DISBURSEMENT TO PLANT SUPPLIER AGAINST PLANT & MACHINERY iii. A visit to some customer of the supplier of plant and machineries need to be undertaken to understand the after sale service of the supplier, in case the cost of plant of machineries is more than Rs. 25 lacs from one supplier.

DISBURSEMENT TO PLANT SUPPLIER AGAINST PLANT & MACHINERY i. A visit of the plant supplier should invariably be conducted where the cost of plant of machineries is more than Rs. 10 lacs from one supplier. ii. During the inspection capability of the supplier need to be assessed. Copy of the bill for the similar type of machinery supplied by the supplier in past to some other company should also be obtained and kept on record.

SERVICES OF OUTSIDE CONSULTANTS i. Allotment of Valuation, Legal, TEV, Stock Audit etc should be conducted by the controlling office through rotation amongst all the empanelled consultants. ii. Accountability of outside consultants should also be examined in case the account turns bad. iii. There should be provision of some Performance Bank Guarantee from the outside consultants to be renewed on annual basis. iv. Renewal of consultants’ empanelment should be a regular exercise.

INSPECTION OF UNITS i. There should be instructions to get some photographs of the inspecting officer with the unit/ stock to ensure the inspection of the unit. ii. Uniform Formats need to be drafted for the Pre sanction/ Post sanction Pre disbursement/ Post disbursement Inspection Reports. I can assist in drafting the same for the banks. iii. Inspection of the accounts of one branch should be conducted by the officers of other branch, may be for accounts above Rs. 100 lacs.

It is desirable that they be imparted compulsory training programs at the induction stage as well as regular mandatory annual training hours there-after, annually for updating. Accordingly we propose the following training program may be introduced: SUGGESTIONS 01. Induction programme for the First Time Independent Directors, immediately on formally joining the boards. 02. Refresher programme for the existing Independent Directors for a minimum 15 hours per year.

Since the Companies Act, 2013 has undergone vast changes as to its composition; there is a strong need to apprise the existing Independent Directors with the new provisions and their implications relating broadly to the changed role of duties and responsibilities. Additionally it has also provided them sufficient independence to discharge their job without fear or favour. In view of the intricacies involved and to apprise them while discharging their duties as Independent Directors.

There should be some system of regular interaction /meetings of Board members with the senior executives of MOF and RBI for better understanding. I am of the firm opinion that this interaction will be very useful in controlling the increased NPAs in the banking system.

Banks are under pressure to contain NPA to the best possible. One way to reduce the NPA is work hard for the recovery of dues. Other way is to extend additional loans either in same company or to some associate concern. The basic concept of System generated NPA is not followed in letter and spirit by the banks and manual intervention is involved in NPA identification. Delay in classification of assets adversely affects chances of recovery. System generated NPA should be followed letter & spirit

Contd.. v. Disbursement without pari-passu charge vi. Disbursement without proportionate promoters margin vii. Many Pre-sanctions due diligence is left to the branch to be complied after sanction etc

It is my personal view that accountability is generally fixed up at comparatively lower level even in case of large borrower accounts. Though I am at the Board of a bank, I propose that accountability at the top most position i.e. till Board should also be fixed up for sanctions without the following basic conditions, in case the account becomes NPA:- i. No Personal guarantee ii. No Collateral security iii. No Corporate Guarantee iv. Disbursement without formation of Consortium ... Contd