disbursement process
bonojit ukil
(Querist) 21 April 2015
This query is : Resolved
Legal position is desired for
Part disbursement of a term loan in names of 3 individuals (A, B, C) for liquidation of another term loan in names of 2 individuals (A, B), whether the process is correct or needs additional precautions
Guest
(Expert) 21 April 2015
Insufficient information to form an appropriate opinion.
bonojit ukil
(Querist) 22 April 2015
More details
1). Two group of individuals listed above are availing term loans from a NBFC (WCTL/ working capital term loan/ hypothecation loan)
2). Group 1 (consists of two individuals A & B) have availed loan earlier
3). Group 2 (consisting of three individuals, A & B are same, one more individual C is added), availing higher term loan with additional collateral security belonging to individual C.
4). A part of disbursement from second loan is towards liquidation of first loan
5). My query to Experts is
Whether the transaction is legally correct in the background of
a). Constitution of borrowers is different in two loans
b). Additional security is available in the second loan
Guest
(Expert) 22 April 2015
Mr. Bonojit,
First of all you have not stated, how you are concerned with any of the two cases.
Secondly, the information is still insufficient to form any opinion.
Thirdly, you have not stated what type of doubt you are having, when both goups are separate, may be with some common members and for what purpose the loan is being taken by any group.
If you are the auditor of the firm, you should have gone through the approved funding policy of the firm. If you have any doubt about loan sanction and disbursement process prescribed in the policy, you could also have discussed with the terms included in the policy along with your description of the problem.
Rajendra K Goyal
(Expert) 22 April 2015
Depends on the loan policy of the NBFC. Generally this is not a good credit decision.
Guest
(Expert) 22 April 2015
Rajendra ji,
Good or bad policy, that is the headache of the Management/Board of Directors to review.
But the querist, being an internal auditor & employed for audit on behalf of the management, has to see whether the policies of the company are being implemented properly or not by the authorities delegated with powers and to report accordingly to the management through his report.
However, he has the duty to see the credit worthiness and paying habits of the parties.
He can only submit his recommendations through the internal audit report, if any policy is being misused due to some loophole in the policy, so that the management/ Board may be able to review its policies to plug the loopholes of the policy.
bonojit ukil
(Querist) 22 April 2015
Dear Mr.Dhingra and Mr. Goyal, thanks for your feedback. Just to add one point, if the co. policies are silent with regard to my query, does such transansations violate the AML provisions or Banking law, as the account holders are not same in both the loan accounts (only two individual are common in both accounts)
Guest
(Expert) 22 April 2015
On the basis of the description given by you, there is no illegality of the transaction.
These are two different entities, as I have already said that both goups are separate, may be with some common members and for what purpose the loan is being taken by any group.
Secondly, I have already suggested, that you can give your recommendation, of course rational, if you have noticed any loophole or instance of misuse of the policy.
Rajendra K Goyal
(Expert) 22 April 2015
Respected expert PS Dhingra ji,
Humble thanks for your comments.
Author,
Does the Bank policy allows loan to a defaulter / person who has no good credit history, without following RBI and other guidelines?
Guest
(Expert) 22 April 2015
Rajendra ji,
You are welcome.
bonojit ukil
(Querist) 22 April 2015
Dear Experts, Mr.Dhingra and Mr. Goyal, thanks for your feedback and sparing your valuable time
Guest
(Expert) 22 April 2015
You are welcome Bonojit.
T. Kalaiselvan, Advocate
(Expert) 30 April 2015
Hope the author is convinced by the elaborate and detailed explanation given by expert Mr. Dhingra. His observation that though the members may be common but the purpose of loan may be different remains unanswered, if the author being auditor and wants to record his observation, the opinion found in this portal may be used as per his taste and submit his report accordingly.
