Impaired Asset Study

Lending is an integral part of bank business. Borrower is expected to use the funds for the purpose for which availed and pay interest and installments regularly. However, default may arise due to business cycles, changed environment, mismanagement and other external factors. Whenever a borrowal account slips to Non-Performing Category, the account needs to be examined closely for analyzing the systematic deficiencies if any, which has resulted in the failure of account. The Objective of IAS will be to identify the causative factors for failure of the account and to take appropriate corrective action for minimizing, if not eliminating systemic or human failures. The exercise of Impaired Asset Study (IAS) would be primarily to look into reasons for the failure of an advance account and to look into Staff accountability aspects to know the acts of Commission and Omission of the staff that might have contributed to such failure. Branch Managers (other than the Branch Manager who sanctioned the loan) will conduct IAS study for all NPA accounts of the branch with Real Account balance up to Rs.2 lakh. The IAS study should be initiated after 90 days from the close of the respective quarter and completed within 6 months from the date of NPA. However, for above Rs.25 lakh & up to Rs.100 lakh, the study should be completed within 120 days and with regard to above Rs.100 lakh loans it should be completed within 90 days. In all the cases where accountability is ascribed shall be referred to Vigilance Department, HO to examine vigilance angle. (Cir no. 51 Ref 26/9 dated 04.05.2012)

NPA – Real Account Competent Authority
I. Sanctioned by Scale-IV & below
Upto Rs.2 lakh Zonal Committee consisting of ZM, second line official & vigilance official.
> Rs.2 lakh and up to Rs.25 lakh
II. Sanctions by AGM
> Rs.25 lakh and up to Rs.100 lakh GM(CMRD) at Head Office
> Rs.100 lakh GMs committee at HO consisting of GM (CMRD), GM (Inspection), GM (RMD) & GM (Oper). Minimum quorum shall be three. Ref 26/15 dated 29.06.11