Monitoring is a system by which a bank can keep track of its clients and their operations. So monitoring is an essential task for a CRO to know the borrowers activities after the loan disbursement. This also facilitates the build up of an information base for future reference.
Importance of Monitoring:
Through monitoring a CRO can see whether the enterprise invested the sanctioned amount in the pre-specified area of his business, how well the business is running, the attitude of the entrepreneur, cash credit sales and purchase, inventory position, work in process and finished goods etc, This information will help the CRO/Standard Chartered Bank to recover the loan accruing to the schedule and to take the necessary decisions for repeat loans. Moreover, monitoring will also help to reduce delinquency. Constant visit over the client /borrower ensures fidelity between the bank and the borrower and tends to foster a report between them.
Area of Monitoring:
The purpose is to know the entire business condition and all aspects of the borrowers so that mishap can be avoided.
a. Business Condition
The most important task of the CRO to monitor the business frequently, it will help him to understand whether the business is running well or not, and accordingly advice the borrower, whenever necessary. The frequency of monitoring should be at least once month if all things are in order.
The CRO will monitor the production activities of the business and if there is any problem in the production process, the CRO will try to help the entrepreneur to solve the problem. On the other hand the CRO can also stop the misuse of the loan other than for the purpose for which the loan was disbursed.
Monitoring sales proceed is another important task of the CRO it will help him to forecast the monthly sales revenue, credit sales etc. which will ensure the recovery of the monthly loan repayments from the enterprise as well as to take necessary steps for future loans.
It is very important to ensure that the entire loan has been invested in the manner invented. If the money is utilized in other areas, then it may not be possible to recover the loan.
e. Management of raw materials
In case of a manufacturing enterprise, management of raw materials is another important area for monitoring. If more money is blocked in raw materials then necessary, then the enterprise may face a fund crisis. On the other hand the production will suffer if there is not enough raw materials.
a. The CRO can consider the following things for monitoring
The CRO will monitor each business at least once a month. He/she will make a monitoring plan/ schedule at beginning of the month
During monitoring the CRO must use the prescribed monitoring from and preserve in the client file and forward a copy of the report to SME head office immediately.
b. An SME branch will maintain the following files
The file will contain-
In addition, all other papers related to furniture and fixture procurement
c. Other fixed assets and refurbishment
All fixed assets and refurbishment related papers such as purchase receipt, Delivery memo’s, Quotation, Guarantee and Warrantee papers, Servicing related papers and any other paper related to fixed assets are refurbishment will be in this file.
d. Lease agreement file
This file will contain all papers related to lease agreement between the SESDS office and owners of the leased premises.
e. Individual client file
Individual files are to be maintained for each borrower and will hold loan application, Loan Proposal, Copies of Loan Sanction Letter, Disbursement Memo, Monitoring Report, CIB application and Report, Credit report from other bank and all other correspondents including bank receipt.
f. Statement file
All types of statement sent to SME head office will be kept in this file chronologically
g. Office instruction file
All kind of office instruction regarding administration should be kept in this file.
h. Operating instruction and guideline files.
All kind office instruction and guidelines related to operating should be kept in this file
i. New forms introduction file
All minutes of meeting, whenever held, should be kept in this file.
j. Security documents and legal aspect file
One set of security documents and lawyer’s opinions and suggestions regarding issue will be kept in this file. The original should be send to SME head office on a weekly basis
k. Survey form file
After conducting survey, all survey will be kept in this file chronological.