Advances Against Hypothecaiton Of Book Debts

14 May 2014

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The manager should verify -

1. The advance against book debts has been granted after a careful Assessment of the borrower as regards creditworthiness,, standing, financial position etc.
2. That credit reports/market reports on the debtors, have been obtained and are found to be satisfactory. 
3. That book debts charged to the bank have arisen out of genuine trade transactions. 
4. That the age wise statements of the hypothecated book debts accompanied by duplicate copies of sale invoices and certified by C.A. are obtained in time and regularly at the stipulated periodical intervals. 
5. That the Book Debts statements are scrutinized and the stipulations regarding the age of the book debts and margin etc. are observed while calculating drawing limit. 
6. That the branch periodically examines the borrower’s books / records to verify the correctness of the information on book debts submitted to the Bank. The auditers certificate as regards outstanding and reliability etc. is obtained. Wherever possible the information is counter checked from the debtors of the borrowers by obtaining a balance confirmation certificate etc. 
7. That the in terms of sanction of credit facilities, the power of attorney in Bank’s favour is obtained and registered.
8. That the case of ltd companies, the search report is held on record and the bank’s charge is duly registered with the Registrar of Companies. 
9. That in case where the borrower has also been sanctioned bills discounting/bills purchased limit a clear distinction is made as to which debtors would be covered under book debts facilities so as to avoid double finance. 

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