final project report of sip(2003)

8/18/2019 Final Project Report of Sip(2003)

1/68

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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2/68

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


3/68

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

3


4/68

-#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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5/68

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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6/68

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

6


7/68

*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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8/68

?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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9/68

$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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10/68

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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11/68

@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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12/68

-roducts Oerie@

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13/68

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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14/68

$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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15/68

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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16/68

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


17/68

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 &


18/68

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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19/68

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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20/68

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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21/68

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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22/68

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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23/68

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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24/68

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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25/68

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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26/68

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

26


27/68

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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28/68

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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29/68

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

29


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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

30


31/68

• 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

31


32/68

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

32


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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

33


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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


35/68

/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

35


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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

36


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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


39/68

=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


40/68

• *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

40


41/68

CUSTO*!# DU! D$$0!"C! CDD A"DC#!D$T

41


42/68

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

42


43/68

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


44/68

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%

44


45/68

• $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


46/68

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


47/68

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


48/68

• 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


49/68

$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#"

49

http://www.thinkplaninvest.com/2009/04/what-is-tds-and-tan/http://www.thinkplaninvest.com/2009/04/what-is-tds-and-tan/http://www.thinkplaninvest.com/2009/04/what-is-tds-and-tan/http://www.thinkplaninvest.com/2009/04/what-is-tds-and-tan/


50/68

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

50


51/68

$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%

51


52/68

• 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