Loans in syndicate bank’s and there delegation of powers for sanctions the credit into the different branches, Loan recovery systems, Interest Rates, Loan file rejection from credit proposal, terms of loans, repayment of loans and loan guarantees.
Delegation of powers for sanctions the credit to
different branches:
The following are the delegation of powers for sanctions the credit to different branches.
Small Branch (Business upto Rs.2.00 crores):
The manager has the power to sanction loan upto Rs.10.00 lakhs (Per borrower) and out of which Rs.3.00 lakhs is for Agriculture.
Medium Branch (Business Upto Rs.2 to 5 crores)
The manager incharge has the power to sanction upto Rs.20.00 lakhs (Per borrower) and out of which Rs.8.00 Lakhs is for agriculture.
Large Branch (Business from Rs.15 to 50 Crores)
Senior manager / Manager has the power to sanctions upto Rs.30.00 lakhs (Per borrower) and out of which Rs.15 lakhs is for agriculture.
Very Large Branch (Business beyond Rs.50 crores)
The Chief Manager or Incharge has the power to sanction upto Rs.15 Lakhs and out which Rs.50 Lakhs is for agriculture.
Delegation of powers for sanctions the credit:
The delegation of powers is given by the head office to all the branch manager according to their grade, size of the branch, special feature of branch at present.
The following are the delegation of powers sanctioned by Head Office.
| Grade | Secured Loan | Clean Loan |
| 1 | 10 Lakhs | 3 Lakhs |
| 2 | 20 Lakhs | 5 Lakhs |
| 3 | 40 Lakhs | 10 Lakhs |
| 4 | 100 Lakhs | 20 Lakhs |
| 5 | 500 Lakhs | 100 Lakhs |
Source: Syndicate Bank Brochure.
Rate of Interest:
Loan upto 2 Lakhs PLR (12.5%) above 2 lakhs parties are graded according to their security, past performance and present feasibility.
The grade are divided into 3 category.
| Credit Rating | Rate of Interest |
| 03 | PLR+1% |
| 04 | PLR+2% |
| 05 | PLR+2.5% |
For small scale industries, issue the credit under a following grade and rate of interest.
| Grade | Rate of Interest |
| 03 | PLR |
| 04 | PLR |
| 05 | PLR+0.5% |
General purpose loan under a personal banking Loans à = PLR + 2%.
Following are the ways of recovery of credit by Bank, they are;
Personal Contact.
Issue of notice.
Register notice.
Advocate notice.
Notice under Securitization Act.
Compromise settlement in case of Bad loans (NPS).
Time norms for disposal of Credit Proposals:
The essence of the bank policy is to ensure timely disposal of credit proposals. In this regard following time norms shall be adhered to in disposing a credit proposals and accounting taken of services is issued to the applicant.
Loan upto Rs.25,000:
The loan upto Rs.25,000/- must be disposed with in 15 days.
Kisan Credit Card – Branch Power:
The Kisan credit card is given to the formers of the cultivation of the crops and for working capital need for agriculture. It must be disposed within 15 days of application.
Small Scale Industries (SSI):
The small scale industries or small medium enterprises loan upto Rs.25,000/- beyond Rs.25,000/-. It must be disposed within 4 weeks.
Export Credit under Gold Card Schemes:
Bank provide export credit under gold card scheme to the eligible borrowers under this scheme the rate of interest 15 less from 0.25%. The eligible borrower should have good turnover and good record under the bank. Under this scheme the fresh application must be sanction within 75 days and application for renewal of existing credit limit within 15 days and application for adhoc credit facilities (arranged or happening when necessary) or in urgent has to be sanction within 7 days.
Export Credit – Other than under gold card:
The fresh application for export credit other than gold card must be sanction within 45 days a application for renewal of existing credit limit within 30 days.
Rejection of Credit Proposals:
The bank as laid down certain condition bases on, which the credit proposal will be appraised and sanctioned by the otherwise the credit proposal will be rejected by the bankers based on these following conditions.
If the borrowers does not posses the technical feasibility in his credit proposals from the bank will be rejected the credit proposal.
If the borrower does not have economic viability in his proposal then also the banker will reject the proposal.
The other things, the banker will see his repaying capacity margin and character of the borrower.
The credit policy of the bank for rejection of credit proposals says that, rejection of credit proposal of SC/ST customer under government sponsored scheme and credit proposal for education Loan, should not be reject by the relevant authority before consulting next higher authority.
Documents are required to issue credit:
The following are the main required document to issue a credit.
Loan application form.
Stamp receipt.
Loan agreement.
Guarantee agreement.
Security details.
Mortgage deed.
Quotation in case of vehicles / machinery loans.
Working Capital:
Syndicate Bank shall provide need based working capital facilities.
Fund based or cash based.
Non fund based.
Short term lending products.
Turnover Method:
Under this method the limit shall be computed at 20% of the projected sales turnover accepted by the bank as working capital credit.
Applicability:
SSI borrowers seeking enjoying fund based working capital limits Rs.20.00 Lakhs.
Duration of Working Capital:
Normally it is upto a maximum of a year (12 months) from the date of sanction except into the following cases.
| a) | In case of employee of the bank | 2 years. |
| b) | O.D. against our banks term deposit | Upto the date of maturity of the terms deposit subject to yearly review. |
| c) | Gold cared for exporters | 3 years subject to the scheme guidelines |
Non-fund based facilities:
Inland Bank Guarantees.
Solvency Certificate and capability certificates.
Inland Bank Guarantees:
A contract of guarantee (Is also known as contract of Suretyship) is a contract to perform the promises or discharge the liability of a third person in case of his (third person) default.
There are 3 parties to a guarantees.
The person who gives the guarantee is called the surety or guarantor (Bank).
The person or whose behalf the guarantee is given is called the principle debtor.
The person in whose favour the guarantee is given is called the creditor or beneficiary.
In the case of bank the occasion to issue guarantee arises whenever the customer of the bank enter into obligation with others for constructions of building, supply of raw-material stocks etc., or to meet pecuniary obligation.
Types of Guarantees:
Financial Guarantees:
This guarantee is used for a repayment of a loan or a debt.
Performance Guarantees:
The guarantees issued in respect of performance of contract or obligation.
Deferred Payment Guarantees:
Insurance of differed payment guarantee favouring suppliers / manufacturers where goods / machineries are supplied on credit and the payment is to be made by different installment.
Advance Payment Guarantees:
Advances payment from their principal to meet part of the expenses for execution of contracts or to meet a part of the working capital requirements.
Solvency Certificate Customer:
Customer sometimes request the bank to issues solvency certificates which they are require for submission to government department or other organization for considering tender application or for similar other purpose.
Term Loans:
Term loan is a single transaction loan where the loan amount is disabused either in lumpsum or in stages and the same is repaid installment along with Interest. Unlike in an operative account the facility of reinstating the limit to the extent of repayment is not available.
Types of term loans:
Short terms loans:
Any loan repayable in a period less than 36 months is called as a short term loans.
Medium terms loans:
Medium term loan is a loan it is payable in 36 months and above but upto inclusive of 84 months.
Long terms loans:
Long term loan is a loan it is payable in a beyond 84 months.
The term loan is given both for industrial and non-industrial borrower i.e., both for activities involved in manufacture / processing repairing and business / trading activities agriculture etc.,
Repayment period of Term Loans:
The maximum period for which term loans can be granted shall be as under.
| Sl. No. | Term Loans | Maximum Repayment Period |
| 1. | Agriculture Loan | 5 to 15 years |
| 2. | Artisans and village industries | 10 years |
| 3. | Small Scale Industries | 7 years |
| 4. | Medium & Large Industry | 9 years |
| 5. | Infrastructure Projects | 12 years (15 years in exceptional cases) |
| 6. | Housing Finance | 20 years |
| 7. | Others | 5 years |
Source: Syndicate Bank Brochure.
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