LFAR Checklist

I Sanctioning and Disbursement

1 Credit facility was sanctioned beyond the delegated authority
Credit facility was sanctioned beyond the delegated authority was not reported/ promptly reported to
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competent authority
3 AD-HOC limits were granted for which sanction is pending
4 Sanction letter was missing at the branch
5 Required stake of promotors was notinvested before disbursement of loan
6 Sanction is time barred
7 Certain proposal were recommended and approval of competent authorityis awaited
8 Facilities were disbursed without compliances with all the terms and conditions of the sanction

II Bad and Doubtful Advances

1 In cas of NPA account, discontinuance of application of interest not followed
2 Govt. gurantees have expired and fresh guarantees not obtained/ not renewed
3 Terms of BIFR scheme not complied with
Payments from govt were not received although the guarantees were unconditional , irrevocable or
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payable on demand
5 Compromise proposal pending at various level where local govt/ outside agency are involved as
6 Copy of search report was not on record/ fresh search report is to be obtained
7 Irregular/ sticky advances was not reported to the controlling authority promptly
8 Compromise/ OTS proposal is recommended but pending since long. Suit is not filed in court/DRT
9 Abnormal delay in filing suit in DRT observed

III Documentation
1 Balance confirmation/ acknowledgement of debt are not obtained as per laid down procedure
2 Periodic review/ renewal of advances are not done as laid down by bank
3 Limit was reviewd before the receipt of financial statement
4 The stock, book debts statements were not received regularly
No pebal interest has been charged for delay in submission of various statements as per terms of
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agreement depending upon the type of loan / credit availed by the borrower
6 Non-moving/ slow moving stock are not deducted to arrive at the drawing power
The age wise break up of book debtswere not found on the [Link] borrowers were allowed to draw
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on entire book debt instead of age wise book debtas per the sanction order
8 Stock audit report not obtained
Audited statements of non-corporate borrowers having limit beyond Rs. 10 lacs have not been obtained
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as per RBI Guidelines.
10 Procedure laid down for physical verification/ inspection of securities charged to bank not followed
Insurance cover for stock / property is inadequate/ not on recoord/ not renewed/ not endorsed in favour
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of bank
Advances that are eligible for whole turnover packing guarantee cover of ECGC were not brought under
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its cover
13 Security obtained is inadequate/ lower as comparted to outstanding/ no collateral security
The account is frequently/ unauthorised overdrawn and the branch has not taken sufficient steps to
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regularise the account promptly
Guidelines prescribed by bank for secutrity creation / asset inspection / insurance and accounting in
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respect of lease finance activity not followed
16 Credit card dues not recovered promptly
IRAC norms prescribed by RBI for identification / classification of advances intostandard/ sub standars/
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doubtful/ loss assets not followed
Suitable changes not incorporated / suggested in MOC for disagrremnt with advance classification as per
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IRAC norms
19 Legal action for recovery/ recall of advances were not taken although autrhorised by the controlling
20 Non performing advances not promptly reported to Controlling Authority
21 Claims for DICGC/ ECGC not duly lodged and settled
In case of NPA, valuation report of Fixed assets from approved valuer not taken oncein three years or
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shorter duration, if required
23 Prescribed Recovery Policy not followed with respect to Compromise/ Settlement and write off cases
24 Drawing power limite are not revised as per market value of shares for advances against security of
End use of fundes were not ensured/ not known. Funds were utilised for purposes other than for which it
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was granted
26 Major sale proceed of borrower were not routed through the bank(Op Dr+ Sale-Cl Dr)
Wrong application of rate of interest , processing charges, commission, other charges etc. resulting in
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income leakages/ excess booking of income
28 Export bills/ foreign currency sight billswhich were overdue , had not been crystallized
29 In case of import credit, bill of entry evidencing import of goods were not found.
Govt. guaranteed accounts, which were irregular since long , the issue of invocation of guarantee, has
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not been considered
In case of allocated limits where full terms of sanction, stock statement, inspection report, margin
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classification as per IRAC norms etc. are not available at montioring branches
32 In case of allocated limits, abnormal delays were noticed in respoding to transfer by the allocator
The limit has been allocated while the outstanding balance at the year endhas not been confirmed by the
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allocatee branches
Cases were regular meeting not heldwith other consortium membersto review the performance of
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borrower and to asssess the current state of affairs/ not been held as per the norms
Individual members of consortium are not advised abouth the periodic operating limits/ DP allocated to
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each one of them
In certain cases minutes of consorium meeting are not found on record/ meeting not been held as per
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the norms
37 Inspection report from consortium members is not obatained
Capital of the borrower has been eroded/ net worth is negative/ [Link] close monitoring is
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rerquired
39 The borrower has not displayed sign board of bank, where pledged/ hypothecated stock is stored
In case of guaramntees, opinion report/ financial statement, IT assessments order etc of the guarantor
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are not on record
41 Pre sanctions/ post sanction inspection were not on record
The borrower is absconding/ deceased and legal formalties are in complete and there is wilfull deafult
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from the borrower. Either establisment was closed/ security was disposed off/ no action taken by
43 Security disposed off/ entity closed by borrower and no action taken by branch
44 Th borrower was dealing with other bank though it was not permitted
FFI/Financial Statement/ Audited Statements/ FFR I and II/ other operational data are not received
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regualarly/ promptly/ not scrutinized and no suitable action is taken.

IV Credit Appraisal
1 Loan application forms not found on record
2 The appraisal form was not filled up correctly
3 The appraisal and assessment was not done properly.
4 Loan applications are not in prescribed form.
The bank in certain cases, did not received necessary documents and annexure required with the
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application form.
Certain adverse features of the borrower were not incorporated in the appraisal note forwarded to the
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management for availing credit to the borrower.
Industry/group exposure and past experience of the bank is not dealt in the appraisal note sent to the
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management for sanction
The projection submitted by the borrower stay far beyond the actual performance. Further, no
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explanation for the same is taken from the borrower.
9 The level for inventory/ book-debts/ creditors for finding out the working capital are not properly
Credit report on principal borrowers and confidential report from their banks are not insisted from the
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borrowers.
The opinion reports of the associates and/ or sister concerns of the borrowers are not called / updated/
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satisfactory/ scrutinised.
The procedures/ instructions regarding preparation of proposal for grant/renewal/ enhancement are not
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followed.
13 No exposure limits are fixed for forward contracts for foreign exchange sales/purchase transactions.
The details of Income Tax assessment of directors/partners/proprietor are not obtained while doing the
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credit appraisal.
15 The branch has not referred the defaulters list of borrower issued by RBI.
Basic documents such as Memorandum and Articles of Association, Partnership Deed etc. which is pre-
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requisite to determine the status of the borrower was not obtained.

V Review/Monitoring/Supervision
1 The security against which the advance was sanctioned was not available /was not on record.
2 Mortgage for the property given as security is not created.
3 Mortgage for the property given as security created, was inadequate, as compared to terms of sanction.
4 Second charge as required, on assets was not created / not on record.
Document pertaining to the registration of charges with ROC or any other concerned authority requiring
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charging of assets is not obtained.
Copies evidencing lodgment of the original conveyance/ sale deed with the sub registrar for the
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registration were not on record.
Authority letter/power of attorney to the bank to collect the original documents from the Sub-registrar
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was not on record.
8 Documents pertaining to consortium advances are not yet executed / not available with the bank.
Documents were signed by persons who were not duly authorised to sign or who have signed in other
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capacity but accepted by the bank.
10 Signatures of the executants were not found on all the pages of the documents.
Some of the documents on record were blank, without signature of the branch manager, witness or
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guarantors etc.
12 Revival letter in respect of documents,was not received.
13 In certain cases guarantees/ guarantor have expired.
14 Guarantees were not taken/renewed/not on record.
15 Net worth of the guarantor was not available.
16 Stamping was not as per the Stamp Act.
17 Documents have been mutilated, soiled, time barred or not obtained.
18 Opinion report by the field officer for the borrower is not found on record.
19 NIL Encumbrances Certificate or No Dues Certificate or No Lien letter was not obtained.
20 In case of vehicle loan where registration certificate/ transfer certificate/ bill/ receipt etc are not
In case of housing loan where work completion certificate/ sale deed/ share certificates of society etc.
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were not on record.
22 The agreement for the hypothecation does not contain details regarding goods hypothecated.
23 In case of term loan where bill/ receipt on the basis of which amount was disbursed, is not recorded.
24 The agreement for the hypothecation does not contain details regarding goods hypothecated.
25 In case of term loan where bill/ receipt on the basis of which amount was disbursed, is not recorded.
26 Original security papers/ sale deed/ lease deed /tile deed/agreement of sale are not available on record.
27 Advance against lien of deposits where lien on deposit has not been marked/ properly marked.
28 TDR/STDR was not discharged/ renewed
29 in case of enhancement of limits, revised document/ document for enhancement not on record.
30 ECGC post shipment insurance cover was not obtained.
31 Common seal of the Borrower Company was not affixed on documents.
32 Confirmed orders for export credit were not found on record for facilities released.