13th 01A-1 Minutes of the Board Meeting of CSB Bank Limited held on Tuesday January 19 2021 at 8 30 a m at Bank s Head Office Thrissur -680020

Overview

This document comprises detailed minutes from a series of committee meetings held by CSB Bank Limited during January and February 2021, covering nomination and remuneration matters, non-performing asset (NPA) settlements, and management as well as credit sanction proposals. The minutes capture discussions on executive remuneration, staff restructuring, NPA settlements, and a range of credit proposals with associated deviations from standard banking policies.

Nomination & Remuneration Committee Meeting (January 18, 2021)

Date & Venue: Monday, January 18, 2021 at Bank’s Head Office, Thrissur (3:00 – 3:45 p.m.)

Participants:

• Smt. Bhama Krishnamurthy (Independent Director & Chairperson, joining from Bengaluru)

• Shri. Madhavan Aravamuthan (Part-time Chairman, joining from Chennai)

• Shri. Madhavan Menon (Non-Executive Director, joining from Mumbai)

• Shri. Sumit Maheshwari (Non-Executive Director, joining from Mumbai)

• Smt. Sharmila Abhay Karve (Additional Director, joining from Pune)

• Company Secretary Shri. Sijo Varghese and invitees including Pralay Mondal (President – Retail, SME, Operations & IT), Harsh Kumar (CHRO), and Jayashankar T (Head – HR).

Key Agenda Items & Resolutions:

1. CTO Appointment Resolution:

   • Approval to recommend Mr. Biswabrata Chakravorty for appointment as Chief Technology Officer.

   • Terms include a fixed emolument of Rs. 1,35,00,000 per annum, a confirmation bonus of Rs. 16,00,000 after six months (performance-linked), and 40,000 performance-linked stock options under the CSB Employees Stock Options scheme 2019.

   • Location of appointment: Mumbai; Reporting to the President (Retail, SME, Operations & IT); and subject to periodic performance appraisal.

2. Board Evaluation Policy Review:

   • Discussion on modifications to the policy, including incorporating media interaction as a parameter in the evaluation of the MD & CEO.

   • Recommendation was made to ensure that feedback and director ratings are communicated to each director.

3. Stock Options Exercise Request (Mr. Sekhar Rao):

   • Discussion on the request for extending the time period for exercising 115,000 stock options under the CSB ESOP Scheme 2013.

   • The committee clarified that extensions are not permissible under the scheme’s provisions and hence the request was declined.

4. Voluntary Retirement Scheme (VRS) for Award Staff – 2021:

   • A proposal to introduce a VRS for award staff was discussed, highlighting the need due to technological adaptation requirements and cost/productivity benefits.

   • Eligibility criteria: Award staff aged 50+ with at least 10 years of service.

   • Financial implications include an expected liability of approximately Rs. 155.49 crore (with an incremental liability of Rs. 83.79 crore) and a maximum permitted expenditure of Rs. 12.07 crore as ex-gratia, subject to proportionate adjustment depending on the number of opt-ins.

5. Grant of Stock Options to MD & CEO (Mr. C.VR. Rajendran):

   • Detailed discussion on historical remuneration data and comparisons of total remuneration benchmarks of CEOs from other banks.

   • Resolution for granting 17,86,400 stock options at an exercise price of Rs. 75 per share, subject to a vesting schedule over three years (33.33% payout on the 1st and 2nd anniversaries and 33.34% on the 3rd).

   • The option cost is computed using the Black-Scholes model with a total estimated value of Rs. 750 lakhs.

   • The resolution was passed in principle, subject to obtaining regulatory approvals (under Section 35B of the Banking Regulation Act, 1949).

Meeting Closure:

• The meeting concluded with a vote of thanks by the Chairperson after confirming quorum and full participation through video conferencing.

NPA Management Committee Meeting (January 18, 2021)

Date & Venue: Monday, January 18, 2021 at Bank’s Head Office, Thrissur (3:45 – 4:10 p.m.)

Participants:

• Shri. Madhavan Aravamuthan (Part-time Chairman, from Chennai)

• Shri. Madhavan Menon (Non-Executive Director, from Mumbai)

• Smt. Sharmila Abhay Karve (Additional Director, from Pune)

• In person invitee: Shri. C.VR. Rajendran (MD & CEO)

• Others included Company Secretary Shri. Sijo Varghese and additional invitees such as Pralay Mondal and Shri. V. Ganesan (Head, Recovery & Credit Monitoring).

Key Agenda Items & Resolutions:

1. Review of Minutes:

   • Previous meeting minutes (December 15, 2020) were reviewed and noted.

2. Settlement Resolutions for NPAs:

   • A/C.M/S. Arjun Associates: One-time settlement approved at Rs. 400 lakh (with phased payments: Rs. 225 lakh by 31st December 2020 and Rs. 175 lakh by 31st January 2021) along with the release of specified land properties.

   • Branch ARB Coimbatore & Other Borrowers: Discussions led to acceptance of a settlement proposal of Rs. 355 lakh from combinations of entities (including M/s Sri Palanimurugan Traders, M/s Sri Saibaba Traders, and M/s Ramana Cotton Company), with key financial figures and impacts noted.

   • Branch Vaniyambadi (M/s Satish Paper Mills): Given the longstanding nature of the account (outstanding since 1997) and poor recoverability prospects, a one-time settlement for Rs. 20 lakh was approved.

   • Additional proposals involving write-offs and close follow-up on technically written-off accounts were also noted.

Meeting Closure:

• The resolutions were approved by the required majority and the meeting concluded with a vote of thanks.

Management Committee Meeting (February 10, 2021)

Date & Venue: Wednesday, February 10, 2021 at Bank’s Head Office, Thrissur (1:30 – 3:00 p.m.)

Participants:

• Smt. Bhama Krishnamurthy (Independent Director & Chairperson, from Bengaluru)

• Shri. C.VR. Rajendran (MD & CEO, from Mumbai)

• Shri. Sumit Maheshwari (Non-Executive Director, from Mumbai)

• Invitees included Shri. Pralay Mondal (President, Retail/SME/Operations & IT), Shri. B.K. Divakara (CFO), and Shri. Arvind K Sharma (Chief Risk Officer), along with Company Secretary Shri. Sijo Varghese.

Discussion & Key Points:

• Review of Minutes: The minutes from the January 8, 2021 meeting were noted.

• Compliance and Observations: Detailed discussion on compliance of management committee directives including credit sanction follow-up. Specific responses concerning pending compliance for various borrower accounts (e.g., M/s. Badve Engineering Limited, M/s. Prashanthi Balamandira Trust, etc.) were reviewed, with some items closed while others were marked for further monitoring.

• Credit (Sanction) Proposals: The meeting covered a comprehensive review of several credit proposals with significant details:

  • Item CA-1: Proposal for a fresh term loan of Rs. 25 crore to India Shelter Finance Corporation Limited for onward lending to its Loan Against Property (LAP) portfolio. The proposal includes concessional interest, revised processing fee, asset coverage parameters and deviations from the standard loan policy norms.

  • Item CA-2: A fresh Working Capital Term Loan of Rs. 4.94 crore under the Guaranteed Emergency Credit Line Scheme (GECL) for Sulochana Cotton Spinning Mills was discussed, addressing operational liabilities arising from the COVID-19 pandemic.

  • Item CA-3: Proposal for Manappuram Home Finance Limited which includes a fresh term loan of Rs. 25 crore for onward lending and the review/continuance of an existing term loan (with current outstanding of Rs. 9.75 crore) with concessional interest rates and revised fee structures.

  • Item CA-4: For Nayara Energy Limited (formerly Essar Oil Limited), the proposal detailed participation in a down-selling of a larger term loan. Key terms involve a fresh term loan of Rs. 150 crore, concessions on interest (linked to one-year MCLR), processing fee concessions, and various regulatory deviations. Background information on the borrower’s turnaround was also discussed.

  • Enhancement Proposals (Items CB-1 and CB-2): These items involve takeover and enhancement of existing credit facilities for Insight Media City (India) Private Limited and proposals related to M/s. Alphonsa Cashew Industries. Discussions covered takeover of credit limits from Punjab National Bank, revised margins, extended security perfection periods, and waivers on certain requirements.

Meeting Closure:

• The committee reviewed responses on various credit proposals, approved several resolutions with specific directions to negotiate better terms on interest and processing fees where applicable, and concluded the meeting with a vote of thanks.

Conclusion

Across these meetings, CSB Bank’s committees addressed a wide range of issues including executive appointments, compensation structuring (especially the ESOPs for the MD & CEO), staff rationalisation through a VRS scheme, resolution of NPAs via one-time settlements, and multiple credit proposals involving fresh term loans and working capital facilities. Detailed discussions on financial metrics, risk ratings, and deviations from standard policies were integral to these sessions, reflecting the bank’s strategic approach in balancing cost-cutting, operational efficiency, and regulatory compliance during challenging economic circumstances.

13th 02A-2 Minutes of the Meeting of Nomination Remuneration Committee held on January 18 2021

Summary of the Meeting Minutes

This document provides a detailed account of the decisions, modifications, and enhancements approved by the committee during the meeting held on January 18, 2021. The meeting covered multiple credit facilities, changes to existing arrangements, and modifications to sanction terms across several borrowers and business correspondent (BC) tie-ups. The summary below is organized by the key agenda items discussed.

1. Export Credit Facility Enhancement for Alphonsa Cashew Industries

Exposure and Proposed Enhancements

• Existing Exposure:

  • Single: Rs 34 crore; Group: Rs 49.20 crore

• Proposed Exposure:

  • Single: Rs 54 crore; Group: Rs 69.20 crore

• Key Proposals:

  • Enhancement of the export credit limit from Rs 30 crore to Rs 50 crore by assuming South Indian Bank’s (SIB) consortium share of Rs 20 crore.

  • Dismantling of the existing consortium arrangement to have the Bank as the sole financier.

  • Renewal of the Merchant Forward Contract credit limit of Rs 4 crore.

  • Concessions retained including:

    • Uniform concessional import/export bill commission of Rs 1000 per bill.

    • 50% concession in premium on ECIB (WT-PC) cover of ECGC (with Bank bearing 50% of the premium).

    • A 15% margin on paid stock and import advance for arriving drawing power.

    • Concessional DD/PO/OBC Commission at Rs 100 per transaction.

    • A consolidated concessional processing fee of Rs 7.50 lakh (absolute sacrifice of Rs 28.50 lakh).

Ownership and Security Changes

• Change in Proprietorship:

  • Approval for transfer of ownership from Mr. Babu Oommen to his son, Mr. Ebin Babu Oommen, ensuring continuity of the concern.

• Collateral and NOC:

  • Issuance of a No Objection Certificate (NOC) for the transfer of title deeds of 16 collateral property parcels currently in the names of Mr. Babu Oommen and Mrs. Omana Babu Oommen. The revised structure will have these properties remortgaged with the Bank as security for credit facilities in the name of Alphonsa Cashew Industries.

Financial and Security Overview

• Borrower Background:

  • Alphonsa Cashew Industries, established in 1986, is an ISO 9001 certified exporter enjoying Gold Card Export status and DGFT Export Trading House status.

• Existing Arrangement:

  • The current export credit of Rs 50 crore is shared on a 60:40 basis (CSB: SIB) in addition to a seasonal Rs 10 crore PCL which was cancelled upon collateral release.

• Financial Performance:

  • Tangible Net Worth (TNW) increased from Rs 26.37 crore (31.03.2019) to Rs 32.15 crore (31.03.2020).

  • FY 2019-20 export sales contributed 45.46% on total sales of Rs 189.91 crore and PAT improved to Rs 6.50 crore from Rs 3.89 crore in the prior year.

• Security Details:

  • The exposure is secured by pari passu first charges on 18 parcels (aggregate value Rs 74.72 crore, 138% security coverage). Post-consortium dismantling, the Bank will have exclusive charges while personal guarantees from Mr. Ebin Babu Oommen, Mrs. Omana Babu Oommen (and extensions from Mr. Babu Oommen) continue to be valid.

• Deviations:

  • Some deviations from the Bank’s loan policy norms (e.g., minimum margin on paid stock and import advance, exposure ceiling, and entry-level external rating) were also approved.

2. Business Correspondent (BC) Exposure Enhancements

Unimoni Financial Services Limited for Gold Loans

• Current Arrangement:

  • Initially sanctioned exposure of Rs 25 crore with disbursements starting in September 2020. As of December 31, 2020, Rs 38 crore disbursed with an outstanding balance of Rs 33 crore.

• Proposed Enhancement:

  • The limit is enhanced from Rs 25 crore to Rs 50 crore (initially proposed Rs 200 crore was re-assessed on a cautious approach).

• Parameter Details:

  • Interest rates vary between bullet payments (21% p.a.) and monthly interest servicing at 19% p.a., split between CSB and Unimoni (e.g. CSB retaining 12.99%).

  • Other charges include processing fees based on the loan amount slabs, with designated stationary charges and fee-sharing details.

  • Monthly payout stipulated as per the agenda note.

BC Tie-Up Exposure for Saggraha Management Services Pvt Ltd and Vector Finance Private Ltd

• Saggraha Management Services Pvt Ltd:

  • Initially appointed with an exposure cap of Rs 5 crore; increased later to Rs 15 crore and then Rs 25 crore.

  • The Committee resolved to enhance the exposure cap from Rs 25 crore to Rs 50 crore.

  • Financial Terms:

    • Interest rate at 25% p.a. with a 60:40 split between CSB and the BC entity (excluding GST), and a processing fee of 1% of the loan amount shared equally.

• Vector Finance Private Ltd:

  • Currently engaged on a similar BC model; initial cap increased from Rs 10 crore to Rs 25 crore.

  • The decision was taken to enhance the exposure cap to Rs 50 crore.

  • Financial Terms:

    • Same interest and fee structure as above, with a monthly payout as per the established terms.

3. Renewal and Modification of Working Capital Facilities for Kosamattam Finance Ltd (KFL)

Facility Details

• Credit Limits:

  • Current single exposure is Rs 50 crore and group exposure is Rs 56.49 crore.

• Proposals:

  • Renewal of the existing Working Capital Demand Loan (WCDL) of Rs 30 crore for one more year on existing terms.

  • Conversion of the existing Overdraft (ODBD) limit of Rs 20 crore to a WCDL in compliance with RBI directives.

• Interest Concessions:

  • Operating at a concessional rate based on three months MCLR of 8.10% p.a. plus 200 bps and 10.10% p.a. for new limits.

Borrower Financial Overview

• Performance Metrics:

  • Tangible Net Worth increased from Rs 362.56 crore to Rs 406.88 crore.

  • Revenue grew from Rs 475.29 crore to Rs 499.24 crore with PAT rising from Rs 43.15 crore to Rs 47.63 crore.

  • NPA ratios and Capital Adequacy Ratio (CAR) of 17.87% were within acceptable limits; borrower rated as OR-3 internally with external rating of IND BBB/Stable.

Directives

• The Committee directed that pre-payment of the WCDL is restricted and any early repayment would attract an additional interest charge of 2% p.a. for the remaining tenor.

4. Modifications in Sanction Terms for Other Borrowers

M/s Prayog Projects (Partnership)

• Proposed Modifications:

  • Extension of the Performance Bank Guarantee (BG) validity from 36 to 48 months for Rs 2.64 crore.

  • Cancellation of one of the proposed projects (Rehabilitation of Mettur West Bank Canal with a PAC of Rs 33.35 crore) on economic grounds.

  • Conversion of the existing Mobilisation BG of Rs 12.12 crore to a one-time BG for procurement for Booster Stations project (revised PAC increased to Rs 132.20 crore).

  • Permission to utilize the existing ODM limit of Rs 13.71 crore for the remaining two projects based on revised cash flows.

• Processing Fee:

  • A fee of 0.25% of the loan amount is to be collected for these substantive modifications.

Jijau Constructions Road Builders Private Limited (JCRBPL)

• Changes in Security and Guarantee Structure:

  • Modification of the fresh Bank Guarantee limit of Rs 25 crore (with a sub-limit of Rs 0.50 crore for Cash Credit) sanctioned earlier.

  • Security substitution from a single non-agricultural (NA) plot to a mix of three NA properties (increasing the security coverage from 75.84% to 81.16%).

  • Additional guarantees from property owners are now provided, including both promoter directors/shareholders and third-party collaterals.

  • Permission to execute a registered mortgage instead of an equitable mortgage with a timeline of 30 days for one property.

  • The action by the MD & CEO to release part of the BG up to Rs 10 crore on 02.02.2021 was ratified by the Committee.

  • A processing fee of 0.25% of the loan amount is also directed for these modifications.

5. Other Credit Matters

Merger of Madura Micro Finance Ltd (MMFL) into CreditAccess Grameen Ltd (CAGL)

• The Committee approved the issuance of an NOC (in the form of a stamped affidavit) to dispense with the creditors meeting as a part of the proposed amalgamation in order to expedite the merger process. It was noted that post-merger, if the exposure exceeds the internal cap of Rs 75 crore for NBFC-MFIs, further Board approval will be necessary.

Mirai Apparrels Private Limited

• Exposure Details:

  • Present exposure is Rs 2.63 crore, proposing an increase to Rs 3.03 crore.

• Margin Modification Request:

  • Approval for a lower margin on the underlying term deposits securing the ODFD limit—from the applicable 10% to 5%—due to lost documentation (an export bill document lost in transit resulting in overdue crystallization). The change is to facilitate the release of goods for an overseas buyer by sanctioning a Bank Guarantee of Rs 0.40 crore.

• The modification, already approved by the Head Office Credit Committee (HOCC) on January 27, 2021, was ratified in this meeting.

6. Business Correspondent (BC) – Other Enhancements

Saggraha Management Services Pvt Ltd and Vector Finance Private Ltd

• Saggraha Management Services Pvt Ltd:

  • Exposure cap enhanced from Rs 25 crore to Rs 50 crore.

  • Financial terms: 25% p.a. interest (60% of interest retained by CSB and 40% as commission), processing fee at 1% of the loan amount (equally shared), and monthly payout as per agenda.

• Vector Finance Private Ltd:

  • Similarly, the exposure cap is enhanced from Rs 25 crore to Rs 50 crore with similar interest and fee arrangements as above.

7. Calendar of Items and Administrative Reports

• Detailed reports were reviewed on:

  • Claims against the Bank not acknowledged as debts.

  • Cases where Board Members/Executives are involved as counter parties.

  • Zone-wise details of slippages during December 2020.

  • Advance reviews, pending renewals, and SMA categorization for advances of Rs 5 crore and above as on December 31, 2020.

  • Temporary/Adhoc sanctions issued by the MD & CEO/HOCC during January 2021 (none recorded in this period).

  • Modifications sanctioned by MD & CEO/HOCC with respect to previously approved credit facilities.

  • Reports on advances (both HOCC and MD & CEO sanctions) as well as submissions of pending returns and statements.

  • A specific report reviewed advances to Scheduled Caste/Scheduled Tribe borrowers.

8. Concluding Remarks

• In closing, after thorough deliberations and review of all proposals and reports, the meeting ended at 3:00 p.m. with a vote of thanks to the Chair.

This summary captures the extensive range of credit-related issues addressed in the meeting, highlighting both the financial metrics and the modified terms across varying exposures and borrower arrangements.

13th 03A-3 Minutes of the Meeting of the NPA Management Committee held on Monday January 18 2021

Meeting Overview

Subject: Minutes of the IT Strategy Committee Meeting of the Board of CSB Bank Limited

Date & Time: Wednesday, February 10, 2021, from 3:00 p.m. to 4:30 p.m.

Venue: Bank’s Head Office, Thrissur

Meeting Type: Committee Meeting (via video conferencing as per MCA Circulars during COVID-19)

Attendance & Virtual Participation

• Members Participating via Video Conferencing:

  • Shri. Madhavan Aravamuthan (Part-time Chairman, Independent) – Participated from his residence in Chennai

  • Shri. C.VR. Rajendran (Managing Director & CEO) – Participated from the Zonal Office, Mumbai

  • Shri. Madhavan Menon (Non Executive Director) – Participated from Mumbai

  • Shri. Sumit Maheshwari (Non Executive Director) – Participated from Mumbai

• Other Attendees:

  • Shri. Sijo Varghese, Company Secretary

• Invitees (via video conference with Chairman’s permission):

  • Shri. Pralay Mondal, President – Retail & SME (Business & Credit Risk), Operation and IT

  • Shri. V Srinivasa Rao, Chief Technology Officer (CTO)

• Key Notes on Participation:

  • Details of connection security, audibility, clarity of the video conferencing mechanism and confirmation of receipt of agenda and documents were duly noted.

  • The roll call confirmed attendance of all members with confirmed locations from where they participated.

  • The requisite quorum, as per the Articles of Association and the Companies Act, 2013, was achieved.

Agenda Items & Detailed Discussions

1. Previous Meeting Minutes Approval (November 30, 2020 Meeting)

• The minutes of the November 30, 2020 meeting held at the Bank’s Head Office were reviewed and noted.

  • Vendor Tie-up Discussion:

    • The proposal to tie up with i-exceed Technology Solutions for the Account Opening Platform was discussed. The CTO confirmed its advanced stage of testing with a planned go live by the end of February, which was noted with satisfaction.

2. Action Taken Reports & IT Initiatives

• Status Report on IT Initiatives:

  • Follow-up with M/s Patterns SDI P Ltd for the implementation of a change in the account number in CBS (New to Old methodology) by March 31, 2021.

  • Implementation of CRM and MIS solutions was emphasized, recommending even a slightly higher cost if the benefits are significant. The suggestion included integrating a Data Warehouse project using open source models.

  • Post account number change, the modernization of the CBS system (CBS Frontend and tech stack upgrade) was prioritized.

  • Performance testing of CBS (to measure Transactions Per Second and concurrent users) was advised, with support from Patterns SDI P Ltd.

  • The initiation of an IT Asset Management/IT Service Management solution for automating outsourcing and change management processes to meet ITGC requirements as per KPMG was recommended.

  • Engagement of Prof. Sivakumar from IITB as a Technology Adviser prior to drafting a medium-term IT strategy plan was advised.

3. Review of Projects Implemented After November 30, 2020

• Completed Projects:

  • Enhancements to the HRMS platform were outlined. Additions include:

    • Payment of compensation for disability in the workplace

    • Recording negative feedback and recording disciplinary proceedings

  • Completion of biometric authentication for the Maarvel CBS in remaining branches (targeted by month-end).

  • Launch of the Decimal Self-service App before month-end.

• Projects Under Implementation:

  • The implementation of Video KYC was stressed as a priority due to delayed progress despite procurement five months earlier. The MD committed to convening a meeting of senior officials to address this issue.

  • Zimbra email revamp was discussed, particularly concerning issues like non-receipt of emails from directors.

  • RTGS 24X7 usage was confirmed by the CTO with specific reference to transactions during off-peak hours (250 outward and 465 inward transactions recorded in January 2021).

  • A Disaster Recovery (DR) drill using the IBM DR drill automation tool was recommended to be completed by March 31, 2021.

4. RAR Action Points - 2019 Progress Report

• The Committee applauded the IT team for successfully closing all RAR and RNC 2019 action points.

5. Compliance with VAPT Audit Comments (Q4 of FY 2019-20)

• The review noted the successful closure of all VA (Vulnerability Assessment) points and advised the IT team to expedite the resolution of the remaining four pending PT (Penetration Testing) points.

6. IT Strategy Plan for the Next 3 Years

• The Committee reviewed the re-drafted IT Strategy Plan which aligned with business department requirements.

• Suggestions included:

  • Inclusion of a clear justification for any change in the Core Banking Platform (CBS), including parameters and benchmarks for such a change.

  • A comprehensive MIS solution through the implementation of a Data Warehouse to cover all MIS reporting needs rather than relying on ad hoc reports.

  • Ensuring that the IT Strategy Plan syncs with the overall business strategy to enhance business target achievement.

  • Inclusion of security enhancements to combat rising cyber threats in the upcoming 6 to 8 quarters.

  • The Committee recommended consultation with Mr. Sivakumar for his inputs before finalization.

7. Migration Audit Report: ATM Switch (Conducted by EY)

• The Audit Report was reviewed in detail, and the IT department was advised to comply promptly with the remaining five pending audit points.

8. Approval for Purchase of 215 Desktop PCs

• Specification & Cost Details:

  • Approval was granted for procuring 215 units of HP 280 Pro G5 Mini Tower PCs from M/s Vertex Techno Solutions (B) Pvt Ltd at a negotiated price of Rs.38,300 per unit (plus applicable taxes), totaling Rs.82,34,500 plus applicable taxes.

• Additional Suggestion:

  • The Committee proposed the use of Linux OS in place of Windows wherever possible to save on operating system costs and reduce the frequency of upgrades.

9. Managed Services for DC-DR-NDR and Branch Network

• The Committee approved the evaluation of proposed managed service models from vendors including IBM, NTT, and Wipro, along with other mid-sized companies.

• Contractual Decisions:

  • Authorization to the Purchase Committee to negotiate a five-year contract.

  • The President – Retail & SME (Business & Credit Risk), Operation, and IT was authorized to finalize the contract based on Purchase Committee recommendations.

• Mobile Banking Outage Discussion:

  • The outage of Mobile Banking on August 13, 2019 (lasting 15.45 hours) was reviewed. According to the penalty clauses in the service contract with M/s Wipro Ltd, since the downtime did not meet the threshold for penalty, no penalty till date could be levied. The Committee also queried the absence of automated maintenance scripts to prevent such incidents.

10. Source Code Audit of Internally Developed Software

• The Committee reviewed the audit findings and suggested mitigating the vulnerabilities identified, particularly those discovered during a compliance audit by M/s TAC Infosec P Ltd.

• An update on vulnerability mitigation as well as the compliance audit status for six applications is to be provided at the next meeting.

11. Approval of Standard Operating Procedure (SOP) Documents

• The redrafted SOPs for Data Backup and Recovery were reviewed and approved.

12. Migration of ATM Operating Systems from Windows 7 to Windows 10

• Approval & Financials:

  • Sanction was given for upgrading the operating systems of NCR and Diebold ATMs to Windows 10 with a total cost not exceeding Rs.3,91,75,200 plus applicable taxes.

  • The Purchase Committee is authorized to negotiate with vendors, and the President – Operations & IT is authorized to approve the negotiated price.

• Additional Recommendations:

  • The Committee advised comparing this cost with what other banks are paying for similar migrations.

  • Additionally, the possibility of switching to a Linux-based environment for ATMs should also be explored.

Closing

• The meeting concluded with a vote of thanks from Shri. Sumit Maheshwari, summarizing key points and setting the stage for follow-up actions on various IT initiatives and projects.

13th 04A-4 Minutes of the Meeting of the Management Committee held on Wednesday February 10 2021

Overview

This document summarizes the series of board committee meetings held predominantly on Wednesday, February 10, 2021, at the CSB Bank Limited Head Office in Thrissur (680020), along with a subsequent Audit Committee meeting held on January 18, 2021. The meetings were conducted through video/audio conferencing in line with MCA Circulars (dated December 30, 2020) to facilitate remote participation during the COVID-19 pandemic. Each meeting had its own agenda, participating members, and invitees. Detailed minutes were recorded for the various committee meetings covering fraud monitoring, customer service, corporate social responsibility (CSR), stakeholder relationships, and audit functions.

Sub-Committee: Monitoring Large Value Frauds (CMF)

Meeting Date & Time: Wednesday, February 10, 2021, from 4.30 p.m. to 5.15 p.m. Venue: Head Office, Thrissur

Participants

• Members participated via video conferencing from various locations (e.g., Tiruchirappalli, Mumbai, Pune).

• Notable members included Independent Director Shri. S. Nagoor Ali Jinnah (Chairman) and Non-Executive Directors Shri. Madhavan Menon and Shri. Sumit Maheshwari.

• Invitees such as Shri. Pralay Mondal (President – Retail, SME, Operations and IT) and others attended.

Key Agenda Items & Discussions

1. Review of Past Meeting Minutes:

   • The minutes from the November 30, 2020 meeting were noted.

2. Action Taken Report (ATR) on CMF Directions (dated November 30, 2020):

   • Progress on developing Standard Operating Procedures (SOPs) for 13 departments, with the Institute of Learning Department (ILD) having completed 15 draft SOPs for the Credit Department.

   • Emphasis on having a well-documented Operations Manual and engaging experts if ILD lacks expertise.

   • Updates on reimbursements for cyber frauds – Branch Service Department is aligning with RBI-timelines. No RBI penal action has been taken to date.

   • Discussion on a gold takeover fraud at the Devanahalli branch highlighting internal control deficiencies and the absence of statutory auditor comments.

   • Recommendations to enforce disciplinary action on staff involved in breaches of internal controls and suggestion to write off old fraud balances where recovery is remote.

   • Status update on pending staff accountability cases related to fraudulent accounts; a concern was voiced over delays (31 pending cases, including two over two years and 16 over one year).

3. Fraud Reports:

   • Large Value Frauds (≥ Rs.100 Lakh): None reported during the quarter ending December 31, 2020.

   • Cyber Frauds: Five instances (unauthorized ATM cash withdrawals) totaling Rs.1.14 lakhs. Mechanisms such as shadow crediting were noted, with reimbursements partly executed by the acquirer bank in cases involving non-EMV enabled ATMs. Recommendation was made for the Branch Service Department to claim insurance where available.

   • Quarterly Fraud Outstanding Report (FMR-II):

     • Fourteen fraud instances reported totalling Rs.40.84 lakhs; Rs.17.99 lakhs recovered during the quarter.

     • Eight cases in the gold loan portfolio (involving spurious, theft-related, or weight discrepancies) and five cases of unauthorized ATM withdrawals plus one fund transfer fraud via phone call.

     • Ongoing concerns were noted in specific branch fraud cases (e.g., Akola branch with phone-based transfers and Avanashi branch with unidentified staff involvement). The Committee advised further police investigation and stringent action against involved staff.

4. Staff Accountability Exercises:

   • Completion in one incident, with 31 pending cases overall. Explicit concern over delays exceeding one year in many instances was expressed, and HR was directed to expedite the process with a time-bound action plan.

5. Conclusion:

   • The meeting concluded with a vote of thanks at 5.15 p.m.

Customer Service Committee Meeting

Meeting Date & Time: Wednesday, February 10, 2021, from 5.15 p.m. to 5.45 p.m. Venue: Head Office, Thrissur

Participants

• Members included Additional Director Smt. Sharmila Abhay Karve (Chairperson), Managing Director Shri. C. VR. Rajendran, Non-Executive Directors Shri. Madhavan Menon and Shri. Sumit Maheshwari.

• Invitees included Shri. Pralay Mondal and Shri. Laxminarayana Rao (Internal Ombudsman).

Key Agenda Items & Discussions

1. Review of Past Minutes:

   • Minutes from the November 30, 2020 meeting were noted.

2. Action Taken Report on Customer Service Issues:

   • Analysis of ATM complaints: 75% of complaints involved customers not receiving cash when using CSB Debit Cards, with 58% attributable to acquirer bank issues/OEM faults. The Bank’s CBS platform maintained 99.95% uptime with minimal transaction declines.

   • The Committee stressed the necessity of analyzing the remaining 42% of complaints and ensuring time-bound resolution to mitigate recurrence.

3. Banking Ombudsman and Customer Protection:

   • No awards by the Banking Ombudsman during the quarter were reported.

   • The Committee advised improved retention (e.g., CCTV footage) for substantiating claims in disputed cases.

   • A report outlined five instances of unauthorized ATM fraud resulting in a total loss of Rs.1,13,000, with follow-up actions including insurance claims and reimbursements, and 38 overall insurance claims raised totalling Rs.6,20,269.

4. Grievance Redressal & Fair Practice Code Review:

   • Eleven complaints were received (with one case leading to account closure) and resolved by sensitizing branch staff; the policy on lender’s liability was recommended for amendment in line with the latest RBI circular.

5. Internal Ombudsman’s Report:

   • Noted a high pendency of complaints (99 total, with 11 pending over 30 days) and a 21% increase in complaints over the previous quarter. The Committee urged stricter adherence to the 30-day resolution guideline and recommended refining the complaint redressal mechanism per RBI guidelines.

6. Additional Topics:

   • Review of RBI’s instructions regarding the scheme for exchange facilities and coin issuance.

7. Conclusion:

   • The meeting concluded with a vote of thanks at 5.45 p.m.

Corporate Social Responsibility (CSR) Committee Meeting

Meeting Date & Time: Wednesday, February 10, 2021, from 5.45 p.m. to 6.15 p.m. Venue: Head Office, Thrissur

Participants

• Members included Independent Directors such as Shri. S. Nagoor Ali Jinnah, MD Shri. C. VR. Rajendran, and Non-Executive Directors Shri. Madhavan Menon and Shri. Sumit Maheshwari.

• Invitee: Shri. Pralay Mondal participated with the Chair’s permission.

Key Agenda Items & Discussions

1. Review of Past Minutes:

   • The minutes of the CSR Committee meeting held on March 02, 2020 were noted.

2. CSR Financial Assistance Requests:

   • Proposal from Malabar Awareness and Rescue Centre for Rs.50,000 was discussed and recommended for Board ratification as a CSR gesture, given the Bank’s recent negative averages in net profit.

   • A request from Santhwanam (Social Apostolate Centre, Trichur Archdiocese) for Rs.10,00,000 to set up homes for disadvantaged groups was discussed. The Committee noted that, while not mandatory due to negative profitability, such contributions are part of maintaining cordial relationships and goodwill.

3. CSR Expenditure & Policy Review:

   • The CSR spending report for FY 2019-20 was reviewed.

   • The Committee discussed revising and recommending the CSR Policy to the Board for further enhancement.

   • A status update on the sponsorship for the education of children of CRPF martyr Shri (Late) Vasanthakumar was noted.

4. Conclusion:

   • The CSR meeting ended with a vote of thanks at 6.15 p.m.

Stakeholders Relationship Committee Meeting

Meeting Date & Time: Wednesday, February 10, 2021, from 6.15 p.m. to 6.45 p.m. Venue: Head Office, Thrissur

Participants

• Members included Independent Director Shri. S. Nagoor Ali Jinnah (Chairman), MD Shri. C. VR. Rajendran, Non-Executive Director Shri. Madhavan Menon, and Independent Director Smt. Bhama Krishnamurthy.

• Invitee: Shri. Pralay Mondal attended with the Chair’s permission.

Key Agenda Items & Discussions

1. Review of Past Minutes:

   • Minutes from the December 15, 2020 Stakeholders Relationship Committee Meeting were noted.

2. Equity Shareholding & Market Activity:

   • A report noted that SBI Mutual Funds’ holding dropped to 4.925%, falling below the 5% threshold.

   • Weekly share price movements, trading volumes, bulk and block deals were reviewed.

3. Shareholding & Demat Details:

   • The shareholding pattern as on December 31, 2020 was discussed along with the status of demat/physical share holdings, issuance of duplicate/new share certificates, and the balances of unpaid/unclaimed dividend accounts.

   • The status and movement of shares in the IEPF Authority Account as well as claims from shareholders for unclaimed dividends were also reviewed.

4. SEBI Compliance & Disclosures:

   • Reports on compliance with SEBI Circulars, audit observations (including risk categorization by Haribhakti & Co. LLP), recent amendments, investor complaints (Regulation 13(3)), and transfer statements were discussed.

5. Conclusion:

   • The meeting concluded with a vote of thanks at 6.45 p.m.

Audit Committee Meeting

Meeting Date & Time: Monday, January 18, 2021, from 4.15 p.m. to 6.45 p.m. Venue: Head Office, Thrissur

Participants

• The Audit Committee comprised Independent Directors (including Chairperson Smt. Sharmila Abhay Karve and Shri. S. Nagoor Ali Jinnah), Non-Executive Directors (e.g., Shri. Madhavan Menon), and the Chairman of the Board, Shri. Madhavan Aravamuthan.

• Invitees included key executives such as Shri. Pralay Mondal (President – Retail, SME, Operations and IT), CFO, Head – Audit, Chief Risk Officer, and others from Recovery, Compliance, Technology, and Operations.

Key Agenda Items & Discussions

1. Review of Previous Minutes:

   • The minutes from the December 15, 2020 Audit Committee meeting were recorded for reference.

2. Action Taken Report/Compliance:

   • Detailed discussion on multiple action items including:

     • Implementation of recruitment and onboarding modules as highlighted in RBI Supervisory Review Meeting on September 07, 2018.

     • Compliance on RBI communications such as ATM security measures (e.g., One Time Combination implementation and completion of ATM cassette swaps in 202 ATMs by March 31, 2021).

     • Rollout of EMV for ATMs manufactured by Diebold; only 32 out of 140 ATMs had been upgraded, with directives to complete the process.

     • Efforts to complete pending CKYC registration for operative clients.

     • Capitalization of advance payments (including HR-related advances) and timely reporting of communications sent to RBI.

     • Updates from Structured Compliance, Risk and Audit Review Meetings (SCRARM) addressing inward remittances, exports software exploration, and other pending issues.

3. RBI Compliance & Legal Audit:

   • Discussion on submission of compliance reports to RBI, including legal audit of title documents for credit exposures of Rs.1 crore and above.

4. Approvals/Recommendations:

   • Execution and ratification of the umbrella letter of engagement dated October 12, 2020 with M/s. B S R & Co. LLP. This covered additional certification tasks, assignment of new responsibilities, and sanctioning a payment of Rs.1,00,000 plus GST for PMJDY Scheme Outlays.

   • Appointment and role clarification of statutory branch auditors, noting the industry practices among private sector banks and the trend towards centralized audit using the core banking system.

   • Emphasis was placed on the timely completion of annual audit plan tasks and expediting pending directives (e.g., formulation of a comprehensive Risk Control Matrix for the bank).

5. Conclusion:

   • The meeting was concluded with a vote of thanks.

Summary Conclusion

Across all meetings on February 10, 2021 (and the Audit Committee meeting on January 18, 2021), the bank’s board committees reviewed past minutes, discussed comprehensive action reports, and monitored compliance across multiple domains including fraud management, customer service, CSR initiatives, stakeholder relationships, and audit functions. Several directives were issued to expedite pending tasks, ensure regulatory compliance with RBI and SEBI guidelines, and strengthen internal controls and grievance redressal mechanisms. Each meeting concluded with a vote of thanks, underscoring the commitment to transparency, prompt addressing of issues, and continual improvement in internal processes.

13th 05A-5 Minutes of the Meeting of the IT Strategy Committee held on Wednesday February 10 2021

Meeting Overview

The meeting held on Wednesday, February 10, 2021, covered a wide range of agenda items addressing statutory audits, audit committees, compliance reports, risk assessments, and detailed financial results. The discussions incorporated recommendations to the Board, detailed reviews by various departments, and inputs from statutory auditors.

Statutory Audit & Audit Committee Formation

• Statutory Audit Resolution:

  • The Committee resolved to recommend that the Board entrust B S R & Co. LLP, Chartered Accountants and Statutory Central Auditors of the Bank, to conduct the statutory audit of the Bank’s branches in accordance with Section 143(8) of the Companies Act, 2013.

  • It was further resolved that Mr. Sijo Varghese, Company Secretary, may be authorized to inform the Reserve Bank of India if required.

• Audit Committee of Executives (ACE):

  • The Committee recommended the constitution of an Audit Committee of Executives with the following members:

    1. President (Retail, SME, Operations, and IT)

    2. Head – Audit

    3. Chief Financial Officer (CFO)

    4. Chief Risk Officer (CRO)

    5. Chief Compliance Officer (CCO)

    6. Chief Human Resource Officer (CHRO)

  • The Committee detailed the functions and responsibilities of the ACE, which include tasks such as drafting Request for Proposal (RFP), obtaining approval from the Audit and Compliance Board (ACB), floating and vetting proposals, and recommending notes for the appointment of Central Statutory auditors and other auditors.

  • It was advised that all audit reports, including Statutory Audit Reports, be reviewed by the ACE before submission to the Board or respective sub-committees.

• Compliance Status of Long Form Audit Report:

  • The Committee noted that 100% of the observations in LFAR 2019-20 issued by the Statutory Auditors have been complied with by the branches.

Trading, Risk, and Compliance Reports

• Trading in Securities:

  • The report on trading in securities by Designated Persons, in accordance with the Bank's Prohibition of Insider Trading Policy for the quarter ended December 31, 2020, was noted by the Committee.

• Related Party Transactions:

  • A review report detailing related party transactions for the quarter ended December 31, 2020, was discussed and taken on record.

• Compliance Risk Assessment:

  • Detailed discussions on open risks identified in the Compliance Risk Assessment were held, with instructions for meeting all stipulated timelines in addressing action points.

• Suite of Legal and Recovery Items:

  • Data on suits filed and decreed debt accounts with a plaint amount of Rs.100 lakhs and above, as on December 31, 2020, was reviewed.

  • Zones were instructed to closely monitor and expedite the resolution of pending cases to ensure early disposal and recovery.

Calendar of Items

• Quick Mortality Accounts (H-1):

  • Quick mortality accounts of one crore and above for December 2020 yielded a nil statement.

• Vigilance Department Review (H-2):

  • A review of the work of the Vigilance Department was undertaken, noting:

    • 14 fraud instances reported to RBI in FMR format with an aggregate amount of Rs.40.84 lakhs.

    • The absence of theft, burglary, or bank robberies, and no instances of attempted fraud during the quarter.

    • Issuance of three caution notes related to fraud incidents.

    • Preventive vigilance audits conducted in 32 branches.

    • Absence of vigilance officers in the Northern and Western Zones, leading to a directive for their immediate posting.

    • Emphasis on strict adherence to joint custody protocols during preventive audits, with possible action against non-compliant officials.

• Fraud Cases and Staff Accountability (H-3):

  • A detailed report on fraud cases suspecting staff involvement was reviewed, noting that disciplinary proceedings in three fraud/attempted fraud incidents involving four staff members remain incomplete.

  • HR was advised to prioritize and finalize accountability cases.

• Report on Fraud Incidents Reported to RBI (H-4):

  • Among 14 fraud instances reported for the quarter:

    • Eight cases were within the gold loan portfolio.

    • Five cases involved unauthorized ATM cash withdrawals of amounts less than Rs.1 lakh.

    • One case pertained to a suspicious fund transfer triggered by a phone call involving an HNI customer.

  • Concerns were raised over increased gold loan frauds and dilution of joint custody practices, notably at the Avanashi branch, with recommendations to follow up with local authorities and enforce secure handling of gold ornaments.

• Equity Share Holdings (H-5):

  • There were no instances where the Bank held more than 30% of the paid-up capital in borrower companies.

• Sensitive Sector Exposure (H-6):

  • The Bank’s total credit exposure to the Sensitive Sector stood at 10.47% of Rs.148,817.22 lakh as of December 31, 2020, which is within the mandated 25% ceiling.

Balance Sheet Discussions

• Prudential Write Off (BS-1):

  • The Committee discussed prudential write-offs and recommended the Board approve a total write-off of Rs.133.85 crore, based on a detailed review of account criteria.

• Pension Provision (BS-2):

  • A resolution was passed to provide Rs.28 crores for the purchase of annuity related to an increase in DA for pension payments as on December 31, 2020.

• Provisioning for NPA Accounts (BS-3):

  • The Committee reviewed and discussed the current provisioning rates for NPA accounts in light of RBI guidelines, the impact of COVID-19, and judicial restrictions. It resolved to recommend a change in provisioning rates as per the annexed policy note.

• Unaudited Financial Results (BS-4):

  • The working results for the quarter and nine-month period ended December 31, 2020, were discussed. Statutory auditors, B S R & Co. LLP, performed a limited review of these results, the draft report of which was placed at the meeting.

Financial Performance Overview

The Chief Financial Officer, Mr. B. K. Divakara, presented detailed financial results highlighting:

• Income and Margin Improvements:

  • Net Interest Income increased from ₹229.25 crores in Q2 FY 21 to ₹251.19 crores in Q3 FY 21.

  • The Net Interest Margin (NIM) improved from 4.49% to 5.17%.

  • Other Income nearly doubled from ₹50.62 crores to ₹116.61 crores, influenced by treasury profits (₹47.73 crores vs. ₹3.96 crores in previous quarters), PSLC premium receipts, and higher processing fee collections.

• Profitability and Efficiency Metrics:

  • The Cost to Income ratio improved from 65.99% in Q3 FY 20 to 50.42% in Q3 FY 21.

  • Operating profit was reported at ₹182.36 crores (up from ₹172.80 crores), while net profit increased to ₹53.05 crores compared to ₹28.14 crores in Q3 FY 20.

  • The Return on Assets (RoA) improved to 0.96% for Q3 FY 21.

• COVID-19 Impact & Provisions:

  • The Bank discussed its response to the COVID-19 pandemic including moratoria on loan repayments, additional provisions totaling ₹8,510.18 lakhs made during the quarter, and the aggregate provision (including RBI mandated amounts) reaching ₹14,487.00 lakhs as of December 31, 2020.

  • The implications of the Supreme Court interim order (Gajendra Sharma Vs Union of India & Anr) on asset classification were also reviewed.

  • Additional adjustments were made for pension-related liabilities and increased provisioning for NPAs, reflecting a prudent approach during the uncertain environment.

Auditor Commentary and Concluding Remarks

• Statutory Auditor’s Review:

  • Representatives from B S R & Co. LLP confirmed that the Bank’s accounts complied with applicable accounting standards and RBI guidelines. They affirmed that the Bank’s provisions were adequate as per prudential norms.

  • The limited review report issued by the Auditors was unqualified. Several follow-up recommendations were noted and accepted by the Committee.

• Overall Observations:

  • The Committee commended the Bank’s robust performance, with particular appreciation for improvements in NIM, cost ratios, and overall risk management.

  • There was a unanimous sentiment of satisfaction with the management’s proactive measures and strong financial results, encouraging further successes in future quarters.

This comprehensive review reflects the Bank’s focus on improving operational efficiency, robust risk management, precise audit mechanisms, and dynamic financial performance in a challenging economic landscape.

13th 06A-6 Minutes of the Meeting of the Sub-Committee of the Board for Monitoring Large Value Frauds CMF held on Wednesday February 10 2021

Meeting Overview and Financials

The primary discussion involved review and recommendation regarding the unaudited working results of the Bank for the nine months ended December 31, 2020. The committee resolved to place these results before the Board for consideration/approval.

Capital Adequacy, Leverage Ratio, and Disclosures

• Capital Adequacy Ratio (CRAR):

  • As per Basel III, CRAR improved from 19.69% on September 30, 2020 to 21.02% on December 31, 2020.

  • Contributing Factors to the Increase:

    • Regulatory Capital Adjustments: Total regulatory capital slightly decreased from ₹1829.38 crore (September 30, 2020) to ₹1816.09 crore (December 31, 2020). Tier I capital decreased marginally from ₹1713.33 crore to ₹1708.08 crore, influenced by a rise in profits on revaluation of forward exchange contracts (₹4.73 crore) and an increase in intangible assets (₹1.09 crore). Tier II capital was maintained at ₹108.01 crore, constrained by regulatory limits (should not exceed 1.25% of risk weighted assets).

    • Credit Risk Weighted Assets: Increased by ₹137.61 crore from ₹6471.73 crore to ₹6609.34 crore. This was due to an increased risk weight for gold loans (an increase of ₹58.38 crore) and an additional ₹54.71 crore allocated for unhedged foreign currency exposure.

    • Market Risk Weighted Assets: Saw a decrease of ₹789.17 crore, dropping from ₹1704.89 crore to ₹915.72 crore mainly due to a reduction in the Available-for-Sale (AFS) portfolio.

• Leverage Ratio: Improved marginally from 7.52% to 7.69% as of December 31, 2020, significantly above the RBI prescribed minimum of 3.50%. Additionally, the Bank maintained an excess in Tier I capital of ₹930.21 crore.

• Conclusion of This Session: The meeting concluded at 06:45 p.m. with a vote of thanks to the Chairperson, affirming that quorum was maintained throughout.

CSB Bank Management Committee Meeting (February 23, 2021)

Meeting Details

• Date & Time: Tuesday, February 23, 2021, from 09:00 a.m. to 09:30 a.m.

• Venue: CSB Bank Head Office, Thrissur

• Mode of Participation: The meeting was conducted via video conferencing as permitted under the MCA Circulars dated December 30, 2020, in response to the COVID-19 pandemic. The system’s audibility and clarity were noted and accepted.

Participants and Roll Call

• Members Participating through Video Conferencing:

  • Smt. Bhama Krishnamurthy (Independent Director/Chairperson, Bengaluru)

  • Shri. C.VR. Rajendran (Managing Director & CEO, Mumbai)

  • Shri. Sumit Maheshwari (Non-executive Director, Mumbai)

• Other In-Person Attendees:

  • Shri. Sijo Varghese, Company Secretary

  • Invitees including Shri. Pralay Mondal (President, Retail, SME, Operations and IT), Shri. B.K. Divakara (Chief Financial Officer), and Shri. Arvind K Sharma (Chief Risk Officer).

• Procedural Aspects:

  • Roll call was conducted and confirmed with members stating their full names and locations.

  • Confirmation was made regarding the receipt of the agenda and relevant materials, and ensuring that the access was restricted to authorized participants.

  • Quorum was declared as per the Articles of Association and the Companies Act, 2013.

  • The minutes of the previous meeting held on February 10, 2021, were duly noted.

Credit (Sanction) – Fresh Proposals Overview

The Committee reviewed a detailed fresh proposal involving credit sanction for Turnkey Enterprise Private Limited concerning tender participation for sand-related operations in Andhra Pradesh.

Key Features of the Proposal

• Financial Requirements & Guarantees:

  • Bank Guarantee: Fresh Bank Guarantee aggregating to Rs.120 crore is required for bid security (Earnest Money Deposit - EMD), which upon a successful bid will convert into a Performance Bank Guarantee for the project.

  • ODFD Limit: A fresh Overdraft (ODFD) facility amounting to Rs.1 crore is sought to cover operating expenditures.

• Fee Structure and Interest Rates:

  • A processing fee of 0.50% on the Rs.120 crore Bank Guarantee, amounting to Rs.60 lakh, to be charged.

  • Bank Guarantee commission applicable at 2% per annum for Performance BGs.

  • The rate of interest on the ODFD is proposed at 2% above the rate charged on the underlying Fixed Deposit.

• Security Perfection and Collateral Arrangements:

  • A timeframe of up to 90 days from the date of issuance of the first Bank Guarantee (EMD) is allowed for security perfection, which includes legal audit, legal opinion, clearance, and valuation.

  • Initially, the cash margin on the BG will be 50% (Rs.60 crore) with provision and permission to release two parcels of exclusive collateral once the cash margin reaches 100%.

  • The proposal details an exclusive charge on the entire current and fixed assets (both present and future) of the applicant company, in addition to security over immovable properties and existing collateral arrangements.

Applicant Company and Project Details

• Turnkey Enterprise Private Limited:

  • Incorporation: December 30, 2020, making it a newly floated company.

  • Business: Engaged in excavation and trading of river and silica sand.

  • Directorship & Ownership: Managed by Mr. Dhandapani Palanichamy and Ms. Thanuja Koduru, each holding 50% shares.

  • Locations: Registered office in Chennai and principal place of business in Andhra Pradesh.

  • Regulatory Approval: The company along with its consortium partners has secured mining and mineral trading approval from the Government of Andhra Pradesh (GoAP). Silica sand sales commenced on February 8, 2021, with river sand operations pending a successful bid from MSTC Limited.

  • Existing Credit Facilities: The company is not enjoying credit facilities with any banks/financial institutions at present.

• Tender and Third Party Involvement:

  • The tender is organized by the Director of Mines and Geology of GoAP, with MSTC Limited responsible for appointing agencies for excavation, storage, and sale of sand.

  • The proposal involves participation in tenders through third party bidders (Jaiprakash Power Ventures Limited and Sri Avantika Contractors (I) Ltd) via MoUs, allowing them to meet eligibility criteria. These third parties earn fixed profit shares of 1.50% and 2.50% of the sand sales value, respectively.

  • Despite the tender submission being in the name of third parties, the BGs are required to be issued in the name of Turnkey Enterprise Private Limited.

• Financial Projections:

  • Revenue: Rs.1327.80 crore for FY 2021-22 and Rs.1588.26 crore for FY 2022-23.

  • Profit After Tax (PAT): Rs.173.08 crore for FY 2021-22 and Rs.206.50 crore for FY 2022-23.

• Additional Funding and Deviations:

  • The initial 50% cash margin is expected to be funded through an intercorporate loan of Rs.100 crore from Vesta Reality Private Limited, an inactive company with negative net worth and a paid-up capital of Rs.5 lakh, with the loan carrying an interest rate of 11%.

  • The proposal allows for certain deviations from the Bank’s Loan Policy norms concerning geographical proximity and acceptance of third-party owned collateral security.

  • There are specific legal clauses and procedural permissions, including exclusive jurisdiction in Vijayawada for disputes, renewal commitments on the guarantee, amendments in MOA/AOA for corporate guarantees, execution of a Hypothecation Agreement, and an adjustment in the collection of Performance BG commission on a yearly basis.

Summary

This document encapsulates multiple meeting discussions spanning:

1. Review and Recommendation of Financial Metrics: Detailed analysis of the Bank’s CRAR improvement, leverage ratio, and changes in risk-weighted asset allocations as of December 31, 2020.

2. CSB Bank Management Committee Meeting: A virtual meeting held on February 23, 2021, with detailed roll-call, quorum confirmation, and a review of preceding minutes from February 10, 2021.

3. Credit Sanction Proposal: An in-depth review of a fresh credit proposal for Turnkey Enterprise Private Limited that includes issuance of a Rs.120 crore Bank Guarantee for tender participation in the sand excavation and trading project under GoAP. The proposal also outlines the necessary fee structure, security measures, collateral arrangements, deviations from standard policy norms, and projections regarding operational and financial performance.

The cumulative discussions highlight both the strategic financial positioning of the Bank and a significant credit initiative targeting new business in the mining and mineral trading sector.

13th 07A-7 Minutes of the Meeting of the Customer Service Committee held on Wednesday February 10 2021

Summary of the Document

This document captures the minutes and discussions from two different committee meetings held in February 2021. The first part of the document relates to the minutes of the Customer Service Committee meeting held on Wednesday, February 10, 2021, and the latter part details various agenda items discussed during the NPA (Non-Performing Assets) Management Committee meetings of CSB Bank Limited, including information from meetings held on January 18, 2021, and February 26, 2021.

Customer Service Committee Meeting – February 10, 2021

Key Discussion Points

• Bank Guarantees & Earnest Money Deposit (EMD):

  • Discussion on the dual use of Bank Guarantees: one held as EMD and the other as performance security. It was noted that following the successful bid and receipt of the Letter of Intent, the Bank Guarantee provided for Bid Security would be converted to performance security. The committee highlighted that at any time, only one of these guarantees would be outstanding with the bank.

• Proposal Evaluation of a New Applicant Company:

  • The applicant company was described as recently floated with a relatively low capital base. Additionally, the promoters of this company were noted as being relatively inexperienced in the proposed line of activity.

  • The company’s financial backing was underlined by its reliance on intercorporate loans to meet margin money for the bank guarantee and to secure an initial fortnight’s advance payment to GoAP as mandated by the tender document.

  • Concerns were also raised regarding stringent norms on mining and quarrying activity which add to the risk profile.

Resolution

• After detailed deliberations and careful consideration of the adverse features associated with the proposal, the Committee resolved to completely refrain from engaging with this proposal. The use of fully secured Bank Guarantees was also ruled out as an option.

Closing Remarks

• The meeting concluded with a vote of thanks to the Chair. The session ended at 09:30 a.m., with Chairperson Bhama Krishnamurthy officially recording the conclusion of the meeting.

NPA Management Committee Meetings – CSB Bank Limited

The latter part of the document details discussions from the NPA Management Committee meetings involving various agenda items, including compromise proposals and account settlements. These meetings were held via video conferencing during the COVID-19 pandemic period, following MCA Circulars dated December 30, 2020.

Meeting on February 26, 2021

Attendees and Participation

• Members Participating via Video Conferencing:

  • Shri. Madhavan Aravamuthan (Part-time Chairman, Independent) – joining from Chennai.

  • Shri. Madhavan Menon (Non-executive Director) – joining from Mumbai.

  • Smt. Sharmila Abhay Karve (Additional Director, Independent) – joining from Mumbai.

• Special Invitee:

  • Shri. C.VR. Rajendran (Managing Director & CEO) – participating from the Zonal Office, Mumbai.

• In attendance: Shri. Sijo Varghese (Company Secretary) and other invitees such as Shri. Pralay Mondal (President for Retail, SME, Operations and IT) and Shri. V Ganesan (Head of Recovery & Credit Monitoring) participated with the permission of the Chairman.

Technical and Procedural Aspects

• The Chairman informed members about the video conferencing mode as allowed by the MCA Circulars (till June 30, 2021) and ensured that all necessary details, security, and technological arrangements were communicated to and received by participating members.

• The roll call, confirmation of receipt of agenda materials, and the maintenance of requisite quorum were recorded.

Agenda Items Discussed in the NPA Management Meetings

1. Minutes Circulation from Previous Meeting (January 18, 2021)

• The minutes of the previous meeting held on January 18, 2021, were noted and circulated among the members.

2. NPAMC-1 B: Action Taken Report on Compromise Settlement

• A report was presented detailing actions taken in respect of compromise sanctions. Notably, for M/S. Sri Palanimurugan Traders, it was recorded that the balance amount to be remitted as per the compromise sanction was Rs. 45 lakhs.

3. NPAMC – AA-1: Resolution on One-Time Settlement (OTS) Proposal

• Accounts Involved:

  • M/s. Malabar Extractions Pvt. Ltd – C.C., involving accounts of Mrs. Nusarath and Mrs. Saheera (LAP), and M/s. Promise Exports (Prop: Smt. Nusarath – C.C.).

• Settlement Details:

  • A resolution was passed by circulation on February 11, 2021. The committee sanctioned a full and final settlement of the accounts by accepting an aggregate amount of Rs. 3,50,00,000.00.

• Payment Structure and Conditions:

  • Rs. 170 lakhs were to be paid on or before February 15, 2021. Following this, a property measuring 10.91 cents of land (with improvements) located in kasba village was to be released in favor of Smt. Saheera P.

  • An additional Rs. 180 lakhs was due on or before March 15, 2021.

  • The resolution was confirmed as passed with the requisite majority.

4. NPAMC – 2: Compromise Proposal for Branch – Guntur (Account of Mr. Maharadhi Karna Kumar)

• Discussion Points:

  • The committee reviewed the potential for recovering dues by assessing the remaining security property, acknowledging that one security property had already been sold and credited to the loan account.

  • Recovery challenges were discussed, including limited recoverability by proceeding personally against the borrower/guarantor or by disposal of the property, and delays attributable to legal processes.

• Financial Details:

  • Dues: Rs. 102.37 lakhs

  • Amount Offered for Settlement: Rs. 30 lakhs

  • Remission Amount: Rs. 72.37 lakhs

  • Total Balance: Rs. 69.05 lakhs

  • Provision made: Rs. 69.05 lakhs

  • The overall impact was a debit of Rs. 39.05 lakhs and a net credit impact of Rs. 29.75 lakhs.

• Resolution:

  • The account was sanctioned to be settled by accepting Rs. 30,00,000.00 (inclusive of advocate fees of Rs. 25,000.00) as full and final settlement. Although there was an agenda note requiring remittance by February 28, 2021, the committee resolved that payment should be received on or before March 25, 2021.

5. NPAMC – 3: Compromise Proposal for Branch – Peravallur (Account of George Fernandes and Vennila Fernandes)

• Key Information:

  • The account had been declared into the fraud category, and a criminal complaint had been filed against the borrowers.

  • Recovery actions by the bank had been undertaken, and the meeting reviewed the current status of these actions.

  • The market value of the available high-quality gold was estimated at approximately Rs. 30 lakhs.

  • The source of repayment was projected to come from liquidating the available securities, with the borrower promising to hand over possession of two security properties located in Coimbatore.

• Discussion Focus:

  • The committee evaluated the feasibility of recovery by proceeding against the security properties, taking into account the time constraints and the complexities of enforcement (including proceedings by the Enforcement Directorate against one of the properties).

Conclusion

The document provides comprehensive insights into the decision-making processes and detailed financial deliberations of the respective committees. The Customer Service Committee prudently declined to engage with a risky proposal due to several adverse features associated with the applicant company, while the NPA Management Committee deliberated on multiple compromise and settlement proposals, carefully considering the recoverability of dues, the structuring of payments, and associated financial impacts. All discussions were substantiated with detailed numerical data and clear timelines, reflecting a robust approach to risk and asset management during a challenging period.

13th 08A-8 Minutes of the Meeting of Corporate Social Responsibility Committee held on Wednesday February 10 2021

Overview

This document contains detailed minutes from the Corporate Social Responsibility Committee meeting held on Wednesday, February 10, 2021. The meeting covered several proposals regarding the settlement of accounts, one-time settlements (OTS), compromise proposals, write-offs, and requests for extension concerning various borrower accounts. The discussion was data intensive with multiple proposals analyzed on the basis of financial impact, recoverability through legal process, valuation reports, and specific conditions attached to each resolution. The decisions taken were largely driven by the low prospects of recovery through legal routes, the current market value of security properties, and the overall financial status of the borrowers.

Proposal 1: Settlement for Gold Loan Accounts (Mr. George Fernandez and Mrs. Vanila Fernandez)

• Financial Impact (Amounts in Lakhs):

  • Dues: 583.28

  • Amount Offered: 175.00

  • Remission: 408.28

  • Total Balance: 366.12

  • Interest Suspense: 36.29

  • Exposure: 329.82

  • Impact: 154.82 (Dr)

  • Provision: 329.82

  • Net Impact: 175.00 (Cr)

• Discussion & Resolution: The committee noted the low likelihood of recovering the full amount via available security due to time constraints and the weak financial standing of the borrowers. It was resolved to settle the account under OTS by accepting a final amount of Rs.175.00 lakhs provided that the payment is remitted on or before June 30, 2021.

• Security Release: Sanction was given to release several security properties on payment of specified amounts. These included:

  1. Gold ornaments (748.50 gms) – Rs.25 lakhs

  2. Site No. A-21 at Sree Sakthi Avenue, Thudiyaloor Village (4 cents and 116 sq.ft) – Rs.35 lakhs

  3. Site No. A-30 at Sree Sakthi Avenue, Thudiyaloor Village (3 cents and 369 sq.ft) – Rs.35 lakhs

  4. Plot No.15, Class C, New Door No. 33, Chennai – 3230 sq.ft – Rs.30 lakhs

  5. Plot No. 32 F & G, Thiruneelagander Nagar, Ambattur – 2873 sq.ft – Rs.20 lakhs

  6. Flat No. S2, 2nd floor, Kodungaiyur, Chennai – 925 sq.ft (super built up area) – Rs.30 lakhs Total amount involved for security release was Rs.175 lakhs.

• Additional Directive: The committee instructed that the criminal complaint filed against the borrowers should remain in force and the account must remain listed under fraud classification until RBI instructions are fully complied with.

Proposal 2: One Time Settlement – M/s. Green Systems and Devices (NPAMC – 4)

• Branch: G.H. Junction, Thiruvananthapuram

• Financial Impact (Amounts in Lakhs):

  • Dues: 41.76

  • Amount Offered: 8.00

  • Remission: 33.76

  • Total Balance: 26.02

  • Interest Suspense: 5.70

  • Exposure: 20.31

  • Impact: 12.36 (Dr)

  • Provision: 20.31

  • Net Impact: 7.95 (Cr)

• Discussion & Resolution: A valuation report indicated that the previously secured property was now valued at just Rs.4 lakhs. Additionally, the original valuer’s name had been removed from the approved list. Given the limited recovery prospects through legal action, the committee resolved to settle the account under an OTS by accepting an amount of Rs.8 lakhs (inclusive of Rs.4,700 charges) on or before March 15, 2021.

Proposal 3: One Time Settlement – M/s. Malakudiyil Traders (NPAMC – 5)

• Branch: ARB Ernakulam

• Financial Impact (Amounts in Lakhs):

  • Dues: 394.64

  • Amount Offered: 200.00

  • Remission: 194.64

  • Total Balance: 306.13

  • Interest Suspense: 37.60

  • Exposure: 268.52

  • Impact: 69.27 (Dr)

  • Provision: 268.52

  • Net Impact: 199.25 (Cr)

• Discussion & Resolution: The committee was informed of the current distress value of the security properties at Rs.153.46 lakhs and noted additional concerns such as tenant occupancy in one of the properties. Considering the higher offered amount relative to the distress value and the borrower’s insufficient resources, the committee approved closing the account under an OTS for Rs.200 lakhs (inclusive of Rs.75,000 charges) if the amount is received by March 31, 2021.

Proposal 4: Write-Off for Employees of M/s. Hindustan Motors Ltd (NPAMC – 6)

• Branch: T-Nagar

• Discussion & Resolution: The committee evaluated the severe difficulties in recovering outstanding amounts through legal processes, particularly due to the age of the account, lack of recovery sources, and inability to locate the borrowers/guarantors. After thorough discussion, the decision was made to waive further recovery efforts and write off the total principal outstanding of Rs.14,79,400.84. Additionally, instructions were given to reverse the interest along with debiting the P/L Bad Debts Written Off account. The committee also directed closure of any pending legal proceedings associated with these accounts.

Proposal 5: Write-Off – M/s. Vinayaka Earth Movers (NPAMC – 7)

• Branch: Chennai-1

• Discussion & Resolution: Discussion highlighted that Rs.9.15 lakhs had already been recovered through the legal sale of the security property. Moreover, issues such as no remaining immovable security, the elapsed time affecting leased asset recovery, and unclear borrower/guarantor status contributed to poor recovery prospects. Consequently, the committee resolved to waive further recovery on an amount of Rs.1,02,17,991 and to write off Rs.6,98,471 of the principal. The decision also included instructions to conclude any pending proceedings with the Debt Recovery Tribunal (DRT).

Proposal 6: Extension and Waiver Request – M/s. Golden Harvest Agro Projects Pvt Ltd (NPAMC – 8)

• Branch: Noida

• Borrowers: M/s. Golden Harvest Agro Projects Pvt Ltd and Rajeev Shankar Tiwari/Mrs. Manju Tiwari

• Financial Impact (Amounts in Lakhs):

  • Dues: 393.53

  • Amount Offered: 180.00

  • Remission: 213.53

  • Total Balance: 319.51

  • Interest Suspense: 106.34

  • Exposure: 213.16

  • Impact: 33.16 (Dr)

  • Provision: 213.16

  • Net Impact: 180.00 (Cr)

• Discussion: The borrower had already remitted an initial payment of Rs.10 lakhs as per the previous sanction order but failed to mobilize additional funds. Attempts to sell the security properties had been unsuccessful, compounded by issues such as improper marking of the bank’s lien in the revenue records.

• Resolution & Payment Schedule: The committee resolved to allow an extension to settle the account under an OTS for Rs.180 lakhs, subject to the following conditions:

  1. Payment of Rs.9 lakhs on the date of sanction

  2. Payment of Rs.10 lakhs on or before March 5, 2021

  3. Payment of Rs.161 lakhs on or before March 31, 2021 Furthermore, the committee instructed that CIBIL records be reviewed with a report forwarded to the MD & CEO for final approval.

Other Directives and Meeting Conclusion

• Legal Proceedings: The committee emphasized that, in some cases, ongoing criminal or civil legal actions (including those under Section 138 of the Negotiable Instrument Act for certain accounts) should not be discontinued until all necessary RBI guidelines have been followed.

• Closure of Proceedings: For accounts where write-offs were sanctioned, the committee directed the closure of any pending legal or court proceedings.

• Meeting Closure: The meeting concluded at 01:00 PM after confirming that a quorum was maintained throughout. A vote of thanks was extended to the Chair, and the minutes were entered with the initials of Company Secretary Madhavan Aravamuthan (DIN: 01865555).

This summary encapsulates all the key data, financial impacts, discussion points, and resolutions presented during the meeting, ensuring that the essential information is accurately captured.

13th 09A-9 Minutes of Stakeholders Relationship Committee Meeting held on Wednesday February 10 2021

Overview

This document is a detailed memorandum to the board of CSB Bank Limited (formerly The Catholic Syrian Bank Ltd) concerning a proposal to avail an automatic refinance facility from NABARD for an eligible amount of up to Rs 600.00 crore. The memo is part of the board meeting communications and includes draft resolutions circulated under Section 175 of the Companies Act, 2013 for formal approval.

Key Dates and Authorship

• Meeting Date: February 10, 2021 (as per the header of the Stakeholders Relationship Committee Meeting)

• Memo Submission Date: February 8, 2021

• Reference Documents: An earlier memo dated February 6, 2020 is also included for historical context.

• Authors and Signatories:

  • C. VR. Rajendran, Managing Director & CEO

  • Sijo Varghese, Company Secretary

  • Additional signatories in subsequent pages include Ayana Krishne M K (Manager) and Thomas P Tharayil (Chief Manager)

Purpose and Agenda

The main objective of the document is to seek the approval of the Board to avail an automatic refinance facility from NABARD, an apex development financial institution fully owned by the Government of India. The refinance facility is targeted for promoting agriculture and rural development under specified schemes. The agenda is directly linked to the following key points:

• Availing a refinance facility of up to Rs 600.00 crore

• Acting in compliance with Section 175 of the Companies Act, 2013 through the use of a circular resolution

• Ensuring the board’s formal confirmation following earlier board approval by a majority of directors on February 8, 2021

Regulatory and Legal Framework

The resolution and related borrowing are framed within the following regulatory provisions:

• Companies Act, 2013:

  • Section 175 (circular resolution for board matters)

  • Section 179(3)(d) concerning borrowing powers

  • Section 180(1)(c) regarding borrowing limits

• Internal Approvals:

  • Clause 82 of the Articles of Association

  • A special resolution passed by shareholders on July 20, 2020 authorizing the Board to borrow money in excess of the bank’s paid-up capital and free reserves, not exceeding an aggregate of Rs 5,000 crore (in addition to paid-up capital and free reserves).

Resolution Details

The resolution contains several detailed components concerning the refinance facility:

1. Borrowing without Security from NABARD:

   • The bank will borrow money from NABARD without directly providing security since NABARD is a government-owned institution.

   • Funds will be used for promoting agriculture and rural development as per the terms laid out in the draft Memorandum of Agreement (MoA) received from NABARD.

2. Terms and Conditions:

   • In addition to the principal borrowings, associated interest, commitment charges, costs, and other charges as stipulated in the MoA will be applicable.

   • If required by NABARD, such borrowings will be secured by an equitable sub-mortgage or sub-hypothecation of properties mortgaged/hypothecated to the bank by the concerned borrowers. Joint equitable mortgages/hypothecations may also be created in favor of both the bank and NABARD.

3. Draft Memorandum of Agreement:

   • The draft Memorandum of Agreement forwarded by NABARD is approved by the Board.

   • The Managing Director is authorized to negotiate, accept modifications, and finalize any changes on behalf of the bank.

4. Authorization of Bank Officials:

   • The following officials are granted authority to execute necessary proceedings:

     • Head of Treasury

     • AGM (Treasury)

     • AGM (Credit)

     • Chief Manager (Credit)

   • These officials are further empowered to accept title deeds from borrowers, execute other deeds, documents, and instruments, and secure necessary assurances demanded by NABARD.

5. Operational Dynamics:

   • The refinancing facility will be active from time to time under the terms and conditions set forth in the agreement.

   • The executed agreement will come into force immediately from the date of execution.

Process and Implementation

• The resolution is proposed to be passed by circulation among the board members in accordance with Section 175 of the Companies Act, 2013. This process allows the bank to move forward without convening a full board meeting.

• Any modifications or conditions as required by NABARD regarding sub-mortgaging of properties or acceptance of title deeds are to be handled through the designated officer(s) who are authorized to work with the National Bank.

Conclusion

In summary, this board memorandum and draft circular resolution seek to formalize the bank’s intent to secure an automatic refinance facility from NABARD for up to Rs 600.00 crore. The document lays out the terms of borrowing without the conventional requirements for security (given NABARD’s status), while also detailing the necessary safeguards through equitable sub-mortgage mechanisms when needed. The resolution was carried by majority vote on February 8, 2021, and is now placed for board confirmation. All actions are taken under the statutory provisions of the Companies Act, 2013 and the internal governance framework of CSB Bank Limited.

13th 10A-10 Minutes of the Meeting of Audit Committee held on January 18 2021

Meeting Overview

The document is the 13th item in the series of minutes from the Audit Committee meeting held on January 18, 2021, pertaining to several resolutions and agreements of dCSBBank (formerly The Catholic Syrian Bank Ltd.). The data covers extensive details on refinancing arrangements, mortgage security provisions, and the execution of related agreements. Central to the discussion is the bank’s intent to avail an automatic refinance facility from NABARD (National Bank for Agriculture and Rural Development) for an eligible amount of up to Rs 600.00 crore.

Resolutions and Approvals

The document records the following key resolutions and points of approval:

• Mortgage and Security Arrangements:

  • The bank has resolved to secure loans and advances by accepting deposit or mortgage of title deeds from borrowers. This may be executed as either a joint equitable mortgage or through sub-hypothecation to both the bank and the National Bank, ensuring appropriate mortgage security for refinance purposes.

  • Designated officials—including Head Treasury/AGM Treasury, Head Credit Monitoring, AGM Credit, and Chief Manager (Credit)—are authorized to accept deposits of title deeds for guarantees related to the loans and advances.

• Approval of Borrowing and Refinance Authorization:

  • There is a resolution for the bank to borrow, with or without security, from the National Bank by way of refinance. This includes the procedure to create equitable sub-mortgage or accept joint equitable mortgage with modifications as might be agreed between the parties.

  • The draft Memorandum of Agreement forwarded by the National Bank is approved by the board, with the Managing Director being authorized to accept modifications in the draft as necessary.

• Delegation of Authority:

  • Several officials are delegated specific authorities to execute or deposit necessary documents on behalf of the bank. These include accepting deposit of title deeds, executing required deeds/instruments, and submitting claim applications for refinancing.

  • Additionally, the Treasury and Credit Monitoring officials have been empowered to handle documents such as Letters of Sanction from NABARD, and make all related arrangements including periodic submission of reports to the National Bank.

NABARD Refinance Facility Discussion

A significant part of the meeting focused on the proposed automatic refinance facility from NABARD. Key aspects of this refinance facility include:

• Rationale and Necessity:

  • The bank’s overall advance portfolio has grown substantially, resulting in a reduction of lendable surplus from Rs 1004 crore as on 30-09-2020 to a deficit of Rs 111 crore as on 31-01-2021. This shortfall is being managed through Money Market borrowings. The refinance facility via NABARD is seen as a stable source of alternate funding that offers benefits such as exemption from CRR/SLR requirements and improves the Certificate of Deposit (CD) Ratio.

• Features of the Refinance Facility:

  • NABARD extends long-term automatic refinance specifically targeted for Agriculture, MSME, and other eligible sectors. Loans eligible for refinance must have a residual maturity of more than 18 months at the time of the application.

  • Extent of Refinance:

    • For loans disbursed for agriculture-related activities, up to 95% is eligible.

    • For loans disbursed for other diversified purposes, up to 90% is eligible.

• Interest Rate Structures:

  • For loans with a repayment period of 5 years and above, the interest rate is pegged at 5.40%, with no additional risk premium if the bank holds a top risk rating on NABARD’s scoring scales. However, minor risk premium variances (0.05 to 0.20%) may apply based on internal risk assessments.

  • For loans with a repayment period of 3 years to less than 5 years, the interest rate is 5.20%, while loans with a period of 2 years to less than 3 years and 18 months to less than 2 years are offered at 4.65% and 4.45% respectively.

Memorandum of Agreement (MoA) Overview

The document includes a detailed draft of the Memorandum of Agreement between the financing institution (the bank) and the National Bank. The key provisions in the MoA are:

• Disbursement and Repayment:

  • Refinance loans are to be disbursed according to a defined schedule, with interest and repayment terms laid out in the Letter of Sanction by NABARD. Variations to these terms can be mutually agreed upon.

• Default and Security Enforcement:

  • Should the financing institution delay repayments or default on due payments, additional interest charges and penalties will be applied. In the case of defaults, the National Bank reserves the right to invoke security arrangements, including the recall of loans.

  • The institution is responsible for furnishing all necessary securities including periodic valuations of borrower properties, and the eventual enforcement of security in case of a default by the constituents.

• Additional Covenants and Operational Provisions:

  • The financing institution is required to maintain separate accounts for each refinancing scheme and to permit periodic inspections by the National Bank.

  • A series of obligations including assignment of security documents, and notification of any changes in the borrower’s solvency, are mandated.

  • There is a clause concerning electronic payments: payments to staff, vendors, and clients are to be made electronically, with deviations (e.g., use of cheques) being rare and subject to audit.

• Intervention in Case of Default:

  • In the event of default, the National Bank has the discretionary power to initiate measures, including directing the Reserve Bank of India or other banks to debit the financing institution’s accounts to recover dues.

Delegation and Execution Details

Specific actions approved include:

• Execution of documents at Mumbai by designated officials representing the bank.

• Submission of board resolutions to NABARD, followed by execution of the required Memorandum of Agreement and Letter of Authority to instruct the Reserve Bank of India on fund recovery procedures.

The document also lists subscribers and signatories validating the board’s resolution, including statements by senior officials such as the Managing Director & CEO and CFO & CCO, and other key members from the Credit Department, all clearing the note for further board action.

Conclusion

In summary, the minutes detail a multifaceted resolution involving:

• The adoption of a refinance facility from NABARD to supplement the bank's dwindling lendable surplus through stable funding channels.

• The establishment of robust security arrangements, including mortgage deposit of title deeds, in concurrence with the refinancing requirements.

• Detailed procedural and authority delegation to ensure smooth execution and compliance with both internal resolutions and NABARD’s prescribed conditions.

This comprehensive resolution not only covers the immediate funding needs through a refinance facility but also delineates the operational, security, and regulatory frameworks essential for implementing and maintaining this arrangement in accordance with the bank’s larger financial strategy.

13th 11A-11 Minutes of the Meeting of the Management Committee of the Board of the CSB Bank Limited held on Tuesday February 23 2021 at 09 00 a m at Bank s Head Office Thrissur

Document Overview

This document constitutes part of the official board records of CSB Bank Limited (formerly The Catholic Syrian Bank Ltd.) and includes multiple sections extracted from the Minutes of the Meeting of the Management Committee of the Board held on Tuesday, February 23, 2021 at 09:00 AM at the Bank’s Head Office in Thrissur. The document spans several pages and includes signed subscription clauses, authorised signatory endorsements from the National Bank, the Financing Institution, and witness signatures, as well as formal memorandums to the board.

Meeting Details and Procedural Formalities

• Meeting Date & Time: Tuesday, February 23, 2021 at 09:00 AM

• Venue: Bank’s Head Office, Thrissur

• Content: The minutes include typical subscription clauses where the National Bank and the Financing Institution have signed the documents through their duly authorised officials. There are detailed signature lines and further sections that address the formal undertaking of resolutions and minutes.

Resolution for Appointment of a New Chief Technology Officer (CTO)

Agenda and Memorandum Overview

A key item in the board’s agenda is the hiring of a new Chief Technology Officer (CTO). A memorandum is issued by the Secretarial Department which outlines the following details:

• Title of Agenda: Passing of a Resolution by Circulation for the Approval of Hiring Mr. Rajesh Choudhary as Chief Technology Officer (CTO).

• Circulation for Resolution: A draft resolution was circulated amongst the board members under Section 175 of the Companies Act, 2013 on February 09, 2021. This resolution was carried by a majority of directors on February 10, 2021. It is now placed before the board for final confirmation.

Background and Rationale for the CTO Appointment

The memorandum details the background of the proposal with the following key points:

• An earlier resolution — passed by circulation on January 5, 2021 — had appointed Mr. Biswabrata Chakravorty as CTO on the recommendation of the Nomination & Remuneration Committee. In accordance with that resolution, a letter of offer was issued to Mr. Chakravorty.

• Subsequently, Mr. Chakravorty communicated to the Bank his inability to join, citing enticement by IndusInd Bank to continue his association with them.

• With the previous appointment not materialising, the Board has recommended hiring Mr. Rajesh Choudhary as the new CTO. A detailed profile of Mr. Rajesh Choudhary is attached with the memorandum to aid in the approval process.

Documentation, Approval, and Digital Endorsements

The document includes multiple layers of approval and authorisation details:

• Memorandum to the Board: Issued by the Secretarial Department with backing from both the Managing Director & CEO (C. VR. Rajendran) and the Company Secretary (Sijo Varghese).

• Approval Process: The memorandum explains that the resolution for hiring Mr. Rajesh Choudhary was circulated among board members and carried by a majority vote, with this circular resolution now being placed for final confirmation during the meeting.

• Reference: Agenda and Resolution No. B-CR-16 for the Financial Year 2020-21 is cited, tying the resolution to the official record of board decisions for that period.

• Digital Signing: The document also features a digitally signed endorsement by Sijo Varghese, reaffirming the authenticity and clearance of the note for board placement. Details like the digital signature certificate information (including issuer information and postal code) are provided.

Conclusion

The extracted portions of the document highlight both the administrative formalities (in the form of subscription clauses, signatory endorsements, and witness attestation) as well as the substantive board matter concerning executive appointments. The board action reflects an adaptive decision in response to changes in previous appointments, moving forward to install Mr. Rajesh Choudhary as the CTO of the Bank after Mr. Biswabrata Chakravorty indicated his unavailability. This thorough documentation underscores the importance of meeting protocols and resolution validation in the corporate governance of CSB Bank Limited.

13th 12A-12 Minutes of the Meeting of the NPA Management Committee of the Board of the CSB Bank Limited held on Friday February 26 2021 at 12 00 noon at the Bank s Head Office Thrissur

Meeting Details

• Event: 12 Minutes of the Meeting of the NPA Management Committee of the Board

• Bank: CSB Bank Limited (formerly The Catholic Syrian Bank Ltd.)

• Date & Time: Friday, February 26, 2021 at 12:00 noon

• Venue: Bank's Head Office, Thrissur

Context and Background

The meeting focused on addressing the vacancy for the senior management position following the refusal of Mr. Biswabrata Chakravorty to accept the assignment. As a result, Mr. Rajesh Choudhary was proposed and ultimately selected as the candidate for the role after being previously shortlisted during the identification process for the previous candidate.

• Mr. Rajesh Choudhary has agreed to take up the assignment subject to fulfilling a notice period as per prevailing law in Norway.

• His expected joining date is the first week of June 2021.

Nomination and Appointment Process

• Policy Reference: The appointment is in line with the Bank’s Nomination policy for senior management appointments.

• Committee Involvement: The Nomination & Remuneration Committee (NRC) reviewed and recommended the appointment.

• Committee Resolution: By circulation on February 09, 2021, the NRC recommended Mr. Rajesh Choudhary’s appointment as the Chief Technology Officer (CTO) of the Bank.

Appointment Resolution Details

The Board was presented with a proposal to approve the appointment by passing a circular resolution as per Section 175 of the Companies Act, 2013. The details recommended in the resolution are as follows:

• Position: Chief Technology Officer (CTO)

• Appointment Effective Date: Date of joining the Bank by Mr. Rajesh Choudhary

Terms and Conditions of Appointment

1. Emolument Structure:

   • Fixed Emolument: Rs. 1,30,00,000 per annum (Cost to Company basis)

   • Confirmation Bonus: Rs. 10,00,000, payable on completion of six months subject to performance appraisal.

   • Stock Options: 40,000 performance-linked stock options as per the CSB Employees Stock Options Scheme 2019, subject to specific approvals.

2. Location and Reporting:

   • Location: Mumbai

   • Reporting: To the President (Retail, SME, Operations and IT)

3. Other Terms:

   • Leave and other benefits are provided as per the Bank's policy.

   • Reimbursement of expenses as per the Bank's policy.

   • Mr. Rajesh Choudhary will be subject to periodical performance appraisal as part of the organizational policy.

Approval Process via Circular Resolution

• Legal Framework: The resolution is proposed to be approved by circulation, as allowed under Section 175 of the Companies Act, 2013 along with the relevant Companies (Meetings of Board and its Powers) Rules, 2014, as amended, and the Secretarial Standards (SS-1) issued by the Institute of Company Secretaries of India (ICSI).

• Action Required: Directors were requested to provide their e-mail/fax confirmation or return a duly signed hard copy of the draft resolution to formally indicate their approval. The confirmation was sought at the earliest and not later than a specified number of days from February 09, 2021.

Conclusion

The meeting successfully facilitated the Board's decision to appoint Mr. Rajesh Choudhary as the CTO of the Bank, under clearly defined terms and conditions. This resolution, which includes remuneration details, incentives, and performance appraisal criteria, aligns with the Bank's policies and statutory requirements. The approval by circular resolution ensures timely travel of the decision without the need for convening a physical meeting, thereby maintaining operational efficiency.

13th 13AA-1 Passing of resolution by circulation Proposal to avail automatic refinance facility from NABARD for eligible amount up to Rs 600 00 crore

Overview

This document outlines the board resolution passed by circulation for a credit proposal involving Muthoot Capital Services Ltd (MCSL). While the index item refers to an automatic refinance facility from NABARD for an eligible amount up to Rs 600 crore, the extracted data provides detailed information on a fresh credit facility proposal – a term loan of Rs 25 crore – along with extensive financial, operational, and risk analysis about MCSL and its group exposures. The proposal has been placed before the Board for approval primarily because the aggregate group exposure exceeds the internal group exposure ceiling.

Borrower Profile and Background

• Name & Registration: Muthoot Capital Services Ltd (MCSL) was incorporated in 1994 as a deposit-taking NBFC and is a constituent of the Muthoot Pappachan Group, popularly known as Muthoot Blue.

• Business Activities: The NBFC is engaged in providing retail loans (including two-wheeler and used car loans), various investment products in the form of fixed deposits and subordinated debts, and also undertakes business lending to corporates.

• Asset Under Management (AUM): As of 31.03.2020, the AUM stood at approximately Rs 2650 crore.

• Shareholding and Management: The promoters (Mr. Thomas John Muthoot, Mr. Thomas George Muthoot, and Mr. Thomas Muthoot) hold significant stakes (each in the range of 18–19% individually). Details of other shareholders include FIIs, DIIs, and the public. The board includes several directors and independent members, and the management team is headed by experienced professionals from the Muthoot Group.

Proposal Details

• Facility Type: Fresh Term Loan

• Amount: Rs 25 crore (for onward lending) with an overall proposed exposure on the borrower rising to Rs 25.66 crore when indirect exposures are considered.

• Repayment Period: The term loan is to be repaid within 36 months.

• Pricing Concessions:

  • Interest Rate: Concessional rate of 9.50% p.a. linked to One Year MCLR (against the applicable rate of 12.75% p.a. for an OR – 4 rated borrower).

  • Processing Fee: Reduced from the standard 1.00% to 0.25% (sacrifice of approximately Rs 18.75 lakh).

• Other Concessions/Modifications:

  • Lower margin on receivables: The margin is reduced to 20% (from the standard 40%), aligning with practices of other major existing lenders.

  • A waiver of the Keyman Insurance requirement, following the norm set by other lenders under Multiple Banking Arrangements.

  • A 120-day period post-disbursement is permitted for obtaining a No Objection Certificate from existing lenders/charge holders to secure a pari-passu first charge on primary assets.

  • Permission granted to the MD & CEO for minor modifications in the sanction terms without affecting overall security coverage.

Group Exposure and Compliance

• Existing Group Exposure: The NBFC group exposure before the new proposal is detailed as follows:

  • Muthoot Fincorp Limited (Indirect/Direct Gold Loan): Rs 125.00 crore

  • Muthoot Microfin Limited (Indirect – Pass Through for Microfinance Loans): Rs 22.45 crore

  • Muthoot Capital Services Ltd (Indirect/Direct for Two-wheeler, reckoned at 25% of outstanding as per norms): Rs 0.66 crore

  • Direct exposures via NCDs and Loan Against Property (LAP) to promoter directors: Rs 25.00 crore (NCD) and three LAPs of Rs 8.53 crore each

  • Total Group Exposure: Rs 198.70 crore, which, including the proposed new facility, becomes Rs 223.70 crore.

• Internal Exposure Ceiling: The bank’s internal policy stipulates a per group exposure ceiling of Rs 200 crore. With the proposed addition, this cap is exceeded, necessitating that the proposal be presented to the Board for approval.

• Regulatory Considerations: The proposal is also scrutinized with respect to guidelines that prohibit lending to or on behalf of directors. An independent director of the bank, Ms. Bhama Krishnamurthy, is on the board of Muthoot Microfin Ltd – however, this entity is not a subsidiary or holding company of MCSL, and hence the restriction does not apply.

Financial and Risk Analysis

Financial Performance

• Recent Performance:

  • There has been a significant increase in Gross NPA levels from 6.90% (31.03.2020) to 11.40% (31.12.2020), while Net NPAs increased moderately (from 4.05% to 4.40%).

  • Capital Adequacy Ratio (CRAR) improved from 24.93% as of March 2020 to 26.93% as of December 2020.

  • Revenue trends show fluctuations with anticipated revenue of Rs 482.25 crore (FY 2020-21) and projections of Rs 591.73 crore (FY 2021-22). Profit after tax and cash accruals, alongside other key ratios, have been detailed in the document.

Risk Metrics and Returns

• RAROC Analysis: Based on the proposed interest rate of 9.50% p.a., the Risk Adjusted Return on Capital (RAROC) is calculated at 138.77%, significantly above the bank’s hurdle rate of 23%. The analysis stipulates that the minimum interest rate required is 7.02% p.a.

• Liquidity & Leverage:

  • The NBFC maintains a current ratio that is expected to improve in projections (from 0.93:1 as on 31.03.2020 to around 1.83:1 as on 31.03.2021).

  • The Total Obligation to Tangible Net Worth ratio is maintained within acceptable limits, with projections indicating stability within the internal threshold.

Detailed Key Financials

The document includes an extensive review of historical and projected financials covering:

• Net Worth and Capital Structure: Paid-up capital of Rs 16.45 crore and a tangible net worth growing from Rs 479.95 crore (as on 31.03.2020) to an estimated Rs 580.91 crore (projected for 31.03.2022).

• Income Statement Metrics: Gross sales/operating income, other income, profit before depreciation and interest (PBDIT), depreciation, PAT, and dividends are enumerated across several fiscal years.

• Ratio Analysis: Metrics such as TOL/ANW, current ratio, net profit margin, and interest service coverage ratios are provided. The debtors’ collection period is also noted to have a significant influence on working capital.

Approval Modifications and Deviations

The Board has been requested to approve deviations from the standard Bank Loan Policy norms on the following grounds:

1. A concession on minimum margin required on receivables (reduced to 20% from the usual 40%).

2. A modified approach for obtaining credit opinions – using CRILC/CIC checks rather than opinions from existing lenders.

3. Waiving the Keyman Insurance requirement for promoters, consistent with the approaches of other lenders in the group arrangements.

4. Permission for minor, non-material modifications in sanction terms by the MD & CEO without diluting security coverage.

5. Approval of a 120-day grace period post-disbursement for securing necessary NOCs from existing charge holders.

Additional Information

• Credit Ratings:

  • Internal Rating: OR – 4 (ABS 2020)

  • External Rating: CRISIL A/Stable with a confirmation of investment grade safety.

• Risk Department Observations: The proposal includes detailed risk assessments, including the behavior of loan accounts (with maximum Days Past Due up to 31 days) and remarks on historical default trends. The company's exposure to asset quality challenges – due notably to its two-wheeler financing business – is acknowledged, though collection efficiency improvements (up to 99.75% in December 2020) have been noted.

• Regulatory and Policy Compliance: The facility aligns with RBI guidelines for NBFCs; however, due to the breach in the internal group exposure ceiling, the resolution has been escalated to the Board. Mention is also made of investments in Muthoot Fincorp debentures under the RBI’s TLTRO scheme, which are not counted towards the exposure under the Large Exposure Framework.

Conclusion

The document is an extremely comprehensive board memorandum detailing the credit proposal for Muthoot Capital Services Ltd. It covers all material dimensions – from detailed borrower financials and risk assessment to specific proposed deviations from conventional sanction terms. Although index data refers to an automatic refinance facility from NABARD for an eligible amount up to Rs 600 crore, the bulk of the captured details in the extracted pages focus on the MCSL term loan proposal and its related operational and financial metrics. The proposal has been submitted for Board approval due to the eventual group exposure exceeding internal limits, with all necessary modifications and risk mitigations explained in detail.

13th 14AA-2 Passing of Resolution by circulation Approval for hiring Mr Rajesh Choudhary as Chief Technology Officer CTO

Resolution Summary

• Passing of Resolution by circulation (Resolution No. 13th 14AA-2) approving the appointment of Mr. Rajesh Choudhary as Chief Technology Officer (CTO).

Financial Performance Overview

• The company witnessed a decline in key profitability metrics with the return on average net worth decreasing from 20.5% to 12.6% between FY19 and FY20.

• Profit After Tax (PAT) declined by 30% year-on-year, linked to an increase in impairments and operating expenses. Specifically, impairments on financial instruments increased from Rs.46.33 crores in FY19 to Rs.70.69 crores in FY20.

• In addition, extra provisions of Rs26.70 crores were made for various contingencies, which include a dedicated COVID-19 provision of Rs18 crores.

• The company’s Total Outstanding Loans to Tangible Net Worth (TOL/TNW) ratios improved gradually, from 5.29x in FY19 to 4.88x in FY21, staying well within the maximum permissible 6x limit.

• The Interest Service Coverage Ratio (ISCR) dropped from 1.75x in FY19 to 1.42x due to an increase in finance costs.

Operational & Asset Quality Indicators

• Collection efficiency, which was adversely impacted during the COVID-19 moratorium (dropping to 36.69% in April 2020), steadily recovered to 99.75% by December 2020.

• While overall collection efficiency improved, about 23% of the loan portfolio under moratorium saw borrowers repaying none or only a single EMI between March and September 2020.

• The company’s Asset Liability Management (ALM) position indicated positive cumulative mismatches across all time buckets, supporting liquidity positions despite some negative mismatches in longer-duration buckets.

Business Overview & Group Exposure

• The applicant company, Muthoot Capital Services Ltd, is part of the diversified Muthoot Pappachan Group, a well-known business house with extensive operations in financial services, among other sectors.

• The group’s portfolio includes various retail finance products such as two-wheeler and used car loans. The company’s outreach is bolstered by over 3500 branches of its flagship, Muthoot Fincorp Ltd, enabling service to a live customer base exceeding 7 lakhs.

• The document details the credit exposures to different entities within the Muthoot group with combined exposures nearing Rs.198.70 crores. The proposed group exposure exceeds the internal ceiling of Rs.200 crores, necessitating board-level approval.

Credit Facilities & Liquidity Management

• A detailed breakdown of various bank facilities is provided, including cash credits, Working Capital Demand Loans (WCDL), and Working Capital Term Loans (WCTL), totalling a grand facility of approximately Rs.1945 crore. These facilities include both direct and indirect exposures to various entities under the group.

• A fresh Term Loan of Rs.25 crore has been proposed for onward lending with a term of 36 months, featuring monthly interest payments and principal repayment in equal installments of around Rs.69.45 lakh each.

• Cash flow projections indicate ample liquidity with disbursal plans ranging from Rs.1813.19 crore to Rs.2750 crore over successive financial years and robust recovery from existing loan servicing.

• The structural liquidity assessment shows graceful management of cash inflows versus outflows across various time buckets, with overall positive cumulative mismatches supporting repayment capacities.

Pricing & Sanction Modifications

• The company holds an internal rating of OR-4 (4th on a scale of 10) and carries an external long-term bank facility rating of ‘A’ by CRISIL, with a stable outlook.

• A concessional interest rate of 9.50% per annum (one-year MCLR) has been recommended, offering an interest spread of 446 basis points over the average cost of the bank’s interest-bearing liabilities.

• Concessions have also been agreed upon regarding processing fees (reduced to 0.25% of the loan amount) and margin on receivables (reduced from 40% to 20% in line with industry norms).

• Modifications to sanction terms include flexibility in documentation requirements such as net worth statements and IT returns for directors and guarantors, along with a provision allowing a 120-day window for obtaining NoC from existing lenders to facilitate the creation of a pari-passu charge over current assets.

COVID-19 Impact & Collection Efficiency

• The disruptions caused by the pandemic resulted in a significant dip in collection efficiency in April 2020; however, by December 2020, efficiency had rebounded close to 100%.

• The company’s strategy to restart fresh loan disbursals in August 2020, ramping up to Rs.75 crore in September 2020, reflects recovery efforts aligned with a revival in economic activity.

Conclusion

• The board has not only approved operational and financial measures to ensure liquidity management and sustainable credit growth but has also passed a key resolution to bolster its leadership team by appointing Mr. Rajesh Choudhary as Chief Technology Officer.

• These comprehensive measures, ranging from financial restructuring to strategic appointments, underscore the company’s proactive efforts to enhance operational efficiency and technological leadership in a challenging environment.

13th 15C-1 Approval for fresh credit facility - A c Muthoot Capital Services Ltd MCSL

Overview

The document relates to the approval of a fresh credit facility for Muthoot Capital Services Ltd (MCSL). The facility is being sanctioned as a fresh term loan amounting to Rs 25 crore, intended for onward lending purposes. The proposal has been evaluated and favorably recommended by the Wholesale Banking Department, with detailed analysis on the borrower’s credit profile, asset quality, and financial performance.

Facility Details

• Type of Facility: Fresh Term Loan

• Amount: Rs 25 crore (Rupees Twenty Five Crore Only)

• Purpose: The facility is intended to support onward lending activities, enhancing the borrower’s capacity to disburse loans.

• Tenor: 36 months with no repayment holiday

• Repayment Structure: Installments are to be made monthly with an approximate installment amount of Rs 69.45 lakh.

• Interest Rate: The rate is set at 9.50% per annum, floating and benchmarked to the prevailing one-year MCLR. The rate is subject to reset annually, and any premium over the MCLR will be revised based on rating changes or deterioration in external/internal assessments.

Security and Guarantee

• Primary Security: The facility is secured by a pari-passu first charge on the entire current assets of MCSL, which includes both present and future standard loan receivables. This is alongside existing working lenders and secured debenture holders. A margin of 20% is applied on these receivables.

• Guarantees: Personal guarantees have been provided by key directors, which include:

  • Mr. Thomas George Muthoot (Business, Management Director)

  • Mr. Thomas John Muthoot (Business, Director)

  • Mr. Thomas Muthoot (Business, Director)

Concessions and Deviations

Several concessions and deviations have been incorporated into the facility’s terms to align the proposal with those adopted by the majority of existing lenders:

1. Concessional Interest Rate: The facility uses a concessional interest rate of 9.50% p.a., linked to the one-year MCLR. This is lower than the applicable rate for OR-4 rated borrowers, which stands at 12.75% p.a.

2. Processing Fee: The processing fee has been reduced to 0.25% of the loan amount, compared to the standard fee of 1%, thereby reducing the overall fee burden by approximately Rs 18.75 lakh.

3. Margin Adjustment: The margin on the receivables has been reduced to 20% as compared to the usual 40% required as per the bank’s loan policy. This adjustment is in line with the margin stipulated by the majority of the other lenders.

4. Time Period for NOC: A period of 120 days from the date of disbursal is being granted to obtain a No Objection Certificate (NOC) from existing lenders/charge holders for ceding the pari-passu first charge on the primary security.

5. Flexibility on Terms: The MD & CEO is permitted to make non-material modifications to the sanction terms without diluting the security coverage, following recommendations from the Head of Wholesale Banking.

6. Additional Deviations: There are modifications to general sanction terms, and deviations have been approved from the bank’s loan policy norms concerning the margin on receivables, the need for obtaining a credit opinion, and requirements for Keyman insurance policies.

Evaluation and Recommendation

The proposal has undergone thorough evaluation, including financial performance analysis supported by metrics such as net interest margins, return on managed assets, and capital adequacy. Despite challenges in asset quality and regional concentration risks, MCSL has maintained a robust profitability profile with a disciplined credit underwriting process.

Based on these assessments and the favorable recommendations from both the Relationship Manager and Head of Wholesale Banking, the sanction for the fresh term loan facility of Rs 25 crore has been approved.

Conclusion

The sanction of the fresh credit facility for Muthoot Capital Services Ltd, amounting to Rs 25 crore, reflects a balanced approach that offers concessional terms, flexible security provisions, and strategic deviations aligning with industry practices. The facility is structured to bolster MCSL’s onward lending capacity while maintaining robust risk management frameworks.

13th 16DS-1 Role of Chief Compliance Officer- RBI Clarifications

Introduction

This document provides clarifications by the RBI on various aspects of the intra-group transaction exposures and related investment definitions as per the RBI Intra-Group Guidelines. It further outlines the necessary compliance measures that the Querist must implement as part of the transaction, in addition to addressing queries on whether certain investments and transactions fall within the defined exposures.

RBI Guidelines on Investment Exposures

The RBI Intra-Group Guidelines lay down the framework for determining exposures arising from intra-group transactions. The guidelines include reference to the RBI Exposure Norms that define exposures in relation to investments including:

• Investments in Shares and Debentures: Investments in the shares and debentures of companies, a key area highlighted under the guidelines.

• Investments in PSU Bonds: Investment in public sector undertakings (PSUs) bonds is specifically enumerated.

• Investments in Commercial Papers (CPs): This includes investments in CPs.

Additional points are addressed concerning the treatment of guarantees and investment exposures:

• Exposure through Security Receipts and PTCs: When assets are sold with compensation through security receipts or pass-through certificates issued by a subsidiary or related company, these exposures are attributable to the entity issuing the certificate. Banks or financial institutions may be allowed, on a case-to-case basis in initial years, to exceed the prudential exposure ceiling given the extraordinary nature of such events.

• Investments Guaranteed by PFIs: If a bank invests in bonds or debentures of corporates that are guaranteed by a Public Financial Institution (PFI), the exposure is treated as being on the PFI and not on the corporate. Guarantees by the PFI extend different exposure percentages:

  • For the PFI: The guarantee is considered a 50% exposure, classified as a non-fund facility.

  • For the Bank: The entire (100%) exposure related to the guarantee is recorded for the bank.

Specific Clarification on the Querist's Investment

It is specified that as part of the Transaction, the Querist will not be subscribing to any financial instruments including shares, bonds, debentures, CPs, security receipts, or PTCs issued by QCL. Therefore, no investment exposure under the defined categories is attributable to the Querist with respect to QCL under the Transaction.

Required Compliance Measures under the RBI Intra-Group Guidelines

The document sets out several mandatory requirements for the Querist in connection with the transaction:

Comprehensive Policy on Intra-Group Transactions

• The Querist must develop and obtain Board approval for a comprehensive policy regarding the monitoring and management of intra-group transactions. This policy should incorporate effective systems and processes for:

  • Identifying, assessing, and reporting risk concentrations.

  • Evaluation of material intra-group transactions on a standalone basis.

Annual Review and Policy Elements

The policy must be reviewed at least annually and include the following elements:

• Regular Review and Reporting: A systematic mechanism for reviewing material intra-group transactions and reporting them to the Board, ensuring clarity on risks.

• Risk Management on Standalone Basis: Ensuring that risks from intra-group transactions are addressed with the same rigor as exposures dealing with non-group entities.

• Consistency in Terms and Conditions: Intra-group transactions must adhere to terms, conditions, and credit standards that are on par with similar transactions with third parties.

• Transfer Pricing Considerations: The policy should detail the transfer pricing methodology applicable to the group transactions.

• Conflict of Interest Resolution: Procedures to detect and resolve any conflicts of interest arising out of these transactions.

• Transparency Requirements: Specific measures to ensure transparency in all third-party dealings involving group entities with clear regulatory linkage.

• Audit and Oversight: Material intra-group transactions should be scrutinized through both internal and statutory audits to confirm adherence to group policies and avoid misuse such as the inappropriate transfer of capital or low-quality asset transfers.

• Compliance with Regulatory, Statutory, and Tax Laws: A mechanism to ensure that transactional structures do not lead to circumvention of any laws and regulations.

Consistency and Justification of Transaction Terms

• If there is any deviation in terms and conditions for intra-group transactions compared to non-group entities, these must be presented to the Board by the sanctioning authority along with adequate justifications, and could be made available to the RBI during inspections.

Outsourcing of Services within the Group

The guidelines also cover the conditions to be met when a bank outsources services to another entity within its group. In the context of the Transaction:

• Outsourced Services: The Querist will be outsourcing housekeeping and security personnel services to QCL.

The following conditions must be complied with:

• Documentation: All details of the Transaction must be properly documented via written agreements, detailing the scope of services, charges, and maintaining adequate documentation supporting process flows.

• Clarity in Transaction Structure: The structure should not create confusion among customers or compromise the safe operation of the Querist on a stand-alone basis.

• RBI Information: The arrangement should allow the RBI unhindered access to necessary information regarding the Querist and the overall group.

• Compliance with RBI Directions: There should be clear obligations for QCL to comply with any RBI directions, ensuring that regulatory oversight is maintained.

• Operational Independence: The dependency on QCL must not affect the operational continuity or risk management of the Querist, particularly if QCL's services (like IT systems or support staff) become unavailable.

• Public Communication: The arrangements must ensure that the Querist does not advertise or imply any responsibility for the obligations of QCL.

Reporting Group Entities

Under RBI guidelines, the Querist must periodically submit a list of group entities to the Department of Banking Supervision (DBS) at RBI, which should include all entities operating in India as well as overseas entities with which material transactions have occurred in the last three financial years. Any changes in the group structure must be reported promptly following the format and frequency prescribed by the DBS.

Clarifications Under SEBI LODR on Related Party Transactions

The document further provides specific clarifications on whether QCL is classified as a related party:

• SEBI LODR Definition: Under Regulation 2(1)(zb) of SEBI LODR, a related party is defined as a person or entity belonging to the promoter or promoter group holding 20% or more shareholding in the listed entity. However, this threshold does not apply for units issued by mutual funds listed on recognized stock exchanges.

• Status of QCL: Based on previous responses and clarifications, QCL is not considered a related party to the Querist under the Companies Act nor based on Accounting Standard definitions (specifically AS 18 as notified under Section 211(3c) of the Companies Act, 1956).

Conclusion

The clarifications set out by the RBI detail not only the definitions of exposures arising from various intra-group transactions but also establish a comprehensive framework for compliance. The Querist is required to implement a robust Board-approved policy, ensure adherence to consistent transaction terms, and establish stringent documentation and audit practices especially in cases of outsourcing services. Furthermore, clarifications regarding the classification of related party transactions under SEBI LODR affirm that QCL does not fall under this category with respect to the Querist. This comprehensive approach ensures that both regulatory compliance and risk management are sufficiently addressed in the context of intra-group transactions.

13th 17DS-1 Annexure RBI FAQ Dated February 02 2021

Overview

This document is part of the 13th 17DS-1 Annexure RBI FAQ dated February 02 2021 and provides an in-depth analysis of the criteria and definitions used to determine whether two parties are considered related, specifically in the context of the Querist and QCL relationship under Accounting Standard 18 and SEBI LODR regulations.

Definitions and Criteria for Related Party Status

The document explains that two parties may be deemed related if one party has the ability to control or exercise significant influence over the other in making financial or operating decisions during the reporting period. Key criteria discussed include:

• Control or Significant Influence: A party is considered to have significant influence if it has, at any time, one-half of the voting power of an enterprise; control over the composition of the board of directors or the corresponding governing body; or a substantial interest that enables it to direct the financial and/or operating policies of the enterprise.

• Substantial Interest Threshold: According to Accounting Standard 18, an enterprise is also considered to have a substantial interest in another if it holds, directly or indirectly, 20 percent or more of the voting power.

• Presumed Absence of Significant Influence: As per paragraph 13 of Accounting Standard 18, if the investing party holds less than 20 per cent of the voting power, it is presumed not to have significant influence unless contrary evidence is presented.

Analysis of the Querist and QCL Relationship

The document specifically addresses the relationship between the Querist and QCL by outlining the following points:

1. Absence of Direct Shareholding or Control:

   • It has been clarified that neither the Querist nor QCL holds any shareholding in the other.

   • There are no arrangements, agreements, or statutory provisions which confer control or influence over the board composition or business decisions of each other.

2. No Evidence of Significant Influence:

   • There has been no evidence provided to establish that the Querist has significant influence over QCL or vice versa.

   • Given that the shareholding is less than the 20 per cent threshold and no legal or contractual control is present, the document concludes that neither party has substantial influence over the other.

3. SEBI LODR Implications:

   • As per Regulation 2(1)(zb) of SEBI LODR, any person or entity that is part of the promoter or promoter group and holds 20% or more shareholding is deemed a related party. The absence of any shareholding between the Querist and QCL further confirms that they do not fall under this related party classification.

Conclusion

Based on the detailed discussion and in light of the definitions and thresholds provided by Accounting Standard 18 and SEBI LODR regulations, the document concludes that:

• The Querist and QCL do not have any shareholding relationships or agreements that provide one party with control over the other.

• Neither party has significant influence over the financial or operating policies of the other.

• Consequently, QCL is not deemed a related party of the Querist as per the applicable standards.

This clarification is provided by Wadia Ghandy & Co. and is intended to address any questions regarding the related party status of these organizations.

Authorship and Documentation Details

• The summary is drawn from a document signed by a partner from Wadia Ghandy & Co., specifically referenced by Shri. Sumit Maheshwari.

• The detailed analysis appears on pages 248 and 249 of the document, ensuring that all pertinent points concerning related party influence and control are comprehensively covered.

13th 18DS-2 Engagement of Quess Corp Ltd for outsourced services PAN India - House Keeping and Security Services

Overview

The document is a comprehensive collection of board memos and investment proposals from the Integrated Treasury of CSB Bank Ltd. The extracted content covers multiple agenda items approved or recommended for board ratification. It includes proposals to invest in commercial paper (CP), invest in non‐convertible debentures (NCDs) under various categories (Held to Maturity (HTM) and Available for Sale (AFS)), reviews of market risk management limits and breaches, and a write-off for a security receipt. While these board memos span different dates and cover diverse investment instruments, each memo details the rationale, terms, and expected impact of the proposals as well as compliance with internal risk policies.

Investment in Commercial Paper by Bombay Burmah Trading Corporation Ltd

• Proposal: Ratification for an investment of Rs 50 crores in an 8.00% CP issued by Bombay Burmah Trading Corporation Ltd.

• Instrument Details:

  • Coupon: 8.00% per annum

  • Tenor/Maturity: 24th February 2021

  • Type: Unsecured CP issued via private placement

  • Issue Size: Rs 50 crores; total CP outstanding in bank’s books is Rs 175 crores (limit: Rs 200 crores)

• Deal Details:

  • Deal Date/Value Date: 25th January 2021

  • Arrangement by: Trust Investment Advisors Private Limited; Issuing and Paying Agent is Kotak Mahindra Bank

  • Ratings: External ratings include A1+ from reputed agencies, indicating very low credit risk

• Risk & Impact:

  • P&L Impact: Gains from interest income at 8.00% and no mark-to-market (MTM) impact as per RBI guidelines (valued at carrying cost)

  • Liquidity: With a short-term surplus of around Rs 382 crores and adequate lendable surplus, liquidity is not adversely impacted

  • Capital Charge: The AFS categorization attracts a capital charge of Rs 1.03 crore on the Rs 50 crore investment

• Recommendation: The proposal was recommended for board ratification after obtaining the necessary approvals from the MD & CEO and the Treasury team.

Investment in Vivriti Capital Private Limited NCD

• Proposal: Approval of an investment of Rs 10 crores in Vivriti Capital Pvt Ltd’s NCD issuance, segmented in HTM (Rs 5.49 crores) and AFS (Rs 4.51 crores) categories.

• Instrument Details:

  • Security: 10.45% coupon NCD with an XIRR of 10.86%

  • Tenor: 36 months from the deemed date of allotment

  • Nature: Secured, rated, listed, redeemable and transferable non-convertible debentures

  • Issue Size: Rs 45 crores (with a greenshoe option of Rs 25 crores)

  • Mode: Private placement, with trustee services provided by IDBI Trusteeship Services Ltd or Catalyst Trusteeship Limited

• Risk & Impact Analysis:

  • P&L: The investment provides a spread (investment yield of 10.86% against TLTRO borrowing rate around 4.00%) creating an incremental interest income advantage

  • Valuation: The NCD portion in HTM is not marked-to-market while the AFS portion is subject to MTM, with a current valuation yield of 9.02%

  • Credit Risk: External ratings of ICRA A–/Stable and BWR A/Stable indicate low credit risk; internal rating for Vivriti stands at OR-3.

  • Detailed financial analysis of Vivriti Capital indicates a strong management team, diversified debt financing focus, and a robust balance sheet with a growing net worth and low NPAs.

• Recommendation: The memo recommends board approval with specific focus on maintaining risk covenants (e.g., capital adequacy and asset quality) and closely monitoring future ratings.

Deployment of TLTRO Funds and Associated Investments

• Context: The proposals detail the bank’s participation in targeted long-term repo operations (TLTRO), aimed to channel liquidity into investment grade bonds, CPs, and NCDs.

• Investment Breakdown:

  • The document lists several tranche details and investment amounts under TLTRO, with varied instruments across different NBFC categories (by asset size) and extensive deployment details.

  • Investments have been made in instruments such as NCDs of companies like Muthoot Finance Ltd, Sundaram Home Finance Ltd, India Infoline Finance Ltd, and others, with detailed yield and maturity information provided for each transaction.

Market Risk Management & Compliance Limit Breaches

• Limit Review: A detailed section of the memos discusses breaches in the Market Risk Management and Investment Policy limits.

• Observations:

  • Daily and monthly mark-to-market (MTM) losses for the trading portfolio (including instruments in AFS and HFT portfolios) are compared against predefined thresholds.

  • Specific days recorded breaches based on the incremental changes in MTM value; these breaches were generally within the 25% threshold and were referred to the Treasury & Investment Management Committee or Board for ratification.

  • Additional details include exceeding the exposure ceiling for state government securities (target set at 50% of the Total Statutory Liquidity Ratio (SLR)).

• Action Taken: The note seeks ratification and approval for these occasional breaches as they remain within the allowable tolerance limits after excluding TLTRO-driven investments.

Write-Off of Security Receipt – Phoenix Trust FY 15-18

• Background: The bank had previously sold accounts (including those of Ind Swift Laboratories Ltd and Sanjivani Garments) under the Phoenix Trust FY 15-18 for Rs 21.25 crores.

• Current Development:

  • Phoenix ARC, acting on behalf of the trust, has decided to write off the remaining balance of the investment.

  • The trustee recovered around Rs 23.75 crores in June 2018. Surplus distributions also occurred in subsequent months.

  • The outstanding amount in the bank's books is Rs 2,12,500, which is recommended for write-off.

Ratification for Investment in Adani Enterprises Ltd Unlisted CP

• Proposal: Ratification for an investment of Rs 50 crores in an unlisted Commercial Paper issued by Adani Enterprises Ltd.

• Instrument Details:

  • Tenor: 90 days, maturing on 31st May 2021

  • Discount Rate: 8.50% (providing a re-pricing gain of approximately 5.15% over the reverse repo rate of about 3.35%)

  • Nature: Standalone, unsecured CP issued via a primary placement; not listed

  • Arrangement: NVS Brokerage Pvt Ltd facilitated the issuance with Trust Investment Advisor Pvt Ltd as the arranger

  • Discount rates used in bidding were benchmarked against T-Bill and certificate of deposit rates prevailing in the market.

• Impact Analysis:

  • Interest Income: Anticipated additional interest income of approximately Rs 0.63 crore for the 90-day period due to the interest rate differential.

  • Valuation: As per RBI guidelines, CPs are maintained at carrying cost, similar to T-Bills, hence no mark-to-market valuation impact.

  • Liquidity: The transaction does not impact overall liquidity considering the available lendable surplus of Rs 682.07 crores and the relatively small investment size.

• Company Details:

  • Adani Enterprises Ltd, incorporated in 1993, is part of the Adani Group and is engaged in coal trading, logistics, mining, and power trading among other diversified activities.

  • It has a robust corporate structure and a detailed published balance sheet reflecting its diversified business interests and financial metrics.

Conclusion

The memos reflect a proactive treasury strategy with multiple investment proposals spanning commercial paper, NCDs, and CPs. Each proposal is supported by detailed analyses covering interest income, credit risk, valuation criteria, liquidity and capital charge impacts, and compliance with internal policy limits. The board is asked to ratify investments after confirming that risk metrics and policy limits are met or are within acceptable deviations, ensuring both profitability and risk management standards are maintained.

13th 19DTM-1 Ratification for investment of Rs 50 crores in 8 00 Bombay Burmah Trading Corporation Ltd Commercial Paper maturing on 24th February 2021 in AFS Category

Investment Proposal Overview

The document details a ratification proposal for a short‑term investment in commercial papers (CP) issued by Adani Enterprises Ltd. The proposal involves an investment of Rs 50 crore in CPs that fall under the Available For Sale (AFS) category. Although the index item mentions Bombay Burmah Trading Corporation Ltd CP maturing on 24th February 2021, the extracted data focuses on CPs issued by Adani Enterprises Ltd with maturities as follows:

• CP #1: Rs 50 crore, maturing on 24‑03‑2021 (Outstanding)

• CP #2: Rs 50 crore, maturing on 31‑05‑2021 (Present Proposal)

The investment is for a very short term (90 days for one of the instruments) and aims to secure a yield differential where the CP’s interest rate is significantly higher than the reverse repo rate, thereby reducing earnings risk by 515 basis points.

Bank and Investment Environment

CSB Bank’s Financials and Position

The internal document includes a detailed snapshot of CSB Bank’s financial performance and risk metrics. Key performance figures for half‑year ends are:

• EBITDA declined from Rs 986.36 crore (H1 FY20) to Rs 476.49 crore (H1 FY21).

• Profit after tax (PAT) fell from Rs 571.43 crore (H1 FY20) to Rs 124.82 crore (H1 FY21).

• The net profit margin dropped from 5.28% to 3.96% over the same period.

• The interest coverage ratio declined from 4.88 in H1 FY20 to 2.30 in H1 FY21.

• The Debt to Equity ratio almost doubled from 0.53% to 1.09%, with a corresponding decrease in the Debt Service Coverage Ratio from 4.50 to 1.32.

These figures suggest a tightening financial condition and a cautious approach to deploying funds into external investments such as CPs.

CP Investment Specifics

The CP instruments under discussion are unsecured, unlisted instruments with ratings of A1+ by Acuite and Brickwork Rating India, further supported by a long‑term company rating of A+. The discount rate is stipulated at 8.50%, which, when compared to the prevailing reverse repo and T‑Bill rates (approximately 3.35% for comparable tenors), results in a favorable re‑pricing gain. The CPs are designed to be valued at their carrying cost, ensuring no immediate impact on the bank’s market risk profile.

Compliance with Investment Guidelines and Limits

Detailed guidelines have been established to ensure the investment remains within the bank’s risk appetite and regulatory framework:

• Aggregate Investment Limit: The current exposure after including the new CP investment stands at 22.46% of the aggregate, which is well within the prescribed limit of 40% of Aggregate Investment.

• Individual Exposure Ceiling: There is a strict limit of Rs 50 crore for individual commercial paper exposures that has not been exceeded.

• Market Risk Management: Specific measures and limits are in place – including duration, modified duration, and PV01 limits – ensuring that any additional risk resulting from the CP investment remains controlled (e.g., the capital charge for this CP investment is Rs 0.88 crore for a short 90‑day period).

Moreover, the bank’s credit policy for large exposures (including the exposure to a single borrower or borrower groups) is carefully adhered to, with clearly defined thresholds based on the bank’s Tier 1 Capital under Basel III norms.

Risk Analysis

Earnings Risk

The investment in CP offers a mitigation of earnings risk by securing an interest yield that is 515 basis points above the reverse repo rate. This spread is beneficial for the bank’s periodic interest income.

Credit Risk

The CP of Adani Enterprises Ltd is well-rated (A1+) and meets the investment policy criteria. The investment is underpinned by the strong track record of the Adani Group, providing reassurance on the creditworthiness of the issuer.

Market Risk

Given that CP instruments are valued at their carrying cost per RBI guidelines, the re‑investment does not presently introduce additional market risk. There is no significant mark-to-market volatility expected during the short tenure of the investment.

Overall Risk View

The document notes that while Adani Enterprises Ltd (AEL) benefits from diversified business operations and strong promoter support—which in turn translates into adequate liquidity and experience—the company is also exposed to several risk factors. These include:

• Volatility in imported coal prices and foreign exchange rate fluctuations.

• Severe operational impacts due to COVID‑19 driven supply chain disruptions.

• A high reliance on short‑term funding and debt, which could stress liquidity if refinancings are delayed.

• Significant capex plans that might increase leverage further.

Despite these risks, the CP investment is considered a Fair Banking Risk given its short tenor and the overall financial discipline maintained by both CSB Bank and the issuer.

Recommendation and Board Discretion

The document concludes with a recommendation for granting ratification for the CP investment. Key points include:

• The investment is being taken up under a discretionary power that rests with the Board because it exceeds an exposure threshold of Rs 50 crore.

• The CP investment is supported by a favorable yield, robust ratings, and compliance with internal investment policies.

• The Board is advised to ratify this investment given the short duration, attractive risk-return trade offering, and the supportive financial condition and oversight of CSB Bank’s treasury operations.

The recommendation is endorsed by several key officials, indicating thorough review by credit and treasury management, and is placed before the Board for final approval.

Summary

In summary, the proposal seeks ratification for a short‑term investment of Rs 50 crore in unsecured CPs issued by Adani Enterprises Ltd, which meet the bank’s rating and compliance standards. It provides a favorable yield spread (8.50% discount rate versus approximately 3.35% for comparable short‑term securities), a controlled market risk profile with carrying cost valuation, and aligns with the bank's internal prudential norms. While acknowledging external risks such as market volatility and operational disruptions due to COVID‑19, the investment is deemed acceptable owing to the robust backing by the Adani Group and the short exposure period, thereby mitigating long‑term impact. The proposal is submitted for Board ratification under the bank’s discretionary guidelines.

13th 20DTM-2 Approval for investment of Rs 10 crores in Vivriti Capital Private Limited Rated Listed Secured Redeemable Non-Convertible Debentures maturing on 36 Months from the Deemed Date of Allotment in HTM AFS Rs 5 49 Cr Rs 4 51 Cr Category

Investment Approval Overview

This summary outlines the details regarding the approval (identified as 13th 20DTM-2) for an investment decision made by the board. The approved investment is in Vivriti Capital Private Limited and involves deploying funds into specially structured securities.

Instrument and Investment Details

• Issuer: Vivriti Capital Private Limited

• Instrument Type: Rated, Listed, Secured Redeemable Non-Convertible Debentures

• Investment Amount: Rs 10 crores

• Maturity Period: The debentures mature 36 months from the Deemed Date of Allotment

Portfolio Classification and Valuation Breakdown

The approved investment is categorized into two distinct classifications within the bank’s portfolio:

• Held To Maturity (HTM): Valued at Rs 5.49 crore

• Available For Sale (AFS): Valued at Rs 4.51 crore

This categorization ensures that the investment is well balanced in terms of its treatment in the asset portfolio, providing clarity on its liquidity and valuation.

Key Attributes

• Security Features: The debentures are secured, lending additional confidence with regard to asset backing and safety.

• Listing and Rating: The instruments are not only rated but are also listed, thereby ensuring a level of transparency and market acceptance.

• Redemption Feature: As redeemable financial instruments, they offer the prospect of repayment at maturity, thus adding to the tracking and planning of cash flows.

Summary of Implications

The approval reflects a strategic move to incorporate a Rs 10 crore investment in financial market instruments that are structured to provide stability (through security and rated status) and clear maturity timelines (36 months). The clear division into HTM and AFS categories (Rs 5.49 crore and Rs 4.51 crore, respectively) facilitates targeted portfolio management as these classifications have different impacts on the bank’s financial statements, particularly in areas such as liquidity and capital adequacy.

Overall, the approach emphasizes a balanced investment decision that maintains adherence to risk management and portfolio diversity requirements while supporting the bank’s strategic objectives.

13th 21DTM-3 Exceeding of Market Risk Management Investment Policy Limits

Overview

This document contains two distinct sections extracted from a regulatory and internal communication file from CSB Bank Ltd. The first section is a formal letter requesting funds for a social welfare initiative, and the second section is a memorandum addressed to the Board regarding the review and update of the Bank’s Credit Monitoring Policy for the financial year 2020-21.

Section 1: Request for CSR Funding

Content and Purpose

• A formal letter is submitted by the Director, Shri Sumit Maheshwari, on behalf of CSB Bank Ltd. The letter requests a financial allocation of Rs. 10 Lakhs. The requested funds are intended for building two houses or similar structures for the poor and underprivileged.

Key Details

• Request Amount: Rs. 10 Lakhs

• Purpose: To build two structures aimed at benefiting the poor and those in need

• Funding Source: The request suggests that the funds could be allocated from Corporate Social Responsibility (CSR) initiatives or other available schemes. The allocation might be processed either by a direct request or via bank transfer.

• Tone and Appeal: The letter is courteously written with an appeal for favorable consideration and timely disbursement of funds.

• Signatory: The letter is signed by the Director, with a clear expression of hope for cooperation.

• Document Pagination: The letter appears on Page 309 out of 1388 pages.

Section 2: Memorandum on Credit Monitoring Policy

Introduction and Administrative Details

• A memorandum is addressed to the Board by the Credit Monitoring Department of CSB Bank Ltd, and it pertains to the review and update of the Bank’s Credit Monitoring Policy for 2020-21.

• Submission Date: 23-02-2021

• Department: Credit Monitoring Department, Head Office

• Registered Office: Thrissur

• Key Personnel:

  • Shri Sumit Maheshwari is mentioned multiple times (likely in connection with signatory responsibilities).

  • C. VR. Rajendran, Managing Director & CEO

  • V. Ganesan, Head – Recovery and Credit Monitoring

Policy Review Details

• Objective: The purpose of the memorandum is to review the existing Credit Monitoring Policy by integrating various new regulatory and policy guidelines that were issued during the review period.

• Latest Revision: The policy was most recently amended on 16.03.2021, referenced under BR no. EC-1.

• Major Changes: The draft policy now includes a list of major changes that have been incorporated from the existing policy. These changes have been annexed as:

  • Annexure I: List of major changes from the existing policy

  • Annexure II: The Modified Credit Monitoring Policy

Recommendation for Approval

• The memorandum recommends that the Board reviews and authorizes the modified Credit Monitoring Policy. The listing and integration of new guidelines are emphasized as the primary reason for the update.

• The document is placed for approval, indicating that the changes are pending review and ratification by the Board.

Sign-Off and Pagination

• The memorandum is signed by key members including Shamna M.M (Manager), Davy Paul C (Chief Manager), and B Shajahan (Head – Credit Monitoring).

• The memorandum appears on Pages 310 and 311 out of the 1388 page document, reinforcing its extensive nature.

Additional Document Metadata

• The header information includes various regulatory reference numbers, for example:

  • Reg. 299/1V12011,12AA No

  • CIT/TCRyTECH/12A13312011-12,80

  • No. AAKTS9893B109115-16/T-0052180G

• Although parts of the metadata appear garbled or fragmented (e.g., multiple typographical errors such as “this.onn.t¡on,” and “w(-l reqLrest”), they indicate the presence of extensive reference material and documentation practices typical for regulatory correspondence.

Relation to the Index Item

• The index item under review is labeled as 13th 21DTM-3 Exceeding of Market Risk Management Investment Policy Limits. While the extracted data does not explicitly mention market risk management or exceedance of limits related to investment policy, it does include key elements of risk and policy review within the Bank (specifically, the Credit Monitoring Policy review).

• It can be inferred that the broader document context involves both market risk management concerns and ongoing regulatory documentation including credit and investment guidelines. The memorandum’s inclusion and stringent review of policy suggest an overarching focus on maintaining compliance and risk management, even if the extracted segments do not detail specifics on investment policy limits.

Conclusion

This summary amalgamates two primary components from the extracted data: a CSR funding request letter aimed at aiding the underprivileged and an internal memorandum for updating and approving the Credit Monitoring Policy. Both sections highlight the Bank’s commitment to regulatory compliance, risk management, and corporate social responsibility. The document, spanning over 1388 pages, signifies a comprehensive approach to both external social commitments and internal financial oversight.

13th 22DTM-4 Write-off of Security Receipt - Phoenix Trust FY 15-18

Summary of Annexure - 1

This document contains a detailed tabular comparison of existing policies with modifications suggested in relation to two distinct subject matters. The information provided includes the original policy details, the modified recommendations, references to relevant circulars, and additional remarks for clarity.

1. One-time Restructuring of Advances to MSME Borrowers

• Existing Policy:

  • The scheme had ended on 31.12.2020 in accordance with the RBI circular dated 11.02.2020.

• Modifications Suggested:

  • Although the original scheme ended on 31.12.2020, a one-time restructuring of existing loans to MSMEs, which are classified as ‘standard’ without a downgrade in the asset classification, is now permitted.

  • The restructuring is available up to 31.03.2021, subject to the eligibility criteria mentioned by RBI.

• References:

  • Amended as per the 7th August 2020 Circular No. 102/2020.

2. Credit Audit

• Existing Policy:

  • Accounts with an internal rating of less than OR-3 with group exposure, whether funded or non-funded, were previously subject to credit audits if their amount was Rs 2 crore and above.

  • It was noted that credit audits were conducted onsite only.

• Modifications Suggested:

  • The threshold for accounts subjected to credit audits has been raised from Rs 2 crore to Rs 3 crore, applicable to accounts with an internal rating of less than OR-3 with group exposure, regardless of whether they are funded or non-funded.

  • The mode of conducting the credit audit has been updated. The audits are now to be conducted onsite/offsite alternately.

• References:

  • Amendments were made on 18th November as per Circular No. 160/2020.

Additional Remarks

• The extracted data includes page reference (Page 312 of 1388) and a signature or approval note from Shri. Sumit Maheshwari, indicating the document’s navigational aid and the authority behind the modifications.

This summary captures all the essential details from the provided extracted data, ensuring that the modifications suggested and existing policies for both subject matters are clearly outlined along with their respective circular references and remarks.

13th 23DTM-5 Ratification for investment of Rs 50 crores in unlisted Adani Enterprises Commercial Paper maturing on 31st May 2021 in AFS Category

Overview

The current index item details a ratification decision for an investment authorization. The ratification, noted as 13th 23DTM-5, approves an investment of Rs 50 crores.

Investment Instrument

• Instrument Type: Unlisted Adani Enterprises Commercial Paper

• Amount: Rs 50 crores

• Maturity Date: 31st May 2021

Portfolio Classification

• Category: The investment is classified under the Available For Sale (AFS) category.

Key Considerations

• The ratification reflects an approval to invest in a short-term debt instrument, specifically commercial paper issued by Adani Enterprises.

• The maturity period set for 31st May 2021 indicates the timeframe during which the commercial paper will reach its maturity and be due for repayment.

• As an AFS asset, the commercial paper will be accounted for under the AFS category, reflecting its valuation and potential impact on the bank’s balance sheet.

Conclusion

This ratification confirms the investment decision of Rs 50 crores into an unlisted commercial paper of Adani Enterprises maturing on 31st May 2021 under the AFS classification. The decision is part of broader financial management and investment strategies that ensure appropriate asset categorization and adherence to investment norms.

13th 24DTM-6 Ratification for investment of Rs 100 crores in unlisted Adani Enterprises Commercial Paper maturing on 5th April 2021 in AFS Category

Investment Ratification Details

• Document Reference: 13th 24DTM-6

• Investment Amount: Rs 100 crores

• Instrument: Unlisted Adani Enterprises Commercial Paper

• Maturity Date: 5th April 2021

• Category: Available-for-Sale (AFS)

This decision ratifies the investment in an unlisted commercial paper issued by Adani Enterprises, with a focus on its status as an AFS investment, thereby subjecting it to periodic fair value assessment and associated compliance requirements.

Overview of Credit Monitoring Department (Extracted Data)

The extracted data outlines a comprehensive framework detailing the structure, scope, functions, and systems of the Bank’s Credit Monitoring Department. Although it largely focuses on credit asset quality management, the insights provided emphasize rigorous monitoring and accountability frameworks. Key elements from the data include:

Organizational Structure

• Leadership and Reporting Lines:

  • The structure includes positions such as Head of Wholesale, Head of SME, Cluster Heads (including Retail and Agri verticals), and specialized roles like Head – Two Wheeler, and Head – Retail.

  • The department functions under the oversight of the Board of Directors, Audit Committee, and Management Committee, ensuring that senior leadership is kept abreast of issues related to credit quality.

• Credit Monitoring Hierarchy:

  • A dedicated Head of Credit Monitoring along with a Deputy Head leads the team which further includes Lead-Credit Monitoring personnel and Credit Monitoring Officers positioned at both the Head Office and Zonal Offices.

  • The data also references the Credit Monitoring Interface with various levels including relationship managers and cluster heads who continuously supervise credit asset quality.

Scope and Functions

The Credit Monitoring Department is tasked with a range of functions to ensure that the Bank’s loan portfolio remains robust and delinquency rates are minimized:

• Credit Supervision:

  • Monitoring compliance with sanction terms and ensuring the appropriate end use of funds.

• Prevention of Slippages:

  • Actively surveilling borrowal units to detect early signs of stress in accounts, thus avoiding escalation to Special Mention Accounts (SMAs) or Non-Performing Assets (NPAs).

• Recovery and Audit:

  • Tracking repayment of loans and conducting periodic credit audits and stock audits to evaluate account health and compliance.

• Compliance and Reporting:

  • Scrutinizing returns, audit reports, and conducting systemic identification of early warning signals (e.g., categorizing accounts as SMA-0, SMA-1, or SMA-2 based on overdue durations).

  • Reporting on defaulting borrowers with large exposures to regulatory bodies like CRILC (Credit Information Regulatory and Leasing Corporation of RBI).

• Committee Participation and Coordination:

  • The department coordinates with committees including the Large Advance Committee, Critical Committee, and Fraud Monitoring Group to ensure that any aberrations are promptly addressed.

• Training and System Enhancements:

  • Regular training is conducted for all staff involved in credit monitoring to keep them updated on monitoring tools, regulatory changes, and internal guidelines. System enhancements are continuously pursued to improve the identification and tracking of stressed assets.

Systems and Audit Mechanisms

The data further describes several systems in place for thorough monitoring:

• Credit Audit:

  • This mechanism is applied to evaluate the overall quality of the loan portfolio. It involves periodic reviews (including half-yearly assessments for large accounts) aimed at early identification of potential issues and recommending corrective measures.

• Stock Audit:

  • For working capital facilities, a stock audit is mandated (often conducted annually), with thresholds set for standard assets and operating vs. non-operating NPAs. The audit is designed to verify the security (stock, book debts) and flag any irregularities.

• Legal Audit:

  • Legal audits focus on the authenticity of title deeds and other security documents for credit exposures above Rs 5 crore. This also extends to verifying third-party certifications and ensuring that accounts involving consortium/multiple banking arrangements are appropriately managed.

Additional Operational Measures

• Review and Renewal of Credit Facilities:

  • Annual reviews are mandatory for various credit facilities, particularly working capital facilities, whose renewal requires thorough credit analysis to assess operational and financial health.

• Early Warning Signals:

  • A system is in place to detect early signs of distress in accounts, categorizing overdue payments to trigger remedial actions. This is key to preempting the transition of accounts to NPAs.

• End Use Verification:

  • Measures such as direct payments for asset creation, third-party independent verification (e.g., Lender’s Independent Engineer reports), and regular unit visits are used to ensure that funds are utilized as intended.

Conclusion

The document ratifies a substantial investment of Rs 100 crores into an unlisted commercial paper of Adani Enterprises, reflecting a strategic allocation in the AFS category. Concurrently, the comprehensive framework detailed in the extracted data underscores the rigorous processes inherent in the Bank’s Credit Monitoring Department – from organizational structure and systemic checks to audits and operational controls – which collectively safeguard asset quality and ensure adherence to regulatory standards.

13th 27EB-1 Request received from Malabar Awareness and Rescue Centre for Wildlife MARC for a financial aid of Rs 50 000 -

Overview

The document records a financial aid request identified by the reference number 13th 27EB-1.

Request Details

• Requestor: Malabar Awareness and Rescue Centre for Wildlife (MARC)

• Purpose: The organization has submitted a request for financial assistance to support its wildlife rescue and awareness efforts.

• Amount Requested: Rs 50,000

Context and Implications

This request, coming from an organization dedicated to wildlife conservation, indicates its need for financial support to further its mission of rescuing and protecting wildlife. The brief note signifies that the organization has formally reached out for aid, with the following specifics:

• Reference Code: 13th 27EB-1

• Organization’s Focus: Wildlife conservation

• Nature of Financial Aid: The aid, amounting to Rs 50,000, is intended to support the operational or project-specific activities of MARC.

Conclusion

The financial aid request encapsulated in this summary highlights the initiative taken by the Malabar Awareness and Rescue Centre for Wildlife (MARC) in seeking Rs 50,000 to bolster its conservation efforts. This succinct record underscores the critical nature of support for organizations working in the field of wildlife conservation.

13th 28EB-2 Banks contribution towards promotion of charitable activities -Request received from Santhwanam Social Apostolate Centre of Trichur Archdiocese

Document Overview

This document contains detailed information extracted from a set of credit audit reports along with statistical summaries and observations from various inspections. Although the index item reference is to the bank’s contribution towards promotion of charitable activities requested by the Santhwanam Social Apostolate Centre of Trichur Archdiocese, the extracted data predominantly focuses on credit audit processes, regulatory compliance and operational performance of banking facilities.

Credit Audit Report Components

The detailed report covers several key areas:

Ad-hoc Sanctions and Over-due Regularization

• Ad-hoc Sanctions: The report raises the question of whether the ad-hoc sanctions are within specified thresholds and prudential limits. Details on the number and nature of these sanctions are investigated to ensure compliance.

• Regularization of Over-due Accounts: The report reviews the adequacy of the actions initiated to regularize over-due accounts. It highlights the expected dates of regularization, the sources of funds earmarked for this process, and any early warning signals that have been observed.

• Persisting Irregularities: Several areas of persisting irregularities are documented. These include:

  • A concurrent audit report (date not applicable).

  • A stock audit report (date not applicable).

  • A surprise inspection on 17.08.16.

  • An internal inspection report on 28.03.17.

  • A credit audit report on 15.11.16.

  • No RBI Inspection Report or further details in certain cases.

Rectification and Branch Performance

• Rectification Status: The report includes details on the current status of rectification measures along with reasons for any cases of non-rectification.

• Branch Action Adequacy: Assessment of the adequacy of actions taken by the branch is included, ensuring that immediate and appropriate steps have been taken in response to identified discrepancies.

Audit Observations and Auditor Suggestions

• Observational Remarks: The credit auditor’s observations on the quality of advances and the concentration of the credit portfolio at the branch are documented. Suggestions for better management of the branch’s credit portfolio, based on audit experience, are provided. The name of the credit auditor (Shri. Sumit Maheshwari) and other associated signatures underscore accountability and detailed scrutiny.

Detailed Audit Reporting and Annexures

The report spans several annexures, each highlighting different aspects of the audit process:

Annexure – IV (Credit Audit Report)

• Credit Exposures Analysis:

  • Separate ratings are provided for credit exposures below Rs.500 lakh. This includes disaggregated details for exposures between Rs.25 lakh and Rs.100 lakh and those between Rs.100 lakh and Rs.500 lakh.

  • A rating-wise distribution is prepared for standard credit exposures, including categories labelled CSB-1 through CSB-6 for amounts between Rs.25 lakh and Rs.100 lakh. Another detailed breakdown exists for credit exposures between Rs.100 lakh and Rs.500 lakh including categories CSB-1 to CSB-8.

Annexure – V (Audit of Sister/Associate Concern of a Group Company)

• Group Company Details:

  • The audit records include the name of the parent or group company, along with the name of the sister or associate concern.

  • Details provided cover the line of activity, industry, year of incorporation, and the nature of the relationship with the bank.

  • The classification of the advanced loan (whether standard, irregular, NPA etc.) and its credit rating are included.

  • Exposure figures (in Rs. lakh), sanction details including dates, facility rating and sanctioned limits form a critical part of this annexure.

• Operational Data: Information also covers account numbers, limits, current balances, drawing power and details of primary security along with collateral information and dates of asset valuation.

Operational Aspects and Statistical Observations

• Account Performance Over the Review Period:

  • A statistical resume is provided for different account types such as OD (Overdraft), ODH (Overdraft Home), ODM, and PCL. This includes limits, turnover, liability, and interest or other charges.

  • The report highlights whether the unit’s actual transactions commensurate with projected figures.

• Transaction Regularity and Defaults:

  • Key operational aspects, such as the regularity in operations, maintenance of deposit accounts, cheque return issues, delays in regularizing returned instruments and pending discharges of cheques or bills, are thoroughly recorded.

  • Details regarding arrears in term loans, number of installments overdue, and reasons for defaults are noted.

  • The report further examines any occurrence of bills drawing on the same party having been dishonoured previously.

• Additional Warning Signs:

  • Instances of defaults, ad-hoc sanctions, overdue accounts, adverse market reports, diversion of funds, and any efforts to suppress irregularities are documented. Early warning signals are captured to aid in proactive risk management.

Synopsis of Other Annexures

Annexure II (Synopsis of Credit Audit - Monitoring Department)

• Facility and Collateral Details:

  • The annexure provides snapshots of key accounts detailing the nature of the credit limits, drawing power, current balances, and types of collateral (such as land, commercial building, etc.).

  • All necessary dates are provided, including dates of the credit audit, report, receipt at head office, and stock verification.

  • Major observations, deficiencies and any highlighted persisting irregularities are reported by the Senior Manager, CMD and the Assistant General Manager, CMD.

Annexure III (Synopsis of Stock Audit)

• Stock Audit Details:

  • This section gives a detailed account of stock and inventory-related limits and drawing power specifics for a given account.

  • Dates for the audit, report compilation, receipt of documents at headquarters, and stock verification are included.

  • The details ensure a comprehensive review of the validity and timeliness of the stock/asset inspections, along with insurance expiry dates if applicable.

  • Major observations, deficiencies and persisting irregularities are likewise summarized here.

Additional Contextual Details

• While the index item refers to the bank’s contribution toward promoting charitable activities at the Santhwanam Social Apostolate Centre of Trichur Archdiocese, the extracted data does not directly detail particulars about the charitable contribution. Instead, it provides extensive data on internal credit audits, risk assessments and operational reviews which form part of the overall regulatory and monitoring framework of the bank.

• The extensive breakdown of credit exposures and audit timelines offers an insight into the robust monitoring mechanism of the bank, ensuring adherence to regulatory standards even in diverse operational spheres.

Conclusion

The data provided is focused on the detailed internal review processes at the bank, including evaluations of ad-hoc sanctions, regularization of overdue accounts, and overall adherence to prudential limits. The audit details across various annexures underscore the depth of financial risk management and operational control within the bank. This comprehensive approach ensures that while individual requests such as the one from Santhwanam Social Apostolate Centre may be discussed, the underlying operational controls and audit frameworks maintain critical importance in the bank’s reporting and governance structure.

13th 29EC-1 Credit Monitoring Policy-2020-21

Overview

The document presents an extensive compilation of policies and board memoranda related to credit monitoring, stressed asset resolution, and digital banking services for CSB Bank Ltd. While the index item is identified as the “13th 29EC-1 Credit Monitoring Policy-2020-21”, the extracted content spans several critical domains. It covers the resolution of stressed assets (RP), guidelines for restructuring loans and change in ownership, board decisions on money changer empanelment, debit card, internet banking, and mobile banking policies. The policies are designed to ensure regulatory compliance with Reserve Bank of India (RBI) guidelines and to enhance risk management, transparency, and customer service.

Policy on Resolution of Stressed Assets

The document lays out a resolution framework in line with RBI directions. Key elements include:

• Early Recognition and Review: The policy mandates early identification of distress in loan accounts and a thirty-day review period for appraising financial difficulties. For borrower exposures above certain thresholds, a resolution plan (RP) must be implemented within 180 days from the end of this evaluation period.

• Independent Credit Evaluation (ICE): For restructuring or change in ownership for accounts with an aggregate exposure of ₹100 crore and above, an ICE from authorized Credit Rating Agencies (such as CRISIL, ICRA, India Ratings, Brickwork, and SMERA) is required. Accounts with exposures of ₹500 crore and above require opinions from two CRAs. The credit evaluation system categorizes the residual or restructured debt using symbols ranging from RP1 (highest safety) to RP7 (very high risk of default).

• Implementation Conditions: A resolution plan is deemed implemented only when all related documentation (including creation of security charges, new capital structure, and loan term changes) is completed, and the borrower remains non-defaulting. For accounts with resolution exiting exposure by assignment or recovery actions, full extinguishment of the exposure is essential.

• Delayed Implementation and Provisioning: If the RP is not executed within 180 days (or 365 days for further delay), additional provisioning of up to 35% of the outstanding debt becomes mandatory. The document specifies conditions under which these extra provisions may be reversed if the borrower demonstrates sustained non-default performance after resolution.

Risk Management and Prudential Norms

The framework emphasizes:

• Asset Classification & Upgrade Conditions: Restructured assets initially retain a downgraded classification (sub-standard or NPA). An upgrade to a ‘standard’ category requires at least 10% repayment of the restructured debt and satisfactory performance for a defined monitoring period. For large exposures (₹100 crore and above), investment-grade ratings by accredited CRAs (BBB– or better) are necessary.

• Provisioning Norms: The policies reinforce that restructured assets should attract provision levels as per existing RBI master circulars on income recognition, asset classification, and provisioning. When additional finance is extended under RP conditions, its classification (standard versus NPA) drives the income recognition basis.

• Change in Ownership: If a change in ownership is undertaken, strict due diligence is required to ensure the new promoter does not belong to the existing promoter group and holds a controlling share. Continued satisfactory performance during the monitoring period is critical before reversing any provisions.

Empanelment and Product Policy Updates

The board memoranda also address strategic product and service updates:

• Empanelment Renewal of AD II Category Money Changers: Based on performance benchmarks (e.g. profit earned and branch engagement), CSB Bank is seeking board approval to renew empanelment of two money changers—EBIXCASH World Money Limited and Orient Exchange & Financial Services (P) Ltd.—while discontinuing empanelment for another due to higher exchange rates.

• Debit Card Policy Review: The revision of the Debit Card Policy integrates RBI circulars to form a comprehensive blueprint governing card issuance. Key areas include design features (EMV chip, holographic security, and potential biometric enhancements), eligibility (only for customers with operative deposit accounts), dispute redressal, transaction limits, fraud risk monitoring, and guidelines for card reissuance and hotlisting. The document provides a detailed table of contents outlining operational protocols and technology-specific measures to maintain high transaction security.

Digital Banking Policies: Internet and Mobile Banking

Two substantial sections of the document cover internet and mobile banking policies.

Internet Banking

• Security Architecture: The framework outlines a three-tiered system architecture – a secure zone hosting the e-banking web server with 256-bit SSL encryption, a channel interface zone handling middleware functions, and a protected core banking database zone. It stresses strict controls such as session expiry, encryption, virtual keyboards, and multi-factor authentication.

• Operational Guidelines: The internet banking policy includes customer protections such as transaction cost information, dispute resolution mechanisms, audit trails, and provisions for addressing unauthorized transactions. The policy also aligns with RBI mandates regarding transparency, grievance redressal, and regulatory reporting.

Mobile Banking

• Service Offerings & Security: The mobile banking policy outlines the scope of services available on mobile devices including fund transfers, bill payments, and the opening of term deposits for joint accounts. Security measures such as binding mobile IMEI numbers, mPIN generation, secure access using OTP, and audit trails are emphasized.

• Technology and Disaster Recovery: The policy mandates robust software and hardware infrastructures, with critical installations located in data centres compliant with disaster recovery and business continuity plans. Enhanced features include offline transaction capabilities, online standing instructions, and interoperability across network operators.

• Regulatory Compliance: The mobile banking guidelines adhere to RBI operative circulars, including transaction limit adjustments and the requirement for board approval of risk mitigation measures. Provisions for an online dispute resolution system are also provided.

Conclusion

Overall, the document offers a comprehensive set of policies that span credit monitoring, stressed asset resolution, product empanelment, and digital banking services. Emphasis is placed on rigorous risk management practices, adherence to RBI guidelines, and continuous review and enhancement of internal policies. The detailed procedural instructions, quantitative thresholds, and stakeholder responsibilities ensure that the bank not only complies with regulatory standards but also safeguards customer interests across all channels.

13th 30EC-2 Policy for Resolution of Stressed Assets - Review

Overview

This document outlines an extensive review and update of key banking policies implemented by CSB Bank Limited, with improvements in mobile banking services coupled with a detailed Board-approved Unified Payment Interface (UPI) policy. The document provides a comprehensive framework to enhance customer experience, integrate cutting-edge security features, and adhere to RBI and regulatory guidelines.

Bank Profile and Communication Details

• CSB Bank Limited is based in Chennai (No.33, Dr. C.N Deivanayagam Complex, Venkata Narayana Road, T‑Nagar, Chennai – 600017).

• Corporate Details: CIN: U65191KL1920PLC000175.

• Customer Contact: Phone Banking at 1800 266 9090; Email available via the customer care channel.

Mobile Banking Enhancements

24x7 NEFT Availability

• In response to RBI directives, CSB Bank is introducing round-the-clock (24x7) availability of the National Electronic Funds Transfer (NEFT) system via its mobile banking application. All procedural guidelines for NEFT transactions are applied.

Application Upgradation

• Umbrella App Concept: Future mobile applications will integrate various banking services including CSB ePassbook, CSB Pay (UPI), and more, creating a single point of access for customers on Android and iOS.

• Enhanced Features: New features include:

  • Refer-a-friend programs with cashback incentives

  • Quick pay options without needing to add a beneficiary

  • Debit card management, including enabling/disabling international usage through SMS or call center, and PIN setting if forgotten

  • Biometric logins (fingerprint-based authentication)

  • QR Code based Scan & Pay

  • UPI fund transfers

  • ASBA for applying to fresh IPO issues

• SIM Binding: To reduce branch dependency, a SIM binding feature is proposed. If a customer changes or loses a phone, self-registration can be executed provided the new handset carries the registered SIM.

• Additional Features: Support for joint account self-registration, collect requests via UPI II, and mobile banking linked to Kisan Credit Card (KCC) accounts.

Customer Registration for Mobile Banking

Various methods are provided for registering for mobile banking services:

• Self-Registration Online: For individual, KYC-compliant accounts with an active debit card and mobile number.

• Existing CSB Net Banking Users: By selecting a ‘Mobile banking’ option through the Net Banking menu.

• Branch Registration: Submission of a customer request form at any CSB branch.

• ATM Registration: Using a debit card at an NFS-enabled CSB ATM.

A detailed onboarding process includes downloading the CSB Mobile+ app, choosing from registration options (branch, net banking, or ATM), entering debit card details, account number, and personal information, followed by setting a 6-digit Mobile Banking PIN and obtaining a User ID via SMS instantaneously. Activation typically completes within one hour or within 7 working days for branch/ATM registrations.

Fund Transfer and Transaction Records

• Higher Fund Transfer Limits: Aligning with industry practices, the bank may provide higher default fund transfer limits and offers options for customers to increase these limits, subject to risk mitigation measures and regulatory compliance.

• Records: All transaction records maintained by CSB serve as conclusive evidence of transaction details.

• Fees: Although currently free for eligible account holders, CSB reserves the right to charge fees for use of the facility in the future with prior notification.

Alerts and Customer Information Accuracy

• Alerts: Customers must update their registered mobile number or email to receive critical alerts. CSB is not liable for delays or non-delivery if the information is outdated or if network issues occur.

• Information Accuracy: Customers are responsible for providing accurate and complete information. Any errors or outdated information supplied may lead to unintentional consequences, for which the bank will not be held liable.

Customer Obligations and Security Responsibilities

• Unauthorized Transactions: It is the customer’s responsibility to immediately report any unauthorized electronic banking transactions. Liability in such events is limited as per RBI guidelines.

• Confidentiality: Customers must maintain the confidentiality of their User ID and MPIN. Strong password policies are enforced, and periodic changes of MPIN are recommended.

• Mobile Security: Additional safeguards include using anti-virus protection, secure logout protocols (automatic termination after inactivity), and mobile device locks. Customers should avoid sharing sensitive data over calls or emails.

Risk Management, Privacy, and Security Measures

• Privacy Commitment: CSB is committed to protecting customer data and ensuring the confidentiality of its transmission using robust encryption and security protocols.

• Security Controls: Measures include blocking mobile application access after multiple incorrect MPIN attempts with procedures for unblocking via branch or registered email. Regular Vulnerability Assessments and Penetration Testing (VAPT) are conducted.

• Disaster Recovery & Business Continuity: The applications are supported by disaster recovery protocols and critical installation policies to maintain continuity of service during emergencies.

UPI Policy Review and Framework

Objectives and Regulatory Compliance

• The UPI policy is a Board-approved document in line with RBI guidelines and NPCI specifications with regular yearly reviews. The document provides a framework for operating/transacting via the CSB UPI application ensuring both sound practices and customer-friendly operations.

• The UPI system is designed as a mobile-first, secure, 2-factor authentication (using UPI PIN or mobile banking PIN) payment platform.

UPI Application Features and Architecture

• Financial Transactions: Cover pay requests (pushing funds) and collect requests (pulling funds) with robust authorization via UPI PIN.

• Non-Financial Transactions: Include tasks like mobile banking registration, OTP generation, PIN changes, and transaction status checks.

• Interoperability: The UPI system is integrated across various banking channels and is accessible via virtual payment addresses (VPA), Aadhaar numbers, mobile numbers, MMID, or standard account details and IFSC codes. Additionally, there is support for Quick Pay through QR code scanning.

System Architecture and Security

• Robust Software and Integrated Security: The UPI application is developed with integrated hardware and software components, hardened operating systems, and a detailed security infrastructure that complies with RBI and NPCI standards.

• Audit and Compliance: Full audit trails are maintained for system access and transactions, with annual information security audits performed to identify and rectify vulnerabilities.

Termination and Governing Law

• Termination: Customers can terminate their mobile banking or UPI facility at any time either by contacting a branch, the call center, or through online channels. CSB also reserves the right to suspend or terminate the service under various conditions including non-use for six months, security breaches, or other emergencies.

• Governing Law: The policies are governed by the laws of India, with any disputes subject to the exclusive jurisdiction of the Courts at Thrissur. The bank assumes no liability for cross-border access or compliance with foreign laws.

Board Approval and Documentation Process

• The document includes details of the Board memorandum submitted on 03.02.2021, with minutes from the meeting on 26.02.2021, and notes approving the UPI Policy review. Senior management including the MD & CEO and the Head of CASA & NRI have endorsed the policy updates.

Conclusion

This comprehensive policy document aims to enhance the CSB Bank mobile banking and UPI services by integrating advanced technological features, ensuring robust security measures, and maintaining full regulatory compliance. The multi-faceted approach includes enhanced customer registration processes, higher transaction limits, immediate alert mechanisms, and a secure and user-friendly platform for financial transactions.

13th 31EIB-1 Empanelment Renewal of AD II Category Money Changers for picking up Foreign Currency Notes

CSB Bank Profile

CSB Bank Limited is prominently operating from its Alternate Channels branch located at No.33, Dr. C.N Deivanayagam Complex, Venkata Narayana Road, T-Nagar, Chennai-600 017. With industry recognitions such as its Corporate Identity Number (CIN: U65191KL1920PLC000175), the bank emphasizes robust financial services including phone banking (toll-free at 1800 266 9090) and customer care facilitated through email communication.

Clearing & Settlement Infrastructure and Online Dispute Resolution

To support a nation-wide mobile banking framework, the bank has outlined the necessity for a 24x7 clearing and settlement infrastructure for interbank fund transfers. This system is essential for the smooth operation of bilateral or multilateral arrangements and requires authorisation from the Reserve Bank of India under the Payment and Settlement System Act, 2007.

In tandem with these efforts, the bank proposes the introduction of an Online Dispute Resolution (ODR) system. This component is designed to handle customer disputes and grievances regarding UPI transactions. The system-driven, rule-based mechanism ensures transparency and minimal manual intervention. Additionally, it offers multiple channels for lodging grievances, including web-based platforms, IVR, mobile applications, call centres, SMS, and physical bank branches.

Customer Complaints and Grievance Redressal Mechanism

Considering the emerging nature of mobile-based banking services, CSB Bank emphasizes the importance of addressing customer and consumer protection issues. Customers using both CSB and non-CSB platforms (BHIM CSB Pay users) can lodge complaints, submit suggestions, or raise disputes directly within the app.

Harmonization of Turnaround Time (TAT) and Compensation

The bank has instituted a framework for the turnaround time (TAT) for resolving customer complaints. Additionally, a compensation framework is in place where financial compensation is processed directly to the customer’s account without awaiting a complaint or claim. Key aspects of the TAT framework include:

• For credit-push funds transfers where the originator’s account is debited but the beneficiary’s account is not credited, the beneficiary bank must effect an auto-reversal by T + 1 day. If the credited transaction is delayed beyond this period, a compensation of ₹100 per day is applicable.

• For merchant-related transactions where an account is debited but the transaction confirmation is not received at the merchant location, auto-reversal is mandated within T + 5 days. Again, a delay beyond this window incurs a compensation of ₹100 per day.

Transaction Limits and Application Features

Transaction Limits

CSB Bank retains the discretion to determine transaction limits for the UPI application. These limits are based on account variants, customer categories, risk assessments, and regulatory guidelines. The limits can be adjusted based on proper due diligence and as approved by the competent authorities, allowing flexibility in meeting individual customer requirements.

Application Features and Discretion

CSB Bank holds the autonomous authority to modify the features on their applications. This includes adding or removing features, discontinuing existing applications, or launching new applications in alignment with industry standards. When an existing application is to be discontinued, the bank commits to notifying customers in advance of the discontinuing date.

Upgradation of the UPI Application

The bank also outlines plans for upgrading its UPI application to enhance the user interface and overall experience for new-generation customers. The upgraded version is expected to include advanced functionalities such as:

• Biometric-based registration and authentication for enhanced security.

• Integrated bill payment services.

• A QR code generator to facilitate receiving payments.

• UPI merchant on-boarding and merchant acquiring capabilities.

• An interoperable QR scanner that supports both Bharat QR and UPI QR formats.

Additional Feature Enhancements

Among other new functionalities, the introduction of the one-time mandate feature allows customers to pre-authorize transactions. This feature enables payments to be processed on a later date with the mandate's one-time block functionality. It benefits both individual users and merchants by facilitating instant mandate generation and automatic deduction of funds on the authorization date.

Conclusion

The extracted information highlights CSB Bank Limited’s commitment to robust banking operations through a 24x7 clearing and settlement system, the implementation of an Online Dispute Resolution system, and stringent customer complaint redressal mechanisms. Additionally, the bank has set definitive guidelines on transaction limits and retains the flexibility to adapt its digital application features as part of its effort to stay current with industry standards and customer expectations.

13th 32EP-1 Review of Debit Card Policy

Overview

This document covers multiple facets of digital banking enhancements and policy reviews implemented by CSB Bank Limited, including updates to UPI features, customer authentication and registration procedures, risk management measures, standard operating procedures for UPI services, and detailed discussions on loan policy revisions and account opening portal commercialization.

UPI Enhancements & Security Features

Invoice Verification:

• The new UPI 2.0 features allow merchants to dispatch an online invoice directly to the customer. This enables customers to view the invoice amount and key merchant credentials prior to payment.

Additional Security Measures:

• Merchant Authenticity: When scanning a QR or Quick Response code, customers get notified about the merchant’s status (whether it is a verified UPI merchant). The system sends notifications if the receiver is not secured.

• SIM Binding: The CSB UPI application may introduce a SIM binding feature. In case of phone changes or loss, the app allows self-registration using the existing SIM on a new device, reducing dependency on branches.

Recurring Transactions:

• Processing of E-Mandate: Under UPI, banks can process e-mandates for recurring transactions with an Additional Factor of Authentication (AFA) during both registration and the first transaction. Subsequent transactions can be processed automatically.

• UPI Auto-Pay: This future functionality enables customers to set recurring e-mandates for various payments such as mobile bills, electricity bills, EMI payments, OTT subscriptions, insurance, and mutual funds.

Customer Registration & Transaction Records

Customer Registration Procedure (Standalone UPI App):

• Download and install the application.

• During installation, the app auto-reads active SIMs. If multiple SIMs are available, the user must select the SIM with the bank-registered mobile number.

• A verification SMS is sent; following which the user verifies the mobile number, updates profile details, and sets a virtual UPI address (e.g., pay2me@csbpay) along with a 4-digit login PIN.

• Linking of bank accounts is mandatory to transact via the BHIM CSBPay App.

Records & Alerts:

• All transaction details (with time stamps) are maintained as conclusive proof by CSB.

• Customers are responsible for updating changes in mobile numbers, email addresses, or account details to receive timely alerts. Delays or failure in notifications can result from the customer's inaccessibility or network issues.

• CSB is not liable for delayed, non-delivered, or distorted alerts due to service provider issues.

Risk Management, Privacy & Security Protocols

Privacy & Security:

• CSB is committed to protecting confidential customer information and employs a wide range of security features and procedures including periodic Vulnerability Assessments and Penetration Testing (VAPT) as well as annual Information Security (IS) audits.

• UPI applications are subject to both internal and regulatory security standards, and protective measures such as blocking the app after five incorrect login attempts are in place.

Customer Best Practices:

• Customers are urged to choose strong 6-digit PINs (login and MPIN) and not to share or write them down.

• Additional recommendations include using secure browsers, logging out after sessions, protecting mobile devices with antivirus software, and verifying website authenticity before entering any confidential information.

• In cases of suspected fraud or identity theft, immediate contact with CSB is advised.

Standard Operating Procedures (SOP) for UPI Services

Registration SOP:

• The process begins by downloading the UPI-enabled app from either the Play Store or the bank’s website.

• Users input personal details (name, age) to create a unique virtual ID, create a profile by linking the bank account, generating a PIN, and confirming their details with debit card credentials and OTP verification.

• The UPI app allows for 24x7 money transfers and fund requests by sharing the virtual ID.

Resetting UPI Login PIN:

• Customers can click on ‘Forgot Login PIN’ during login.

• An OTP is sent to the registered mobile number. The customer then selects a security question, answers it, and sets a new 4-digit PIN.

• If the security question is not remembered, a request can be sent via email to the designated CSB mobile banking team.

CASA & NRI Department – Account Opening Portal

Partnership with Decimal Technologies:

• CSB Bank has tied up with M/s Decimal Technologies for a tablet-based and online account opening portal.

• Originally approved under an OPEX model, negotiations led to a transition to a CAPEX model, which is more favorable in the long run. Key financials include:

  • One-time implementation/integration cost of Rs 84 lakhs.

  • A one-time platform/product license fee of Rs 49.90 lakhs (in the revised quote).

  • An AMC charge of 20% of the license cost.

  • Additional costs for resource support detailed per monthly rates for L1, L2, and Lead Manager.

• The portal was launched on a pilot basis in Feb’20 and fully deployed by Apr’20 with around 48,000 accounts opened to date. A self-app based process was launched in Feb’21, with desktop URL testing concluding by Mar’21.

Loan Policy Review

Scope & Purpose:

• The Bank’s Loan Policy undergoes periodic review, with the latest revisions incorporating regulatory guidelines, internal communications, and business team input. Key changes include updated requirements, definitions, and delegations of authority.

Key Changes in Policy:

1. Financial Documentation: Audited balance sheets are now mandatory for all proposals (fresh, enhancement, take-over) submitted on or after 30th June from FY 2021-22 onwards (previously from 1st October).

2. Banking Directions: Guidelines regarding Overdraft (OD), Cash Credit (CC) accounts, and maintenance requirements are updated as per RBI directions.

3. HFC Borrowing Limits: Changes aligning with the latest RBI guidelines on maximum borrowing limits for Housing Finance Companies.

4. MSME Definitions: Revised definitions based on RBI’s composite criteria involving investment and turnover.

5. Exposure Ceilings: Amendments include the latest prudential and internal exposure limits as approved by the board.

6. Relaxations for NBFCs/Corporates: Provisions for margin relaxations, accepting alternative audit reports such as probe 42 reports, and credit opinions in lieu of traditional ROC searches.

7. Hurdle Rates & Short Reviews: Revisions to internal credit ratings; now proposals with ratings worse than OR-6/FR-6 will not be entertained except under exceptional circumstances and with authorized deviations by the NCH Committee and above.

8. Deviations & Authority: The policy outlines delegated powers to sanction deviations in credit proposals, including detailed guidelines on rating validations, external ratings for MSME exposures, and approved relaxations on DSCR, Debt to EBITDA ratios, and asset margins.

9. Other Specifics: Additional clauses on corporate guarantees, pledge of promoter shares, and compliance with IBA caution lists for fraudulent third-party entities have been included.

Loan Repayment Period & Foreign Currency Loans:

• Standard term loans normally have a repayment period of six years, not exceeding eight years (with exceptions for government schemes, house loans, educational loans, and infrastructure projects). Extensions in exceptional restructuring cases are permitted by higher authorities.

• Foreign currency loans will be sanctioned for both capital expenditure and working capital. These loans are subjected to a LIBOR or external benchmark linked rate, with a compulsory forward exchange cover unless natural hedges exist. For exposures under USD 1 million, the forward cover becomes optional with an undertaking to bear potential exchange losses.

Conclusion

The document provides a comprehensive overview of CSB Bank Limited’s strategic initiatives across its digital payment platforms and lending policies. Robust security measures, streamlined customer registration protocols, and effective risk management mechanisms have been established to ensure secure and efficient banking operations. Concurrently, extensive revisions in the Loan Policy aim at maintaining regulatory compliance and enhancing operational flexibility through clearly defined guidelines and delegated authority.

13th 33EP-2 Review of Internet Banking Policy

Review of Banking Policy Amendments Summary

This document provides detailed amendments across various aspects of the bank’s policies. The changes span credit facilities, lending to NBFCs/HFCs, bank guarantees, and exposure ceilings, along with updated requirements for guarantees, margin deviations, legal compliance, and interest rate policies. Below is a breakdown of the major updates:

1. Credit Facilities and Line of Credit

• Line of Credit:

  • Facilities will be extended to corporates that are AAA/AA/A rated or have an equivalent short-term rating (or an internal rating of OR-6 or better).

  • Deviations from these norms can be permitted by the HO Committee and above.

2. Bank Guarantee (BG) Amendments

• New BG Clause:

  • A new clause classifies bank guarantees into financial and performance guarantees.

  • An indicative list and criteria for BG classification have been added to streamline the categorization.

3. Lending to NBFCs and HFCs

• Assessment of MPBF:

  • For NBFCs (except HFCs and RNBCs), MPBF is to be assessed under the II method of lending as recommended by the Tandon-Chore Committee (or via cash budget/cash flow methods).

  • For HFCs and RNBCs, MPBF is limited to the borrower’s net owned funds (NOF) estimated in a prescribed manner.

  • Amendments clarify that HFCs can borrow up to 14 times their NOF, correcting earlier limitations.

4. Exposure Ceilings

• NBFCs and HFCs:

  • Both revised prudential and internal exposure ceilings have been specified in line with RBI directions.

  • Investments under Targeted Long-Term Repo Operations (TLTRO) are partially exempt from reckoning under the Large Exposure framework, subject to conditions on fund repayment.

5. Infrastructure Investment Guidelines

• Harmonized Master List:

  • An updated list of infrastructure sub-sectors (as per Ministry of Finance notification dated 01.08.2016) has been attached. This meets the directions laid out by RBI and the government.

6. Educational Institutions Loan Provisions

• Fee Collection Requirement:

  • Fee collections of financed educational institutions must be routed through an escrow account with the Bank, in compliance with RBI guidelines.

7. Current Account and Cash Flow Routing

• Sole Banking:

  • Under sole banking arrangements, the entire cash flow must be escrowed through the Bank’s account. Opening current accounts with other banks is generally not permitted.

  • Exceptions may be allowed by the sanctioning authority (based on a deviation matrix), provided receipts are pooled into the Bank’s account on the same day or at a mutually agreed frequency.

• Consortium/Multiple Banking Accounts:

  • In such cases, a proportionate routing of cash flow through the Bank is required. If the Bank’s exposure is less than 10% of total exposure to that borrower from the banking system, operational guidelines as per RBI directions apply.

8. Special Provisions for Construction Contractors

• Credit Facilities to Contractors:

  • For exposures exceeding Rs 5 crore, a worksite inspection must be conducted every six months by an Engineer from the Bank’s Approved Panel to verify work progress and fund utilization.

9. Guarantee Requirements

• Personal Guarantees:

  • For new proposals and additional exposures in individual or proprietorship loans, the personal guarantee of the spouse is mandatory. Existing accounts must also provide this guarantee when requesting additional exposure.

• Guarantee on Promoter/Shareholders:

  • The Bank will insist on personal or corporate guarantees from promoters or major shareholders (holding more than 10% stake) across all borrower accounts. Exceptions apply for PSUs, listed companies, and corporates with AAA, AA, or A ratings, or those under a consortium arrangement.

  • Waivers or deviations from these conditions can be authorized by the NCH Committee and above level functionaries.

• Corporate Guarantee:

  • The Bank may obtain upstream or downstream guarantees from parent/holding companies or subsidiaries, in accordance with the provisions of the Companies Act 2013. (NBFCs are excluded from this requirement.)

10. Margin Stipulations and Deviations

• Deviation in Margin Stipulation:

  • For certain borrowers (including NBFCs, PSUs, AAA/AA/A rated companies, etc.), the NCH and HO Committees can reduce margins by up to 5 or 10 percentage points (non-cumulative).

  • The Management Committee retains authority for reducing margins in other cases.

• Margin on Advances Against Term Deposits:

  • A new clause provides that the MD & CEO is authorized to permit relaxations in the stipulated margin, subject to maintaining a minimum margin of 5%.

11. Legal Entity Identifier (LEI) Requirements

• LEI Acquisition:

  • The RBI has directed that large corporate borrowers (with total exposures of Rs 50 crore and above) must obtain an LEI by the specified deadline. Failure to do so will result in denial of renewal or enhancement of credit facilities.

  • A separate roadmap will be issued for borrowers with exposures between Rs 5 crore and Rs 50 crore.

12. Data Verification and ROC Searches

• MCA Data Verification:

  • Data from the Ministry of Corporate Affairs (MCA) portal must be verified for all credit facilities extended to companies, ensuring accuracy of borrower information.

• ROC Search:

  • ROC search reports (obtained via vendors in a quick turnaround time) are mandatory to verify the exact nature and description of provided securities.

13. Revised Exposure Ceiling and Geographical Concentration Limits

• Exposure Ceiling Updates:

  • Latest prudential and internal exposure ceilings have been updated.

  • Revised guidelines include geographic credit concentration measures: a tentative ceiling of 35% in any single state (previously based on zones) is specified. Large corporate exposures from NBFCs/HFCs (rated investment grade or above) are excluded.

• Sector-wise Exposure:

  • Exposure ceilings are now calculated with reference to total credit exposure (both funded and non-funded), and ceilings have been adjusted based on industry averages and existing outstanding exposures.

14. Credit Approval and Administration Processes

• Approval Authorities:

  • All credit requests from a borrower or group must be managed by the respective business vertical, with separate handling for retail loan requests.

  • For securitized or buyout exposures, a portion (25% of gross consideration) will be aggregated with on-balance sheet exposure for sanctioning purposes.

• Submission of Credit Proposals:

  • New guidelines allow for the submission of proposals via both hard copies and secure emails. Digital submissions must include process notes in editable and non-editable formats, with appropriate email tracking.

• Credit Administration Team (CAT):

  • The CAT is responsible for pre-disbursal compliance specifically for non-retail loans. Post-sanction compliances will be managed by Relationship Managers or equivalent functionaries.

15. Interest Rate Policies and External Benchmarking

• External Benchmark Based Lending:

  • The Bank has adopted external benchmarks for interest rates:

    • For MSME borrowers: RBI’s policy Repo rate is used, resulting in a Repo Linked Lending Rate (RLLR).

    • For non-MSME borrowers: The Government of India 3-Month Treasury Bill yield published by FBIL is used, though MCLR linkage remains an option for certain floating rate loans.

  • Interest rates under external benchmarks will be reset at least once every three months, effective from the beginning of the ensuing quarter.

• Interest Rate Adjustments on Rating Downgrades:

  • In the event of borrower rating downgrades, the risk premium over the benchmark (whether MCLR or an external benchmark) will be increased by 25 basis points per notch for internally linked loans. For external benchmark-linked loans, the adjusted risk premium will align with the new rating category.

  • Rate changes are made effective from the first of the succeeding month following the balance sheet date.

• Foreign Currency Advances:

  • For foreign currency advances, the interest rate will be pegged to a market-determined external benchmark such as LIBOR, EURIBOR, or SOFR.

16. Processing Fees and Relaxations

• Processing Fee (PF):

  • A PF will be levied on the sanctioning of all new credit facilities (with certain exemptions) and on the renewal/enhancement of working capital facilities.

  • PF is computed on the qualifying amount for each facility and aggregated to ensure the total cost does not exceed the upper ceiling set by the Bank.

  • For combined limits (fungible between fund-based and non-fund based), the fee applicable for fund-based facilities will be collected.

• Relaxations in Charges:

  • Delegated authorities (ranging from MD & CEO to NCH Committee and HO Committee) have been empowered to permit relaxations in processing fees and various other charges, including commitment, penal, and prepayment charges.

17. Debit Reversals and Interest Concessions

• Reversal of Wrong/Ineligible Debits:

  • Cluster Heads or equivalent functionaries are authorized to sanction reversals of ineligible debits on a monthly consolidated basis, with reporting to the head of the respective business vertical.

• Interest Concessions:

  • Functionaries as per the defined matrix have the authority to grant interest rate concessions, with the MD & CEO designated to make decisions on standalone requests beyond the usual limits.

  • Concession limits are defined from up to 0.5% by Head–RCH, 1% by AGM NCH/Head NCH, and up to 1% by the NCH Committee, while higher concessions require MD & CEO or HO Committee approval.

18. Additional Operational and Compliance Guidelines

• Maintenance of Current Accounts:

  • In line with RBI guidelines, banks are restricted from opening current accounts for entities that have existing credit facilities unless a Non-Objection Certificate (NOC) is obtained. This is to prevent fund diversion.

• ROC Searches and MCA Data:

  • Regular ROC searches and MCA data verification form part of the due diligence process for credit proposals.

• Submission and Record Keeping:

  • All communication and submission of digital proposals must be preserved (including printouts of forwarding emails) to ensure traceability and compliance.

This comprehensive review outlines multiple amendments and new clauses aimed at enhancing risk management, regulatory compliance, and operational efficiency across the bank’s credit and lending policies.

13th 34EP-3 Review of Mobile Banking Policy

Overview

This summary encapsulates key updates and guidelines extracted from the document, reflecting revisions across several aspects of the bank’s loan policy. The extracted data covers procedural updates on revival letters, legal audits, security perfection, document vetting, valuation and legal opinions, credit audit, qualitative and annual reviews, priority sector lending targets, classification of MSMEs, and specialized loans including education, housing, social infrastructure, renewable energy, and other niche products. The guidelines also address the procedures for assignments and securitization portfolios.

Revival Letters

• Timing and Exceptions: Revival letters are to be obtained after 2¼ years but within three years from the date of execution of documents (promissory note, loan agreement, guarantee agreement, or last revival). For cases involving standalone term loans and mortgage loans, the criteria for obtaining the revival letter are waived.

• Additional Directive: A later clause mandates that in all applicable cases, the revival letter should be obtained on completion of 27 months from the date of execution of the relevant document or from the last revival letter, whichever is later.

• Reference: These revisions reference HO Circular No.29/2020 dated 25.03.2020.

Legal Audit

• Scope: Title deeds and other documents for all credit exposures of Rs.1 crore and above are subject to periodic legal audit and re-verification by designated authorities. This process continues until the loan is fully repaid.

• Monitoring: Legal audit monitoring and certification will be conducted by relevant authorities, as per the amended directions and anticipated modifications in the legal audit process by the legal vertical.

• Reference: Change incorporated as per HO Circular No.70/2020 dated 20.06.2020.

NOC & Letter Ceding Paripassu Charge

• Procedure: The letter ceding the paripassu charge or joint documents should be obtained, as per the terms of sanction, preferably within three months from the date of disbursal. However, NOC (No Objection Certificate) for ceding charge must be obtained before disbursal.

• Additional Requirement: Clear directives on security perfection and NOC processes have been added.

Security Perfection

• Regular and Consortium Arrangements: For lending under consortium or multiple banking arrangements, security perfection should be completed within a maximum of 3 months. In regular cases (non-consortium), security perfection is expected on the same day as disbursal, unless a deviation is sanctioned.

• Penalties for Delay: If security perfection is not completed within the permitted timeframe, a 1% penal charge will be levied from the date of disbursal.

• Authorization for Deviations: HO Committee and higher-level functionaries can permit deviations provided regulatory guidelines are met.

Document Vetting Process

• CAT Involvement: When loan documents are prepared by the CAT system, additional vetting is dispensed with.

• Branch-Level Responsibilities: In other cases, document vetting is performed either by the concurrent auditors of the loan booking branch or by cluster heads/equivalent functionaries in branches not covered under the concurrent audit cluster.

Valuation and Legal Opinion

• Pre-Sanction Requirements: Valuation reports and legal opinion reports should be obtained before the sanctioning of facilities. There is flexibility in timing for valuation (exceptions allowed based on value conferred by the business vertical team) provided that the post-valuation value does not fall below the offered value.

• Mandatory Legal Opinion: To avoid future legal complications, legal opinions must be received before disbursal.

Credit Audit and Qualitative Review

• Credit Audit: Accounts of borrower groups with an internal rating of OR–3 or better having aggregate limits of Rs.5 crore and above are subject to credit audit. For accounts with ratings worse than OR–3, the threshold is group exposures more than Rs.3 crore. These audits are carried out on a half-yearly basis by the Credit Monitoring Department.

• Qualitative Review: Post-disbursal qualitative reviews will be guided by system triggers. The quality of an account is now primarily assessed using system-based markers such as SMA (Special Mention Account) identification.

Annual Review Guidelines

• Review Date Calculation: The due date for the annual review is computed as the last day of the calendar month in which one year (or another prescribed periodicity) from the date of sanction is completed—not from the disbursal date.

• Short Reviews: If a regular review cannot be conducted for valid reasons, a short review (maximum validity of three months) may be carried out. However, such reviews should not be used to postpone the primary review, and failure to conduct a review within 180 days of the original due date will result in classification as a Non-Performing Asset (NPA).

Priority Sector Lending (PSL) Targets

• Agriculture & Advances to Weaker Sections: Targets are set at 18% of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure for agriculture, with sub-targets prescribed for Small and Marginal Farmers. For Advances to Weaker Sections, the targets vary between 10% and 12% depending on the specific guidelines.

• Performance Benchmarks: Banks must ensure that overall lending to non-corporate farmers does not fall below the system-wide average of the past three years. Efforts should be made to achieve a level of 13.5% direct lending to agriculture beneficiaries.

• Phased Implementation: Targets for agriculture and SMFs have been set incrementally across fiscal years 2020–21 through 2023–24.

Classification of Business Enterprises as MSME

• Manufacturing and Service Sectors: The classification is based on investment thresholds in plant and machinery (or equipment) and turnover. Micro, small, and medium enterprises are defined with specific limits for investment and turnover, differentiated for manufacturing and service sectors.

• Documentation and Valuation: Acceptable documents include purchase invoices, audited account details for gross block investment, or certificates from Chartered Accountants. For classification purposes, the purchase (invoice) value is considered excluding GST, and depreciation is not deducted.

Overdrafts and Other Specialized Lending

• PMJDY Overdrafts: Overdrafts extended under Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts that meet specific income criteria and limits (up to Rs.5,000) qualify for meeting the targets related to Micro Enterprises.

• Education Loans: Loans for educational purposes, including vocational courses, up to Rs.20 lakh irrespective of sanctioned amounts, are eligible for classification under the priority sector.

• Housing Loans: The guidelines differentiate between housing loans based on geographic location and purpose. For instance, loans can be classified under PSL for housing loans up to Rs.35 lakh in metropolitan centers and Rs.25 lakh in other areas, with specific conditions for repairs, affordable housing, HFC on-lending, and government-backed projects.

Social Infrastructure and Renewable Energy Loans

• Social Infrastructure: Bank loans up to Rs.5 crore per borrower are allowed for constructing schools, health care facilities, drinking water, and sanitation infrastructures. In the case of healthcare facilities, the loan limit may extend to Rs.10 crore per borrower in designated zones.

• Renewable Energy: Loans are extended for renewable energy purposes such as solar, biomass, wind, and micro-hydro power projects. The limits are up to Rs.30 crore for institutional borrowers (with individual household loans capped at Rs.10 lakh).

Other Lending Guidelines

• Small Loans for Low-Income Individuals and Distressed Persons: Loans not exceeding Rs.1 lakh per borrower are provided directly to individuals or SHG/JLG members who meet specified household income conditions. There are also provisions for loans to distressed persons for debt prepayment against non-institutional lenders.

• Securitization and Asset Transfers: For investments in securitized assets or direct asset assignment/purchase, the all-inclusive interest charged must not exceed the External Benchmark Lending Rate (EBLR) by more than 14% or MCLR plus 10%.

Publication and Implementation

• Document Reference: The extracted policy is from the LOAN POLICY 2021 (Version 4.1) issued by CSB BANK LIMITED (formerly The Catholic Syrian Bank Ltd.) on March 16, 2021. It forms part of the broader policy framework covering credit management, disbursement, collateral management, monitoring, and recovery.

This summary consolidates the key data points and procedural elements from the extracted text, providing a data-rich overview of the revised guidelines and procedural changes in the bank’s loan policy.

13th 35EP-4 Review of UPI Policy

Overview

This document presents an extensive review and update of the bank’s credit and lending policy, including topics related to restructuring, regulatory exemptions, asset classification, risk management, and a detailed framework for loan appraisal and recovery. Although the index item refers to the 13th 35EP-4 Review of UPI Policy, the extracted sections mostly focus on restructuring guidelines, asset classification, provisioning, income recognition, and risk mitigation in the broader context of the bank’s lending operations.

13. Restructuring & Prudential Norms

The restructuring section outlines detailed prudential norms applicable to all resolution plans (including those under IBC). Key elements include:

• Exceptions & Other Stipulations (Section 13.2.8): Specific exceptions and additional stipulations are provided that adjust standard guidelines under exceptional circumstances.

• Restructuring Procedures (Section 13.3):

  • Prudential Norms: Clear guidelines for asset classification, upgrade conditions, provisioning norms, additional financing, and income recognition.

  • Conversion Mechanisms: Rules for converting principal into debt or equity and converting unpaid interest into a Funded Interest Term Loan (FITL) or other instruments are stipulated.

  • Ownership Changes: Detailed procedures and requirements regarding changes in ownership during restructuring.

  • Special Transactions: Principles governing the classification of sale and leaseback transactions as restructuring activities.

  • Refinancing in Different Currencies: Specific prudential norms for refinancing exposures when borrowers have liabilities in other currencies.

  • Regulatory Exemptions & Fraud Considerations: Guidelines detail exemptions from RBI and SEBI regulations and include measures to address cases of fraud or willful default.

• Other Sections in Chapter 13: Additional guidelines are provided for settlements/compromises, legal action and recovery, write-offs, and actions concerning willful defaulters and non-cooperative borrowers, as well as procedures to prevent technical slippages.

14. Asset Classification, Provisioning, and Income Recognition

Chapter 14 focuses on the methods and norms for categorizing assets, provisioning for losses, and recognizing income. This section underpins the practical application of prudential norms in monitoring asset quality and ensuring financial robustness.

15. Risks and Mitigants in Lending

This chapter details a comprehensive risk management framework, breaking down risk into several categories:

• Credit Risk: Procedures for credit risk measurement using internal rating models and scorecards, including mandatory internal ratings for exposures above Rs.25 lakh and detailed guidelines for deteriorating ratings.

• Collateral Risk: Examination of risks associated with security and collateral to cushion financial exposure.

• Operational Risk: Guidelines to mitigate risks inherent in day-to-day banking operations.

• Market/Business Risk: Analysis of risks associated with market fluctuations and borrower-specific factors.

16. Focus Areas for Accelerating Lending

The document outlines specific sectors and verticals that the bank intends to focus on to bolster its lending portfolio. These include:

• Priority Sectors: Emphasis on sectors identified as priority by the RBI.

• Sectoral Focus: Detailed focus on agriculture, retail, MSMEs, export credit, education, housing, social infrastructure, and renewable energy.

• Special Categories: Targeted attention to weaker sections and innovative financing such as bank loans to NBFCs and MFIs, alongside capping interest on investments in securitized assets or direct assignments.

17 & 18. Deviations from Policy and Annexures

• Permitted Deviations (Chapter 17): A list of exceptions and deviations from the standard loan policy is provided, including the authority responsible for permitting such deviations.

• Annexure I (Chapter 18): An updated harmonized master list of infrastructure sub-sectors is included to support lending decisions in infrastructure finance.

Comprehensive Lending Policy Framework (Additional Content)

Beyond restructuring and risk management, the document includes a detailed introduction and organizational framework for credit management:

Policy Objectives & Coverage

• Mother Policy Stature: This Loan Policy serves as the fundamental guideline for all credit-related operations, aligning with RBI, FEMA, SEBI and other regulatory mandates.

• Policy Coverage: It specifies that all credit operations (except for certain exclusive staff schemes) must adhere to these guidelines. Special policies for business verticals are read in conjunction with this master document.

Lending Objectives & Strategies

The document lays out objectives to:

• Position the bank as the preferred choice for various borrower segments including SMEs, rural and micro-banking, agriculture, and retail.

• Build a diversified quality asset portfolio through risk-based lending.

• Enhance customer relationships through prompt servicing and risk-return optimization.

Strategies include adherence to fair practices, setting general norms for appraisal, mobilizing quality loan proposals, and ensuring a balanced loan portfolio to mitigate concentration risk.

Organizational & Appraisal Structure

• Marketing and Business Verticals: Distinct divisions (such as Gold Loan, SME, Retail, Agriculture etc.) drive the loan marketing strategy.

• Credit Appraisal Hierarchy: A multi-tiered structure via Regional Credit Hubs, National Credit Hub, and Central Credit Hub segregates risk analysis:

  • Proposals are evaluated using credit rating processes that incorporate internal scorecards and external rating inputs, with detailed delegation of sanctioning powers depending on exposure size.

• Asset Recovery Mechanism: Specific departments and branch groups are responsible for following up on NPAs (Non-Performing Assets) to minimize loss and ensure recovery.

Target Borrower Categories & Geographical Norms

Borrowers are segmented into:

• Corporate and Government Banking Clients

• Small and Medium Enterprises (SMEs)

• Rural, Micro-Banking and Agriculture

Geographical norms ensure that loan facilities are predominantly sanctioned to borrowers whose business premises fall within a defined proximity to the booking branch; flexibility exists based on adequate supervision and monitoring.

Credit Risk Management and Appraisal Processes

• Internal Rating Models: Guidelines stipulate a mandatory internal rating using proprietary models; ratings are validated by designated authorities depending on credit exposure size.

• External Ratings: Exposure above Rs.25 crore requires an external rating. For exposures above Rs.5 crore, banks are urged to have an external rating to cross-check the in-house assessment.

• Risk Mitigation: The document details measures including collateral management, higher margin pricing, insurance for assets, use of eligible financial collaterals, and guarantees to offset default risks.

Lending Restrictions & Prohibitions

A significant portion of the document is devoted to specifying prohibited and restricted areas:

• Prohibitions: A list is maintained under statutory guidelines (e.g. loans against bank’s own shares, speculative financing, financing sectors involved in production or trade of banned or illegal items, etc.).

• Additional Prohibitions: Specific prohibitions include lending for purchase of gold, advances to silver bullion dealers, or inter-company deposits based on unethical practices.

• Restrictions on Lending to Directors & Employees: Detailed guidelines prevent conflicts of interest and ensure that loans to directors, their relatives, or employees follow additional levels of scrutiny and approval. There are many stipulations defining the scope of relative and ensuring that any exception is carefully documented and approved.

• Industry-Specific Restrictions: The policy outlines restrictions on certain industries (e.g. film production, mini cement or steel plants, leasing activities) and outlines special conditions for NBFC financing, infrastructure projects, and real estate, along with clear guidelines governing bank guarantees and bridge loans.

Conclusion

In summary, the document provides an exhaustive framework for risk-based, prudent credit management. It combines detailed restructuring norms with robust asset classification, provisioning and risk mitigation strategies. It also lays out clear organizational responsibilities, borrower segmentation, and lending restrictions to ensure compliance with regulatory mandates and safeguard the bank’s asset quality. The segmented approach enables both granular review of individual credit proposals and a macro-prudential management of the institution’s overall credit exposure.

13th 36EP-5 Account Opening Portal Tie-up with Decimal Technologies Ratification of Revised Commercials

Summary of Margin and Advance Guidelines

This document details comprehensive guidelines and procedures for banks when extending advances against shares, debentures, and bonds, particularly for share and stock brokers as well as commodity brokers. The guidelines are structured into several key areas that cover margin requirements, the modalities of financing for brokers, and general protocols applicable to collateral securities in the context of advances.

Margin Requirements

• For equity shares and convertible debentures held in physical form, banks are required to maintain a minimum margin of 50% of the market value. For instruments held in dematerialised form, the minimum margin is set at 25%.

• In certain cases, banks may choose to apply higher margin requirements where deemed necessary.

• Margin requirements for advances against preference shares, non-convertible debentures, and bonds are determined on a case-by-case basis by the appropriate sanctioning authority.

Advances to Share and Stock Brokers/Commodity Brokers

Prohibited and Permissible Transactions

• Banks and their subsidiaries are explicitly prohibited from financing ‘Badla’ transactions.

• Share and stock brokers or commodity brokers may receive need-based overdraft facilities or lines of credit secured by the shares and debentures held as stock-in-trade.

Assessment and Conditions

• A careful need-based assessment is required taking into account factors such as the borrower’s financial position, their own trading activities, turnover period of stocks, and capital involvement in their operations.

• Banks are discouraged from facilitating large-scale investments in shares and debentures on the brokers’ own account through bank finance. Only easily marketable securities should be accepted as collateral.

Specific Provisions for Brokers and Guarantee Issuance

• Unlike regular borrowers, share and stock brokers are not subject to the ceiling of Rs. 10-20 lakhs for advances against shares/debentures; rather, such advances are based on demonstrated needs.

• Short-term working capital facilities may be granted to SEBI-registered brokers who comply with capital adequacy norms. These facilities aim to bridge the cash flow gap between delivery and payment in Delivery Versus Payment (DVP) transactions. The duration of these working capital facilities is short, and their utilisation is monitored on a per-transaction basis.

• A uniform margin of 50% is applied to all advances including financing of IPOs and the issuance of guarantees, with a minimum cash margin of 25% maintained specifically for guarantees issued for capital market operations. This uniform margin is also applicable to temporary overdraft facilities extended to brokers for DVP transactions.

• Banks may issue guarantees on behalf of brokers in favour of stock exchanges or commodity exchanges (e.g., NCDEX, MCX, NMCEIL) in place of security deposits or margin requirements. The issuance of such guarantees is subject to assessment of the borrowers’ requirements and adherence to exposure ceiling safeguards.

Collateral and Security Substitution

• For advances provided to brokers, if shares are held as security for a short-term period (not exceeding nine months), the requirement to transfer the shares in the bank’s name does not apply. For dematerialised shares, banks can utilise the depository pledge facility, which blocks the securities in favour of the lending bank without necessarily transferring ownership.

• In cases of default, banks have the right to exercise an option for transferring shares into their name.

• Brokers have the flexibility to substitute the pledged shares as needed, provided that all necessary conditions are met.

General Guidelines for Advances Against Shares/Debentures/Bonds

Statutory and Procedural Compliance

• Banks must strictly adhere to the statutory provisions of the Banking Regulation Act 1949 (especially Sections 19(2), 19(3) and 20(1)(a)) when granting advances against shares, including those held in dematerialised form.

• Advances should be assessed based on the intended use rather than merely the collateral provided. Standard procedures for sanction, appraisal, and post-sanction monitoring must be followed.

Segregation and Market-related Assessments

• Advances against shares, debentures, or bonds should be treated as distinct finances, separate from other advances.

• Banks need to verify the marketability of the collateral securities and scrutinise the financial stability and working of the company whose securities are being used.

• Securities must be valued at prevailing market prices upon being lodged as collateral.

Limitations and Risk Management

• Special care must be taken when advances are requested against large blocks of shares held by an individual or a group to ensure that such advances neither facilitate the retention of a controlling interest in any company nor support inter-corporate transactions.

• No advances shall be extended against partly-paid shares or to partnership/proprietorship concerns when shares/debentures are the primary security.

• For cumulative advances exceeding Rs. 10 lakhs, banks must ensure that the securities are transferred to their name (if not in dematerialised form) to secure exclusive and unconditional voting rights.

Voting Rights and Security Integrity

• Banks retain the discretion to institute their own procedures regarding the exercise of voting rights on the collateral securities.

• It is imperative to verify that securities are authentic and free from issues such as duplication, theft, or benami arrangements. Any such irregularities must be reported immediately to the RBI.

Authority and Regulation

• The authority levels for sanctioning these advances will be held as decided periodically by the bank’s Board of Directors.

• Indian banks are prohibited from engaging in transactions that involve extending credit to clients of Indian nationality/origin through their overseas branches for investments in shares and debentures/bonds of Indian companies.

This detailed set of guidelines ensures that banks implement robust assessment and risk mitigation strategies when offering advances against shares, debentures, and bonds, particularly focusing on market risks, borrower credibility, and the legal framework governing such transactions.

13th 37EP-6 Loan Policy - Review

Overview

This document is a comprehensive memorandum submitted to the Board for review and approval of significant policy updates across multiple areas, including the Collateral Management Policy, the Valuation Policy, and the Loan Takeover Policy. These policies detail the bank’s internal guidelines, risk practices, quality controls, and operational standards in relation to credit asset security and the procedures for taking over loan accounts from other financial institutions.

Collateral Management Policy

Definition and Impact on Credit Risk

• Definition: Collateralized transactions are those in which a bank’s credit exposure is hedged by assets posted by a counter-party or third party. The term “collateral security” includes both primary security and additional collateral that mitigates the credit risk.

• Risk Mitigation: The use of collateral helps improve the recovery rate, reduce loss given default, and lower the bank’s expected loss—not affecting the probability of default but providing enforceable security.

Residual Risks

The policy acknowledges several residual risks:

• Operational Risk: Inaccurate structuring or ineffective documentation can burden operations or reduce collateral value.

• Market Risk: Inadequate monitoring of price volatility and haircuts can lead to losses if the collateral value drops unexpectedly.

• Concentration Risk and Correlation Risk: Overreliance on similar assets or assets with similar market cycles can lead to systemic exposure.

• Legal Risk: Issues include non-compliance with statutory registration and disputes regarding title or priority among creditors.

Objectives and Classification of Collateral

• Objectives: Ensure the bank’s right to liquidate or enforce collateral is maintained, with clear procedures and timely liquidation if necessary.

• Types of Collaterals: Primary focus is on highly liquid cash collaterals (bank deposits, NSCs, government securities, etc.) and immovable properties (land/building). The policy also allows for other types of financial assets (shares, gold, convertible instruments) under certain conditions.

Acceptability and Due Diligence

• Acceptability Criteria: Detailed criteria for accepting immovable property are provided. For example, properties not demarcated, improperly partitioned, or with certain encumbrances (e.g., religious sites, wetlands, or properties with inadequate access) are not acceptable.

• Documentation and Verification: The policy mandates the collection of certified title deeds through legal scrutiny, periodic searches, and registration (e.g. CERSAI for charges) to safeguard the bank’s interests.

Custody and Release

• Title deeds and loan documents must be held in safe custody, and collateral should be released only after full settlement of dues as per strict register protocols.

Valuation Policy Updates

The memorandum includes an updated Valuation Policy that has extensive annexures detailing the empanelment process for valuers, methodologies, and reporting formats.

Empanelment of Valuers

• Criteria for Non-Retail and Retail Valuers: Qualifications, minimum work experience, registration requirements, and disqualification clauses (e.g., pending complaints, involvement in fraud, conflict of interest) are specified.

• Categorization: Valuers are classified into categories (A, B, C) based on their experience and the value of properties they are authorized to value. For plant and machinery, experience requirements may be relaxed with postgraduate degrees.

• Empanelment Process: Applications are to be submitted in prescribed formats with supporting documentation. The empanelment committee (comprising the MD & CEO, Chief Credit Officer, Head of business vertical, and Head – Monitoring & Recovery) reviews and approves applications.

Valuation Methodologies

The policy outlines various approaches depending on the asset type:

• Market-Based Methods: For land and buildings, comparable sales and the land and building method are used.

• Income Approach: Rent capitalization is used when assets generate income, and profit method for businesses like hotels or cinemas.

• Cost Approaches: Accounts method, plinth area rates and cost index method, and detailed item-wise or contract methods are detailed.

Process and Reporting

• Valuation requests are triggered via an automated Loan Origination System that factors in property type, location, and pending assignments.

• Valuation reports must include timestamps on photos, detailed assumptions, and must be independently verified by a relationship manager or cluster head.

• If there is a significant discrepancy between two valuations for high-value properties (above Rs 1 crore with exposure over Rs 5 crore), a second opinion is required with the lower value used for security.

Loan Takeover Policy Review

Scope and Key Revisions

• Policy Scope: The revised Loan Takeover Policy now excludes retail loans including Loan Against Property (LAP) for both personal and business purposes based on recommendations from the retail vertical team. This marks a narrowing of the scope to focus on larger, corporate exposures.

• Stock Audit Reliance: For takeover proposals, particularly for large borrowers, the revised guidelines allow the bank to rely on the latest stock audit reports provided by the transferring bank, subject to compliance with other policies.

• Relaxed Verification: Criteria for verifying account statements with banks other than the transferor bank may be waived for large borrowers if justified, aiming to streamline the loan takeover process.

Annexures and Documentation

• Annexure I: Lists the major changes compared with the earlier policy. Key highlights include the removal of retail loans from the takeover process and updated procedures to verify collateral and financial information.

• Annexure II: Contains the revised Loan Takeover Policy, aligning it with recent internal communications, regulators’ guidelines, and business team feedback.

Conclusion

The memorandum reflects the bank’s proactive approach to updating its collateral management, valuation, and takeover policies. These changes are aimed at improving risk management, ensuring adequate security in credit exposures, and streamlining processes for loan takeover from other institutions. This comprehensive review incorporates regulatory updates, internal assessments, and feedback from various departments to ensure the bank’s lending operations remain robust and compliant with current market and regulatory conditions.

13th 38EP-7 Valuation Policy - Review

Overview

The document provides an extensive review and update of policies governing the takeover of credit facilities, valuation practices, and overall risk management at the bank. The guidelines cover everything from borrower selection, due diligence, appraisal and sanction procedures, to post-sanction monitoring. It also encompasses detailed instructions on valuation requirements under the SARFAESI Act, reporting and delegation structures, and recovery guidelines. This consolidated policy review is aimed at ensuring strict regulatory compliance, prudent risk assessment, effective portfolio management, and timely recovery mechanisms.

Loan Takeover and Borrower Selection

• Borrower Eligibility: The policy mandates comprehensive due diligence including obtaining credit information reports (CRILC, CIBIL, CIC, NeSL) and relevant KYC/AML documentation. Borrower selection is based on financial strength, credit ratings (internal rating thresholds such as FR – 6 and Obligor Rating OR –6 or better), and compliance with statutory norms. For companies, regular certifications from professionals (such as Chartered Accountants or Company Secretaries) in a specified format are required.

• Credit Rating and External Ratings: External ratings are required for large exposures (accounts above Rs 25 crore). In the MSME category, a minimum long-term rating of BB+ or equivalent is necessary. Deviations in entry-level internal and external ratings can be approved by HO committees and higher authority.

• Account Verification: Verification of past account statements for a period of at least one year (or a lesser period if the unit is new) is a key requirement. Emphasis is given to qualitative factors such as cheque returns, overdrawn accounts, and fluctuations in balances.

Risk Assessment and Financial Metrics

• Key Ratios and Metrics: The document specifies parameters such as Debt Service Coverage Ratio (DSCR), Debt to EBITDA (PBDIT) ratio, and debt-equity ratios. Minimum DSCR thresholds (not less than 1.1 for any year and an average of 1.30) are stipulated. The desirable debt to EBITDA ratio should be less than 4, although flexibilities are allowed subject to internal approvals.

• Relaxations: Various tiers of authority (from Head NCH/AGM downwards) are empowered to permit relaxations in parameters like DSCR and Debt to EBITDA ratios, and in some cases, deviations can be made subject to higher authority approval.

Valuation and Appraisal Guidelines

• Valuation Policy Requirements: The policy emphasizes that valuation reports, used especially for fixing the reserve price under SARFAESI proceedings, must not be more than one year old. These valuations should be conducted by approved valuers as per the guidelines laid out under the Sarfaesi Act. Reserve prices for auctions are to be determined based on the fair market or saleable value and may be reduced by up to 15% in subsequent auctions, if justified by market conditions.

• Appraisal Process: All credit proposals, particularly for takeover cases, require appraisals backed by audited financial statements (or provisional accounts if audited versions are unavailable), comprehensive balance sheet analysis, and thorough investigation by the Relationship Manager and Cluster Head during unit visits.

Approval, Deviation, and Reporting Structures

• Delegation of Powers: The sanctioning authority is clearly delineated across several levels—from branch-level officers to the Head Office Committee and the Management Committee of the Board (MCB). Deviations from the standard policy parameters (including entry level ratings and financial metrics) require approval from the designated authority with properly documented justifications.

• Reporting Requirements: All takeover sanction decisions must be reported to the next higher authority by the 10th of the subsequent month, following the structure laid down in the bank’s loan policy.

Securitisation Portfolio Performance

• Portfolio Composition: The document provides an in-depth breakdown of the securitisation portfolio, which includes direct assignment (DA) pools and Pass Through Certificates (PTC) for various asset classes such as gold loans, MFI loans, loans against property, SME loans, two-wheeler, and commercial vehicle loans.

• Credit Enhancement: Various forms of credit enhancements (fixed deposits, over-collateralization, excess interest spread, and subordinated debt structures) are detailed along with their role in protecting the asset quality of the pooled loans. Amortisation trends and performance metrics across these pools are also reviewed.

• Asset Quality: The review includes performance metrics for asset classes including NPA percentages (as compared to purchase consideration) and periodic trends. Specific asset classes such as commercial vehicle loans, LAP, MFI, and two-wheeler loans are monitored for performance and moratorium effects.

Recovery Policies and SARFAESI Proceedings

• NPA and Recovery: The document details revised guidelines for monitoring, escalating, and recovering Non-Performing Assets (NPAs). This includes detailing roles at branch, zonal, and executive levels with a multi-tier committee structure responsible for overseeing recovery and legal action if required.

• Legal Procedures: Emphasis is placed on the initiation of steps under the SARFAESI Act. Guidelines specify that legal action should not be halted by mere notices and should include eventual auction processes with clearly defined reserve pricing based on approved valuation reports.

• Committee Structures: Multiple tiers (ranging from Tier I to IV committees) are defined with clear thresholds for decision-making, ensuring that appropriate levels of management control all recovery actions.

Conclusion

The policy review encapsulated in the document provides a holistic framework for maintaining loan quality through effective takeover procedures, rigorous valuation and appraisal protocols, and robust risk mitigation and recovery measures. By ensuring updated valuation practices, strict adherence to RBI directives, and a well-defined delegation matrix for approvals and deviations, the bank aims to sustain diversified credit risk, optimize returns, and maintain a high-quality asset portfolio.

13th 39EP-8 Collateral Management Policy- Review

Overview

This document presents a comprehensive review of policies, procedures, and roles related to collateral management, recovery proceedings, and asset disposal. It covers everything from sanctioning expenditures for registration costs, establishing recovery cells, legal actions including the filing of suits, and detailed guidelines on compromise settlements and write-off proposals. The document is structured into various sections which set out the responsibilities of senior officials, legal protocols, and internal review mechanisms.

Key Roles and Governance

• Senior Management and Authority Figures:

  • The MD & CEO, Head – Recovery & Credit Monitoring, Chief Financial Officer, Chief Risk Officer, and Chief Credit Officer are all involved in decisions.

  • Additional roles include Head of Premises Dept, Deputy General Manager (ARD)/AGM (ARD) and other role-specific positions such as Recovery Vertical and Relationship Managers.

• Committee Structures:

  • A number of committees and cells are mentioned, including Recovery Cells, Zonal Committees, HO Executive and HO Compromise Committees, as well as NPAMC/Board level committees.

  • These committees have clearly defined discretionary powers to sanction proceedings for legal actions, compromise settlements, or write-offs.

Expenditure on Collateral Management

• Registration Expenses:

  • The document sanctions expenditure for the registration of properties with stamp duty, registration charges, and other expenses at up to 1% of the property’s value.

  • These costs are recorded under the Non-Banking Asset account.

  • Approval for such expenditure is provided by the respective discretionary authority who initiates SARFAESI proceedings (or AGM for ARB accounts).

Recovery Cell and Follow-Up Procedures

• Setting up Recovery Cell:

  • The Recovery Policy mandates the creation of a Recovery Cell at each zonal office.

  • Its purpose is to intensify the follow-up for NPA accounts and enhance proceedings under the SARFAESI Act.

  • The cell comprises key branch personnel including the Area Manager, Chief Manager (Law) or Law Officer, and additional designated officers (e.g., Recovery Officers) based on geographic or operational needs.

Legal Actions and Suit Filing

• Initiation and Timing:

  • Filing a legal suit is considered a last resort after other recovery avenues have been exhausted.

  • Once an account becomes an NPA, a report (R-47A) must be forwarded within 30 days and staff accountability is finalized within 60 days (or sooner pending other instructions).

  • The parent branch is responsible for filing Form R-47B to receive the necessary sanction before filing a suit, ensuring that suit filing occurs within the prescribed time bar period.

• Sanction and Responsibility:

  • The respective authorities, including Branch, Zonal, and HO departments, ensure that staff accountability is examined and finalized before legal proceedings.

  • In urgent cases, sanction can be issued pending completion of the accountability review, with follow-up requirements.

• Legal Action Details:

  • It is emphasized that legal action is a natural consequence of willful default and non-cooperation by borrowers.

  • Legal steps should also include measures such as preventing further alienation of assets and attaching personal uncharged assets of borrowers and guarantors.

Recovery Through Compromise

• Committee Discretion:

  • Multiple committees (Zonal, HO Executive Compromise, HO Compromise) have clearly defined discretionary powers to sanction compromise proposals.

  • Limits are set on the maximum remission amounts allowed, and these vary depending on the account type and the committee’s level.

  • For example, the HO Executive Compromise Committee can sanction proposals with remission amounts that have a maximum debit limit on the Profit and Loss account (ranging from ₹3 lakhs up to ₹20 lakhs in different scenarios).

  • Special provisions exist for educational, government-sponsored, and PMRY/SME loans where sanction thresholds differ.

• Extension of Due Dates:

  • The HO Executive and HO Compromise Committees have the authority to extend the due dates for settlements up to six months beyond the original due date.

  • Extensions are subject to collection of simple interest calculated at Base Rate/MCLR plus an additional 3% rate for the delayed period.

  • The waiver of interest for the extension may be considered within set limits (e.g., up to 25% waiver or a maximum of ₹50,000, depending on the case).

Valuation and Documentation

• Security Property Valuation:

  • For compromise proposals involving remission amounts above certain thresholds, security properties must be valued at submission.

  • Valuations below ₹10 lakhs are done by the Branch Manager; for amounts above that but below ₹50 lakhs, a nearby Branch Manager should co-value; and for proposals above ₹50 lakhs, an approved valuer must be engaged.

  • Valuation reports must be no older than six months at the time of processing.

• Staff Accountability and Reporting:

  • Prior to transferring accounts to asset recovery branches (ARB), the parent branch must submit detailed staff accountability reports (using R.47A and R.47B forms) to the relevant authorities.

  • Such diligence is required not only for internal transparency but also to support or challenge legal and compromise proposals.

Write-Off Proposals

• Criteria and Approvals:

  • Write-off proposals follow strict guidelines where proposals are considered only after the Branch Manager certifies the absence of tangible assets in the name of the borrower or guarantors.

  • Recommendations from both Branch and Zonal Managers (or AGM/ARB) are required.

  • The HO Compromise Committee has set discretionary limits (e.g., sacrifice thresholds up to ₹20,00,000 and corresponding P&L debits) and further proposals, especially those concerning willful defaults or fraud-related cases, must be escalated to NPAMC/Board level.

Role of Auditors and Internal Controls

• Auditor Accountability:

  • The document outlines that in cases where there is falsification or negligence in audits, banks should lodge formal complaints with the Institute of Chartered Accountants of India (ICAI) and, if necessary, consult the RBI and other regulatory bodies.

  • This is intended to ensure that auditors are held accountable for deficiencies that could adversely affect the bank’s interests.

• End-Use Certification:

  • Banks are advised to obtain specific certification on the end-use of funds from the borrowers’ auditors if there are concerns regarding the diversion or siphoning of funds.

  • This may involve awarding separate mandates to independent auditors to verify adherence to loan covenant requirements.

Additional Reporting and Classification Procedures

• Wilful Default and Non-Cooperative Borrowers:

  • The policy mandates that branches submit reports on suspected cases of wilful default and non-cooperative borrowers.

  • These reports are to be routed through Zonal Offices and further recommended by relevant Relationship Managers and Cluster Heads before reaching the HO-ARD for appropriate classification.

  • There are also clearly laid out procedures for the possible removal of names from these lists, subject to committee approvals.

• Sale of Financial Assets:

  • Guidelines are provided for the sale of non-performing financial assets to other institutions (such as SCs/RCs), including the constitution of identification committees and periodic review at the Board level.

  • The process involves periodic listing and review of accounts, with special provisions to adopt methods such as the Swiss challenge to reduce the vintage of NPAs.

Conclusion

This policy comprehensive review outlines the full spectrum of processes related to collateral management. It integrates roles from senior management down to zonal and branch levels, mandates strict adherence to timelines in legal and compromise settlements, enforces rigorous documentation and valuation controls, and assigns clear responsibilities for audit and internal oversight. The detailed guidelines ensure that the recovery process—from initiation of legal action to asset write-off—is executed transparently and within prescribed financial limits, thereby safeguarding the bank’s interests while maintaining regulatory compliance.

13th 40EP-9 Loan Takeover Policy- Review

Loan Takeover Policy Review – Overview

The document outlines comprehensive guidelines for the recovery and management of non-performing advances (NPAs) by banks. It emphasizes the bank’s role as a custodian of public funds and the importance of timely recovery to maintain liquidity, profitability, and adherence to prudential norms. The policy is designed to activate recovery machinery effectively while ensuring quality control of assets and maintaining regulatory compliance.

Preamble and Quality Standards

• Preamble: Banks operate on a simple principle – take money, lend money, and earn interest. Prompt recovery is pivotal in ensuring budgeted profits and recycling funds. The policy underscores the evolution of NPAs in the Indian banking system following reforms based on the Narasimham Committee recommendations.

• Quality Control Measures: Four key practices are stressed:

  • Timely recovery of installments and interest

  • Early detection of signs of asset sickness

  • Timely restructuring or rescheduling to avoid NPAs

  • Periodic account review and renewal

NPA Monitoring and Annual Budgeting

A structured monitoring system is implemented through a four-tier review mechanism:

• Tier I: Board-level NPAM Committee for accounts with outstanding amounts of Rs.500 lakhs and above

• Tier II: Head Office (HO) Review Committee for accounts between Rs.50 and Rs.500 lakhs

• Tier III: Executive-level Committee for accounts ranging from Rs.10 to Rs.50 lakhs

• Tier IV: Zonal Committees for accounts up to Rs.10 lakhs

The Bank fixes an annual NPA budget, approved by the Board, which is communicated to all branches and zonal offices for coordinated action.

Management and Prevention of NPAs

• Prevention Strategy: Emphasizes proactive follow-up mechanisms such as date diaries, borrower notifications (via letter, phone, or email), borrower visits, and obtaining standing instructions to debit linked accounts.

• Post-NPA Recovery: For accounts that have turned into NPAs, actions include borrower visits, exploring enforcement actions under the SARFAESI Act, negotiating compromise settlements, and initiating legal proceedings when necessary. The strategy also includes an ABC analysis to prioritize accounts for recovery.

Restructuring of Non-Performing Assets

Eligible NPA accounts can be restructured if:

• They are not written off or classified as loss assets

• The corrective plan ensures the venture becomes viable within seven years and the repayment period is within ten years

• Promoter or borrower contributions meet minimum thresholds

Other specific conditions cover multiple banking exposures, secured versus unsecured assets, and specialized treatment under the Government scheme (e.g., subordinated debt for stressed MSMEs). The policy mandates recognizing interest on a cash basis until account performance is restored.

SARFAESI Act and Recovery Procedures

The policy provides detailed procedures for initiating recovery under the SARFAESI Act 2002:

• Notice and Possession: If dues are not settled within 60 days of a notice, the bank may take possession of movable or immovable properties following prescribed rules (including inventory, panchnama, and publication of notices).

• Auction Processes: Clearly defined steps for auction sale of secured assets—reserve price determination by designated officers based on fair market value, required notice periods, and possibility of bid reductions for subsequent auctions. Specific guidelines are provided for both movable and immovable assets.

• Bidding by the Bank: Detailed delegation of discretionary powers for bidding on property in cases where external bids are not received.

Recovery Cell, Legal Actions, and Compromise Settlements

• Recovery Cell: Each zonal office has a dedicated cell to intensify follow-up actions and manage SARFAESI proceedings.

• Legal Action: Filing of suits is a last resort and must be initiated timely with coordinated actions via branch, zonal, and HO approvals. The process includes issuing legal notices, pursuing third-party actions, invoking Lok Adalats, and transitioning cases to Debt Recovery Tribunals (DRTs).

• Compromise Settlement: The policy outlines a committee approach with specific limits on the maximum remission allowed. Committees at zonal and HO levels assess proposals using net present value (NPV) concepts and detailed negotiation guidelines. Provisions for extending due dates and waiving delayed interest are also covered.

Write Off and Staff Accountability

• Write Off Process: When all recovery avenues have been exhausted, accounts are written off. The process requires robust evidence of non-recoverability and follows strict administrative guidelines with delegated limits at various committee levels.

• Staff Accountability: Detailed reviews of staff performance and accountability are required when submitting proposals related to compromise or write-off decisions.

Guidelines on Wilful Defaulters and Non-Cooperative Borrowers

• Wilful Default: Defined through deviation from payment responsibilities, diversion of funds, and asset misappropriation. The policy mandates reporting suspected cases and outlines penal measures such as denial of further facilities, legal action, and public reporting via credit information companies.

• Non-Cooperative Borrowers: Borrowers failing to respond constructively to recovery efforts (with thresholds set at aggregate facilities of Rs.5 crores) can be classified as non-cooperative. Specific committees review such cases and issue show cause notices.

Asset Recovery Branches (ARB)

For NPAs of Rs.10 lakhs and above, the policy introduces Asset Recovery Branches. Key aspects include:

• Criteria for account migration to ARBs

• Process flow: continued follow-up by the parent branch for 90 days before ARB transfer

• Clear guidelines for documentation, suit filing, and handling of accounts (including provisions for fraud or statutory violations)

• Detailed administrative structures, roles of ARB and parent branches, and control of recovery actions.

Conclusion

The Loan Takeover Policy sets out an extensive framework for managing NPAs through stringent quality controls, structured committee reviews, legal and compromise mechanisms, and specialized recovery units. By integrating regulatory compliance with robust recovery strategies such as SARFAESI proceedings and asset restructuring, the policy ensures that banks maintain asset quality and safeguard public funds while pursuing every possible avenue for recovery.

13th 41EP-10 Review of the Securitisation portfolio- December 2020

Summary of the Review of the Securitisation Portfolio – December 2020

This document captures detailed procedures and guidelines related to asset recovery and the management of non-performing assets (NPAs) as part of the securitisation portfolio review. The contents are organized into several sections covering account transfers, record keeping, monitoring, inspection, reporting, revaluation of security properties, part release of securities, engaging recovery/resolution agencies, real estate brokers, and the sale of financial assets to Securitisation/Reconstruction Companies (SC/RC).

Account Transfer & Record Keeping

• Transfer Process:

  • Accounts are transferred from the Parent Branch to the Asset Recovery Branch (ARB). During this transfer, proper acknowledgement is obtained using an account transfer format, which is then maintained in a manual register at both the Parent Branch and ARB. Each account is recorded in a separate folio.

  • Associated documents such as title deeds (with an authenticated copy of the relevant title deed register page) are attached to the transfer.

  • In cases with sub-limits maintained at another branch for NPAs, the sub-limit must be transferred to the parent branch unless noted otherwise on the transfer form.

  • A formal communication (using a standardized format, Form ARB 2) is sent to borrowers/guarantors/mortgagors regarding the transfer, and copies of all related correspondences (notices, postal receipts, acknowledgements) are maintained.

Review Mechanism & Inspection

• Review Meetings:

  • HO Asset Recovery Department (ARD) conducts a review meeting within 7 days of the account transfer, involving both the HO and ARB teams. The discussions focus on a brief history of the account, present status, observed deficiencies, strengths, and weaknesses, along with a resolution strategy.

  • Regular monthly meetings are held with the Asset Recovery Department at head office to review recovery progress.

• Inspection:

  • Post-transfer, a zonal officer is assigned to verify completion of the transfer process, record maintenance, and to certify the process both at the Parent Branch and ARB.

  • An annual inspection by the Head Office’s Inspection Department further verifies the overall transfer and organisational record maintenance procedures, with findings included in the annual report.

Reporting of Compromise / Write Off Proposals

• All compromise or write off proposals sanctioned by the Zonal Committee are reported monthly to the HO ARD. Proposals sanctioned by the HO Executive Compromise Committee are r eported quarterly to the MD & CEO and the NPAM Committee of the Board.

Revaluation of Security Properties for NPA Accounts

• Revaluation Requirements:

  • Security properties must be revalued immediately within 120 days of the account’s classification as an NPA and subsequently every three years.

  • For accounts with outstanding balances up to Rs.50 lakhs, the branch’s principal officer is responsible; for balances of Rs.50 lakhs or more, an approved valuer must conduct the revaluation.

  • The valuation report should be submitted within one month from the revaluation due date. Any anomalies in the existing valuation certificate (EC) must be promptly reported.

Part Release of Securities

• Guidelines for Part Release:

  • Part release of securities is allowed if the offer meets at least 70% of the distressed sale value of the proposed property to be released. The valuation should be current (not older than six months) and performed by an authorised official.

  • Decisions for part releases are discretionary: the Head – Recovery & Credit Monitoring can approve releases on NPA accounts originally sanctioned at branch or zonal level, whereas MD & CEO authority is required for all other cases.

  • No discretionary power for part release is vested in zonal offices.

Guidelines for Engaging Resolution / Recovery Agencies

• Objective and Eligible Accounts:

  • Recovery agencies/agents are engaged to collect outstanding amounts, covering all NPA accounts, SARFAESI-initiated accounts, suit-filed or decreed debt cases, and accounts of loss/willful defaults or fraud, including SMA 1/2 category accounts.

• Appointment & Selection:

  • The appointment, extension, and termination of these agencies fall under the coordinated decision-making of the MD & CEO and Head – Recovery & Credit Monitoring. Zonal offices are tasked with conducting due diligence, evaluating financial soundness, capability, training, past experience, infrastructure, and compliance with RBI guidelines.

  • Agencies are not permitted to use the bank’s name, trademark, or logo in marketing materials.

• Code of Conduct & Responsibilities:

  • Agents must adhere to the highest ethical standards, ensuring compliance with all legal requirements and RBI/Bank directives. They are responsible for safeguarding information, taking custody of securities if required, and maintaining a detailed register of communications, visits, and recoveries.

  • The agents must only accept payments via cheques or drafts drawn in favor of the Bank’s account, and collect no cash directly from constituents.

  • A formal agency agreement, vetted by the bank’s legal officers, defines terms, fees, and liabilities. Agencies are also held accountable for any loss from misappropriation or negligence, with constructed arrangements for regular monitoring and grievance redressal.

• Fees and Incentives:

  • Fees are determined on a case-by-case basis by the competent authority, with incentives tied to performance. However, targets are set carefully to avoid encouraging unprofessional or intimidating recovery practices.

• Monitoring/Grievance Mechanism:

  • At both zonal and HO levels, three-member committees are established to monitor recovery progress, review monthly reports, and handle grievances. These reports are escalated to MD & CEO and presented to the NPAM Committee at periodic intervals.

  • In the event of any borrower’s complaint, the agency assigned may be temporarily excluded from further recovery actions pending investigation.

Engaging Real Estate Brokers / Agents

• Real estate brokers or agents are engaged to identify prospective buyers for assets under SARFAESI or non-legal sales. Fees are charged at prevailing market rates and sanctioned by the MD & CEO and other senior recovery officials.

Sale of Financial Assets to Securitisation/Reconstruction Companies (SC/RC)

• Scope and Eligibility:

  • Guided by the SARFAESI Act 2002 and RBI guidelines, the bank may sell financial assets (including NPAs, non-performing bonds, and even written-off assets) to SC/RC. Standard assets covered under consortium arrangements where at least 75% of the participating institutions agree to the sale also qualify, as well as assets reported as SMA-2.

  • Assets under an OTS (One Time Settlement) that are not materializing or whose sanctioned terms are not upheld can also be considered for sale.

• Sale Process:

  • A committee comprising senior officers (including the Head – Recovery & Credit Monitoring, CFO, and legal representatives) is tasked with identifying and recommending assets for sale. A quorum is formed and the committee has the authority to modify the asset list.

  • The bank employs a Swiss-challenge method annually to reduce the vintage of NPAs being sold and ensures that the invitation for bids is widely published in two English newspapers and on the bank’s website.

  • Auctions for sale can be held via e-auction or physical auction, with a minimum due diligence period of two weeks provided to prospective buyers prior to final valuation and decision-making.

This review lays out a detailed framework aimed at ensuring legal compliance, improving accountability in recovery efforts, and safeguarding the bank’s interests in the process of securitisation and asset recovery.

13th 42EP-11 Approval to act as signing authority in demat accounts of borrowers pursuant to POA executed by borrowers in favour of CSB Bank

Recovery Policy Overview

This document outlines the asset recovery policy as established by the Asset Recovery Department based at the Head Office in Thrissur. It provides detailed procedures for handling the sale of non-performing assets (NPAs) and distressed assets to specialized asset care channels generally designated as SC/RC. The policy addresses offer submission, bidding, valuation, decision-making delegation, provisioning, and utilization of floating or counter-cyclical provisioning buffers.

Offer Submission and Bidding Process

Identification Committee and Negotiation

• The identification committee is responsible for compiling offers and submitting them with comprehensive details received from the SC/RC to the MD & CEO.

• The MD & CEO holds the authority to negotiate further with SC/RC regarding the offered price and terms to enhance or modify the proposal.

Right of First Refusal and Auction Mechanism

• Priority is given to a SC/RC that has already secured the highest and a significant share (between 25-30%) of the asset, allowing them the first right of refusal.

• This process is anchored in a price discovery method using auction, whereby the SC/RC matching the highest bid may secure the asset.

Final Offer Evaluation and Board Involvement

• Once the final offer is received, it is reviewed in detail by the Board of Directors or the NPA Management Committee.

• Any changes in the list of identified accounts, as observed during the review, must be presented to the board or the designated committee along with the final offer.

Bidding Dynamics and Order of Preferences

• The board or its committee may disclose the identity of prospective bidders upon entering into a confidentiality agreement.

• Bidders can submit bids for assets listed for sale by the bank. If a bidder offers more than 30% of the outstanding loan in cash, the bank will solicit counter bids from other interested parties.

• In such counter bidding scenarios, the bank may invite the pre-qualified SC/RC (that already holds the highest significant stake) to match the highest counter bid.

• The preference hierarchy for executing the sale is as follows:

  1. SC/RC with the highest significant stake

  2. The original bidder

  3. The highest bidder from the counter bidding process

Bank’s Options Post-Bidding

• The bank can opt to sell the asset to the determined winning bidder.

• Alternatively, if the bank chooses not to proceed with the sale, it is obligated to make an immediate provision on the account equal to the higher of either: a) The discount on the book value as quoted by the highest bidder b) The provisioning mandated by the existing asset classification and provisioning norms.

Terms of Sale

• The sale of standard, SMA-2, or NPAs to a SC/RC may be transacted in cash, or through the issuance of security receipts, or via a combination of both.

• Sales will not be executed on a contingent price mechanism that would force the bank to assume a part of any shortfall if SC/RC realization does not meet expected targets.

Valuation of Financial Assets

Methodology and Reports

• Asset valuation is primarily based on the exposure amount.

• For exposures of Rs.50 crore or below, an internal valuation report (not older than one year) will be utilized.

• For exposures exceeding Rs.50 crore, two external valuation reports (each not older than one year) will be used, with the cost of the valuation process borne by the bank.

Assessment and Pricing

• The bank independently assesses the value offered by SC/RC to ensure that the realizable value of the financial asset is properly estimated, guiding the acceptance or rejection of offers.

• When disposing of standard/SMA-2/NPAs, the sale price must generally not fall below the net present value (NPV) of the estimated cash flows from available securities, after accounting for realization costs.

• The applicable discount rate in this calculation will be the lower of the contract interest rate or the penalty rate.

Delegation of Decision-making Powers

• Authority for decisions regarding the identification of accounts and the finalization of sale prices lies with the Board of Directors or its designated subcommittee.

• The Board or its subcommittee may further delegate authority for completing necessary documentation, due diligence, and the entire asset sale process, including investment in security receipts.

• Transactions may be executed using the assignment agreement format and the forms prescribed by the Indian Banks’ Association (IBA).

Provisioning and Valuation Norms

• Upon the sale of financial assets to a SC/RC, those assets will be removed from the bank’s books.

• The bank is required to adhere to all RBI guidelines on provisioning and valuation norms, ensuring compliance with regulatory standards.

Utilization of Floating Provisions/Counter-Cyclical Provisioning Buffer

• If the NPA amount in a financial year increases by more than 20% compared to the outstanding balance as of 31 March of the previous financial year, up to 33% of the counter-cyclical provisioning buffer (or floating provisions held as of 31 March 2013) may be used to create specific provisions for non-performing assets. This is in addition to provisions made under the Reserve Bank's framework for revitalizing distressed assets.

• Additionally, counter-cyclical/floating provisions may be used to counteract any shortfalls if an asset is sold at a price below its net book value.

Conclusion

This comprehensive recovery policy establishes a structured and methodical approach for the sale of NPAs and distressed assets. It details the entire process from initial offer submission and negotiations through to the final sale, including detailed methodologies for asset valuation, decision-making delegation, and the utilization of financial buffers to accommodate sale shortfalls. The guidelines ensure that the bank maximizes recovery while maintaining compliance with statutory provisioning and valuation norms.

13th 45ER-1 Recovery Policy 2020 2021 Review and Modifications in Existing Policy

Overview

This document presents a comprehensive review and several modifications to the bank’s existing foreign exchange, recovery, and contingency funding policies as part of its annual review process. The revisions are driven by changes in regulatory guidelines issued by bodies such as the Reserve Bank of India (RBI), FEDAI, and other authorities, as well as evolving market conditions and internal organizational changes. The document spans detailed amendments on exchange rate calculation procedures, card rate margins, branch categorizations, forward contract guidelines, and risk management protocols.

Key Revisions in the Foreign Exchange Policy

Exchange Rates & Card Rates

• Exchange Rate Determination: Dealers are required to calculate card rates based on market rates prevailing during market opening times. Updated procedures call for rates to be displayed in B category branches and uploaded on the website, ensuring transparency through electronic dissemination.

• Card Rate Margins: The amendments have refined the maximum margins on various transactions. For example, the maximum margin on TT buying, TT selling, bill buying, and bill selling rates has been increased from 1.0% to 1.5% of prevailing market rates, and the cheque buying margin has been raised from 1.5% to 2.0%. Additionally, for certain transactions, a threshold of Rs 2.00 lakh is set, while a maximum forward premium margin of 50 paise is maintained. Head Treasury retains discretionary authority to adjust these margins within the permitted maximum based on market conditions, competition, and profitability.

Branch Categorization and Operational Changes

• The document includes a revision of branch categorization for foreign exchange operations. Several branches are re-designated based on operational potential. Non-operating branches (e.g., Ernakulam [M.G. Road], Chertala, Noida, Erode, and T-Nagar Chennai) have been reclassified, while specific branches are now labeled as operating to streamline FX transactions.

• Dealing Room Operations: The roles and responsibilities in the dealing room are clearly demarcated among front office (dealers), mid-office (risk management and MIS), and back-office (settlement and reconciliation). Dealers are required to maintain detailed deal slips, perform regular rate scans, and adhere strictly to internal and regulatory guidelines.

Forward Contracts and Derivatives

Guidelines for Booking and Hedging

• Booking Forward Contracts: The guidelines enable bank clients to book forward exchange contracts as a risk hedging mechanism. Derivative contracts, including swaps and options, must be structured such that the notional amount and tenor do not exceed the underlying exposure. The document outlines detailed procedures for cancellation, early delivery, and extension of contracts.

• User Classification Framework: A clear separation between retail and non-retail users is implemented. Non-retail users include large-scale corporate entities, NRIs (excluding individuals), and entities with net worth above a predetermined threshold. This classification informs the types of products available as well as margin parameters and risk management obligations for each group.

• Hedging Guidelines: Evidence of contracted or anticipated exposure must be obtained within 15 days of the trade, with stringent penalties for non-compliance. The policies mandate that derivative contracts must serve the purpose of hedging and should be recorded with full documentation

Risk Management, Reporting, and Controls

• Risk Management Measures: The revised policies strengthen internal controls with explicit instructions for daily monitoring of trading positions, reconciliations of nostro and vostro accounts, and regular reporting to senior management such as the Head-Treasury, ALCO, and Risk Management Committees. The back office is tasked with ensuring that all deals are confirmed independently and that discrepancies are resolved promptly.

• Contingency Funding and Liquidity Management: In parallel with the FX policy revisions, the document outlines an updated Contingency Funding Policy. This includes provisions for quarterly liquidity stress tests, scenario analyses (local liquidity crises versus nationwide name problems), and detailed action plans to address potential funding shortfalls. Key liquidity sources are identified (e.g., short-term interbank deposits, investments in commercial papers, excess SLR, and CRR).

• Foreign Inward Remittance Procedures: Detailed guidelines on the processing of foreign currency remittances are provided. Remittances up to Rs 2.00 lakh may be immediately converted into Indian Rupees provided all requisite information is available. For amounts exceeding this threshold, alternative execution in foreign currency or conversion with beneficiary consent is mandated. Compensation measures for delayed payments are specified, including interest at 2% over the bank’s savings rate and mechanisms to address adverse exchange rate movements.

Additional Amendments and Procedural Updates

• Limits and Exposure Controls: The revised policy increases limits for placing foreign currency deposits with various categories of banks (e.g., enhancing limits for private sector, public sector, and state banks) to maximize arbitrage opportunities. Similarly, buy-sell swap limits for investment purposes have been enhanced.

• Documentation & Compliance: All changes are to be automatically amended when updated by regulatory authorities. New clauses ensure that all procedures—from the maintenance of foreign currency accounts across borders to the reconciliation of nostro/vostro balances—comply with statutory obligations and regulatory guidelines.

Conclusion

In summary, the reviewed document aggregates numerous modifications aimed at improving the bank’s recovery, foreign exchange, and contingency funding policies in line with the latest market and regulatory developments. The robust changes enhance transparency in rate calculations, fortify risk management protocols, provide clearer operational roles within the dealing infrastructure, and expand liquidity management mechanisms. The integrated approach is designed to protect the bank’s interests while maximizing returns and maintaining compliance with evolving RBI, FEDAI, and other regulatory norms.

13th 46ETM-1 Investment policy on Alternative Investment Fund AIF

Unique Identification and Trade Processing

The document establishes that every trade (and related cash flows) must be assigned a unique reference derived from account details (such as account numbers) to ensure traceability. This unique identification is critical for netting losses or passing on gains as required. Additionally, when entering contracts or processing cancellations, branches are instructed to confirm with the customer that the referenced cash flow is exclusive to that contract and not used concurrently elsewhere.

USD 10 Million Facility for FX Hedging

The revised FX Hedging Guidelines introduce a USD 10 million facility which permits users to book derivative contracts in INR up to a USD 10 million equivalent notional outstanding without needing to establish underlying documentation. The key points include:

• Facility Nature: Not a separate facility but a documentation simplification measure provided to clients.

• Transaction Declaration: At the time of entering into a transaction, clients must indicate if the transaction is on a Contracted Exposure (CE) or Anticipated Exposure (AE) basis. For transactions up to USD 10 million, contracts can be freely cancelled or rebooked with gains or losses passed or recovered appropriately.

• Exceeding the Limit: If the client’s outstanding notional exceeds USD 10 million, the client must submit required underlying documents for all outstanding CE contracts according to prevailing norms. Subsequent contracts will follow the established RBI guidelines.

• Global Threshold: The USD 10 million limit is applied cumulatively across all banks. Branches solely rely on client declarations for monitoring compliance. The entire notional basis of instruments per user classification is considered, and FCY/INR contracts involving currencies other than USD require a conversion with Treasury assistance.

• Future Eligibility: Clients who exceed this threshold once in a financial year are not allowed to avail further documentary relaxation during the same period.

Transition Guidelines

Existing hedge contracts booked under the earlier regulatory framework (specifically those outstanding as of 31 August 2020) continue to be governed by the regulatory guidelines in place at that time. Key points include:

• Contracts booked against Contracted Exposure, Past Performance, or under SHF remain under the old guidelines until maturity, cancellation, or rollover.

• Branches remain responsible for obtaining associated documents/declarations as required under the earlier framework until such contracts either mature or undergo market actions.

• Any rollover or rebooking is subject to the prevailing RBI guidelines and regulations at the time of such transaction.

General Principles for Forex Derivative Transactions

The guidelines outline several general principles and responsibilities for all forex derivative transactions:

• Client Declarations: Banks must take a declaration from clients confirming that the exposure is unhedged and not being doubly hedged with another AD Category I bank. Corporates must also provide an annual certificate indicating board awareness and authorization of the derivative transactions.

• Eligibility for Hedge: Foreign currency loans/bonds become eligible for hedging only after final Reserve Bank approval or assignment of the Loan Registration Number. Similarly, GDRs/ADRs are hedged only after finalization of the issue price.

• Forward Contract Handling:

  • Forward contracts involving rupees, for resident customers, can be cancelled and rebooked with a different AD Category I bank under specific conditions such as competitive rates, simultaneous cancellation and rebooking on maturity, and ensuring cancellation by the original booking bank.

  • The overall forward cover booked must be monitored daily, with detailed customer-wise positions reported to senior management, and monthly MTM reports generated at Integrated Treasury.

• Customer Options and Bank Responsibilities:

  • Customers may request early delivery, extension, or cancellation of contracts. In cases where the bank accepts early delivery it shall account for swap differences along with interest on funds outlay or inflow.

  • For contract extensions, the original contract is cancelled and rebooked at the current exchange rate with subsequent recovery or payment of the difference between the original and current rates.

• Cancellation Mechanics:

  • When a customer cancels a contract (on or before the maturity date) the bank recovers or pays the exchange difference based on the contracted and cancellation rates.

  • Cancellation of purchase contracts is executed at the TT selling rate, whereas sale contracts are at the TT buying rate. If contracts are cancelled after maturity due to customer default, no exchange gain is passed to the customer and any observed loss is recovered.

• Swap Costs and Interest:

  • In early delivery cases, swap cost is recovered upfront regardless of whether an actual swap is executed. Swap gains are settled at the end of the swap period.

  • The bank recovers or pays interest on the funds outlay or inflow calculated as the difference between the original contracted rate and the swap rate. Rates applicable include MCLR +3% for outflow (minimum one month’s MCLR if period is less than one month) and a discretionary term deposit rate for inflows.

Advance Remittance for Import of Goods and Services into India

Branches are permitted to allow advance remittances for imports provided they adhere to detailed ceilings and guidelines:

Definition and Documentation

• Approvals for advance remittance must be sought based on the aggregate amount on the import invoice irrespective of individual remittance values.

• Remittances should strictly follow the contractual terms and be made directly to the supplier’s account (ultimate beneficiary), avoiding numbered accounts.

• Extensive KYC/AML scrutiny must be undertaken to verify the genuineness of the import transactions, accompanied by documentary evidence that the overseas buyer requires an advance payment.

Conditions Based on Bank Guarantee (BG) / SBLC

1. When BG/SBLC is Furnished:

   • For both import of goods and services, advance remittance can be made without any ceiling, provided an unconditional, irrevocable standby LC or guarantee is presented. This guarantee must come from an international bank of repute or an AD Category I bank (subject to a counter-guarantee from an international bank) and must be accompanied by compliance with KYC, AML, and all other requisite RBI/internal instructions.

2. When BG/SBLC is Not Furnished:

   • Upper Ceilings:

     • Imports of goods are not permitted to have advance remittance above USD 5 million or equivalent in other currencies.

     • Imports of services are capped at USD 5 lacs or equivalent in other currencies.

   • General Conditions:

     • There must be no overdue import bills with the bank.

     • The importer must not be classified as an NPA, and a satisfactory credit report of the foreign supplier should be obtained (waivers allowed under certain thresholds).

     • The importer should be a regular customer with a proven track record in advance remittances and without negative audit or inspector comments.

     • Public sector or Government/State undertakings who find it difficult to obtain BG from an international bank need to secure a waiver from the Ministry of Finance to make remittances exceeding USD 100,000.

Approval Hierarchy for Import of Goods

• The sanction authority and the corresponding reference number must be clearly marked in the sanction order and quoted when seeking exchange rates from the Dealing Room. The authority for sanctioning advance remittances depends on the aggregate invoice amount (above or below USD 100,000 or equivalent) and the relationship of the customer (borrower or non-borrower) with the bank.

Conclusion

The document comprehensively details the operational, documentation, and regulatory requirements for forex derivatives (including hedging and cancellation protocols) and advance remittances for imports. It emphasizes stringent compliance with guidelines, thorough due diligence on client transactions, and proper monitoring and documentation for both the hedging facility and remittance processes to ensure regulatory conformity and risk management.

13th 47ETM-2 Annual Review of Dealing Room Manual

Overview

This document represents the 13th review under the 47ETM-2 Annual Review of the Dealing Room Manual. It consolidates a wide range of guidelines and operational procedures for dealing room operations, risk management, and investment policies. The review revises limits, outlines risk measures, clarifies reporting structures, and adjusts discretionary authorities to ensure adherence to regulatory norms and internal controls.

Credit Report and Approval Guidelines

• Approval Requirements: Credit reports must be approved by DGM [Credit] / CCO or any higher functionary when the customer has a record extending for at least one year and is being reported to the Zonal Manager (ZM). In other instances, a waiver for the report requires approval solely by the ZM.

• Deposit Customers: Differentiated treatment is provided based on the account’s operational timeline:

  • Accounts in operation for more than one year and less than one year are handled differently with due diligence reports being reviewed by ZM or Branch Officers as specified.

• Outstanding Advance Remittances:

  • If the outstanding advance remittance exceeds USD 5 lac (or equivalent), sanctions are contingent on branch due diligence confirmation by the ZO.

  • For remittances exceeding USD 2 lac, similar confirmation is required. Maximum outstanding levels should generally not exceed USD 2 lac unless accompanied by a satisfactory supplier credit report, in which case ZM has the discretion to approve beyond the standard limit. In other cases, approval from the Head-Wholesale Banking or DGM [RM] is required.

• Advance Remittance for Import of Services: ZM approves advances up to USD 100,000 (or equivalent), whereas amounts above that require approval from the CCO/Head – Wholesale Banking.

Risk Management Measures

• Identified Risks: The dealing room operations are exposed to multiple risks including:

  • Adverse exchange rate movements from open positions (spot/forward or combined).

  • Interest rate risk due to maturity mismatches.

  • Settlement risk leading to potential replacement costs on failed transactions.

  • Time zone risk and country risk.

• Prudential Limits: Specific limits are set for dealing functions and counterparty exposures:

  • Limits for deals settled outside CCIL vary based on the type and financial strength (e.g., Rs350 crores for banks with net worth above Rs.2500 Cr, Rs150 crores, Rs50 crores, or USD 80 million for investment grade overseas banks).

  • Trades through CCIL are capped at 50% of the bank’s net worth.

• Foreign Currency Deposits & Buy-Sell Swaps:

  • Limits for placing foreign currency deposits are specified in USD million. Individual approvals for placements fall under the authority of the AGM (Treasury), with overall caps dictated by the Bank’s Investment Policy.

  • Buy-sell swaps are subject to two separate limits: USD 100 million for pure investment purposes and USD 40 million for generating foreign currency funds from rupee resources meant for PCFC lending.

• Nostro Balances: Detailed maximum balances are set for various currencies (e.g., USD up to 21,000 thousand, GBP up to 1,000 thousand, etc.), ensuring exposure is monitored and stays within approved thresholds.

Operational and Reporting Controls

• Daily Operations: The Integrated Treasury is mandated to continuously monitor gaps and conduct daily VaR calculations. Trading and dealing operations are to be executed within the established prudential limits to control liquidity, exchange, interest rate, and credit risk.

• Reporting Requirements: A series of MIS reports should be submitted:

  • Daily reports covering Consolidated Foreign Exchange Position and Currency Positions.

  • Monthly reports (e.g., Maturity and Gap Statements, Foreign Exchange Liquidity Statement).

  • Proprietary deals and daily transaction details must be reported separately to designated officers.

• Segregation of Deals: Proprietary deals must be distinguished from merchant deals, with separate assessments of profit on proprietary transactions.

Discretionary Authorities and Profit Sharing

• Reversal Transactions:

  • AGM (Treasury) can approve exchange differences on reversal transactions up to a maximum loss of Rs 10,000 per transaction (annual limit Rs 1,00,000).

  • The Head-Treasury can approve up to Rs 50,000 per transaction (annual limit Rs 5,00,000); losses beyond these thresholds require MD & CEO approval. All such reversals require departmental recommendations and must be reported to the ORMC in quarterly statements.

• Profit Sharing Models:

  • Profits arising from merchant deals are to be shared between operating branches and the Integrated Treasury based on a ratio determined by the AGM (Treasury).

  • Additionally, commissions on export/import bills and Letters of Credit are shared equally between operating and non-operating branches.

Amendments to Investment Policy and Control Framework

• Overview of Amendments: The review includes multiple changes to the Investment Policy with an aim to update discretionary powers, investment exposure limits, and reporting structures. Amendments incorporate:

  • Adjustments in discretionary authorities – e.g., if the Head-Treasury is unavailable, MD & CEO can delegate powers to either the Head – Wholesale Banking or the CFO.

  • Revised sale conditions for Assets in the Available For Sale (AFS) category, including provisions for executing sales during volatile market conditions with post-sale ratification from TIMCO.

  • Increased limits in equity investment exposures and IPO applications reflecting market trends and trading volumes adjustments.

  • Streamlined interbank deposit limits, broker panel reconstitution guidelines, and reporting frequency changes (elimination of redundant weekly/fortnightly reports in favor of daily transmissions).

Conclusion

The Annual Review of the Dealing Room Manual under 47ETM-2 encapsulates significant revisions aimed at strengthening risk management, ensuring regulatory compliance, and optimizing treasury efficiency. The integration of strict operational limits, improved internal reporting mechanisms, and updated discretionary powers are designed to maximize profit generation while mitigating risks. With these adjustments, the Bank’s treasury operations are better poised to respond to volatile market conditions, maintain robust risk management protocols, and comply with evolving regulatory standards.

13th 48ETM-3 Annual Review of Contingency Funding Policy

Overview

This summary covers detailed policy guidelines and internal controls from the 13th 48ETM-3 Annual Review of Contingency Funding Policy, with particular focus on investment instruments, listing & rating guidelines, internal limits, entry-level ratings for various maturity bands, and detailed provisions for equity investments including equity shares, preference shares, and mutual funds.

Eligible Instruments and Investment Categories

The policy specifies that the following instruments are considered eligible for various capital purposes:

• Preference shares eligible for capital status

• Subordinated debt instruments

• Hybrid debt capital instruments

• Any other instrument approved in the nature of capital

Guidelines on Listing & Rating

Investments in securities are governed by stringent listing and rating guidelines. Key points include:

• Exclusion Criteria: Investments in securities directly issued by Central/State governments (not reckoned for Statutory Liquidity Ratio or SLR purposes) and certain equity and venture capital instruments are excluded.

• Unrated Securities: The bank should avoid investing in unrated non-SLR securities, except for unrated bonds issued by companies in infrastructure, which are allowed within a ceiling of 10% for unlisted non-SLR securities.

• Fresh Investments: New investments in non-SLR debt securities must be in listed securities compliant with SEBI requirements. If a security expected to be listed is not, it will count towards the 10% limit for unlisted non-SLR securities.

• Exceeding Limits: In cases where investments breach the stipulated limit, no further investments in non-SLR securities or unrated bonds for infrastructure companies should be made until the portfolio aligns with the prescribed limits. An additional 10% over the base limit is permitted for investments in securitisation papers and bonds/debentures issued by securitisation or reconstruction companies.

• Exempted Investments: Certain instruments such as security receipts from RBI-registered securitisation/reconstruction companies, rated asset-backed or mortgage-backed securities, and unlisted convertible debentures are not counted towards the unlisted non-SLR securities limit.

• Additional Considerations: Investments in RIDF/SIDBI/RHDF deposits and in mutual fund schemes with less than 10% exposure to unlisted securities are treated favorably under the prudential limits. The denominator for non-SLR investments encompasses shares, bonds/debentures, subsidiaries/joint ventures, and other items as per Schedule 8 on the balance sheet.

Internal Guidelines

Internal controls mandate that:

• Total investment in non-SLR securities (excluding those created as part of Corporate Debt Restructuring (CDR) or security receipts from NPAs) should not exceed 40% of the aggregate investments outstanding at any given time.

• For conversion of loans to investment (as part of debt restructuring), detailed documentation is required covering instrument type, form, convertibility, listing and rating status, asset classification, valuation provisions, and investment compliance guidelines.

Entry Level Minimum Ratings / Quality Standards and Limits

This section establishes minimum entry level ratings and quality standards by maturity, issuer type, and industry category. Important elements include:

Entry Level Ratings

• Maturity Bands and Ratings: Guidelines detail specific durations (e.g., <3 years, 2.5-3 years, 3-5 years, etc.) with separate entry level rating requirements for PSU/Govt and private issuers across different industries such as manufacturing, infrastructure, and services. For instance, for instruments with maturity up to 2.5 or 3 years, PSU/Govt issuers require an A+ rating while private issuers require an AA, with similar structured grading across extended durations.

• Investments in CDs and CPs: These are restricted to top rating A1+ issuers.

Exposure Limits

• Industry Wise Exposure: The policy sets limits based on 25% of Capital Funds. For instance:

  • Banks may have exposure up to 30%

  • Manufacturing: 15%

  • Service industries (non-banking/NBFC/HFC/ARC): 13%

  • Infrastructure: 12%

  • NBFC/HFC: 15%

• Maturity Wise Limits: The residual maturity exposure is distributed as follows:

  • Less than 3 years: 20%

  • 3-7 years: 30%

  • Above 7 years: 50%

• Issuer Wise Limits: Limits are fixed as 25% for public issuers and 75% for private issuers, with an additional constraint for small finance banks.

Investments of Tax Free Nature

Investments in tax free bonds, certain equity or preference shares, and mutual funds (dividend exempt) must be made solely using the bank’s cost free deposits, paid-up capital, and free reserves. These investments must not exceed 50% of the current deposit account balance or 100% of the paid-up capital and free reserves (as on March 31 of the previous year).

Equity Investments: Equity Shares, Preference Shares & Mutual Funds

Decisions regarding investments in equity forms must be backed by a strong analysis of financial strength, management quality, fundamentals, and market trends. These decisions are taken by the Treasury & Investment Management Committee. Key aspects include:

General Considerations

• Secondary Market Operations: Emphasis on timing for entry and exit is critical to ensuring profitability. Equity shares are segmented into Large Cap, Mid Cap, and Small Cap, with mid/small caps offering potential high returns but increased volatility.

• Analysis: Prior to investment decisions, detailed analysis of stock exchange data, growth potential, volatility, and industry fundamentals is required.

Exposure Limits

• Overall Exposure: Total exposure to capital markets (both fund-based and non-fund-based) should not exceed 40% of net worth, with direct equity investments capped at 20% of net worth.

• Direct Equity Investments: Cumulative exposure in equity shares, convertible bonds, convertible debentures, and equity-oriented mutual funds should be limited to Rs 60 crore, of which equity shares alone must not exceed Rs 15 crore (with IPO exposures subject to different limits). Per company, direct investment in equity shares is capped at Rs 1 crore, except for shares obtained through IPO (which fall under the overall exposure limit).

• IPO Guidelines: The Treasury & Investment Management Committee can authorize IPO investments up to Rs 100 crore subject to conditions including allotment limits, mandatory divestment within 15 days (up to 90 days with special approval), and compliance with RBI’s statutory requirements.

• Industry Segmentation: In secondary market operations, investments generally focus on shares quoted in high-rating groups (e.g., “A”, “B” categories in BSE, NIFTY 50, Nifty Junior). Exposure in a particular industry segment should not exceed 40% of total equity investments.

Specific Operational Guidelines

• Discretionary Powers to Head – Treasury: For secondary market investments, the Head of Treasury is granted discretion with a maximum overall limit of Rs 15 crore. Specific per-scrip limits are as follows:

  • Sensex + Nifty shares: Rs 1 crore

  • Large Cap (excluding Sensex/Nifty 50): Rs 1 crore

  • Mid Cap: Rs 50 lakh

  • Small Cap: Rs 10 lakh

  • Additionally, per industry maximum exposure is set at Rs 300 lakh.

• Reporting: All transactions, including weekly reporting, detailed valuations, and immediate reporting of losses or deviation from stop loss guidelines, must be communicated to the Treasury & Investment Management Committee.

• Operational Protocols: Investments must be carried out in listed equity shares (with exceptions for certain private placements or IPOs) and executed via recognized stock exchanges and authorized brokers with proper documentation.

This comprehensive framework ensures that the bank manages its investment portfolio within well-defined prudential limits while addressing market risks through structured rating guidelines and dynamic exposure controls.

13th 49ETM-4 Annual Review of Foreign Exchange Policy

Overview

This document outlines the detailed investment, treasury, and risk management policies of CSB Bank Ltd’s Integrated Treasury in Mumbai. It covers a broad spectrum of instruments and operations including equity, preference shares, mutual funds, bonds, debentures, money market instruments, derivatives, internal controls, and corporate social responsibility (CSR) practices. The guidelines articulate procedures, limits, and internal controls to ensure compliance with Reserve Bank of India (RBI) regulatory requirements and prudent risk management practices.

Equity & Preference Investments

• Equity Investments:

  • Equity investments should be maintained via a designated depository participant (DP) account with the bank’s custodian (Stock Holding Corporation of India Ltd).

  • Investments are subject to RBI guidelines and limits. Special cases include conversion of loans into equity, capital contributions to subsidiaries, and underwriting of public issues.

• Preference Shares:

  • Investments are permitted only in securities rated in the top two tiers (for CPs or term deposits) with ratings no older than six months.

  • Limits: Investment in preference shares of joint stock companies should not exceed Rs.50 lakhs per company, while for PSUs, PFIs, or commercial banks it can be up to Rs.500 lakhs, subject to overall prudential limits. The aggregate investments in preference shares must not exceed 10% of non-SLR (Statutory Liquidity Ratio) investments.

Debt Instruments & Mutual Funds

• Debt Mutual Funds:

  • Can be acquired via direct subscription or secondary market, and purchases/sales require comprehensive documentation (including unit details, brokerage amounts, and NAV).

  • Investments in schemes with minimal exposure to unlisted securities are treated similarly to listed ones for prudential compliance.

• Profit/Loss on Sale:

  • Authority to sell/redeem equity shares, mutual funds, and AFS (Available For Sale) securities is delegated to the Head of Treasury and the Treasury & Investment Management Committee (TIMCO).

  • In cases of loss, securities in the HFT (Held For Trading) category may be sold with a loss, provided the loss does not exceed Rs.25 lakhs per annum and is reported to TIMCO.

• Bonds, Debentures, Commercial Papers, and Certificates of Deposit (CDs):

  • Investments are to be limited to instruments that are rated, investment grade, and are evaluated with stringent credit risk analysis similar to loan appraisal standards.

  • For corporate bonds/debentures, only top-rated companies (highest two rating categories) are eligible. Exposure norms apply (e.g., investments in bonds by any single entity should not exceed Rs.25 crore, subject to additional limits in PSU bonds and other instruments).

  • Trading must occur on recognized stock exchanges with proper documentation of contract notes and broker details. Repo transactions in corporate debt securities are allowed for eligible securities (rated AA and above) as per RBI guidelines.

Money Market Operations & Interbank Activities

• Call Money Operations:

  • Designed to manage temporary cash flow mismatches. Both borrowing and lending in the call money market must adhere to limits set as a percentage of capital funds with daily and fortnightly ceilings (e.g., up to 50% on any day for lending, up to 125% on any day for borrowing).

  • All call money transactions must be reported through the Negotiated Dealing System within RBI’s stipulated time frames.

• Interbank Deposits:

  • The bank can deploy surplus funds through deposits with various categories of banks (with specified limits, e.g., Rs.150 crore with banks having Nostro relationships; differentiated limits for SBI, PSU banks, private banks and foreign banks).

  • Overall interbank exposure, including call money, bonds, CDs, and related instruments, must not exceed 25% of Tier 1 capital.

• Inter-Bank Participations (IBPC):

  • Framework detailed for transactions between banks, including both non-recourse (risk-sharing) and recourse (without risk-sharing) deals. Limits and credit risk assessment methods are provided, and such transactions are subject to strict internal and external reporting.

Derivatives

• Interest Rate Futures:

  • The bank has an exposure limit of Rs.50 crore in Interest Rate Futures, which are standardized contracts based on the 10-year government security. Specifications include lot size, ticker, trading hours, and margin requirements.

• Interest Rate Swaps (IRS):

  • Used to hedge interest rate risk on assets and liabilities. The guidelines cover the entire lifecycle – from entering into swaps (with a notional cap of Rs.500 crore for hedging), exit strategy before maturity, documentation, and valuation.

  • Transactions require adherence to ISDA agreements, and detailed provisions are provided for accounting, marking to market, and capital adequacy (default risk and credit migration risk) using the current exposure method.

Risk Management

• A comprehensive framework is in place to manage liquidity risk, market risk (including mark-to-market procedures for HFT investments), interest rate risk, and credit risk across all investment categories.

• Regular reviews (daily, weekly, monthly, quarterly, half-yearly, and annual) are mandated, including stress testing, duration analysis, and sensitivity analysis of investments.

• The management of stop-loss levels is stringent; for example, stop losses may be triggered at 1% of holding cost for short positions.

Internal Controls & Reporting

• Segregation of Duties:

  • Clear functional separation among front, mid, and back office functions, with distinct roles for trading, settlement, and recording transactions.

• Documentation and Audit:

  • All transactions must be supported by detailed deal slips, contract notes, and reconciled regularly through monthly and periodic audits.

  • SLR registers are maintained, and dematerialization of securities is encouraged.

• Reporting Requirements:

  • Daily reporting to TIMCO of discretionary transactions, periodic valuation of investments (daily for HFT, quarterly for AFS), and comprehensive reports on investment limits, sensitivity analyses, and non-SLR compliance.

  • Annual statutory audit certificates and half-yearly reviews are presented to the Board and RBI.

Corporate Social Responsibility (CSR) Policy

• The document also includes the annual review and recommended modifications of the Bank’s CSR Policy pursuant to section 135 of the Companies Act, 2013.

• Detailed amendments address definitions (such as “Administrative Overheads”, “CSR Policy”, “Net Profit”), terms of reference for the CSR Committee, and specifics on CSR project execution, expenditure, and monitoring requirements.

• Amendments are aligned with the Companies (CSR Policy) Amendment Rules, 2021.

Conclusion

• The guidelines laid down in this comprehensive document apply exclusively to investments made from the bank’s own funds, with separate guidelines potentially applicable to externally managed portfolios.

• Continuous compliance with RBI, Government, and SEBI regulations is mandated, with any modifications to regulatory norms automatically incorporated into the policy.

• The bank’s Treasury & Investment Management Department is responsible for ensuring that all operations are conducted in a manner that maximizes returns while adhering to strict internal controls, risk management practices, and regulatory requirements.

13th 50ETM-5 Annual Review of Investment Policy

Summary of the Document

This document is a comprehensive overview combining two key areas: (a) a detailed Corporate Social Responsibility (CSR) policy with amendments in line with recent regulatory changes and (b) an in-depth Business Continuity Plan (BCP). It covers policy modifications, implementation guidelines, reporting formats, and detailed procedures for mitigating risk and ensuring organizational resilience.

Corporate Social Responsibility (CSR) Policy

Key Policy Amendments and Provisions

• CSR Expenditure and Surplus Management: Any surplus from CSR activities is not considered part of business profits; instead, it must either be ploughed back into the original project or transferred to the Unspent CSR Account. The surplus transferred must be spent later according to the annual CSR policy or moved to a specific fund within six months.

• Excess Expenditure Set Off: Excess expenditure beyond the statutory requirement (2% of the average net profit as per section 135 of the Act) may be set off against future obligations for up to three financial years. However, surplus from CSR activities is excluded from this set off calculation. A board resolution is necessary to enable this adjustment.

• Unspent CSR Funds: The policy details procedures for both ongoing projects and other cases:

  • For ongoing projects, unspent funds must be transferred within 30 days from the end of the financial year to a special account designated as the Unspent CSR Account. These amounts must then be spent over three financial years or transferred to a fund specified in Schedule VII if not used.

  • For other projects, any unspent amount is to be transferred into applicable funds (e.g., Swach Bharat Kosh, Clean Ganga Fund, PM National Relief Fund, PM CARES Fund, or any other government-designated socio-economic development fund).

• Non-Qualifying CSR Activities: The policy excludes certain activities from CSR spending including projects that benefit only employees and their families, activities undertaken outside India (with limited exceptions), research and development in the company’s core business (unless related to critical issues like COVID-19 under controlled conditions), marketing sponsorships, fulfilment of statutory obligations outside CSR, and contributions to political parties.

Implementation and Monitoring

• Execution Modalities: CSR activities may be implemented directly by the bank or through specialized entities such as a Section 8 company, registered trust, or society established by the bank. When engaging third parties, all modalities regarding fund utilization, project monitoring, and reporting must be clearly documented in the Memorandum of Understanding.

• Monitoring Framework: A CSR Committee is mandated to oversee project implementation. This includes the formulation of project execution schedules, monitoring processes, and reporting mechanisms. The committee also reviews the compliance of fund utilization with approved terms and is responsible for maintaining a transparent reporting system. The Chief Financial Officer or the designated person certifies and submits a Utilization Certificate to the Board.

• Disclosure Requirements: The bank is required to publicly disclose the composition of the CSR Committee, the CSR policy, and details of projects approved by the board on its website, along with an annual report on CSR activities appended to the board’s report.

• Penal Provisions: In case of default (particularly with the non-transfer of requisite funds to designated CSR funds or the Unspent CSR Account), the bank and its defaulting officers are liable for penalties. The penalties are calculated as a multiple of the amount that needed to be transferred or capped at specific limits.

Schedule VII and Reporting Formats

• Schedule VII Amendments: The CSR policy incorporates changes to Schedule VII of the Companies Act with detailed clauses addressing activities in areas such as poverty eradication, education, healthcare, environmental sustainability, heritage preservation, empowerment of disadvantaged groups, and research and development.

• Annual CSR Report Format: The document specifies a detailed format for the Annual CSR Report. This includes outlining the CSR policy, committee details, impact assessment reports, financial figures such as amounts spent/unspent, surplus management, and set off details for multiple financial years.

Business Continuity Plan (BCP)

Overview and Objectives

• Purpose: The BCP is designed to ensure readiness and resilience in the event of a disaster, minimizing downtime in critical business processes and mitigating losses. It protects customer service, regulatory compliance, and the bank’s reputation.

• Phases of BCP: The BCP is segmented into three primary phases: Business Impact Analysis (BIA), Business Continuity and Recovery Procedures, and Testing. Each phase involves systematic evaluation and preparation to ensure rapid recovery.

Key Components and Procedures

• Business Impact Analysis (BIA): The BIA involves:

  • Completing detailed questionnaires to assess critical processes and their interdependencies.

  • Documenting workflows and identifying potential single points of failure.

  • Setting Recovery Time Objectives (RTO) and Recovery Point Objectives (RPO) based on the criticality of various departments (e.g., Core Banking, RTGS/NEFT, Treasury).

• Incident Response and Recovery: The plan outlines structured incident response measures, including:

  • Allocation of responsibility to specialized teams such as the Incident Response Team, Emergency Action Team, Emergency Management Team, Administration Team, IT Security Team, and Transportation Team.

  • Detailed procedures for activating the plan, relocating to alternate sites, and restoring business operations (including specific protocols for Core Banking Systems, Integrated Treasury, RTGS & NEFT, cheque truncation systems, and branch operations).

• Testing and Drills: Regular tests (both parallel and full interruption tests) are mandated to evaluate the efficacy of the plan. Tests are documented and reviewed comprehensively to incorporate improvements and ensure that all team members are familiar with their roles during a disaster.

Infrastructure and Risk Management

• Risk Register: The BCP includes a comprehensive risk register detailing risks related to IT systems, network connectivity, data backup, and other operational vulnerabilities. Mitigation measures include real-time replication of data, alternative connectivity arrangements, and contractual agreements with service providers.

• Disaster Recovery Site and Safety Measures: The bank maintains a robust DR site with redundant connectivity, biometric access, data replication, and constant monitoring. Additionally, safety measures and training protocols are in place to ensure personnel readiness during emergencies.

Conclusion

The document establishes a detailed framework for adhering to CSR regulatory requirements and ensuring business continuity in the face of potential disasters. It lays out clear guidelines for fund utilization, public disclosure, risk management, and operational resilience, thereby reinforcing the bank’s commitment to responsible corporate governance and sustainable business practices.

13th 51FB-1 Review of Corporate Social Responsibility Policy of the Bank

Overview

This document comprises detailed segments on the bank’s business continuity planning, risk management, compliance risk assessment models, and a review of modifications to the Credit Risk Management Policy for FY 2021-22. Although the index item is titled “Review of Corporate Social Responsibility Policy of the Bank,” the extracted text focuses on operational and financial risk planning across multiple areas.

Business Continuity Plan (BCP)

The BCP section details a broad spectrum of risks that the bank faces and outlines the mitigating actions, roles, and procedures needed to address potential business interruptions. The plan is organized in numbered risk items and outlines responsibilities by department, probability, impact, risk type, and current status. Key highlights include:

Risk Identification and Mitigation

• Branches and Physical Assets:

  • Risk: Access to strong room and continuity of operations

  • Mitigant: Dual custody implementation

  • Probability/Impact: Medium/Very High

• Network Connectivity and IT Security:

  • Risks: Damage to servers, cyber-attacks or hacking-related breaches

  • Mitigants: Deployment of Disaster Recovery (DR) sites (e.g., Bangalore for DR and Chennai for primary), IS policies and regular audits, installation of updated antivirus and firewalls

  • Probability/Impact: Medium/Very High

• Compliance and Regulatory Mandates:

  • Risk: Failure to comply with laws, regulations, and codes of conduct

  • Mitigant: Strong integration of compliance functions within governance

  • Probability/Impact: Low/Very High

• Financial Reporting and Loan Processes:

  • Risks: Non-integration of credit sanctioning processes, improper rating leading to wrong pricing, untimely balance sheet reporting, and regulatory non-compliance (e.g., capital adequacy ratio maintenance)

  • Mitigants: Implementation of robust rating models, integrated systems, and stringent audit procedures

  • Probability/Impact: Mostly Medium to Low and Very High impact for financial risks

• Human Resources and Physical Hazards:

  • Risks: Sabotage by disgruntled employees, sudden loss of key personnel, occupational hazards, and inadequate physical security (e.g., power outages, non-renewal of office lease)

  • Mitigants: Succession planning, segregation of duties, defined safety procedures, and redundancies for utility services

  • Probability/Impact: Ranges from Medium to High with varying risk types

• Additional Operational Risks:

  • Data corruption, inadequate access controls, dependency on single ISP sources, and risk of theft or burglary with detailed physical security measures provided including surveillance and silent alarms.

Disaster Recovery Process

A sample action plan for fire is described in detail:

• Emergency Action Team: Responsible for safe evacuation, contacting emergency services, administering first aid, and safeguarding vital records.

• Damage Assessment Team: Evaluates the extent of damage to physical structures, IT infrastructure, and utilities, and coordinates insurance claims and legal formalities.

• IT Team: Focuses on restoring IT systems, network connectivity, and business applications by interfacing with vendors and following the latest Disaster Recovery Plan.

• Administrative and Recovery Monitoring Teams: Coordinate necessary equipment transfers, repair scheduling, and monitor funds and staffing to ensure a smooth transition back to primary operations.

Questionnaire and Standard Operating Procedures

The document also includes a detailed questionnaire for departments to assess their business processes during normal and disaster situations. It covers:

• Business objectives, resource usage, process interruptions, third‐party dependencies, and cross-training of staff.

Standard Operating Procedures (SOP) for the BCP are provided with guidelines on contacting incident response teams. Roles are assigned to senior officials from Operations, HR, Finance, IT, Legal, and other key departments to ensure continued communication and action during emergencies. A detailed disaster team roster outlines teams for incident response, administration, IT security, transportation, damage assessment, recovery monitoring, and claim settlement.

Compliance Risk Assessment Model

A memorandum to the Board explains the bank’s Compliance Risk Assessment Model covering the years 2018, 2019, and 2020. Key points include:

• Risk Scores and Percentages:

  • 2018: Compliance risk score of 33.02% based on a total score of 141 out of a maximum of 427.

  • 2019: Score of 38.88% (166/427).

  • 2020: Score of 35.83% (153/427).

  • These scores indicate that the bank’s compliance risk is at a medium level overall.

• Measurement Parameters:

  • Detailed risk measurement across various areas including revision of compliance processes, reporting and monitoring of compliance data, adequacy of compliance resources, and supervisory commitments.

  • The model utilizes quantitative metrics such as the number of non-compliances, penalties, and instances of internal or external audit failures.

Credit Risk Management Policy 2021 – Review and Modifications

A significant portion of the document is dedicated to the review and proposed modifications to the Credit Risk Management Policy for FY 2021-22. Major changes include:

Reconstitution of Credit Risk Management Committee

• Changes in Membership and Quorum:

  • Revisions propose detailed changes to committee membership including roles from MD & CEO to specialized heads in retail, wholesale, SME, and audit functions.

  • Specific alterations in the composition ensure a broader representation from various divisions such as Retail & SME, Strategy, IT, Compliance, Recovery, and more.

Credit Risk Assessment (CRA) Framework

• Enhancements to Rating Models:

  • A rating model for high value accounts (exposures of Rs. 25 crore and above) is emphasized.

Borrower Rating and Rating Updation

• Borrower Rating Hurdles:

  • Exposures are primarily sanctioned for borrowers rated OR-6 or better. For ratings of OR-7 or worse, fresh exposures are generally not entertained unless under exceptional circumstances.

• Rating Updation Processes:

  • Revised norms stipulate that fresh/enhancement proposals after specified dates must be supported by audited financial statements of the immediate preceding financial year. Extensions in deadlines and penal interest structures are clearly configured for delays in submission of these statements.

Adjustments in Regulatory Portfolio Guidelines

• Retail Portfolio Modifications:

  • The threshold for aggregated retail exposure to a counterparty has been increased from Rs. 5 crore to Rs. 7.5 crore for exposures backed by government guarantees, with corresponding risk weight modifications.

  • A separate section revises parameters for corporate loans, internal rating downgrades, and exposure categorization under regulatory capital guidelines.

Conclusion

The extracted document is a comprehensive operational compendium that not only outlines the bank’s business continuity and disaster recovery procedures but also integrates detailed compliance risk metrics and credit risk management policy modifications. These measures are designed to ensure robust governance across operational, IT, compliance, and financial management realms, thereby safeguarding the bank against multifaceted risks.

13th 52FM-1 BCP Policy 2021

Summary of the Credit Risk Management Policy 2021

This document outlines a comprehensive framework for credit risk management adopted in 2021. It specifies the various instruments, methodologies, processes, and organizational structures used to identify, measure, monitor, control, and mitigate credit risk. Key aspects of the policy are detailed below.

1. Risk Management Framework and Organizational Structure

• Objective: Establish an integrated system for managing credit, market, operational, and other risks. The policy emphasizes prudent lending, efficient monitoring, and risk mitigation to maximize risk‐adjusted returns.

• Organizational Hierarchy: The board of directors holds overall responsibility. The Risk Management Committee (RMC) is supported by several specialized committees including the Credit Risk Management Committee (CRMC), Asset Liability Management Committee (ALCO), Operational Risk Management Committee (ORMC) and Information Security Committee.

• Integrated Risk Management Department (IRMD): This department, led by the Chief Risk Officer (CRO), operates independently to support the risk management framework. It coordinates with other departments such as Credit Risk Management Department (CRMD) and Credit Monitoring Department (CMD).

2. Credit Risk Assessment (CRA) Framework

• Type of Models: Eleven different Credit Risk Assessment models are used for exposures of Rs. 25 lakhs and above (both fund-based and non-fund based) excluding retail loans. These include specialized models for NBFCs, educational institutions, commercial real estate, overdrafts on gold, micro enterprises, large corporates, SME manufacturers, traders, services, EPC contractors, and personal loans.

• Specialized Rating Model for High Value Accounts: In addition to the eleven CRA models, a separate rating model is provided for high value accounts with exposures of Rs. 25 crore and above. For retail borrowers, score cards (such as those developed by CRIS) are used for education loans, LAP for salaried and self-employed individuals, personal loans, and an agricultural scoring model for agri-financed loans.

• Rating Scales: Borrower ratings are assigned on a scale from OR-1 (best) to OR-10 (default) and are based on criteria including financial risk, market and managerial risks, track record, compliance, and external ratings. Facility-wise ratings are also used with separate scales for working capital and term loans.

3. Borrower Rating and Updation Process

• Rating Criteria: A borrower is generally required to have a rating of OR-6 or better to qualify for fresh or enhanced exposures. Proposals with ratings of OR-7 or worse are not normally entertained except under exceptional circumstances where additional scrutiny applies.

• Updation of Ratings: The rating process uses the most recent audited balance sheets with specific age limits (up to 19 months for FY 2020-21 and up to 15 months for FY 2021-22). In the event audited financials are delayed, provisional figures are used, with audited statements expected within a specified period (7 months for FY 2020-21 and 3 months for FY 2021-22).

• Penal Provisions: Borrowers failing to submit the Immediate Preceding Financial Year’s Audited Balance Sheet (ABS) by specified dates (31st October or 30th June, as applicable) are placed under a rating watch, which incurs penal interest at 2% per annum based on the outstanding balance until receipt of the audited documents. Furthermore, continuous non-submission may trigger automatic downgrades for PD computation by one notch for every defined period (4 months, 16 months, and 28 months, respectively).

4. Risk Weighting and Regulatory Adjustments

• Retail Portfolio Adjustments: For regulatory capital purposes, retail claims (both funded and non-funded) are defined based on orientation, product, granularity, and low value of individual exposures. The threshold limit for aggregated retail exposure to a counterparty, which was previously Rs. 5 crore, has been increased to Rs. 7.5 crore from October 12, 2020. Claims within this revised limit benefit from a 75% risk weight for both fresh and incremental exposures.

• Corporate Loans and External Ratings: The policy allows banks to use external ratings from recognized domestic agencies (including CRISIL Ratings Limited, ICRA, India Ratings, Credit Analysis and Research Limited, BRICKWORK Credit Rating, SMERA, and INFOMERICS) for risk weighting corporate loans. In cases where there is a deviation between internal and external ratings by more than three notches, the internal rating is automatically downgraded to align within the three-notch deviation.

• Loans against Residential Property: Revised guidelines rationalize risk weights irrespective of loan amount for new housing loans (sanctioned on or after the circular date) up to March 31, 2022. The risk weight is determined solely based on the LTV ratio, with separate categories for LTV ≤80% (35% risk weight) and >80% to ≤90% (50% risk weight). Existing loans prior to the circular date continue as before.

• Guaranteed Emergency Credit Line: For credit facilities under the Emergency Credit Line Guarantee Scheme, which are backed by an unconditional and irrevocable government guarantee via the National Credit Guarantee Trustee Company (NCGTC), zero percent risk weight is assigned up to the guarantee coverage, with all other exposures at 100% risk weight.

5. Risk Pricing and Return Analysis

• Risk-Adjusted Return on Capital (RAROC): The document outlines a detailed methodology for RAROC, which includes return from the loan (comprising interest, commissions, and other incomes) minus risk-adjusted costs (including marginal cost of funds, expected loss premium, and term premium). RAROC is calculated by dividing this net return by the capital requirement on unexpected loss. This analysis supports pricing decisions and capital allocation to ensure risks are priced appropriately.

6. Portfolio Management and Loan Review Mechanism

• Portfolio Management: The policy emphasizes regular analysis of the rated exposures to identify migration between risk categories. This includes monitoring the concentration of borrowers by industry and assessing the overall portfolio mix to ensure that risk exposure remains within acceptable limits. Targets for low risk, medium risk, high risk, and very high risk exposures are set in indicative percentages.

• Loan Review Mechanism: Periodic reviews are conducted both on portfolio level and for individual large exposures. Retail and non-retail portfolios have distinct review frequencies, with special attention on high-value exposures and those experiencing stress. This mechanism also covers reviews for unhedged foreign currency exposures, thereby ensuring timely corrective actions and appropriate provisioning.

7. Expected Credit Loss (ECL) Methodology

• IFRS 9 Approach: The policy replaces the incurred loss model with an Expected Credit Loss (ECL) methodology that recognizes impairment losses from the date of origination. Exposures are categorized into three stages:

  • Stage 1: No significant increase in credit risk (12-month ECL)

  • Stage 2: Significant increase in credit risk (lifetime ECL)

  • Stage 3: Credit-impaired accounts (lifetime ECL)

• Calculation Components: Key inputs include Probability of Default (PD), Loss Given Default (LGD) – computed using historic recoveries, and Exposure at Default (EAD) – which factors in both drawn and undrawn amounts (adjusted using a Credit Conversion Factor, or CCF).

8. Additional Provisions for Standard Assets

• In line with RBI directions, the policy mandates higher provisions (beyond the regulatory minimum) for advances to stressed sectors. This involves quarterly reviews of sector performance and emerging risks, with separate guidelines to ensure that additional provisioning is made where necessary.

9. Standard Operating Procedures and Policy Updates

• Credit Sanctioning and Rating Systems: The policy includes robust procedures for credit sanctioning based on defined prudential exposure limits and risk ratings. It ensures that lending decisions are consistent with the scorecard evaluations, risk pricing, and periodic updates in borrower ratings.

• Integrated Policy Adjustments: The document also includes detailed amendments and updates to the Integrated Risk Management Policy. These modifications revise committee functions, permanent invitee participation (including roles for Chief Technology Officer, Chief Information Security Officer, and others), and the charter of the Integrated Risk Management Department. Such updates ensure alignment with evolving regulatory guidelines and best practices in risk governance.

Conclusion

The Credit Risk Management Policy 2021 lays out an extensive and detailed framework for managing credit risk. It integrates various methodologies—from borrower rating, risk pricing, portfolio management to expected credit loss calculations—ensuring robust risk governance. The policy has been updated to incorporate new regulatory norms, align internal ratings with external benchmarks, and to ensure that lending exposures remain within acceptable risk parameters, thereby protecting the bank’s capital while achieving its risk-return objectives.

13th 53FM-2 Compliance Risk Assessment Model

Overview

The document outlines the Integrated Risk Management Policy for the Bank, detailing a comprehensive framework for identifying, measuring, monitoring, controlling, and mitigating various risk types. The policy emphasizes balancing risk with return and optimizing risk-adjusted capital allocation. This summary encapsulates the detailed risk management policies, roles, committee structures, and standard operating procedures that govern the Bank’s overall risk governance.

Risk Management Policies

The Bank has established multiple sub-policies to address specific risk categories. Each policy is designed to provide clear guidelines, frameworks, and methodologies for managing the associated risk. The key policies include:

• Credit Risk Management Policy:

  • Defines credit risk and outlines the credit risk management (CRM) framework.

  • Specifies the functions of the CRM committee and tools such as risk rating systems, risk pricing, prudential exposure limits, portfolio management, and loan review mechanisms.

• Operational Risk Management Policy:

  • Defines operational risks and the role of the ORM committee.

  • Focuses on identifying, assessing, measuring, mitigating, controlling, and monitoring operational risk.

  • Includes procedures for new product/process introductions and risk assessment using an RCSA (Risk Control Self-Assessment) model.

• Market Risk Management Policy:

  • Establishes risk limits for forex and investment exposures.

  • Describes the risk monitoring mechanisms.

• Asset and Liability Management (ALM) Policy:

  • Outlines the functioning of the Asset Liability Committee (ALCO).

  • Details tools for measuring and managing interest rate risks, setting limits for asset and liability mixes, deposit/loan pricing, and funds transfer pricing.

• Liquidity Management Policy:

  • Details responsibilities for managing liquidity risk.

  • Covers monitoring prudential limits, maintaining minimum liquid asset holdings, and intra-day liquidity management.

• ICAAP Policy (Internal Capital Adequacy Assessment Process):

  • Provides methodologies for quantifying Pillar II risks and capital allocation among business units.

  • Sets forth the Bank’s risk appetite and monitoring mechanisms.

• Stress Testing Policy:

  • Describes the framework for conducting scenario and sensitivity tests in accordance with RBI guidelines.

• Country Risk Policy:

  • Explains country risk assessment procedures including risk categories, limit settings, and monitoring of country exposures.

• Reputational Risk Policy:

  • Identifies factors that contribute to reputational risk.

  • Outlines the tools for measurement, mitigation, and management.

• Outsourcing Policy:

  • Specifies guidelines for outsourcing activities including senior management roles, vendor due diligence, and norms for outsourced agencies.

• Business Continuity Planning (BCP) Policy:

  • Provides a framework to ensure continuity of critical business processes to safeguard customer service, business operations, regulatory compliance, and brand reputation.

• Key Personnel Risk Policy:

  • Addresses risks related to the loss of crucial staff due to various circumstances, and measures to manage such risks.

• Strategic Risk Policy:

  • Focuses on strengthening earnings resilience and mitigating undue earnings volatility, as well as managing risks associated with strategy formulation and implementation.

• Additional Provisioning Policy on Standard Advances under Stressed Sectors:

  • Facilitates the assessment of emerging risks and establishes guidelines for additional provisioning when necessary.

• Information Security Policy:

  • Guides how to secure information assets against accidental or deliberate changes, including unauthorized access or data loss.

• Cyber Security Policy:

  • Combines technological, procedural, and process-based measures to protect against cyber-attacks and unauthorized access.

  • Includes a Cyber Crisis Management Plan in alignment with overall cybersecurity strategies.

• Group Risk Policy:

  • Ensures that all group entities adhere to minimum risk management requirements and prudential limits for intra-group exposures.

• Model Risk Policy:

  • Provides guidance on effective model risk management including model development, validation, risk mitigation, and reporting.

Chief Risk Officer (CRO) and Committee Structures

Role of the Chief Risk Officer (CRO)

• The CRO is responsible for consolidated management of credit, market, and operational risks under the overarching risk management framework.

• Key responsibilities include risk measurement, monitoring, control/mitigation, and reporting.

• The CRO is appointed for a fixed tenure with Board approval and may only be transferred or removed with similar approvals, with such changes reported to the relevant regulatory authorities and stock exchanges.

• The position requires adequate professional qualification and experience in risk management.

• Reporting is directly to the MD & CEO or the Risk Management Committee (RMC), with the CRO acting as a non-voting adviser within the credit sanction process to ensure independence.

Risk Management Committees

• Board-level Risk Management Committee (RMC):

  • Chaired by the MD & CEO and includes four directors as members, with a quorum of two members.

• Permanent Invitees to the RMC:

  • This list includes senior executives such as the Chief Risk Officer, President ± Retail & SME (Business and Credit Risk), Chief Financial Officer, Chief Credit Officer (Retail & SME, Strategy, BIU, and Analytics), Chief Technology Officer, Head - Recovery & Credit Monitoring, Chief Human Resource Officer, Head - Inspection & Audit, Chief Compliance Officer, Chief Information Security Officer, and Assistant General Managers for both credit and market risk management.

  • In case a head of a department is absent, the responsible executive in charge attends the meeting instead.

• Meeting Frequency:

  • The Risk Management Committee meets on a quarterly basis.

Standard Operating Procedures & Integrated Risk Management Department (IRMD) Charter

Standard Operating Procedures

• The primary objective is to balance the trade-off between risk and return, achieving an optimal risk-adjusted profile.

• The integrated policy ensures that all material risks – including credit, market, operational, liquidity, and Pillar-II risks – are addressed consistently throughout the Bank.

• The Board of Directors oversees all risk management strategies which are implemented by specialized sub-committees such as the CRMC, ORMC, ALCO, and the Information Security Committee.

IRMD Charter Summary

• Objective: Defines the mission, organizational structure, and responsibilities of the Integrated Risk Management Department.

• Scope: Describes the function and accountability of the IRMD, including detailed responsibilities of the CRO and the reporting structure.

• Definitions: Clarifies terminology across the risk spectrum — from Business Continuity Plans and Crisis Management to specific risk types such as Credit, Market, Liquidity, Operational, Reputation, and Legal risks.

• Accountability: Assigns roles and authority within the risk management framework, ensuring executive support and adequate resources.

Conclusion

This Integrated Risk Management Policy provides a robust framework for managing a spectrum of risks that the Bank faces. It incorporates detailed sub-policies for specific risk areas, a clearly defined role for the CRO, and a multi-layered committee structure to ensure adherence and continuous monitoring. The policy framework is supported by standard operating procedures and an explicit charter for the Integrated Risk Management Department, all of which empower the Bank to achieve optimal risk management and maintain financial stability while meeting regulatory requirements.

13th 54FM-3 Review of Credit Risk Management Policy 2021

Summary of the 13th 54FM-3 Review of Credit Risk Management Policy 2021

This document is a comprehensive review and update of the Bank’s integrated risk management framework, focusing primarily on credit and operational risk management in 2021. It outlines definitions, processes, responsibilities, committee structures, and modifications made to support the Bank’s overall risk mitigation objectives.

Risk Management Terminology and Definitions

The policy provides detailed definitions and explanations for a range of risk management concepts including:

• Risk Analysis Process: Methods to comprehend and quantify risk exposure, including evaluation of probabilities of specific risk events.

• Risk Appetite and Tolerance: Definition of the amount of risk the Bank is willing to accept in pursuit of its mission.

• Risk Assessment Process: A systematic approach to identify, assess, and rank the risks faced by the institution, including both internal and external risk factors.

• Risk Culture: The values and behaviors embedded across the Bank that influence risk decisions.

• Risk Governance and Management: Guidelines covering the design, implementation, and continuous improvement of the risk management system. This includes clear segmentation of roles and responsibilities across business units.

• Other Key Terms: Definitions include strategic risk, uncertainty, threat, and the specific processes to measure risk magnitude.

Purpose and Scope of the Integrated Risk Management Function

The policy outlines the roles of the Integrated Risk Management Department (IRMD) in conjunction with Compliance, Legal, and other supporting functions. Key aspects include:

• Establishing frameworks, policies, limits, and processes for risk identification, management, monitoring, and reporting.

• Supporting the Board-level Risk Management Committee (RMC) in providing independent oversight and in setting risk appetite, policy parameters, and strategic risk mitigation measures.

• Covering both on- and off-balance-sheet exposures and a wide spectrum of risks – from banking risks defined under Basel (credit, market, capital, operational, and compliance risks) to other emerging risks such as reputational, legal, and cyber risks.

Governance, Accountability, and Organizational Structure

The document lays out a robust risk governance framework with clear delineation of roles:

• Reporting Structure: The IRMD is independent of business units. It reports directly to the Chief Risk Officer (CRO) and, by extension, to the Risk Management Committee.

• Committee Structure: Several support committees are detailed:

  • Credit Risk Management Department (CRMD): Supports credit committees in approvals and policy development regarding credit risk and owns internal credit rating models.

  • Operational Risk Management Department (ORMD): Monitors and manages operational risks, including incident tracking, control testing, and ensuring compliance with new or changing products/processes.

  • Asset & Liability Management (ALM), and Information Security and Fraud Risk Management: Support policy adherence and cyber risk mitigation.

• Executive Committees: The RMC is supported by sub-committees like the Operational Risk Management Committee (ORMC) and Product/Process Evaluation Committee (PEC) which review and clear proposals for new products or processes considering compliance, legal, IT, and risk perspectives.

Key Responsibilities and Processes

Under the guidance of the CRO, the IRMD is charged with several responsibilities:

1. Risk Governance: Crafting and updating policies to meet regulatory and internal standards, developing strategies for capital, liquidity, and multi-risk management measures, and embedding a risk-aware culture across the Bank.

2. Risk Appetite/Tolerance Setting: Analytically supporting the setting, review, and annual update of risk appetite and tolerance levels, ensuring alignment with evolving regulatory and legislative requirements.

3. Risk Identification, Assessment, Control, and Monitoring: Implementing a systematic process—including Risk and Control Self-Assessment (RCSA)—to identify risk events, quantify their impacts using a defined Risk Matrix (assessing likelihood and severity), and set measures to mitigate or control such risks.

4. Risk Reporting and Communication: Generating detailed risk reports (including key risk indicators, incident reports, and quantitative assessments) that are communicated to the Board, RMC, and operational units. The reporting process also includes provisions for escalations and recommendations for corrective actions.

5. Business Continuity Planning (BCP): Developing, testing, and updating contingency and disaster recovery plans to ensure continuity of essential operations during disruptions.

6. Capital Computation: The Bank computes its operational risk capital charge using the Basic Indicator Approach as defined by regulatory guidelines, where the charge is 15% of the average positive annual gross income over the previous three years.

Modifications and Enhancements

The review outlines several modifications including:

• Reconstitution of Key Risk Committees: Changes to the Operational Risk Management Committee and the Product/Process Evaluation Committee to streamline membership and approval processes. Revised quorum requirements ensure robust oversight from various departments including IT, Legal, and Compliance.

• Policy Updates and Annexures: Various annexures provide detailed formats for agendas, review procedures, and loss event classifications. The attachments include detailed standard operating procedures, methods for measuring and forecasting loss events (using tools like the FORECAST.ETS function in Excel), and granular definitions of loss event categories.

• Alignment with Regulatory and Market Conditions: Throughout the revision, the policy is aligned with recent regulatory expectations and market practices. No new regulatory guidelines have necessitated further changes during the review period, ensuring continuity while preparing for future updates.

Conclusion

The 2021 review of the Credit Risk Management Policy reflects the Bank’s commitment to a detailed, integrated risk management framework. It emphasizes rigorous risk identification, assessment, governance, and reporting processes, and ensures that committees and responsible departments are clearly organized and accountable. With well-defined roles, updated procedural annexures, and coherent alignment with regulatory standards, the revised policy provides a strong foundation for managing the Bank’s evolving risk landscape and supports a proactive risk-aware culture across its operations.

13th 55FM-4 Integrated Risk Management Policy 2021

Introduction

The Integrated Risk Management Policy 2021 is designed to ensure that the Bank not only complies with RBI guidelines on asset classification and provisioning for advances, but also proactively identifies and addresses risks in stressed sectors of the economy. In accordance with RBI’s Master Circular on Income Recognition, Asset Classification, and Provisioning as well as subsequent RBI circulars (e.g., DBR.No.BP.BC.64/21.04.048/2016-17 dated 18/04/2017), the Bank is required to maintain higher provisions for advances in stressed sectors. The policy sets a framework for identifying these sectors and determining the need for additional provisioning based on a comprehensive evaluation of both quantitative and qualitative risk factors.

Objective

The primary objective of the policy is to periodically (quarterly) evaluate both present and emerging risks across various economic sectors, and, if necessary, to make additional provisions on standard assets. This is aimed at fortifying the financial stability of the Bank and ensuring that adequate loan loss provisions are maintained at all times.

Scope

The policy applies to industry sectors that satisfy one or both of the following criteria:

• (a) Sectors with more than a 2% share in non-food credit in India to which the Bank has exposure.

• (b) Sectors constituting more than 4% of the Bank’s total non-food credit.

Only standard asset accounts in these industries are analyzed when determining additional provisioning requirements.

Identification of Stressed Sectors

Review Process

Major industries and sectors where the Bank has exposure are reviewed on a quarterly basis. This review includes:

• Macroeconomic Performance and sector-specific updates

• Quantitative Measures: Ratios and metrics such as Debt Equity Ratio (DER), Interest Service Coverage Ratio (ISCR), profit margins, ratios of rating stability/upgrades to total rated accounts, and the ratio of stressed assets (SMA1 + SMA2) to total standard assets.

• Qualitative Measures: Industry performance and outlook (informed by industry research reports), legal and regulatory issues impacting the sector, and the availability of additional comforts (e.g., collateral cover or guarantees).

Qualitative Aspects

1. Industry Performance and Outlook:

   • Utilizes industry risk scores from agencies like CRISIL. If the industry risk score is 2 or below, the standard provision for assets may be increased by 10% over the RBI-prescribed rate.

   • In the absence of industry risk scores, significant adverse qualitative factors (e.g., intense competition, unfavorable climate conditions, or macroeconomic shocks) lead to a similar 10% increase in provisioning.

2. Legal/Regulatory Issues:

   • Newly emerging legal or regulatory challenges that could adversely affect borrower profitability or operations trigger a 10% increase in the required provisioning.

3. Additional Comforts:

   • If a borrower’s account benefits from additional segurança measures such as robust collateral or guarantees from a parent company, additional provisioning may not be necessary if the account performance remains regular.

Quantitative Aspects

1. Debt Equity Ratio (DER):

   • For non-finance companies, if the DER is 8:1 or more, and for finance companies, if it is 20:1 or more, provisioning is increased by 10 basis points.

2. Interest Service Coverage Ratio (ISCR):

   • An ISCR of less than 1 results in an additional provisioning of 5 basis points.

3. Profit Margins:

   • If average gross profit margins decline by 50% compared to the corresponding quarter of the previous year, an additional provisioning of 5 basis points is applied.

4. Rating Stability:

   • If the ratio of stable/upgraded borrowers to total rated borrowers is below 30%, a 5 basis point increment in provisioning is mandated.

5. Stressed Assets Ratio:

   • This ratio is calculated as: (Number of SMA1 + SMA2 accounts x 100) / (Number of Standard Advances).

   • If the ratio exceeds 40% at the end of a quarter, additional provisioning of up to 100% of the standard asset provision rate may be required.

   • For retail loans (housing, vehicle, education), only this stressed asset ratio is considered for additional provisioning.

In cases where industry averages or ratios are unavailable, the performance of advances above Rs. 5 crore is used as a proxy for the industry average.

Standard Operating Procedure (SOP) for Additional Provisioning

1. Quarterly Review: The Bank is mandated to continuously review present and emerging risks and stress in the relevant sectors on a quarterly basis. The review covers both qualitative and quantitative parameters.

2. Sector Identification: Identify sectors meeting the criteria (greater than 2% share of non-food credit nationally or over 4% of the Bank's non-food credit).

3. Risk Assessment: Assess each identified sector based on:

   • Quantitative Aspects: DER, ISCR, profit margins, ratings and stressed asset metrics across standard accounts.

   • Qualitative Aspects: Industry performance reports, legal/regulatory factors, and additional comfort factors.

4. Provision Calculation: Additional provisions are calculated on the balance outstanding in standard accounts at the end of the current quarter. Specific increments are applied as per the following triggers:

   • DER thresholds (10 basis points increase)

   • ISCR below 1 (5 basis points increase)

   • Profit margin decline of 50% (5 basis points increase)

   • Rating ratio below 30% (5 basis points increase)

   • Stressed Assets Ratio exceeding 40% (additional provisioning up to 100% of RBI rate).

5. Reporting: The additional provisioning figures are communicated to the accounts department and included in the quarterly Risk Management Committee (RMC) report to the Board.

This comprehensive framework is designed to adapt to evolving risks in various economic sectors, ensuring that the Bank maintains prudent provisioning levels in line with regulatory expectations and emerging market conditions.

13th 56FM-5 Review of Operational Risk Management Policy 2021

Summary of 13th 56FM-5 Review of Operational Risk Management Policy 2021

This document provides a detailed review of various facets of operational risk, including investment performance, staff accountability in NPA related accounts, integrated treasury operations, forex and non-SLR investment activities, and extensive credit department update and board memos. Below is a consolidated, data-heavy summary of the key areas:

1. Investment in Security Receipts

• Trust and Investment Details: The report covers investments made via various trusts and ARCs (Asset Reconstruction Companies). One section details a trust (Group Twenty Four Trust II) with the following metrics:

  • Amount Invested: Rs. 31.45 crore

  • Redemption since inception: Rs. 2.01 crore

  • Present Book Value: Rs. 29.44 crore

  • Market Value (based on NAV): Rs. 22.08 crore

  • Depreciation: Rs. 7.36 crore (equivalent to 75% redemption with additional percentages indicated)

• Performance and Recovery Actions: The book value vs. market value discrepancies are noted, along with recovery actions that include filing suits in DRT/Civil Courts and initiating SARFAESI actions. Auction efforts have been made (with one property sold for Rs. 6.50 lakhs and another attempted resale at Rs. 3.00 crore, both impacted by Covid-19), while more properties are scheduled for auction.

• Rating Migration: The document provides a table showing rating changes for various trusts across time periods. Examples include:

  • Phoenix Trust FY14-10 sustaining an India rating of NR-5, with slight migration from a previous NR-4 rating.

  • JM Financial ARC’s Sep 2014 trust consistently holding Brickwork [RR 3] ratings.

  • Group Twenty Four Trust I and II show slight upward adjustments from ICRA [RR-3] to ICRA [RR-2].

• Mode of Investment: All Security Receipts are privately placed, unlisted, and held in dematerialised form.

2. HR Department – Staff Accountability in NPA Related Accounts

• Case Processing Over 3 Years: During the period 01.01.2018 to 31.12.2020, 313 cases of staff accountability lapses (excluding fraud-related issues) were processed and forwarded by the Inspection Department.

• Breakdown of Disciplinary Actions:

  • Major Punishment: 85 cases (27.16%) involving 158 officers; in 12 cases, dismissals and CRS were imposed (14.12% of the affected officers).

  • Minor Punishment: 24 cases (7.67%) involving 70 officers.

  • Cases Closed on Merits: 18 cases (5.75%).

  • No Lapses Observed: 171 cases (54.63%).

  • Pending Cases: 15 cases (4.79%) with 43 officers pending resolution.

• Additional Measures: For the first time, the DP Cell initiated action against non-performers, awarding punishment in 18 cases in 2019 and 66 cases in 2020.

3. Integrated Treasury Operations (January 2021)

• CRR and SLR Maintenance:

  • CRR: Maintained at Rs. 535.72 to Rs. 540.61 crore, meeting RBI guidelines with marginal excess figures (e.g., 1.17 and 1.06 crore excess).

  • SLR: Excess maintained with figures such as Rs. 334.10 crore and Rs. 241.12 crore excess on required SLR amounts.

• Securities Transactions:

  • Detailed purchase and sale figures for instruments like Government Securities (G-Sec), State Development Loans (SDL), and T-Bills are provided. For instance, the G-Sec position moved from an opening balance of Rs. 1528.34 crore to a closing balance of Rs. 1647.06 crore after purchases, auction sales, and redemptions.

  • The total portfolio is segmented into SLR (Rs. 4495.52 crore) and Non-SLR investments (Rs. 1652.13 crore) with a total market portfolio of Rs. 6147.65 crore.

• Profit & Loss and Money Market Operations:

  • Interest income from SLR investments and profit on sales of securities are detailed, with cumulative monthly figures provided (e.g., total interest and sale profits in the range of Rs. 30.20 to Rs. 126.87 crore).

  • The document includes money market borrowing and lending operations, highlighting instruments like call borrow, term repo, and CD borrow, with aggregate borrowings of Rs. 1315.93 crore and lending instruments totaling Rs. 318.97 crore.

• Additional Details: IPO details (e.g., Indigo Paints Limited with an issue size of Rs. 1170 crore and a weighted average sale price around Rs. 2528.75) and RBI policy updates influencing yield movements are also discussed.

4. Forex and Non-SLR Investments

• Non-SLR Investments: Transactions include corporate shares acquisition (e.g., Tata Consumer Products, Infosys, Nestle India, etc.) summing up to Rs. 75.58 crore in purchases.

• Forex Operations:

  • Details on both domestic and international broker turnovers are provided. For example, total domestic forex turnover reached Rs. 3363.33 crore with specific brokers like NVS Brokerage contributing significantly.

  • Foreign Currency Fund Position stands at Rs. 60.54 million USD with breakdowns across FCNR, EEFC deposits, and swapped funds.

  • Forex trading & arbitrage operations: Number of deals increased (758 in Jan 2021 vs. 566 in Dec 2020) with an overall deal volume (e.g. Rs. 333.3 million USD in Jan) and net profits accruing in lakhs.

5. Credit Department and Board-Level Approvals

• Overview of Credit Activities: The report contains lengthy memos and annexures detailing modifications, renewals, and fresh credit facilities sanctioned by the Management Committee of the Board during January 2021. These include a variety of credit types such as LAPs (Loan Against Property), term loans, cash credits, and bank guarantee facilities.

• Key Data Points:

  • Detailed case studies from various branches (e.g., South Kerala, Pune, Chennai, Mumbai, Bangalore) are presented with borrowers’ details, facility amounts (ranging from sub-crore amounts to over Rs. 90 crore) and associated interest rates typically between 9.00% to 12.50% per annum.

  • Facility modifications include additional top-ups, takeover of credit facilities from other banks, reviews/renewals, and concessions such as concessional processing fees, deviations from standard security norms, and waiver of certain guarantees.

  • Several borrowers (including individuals, public limited companies, trusts, and partnerships) are described with key financial metrics such as tangible net worth, current ratios, debt-equity ratios, and collateral valuations.

• Risk and Compliance Directives: The board memos also specify directions for compliance such as cross-default clauses, security perfection procedures, and triggers for legal audits. Detailed exposure limits for various instruments (e.g., call money operations, interbank deposits, equity exposures) have been laid out to ensure adherence to both internal and RBI-prescribed guidelines.

Conclusion

This review provides a comprehensive analysis of risk management performance and operational data, spanning investment valuations, recovery and rating migration, staff accountability measures, treasury and forex operations, as well as intricate credit facility modifications. The document underscores stringent adherence to RBI guidelines, risk limits on various portfolios, and proactive measures in staff accountability and credit risk mitigation, offering deep insight into the bank’s operational risk management policy as of 2021.

13th 57FM-6 Review of Policy for Additional Provision of Standard Assets under Stressed Sector 2021

13th 57FM-6 Review of Policy for Additional Provision of Standard Assets under Stressed Sector 2021

This document provides a detailed review of policy modifications, sanction conditions, deviations from the standard loan policy norms, and an extensive report on fraud cases related to gold loans. It covers key financial details, sanction modifications for specific accounts, and a comprehensive analysis of recent fraudulent incidents.

Policy Guidelines and Sanction Conditions

• Pledge Loan Disbursement:

  • A permission was granted to disburse a pledge loan of Rs 12 crore. This is subject to executing an agreement to mortgage and a condition that the perfection of additional charge on existing collateral security properties must be completed within 30 days from the date of sanction.

  • The action of the MD & CEO in permitting this on 09.12.2020 was subject to post facto approval and ratification.

• Deviation from Standard Loan Policy Norms:

  • Tangible Net Worth & Security Details:

    • Borrower’s tangible net worth is Rs 8.27 crore with collateral including land/building valued at Rs 19.29 crore and partners’ contribution of Rs 33.68 crore. This results in a total security of Rs 41.95 crore with a security coverage of 60.07%.

  • Key Financials as on 31.03.2020:

    • Paid-up capital: Rs 0.005 crore

    • Tangible Net Worth without quasi equity: Rs 8.72 crore

    • Tangible Net Worth with quasi equity: Rs 10.50 crore

    • Net sales/operating income: Rs 111.59 crore

    • Profit After Tax (PAT): Rs 0.64 crore

    • Total Outstanding Loans (TOL) to Tangible Net Worth (without QE): 6.26x

    • TOL to Tangible Net Worth (with QE): 5.20x

    • Current Ratio: 1.07x

• Direction for Management Committee:

  • A cross default clause is to be stipulated. In case of default by any group concern, the other group entities must undertake to meet the repayment obligations.

  • The consolidated financial position of the group should be analyzed and presented to the Committee.

  • Possibilities of exiting one of the group accounts should be explored to accommodate further finance for the performing companies within the group.

Modifications in Terms of Sanction, Concessions, and Waivers

• **Sanction Details:

  • Date of Sanction:** 08.01.2021

  • Sanction Number: 74

  • Authority: Management Committee (ratifying the action of the MD & CEO from 04.12.2020)

• Borrower Details and Modifications:

  • Borrower: Matrix Financers Limited, Public Limited Indian Non-Government Company (Unlisted)

  • Zone and Branch: Western Zone, Mulund Branch

  • Modification Request:

    • The borrower requested a higher Loan-to-Value (LTV) of 90% for the enhanced ODFD limit of Rs 1.62 crore, compared to the minimum stipulated LTV of 75% as per the Bank’s Loan Policy.

  • The Management Committee ratified the MD & CEO’s approval for this higher LTV sanction.

Detailed Fraud Cases Report (January 2021)

The document also includes an in-depth report on fraud cases involving Rs 1.00 lakh and above, as well as a case of theft/burglary related to gold loans. The aggregate amount involved in reported frauds for the month amounts to Rs 15.12 lakhs. Major cases include:

Case 1: Spurious Ornaments - Guntur Branch

• Fraud Details:

  • Fraud Type: Cheating and Forgery

  • Area: Gold loans

  • Aggregate Amount Involved: Rs 2.03 lakhs (No loss incurred as the customer had closed the gold loans)

• Event Timeline:

  • Date of Occurrence: 27-Oct-2020

  • Date of Detection: 17-Dec-2020 (detected during a gold loan inspection by the Inspection Department)

  • Date of Reporting to RBI: 05-Jan-2021

• Perpetrator Details:

  • Name: Sri Valiveti Venkata Naveen

  • Modus Operandi: Availed six gold loans by pledging gold ornaments, with two accounts found to have spurious ornaments.

• Root Cause Analysis & Preventive Measures:

  • Issues: Lack of expertise in appraising a variety of gold ornaments aside from the standard acid and stone tests and over-reliance on external gold appraisers.

  • Preventive Steps:

    • Providing training to officers through in-house training sessions and video tutorials (available on HRMS) for appraising different types of gold ornaments.

    • Initiating a system of reappraisal for a certain percentage of pledged ornaments by another bank-appointed appraiser in the subsequent month.

Case 2: Spurious Ornaments - Rajamundry Branch

• Fraud Details:

  • Fraud Type: Cheating and Forgery

  • Area: Gold loans

  • Aggregate Amount Involved: Rs 4.71 lakhs (No loss as the associated gold loans were closed)

• Event Timeline:

  • Date of Occurrence: 08-Oct-2020

  • Date of Detection: 04-Jan-2021 (detected during a gold loan inspection)

  • Date of Reporting to RBI: 16-Jan-2021

• Perpetrator Details:

  • Name: Smt. Dusanapudi Sridevi

  • Background: An established customer active since 04.07.2018 with multiple gold loans; out of eleven outstanding loans, two had spurious ornaments.

• Preventive Actions and Staff Accountability:

  • Similar preventive training and reappraisal measures as in Case 1.

  • Explanations were sought from the Principal Officer due to observed lapses, with further actions pending based on the responses.

Case 3: Missing Gold Packet - Yelahanka Branch

• Fraud Details:

  • Fraud Type: Misappropriation and Criminal Breach of Trust

  • Area: Gold loans

  • Aggregate Amount Involved: Rs 6.00 lakhs

• Event Timeline:

  • Date of Occurrence: 05-Dec-2020 (following re-pledging of gold ornaments after closing an outstanding gold loan)

  • Date of Detection: 08-Jan-2021 (detected during a routine inspection when a gold packet was found missing)

  • Date of Reporting to RBI: 19-Jan-2021

• Detection and Investigation:

  • The gold packet was missing from the safe custody maintained by joint custodians. The loss is suspected to be due to misappropriation by either a staff member or an external customer, compounded by a delay in placing the pledged packet in safe custody immediately after the transaction.

  • The absence of CCTV footage hindered the determination of the culprit, necessitating possible police interrogation for further insights.

Summary of Preventive and Corrective Measures

• Training & Skills Development:

  • Enhanced training programs and video tutorials for gold loan inspectors to improve appraisal skills across a variety of gold ornaments.

• Improved Internal Controls:

  • Implementation of a reappraisal system for a percentage of pledged gold ornaments as a control measure to detect frauds at early stages.

• Staff Accountability:

  • Investigations to be conducted with explanations sought from responsible officers in instances where negligence or procedural lapses are noted.

This comprehensive review not only addresses the modifications in sanction and deviations from established policies but also underscores the importance of vigilant monitoring, strict internal controls, and proactive staff training in mitigating fraud risks in gold loan operations.

Meeting Details

• Event: 12 Minutes of the Meeting of the NPA Management Committee of the Board

• Bank: CSB Bank Limited (formerly The Catholic Syrian Bank Ltd.)

• Date & Time: Friday, February 26, 2021 at 12:00 noon

• Venue: Bank's Head Office, Thrissur

Context and Background

The meeting focused on addressing the vacancy for the senior management position following the refusal of Mr. Biswabrata Chakravorty to accept the assignment. As a result, Mr. Rajesh Choudhary was proposed and ultimately selected as the candidate for the role after being previously shortlisted during the identification process for the previous candidate.

• Mr. Rajesh Choudhary has agreed to take up the assignment subject to fulfilling a notice period as per prevailing law in Norway.

• His expected joining date is the first week of June 2021.

Nomination and Appointment Process

• Policy Reference: The appointment is in line with the Bank’s Nomination policy for senior management appointments.

• Committee Involvement: The Nomination & Remuneration Committee (NRC) reviewed and recommended the appointment.

• Committee Resolution: By circulation on February 09, 2021, the NRC recommended Mr. Rajesh Choudhary’s appointment as the Chief Technology Officer (CTO) of the Bank.

Appointment Resolution Details

The Board was presented with a proposal to approve the appointment by passing a circular resolution as per Section 175 of the Companies Act, 2013. The details recommended in the resolution are as follows:

• Position: Chief Technology Officer (CTO)

• Appointment Effective Date: Date of joining the Bank by Mr. Rajesh Choudhary

Terms and Conditions of Appointment

1. Emolument Structure:

   • Fixed Emolument: Rs. 1,30,00,000 per annum (Cost to Company basis)

   • Confirmation Bonus: Rs. 10,00,000, payable on completion of six months subject to performance appraisal.

   • Stock Options: 40,000 performance-linked stock options as per the CSB Employees Stock Options Scheme 2019, subject to specific approvals.

2. Location and Reporting:

   • Location: Mumbai

   • Reporting: To the President (Retail, SME, Operations and IT)

3. Other Terms:

   • Leave and other benefits are provided as per the Bank's policy.

   • Reimbursement of expenses as per the Bank's policy.

   • Mr. Rajesh Choudhary will be subject to periodical performance appraisal as part of the organizational policy.

Approval Process via Circular Resolution

• Legal Framework: The resolution is proposed to be approved by circulation, as allowed under Section 175 of the Companies Act, 2013 along with the relevant Companies (Meetings of Board and its Powers) Rules, 2014, as amended, and the Secretarial Standards (SS-1) issued by the Institute of Company Secretaries of India (ICSI).

• Action Required: Directors were requested to provide their e-mail/fax confirmation or return a duly signed hard copy of the draft resolution to formally indicate their approval. The confirmation was sought at the earliest and not later than a specified number of days from February 09, 2021.

Conclusion

The meeting successfully facilitated the Board's decision to appoint Mr. Rajesh Choudhary as the CTO of the Bank, under clearly defined terms and conditions. This resolution, which includes remuneration details, incentives, and performance appraisal criteria, aligns with the Bank's policies and statutory requirements. The approval by circular resolution ensures timely travel of the decision without the need for convening a physical meeting, thereby maintaining operational efficiency.

Overview

This document is part of the 13th 17DS-1 Annexure RBI FAQ dated February 02 2021 and provides an in-depth analysis of the criteria and definitions used to determine whether two parties are considered related, specifically in the context of the Querist and QCL relationship under Accounting Standard 18 and SEBI LODR regulations.

Definitions and Criteria for Related Party Status

The document explains that two parties may be deemed related if one party has the ability to control or exercise significant influence over the other in making financial or operating decisions during the reporting period. Key criteria discussed include:

• Control or Significant Influence: A party is considered to have significant influence if it has, at any time, one-half of the voting power of an enterprise; control over the composition of the board of directors or the corresponding governing body; or a substantial interest that enables it to direct the financial and/or operating policies of the enterprise.

• Substantial Interest Threshold: According to Accounting Standard 18, an enterprise is also considered to have a substantial interest in another if it holds, directly or indirectly, 20 percent or more of the voting power.

• Presumed Absence of Significant Influence: As per paragraph 13 of Accounting Standard 18, if the investing party holds less than 20 per cent of the voting power, it is presumed not to have significant influence unless contrary evidence is presented.

Analysis of the Querist and QCL Relationship

The document specifically addresses the relationship between the Querist and QCL by outlining the following points:

1. Absence of Direct Shareholding or Control:

   • It has been clarified that neither the Querist nor QCL holds any shareholding in the other.

   • There are no arrangements, agreements, or statutory provisions which confer control or influence over the board composition or business decisions of each other.

2. No Evidence of Significant Influence:

   • There has been no evidence provided to establish that the Querist has significant influence over QCL or vice versa.

   • Given that the shareholding is less than the 20 per cent threshold and no legal or contractual control is present, the document concludes that neither party has substantial influence over the other.

3. SEBI LODR Implications:

   • As per Regulation 2(1)(zb) of SEBI LODR, any person or entity that is part of the promoter or promoter group and holds 20% or more shareholding is deemed a related party. The absence of any shareholding between the Querist and QCL further confirms that they do not fall under this related party classification.

Conclusion

Based on the detailed discussion and in light of the definitions and thresholds provided by Accounting Standard 18 and SEBI LODR regulations, the document concludes that:

• The Querist and QCL do not have any shareholding relationships or agreements that provide one party with control over the other.

• Neither party has significant influence over the financial or operating policies of the other.

• Consequently, QCL is not deemed a related party of the Querist as per the applicable standards.

This clarification is provided by Wadia Ghandy & Co. and is intended to address any questions regarding the related party status of these organizations.

Authorship and Documentation Details

• The summary is drawn from a document signed by a partner from Wadia Ghandy & Co., specifically referenced by Shri. Sumit Maheshwari.

• The detailed analysis appears on pages 248 and 249 of the document, ensuring that all pertinent points concerning related party influence and control are comprehensively covered.

CSB Bank Profile

CSB Bank Limited is prominently operating from its Alternate Channels branch located at No.33, Dr. C.N Deivanayagam Complex, Venkata Narayana Road, T-Nagar, Chennai-600 017. With industry recognitions such as its Corporate Identity Number (CIN: U65191KL1920PLC000175), the bank emphasizes robust financial services including phone banking (toll-free at 1800 266 9090) and customer care facilitated through email communication.

Clearing & Settlement Infrastructure and Online Dispute Resolution

To support a nation-wide mobile banking framework, the bank has outlined the necessity for a 24x7 clearing and settlement infrastructure for interbank fund transfers. This system is essential for the smooth operation of bilateral or multilateral arrangements and requires authorisation from the Reserve Bank of India under the Payment and Settlement System Act, 2007.

In tandem with these efforts, the bank proposes the introduction of an Online Dispute Resolution (ODR) system. This component is designed to handle customer disputes and grievances regarding UPI transactions. The system-driven, rule-based mechanism ensures transparency and minimal manual intervention. Additionally, it offers multiple channels for lodging grievances, including web-based platforms, IVR, mobile applications, call centres, SMS, and physical bank branches.

Customer Complaints and Grievance Redressal Mechanism

Considering the emerging nature of mobile-based banking services, CSB Bank emphasizes the importance of addressing customer and consumer protection issues. Customers using both CSB and non-CSB platforms (BHIM CSB Pay users) can lodge complaints, submit suggestions, or raise disputes directly within the app.

Harmonization of Turnaround Time (TAT) and Compensation

The bank has instituted a framework for the turnaround time (TAT) for resolving customer complaints. Additionally, a compensation framework is in place where financial compensation is processed directly to the customer’s account without awaiting a complaint or claim. Key aspects of the TAT framework include:

• For credit-push funds transfers where the originator’s account is debited but the beneficiary’s account is not credited, the beneficiary bank must effect an auto-reversal by T + 1 day. If the credited transaction is delayed beyond this period, a compensation of ₹100 per day is applicable.

• For merchant-related transactions where an account is debited but the transaction confirmation is not received at the merchant location, auto-reversal is mandated within T + 5 days. Again, a delay beyond this window incurs a compensation of ₹100 per day.

Transaction Limits and Application Features

Transaction Limits

CSB Bank retains the discretion to determine transaction limits for the UPI application. These limits are based on account variants, customer categories, risk assessments, and regulatory guidelines. The limits can be adjusted based on proper due diligence and as approved by the competent authorities, allowing flexibility in meeting individual customer requirements.

Application Features and Discretion

CSB Bank holds the autonomous authority to modify the features on their applications. This includes adding or removing features, discontinuing existing applications, or launching new applications in alignment with industry standards. When an existing application is to be discontinued, the bank commits to notifying customers in advance of the discontinuing date.

Upgradation of the UPI Application

The bank also outlines plans for upgrading its UPI application to enhance the user interface and overall experience for new-generation customers. The upgraded version is expected to include advanced functionalities such as:

• Biometric-based registration and authentication for enhanced security.

• Integrated bill payment services.

• A QR code generator to facilitate receiving payments.

• UPI merchant on-boarding and merchant acquiring capabilities.

• An interoperable QR scanner that supports both Bharat QR and UPI QR formats.

Additional Feature Enhancements

Among other new functionalities, the introduction of the one-time mandate feature allows customers to pre-authorize transactions. This feature enables payments to be processed on a later date with the mandate's one-time block functionality. It benefits both individual users and merchants by facilitating instant mandate generation and automatic deduction of funds on the authorization date.

Conclusion

The extracted information highlights CSB Bank Limited’s commitment to robust banking operations through a 24x7 clearing and settlement system, the implementation of an Online Dispute Resolution system, and stringent customer complaint redressal mechanisms. Additionally, the bank has set definitive guidelines on transaction limits and retains the flexibility to adapt its digital application features as part of its effort to stay current with industry standards and customer expectations.

Summary of Annexure - 1

This document contains a detailed tabular comparison of existing policies with modifications suggested in relation to two distinct subject matters. The information provided includes the original policy details, the modified recommendations, references to relevant circulars, and additional remarks for clarity.

1. One-time Restructuring of Advances to MSME Borrowers

• Existing Policy:

  • The scheme had ended on 31.12.2020 in accordance with the RBI circular dated 11.02.2020.

• Modifications Suggested:

  • Although the original scheme ended on 31.12.2020, a one-time restructuring of existing loans to MSMEs, which are classified as ‘standard’ without a downgrade in the asset classification, is now permitted.

  • The restructuring is available up to 31.03.2021, subject to the eligibility criteria mentioned by RBI.

• References:

  • Amended as per the 7th August 2020 Circular No. 102/2020.

2. Credit Audit

• Existing Policy:

  • Accounts with an internal rating of less than OR-3 with group exposure, whether funded or non-funded, were previously subject to credit audits if their amount was Rs 2 crore and above.

  • It was noted that credit audits were conducted onsite only.

• Modifications Suggested:

  • The threshold for accounts subjected to credit audits has been raised from Rs 2 crore to Rs 3 crore, applicable to accounts with an internal rating of less than OR-3 with group exposure, regardless of whether they are funded or non-funded.

  • The mode of conducting the credit audit has been updated. The audits are now to be conducted onsite/offsite alternately.

• References:

  • Amendments were made on 18th November as per Circular No. 160/2020.

Additional Remarks

• The extracted data includes page reference (Page 312 of 1388) and a signature or approval note from Shri. Sumit Maheshwari, indicating the document’s navigational aid and the authority behind the modifications.

This summary captures all the essential details from the provided extracted data, ensuring that the modifications suggested and existing policies for both subject matters are clearly outlined along with their respective circular references and remarks.

Document Overview

This document constitutes part of the official board records of CSB Bank Limited (formerly The Catholic Syrian Bank Ltd.) and includes multiple sections extracted from the Minutes of the Meeting of the Management Committee of the Board held on Tuesday, February 23, 2021 at 09:00 AM at the Bank’s Head Office in Thrissur. The document spans several pages and includes signed subscription clauses, authorised signatory endorsements from the National Bank, the Financing Institution, and witness signatures, as well as formal memorandums to the board.

Meeting Details and Procedural Formalities

• Meeting Date & Time: Tuesday, February 23, 2021 at 09:00 AM

• Venue: Bank’s Head Office, Thrissur

• Content: The minutes include typical subscription clauses where the National Bank and the Financing Institution have signed the documents through their duly authorised officials. There are detailed signature lines and further sections that address the formal undertaking of resolutions and minutes.

Resolution for Appointment of a New Chief Technology Officer (CTO)

Agenda and Memorandum Overview

A key item in the board’s agenda is the hiring of a new Chief Technology Officer (CTO). A memorandum is issued by the Secretarial Department which outlines the following details:

• Title of Agenda: Passing of a Resolution by Circulation for the Approval of Hiring Mr. Rajesh Choudhary as Chief Technology Officer (CTO).

• Circulation for Resolution: A draft resolution was circulated amongst the board members under Section 175 of the Companies Act, 2013 on February 09, 2021. This resolution was carried by a majority of directors on February 10, 2021. It is now placed before the board for final confirmation.

Background and Rationale for the CTO Appointment

The memorandum details the background of the proposal with the following key points:

• An earlier resolution — passed by circulation on January 5, 2021 — had appointed Mr. Biswabrata Chakravorty as CTO on the recommendation of the Nomination & Remuneration Committee. In accordance with that resolution, a letter of offer was issued to Mr. Chakravorty.

• Subsequently, Mr. Chakravorty communicated to the Bank his inability to join, citing enticement by IndusInd Bank to continue his association with them.

• With the previous appointment not materialising, the Board has recommended hiring Mr. Rajesh Choudhary as the new CTO. A detailed profile of Mr. Rajesh Choudhary is attached with the memorandum to aid in the approval process.

Documentation, Approval, and Digital Endorsements

The document includes multiple layers of approval and authorisation details:

• Memorandum to the Board: Issued by the Secretarial Department with backing from both the Managing Director & CEO (C. VR. Rajendran) and the Company Secretary (Sijo Varghese).

• Approval Process: The memorandum explains that the resolution for hiring Mr. Rajesh Choudhary was circulated among board members and carried by a majority vote, with this circular resolution now being placed for final confirmation during the meeting.

• Reference: Agenda and Resolution No. B-CR-16 for the Financial Year 2020-21 is cited, tying the resolution to the official record of board decisions for that period.

• Digital Signing: The document also features a digitally signed endorsement by Sijo Varghese, reaffirming the authenticity and clearance of the note for board placement. Details like the digital signature certificate information (including issuer information and postal code) are provided.

Conclusion

The extracted portions of the document highlight both the administrative formalities (in the form of subscription clauses, signatory endorsements, and witness attestation) as well as the substantive board matter concerning executive appointments. The board action reflects an adaptive decision in response to changes in previous appointments, moving forward to install Mr. Rajesh Choudhary as the CTO of the Bank after Mr. Biswabrata Chakravorty indicated his unavailability. This thorough documentation underscores the importance of meeting protocols and resolution validation in the corporate governance of CSB Bank Limited.

Overview

The current index item details a ratification decision for an investment authorization. The ratification, noted as 13th 23DTM-5, approves an investment of Rs 50 crores.

Investment Instrument

• Instrument Type: Unlisted Adani Enterprises Commercial Paper

• Amount: Rs 50 crores

• Maturity Date: 31st May 2021

Portfolio Classification

• Category: The investment is classified under the Available For Sale (AFS) category.

Key Considerations

• The ratification reflects an approval to invest in a short-term debt instrument, specifically commercial paper issued by Adani Enterprises.

• The maturity period set for 31st May 2021 indicates the timeframe during which the commercial paper will reach its maturity and be due for repayment.

• As an AFS asset, the commercial paper will be accounted for under the AFS category, reflecting its valuation and potential impact on the bank’s balance sheet.

Conclusion

This ratification confirms the investment decision of Rs 50 crores into an unlisted commercial paper of Adani Enterprises maturing on 31st May 2021 under the AFS classification. The decision is part of broader financial management and investment strategies that ensure appropriate asset categorization and adherence to investment norms.

Introduction

This document provides clarifications by the RBI on various aspects of the intra-group transaction exposures and related investment definitions as per the RBI Intra-Group Guidelines. It further outlines the necessary compliance measures that the Querist must implement as part of the transaction, in addition to addressing queries on whether certain investments and transactions fall within the defined exposures.

RBI Guidelines on Investment Exposures

The RBI Intra-Group Guidelines lay down the framework for determining exposures arising from intra-group transactions. The guidelines include reference to the RBI Exposure Norms that define exposures in relation to investments including:

• Investments in Shares and Debentures: Investments in the shares and debentures of companies, a key area highlighted under the guidelines.

• Investments in PSU Bonds: Investment in public sector undertakings (PSUs) bonds is specifically enumerated.

• Investments in Commercial Papers (CPs): This includes investments in CPs.

Additional points are addressed concerning the treatment of guarantees and investment exposures:

• Exposure through Security Receipts and PTCs: When assets are sold with compensation through security receipts or pass-through certificates issued by a subsidiary or related company, these exposures are attributable to the entity issuing the certificate. Banks or financial institutions may be allowed, on a case-to-case basis in initial years, to exceed the prudential exposure ceiling given the extraordinary nature of such events.

• Investments Guaranteed by PFIs: If a bank invests in bonds or debentures of corporates that are guaranteed by a Public Financial Institution (PFI), the exposure is treated as being on the PFI and not on the corporate. Guarantees by the PFI extend different exposure percentages:

  • For the PFI: The guarantee is considered a 50% exposure, classified as a non-fund facility.

  • For the Bank: The entire (100%) exposure related to the guarantee is recorded for the bank.

Specific Clarification on the Querist's Investment

It is specified that as part of the Transaction, the Querist will not be subscribing to any financial instruments including shares, bonds, debentures, CPs, security receipts, or PTCs issued by QCL. Therefore, no investment exposure under the defined categories is attributable to the Querist with respect to QCL under the Transaction.

Required Compliance Measures under the RBI Intra-Group Guidelines

The document sets out several mandatory requirements for the Querist in connection with the transaction:

Comprehensive Policy on Intra-Group Transactions

• The Querist must develop and obtain Board approval for a comprehensive policy regarding the monitoring and management of intra-group transactions. This policy should incorporate effective systems and processes for:

  • Identifying, assessing, and reporting risk concentrations.

  • Evaluation of material intra-group transactions on a standalone basis.

Annual Review and Policy Elements

The policy must be reviewed at least annually and include the following elements:

• Regular Review and Reporting: A systematic mechanism for reviewing material intra-group transactions and reporting them to the Board, ensuring clarity on risks.

• Risk Management on Standalone Basis: Ensuring that risks from intra-group transactions are addressed with the same rigor as exposures dealing with non-group entities.

• Consistency in Terms and Conditions: Intra-group transactions must adhere to terms, conditions, and credit standards that are on par with similar transactions with third parties.

• Transfer Pricing Considerations: The policy should detail the transfer pricing methodology applicable to the group transactions.

• Conflict of Interest Resolution: Procedures to detect and resolve any conflicts of interest arising out of these transactions.

• Transparency Requirements: Specific measures to ensure transparency in all third-party dealings involving group entities with clear regulatory linkage.

• Audit and Oversight: Material intra-group transactions should be scrutinized through both internal and statutory audits to confirm adherence to group policies and avoid misuse such as the inappropriate transfer of capital or low-quality asset transfers.

• Compliance with Regulatory, Statutory, and Tax Laws: A mechanism to ensure that transactional structures do not lead to circumvention of any laws and regulations.

Consistency and Justification of Transaction Terms

• If there is any deviation in terms and conditions for intra-group transactions compared to non-group entities, these must be presented to the Board by the sanctioning authority along with adequate justifications, and could be made available to the RBI during inspections.

Outsourcing of Services within the Group

The guidelines also cover the conditions to be met when a bank outsources services to another entity within its group. In the context of the Transaction:

• Outsourced Services: The Querist will be outsourcing housekeeping and security personnel services to QCL.

The following conditions must be complied with:

• Documentation: All details of the Transaction must be properly documented via written agreements, detailing the scope of services, charges, and maintaining adequate documentation supporting process flows.

• Clarity in Transaction Structure: The structure should not create confusion among customers or compromise the safe operation of the Querist on a stand-alone basis.

• RBI Information: The arrangement should allow the RBI unhindered access to necessary information regarding the Querist and the overall group.

• Compliance with RBI Directions: There should be clear obligations for QCL to comply with any RBI directions, ensuring that regulatory oversight is maintained.

• Operational Independence: The dependency on QCL must not affect the operational continuity or risk management of the Querist, particularly if QCL's services (like IT systems or support staff) become unavailable.

• Public Communication: The arrangements must ensure that the Querist does not advertise or imply any responsibility for the obligations of QCL.

Reporting Group Entities

Under RBI guidelines, the Querist must periodically submit a list of group entities to the Department of Banking Supervision (DBS) at RBI, which should include all entities operating in India as well as overseas entities with which material transactions have occurred in the last three financial years. Any changes in the group structure must be reported promptly following the format and frequency prescribed by the DBS.

Clarifications Under SEBI LODR on Related Party Transactions

The document further provides specific clarifications on whether QCL is classified as a related party:

• SEBI LODR Definition: Under Regulation 2(1)(zb) of SEBI LODR, a related party is defined as a person or entity belonging to the promoter or promoter group holding 20% or more shareholding in the listed entity. However, this threshold does not apply for units issued by mutual funds listed on recognized stock exchanges.

• Status of QCL: Based on previous responses and clarifications, QCL is not considered a related party to the Querist under the Companies Act nor based on Accounting Standard definitions (specifically AS 18 as notified under Section 211(3c) of the Companies Act, 1956).

Conclusion

The clarifications set out by the RBI detail not only the definitions of exposures arising from various intra-group transactions but also establish a comprehensive framework for compliance. The Querist is required to implement a robust Board-approved policy, ensure adherence to consistent transaction terms, and establish stringent documentation and audit practices especially in cases of outsourcing services. Furthermore, clarifications regarding the classification of related party transactions under SEBI LODR affirm that QCL does not fall under this category with respect to the Querist. This comprehensive approach ensures that both regulatory compliance and risk management are sufficiently addressed in the context of intra-group transactions.

Summary of Margin and Advance Guidelines

This document details comprehensive guidelines and procedures for banks when extending advances against shares, debentures, and bonds, particularly for share and stock brokers as well as commodity brokers. The guidelines are structured into several key areas that cover margin requirements, the modalities of financing for brokers, and general protocols applicable to collateral securities in the context of advances.

Margin Requirements

• For equity shares and convertible debentures held in physical form, banks are required to maintain a minimum margin of 50% of the market value. For instruments held in dematerialised form, the minimum margin is set at 25%.

• In certain cases, banks may choose to apply higher margin requirements where deemed necessary.

• Margin requirements for advances against preference shares, non-convertible debentures, and bonds are determined on a case-by-case basis by the appropriate sanctioning authority.

Advances to Share and Stock Brokers/Commodity Brokers

Prohibited and Permissible Transactions

• Banks and their subsidiaries are explicitly prohibited from financing ‘Badla’ transactions.

• Share and stock brokers or commodity brokers may receive need-based overdraft facilities or lines of credit secured by the shares and debentures held as stock-in-trade.

Assessment and Conditions

• A careful need-based assessment is required taking into account factors such as the borrower’s financial position, their own trading activities, turnover period of stocks, and capital involvement in their operations.

• Banks are discouraged from facilitating large-scale investments in shares and debentures on the brokers’ own account through bank finance. Only easily marketable securities should be accepted as collateral.

Specific Provisions for Brokers and Guarantee Issuance

• Unlike regular borrowers, share and stock brokers are not subject to the ceiling of Rs. 10-20 lakhs for advances against shares/debentures; rather, such advances are based on demonstrated needs.

• Short-term working capital facilities may be granted to SEBI-registered brokers who comply with capital adequacy norms. These facilities aim to bridge the cash flow gap between delivery and payment in Delivery Versus Payment (DVP) transactions. The duration of these working capital facilities is short, and their utilisation is monitored on a per-transaction basis.

• A uniform margin of 50% is applied to all advances including financing of IPOs and the issuance of guarantees, with a minimum cash margin of 25% maintained specifically for guarantees issued for capital market operations. This uniform margin is also applicable to temporary overdraft facilities extended to brokers for DVP transactions.

• Banks may issue guarantees on behalf of brokers in favour of stock exchanges or commodity exchanges (e.g., NCDEX, MCX, NMCEIL) in place of security deposits or margin requirements. The issuance of such guarantees is subject to assessment of the borrowers’ requirements and adherence to exposure ceiling safeguards.

Collateral and Security Substitution

• For advances provided to brokers, if shares are held as security for a short-term period (not exceeding nine months), the requirement to transfer the shares in the bank’s name does not apply. For dematerialised shares, banks can utilise the depository pledge facility, which blocks the securities in favour of the lending bank without necessarily transferring ownership.

• In cases of default, banks have the right to exercise an option for transferring shares into their name.

• Brokers have the flexibility to substitute the pledged shares as needed, provided that all necessary conditions are met.

General Guidelines for Advances Against Shares/Debentures/Bonds

Statutory and Procedural Compliance

• Banks must strictly adhere to the statutory provisions of the Banking Regulation Act 1949 (especially Sections 19(2), 19(3) and 20(1)(a)) when granting advances against shares, including those held in dematerialised form.

• Advances should be assessed based on the intended use rather than merely the collateral provided. Standard procedures for sanction, appraisal, and post-sanction monitoring must be followed.

Segregation and Market-related Assessments

• Advances against shares, debentures, or bonds should be treated as distinct finances, separate from other advances.

• Banks need to verify the marketability of the collateral securities and scrutinise the financial stability and working of the company whose securities are being used.

• Securities must be valued at prevailing market prices upon being lodged as collateral.

Limitations and Risk Management

• Special care must be taken when advances are requested against large blocks of shares held by an individual or a group to ensure that such advances neither facilitate the retention of a controlling interest in any company nor support inter-corporate transactions.

• No advances shall be extended against partly-paid shares or to partnership/proprietorship concerns when shares/debentures are the primary security.

• For cumulative advances exceeding Rs. 10 lakhs, banks must ensure that the securities are transferred to their name (if not in dematerialised form) to secure exclusive and unconditional voting rights.

Voting Rights and Security Integrity

• Banks retain the discretion to institute their own procedures regarding the exercise of voting rights on the collateral securities.

• It is imperative to verify that securities are authentic and free from issues such as duplication, theft, or benami arrangements. Any such irregularities must be reported immediately to the RBI.

Authority and Regulation

• The authority levels for sanctioning these advances will be held as decided periodically by the bank’s Board of Directors.

• Indian banks are prohibited from engaging in transactions that involve extending credit to clients of Indian nationality/origin through their overseas branches for investments in shares and debentures/bonds of Indian companies.

This detailed set of guidelines ensures that banks implement robust assessment and risk mitigation strategies when offering advances against shares, debentures, and bonds, particularly focusing on market risks, borrower credibility, and the legal framework governing such transactions.

Overview

The document outlines the Integrated Risk Management Policy for the Bank, detailing a comprehensive framework for identifying, measuring, monitoring, controlling, and mitigating various risk types. The policy emphasizes balancing risk with return and optimizing risk-adjusted capital allocation. This summary encapsulates the detailed risk management policies, roles, committee structures, and standard operating procedures that govern the Bank’s overall risk governance.

Risk Management Policies

The Bank has established multiple sub-policies to address specific risk categories. Each policy is designed to provide clear guidelines, frameworks, and methodologies for managing the associated risk. The key policies include:

• Credit Risk Management Policy:

  • Defines credit risk and outlines the credit risk management (CRM) framework.

  • Specifies the functions of the CRM committee and tools such as risk rating systems, risk pricing, prudential exposure limits, portfolio management, and loan review mechanisms.

• Operational Risk Management Policy:

  • Defines operational risks and the role of the ORM committee.

  • Focuses on identifying, assessing, measuring, mitigating, controlling, and monitoring operational risk.

  • Includes procedures for new product/process introductions and risk assessment using an RCSA (Risk Control Self-Assessment) model.

• Market Risk Management Policy:

  • Establishes risk limits for forex and investment exposures.

  • Describes the risk monitoring mechanisms.

• Asset and Liability Management (ALM) Policy:

  • Outlines the functioning of the Asset Liability Committee (ALCO).

  • Details tools for measuring and managing interest rate risks, setting limits for asset and liability mixes, deposit/loan pricing, and funds transfer pricing.

• Liquidity Management Policy:

  • Details responsibilities for managing liquidity risk.

  • Covers monitoring prudential limits, maintaining minimum liquid asset holdings, and intra-day liquidity management.

• ICAAP Policy (Internal Capital Adequacy Assessment Process):

  • Provides methodologies for quantifying Pillar II risks and capital allocation among business units.

  • Sets forth the Bank’s risk appetite and monitoring mechanisms.

• Stress Testing Policy:

  • Describes the framework for conducting scenario and sensitivity tests in accordance with RBI guidelines.

• Country Risk Policy:

  • Explains country risk assessment procedures including risk categories, limit settings, and monitoring of country exposures.

• Reputational Risk Policy:

  • Identifies factors that contribute to reputational risk.

  • Outlines the tools for measurement, mitigation, and management.

• Outsourcing Policy:

  • Specifies guidelines for outsourcing activities including senior management roles, vendor due diligence, and norms for outsourced agencies.

• Business Continuity Planning (BCP) Policy:

  • Provides a framework to ensure continuity of critical business processes to safeguard customer service, business operations, regulatory compliance, and brand reputation.

• Key Personnel Risk Policy:

  • Addresses risks related to the loss of crucial staff due to various circumstances, and measures to manage such risks.

• Strategic Risk Policy:

  • Focuses on strengthening earnings resilience and mitigating undue earnings volatility, as well as managing risks associated with strategy formulation and implementation.

• Additional Provisioning Policy on Standard Advances under Stressed Sectors:

  • Facilitates the assessment of emerging risks and establishes guidelines for additional provisioning when necessary.

• Information Security Policy:

  • Guides how to secure information assets against accidental or deliberate changes, including unauthorized access or data loss.

• Cyber Security Policy:

  • Combines technological, procedural, and process-based measures to protect against cyber-attacks and unauthorized access.

  • Includes a Cyber Crisis Management Plan in alignment with overall cybersecurity strategies.

• Group Risk Policy:

  • Ensures that all group entities adhere to minimum risk management requirements and prudential limits for intra-group exposures.

• Model Risk Policy:

  • Provides guidance on effective model risk management including model development, validation, risk mitigation, and reporting.

Chief Risk Officer (CRO) and Committee Structures

Role of the Chief Risk Officer (CRO)

• The CRO is responsible for consolidated management of credit, market, and operational risks under the overarching risk management framework.

• Key responsibilities include risk measurement, monitoring, control/mitigation, and reporting.

• The CRO is appointed for a fixed tenure with Board approval and may only be transferred or removed with similar approvals, with such changes reported to the relevant regulatory authorities and stock exchanges.

• The position requires adequate professional qualification and experience in risk management.

• Reporting is directly to the MD & CEO or the Risk Management Committee (RMC), with the CRO acting as a non-voting adviser within the credit sanction process to ensure independence.

Risk Management Committees

• Board-level Risk Management Committee (RMC):

  • Chaired by the MD & CEO and includes four directors as members, with a quorum of two members.

• Permanent Invitees to the RMC:

  • This list includes senior executives such as the Chief Risk Officer, President ± Retail & SME (Business and Credit Risk), Chief Financial Officer, Chief Credit Officer (Retail & SME, Strategy, BIU, and Analytics), Chief Technology Officer, Head - Recovery & Credit Monitoring, Chief Human Resource Officer, Head - Inspection & Audit, Chief Compliance Officer, Chief Information Security Officer, and Assistant General Managers for both credit and market risk management.

  • In case a head of a department is absent, the responsible executive in charge attends the meeting instead.

• Meeting Frequency:

  • The Risk Management Committee meets on a quarterly basis.

Standard Operating Procedures & Integrated Risk Management Department (IRMD) Charter

Standard Operating Procedures

• The primary objective is to balance the trade-off between risk and return, achieving an optimal risk-adjusted profile.

• The integrated policy ensures that all material risks – including credit, market, operational, liquidity, and Pillar-II risks – are addressed consistently throughout the Bank.

• The Board of Directors oversees all risk management strategies which are implemented by specialized sub-committees such as the CRMC, ORMC, ALCO, and the Information Security Committee.

IRMD Charter Summary

• Objective: Defines the mission, organizational structure, and responsibilities of the Integrated Risk Management Department.

• Scope: Describes the function and accountability of the IRMD, including detailed responsibilities of the CRO and the reporting structure.

• Definitions: Clarifies terminology across the risk spectrum — from Business Continuity Plans and Crisis Management to specific risk types such as Credit, Market, Liquidity, Operational, Reputation, and Legal risks.

• Accountability: Assigns roles and authority within the risk management framework, ensuring executive support and adequate resources.

Conclusion

This Integrated Risk Management Policy provides a robust framework for managing a spectrum of risks that the Bank faces. It incorporates detailed sub-policies for specific risk areas, a clearly defined role for the CRO, and a multi-layered committee structure to ensure adherence and continuous monitoring. The policy framework is supported by standard operating procedures and an explicit charter for the Integrated Risk Management Department, all of which empower the Bank to achieve optimal risk management and maintain financial stability while meeting regulatory requirements.

Overview

This document contains two distinct sections extracted from a regulatory and internal communication file from CSB Bank Ltd. The first section is a formal letter requesting funds for a social welfare initiative, and the second section is a memorandum addressed to the Board regarding the review and update of the Bank’s Credit Monitoring Policy for the financial year 2020-21.

Section 1: Request for CSR Funding

Content and Purpose

• A formal letter is submitted by the Director, Shri Sumit Maheshwari, on behalf of CSB Bank Ltd. The letter requests a financial allocation of Rs. 10 Lakhs. The requested funds are intended for building two houses or similar structures for the poor and underprivileged.

Key Details

• Request Amount: Rs. 10 Lakhs

• Purpose: To build two structures aimed at benefiting the poor and those in need

• Funding Source: The request suggests that the funds could be allocated from Corporate Social Responsibility (CSR) initiatives or other available schemes. The allocation might be processed either by a direct request or via bank transfer.

• Tone and Appeal: The letter is courteously written with an appeal for favorable consideration and timely disbursement of funds.

• Signatory: The letter is signed by the Director, with a clear expression of hope for cooperation.

• Document Pagination: The letter appears on Page 309 out of 1388 pages.

Section 2: Memorandum on Credit Monitoring Policy

Introduction and Administrative Details

• A memorandum is addressed to the Board by the Credit Monitoring Department of CSB Bank Ltd, and it pertains to the review and update of the Bank’s Credit Monitoring Policy for 2020-21.

• Submission Date: 23-02-2021

• Department: Credit Monitoring Department, Head Office

• Registered Office: Thrissur

• Key Personnel:

  • Shri Sumit Maheshwari is mentioned multiple times (likely in connection with signatory responsibilities).

  • C. VR. Rajendran, Managing Director & CEO

  • V. Ganesan, Head – Recovery and Credit Monitoring

Policy Review Details

• Objective: The purpose of the memorandum is to review the existing Credit Monitoring Policy by integrating various new regulatory and policy guidelines that were issued during the review period.

• Latest Revision: The policy was most recently amended on 16.03.2021, referenced under BR no. EC-1.

• Major Changes: The draft policy now includes a list of major changes that have been incorporated from the existing policy. These changes have been annexed as:

  • Annexure I: List of major changes from the existing policy

  • Annexure II: The Modified Credit Monitoring Policy

Recommendation for Approval

• The memorandum recommends that the Board reviews and authorizes the modified Credit Monitoring Policy. The listing and integration of new guidelines are emphasized as the primary reason for the update.

• The document is placed for approval, indicating that the changes are pending review and ratification by the Board.

Sign-Off and Pagination

• The memorandum is signed by key members including Shamna M.M (Manager), Davy Paul C (Chief Manager), and B Shajahan (Head – Credit Monitoring).

• The memorandum appears on Pages 310 and 311 out of the 1388 page document, reinforcing its extensive nature.

Additional Document Metadata

• The header information includes various regulatory reference numbers, for example:

  • Reg. 299/1V12011,12AA No

  • CIT/TCRyTECH/12A13312011-12,80

  • No. AAKTS9893B109115-16/T-0052180G

• Although parts of the metadata appear garbled or fragmented (e.g., multiple typographical errors such as “this.onn.t¡on,” and “w(-l reqLrest”), they indicate the presence of extensive reference material and documentation practices typical for regulatory correspondence.

Relation to the Index Item

• The index item under review is labeled as 13th 21DTM-3 Exceeding of Market Risk Management Investment Policy Limits. While the extracted data does not explicitly mention market risk management or exceedance of limits related to investment policy, it does include key elements of risk and policy review within the Bank (specifically, the Credit Monitoring Policy review).

• It can be inferred that the broader document context involves both market risk management concerns and ongoing regulatory documentation including credit and investment guidelines. The memorandum’s inclusion and stringent review of policy suggest an overarching focus on maintaining compliance and risk management, even if the extracted segments do not detail specifics on investment policy limits.

Conclusion

This summary amalgamates two primary components from the extracted data: a CSR funding request letter aimed at aiding the underprivileged and an internal memorandum for updating and approving the Credit Monitoring Policy. Both sections highlight the Bank’s commitment to regulatory compliance, risk management, and corporate social responsibility. The document, spanning over 1388 pages, signifies a comprehensive approach to both external social commitments and internal financial oversight.

Document Overview

This document contains detailed information extracted from a set of credit audit reports along with statistical summaries and observations from various inspections. Although the index item reference is to the bank’s contribution towards promotion of charitable activities requested by the Santhwanam Social Apostolate Centre of Trichur Archdiocese, the extracted data predominantly focuses on credit audit processes, regulatory compliance and operational performance of banking facilities.

Credit Audit Report Components

The detailed report covers several key areas:

Ad-hoc Sanctions and Over-due Regularization

• Ad-hoc Sanctions: The report raises the question of whether the ad-hoc sanctions are within specified thresholds and prudential limits. Details on the number and nature of these sanctions are investigated to ensure compliance.

• Regularization of Over-due Accounts: The report reviews the adequacy of the actions initiated to regularize over-due accounts. It highlights the expected dates of regularization, the sources of funds earmarked for this process, and any early warning signals that have been observed.

• Persisting Irregularities: Several areas of persisting irregularities are documented. These include:

  • A concurrent audit report (date not applicable).

  • A stock audit report (date not applicable).

  • A surprise inspection on 17.08.16.

  • An internal inspection report on 28.03.17.

  • A credit audit report on 15.11.16.

  • No RBI Inspection Report or further details in certain cases.

Rectification and Branch Performance

• Rectification Status: The report includes details on the current status of rectification measures along with reasons for any cases of non-rectification.

• Branch Action Adequacy: Assessment of the adequacy of actions taken by the branch is included, ensuring that immediate and appropriate steps have been taken in response to identified discrepancies.

Audit Observations and Auditor Suggestions

• Observational Remarks: The credit auditor’s observations on the quality of advances and the concentration of the credit portfolio at the branch are documented. Suggestions for better management of the branch’s credit portfolio, based on audit experience, are provided. The name of the credit auditor (Shri. Sumit Maheshwari) and other associated signatures underscore accountability and detailed scrutiny.

Detailed Audit Reporting and Annexures

The report spans several annexures, each highlighting different aspects of the audit process:

Annexure – IV (Credit Audit Report)

• Credit Exposures Analysis:

  • Separate ratings are provided for credit exposures below Rs.500 lakh. This includes disaggregated details for exposures between Rs.25 lakh and Rs.100 lakh and those between Rs.100 lakh and Rs.500 lakh.

  • A rating-wise distribution is prepared for standard credit exposures, including categories labelled CSB-1 through CSB-6 for amounts between Rs.25 lakh and Rs.100 lakh. Another detailed breakdown exists for credit exposures between Rs.100 lakh and Rs.500 lakh including categories CSB-1 to CSB-8.

Annexure – V (Audit of Sister/Associate Concern of a Group Company)

• Group Company Details:

  • The audit records include the name of the parent or group company, along with the name of the sister or associate concern.

  • Details provided cover the line of activity, industry, year of incorporation, and the nature of the relationship with the bank.

  • The classification of the advanced loan (whether standard, irregular, NPA etc.) and its credit rating are included.

  • Exposure figures (in Rs. lakh), sanction details including dates, facility rating and sanctioned limits form a critical part of this annexure.

• Operational Data: Information also covers account numbers, limits, current balances, drawing power and details of primary security along with collateral information and dates of asset valuation.

Operational Aspects and Statistical Observations

• Account Performance Over the Review Period:

  • A statistical resume is provided for different account types such as OD (Overdraft), ODH (Overdraft Home), ODM, and PCL. This includes limits, turnover, liability, and interest or other charges.

  • The report highlights whether the unit’s actual transactions commensurate with projected figures.

• Transaction Regularity and Defaults:

  • Key operational aspects, such as the regularity in operations, maintenance of deposit accounts, cheque return issues, delays in regularizing returned instruments and pending discharges of cheques or bills, are thoroughly recorded.

  • Details regarding arrears in term loans, number of installments overdue, and reasons for defaults are noted.

  • The report further examines any occurrence of bills drawing on the same party having been dishonoured previously.

• Additional Warning Signs:

  • Instances of defaults, ad-hoc sanctions, overdue accounts, adverse market reports, diversion of funds, and any efforts to suppress irregularities are documented. Early warning signals are captured to aid in proactive risk management.

Synopsis of Other Annexures

Annexure II (Synopsis of Credit Audit - Monitoring Department)

• Facility and Collateral Details:

  • The annexure provides snapshots of key accounts detailing the nature of the credit limits, drawing power, current balances, and types of collateral (such as land, commercial building, etc.).

  • All necessary dates are provided, including dates of the credit audit, report, receipt at head office, and stock verification.

  • Major observations, deficiencies and any highlighted persisting irregularities are reported by the Senior Manager, CMD and the Assistant General Manager, CMD.

Annexure III (Synopsis of Stock Audit)

• Stock Audit Details:

  • This section gives a detailed account of stock and inventory-related limits and drawing power specifics for a given account.

  • Dates for the audit, report compilation, receipt of documents at headquarters, and stock verification are included.

  • The details ensure a comprehensive review of the validity and timeliness of the stock/asset inspections, along with insurance expiry dates if applicable.

  • Major observations, deficiencies and persisting irregularities are likewise summarized here.

Additional Contextual Details

• While the index item refers to the bank’s contribution toward promoting charitable activities at the Santhwanam Social Apostolate Centre of Trichur Archdiocese, the extracted data does not directly detail particulars about the charitable contribution. Instead, it provides extensive data on internal credit audits, risk assessments and operational reviews which form part of the overall regulatory and monitoring framework of the bank.

• The extensive breakdown of credit exposures and audit timelines offers an insight into the robust monitoring mechanism of the bank, ensuring adherence to regulatory standards even in diverse operational spheres.

Conclusion

The data provided is focused on the detailed internal review processes at the bank, including evaluations of ad-hoc sanctions, regularization of overdue accounts, and overall adherence to prudential limits. The audit details across various annexures underscore the depth of financial risk management and operational control within the bank. This comprehensive approach ensures that while individual requests such as the one from Santhwanam Social Apostolate Centre may be discussed, the underlying operational controls and audit frameworks maintain critical importance in the bank’s reporting and governance structure.

Unique Identification and Trade Processing

The document establishes that every trade (and related cash flows) must be assigned a unique reference derived from account details (such as account numbers) to ensure traceability. This unique identification is critical for netting losses or passing on gains as required. Additionally, when entering contracts or processing cancellations, branches are instructed to confirm with the customer that the referenced cash flow is exclusive to that contract and not used concurrently elsewhere.

USD 10 Million Facility for FX Hedging

The revised FX Hedging Guidelines introduce a USD 10 million facility which permits users to book derivative contracts in INR up to a USD 10 million equivalent notional outstanding without needing to establish underlying documentation. The key points include:

• Facility Nature: Not a separate facility but a documentation simplification measure provided to clients.

• Transaction Declaration: At the time of entering into a transaction, clients must indicate if the transaction is on a Contracted Exposure (CE) or Anticipated Exposure (AE) basis. For transactions up to USD 10 million, contracts can be freely cancelled or rebooked with gains or losses passed or recovered appropriately.

• Exceeding the Limit: If the client’s outstanding notional exceeds USD 10 million, the client must submit required underlying documents for all outstanding CE contracts according to prevailing norms. Subsequent contracts will follow the established RBI guidelines.

• Global Threshold: The USD 10 million limit is applied cumulatively across all banks. Branches solely rely on client declarations for monitoring compliance. The entire notional basis of instruments per user classification is considered, and FCY/INR contracts involving currencies other than USD require a conversion with Treasury assistance.

• Future Eligibility: Clients who exceed this threshold once in a financial year are not allowed to avail further documentary relaxation during the same period.

Transition Guidelines

Existing hedge contracts booked under the earlier regulatory framework (specifically those outstanding as of 31 August 2020) continue to be governed by the regulatory guidelines in place at that time. Key points include:

• Contracts booked against Contracted Exposure, Past Performance, or under SHF remain under the old guidelines until maturity, cancellation, or rollover.

• Branches remain responsible for obtaining associated documents/declarations as required under the earlier framework until such contracts either mature or undergo market actions.

• Any rollover or rebooking is subject to the prevailing RBI guidelines and regulations at the time of such transaction.

General Principles for Forex Derivative Transactions

The guidelines outline several general principles and responsibilities for all forex derivative transactions:

• Client Declarations: Banks must take a declaration from clients confirming that the exposure is unhedged and not being doubly hedged with another AD Category I bank. Corporates must also provide an annual certificate indicating board awareness and authorization of the derivative transactions.

• Eligibility for Hedge: Foreign currency loans/bonds become eligible for hedging only after final Reserve Bank approval or assignment of the Loan Registration Number. Similarly, GDRs/ADRs are hedged only after finalization of the issue price.

• Forward Contract Handling:

  • Forward contracts involving rupees, for resident customers, can be cancelled and rebooked with a different AD Category I bank under specific conditions such as competitive rates, simultaneous cancellation and rebooking on maturity, and ensuring cancellation by the original booking bank.

  • The overall forward cover booked must be monitored daily, with detailed customer-wise positions reported to senior management, and monthly MTM reports generated at Integrated Treasury.

• Customer Options and Bank Responsibilities:

  • Customers may request early delivery, extension, or cancellation of contracts. In cases where the bank accepts early delivery it shall account for swap differences along with interest on funds outlay or inflow.

  • For contract extensions, the original contract is cancelled and rebooked at the current exchange rate with subsequent recovery or payment of the difference between the original and current rates.

• Cancellation Mechanics:

  • When a customer cancels a contract (on or before the maturity date) the bank recovers or pays the exchange difference based on the contracted and cancellation rates.

  • Cancellation of purchase contracts is executed at the TT selling rate, whereas sale contracts are at the TT buying rate. If contracts are cancelled after maturity due to customer default, no exchange gain is passed to the customer and any observed loss is recovered.

• Swap Costs and Interest:

  • In early delivery cases, swap cost is recovered upfront regardless of whether an actual swap is executed. Swap gains are settled at the end of the swap period.

  • The bank recovers or pays interest on the funds outlay or inflow calculated as the difference between the original contracted rate and the swap rate. Rates applicable include MCLR +3% for outflow (minimum one month’s MCLR if period is less than one month) and a discretionary term deposit rate for inflows.

Advance Remittance for Import of Goods and Services into India

Branches are permitted to allow advance remittances for imports provided they adhere to detailed ceilings and guidelines:

Definition and Documentation

• Approvals for advance remittance must be sought based on the aggregate amount on the import invoice irrespective of individual remittance values.

• Remittances should strictly follow the contractual terms and be made directly to the supplier’s account (ultimate beneficiary), avoiding numbered accounts.

• Extensive KYC/AML scrutiny must be undertaken to verify the genuineness of the import transactions, accompanied by documentary evidence that the overseas buyer requires an advance payment.

Conditions Based on Bank Guarantee (BG) / SBLC

1. When BG/SBLC is Furnished:

   • For both import of goods and services, advance remittance can be made without any ceiling, provided an unconditional, irrevocable standby LC or guarantee is presented. This guarantee must come from an international bank of repute or an AD Category I bank (subject to a counter-guarantee from an international bank) and must be accompanied by compliance with KYC, AML, and all other requisite RBI/internal instructions.

2. When BG/SBLC is Not Furnished:

   • Upper Ceilings:

     • Imports of goods are not permitted to have advance remittance above USD 5 million or equivalent in other currencies.

     • Imports of services are capped at USD 5 lacs or equivalent in other currencies.

   • General Conditions:

     • There must be no overdue import bills with the bank.

     • The importer must not be classified as an NPA, and a satisfactory credit report of the foreign supplier should be obtained (waivers allowed under certain thresholds).

     • The importer should be a regular customer with a proven track record in advance remittances and without negative audit or inspector comments.

     • Public sector or Government/State undertakings who find it difficult to obtain BG from an international bank need to secure a waiver from the Ministry of Finance to make remittances exceeding USD 100,000.

Approval Hierarchy for Import of Goods

• The sanction authority and the corresponding reference number must be clearly marked in the sanction order and quoted when seeking exchange rates from the Dealing Room. The authority for sanctioning advance remittances depends on the aggregate invoice amount (above or below USD 100,000 or equivalent) and the relationship of the customer (borrower or non-borrower) with the bank.

Conclusion

The document comprehensively details the operational, documentation, and regulatory requirements for forex derivatives (including hedging and cancellation protocols) and advance remittances for imports. It emphasizes stringent compliance with guidelines, thorough due diligence on client transactions, and proper monitoring and documentation for both the hedging facility and remittance processes to ensure regulatory conformity and risk management.

Meeting Overview

The document is the 13th item in the series of minutes from the Audit Committee meeting held on January 18, 2021, pertaining to several resolutions and agreements of dCSBBank (formerly The Catholic Syrian Bank Ltd.). The data covers extensive details on refinancing arrangements, mortgage security provisions, and the execution of related agreements. Central to the discussion is the bank’s intent to avail an automatic refinance facility from NABARD (National Bank for Agriculture and Rural Development) for an eligible amount of up to Rs 600.00 crore.

Resolutions and Approvals

The document records the following key resolutions and points of approval:

• Mortgage and Security Arrangements:

  • The bank has resolved to secure loans and advances by accepting deposit or mortgage of title deeds from borrowers. This may be executed as either a joint equitable mortgage or through sub-hypothecation to both the bank and the National Bank, ensuring appropriate mortgage security for refinance purposes.

  • Designated officials—including Head Treasury/AGM Treasury, Head Credit Monitoring, AGM Credit, and Chief Manager (Credit)—are authorized to accept deposits of title deeds for guarantees related to the loans and advances.

• Approval of Borrowing and Refinance Authorization:

  • There is a resolution for the bank to borrow, with or without security, from the National Bank by way of refinance. This includes the procedure to create equitable sub-mortgage or accept joint equitable mortgage with modifications as might be agreed between the parties.

  • The draft Memorandum of Agreement forwarded by the National Bank is approved by the board, with the Managing Director being authorized to accept modifications in the draft as necessary.

• Delegation of Authority:

  • Several officials are delegated specific authorities to execute or deposit necessary documents on behalf of the bank. These include accepting deposit of title deeds, executing required deeds/instruments, and submitting claim applications for refinancing.

  • Additionally, the Treasury and Credit Monitoring officials have been empowered to handle documents such as Letters of Sanction from NABARD, and make all related arrangements including periodic submission of reports to the National Bank.

NABARD Refinance Facility Discussion

A significant part of the meeting focused on the proposed automatic refinance facility from NABARD. Key aspects of this refinance facility include:

• Rationale and Necessity:

  • The bank’s overall advance portfolio has grown substantially, resulting in a reduction of lendable surplus from Rs 1004 crore as on 30-09-2020 to a deficit of Rs 111 crore as on 31-01-2021. This shortfall is being managed through Money Market borrowings. The refinance facility via NABARD is seen as a stable source of alternate funding that offers benefits such as exemption from CRR/SLR requirements and improves the Certificate of Deposit (CD) Ratio.

• Features of the Refinance Facility:

  • NABARD extends long-term automatic refinance specifically targeted for Agriculture, MSME, and other eligible sectors. Loans eligible for refinance must have a residual maturity of more than 18 months at the time of the application.

  • Extent of Refinance:

    • For loans disbursed for agriculture-related activities, up to 95% is eligible.

    • For loans disbursed for other diversified purposes, up to 90% is eligible.

• Interest Rate Structures:

  • For loans with a repayment period of 5 years and above, the interest rate is pegged at 5.40%, with no additional risk premium if the bank holds a top risk rating on NABARD’s scoring scales. However, minor risk premium variances (0.05 to 0.20%) may apply based on internal risk assessments.

  • For loans with a repayment period of 3 years to less than 5 years, the interest rate is 5.20%, while loans with a period of 2 years to less than 3 years and 18 months to less than 2 years are offered at 4.65% and 4.45% respectively.

Memorandum of Agreement (MoA) Overview

The document includes a detailed draft of the Memorandum of Agreement between the financing institution (the bank) and the National Bank. The key provisions in the MoA are:

• Disbursement and Repayment:

  • Refinance loans are to be disbursed according to a defined schedule, with interest and repayment terms laid out in the Letter of Sanction by NABARD. Variations to these terms can be mutually agreed upon.

• Default and Security Enforcement:

  • Should the financing institution delay repayments or default on due payments, additional interest charges and penalties will be applied. In the case of defaults, the National Bank reserves the right to invoke security arrangements, including the recall of loans.

  • The institution is responsible for furnishing all necessary securities including periodic valuations of borrower properties, and the eventual enforcement of security in case of a default by the constituents.

• Additional Covenants and Operational Provisions:

  • The financing institution is required to maintain separate accounts for each refinancing scheme and to permit periodic inspections by the National Bank.

  • A series of obligations including assignment of security documents, and notification of any changes in the borrower’s solvency, are mandated.

  • There is a clause concerning electronic payments: payments to staff, vendors, and clients are to be made electronically, with deviations (e.g., use of cheques) being rare and subject to audit.

• Intervention in Case of Default:

  • In the event of default, the National Bank has the discretionary power to initiate measures, including directing the Reserve Bank of India or other banks to debit the financing institution’s accounts to recover dues.

Delegation and Execution Details

Specific actions approved include:

• Execution of documents at Mumbai by designated officials representing the bank.

• Submission of board resolutions to NABARD, followed by execution of the required Memorandum of Agreement and Letter of Authority to instruct the Reserve Bank of India on fund recovery procedures.

The document also lists subscribers and signatories validating the board’s resolution, including statements by senior officials such as the Managing Director & CEO and CFO & CCO, and other key members from the Credit Department, all clearing the note for further board action.

Conclusion

In summary, the minutes detail a multifaceted resolution involving:

• The adoption of a refinance facility from NABARD to supplement the bank's dwindling lendable surplus through stable funding channels.

• The establishment of robust security arrangements, including mortgage deposit of title deeds, in concurrence with the refinancing requirements.

• Detailed procedural and authority delegation to ensure smooth execution and compliance with both internal resolutions and NABARD’s prescribed conditions.

This comprehensive resolution not only covers the immediate funding needs through a refinance facility but also delineates the operational, security, and regulatory frameworks essential for implementing and maintaining this arrangement in accordance with the bank’s larger financial strategy.

Recovery Policy Overview

This document outlines the asset recovery policy as established by the Asset Recovery Department based at the Head Office in Thrissur. It provides detailed procedures for handling the sale of non-performing assets (NPAs) and distressed assets to specialized asset care channels generally designated as SC/RC. The policy addresses offer submission, bidding, valuation, decision-making delegation, provisioning, and utilization of floating or counter-cyclical provisioning buffers.

Offer Submission and Bidding Process

Identification Committee and Negotiation

• The identification committee is responsible for compiling offers and submitting them with comprehensive details received from the SC/RC to the MD & CEO.

• The MD & CEO holds the authority to negotiate further with SC/RC regarding the offered price and terms to enhance or modify the proposal.

Right of First Refusal and Auction Mechanism

• Priority is given to a SC/RC that has already secured the highest and a significant share (between 25-30%) of the asset, allowing them the first right of refusal.

• This process is anchored in a price discovery method using auction, whereby the SC/RC matching the highest bid may secure the asset.

Final Offer Evaluation and Board Involvement

• Once the final offer is received, it is reviewed in detail by the Board of Directors or the NPA Management Committee.

• Any changes in the list of identified accounts, as observed during the review, must be presented to the board or the designated committee along with the final offer.

Bidding Dynamics and Order of Preferences

• The board or its committee may disclose the identity of prospective bidders upon entering into a confidentiality agreement.

• Bidders can submit bids for assets listed for sale by the bank. If a bidder offers more than 30% of the outstanding loan in cash, the bank will solicit counter bids from other interested parties.

• In such counter bidding scenarios, the bank may invite the pre-qualified SC/RC (that already holds the highest significant stake) to match the highest counter bid.

• The preference hierarchy for executing the sale is as follows:

  1. SC/RC with the highest significant stake

  2. The original bidder

  3. The highest bidder from the counter bidding process

Bank’s Options Post-Bidding

• The bank can opt to sell the asset to the determined winning bidder.

• Alternatively, if the bank chooses not to proceed with the sale, it is obligated to make an immediate provision on the account equal to the higher of either: a) The discount on the book value as quoted by the highest bidder b) The provisioning mandated by the existing asset classification and provisioning norms.

Terms of Sale

• The sale of standard, SMA-2, or NPAs to a SC/RC may be transacted in cash, or through the issuance of security receipts, or via a combination of both.

• Sales will not be executed on a contingent price mechanism that would force the bank to assume a part of any shortfall if SC/RC realization does not meet expected targets.

Valuation of Financial Assets

Methodology and Reports

• Asset valuation is primarily based on the exposure amount.

• For exposures of Rs.50 crore or below, an internal valuation report (not older than one year) will be utilized.

• For exposures exceeding Rs.50 crore, two external valuation reports (each not older than one year) will be used, with the cost of the valuation process borne by the bank.

Assessment and Pricing

• The bank independently assesses the value offered by SC/RC to ensure that the realizable value of the financial asset is properly estimated, guiding the acceptance or rejection of offers.

• When disposing of standard/SMA-2/NPAs, the sale price must generally not fall below the net present value (NPV) of the estimated cash flows from available securities, after accounting for realization costs.

• The applicable discount rate in this calculation will be the lower of the contract interest rate or the penalty rate.

Delegation of Decision-making Powers

• Authority for decisions regarding the identification of accounts and the finalization of sale prices lies with the Board of Directors or its designated subcommittee.

• The Board or its subcommittee may further delegate authority for completing necessary documentation, due diligence, and the entire asset sale process, including investment in security receipts.

• Transactions may be executed using the assignment agreement format and the forms prescribed by the Indian Banks’ Association (IBA).

Provisioning and Valuation Norms

• Upon the sale of financial assets to a SC/RC, those assets will be removed from the bank’s books.

• The bank is required to adhere to all RBI guidelines on provisioning and valuation norms, ensuring compliance with regulatory standards.

Utilization of Floating Provisions/Counter-Cyclical Provisioning Buffer

• If the NPA amount in a financial year increases by more than 20% compared to the outstanding balance as of 31 March of the previous financial year, up to 33% of the counter-cyclical provisioning buffer (or floating provisions held as of 31 March 2013) may be used to create specific provisions for non-performing assets. This is in addition to provisions made under the Reserve Bank's framework for revitalizing distressed assets.

• Additionally, counter-cyclical/floating provisions may be used to counteract any shortfalls if an asset is sold at a price below its net book value.

Conclusion

This comprehensive recovery policy establishes a structured and methodical approach for the sale of NPAs and distressed assets. It details the entire process from initial offer submission and negotiations through to the final sale, including detailed methodologies for asset valuation, decision-making delegation, and the utilization of financial buffers to accommodate sale shortfalls. The guidelines ensure that the bank maximizes recovery while maintaining compliance with statutory provisioning and valuation norms.

Overview

This document is a detailed memorandum to the board of CSB Bank Limited (formerly The Catholic Syrian Bank Ltd) concerning a proposal to avail an automatic refinance facility from NABARD for an eligible amount of up to Rs 600.00 crore. The memo is part of the board meeting communications and includes draft resolutions circulated under Section 175 of the Companies Act, 2013 for formal approval.

Key Dates and Authorship

• Meeting Date: February 10, 2021 (as per the header of the Stakeholders Relationship Committee Meeting)

• Memo Submission Date: February 8, 2021

• Reference Documents: An earlier memo dated February 6, 2020 is also included for historical context.

• Authors and Signatories:

  • C. VR. Rajendran, Managing Director & CEO

  • Sijo Varghese, Company Secretary

  • Additional signatories in subsequent pages include Ayana Krishne M K (Manager) and Thomas P Tharayil (Chief Manager)

Purpose and Agenda

The main objective of the document is to seek the approval of the Board to avail an automatic refinance facility from NABARD, an apex development financial institution fully owned by the Government of India. The refinance facility is targeted for promoting agriculture and rural development under specified schemes. The agenda is directly linked to the following key points:

• Availing a refinance facility of up to Rs 600.00 crore

• Acting in compliance with Section 175 of the Companies Act, 2013 through the use of a circular resolution

• Ensuring the board’s formal confirmation following earlier board approval by a majority of directors on February 8, 2021

Regulatory and Legal Framework

The resolution and related borrowing are framed within the following regulatory provisions:

• Companies Act, 2013:

  • Section 175 (circular resolution for board matters)

  • Section 179(3)(d) concerning borrowing powers

  • Section 180(1)(c) regarding borrowing limits

• Internal Approvals:

  • Clause 82 of the Articles of Association

  • A special resolution passed by shareholders on July 20, 2020 authorizing the Board to borrow money in excess of the bank’s paid-up capital and free reserves, not exceeding an aggregate of Rs 5,000 crore (in addition to paid-up capital and free reserves).

Resolution Details

The resolution contains several detailed components concerning the refinance facility:

1. Borrowing without Security from NABARD:

   • The bank will borrow money from NABARD without directly providing security since NABARD is a government-owned institution.

   • Funds will be used for promoting agriculture and rural development as per the terms laid out in the draft Memorandum of Agreement (MoA) received from NABARD.

2. Terms and Conditions:

   • In addition to the principal borrowings, associated interest, commitment charges, costs, and other charges as stipulated in the MoA will be applicable.

   • If required by NABARD, such borrowings will be secured by an equitable sub-mortgage or sub-hypothecation of properties mortgaged/hypothecated to the bank by the concerned borrowers. Joint equitable mortgages/hypothecations may also be created in favor of both the bank and NABARD.

3. Draft Memorandum of Agreement:

   • The draft Memorandum of Agreement forwarded by NABARD is approved by the Board.

   • The Managing Director is authorized to negotiate, accept modifications, and finalize any changes on behalf of the bank.

4. Authorization of Bank Officials:

   • The following officials are granted authority to execute necessary proceedings:

     • Head of Treasury

     • AGM (Treasury)

     • AGM (Credit)

     • Chief Manager (Credit)

   • These officials are further empowered to accept title deeds from borrowers, execute other deeds, documents, and instruments, and secure necessary assurances demanded by NABARD.

5. Operational Dynamics:

   • The refinancing facility will be active from time to time under the terms and conditions set forth in the agreement.

   • The executed agreement will come into force immediately from the date of execution.

Process and Implementation

• The resolution is proposed to be passed by circulation among the board members in accordance with Section 175 of the Companies Act, 2013. This process allows the bank to move forward without convening a full board meeting.

• Any modifications or conditions as required by NABARD regarding sub-mortgaging of properties or acceptance of title deeds are to be handled through the designated officer(s) who are authorized to work with the National Bank.

Conclusion

In summary, this board memorandum and draft circular resolution seek to formalize the bank’s intent to secure an automatic refinance facility from NABARD for up to Rs 600.00 crore. The document lays out the terms of borrowing without the conventional requirements for security (given NABARD’s status), while also detailing the necessary safeguards through equitable sub-mortgage mechanisms when needed. The resolution was carried by majority vote on February 8, 2021, and is now placed for board confirmation. All actions are taken under the statutory provisions of the Companies Act, 2013 and the internal governance framework of CSB Bank Limited.

Overview

The document records a financial aid request identified by the reference number 13th 27EB-1.

Request Details

• Requestor: Malabar Awareness and Rescue Centre for Wildlife (MARC)

• Purpose: The organization has submitted a request for financial assistance to support its wildlife rescue and awareness efforts.

• Amount Requested: Rs 50,000

Context and Implications

This request, coming from an organization dedicated to wildlife conservation, indicates its need for financial support to further its mission of rescuing and protecting wildlife. The brief note signifies that the organization has formally reached out for aid, with the following specifics:

• Reference Code: 13th 27EB-1

• Organization’s Focus: Wildlife conservation

• Nature of Financial Aid: The aid, amounting to Rs 50,000, is intended to support the operational or project-specific activities of MARC.

Conclusion

The financial aid request encapsulated in this summary highlights the initiative taken by the Malabar Awareness and Rescue Centre for Wildlife (MARC) in seeking Rs 50,000 to bolster its conservation efforts. This succinct record underscores the critical nature of support for organizations working in the field of wildlife conservation.

Investment Approval Overview

This summary outlines the details regarding the approval (identified as 13th 20DTM-2) for an investment decision made by the board. The approved investment is in Vivriti Capital Private Limited and involves deploying funds into specially structured securities.

Instrument and Investment Details

• Issuer: Vivriti Capital Private Limited

• Instrument Type: Rated, Listed, Secured Redeemable Non-Convertible Debentures

• Investment Amount: Rs 10 crores

• Maturity Period: The debentures mature 36 months from the Deemed Date of Allotment

Portfolio Classification and Valuation Breakdown

The approved investment is categorized into two distinct classifications within the bank’s portfolio:

• Held To Maturity (HTM): Valued at Rs 5.49 crore

• Available For Sale (AFS): Valued at Rs 4.51 crore

This categorization ensures that the investment is well balanced in terms of its treatment in the asset portfolio, providing clarity on its liquidity and valuation.

Key Attributes

• Security Features: The debentures are secured, lending additional confidence with regard to asset backing and safety.

• Listing and Rating: The instruments are not only rated but are also listed, thereby ensuring a level of transparency and market acceptance.

• Redemption Feature: As redeemable financial instruments, they offer the prospect of repayment at maturity, thus adding to the tracking and planning of cash flows.

Summary of Implications

The approval reflects a strategic move to incorporate a Rs 10 crore investment in financial market instruments that are structured to provide stability (through security and rated status) and clear maturity timelines (36 months). The clear division into HTM and AFS categories (Rs 5.49 crore and Rs 4.51 crore, respectively) facilitates targeted portfolio management as these classifications have different impacts on the bank’s financial statements, particularly in areas such as liquidity and capital adequacy.

Overall, the approach emphasizes a balanced investment decision that maintains adherence to risk management and portfolio diversity requirements while supporting the bank’s strategic objectives.

Overview

This document presents a comprehensive review of policies, procedures, and roles related to collateral management, recovery proceedings, and asset disposal. It covers everything from sanctioning expenditures for registration costs, establishing recovery cells, legal actions including the filing of suits, and detailed guidelines on compromise settlements and write-off proposals. The document is structured into various sections which set out the responsibilities of senior officials, legal protocols, and internal review mechanisms.

Key Roles and Governance

• Senior Management and Authority Figures:

  • The MD & CEO, Head – Recovery & Credit Monitoring, Chief Financial Officer, Chief Risk Officer, and Chief Credit Officer are all involved in decisions.

  • Additional roles include Head of Premises Dept, Deputy General Manager (ARD)/AGM (ARD) and other role-specific positions such as Recovery Vertical and Relationship Managers.

• Committee Structures:

  • A number of committees and cells are mentioned, including Recovery Cells, Zonal Committees, HO Executive and HO Compromise Committees, as well as NPAMC/Board level committees.

  • These committees have clearly defined discretionary powers to sanction proceedings for legal actions, compromise settlements, or write-offs.

Expenditure on Collateral Management

• Registration Expenses:

  • The document sanctions expenditure for the registration of properties with stamp duty, registration charges, and other expenses at up to 1% of the property’s value.

  • These costs are recorded under the Non-Banking Asset account.

  • Approval for such expenditure is provided by the respective discretionary authority who initiates SARFAESI proceedings (or AGM for ARB accounts).

Recovery Cell and Follow-Up Procedures

• Setting up Recovery Cell:

  • The Recovery Policy mandates the creation of a Recovery Cell at each zonal office.

  • Its purpose is to intensify the follow-up for NPA accounts and enhance proceedings under the SARFAESI Act.

  • The cell comprises key branch personnel including the Area Manager, Chief Manager (Law) or Law Officer, and additional designated officers (e.g., Recovery Officers) based on geographic or operational needs.

Legal Actions and Suit Filing

• Initiation and Timing:

  • Filing a legal suit is considered a last resort after other recovery avenues have been exhausted.

  • Once an account becomes an NPA, a report (R-47A) must be forwarded within 30 days and staff accountability is finalized within 60 days (or sooner pending other instructions).

  • The parent branch is responsible for filing Form R-47B to receive the necessary sanction before filing a suit, ensuring that suit filing occurs within the prescribed time bar period.

• Sanction and Responsibility:

  • The respective authorities, including Branch, Zonal, and HO departments, ensure that staff accountability is examined and finalized before legal proceedings.

  • In urgent cases, sanction can be issued pending completion of the accountability review, with follow-up requirements.

• Legal Action Details:

  • It is emphasized that legal action is a natural consequence of willful default and non-cooperation by borrowers.

  • Legal steps should also include measures such as preventing further alienation of assets and attaching personal uncharged assets of borrowers and guarantors.

Recovery Through Compromise

• Committee Discretion:

  • Multiple committees (Zonal, HO Executive Compromise, HO Compromise) have clearly defined discretionary powers to sanction compromise proposals.

  • Limits are set on the maximum remission amounts allowed, and these vary depending on the account type and the committee’s level.

  • For example, the HO Executive Compromise Committee can sanction proposals with remission amounts that have a maximum debit limit on the Profit and Loss account (ranging from ₹3 lakhs up to ₹20 lakhs in different scenarios).

  • Special provisions exist for educational, government-sponsored, and PMRY/SME loans where sanction thresholds differ.

• Extension of Due Dates:

  • The HO Executive and HO Compromise Committees have the authority to extend the due dates for settlements up to six months beyond the original due date.

  • Extensions are subject to collection of simple interest calculated at Base Rate/MCLR plus an additional 3% rate for the delayed period.

  • The waiver of interest for the extension may be considered within set limits (e.g., up to 25% waiver or a maximum of ₹50,000, depending on the case).