE A- Compromise Proposal under OTS Policy for Book Balance up to Rs.10.00 lacs
Date: ____________
Branch:
A.
B
Zone
Proposal Falls Under the Powers of:

Borrowers
Name:
CIF No.
Sector
Sub Sector
NPA Date
Priority / Non Priority

Agriculture / MSME / Educational
Loans / Home Loans / Othersspecify
Asset Classification
as on 31.03.13
Provision Held
As on
Amt Rs
C Outstanding Dues as on ____________:

(Here show details of outstanding dues in all accounts in the name of the borrower individually)
C.1
All accounts other than Farm Mechanisation Loans: (Amount in Rupees)

(MOI figure should be as at end of the current quarter)
No.
CBS A/c No.
Facility
Limit
Book Bal
MOI
MLE/MOX
Total dues
1
2
3
4
Total
C.2
Farm Mechanisation Loan Accounts: (Amount in Rupees)
No.
CBS A/c No.
Facility
Limit
Book Bal
MOI
MLE/MOX
1
2
Total
C.3
Total dues
Grand Total (C1 + C2)
D. Security Details:
Subsidy: Amount and Date of credit to loan account
Guarantee cover: if eligible, amount settled details
At the time of Sanction
securities
held:
Nature of Security
Date of
Valuation
a) Primary
(Rs. in lacs)
Market
Value
Distress
Sale Value
Market
Value
Distress
Sale Value
b) Collateral
Total
securities
held:
Nature of Security
Present Position
Date of
Valuation
a) Primary
b) Collateral
Total
A
____________________Br.
E. Recovery Action: In case of non-suit filed a/c: Date of expiry of Limitation: _____________
(Rs. in lacs)
If Suit filed?
Date of Suit:
Suit amount:
If decreed?
Date of decree:
Decreed Amt & ROI awarded:
If under SARFAESI
Dt. of Notice :
Dt. of Possession & Sale:
Present position of above:
(Rs. in lacs)
F. Recoveries Made: (in all accounts)

Total Recovery effected from the date of NPA
Of the above, recovery towards
Rs.
Principal
MOI
MLE
G. Discrepancies / Irregularities, if any

Adverse Inspection remarks / Irregularity if any
Staff lapses, if any, and action taken
H. MRA Computation: - As per Annexure attached.

I. OTS SANCTIONED / APPROVED & SACRIFICE
No.
1
Other
Loans
Particulars
Total Book Balance as on date of OTS. (Should tally with

Column (i) of MRA Computation Sheet)
MRA amount (Column (vi) of MRA Computation)
OTS Amount Offered by the Party
OTS Amount Recommended / Sanctioned
Sacrifice (Write Off) (Sr. No. 1 minus Sr. No. 4)
Amt. in Rupees
Farm Mechn.
Loans
6.
Income / Interest earned (if OTS concluded is more than

book balance) (Sr. No. 4 Sr. No.1)
(Note: Discretionary Power for sanctioning of OTS depends only for the final write off amount
involved irrespective of sacrifice by way of waiver of MOI interest. Hence, wherever, OTS
concluded is more than the Book Balance as above, the OTS may be sanctioned by the branch
manager himself).
J. Terms & Conditions:
Upfront Amount received / kept in NLA:
Payment Terms:
Other conditions, if any:
K. Certificate:
OTS Conforms to all (RBI/Bank) norms of OTS Policy for Book Balance up to Rs.10.00
lacs as per Recovery Policy 2013-14 and no deviation is involved.
Sector classification of the advances, NPA Date, Asset Classifications, Book Balances,
MOI/MLE/MOX figures have been verified and found correct.
No Staff Lapse identified / reported at Sr. No: G. above.
Sanctioned / Recommended to ZO
Asst. Branch Manager / Loans Officer
Branch Manager
TOTAL
Farm Mechanisation Loans:
TOTAL
(i)
(ii)
(ii)
(iii) = (i) x (ii)
(iii) = (i) x (ii)
(iv)
(iv)
Interest,
if any, as
per Policy
(Rupees)
(v)
(v)
MLE / MOX,
if any
(Rupees)
(vi)
= (iii) + (iv) + (v)
(vi)
= (iii) + (iv) + (v)
Final MRA
(Rupees)
Annexure A1
______________________Br.
* Please see Recovery Policy Chapter 5, Para 5.7.1 Give the category as (A), (B 1), B2.a, B2.b, B2.c as given in the Para.
** Existing Book balances should be reduced by the amount of (a) Subsidy and (b) Claims Settled amounts, if any received and kept still
unappropriated to the loan accounts.
H.2
(i)
All accounts other than Farm Mechanisation Loans:

Distressed *Category ** Book Bal.
as on OTS
(as per
Account
Sale Value of
Securities, if Settlement
date
(Facility wise)
(Rupees)
Formula)
any
H.1
No
Computation of Minimum Recoverable Amount (MRA)
H.
% for MRA Book Balance

prescribed
portion for
MRA
for the
Category
(Rupees)
A/c:_______________________________ of Branch______________
____________________Br.
A
____________________Br.
Annexure B - Proposal under General OTS Policy
Branch:
Zone:
(If ARM branch) a/c

transferred from:
Date:
Proposal for:
(Mention whether the proposal is for (a) OTS, (b) Write-Off of Entire Dues, (c) Release of Part of
Securities or for (d) Other PurposePlease Specify)
Competent Authority
to Approve / Sanction:
Reason for referring to
the Competent Authority:
(Mention whether due to (a) Sacrifice for the OTS / Write off of the account, (b) Relaxation /
Deviation from Norms, (c) Part Release of Securities as per guidelines, (d) Fraud involved /
Wilful Defaulter (e) Staff / Staff Related Account etc.falls under the Authority, (f) Extension of Time
for Payment of OTS dues, (g)Others Specify)
Nature of Deviation /
Relaxation from Norms
(Mention whether (a) OTS is less than MRA, (b) OTS is less than NPV of securities, (c) Or Both,
(d) Longer Time for Payment of OTS, (e) Extension of Time without interest, (f) Others Specify.)
Borrower / Name of
Account:
This Proposal comprises of the following Annexures forming part of the proposal:
1. Borrower / Account Profile / Brief History
3. Guarantor Details
5. Recovery Action Taken
7. Staff Accountability
9. Computation of Minimum Recoverable Amount
11.Pending Legal Proceedings by / against Bank
13.Zonal Managers Recommendations
(A
(B
2.Credit Limits Sanctioned and Present Position

4. Security Details
6. Recoveries Made from the Date of NPA
8. Group Accounts / Exposure/Indirect Liabilities
10. Part Release of Securities
12. Branch Managers Recommendations
14. Sacrifice involved in the Proposal
Summary of the Proposal

Outstanding Liabilities: (Details in Annexure 2)
Particulars
Book
MOI
MLE
Balance
Total Dues in all
accounts
(Rs. in lacs)
MOX
Total
Liability
Account Details:
Sector and Line of Activity
NPA Date
Asset
Class
Provisio
n Held
Suit filed
on
Decreed
on
A
____________________Br.
(C
Valuation of Presently Available Securities: (Details: Annexure 4)

Present Valuation
Nature of Security
As per 1st EVR
As per 2nd EVR
M.V.
R.V.
M.V.
R.V.
Primary Securities:
Stocks
Plant & Machinery
Factory Land / Building
Other Primary Securities
Total Primary Securities
Collaterals:
Immovable Properties
Other Securities
Total Collateral Securities
Total Value of Securities
(M.V. = Market Value; R.V. = Realisable Value)
Any Deviation in Value from the value at
the time of sanction. If so, details &
reasons therefor.
Any Loss of Securities due to fraud /
documentation deficiencies. If so, details
Accepted Realisable Value for the
purpose of OTS
Justification for accepting lower amount
than the RV as per valuation report.
D.
E.
OTS Amount as per Norms:

(Rs. in lacs)
Net Present Value of the Securities permitted (Annexure - 4.11)
Minimum Recoverable Amount permitted (Annexure
- 9.9)
As per Norms, the OTS amount should not be less
than:
(As per norms, OTS amount should not less than the above NPV of securities in the case of
(a) MSE secured advance, (b) Agricultural Advances where Agricultural Land is the security
and (c) where the account is NPA from a date on or prior to 31.03.2005. In all other cases,
the OTS amount should not be less than both NPV of securities as well as MRA.)
(Rs. in lacs)
OTS offered / proposed by
Borr Branch
ZO
CGM
SAC
ower
OTS Amount
Period of Payment
Upfront Amount Deposited
Rs.
Date of Deposit:
A
____________________Br.
G.
Staff Accountability Issue:

Staff Lapses identified
Action Taken / Status
H.
Fraud / Willful Defaulter:

Issues Involved
Steps Taken
I.
Reasons / Justification for:

Going for OTS or Part
Release as against full
recovery.
Accepting Deviations
from stipulated Norms
Accepting the proposal
(OTS amt. / Part
Release / Full Write
Off) as recommended
J.
Benefits of
Compromise:
Effective Rate of
Return
At Simple
At Q.C.
Cash recovery
Reduction of NPA
MOI/MLE/MOX
Recovery (Income)
Retrieval of Provision
Impact on P/L
G.
Branch Managers Sanction / Recommendation:
Signature of Branch Manager
A
____________________Br.
H.
Zonal Managers Recommendation:
Zonal Managers Signature

I.
Recommendation by Committee of General Managers (CGM Meeting

dtd.
)
J.
Recommendation by Settlement Advisory Committee (SAC Meeting dtd.

)
K.
Final Recommendations by Corporate Office:
H. Terms and Conditions Proposed:
Asst. General Manager (R)
Dy. General Manager (R&L)
General Manager (R&L)
A
____________________Br.
Date:
Branch:
Zone :
Account:
Annexure 1
Borrower / Account Profile / Brief History
1.1
Address:
1.1.1
Business / Office Address:

(Residence Address, if individual)
1.1.2
Factory Address:
1.1.3
Whether owned / leasehold /

Rented (Indicate expiry date of
lease, if property is leased).
1.2
Constitution
and
Date
Incorporation / Partnership
1.3
Customer since.
1.4
CIF Number
1.5
Name(s)
of
the
Partners / Directors
of
Proprietor/ 1.
2.
3.
4.
5.
1.6
At the time of sanction
Net Worth of the borrower
Date of A&L /
Amount
(Rs. in lacs)
Credit Report /
Balance Sheet
1.6.1. Individual / Proprietorship:
1.6.2
Firm / Company:
1. Paid up Capital
2. Reserves /Surplus
3. Drawings / Accumulated
Losses
4. Net Worth (1+2-3)
1.7
Financing Pattern: Indicate
1.7.1
If on consortium, indicate all

banks and shares.
If on Multiple Banking
Arrangement OR there are
other financial institutions,
indicate names and their
dues.
Sole Banking
Indian Bank
Present Position
Date of A&L /
Amount
Credit Report /
Balance Sheet
Consortium
Multiple Bkg.
Share% or Dues
A
____________________Br.
1.7.2
Status of accounts with

others:
1.8
Brief History:
1.8.1
Line of Activity and since

when they are in the field
Products manufactured /
traded.
Present Status of the Unit.
(If closed, since when)
Purpose for which the
Banks
advance
was
granted
and
whether
advance was utilized for
that purpose.
1.8.2
1.8.3
1.8.4
1.8.5
1.8.6
a) Reasons for the account

becoming NPA / sticky and
unit / business becoming a
failure.
b) Date of NPA
c) Asset Classification
Briefly
explain
the
developments leading to the
present
condition
of
functioning of the unit.
1.8.7
Steps / Efforts taken by the

customer
/
bank
for
upgradation,
restructure,
rehabilitation and the result
thereof.
1.8.8
If
any
fraudulent
transactions, activities, etc.
were involved, full details
thereof.
If it is a Wilful
Defaulter,
reasons
for
declaring them so and
details of reporting made.
1.8.9
Any other matters / issues,

regarding background /
history of the case.
1.
2.
3.
4.
b)
c)
A
____________________Br.
Annexure 2
Details of Credit Sanctioned by the Bank and Present Position
2.1
Date of original sanction of Credit Facilities:
2.2
Date of latest sanction / renewal:
2.3
Sanctioning Authority of last sanction / renewal:
2.4
Present Position of Accounts:
Nature of
facilities
CBS Account
No.
Limit
(All Amounts in Rs. in lakhs)

Present
Book
Balance
MOI *
From:
To :
MLE
MOX
Total
Dues
Total
Note:
MOI should be at applicable ROIs from time to time from Cut-Off Date upto the end of the quarter
in which OTS is submitted. (Cut Off Date = date from which interest ceased to be charged in the
NPA a/c)
In case of decreed accounts, the MOI interest amount should be computed at the ROI (simple or
compounding) as awarded by the Court in the decree.
In case the Bank has appealed or has decided to appeal against the decree, the MOI should be
continued to be at card / applicable ROI only.
Annexure 3
Guarantor Details
3.1
Name of Guarantor/s
Individuals:
3.2
Net Worth
A/L Stmt. / Cr
Amount
Report / Bal
Sheet Date
(Rs. in lacs)
Net Worth
At present
A/L Stmt. / Cr
Amount
Report Date /
Bal Sheet Date
1.
2.
3.
4.
Corporate Guarantees
Name:
1. Paid up Capital
2. Reserves / Surplus
3. Accumulated Losses
4. Net Worth (1+ 2 3)
3.3
Details of Institutional Guarantee cover, if any,
3.3.1
Amount held in Claims settled account and

Date of settlement
ECGC / CGTMSE
A
____________________Br.
3.3.2
Reason for not preferring / non-settlement /

rejection of claim.
Annexure 4
Security Details
(Rs. in lacs)
Nature of Security
4.1
4.1.1
4.1.2
4.1.3
4.1.4
4.1.5
Present Valuation
Valuer /
Value
Date
Source
Primary:
Stocks
Plant/Machinery (MV)
(RV)
2nd Valuation: (MV)
(RV)
Factory
(MV)
(RV)
nd
2 Valuation: (MV)
(RV)
Other Immovables (MV)
(RV)
2nd Valuation: (MV)
(RV)
Other Securities:
4.2.2
Collaterals:
Immov. Property (MV)
(RV)
2nd Valuation: (RV)
(RV)
Other Securities:
4.3
M.V. Total 1st Valuation
4.2
4.2.1

Valuer /
Value
Date
Source
2nd Valuation
4.4
R. V. Total 1st Valuation

2nd Valuation
(Note: MV = Market Value, RV = Realisable Value / Distress Sale Value / Forced Sale Value)
Present Valuation report should not be more than one year old;
For any security of value of more than Rs 50 lakhs- Valuation to be obtained from two independent
valuers which should be cross verified by Branch Manager by making local enquiries
If our charge on the securities is on Pari-Passu basis or Second Charge, our share of the value of
securities should also be indicated.
A
____________________Br.
Wherever properties / assets of borrower / guarantor/s are attached through Attachment Before
Judgement (ABJ) after tracing through Private Detective Agency (PDA) / Recovery Agents / Market
Enquiries etc., the details to be furnished under Other Securities above at 4.2.2.
In case there are more than one immovable property securities (both primary & collateral), additional
rows may be inserted at the relevant place and details may be furnished.
In the case of above immovable properties:

4.5
Description
(Agricultural /
Residential / Industrial
/ Commercial)
Location /
Address
Surve
y No.
Owner /
Freehold
/ Lease
Hold
Date
of EM
First / PariPassu /
Second
Charge
4.5.1
4.5.2
4.5.3
4.5
Variation in Value: If there is any variation (+) of more than 10% in present security
value compared to the value at the time of sanction, reasons for variation in securities /
valuation. If any asset was sold by the Bank, give detail of security sold, date a & amt.
4.6
Documentation Deficiency: If there are deficiency in documentation / security

creation / fraudulent sale by mortgagor etc. subsequent to creating mortgage with us
details to be given explaining the reasons and the extent upto which the value of the
security has been affected to be discussed. Lawyers opinion as to enforceability to be
furnished.
4.7
Securities Inspection: Details of inspection of unit / Securities such as Dates when

inspected, Working Condition, Observations of inspecting officials on the Position/
Status / Marketability of securities charged to Bank / Locational Advantages /
Disadvantages etc. to be discussed.
4.8
Visit Report by Team of Officials: Where OTS recommendation is less than the
Realisable Value of Securities, Visit Report to be submitted. (Para 3.6 of Recovery
Policy). Report to be attached. To be highlighted in brief here:
4.9
Realisable Values of Securities: Values

as accepted by Branch Manager / Zonal
Manager. (If valuation done by two
valuers, higher of the Realisable Values
of the two valuers to be taken.)
Primary:
4.9.1
A
____________________Br.
4.9.2
Collaterals:
4.9.3
If the value accepted by BM/ZM is lower

than the Realisable Value (RV) assessed
by Valuer, reasons therefor:
4.10
Net Present Value (NPV) of Realisable

Value of Securities: (Para 3.5 of
Recovery Policy)
a) Accepted Realisable Value
b) No. of Years taken for realizing the
value
c) Discounting Rate: Base Rate (10.20%)
d) NPV factor (see table in Para 3.5)
e) NPV of securities (a) divided by (d)
4.11
Security
I
Security
II
Security
III
10.20%
10.20%
10.20%
Relaxation permitted in NPV of securities:

(as per Para 6.8 of the Recovery Policy)
Whether the borrower is eligible for relaxation in NPV
Reason therefor:
The extent of relaxation permitted under the norms
The extent of relaxation now proposed.
Based on the above, the NPV of securities arrived
Annexure 5
Recovery Action Taken
5.1
5.1.1
5.1.2
5.1.3
5.1.4
5.1.5
5.1.6
5.1.7
5.1.8
5.1.9
5.1.10
5.1.11
5.2
Suit Filed / DRT Recovery Application filed:

Date of suit / OA
Balance in Protested Bills at the time of filing suit
MOI upto the date of suit
Suit claim amount (5.1.2 + 5.1.3)
Law Charges
MOI after suit filing upto the end of next quarter
Rate of interest claimed in suit
Date and Amount of decree:
Rate of interest as per decree
Present position of legal proceedings in the suit:
Steps taken for Completing the DRT process /
Reasons for Delay / Filing EP/Proceeding under
Recovery Certificate/Filing of Insolvency
Petition/seeking arrest of borrowers, etc.,
to be covered. Pending appeals to be discussed.
Sale of security, if any made through Court and
proceeds realized so far:
SARFAESI Action:
Total
(I+II+III)
A
____________________Br.
5.2.1
5.2.2
5.2.3
5.2.4
5.2.5
5.2.6
5.2.7
5.2.9
5.1.10
Date of SARFAESI Notice issued

Date Possession taken
Date/s of Sale fixed (1st, 2nd, 3rd sales)
Reserve Price/s Fixed (1st, 2nd, 3rd RPs)
Outcome of Sale/s
Selling Price, if sale was concluded
Whether Sale Certificate issued?
Amount Appropriated to Principal
Amount Appropriated to MLE / MOX / MOI
If SARFAESI action not yet initiated or yet to
be completed, give reasons:
Details of SARFAESI Appeal by the party
Present position,
Steps taken to vacate stay and proceed
further.
5.3
5.3.1
Other Recovery Action taken:

Details of other recovery steps taken, like seizure
of vehicles, engagement of PDAs, filing of
Insolvency Petitions, etc. and outcome, present
status thereof.
5.3.2
Details of references made to BIFR / CDR,

developments / progress made and present
status.
Annexure 6
Recoveries Made From the Date of NPA
(Rs. in
lacs)
6.1
Amount recovered from the date of NPA
6.1.1
6.1.2
Amount Recovered in the normal course /

remitted by the borrower
Amount Recovered by sale of securities
6.1.3
Amount Remitted by borrower under court orders
6.1.4
Total Recoveries made since NPA date
6.1.5
Amount appropriated towards Principal
6.1.6
Amount appropriated towards towards MOI
Date
Amount
A
____________________Br.
Annexure 7
Staff Accountability
7.1
7.2
7.3
7.4
7.5
7.6
7.7
Any adverse inspection remarks by

Inspector/ Statutory Auditors/ RBI/
Concurrent Auditor/etc.,
Progress / Position of rectification of
irregularities
Whether the Account is reported as
Fraud to RBI through CO Vigilance
Dept. If so, FMR No. and Date of
Report to RBI
Whether the Account pertains to
PIL/CBI investigation. If so, give full
details, progress and latest position.
Whether Staff Accountability Report
submitted.
Staff Lapses identified, if any.
Name of Staff / Officers responsible

and Details of Staff Action Taken.
Annexure 8
Group Accounts / Exposure / Indirect Liabilities
8.1
Name of Account/
Branch
8.2
Present position of
group accounts,
Whether Operation
Satisfactory or
Recovery action
being taken / taken
and its present
position.
8.3
Name/s of Common
directors / partners.
Limits
sanctioned
Date of
Sanction /
By Whom
Outstanding
Dues
Asset
Status
Value of
Security held
A
____________________Br.
8.4
Name/s of Common
Guarantors.
8.5
Details of Common /
Extended Securities.
8.6
Action proposed, if
any:
Whether to
continue with the
group account or
Take recovery
action or
Hold securities
in the subject
account till
adjustment of
group dues, etc.
A
____________________Br.
Annexure 9
Computation of Minimum Recoverable Amount
9.1.1
Date on which the borrowal account was classified as NPA (NPA date)
9.1.2
Date from which the borrowal account ceased to earn interest (Cut-Off
Date)
9.1.3
ROI for calculating INTEREST COMPONENT:

If non-suit filed account or suit-filed but not decreed account (Base Rate
quarterly compounding)
If decreed, (ROI awarded in the decree/RC-Compound or Simple)
9.2.1
Total Book Balances outstanding as on the Cut-Off Date (Rs. in lacs)
9.2.2
Interest Component: Interest Amount Calculated with QC or Simple as

applicable at 9.1.3 on the total book balance at 9.2.1 above from the
Cut-Off Date till end of quarter in which OTS is concluded. (Rs. in lacs)
(Credits / Debits made into the account subsequent to COD to be taken
in to account and value-dated.)
9.3
NOTIONAL DUES:
9.3.1
Total Book Balances as on the date of OTS proposal / negotiation
9.3.2
Interest Component as computed at 9.2.2 above
9.3.3
Actual outstanding MLE (Sr. No. 2.4 of Annexure 2 of the Proposal)
(Rs. in lacs)
Actual outstanding MOX (
- do-
Future Law Charges (if any expected to be incurred)

9.3.4
Notional Dues (Sum of all the above)
9.4
Total Realisable Value of Securities (Sr. No. 4.4 of Annexure 4)
9.5
Whether the Notional Dues is:

Fully Secured (if above realizable value is greater than Notional Dues)
Partly Secured (if above realizable value is less than Notional Dues but
more than 50% of the Notional Dues)
Unsecured (if realizable value is less than 50% of the Notional Dues)
9.6
Percentage of Concession on INTEREST COMPONENT eligible

(as per Para 6.7.1 of Recovery Policy norms)
9.7
Notional Dues as arrived at Sr. No. 9.3.4 above
9.8
Less: Amount of Interest Concession allowable

(Interest Component at 9.2.2 above multiplied by percentage at 9.6)
9.9
Minimum Recoverable Amount (Sr. No. 9.7 minus 9.8)
A
____________________Br.
9.9
Relaxation permitted in MRA as per Norms

(Please see Para 6.8 of Recovery Policy.
Whether the borrower is eligible for relaxation in MRA.
Reason therefor:
The extent of relaxation permitted under the Norms
The extent of relaxation now proposed.
Based on the above, the MRA arrived at for the account
Annexure 10
Part Release of Securities
(Rs. in lacs)
10.1
Total Realisable Value of Securities presently held by / charged in

favour of the Bank (as shown at Sr. 4.4 of Annexure 4 of the Proposal)
10.2
Out of the Securities listed at Sr. No. 4.1, 4.2 & 4.5, specify below and
give description of the security proposed to be released:
10.3
Realisable Value of the above property to be released
10.4
Balance amount of Realisable Value of securities that will be left with the
Bank after release of the proposed security. (Sr. 10.1 minus 10.3)
10.5
Amount Proposed to be accepted against release of the above said

security.
Particulars
10.6
Book
Balance
MOI
MLE +
MOX
10.7
Present Total Dues (Sr. No. 2.1 of

Annexure 2):
Appropriation of amount proposed to
be recovered against release of part
of the security. (Sr. No. 10,5)
10.8
Remaining Balance (10.6 minus 10.7)
10.9
Security Coverage presently available (Percentage of Total Realisable

Value of Securities presently held as shown at Sr. No. 10.1 to the Total
Actual dues at Sr. No. 10.6)
10.10
Security Coverage that will be available after part-release of proposed

security.(Percentage of Total Realisable Value of Securities presently
held as shown at Sr. No. 10.4 to the Total balance dues at Sr. No. 10.8)
Total
A
____________________Br.
Annexure 11
Details of Pending Legal Proceedings, if any, by and against the Bank
Sr.
No.
Case No. &

Court / DRT
Filed by & against

whom
Issues involved /
Details of the case
Present Status
Next
Hearing on
Annexure - 12
Detailed Recommendations of Branch Manager
Annexure 13
Detailed Recommendations of Zonal Manager
Annexure 14
1.
2.
3.
4.
5.
6.
Total Sacrifice Involved and Sacrifice for Competent Authority

(in case of OTS)
(Rs. in lacs)
Actual as per Books
Notional Dues as per Sr. No. 9.3
(Sacrifice for accounting purpose)
(Sacrifice for deciding sanctioning authority)
Book Balance
1. Book Balance
MOI upto quarter end
2. Interest Component
MLE / MOX
3. MLE / MOX
Total Actual Dues
4. Notional Dues
Final OTS Amt. proposed
5. Final OTS Amt. proposed
Sacrifice (Sr. No. 4 5)
6. Sacrifice (Sr. 4 5)
1.
Write Off
1.
Write Off
2.
Waiver .
2.
Waiver .
A
____________________Br.
ANNEXURE C- REC -2
DRAFT OF THE COMMUNICATION OF COMPROMISE SANCTION TO BE SENT BY
THE BANK TO BORROWERS / GUARANTORS/ MORTGAGERS ETC.
( Non-Suit filed accounts)
"WITHOUT PREJUDICE TO THE
RIGHTS OF THE BANK"
To
Dear Sir/s,
Sub: Accounts M/s
compromise settlement
with
branch; Proposal for
Reference is invited to your letter Ref.

Dated
wherein you have
proposed and offered to settle the captioned account. The total outstanding in the
account as on..
is Rs.
(Rupees
only). We wish to state that the Bank is prepared to receive Rs.
(Rupees
only) in full settlement of the account on the following terms and conditions:
1. You have to pay Rs.

as the compromise amount, on or before .
2. (Terms of payment)
a)
b)
c)
3. Interest @____% simple / compound, should be paid on the compromise amount on
running balance from _________ till the date of final payment.
4. All claims, whatsoever, against the Bank should be withdrawn.
Incorporating the above terms, compromise memo to be filed before the Court
concerned, where the suit is filed, if applicable.
Please note that your letter dt.

and this letter should not be taken as fresh
contract and we have never intended that this shall be considered as novation of
contract.
You are requested to sign and return a copy of this letter within 7 days from the date of
this letter, as token of your acceptance of the terms and conditions stipulated therein.
We make it clear that in the event of your not accepting or not adhering to any of the
aforesaid terms and conditions, this sanction shall be deemed as cancelled without any
further intimation and the Bank shall take all steps, which may include a suit in the court
of law / invocation of security interest under the relevant Act, to recover the entire loan
outstanding together with interest at contracted rate.
Yours faithfully,
Branch Manager.
A
____________________Br.
ANNEXURE- D
DRAFT OF THE COMMUNICATION OF COMPROMISE SANCTION TO BE SENT BY THE
BANK TO BORROWERS / GUARANTORS/ MORTGAGERS ETC.
( Suit filed accounts)
"WITHOUT PREJUDICE TO THE RIGHTS OF THE BANK"
Under the O.S./O.A/T.A.No. / DECREE AWARDED IN THE COURT OF .
To
Dear Sir/s,
Sub: Accounts M/s
Proposal for compromise settlement
with
branch --
Reference is invited to your letter Ref.

Dated
wherein you have proposed and
offered to settle the captioned account. The total outstanding in the account as on
is
Rs..
(Rupees
only). We wish to state that the Bank is
prepared to receive Rs.
(Rupees
only) in full settlement of the account on the
following terms and conditions:
1. You have to pay Rs.
as the compromise amount.
2. (Terms of payment)
a)
b)
c)
3. Interest @ _______ % simple / compound, should be paid on the compromise amount on
running balance from ________ till the date of final payment.
4. All claims, whatsoever, against the Bank should be withdrawn.
5. Upon your acceptance of the aforesaid terms and conditions (within 7 days from the date of
this letter), a joint application should be filed in the pending suit / proceedings before the Court /
Debt Recovery Tribunal and a Decree / Recovery Certificate obtained in terms thereof with a
default clause enabling the Bank to recover the entire suit claim with contract rate of interest, in
the event of your default in adhering to the terms and conditions of the Decree/ Recovery
Certificate.
Please note that your letter dt.
and this letter should not be taken as fresh contract and we
have never intended that this shall be considered as novation of contract.
You are requested to sign and return a copy of this letter within 7 days from the date of this letter,
as token of your acceptance of the terms and conditions stipulated therein. In the event of your
not accepting or not adhering to any of the aforesaid terms and conditions, please note that this
sanction shall be deemed as cancelled without further intimation and
A) Bank will proceed with suit / EP / Recovery proceedings before court / DRT/RO
B) Bank shall proceed for effecting recovery under the law relating to enforcement of security
etc.
Yours faithfully,
Branch
REC. FORM 1
____________________Br.
Date of Sanction
Branch
Name of Borrower
Account No
Nature of Facility
Sanctioned
Date of Sanction of
Loan/Facility
for
________________
NPA Date
Branch / Zone :
Book Balance
FOR THE MONTH OF ________________
MOI
10
MLE
11
Total Dues
12
Date of OTS Sanction

13
for
14
Sanctioned OTS Amt

15
Write Off
16
Waiver
17
Recovery
18
Asset Class
19
Provision
20
Whether Classifed
under Willful Default
Activity/
Occupation of the
22
If Salaried Class, name

of employer
23
Suit filed/ Non suit filed

24
25
Security
SIGNATURE of BM/ZM
Date:
21
26
Sector
COMPROMISE PROPOSALS CONSIDERED UNDER THE FINANCIAL POWERS OF GM/ DGM/ AGM/ CMs at ZO/ BRANCH MANAGER
(SCALE I, II, III,IV)
(To be submitted to the next higher authority within the 5th of the succeeding month)
ANNEXURE E
27
Sub Sector
_______Branch
ANNEXURE -F
REC. FORM II
COMPROMISE PROPOSAL -- COMPLIANCE REPORT
(to be submitted within the 5th of the succeeding month)
A/c_____________________
Ref: Sanction communication No.
dt.
of CO/ Zonal Office
1. Amount due under the sanction:

2. Terms of payment: One time payment/
M / Q / HY / Y instalments of Rs.
each beginning from
3. a. Recoveries effected upto the end of last month:

b. Particulars of recovery effected during the month:
Date
Amount
Appropriated to
Principal
interest
c. Cumulative recovery upto the end of this month.

4. In case of delayed payment,
a) Authority who has approved extension of time
b) Rate and Amount of interest collected and
credited to income account of such delay
1. In case of suit filed accounts, if the account
is eligible for refund of applicable court fee;
If so, please furnish the amount received and
Credited to income account and/ or present position.
2. In case compromise amount is yet to be paid/ not fully paid,
please furnish the expected date of payment
with reasons for delay and your recommendations.
Place : ____________
____________
Date : ____________
BRANCH MANAGER
To
Zonal Manager
Indian Bank
Zonal Office
_______________
(In the case of accounts sanctioned at

Corporate Office only)
Corporate Office
Recovery Department, Chennai- 600 001.
_______Branch ________Zonal
Office
ANNEXURE- G
REC. Form III
REGISTER FOR COMPROMISE PROPOSALS RECEIVED / DISPOSED

Branch:
/ Zonal Office:
1. Serial No.
:
2. Date of Receipt of Proposal
3. Name of the Borrower
4. Total Dues (Book Balance/MLE/MOI/)
5. Amount offered
6. Sacrifice (4 minus 5)
7. Of 6 above
a) Waiver :
b) Write off :
8. Date of sanction/ communication of sanction
9. Sanctioned by
10.Amount sanctioned
11.Date of payment in full
12. Rate and amount of interest, for delayed payment
13. Authority authorising release of security
:
:
14. Date of release of security

:
(to be done only after ascertaining that there are no direct or
indirect liability in the name of borrower/ guarantor/ mortgagor)
15.In the case of suit filed account:
a)
Date of filing joint memo for withdrawal of case
:
b)
Date of Consent Decree/ Recovery Certificate
c)
Date of filing of satisfaction memo with Court/ DRT
d)
For refund of applicable court fee
i)
Date of application made
ii)
Date of receipt of refund
16.Observations/ Remarks of sanctioning authority
:
17.Initials:
Branch Manager
Inspection Official
:
Zonal Manager
_______Branch ________Zonal
Office
ANNEXURE - H
NO DUE CERTIFICATE
To
M/s / Shri..
..
Sir,
Sub : Loan Account of M/s with our Branch
We wish to inform that in the above borrowal account, pursuant to the OTS/compromise
offered by M/s bank agreed to receive a sum of
Rs.. (Rupeesonly) towards full and final
settlement
of
the
outstanding
in
the
subject
borrowal
account
viz.
Rs(Rupees.onl
y)
involving
sacrifice
of
Rs...
(Rupees.only). Accordingly the OTS/compromise amount of
Rs (Rupees.only) has
been paid in full and as on date there is no dues to the Bank in the subject account.
Yours faithfully,
Branch Manager.

Adv 160

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MAIN :

SUB: RECOVERY POLICY 2013-14

Contact / Pursue with the borrowers for immediate/time-bound recovery;

Through repeated contacts/personal visits, the Mind-set of the borrowers

Motivate and assign targets to Zonal /Branch Recovery Team to ensure

Follow up relentlessly and monitor all the recovery measures.

Conduct ABC Analysis of your NPA portfolio (A-Immediate Recovery;

Implement Account-wise Action Plan;

Hold regular Recovery Camps.

Organize more Lok Adalath & settle maximum NPA accounts.

Be Alert on early warning signals and ensure swift action

Resolve /Recover the overdues at SMA-1 & SMA-2 stage itself

Take up Rephasement/Restructuring on time

Recover /upgrade all fresh NPAs of March 2013.

C:\Documents and Settings\Administrator\Desktop\CIC CIR 2012-13\M2 ADV\WORD\ADV_160.doc

Focus on High value NPAs of your Branch/Zone and Accelerate Recovery

Ascertain particulars of Non-EM properties by utilizing the Private Detective

Ensure timely SARFAESI proceedings

Achieve NPA Recovery Target consistently on weekly/monthly basis.

Data Cleaning: Ensure error-free data inputs on Repayment schedule,

Ensure total Data integrity towards100% system driven identification of

Ensure One BorrowerOne CIF approach; Correct Duplicate CIF, if any;

Update Review/Renewal Date /Stock Statement Date.

Ensure borrower-wise asset-classification One Borrower-One Asset

Ensure updating of all NPA Recovery/AUC Recovery in BB-MIS- Template 502

Branches/Zonal Offices are advised to ensure meticulous compliance to the above

C:\Documents and Settings\Administrator\Desktop\CIC CIR 2012-13\M2 ADV\WORD\ADV_160.doc

Annexure I to Circular No. 160/2012-13 DT 30 03 2013

HIGH LIGHTS OF RECOVERY POLICY 2013-14

known as GENERAL OTS POLICY

(A) OTS Policy for Book Balance Upto Rs.10.00 lakhs

All NPA Accounts which were classified as NPA on or prior to

All fresh NPAs identified from 01.04.2013.

C:\Documents and Settings\Administrator\Desktop\CIC CIR 2012-13\M2 ADV\WORD\ADV_160.doc

In respect of all other

All Agricultural & MSE

All other Advances:

Where Distress Sale

Only 100% of 90% of Book

Final Compromise Amount :

C:\Documents and Settings\Administrator\Desktop\CIC CIR 2012-13\M2 ADV\WORD\ADV_160.doc

C:\Documents and Settings\Administrator\Desktop\CIC CIR 2012-13\M2 ADV\WORD\ADV_160.doc

Note: The discretionary power mentioned is Write-Off amount only irrespective of

General OTS Policy:

First calculate INTEREST COMPONENT as follows:

BASE RATE at Quarterly Compounding, if the account is non-suit

Card Rate at Quarterly Compounding, if Card Rate as per

iii. ROI (compound or simple) as allowed by DRT / Court in the

C:\Documents and Settings\Administrator\Desktop\CIC CIR 2012-13\M2 ADV\WORD\ADV_160.doc

RC. Interest amount either at the decreed rate or at Base Rate

Next calculate NOTIONAL DUES as follows:

Book Balance as on the date of OTS

Interest Component calculated as above

Actual outstanding MLE / MOX

The actual amount of OTS proposed by the branch / ZO should be

Concession on Interest Component:

C:\Documents and Settings\Administrator\Desktop\CIC CIR 2012-13\M2 ADV\WORD\ADV_160.doc

Category of Advance / Asset Classification

Agricultural Advances (Direct / Indirect /

Micro and Small Enterprises

Substandard and Doubtful (D-1) Assets

Doubtful (D2, D3) and Loss Assets

All other types of advances