Bank of baroda

BANK OF BARODA
End-use of Funds Compliance Review; and
Regular Audit.
Periodic Review
Credit facilities, once sanctioned and granted, are monitored through regular annual and monthly reviews.
Annual Reviews
Currently, all loans and credit facilities granted are subject to reviews at least once a year. In these annual reviews, we
undertake a comprehensive analysis of issues covering the borrower’s financial health, its business performance and
prospects, the quality and competence of its management staff, as well as a thorough examination of the borrower’s
financial accounting records and compliance systems. Such annual reviews allow us to continually assess our overall
credit risk exposure and helps to ensure that our borrowers are financially competent in meeting their loan and credit
obligations.
Short Reviews
In addition to the annual reviews, we also carry out short reviews of various loans and credit facilities granted. In these
short reviews, an officer (with a position not below Chief Manager) prepares a status note that sets out the officer’s
opinion of the financial health of the borrower on the basis of particular information and specific financial indicators. In
cases where the officer is not satisfied with the financial health of the borrower or is aware of any impairment to the
borrower’s credit-worthiness, the borrower will be placed before a review board which may consider and impose any
necessary action. Short reviews on particular borrowers can be carried out as frequently as twice within a period of six
months.
Monthly Monitoring
We also pay special attention to borrowers with large exposures by carrying out tailored monthly monitoring programs.
With a system that prescribes monthly monitoring mechanisms for borrowers with various high levels of credit exposure,
we are able to effectively prevent any asset quality slippage and take timely corrective steps to improve and maintain the
quality of our credit portfolio.
In accounts of credit facilities in excess of Rs. 100 million, branch offices that have sanctioned such credit facilities must
prepare and submit an monthly review report through the relevant office in that region to the corporate office for review
and analysis.
In accounts of credit facilities in excess of Rs. 50 million but not more than Rs. 100 million, the relevant Zonal Manager
will be required to monitor activities of the borrower, and alert the corporate office of any irregular activities that might be
of concern before the 10th of each month.
In accounts of credit facilities in excess of Rs. 10 million but not more than Rs. 50 million, monitoring responsibilities fall
on the regional manager who must report to the Zone, any irregular activities that might be of concern before the 7th of
each month.
Post-Sanction Reporting
We have in place a post-sanction reporting system that reviews and cross-checks all loans and credit facilities sanctioned
and granted to protect the strength of our credit portfolio. In particular, all credit decisions, whether it is an approval to
accept, increase, reject or modify loan terms, are reviewed within 30 days of such decision being made. In particular,
general managers at the central office are responsible for reviewing general parameters of all loans and credit facilities.
The branch office that sanctioned the loan or credit facility shall has the responsibility of ensuring that procedural
requirements are complied with such as credit appraisal, adequacy of security and effective documentation.
To specifically protect ourselves from large exposures to credit risk, we also require copies of all proposals of credit
facilities in excess of Rs. 1 million to be forwarded to general managers at the central office for review. Accompanying the
copy of the proposal being sent to the central office is an appraisal note issued by the relevant branch office setting out
the business case for granting the loan or credit facility, along with the latest financials, credit rating sheet, list of potential
adverse outcomes and any non-compliance of the terms and conditions of the credit facility. In the case of credit facilities
in excess of Rs. 500,000 but not more than Rs. 1 million, the relevant branch office will be required to submit an

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appraisal note to the central office but will not be required to enclose any financial documentation.
Periodic Inspection of Securities
Most of our loans and credit facilities are granted only after obtaining collateral securities. In order to guarantee the value
of such collateral securities, we undertake periodic inspection of collateral securities in various intervals depending on
the type of credit facilities granted.
In our commercial lending schemes, the frequency of inspection of securities is dependent upon the type of security
being offered. In commercial credit facilities where the security offered is the borrower’s working capital, securities will be
inspected in the following intervals: