Guidelines/Audit Programe for Bank Audits

	General
	If the growth in advances is abnormal in comparison to the earlier periods, Concurrent Auditors need to critically examine the reasons for the same and satisfy them that credit discipline has been maintained notwithstanding the spurt in advances
	Loan applications received, disposed off register should be maintained by the branch.
	Loan application should be properly filled, borrower’s, guarantors signatures should be available wherever required
	Individual Assets & Liability statements of the borrower/s, guarantor/s should be filled properly, signed with date
	Credit proposals received shall be dealt with and decision communicated to the applicants within a reasonable time
	Proper due diligence should be carried out for new proposals. IT return verification, Due diligence and CIBIL report generation is must for all the loan customers
	Search certificates from ROC should be ensured for eligible accounts before considering the proposals
	Branch should obtain relevant documents in respect of customers who are legal persons/entities such as partnership, companies, societies, associations, trust etc. to determine who are the natural persons who ultimately control the persons /entities?
	Revenue records (khesra, khata, etc.), and genuineness of title deed should be verified from related offices and report should be filed.
	Branch should obtain confidential opinion/No Due Certificate/statement of account from previous Banker and examine to ascertain the indebtedness of the applicant/borrower/guarantor.
	Branch should verify RBI Defaulters List, ECGC Caution List etc. to cross-check the previous indebtedness of the borrower and the guarantor
	Assessment of external rating wherever applicable should be done as per Bank guidelines
	As per Bank’s guidelines Internal Risk Rating should be carried out by the branch in respect of all eligible accounts from the Risk Rating Module
	Genuineness / authenticity of balance sheets wherever applicable, should be ensured by the branch by enquiring from chartered accountants firm and report to this effect should be held on record and brought out in the process note.
	Wherever applicable search reports from ROC should be obtained, verified for registration of charge and also in respect of existing charges. and held on record.
	For loans above Rs.5 crore and housing loans above Rs.1 crore, obtain two LSRs and Valuation reports from two different / independent advocates / valuers (Large variation if any should be justified)
	Advances granted under CGTMSE schemes are being misused. Therefore branch should take special care while processing these advances. Proper due deligence, unit inspection etc should be carried out by the branch and relevant report should be placed and referred in the process note. End use of funds should be monitored by the branch.
	Search for prior charge has been obtained for immovable property through CERSAI at the time of sanction
	Securities such as properties/stock/assets charged to the bank should be insured for full amount with bank’s clause and should be in force.
	Sanction
	Loan Officer should involve in the credit appraisal placing all the facts and figures to the sanctioning authority, through a process note
	Sanctioning authority should exercise the sanctioning power deligently as per delegated/ discretionary powers accorded.
	Branch should maintain sanction/rejection of loan proposals register sanction-authority-wise for the credit limits sanctioned
	In case of exceeding the lending powers / overdrawing / adhoc limits allowed beyond discretionary powers, branch has to obtain ratification from the competent authorities and record to this effect should be held by the branch
	Detailed process note with proper recommendation by officials and decision by the sanctioning authority should be available duly signed by the Sanctioning and recommending officials
	Documentation
	Branch should obtain necessary documents as per Bank’s guidelines which should be complete, valid, enforceable, and adequately stamped.
	Latest premium paid receipt, surrender value calculation on the basis of which the amount is advanced, should be available on records, with proper discharge certificates/copy of the assignments.
	Latest EC with bank’s charge noted should be available for immovable properties
	Security / Charge Creation
	For immovable properties taken as security, bank’s charge should be created by creating equitable Mortgage and memorandum should be registered with the concerned Sub Registrar’s Office wherever applicable. EC should be obtained and ensured that our charges are noted
	During renewal of the limits with enhancements charge should be created for enhanced portion and fresh EC should be obtained ensuring noting of our charge with the enhanced portion.(wherever applicable)
	Search Reports should be obtained before considering the renewal so as to ensure that no charge has been created in the intervening period by any other Bank/lending institutions to the detriment of the bank’s interest
	Property mortgaged with the bank should be noted in the CERSAI as per Bank’s guidelines
	Forms duly discharged and Charges should be noted with RTO for Vehicle loans
	Loan against deposit
	All the deposits taken should be properly discharged. Signatures should be verified with the account opening form.
	Lien should be noted to all the deposit accounts taken as security
	Differential rate of interest should be charged for LTD accounts where third party deposits are taken as security
	Proper due diligence should be conducted by the Branch while advancing high value accounts
	Housing Loan
	Legal opinion from empanelled lawyer should be obtained in the bank’s format. LSR should be studied and any ambiguity should be noted and action should be taken. Process note should refer the LSR and necessary recommendations should be placed before the sanctioning authority. If the value of the property is more than 1 Crore, 2 legal opinions should be obtained and analyzed. LSR should accompany search report also.
	Property mortgaged with the bank should be noted in the CERSAI as per Bank’s guidelines
	Loan proceeds should be paid directly to the seller with proper acknowledgement. Proceeds should not be handed over to the borrower. In case of fresh purchase, Branch Manager/official should visit the Registrar’s office and handover the proceeds to the seller and obtain the documents after registration
	Property documents listed as per LSR should be obtained and kept serially and safely along with the loan documents
	Insurance cover for the property with bank’s clause should be available
	Legal audit should be conducted and enforceability should be ensured and reports should be held on record
	Risk Rating should be done as per extant guidelines and reports should be held on record.
	Property inspection report should be on record.
	Vehicle Loan
	Latest CIBIL report of the constituent, partners, guarantors etc should be obtained and analyzed in the process notes. If any deviations are observed Branch has to justify/obtain specific approval from competent authority
	ITR/Income proof of the borrower/guarantor should be available
	RC with bank's clause should be available. Original Invoice, delivery challan and stamped receipt to be obtained
	Insurance for the vehicle with Bank’s clause should be on record
	Branch has to ensure the infusion of margin money by the borrower as per sanction terms.
	Branch has to obtain an acknowledgement from the borrower for having taken delivery of the vehicle
	Review/Renewal of limits
	Latest Balance Sheet and other financial statements (audited wherever applicable) should be obtained and verified with the banks transaction. Variance if any should be probed and relevant noting are recorded and held on record. Projected balance sheet obtained previously should be verified with the actual
	Pricing of loans (application of rate of interest) should be done as per prescribed guidelines and as per risk rating of the account wherever applicable
	Eligible working capital limits, Annual review/mid-year review/other periodic review should be conducted as per Bank’s guidelines
	Operation in expired limits should be allowed only with proper authorization from competent authorities
	Stock Statements
	Verified the stock statements due during the particular period.
	Whether all the stock statement due during the period are received in time ie. 7th of the next month/quarter?
	Whether penal interest is charged in case stock statements not received?