Books of accounts and Stock Statements: One of the preconditions for sanctioning advances to traders is the maintenance of up-to-date books by the traders, showing therein the actual position in respect of daily purchases and sales as also the level of stocks and cash. The periodicity of submission of stock statements should ordinarily be once in a month, but where the items of stocks are too many or it is otherwise difficult, summary statement should be obtained at monthly intervals showing therein the total purchases, sales and residual value of stocks held. Borrower should maintain, inter alia, a standardised stocks-cum-transactions register showing the daily purchases, sales and level of stocks, etc. Branches may obtain from the trade units stock statements in a simplified format suitable for the business concerned and to meet the Bank’s requirements. The statement should, as usual, include the certificates regarding inventory/book debts usually obtained from a borrower.
Submission of detailed stock statements at least once in a year showing the actual inventory position with value as at the time of stocktaking should be insisted upon. Besides, the borrowers availing fund-based WC limits of Rs.1.00 crore and above should submit Financial Follow-up Reports (FFRs) at stipulated intervals.
iii) Inspection: Inspection of borrowal units is to be normally carried out at monthly intervals in the manner specified in paragraph 9.12.4 Chapter 6. However, in the case of select borrowers of good business repute in the Trade & Services sector, such inspection procedures can be carried-out at quarterly intervals with the approval of the sanctioning authority; subject to the designated branch officials visiting the borrower each month during the quarter and discussing the following aspects:
— Sales
— Purchases
— Price fluctuations, if any
— Sales collections
— Movement of goods
— Liquidity in the business
A brief note containing the gist of discussions should also be recorded and kept in the unit’s file.
iv). Margin norms: The following table contains a set of indicative margins for various facilities extended.
Asset Margin
Stocks-in-trade 20% to 25% In the case of commodities covered under Selective Credit Control, margin as stipulated by R.B.I. to be maintained.
Book debts (*) 40% to 50%
Term loan 30 to 50%
Letter of Credit 10% Normal margins should be maintained as soon as stocks purchased under L/C are brought under pledge/ hypothecation. In case of usance LCs, lien should be marked against the drawing power on CC(stocks).
(*) Book-debts outstanding for more than 90 days should not ordinarily be financed. Book-debts due from first class parties should be preferred. Credit facility against book-debts should be extended to parties of undoubted integrity only.
In cases of high risk perception, it may be necessary to maintain higher margins. Margin may also be relaxed by the sanctioning/ controlling authority in deserving cases taking into account the collateral available, standing of the borrower, nature of the inventory, price fluctuations, standing of debtors, etc. in each case.
5.9. For traders dealing with commodities covered under the Selective Credit Control directives of the RBI, the relevant margin norm in force would be made applicable to the advances against such items.
5.10. General instructions regarding compilation of opinion/ credit report, pre- and post-sanction credit process viz., appraisal, assessment, sanction, follow-up, supervision and monitoring, insurance documentation,
