The Manager/Officer should ascertain –
Stocks Pledged and Hypothecated being supervised on behalf of other offices of the Bank
During the course of inspection if the Inspecting Officer comes to know that the branch is holding stocks o behalf of other offices of the bank, he must ascertain from the branch manager the date on which these stocks were received and checked. He should also verify the correctness of the same. He should further see that proper supervision and effective control is exercised by the branch on behalf of the other office of the Bank.
Advances against Goods Stored in open compound
In case of advances against stocks of any commodity stored in an open compound the Inspecting Officer should verify that –
1.The goods so accepted are stored in a properly fenced open compound.
2.Such goods are supervised by a full time godown keeper at the borrowr’s cost.
3.The bank’s name boards are prominently displayed.
4.There is proper insurance cover in terms of sanction.
Multiple Finance
It is always desirable to follow concept of one bank, one borrower.
However the possibilities of one borrower, more than one banks are also there where there is no formal consortium finance. There is a need to exercise great caution in such cases, it is to ensure that the goods pledged to the bank, when lying in a factory compound or in open godowns, are properly segregated and demarcated. Possession over the goods must at all the times be effective, constructive apparent and undisputable. The Officer should also examine as t whether a careful watch over the dealings, business activities and operations in the account is kept by the branch officials. It is also be examined that periodical review of the financial position of the borrower is undertaken on the basis of audited financial statement income tax / wealth tax / sales tax returns and assessment orders.
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1. That the basis of valuation of goods is as per cost price, invoice price or market price whichever is lower.
2. That the drawings allowed are within the drawing power arrived at after maintaining proper margin as per terms of sanction.
3. That adequate insurance covering various risks in terms of sanction, has been obtained and the insurance policy with Bank’s clause is available on record.
4. That the goods forming security belong to the borrower & have been fully paid for.
5. That the branch maintains Market Rate Register and according to fluctuations in prices of commodities in various accounts the drawing power is properly calculated and shortfall, if any, in the concerned account is recovered from the borrower.
6. That the branch holds original purchase invoices or their certified copies on record.
7. That the delivery of the pledged goods is mode on payment of the advance amount and against proper delivery order.
8. That the goods are readily salable, marketable and movement is frequent.
9. That the Godown register is properly posted and the relevant information in the Register is complete.
10. That the godown keys are handled by authorized officials and that there is proper control and custody and the duplicate keys are in the custody of the Manager or authorized official.
11. That proper record of the commodities coming within the purview of selective credit control imposed by RBI/Bank is kept and drawing power is calculated correctly against them.
12. That the branch officials are carrying out regular periodical inspection of godown/s.
13. That the bank’s name board is displayed both inside and outside the godown.
14. That the godown doors are locked with padlocks of standard make. In case there are more than one entrances /doors, all but one door, are properly secured from inside and the godown has only one independent access. The godown should have proper ceiling and the walls built up to the roof. The godown must be free from dampness to avoid any deterioration of the goods pledged to the bank.
15. That the goods are stored properly in the godowns with Bin Cards duly displayed, so as to facilitate quick and easy verification.
16. That the godown does not contain stocks which are not pledged to the bank.
17. That in the case of rented godown the branch holds a letter from the owner/landlord declaring therein that he has no lien over the over the goods and that the borrower pays the rent promptly to the godown owner.
18. That the mill packed goods are in their original packing.
19. That in the case of produce stored loose in godowns, such as good grains, paddy, etc.cubic capacity of the storage is calculated and multiplied by weight per cubic meter of the produce. Such stocks are delivered godownwise in full. No partial deliver is effected of such stocks.
2. That the drawings allowed are within the drawing power arrived at after maintaining proper margin as per terms of sanction.
3. That adequate insurance covering various risks in terms of sanction, has been obtained and the insurance policy with Bank’s clause is available on record.
4. That the goods forming security belong to the borrower & have been fully paid for.
5. That the branch maintains Market Rate Register and according to fluctuations in prices of commodities in various accounts the drawing power is properly calculated and shortfall, if any, in the concerned account is recovered from the borrower.
6. That the branch holds original purchase invoices or their certified copies on record.
7. That the delivery of the pledged goods is mode on payment of the advance amount and against proper delivery order.
8. That the goods are readily salable, marketable and movement is frequent.
9. That the Godown register is properly posted and the relevant information in the Register is complete.
10. That the godown keys are handled by authorized officials and that there is proper control and custody and the duplicate keys are in the custody of the Manager or authorized official.
11. That proper record of the commodities coming within the purview of selective credit control imposed by RBI/Bank is kept and drawing power is calculated correctly against them.
12. That the branch officials are carrying out regular periodical inspection of godown/s.
13. That the bank’s name board is displayed both inside and outside the godown.
14. That the godown doors are locked with padlocks of standard make. In case there are more than one entrances /doors, all but one door, are properly secured from inside and the godown has only one independent access. The godown should have proper ceiling and the walls built up to the roof. The godown must be free from dampness to avoid any deterioration of the goods pledged to the bank.
15. That the goods are stored properly in the godowns with Bin Cards duly displayed, so as to facilitate quick and easy verification.
16. That the godown does not contain stocks which are not pledged to the bank.
17. That in the case of rented godown the branch holds a letter from the owner/landlord declaring therein that he has no lien over the over the goods and that the borrower pays the rent promptly to the godown owner.
18. That the mill packed goods are in their original packing.
19. That in the case of produce stored loose in godowns, such as good grains, paddy, etc.cubic capacity of the storage is calculated and multiplied by weight per cubic meter of the produce. Such stocks are delivered godownwise in full. No partial deliver is effected of such stocks.
Stocks Pledged and Hypothecated being supervised on behalf of other offices of the Bank
During the course of inspection if the Inspecting Officer comes to know that the branch is holding stocks o behalf of other offices of the bank, he must ascertain from the branch manager the date on which these stocks were received and checked. He should also verify the correctness of the same. He should further see that proper supervision and effective control is exercised by the branch on behalf of the other office of the Bank.
Advances against Goods Stored in open compound
In case of advances against stocks of any commodity stored in an open compound the Inspecting Officer should verify that –
1.The goods so accepted are stored in a properly fenced open compound.
2.Such goods are supervised by a full time godown keeper at the borrowr’s cost.
3.The bank’s name boards are prominently displayed.
4.There is proper insurance cover in terms of sanction.
Multiple Finance
It is always desirable to follow concept of one bank, one borrower.
However the possibilities of one borrower, more than one banks are also there where there is no formal consortium finance. There is a need to exercise great caution in such cases, it is to ensure that the goods pledged to the bank, when lying in a factory compound or in open godowns, are properly segregated and demarcated. Possession over the goods must at all the times be effective, constructive apparent and undisputable. The Officer should also examine as t whether a careful watch over the dealings, business activities and operations in the account is kept by the branch officials. It is also be examined that periodical review of the financial position of the borrower is undertaken on the basis of audited financial statement income tax / wealth tax / sales tax returns and assessment orders.
Note:All content is copyrighted to http://sm-information.blogspot.com and may not be reproduced on other websites.
If you have any question regarding this websites or any other post related you can Email us.
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