Management of Advances for Urban Co-operative Banks (UCBs)
This Master Circular outlines the guidelines for UCBs to manage advances effectively.
Working Capital Requirements: UCBs should assess the working capital requirements of borrowers and ensure that the loan system is in place for delivery of bank credit.
Loan System: The loan system should include ad hoc credit limits, sharing of working capital finance, and export credit. The rate of interest and period of loan should be clearly defined.
Credit Administration: UCBs should ensure proper credit administration, including rate of interest, foreclosure charges, and no objection certificates. They should also certify accounts of non-corporate borrowers and monitor defaults in payment of statutory dues.
Sanction of Advances: UCBs should ensure that advances are sanctioned with proper delegation of powers, and any irregularities or deficiencies are addressed. They should maintain a proper record of deviations and ensure post-sanction monitoring.
Monitoring Operations: UCBs should monitor loan accounts regularly, identify accounts showing signs of turning into non-performing assets (NPAs), and conduct annual reviews of advances. They should also ensure proper valuation of properties.
Chat with the Master Circular: