Advances Against Hypothecatin Of Goods

14 May 2014

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Advances Against Hypothecatin Of Goods (Advances General Information)

The Manager/Officer should ascertain

1. That the branch has obtained from the borrower statement relating to hypothecation of stocks in the prescribed form declaring the quality, rate and value of goods, purchase and sales figures alongwith declaration that the stocks are not hypothecated to any other bank.
2. That the periodical statement of stock hypothecated is properly scrutinized and value of stock shown is at invoice price or market price whichever is lower. 
3. That the stocks are fully insured with bank’s name Board is affixed as per terms contained in the sanction letter. 
4. That the sale proceeds of stocks are routed through the account. 
5. That adequate margin in terms of sanction is maintained. 
6. That the drawing power is calculated keeping in view the value of security, sundry creditors level, sundry debtors level less margin and it is recorded in drawing power point and cash credit ledger. 
7. That the separate credit facility on clean basis is not granted to the same borrower. 
8. That stocks are inspected by surprise at irregular intervals, and stock verification reports are kept on record. 
9. That the movement of stocks under hypothecation is satisfactory. 
10. That the old stocks are not shown in the statements or if shown drawing power is not allowed against them. 
11. That the stock statement represents a true picture of the stocks held and tallies with the stock register maintained by the borrower. Unpaid stocks should be reduced from total stock for proper drawing power. 
12. That in the case of participative advance the participating banks have periodical exchange of information as regards total value of goods charges, balances outstanding insurance documents and conduct of the account. 
13. That in case of limited companies, the bank’s charge has been duly registered with the Registrar of Companies (within 30 days from the date of documents)after making a search in the Registrar’s office that there are no other charges, filed/registered.
14. That the total stock figures as per the latest audited sheet of the company agrees with the total stocks hypothecated and or pledged according to the statement submitted by the borrowing company as on the date of the balance sheet. If there are any discrepancies, the reasons thereof are ascertained and satisfactory explanation is called for an kept on record.
15. That proper margin in respect of the commodities coming within the purview of selective credit control is maintained as per the directives issued by the Reserve Bank of India / Bank and drawing are allowed strictly as per the drawing power arrived at.

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Post Category : Advances General Information , Banking , Business , Core Banking System