Final Project Report of Sip(2003)
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Transcript of Final Project Report of Sip(2003)
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Final project report
On
STUDY OF
“Techniques used for Credit
Assessment”
With Special Reference to
CHOLAMANDALAM INVESTMENT AND FINANCE
COMPANY LIMITED
!
SHALINI
MA" #r$ SEMESTER
%SHA MARTIN ACADEMY S%MMER INTERNSHIP PRO&RAMME
'ATCH OF ())*+(),,-
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PRO.ECT TITLE
St/$! of 0Techni1/e2 %2e$ For Cre$it A22e223ent4
With 2pecial reference to Chola3an$ala3 In5e2t3ent an$ Finance
Co3pan! Li3ite$62 Vehicle Finance
A Report 2/73itte$ in partial f/lfill3ent of the re1/ire3ent of MA pro8ra3
Co3pan! &/i$e9
Mr: Sha2han; Saha!
ranch Cre$it Mana8er
CIFCL
Patna
Fac/lt! &/i$e9
Mr: S/par2a
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TAB! OF CO"T!"TS
D!CA#AT$O" %&
C!#T$F$CAT! %'
A("O)!D!*!"T %+
$"T#ODUCT$O" TO F$"A"C! $"DUST#Y % ,
CO*-A"Y %.
T/! S-$#$T OF *U#U0A--A 0#OU- %12
-#ODUCT O3!#3$!) %11
C/OA*A"DAA* $"3!ST*!"T A"D F$"A"C! CO4 TD4% 15
CO*-!T$TO#S %1'
CUSTO*!#S A"D T/! BAS$S OF T/!$# CAT!0O#$6AT$O"% 1.$"DUST#Y %71
3!/$C! F$"A"C! %77
ASS!T -#OF$! %
75
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-#ODUCT *$8 %7&
BAS$C -A#A*!T!#S FO# C#!D$T ASS!SS*!"T A"D
D!C$S$O" % 7'
C#!D$T A"D $TS T!C/"$9U!S %7+
T/! FO) ASS!*BY $"! -#OC!SS %:1
/O) DO!S C#!D$T OO( AT A F$! %
:7
-#$"C$-A DOCU*!"TAT$O"S % ::
(YC -O$CY %:5
*O"!Y AU"D!#$"0 A"D C#!D$T %
:'
TY-!SOF *O"!Y AU"D!#$"0 ACT$3$T$!S %:+
CUSTO*!# DU! D$$0!"C! A"D C#!D$T % :,
C$B$ % :.
F#AUD A"D $TS $D!"T$F$CAT$O" %57
!A#"$"0 $" C/OA*A"DAA* % &:
#AT$O"A! OF T/! STUDY %&+
OB;!CT$3! OF T/! STUDY %&,
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CO"T#$BUT$O" A"D FUTU#! SCO-! %&.
D!CA#AT$O"
$< S/A$"$< here=> declare that the project report
entitled “Stud> Of Techniques Used For Credit
Assessment” is an ori?inal piece of @or done => me
durin? m> Summer $nternship -ro?ram S$- at
C/OA*A"DAA* $"3!ST*!"T A"D F$"A"C! CO*-A"Y
$*$T!D< -atna4 The report has not earlier =een
su=mitted in an> manner4
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S/A$"$Date%
C!#T$F$CAT!
This is to certif> that the Summer $nternship project
titled “Stud> Of Techniques Used For Credit
Assessment” is a =ona Ede @or of S/A$"$ @hich is
ori?inal and has =een done under m> superision
to@ards the partial fulEllment of *BA for the period of 7months from :rd "oem=er< 72114 $
am pleased to sa> that her performance durin? the
period @as eGcellent4
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*r4 Suparsa@a Chara=ort>
Facult> 0uideUsha *artin Academ>-atna
AC("O)!D0!*!"T
An Old Chinese proer= sa>s% “)hen eatin? >our=am=oo sprouts< remem=er the men @ho planted them4"o@ that m> sprouts are read> to eat< it is time for meto eGpress m> deepest ?ratitude to All those @ho haemade this possi=le4”
Acno@led?ment ?ies us an opportunit> tohi?hli?ht and than people @ho ?enuinel> too interestin m> assi?nment and al@a>s stood neGt< @heneerneeded4
$ @ould lie to than m> Branch *ana?er< *r4Surendra (umar< Branch Credit *ana?er and Corporate0uide *r4 Shashan Saha> and Branch Operations$nchar?e< *r4 0opi (rishna for their moral support<encoura?ement and ind assistance and s>stematic
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?uidance< inalua=le adice throu?hout this project@or4
*> heartfelt thans to m> Facult> 0uide< *r4Suparsa@a Chara=ort> for his inalua=le adice<support and ?uide durin? m> project @heneer itsurmounts @ith diHculties4
$ o@e successful completion of this project to all thesupportie people @hose ideas< critical insi?hts andsu??estions proed inalua=le in the accomplishment of this report4
$ @ould lie to cone> m> special thans to all thefacult> mem=ers of Usha *artin Academ>< -atna< for?iin? me the opportunit> to @or on this project andproidin? all the requisite trainin? needed to accomplishm> -roject on time.
S/A$"$
Usha *artin Academ>
$"T#ODUCT$O" TO T/! F$"A"C!$"DUST#Y
The Enancial s>stem comprises of Enancial
institutions< Enancial instruments and Enancial marets
that proide an eIectie pa>ment and credit s>stem and
there=> facilitate channeliJin? of funds from saers to
the inestors of the econom>4 $n $ndia considera=le
?ro@th has taen place in the "on=anin? Enancial
sector in last t@o decades4 Oer a period of time the>
are successful in renderin? a @ide ran?e of serices4
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$nitiall> intended to cater to the needs of saers
and inestors< "on Banin? Financial Companies
"BFCs later on deeloped into institutions that can
proide serices similar to =ans4 $n $ndia seeral
factors hae contri=uted to the ?ro@th of "BFCs4 The>
are the Enancial institutions that proide =anin?
serices @ithout meetin? the le?al deEnition of =an i4e4
one that does not hold a =anin? license4 Operations are
re?ardless of this< still eGercised under Ban
#e?ulations4 The serices proided => them are%
aActs as suppliers of loan and credit facilities
=Funds for priate education
c Trade mone> maret instruments
dSupportin? inestments in propert>
e-roide retirement plannin?
CO*-A"Y
Cholamandalam =ein? a "BFC is a pan $ndian<
composite Enancial serices proider4 $t comprises the
parent compan>< Cholamandalam $nestment K Finance
Compan> imited C$FC< and its su=sidiaries
Cholamandalam Distri=ution Serices imited CDS
and Cholamandalam Securities imited4 The shares of
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C$FC are listed in the Bom=a> Stoc !Gchan?e td4 and
"ational Stoc !Gchan?e of $ndia td4
C$FC @as incorporated in 1.+, as the Enancial arm
of the *U#U0A--A ?roup4 The compan> that
commenced =usiness as an equipment Enancin?
compan> has no@ emer?ed as a comprehensie Enancial
serices solution proider that oIers ehicle Enance<
=usiness Enance< home equit> loans< stoc =roin? and
distri=ution of Enancial products to its customers4 The
compan> operates across $ndia @ith assets under
mana?ement oer #s .222 Crores4 The su=sidiaries of
Cholamandalam include Cholamandalam securities
limited CSec and Cholamandalam distri=ution imited
CDS4
*U#U0A--A 0roup founded in the >ear 1.22< the
#s41:'1+ crores USD :42: =illion is one of $ndiaLsleadin? =usiness con?lomerates @ith interests in
en?ineerin?< a=rasies< Enance< ?eneral insurance<
fertiliJers< farm inputs< su?ar< =ioproducts< c>cles and
plantations44 The ?roup has 7. companies under its
um=rella< of @hich seen are listed and actiel> traded
in "S! K BS!4
/eadquartered in Chennai< the major companies of
the 0roup include Car=orundum Uniersal imited<
Cholamandalam $nestment K Financial Compan>
imited< Cholamandalam *S 0eneral $nsurance
Compan> imited< Coromandel $nternational imited<
Coromandel !n?ineerin? Compan> imited< !$D
-arr>$ndia td< -arr> A?ro $ndustries td< Tu=e
$nestment of $ndia imited K )endt$ndiatd4 The0roup< @hich has for?ed stron? joint enture alliances
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@ith leadin? international companies lie DBS Ban<
*itsui Sumitomo< Car?ill< China !n?ineerin? K
!Gplorations Bureau and 0roupe Chimique Tunisien< has
consolidated its status as one of the fastest ?ro@in?
diersiEed =usiness houses in $ndia4
T/! S-$#$T OF T/! *U#U0A--A 0#OU-
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-roducts Oerie@
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14 A?riculture and farm products inputs%
•
FertiliJers• -esticides
• -lantation
• Su?ar and Bio-roducts
74 !n?ineerin? products%
• Chain
• Tu=es
• *etal frames of cars
:4 Consumer dura=les%
• Sanitar> @are
• Bic>cles
54 Serice Sector%
• Financial serices
• $nsurance serices
•$T serices
• Traels
Concentratin? on the Serice sector< the discussionof the su= sectors under serice are as follo@s%
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$4 Financial serice% Cholamandalam DBS< the Enancialarm of the ?roup< is a leadin? pla>er in the industr>and proides holistic Enancial serices4 $t includesehicle Enance< capital maret Enance< personal
loans< mutual funds< securities =roin?< depositor>serices< as @ell as distri=ution serices
$$4 $nsurance serices% Cholamandalam *S oIerscomprehensie product solutions coerin? almosteer> nonlife insurance need< from motorinsurance< health< home and trael< to accident topropert>< marine and en?ineerin?4 Cholamandalam
*S is completel> consumer oriented< ri?ht fromunder@ritin? and product deelopment to productdiIerentiation< quic polic> issuance< as @ell as fairand quic claims settlement4
$$$4 $T Serices< Trael% The 0roup has three companiesthat do =usiness in the sunrise informationtechnolo?> sector4 )hile aser @ords is into hi?h
end pu=lishin?< "et Access proides hostin? andmailin? solutions< and creates @e=sites4 )end soft<part of )endt $ndia< has introduced t@o eGcisemana?ement soft@are paca?es and marets t@oeGclusie soft@are paca?es4
$34 Traels% -arr> Traels a =usiness diision of -arr>!nterprises $ndia imited< oIers complete traelsolutions includin? air ticetin?< hotelaccommodation and paca?e tours4
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C/OA*A"DAA* $"3!ST*!"T A"DF$"A"C!
CO*-A"Y $*$T!D C$FC
C$FC @as incorporated in 1.+, as the Enancial
serices arm of the *U#U0A--A 0#OU-4 The co3pan! imited
and Central Depositor> Serices $ndia imited4 $t
operates from approGimatel> 152 =ranches4 The
su=sidiaries of Cholamandalam include
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a Cholamandalam Securities imited%
Cholamandalam Securities imited is a securities
=roera?e Erm oIerin? stoc =roin? and equit>
research serices to institutional inestors< includin?
man> of the lar?est
mutual funds in $ndia< and to select
indiidual clients4 CSec is a mem=er of the Stoc
!Gchan?e< *um=ai BS! and the "ational Stoc
!Gchan?e "S!4 $t is also a depositor> participant @ith
"SD4
= Cholamandalam Distri=ution imited% Formerl>called Cholamandalam A*C td< DCA* is the assetmana?ement compan> and the inestment mana?er of DBS Chola *utual Fund< @hich oIers mutual funds toretail and institutional inestors4 !sta=lished in 1..'<the compan> mana?es funds in eGcess of #s 7
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CO*-!T$TO#S
1 Shriram Transport Finance Compan> imited
STFC%
$t @as esta=lished in 1.+. to Enance Small #oad
Transport Operators S#TO @ho o@n and operate oer
+&N of trucs in $ndia4 !n?a?ed eGclusiel> in Enancin?
of Commercial 3ehicles< =oth ne@ as @ell as old< STFC<as of no@ has &
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eGistin? ehicle and =u>in? reconditioned or ne@
ehicle< amon? others4
7 arsen KTou=ro Finance imited TF%
$t is a su=sidiar> of arsen and Tou=ro4 $t @as
incorporated as a "on Banin? Finance Compan> in
"oem=er 1..54 Throu?h TF< KT aims at main? a
stron? fora> in the eereGpandin? Enancial serices
sector4TF oIers a spectrum of Enancial products and
serices for trade< industr> and a?riculture4 The
compan>Ps focus se?ments are corporate products<
construction equipment< Commercial 3ehicles and
tractors4
Despite the tur=ulence in the Enancial serices
marets oer the past fe@ >ears< KT Finance hasadapted @ell to the chan?in? maret d>namics to
remain consistentl> proEta=le4
ie the rest of the companies in KT ?roup< TF is
also professionall> mana?ed4 TF shares the
professional alues and ethics of its parent compan><
and has acquired and maintained a reputation for
relia=ilit>< transparenc> of operations and a=solute
inte?rit>4
: *a?ma Fincorp td *F%
$t is a (olata =ased non=anin? Enancin?compan> "BFC4 $t proides Enancin? of C3<construction equipment< cars< utilit> ehicles< tractors<
S*! loans and insurance distri=ution4 $t has a pan$ndiapresence @ith 1&+ =ranches across 72
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States and 1 union territor> @ith an emplo>ee =ase of Q5+224 $t mainl> tar?ets rural and semiur=an maretsand has a niche in Enancin? Erst time =u>ers and smallentrepreneurs4
*a?ma Fincorp has =een a relatiel> conseratiepla>er< Enancin? asset=aced products4 Unlie man>companies< *a?ma does not deal in personal loans4 *FoIers Enancin? to a =road spectrum of se?ments iJ4Commercial 3ehicle C3 Finance< Construction!quipment C! Finance< Car K Utilit> 3ehicle Finance<Used Car Finance< S*! loans and Tractor Finance4 )eare of the opinion that most of these se?ments are
seein? a =uo>ant demand and *a?ma @ith its eIectiecollections is a proG> pla> to these ?ro@in? sectors in$ndia4
5 Tata *otors imited%
!sta=lished in 1.5&< Tata *otorsP presence indeed
cuts across the len?th and =readth of $ndia4 $t is $ndiaPs
one of the lar?est automo=ile compan>< @ith
consolidated reenues of #s4 .7 is the @orldPs fourth
lar?est truc manufacturer< and the @orldPs second
lar?est =us manufacturer4
The compan>Ps 75ees are ?uided => theision to =e R=est in the manner in @hich @e operate<=est in the products @e delier< and =est in our alues>stem and ethics4R
& *ahindra K *ahindra Financial Sericesimited%
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A su=sidiar> of *ahindra K *ahindra imited< thecompan> is one of $ndiaLs leadin? non=anin? Enance companies4 Focused
on the rural and semiur=an sectors< it proides Enancefor utilit> ehicles< tractors and cars and has the lar?estnet@or of =ranches coerin? these areas4
$ts ?oal is to =e the preferred proider of retailEnancin? serices in the rural and semiur=an areas of $ndia< @hile its strate?> is to proide a ran?e of Enancialproducts and serices to its customers throu?h anation@ide distri=ution net@or4
' Other Competitors%
Other competitors of Cholamandalam $nestmentand Finance Compan> imited include the follo@in?%
/DFC
$ndusind Ban
#eliance Capital
CUSTO*!#S A"D T/! BAS$S OF T/!$#
CAT!0O#$SAT$O"
$"D$3$DUA
-#O-#$!TA#Y CO"C!#"
-#$3AT! -UB$C $*$T!D CO*-A"Y
-A#T"!#S/$- F$#*
CO#-O#AT!
"#$
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T#UST SOC$!TY
The customers can =e cate?oriJed into the
follo@in? three cate?ories%
• ASS!T BAS!D% A specialiJed method of proidin?
structured @orin? capital and term loans that are
secured => accounts receia=le< inentor><
machiner>< equipment andor real estate4 This t>peof fundin? is ?reat for startup companies<
reEnancin? eGistin? loans< Enancin? ?ro@th<
mer?ers and acquisitions< and mana?ement =u>
outs *BOs and =u>ins *B$s4
)hen the applicant has some asset on his
name or the coapplicant has some asset on his
name< then the> fall in the cate?or> of Asset =ased
Enancin?4 Thus< either the applicant or the co
applicant must hae some asset on their name4
• A0#$CUTU#! BAS!D% The customer can also =e
cate?oriJed under A?riculture =ased Enancin? @hen
he satisEes or fulElls the conditions stated =elo@
The o@nership of the a?ricultural land must =e in thename of the hirer
A?riculture land o@nership documentar> proof is to
=e collected @hich @ould =e either a?riculturepass=oo< patta< chitta< adan?al< Form +17 etc4
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The usa?e of the ehicle should =e purel> for carr>in?
a?ricultural produceinputs
$n case of reEnance or top up the usa?e of funds
should =e for production or inestment fora?ricultural or allied actiities and the hirer shouldnot =e the o@ner of more than one ehicle
• 0#!!" C/A""!% )hen the applicant has some
asset on the name of his ancestors< ma> =e
0randfather or ?reat ?rand father then he can =e
cate?oriJed under ?reen channel Enancin?4
$"DUST#Y
Cholamandalam DBS Finance imited the compan>
@ith its total assets =ase of #s4 55,& crores includin?
assets securitiJed and assi?ned is one of the premier
non=anin? Enance companies in the countr>4 The
compan>< alon? @ith its su=sidiaries proides a ran?e of
serices such as ehicle Enance< Enance a?ainst shares<personal loans< loans a?ainst propert>< secured loans to
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corporate< mutual funds< distri=ution of Enancial
products and securities tradin?4
3ehicle Enance @ith an asset deplo>ment share of &7N continues to hold lar?est share of the asset
portfolio of the compan>4 The personal loans =usiness
achieed si?niEcant ?ro@th leels durin? this >ear and
accounts for 1+N of the asset siJe of the compan>4
Durin? the >ear 722'2+< the compan> also increased its
=usiness in the =usiness Enance sector => oer 1&2N
@hich currentl> accounts for 72N of the total assets of
the compan>4 The compan> continues to enjo> a hi?hreputation @ith institutional fundproiders and ratin?
a?encies4 Oer the >ears< the compan> has =uilt up a
stron? maret presence throu?h its cumulatie
eGperience< stron? distri=ution net@or< sound s>stems
and processes4
The compan>Ls lon?term aspiration is to pla> a
si?niEcant role in meetin? the Enance requirements of small and lar?e commercial ehicle operators< retail
=orro@ers and inestors and small and medium
enterprises4
3!/$C! F$"A"C!
3ehicle Enance is the Compan>Ps lar?est =usiness of
Cholamandalam $nestment K Finance Compan> imited
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accountin? for oer &1N of assets4 The Compan> oIers
Enance for a ran?e of ehicles< includin? /ea> and
i?ht Commercial 3ehicles< *ulti Utilit>
3ehicles< car?o and cars4
Traditionall>< Cholamandalam has Enanced the
acquisition of commercial ehicle and cars4 Oer the
>ears< Cholamandalam $nestment K Finance Compan>
imited ehicle Enance =usiness has =uilt si?niEcant
stren?ths< namel> stron? distri=ution @ith presence in
1&2 locations< major product presence and stron? credit
and recoer> s>stems< mared => customer serice
eGcellence4
Cholamandalam $nestment K Finance Compan>
imited serice to customers is not restricted to eGi=le
credit norms< quic credit decisions and speed>
dis=ursements4 The Compan> nurtures lon?term
relationships @ith its customers< een adisin? them onthe choice of appropriate ehicles that suit their
=usiness and personal requirements4
The past fe@ >ears sa@ the economic ?ro@th
continuin? @ith si?niEcant ?ro@th in almost all sectors<
@hich had a faora=le impact on the ehicle Enance
=usiness4 Focus on commercial ehicles especiall> in theused and mini li?ht commercial ehicles se?ment helped
the ehicles Enance =usiness enhance spreads and
proEta=ilit>4 The compan> @as selectie in its approach
to@ards eGtendin? Enancin? to ne@ commercial ehicles
and cars @ith re?ard to credit and >ield< @hich helped to
maintain its presence in these se?ments4 The e>
strate?ies adopted => the =usiness are%
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V continue diersiEcation of product miG into used
ehicles and small commercial ehicles4
V maintain superior portfolio =ehaior throu?h improed
collection eHcienc>< sound internal processes and ris
mana?ement s>stems4
V improe productiit> leels to reduce cost and
turnaround time4
V nurturin? a stron? and mutuall> =eneEcial relationship
@ith the manufacturers of commercial ehicles4
V 0eneration of fee income throu?h serice char?es and
cross sellin? to enhance customer impact and
proEta=ilit>4
V Customer serice throu?h @ider product oIerin?s<
quic approals and simple documentation resultin? in a
sharp improement in customer retention and referral
=usiness4
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ASS!TS -#OF$!
The ehicle industr> @itnessed a ro=ust ?ro@th4
The commercial ehicle and car Enancin? industr>Ls
?ro@th are eGpected to mirror the ?ro@th in respectieehicle sales4
The lar?er =ans and manufacturer o@ned Enance
companies continued to dominate the maret throu?h
a??ressie pricin? and a stron? distri=ution presence4
)hile the penetration in the used ehicle industr>
improed si?niEcantl> as a proportion of total Enancin?<
lac of aaila=ilit> of scientiEc ealuation models andor?aniJed used ehicles distri=ution net@or continues
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to impede the ?ro@th of or?aniJed used ehicle
se?ment.
-#ODUCT *$8
The compan>Ls ehicle Enance =usiness reie@s its
product miG =ased on ealuation criteria that taes into
consideration
• the siJe of the maret
• the ris leels associated @ith the product cate?or>
• the intensit> of competition
• Enancial ia=ilit> and
• The compan>Ls a=ilit> to enhance customer alue4
The product miG @as suita=l> adapted to ?enerate
top line ?ro@th< au?ment reenue and insulate the=usiness from rate sensitiities4 The compan> has
?rasped the increased consolidation of used ehicle
se?ment as an opportunit> for ?ro@th4 $ts domain
no@led?e and @ider distri=ution net@or proided a
stron? platform to improe its penetration in this
se?ment4 As this is a hi?h mar?in =usiness< this has also
helped increasin? the spread leels for the compan>4 To
miti?ate the ris< the compan> esta=lished ti?hter creditprocesses and increased the feet on street collection
staI4
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Basic -arameters for Credit Assessment
and Decision
There are certain parameters for assessin? the
credit and main? the decision thereafter< @hich are as
follo@s%
a Cate?or> of Fundin?% $t is an important point to see
under @hich cate?or> a proposal is =est suited4
= -roduct 3ia=ilit>% $t inoles assessin? @hether the
product is ia=le for the sort of =usiness the customer is
into4 This has to =e lined @ith the !*$ amount and
compared @ith the income ?eneration to =e o=tained
from the ehicle4
C Deiations Assessment% The deiations noticed in the
proposal should =e taen into consideration4 $t should
=e checed @hether the deiations pertainin? to
documents are as per norms or are @ithin the aaila=le
documents4
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d #is Assessment% Finall>< tr>in? to assess the riss
inoled in fundin? a proposal is also seen4 This has to
=e done @ith a ie@ of @hat @ould =e the loss in case if
the ehicle is seiJed4 $n case of resale< if loss arises<
then can the shortfall amount =e collectedW
Credit and its Techniques
Credit Assessment is the ealuation or estimation
of the nature< qualit>< or a=ilit> of someone to o=tain
?oods or serices =efore pa>ment< =ased on the trustthat pa>ment @ill =e made in the future4
Credit assessment focuses at determinin? credit
ris for arious Enancial and nonEnancial instruments as
@ell as projects4 The measurement and mana?ement of
credit ris has =ecome a e> rismana?ement issue for
=oth Enancial and nonEnancial institutions4
The Fie XCLs of Credit )hat lenders loo for in amort?a?e application%
All questions that are found in a mort?a?eapplication are Xal@a>sL motiated to@ards o=tainin?information that @ill ?ie the lender a solidunderstandin? of oneLs credit@orthiness4
The RFie CPsR of credit are the =asic components of
an> credit assessment4 The &XCLs are descri=ed here to?ie an insi?ht into @hat a lender is thinin? and @hatthe e> issues that @ill =e assessed4
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1 Capacit>% The capacit> to repa> a mort?a?e is themost critical of the Ee credit factors4 An> prospectielender @ill @ant to no@ eGactl>< ho@ >ou intend torepa> the loan and from @hat income sources4 $f >ou
are emplo>ed< it is a relatiel> simple tas to identif>ho@ much >ou earn< irrespectie as to @hether >ou areemplo>ed on a full time< part time< causal or on contract=asis4 The lender merel> has to conErm this information@ith >our emplo>er or throu?h other documents such as0roup CertiEcates< or computer ?enerated pa> slips thatsho@ the num=er of hours @ored< >ear to date incomeearned and other information that the lender requires4Simpl> speain?< diIerent lenders hae diIerent
policies as to @hat income the> @ill accept< @hich is @h>there is a =road ran?e of maGimum loan siJes aaila=lefrom lenders to the same applicant4
7 Credit% The second XCL of credit assessment is alla=out oneLs credit histor>4 Consumer K small =usiness
credit histor> records are a er> =asic s>stem of XeentLrecordin?4 Of the fe@ credit reportin? =ureausoperatin?< the leadin? =ureau merel> proides lists of XeentsL there is no interpretation or assessmentproided< a credit report must sho@ the follo@in?%
• Consumer Credit enquires• Credit defaults
• e?al Actions
• Directorships K -roprietorships
• Banruptcies
/o@eer< one @ill hae a credit record that sho@sM
• "o credit histor>• A credit histor> @ith no XaderseL entries noted or
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• A credit histor> @ith one or more aderse creditentries
"o@< the e> issue for an> =orro@er is to
understand @hat lenders are looin? for @hen the>reie@ oneLs credit Ele4
/ain? "o credit histor> can =e frustratin? in somecircumstances< =ut this pro=lem ?enerall> impacts on=orro@ers intendin? to o=tain XunsecuredL loanspersonal loans< car loans etc4 For secured loans liemort?a?es hain? no credit histor> is of littlereleance< unless it conicts @ith other information thatis aaila=le to a lender4
A credit histor> @ith no aderse entries allo@s the=orro@er a fairl> free hand at the choice of lender andproduct aaila=le from the entire lendin? communit>4enders call these applicants XcleanL and are the mostdesired =orro@er t>pe4
$f a =orro@er has ?ood income< si?niEcant assets<lo@ de=t leels and a XcleanL credit histor>< then this
credit XproEleL is the most preferred =orro@er t>pe andimplies a lo@ ris of an> future default or loss for thelender4
An XaderseL credit histor> is an area @hich catchesman> =orro@ers out4 $f one has a XpoorL credit histor><this could mean diIerent thin?s to diIerent lenders4 Forsome lenders< hain? a num=er of unpaid defaults< ma>not necessaril> mean one cannot o=tain a mort?a?e4 $t
simpl> means that the num=er of lenders that @ill loo at one application is reduced4 *ost lenders tr> tounderstand one application and the reasons for an>credit default< =ut that does not mean that one is?uaranteed to o=tain a mort?a?e @ith an> lender onechoose4
: Collateral% Collateral refers to an asset or assets thata lender XsecuresL => @a> of a mort?a?e to protectthemseles in the eent of =orro@er loan default4 As far
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as mort?a?e Enance is concerned< collateral relates toreal propert> securit>4 This could mean #esidential<$ndustrial< Commercial< #ural< 3acant land etc4-racticall> an>thin? that has a Title Deed4 The collateral
proided => a =orro@er proides a lender @ith theXsecurit>L necessar> to hed?e a?ainst a =orro@erdefaultin? on a loan4
*ore often than not< a securit> is alued either =>lenders staI or => licensed aluers @ho prepare @rittenreposts outlinin? their XopinionL of the properties
• !stimated maret alue• *areta=ilit> of the propert>
• SiJe< t>pe and use of the propert>
• ocation
• 0eo?raphic location
• *aret olatilit>
5 Conditions% 0enerall>< the XconditionsL issue is onethat lenders re?ard @hen considerin? the economiccircumstances of the oerall national econom>< the stateand re?ional economies and also the industr> t>pe theapplicant or securit> is inoled in4
enders @ill loo at the macro and micro economicfactors releant to this industr> t>pe K @ill jud?e themerit of the =orro@ers application @ith the added
stren?th or lac of it of sound future cash o@s<industr> ?ro@th< emplo>ment opportunities K ordemand for a securit> t>pe4
& Character% Character refers to the ?eneral impression
one mae on a prospectie lender4
$f one has chan?ed jo=s 5 times in the last >ear@ithout a ?ood reason to do so< and one has moed
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house t@o or three times as @ell< hae a one or t@osmall credit defaults< and no record of a sain?s histor>plus a car loanM oneLs credit proEle simpl> @onLt impressthe lender4 There ma> =e opportunities to secure
mort?a?e Enance< =ut oneLs options @ill =e limited4
On the other hand< if one has saed some funds orhae equit> in a propert>< hae no credit defaults< littlede=t and a sound emplo>ment record @ith residentialsta=ilit>M one @ill =e seen to =e a less Xris>L =orro@er4Of course there is no ?uarantee that an>one @ill repa>their loan< as per their contract< =ut assessin? thecharacter of a =orro@er from personal meetin?s or their
preparedness to proided full and fran disclosures or another4 Some lenders @illprocess loan applications on a Xscorin?L =asis @ithlimited human interference in the approal decisionprocess4
Of course these models are not foolproof< so people
still @ill reie@ mar?inal cases4 $n the recent >ears< anum=er of specialist lenders hae actuall> ?one =ac tomore XtraditionalL methods of credit assessment =>looin? at eer> application in detail4 These specialistlenders are endeaorin? to identif> reasons to actuall>approe a loan< @hen other lenders hae scored theloan as XdeclinedL4
endin? toda> has =ecome a astl> more compleG
industr> ho@eer to secure the ri?ht Enance< one reall>need to secure the ri?ht assistance.
The Flo@ Assem=l> ine -rocess
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AS $T $S
Other Terms
The a=oe dia?ram sho@s the process of credit andmaes the arious sta?es er> clear4
$n relation @ith the process< there are certain points on
@hich the Eles are looed upon and are sated in the=elo@ topic4
34
F$Tri??e
r
Sourc
ed
!alua
tion
Approe
d
A?reement
$-#-*T
Delier>Order
-DD
Updation
"OC
-aid and
oer
SeiJure
Shortf
all
Capitalisati
on
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/o@ does Credit loo at a EleW
• )hich is the ehicle
• )hat is the cate?or> of fundin? proposed
• )hat is the amount of fundin?
• -urpose of the ehicle
• )hat and ho@ man> deiations are there in the Ele
• Should it =e an outri?ht rejectW
• Shall approal =e ?ien @ith some conditionsW
• a> do@n the possi=le riss =efore Enal approal
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-rincipal Documentation
$4 $ncome -roof For income proof< audited Balance
Sheet and -roEt and oss Ac for the last t@o >ears
or $ncome TaG #eturns dul> si?ned => the /irer
should =e ?ien for the purpose of no@in? the
Enancial soundness of the concerned part>4
$$4 Address -roof For contact a=ilit>< address proof is
an important document4 For ensurin? the sta=ilit>
of sta>< #esidence proof is required @hich includes
#ation Card -assport -ropert> TaG #eceipt Driin?
icense Telephone Bill @hereas to ensure the
continuit> in emplo>ment =usiness< OHce -roof is
required and includes ST #e?n4 Shop or
!sta=lishment #e?n4 ease Deed Telephone =ill
=ein? a document that @ill esta=lish eGistence4
$$$4 -hoto?raph For identit> as le?al reference<
photo?raph is required @hich should =e dul> si?ned
=> the -roprietor on the reerse or an> -u=lic
Document4
$34 -ost Dated Cheques For securit> purpose< post
dated cheques for the entire tenure is a must4
34 Application Form For the purpose of Data capture<
application form is required @hich should =e dul>
si?ned => /irer and 0uarantor4 $t is a le?al
requirement to aoid dispute as to the papers @ere
not ?ien => the customer4
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(YC -olic>
(no@ >our customer (YC is the due dili?ence
and =an re?ulation that Enancial institutions and other
re?ulated companies must perform to identif> their
clients and ascertain releant information pertinent to
doin? Enancial =usiness @ith them4 $n the USA< (YC is
t>picall> a polic> implemented to conform to a customer
identiEcation pro?ram mandated under the Ban
Secrec> Act and USA -AT#$OT Act4
(no@ >our customer policies are =ecomin?
increasin?l> important ?lo=all> to preent identit> theft
fraud< mone> launderin? and terrorist Enancin? "BFCs
need to follo@ certain customer identiEcation procedure
for openin? of accounts and sanctionin? of loans to
customers4 This polic> is called (YC polic>4
)hat (YC meansW
• (no@ )hat @e should no@W
True identit> and =eneEcial o@nership of theaccounts
-ermanent address< re?istered and
administratie address
• Your )ho should no@W
Branch *ana?er
Audit OHcer
37
http://en.wikipedia.org/wiki/Due_diligencehttp://en.wikipedia.org/wiki/Bank_regulationhttp://en.wikipedia.org/wiki/Financial_institutionshttp://en.wikipedia.org/wiki/Company_(law)http://en.wikipedia.org/wiki/Customer_Identification_Programhttp://en.wikipedia.org/wiki/Customer_Identification_Programhttp://en.wikipedia.org/wiki/Bank_Secrecy_Acthttp://en.wikipedia.org/wiki/Bank_Secrecy_Acthttp://en.wikipedia.org/wiki/USA_PATRIOT_Acthttp://en.wikipedia.org/wiki/Money_launderinghttp://en.wikipedia.org/wiki/Terrorist_financinghttp://en.wikipedia.org/wiki/Due_diligencehttp://en.wikipedia.org/wiki/Bank_regulationhttp://en.wikipedia.org/wiki/Financial_institutionshttp://en.wikipedia.org/wiki/Company_(law)http://en.wikipedia.org/wiki/Customer_Identification_Programhttp://en.wikipedia.org/wiki/Customer_Identification_Programhttp://en.wikipedia.org/wiki/Bank_Secrecy_Acthttp://en.wikipedia.org/wiki/Bank_Secrecy_Acthttp://en.wikipedia.org/wiki/USA_PATRIOT_Acthttp://en.wikipedia.org/wiki/Money_launderinghttp://en.wikipedia.org/wiki/Terrorist_financing
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*onitorin? OHcials
• Customer
One @ho maintains an account< esta=lishes=usiness relationship< on @hoLs =ehalf accountis maintained< =eneEciar> of accountsmaintained => intermediaries< and one @hocarries potential ris4
(YC means
*ain? reasona=le eIorts to determine the trueidentit> and =eneEcial o@nership of accounts
-urpose of loans
"ature of customersL =usiness
Constitutes of a reasona=le account actiit>
(YC does not mean
Denial of serice to the common person
$ntrusie =ehaior
Use of information for cross sellin?
/arassment of customers
One aspect of (YC checin? is to erif> that thecustomer is not on an> list of no@n fraudsters<terrorists or mone> launderers< such as the OHce of Forei?n Assets ControlPs Speciall> Desi?nated "ationalslist4 This list contains thousands of entries and is
updated at least monthl>4 As @ell as sanctions liststhere are lists of third part> endors that trac lins
38
http://en.wikipedia.org/wiki/Fraudhttp://en.wikipedia.org/wiki/Terrorismhttp://en.wikipedia.org/wiki/Money_launderinghttp://en.wikipedia.org/wiki/Office_of_Foreign_Assets_Controlhttp://en.wikipedia.org/wiki/Office_of_Foreign_Assets_Controlhttp://en.wikipedia.org/wiki/Specially_Designated_Nationalshttp://en.wikipedia.org/wiki/Fraudhttp://en.wikipedia.org/wiki/Terrorismhttp://en.wikipedia.org/wiki/Money_launderinghttp://en.wikipedia.org/wiki/Office_of_Foreign_Assets_Controlhttp://en.wikipedia.org/wiki/Office_of_Foreign_Assets_Controlhttp://en.wikipedia.org/wiki/Specially_Designated_Nationals
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=et@een persons re?arded as hi?hris o@in? tone?atie reports in the media a=out them or in pu=licrecords4
Be>ond name matchin?< a e> aspect of (YCcontrols is to monitor transactions of a customer a?ainsttheir recorded proEle< histor> on the customerLsaccounts and @ith peers4
*O"!Y AU"D!#$"0 A"D C#!D$T
*one> launderin? is the process of main? dirt>
mone> clean4 The mone> is moed around the Enancial
s>stem a?ain and a?ain in such a manner that its ori?in
?ets hidden4 *one> ?enerated from ille?itimate source
is conerted into that deried from le?itimate source
and used for terrorist actiities4
So< it is the le?al o=li?ation of the compan> to loo
after fe@ important points to control mone> launderin?4
The le?al o=li?ations are as follo@s%
• -roper identiEcation of all the customers
• #is classiEcation of all the customers39
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• *onitorin? the on?oin? transactions
• #eportin? of cash transactions oer #s4 12 lacs
• *onitorin? of suspicious transactions
• #eportin? of suspicious transactions
• *aintenance of customer records
TY-!S OF *O"!Y AU"D!#$"0 ACT$3$T$!S
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CUSTO*!# DU! D$$0!"C! CDD A"DC#!D$T
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CDD refers to the monitorin? of clients and their
actiities to see if the client does not chan?e maredl>
oer time4 $n eIect this com=ats the possi=ilit> that an
indiidual or more often an or?aniJation that has
passed (YC is still @ho the> sa> the> are and doin? @hat
the> said the> @ould do @hen the> under@ent (YC
checs4
For eGample a corporate account set up honestl>
and openl> => one person @ho passes (YC checs could
=e passed >ears later to another person that @ould not<
@ithout CDD the serices proider @ould not no@ that
the ne@ o@ner is present4 (YC CDD polic> @ouldnormall> demand (YC checs on the ne@ o@ner
re?ardless of the account histor>4
$n order to control the mone> launderin?< there are
certain ?uidin? principles for the Customer Due
Dili?ence @hich is stated =elo@%
•
Do =usiness onl> @ith reputa=le clients inoled inle?itimate and la@ful =usiness actiities4
• Determine and record the identit>< =ac?round and
=usiness of all clients4
• $dentif> and no@ the =eneEcial o@ners of all
relationships4
• Understand the =usiness purposes for @hich
compan>Ls products and serices are used4
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C#!D$T $"3!ST$0AT$O" BU#!AU $"D$A
TD4
Credit $nformation Bureau $ndia imited is $ndiaPs
Erst credit information =ureau4 $tLs a repositor> of
information< @hich contains the credit histor> of
commercial and consumer =orro@ers4 C$B$ proides this
information to its mem=ers in the form of credit
information reports4
As on Septem=er 722.< C$B$ has an information=ase on oer 1'2 million consumer trades< and 5 million
commercial trades @hich continues to ?ro@ at a fast
pace and shares credit information @ith its 1+& mem=er
=ase on the principle of reciprocit>4 C$B$Ls mem=ers
include all leadin? =ans< Enancial institutions< non
=anin? Enancial companies< housin? Enance
companies< state Enancial corporations and credit card
companies4
C$B$ @as promoted => the State Ban of $ndia<
/ousin? Deelopment Finance Corporation imited< Dun
K Bradstreet $nformation Serices $ndia -riate imited
and TransUnion $nternational $nc4 The shareholdin?
pattern @as as follo@s%
•
SB$ 1'47&N• /DFC 1'47&N
• $C$C$ Ban 12N
• Dun K Bradstreet 12N
• TransUnion 12N
TransUnion and Dun K Bradstreet are the technical
and equit> partners of C$B$4 TransUnion is one of thelar?est consumer credit =ureaus in the @orld4 Dun K
43
http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Credit_historyhttp://en.wikipedia.org/wiki/Commercehttp://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/wiki/Tradehttp://en.wikipedia.org/wiki/Reciprocityhttp://en.wikipedia.org/wiki/Credit_cardhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Credit_historyhttp://en.wikipedia.org/wiki/Commercehttp://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/wiki/Tradehttp://en.wikipedia.org/wiki/Reciprocityhttp://en.wikipedia.org/wiki/Credit_cardhttp://en.wikipedia.org/wiki/India
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Bradstreet is @orldLs leadin? source of commercial
information and insi?hts on =usinesses4
$n 7225< SB$ and /DFC diested a part of their stae
in C$B$ to other shareholders comprisin? of leadin?=ans and Enancial institutions in the countr>4
Accordin? to the )orld Ban oer the last fe@ >ears
seeral reforms hae improed the enironment for
?ettin? credit in $ndia4 Credit $nformation Bureau
$ndia imited< a priate partnership =et@een seeral
commercial =ans and credit information serice
proiders< has started to increase the amount of creditinformation aaila=le in the countr>4 C$B$Ls coera?e
has more than dou=led in the last fe@ >ears4
The adanta?e of C$B$ is that it ?ies =oth positie
and ne?atie information @ith the help of @hich
opportunities can =e aailed and pitfalls can =e
aoided4 $t helps us in no@in?%
• )hom to ?ie loan
• )hom not to ?ie loan
• #etention of ?ood customers
• Alerts on possi=le defaulters
The rejection criteria are as follo@s%
• Customers must not hae an> Suit Eled in the
C$B$ report
• Customers must =e neer '2 Da>s -ast Due<
neer Su= Standard< neer Dou=tful< neer
oss in the last 17 months
The criteria for approal are%
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• $f customer is eer '2< Su= Standard< Dou=tful
or oss then the outstandin? =alance must not
=e less than equal to #s4 &222 as this can =e
cheque =ounce or non accrual char?es4
C$B$ FO) C/A#T
Y!S
"O
Y!S"O
"O "O
45
C$B$
Suit
Filed
#eject
ast 17
months
sho@in?
eer '2<
SUB< DBT
or OSS
Balance
Outstan
din? Z[
#s4 &222
Approe
#eject
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F#AUD A"D $TS $D!"T$F$CAT$O"
$n the =roadest sense< a fraud is an intentionaldeception made for personal ?ain or to dama?e anotherindiidual4 The speciEc le?al deEnition aries => le?al
jurisdiction4 Fraud is a crime< and also a ciil la@iolation4
There are certain documents @hich the creditdepartment comes across almost eer> da>4 The> are%
1 BA"( STAT!*!"T%
An account statement or a =an statement is a
summar> of all Enancial transactions occurrin? oer a
?ien period of time on a deposit account< a credit card<
or an> other t>pe of account oIered => a Enancial
institution4
Ban statements are t>picall> printed on one or
seeral pieces of paper and either mailed directl> to the
account holderPs address< or ept at the EnancialinstitutionPs local =ranch for picup4 Certain AT*s oIer
46
http://en.wikipedia.org/wiki/Deceptionhttp://en.wikipedia.org/wiki/Crimehttp://en.wikipedia.org/wiki/Civil_law_(common_law)http://en.wikipedia.org/wiki/Financial_transactionhttp://en.wikipedia.org/wiki/Deposit_accounthttp://en.wikipedia.org/wiki/Credit_cardhttp://en.wikipedia.org/wiki/Financial_institutionhttp://en.wikipedia.org/wiki/Financial_institutionhttp://en.wikipedia.org/wiki/Branch_(banking)http://en.wikipedia.org/wiki/Automated_teller_machineshttp://en.wikipedia.org/wiki/Deceptionhttp://en.wikipedia.org/wiki/Crimehttp://en.wikipedia.org/wiki/Civil_law_(common_law)http://en.wikipedia.org/wiki/Financial_transactionhttp://en.wikipedia.org/wiki/Deposit_accounthttp://en.wikipedia.org/wiki/Credit_cardhttp://en.wikipedia.org/wiki/Financial_institutionhttp://en.wikipedia.org/wiki/Financial_institutionhttp://en.wikipedia.org/wiki/Branch_(banking)http://en.wikipedia.org/wiki/Automated_teller_machines
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the possi=ilit> to print< at an> time< a condensed ersion
of a =an statement4
Dependin? on the Enancial institution< =an statements
ma> include certain features such as the cancelledcheques or their ima?es that cleared throu?h the
account durin? the statement period< promotional
inserts or important notices a=out chan?es in fees or
interest rates4 Due to identit> theft concerns< a irtual
statement ma> =e seen as a safer alternatie a?ainst
ph>sical theft as it does not contain tan?i=le personal
information< and does not require eGtra safet> measures
of disposal4
Thin?s to =e @atched in a Ban Statement is as follo@s%
• Transactions should =e @ithin the period for
@hich the statement has =een printed
• An> transaction =efore or after that date sho@s
Fud?ed Banin?
• Transactions should not =e present on Ban
/olida>s
• Transactions should =e in ascendin? order of
dates
47
http://en.wikipedia.org/wiki/Chequehttp://en.wikipedia.org/wiki/Insert_(advertising)http://en.wikipedia.org/wiki/Feeshttp://en.wikipedia.org/wiki/Interest_ratehttp://en.wikipedia.org/wiki/Identity_thefthttp://en.wikipedia.org/wiki/Chequehttp://en.wikipedia.org/wiki/Insert_(advertising)http://en.wikipedia.org/wiki/Feeshttp://en.wikipedia.org/wiki/Interest_ratehttp://en.wikipedia.org/wiki/Identity_theft
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• The interest paid => the =an is al@a>s
credited periodicall>
• *inimum =alance char?es need to =e De=ited
from the account
• $n 0oernment Bans< the coer pa?e of the
pass=oo ?ies the details of the customer
• The ne@l> opened account can =e determined
if the Erst =alance in the statement is Jero
• )hile checin? the totals< in case of addition
mistaes< the statement is fud?ed
7 FO#* 1'%
Form 1'
is CertiEcate of deduction of taG at source
under section 72: of
the $ncome TaG Act< 1.'14
!mplo>ers proide TDS
certiEcate to the emplo>ees on
Form 1'.48
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$f >ou are salaried emplo>ee in an or?aniJation<
then >ou @ill ?et the salar> after deductin? taG => the
emplo>er4 This process is called as TaG Deduction at
Source TDS4 !er> compan> has to ?et the TIN4 TIN is
Tax Identifcation Number4 This num=er is issued to a
person @ho is responsi=le to deduct TaG on pa>ments
made to emplo>ees4
At the end of Enancial >ear< compan> must issue a
orm 16 @hich contains the details a=out the salar>
earned => that emplo>ee and ho@ much taG deducted4 $t
@ill hae details on each month4 $n simple terms Form 16
is details a=out the taG deducted => the emplo>er in=ehalf of emplo>ee4 The same @ill =e paid to
?oernment => the compan>
Thin?s to =e @atched in Form 1' are as follo@s%
• The name and the desi?nation of the emplo>ee
is mentioned in the top part of the form
• $ncome of the particular Enancial >ear is taGed
in the neGt >ear called the Assessment >ear
: $"CO*! TA8 #!TU#"
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This document ?ies the taG collector information
a=out the taG pa>erPs taG lia=ilit>4The points @hich hae to =e taen into
consideration are as follo@s%
• -A" no4 should =e eriEed @ith the -A" card and
the Form 1' to esta=lish that all these =elon? to the
same person4
• "o cuttin? @hitener is permitted especiall> at the
top part of the $T#
Three thin?s are a must in an> $T#%
Date of the Elin? return
)ard Circle #an?e no4
Serial no4 #eceipt no4
• Assessment >ear Z -reious Financial >ear \ 1
• Date cannot =e a Saturda> Sunda> 0oernmentholida>
• $f the hand@ritin? in the top part customer detail
is diIerent from the hand@ritin? in the rest of the
$T#< there is a possi=ilit> of fraud
•$f on the Ori?inal $T#< the Stamp is of #ed in< itsho@s that the applicant does not hae a -A" card4
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$f the stamp is =lue< it sho@s that the applicant @ill
hae a -A" card
• Simple addition and su=traction should =e correct
• There should =e some re=ate deductions in the $T#
• -A" no4 is necessar> from Financial >ear 7227722:
5 3OT!# $D
One thin? that has much importance as to proe
identit> in $ndia is oter $D card issued to adults => the
!lection Commission4 There are multipurpose roles of oter icard hence it remains in limeli?ht due to one
reason or the other4 Usuall> oter icard is issued to
adults after cross eriEcation on local leel4 "eGt to
passport one possesses oter $D card is an identit>
proof that uses at arious occasions4
A oter id card is issued to indiidual oters in
eer> constituenc>4 ist of oters is decided accordin?
to people fulEllin? criteria4 Terminolo?> used for such
people is electoral roll comprehensie list of
indiiduals @hom oter icard is issued4 Certain factors
are taen into account =efore issuance of oter $D card4
$t includes conErmin? a?e of applicant that should =e
at least ei?hteen >ears @hile enrolled4
The points that are taen into consideration are as
follo@s%
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• The photo?raph on the oter $D card should =e
computeriJed
• The serial no4 appears on =oth sides of the card
@hich are issued after 72224 /ence< for a ?ien
cop>< =oth the serial num=ers should match
• Date in the Eeld XA?e as on” front pa?e @ill
al@a>s =e less than date of issue 7nd pa?e and
the diIerence @ill neer eGceed one and a half
>ears
• The font should match on the front and the secondpa?e4 The t@o commonl> used fonts are Ariel and
Times "e@ #oman siJe, 12
• The si?nature of the issuin? authorit> on the =ac
second side is stamped not done => pen
• The photo is : cml and 74: cm =
& SAA#Y S$-%
Salar> slip is a document that ?ies the details of
the salar> of an emplo>ee durin? the particular period4
"ormall> the salar> is paid on monthl> =asis4 There areman> custom information that can =e @ritten in the pa>
slip =ased on compan> polic>< for eGample lie da>s
present< da>s a=sent< =asic earnin?s< other allo@ances<
deductions of taGes and other dues4 And usuall> salar>
slip format ?ies =reaup of the ?ross earnin?s<
deductions and net earnin?s of the emplo>ee4
Thin?s to =e @atched in salar> Slip are as follo@s%
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• The emplo>ee code should =e present on the salar>
slip of cate?or> A and B or?aniJation 0oernment
or?aniJations
• $n the salar> account =an account the E?ures
eer> month should match salar> slip
• Stamp of the compan> si?nature of the accountant
should =e present
• "o @hitener should =e applied on the slip no
cuttin? is permitted
• Basic salar> is al@a>s mentioned in the slip
• An> loan taen from the or?aniJation is also
mentioned
• -F deductions< if mentioned< is in the ran?e of
,4::N to 17N
' D#$3$"0 $C!"S!
$t is an oHcial document @hich states that a
person ma> operate a motoriJed ehicle< such as a
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motor=ie< car< truc or a =us< on a pu=lic road@a>4 The
la@s relatin? to drierPs licensin? ar> =et@een
jurisdictions4 $n some jurisdictions< a driin? license is
issued after the recipient has passed a driin? test<
@hile in othersM a person acquires a license =efore
=e?innin? to drie4 DiIerent cate?ories of license often
eGist for diIerent t>pes of motor ehicles< particularl>
lar?e trucs and passen?er ehicles4 The diHcult> of the
driin? test aries considera=l> =et@een jurisdictions<
as do factors such as a?e and the required leel of
practice.
Thin?s to =e @atched in a Driin? icense are asfollo@s%
• The serial no4 mentioned on the top of the driin?
license contains a location speciEc alpha=et - for
Delhi follo@ed => , num=ers the date @hich is
al@a>s less than or equal to date of issue
• -hoto?raph is 74& cm]74& cm
• "o@ada>s in all driin? licenses the photo?raph is
computeriJed
• At the top ri?ht side there is an alpha=et mentioned
@hich can =e%
" Stands for "e@ Driin? icense
# Stands for #ene@al of icenseD Stands for the duplicate of the Driin? icense
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• A Commercial Driin? icense is for 1 >ear
• A -ersonal Driin? icense is for >ears that aremultiple of &
+ -A" CA#D
-A" or -ermanent Account "um=er is a tendi?it
alphanumeric code ?enerated => the $ndiaPs P$ncome TaG
DepartmentP< that is required => an>one and eer>one
@ho @ish to conduct an> ind of Enancial transaction in$ndia4 !en those @hose Enancial transaction is limited
to pa>in? income taG require it4 -A" is required if >ou
@ish to enter the $ndian Share *aret4 This is true for
"#$s "on #esident $ndians liin? a=road too< @ho @ish
to mae inestment in $ndia< =u> propert> house in
$ndia< open =an account< etc4
Thin?s to =e considered in a -an Card are as
follo@s%
• $t consists of a 12 di?it no4 & Alpha=ets< 5
"um=ers< 1 Alpha=et respectiel> in order
• The &th Alpha=et is the Erst letter of the applicantLs
surname
• FatherLs name is a mandator> Eeld
• Date of Birth \ si?nature of the applicant scanned
alon? @ith a scanned photo?raph is present
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• Bottom ri?ht there is the scanned si?nature of the
issuin? Authorit> @ith the name4 $ssuin? Authorit>is the Commissioner of $ncome TaG
• Top ri?ht The scanned XAshoa CharaL lo?o @ith
lions is present
• SiJe of photo is :47 cml]74& cm=
• All headin?s Eelds are mentioned in =oth !n?lish
and /indi re?ional lan?ua?e
• For a /indu Undiided Famil>< the name and photo
of the (arta is present =ut instead of date of =irth<its date of incorporation is ?ien
, #AT$O" CA#D
A #ation Card is a document issued under an orderor authorit> of the State 0oernment< as per the -u=licDistri=ution S>stem< for the purchase of essentialcommodities from fair price shops4 State 0oernments
issue distinctie #ation Cards to A=oe -oert> ine<Belo@ -oert> ine and Ant>oda>a families and conductperiodical reie@ and checin? of #ation Cards4
A #ation Card is a er> useful document for $ndiancitiJens4 $t helps sae mone> => aidin? in theprocurement of essential commodities at a su=sidiJedrate4 $t has also =ecome an important tool of identiEcation no@ada>s4 One ma> need to produce a
cop> of oneLs #ation Card as proof of identiEcation @henappl>in? for other documents lie Domicile CertiEcate<for inclusion of oneLs name in the !lectoral #olls< etc4
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Thin?s to =e considered in a #ation Card are as
follo@s%
• -a?e 1 left contains the name of o@ner \ photo of o@ner \ fatherLs name \ date of issue \ residence
address
• The stamp of the Food and Suppl> Corporation is
near the address on pa?e 1
• -a?e 7 ri?ht contains the name and relation of the
dependants alon? @ith their a?e as on date of issue
• -a?e 7 also contains the stamp of the Food and
Suppl> Corporation in case of an> address chan?e
• The headin?s Eelds are in /indi re?ional lan?ua?e
. -ASS-O#T
A passport is a document< issued => a national?oernment< @hich certiEes< for the purpose of
international trael< the identit> and nationalit> of itsholder4 The elements of identit> are name< date of =irth<
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seG< and place of =irth4 *ost often< nationalit> andcitiJenship are con?ruent4
A passport does not of itself entitle the passport
holder entr> into another countr>< nor to consularprotection @hile a=road or an> other priile?es4 $t does<ho@eer< normall> entitle the passport holder to returnto the countr> that issued the passport4 #i?hts toconsular protection arise from internationala?reements< and the ri?ht to return arises from the la@sof the issuin? Countr>4 A passport does not representthe ri?ht or the place of residence of the passportholder in the Countr> that issued the passport4
Thin?s to =e considered in a -assport are asfollo@s%
• The serial no4 present on the Erst pa?e should
match the serial num=ers on the other pa?es of the
passport this is a must
• The headin?s Eelds are in !n?lish \ /indi re?ional
lan?ua?e
• The information is Elled in !n?lish
• $n the computeriJed -assport< there is a 7, di?it
code in the last line
The Erst , di?its are the serial no4
Di?its 11< 17< 1: are $"D countr>
15 1. connotes the date of =irth of the holder
in reerse
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71 is the seG
77 7+ is the date of eGpir> in reerse
• Duration of the -assport is 12 >ears4 Bet@een 1..&
., there had =een a proision for 1 >ear durations
15 !!CT#$C$TY B$
!ach location has a diIerent serice proider andthe format of the =ill ma> diIer mar?inall>4
The =ill @ill contain%
• "ame of the customer the o@ner
• Address
• -eriod for @hich the statement pertains
• Units used
• Cost per unit
• Arrears outstandin? if an>
• Date of su=mission @ithout late fees
• Amount to =e su=mitted after the due date @ith
late fees
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The thin?s to @atch out for are%
• Arrears
• #econnection char?es
!A#"$"0 $" C/OA*A"DAA*
14 T!!CA$"0
Telecallin? @as made mainl>< for : purposes4The> @ere
• For collection of #e?istration CertiEcate #C%
#e?istration CertiEcate also no@n as O@ner
=oo is an important document for an> 3ehicle
Enance compan>4 The customers are supposed
to su=mit the photocop> of the #e?istration
CertiEcate as it is ept as a =acup or proof and as a traineeM $ called them for su=mittin?
the #CLs photocop> in the oHce4 The
interaction @ith diIerent people @as er>
interestin? as it helped in enhancin? the inter
personal sills4
• For remindin? for $nstallments% Accordin? to
the terms and norms< the customers aresupposed to deposit the installment on the due
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dates of eer> month and $ called the
customers for main? them a@are of the
installment dates4 Durin? the calls< $ receied
fe@ ?ood feed=acs =ecause man> customers
o@ned more than one ehicle< so< remem=erin?
the dates for eer> installment @as confusin?4
• For CustomerLs feed=ac% (no@in? the
CustomerLs feed=ac for the compan> is an
important tas =ecause the customers ma>
hae an endless num=er of complains
re?ardin? the compan>4 But none of the
customers @ere hain? ?rieances and $ @ould
=e happ> to sa> that< our compan> is one of
the =est serice proiders4
74 DA$Y CO!CT$O" #!-O#T DC#
#eferrin? to Cashier Collection< @hen cashiers
calculate their Sales Collection for the da>< this report
proed itself of =ein? er> useful4 The real purpose is
to calculate ho@ much is the net amounts suppose to
remain in the cashierPs dra@er at the end of the da>4
/o@eer< inoices are not included =ecause $noices
does not require immediate pa>ment fromcustomers4 4 /ence< pa>ment has not receied >et and
not sho@n in this report4
$ learnt to Ell the DC# and maintain it in the
#e?ister as @ell as in the !Gcel sheet4
:4 F$"A A--#O3A *!*O FA*61
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Before dispatchin? the Ele of loan to the /ead
OHce< Final Approal is required from the Branch
OHce4 A FA* includes the name< application no4< and
other details of the applicant4 $t also includes the
name of the dealer and the cate?or> in @hich the
ehicle falls4
54 A"AYS$"0 T/! -#OB!*
$t @as a ind of testin? the anal>tical po@er4 $nthis tas< certain pro=lems @ere assi?ned and $ @as
to come out @ith a solution4 $n this< $ too feed=ac
of customers as @ell as the eGecutiesL feed=ac4
Then< $ had to End the deiation =et@een the t@o and
su=mit a report on the same4 This has deEnitel>
increased m> anal>tical po@er4
&4 C$B$
Credit $nformation Bureau $ndia imited is
$ndiaPs Erst credit information =ureau4 $tLs a
repositor> of information< @hich contains the credit
histor> of commercial and consumer =orro@ers4 C$B$
proides this information to its mem=ers in the form
of credit information reports4 C$B$ can help in
catchin? the defaulter easil>4 $n this form< all the
minute detail is =ein? Elled up related to the
applicant4 And the moment it is su=mitted< it can
erif> that the indiidual has taen the loan from an>
other =an or not4
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'4 T!!-/O"$C 3!#$F$CAT$O" #!-O#T
$t is made to chec the authenticit> of the
documents< @hich are attached @ith the application
form4 $n this< @e tal to the =orro@er< co=orro@er<?uarantors and references if an> re?ardin? the
details su=mitted in the form4
+4 /!AT/ C/!C(
The proper checin? of the Ele is termed as
health chec4 Thus each and eer> documents are
required to =e checes in Eles4 The documents
required are as follo@s%
• Application form
• A?reement
• -ost Dated Cheques
• F!F$ form
• TAT Sheet
• TA$C
• #TO Documents
• -AC Form
• Term Cum -a>ment Sheet
• Si?nature 3eriEcation Form
• T3#
• C$B$< etc4
,4 T#AC( #!CO#D$"0
The Trac #ecord of the applicant is used fortracin? his past records that helps in anal>Jin? the
time period and pattern of pa>ment of theinstallments4 Trac recordin? helps in main? the
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decision @hether to ?rant loan to the applicant ornot4
.4 D!A ST#UCTU#!
An A?reement made =et@een the inestorand the compan> deEnin? the ri?hts ando=li?ations of the parties inoled4 The process =>@hich one arries at the Enal term and conditionsof the inestment4
#AT$O"A! OF T/! STUDY
Credit Assessment is the technique @ith the help of
@hich one ealuates an indiidualLs capa=ilit> to pa>
=ac the loan taen a?ainst an asset or propert>4 Theproject undertaen is er> much important and releant
to an> Enancial $nstitution proidin? loan to an>
indiidual< trust or a compan>4 )hen the institution
proides loan to an> part>< it is important to loo for his
credita=ilit>4 The Banin? or the "on Banin? Enancial
$nstitution< @ithout no@in? these thin?s @ould not
proide loan< =ecause< ultimatel> itLs the $nstitution
@hich =ears the ris4
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Bein? in the 3ehicle Finance Department< $
undertoo this topic to no@ the =asic fundamentals
re?ardin? the pros and cons of credit assessment of an
indiidual appl>in? request for a loan @hich helps
determinin? the lielihood of the applicant that he she
@ill lie up to hisher o=li?ations4
OB;!CT$3! OF T/! STUDY
The stud> sho@s the learnin? process that one ?oes
throu?h to ?et a result4 The stud> allo@s for a er>
structured s>stem to or?aniJe @or4 $t allo@s for
sho@in? ho@ small steps lead to the lar?er @hole4 The
stud> also allo@s to see at a ?lance the sta?es of their
@or for selfreection and ealuation4 Allo@in? for selfealuation ?ies the opportunit> to tae full o@nership
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of @or4 Authentic assessment is an important part of
the stud>4 The mana?ement trainees use their creatiit>
to desi?n projects to demonstrate their ?rasp of the
curriculum4
A credit ratin? helps in assessin? the credit4 Credit
#atin? estimates the credit @orthiness of an indiidual<
corporation< or een a countr>4 $t is an ealuation made
=> credit =ureaus of a =orro@erLs oerall credit histor>4
A credit ratin? is also no@n as an ealuation of a
potential =orro@erPs a=ilit> to repa> de=t< prepared => a
credit =ureau at the request of the lender4 Credit ratin?s
are calculated from Enancial histor> and current assetsand lia=ilities4 T>picall>< a credit ratin? tells a lender or
inestor the pro=a=ilit> of the su=ject =ein? a=le to pa>
=ac a loan4 A poor credit ratin? indicates a hi?h ris of
defaultin? on a loan< and thus leads to hi?h interest
rates< or the refusal of a loan => the creditor4
Thus< credit assessmentLs main o=jectie is
ealuatin? or estimatin? the nature< qualit>< or a=ilit> of an indiidual< corporation or trust to o=tain ?oods
=efore pa>ment< =ased on the trust that pa>ment @ill =e
made in the future4
CO"T#$BUT$O" A"D FUTU#! SCO-!
$n the past decade< re?ulators hae =een ?ainin?
familiarit> and eGperiences in the monitorin? of =ansand other Enancial institution in terms of issuance of
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credit on arious =ases4 Durin? 7221 and 7227< there
hae =een er> hi?h proEle cases of default< @ith er>
lar?e amount of outstandin? de=t4 Some Enancial
institutions hae =een cau?ht un?uarded @ith lar?e
amount of eGposure4 The correct credit assessment and
anal>sis and accurate measurement of the amount of
credit ris inoled is er> important in determinin?
@hether the eGtra =eneEt from other =usiness can
compensate4 The ris Enall> has to =e =orne => the
Compan> so it is er> important to loo after eer>
aspect of credit4
$t is important for Enancial institutions to deelop
internal models to demonstrate the capa=ilit> of ris
mana?ement< includin? demonstratin? the eIectieness
of hed?in? @hich can result in freein? up of re?ulator>
capital4 0ien the improement in the re?ulator>
re?ime< sound credit assessment and anal>sis< are more
releant for the future4
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T/A"( YOU