LOAN POLICY

AND PROCEDURE

C O M PA N Y N A M E

TABLE OF CONTENTS

PREAMBLE Pg 03

0 1 SCOPE AND OBJECTIVES OF LOAN POLICY Pg 05

02 POLICY DIRECTIVES OF THE RESERVE BANK OF INDIA Pg 08

03 POLICY DIRECTIVES ON SECTOR‐WISE EXPOSURE Pg 15

04 LOAN PROCESSING POLICY Pg 18

05 POLICY DIRECTIVES ON CREDIT DISPENSATION Pg 23

06 POLICY DIRECTIVES ON LOAN PRICING Pg 29

07POLICY DIRECTIVES ON CREDIT ASSESSMENT & RISK

MONITORINGPg 33

08 POLICY ON LOAN PRODUCTS‐ EXISTING AND NEW Pg 39

A ANNEXURES Pg 42

B APPENDIX Pg 55

SCOPE AND OBJECTIVES

OF LOAN POLICY

3

SCOPE AND OBJECTIVES OF

LOAN POLICY

ABCDE Investments & Trading Company Private

Ltd (ABCDE, “the Company”), is a Lending

Finance Company of DOLAT GROUP OF

COMPANIES (DOLAT), which is the flagship

company of Dolat Capital Limited. ABCDE is

registered with the Reserve Bank of India as a

non – deposit accepting, systemically important,

Non–Banking Financial Company (NBFC‐ND‐SI).

Currently CITCPL’s main business is asset based

lending to clients primarily referred to it by

various group entities , consultants. ABCDE is

uniquely positioned to capitalize on the

opportunity thrown by the capital market

financing, real estate backed lending and fixed

income structured products spaces on account

of the strong promoter linkages to growth

companies and prime short‐term credit rating.

Hence, the Company will offer multiple

products to its clients depending upon their

requirements.

With the gradual expansion of ABCDE

Investments lending book, a formally

accepted exposure norm would help all

employees have a clear understanding of

management risk appetite, circumscribed by

regulatory norms. The norms formulated in this

document will be modified from time to time,

subject to board approval to take cognizance

of changed economic conditions, changed

management risk appetite or changed strategic

focus. The Risk Group will also, from time to

time, highlight to the credit committee the

changes in the credit environment and the

changing credit risk profile of different sectoral

exposures. This policy holds or all lending

transactions. more specifically wholesale-lending

. While the company is predominantly in the

secured financing business, any other structure,

such as ICDs, mezzanine finance, structured

finance etc can be explored with the approval of

the Credit Committee after a detailed credit and

risk note is placed before it. The company shall

however not grant on demand loans.

The document supersedes any current lending

policy document

1.0

4

Scope and Objectives of Loan

Policy This Loan Policy Document broadly deals with the following:

• Product Offering of the company

• Risk containment measures to mitigate the credit and Credit for the gamut of products

offered by the Company

• Loan sanctioning authority and delegation

• Sectoral exposure limits

1.1 SCOPE OF THE LOAN POLICY

Scope and Objectives of Loan

Policy The objectives of the Loan Policy are the following:

• To have a loan portfolio which generates adequate risk adjusted returns.

• Ensure all deal managers have a clear understanding of the composition of the

incremental portfolio,

• Define clearly the size and nature of deals that must be brought to the credit

committee for approval before disbursement,

• To ensure operational efficiency and effectiveness

• To comply with the norms set by the Regulators and stakeholders from time to time,

• Enable Standardization of Procedures

1.2 OBJECTIVES OF LOAN POLICY

5

Scope and Objectives of Loan

Policy 2.1.1 SINGLE BORROWER LIMIT

ABCDE shall limit its exposure on a single

borrower and borrowers belonging to a group

to the following limits

• Single Borrower :- 15% of the NBFC’s

own funds

• Group Borrower :- 25% of the NBFC’s

own funds

For FY15 the limits in absolute amounts are

• Single Borrower Rs.__________

• Group Borrower Rs.__________

Single borrower is defined as an individual

borrower that may be an individual, a

proprietorship, a private or public company,

listed company, etc.

Borrowers belonging to a group can be

defined as business entities having one or

more common partner/director. In the case

of public limited companies, the group

definition is based on the concept of

commonality of management and effective

control (that means if a professional is a

director in two public companies and does

not have substantial

shareholding/management control, such

companies would not be classified as group

companies. A limited company which is a

subsidiary of another limited company or a

closely held company with substantial interest

(i.e. more than 50% of the equity share

capital of the company is held by the other

company) would be said to belong to the

same promoter group.

The single borrower limit shall be reviewed

every year after the audited financial results

of the year have been prepared.

2.1 PRUDENTIAL EXPOSURE NORMS

6

Scope and Objectives of Loan

Policy 2.1 PRUDENTIAL EXPOSURE NORMS

2.1.2 CAPITAL MARKET EXPOSURE

The following exposures shall qualify as capital

market exposure:

• Direct investment in equity shares,

convertible bonds and debentures

and units of equity oriented mutual

funds

• Advances against shares/convertible

bonds and debentures or other

securities including loans to retail

borrowers for margin, IPO financing

as well as ESOP financing

• Bridge loans to borrowers against

expected equity inflows

• Exposures to venture capital funds

2.1.3 PROHIBITED EXPOSURES

Lending for the following purposes and to the

following categories of borrowers is prohibited:

• Sanction of fresh loans to declared

NPA Accounts

• Lending to borrowers for illegal /illicit

activity

• Restricted Industry as declared from

time to time

7

3.1 CREDIT RISK APPETITE MATRIX

The following table lists the current appetite of the management for the following industries:

Activity / Industry Classification

Maximum Exposure (Rs. in lakhs)

Activity / Industry Classification

Maximum Exposure (Rs. in lakhs)

Agriculture 250 Trading 150

Small Scale Industries 500 Retail Trade 150

ITES & Software 250 E-commerce 200

Education Sector 250 Infrastructure 500

Hospitality Sector 300 Transport & Logistics 500

Redevelopment Projects

1,000Auto Ancillary/ Cements/Steel

250

Construction Services 500 Consumer Durables 150

Advances to Capital Market

1,500 Others 1,000

(Amit to advise on changes)

Any change in sector cap (once put in place),

must be approved by the Credit Committee. All

credit proposals must clearly specify to

which industry grouping the borrower

belongs. Supporting data such as turnover from

sector, order book, regulatory classification etc

must be provided.

Risk Management must ensure that all sector

limits are in conformance with RBI norms for non

deposit taking NBFCs that might be prevalent at

that time.

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