CAD Manual

CAD Manual
National Bank of Pakistan

CREDIT ADMINISTRATION DIVISION (CAD)

 CAD Manual

This document is for internal use of National Bank of Pakistan employees only. Any act of
divulgence to third parties shall be viewed seriously and warrant disciplinary action.

Version Control
Document Owner Credit Administration Division (CAD), RMG (Head Office)

Version # Release Date Approval Date

2.0 June 11, 2018 May 02, 2018
The previous version of Credit Administration Procedure Manual (CAPM) issued vide
Instruction Circular # 08/2009 dated 22-Jan-2009

Revision Date After One Year of Approval

Availability at [Link]
NBP Intranet [Link]

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All Group Chiefs

All Group Heads

All Divisional Heads

All Regional Corporate Heads & Regional Heads

Distributed To
All Regional Executives – Business

All Regional Executives – Credit

All Regional Executives – CAD

All Corporate & Islamic Managers – CAD

All Commercial and SME Centers (CSC) Heads

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Table of Contents
PREFACE .......................................................................................................................... IX
INTRODUCTION ................................................................................................................ X
PURPOSE X

OBJECTIVE X

SCOPE X

ORGANOGRAM (CREDIT ADMINISTRATION DIVISION) .................................................... XII

PART A: PRE-DISBURSEMENT FUNCTIONS ......................................................................... 1
ACTIVITY 1 - SCRUTINY OF SANCTION ADVICE ................................................................ 2
1.1 - ACTIVITY DESCRIPTION 2
1.2 - CAD’S ROLE 2
1.3 - PROCEDURAL GUIDELINES 2

ACTIVITY 2 - SCRUTINY OF FACILITY OFFER LETTER (FOL) ................................................ 3

2.1 - ACTIVITY DESCRIPTION 3
2.2 - CAD’S ROLE 3
2.3 - KEY GUIDELINES 3
2.4 - PROCEDURAL GUIDELINES 4

ACTIVITY 3 - PREPARATION OF DOCUMENTATION CHECK LIST (DCL)............................... 6

3.1 - ACTIVITY DESCRIPTION 6
3.2 - CAD’S ROLE 6
3.3 - PROCEDURAL GUIDELINES 6

ACTIVITY 4 - PREPARATION OF FINANCE / SECURITY DOCUMENTS ................................. 7

4.1 - ACTIVITY DESCRIPTION 7
4.2 - CAD’S ROLE 8
4.3 - KEY GUIDELINES 8
4.4 - PROCEDURAL GUIDELINES FOR RETAIL, COMMERCIAL & CORPORATE LOANS 10
4.4.1 PRECAUTION 11
[Link] SUBORDINATED LOAN 11
[Link] MORTGAGE DEED 11
[Link] MEMORANDUM OF DEPOSIT OF TITLE DEEDS (MODTD) 11
4.5 - PROCEDURAL GUIDELINES FOR INVESTMENT / SYNDICATE FINANCING 12

ACTIVITY 5 - REVIEW OF DOCUMENTATION ................................................................. 14

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5.1 - ACTIVITY DESCRIPTION 14

5.2 - CAD’S ROLE 14
5.3 - KEY GUIDELINES 14
5.4 - PROCEDURAL GUIDELINES 15
5.5 - PRECAUTIONS 16
5.6 - SEEKING GENUINENESS CERTIFICATE 17
5.7 - ESSENTIALS FOR REGISTRATION OF CHARGE WITH THE REGISTRAR OF ASSURANCES/ COMPANY REGISTRAR 17
5.8 - E - FILING OF CHARGE REGISTRATION 17
5.9 - SEEKING PERFECTION CERTIFICATE 18

ACTIVITY 6 - DEFERRAL FOR DEFICIENCIES .................................................................... 19

6.1 - ACTIVITY DESCRIPTION 19
6.2 - CAD’S ROLE 19
6.3 - KEY GUIDELINES 19

ACTIVITY 7 - ISSUANCE OF DISBURSEMENT AUTHORIZATION CERTIFICATE (DAC).......... 20

7.1 - ACTIVITY DESCRIPTION 20
7.2 - CAD’S’ ROLE 20
7.3 - KEY GUIDELINES 20
7.4 - PROCEDURAL GUIDELINES 21

ACTIVITY 8 - CUSTODY OF DOCUMENTS / SHADOW CREDIT FILES ................................. 22

8.1 - ACTIVITY DESCRIPTION 22
8.2 - CAD’S ROLE 22
8.3 - KEY GUIDELINES 22
8.3.1 MAINTENANCE OF SHADOW CREDIT FILES 22
8.3.2 ENTRY IN SAFE-IN SAFE-OUT REGISTER 23
8.3.3 SIGNATURE IN SAFE-IN SAFE-OUT REGISTER 23
8.3.4 SAFE KEEPING OF DOCUMENTS 23
8.3.5 CUSTODY OF KEYS 24
8.4 - CONTENTS OF SECURITY DOCUMENTS & SHADOW CREDIT FILES 25

ACTIVITY 9 - LIMIT & DATA FEEDING ............................................................................ 27

9.1 - ACTIVITY DESCRIPTION 27
9.2 - CAD’S ROLE 27
9.3 - KEY GUIDELINES 27

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PART B: POST DISBURSEMENT FUNCTIONS ..................................................................... 28

ACTIVITY 10 - CAD TICKLERS ....................................................................................... 29
10.1 - ACTIVITY DESCRIPTION 29
10.2 - CAD’S ROLE 29
10.3 - KEY GUIDELINES 30
10.4 - EXCESS OVER LIMITS (TICKLER D-9) 30
10.5 - LIMIT EXPIRY (TICKLER D-5) 31
10.6 - PAST DUE OBLIGATIONS (PDO) 31
10.7 - TEMPORARY EXTENSION 31
10.8 - DEFERRAL EXPIRY 31
10.9 - RE-VALUATIONS 31
10.10 - INSURANCE EXPIRY (TICKLER D-7) 32
10.11 - PLEDGE MANAGEMENT REPORT (TICKLER D-4) 32
10.12 - PLEDGE SITE VISIT REPORT (TICKLER D-1) 32
10.13 - PENDING HYPO STOCKS/RECEIVABLES REPORTS (TICKLER D-10) 32
10.14 - LIMIT BLOCKING REPORT (TICKLER D-6) 32
10.15 - SUMMARY OF DACS ISSUED, COUNTER VERIFIED AND UNAUTHORIZED DISBURSEMENT(S) (TICKLER D-11) 32

ACTIVITY 11 - COLLATERAL MANAGEMENT................................................................. 34

11.1 - ACTIVITY DESCRIPTION 34
11.2 - CAD’S ROLE 34
11.3 - KEY GUIDELINES 34
11.4 - PLEDGE OF SHARES 35
11.5 - VISIT OF PLEDGE STOCKS / SITES 35
PRECAUTIONS 37
[Link] GENERAL CONDITIONS FOR OPEN PLEDGE 38
11.6 - JOINT INSPECTION 39
11.7 - SHORTAGES IN PLEDGED STOCKS 40
11.7.1 PRECAUTIONS 41
11.8 - FIRE INCIDENCE 42
11.9 - SHORTFALLS IN PLEDGED STOCKS 42
11.10 - HYPOTHECATION OF STOCKS 42
11.11 - MIS REPORTS FOR COLLATERAL MONITORING 43
11.12 - PLEDGED STOCKS 43

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11.12.1 Pledge-in .................................................................................................................................. 43

11.12.2 Pledge in - FIM ......................................................................................................................... 44
11.12.3 Precautions .............................................................................................................................. 45
11.13 - DELIVERY ORDER 45
11.13.1 - Precautions ............................................................................................................................ 46
11.14 - PRICE MECHANISM FOR PLEDGED GOODS 46
11.15 - SIGNING ROLE 46
11.16 - PROCEDURAL GUIDELINES FOR NOMINATION / ASSIGNMENT TO MUCADDUM 47
11.16.1- Allocation of Mucaddum .......................................................................................................... 47
11.17 - Nomination of Mucaddum ....................................................................................................... 47
11.18 - Diarize the Date of Appointment of Mucaddum ...................................................................... 47
11.19 - Precautions .............................................................................................................................. 47
11.20 - PROCEDURAL GUIDELINES FOR ROTATION OF MUCADDUM 48
11.21- Rotation of Mucaddam ............................................................................................................ 48
11.22- Performance Assessment of Mucaddum Companies ............................................................... 48

ACTIVITY 12 - INSURANCE OF COLLATERAL ................................................................. 49

12.1 - ACTIVITY DESCRIPTION 49
12.2 - KEY GUIDELINES 49
12.3 - RECEIVING INSURANCE POLICY 49
12.4 - REVIEW OF INSURANCE POLICY 49
12.5 - GENUINENESS OF INSURANCE POLICY 50
12.6 - UPDATING EXPIRY OF INSURANCE POLICY 50
12.7 - PRECAUTIONS 51
12.7.1- Premium Paid Receipt (PPR) for Partial Amount ...................................................................... 51

ACTIVITY 13 - VALUATION OF PROPERTY BY EXTERNAL VALUATORS ........................... 52

13.1 - ACTIVITY DESCRIPTION 52
13.2 - CAD’S ROLE 52
13.3 - KEY GUIDELINES 52
13.4 - PROCEDURAL GUIDELINES FOR VALUATION BY EXTERNAL EVALUATORS 53
13.4.1 - Nomination of Valuators .......................................................................................................... 53
13.4.2 - Allocation of Assignment to Evaluators ................................................................................... 53
13.4.3 - Valuation Reports..................................................................................................................... 53
13.5 - KEY GUIDELINES ON RELEASE OF COLLATERAL 54

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13.6 - PROCEDURAL GUIDELINES ON RELEASE OF COLLATERAL 54

ACTIVITY 14 - BLOCKING / UN-BLOCKING ................................................................... 56

14.1 - ACTIVITY DESCRIPTION 56
14.2 - CAD’S ROLE 56
14.3 - KEY GUIDELINES 56
14.4 - PROCEDURAL GUIDELINES FOR LIMIT BLOCKING 57
14.4.1. Limit Expiry / Unauthorized Operation Allowed ....................................................................... 57
14.4.2. Expired Deferrals ...................................................................................................................... 57
14.4.3. Expiry of Temporary Extension ................................................................................................. 58
14.4.4. Unauthorized Disbursement .................................................................................................... 58
14.4.5. Shortage in Pledge ................................................................................................................... 58
14.4.6. Expired Insurance ..................................................................................................................... 58
14.4.7. Non-Submission of Hypothecation Stock Report ...................................................................... 58
14.4.8. Non-Submission of Partial / Full Premium Payment Receipt ................................................... 59
14.4.9. Unauthorized Excess over limit (EOL) ....................................................................................... 59

ACTIVITY 15 - ALLOCATION OF ASSIGNMENTS TO BLA ................................................ 60

15.1 ACTIVITY DESCRIPTION 60
15.2 - FORMATION OF PANEL OF BLA TO ASSIST CREDIT ADMINISTRATIVE FUNCTIONS 60
15.3 ALLOCATION OF ASSIGNMENT TO BLA 61
15.3.1 For Commercial & SME Accounts ............................................................................................. 61
15.3.2 For Corporate Accounts............................................................................................................ 61

PART C: FORMATS .......................................................................................................... 62

PART D: ANNEXURES ...................................................................................................... 90
ANNEXURE A - REVENUE STAMP REQUIREMENT SHEET (RSRS)........................................ 91
ANNEXURE B - FACILITY WISE DOCUMENTATIONS .......................................................... 92
ANNEXURE C - PROCESS FLOW FOR ISSUANCE OF DISBURSEMENT AUTHORIZATION
CERTIFICATE ................................................................................................................. 105
ANNEXURE D - CAD MIS TICKLERS ................................................................................. 106
TICKLERS D.1 - PLEDGE SITE VISIT REPORT 106
TICKLERS D.2 - DEFERRAL EXPIRY REPORT 107
TICKLERS D.3 - PAST DUE OBLIGATION 108
TICKLERS D.4 - PLEDGE MANAGEMENT REPORT 109

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TICKLERS D.5 - LIMIT EXPIRY REPORT 110

TICKLERS D.6 - LIMIT BLOCKING REPORT 111
TICKLERS D.7 - EXPIRED INSURANCE POLICY 112
TICKLERS D.8 - VALUATION REPORT 113
TICKLERS D.10 – PENDING HYPO STOCKS / RECEIVABLE REPORT 115
TICKLERS D.11 – DACS ISSUED AND COUNTER VERIFICATION REPORT 116

NOTE: IN CASE IF ANY UNAUTHORIZED DISBURSEMENT OBSERVED, THE SAME SHALL BE

REPORTED SEPARATELY WITH RELEVANT DETAILS ........................................................ 116
ANNEXURE E - REGIONAL / CORPORATE CAD - STRUCTURE ........................................... 117
ANNEXURE G–LIST OF ABBREVIATIONS ......................................................................... 119

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PREFACE
Credit Administration Division (CAD) presents its Procedure Guidelines Manual in line with the
approved functions by Board of Directors containing its Terms of References (TORs) and
Standard Operating Procedures (SOPs). It has been prepared in compliance of BASEL – II
Guidelines, CAD Remediation Plan and Areas for Improvement (AFI) Identified under BPR &
COSO implementation project. Before developing this document, procedures of peer banks
were studied and best practices were filtered and adopted, after accounting for NBP practices
in vogue. This procedure manual shall be read in conjunction with other relevant policies of the
Bank.

This manual defines Procedural Guidelines for CAD related activities. Implementation of this
manual will ensure that Credit Administration support to Corporate, Commercial and SME
Business Units is consistent and predictable.

The key element toward ensuring proper credit discipline in the Bank is development of a strong
Credit Administration Function. CAD implements uniform credit administration procedures
throughout the bank to ensure efficient and appropriate use of bank’s resources, consistent with
its goals and objectives. The successful implementation of CAD functions will enable the
business to devote more time for enhancing core business function that may eventually lead to
improved profitability and will enhance stakeholders’ perception.

In preparation of this document various work around approaches had to be adopted for some
of the functions while a few had to be phased out as CAD is in development phase with
Information Technology (IT), Logistics and HR perspective. As such, the manual shall be reviewed
after one year of its approval with a view to update any procedural guidelines, departmental
structural changes and functions phased out.

In case if there is no significant change required in the document then a note with “NO CHANGE”
will be put forward to competent authority for renewal and continuation of this document, till
next review.

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INTRODUCTION
Purpose

The basic purpose of this CAD Manual is to ensure proper credit discipline in our bank by
developing strong and vigilant credit administration functions, independent of credit initiations,
approvals and credit operations.

Objective

The primary objective for inducting a CAD Manual is to:

1. Ensure perfection of financing documents and securities.

2. Implement uniform credit administration procedures throughout the Bank

3. Support Business units with timely provision of credit related information through
periodic ticklers and observed irregularities (as and when identified)

4. Centralize Safe-Keeping of financing & security documents with uniform procedures

Scope

The Manual has been developed in line with the approval of Board of Directors which outlines
CAD’s scope for administration of regular accounts of Corporate (including syndicate/project
finances and non-funded facilities), Small and Medium Enterprises, Commercial and Agriculture
(non-gold) portfolio including rescheduled/restructured advances. The DACs of Structured /
Consumer products including Gold loans shall be issued by Branch Managers and counter
verified by CAD subsequently within 30 days, till the time, final decision of CAD’s disengagement
from Structured Products, in line with BoD’s approval, is finalized. All other accounts / Approved
products, such as, Commodity Operation Financing, Staff Financing, Qarz-e-Hasana, Student
Loans etc. shall be managed by the concerned groups as per practice / respective Product
Program.

The role of CAD shall begin strictly after the receipt of Sanction Advice which shall be restricted
to functions outlined in this manual. The completion of all pre-sanction formalities outlined in
Bank’s Policies and compliance of SBP Prudential Regulations shall be the responsibility of
authorities involved in Credit Processing & Approval. Any role / responsibility defined by
different Groups in their Policies / Product Program shall be in accordance with this Manual,
duly agreed by CAD, however in case of procedural conflict, guidelines defined in this manual
shall prevail. Accordingly, utmost care shall be observed while issuing Sanction Advice and
defining the role of CAD therein.

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The independent CAD (under reporting to Divisional Head – CAD at Head Office) has recently
been introduced in the Islamic Banking Group by establishing Islamic CAD offices (North &
South) where issuance of DACs of all products excluding consumer has been initiated. The detail
guidelines of Islamic CAD functions shall be developed once Credit Policy w.r.t. Islamic banking
is developed. Similarly, detail guidelines of International Operations shall be developed
separately.

The procedures herein are intended to align with the BASEL Guidelines, CAD Remediation Plan
and Areas For Improvement (AFI) identified under BPR & COSO implementation project. It aims
to ensure completion of documentation & compliance of terms of sanction before
disbursement/limit feeding, communicating irregularities from CAD ticklers, periodic valuations
of mortgaged properties (on post disbursement basis) and pledged stocks/site visits. This also
includes maintaining MIS and generating periodic reports, maintenance of shadow credit files
and collateral/security documents in an acceptable manner and dissemination of deficiencies
and exception reports.

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ORGANOGRAM (CREDIT ADMINISTRATION DIVISION)

Group Chief - RMG

Divisional Head - CAD

Vendor Management,
Regional, Corporate & Corporate, Commercial,
International CAD & F.I Administration & MIS Structured Products, HO CAD
Islamic CAD Offices SME, Islamic & CAD
Support Wing (CAD) Support Wing Agriculture Finance & Inspectors based at
Headed by Managers Plan Support Wing
Wing Head Wing Head Legal Support Wing different Regions
CAD Wing Head
Wing Head

Department Manager
Unit Heads Department Manager Department Manager Department Manager Department Manager
Corporate, Commercial &
Documentation F.I Support MIS (CAD) Vendor Management Legal Support
SME

Unit Heads Sectional Head

Sectional Head Sectional Head Sectional Head Sectional Head
Collateral / Vendor Corporate, Commercial &
F.I Support MIS (CAD) Vendor Management Legal Support
Management SME

Department Manager Department Manager

Unit Heads Department Manager Department Manager Structured Products, Agri.
Islamic & CAD Plan
Credit Maintenance International CAD Administration Support Finance & I.T
Support
Coordinator

Sectional Head Sectional Head

Unit Heads Sectional Head Sectional Head
Islamic & CAD Plan Structured & Consumer
MIS International CAD Administration Support
Support Products

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PART A: PRE-DISBURSEMENT
FUNCTIONS

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ACTIVITY 1 - SCRUTINY OF SANCTION ADVICE

1.1 - Activity Description

Scrutiny of Sanction Advice is a crucial activity in which the Sanction Advice is reviewed by the
CAD personnel after approval of facilities to ensure that the facility(ies) has been approved in
line with the power conferred upon different hierarchy level by the competent Authority.

1.2 - CAD’s Role

CAD has been vested with the responsibility of scrutinizing the Sanction Advices prepared by the
Branches, Area Offices, Commercial & SME Centres, Regions and Head Office to review the
credit approval granted by the competent authority. The issuing authority will send the copy of
Sanction Advice directly to concerned CAD offices (Regional & Corporate). The activity would
enable CAD to ensure that approvals have been made by the appropriate authority.

1.3 - Procedural Guidelines

During the Scrutiny, the CAD personnel will perform the following steps:
1. CAD will scrutinize the Sanction Advice ensuring that approval levels for the finance are in
line with Credit Approval Authority Booklet / Seasonal policies and does not exceed the
powers conferred upon various hierarchical levels of the Bank depending upon business
potential level of the Region, facility / security type & the legal constitution of the
borrower.
2. For each credit facility sanctioned for a particular borrower against particular security, the
approved limit shall be scrutinized for discretionary powers of the sanctioning authority
through CAAB / respective Seasonal Policy.
3. CAD will ensure that respective BM / RM / Unit Head has provided pre-sanction
documents such as BBFS, LAF, Form A/29, Partnership Deed etc. (as the case may be) with
the copy of Sanction Advice.
4. In case of any exception, relaxation from the bank's policy, as mentioned in Sanction
Advice, CAD shall ensure that necessary approval(s) are held in place such as Minutes of
the Meeting of the Credit Committee, intimation letter from competent authority etc.
5. In case of any irregularity / violation found in Sanction Advice, the same will be returned
within one working day along with the observations.

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ACTIVITY 2 - SCRUTINY OF FACILITY OFFER LETTER (FOL)

2.1 - Activity Description

Facility Offer Letter (FOL) is a basic document which delineates the key terms and conditions of
the facility which the bank is offering to its customer. It is accepted / acknowledged by the
customer and also by the authorised representative of the Bank. The offer letter setting out the
terms and conditions for the credit facility under consideration contains the following
information:

1. Nature, amount, purpose, tenor, expiry of the facility

2. Pricing mechanism of the facility
3. Specific securities and margins thereon
4. Procedural requirements and other covenants as specified by the approving authority in
the Sanction Advice
5. All other general as well as Special Terms & Conditions as per Sanction Advice.
During the scrutiny of offer letter, it is ensured that FOL has been prepared in accordance with
the terms and conditions of Sanction Advice of the respective customer for different types of
credit approvals e.g. fresh, renewal, enhancement, rescheduled / restructured facility etc.

2.2 - CAD’s Role

CAD shall ensure that the Facility Offer Letter has been prepared in accordance with the terms
and conditions of the related Sanction Advice1. The Facility Offer Letter shall be signed by the
Business Official and reviewed by CAD.

2.3 - Key Guidelines

a) Facility Offer Letter, addressed to the borrower is prepared by Business Units and
Reviewed by Regional / Corporate CAD.
b) This document is signed by business unit (BM / RM / Unit Head), counter signed by CAD
under the noting “Reviewed by CAD” as a token of having reviewed the same.
c) Regional / Corporate CAD scrutinizes the offer letter to ensure that it is prepared in
accordance with the terms and conditions of Sanction Advice to ensure the following key
components.

1
The approved pricing, processing fee and approved conditions etc. should be treated as the minimum to be offered
to the customer and any addition from Business side may be included in the FOL. For instance, if the pricing is
approved at 3K+2.0% p.a. it may be offered at a higher rate at 3K+2.5% p.a. etc. and finally agreed by the customer,
whatsoever, but not lesser than mentioned in Sanction Advice. Similarly, a processing fee may be included by
business side to improve the overall profitability from the relationship.

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 FOL is addressed to the relevant authority / customer

 Nature and amount of facility(ies) approved.
 Purpose of facility(ies) approved for.
 Security description containing nature of securities including primary &
secondary i.e. stocks, book debts / receivables, plant & machinery, land &
building etc., its location, Market Value, Forced Sale Value (FSV), date of valuation
& valuators in case of properties, plant and machineries etc.
 Description of the nature of charge, ranking of the charge, amount of charge to
be registered with concerned registrar / SECP.
 Margin to be maintained on securities.
 Mark-up rate along with Rebate / Re-pricing Frequency / Prompt Payment Bonus
/ Special Discounts
 Markup Payment frequency.
 Insurance arrangements.
 Repayment mechanism.
 Date of expiry & date of final adjustment
 Inclusion of clause in FOL for joint inspections as per SBP PRs, customer shall
inform the Bank regarding their pledge facilities with other Banks.
 Charges for outsources inspection of securities as per schedule of Bank’s charges.
 Other documentation requirements
 Special conditions, if any, along with general terms & conditions, relevant to the
facility
 Condition precedents & Covenants (if any)

d) BM / RM to ensure that there shall be no alterations or cuttings in the offer letter.

Alteration or cuttings in the offer letter (if any) must be singed / authenticated by the
Customer as well as bank’s official, duly approved by the Sanctioning Authority,
otherwise, no alterations / cuttings in contradiction of Sanction Advice shall be allowed.

2.4 - Procedural Guidelines

1. BM / RM / Unit Head shall prepare the FOL based on Sanction Advice and submit to CAD
for scrutiny.

2. CAD receives FOL from business unit duly signed by BM / RM / Unit Head.

3. Regional / Corporate CAD scrutinizes the FOL to ensure that it is prepared in accordance
with the terms and conditions of Sanction Advice.

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4. In case, the FOL is not in line with Sanction Advice, the same shall be returned to the
respective business unit by Regional / Corporate CAD personnel along with their
observations after retaining a copy for their record.

5. Regional / Corporate CAD after verifying the correctness of FOL, shall sign the Facility
Offer Letter as an acknowledgement of having reviewed, strictly under the noting
“Reviewed by CAD”.

6. CAD officer will make a copy of the FOL for record purpose.

7. CAD shall prepare Documentation Checklist (DCL) and Revenue Stamp Requirement
Sheet (RSRS) as per FOL / Sanction Advice.

8. FOL shall be provided to the relevant business units along with DCL (Format # 1) and
Revenue Stamp Requirement Sheet (RSRS) (Annexure-A).

9. Business Unit shall offer the facilities to the Customer through FOL for acceptance by the
authorized signatory(ies) of the Customer.

10. Customer executes and stamps / seals the FOL as an acceptance of the terms &
conditions of the facility(ies) and return accepted FOL in original to the Bank.

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ACTIVITY 3 - PREPARATION OF DOCUMENTATION CHECK LIST (DCL)

3.1 - Activity Description

Documentation checklist (DCL) enlists all required documents related to the approved facilities
and securities there against in line with Sanction Advice. DCL enables CAD to ensure the
availability of all required documents once submitted to CAD by BM / RM / Unit Head for
issuance of DAC.

3.2 - CAD’s Role

Once the Facility Offer Letter (FOL) and copy of the Sanction Advice is submitted to Regional /
Corporate CAD, the CAD officer shall prepare the Documentation Checklist– DCL (Format 1) in
line with FOL/Sanction Advice, enlisting all required documents from the Customer and / or BLA.
However, review of the DCL is responsibility of RE / CM – CAD.

3.3 - Procedural Guidelines

1. Regional / Corporate CAD shall review the Sanction Advice / FOL to ascertain the
documentary requirements and prepares DCL (Format 1) enlisting all required documents
from BM / RM / Unit Head and/or BLA with respect to following
 Legal Constitution based Documents
 Facility based documents
 Security based documents
 Any other documents including insurance arrangements deemed necessary
under the Sanction Advice.

2. Each column of the DCL viz. “Required”, “In Possession”, “To be Obtained”, “Deferred Up
to” shall be duly marked checked (  ) or crossed (X) respectively. However, the column
“Deferred Up to” shall contain the expiry date of deferral against the respective document.

3. From the DCL, CAD officer shall prepare RSRS mentioning the cost of stamps required in
terms of Provincial Stamps requirements.

4. On completion of above, CAD shall forward the set of signed FOL along with DCL and RSRS
to BM / RM, for arranging the required documents & stamp papers.

5. Concurrently, RE – CAD, where required, shall seek approval from CAD, H.O. for nomination
of BLA, recommending such names from Bank’s panel.

While preparing DCL, CAD field functionaries may additionally refer facility wise
documentation, list attached as Annexure ‘B’, as guidance for ascertaining the required
documents related to approved facility and structure.

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ACTIVITY 4 - PREPARATION OF FINANCE / SECURITY DOCUMENTS

4.1 - Activity Description

To secure the advances and to mitigate the reputational and legal risk at an acceptable level, it
is imperative that the documentation requirements are complied with, before the disbursement
of the loan. The documents are obtained and legally enforceable charge(s) are created over the
offered securities.

Types of Documents

Considering the nature of the documents it can be segregated into following three categories;

1) Finance Agreements

a. Finance Agreement (IB-6)

b. Inter-Creditor Agreements / Consortium Finance Agreement
c. Restructuring / Rescheduling Agreement
d. Agreement for Finance under FE – 25 for Import / Export
e. Demand Promissory Note (IB-12)
f. Letter of Continuity (if applicable)
g. Any other documents that falls under this category

2) Security Documents

a. Letter of Hypothecation (IB-25)

b. Letter of Pledge (IB-26)
c. Letter of Lien & Set-off
d. Letter of Pledge (Shares) / Lien for Marketable Securities / Shares
e. Memorandum of Deposit of Title Deeds (MODTD) (IB-24)
f. Mortgage Deed (IB-22/23)
g. Personal Guarantees (IB-29)
h. Assignment Agreements
i. Any other documents that falls under this category

3) General Documents

a. Subordination Agreement
b. Direct Debit Authority
c. Undertaking for proper utilization of funds
d. Letter of Disclaimers
e. Assignment of Receivables
f. Any other documents that falls under this category

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Seeking Legal Help

Documents requiring legal expertise shall be referred to Legal Division and / or BLA, especially
in cases of;

i) Financing to Limited Liability Companies, Trusts, Associations, Clubs, Public Sector

Enterprises, and Public Private Ventures, Autonomous Bodies etc.

ii) Consortium Finance, Joint Ventures, Supplemental Agreements, Restructuring /

Rescheduling, Inter-Creditor Agreement & MOUs etc.

iii) Preparation of Mortgage Deed & Memorandum of Deposit of Title Deed (MODTD).

iv) Charge registration and/or up-gradation & vacation along with relevant Charge
Creating Instruments etc. with Securities & Exchange Commission of Pakistan (SECP)

4.2 - CAD’s Role

 CAD is vested with the overall responsibility for preparation/arranging/printing2 of

documents for facilities and securities approved, in line with Sanction Advice and accepted
offer letter.

 CAD officer shall proceed with preparation of the documents on receipt of request from BM
/ RM, along with required Revenue Stamp Papers.

 In cases mentioned above, Regional / Corporate CAD shall appoint BLA for preparation of
required documents.

 Regional / Corporate CAD shall provide BM / RM with the relevant security & finance
documents for execution by the customer. BM/RM shall ensure before forwarding the same
to CAD that the documents are duly witnessed and customers’ signatures are verified by the
branch officials.

 CAD shall ensure that all required documents are in place for each credit facility to safe guard
the bank’s interest.

4.3 - Key Guidelines

 Regional / Corporate CAD may seek services of either the Legal Division or BLA on the bank’s
approved list for preparation of documents for the cases described above.

2
At Corporate centers, CAD shall provide printed set of financing documents to concerned RM / Unit Head for
execution.

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 For fresh financing / enhancement, BLA/ Legal division shall provide pre-mortgage legal
opinion (Format 11) after vetting through copies of all constitutional documents3, title
documents that are essential to constitute a complete and valid charge / mortgage in the
bank’s favour. In absence of Pre-Mortgage legal opinion, the complete chain of Title
documents shall be provided to BLA for their opinion. In case of any deficiency/legal
observation the same shall be communicated to BM/RM for rectification.

 The BLA, in all cases, where mortgage of collateral is involved, shall furnish the Genuineness
Certificate along with physical verification of title documents from the concerned property
records.

 While documentation is in process, CAD shall ensure that partially received documents are
kept in safe custody folders of the respective client to minimize the risk of documents from
being misplaced / duplicated / unwarranted situations. In no case, shall the documents be
left outside overnight.

 CAD will ensure that no financing / security documents are obtained in blank as required
under the section 18 of Financial Institutions (Recovery of Finances) Ordinance, 2001.

 CAD shall assess that all security & finance documents are executed by authorized
signatories of the Customer and the bank in the presence of any two witnesses along with
their Name & CNIC, where applicable, as per Qanoon-e-Shahadat Order 19844.

Deviations

Any deviations5 from the text of financing documents, requested by Corporate / Commercial
borrowers, BLA / Legal Division’s (as nominated by CAD) written opinion shall be obtained by
Business in support of such requests. All qualified / negative opinions shall be referred to
business for immediate rectification. However, for any reason, rectifications of such issues are
not resolved, the business shall seek approval of the Credit Committee based on the legal
opinion. In case of unqualified opinion from BLA the Regional / Corporate CAD shall proceed
accordingly.

3
Constitutional documents are defined as the document evidencing the constitution of a company or firm (e.g.
Memorandum & Article of Association/ Partnership Deed / Govt. Charter / Trust Deed etc.)
4
Please note that one male witness can be substituted by two female witnesses. However, one male witness is
mandatory.
5
Deviations are defined as the ones where the customers seek any amendments / deletion in the text of financing
agreement.

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4.4 - Procedural Guidelines for Retail, Commercial & Corporate Loans

1. Once the FOL is accepted by the customer and customer’s signatures are verified by Branch
officials, BM / RM shall arrange for Stamp / Revenue Papers through the customer for the
preparation of finance / security Documents (as per RSRS) and shall forward the same to
CAD along with request for preparation of the same.

2. During review, CAD shall ensure that there shall be no alterations or cuttings in the offer
letter. In case of any disagreement w.r.t term and conditions of the facility, the same shall
be validated by the competent/approving authority.

3. While accepting the stamp/revenue papers the BM/RM as well as Regional / Corporate CAD
shall ensure that such stamp papers are issued in the name of bank / customer.

4. The validity of the FOL shall be ensured by BM / RM as well as Regional / Corporate CAD as
per Credit Policy of the Bank.

5. Regional / Corporate CAD to check the count / value of Stamps in accordance with the
requirements stipulated in RSRS.

6. CAD shall prepare the documents on bank’s standardized IB formats (where applicable) as
per practice in vogue, ensuring that all the blank columns are filled accordingly and no space
is left blank.

7. Documents requiring legal expertise, shall be arranged through BLA.

8. The Regional / Corporate CAD shall ensure that Genuineness Certificate / Pre-Mortgage legal
opinion has been provided by the BLA in fresh and enhancement cases (Format # 11).

9. BLA shall provide Genuineness Certificate along with Pre-Mortgage legal opinion after
vetting through copies of all constitutional documents, title documents that are essential to
constitute a complete and valid charge / mortgage in the bank’s favour. Acceptable chain of
title documents shall also have been examined and found in order.

10. In case of any deficiency/observation in the legal opinion, CAD shall communicate the same
to BM/RM for onward rectification through customer.

11. CAD may engage the BLA for the preparation of any other document required for specific
transaction and / or advised in Sanction Advice, taking BM / RM / Unit Head in loop. In that
case BLA shall render the requested services and submit the desired documents / Opinions
to Regional / Corporate CAD along with bill of Service Charges.

12. Regional / Corporate CAD shall request the respective Branch for issuance of Pay Order
(payable by customer) against the bill of service charges received from BLA.

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13. CAD shall provide the prepared documents to BM / RM for execution (including signature(s),
stamping / sealing, witnessing & signature verifications) from Borrower & Branch, obtaining
acknowledgment of same

4.4.1 Precaution

[Link] Subordinated Loan

In case of Subordinated Loan Covenant; Regional / Corporate CAD shall ensure this
condition is included in the FOL and subordination agreement has been obtained from the
relevant directors.

[Link] Mortgage Deed

Mortgage deed shall be prepared on format IB-22/23 of the token or full amount of finance
as advised in Sanction Advice. The registration must be made through BLA (in accordance
to provincial stamp duty regulations) under supervision of CAD. The registered mortgage
deed shall be furnished to CAD along with the covering letter of BLA.

[Link] Memorandum of Deposit of Title Deeds (MODTD)

Memorandum of Deposit of Title Deeds (MODTD) shall be on IB-24 on revenue stamp

paper/stamped specifically prepared by BLA (as per provincial stamp duty regulations) and
shall cover the finance amount (less token amount of registered mortgage if any) plus mark-
up, service charges and any other costs/charges, expenses and liquidated damages, if any.

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4.5 - Procedural Guidelines for Investment / Syndicate Financing

The transactions of investment banking are peculiar in nature and cannot be addressed through
standardized procedures, hence, broader guidelines are being provided in this section. For all
other CAD aspects, the relevant sections shall be followed.

In case of Syndicate/Consortium financing, appointment of lawyer/legal counsel, collectively

decided by the Consortium/Syndicate members should be from Bank’s approved Panel,
otherwise approval of bank’s competent authority shall be provided by business.

The scope (on case to case basis) of the BLA/Legal Counsel shall be finalized in consultation with
CAD. All documents should be prepared in accordance with the law of the land, however, if the
same is not applicable, approval of the Competent Authority shall be provided by business.

The formats of the documents prepared in the case of Syndicate/Consortium transactions will
be different from the standard NBP documents which must be accompanied by a legal opinion
from Syndicate lawyer/legal counsel that such documents safeguard the interest of all the
Syndicate/Consortium members.

Business shall review the condition precedents (CPs) either mentioned in the sanction advice or
ITS or any other document (as the case may be) prepared by the BLA/Legal counsel or decided
by the Syndicate/Consortium members as and when required. Upon satisfactory compliance of
CPs, the CP confirmation shall be signed. If for any reason any covenant/terms and condition or
condition precedent not satisfied then either the deferral /waiver, backed by the
Customer/Agent/Security Trustee’s commitment as the case maybe, together with the Approval
from the Competent Authority shall be furnished to CAD. Request for issuance of DAC shall only
be forwarded to CAD once CP confirmation letter is already signed.

In case if NBP is participating Bank then Copies of duly executed documents shall be furnished
to CAD by Business Group while original shall be retained by the Agent/Security Trustee as the
case may be and confirmation from Agent Bank shall be obtained confirming that the documents
are held in their records on behalf of all the participating banks and will not be released without
formal approval of the participating banks.

Request for issuance of DAC shall only be made once all the executed documents in original
(where NBP is security Trustee) otherwise copies thereof as well as Legal Opinion from the
Consortium/Syndicate Lawyer/Legal Counsel, covering agreed scope together with all the
approvals and Sanction Advice is submitted to CAD.

CAD shall require Approval In-Principal (AIP), Indicative Term Sheet (ITS) or any other document
on which the basic agreements or framework of the transaction was prepared besides definitive
approval. Sanction Advice should ideally be in line with definitive approval. The same should be
submitted to CAD for review.

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Before issuance of DAC, CAD shall scrutinize the documents ensuring that all the documents
have been prepared by the appointed BLA and executed documents are properly backed by
Internal Approvals together with CP confirmation letter(s), sanction advice, ITS, AIP, satisfactory
legal opinion covering the agreed scope and request letter of the Business Group supported by
customer’s drawdown notice or agent’s request as the case maybe, is submitted to CAD.

It shall be the responsibility of Business to ensure submission of all the relevant documents to
CAD well before Facility Effective Date (FED) enabling CAD adequate time for review. In case if
FED cannot be met then amendment in the agreements together with the approval from the
concerned Business Group and satisfactory legal opinion (sought by business) on the amended
document along with Customer’s request or Agent’s request as the case maybe is submitted to
CAD for review. DAC shall be issued by CAD upon completion of required formalities, otherwise,
necessary deferrals / waivers, duly approved, are in place.

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ACTIVITY 5 - REVIEW OF DOCUMENTATION

5.1 - Activity Description

The purpose of this activity is to review finance / security documents along with corroborative
documents in line with the legal opinion to ensure that all finance & security documents are
intact as per approved facility.

5.2 - CAD’s Role

 CAD shall review these documents for completeness ensuring that documentation is correct,
complete and corresponds with the approved facility, blank spaces are duly filled,
documents are dated, signed and stamped, the signatory(ies) are authorized to execute such
documents, signatures are duly verified etc.

 In case documentation is incomplete, or any discrepancy exists, Regional / Corporate CAD

shall advise the BM / RM to seek rectification prior to disbursement, otherwise deferral of
the required formalities/documents may be requested by business from the competent
authority in light with Bank’s Policies.

5.3 - Key Guidelines

 The concerned BM / RM shall also review the documents to ensure that they are complete
as per DCL and executed (duly stamped / sealed and signed by the authorized signatories)
before submitting it to Regional / Corporate CAD for issuance of DAC. In addition, CNIC
copies of the borrower(s), guarantor(s) and witnesses shall accompany the documents.

 Multipage page documents shall be duly signed and stamped on each page by the customer
(and the bank where necessary) as a precaution against substitution of any pages thereto.

 Corrections, errors, over-writings, alterations etc., in a document shall always be

authenticated and signed by the same signatory(ies) of the documents.

 The BLA, in all cases, where mortgage/Hypothecation/Pledge of accepted securities /

registration of charge with SECP is involved, shall also furnish Perfection Certificate, after
completion of all formalities. The perfection certificate shall clearly state that a valid claim
over the collateral has been created and the bank’s interest is secured.

 On satisfaction in respect to the completeness of the all documents securing Bank’s

interests, CAD shall issue Disbursement Authorization Certificate (DAC) (Refer Activity # 7).

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Legal Review of Complete documents (After every three years)

Besides review of facility renewal, the whole set of documents including property and other
security documents of all Corporate, Commercial and Small & Medium Enterprise borrowers
shall be reviewed by BLA after every three years which shall be initiated by CAD. This shall be
coordinated with relevant RH/CH, taking into consideration the Renewal Date, so that the
updated legal review is available on file. However, in case the bank is contemplating litigation
against any borrower then the same shall be done immediately. The charges in lieu of the
services offered by BLA shall be borne by the borrower.

5.4 - Procedural Guidelines

1. BM / RM shall submit complete set of documents in one go (in line with DCL) to Regional /
Corporate CAD including but not limited to the following:

a. Original Facility Offer Letter (FOL) duly accepted by the borrower

b. The executed charge/ financing documents
c. Original Title Deeds / Documents.
d. Any other documents required as per DCL.
e. Insurance arrangements as per relevant Bank’s Policies.
f. In case of any shortfall with respect to any document / formalities, deferral approved
by the competent authority as per Deferral Policy.

2. Upon receipt of executed documents Regional / Corporate CAD shall ensure that the
documents are properly executed / stamped / sealed by the Customer. This includes
supplemental agreement for Temporary Extension as per credit policies / relevant circulars
of the Bank.

3. Section 18 of Financial Institutions (Recovery of Finances) Ordinance, 2001 provides that no

banking documents shall be obtained in blank. All security & finance documents shall be
executed by authorized signatories of the Customer and the bank in the presence of any two
witnesses along with their Name & CNIC, where applicable, as per Qanoon-e-Shahadat Order
19846.

4. If found in order the same shall be forwarded to the concerned BLA. In case of any
discrepancy / irregularity in executed documents ‘Documents Review Sheet – (Format 3) is
prepared and forwarded to BM / RM for rectification or arranging deferral from Competent
Authority.

6
Please note that one male witness can be substituted by two female witnesses. However, one male witness is
mandatory.

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5. BM / RM shall arrange rectification of the discrepancies / irregularities or shall arrange

deferral from competent authority (Refer Activity # 6) and provide the same to the CAD in
timely manner.

6. Regional / Corporate CAD shall ensure to submit the executed finance / security and other
related documents to BLA for registration of charge with SECP and / or creation of Mortgage
with property registrar and marking of lien with relevant authorities as per terms &
conditions of Sanction Advice.

7. The BLA after registration of Mortgage / charge shall submit the same to CAD. The BLA, in
all cases, where mortgage of collateral / registration of charge with SECP is involved, shall
also furnish the Perfection Certificate, after completion of all the documentation formalities,
certifying that a valid claim over the collateral is created, all the finance documents are
perfectly executed, legally enforceable and confirming the bank’s interest is secured
(Attached format 10)

8. Regional / Corporate CAD shall request the respective Branch for issuance of Pay Order
against the bill of service charges received from BLA.

9. On satisfaction in respect to the completeness of the all documents securing Bank’s

interests, Regional / Corporate CAD shall issue Disbursement Authorization Certificate (DAC)
(Refer Activity # 7).

5.5 - Precautions

1. While documentation is in process, Regional / Corporate CAD shall ensure that partially
received documents are kept in safe custody folders of the respective client overnight to
minimize the risk of documents from being misplaced / duplicated / unwarranted situations.

2. Regional / Corporate CAD to ensure that the documents are duly witnessed along with CNIC
copies of the signatories.

3. Regional / Corporate CAD shall ensure that the finance / security documents are executed
by the Customer.

4. Regional / Corporate CAD shall ensure that Constitutional Documents are certified true
copies of originals (in case if required).

5. Multipage documents are duly signed and stamped on each page by the customer (and the
bank where necessary) as a precaution against substitution of any pages thereto.

6. Corrections, errors, over writings, alterations etc., in documents, are always signed by the
same signatories of the Customer.

7. No DAC shall be issued without completion of documentation formalities and fulfilment of

conditions precedent to disbursement as per Sanction.

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5.6 - Seeking Genuineness Certificate

Copies of property documents shall be submitted to BLA by Regional / Corporate CAD for seeking
Genuineness Certificate regarding physical verification and validation of the title documents
from the concerned property record, including confirmation that the Chain of Property
Documents is complete in all respect (Format # 11).

5.7 - Essentials for Registration of Charge with the Registrar of Assurances/ Company
Registrar

In cases where Mortgage is to be created with the Registrar of Assurances, Regional / Corporate
CAD will liaison with the BM / RM who shall ensure the availability of the customer / Borrower
/ Authorized representative and BLA for registration of mortgage before the registrar. The
Mortgage charge over the property will be registered under the supervision of Regional /
Corporate CAD.

In case of charge registration with SECP, Regional / Corporate CAD will submit the relevant
executed documents to the nominated BLA for creation of charge along with applicable NOCs
within 30 days of execution by the borrower, failing which the documents will become void as
per Companies Act, 2017.

Once the charge is registered, the acknowledgement receipt will be held under custody of CAD,
for collecting Registered Mortgage Deed / Charge Registration Certificate in Original on the
advised Due date.

Regional / Corporate CAD shall obtain SECP search report confirming that the Charge as per
Sanction Advice has been created.

5.8 - E - Filing of Charge Registration

SECP has automated their process of filing of statutory returns and other periodical documents
through electronic services by providing companies authorized sets of user-ID /passwords.
(Please note that these user-ids / passwords are allowed to be used by the companies only).
Though, the process of manual submission is valid and active, but many companies now prefer
using e-services.

In case of any query / rejection, the company representatives are e-mailed directly by the SECP
for clarification or resolution. Once the data is validated, it is moved to records and statutory
return, acknowledgements and / or certificates are emailed electronically as well as physically.

Previously all these forms and documents were used to be submitted by companies / their
authorized agents, manually through Company Registration Office (CRO) windows at major
cities of Pakistan. In such cases, a BLA duly nominated by CAD potentially acts as an agent of
company and submits Form 10 (for Charge Registration) /Form 16 (for Charge Modification),
certified true copies of Charge Creating Instrument and affidavit by the company secretary /

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director of the company along with a pay order in favor of SECP through CRO windows. After
submission, an acknowledgement is issued by SECP followed by a Charge Registration Certificate
(CRC) within 7 to 8 working days (generally).

Where, any company opts out to submit the same electronically, BLA role of submission of
documents to CRO window is reduced. Instead, Company itself files Form 10/16 online while
attaching scanned copies of charge creating instruments and affidavit (duly certified by the
Bank) along-with online transfer of applicable service charges. Once the data and scanned files
are accepted by CRO /SECP, electronic, copy of Charge Registration Certificate is emailed and
hard copy certificate is couriered to company.

Note: Since, the Bank is concerned with Charge Registrations Certificate (i.e. statutory returns,
acknowledgements and / or certificates) issued by SECP, Bank is indifferent of the process being
adopted by the Company.

5.9 - Seeking Perfection Certificate

After creation of charge, copies of complete set of documents, including Constitutional

documents will be forwarded to BLA for seeking Perfection Certificate stating that all legal
requirements have been completed, mortgages and Charges created in Bank’s favor and are
legally enforceable in the Court of Law. (Format 10)

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ACTIVITY 6 - DEFERRAL FOR DEFICIENCIES

6.1 - Activity Description

Deferral is defined as approval from competent authority (as per deferral Policy) for allowing
specific time to complete certain deficiencies in security / support documents and / or
compliance of certain covenants, terms and conditions of sanction, which remains incomplete
at the time of disbursement.

6.2 - CAD’s Role

 CAD shall ensure that for all deficiencies / discrepancies, formal approval for deferral, duly
approved by the Competent Authority is provided by the business groups. All outstanding
deferrals shall be followed up by Regional / Corporate CAD, with the respective RH / CH to
ensure its timely satisfaction through their monthly MIS Reports. Regional / Corporate CAD
shall also report the same to relevant offices on periodic basis.

 In case of non-compliance by the due date and in the absence of revised deferral, Regional
/ Corporate CAD shall block the limit of the delinquent, where the system allows, otherwise
Regional / Corporate CAD shall advise RH / CH to stop debit operations in the account and
keep follow-up on best effort basis with the concerned quarters for materialization of
deferrals. Upon satisfactory compliance, the limit shall be unblocked by Regional /
Corporate CAD; otherwise Regional / Corporate CAD shall advise RH/CH to do so.

6.3 - Key Guidelines

 Requests for deferral shall be made by the business (RM/BM) to competent authority only
in cases of extreme need, i.e. after all reasonable attempts have failed due to unusual
circumstances e.g. some legal limitations on part of the customer.

(Note # 1: Deferral Policy is under development phase at CMG, once finalized

and incorporated in relevant Credit Policies, the same shall be referred in CAD
Manual. Till the time formal deferral policy, approved by Competent Authority
is in place, the same shall be handled as per existing practice in vogue).

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ACTIVITY 7 - ISSUANCE OF DISBURSEMENT AUTHORIZATION

CERTIFICATE (DAC)
7.1 - Activity Description

Disbursement Authorization Certificate (DAC) is an authorization for the disbursement of facility

(fresh, renewal, enhancement, rescheduled / restructured, Excess over Limit, Temporary
Extension).

7.2 - CAD’s’ Role

 Only CAD is authorized to issue DACs in Corporate, Commercial, SME and Agriculture (Non-
Gold) finances. Regional / Corporate CAD shall proceed for issuance of Disbursement
Authorization Certificate (DAC) only after satisfaction with respect to the completeness and
ensuring Perfection (through BLA) of documentation formalities and compliance of all the
terms & conditions in line with Sanction Advice.

 Regional / Corporate CAD shall not issue Disbursement Authorization Certificate (DAC)
unless & until all the required documents are in place, and all outstanding
issues/discrepancies are resolved. However, in certain cases if some requirements are
outstanding, DAC may be issued provided that deferral from competent authorities is in
place.

7.3 - Key Guidelines

 In cases, where approvals have been granted for disbursement in more than one tranches,
separate DACs shall be issued for each tranche, after confirmation regarding satisfaction of
requirements from the RH / CH or delegates as mentioned in Sanction advice / relevant
product policy.

 Head Documentation Unit and RM/CM CAD shall sign the DAC evidencing the review of
security & financing and other documents. In absence of RM/CM CAD, the acting RE / CM
CAD shall sign the DAC.

 Cases of unauthorized disbursements, without issuance of DAC, if found, shall be considered

as serious violation and shall be treated in accordance with Bank’s Disciplinary Action Policy.
If Regional / Corporate CAD becomes aware of any such instance, limit shall immediately be
blocked, where the system allows, otherwise Regional / Corporate CAD will advise RH / CH
to stop debit operations in the account under advice to CAD, H.O. Upon satisfactory
compliance, the limit shall be unblocked by Regional / Corporate CAD; otherwise Regional /
Corporate CAD shall advise RH/CH to unblock the account.

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7.4 - Procedural Guidelines

1. Regional / Corporate CAD shall proceed with Issuance of Disbursement Authorization

Certificate (DAC) only after completion of all documentation formalities and compliance of
the terms & conditions/covenants of the Sanction Advice.
2. Before the issuance of DAC, the validity of the FOL shall be ensured by the Regional /
Corporate CAD. Regional / Corporate CAD shall not issue DAC against expired Facility Offer
Letter (FOL) as required by the Credit Policy.
3. Two officials from Regional / Corporate CAD (including RM/CM-CAD) shall sign the
Disbursement Authorization Certificate (DAC) on Format 2, evidencing the review of
documents.
4. Original Disbursement Authorization Certificate shall be handed over to BM / RM while its
photocopies shall be retained in Customer Credit File and in vault along with facility &
security documents.
5. RM/CM-CAD shall not issue DAC against partial or incomplete documents, except where
formal deferrals duly approved by Competent Authority are provided.
6. In instances, where expiry dates of approved deferrals, insurance policies etc., are prior to
the expiry dates of the corresponding limits, Conditional DACs shall be issued with expiry
date whichever comes first. If the satisfactory compliance is not made till the expiry date of
Conditional DAC, then Regional / Corporate CAD shall block the limit or intimate RH/CH for
blocking of limit as the case may be. In case of temporary extension, Regional / Corporate
CAD shall allow operations in the account, as per approval, in line with the guidelines as
provided in the relevant sections of Credit Policy.
7. After issuance of DAC, all its particulars shall be entered into chronologically maintained
‘DAC Issuance Register’ (Attached format 4)
8. For authorizing Temporary Extension, Format # 7 shall be used. The 'DAC #' in the referred
format shall be marked as follows.

XXX/A, if TE is allowed for the first time.

XXX/B, if TE is allowed for the Second time.
XXX/C, if TE is allowed for the third time.

Where, XXX represents the DAC number initially allotted to the regular limit.

Note:
For Corporate accounts, CAD shall also jointly sign No Objection Certificate (NOC) along with
Business, for creation / enhancement of charge(s) already held as collateral by the Bank, as per
approval.

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ACTIVITY 8 - CUSTODY OF DOCUMENTS / SHADOW CREDIT FILES

8.1 - Activity Description

This activity ensures that all original security and finance documents are kept in the Vaults.
However, in certain regions where vaults are not available with Regional / Corporate CAD, such
documents shall be kept in fireproof almirahs. All aforesaid documents shall remain under the
dual control of credit administration officials. Maintenance of Safe in / Safe out Register for
documents is also an important aspect of this activity in order to keep track of their movement.

8.2 - CAD’s Role

CAD has been vested with the responsibility of safe keeping of security/finance documents.

8.3 - Key Guidelines

 CAD shall act as a custodian of all security and finance documents.

 Any movement of documents in and out of the vault shall be properly recorded in Safe-in /
Safe-out register (Format 18)

 Keys of the vault shall be in dual control under the custody of two officials of respective
Regional / Corporate CAD (with one being RE / CM-CAD). Under no circumstance, shall the
documents be kept outside overnight.

 Physical checks on security documents shall be conducted on a regular basis to ensure that
all the documents are intact.

 Documents requiring Temporary Release by BM / RM shall be duly approved by Regional

Heads / Regional Corporate Heads clearly mentioning the return dates, along with reasons
thereof. In cases where the documents are required by BLA, the release shall be authorized
by Regional / Corporate CAD duly stating reasons for the release. Acknowledgement for
receipt in original shall be obtained thereon.

8.3.1 Maintenance of Shadow Credit Files

Maintenance of shadow credit files is an important function of the Credit Administration

process. Copies of Credit files containing pre-sanction CAD related documents & other relevant
records submitted to the Bank by the Borrower shall be maintained by Regional / Corporate
CAD.

 There shall be a separate shadow credit file for each Customer.

 These files are confidential in nature and must be kept locked in CAD’s custody, when
not in use.

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 Credit files are never to be removed from Bank premises unless the account is
terminated and stipulated retention period as per the Bank’s policy is over when they
will be sent for storage in the Bank’s Godown.

 Updating of shadow credit files is essential to ensure that required information is

easily traceable and maintained in good order.

8.3.2 Entry in Safe-In Safe-Out Register

After issuance of Disbursement Authorization Certificate, (amount, date, description) of all

documents shall be entered into ‘Safe-In Safe-Out Register’ (Format 18)

8.3.3 Signature in Safe-In Safe-Out Register

Head of Documentation Unit along with RE / CM CAD shall place their initials on the folio of
‘Safe-In Safe-Out Register’ (Format 18) as an evidence of having safely kept the documents in
fire proof almirahs / Vault.

8.3.4 Safe Keeping of Documents

1. Upon receipt, security documents shall be labelled / tagged with DCL number confirming
that they have been entered in the Document Checklist so that these may be accurately
identified and readily retrieved.

2. Regional / Corporate CAD shall scan these documents and save these scanned files to
relevant Customer folders in Computer Hard Disk. As a precautionary measure, Back-up of
the same files shall also be copied on External Hard Drive, to be kept in Fire Proof Cabinet
/ Vault. The back-up of all such files shall be made on quarterly basis.

3. Once scanned and recorded, these documents shall be lodged in safe custody under dual
control of two CAD officials.

4. The Scanned files of financing and security documents shall be provided to the BM / RM
for their record, back-up and Audit purposes. In case, it is required to review the original
documents by internal, external auditors and SBP / Regulatory bodies, shall be coordinated
with relevant CAD office.

5. DCL duly signed jointly by BM / RM & Regional / Corporate CAD (evidencing that all the
requirements were complied with) shall be kept in the credit file as evidence of lodgement
of documents.

6. Same DCL shall be updated at the time of receipt of new documentation for which deferrals
were earlier approved (with receiving dates).

7. Copy of jointly signed DCL shall also be provided by Regional / Corporate CAD to BM / RM
for their record.

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8. Any movement of documents in and out of the vault shall be properly recorded in Safe-in
/ Safe-out register.

9. Fresh executed documents after entry into register are packed in envelop. Customer Name,
DAC number and documents description is written on envelop. This envelop is then kept
in the Security Bag of respective customer. Security Bags of all customers are kept in fire
proof vault.

8.3.5 Custody of Keys

Each lock of the vault has two keys. Master keys of each lock shall be kept with RE / CM - CAD
and other key shall be with Head of Documentation Unit. Only RE / CM - CAD and Head
Documentation Unit shall be authorized for the movement of the documents.

A register of all important keys should be maintained in all Regional / Corporate CAD offices.
The register will show original and duplicates keys existence and where they could be found
along with the movement which must be initialed by dual custodians i.e. Head Documentation
Unit and RE / CM CAD.

Important keys along with the duplicates shall be denoted as:

 Keys of Strong Room

 Fire proof Cabinets containing Security and Finance documents

The keys shall remain in custody of the entrusted officials. In case of annual leaves /
incapacitation for duty and emergencies, the custody of keys shall be delegated temporarily to
responsible officials during the period.

In the absence of Head Documentation, the RE / CM CAD shall authorize senior most personnel
to perform the assigned duties. However, in absence of RE / CM CAD, the officiating personnel
shall be delegated the custody of keys, subject to approval of CAD, H.O.

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8.4 - Contents of Security Documents & Shadow Credit Files

Documents to be maintained in Fire Proof Almirahs (in Relevant Customer Pouches)

Please note that the below mentioned list is not exhaustive and shall vary from case to case:

1. Finance / Control Documents

a) Finance Agreement
b) Demand Promissory Note
c) Personal Guarantee / Corporate Guarantees
d) Direct Debit Authority
e) Letter of Disclaimers
f) Letter of Continuity (if any)

2. Security Documents
a) LOH: Letter of Hypothecation
b) MOTD: Memorandum Deposit of Title Deeds
c) Mortgaged Deed
d) LOP: Letter of Pledge
e) LOL: Letter of Lien
f) Charge Registration Certificate (CRC) with form 10 / form 16
g) Insurance Policies &Premium Payment Receipts (PPR)
3. Title Documents and Corroborative documents
a) Chain of Title Documents / Lease / Sale / Gift deeds etc.
b) Mortgage Deed
c) PT-1 / PT-10
d) Demarcation Certificate
e) Approved Building Plan
f) Approved SITE Plan
g) Other documents as mentioned in Legal Opinion.
h) Genuineness certificate on property
i) Original lease deed/ sale deed/conveyance deed/ gift deed etc.
j) Certified copy of ownership mutation
k) Previous title documents (if any)
l) Fard Jamabandi / Records of Rights
m) Non-encumbrance (NEC) / Search Certificate
n) Permission to mortgage /NOC
o) Fard with noting of Bank’s Charge/ Records of Rights
p) Certified copy of mutation / Naql-e-Inteqal (Bank’s Charge)
q) Certified copy of Form PT-I (Bank’s Charge)
r) Lien marking in the records of concerned Land Authority

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s) MODTD signed by mortgagor(s)

t) Aks Shajra
u) Attested copies of CNIC of the Mortgagor(s)

4. Documents to be maintained in Shadow Credit Files (photocopies)

a) Sanction Advice / Accepted offer letter / Deferral Approvals / Exception /
Waivers7 etc.
b) BBFS & Loan Application form (LAF)
c) Latest ECIB
d) Latest Financial Statements
e) Undertaking for appropriate utilization of funds
f) Board Resolution
g) Constitutional documents (e.g. Memorandum & Article of Association/
Partnership Deed / Govt. Charter / Trust Deed etc.)
h) Form A / 29
i) Certificate of Incorporation
j) Certificate of Commencement of Business
k) Search Report
l) Valuation reports
m) Inspection/visit report
n) Legal Opinion / Perfection Certificate / Genuineness Certificate
o) Stock Reports

7
Waivers are defined as absolute exemptions from competent authorities and do not require follow-up.

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 CAD Manual

ACTIVITY 9 - LIMIT & DATA FEEDING

9.1 - Activity Description

It is important that information in the system is accurately and timely fed for effective credit
monitoring and extraction / generation of accurate reports / information.

As part of on-going initiatives by CAD to automate the credit administration activities and to
make it more and more system based, key guidelines relating to input of limit, relevant data
feeding and collateral management are being redesigned along with the functionalities of the
system.

9.2 - CAD’s Role

 CAD has been vested with the responsibility of feeding of limit in the system.

 In order to bring uniformity across the bank, CAD is made responsible for feeding of related
facility information, relevant limit management aspects and collateral details in the system.

9.3 - Key Guidelines

 Regional / Corporate CAD shall enter Limit Plan, collateral details8 etc. in the system w.r.t
the credit facility(ies) for which DAC is issued by CAD.

 RM/CM CAD shall authorize / supervise every entry for dual control under maker-checker
concept. (where available in the system).

 Regional / Corporate CAD shall ensure that the correct and relevant data is fed into the
system with respect to limit plan. Further, during the process if CAD identifies any erroneous
data already fed in the system, should highlight the same to the relevant quarters for the
data cleansing.

 No debit operations shall be allowed in the accounts after expiry of limits, unless approval
from Competent Authority is in place and requisite documents (Supplemental agreement)
and formalities have been completed

8
These functions shall be performed at the Regional / Corporate CAD offices where appropriate functionalities in
the system (CBA/ Profile / Theta) and infrastructure is made available for carrying out such activities.

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PART B: POST DISBURSEMENT

FUNCTIONS

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 CAD Manual

ACTIVITY 10 - CAD TICKLERS

10.1 - Activity Description

This activity deals with the preparation & analysis of the Periodic reports through standard CAD
ticklers. The observations identified are meant for concerned Business Groups and relevant
quarters for taking appropriate actions for resolutions.

10.2 - CAD’s Role

 CAD shall have a vigilant eye and keep relevant groups informed through periodic monthly
reports (CAD MIS Ticklers).

 Regional / Corporate CAD shall follow up with RH/CH for resolution of the matters
highlighted in the monthly MIS Ticklers on timely basis.

 Regional / Corporate CAD shall prepare and consolidate the Monthly statements of their
respective regions and convey the observations/concerns to respective Regional Heads /
Regional Corporate Heads for appropriate actions at their end with copy of all Tickers to CAD
(HO) on monthly basis. These MIS Ticklers are as follows:

1. Excess over Limit (Refer Activity # 10.4)

2. Limit Expiry (Refer Activity # 10.5)
3. Past Due Obligation (Refer Activity # 10.6)
4. Temporary Extension (Refer Activity # 10.7)
5. Deferral Expiry (Refer Activity # 10.8)
6. Re-Valuations (Refer Activity # 10.9)
7. Insurance Expiry (Refer Activity # 10.10)
8. Pledge Management Report (Refer Activity # 10.11)
9. Pledge site visit Report (Refer Activity # 10.12)
10. Pending Hypo Stocks/Receivables Report (Refer Activity # 10.13)
11. Limit Blocking Report (Refer Activity # 10.14)
12. Summary of DACs Issued, Counter Verified and Unauthorized Disbursement(s)

 The above-mentioned MIS Ticklers shall contain information pertaining to Business

segments including Corporate, Commercial, Medium Enterprises, Small Enterprises and
Agriculture Finance (Non-Gold). The status of these accounts shall continue to be reported
till one year from the date of respective limit expiry. Thereafter, the account shall be
excluded from reporting in these ticklers, otherwise, specifically mentioned in the detail of
each statement.

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10.3 - Key Guidelines

 The key purpose of the above-mentioned MIS ticklers is to update relevant quarters (RH /
CH) regarding the status of the credit portfolio and outstanding matters which requires
resolution.

 Respective RH/CH, on receipt of periodic MIS Ticklers (Annexure D), shall immediately act
for early resolution, disposal & rectification of any irregularities & discrepancies.

 Regional / Corporate CAD to follow up with RH/CH for resolution of the matters highlighted
in the monthly MIS Ticklers on periodic basis, while it would be the responsibility of RH/CH
to ensure the resolutions through customer/BM/RM (as the case may be).

 Regular updates on issues highlighted in the form of summary reports are provided by RE /
CM CAD to Divisional Head, CAD at Head Office. CAD (HO) shall inform the irregularities to
Groups including, but not limited to Business Groups and CMG at Head Office with copy to
the Group Chief RMG (for information, where necessary)

 Divisional Head, CAD shall escalate the unresolved matters to Group Chief / higher
management including Credit/ Management Committee, where deemed necessary.

10.4 - Excess over Limits (Tickler D-9)

 This activity deals mainly with the proper control of all credit accounts facilitated under
various modes of finance, where outstanding is in excess of the allowed limits.

 Excess Over Limit (EOL) shall only be allowed to customers after obtaining prior approval
from Competent Authority having proper documentation as well as written authorization
from CAD.

 CAD has been vested with the responsibility of monitoring adjustment of EOL. In case EOL
remains unadjusted, the facility limit shall be blocked (refer Activity # 14) on account of
expired EOL. Once adjusted, limits shall be unblocked by CAD. The status of adjustment of
EOL as of the due date shall be reported to CAD (HO) on monthly basis. (Please Refer Tickler
D-9)

 Regional Head / Regional Corporate Head shall arrange for regularisation of EOL.

 No EOL shall be allowed without authorization of CAD

 All Overdue EOLs shall also be reported in the PDO Report.

 In case any unauthorized EOL is identified (on post facto basis), the matter shall be referred
to RH / CH for taking necessary action against the delinquents (if applicable) with a copy to
CAD (HO).

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10.5 - Limit Expiry (Tickler D-5)

Regional / Corporate CAD shall advise the expired as well as to be expired limits (expiring within
next three months) to Regional Head / Regional Corporate Head for renewal / adjustment (as
the case may be) and its follow up on monthly basis through CAD tickler (Tickler D-5). The Tickler
shall also contain information of those accounts where DACs have been issued or otherwise
pending after sanction / approval.

10.6 - Past Due Obligations (PDO)

The purpose of this exercise is to identify any irregularities with respect to non-receipt of
principal, instalment or mark-up on due date, enabling business managers to expedite recovery
measures and preventing the account from falling into classification status.

Loans and advances are Past Due if:

1. Any principal, instalment or mark-up amount not received after the due date.
2. Excesses over limit remained unadjusted after the time-period allowed.

Regional / Corporate CAD has the responsibility to consolidate all the PDO (Past Due Obligations)
at their level from respective Branches and furnish the same to Business Units for remedial
actions. (Please Refer Tickler D-3) till the time, the correct information is generated through
system.

10.7 - Temporary Extension

The practice of allowing operations in previously approved limit for specific number of days after
expiry (90 Days Maximum) is referred as Temporary Extension. Regional / Corporate CAD shall
maintain record of all Temporary Extensions (on Tickler D-5) authorized by CAD after issuing
DAC for Temporary Extension.
The Regional / Corporate CAD shall also remind BM / RM for renewal or adjustment of limits
where temporary extension has been expired through MIS Tickler D-5 with a copy to CAD (HO).
10.8 - Deferral Expiry
In case of any deferral allowed for completion of documentation formalities on post sanction
basis, Regional / Corporate CAD shall diarize the respective due dates of each deferral. Regional
/ Corporate CAD shall also follow up with Business units on monthly basis w.r.t all outstanding
deferrals allowed through Tickler D-2 with a copy to CAD (HO).

10.9 - Re-Valuations
Regional / Corporate CAD shall ensure that collaterals are revalued after every three years from
the previous valuation date. Accordingly, CAD shall prepare a report as per tickler D-8 and
furnish to RH / CH for making necessary arrangement for valuation through CAD.

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10.10 - Insurance Expiry (Tickler D-7)

Regional / Corporate CAD shall record the expiry dates of all the insurance policies submitted to
CAD at the time of issuance of DAC and during the currency of limits for the securities held. The
CAD shall intimate the Business units w.r.t the status of expired and to be expired (by end of
next month) on Tickler D-7, with a copy to CAD (HO).
10.11 - Pledge Management Report (Tickler D-4)
Regional / Corporate CAD shall prepare pledge management report on Tickler D-4 containing
details of active9 pledge sites having description of stocks pledged, principal outstanding,
drawing powers shortages, shortfall if any etc., and communicate the observations to the RH /
CH for resolution and necessary actions with copy to CAD (HO).
10.12 - Pledge Site Visit Report (Tickler D-1)
Regional / Corporate CAD shall prepare Report based on all the pledge sites visited (regular as
well as classified accounts) during the month by CAD staff. The finding observed at pledge site
shall be communicated to RH/CH, BM/RM and Mucaddam companies (as the case may be) with
copy to CAD (HO).
10.13 - Pending Hypo Stocks/Receivables Reports (Tickler D-10)
Attested copies of Stock reports for all finances against hypothecation of stocks and receivables
(SL-5)10 shall be submitted to Regional / Corporate CAD on monthly basis by BM / RM enabling
them to keep the track of all pending reports through CAD MIS Ticklers. (Tickler D.10).
The statement containing details of all such delinquent customers shall be communicated to RH
/ CH on monthly basis for necessary action at their end.
10.14 - Limit Blocking Report (Tickler D-6)
Regional / Corporate CAD shall prepare a report highlighting instances where limits were
blocked / advised to be blocked during the month and therebefore. The blocking of limit shall
be done instantly or as advised in Activity # 14, however, consolidated report shall be prepared
on monthly basis and communicated to the Regional / Corporate Head for necessary action,
with copy to CAD (HO).

10.15 - Summary of DACs Issued, Counter Verified and Unauthorized Disbursement(s)

(Tickler D-11)
Regional / Corporate CAD shall prepare a report on monthly basis containing the summary of
number of DACs issued and counter verification of DACs (issued by Branch Managers), during
the month.

9
Active Pledge sites refers the pledge sites of regular accounts and the accounts that remains unadjusted for the
period of three years from the date of respective limit Expiry.
10
SL-5 may contain the detail of securities hypothecated with the Bank including raw material to finished goods,
goods in transit, receivables, plant & machinery and details of borrowings from other Banks (if any) etc.

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The RE / CM CAD shall analyse the statement and take up the matters regarding disbursements
made without issuance of DAC (unauthorized disbursement where identified), decline in counter
verification of DACs etc. with concerned Regional / Corporate Heads with copy to CAD (HO).

The format of above mentioned Ticklers can be modified based on the requirements arising from
time to time or any shortcoming identified by Auditors / Regulators etc. duly approved by
Divisional Head – CAD.

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 CAD Manual

ACTIVITY 11 - COLLATERAL MANAGEMENT

11.1 - Activity Description

Collateral is defined as a security that is provided by the borrower for the value of loan, including
but not limited to the following:

 First exclusive charge, senior to all other lenders

 First pari-passu charge (where the prior charge holders, by issuance of No Objection
Certificates (NOCs).
 Inferior charge
 Floating charge
 Lien on Cash Deposit/Term Deposits
 Pledge and exclusive charge (which confers physical possession of assets)
 Pledge of marketable securities such is TFC’s, GOP bonds, shares etc.
 Equitable and /or Registered mortgage of industrial, commercial residential properties
etc.
 Standby letter of credit
 Bank guarantee
 Corporate or personal guarantees

11.2 - CAD’s Role

The details of CAD related collateral management aspects have been elaborated in the following
sub-sections.11

11.3 - Key Guidelines

 Updating / Feeding of Drawing Power in loan accounts and issuance of Delivery Orders shall
be performed by CAD12

 Any mismatch between the maturity/expiry date of collateral document with the limit expiry
date shall be reviewed by Regional / Corporate CAD before issuance of DAC.

11
CAD is in process of development of Collateral Management system (CMS) in collaboration with ITG. Once CMS
will be developed and rolled out, there may be some change in the procedures related to CAD which will be updated
at later stages.
12
Please note that due to I.T. Limitations vis-à-vis Collateral Management system, DP and DO issuance activities will
continue to be performed by Branches as per CPM / SPM. The matter has been taken up with ITG and no sooner
this functionality is developed in the system, CAD will take over this function.

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 Any additional collateral taken as extra comfort shall not be factored into the drawing-power
calculation unless specifically mentioned in the approval.

11.4 - Pledge of Shares

The role of CAD w.r.t pledge of shares is covered as follows

 A pledge account (Sub-Account) will be opened under NBP main CDC Account by FCD
and shares will be deposited into the pledge account by the customer.
 In case of third party pledge of shares, the Memorandum and Articles of Association shall
be checked for powers vested in the company to secure the debts of a third party.
 The company’s Board Resolution should also be obtained which authorizes the pledge of
the company’s assets with bank in favour of the third party (the borrower).
 Before disbursement a statement from FCD shall be taken confirming that the shares
have been pledged with NBP.
 FCD shall provide CDC statements of all pledged shares to CAD, HO on monthly basis CAD
HO shall consolidate these statements and disseminate the same to all relevant regions
and corporate offices for monitoring purposes.
 Regional / Corporate CAD shall monitor the margin against shares held as primary
security, fortnightly against the closing price and shall advise the business unit for taking
appropriate action including margin calls (where required).
 The release of Pledged shares shall be made after approval of the same from the Business
(RH/CH) is provided to Regional / Corporate CAD. The Regional /Corporate CAD following
the procedure as defined in Chap 13.5 shall request CAD(HO) for the release of shares
through NBP CDC account at FCD.

11.5 - Visit of Pledge Stocks / Sites

Financing against pledge of stocks becomes very risky, if effective monitoring mechanism is not
in place. To avoid any untoward situation, it is necessary that visits are carried out in an
organized manner as per four eye concept to safeguard the interest of the Bank. Following layers
for pledge monitoring shall be in place to suffice the purpose:

 Credit Administration (CAD)

 Credit Monitoring (CCMW – CMG) on need basis
 Branch Manager or delegate official(s) shall visit twice during the currency
preferably once in each half year.
 External / Outsource inspection of Pledge Stocks.

Following are the procedural guidelines for the visit of Pledge sites
1. CAD shall arrange/conduct the visit of pledge sites, through CAD staff and PBA approved
outsourced surveyors / evaluators (on need basis), once in every two months for regular
accounts.

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2. CAD shall inspect the expired pledged accounts as follows:

 Once after expiry of facility before Substandard.
 Once after account is classified as sub-standard before Doubtful
 Once after account is classified as Doubtful before Loss
 Once in every year after Loss classification till the account is transferred / tagged
to ARG.
 Once the account is transferred / tagged to ARG, monitoring of the account
including the pledge site shall not be the responsibility of CAD.
3. Outsourced inspections shall be carried out through surveyors/evaluators on PBA
approved panel certifying the quantity, quality and value of stocks (Including fumigation,
rodent control, aging and sub type of commodity etc. requirement where necessary).
Charges of outsourced stock inspection shall be borne by the Customer.
4. For each outsource inspection, prior permission of CAD (HO) shall be sought by RE / CM
CAD. However, in case of extreme emergency the Regional / Corporate CAD shall arrange
for internal / outsource inspection and take post facto approval from CAD (HO).
5. Observations identified by the outsourced inspectors shall be escalated to relevant
quarters with copy to CAD (HO).
6. The report of outsourced inspection, in original, shall be kept in record by CAD.
7. RE / CM CAD shall ensure that Outsource Inspector shall not represent the same
company or any of its associated company of the Mucaddam deployed on the respective
pledge site.
8. At the time of taking custody of first pledge, CAD shall arrange for the visit of stocks
/pledge site through Mucaddam Supervisors.
9. In cases where pledge sites are located in regions other than where account is parked,
the Regional / Corporate CAD of the region, where account is parked, will request to
Regional / Corporate CAD of the region where pledged site is located for conducting
mandatory site visits of the pledge sites with copy to CAD (HO). The visiting officials will
submit the reports to requesting Regional / Corporate CAD for further actions at their
end after retaining a copy for the record.
10. The visiting officials shall submit the report to the requesting Regional CAD for further
actions at their end.
11. Any irregularity / observation of serious nature, if noted during the visit, shall be referred
to RH/CH as well as BM/RM on immediate basis for their information and for taking
remedial action.
12. All site visited by Regional / Corporate CAD officials shall preferably be approved from
CAD (HO) prior to the visit. However, on need basis, the approval shall be obtained on
post-facto basis.

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Pledge site visit reports (Format 9) shall contain the following information, at the minimum:
 Stock details/description of Items/category wise break-up of the values
 Condition of stocks including quality, spoilage, in heaps, spilling, unpacked on floors
etc. shall be reported under general observations.
 Condition of warehouse such as proofing for dampness & leakages, proper
ventilation and adequate electrical installation (as the case may be) etc. shall also be
reported in relevant heading of General observation w.r.t godown.
 Adequacy of fire protection devices
 Watch and ward arrangement at warehouse
 Goods pledged with different banks shall be properly segregated and marked
accordingly. The stocks pledge in godowns on sharing basis, must be approved in
Sanction Advice.
 Stocks Pledged in EB-4 godown cannot be under lock and Keys
 Signboards of the Bank are displayed prominently at the warehouse.
 Report confirms that stocks are stacked in a countable manner and stack charts are
attached to each lot.
 Report confirms that bin cards are properly placed.
 Report shall contain the status of commodities as per Branch Books, Mucaddam
Register and stocks available at site. The report shall also contain unit rates, margin
amount as well as Drawing powers based on the availability of stocks at site.
 Any other observations.
 Regional / Corporate CAD shall arrange filing of all pledge site visit reports and safe
keeping for record purpose.
 To ensure the adequacy of quantity as well as quality of pledged stocks shall be the
responsibility of Bank’s approved Mucaddam company, however, Bank’s officials
visiting the pledge site shall also review the same on random basis.
 Ensuring that proper registers and records are maintained by Mucaddam
 The visit conducted previously by Mucaddam supervisor shall also be noted by CAD
staff.
 The quantity of stocks shall be tallied with bank’s records and Mucaddam register.
 Any irregularity / observation of serious nature, if noted during the visit, shall be
referred to all relevant authorities on immediate basis for their information and for
taking remedial action.

Precautions

[Link] Guidelines for Maintenance of Godown

The Mucaddam company shall submit their Godown Certificate (Format 17) to the Regional
/ Corporate CAD w.r.t. the following condition at the time of taking over the pledge site. The

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godown conditions shall also be ensured and duly recorded by BM / RM during their call visits.
Moreover, condition of godown shall also be confirmed by CAD on best effort basis.
 Godown is not inside shop or residential premises.
 Godown is not located in low-lying area with river banks and canal nearby.
 Godown has an easy approach to road / internal roads.
 Godown has arrangements for easy loading and unloading of stocks.
 Godown is secured having no unauthorized access / intrusion through any other
godown(s) / Mill Area.
 Godown has drainage arrangements
 Effective firefighting arrangements in place at godown
 There is a watch and ward arrangements at godown from theft, burglary etc.
 Roof of the godown is water proof / sufficiently strong (without leakages) to protect
from rain, weather effects etc.
 Godown is dry and has satisfactory flooring with no moisture / dampness.
 Godown has proper ventilation arrangements with no apertures having protection
from birds, rodents etc.
 All the doors of godown are strong enough (not easily breakable) and can be secured
through lock and key arrangements.
 Appropriate arrangement for placement of Goods on elevated position (e.g. blocks,
planks, boards, metals, plastic bracing etc. used in securing goods) is in place.
 Godown must be of adequate capacity mentioning the parameters of the godown
(i.e. length, breadth, height) where goods are to be stored and visits can be done
conveniently after storage.
 The godown can be sealed for effective fumigation etc.
 Godown is not shared for storage of stocks pertaining to other Banks / Customer.

[Link] Open Pledge / Seasonal Financing

Open Pledge shall only be accepted in case it is explicitly mentioned in Sanction Advice /
Seasonal Policy.

[Link] General Conditions for Open Pledge

 Stocks are kept in open area within the Mill’s / Factory boundary wall on elevated
platform (e.g. thallas etc.) under the Bank’s appointed Mucaddam’s supervision with the
main gate remaining secured under lock and key.
 Pledged goods shall be kept in clearly segregated storage place from any other goods or
any other party. The area where the goods are stored should be identifiable & cordoned
off by some reasonable means in such a manner that they cannot be confused with goods
of any other Bank / Customer.

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 The segregated area should have limited entry and exit points, and they should be under
control of the Mucaddam.
 Sign posts communicating the pledge of the bank are in place.
 Goods shall be under the round the clock watch and ward arrangement of the Bank’s
appointed Mucaddam or Bank’s staff as per Bank’s Policy in this respect.
 The goods are stored in a manner that they are fully protected from damage and
deterioration due to being stored in open for e.g. covered with shed/tarpaulin.
 The employees of the Mucaddam are vigilant in supervision of the goods.
 Confirmation from the Mucaddam is available about the quantity of goods under his
control.
 All conditions regarding storage etc. stipulated in the insurance policy are complied with.

11.6 - Joint Inspection

In case of syndicate / consortium financing / multiple creditors, joint inspections are mandatory
in line with SBP Prudential regulation (PR-5) which is mentioned bellow. The CAD official, upon
intimation from the Business shall accompany for the site inspection.

PR No. R-5 of Corporate/ Commercial issued in 2014 by SBP requires as under: -

1) All the banks/DFIs financing any particular customer against pledge of stocks of below
mentioned commodities shall conduct joint inspection of the pledged stocks at least once in
a quarter, where aggregate exposure against such stocks equals or exceeds the amount
shown against each commodity

Aggregate Committed Exposure (Rs. In

Commodity
Million)
Cotton (bales), excluding Phutti 500.00
Sugar 500.00
Wheat 250.00
Edible Oil 250.00
Rice/Paddy 150.00

The bank/DFI with the largest committed exposure (limit) shall act as the lead bank/DFI to
coordinate the quarterly joint inspection. In case two or more banks/DFIs have the same
level of highest committed exposure, they shall mutually agree on which bank/DFI to
assume the responsibility. The lead bank/DFI once selected shall perform coordination for
one year and subsequently transfer the responsibility if, during the one year period, some
other bank/DFI commits the largest exposure. In case of syndicate financing against pledge
of stocks, the agent bank/DFI shall act as the lead bank/DFI for coordinating the quarterly
joint inspection.

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2) The Borrower’s Basic Fact Sheet (BBFS) shall serve as the main source for obtaining
information on exposures committed by the banks/DFIs against pledged stocks for any
customer. Any bank/DFI taking exposure on a customer against pledge of stocks shall inform,
after seeking prior written consent from obligor as per law, about the same to all the
banks/DFIs already financing that customer, within five working days of the credit approval.

3) The Business shall be responsible to act as a Coordinator to deal with other banks as well as
Borrower.

4) The Business shall provide data to their respective Regional / Corporate CAD regarding
customers where financing by other banks is also involved, clearly specifying where NBP is
the largest shareholder as and when the facility is sanctioned. An MIS shall be maintained
by Regional / Corporate CAD w.r.t. sites eligible for Joint inspection on Format 19.

5) Regional / Corporate CAD shall follow-up with BM/RM for scheduling and coordinating with
other Banks and borrower for joint inspection.

6) The date finalized for joint inspection shall be communicated to CAD, at-least 2 working days
before the actual inspection date.

7) The CAD official shall accompany Business Group representative, on their request, in the
joint inspection of the pledged site.

8) Where NBP is a minor shareholder, Business shall communicate the same to CAD where joint
inspection is scheduled by other Bank well before in time.

9) A joint inspection report shall be signed by all participating Banks officials.

10) The joint inspection participated by CAD shall suffice the purpose for regular inspection to
be conducted by CAD, once in two months. Therefore, CAD shall also prepare visit report on
Format 9 as per procedure defined.

11) The finding of the inspection shall be sent to all concerned quarters with copy to CAD (HO).

12) The inspection report shall be kept in a separate file maintained exclusively for joint
inspection.

11.7 - Shortages in Pledged Stocks

a) BM / RM / Regional / Corporate CAD shall be informed by concerned Mucaddam in case any

shortage occurs due to unauthorized/forced lifting, theft, pilferage etc.
b) Shortages can also be detected during visits of pledge sites by Regional / Corporate
CAD/BM/RE Business or any other Bank official.

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c) On receipt of information of shortage, immediate visit of the pledged site shall be

undertaken by Regional / Corporate CAD with Business & CMG representatives jointly and
shall be reported to CAD, Head Office on immediate basis.
d) Regional / Corporate CAD shall take up the matter with Mucaddam and respective Regional
Head / Regional Corporate Head enabling business to expedite recovery process.
e) The concerned Business Group shall endeavour to recoup the identified shortage within 02
working days of identification, failing which Regional / Corporate CAD shall block the limit of
the delinquent, where the system allows, otherwise CAD shall advise RH/CH to stop debit
operations in the account and keep follow-up with the concerned quarters. Upon
satisfactory compliance, the limit shall be unblocked by CAD; otherwise shall advise RH/CH
to do so.
f) Where, all the recovery efforts are exhausted and customer fails to discharge its liabilities
towards the Bank / regularize the position, Business shall initiate legal proceeding against
the Borrower including, but not limited to, filing of F.I.R (through Mucaddam being followed-
up by Regional / Corporate CAD), lodgement of criminal complaint and / or filing of recovery
suit as per Bank’s Policy.
g) If the lifting is found to be with connivance of Mucaddam staff, the matter shall be handled
in line with the Mucaddam policy for appropriate action.
h) If shortage is not made good within 02 working days of the event, RE / CM CAD shall
immediately report the same to Compliance Group (HO) through CAD (HO) for necessary
action at their end.

11.7.1 Precautions

Fumigation of Pledge Stocks: -

Fumigation is an essential exercise conducted invariably by all the borrowers as and
when required. Further, the need of fumigation if identified during the visit by Bank
officials / Mucaddam / Outsource evaluators, the Borrower shall be pursued for
carrying out fumigation.
To mitigate the possibilities of shortage during the period of fumigation the following
procedures shall be adopted:
 The BM / RM shall obtain written request from the borrower with regards to
fumigation of pledged stocks.
 The BM / RM shall accord permission for the fumigation of stocks with the
following condition:
o Obtain undertaking on Stamp Paper from the borrower as per the format 23
o Obtain Pre & Post fumigation stocks report of respective Mucaddam
company.
 The approval of fumigation granted by BM / RM shall also be shared with CAD &
RH / CH before fumigation.
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 During the fumigation period, the adequacy of stocks could not be verified
physically, as such the concerned Bank officials including BM / RM & CAD shall
keep close contact with the Borrower and Mucaddam, respectively for reopening
of pledge site or any other updates.

11.8 - Fire Incidence

In case of fire at pledge site, the Mucaddam shall immediately report to the respective Regional
/ Corporate CAD and BM / RM. Following steps shall be taken:

1. Regional / Corporate CAD shall immediately take up the matter with respective
Branch & Regional/Regional Corporate Head for necessary actions with the
concerned quarters i.e. Insurance Co / Borrower etc. for claim
lodgement/settlement, recovery etc., while keeping CAD, HO in loop.
2. Concurrently a joint visit of the pledged site by Regional / Corporate CAD and
nominated officials from business shall be carried out and visit report in this
respect shall be immediately sent to all concerned authorities at HO including
RH/CH.
3. The possible scenario for recovery in such cases may be as following:
a. Follow up with the Insurance Company for claims
b. Replacement of Goods / Pledged stocks up to the Bank’s Exposure
including Margin etc.
c. Cash Recovery
4. All fire incidents will be treated as shortages and will be reported to compliance
as per the procedure defined in Activity # 11.7.

11.9 - Shortfalls in Pledged Stocks

In case of identification of shortfall by Bank’s officials involved in relevant monitoring function,

the same shall immediately be reported to RH / CH for pursuing the Borrower for making good
of the shortfall either through top up of security and/or cash recovery. In case of non-
regularization of situation, the matter shall be dealt in accordance to the Bank’s credit policies.
Meanwhile Regional / Corporate CAD shall also take CAD (HO) in loop.

11.10 - Hypothecation of Stocks

1. Every customer availing credit facilities against hypothecation of stock / receivables submits
position of its stocks / receivables to the BM / RM as per approval.
2. Copy of the Stock report submitted by the customer, duly verified by BM / RM along with
outstanding amount specified as of the date of the report shall be furnished to Regional /
Corporate CAD enabling to keep track of non-submission of stocks reports.

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3. Pending stock reports are reported in monthly ticklers (Tickler D-10) by CAD to BM/RM for
follow-up with the borrower.

11.11 - MIS Reports for Collateral Monitoring

The following ticklers with respect to collateral management shall be prepared by Regional /
Corporate CAD and shall be forwarded to relevant business units by taking CAD (HO) in loop on
periodical basis.
 Pledge Management Report
 Pledge site visit Report
 Insurance Expiry Report
 Statement of outstanding deferrals
 Valuation of collateral / assets
1. Based on the above MIS reports on standard CAD ticklers, the Regional / Corporate CAD shall
prepare and furnish observations to respective RH/CH, while keeping CAD, HO in the loop.
2. CAD (HO) shall consolidate the reports and escalate the matters to groups at HO including
but not limited to business and CMG for necessary action (where applicable).
11.12 - Pledged Stocks13
11.12.1 Pledge-in
a) Customer prepares Pledge-in Letter (PIL) as per Format 13 (F-216) addressed to BM,
requesting the Bank to take delivery of the goods or produce to be pledged. The quantity
of stocks and their value shall be detailed in the letter; if the quantity is specified in bags,
bales, etc., the weights of the same must be given.
b) The BM sends the scanned / fax copy /original PIL (after signature verification) to
Regional / Corporate CAD after affixing signature and stamp.
c) Regional / Corporate CAD shall issue instructions to Mucaddam Company by taking
branch in loop after adopting the procedure as provided in Activity # 11.18 by sending a
letter on Format 15 (CAD 3.7.F). (Note: Format 15 shall only be used when Mucaddam is
taking over the stocks for the first time).
d) Mucaddam shall confirm the receipt of goods on Format 16 (CAD 5.2.A) and provide
Godown Certificate on Format # 17 (CAD F-217) along with stock report to Branch with
copy to CAD.
e) The BM, after ensuring that the pledge-in Item are as per details submitted in PIL,
forwards the scanned/faxed copies of the format 15, 16 & 17 to Regional / Corporate

13
Please note that due to I.T. Limitations vis-à-vis Collateral Management system, DP and DO issuance activities will
continue to be performed by Branches as per CPM / SPM. The matter has been taken up with I.T.D and no sooner
this functionality is developed in the system, CAD will take over this function in line with the above policy /
procedure.

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CAD after affixing their signature with remarks on PIL “May be accepted against the
approved CF/RF limit of Rs. _____”.
f) RM / BM also shall also submit valid Insurance Policy & PPR to the Regional / Corporate
CAD, as per sanction / respective policies.
g) The Regional / Corporate CAD on receipt of the scanned/faxed copies from BM shall
records the details on the pledge-in register, works out Drawing Power and updates the
same in the system.
h) The Regional / Corporate CAD ensures receipt of Stock Position from Mucaddam at each
pledge-in/out, as well as the Month-end position by 5th of following month, duly signed
by the Mucaddam and Borrower.
i) The Regional / Corporate CAD shall compare the position of pledged stocks as per stock
report against the record being maintained at their end, along with insurance coverage
thereof.

11.12.2 Pledge in - FIM

1. For Payment Against Document (PAD) to be retired through FIM, the Branch on receipt of
import documents, shall:

i. Ensure timely receipt of advice, Mucaddam nominated by CAD, Customer’s

request duly approved by Branch for Clearing & Forwarding Agent.
ii. Entrusts import / shipping documents to the designated Mucaddam along with
letter on Format 15, after ensuring that Transit Insurance is in place for arranging
clearance of the consignment through authorised Clearing & Forwarding Agents
(CFA) with following instructions to Mucaddam:
a) Store the goods at the indicated godown after clearance & send storage
certificate along with godown certificate (Format 17) under their Stamp &
Signature (in case of storage in bonded warehouse, receipt issued by Customs
& Countersigned by Mucaddam) to BM with copy to Regional / Corporate
CAD.
b) Pending issuance of storage certificate, Regional / Corporate CAD & Branch
to be kept apprised of status on clearance.
c) On clearance of the consignment, Mucaddam shall confirm the receipt of
good on format 16 along with the Clearing Agent’s Copy to Branch. In case,
the goods are stored at Custom’s Warehouse, the Storage certificate issued
by Custom Authorities duly countersigned by Mucaddam, shall be provided
to Branch with copy to Regional / Corporate CAD.

2. The BM, after ensuring that the pledge-in Item are as per Import documents, forwards the
scanned/faxed copies of the Import documents, insurance policies along with PPR, Format 16
& 17 to Regional / Corporate CAD against the approved FIM facility of Rs. _____.

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3. Mucaddam after taking effective control of the goods at the designated site shall forward to
the Regional / Corporate CAD;

 Goods declaration certificate from custom/ Clearance Certificate from Customs

 Storage Certificate.
 Stocks Report with Quantity of the imported Goods in units with unit value.
4. The Regional / Corporate CAD on receipt of the scanned/faxed copies from BM shall records
the details on the pledge-in register, works out Drawing Power and updates the same in the
system.
5. The Regional / Corporate CAD ensures receipt of Stock Position from Mucaddam at each
pledge-in/out, as well as the Month-end position by 5th of following month, duly signed by
the Mucaddam and Borrower.
The Regional / Corporate CAD shall compare the position of pledged stocks as per stock
report against the record being maintained at their end, along with insurance coverage
thereof.

11.12.3 Precautions

a) Request letter shall be on company’s letter head.

b) It shall be signed by authorized signatory (ies) of the company, as per board resolution (in
case of limited Liability Company).
c) The stock report shall be signed jointly by Mucaddam and Customer.
d) Signatures shall be verified by Branch officials.

11.13 - Delivery Order14

1. Authorized Signatory of borrower shall request BM to release the goods mentioning the
quantity, description and their value on their Letter Head. BM shall validate Customer's
request ensuring the coverage of outstanding amount with the remaining Stocks with
margin.

14
Please note that due to I.T. Limitations vis-à-vis Collateral Management system, DP and DO issuance activities
will continue to be performed by Branches as per current practices. The matter has been taken up with I.T.G, and
no sooner this functionality is developed in the system, CAD will take over this function in line with the above
procedure.

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2. The BM shall (after being satisfied) forward the same to Regional / Corporate CAD with its
recommendation for issuance of Delivery Order.

3. Regional / Corporate CAD shall review the request by calculating & ensuring the remaining
Stock position covering the revised outstanding amount, and on satisfaction shall issue
Delivery Order (2 copies; one for customer, other for Mucaddam), (Format # 12) & reduce
DP in the system accordingly.

i. Customer’s copy of the D.O. shall be faxed/ scanned through email to Branch.

ii. Mucaddam’s copy shall be faxed / forwarded to their respective office for release of
goods.

4. Regional / Corporate CAD shall record the transaction / movement in pledge register and
shall update the MIS accordingly.

5. Mucaddam shall deliver the specified quantity of goods to the customer and issue updated
Stock report accordingly with Customers signatures, to be submitted to Regional / Corporate
CAD.

11.13.1 - Precautions

 Request letter is on company’s letter head.

 It shall be signed by authorized signatory (ies) of the company, as per Board resolution (in
case of limited Company)
 Signatures are verified by Branch Officials.
 Original delivery order shall never be delivered to customer in any case.
 No stocks shall be delivered by Mucaddam without proper delivery order duly issued
by the Regional / Corporate CAD.

11.14 - Price Mechanism for Pledged Goods

Pricing for all goods pledged with NBP will be determined as per seasonal policy or as per
practice in vogue.

11.15 - Signing Role

Regional / Corporate CAD is authorized to sign-off all the correspondence with Regional Heads
/ Regional Corporate Heads etc., including all the day to day matters related to the vendors such
as Mucaddam and BLAs.

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11.16 - Procedural Guidelines for Nomination / Assignment to Mucaddam

11.16.1- Allocation of Mucaddam

Mucaddam shall be appointed for effective Bank’s control for facilities financed against pledge
of stocks. Allocation of Mucaddam for pledge sites shall be done by CAD (HO) in line with Bank’s
prevailing Mucaddam Policy.

11.17 - Nomination of Mucaddam

1. BM / RM shall request for appointment of Mucaddam along with recommendation of

Mucaddam companies at a particular site to Regional / Corporate CAD.

2. RE / CM - CAD shall recommend three names out the list of approved panel to CAD (HO), on
specified format (Attached format # 8 - CAD-3.7. (Revised)

3. CAD (HO) based on the thresholds defined in the Mucaddam policy, shall approve
Mucaddam and communicate the same to the selected Mucaddam Company with a copy to
Regional / Corporate CAD for onward processing.

4. The BM/RM shall not recommend any such Mucaddam Company that has already been
providing mucaddamage services at the same site for other lenders. However, it is the
responsibility of Mucaddam Company to ensure that it shall not offer mucaddamage services
to other lenders, at the same site, once it has been allocated pledge site by NBP.

The assignment to Mucaddam will depend upon the following two factors:

a) Maximum per party limit that each Mucaddam is entitled to handle.

b) Number of Sites Mucaddam is already handling / Mucaddam concentration threshold.

The above two parameters must be complied in line with the Mucaddam Policy.

11.18 - Diarize the Date of Appointment of Mucaddam

CAD (HO) shall diarize the appointment date of every Mucaddam.

11.19 - Precautions

11.19.1- Letter of Disclaimer

In case, pledged stock is kept in a rented godown, Letter of Disclaimer on stamp paper of
Rs.100 is obtained from the owner of the godown. NIC copies of owner of godown and two
witnesses are also required.

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11.20 - Procedural Guidelines for Rotation of Mucaddam

Mucaddam shall be rotated to have an effective control over pledged stocks. Once the pledge
site is handed over to new Mucaddam by previous / old Mucaddam, it will be sole responsibility
of new Mucaddam to ensure the adequacy of stocks in terms of quality and quantity, at the time
of taking over the site. Any shortcoming in the stocks / site shall immediately be informed to
Regional / Corporate CAD in writing along with details.

11.21- Rotation of Mucaddam

The procedure for rotation of Mucaddam shall be initiated with the time of approval / renewal
of the facility by following procedure mentioned at Activity 11.16. Mucaddam shall be rotated
every year / currency period; however, where necessary the Mucaddam may be retained where
necessary. A separate letter shall be sent to the previous Mucaddam advising handing over the
charge to new Mucaddam.

11.22- Performance Assessment of Mucaddam Companies

The performance assessment of Mucaddam shall be carried out by CAD, HO as per the
procedures laid down in the Mucaddam Policy. The overall responsibility of Enlistment /
Suspension and De-listment rests with CMG.

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ACTIVITY 12 - INSURANCE OF COLLATERAL

12.1 - Activity Description

Insurance is a mode through which bank can protect itself from possible loss of collaterals which
may emanate through various hazards e.g. fire, flood, earthquake etc. So, it is very important
for the banks/FIs to ensure that the insurable assets on which they have a charge remain
adequately insured.

12.2 - Key Guidelines

All assets charged to the bank are required to be insured during the tenor of outstanding
liabilities. In case of fixed assets, value of land is excluded to calculate the value of insurance.

In all cases of Insurances where bank’s charge is secured through Hypothecation / Pledge /
Mortgage of borrower’s assets which are held as security against the financing/credit limit,
Regional / Corporate CAD shall intimate respective Branch / Corporate Office under Copy to
Regional Head / Regional Corporate Head, as per relevant CAD Tickler, in order to ensure timely
valid insurance arrangements by BM / RM.

Upon non-submission of renewed Insurance arrangement as per bank’s policy, upon expiry of
the insurance arrangement, Regional / Corporate CAD shall block the limit, where the system
allows, otherwise shall advise RH/CH for the same. Upon satisfactory compliance, the limit shall
be unblocked by Regional / Corporate CAD.

12.3 - Receiving Insurance Policy

Where a cover note, which is valid for a period of 30 days, is tendered by the borrower it may
be accepted provided it is accompanied by a receipt or certificate from the company concerned
stating that the amount of premium has been duly received by them.

It must be ensured that the relevant policy is received within 30 days from the date of the cover
note; this date should be diarized. All insurance policies and cover notes must have attached to
them the standard Bank/ Mortgage Clause.

In case of bilateral arrangements (i.e. where NBP is the sole mortgagee), BM / RM shall obtain
the original insurance policy from the borrower and submits to Regional / Corporate CAD. In
case of Syndicate financing, where NBP is not the lead bank, BM / RM shall provide, a duplicate
copy of Insurance Policy duly attested by the lead bank / holder of the original Policy.

12.4 - Review of Insurance Policy

While reviewing Insurance Policy, following points shall be considered by the Regional /
Corporate CAD:

1. Insurance Company shall be on the Bank’s approved panel.

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2. Insurance policy shall be in the joint name of the Bank and borrower / with Bank Mortgage
Clause.
3. Preferably Expiry date of insurance policy shall cover the currency of limit / at least one year
for long term facilities. The expiry date of insurance shall be diarized.
4. Description and location of insured assets (stocks, plant & machinery, building, etc.)
mentioned in the insurance policy shall be relevant to the Sanction Advice.
5. All risks as required or mentioned in the Sanction Advice shall be included in insurance
policy. Assets under charge may be insured against relevant risks including but not limited
to fire, SRCC, burglary, pilferage, theft atmospheric/natural damages, in the joint name of
the bank and borrower.
6. The Insurance Policies shall be backed by Original Premium Paid Receipt (PPR) of the
amount mentioned in the insurance policy otherwise the certificate from insurance
company shall be available.
7. Value of insurance is adequate to cover Finance amount / exposure as mentioned in the
Sanction Advice. However, if the Bank has agreed in certain cases to dispense with
insurance up to the extent of finance amount, stocks under pledge to the Bank must be
kept fully insured to the extent of the Bank’s exposure and the desired margin.
8. In case the insurance policy is issued in the name of multiple banks, it is necessary that the
share of NBP is duly mentioned or otherwise endorsement of the same has been obtained.
9. Sum insured by Insurance Company (ies) is within per single risk limit of the insurance
companies approved by the Bank. In cases, where sum insured exceeds per single risk limit
of the Company, co-Insurance from the insurance companies on the Bank’s panel, within
the approved limit shall be provided, otherwise exception shall be arranged by the Business
as per criteria defined in the Policy for enlistment of Insurance / Takaful companies.
10. Since the insurance policy is submitted by the Borrower, as such, it shall be ensured by BM
/ RM that the submitted insurance arrangements are as per Bank’s policies / guidelines.
Exceptions / deviations shall be handled in accordance with the guidelines provided in
relevant policies of the Bank.

12.5 - Genuineness of Insurance Policy

Regional / Corporate CAD shall request the Insurance Company on standard format (Attached
format # 5) to confirm the genuineness of insurance policy as well as PPR through a confirmation
letter on its letter head.

12.6 - Updating Expiry of Insurance Policy

A separate MIS – Tickler has been developed for recording and follow-up with business
(Annexure E - Tickler # D.7). Regional / Corporate CAD – MIS Unit shall update the records into
CAD MIS Ticklers at the time of issuance of DAC and follow up for resolution of expired
insurances until renewed.

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12.7 - Precautions

12.7.1- Premium Paid Receipt (PPR) for Partial Amount

It is bank’s policy to obtain PPR for full premium amount along with original insurance policy
as mandatory. However, in cases any credit arrangement for payment of premium has been
agreed between the Borrower and Insurance company, the same shall be mentioned in the
Sanction Advice to dispense with the PPR requirements, while issuing DAC. However, following
aspects shall be ensured:

o Approval from Regional Head / Regional Corporate Head for the same, in case
the arrangement was not mentioned in the Sanction Advice.
o Insurance Policy clearly specifying applicable risk coverage, sum insured &
premium to be paid by Customer.
o PPR for the initial payment(s) made so far.
o An undertaking from Insurance Company (Format # 6)
o Payment Schedule from Insurance Company

The Regional / Corporate CAD shall ensure during their review that respective RM / BM
provides the PPR for the subsequent payments in line with payment schedule to Regional /
Corporate CAD within 7 days of the receipt from the customer. In case of non-compliance, CAD
shall block the limit of the delinquent, where the system allows, otherwise regional /
Corporate CAD shall advise RH / CH to stop debit operations in the account and keep follow-
up with the concerned quarters. Upon satisfactory compliance, the limit shall be unblocked
by Regional / Corporate CAD.

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ACTIVITY 13 - VALUATION OF PROPERTY BY EXTERNAL VALUATORS

13.1 - Activity Description

Valuation of property/ fixed assets once made shall be valid for three years unless any addition
has been made in the asset. Revaluation for enhancement of credit facility shall not be allowed
before the expiry of three years from the date of last valuation.

13.2 - CAD’s Role

Valuation is required, where financing facilities are secured by way of hypothecation over plant
& machinery or through registered/equitable mortgage over land & building.

1. Regional / Corporate CAD shall arrange for re-valuation of the securities upon revaluation
requirement i.e. three years from the date of previous valuation on post sanction basis as
per following:

a. Comprehensive valuations expired / nearing to expire

b. Valuation at the time of provisioning/classification as and when required by business

2. Besides, Regional / Corporate CAD shall also review the copy of valuation report submitted
along with other documents at the time of issuance of DAC, to ensure that valuation has
been conducted by PBA approved evaluator.

13.3 - Key Guidelines

While processing this activity following factors shall be accounted for:

 The limits/category assigned to the valuator shall be complied as per PBA approved list.

 Any serious exception noted in the post disbursement valuation report (such as closure
of plant & machinery) shall be taken-up by Regional / Corporate CAD with RH/CH for
necessary remedial measures.

Regional / Corporate CAD shall accept valuation report15 only from a Valuator on PBA approved
panel duly nominated by CAD (HO) unless exception in this respect is approved by the
competent authority. Approval for nomination of valuator shall be granted by CAD (HO), out of
3 recommended evaluators by Regional / Corporate CAD. On receipt of approval from CAD (HO),
the Regional / Corporate CAD will proceed with the assignment to the approved/nominated
valuation company.

15
CAD will only involve in post sanction valuations. Any valid valuation carried out at pre-sanction stage (including
renewal and enhancement) will be accepted by CAD provided the valuation reports are in line with the Bank’s credit
Policies.

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13.4 - Procedural Guidelines for Valuation by External Evaluators

The detail procedure for arrangement of valuation after every three years on post disbursement
basis has been detailed as under:

13.4.1 - Nomination of Valuators

1. The Regional / Corporate CAD shall collect the names of valuators on PBA approved Panel
and shortlist those who are already working within the vicinity of the region.

2. Regional / Corporate CAD shall ensure that adequate number of valuators are identified as
per their expertise, for the following:

a) Land & Buildings

b) Plant & Machinery

c) Current Assets & Inventories etc.

3. The Regional / Corporate CAD, in consultation with RE Credit & Regional Head for
Commercial & SME accounts and Corporate Branch Manager & Unit Head / Regional
Corporate Head for Corporate Accounts will finalize the list, based on their satisfactory
performance with NBP / reputation in the market.

4. The list of these evaluators shall be forwarded to CAD(HO) for finalization of the CAD Panel
of evaluators.

5. The CAD (HO) shall communicate the finalized CAD panel to Regional / Corporate CAD.

13.4.2 - Allocation of Assignment to Evaluators

1. For evaluation of assets pertaining to Corporate, Commercial & SME borrowers, the
Regional / Corporate CAD shall send three nominations to the CAD Head office. The
Regional / Corporate CAD shall also mention name of previous evaluator and respective
date of evaluation.

2. The CAD (HO) shall approve from the nominations and advise the same to Regional /
Corporate CAD

13.4.3 - Valuation Reports

Upon receipt of valuation report, the report shall be reviewed by Regional / Corporate CAD and
in case of any major observation w.r.t. valuation of the assets, the valuation report shall be
submitted to RH/CH for necessary remedial measures at their end.

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13.5 - Key Guidelines on Release of Collateral

Release of security / collateral, must be undertaken with responsibility, vigilance and caution.
Release of any securities/collateral of a borrowing customer in case of full and final adjustment
of all outstanding, including up to date mark-up must be initiated by the business group and
shall be duly approved by the competent authority i.e. RH/CH as per prevalent policy/practice.

If any collateral is to be released / replaced prior to adjustment of the full loan amount, then
approval shall be sought from the original sanctioning authority. However, in case of liquid
securities (For e.g. TDR, SSCs, DSCs etc.), release of collateral for the purpose of encashment /
reinvestment, shall be allowed by RH / CH. In this case BM/RM shall ensure timely resubmission
of equivalent security/ies as per approval.

Regional / Corporate CAD shall release security / security documents in the following cases,
subject to prior approval from Regional / Regional Corporate Head.

1. Full release of security / security documents upon full and final settlement of finance
2. Partial release of security upon partial adjustment
3. Replacement of security
4. Release of security for encashment and adjustment of facility (ies).
5. Release of security for re-investment purposes

While processing the release of collateral Regional / Corporate CAD shall take in to account the
following factors:

1. RH/CH to ensure that security/ies are not common in any other finance of the bank.
2. Regional / Corporate CAD shall ensure that all relevant formalities / approvals have been
complied/ obtained prior to authorising the release of security documents.
3. Regional / Corporate CAD shall ensure that appropriate deletion entries have been made
and limit is cancelled in the system.

13.6 - Procedural Guidelines on Release of Collateral

While processing this activity Regional / Corporate CAD shall consider the following factors:
 Upon receipt of request from the customer the BM / RM shall prepare a Memo and
obtain necessary approval from the competent authority after seeking clearance from
branch operations regarding outstanding amount against the borrower, if any.
 Signed customer request letter shall be attached with the collateral release approval and
signatures on the request letter shall be duly verified by the branch with bank’s stamp.
 Regional / Corporate CAD shall maintain an MIS with respect to security / collateral / title
documents held on behalf of other Banks. In such cases, CAD shall seek confirmation

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from other Bank(s) prior release of security documents under intimation to BM / RM.
The security / title documents shall not be released till the clearance from other charge
holders.
 Regional / Corporate CAD shall ensure that in case of third party mortgage/ security/
Personal Guarantees / Cash Collateral request letter from the third party along with copy
of CNIC shall be obtained. The letter shall contain complete address of mortgaged
property/ies, signature of the mortgagor should match/ verify with the ones on MODTD/
lease/ lien documents. In case of authorisation the request letter shall clearly mention
to whom the property documents are to be delivered.
 Regional / Corporate CAD shall ensure that all relevant formalities / approvals have been
complied/ obtained prior to authorising the release of security documents.
 RH/CH to ensure that security (ies) are not common in any other finance facility of the
bank.
 Once the approval is received and above measures are taken care of, CAD shall authorise
the release of security. The approval is filed in the credit file for bank’s record.
 In case of replacement of security / guarantee, CAD shall ensure that new security is
received, prior to release of old security or otherwise as mentioned in the approval.

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ACTIVITY 14 - BLOCKING / UN-BLOCKING

14.1 - Activity Description

Limit Blocking is an activity being carried out in exceptional instances, occurrence of which
renders suspension in debit operations in the customer’s loan account(s) until required
formalities being complied with. These instances generally include non-compliance of the
required covenants, violations of Regulations /Banks policy, document deficiencies, etc.

14.2 - CAD’s Role

Regional / Corporate CAD shall ensure that in case any exception arises as defined in this CAD
Manual, the limit shall be blocked on immediate basis where system allows, otherwise Regional
/ Corporate CAD will advise RH / CH to block debit operations in the account.

14.3 - Key Guidelines

It is mandatory for the Bank to ensure that all necessary requirements are completed before
any loan is sanctioned / disbursed. However, there are scenarios where Bank due to limitation
of the customers’ inability to complete certain formalities gives leverage to certain customers
allowing them to complete the formalities within the required period. Failure to comply,
requires measures including Limit Blocking.
Moreover, there are certain circumstances during the currency of limit / post disbursement
scenarios when blocking the operations in account becomes necessary in order to create credit
discipline.

Cited below are the instances where Limit shall be blocked:

1. Expired Limit / Unauthorized Operations Allowed

2. Expired Deferrals
3. Expiry of Temporary Extension
4. Unauthorized Disbursement reported
5. Shortage in Pledge / Security
6. Expired Insurance(s)
7. Non-Submission of Hypothecation stock reports for consecutive 3 months
8. Non- Submission Partial / Full Premium Payment Receipt
9. Un-authorized Excess over limit
Any untoward event / instance identified by the other Group Concerns and reported to CAD
for blocking of limits, CAD shall perform accordingly.

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14.4 - Procedural Guidelines for Limit Blocking

14.4.1. Limit Expiry / Unauthorized Operation Allowed

a) The system (Profile) upon the expiry of limit shall automatically blocks the debit
operations in the account.
b) Subsequently, if the renewal is in place and the required formalities including
documentation is intact; business applies for issuance of DAC from Regional / Corporate
CAD. After issuance of DAC, the branch official / Regional / Corporate CAD amends the
expiry of the limit in the system as per Sanction Advice thus operations in the loan
account are allowed.
c) In case where Renewal is not in place or is delayed due to any reason, RM / BM arranges
for Temporary Extension of the expiry date for allowing operation in the accounts for a
specific period. Upon approval of Temporary Extension and execution of the documents,
the expiry date of the facility is accordingly extended in the system.
d) If temporary extension expires and renewal has not been approved, then limit shall
automatically be blocked in the system unless further extension or renewal of facility is
approved. Subsequently, upon renewal of the facility, the limit expiry date is amended
as per the Sanction advice.

No Limit shall be unblocked / amended without having DAC/ temporary extension

authorization by Regional / Corporate CAD. In case of any violation, strict disciplinary
action shall be taken against the branch officials / delinquent.

The responsibility to ensure that further drawings against expired limits shall not be
allowed will rest with Regional Head and Regional Corporate Head respectively.

14.4.2. Expired Deferrals

The deferrals are only approved to allow customers enough time to complete the necessary
formalities which remained outstanding due to unavoidable circumstances; at the time of
credit approval.

In cases where deferral has been allowed by competent authority, Regional / Corporate CAD
upon expiry of deferral shall seek for evidences for materialization from BM / RM. Grace
period of three (3) working days or as per Deferral Policy shall be provided to BM / RM to
produce the evidence for the materialization of deferral failing which Regional / Corporate
CAD shall block the limit and inform the RH / CH regarding the same.

Upon regularization of the matter, the limit shall be unblocked accordingly.

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 CAD Manual

14.4.3. Expiry of Temporary Extension

The system (Profile) upon the expiry of temporary extension shall automatically blocks the
debit operations in the account. The operations in the expired limit shall not be allowed
unless approval from competent authority for renewal / further temporary extension is
provided to Regional / Corporate CAD as per the Temporary Extension Policy stated in
Instruction Circular 78 / 2016 dated July 15, 2016.

After completion of required documents as per the policy, Regional / Corporate CAD shall
allow operation in accounts by extending the expiry date in the system (Profile); for number
of days temporary extension has been approved or as per renewal of the facility.

Operations in the account shall only be authorized by Regional / Corporate CAD. In case of
any violation; strict disciplinary action shall be taken against the branch officials /
delinquent.

14.4.4. Unauthorized Disbursement

No disbursement shall be allowed to customers without the issuance of DAC by Regional /

Corporate CAD (except for those finances where CAD counter verify the DAC on post facto
basis). If any unauthorized disbursement is identified / reported; strict disciplinary action
shall be taken against the delinquent / Branch official(s).

Regional / Corporate CAD upon receiving the information shall immediately block the limit
and report the same to RH / CH with copy to CAD(HO). CAD (HO) shall escalate the matter
to Business Groups and relevant quarters including Compliance Group for appropriate
action.

14.4.5. Shortage in Pledge

Upon identification of shortage(s) (as discussed in Activity 11.7), CAD shall immediately
block the limit and advise the same to concerned RH / CH with a copy to CAD (HO). The limit
may be unblocked upon regularization of the matter or as per decision of the RH / CH.

14.4.6. Expired Insurance

The Regional / Corporate CAD shall inform the relevant business units one month prior
regarding expiring insurance(s) and upon expiry shall block the limit after 15 days of expiry
and upon compliance shall unblock the limit.

14.4.7. Non-Submission of Hypothecation Stock Report

Debit Operations shall be blocked in the Borrowers account where Hypothecation stock
report (SL-5) is not provided by the Borrower (duly verified by Branch) for 3 consecutive
months. RM / BM shall ensure the same is provided to Regional / Corporate CAD on timely
basis. The unblocking shall be done upon receipt of all pending reports.

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 CAD Manual

14.4.8. Non-Submission of Partial / Full Premium Payment Receipt

No disbursement shall be made in cases where Full / Partial Premium Receipt (PPR) is not
provided to CAD, unless an approved deferral from competent authority as per the Deferral
policy is provided.

Further, in cases where customer has arrangement of Partial / Periodical Payment, RM / BM

shall ensure that the Customer submits partial payment receipt for the subsequent
payments in line with payment schedule & shall submit the same to Regional / Corporate
CAD within 7 days of the receipt. Upon non-receipt of PPRs, Regional / Corporate CAD shall
block the account of the delinquent and unblock upon receipt of the due PPR.

14.4.9. Unauthorized Excess over limit (EOL)

Upon identification of unauthorized EOL, limit shall be blocked immediately in order to avoid
any further drawings in the account. Regional / Corporate CAD shall also report the instance
to RH / CH with a copy to CAD (HO).

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 CAD Manual

ACTIVITY 15 - ALLOCATION OF ASSIGNMENTS TO BLA

15.1 Activity Description

Services of Bank’s Legal Advisors (BLAs) are utilized by CAD from the legal advisors enlisted
by Legal Division of the Bank. The services of BLAs are required, including but not limited to
the following purposes:

a. Preparation of financing / security documents (on case to case basis)

b. Seeking legal opinion w.r.t. completeness of title / property documents

c. Seeking Genuineness Certificate for the property document(s) after verification

from the concerned registrar / record of rights.

d. Registration of charge with concerned registrar / revenue record and marking of

lien.

e. Registration of charge with SECP (where required)

f. Seeking Perfection Certificate ensuring that the Bank’s interest is safeguarded

g. Expertise in handling cases of Banking Courts and Banking Tribunal etc.

15.2 - Formation of Panel of BLA to Assist Credit Administrative Functions

The CAD (HO) shall seek the names / list of external legal counsels for different regions /
corporate centers already enlisted with the Bank’s legal Division, having expertise in handling
assignment of CAD, based on following criteria.
 BLA shall be enlisted with major peer banks, providing services w.r.t. documentation
of financing facilities.
 BLA / Firm shall possess the required staff strength enabling them to accomplish the
assigned task in timely manner.
 Having expertise regarding transaction of syndicate financing and investment banking.
 Having expertise for the documentation of restructured / rescheduled loans
 Having expertise for verification of property / title documents.
Once the list is finalized, the same shall be shared with the relevant Regional and Corporate
CAD centers. In case, any BLA is delisted by the Legal Division, the same shall also be
communicated to CAD for discontinuation of their services. Further, any adverse observation
regarding BLA’s performance, the same shall be shared with Legal Division by CAD.

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 CAD Manual

15.3 Allocation of Assignment to BLA

15.3.1 For Commercial & SME Accounts

1. For fresh / renewal of limits of Commercial & SME borrowers (as per single Sanction
Advice) up to Rs.30 (M), the Regional CAD will make allocations to BLA for
documentation, genuineness, perfection certificates, legal opinions etc.

2. For limits above Rs. 30 (M), Regional CAD will submit appropriate nominations of BLA to
CAD Head Office. The CAD HO will approve from the nomination(s) received and
communicate accordingly to the Regional CAD.

15.3.2 For Corporate Accounts

1. For fresh / renewal of limits of corporate borrowers (as per single Sanction Advice) up to
Rs.100 (M), the Regional / Corporate CAD will make allocations to BLA for
documentation, genuineness, perfection certificates, legal opinions etc.

2. For limit above Rs.100 (M) Regional / Corporate CAD will submit appropriate nominations
of BLA to CAD Head Office. The CAD HO will approve from the nomination(s) received
and communicate accordingly to the Regional / Corporate CAD.

Note:

The charges in lieu of BLA Services utilized shall be borne by the customer as per Bank’s
tariff / Schedule of Bank’s charges.

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 CAD Manual

PART C: FORMATS16

16
Important

In addition to these supportive formats the field officials may make use of the formats as prescribed in CPM/
Circulars in vogue, where deemed necessary

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 CAD Manual

FORMAT 1 - DOCUMENT CHECKLIST (DCL)

 Provisional
Regional / Corporate CAD ______________
 Final
Sanction FOL
Sanction #
Dated Dated
 Private   Any Other,
Legal  Public Limited 
Limited Partnership specify
Structure Company Proprietorship
Company Firm _________
Customer:
Branch:

Facilities
Documents to be

In possession of CAD
obtained

Held by Branch
i.

Required
Remarks

by the branch

disbursement

Deferred up
ii.

before DAC
issuance/
before

to
iii.

iv.
(A) Constitutional Documents
Copy of Partnership Deed duly attested by the
-
Branch.
List of existing directors on customer’s Letter
-
Head showing names of directors with father /
husband name& Article
Memorandum and present residential
of Association duly
-
addresses
attested by SECP and duly confirmed by the
- Company Secretary,
Certificate Up- to-Date
of Incorporation
- Certificate of Commencement of Business
Fresh Form A and Form 29 duly attested by
-
SECP (Original) Not older than 1 year
(B) Other related documents
- Sanction Advice of the facility
Minutes of the Credit Committee (where
-
applicable)
- Request Letter from borrower
- Board Resolution to borrow
Facility Offer Letter (FOL) with Company
-
Common Seal / Stamped duly accepted
FOL to show “Directors Loan reflected in the
- Financials to be sub-ordinated in favor of the
Bank.” (if applicable)
- Search Report
- Latest Stock Report
e-CIB Report (Fresh e-CIB report to be
- obtained in case the available e-CIB is two
months old)

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 CAD Manual

- e-CIBs of all group / sister concerns

e-CIB of all directors / Partners (where
-
applicable)
- Copy of Latest Financials
Confirmation of Cash margin / Lien Marking
-
from the Branch
- Copy of Borrower Basic Fact Sheet
Undertaking for appropriate utilization of
-
facilities
Credit Investigation Reports (ICIL, BCIL Reports
-
– if applicable)
Confidential Opinion from other Bank(s) (if
-
any)
- Copy of Call / Visit Report
Attested copies of CNICs of signatories and
-
witnesses
Expired deferral if any to be satisfied before
-
DAC
All finance / security Documents are duly
-
signed and witnessed (where applicable)
Signature on Facility Offer Letter, financing &
- security documents to be verified by the
Branch Official
No Objection Certificates from other Banks (if
-
applicable)
(C) Financing Documents
Cash Finance / Running Finance
- Short Term Finance Agreement (IB-6)
- Demand Promissory Note
Export Running Finance-I / Export Running Finance -II / Packing Finance
- Short Term Finance Agreement (IB-6)
- Demand Promissory Note
FE-25-Import / FE-25-Export / FE-25-FATR / FE-25-FIM
- Short Term Finance Agreement (IB-6)
- Demand Promissory Note
FAFB / FBPN / Bill Purchase / Bill Discount / Bank Guarantee
- Short Term Finance Agreement (IB-6)
- Demand Promissory Note
- Counter Guarantee (where applicable)
Demand Finance / Term Finance / Long Term Finance Facility
- Term Finance Agreement
- Demand Promissory Note
- Draw Down Notice
(D) Security / Support Documents
- Hypothecation/Floating charge on Stock/Book debts/Receivables/Plant & Machinery

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 CAD Manual

Letter of Hypothecation / Supplemental Letter

- of Hypothecation for an amount of Rs.
_______________ being __________ charge
Photocopy of Form - 10 / Form - 16 submitted
-
to SECP for registration of Charge
Charge Registration Certificate (CRC) by SECP
- confirming the registration of Charge as per
approved terms and conditions
Search Report confirming the registration of
-
charge.
Insurance policy from the company on Bank’s
panel with amount & risk coverage as per
- approved terms and conditions having Bank's
name as loss payee with Premium Payment
Receipt
Valuation Report dated ________ by
-
M/s________________
Pledge of Stock
Photocopy of Form - 10 / Form - 16 submitted
-
to SECP for registration of Charge
Charge Registration Certificate (CRC) by SECP
- confirming the registration of Charge as per
approved terms and conditions
Search Report confirming the registration of
-
charge.
Godown / Warehouse Certificate (where
-
applicable)
Tenancy Agreement / Lease Agreement
-
(Where applicable)
- Letter of Disclaimer (for third party godown)
- Letter of Pledge
Insurance policy from the company on Bank’s
panel with amount & risk coverage as per
- approved terms and conditions having Bank's
name as loss payee with Premium Payment
Receipt
Stock report from Muqaddam company duly
- signed by the Borrower and verified by the
Branch
Pledge / Lien on Deposit Account/Government Securities/Shares
- Letter of Lien
Pledge of DSC/SSC/RIC/COD for Rs. _______
- duly marked lien in favor of the Bank as
mentioned in Sanction Advice

- Report of Pledge of shares

- Lien marking confirmation of Deposit Account

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 CAD Manual

Personal / Corporate Guarantee of Directors/Counter Guarantee

Personal Guarantee supported with Net
-
Worth Statement (where applicable)
Corporate Guarantee supported by Board
-
Resolution
Equitable / Registered Mortgage of Property (land/building)
MODTD / Supplemental MODTD /
- Memorandum of Constructive Deposit of Title
Deeds
Photocopy of Form - 10 / Form - 16 submitted
-
to SECP for registration of Charge
Charge Registration Certificate (CRC) by SECP
- confirming the registration of Charge as per
approved terms and conditions
Search Report confirming the registration of
-
charge as approved in Sanction Advice
- Letter of Continuity
- Registered Mortgage Deed
Search certificate showing entry of mortgaged
-
registered in favor of the Bank
Equitable mortgage with full set of property
documents (Title deeds, mutation,
NOC/Permission to Mortgage, Search
-
Certificate, confirmation of genuineness of
title deeds, Approved Building Plan, etc.) as
per legal opinion of nominated Lawyer
- Valuation Report of the Property / Collateral
Insurance policy from the company on Bank’s
panel with amount & risk coverage as per
- approved terms and conditions having Bank's
name as loss payee with Premium Payment
Receipt
Perfection / Pre-Disbursement certificate from
-
Bank’s approved Legal Advisor
Trust Receipt
- Trust Receipt (where applicable)
(E) Any Other Document
Any other document / undertakings required
-
as per Sanction Advice.
Note: Please delete which is not applicable
Documents shall be submitted to RCAD in one bunch

Relationship Manager / Branch Manager Unit Head (Documentation) / Manager (CAD)

(Signature, Stamp & Date) (Signature, Stamp & Date)

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 CAD Manual

FORMAT 2 – DISBURSEMENT AUTHORIZATION CERTIFICATE (DAC)

National Bank of Pakistan

Regional / Corporate CAD, _______________
Disbursement Authorization Certificate (DAC)
 Regular
 Conditional
Branch
Borrower
Issuance Date
Sanction Advice Reference
#
S. No. Facilities Limit Amount Expiry DAC # Remarks
Date

Deferrals (if Any):

# Brief of Document Deferred

Conditions (if Any):

__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
_________
Please Note: The Copies of DCL & Sanction Advice (referred above) shall be made an integral part of this DAC.

Authorized By

Signature: ___________________ Signature: _________________

Name: ______________________ Name: ____________________
Designation: _________________ Designation: _______________

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 CAD Manual

FORMAT 3 – DOCUMENT REVIEW SHEET

Regional / Corporate CAD, _____________

Reference #: _______________________ DATE: _________________
Borrower Branch:
Sanction Date: Document Review Date
# Facility
1
Credit facilities 2
3
4
5

BM / RM Name: ________________________
During review for issuance of Disbursement Authorizing Certificate (DAC), following
discrepancies / irregularities has been observed, which need to be rectified as per policy.

# Discrepancies in Document

Shall appreciate if above documents are submitted after rectification of discrepancies,

enabling CAD to issue the DAC.

__________________ __________________
Documentation Unit Manager CAD

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 CAD Manual

FORMAT4 -DAC ISSUANCE REGISTER

Disbursement Authorization Certificate Issuance Register

(DAC REGISTER)

DAC
Limit DAC Valid
# Sanction # Borrower Facility DAC # Issuance Initial
Amount up to
Date

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 CAD Manual

FORMAT 5 - THE GENUINENESS OF INSURANCE POLICY17

(Insurance Company)
Reference No: __________________
Date: _________________________

The Regional Executive / Corporate Manager – CAD

National Bank of Pakistan,
CAD Office, ____________________

Dear Sir / Madam

INSURANCE OF ___________

Customer M/s ___________________________________

Policy No: ____________________________________ Period _________

We Refer to your letter Ref: , dated regarding the confirmation

of genuineness of insurance policy (ies).

On account of above customer, we hereby confirm that the policy no. is genuine
duly issued by our Branch and premium stands paid / will be paid as per Agreed
schedule.

Trust you will find this in order.

Authorized Signatory of Insurance Company CAD –18

17
The above format is an indicative specimen for support of field functionaries

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 CAD Manual

FORMAT 6 –UNDERTAKING FROM INSURANCE COMPANY18

Letter of Undertaking

The Manager,
______________ Branch,
National Bank of Pakistan
__________________

Dear Sir,

Sub: Insurance Coverage arrangements for A/c ___________________ favoring

National Bank of Pakistan.

We confirm that NBP’s risks are covered under the insurance policy issued in the name of
_______________ bearing number ______________ dated _______________ valid up to
__________________ with sum insured of Rs. __________________ irrespective of receipt
of premium from the clients.

We also confirm that there is a special arrangement between the said client and our company
regarding payment of insurance premium according to which they are allowed to make
periodical payments (as per schedule)

We also confirm that the policies shall remain valid for the full period of insurance and that
no claim under these policies will be prejudice due to non-payment of premium. In case
insurance premium is not paid by the client within three working days as per scheduled
date(s), the bank shall be advised accordingly.

For and on behalf of

M/s _______________________________

____________________________
Name & Signature of Authorized Signatory

18
The above format is an indicative specimen for support of field functionaries

Page | 71
 CAD Manual

FORMAT 7 – AUTHORIZATION FOR ALLOWING TEMPORARY EXTENSION

DAC # ________
____________ BRANCH

______________REGION / CORPORATE

AUTHORIZATION FOR ALLOWING TEMPORARY EXTENSION (T.E)

Borrower ACCOUNT #
FACILITY LIMIT
EXPIRY DATE T.E VALID UP TO

Serial No Requirement Yes No Remarks

1. Approval of Temporary Extension is in accordance
with the Authority Matrix delineated vide
Instruction Circular # 78/2016 dated July 15, 2016.
2. Conditions verified through the Short Form of
Credit Request Format w.r.t. following areas.*
2.1 Renewal Proposal already initiated
2.2 No New exemption from SBP PRs involved
2.3 No Fresh exception from Bank’s Policy
involved.
2.4 Account is regular & there is no history of
shortage.
2.5 Temporary Extension is strictly on the existing
terms and conditions of sanction advice.
2.6 Compliance of all the Terms & Conditions of
last sanction.
2.7 No Deferral stands expired
2.8 Markup recovered up to the Expiry of Facility.
3. Approval is allowed by original approving
authority, in case of any shortage history.
4. Supplemental Agreement is duly executed and
witnessed.
* In case of conditional approval of Temporary Extension, the confirmation shall be sought from Branch
Manager / Relationship Manager for rectification / compliance of such condition before allowing
operations in the account.

This is to certify that above-mentioned formalities are compiled with, necessary for allowing operations
in the account.

Unit Head (CAD)– Documentation Regional / Corporate Manager CAD

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 CAD Manual

FORMAT 8 - REQUEST FOR SELECTION OF MUCADDAM COMPANY FOR THE

PLEDGE OF SITE / STOCKS
Reference # Date:
Customer
Region / Corporate Branch:
Nature of Finance  General  Seasonal
Limit
Facility against pledge (Rs. in Fresh / Renewal
M)
CF  Fresh  Renewal
Packing Finance  Fresh  Renewal
FIM  Fresh  Renewal
Any other, please specify  Fresh  Renewal
Value of Stocks to be pledged
Description of Commodity(ies)
(as per Sanction Advice)

Address of Site

Name of other Borrower

In case of Seasonal Finance Account Number
(Rice & Cotton in Limit Amount
exceptional Value of stocks to be pledged
circumstances) and joint (as per Sanction Advice)
processing unit of Two Name of Mucaddam
parties. Name of Marka of other Party
Other
Name of Owner
Details in case of Third Relationship with Owner:
Party Site / Godown & In case of lease, please provide details
Rented Warehouses Proof of ownership (please describe the title deed)
Letter of Disclaimer obtained  Yes  No
For constructive pledge /
stocks under transit, name
of Clearing & Forwarding
agent and details of stock
in transit, required:
To be Filled by the Business & Regional CAD
1
Name of Proposed
2
Mucaddam Company
3
1
Name(s) of Previously
2
Appointed Mucaddam(s)
3

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 CAD Manual

For Accounts Parked at Recommendation of Relationship Recommendation of Regional

Corporate Branches Manager Corporate Head

Signature Signature
Date: Date:
For Accounts Parked at Recommendation of Branch Recommendation of Regional
Branches under CRBG Manager Head

Signature Signature
Date: Date:
Specific Recommendation Recommendation of Head – Recommendation of RE / CM -
of Regional / Corporate - Vendor Management Unit CAD
CAD

Signature Signature
Date: Date:
FOR THE USE OF CAD (HO)
The following % age Wise Per site
company(ies) is/are Name of Mucaddam Business Limit of
#
appointed by the Credit Company Allocated to Mucaddam
Administration Division Mucaddam Company
(Head Office) to perform 1
Mucaddamage services at 2
the subject site(s). 3
The exposure on one Site allocated to M/s (Name of Mucaddam Company)
Mucaddam shall not Total sites currently handled by Mucaddam in the Region ______
exceed 25 % of the total Total number of active sites in the Region _________
exposure of the region. In
case of exception please
Remarks:
list the details
Comments of Department Comments of Wing Head –
Appointed Mucaddam Manager - Vendor Management Vendor Management
Name
Borrower
Site:
Previous Mucaddam Signature Signature
Date Date
Comments / Approval of the Divisional Head – CAD (HO)

Signature
Date

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 CAD Manual

FORMAT 9–PLEDGE SITE VISIT REPORT19

Detail of Pledge Site

Date of current visit by CAD
Date of Previous visit by CAD
Site Address
Godown # / Open Pledge
Godown Ownership  Owned  Rented
Godown Shared with other Banks / Customers  Yes  No

Account Position
Borrower Branch
Limit Amount Account #
Facility Expiry Date
Insurance coverage Amount Insurance Expiry
Type of Financing  General  Seasonal
Last Delivery Order Issued Dated Value
Last Pledge-In Dated Value
Last Stock Report Dated Signed*  Yes  No
* to be signed by Borrower and Mucaddam

Stocks Position
Principal Outstanding (Rs.)
Quantity (Units)
As per As per Rate / Total Margin
Commodity D.P
Bank’s Mucaddam As per Site Unit Value Amount
Books Register

Quantity Amount
Shortage (If Any)
Shortfall (if Any)

Aging of Stocks Quantity Value

Older than 3 Months
Older than 6 Months
Older than 1 Year

19
The observation w.r.t pledge site visits are based on judgment as a Banker and shall not be treated as certificate
of value, quantity and quality of stocks.

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 CAD Manual

Mucaddam Details
Mucaddam Company
Last Inspection by Mucaddam Supervisor
(Date)
Mucaddam Representative Available  Yes  No
Stock Registers Maintained by Mucaddam  Yes  No

Other Observations
Mill / Factory is operational  Yes  No  N/A
Mill / Factory has boundary walls  Yes  No  N/A
Stock placed other than designated area  Yes  No  N/A
Bin Card placed  Yes  No  N/A
Stacking Charts placed  Yes  No  N/A
Keys with Mucaddam  Yes  No  N/A
Mill / Factory board displayed  Yes  No  N/A
Bank’s board displayed  Yes  No  N/A
Insurance warranties observed  Yes  No  N/A
Watch & Ward arrangement  Yes  No  N/A
Fumigation Required  Yes  No  N/A
Marka Placed on Stocks  Yes  No  N/A
Stocks in countable position  Yes  No  N/A
Stocks Segregated from other Banks  Yes  No  N/A
Joint Inspection required  Yes  No  N/A
Fire Fighting arrangements were adequate  Yes  No  N/A
Stocks infected by Dampness / Insects etc.  Yes  No  N/A

General Observations
Condition of Stocks

Condition of Godown

Any Other

Visit conducted by (Signature, Name and Designation)

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 CAD Manual

FORMAT 10-PRE-DISBURSEMENT / PERFECTION CERTIFICATE20

REF: NBP-___/_____/___/___/__
Mr. ___________,
___________________,
National Bank of Pakistan,
__________ Branch,
Karachi.
MONTH DD, YYYY
Dear Sir,
PRE-DISBURSEMENT / PERFECTION CERTIFICATE
Customer Name:
__________________________
Credit Approval Dated: ___________
Offer Letter Dated: ___________
Facilities:
1. _______________ [name of facility] for an amount of Rs. ___________________/-
2. _______________ [name of facility] for an amount of Rs. ___________________/-
Security Structure /Description
1. Token Registered Mortgage of Rs. ____________ Mn and rest Equitable Mortgage
over the ______________________________ (the “Property”)
2. 1st Hypothecation charge over ___________ assets for an amount of Rs.
____________________
3. Pledge over _____________________ for an amount of Rs. _________________
4. Personal Guarantee of owner of the Property
5. Personal Guarantees of all the Directors of the Company
Documents Reviewed (all copies/original):
S.R No. Documents Required
1
2
3
4

20
The above format is an indicative specimen for support of field functionaries.

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 CAD Manual

OVERALL COMMENTS ON FINANCING/SECURITY DOCUMENTS

1. All financing/security documents are complete and in order
 Yes  No
2. All financing/security documents are properly executed by customer or, in case the
customer is a company, by its authorized signatory (ies)
 Yes  No
3. All major blanks in the documents have been filled up
 Yes  No
4. All the charge documents, as required by the Offer Letter, are in place
 Yes  No
5. Documents bear stamps of the amount required by the Stamp Act 1899
 Yes  No
6. Whether any securities / charges that have been created in favor of the bank are valid
and enforceable?
 Yes  No
7. Whether the title documents held by the bank are genuine?
 Yes  No
8. Whether PTM/NOC/NEC is available and satisfactory?
 Yes  No
Please see our comments below.
Suggestion/Comment:
You may disburse the facilities after observing the following:
1. (if any document is required to be obtained before disbursement)

Please feel free to contact us if you have any query in this regard.
Yours truly,
FOR AND ON BEHALF OF Lawyer firm
_____________ ____________

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 CAD Manual

FORMAT 11 –PRE – MORTGAGE LEGAL OPINION / GENUINENESS

CERTIFICATE21

Ref: NBP/CAW/_____/______/__
Mr. _____________,
Manager,
Credit Administration Division,
National Bank of Pakistan,
_________________,
Karachi.
MONTHDD, YYYY
Dear Sir,
[CUSTOMER NAME] – Property bearing
________________________________________________ (the “Property”)
Reference the captioned matter, after thoroughly reviewing the copies of the following
documents that you have forwarded to us:
Indenture of Lease executed by ___________in favor of ___________ dated ____________
Sale Deed executed by __________in favor of ___________ dated __________
__________________________
__________________________
We offer our opinion as under:
A. Whether the Sale Deed in favor of Mr. is genuine?
After physically verifying the contents of Sale Deed in favor of Mr. __________________
bearing Registered No.__________, Book No.I, dated ____________, with M.F Roll No. U-
___________________, dated ___________________, registered with the Sub-
Registrar___________, Karachi, from the office of Micro Filming Officer and Photo Registrar
(Urgent), Karachi, we hereby confirm the same is genuine.
Documents confirming the above being enclosed:
Certified True Copy of Sale Deed (for verification purposes) in favor of Mr.
_________________ dated ____________
Search Certificate issued by the Sub-Registrar______________Karachi dated
_______________

21
The above format is an indicative specimen for support of field functionaries

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 CAD Manual

B. Whether the Property may be mortgaged in favor of National Bank of Pakistan

(“NBP”)?
Yes. The Property may be mortgaged in favor of NBP by observing any one or both of the
following steps:
a) For Equitable Mortgage:
If you want to acquire an equitable mortgage in favor of NBP, you shall observe the following
steps:
Obtain Permission to Mortgage (PTM)/NOC for mortgage in favor of NBP from __________
Obtain original Sale Deed in favor of Mr. _______________ dated __________
Get the Memorandum of Deposit of Title Deeds executed by Mr. _____________ in favor of
NBP
b) For Registered Mortgage:

If you want to acquire registered mortgage in favor of NBP, you shall observe the following
steps:
Obtain PTM/NOC for mortgage in favor of NBP from ___________
Get the Mortgage Deed in favor NBP registered with the Sub-Registrar concerned
C. Documents required:
Kindly obtain the following documents from your customer/mortgagor:
1. Original Mutation Order in favor of Mr. _______________ from ______________
2. Original ___________________ [chain documents of the Property]
3. Original Approved Building Plan of the Property (if the Property is constructed)
4. Original of Completion Plan (in respect of the main plot)
5. Latest paid tax challan of the Property (if original is not available then do obtain copy
thereof)
6. Valuation Report of the Property
Please feel free to contact us if you have any query in this regard.
Yours truly,

FOR AND ON BEHALF OF LAWYER FIRM

_____________ __________________
LAYWER’S NAME LAYWER’S NAME
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FORMAT 12 –DELIVERY ORDER

F-220 F-220
National Bank of Pakistan
Delivery Order # Delivery Order # Branch
Godown # The Godown Keeper Dated:
Borrower

Please deliver the undernoted goods to

Quantity to be delivered.
(To be shown in detail) against acknowledgment and return this order to the
undersigned after delivery:

Godown # of
Description Weight
# Packages

Total

Total Number of Packages

(In Words)
Total Weight
(In Words)
__________________________________
Dated. ________________________

________________ _________________
Branch Manager Branch Manager
Back
Received from National Bank of Pakistan the undermentioned in order and good condition:
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________

_____________________ __________________________
Dated Signature of Borrower

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FORMAT 13–PLEDGE-IN LETTER (PIL)

(On Firm / Company’s Letter Head)
The Manger,
National Bank of Pakistan, Dated ______________
__________________ No.________________
__________________

Dear Sir,

Please take delivery of the following goods / commodities stored in Godown No._________
Situated at ______________________________ belongs to __________________________

No. of Packages Commodity Packing Weight Rate Value

I/We hereby declare that the above goods are my / our bonafide property, are free from all
burdens, charges and encumbrances, have been stored by me / us that my / our title to the goods
is clear and undisputed and that no one except the Bank has any lien over them.
I / We further declare that the above entries are correct, truthful and accurate in all their details
and specifications and that I / We shall be responsible for any defects, short comings and
inaccuracies discovered at any time hereafter. I/ We shall further be responsible for any
deterioration, delay or loss of the goods arising from any cause whatever.

Yours Faithfully
Name & Signature of Borrower

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FORMAT 14 – FORMAT FOR UNDERTAKING AGAINST FUMIGATION

On stamp paper of Rs. 100

Undertaking

I / We _____________________________ S/o ___________________________ R/o

_________________, the proprietor / authorized representative of M/s
___________________________do hereby undertake following that:

I / We availed finance of Rs. __________ (Amount in words) against the pledge of stocks of
commodity i.e. _______________ valuing Rs. ________________ (Amount in words) placed
at my / our owned / rented / leased place situated at ____________________ under
possession of Bank through its authorized Mucaddam.

 That natural course of business requires fumigation to maintain the quality of stocks.
 That I / We understand during the fumigation process, it is practically impossible for
any person to enter the premises.
 I / We also understand that during fumigation the watch and ward of the stocks will
remain under symbolic possession of the Bank and practically I / we shall be
responsible for safety, quality and quantity of pledged stocks.

I / We hereby further undertaking that in case of any decrease in quality and quantity of
pledged stocks, I / We shall be held responsible to recoup / make good that shortage /
shortfall within 3 days.

___________________________
(Borrower)
M/s ______________________

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FORMAT 15 –BAILMENT / PLEDGE OF GOODS

Reference No:
Date:
M/S
Dear Sir / Madam,
BAILMENT/PLEDGE OF GOODS
A/C___________________________________
Reference is made to the above subject and your agreement with our bank. The said customer
intends to pledge its moveable goods with our bank to avail the approved finance facility. You are
hereby authorized and entrusted to take delivery of the goods in terms of the above-referred
agreement and Section 149 of the Contract Act 1872 read with other enabling provisions of law.
Please note that you shall take delivery after complying with all legal requirements and shall be
responsible for your acts as agent. We are providing the particulars of the captioned customer
and the immovable goods as follows.
1. Address of site: ___________________________________________________
2. Description of Goods: ________________________________________________
3. Maximum amount of limit: ____________________________________________
Please take delivery after verifying the quality and quantity as promised by customer and certify
us in writing that the quality and quantity of the goods is/are adequate. You shall also be liable to
provide stock reports as per agreement and as per procedures of the bank as time and again
promulgated and informed to you by sending a copy to your head office through courier. It is also
worth reminding here that you shall not release the goods until the Delivery Order (duly signed
by the authorized Bank official, the signatures of whom are affixed below and any changes shall
be advised to you in writing). Please note that it is your responsibility under the agreement and
also under Chapter IX of Contract Act 1872 to ensure quantity as per drawing power of the
customer as advised by the bank all times and to ensure quality along with the prevalent market
rate of the commodity under bailment with you. We are entrusting the above referred goods to
you as agent and also in the same legal sense as “bailee”. It is also worth reminding you that in
case of any shortage in goods/stocks as detected by the bank, you shall be liable to make good
the loss of the bank within one month of the detection of the shortage. In case of your default
the bank shall take criminal and civil action against you.
In compliance and in agreement of above, kindly make arrangements to take the delivery and
advise us in writing, the names and contact numbers of the staff handling the above site on your
behalf.
Regards,
Branch Manager

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FORMAT 16 –DELIVERY OF PLEDGE GOODS22

(ON THE LETTER HEAD OF MUCADDUM COMPANY)

The Branch Manager
National Bank of Pakistan
Branch ____________
Dear Sir / Madam
DELIVERY OF STOCKS VALUING RS. _____________
M/S ________________________________________
Reference is made to the above subject and agreement of your bank with our
concern/firm/company.
We hereby confirm taking delivery of the goods as specified below in terms of the above-
referred agreement and Section 149 of the Contract Act 1872 read with other enabling
provisions of law. We also confirm that the delivery has been taken after complying with all
legal requirements and we shall be responsible as legally constituted agent of the bailee as
defined in Contract Act 1872. Following is our report of taking delivery of the goods with
respect to captioned customer.

[Link]. Narration Report

1. Customer’s name
2. Complete Site Address
3. Godown owner’s name
4. Nature of the goods or produce stored
5. The inside measurements of the Godown
6. The full storage capacity of the Godown
7. The height of the storage
8. Quantity stored (units/bags/weight etc.)
11. The insurance risk-whether pucca or kutcha
built Godown, Chances of Fire etc.
12. Names and contact numbers of Chowkidars
posted at site.
13. Other Remarks

22
The above format is an indicative specimen for support of field functionaries

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We further confirm as following:

1) That we have taken delivery after verifying the quality and quantity.
2) We certify that the quality and quantity of the goods is adequate and as per letter of
pledge.
3) That we shall be liable to provide stock reports as per agreement and as per
procedures of the bank or as and when advised by the Bank.
4) We also confirm that we shall not release the goods until the Delivery Order (duly
signed by the authorized Bank official) is received by us.
5) We also confirm that it is our responsibility under the agreement and also under
Chapter IX of Contract Act 1872 to ensure quantity as per drawing power of the
customer as advised by the bank all times.
6) We confirm to ensure quality of the goods pledged along with the prevalent market
rate of the commodity under bailment.
7) We also confirm to communicate any fluctuation in market price of the goods pledged.
8) We also understand that in case of any shortage in goods/stocks as detected by the
bank, we shall be liable to make good the loss of the bank and in case of default on
our part the bank reserve the right to take criminal and civil action against us.
We are also enclosing stock report for your perusal.

Regards,

______________ _________________

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FORMAT 17 –GODOWN CERTIFICATE

Borrower
Location / Address of Godown
Godown # Municipal #
Construction quality of godown  Pacca  Kutcha
Limit (Rs.) Margin Rs. Total Rs.

Inside Measurement of Godown Surroundings of Godown

Length North
Width East
Height West
Total Capacity South

Other Conditions
Godown is inside shop / Residential Premises  Yes  No
Godown is in low-lying area with river banks and canal nearby.  Yes  No
Godown has an easy approach to road / internal roads.  Yes  No
Godown is secured having no unauthorized access / intrusion through any
 Yes  No
other godown(s) / Mill Area.
Godown has drainage system  Yes  No
Effective firefighting arrangements are available at site  Yes  No
There is a watch and ward arrangements at godown from theft, burglary etc.  Yes  No
Roof of the godown is water proof / sufficiently strong (without leakages) to
 Yes  No
protect from rain, weather effects etc.
Godown is dry and has satisfactory flooring with no moisture / dampness.  Yes  No
Godown has proper ventilation arrangements with no apertures having
 Yes  No
protection from birds, rodents etc.
All the doors of godown are strong enough (not easily breakable) and can be
 Yes  No
secured through lock and key arrangements.
Godown is of adequate capacity where goods are to be stored and visits can
 Yes  No
be carried out conveniently after storage.
The godown can be sealed for effective fumigation.  Yes  No
Godown is shared for storage of stocks pertaining to other Banks / Customer.  Yes  No

In case, godown is shared with other Bank(s)

# Bank Name Mucaddam Allocated

Remarks / Additional Comments (If Any)

Mucaddam Representative (Signature & Name)

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FORMAT 18 -SAFE IN / SAFE OUT REGISTER

Branch
Borrower

Safe-In (Inward Movement) Safe-Out (Outward Movement)

DCL
Refer Document Details Initials Document Details Initials
ence
Date of
R Return R
E Reason for (In Case E
S. No.

S. No.
Handed
Date

Date
/ Outward of /
No. of UH – No. of Over To
Movement Tempora
Ref. No.

Docs. Scan C UH - C
Dated

Docs. Docs. Description Amount Pages Docum Docs. Docs. Pages

Index Folio M ry Documenta M
Type Name of Docs. of Docs. (of entatio Index No. Name (of
No. No. - Release) tion Unit -
Docs.) n Unit Docs.)
C C
A A
D D

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 CAD Manual

FORMAT 19 – FOLLOW-UP MIS FOR JOINT INSPECTION

National Bank of Pakistan

Regional / Corporate Administration Department
Follow-up for Joint Inspection

Leading / Quarter of
Borrowe Address Name of Limits Sanctioned Date of
Facility Commodity Participating Total Limit the Year (Q1
r Site Bank as per BBFS Visit
Bank to Q4)

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PART D: ANNEXURES

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ANNEXURE A - REVENUE STAMP REQUIREMENT SHEET (RSRS)

Business
Borrower: Segment:

Branch

REMARK
Sanction Advice #
LIMIT WISE REVENUE STAMP DUTY S

Facility Facility Facility Facility

1 2 3 4
S.
REQUIRED IB DOCUMENTS Amount Amount Amount Amount …
No.
______ ______ ______ ______
_ _ _ _

1 Finance Agreement

2 Demand Promissory Note

3 Letter of Hypothecation

4 Letter of Pledge

5 Mortgage Deed

6 MODTD

7 Personal Guarantee

8 Corporate Guarantee

9 Letter of Lien & Set Off

10 Counter Guarantee

Any other undertaking / Debit Authority (if

11
any)

TOTAL

BM / RM is requested to arrange above listed Revenue Stamp Papers for preparation of documents

SIGNATURE:

Documentation Unit Manager CAD

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 CAD Manual

ANNEXURE B - FACILITY WISE DOCUMENTATIONS

ADVANCES

1. RF (Running Finance)
 Customer request letter for availing facility
 Facilities offer letter / letter of financing facility
 Letter of authority for debit of markup and other charges
 Demand promissory note (D.P. NOTE) IB-12
 Agreement for financing on markup basis IB-6
 Trust receipt IB-27
 Letter of hypothecation IB -25
 Personal guarantee IB-29 (individual /proprietor / partners/ Directors in case of
Pvt. Ltd Co. or Unlisted Public Limited Co). (PGs are linked with Risk Rating so when
Risk Rating is 1 to 4 it is exempted; 5-6 Risk Rating can be exempted by CC but over
6 Risk Rating and PGs are must) (Along with PGs NWS submitted to FBR is also
required)
 Undertaking as per Sanction Advice-clauses no 11 to 17 (in case of seasonal
financing)
 Undertaking for corporate and commercial borrower (in case of seasonal
financing)
 Undertaking for corporate and commercial borrower (in case of seasonal
financing)
 Undertaking for SME’s borrower (in case of seasonal financing)
 Undertaking for SME’s borrower (in case of seasonal financing)
 Undertaking for utilization of facility as per loan application or request letter
2. CF (Cash Finance)
 Customer request letter for availing facility
 Facilities offer letter / letter of financing facility
 Letter of authority for debit of markup and other charges
 Demand Promissory Note (D P NOTE) IB-12
 Agreement for financing on markup basis IB-6
 Letter of pledge IB -26
 Personal guarantee IB-29 (individual /proprietor / partners/ directors in case of
Pvt Ltd Co)
 Undertaking as per Sanction Advice-clauses no 11 to 17 (in case of seasonal
financing)
 Undertaking for corporate and commercial borrower (in case of seasonal
financing)

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 Undertaking for corporate and commercial borrower (in case of seasonal

financing)
 Undertaking for SME’s borrower (in case of seasonal financing)
 Undertaking for SME’s borrower (in case of seasonal financing)
 Undertaking for utilization of facility as per loan application or request letter
3. DF (Demand Finance)
 Customer request letter for availing facility
 Facilities offer letter / letter of financing facility
 Letter of authority for debit of markup and other charges
 Demand Promissory Note (D P NOTE) IB-12
 Agreement for financing on markup basis IB-6
 Letter of pledge IB -26
 Personal guarantee IB-29 (individual /proprietor / partners/ directors in case of
Pvt Ltd Co)
 Undertaking for utilization of facility as per loan application or request letter
 Mortgage Deed IB-22/23
 MODTD IB -24
 CMODTD
4. Bridge Financing
 Documentation as per sanction and as per CPMs
 DP Note
 Agreement for finance IB-6A
 Letter of hypothecation IB 25
 Mortgage Deed IB-22/23
 MODTD IB -24
 P/G of the Sponsors/ Directors
 Guarantee issued by Bank /Financial Institution / Federal Provincial Government
5. Consortium Financing
 Consortium Agreement
6. Financing for Commodity Operations
 DP note (IB12)
 Agricultural finance Agreement (IB- 4)
 Letter of Hypothecation of stocks (IB-25)
 Certificate from authorized officer the Provincial / Federal Government or their
Agencies (IB- 2)
 Counter Guarantee from the Provincial / Federal Government (IB-3)
7. LMM: (Local Manufactured Machinery) Financing
 Facility letter IB-33

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 D P Note IB -12 for limited companies or IB 30A for Single/ Joint/ Proprietorship /
Partnership Account
 Agreement for finance on markup basis (IB-6A)
 P/G IB-29
 Letter of hypothecation / receivable in case of securities being offered stocks, book
debts and receivable IB-25
 Letter of pledge IB-26 in case of pledge of goods
 Mortgaged Deed IB 22/23
 MODTD-IB 24
a. Hire Purchase Financing
In case finance extended for purchased of Fixed Assets
o Hire purchase agreement

AGRICULTURAL FINANCE

1. Farm credit – Production purpose (Short Term)

 Loan application form along with photo copy of NIC
 IB-7 (Agreement cum Guarantee) Revised
Based on the collateral offered by the borrower, obtain:
 Copy of KhasraGardwari (in case of surety loans) / Bonafide growers certified
by the Mills / Factory / copy of agreement for supply of sugarcane / cotton /
tobacco etc.
 Charge creation certificate on passbook
 Mortgage of rural / urban property (IB-24)
 Lien on deposit / DSC / SSC (IB-28, IB-31)
2. Farm Credit – Development Purpose (Medium / Long Term)
 Loan application form along with photo copy of NIC
 IB-7 (Agreement cum Guarantee) Revised
Based on the collateral offered by the borrower, obtain:
 Charge creation certificate on passbook
 Mortgage of rural / urban property (IB-24)
 Lien on deposit / DSC / SSC (IB-28, IB-31)
 Pledged of gold and gold ornaments, silver and silver ornaments (IB-26) Weight
and Valuation Certificate from Banks approved Gold smith

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 Quotation of items sought (Where ever applicable)

 Registration of Tractor / Vehicle in the joint name of bank and borrower (Where
ever applicable under the Registration rules)
 Comprehensive Insurance for tractor / vehicle and other insurable assets (Where
ever possible / applicable)
3. Non-Farm credit
 Loan application form along with photocopy of NIC
 IB-7 (Agreement cum Guarantee) Revised
Based on the collateral offered by the borrower, obtain:
 Charge creation certificate on passbook
 Mortgage of rural / urban property (IB-24)
 Lien on deposit / DSC / SSC (IB-28, IB-31)
 Pledged of gold and gold ornaments, silver and silver ornaments (IB-26) Weight and
Valuation Certificate from Banks approved Gold smith
 Quotation (Where ever applicable)
 Feasibility report (Where ever necessary)
 Insurance Cover on case-to-case basis
 Please note that Khasra Gardwari is not required in Non-Form Credit
4. Cash Collateral Base Documents
 Customer request letter for availing facility
 Facility (s) offer letter / letter of financing facility(s)
 Letter of authority for debit of markup and other charges
 Demand Promissory Note (D P NOTE) IB-12
 Agreement for financing on markup basis IB-6
 Letter of set off
 IB- 31
 Personal guarantee IB-29 (If mentioned in Sanction Advice)
EXPORT BASE FACILITIES

1. F B P (Foreign Bill Purchased and Discounted Against L/ C)

 Authenticated Original L/C
 Documents title to goods (B/L / Airway etc.)
 B/E Drafts (Where Necessary)
 Commercial invoice

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 Certificate of origin of goods (where necessary)

 Packing list (where necessary)
 Insurance policy (in case of C I & F shipment)
 Any other documents as per terms & conditions of Letter of Credit
 IB-9: Letter of Indemnity –Cum Buyback Guarantee against Export Bills
 In case of Usance L/C, acceptance through swift message with Maturity Date of
Payment is also required
 2nd& 3rd copy of Form E
 GD Form (Goods Declaration Certificate)
2. FBC (Collection of Foreign Clean Bills)
 Undertaking from customer to pay if bill dishonored (BLA)
 Copy of cheques at sight &Usance
3. FDBC (Foreign Documentary Bills for Collection) At Sight / Usance
 Sanctioned Advice to speak for the required documents
 Sales contract (signed by both the party)
 Commercial Invoice
 Evident of Shipment – Title to goods – (B/L, Airway Bill, Railway Receipt and Truck
Receipt)
 Bill of exchange (If required)
 2nd & 3rd copy of Form ‘E’ from Exporter
 G D Form (Goods Declaration Form)
 IB-9: Letter of Indemnity –Cum Buyback Guarantee against Export Bills
 Any other documents as per sale contract
4. ERF (Export Re-Finance Part I)
Documents under Refinance under Part-I allowed against Firm Export Order/ Export
Letter of Credit
a. Pre-shipment
o IB-12 Demand Promissory Note
o IB-10 Undertaking by the exporter under SBP export finance scheme
o IB-13 Application by the exporter under SBP export finance scheme (Form D)
o Agreement for Export Finance
o IB-9 Letter of indemnity Cum Buy-back Guarantee
o Consolidated position of overdue Export Proceeds Certificate
b. Post Shipment
Following copies of documents got to be obtained
o Commercial invoice, B/L (Airway Bill/ Truck Receipt)

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o G D Form (Goods Declaration Certificate)

5. EXPORT FINANCE (Refinance under Part-1)
 IB-11 undertaking to be signed by exporter under SBP export finance scheme
 IB-11A to be used by banks whose rate of service charges is not adequate (i.e.
Finance on mark-up basis) to be executed by exporter
 IB-12 D.P. Note to be executed by exporter
 IB-13 Application by exporters (FORM D)
 Form (D E-3)
 Form E P for Rollover
 Verified ‘EE-1’ Statement
 Consolidated position of overdue Export Proceeds Certificate
6. Refinancing from State Bank of Pakistan
 IB-14 Certificate to be given by the Bank to SBP
 IB-15 Application Form to be submitted by the Bank to SBP to obtain Refinance Form
 IB-16 Agreement to be executed by P.O. with SBP
 IB-17 Application to SBP for refinance facility for locally manufactured Machinery /
LTFF
 IB-18 Appendix A of IB-17
 IB-19 Statement showing particulars of finance account (Local Manufacturing
Machinery / LTFF)
IMPORT BASE FACILITIES

1. P A D (Payment against Documents)

 Negotiating Bank Schedule
 Draft/ Bill of Exchange (If Any)
 Commercial Invoice
 Transport Documents i.e. Airway Bill, Truck Receipt must be endorsed in favor of
Bank
 Certificate of origin (If required by applicant from Exporter)
 For Usance Bills Customer acceptance on B/E or Letter of acceptance to be obtained
at the time of release of documents
 In case of Usance Bills, if deficiency found in documents, importer is being informed
accordingly
2. FATR (Finance against Trust Receipt)

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 At the time of lodgment of Documents either from the customer along with
acceptance of documents on his Letter Head
 Bill of exchange duly accepted by the party
 Invoice
 Demand Promissory Note (D P NOTE) IB-12
 Agreement for financing on markup basis IB-6A
 Trust Receipt IB-27
 Personal Guarantee IB-29 (Individual /Proprietor / Partners/ Directors in case of Pvt
Ltd Co) as per Bank Policy
 Insurance Policy of Goods
3. FIM (Finance against Imported Merchandise)
 Bill of exchange duly accepted by the opener or letter of acceptance
 Letter of request from the Importer
 Demand Promissory Note (D P NOTE) IB-12
 Agreement for financing on markup basis IB-6A
 Letter of Pledge IB -26
 Personal guarantee IB-29 (Individual /Proprietor / Partners/ Directors in case of Pvt
Ltd Co) as per Bank Policy
 Undertaking for utilization of facility as per loan application or request letter
 Care Mucaddam& Clearing Agent shall be Bank Approved
 Insurance Policy
 Stock report duly signed by the Borrower &Mucaddam
 Land + Godown premises shall be free from all encumbrances
 Letter of disclaimer in case of Third Party Godown
4. FAPC (Finance against Packing Credit on Markup Basis)
 Customer request letter for availing facility
 Facilities offer letter / letter of financing facility
 Letter of authority for debit of markup and other charges
 Demand promissory note (D P NOTE) IB-12
 Agreement for financing on markup basis IB-6
 Letter of hypothecation of stock IB -25
 Personal guarantee IB-29 (Individual /Proprietor / Partners/ Directors in case of Pvt
Ltd Co) as per Bank Policy
 Insurance of Hypothecated Stocks
 Charge Registration Certificate from SECP (in case of Pvt / Public Ltd Company
 Undertaking for utilization of facility as per loan application or request letter
 Usual documents as per sanctioned limit
5. FAFB (Finance against Foreign Bills)

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Invoice
Bill of exchange / Airway Bills
Form E duplicate copy
Acceptance of Bill (in case of Usance)
G D Form (Goods declaration Form)
Customer request letter for availing facility
Facilities offer letter / letter of financing facility
Letter of authority for debit of markup and other charges
Demand Promissory Note (D P NOTE) IB-12
Agreement for Financing on Markup Basis IB-6
Personal guarantee IB-29 (individual /proprietor / partners/ directors in case of Pvt
Ltd Co) as per Bank Policy
 Undertaking for utilization of facility as per loan application or request letter
 Other usual and special documents in compliance with the instruction contained in
the sanctioned limit
GUARANTEES

1. Shipping Guarantee
Following documents required from the customer at the time of issuance of Shipping
Guarantee:
 Copy of Invoice
 Copy of non-negotiable Bill of Lading / Transport Bill
 Text of the Shipping Guarantee to be issued
 Letter of acceptance (to accept the documents even if they are found discrepant
 Letter of Rate Fluctuation
 Undertaking to accept the B/E (bill of exchange) in case of Usance L/C
 Counter Guarantee in favor of the Bank
 Covering letter to the Shipping Company along with Shipping Guarantee
 IB-29 For Guarantee to be executed by guarantors
 IB-30 For counter guarantee to be executed by applicants/Clients
Other Documents required From Borrower (Customer to Customer Basis) Along with the above
Finance / Charge Documents and / or as advised by the Bank’s Legal Adviser (BLA)

 Original National Saving Certificates (DSC/SSC/RIC) Duly Signed / Discharged by the

Owners / title holders
 Legible copy of CNIC of customer and witnesses (Attested with Nadra Verification)
 Borrower Basic Fact Sheet (BBFS) must be co-signed by the borrower and
respective BM / RM
 Loan Application Form
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DOCUMENTS REQUIRED AS PER CONSTITUTION

1. For Sole Proprietorship Concern
 Letter of Proprietorship / Proprietor Ship Declaration
 Copy of NTN Certificate (Where Applicable)
2. For Partnership Concerns
 Original / Certified True Copy of Partnership Deed (Registered /Unregistered)
 Partnership Mandate / Resolution Signed by All Partners
 Copy of NTN Certificate (Where Applicable)
3. Joint Venture
 Joint Venture Agreement
4. For Companies
 Copy of Memorandum and Articles of Association (Attested by SECP)
 Certificate of Copy of Incorporation & Commencement of Business
 BOD (Board of Directors Resolution)
 Latest Copy of Form- 29 (Attested By SECP)
 Latest Copy of Form- A (Attested By SECP)
 Copy of NTN Certificate
 Latest Search Report
5. For Trust / Club/ Association / Society/ Corporation
 Certified Copy of Bye-Laws / Charter
 List of Members / Trustees
 Copy of NTN Certificate (Where Applicable)
 Minutes of Meeting of the Governing Body / Resolution Passed by Board of
Trustees
6. Charge Creating Documents
 Mortgage Deed (IB 22 /23)
 MODTD (Memorandum of Deposit of Title Deed)
 Letter of Hypothecation (for creating charge on CA and FA of the Firm)
Collateral /Security Documentation & Requirements (Hypothecation / Pledge Stocks) For
Proprietorship / Partnership Firm

 Latest Stock Report with Breakup / Specification Godown Location of stock

 Valid comprehensive insurance policy with PPR for PRs _______________ Expiry
____________
 Last twelve month stocks report (branch’s confirmation required)
 Current inspection report of Hypo / pledge stocks
7. Mortgages / Fixed & Immoveable Assets (for Proprietorship / Partnership Firm)
 Property situated at ________________________________________________

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 Initial legal opinion /vetting of property documents (Genuineness Certificate /pre-

mortgage BLA opinion)
 Final legal vetting/ perfection certificate (post mortgaged BLA opinion)
 Genuineness certificate on property
 Original lease deed/ sale deed/conveyance deed/ gift deed etc.
 Certified copy of ownership mutation #
 Previous title documents (if any)
 Fard Jamabandi / Records of Rights
 Non-encumbrance (NEC) / Search Certificate
 Permission to mortgage /NOC
 Form PT1
 Registered Mortgage Deed (IB-22/23) # ____________ dated _____________ MF
Roll #______________ dated _______________
 Mutated Fard / Records of Rights
 Certified copy of mutation (Bank’s Charge) #______________
 Certified copy of Form PT1 (Bank’s Charge)
 Lien marking in the records of concerned Land Authority
 MODTD signed by mortgagor (s)
 Undertaking on E/ M
 Ask Shajra
 Approved SITE Plan
 P/G of Mortgagor (s)
 Attested copies of CNIC of the Mortgagor(s)
 Valuation report of mortgaged property
 Valid comprehensive insurance policy with PPR for PRs_____________
expiry________________ Building / Plant & Machinery
 Any other documents if required as per sanction and advised by BLA
8. Cash Collaterals / lien on account (SSC /DSC /RIC /TDR /etc.)
 Lien on FCY/LCY deposit account # for PRs _____________________
 Lien Marked on the original instruments / accounts
 Letter (s) of lien from borrower – each address to issuing authority for marking of
lien
 Letter(s) of encashment (prepare separately for each issuing authority
 Undertaking for utilization of facility as per loan application or letter request
 Holder branch’s confirmation for possession of security with pertinent
documents/ requirements

9. Shares Certificate Scripts / Public Stocks

 Share certificate held in borrower & / or 3rd Party share
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 Blank Transfer deed of above share certificates scripts (borrower & / or 3 rd Party
share)
 CDC lien marked & acknowledgement held
 Prudential margin requirement meet
 NBP margin requirement meet as per policy
 Company(s) listed in CDC whose shares are being pledged
 Agreement / letter of pledge of shares certificates scripts
 Authorization for third party
PUBLIC / PRIVATE LIMITED COMPANY

1. Prudential requirements / other documents

 Latest audited / unaudited financial /balance sheet (attested)
 Undertaking not to amend M & AOA without prior notice / permission to the Bank
 Directors loan / subordination loan agreement (where applicable)
 Annual/ periodical clean up requirement once in 180 days/ as per approval/ policy
 Quarterly call visit report by manager with a copy to credit and credit file (as per
previous approval)
 Annual call visit by manager as per previous approval)
 Industry specification requirements (if any) e.g. Food Department’s License for
wheat procurement)
 Others if any advised by BLA and as per sanction
2. Collateral /Security Documentation & Requirements
Current & moveable assets Hypo/ Charge/s etc.

 Exclusive / First Registered (SECP) Hypo Charge of Current Assets for

PRs_______________(m) over entire present and future stock of with % lending
margin (latest)
 Hypo of current & / moveable assets of the borrower for PRs____________ (m)
over entire present & future of with % lending margin
 NOC’S of prior charge holder (s)
 Latest stock statement (along with updated previous record) of above
hypothecated stocks / assets
 Valid insurance policy with PPR of above hypothecated stocks / assets (current &
/ moveable assets
 SECP registration certificate of above charge on current & / moveable assets
(latest)
 Relevant form 10/16 evidencing submission of above charge with SECP (latest)
 Chain documents for above current & / moveable assets Hypo charge (i.e. original
Hypo instruments along with subsequently filed instrument(s)

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 NOC and relevant form (s) 10/16 & registration certificate(s) other than the (latest)
3. Fixed & Immoveable Assets Hypo / Charge/s ETC
 First Registered (SECP) Hypo Charge of fixed / immoveable Assets for
PRs_______________(m) over all present and future fixed assets of the company
including
 Hypo of fixed / immoveable assets for PRs____________ (m) over all present &
future fixed assets of the company including
 NOC’s of prior charge holder (s)
 Valuation report of above fixed assets
 Valid insurance policy with PPR of above hypothecated fixed assets
 SECP registration certificate of above charge on fixed assets
 Relevant form 10/16 evidencing submission of above charge with SECP (latest)
 Chain documents for above fixed assets Hypo charge (i.e. original Hypo
instruments along with subsequently filed instrument(s) and relevant form(s)
10/16 & registration certificate(s) including the (latest)
4. Mortgages /s fixed & / immoveable assets hypo / charge/s etc.
1st mortgage property
 Initial legal opinion /vetting of property documents
 Final legal opinion / perfection certificate
 Genuineness certificate on property
 Original lease /sale / conveyance & gift deeds # __________ dated __________
MF Roll No _______________ dated __________
 Certified copy of ownership mutation #
 Previous title documents (if any)
 Fard jamabandi/ records of rights
 NEC (Non-Encumbrance Certificate)
 Permission to mortgage / NOC
 Form PT1
 Clearance certificate form excise & taxation
 Registered mortgage deed # ________ dated _________ MF Roll no ________
dated____________
 Mutated Fard / Records of Rights
 Certified copies of mutation (Bank’s Charge)
 Certified copy of form PT1 (Bank’s charge)
 Lien marking in the record of concerned land’s authority
 MODTD (IB 24) signed by the mortgagor
 Undertaking on equitable mortgage
 Ask shajra

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 Approved SITE plan duly signed by the owner

 P/s of Mortgagor(s)
 Valid insurance policy with PPR for PRs _____________ expiry_____________
must be bifurcated with cost of Land PRs _________Building PRs ___________
 Attested copy (s) of CNIC of mortgagor (s)
 Valuation report of mortgaged property
 Other if any
 First registered (SECP) equitable mortgage charge (through MODTD) for PRs
___________(m) over all present and future Fixed assets of the company
including (latest)
 SECP registration certificate of above mortgaged assets (latest)
 Relevant form 10/16 evidencing submission of above charge with SECP (latest)
 Chain documents for above mortgage charge (i.e. original instruments along
with subsequently filed instrument(s) and relevant form(s) 10/16 &
registration certificate(s) including the (latest
 NOC of other prior charge holders

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 CAD Manual

ANNEXURE C - PROCESS FLOW FOR ISSUANCE OF DISBURSEMENT AUTHORIZATION CERTIFICATE

Borrower

Title/ Property Provides

Execution Execution of Documents Insurance Policies
Documents
and Stock Reports

Yes
Receives back
Receives Sanction Examine FOL for No executed Insurance Policy
Advice Receives
Customer’s acceptance In Order? Documents & Title and Stock Report
Accepted FOL
Documents

Review of
prepared Forwards executed Arrange for
Documents documents alongwith rectification of
BM / RM

Property/ Title observations or

Documents to CAD arrange deferral
Forwards Sanction
Prepare FOL and Requests CAD for
Advice and Pre-
forward to CAD for preparation of
Sanction
Review Documents
documents

Finance & Security

Documents

Verify Genuineness of Provides copy of

Notify Business for
insurance policy and DAC to Business
Discrepancies/
check latest stock for record
Irregularities
position by Branch
No
Regional / Corporate CAD

Yes
Forward FOL to
Yes Business for Review Issue
Reviews FOL vis-à- Feed / Update
FOL in order? acceptance from completeness of Disbursement
vis Sanction Advice Prepare Documents Discrepancy Limit Plan in
Borrower along documents in light Authorization
and engage BLA No the System
with DCL & RSRS of DCL Certificate (DAC)

Prepares DCL & RSRS, Safe Custody

in light of approval &
forward to business

Prepares
documents and Registration of Charge,
Mortgage, Legal Opinion,
BLA

provides
requested services Genuineness and
Perfection Certificates

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 CAD Manual

ANNEXURE D - CAD MIS TICKLERS

Ticklers D.1 - Pledge Site Visit Report

National Bank of Pakistan

Regional / Corporate Credit Administration Department
Monthly Pledge Site Visit Report
As On _______________

PKR in Million
Inspection Quantity Mucaddam
O/s Site As per
# Office Branch Borrower Segment Limit As per Quality Company Observations
* Address Date By** Bank Performance
Site Name
Books

* Principal outstanding as of date of visit

** Name & Designation of CAD staff inspected the site

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 CAD Manual

Ticklers D.2 - Deferral Expiry Report

National Bank of Pakistan

Regional / Corporate Credit Administration Department
Monthly Statement of Outstanding Deferrals
As On _______________

PKR in Million
Deferral Details
Limit Subsequent Remarks
# Office Branch Borrower Segment Facility Expiry Allowed Valid Deferral, if any Materialized/
Approved Materialized
Date Document on Up to Pending
by Allowed Valid Up on (Date)
(Date) (Date)
on Date to

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 CAD Manual

Ticklers D.3 - Past Due Obligation

National Bank of Pakistan

Regional / Corporate Credit Administration Department
Monthly Past Due Liability Obligation
As On _______________
PKR in Million
Principal Mark-up
# Office Branch Borrower Segment Facility Limit Amount Overdue Amount Overdue Remarks
overdue Since (Date) overdue Since (Date)

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Ticklers D.4 - Pledge Management Report

National Bank of Pakistan

Regional / Corporate Credit Administration Department
Monthly Pledge Management Report
As On _______________
PKR. in Million
Shortage / Date of
General Mucaddam
Stocks Book Shortfall Last
# Office Branch Borrower Segment / Limit Expiry Margin D.P O/s
Details value Inspection Allocation
Seasonal Amount Reason Name
by CAD Date

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 CAD Manual

Ticklers D.5 - Limit Expiry Report

National Bank of Pakistan

Regional / Corporate Credit Administration Department
Monthly Credit Limit Expiry & Temporary Extension Report
As On _______________
PKR in Million
Temporary Extension DAC / PDV*
Limit
Approved Validity Number Limit For
Offic Branc Borrowe Segmen Facilit Limi Expir Authorize
# Ye On By of Renewa Fresh / Dat
e h r t y t y Fro Dat d by CAD
s/ (Date Authorit Extension l Date Renewa e
Date m e on (Date)
No ) y s Allowed l

* PDV is Post Disbursement Verification of documents where unauthorized disbursement(s) made by the Branch without obtaining DAC from CAD. The PDV shall only be conducted after seeking
permission from the Divisional Head (CAD)

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Ticklers D.6 - Limit Blocking Report

National Bank of Pakistan
Regional / Corporate Credit Administration Department
Monthly Statement of Limit Blocking
As On _______________
PKR in Million
Effective
Limit Reasons for Advising Date Limit
Date of
# Office Branch Borrower Facility Limit Outstanding Expiry Limit for Limit Restoration Remarks
Limit
Date Blocking Blocking (Date)
Blocking

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 CAD Manual

Ticklers D.7 - Expired Insurance Policy

National Bank of Pakistan
Regional / Corporate Credit Administration Department
Monthly Statement of Expired / Expiring Insurance Policies
As On _______________
PKR in Million
Insurance Details Per Party
Expired /
# Region Branch Borrower Segment Limit Insurance Sum Assets Single Risk
Policy # Date Expiry Not Expired
Company Insured Insured Limit

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 CAD Manual

Ticklers D.8 - Valuation Report

National Bank of Pakistan
Regional / Corporate Credit Administration Department
Monthly Statement of Valuations Requirements
As On _______________
PKR in Million

Limit Previous
Collateral Address of Name of Market
# Office Branch Borrower Segment Facility Limit Expiry Evaluation FSV
Details Property Evaluator Value
Date Report Date

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 CAD Manual

Ticklers D.9 - Excess Over Limit Report

National Bank of Pakistan
Regional / Corporate Credit Administration Department
Monthly Excess Over Limits Report
As On _______________

PKR in Million

Approval EOL EOL Excess EOL

EOL
# Office Branch Borrower Segment Facility Limit Outstanding Obtained Approving Approval Since Adjustment Remarks
Amount
(Yes/No) Authority Date (Date) Date

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 CAD Manual

Ticklers D.10 – Pending Hypo Stocks / Receivable Report

National Bank of Pakistan

Regional / Corporate Credit Administration Department
Statement of Overdue Stock / Receivables Report (Monthly)
As On _______________
PKR in Million
Report Pending for the
# Region Branch Borrower Segment Facility Limit Outstanding Remarks
month(s) of

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 CAD Manual

Ticklers D.11 – DACs Issued and Counter Verification Report

NATIONAL BANK OF PAKISTAN

Regional / Corporate Credit Administration Department

Monthly Summary of Disbursements, Issuance of DACs & Counter Verification report

As on __________________________
Number of Number of Number of Number of Counter Counter
Counter
Number of DACs DACs DACs DACs Verification Verifications
Verification Total
Cases Issued by Issued by Issued by Counter Pending Pending
Segments Declined by (E + F + G)
Disbursed Manager Delegated Branch Verified by (Current (Previous
CAD
CAD Officer Managers CAD month) months)
A B C D E F G H I
Corporate
Commercial
Medium Enterprise
Small Enterprise
Agriculture (Non-Gold)
PMYBL
Advance Salary
Saibaan
Agriculture & D.F (Gold)
Any other Segment, please specify

Note: In case if any unauthorized disbursement observed, the same shall be reported separately with relevant details

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 CAD Manual

ANNEXURE E - REGIONAL / CORPORATE CAD - STRUCTURE

DOCUMENTATION UNIT
 Scrutiny of Sanction Advice with reference to Credit Approval Authority Booklet (CAAB)
/ Seasonal Policies
 Scrutiny of Facility Offer Letter (FOL) against the Sanction Advice.
 Selection of Bank’s Legal Advisor and allocation of assignments to BLA.
 Preparation of standard documentations i.e. IBs, for SME, Commercial & Corporate
Accounts
 Preparation of non-standard documentation through BLA.
 Supervision of Registration of charge with SECP through BLA.
 Supervision of Registration of Mortgages and Marking of lien with concerned registrars /
Revenue Offices, through BLA.
 Seeking Genuineness Certificate from BLA, regarding physical verification of title
documents from the concerned property record.
 Seeking Perfection Certificate from BLA over the charge / finance documentation that
the documents are in perfect order and are legally enforceable, before disbursement.
 To ensure that Bank Guarantee submitted by customer is in line with the Sanction Advice
for e.g. expiry date of the guarantee, general text, claim lodgement date etc.
commensurate with the terms & conditions stipulated in the Sanction Advice. It should
also be ensured that signature of the executants are verified by the concerned officials,
before taking into custody.
 Preparation for Documentation checklists.
 Preparation of Disbursement Authorization Certificate (DAC) for all SME, Commercial &
Corporate Accounts including Seasonal Finance and Agriculture Finance (Non-Gold).
 Handling / Maintenance of Security / Finance Documents.
 Maintenance of relevant register including safe-in & safe-out register.
 Ensuring that Insurance arrangement / policies tendered by the customers, are valid,
backed by the premium paid receipt (in original), covering all the required risks and as
per Sanction Advice / Bank’s Policies.
MIS UNIT
 Feeding customer, facility, collateral, insurance and all related details in system / ticklers.
 Preparation of CAD related MIS & its submission to controlling office.
 Preparation of CAD Ticklers & circulation amongst respective CAD units.
 Maintenance of Credit Files related to CAD.
 Feeding of Limit & Drawing Power into the system (where available).

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CREDIT MAINTENANCE UNIT

 Monitoring of allowed Deferrals & its follow-up for completion of deferred formalities
within the stipulated time & blocking the limit in case of non-completion / submission of
deferred formalities/ documents, by the due date, till the time, the deferred formalities
/ documents or further Deferral from competent authority is furnished by the business.
 To monitor and intimate the business officials with respect to early signs of irregularity,
early watch-listing triggers relevant to CAD and intimate the Branch Manager / Business
officials for their necessary action.
 Monitoring of Blocked / Earmarking of Limits.
 Monitoring for compliance terms & conditions and covenants, stipulated in the Sanction
Advice with respect to the securities, collaterals etc. during the currency period.
 Monitoring of expiry status of Insurance Policies of Collaterals / stocks held by the Bank.
 Monitoring of expiry of limits / temporary extensions
 Monitoring of Excess Over Limit (EOL), Monitoring the adjustment of EOL within
approved period, its follow up with the Branch Manager/RH for its adjustment.
 Monitoring and escalation of observations / findings from, CAD Ticklers to concerned
Business units
COLLATERAL/VENDOR MANAGEMENT UNIT
 In house visit of Pledge sites and coordination for arranging outsource inspection of
pledged stocks
 In case of any shortage / shortfall / shortcomings, observed during the visit, the same
shall be reported to RM–CAD for further escalation.
 Review the outsourced stock inspection and valuation reports.
 Maintenance / Monitoring of pledge register & Issuance of DO (Delivery Order) upon
availability of system
 Preparation of pledge monitoring report & circulation amongst CAD Units for further
escalation and updating MIS Ticklers.
 Collections of stock reports from Mucaddam (in case of Pledge financing) & from
Business/ Branches (in case of Hypothecation) and calculation of applicable drawing
power there against, once system for collateral management is made available to CAD.
 Allocation of Mucaddam Companies for Pledge sites under supervision of Manager-CAD.
 Correspondence with vendors / Mucaddam regarding day to day affairs.
 Evaluation of performance of vendors for onward submission to RM–CAD.

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 CAD Manual

ANNEXURE G–LIST OF ABBREVIATIONS

BBFS Borrower’s Basic Fact Sheet
BLA Bank’s Legal Advisor

CAAB Credit Approval Authority Booklet

CAD Credit Administration Division

CC Credit Committee

CH Regional Corporate Head

CM – CAD Corporate Manager – CAD
CMG Credit Management Group
CNIC Computerized National Identify Card

Corporate Head Regional Corporate Head

CP Expiry Credit Proposal Expiry

CPM Credit Policy Manual

CRC Charge Registration Certificate

CRO Company Registration Office

D.O. Delivery Order

DAC Disbursement Authorization Certificate

DCL Documentation Checklist

DP Drawing Power
DP Note Demand Promissory Note

DSCs / SSCs Defence Saving Certificates / Special Saving Certificate

eCIB Electronic Credit Information Bureau

EOL Excess over Limit

FIM Finance against Imported Merchandise

FOL Facility Offer Letter

RE – Credit Regional Executive – Credit

GOP Government of Pakistan

H.O. Head Office

IBG Investment Banking Group

LAF Loan Application Form

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LOH Letter of Hypothecation

LOL Letter of Lien

LOP Letter of Pledge

MIS Management Information System
MOA / AOA Memorandum of Association / Article of Association

MODTD Memorandum of Deposit of Title Deed

NBP National Bank of Pakistan

NOC No Objection Certificate

NPL Non – Performing Loans

PDO Past Due Obligations

PPR Premium Payment Receipts

PR Prudential Regulations
PT – 1 / PT – 10 Property Tax
RCAD Regional Centre – CAD

RH Regional Head

RE – CAD Regional Executive – CAD

RM / BM Relationship Manager / Branch Sales & Services Manager

RMG Risk Management Group

RSRS Revenue Stamps Requirement Sheet

SBP State Bank of Pakistan

SECP Securities & Exchange Commission of Pakistan

TFC Term Finance Certificate

TOD Temporary Over Draft

NADRA National Database and Registration Authority

PAD Payment against Documents

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