MSME Guiding Document version 1.0 | Confidential |
Oriental Bank of Commerce –
Project Udbhav
Guiding document for MSME
Vertical
Oriental Bank of Commerce
MSME Guiding Document version 1.0 | Confidential Page 2
Contents 1. Glossary of terms ...................................................................................................................... 4
2. Scope of the guiding document ................................................................................................ 5
3. Overview of the overall organization structure ........................................................................ 6
3.1. Principles of the design ......................................................................................................... 6
3.1.1. Clusters ................................................................................................................................. 6
3.1.2. Cluster Monitoring Offices (CMOs) ....................................................................................... 7
3.2. Organization structure ........................................................................................................... 8
4. Overview of structure, processes and roles in MSME vertical ............................................. 14
4.1. Organization structure and roles ......................................................................................... 14
4.1.1. Head Office ......................................................................................................................... 14
4.1.2. Cluster Monitoring Office (CMO) ........................................................................................ 15
4.1.3. Cluster ................................................................................................................................. 16
4.1.4. Role of branches with respect to MSME vertical ................................................................ 18
4.2. Process work-flow in MSME vertical ................................................................................... 19
4.2.1. Sourcing .............................................................................................................................. 19
4.2.2. Processing........................................................................................................................... 20
4.2.3. Sanctioning ......................................................................................................................... 23
4.2.4. Execution of the sanction .................................................................................................... 24
4.2.5. Disbursement ...................................................................................................................... 25
4.2.6. Post Sanction ...................................................................................................................... 27
4.2.7. Collection and Monitoring ................................................................................................... 28
4.2.8. Account Closure .................................................................................................................. 30
4.2.9. Reporting System ............................................................................................................... 31
4.2.10. Collection of Charges .......................................................................................................... 31
4.2.11. Processing of service requests post disbursement ............................................................ 31
4.2.12. Deviations............................................................................................................................ 32
4.2.13. OGC/OKGC above branch limits and other agriculture loans ........................................... 32
4.3. Comparison of existing and proposed role ......................................................................... 33
4.4. Touchpoints for the customer and external linkages .......................................................... 34
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4.5. Role Description .................................................................................................................. 35
4.5.1. Cluster Head ....................................................................................................................... 35
4.5.2. Relationship Manager ......................................................................................................... 36
4.5.3. Sales ................................................................................................................................... 37
4.5.4. Operations ........................................................................................................................... 38
4.5.5. Cluster Monitoring Head ..................................................................................................... 39
4.5.6. Operations and Collections Manager ................................................................................. 40
5. 30-day roll-out plan .................................................................................................................. 41
6. Frequently Asked Questions (FAQs) ...................................................................................... 43
7. Notes ............................................................................................ Error! Bookmark not defined.
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1. Glossary of terms
Abbreviation Full form
ASF Annual Service Fee
BCC Branch Certificate of Compliance
CERSAI Central Registry of Securitization Asset Reconstruction and Security
CGTMSE Credit Guarantee Fund Trust For Micro and Small Enterprises
CIR Credit Information Report
CMO Cluster Monitoring Office
CRG Customer Relations Group
DP Drawing Power
ECS Electronic Clearing Service
JLA Joint Lending Arrangements
LC Letter of Credit
LRM Loan Review Mechanism
MOR Monitoring Officer’s Report
NACH National Automated Clearing House
NOC No Objection Certificate
OSV Original Seen and Verified
QIS Quarterly Information System
RBS Risk Based Supervision
RI Regional Inspectorate
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2. Scope of the guiding document
This guiding document is intended as an interim pre-read document for the
workshop on July 4, 2016, and describes the new organization structure and
operating model for the MSME vertical. The new organization structure and
operating model for the organization will be rolled out for Wave 1 branches
effective July 11 2016.This document has been developed by BCG, Team
Udbhav and the MSME vertical.
The document maps the activities required to be undertaken for lending a
commercial loan, to the new organization structure detailing the different
stakeholders across the workflow. Kindly read this document in conjunction with
the Advance Manual (Volume 1, 2 and 3) and the Loan Policy Document and any
other amendments as released by the bank.
The document begins with an overall explanation of the new vertical organization
structure and introduces two new business units viz. Cluster Monitoring Office
(CMO) and Clusters, in place of the erstwhile geography based Regional Office
(RO) structure. In addition, this section also covers a brief description of all the
verticals in the organization.
The next section details out the organization structure of the MSME vertical and
different roles at HO, CMO and cluster level. The section details the process flow
to highlight new role boundaries and handoffs. Dependencies on other
departments have also been highlighted. The Key Responsibility Areas (KRAs) of
the new roles introduced at different levels in the vertical are detailed along with
their KPIs.
The penultimate section has an indicative list of activities spread over the first 30
days for employees in their new roles to facilitate easy transition. This is followed
by the last section, which lists answers to a few frequently asked questions.
In addition to this guiding document, following documents will be circulated
separately
Mapping of branches to clusters
Mapping of clusters to CMOs
Delegation of authority
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3. Overview of the overall organization structure
3.1. Principles of the design
The bank’s new organization structure is based on the principle of functional
specialization instead of geography driven approach. In the new structure, two
new entities – Clusters and Cluster Monitoring Offices (CMOs) are introduced
and Regional Office structure has been discontinued. The new operating unit
structure is outlined in the figure below.
Fig 1: New organization structure based on vertical functions
3.1.1. Clusters
Clusters will take over business vertical specific activities from branches.
For example, in case of MSME lending business, clusters will be
responsible for sourcing leads from non-branch customers; processing,
sanctioning and monitoring of loans.
Branches will now be responsible for sourcing business from walk-in
customers and coordinating with clusters on a few operational activities
such as loan agreement execution and day-to-day transaction support
1,754 branches, called Udbhav Branches, are mapped to clusters though
there is no reporting line between branches and clusters.
There are 81 distinct clusters each for MSME, Retail Assets Group,
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Customer Relations Group (CRG) and Recovery verticals
There are 34 clusters each for Information Technology (IT), and ADC &
COPEC verticals
3.1.2. Cluster Monitoring Offices (CMOs)
CMOs monitor clusters for respective verticals, and drive CMO-level
business and relationships
CMOs do not have any sanctioning authority; all sanctioning to happen at
either branches, clusters or head office depending on delegation of powers
Clusters in each vertical are mapped to CMOs for the vertical and there is
no overall CMO Head
CMO Head for Branch Banking vertical will be responsible for coordination
across different verticals for cross-sell, relationship management and HR
meetings
10 CMOs are created across India:
Fig 2:Cluster Monitoring Offices spread across India
o Eastern and Central UP (Uttar Pradesh)
o Eastern India
o Haryana
o NCR
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o Punjab & HP (Himachal Pradesh)
o Punjab & JK (Jammu and Kashmir)
o Rajasthan & MP (Madhya Pradesh)
o Southern India
o UP & UK (Uttar Pradesh and Uttarakhand)
o Western India
3.2. Organization structure
New organization structure constitutes of 22 verticals:
Business functions
o Large Corporate business (LCB)
o Mid Corporate business (MCB)
o Retail Assets Group (RAG)
o Customer Relations Group (CRG)
o MSME
o Agriculture and RD&PS
o Branch Business
o Resolution, Recovery and Law
o Treasury, IBD and MBD
o Classic Branches (detailed subsequently)
Support functions
o Project Udbhav
o IT
o Services, Security and Rajbhasa
o ADC and COPEC
o Human Resources
o Learning
Control Functions
o Inspection and Control
o Risk Management
o Compliance and RBS
o CS&P and MIS
o CFO and Accounts
o SLBC and Central Government
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Fig 3: New organization consists of 22 groups
Each of the verticals is to have a clearly defined role and team. Salient
activities of these verticals are outlined below:
Large Corporate business (LCB), this vertical is responsible for:
o Driving advances more than Rs. 50 Cr
o Handling business from 5 core LCB branches, which work directly with
HO, and LCB business from other branches
o 5 core branches include - Hyderabad, Jubilee Hills (SOL 1110);
Chennai, RK Salai (SOL 1043); Mumbai, LCB (SOL 902); Kolkata, LCB
(SOL 171) and New Delhi, E-block Connaught Place (SOL 7)
Mid Corporate business (MCB), this vertical is responsible for:
o Driving advances above Rs. 10 Cr. and up to Rs. 50 Cr.
o Handling business from 42 core branches, which work directly with HO,
and MCB business from other branches
Retail Assets Group (RAG), this vertical is responsible for:
o Driving and monitoring retail advances through 81 clusters formed
across the country
o Sourcing from tie-ups such as dealers, builders, etc.
Customer Relations Group (CRG), this vertical is responsible for:
o Driving institutional CASA business such as state government,
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societies, salary accounts, etc.
o Driving cross-sell advances and fee products to institutional CASA
customers
o Managing local relationships through 81 clusters
o Conducting Publicity and PR activities
Micro, Small and Medium Enterprises (MSME), this vertical is responsible
for:
o Driving commercial loans up to Rs. 10 Cr., through 81 clusters across
India
o Processing of LCB and MCB files in non-LCB / MCB branch locations
o Processing and sanctioning commercial Agriculture and RD&PS loans
such as food processing units
o Processing and sanctioning retail agriculture loans (e.g. OGC, OKGC)
beyond the sanctioning powers of the branches
o The scope of this vertical may not include priority sector lending as per
the RBI definition; the scope is defined in terms of loan value
Agriculture and RD&PS, this vertical is responsible for:
o Handling retail agriculture advances such as OGC, OKGC, etc.
o Agriculture loan officers are co-located with MSME cluster
Branch Business, this vertical is responsible for:
o Driving retail CASA, Third Party Product (TPP) sales and managing
support operations such as currency chest, CASA account opening
back-office, customer care, complaints, DEAF, etc.
o Prospecting advances customers and referring to respective verticals
Resolution, Recovery and Law, this vertical is responsible for:
o Driving NPA recovery and resolution across all verticals
o Managing legal proceedings in NPA cases
Treasury, IBD and MBD (operations), this vertical is responsible for:
o Maintaining SLR, CRR, Investments and Fund Management
o Handling treasury dealing room operations
o Handling forex policy formulation, forex operations and forex support to
branches
Classic branches:
o 545 branches are not mapped to vertical clusters, due to distance and
small size constraints, and function independently under Classic
Branches vertical
o These branches and vertical continue to function as per the old system
and focus on all advances and deposits business based in their
geographical location, reporting to 10 CMOs they are mapped to
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o Such branches constitute less than 15% of the bank’s business
Fig 4: Business group consists of 10 verticals
Fig 5: Support group consists of 6 verticals
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Fig 6: Control group consists of 6 verticals
Fig 7: Summary of all 22 verticals in the new structure
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4. Overview of structure, processes and roles in MSME vertical
4.1. Organization structure and roles
MSME vertical drives commercial loans up to Rs. 10 Cr., through 81 clusters
across India. The scope of this vertical may not include priority sector lending
as per the RBI definition. The scope is defined in terms of loan value.
Additionally MSME vertical processes LCB and MCB files flowing from non-
LCB / MCB branch locations. This also includes commercial agriculture and
RD&PS loans such as food processing units.
MSME vertical also processes and sanctions retail agriculture loans (e.g.
OGC, OKGC) beyond the sanctioning powers of the branches.
The following schematic gives an overview of the MSME vertical organization
structure.
Fig 8: Overview of MSME organization structure
4.1.1. Head Office
The figure below illustrates the overall structure at HO–
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Fig 9: Overview of MSME organization structure at HO
GM-MSME at head office responsible for driving overall business and
growth of this segment for OBC
o Monitor and co-ordinate with Cluster Monitoring Head of MSME
Head of Product and Strategy at head office responsible for -
o Designing new products/schemes
o Creating strategy, design and implementation of new initiatives
o Conducting competitive benchmarking
o Managing credit policy along with risk management
o Conducting IT requirement analysis
Head of Credit at head office responsible for -
o Processing cases escalated to HO e.g. deviations, restricted area files
o Processing proposals less than Rs. 10 Cr for MCB, LCB accounts
4.1.2. Cluster Monitoring Office (CMO)
The following figure illustrates the overall structure at a CMO -
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Fig 10: Overview of MSME organization structure at cluster monitoring office
MSME Head (DGM) posted at CMO responsible for driving overall growth
of MSME business and target setting for clusters. Sourcing prospective
MCB and LCB customers will also be an additional responsibility entrusted
to the CMO Head. The Cluster Monitoring Head (MSME) shall work in
coordination with the Cluster Monitoring Head (Branch Business) to
allocate and monitor targets of branches with respect to MSME portfolio
Operations and Collections Manager at CMO responsible for -
o Liaising with other verticals e.g. Inspection and Control, Risk
Management
o Monitoring collections at each cluster
4.1.3. Cluster
The following figure illustrates the overall structure at a cluster -
MSME Cluster Head (AGM) posted at cluster office responsible for driving
overall MSME growth at the cluster and sanctioning credit proposals
One/two sales officers responsible for sourcing MSME leads
Processing team consisting of officers of Scale-II/III/IV responsible for
doing all pre-sanction formalities, preparation of process notes and small
ticket loan sanction(if required)
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Operation team consisting of officers of Scale-I/II responsible for post-
sanction formalities, disbursement
Fig 11: Overview of teams within a typical MSME cluster
The figure above summarizes various roles within the cluster. Detailed
responsibilities of cluster constituents are described below -
Cluster Head
Strategize and plan to achieve projected MSME targets
Manage cluster performance and overall credit quality of portfolio
Pursue important leads along with sales team to drive overall growth
Sanction/renew/review credit facilities flowing through cluster
Monitor teams working under him i.e. sales team, relationship managers
and operations team
Restructuring cases of MSME credit facilities up to assigned delegated
power of cluster head
Attend meetings of consortium accounts / multiple banking accounts / Joint
Lending Agreement (JLA) / syndication accounts if any within the cluster.
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Sales Team
Generate / source leads within geographical area assigned to cluster -
make telephone calls, in-person visits and presentations to existing and
prospective customers
Research sources for developing prospective customers and determine
potential
Conduct initial prospecting and customer meetings
Identify advantages of OBC products over competitors
Operationalize tie-ups with corporate for financing ancillaries
Participate in trade shows and conventions
Relationship Manager (RM)
Scrutinize sourced proposals (from branch/cluster)
Conduct pre-sanction visit, due diligence, verification of securities
Generate Credit Information Reports and internal ratings
Obtain valuation report and Non-Encumbrance Certificate(NEC)/ legal
opinion from empanelled professionals/ agencies
Prepare LF-81, LF-82A, LF-82as the case may be(credit appraisal note)
RM (CM)to sanction renewal cases less than Rs. 1 Cr. (if required)
Maintain records of sanction/rejection of proposals
Prepare process notes for restructuring under the delegated power of
cluster head
Cross-sell of retail assets, institutional CASA, TPP. Provide leads to
respective cluster office
Operations Team
Execution/vetting of documents (co-ordination with branch) and ensuring
compliance of terms & conditions of sanction – BCC, MOR, QIS
Loan account opening and disbursement
Post-sanction formalities e.g. ensure end use of funds, post-sanction visits
Audit support and rectification
Feeding Stock statements in Finacle
Marking Drawing Power
Allowing over limit against clearing
4.1.4. Role of branches with respect to MSME vertical
Branches shall be responsible for sourcing MSME business from walk-in
customers and referrals. The branches shall discuss the requirements of
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the customer and explain the product features to prospective borrowers.
The branches will collect loan application forms and other related
documents as per the list for the particular scheme/product and forward
the same to the relationship manager. While forwarding the credit
proposal, the branch shall ensure that the application form is duly filled in
and accompanied by all related documents as per scheme guidelines.
The branch shall verify the KYC documents with original documents and
stamp OSV. Ensuring compliance of KYC norms shall be responsibility of
the branch.
Branches shall not reject any credit proposal because of any
deviation/relaxation sought by the prospective borrower from the extant
guidelines. The MSME cluster shall deal the request for
deviation/relaxation.
The relationship manager shall communicate the sanction to the branch.
Branches shall continue to service routine transactions such as cash
deposit, cheque and statement generation. However, all other services
requested like renewals, enhancements, partial disbursement, issuance of
NOC shall be forwarded by the branch to the relationship manager.
All the MUDRA Loans, PMEGP, Start up India, Stand up India and other
Government sponsored cases shall be dealt at MSME Cluster office.
OD to PMJDY in eligible PMJDY accounts shall be dealt at MSME Cluster
office only.
4.2. Process work-flow in MSME vertical
4.2.1. Sourcing
Sourcing of MSME business shall be done by branches (walk-in) or cluster
sales officer/s (outbound leads). The branch/ cluster sale officer/s shall
discuss requirements of funding/required credit facilities of the customer
and explain the product features of the applicable scheme to the
prospective borrowers.
After having the proposal discussion with the customer, the branch/cluster-
sales officer/s shall collect all the required documents for sanction of credit
facilities and get the application form (LF1, LF4) duly filled by the
customer. The same shall be fed in the Proposal Tracking System(PTS)
and the performance will be tracked on this.
If the cluster sales team is involved in getting the final application filled
along with the supporting documents then the credit will be given to the
cluster sales team.
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The same is true for walk-in customers at branch where the branch
manager will get credit only if the application and documents are submitted
by the branch manager. If more documents are required during
processing, the final submitter will be responsible for arranging the same
The branch/ cluster sale officer/s shall verify the KYC documents with the
original documents and stamp OSV. Compliance of KYC norms shall be
responsibility of the Branch/ Cluster Sale officer/s
The Branch/ Cluster Sale officer/s shall submit the duly filled application
form along with the documents and checklist to cluster office
The following figure summarizes the key steps in the sourcing process -
Fig 12: MSME loan process flow – Sourcing
4.2.2. Processing
Fig 13: MSME loan process flow – Processing
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The figure above summarizes the key steps during processing of the note
which is also detailed below -
The RM at the cluster office shall acknowledge the application received
from the Branch/Cluster Sales officer/s and scrutinize the loan application
form for ensuring that the documents are complete in all respects.
In case any document is missing, information incomplete or any other
discrepancy - RM shall collect relevant missing information/ documents
from the Branch/ Cluster Sale officer/s who has submitted the proposal
RM shall check Credit Information Report (CIR) provided by the Credit
Information Companies (CICs)
In case of mortgage backed credit facilities, the RM shall search the details
of the property proposed to be mortgaged on the CERSAI portal for
ensuring that the property is free from all encumbrances.
Further, the RM shall carry out in-depth study of the property documents
like title deeds/allotment letter/leasehold letters etc. and entrust the job of
issuance of Non-Encumbrance Certificate (NEC)/Legal Opinion and
Valuation Report to the Advocate and Valuer respectively on the panel of
the cluster
o The cluster shall have at least seven or eight empanelled advocates
and similar number of valuers approved by CMO / cluster office on its
panel to issue NEC and Valuation Report. The assigned advocate and
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valuer will be required to visit the cluster to collect papers and submit
the report thereafter. The advocate will be required to submit the NEC
within four working days. Similarly, the valuer will have to submit the
valuation report as per the bank prescribed format within two working
days from collection of papers from the cluster
The RM will carry out pre-sanction visit(s), run a due diligence and shall
verify the property for its marketability and realizable value. During the
visit, the RM will ascertain the sale price/realizable value of similar
house/flat/plot from the market/ nearby areas and shall ensure that the
value of property as assessed by the valuer is in accordance with the rates
prevailing in the area
o As there are a number of frauds taking place because of forged title
deeds/stamp papers, the RM shall exercise utmost care to mitigate
frauds. The RM shall ensure meticulous compliance of all guidelines
issued by the bank for prevention of frauds.
The RM will carry out/initiate an Internal Credit Risk Rating in IMAC of the
borrower and shall forward the same to the RMD vertical at the respective
cluster monitoring office.
After having conducted legal formalities, verified realizable value of
property, personal verification and credit-worthiness of prospective
borrower, the RM will prepare a credit process note (LF 81, LF 82A, LF 82)
on the basis of guidelines issued by the bank and place the same along
with his views/ recommendation before the sanctioning authority for
sanction / rejection of proposal. For Mudra loans, refer circular No. HO:RD
& PS:48:2015-16:453 and other amendments issued by the bank
Any ad-hoc limit requested by the client from time to time shall be taken
care by the RM at cluster (Refer Para 11 of Loan Policy and subsequent
amendments)
All consortium / multiple banking meetings shall be attended either by
cluster head or RM
The cluster head shall look after day to day requirements of over limit,
cheque purchase, allowing over limit in co-ordination with respective RMs.
RMs shall be responsible for pre-sanction visits, internal ratings, credit
appraisals and recommend the same for sanction to cluster head (same
role as for a fresh proposal)
MCB business from non-MCB branch locations will be processed by the
MSME cluster. For such cases, MSME cluster will process the note and
send it to MCB vertical at HO for sanctioning.
For LCB proposals in non-LCB locations, it will be first directed to a LCB
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branch or a MCB branch if it falls within the same city geographical area
else it will be processed by the MSME cluster and then sent to LCB
vertical at HO for sanctioning
4.2.3. Sanctioning
The sanctioning authority i.e. Cluster Head (AGM) or RM (CM) shall
scrutinize the process note and accordingly approve/reject the credit
proposal depending upon the merits of the case. The senior most RM will
have the power to sanction renewal cases of up to Rs. 1 Cr. In case of
credit proposals falling beyond the delegation of authority of the
sanctioning authority at the cluster office i.e. restructuring cases/
deviations/ concessions / group accounts, the credit proposal shall be sent
to vertical head at HO of MSME.
The Risk Manager from Risk Management vertical situated at cluster
monitoring office shall sanction the Internal Credit Risk Rating of the
borrower in the system
The following figure summarizes the process flow during sanctioning -
Fig 14: MSME loan process flow – Sanctioning
On approval by the sanctioning authority, sanction/rejection letter shall be
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issued to the branch/cluster operations team/RM. The RM shall
subsequently communicate the terms of sanction to the borrower
The RM shall send the sanction letter to the disbursing branch and inform
the operation officers at the cluster and also provide a checklist of loaning
documents to be executed from the borrower
The RM is also responsible for renewal, enhancement of working capital
facilities and review of term loans. They shall compile the proposal for
renewal/ enhancement/review and collect all the required documents from
the customer and conduct KYC, due diligence, visits, and submit the
renewal/enhancement/review proposal to cluster for sanction
Execution of the sanction
The following figure summarizes the process flow during execution of
documents -
Fig 15: MSME loan process flow – Execution
On receipt of the sanction letter, the branch/RM shall contact the customer
and request him/her to visit the branch for completion of documentation
formalities and disbursement of credit facility thereafter. If the customer is
required to bring additional documents, he/ she will be informed
accordingly by branch/RM.
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The cluster operations team shall prepare and send the complete set of
documents (after duly filling in all the required information in the
documents) to be executed by the borrower at the branch. The set of
documents being sent to the branch office shall be accompanied by a
covering letter specifically delineating the details of all the documents to be
executed by the borrower and instructions to branch manager for
signatures, document collection, etc. Cluster operations team shall visit the
branch if need be.
The cluster operations team should ensure that all pre-disbursement
conditions have been complied with.
The branch shall obtain ECS/NACH/Standing Instructions mandate from
the customer at the time of execution of the documents.
In case of mortgage backed credit facilities, the mortgage shall be created
at the branch and the mortgage register (Recital of Title Deeds) shall be
maintained by the branch. Before creation of the mortgage, cluster
operations shall check on the Central Registry (CERSAI) that the property
being mortgaged is free from all encumbrances.
The registration of security interest pertaining to immovable, movable and
intangible assets on Central Registry (CERSAI) shall be done by the
cluster operations team subsequent to creation of charge on the security
If the documents are to be vetted by Local Legal Counsel then the branch
shall get loan documents vetted from the appropriate authority in co-
ordination with cluster operations. (For Vetting Circular
No.HO/RMD/21/2016-17/241 Dated 30.06.2016).
The vetting of loan documents is the also the accountability of cluster
operations if the documents are to be vetted by Legal Retainer / Legal
Officer. Subsequently the branch shall send the original loan
documents/property documents, CERSAI report, copy of recital register of
the Title Deeds and vetting certificate to the cluster office for storage. The
cluster operations team shall be responsible for the safe custody of the
documents
4.2.4. Disbursement
The cluster operations team shall open the loan account in CRISMAC
(within 1 working day) system after ensuring that the documents have
been duly executed and vetted
Branch shall make disbursement in line with the instructions provided by
the cluster operations team. In cases that involve multiple partial
disbursements, the borrower shall make a request to the RM along with
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the relevant information/papers. The RM shall in turn forward the request
for partial disbursement to cluster operation. After scrutinizing the request
for partial disbursement, operations in consultation with RM shall direct the
branch to make the partial disbursement.
The operation team shall open the Loan account after entering in to the
Sol of the respective branch.
Loan shall be disbursed at the branch as per instruction given by operation
team of MSME. Two vouchers shall be prepared by the Branch original
shall be sent to cluster office (which shall be kept with loaning documents)
and duplicate copy of the same shall be kept in the branch along with
vouchers.
Loans shall be booked in branch SOLs. If a branch has sourced the
proposal then the loan shall be booked in the same branch. If the proposal
is sourced by cluster sales team then the loan shall be booked in the
branch of customer’s choice within the cluster
The following figure summarizes key activities during disbursement and post
sanction-
Fig 16: MSME loan process flow – Disbursement, Post Sanction
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4.2.5. Post Sanction
The operations team shall ensure that the asset financed by the Bank (if
any) is adequately insured. The operations team shall also obtain the
insurance certificate and ensure that the details with regard to insurance
are fed into the system (Finacle).
The operations team shall prepare the Branch Certificate of Compliance
(BCC) which shall be cleared by the sanctioning authority (Refer Para 15.3
of Loan Policy)
The operations team shall be responsible for carrying out post sanction
visits as per the bank’s extant guidelines (Refer Para 15.4 of Loan Policy)
RM, in close co-ordination with the operations team, shall ensure overall
health of the account (Refer Para 16 of Loan Policy) and rectify all audit
observations observed by different auditors
The cluster operations team in co-ordination with the branch shall ensure
that the Balance Confirmation/Letter of Revival has been obtained as per
the bank’s extant guidelines
Cluster operations shall be responsible for all post-sanction formalities
which includes monitoring end use of funds / post-sanction visits/
monitoring of conduct of accounts etc.(Refer Para 15,15.4 of Loan Policy)
under the guidance of the RM
The Operations team shall prepare MOR (Refer Para 15.7 of Loan
Policy)and compile QIS (Refer Para 15.8 of Loan Policy) whenever
required
The Operations team shall prepare monthly statements e.g. generation of
STM-41 and shall send to the respective cluster monitoring office
As per sanction terms, all the original invoices / bills / receipts shall be
obtained by cluster operations and be kept on record
Cluster operations shall feed Stock statements in the system (Finacle) to
allow DP
Cluster operations shall enter CERSAI before release of the sanctioned
credit facility
Cluster operations shall also be responsible for Charge with ROC (Refer
Advances Manual-II)
Wherever further disbursement is required by the borrower, the request
will be either received by the cluster operations team / or at the respective
branch.
Cluster operations shall conduct Stock audits (Refer Para 15.9 of Loan
Policy)
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MSME Guiding Document version 1.0 | Confidential Page 28
All other audits shall also be conducted by operations in co-ordination with
the audit team. Observations of these audit reports shall also get rectified
by operations
Sharing of information on quarterly basis in case of consortium / multiple
banking cases shall be the responsibility of operations team at cluster
(Refer Para 13.5 of Loan Policy)
LRM of all eligible accounts shall be conducted by the
Inspection team at cluster monitoring office and observation(s) of the same
shall be rectified by the operations team at cluster (Refer Para 12.10 of
Loan Policy)
CGTMSE guarantee coverage, sending ASF and correspondence
thereafter shall be the responsibility of the operations team
Bill purchased under LC shall be dealt by cluster head(along with
respective RM)
All non-forex non-fund business shall also be dealt by cluster operations
e.g. opening of BGs / LCs as under:-
If any request of LCs / BGs received at the branch the same
shall be immediately sent to cluster office along with the
guarantee bonds.
All the loaning documents, if any shall be obtained at Branch as
per the instruction given by the cluster office.
After opening of BGs in the system the original Bond /
documents of BGs shall be directly sent to beneficiary and other
copy of the same shall be sent to respective departments as well
as applicant as per system in-vouge. However in case of LCs
the same be fed in through SFMS.
The confirmation of BGs shall be done at CMO-MSME and
confirmation of LCs shall be done through SFMS.
All the required registers i.e. Insurance register, D.P. register, Limitation
register, documents register, higher officials visit register shall be
maintained at the cluster office
4.2.6. Collection and Monitoring
The following figure summarizes key activities during disbursement and post
sanction-
Fig 17: MSME loan process flow – Monitoring
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MSME Guiding Document version 1.0 | Confidential Page 29
Operations team shall monitor accounts and shall track all borrowal
accounts to ensure that repayment is being made as per schedule (Refer
Para 16 of Loan Policy)
RM shall contact borrowers whose accounts are classified as SMA-0, 1
and 2 and persuade them for regularization. RM shall contact the customer
through phone call, overdue notice and personal visit
The operations team shall be responsible for handing over the borrowal
account to the Cluster Office-Recovery, Resolution & Law Head as and
when the account is classified as a Non-Performing Asset (NPA)
The following figure detail so the responsibilities during monitoring and
collections -
Oriental Bank of Commerce
MSME Guiding Document version 1.0 | Confidential Page 30
Fig 18: MSME loan process flow – Monitoring, Collections
4.2.7. Account Closure
The following figure details the account closure process -
Fig 19: MSME loan process flow – Account closure
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MSME Guiding Document version 1.0 | Confidential Page 31
Request for closure of the credit facility shall be received and processed
by the cluster operations team. The loan account in the system shall be
closed and ‘No-Objection Certificate (NOC)’ be issued to the borrowers. In
case of mortgage backed credit facilities, the credit facility shall be closed
and cluster operations shall co-ordinate handover of the original property
documents with the branch
4.2.8. Reporting System
Credit proposals sanctioned by the cluster shall be reported in the monthly
statement of Regular Advances Sanctioned i.e. STM-41 by operations
team
4.2.9. Collection of Charges
The operations team shall be responsible for recovery of the charges for
checking Central Registry (CERSAI) at the time of creation of mortgage
and registration of Security Interest pertaining to the immovable, movable
and intangible assets
All other charges shall be recovered by the Branch but the same shall be
ensured by the operations team
4.2.10. Processing of service requests post disbursement
The branches shall provide all information with respect to the specific
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MSME Guiding Document version 1.0 | Confidential Page 32
credit facility including statement of account, interest certificate etc. to the
borrower
Fig 20: MSME loan process flow – On-going activities
4.2.11. Deviations
In case of high value loans/deviations/ restricted area that do not fall under
the delegation of authority of cluster head, credit proposals shall be sent to
Head Office at MSME. Takeover of any credit facility from a different bank
shall be guided by bank/RBI takeover guidelines (Circular No.
HO/RMD/57/2014-15/655 dated 13.11.2014)
4.2.12. OGC/OKGC above branch limits and other agriculture loans
Agriculture officer co-located at MSME cluster shall be responsible for
processing. The officer shall place the proposal for sanction either to the
CM (for loans < Rs.1 Cr.) or to the cluster head
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MSME Guiding Document version 1.0 | Confidential Page 33
4.3. Comparison of existing and proposed role
The following table summarizes key differences with the existing process –
S. No Activity Existing Stakeholder Proposed Stakeholder
1. Sales/Marketing Branch Sales Team(outbound)/
Branch(walk-in)
2. Pre-sanction due diligence, internal rating
Branch Relationship Manager at
MSME cluster office
3. Preparation of credit process note
Branch Relationship Manager at
MSME cluster office
4. Loan account opening Branch Operations at MSME
cluster office
5. Compliance of all sanction terms
Branch Operations at MSME
cluster office
6. Documentation Branch Operations at MSME
cluster office
7. Vetting of documents, preparation of BCC
Branch Operations at MSME
cluster office
8. Account closure Branch Operations at MSME
cluster office
9. Conducting audits and rectification
Branch Operations at MSME
cluster office
10.
Recovery process e.g. serving of SARFAESI notices, attending DRT, Lok Adalat etc.
Branch Recovery vertical
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4.4. Touch points for the customer and external linkages
The customer will liaise with the branch and RM during the loan lifecycle.
Fig 21: Customer touch points in the new process
The following figure illustrates linkages to other verticals for MSME
Fig 22: External linkages to other verticals
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MSME Guiding Document version 1.0 | Confidential Page 35
4.5. Role Description
The following section should be read in conjunction with the process flow.
4.5.1. Cluster Head
Review Authority: Cluster Monitoring Head, MSME
Direct Reports: Operations Team, Sales Team and Relationship Managers
Key Responsibility Areas
Key Responsibility Areas
Individual
Driving MSME business at cluster
Formulate cluster strategy and annual operating plan e.g. target setting of RMs
Sanction loans routed through the cluster in a timely manner
Manage overall operating and credit risks: o Pre-emptively identify and manage risks and define
mitigation approach o Escalate exceptions in a timely manner e.g. deviations
Supervision Monitor cluster team for smooth functioning
Monitor performance of the cluster and productivity of its resources
Key Performance Metrics
Metrics Units
B ud
ge
ta ry
Yield on advances %
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MSME Guiding Document version 1.0 | Confidential Page 36
Non-interest income %
% GNPA %
Fresh slippage % of accounts, % of value
Growth in advances %
Value of loans originated Rs.
Value of loans sanctioned Rs.
Disbursement to sanction ratio Number
Regularization of SMA by accounts and value % of accounts, % of value
No
n-
bu
dg
eta
ry Proposals disbursed within defined TAT Number
# of meetings per sales person Number
4.5.2. Relationship Manager
Review Authority: Cluster Head, MSME
Key Responsibility Areas
Key Responsibility Areas
Individual
End to end ownership of MSME accounts
Conduct pre-sanction visit, due diligence, verification of securities etc.
Obtain valuation report and NEC/ legal opinion from the empaneled professionals / agencies
Prepare LF-81, LF-82A, LF-82 (credit appraisal note)
RM (Scale 4) to sanction loans (if required)
Cross-sell of retail asset, institutional CASA, TPP
All renewals/ enhancements/ reviews requests
Follow-up on SMA accounts
Key Performance Metrics
Metrics Units
Bu
dg
eta
ry Yield on advances %
Non-interest income %
% GNPA %
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MSME Guiding Document version 1.0 | Confidential Page 37
Fresh slippage % of accounts, % of value
Growth in advances %
Value of loans originated Rs.
Value of loans sanctioned Rs.
Disbursement to sanction ratio Number
Regularization of SMA by accounts and value % of accounts, % of value
No
n-
bu
dg
eta
ry
Proposals disbursed within defined TAT Number
4.5.3. Sales
Review Authority: Cluster Head, MSME
Key Responsibility Areas
Key Responsibility Areas
Individual
Generate/source leads within geographical area assigned to cluster - make telephone calls, in-person visits and presentations to existing and prospective customers
Research sources for developing prospective customers and determine potential
Conduct initial prospecting and customer meetings
Identify advantages of OBC products over competitors
Operationalize tie-ups with corporate for financing ancillaries
Participate in trade shows and conventions
Key Performance Metrics
Metrics Units
Bu
dg
eta
ry
Value of loans originated
Rs.
No
n-
bu
dg
eta
ry
# of meetings per sales person Number
# of months for which monthly target is achieved Number
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MSME Guiding Document version 1.0 | Confidential Page 38
4.5.4. Operations
Review Authority: Cluster Head, MSME
Key Responsibility Areas
Key Responsibility Areas
Individual
Execution/vetting of documents (co-ordination with branch) and ensuring compliance of terms & conditions of sanction – BCC, MOR, QIS
Loan account opening and disbursement
Post-sanction formalities e.g. ensure end use of funds, post-sanction visits
Audit support and rectification
Feed stock statements in system
Mark Drawing Power
Allowing over limit against clearing Send monthly statements like STM-41 to CMO
Opening of LC/BG
Maintaining documents at cluster office
Key Performance Metrics
Metrics Units
Bu
dg
eta
ry
Fresh slippage % of accounts, % of value
No
n-
bu
dg
eta
ry
Proposals disbursed within defined TAT
Number
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MSME Guiding Document version 1.0 | Confidential Page 39
4.5.5. Cluster Monitoring Head
Review Authority: GM Head Office, MSME
Direct Reports: Cluster Heads, Operations and Collections Manager
Key Responsibility Areas
Key Responsibility Areas
Individual
Drive MSME strategy of the bank for the CMO
Drive MSME business within clusters assigned; set targets for each cluster head
Scout for MSME / MCB/LCB leads within area assigned
Conduct meetings with key accounts within cluster (with cluster head)
Manage operating and credit risks: o Pre-emptively identify and manage risks and define mitigation
approach
Monitor SMAs
Supervision
Monitor sanctions conducted at clusters as per bank policies
Overall performance of the territory and the productivity of cluster heads
Conduct training sessions for cluster heads and relationship managers
Key Performance Metrics
Metrics Units
Bu
dg
eta
ry
Yield on advances %
Non-interest income %
% GNPA %
Fresh slippage % of accounts, % of value
Growth in advances %
Value of loans originated Rs.
Value of loans sanctioned Rs.
Disbursement to sanction ratio Number
Regularization of SMA by accounts and value % of accounts, % of value
No
n-
bu
dg
eta
ry
Proposals disbursed within defined TAT Number
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MSME Guiding Document version 1.0 | Confidential Page 40
4.5.6. Operations and Collections Manager
Review Authority: Head, Cluster Monitoring Office, MSME
Key Responsibility Areas
Key Responsibility Areas
Individual Liaise with other verticals for operations e.g. Inspection and Control,
Risk Management etc.
Monitor collections within assigned clusters
Supervision NA
Key Performance Metrics
Metrics Units
Bu
dg
eta
ry
% GNPA %
Fresh slippage % of accounts, % of value
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MSME Guiding Document version 1.0 | Confidential Page 41
5. 30-day roll-out plan
The following figures denote the key activities to be conducted by various
stakeholders over the first 30 days post roll out e.g. all accounts with value
greater than Rs. 50 Lakh to be closed within first 30 days
Fig 23: Key activities as part of roll out plan at HO
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MSME Guiding Document version 1.0 | Confidential Page 42
Fig 24: Key activities as part of roll out plan at CMO
Fig 25: Key activities as part of roll out plan at Cluster
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MSME Guiding Document version 1.0 | Confidential Page 43
6. Frequently Asked Questions (FAQs)
Q1) What will be the procedure for Stock Audit / MOR / BCC / LRM
compilation and closure?
The procedure is as shown below:
Stock Audit shall be allocated by the cluster monitoring office and
conducted by the operations team at the cluster and the same shall be
closed post recommendation from the sanctioning authority
MOR is prepared by the operations team and submitted to RM/processing
officer and the same shall be placed before the sanctioning authority for
closure
BCC shall be prepared by the operations team and submitted to
sanctioning authority for clearance
LRM is conducted by I&C vertical at the cluster monitoring office in eligible
credit accounts and the observations of the same shall be rectified by the
operations team
Q2) Where will enhancement in accounts take place for cases where
credit rating is below benchmark level?
Enhancement in accounts where credit rating is below the benchmark level
shall be dealt by MSME department at HO.
Q3) Where will deviations in takeover cases for MSME accounts up to
Rs.10 Crore be looked into?
The deviation in take over cases for MSME cases up to Rs.10 Crore shall be
dealt by MSME department at HO.
Q4) Who will obtain Annexure B1 and B2 in the NEC for mortgage
backed loans?
The RM at the cluster office will be entrusted with the same
Q5) Where will the mortgage register be kept?
Mortgage register is to be kept at the branch with a copy sent to the cluster
office along with other documents
Q6) Who will attend meetings for consortium/ multiple banking
proposals?
The meeting shall be attended by the cluster head along with the respective
RM
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Q7) Who is responsible for TOD/against clearing in the new structure?
Against clearing will be allowed in branches whereas discretionary power of
over limit/ ad hoc limit shall rest with the cluster office according to delegation
of powers.
Q8) Where will LCs/BGs at 100% margin be issued?
Issuance of LCs/BGs at 100% margin will be shifted to the cluster.
Q9) Where will loan documents be executed?
Loan documents will be executed at the branch as per the instructions from
the RM/Operations at the cluster office. Branch manager will execute the
document on behalf of the bank as per instruction letter from the cluster
Q10) Who will take care of SLBC/DLCC/BLBC functions and meetings by
district authorities?
The following authorities will take care of this function based on their location:
Cluster Monitoring Head Branch Business
Cluster Head Branch Business
Senior most branch manager in the city
Q11) Who will attend court in case a summon is served on the bank?
The following authorities will take care of this function based on their location:
Cluster Monitoring Head Branch Business
Cluster Head Branch Business
Senior most branch manager in the city
Or
Concerned branch manager on which summon is served
Q12) Who will be the Member Lending Institution (MLI) for CGTMSE?
MSME cluster will be the MLI
Q13) How will inland LC/BG be handled in the new system?
Inland LC/BG shall be sanctioned/issued by the cluster office MSME however
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the branch will sign the covering letter and Guarantee Bond (if required) on
the terms that LC/BG has been opened in Finacle by the cluster.
Q14) How will forex LC/BG be handled in the new system?
The AD branch will issue the Forex LC/BG.
Q15) Who will issue the solvency certificate?
MSME cluster will issue the solvency certificate
Q16) How will STM 41,41A, 41B, 41C be handled in the new system?
They will be sent as shown below -
Udbhav branches to Cluster Monitoring Head Branch Business
Classic branches to Cluster Monitoring Head Classic
RAG, MSME Clusters to their Cluster Monitoring Head
MCB to MCB HO
LCB to LCB HO
However since there is no sanctioning power at CMO-MSME hence the
41C of RAG / MSME / Mid Corporate / Large Corporate shall be dealt /
action confirmation at respective department at HO.
Q17) What will be the detailed process be for preparation and clearance
of BCC?
Preparation of BCC by respective processing officer and clearance by
sanctioning authority is shown in the table below –
Preparation Clearance
Classic Branch Loan Officer BM
MCB/LCB Loan Officer MCB/LCB HO
Cluster* Processing Officer
Cluster Head*
Classic Branch Branch Loan Officer
Cluster Monitoring Head Classic Branch
*The BCC of Mid Corporate / Large Corporate accounts shall be cleared at
respective department at HO, only processing of these credit facility shall be
done at CO-MSME.
Q18) How will re-structuring (CDR / SDR) be taken care of in the new
operating model?
In standard accounts, the respective sanctioning authority up to their
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delegated sanctioning power will do restructuring and thereafter the file shall
be transferred to Recovery & Resolution department.
Q19) Who will do vetting for different limits?
The documents will be vetted by -
Particulars Documents vetted by
Limits up to Rs1 Cr. Local panel legal counsel
Limits >Rs 1 Cr. and up to Rs 5 Cr.
Legal Retainers of cluster
Limits >Rs 5 Cr Law officer of the bank
Q20) Who will do vetting in take over accounts?
Vetting in case of takeover accounts will be done by -
Particulars Documents vetted by
Limits up to Rs 1 Cr. Legal Retainers of cluster
Limits >Rs 1 Cr. Law officer of the bank
Q21) Which facilities will be exempt from vetting?
The following facilities will be exempt from vetting –
1.1. Loans to staff members (under Staff or General Loans Schemes) which are not secured by immovable property (ies). 1.2. Loan against self-Deposit to an individual. 1.3. Loan against Third Party Deposit to an individual where the Deposit Receipt is also in the name of an individual. 1.4. Loan to individuals against Shares/Bonds /Debentures /Mutual funds, NSC, LIC Policy and other Government securities.
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1.5. Purchase of Government cheques, Pay orders, bank draft issued by Scheduled Commercial Banks. 1.6. Occasional cheques purchase and withdrawal against un-cleared instruments/cheques in case of non-borrowal accounts. (In case of borrowal accounts, Occasional cheques purchase and withdrawal against un-cleared instruments/cheques is done within Over Limit and no documentation is done in case of Over Limit.) 1.7. Credit facilities up to ` 10.00 Lacs sanctioned under Government Sponsored Schemes. 1.8. Oriental Green Card (OGC) up to ` 10.00 Lacs.
1.9. Credit facilities covered under Mudra Scheme. 1.10. Credit facilities up to ` 10.00 Lacs sanctioned under Retail Credit
Schemes which are not secured by immovable property (ies).