What documents are required for identification of the title of the mortgage property

 Documents required for identification of the title of the mortgage property are described as follows:

For Single Party:

 Main document:-

1. D.P. Note Signed by Borrower

2. D.P. Note delivery letter signed by borrower

 Supporting Document:-

3. Revival Letter signed by Borrower

4. Balance confirmation signed by borrower

5. Agreement for cash credit hypothecation of goods signed by borrower.

6. Mortgage dead signed by borrower

7. Power of attorney singed by borrower

8. Affidavit signed by borrower.

 

For Double Party.

 Main document:-

1. D.P. Note Signed by Borrower endorsed by Guarantor

2. D.P. Note delivery letter signed by both borrower and Guarantor

 Supporting Document:-

3. Revival Letter signed by Borrower

4. Revival Letter signed by Guarantor

5. Balance confirmation signed by borrower

6. Agreement for cash credit hypothecation of goods signed by both Borrower and Guarantor.

7. Guarantee form signed by Guarantor

6. Mortgage dead signed by borrower

7. Power of attorney singed by borrower

8. Affidavit signed by borrower.

Discuss different modes of creation of charges on securities

 Charging Securities: Bank tend to safeguard their advances by taking different kinds of securities .The main purpose of taking a security is to fall back on it in case the loan is defaulted. Bank take movable properties immovable properties or a debt as securities for a loan .The method of creating charge over a property depends upon the nature of property and nature of charge.

Bank charge over property confines itself to one or more of the following seven types of charges.

·         Hypothecation

·         Pledge

·         Assignment

·         Lien

·         Set-off

·         Mortgage

 

Hypothecation:

Hypothecation is a charge against property for an amount of debt where neither ownership nor possession is passed to the creditor. Though the borrower is an actual physical possession but the constructive possession remains with the bank as per ‘Deed of Hypothecation’. The borrower holds the possession not in his own right as owner of the goods but as the agent of the bank.

Features of Hypothecation

 

·         Charge against property for an amount of debt

·         Goods remain with the possession of the borrower

·         Ownership remains with the borrower

·         Borrower binds himself to give possession of the hypothecated goods to the bank when called up on to do so

·         It is a floating charge

·         It is rather precarious.

 

 

Pledge:

Pledge is said to be a bailment of goods as security for payment of a debt or performance of a promise. Pledged is the borrower who pledges the property and pledgee is the person with whom the property in pledged. Two important features of pledge are delivery of goods and return of goods.

 

Ownership of goods is not given and only possession over the goods is given, when goods are pledged. The pledger remains the owner of the property. This method is said to be very popular and simple in order to secure a charge on the property. The bank has the right to retain the security only in case of a particular debt for which goods are pledged.

Features of Pledge:

 

·         Goods bailed / pledged must be movable property (borrower)

·         Ownership remains with pledger (borrower)

·         Possession retains with pledgee (bank).

 

Assignment:

An assignment means a transfer by one person of a right, property or debt (existing or future) to another person. The person, who assigns is ’Assignor’ & to whom, is called ‘Assignee’. In banking the usual subject of assignment is “Actionable Claim”. It is permissible under sec.130 & 136 of Transfer of Property Act-1882 to assign “Actionable Claim” to anyone except to a          

(a)  Judge

(b)  A legal practitioner, &

(c)  An office of court of justice.

There are some defects on Assignment as security. So, Bank always creates Legal Assignment.

 Features of Legal Assignment

 ·         Must be in writing

·         Must be assigned by the assignor

·         Must be absolute

·         Notice is mandatory.

 

Lien:

Lien is the right of the Creditor in possession of the goods and securities belonging to a debtor, to retain them until a debt due from the latter is paid. (Sec-171 of Cont. Act-1872)

 

Presupposes: Before creation of charge Lien, the following conditions must be fulfilled:

 1)    Goods must be in the possession of the creditor in the ordinary course of business.

2)    Lawful debt.

3)    There must not have any contract to the contrary.

Types of Lien

 In terms of possession of security to the Creditor, Lien is of two types:

a) Particular Lien: - This is the right of the creditor to retain the particular commodity in respect of particular debt.

 b)    General Lien: - This is the right to retain goods & security not only in respect of particular debt incurred with the connection with them but in respect of general balance of account due by owner of the goods & securities, to the person in possession with them i.e. Creditor. The right of general lien is specially given by law to a) banker, b) wharfinger, c) Attorney of High Court, d)Factor & e) Policy broker     ( Contract Act-1872, sec-171).

 Features of General Lien:

 ·         Right for general balance,

·         Does not right to sell the property,

·         Simply the right to retain.

 Bankers lien is more then a general lien. Convention & legal decision have further extended the implication & scope of this right. In Brando vs. Barnett (1846) 12C1. And Fin.787, Lord Campbell stated that “Bankers have a general lien on all securities deposited with them as banker by customer, unless there be an expressed contract, inconsistent with lien. A bankers’ lien is more than a general lien; it is an implied pledge”.

  Set-off :

Set-off is combining accounts between a debtor & creditor as to arrive in net balance payable to one or other. Set-off means the total or partial merging of a claim of one person against another by counter claim by the latter against the former.

  Ingredients of Set-off

        i.   Mutual debt be for sums certain (two accounts of same persons)

      ii.   Debts to be due immediately

    iii.   Debts in same right

    iv.   No agreement to the contrary

      v.   Letter of Set-off Or Notice is required.

 

Automatic right of Set-off

 

(a)  On death, insanity or insolvency of the customer

(b)  On insolvency of a partner of a firm

(c)   On winding-up a company

(d)  On received a Garnishee order

(e)  On received a notice of assignment.

 

 

Mortgage:

A mortgage is the transfer of an interest in specific immovable property for the purpose of securing:-

 

1.    The payment of money advanced or to be advanced by way of loan

2.    An existing or future debt, or

3.    The performance of an engagement which may give raise to a pecuniary liability.  [T.P.act-1882 sec-58(a)]

 The transferor is called ‘Mortgagor’ & the transferee is called ‘Mortgagee’. The principal money & the interest of which payment is secured is called ‘Mortgage money’ & the instrument by which the transfer is effect called ‘Mortgage Deed’.

 Types of mortgage

1.    Simple Mortgage

2.    Mortgage by conditional sale

3.    Usufructuary mortgage

4.    English mortgage

5.    Equitable mortgage, &

6.    Anomalous mortgage.

What are the stages of credit management

 Stages of credit management are:

1.         Assessment of Borrowers data

2.         Sanction of the credit

3.         Documentation

4.         Disbursement of the credit

5.         Monitoring and supervision

6.         Recovery of disbursed loan

Two measures are taken

-Non Legal Measures

-Legal Measures.

Discuss different aspect of project appraisal

 Project Appraisal: Project appraisal is the process of analyzing the technical feasibility and economic viability of a project proposal their costs. Project appraisal enables to take a decision on with long term effects. During the appraisal stage, measurement of costs and benefits are difficult as these are spread over a long term with high degree of uncertainty. Different aspects of project appraisal are discussed as follows:

Technical Aspects:

Determines whether the technical parameters are soundly conceived, realistic and technically feasible. Technical feasibility analysis is the systematic gathering and analysis of the data pertaining to the technical inputs required and formation of conclusion there from. The availability of the raw materials, equipment, hard/software, power, sanitary and sewerage services, transportation facility, skilled man power, engineering facilities, maintenance, local people etc., depending on the type of project are coming under technical analysis. This feasibility analysis is very important since its significance lies in planning the exercises, documentation process, and risk minimization process and to get approval.

Checklist

- Physical scale

- Technology used & Type of equipment’s & Suitability conditions

- How realistic is the implementation schedule

- Labor intensive method or others

- Cost estimates of Engineering Data

- Escalation are taken care of or not

- Procurement arrangement

- Cost of operation & Maintenance

- Necessary raw material & Inputs

- Potential impact of project on human & physical Environment

-Location

-Size

-Process.

-Machines

-effluents and waste management

-availability of raw materials, power and other necessary inputs.

 

Financial Aspects:

 To determine whether the financial costs and returns are properly estimated and whether the project is financially viable? Whether prerequisites for the success of the project considered?    Following minimum details are determined in the financial appraisal;

1.      Total Cost

2.      O & M Expenditure

3.      Opportunity costs

4.      Other costs

5.      Returns on Investment over project life

6.      Net Present Value, Pay Back Period

7.      CBR 8. IRR

8.      Cash flows in the project

9.      Break Even Point. Level of risk

10.  Marketing Return expectation

 

 

Organizational Aspects:

To determine whether the implementing agencies as identified in the report are capable for effective implementation, monitoring, and evaluation of the scheme. Managerial competence, integrity, knowledge of the project, the promoters should have the knowledge and ability to plan, implement and operate the entire project effectively. The past record of the promoters is to be appraised to clarify their ability in handling the projects.

 

Checklist

·         Whether the entity is properly organized do the job

·         Strength to use capability and take initiatives to reach the objectives

·         Openness to new ideas and willingness to adopt long term approach to extend over several projects

 

Marketing Aspects:

It is one of the major areas of introducing of any product in market In that case must be considered this things before launching the product in the market.

·         What would be the aggregate demand of the proposed product of service?

·         What would be the market share of the project under appraisal?

 

Some popular issues in marketing appraisal are

·         Past and current demand trends

·         Past and current supply position

·         Production possibilities and constraints

·         Imports and exports

·         Nature of competition

·         Cost structure

·         Elasticity of demand

·         Consumer behavior such as motivation, attitudes, preferences, requirements etc.

·         Distribution channel

·         Marketing Policies

 

 

Environmental Aspects:

To see any detrimental environmental impacts and how to minimize the impacts. Environmental appraisal concerns with the impact of environment on the project. The factors include the water, air, land, sound, geographical location etc. Economic Appraisal How far the project contributes to the development of the sector, industrial development, social development, maximizing the growth of employment, etc. are kept in view while evaluating the economic feasibility of the project. Impact on quality of air, Water, Noise, Vegetation, human life etc. should be considered.

 

Legal Aspects:

To determine whether the project satisfies the legal issues related to land acquisition, title deed, environmental clearance etc.

 

Socio-Economic Aspects:

The economic feasibility basically deals with the marketability of the product. Basic data regarding demand and supply of a product in the domestic market so also marginal and also artificial.

Checklist

Socially acceptable technology.

Socio cost benefit analysis

Impact on level of savings and investment in society.

Impact of fulfillment of national goals such as Self-sufficiency, employment, social order etc.

discuss the internal and external factors affecting the change in attitudes towards bank marketing

 Every organization has to work within a framework of certain environmental forces and there is a continuous interaction between the organization and its environment. The interaction suggests a relationship between the two. This relationship can be analyzed in three ways.

First, the organization can be thought of as an input-output system. It takes various inputs-human, capital, technical-from the environment. These inputs are transformed to produce outputs-goods, services, profits-which are given back to the environment. Thus, the organization merely performs the function of input-output mediator. In this process, the environment in its interaction with the internal factors of the organization will determine what kind of inputs should be taken or outputs given.

Second, the organization can be taken as the central focus for realizing the contributions of many groups, both within and outside the organization. When these groups contribute to the well being of the organization, they must have a legitimate share in organizational outputs. These groups may be employees, consumers, suppliers, shareholders, movement, and the society in general. Thus, the organizational functioning will be affected by the expectations of these groups and the organization has to take these factors into account.

Third, the organization can be treated as operating in environment presenting opportunities and threats to it. Thus, how an organization can make the best use of the opportunities provided or threats imposed is a matter of prime concern for it. Any single approach by itself is insufficient to explain the complex relationship between the organizations and its environment Moreover, these approaches are not inconsistent to each other; they are complementary. Thus, an organization will be affected by the environment in which it works.

 The environment-organization interaction has a number of implications from strategic management point of view.

1. The environmental forces may affect different parts of the organization in different ways because different parts interact with their relevant external environment. For example, the technological environment may affect the organization’s R & D department. Further, these forces of the environment may have direct effect on some parts but indirect effect on others. For example, any change in the fiscal policy of government may affect the finance department directly but it may affect production and marketing indirectly because their program may be recasted in the light of new situation, though not necessarily.

2. The environmental influence process is quite complex because most things influence all other things. For example, many of the environmental forces may be interacting among themselves and making the impact on the organization quite complex. Moreover, the impact of these forces on the organization may not be quite deterministic because of interaction of several forces. For example, the organization structure will be determined on the basis of management philosophy and employee attitudes. But the organization structure becomes the source for determining the employee attitudes. Thus, there cannot be direct and simple cause-effect relationship rather much complexity is expected.

3. The organizational response to the environmental forces may not be quite obvious and identical for different organizations but these are subject to different internal forces. Thus, there is not only the different perception of the environmental forces but also their impact on the organization. Key factors determining responses to environmental impact may be managerial philosophy, life cycle of the organization, profitability, etc.

4. The impact of environmental forces on the organizations is not unilateral but the organizations may also affect the environment. However, since the individual organizations may not be able to put pressure on the environment, they often put the pressure collectively. Various associations of the organizations are generally formed to protect the interest of their members. The protection of interest certainly signifies the way to overcome unilateral impact of the environment on the organizations. The nature of organization-environment interaction is such that organizations, like human species or animals, must either adjust to the environment or perish.