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Collection  Policy  
 
February  2017  
 
 
 
   

 
Corporate  office  Address:  
Grape  Garden,  No.  27,  3rd  A  Cross,  18th  Main            
Koramangala  6th  Block,  Bengaluru  560  095                  
 

 
 
 
 
 
This  document  is  for  Internal  Uses  only  and  may  not  be  reproduced  in  any  form  without  the  consent  of  
Ujjivan  Small  Finance  Bank  Ltd  
 

 
Confidential                                  
     
   
Policy  Approval  Committee  
Samit  Ghosh   Chief  Executive  Officer  &  Managing  Director  
Sneh  Thakur     Head  of  Credit  and  Collections  -­‐  Microfinance  
Arunava    Banerjee   Chief  Risk  Officer  
Srikumar  Vadake  Varieth   Head  of  Legal  
Premkumar  G   Chief  Vigilance  Officer  
Alagarsamy    A  P   Head    of  Audit  
Carol  Furtado     Head  of  HR  &  Service  Quality  
Sridhar  Mallu   Head  of  Credit  -­‐  Housing  &  MSE  
 

Proposed  by  
Sneh  Thakur   Head  of  Credit  and  Collections  -­‐  Microfinance  
Sridhar  Mallu   Head  of  Credit  -­‐  Housing  &  MSE  
Vijay  Kumar   National  Collections  Manager    
 

Effective  Date   Feb  01,  2017  


Approver   Board  of  Directors  
Approved  on   Jan  10,  2017  
Head  of  Credit  and  Collections  –  Microfinance  &    Head  of  Credit  -­‐  
Policy  Owner  
Housing  &  MSE      
Review  frequency   Annual  
 

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Contents  
1.   INTRODUCTION  ....................................................................................................................................  7  
1.1.   Scope  Objectives  and  Principle  .....................................................................................................  7  
1.2.   Guiding  Principles  of  Collection:  Code  of  Conduct  .......................................................................  8  
1.3.   Collection  Dos  and  Don’ts  ..........................................................................................................  10  
1.4.   Policy  Review  &  Approval  process  ..............................................................................................  12  
1.5.   Collection  Organization  Hierarchy:  Micro  Finance  GL  &  IL  &  Housing  &MSE  ............................  12  
1.6.   Product  Segment  ........................................................................................................................  13  
2.   MICRO  FINANCE-­‐  GROUP  LENDING  ...................................................................................................  14  
2.1.   Identifying  Overdue  ....................................................................................................................  14  
2.2.   Broad  Default  Classification:  ......................................................................................................  14  
2.3.   Managing  Client  and  Spouse  demise  cases  ................................................................................  16  
2.4.   Collection  strategy  ......................................................................................................................  18  
2.5.   Dunning  strategy  ........................................................................................................................  19  
3.   MICRO  FINANCE  -­‐  INDIVIDUAL  LENDING  ..........................................................................................  19  
3.1.   Type  of  defaults:  .........................................................................................................................  20  
3.2.   Collection  strategy:  .....................................................................................................................  22  
3.3.   Bucket  wise  collection  strategy  ..................................................................................................  22  
3.4.   SMS  Strategy  ..............................................................................................................................  24  
3.5.   Calling  Strategy  ...........................................................................................................................  24  
3.6.   Field  Visit  Strategy  (>  30  DPD)  ....................................................................................................  25  
3.7.   Dunning  strategy  ........................................................................................................................  25  
3.8.   ECS/ACH  Representation  ............................................................................................................  26  
3.9.   Legal  Strategy  .............................................................................................................................  26  
4.   COLLECTION  PROCESS  FOR  HOUSING  &  MSE  ...................................................................................  26  
4.1.   Introduction  ................................................................................................................................  26  
4.2.   Collection  Strategy  .....................................................................................................................  27  
4.3.   Bucket  wise  collection  strategy  ..................................................................................................  28  
4.4.   SMS  Strategy  ..............................................................................................................................  30  
4.5.   Calling  Strategy  ...........................................................................................................................  31  

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4.6.   Field  Visit  Strategy  (>  30  DPD)  ....................................................................................................  32  
4.7.   Dunning  strategy  ........................................................................................................................  32  
4.8.   ECS/ACH  Representation  ............................................................................................................  32  
4.9.   LEGAL  STRATEGY  ........................................................................................................................  32  
4.10.   Recovery  &  Resolution  Mechanism  ........................................................................................  34  
4.11.   Engagement  of  Recovery  Agents  ............................................................................................  34  
4.12.   Identification  of  Wilful  Defaulters  ..........................................................................................  35  
4.13.   Tools  for  Recovery  ..................................................................................................................  38  
4.13.1.   Restructuring,  Rephasement&  Rehabilitation  ................................................................  38  
4.13.2.   Loan  Rescheduling  ..........................................................................................................  40  
4.13.3.   Exit  Strategy  ....................................................................................................................  42  
4.13.4.   Settlement/Compromise  –  For  secured  &  Unsecured  IL  ................................................  42  
4.13.5.   Sell  down  to  Asset  Restructuring  Company/other  entities  ............................................  45  
4.13.6.   Write  off/Waiving  of  Legal  action  ...................................................................................  45  
4.13.7.   Invoking  the  Provisions  of  SARFAESI  Act  ........................................................................  46  
5.   LEGAL  ACTION  &  RECOVERY  (Procedure)  .........................................................................................  49  
5.1.   Guidelines  on  seizure  /  repossession  of  assets  hypothecated  to  Ujjivan  ...................................  49  
5.2.   Arbitration  proceedings  ..............................................................................................................  51  
5.3.   SEC  138/25  NI  ACT  ......................................................................................................................  54  
5.4.   Demand  Promissory  Note  ..........................................................................................................  57  
5.5.   LokAdalat  ....................................................................................................................................  58  
5.6.   Debt  Recovery  Tribunal  ..............................................................................................................  59  
6.   RECOVERY  MECHANISMS  -­‐  Repossessions  .......................................................................................  60  
6.1.   Giving  notice  to  borrowers  .........................................................................................................  60  
6.2.   Repossession  of  Secured  assets  .................................................................................................  60  
6.3.   Valuation  &  sale  of  secured  assets  .............................................................................................  61  
6.4.   Opportunity  for  the  borrower  to  take  back  the  secured  assets  .................................................  61  
7.   SKIP  TRACING  PROCESS  .....................................................................................................................  62  
8.   POLICY  ON  NON-­‐STARTERS  ...............................................................................................................  63  
9.   COLLECTION  STRATEGIES  FOR  MASS  DEFAULT  BRANCHES  ..............................................................  67  

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9.1.   Identification  of  mass  default  cases  ...........................................................................................  67  
9.2.   Strategies  for  handling  mass  default  cases:  ...............................................................................  68  
10.   REPAYMENT  MODE  ........................................................................................................................  69  
11.   RECEIPT  BOOK  PROCESS  –  for  field  collections  .............................................................................  70  
11.1.   Indenting,  distribution,  custody  and  verification  of  Receipt  Books  ........................................  70  
11.2.   Record  maintenance  and  audit  checks:  ..................................................................................  71  
11.3.   Process  for  lost  receipt  book  ..................................................................................................  71  
12.   COLLECTION  MANAGEMENT  SOFTWARE  (IC4)  .............................................................................  71  
12.1.   Introduction  ............................................................................................................................  71  
12.2.   IC4  Overview:  .........................................................................................................................  73  
12.3.   Mobile  Module:  ......................................................................................................................  73  
12.4.   Web  module:  ..........................................................................................................................  73  
12.5.   Collection  Management  Responsibilities:  ..............................................................................  73  
13.   TELE-­‐CALLING  FOR  MICRO  FINANCE  IL,  HOUSING  &  MSE  ............................................................  75  
14.   COLLECTIONS  CAPACITY  PLANNING  ..............................................................................................  77  
14.1.   Collection  reviews  ..................................................................................................................  78  
14.2.   Supervisory  Review  ................................................................................................................  78  
15.   COLLECTOR  TRAINING  ...................................................................................................................  79  
16.   COLLECTION  MIS  ............................................................................................................................  79  
17.   DAILY  COLLECTION  REPORT  ...........................................................................................................  80  
18.   LATE  PAYMENT  CHARGES–  ALL  PRODUCTS  ..................................................................................  80  
19.   LOAN  WRITE  OFFs  ..........................................................................................................................  80  
19.1.   Process  for  Write  off  (Existing)  ...............................................................................................  81  
19.2.   System  write-­‐off  process  using  IC4  .........................................................................................  82  
19.3.   Write  off  recovery:  .................................................................................................................  82  
19.4.   Monitoring  Bad  debt  Recovery  ...............................................................................................  83  
20.   STAFF  LOAN  RECOVERY  .................................................................................................................  84  
20.1.   Recovery  Process  -­‐  Pre-­‐Staff  Loan  OD:  ...................................................................................  84  
20.2.   Recovery  Process  -­‐  Post-­‐Staff  Loan  OD:  .................................................................................  85  
20.2.1.   Steps  of  Recovery  ...........................................................................................................  85  

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20.3.   Receivables  from  Staff  ............................................................................................................  87  
21.   DOCUMENT  PRESERVATION  ..........................................................................................................  87  
22.   PROVISIONING  NORMS  .................................................................................................................  88  
23.   ANNEXURE  1:  Abbreviations  .........................................................................................................  89  
24.   ANNEXURE  2:  References  to  Key  RBI  Circulars  .............................................................................  90  
25.   ANNEXURE  3:  Notice  Formats  .......................................................................................................  91  
26.   ANNEXURE  4:  IC  4  Workflows  with  OD  reasons  .........................................................................  104  

Detailed WF.xlsx
 ......................................................................................................................................  105  
26.1.   ANNEXURE  5:  IC4  Auto  Report  formats  ................................................................................  107  
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 

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1. INTRODUCTION  
The  purpose  of  the  collection  policy  is  to  create  a  set  of  standardized  policies  and  procedures  for  
collection   activities.   An   effective   collection   policy   is   essential   to   keep   a   strong   control   on   the  
portfolio  of  the  USFBL  and  thereby  ensuring  that  the  credit  expense  of  the  organization  is  low.  It  is  
essential   to   adopt   effective   collection   strategies   that   promote   on   –   time   repayment   as   well   as  
manage  delinquencies  better.    
The   essential   component   of   a   sound   NPA   management   system   is   quick   identification   of   non-­‐
performing  advances,  their  containment  at  minimum  levels  and  ensuring  that  their  impingement  
on  financials  of  Ujjivan  are  minimum.    
Thus  the  Collections  Policy  of  Ujjivan  Small  Finance  Bank  Ltd.,  (hereafter  referred  as  “the  USFBL”  
or  “Ujjivan”)shall  aim  at  making  the  recovery  process  faster,  so  that  Gross  NPA  level  is  maintained  
within  the  risk  appetite  of  the  USFBL.  

1.1. Scope  Objectives  and  Principle  


The   quality   and   performances   of   advances   have   a   direct   bearing   on   the   profitability   of   Ujjivan.  
Despite  an  efficient  credit  appraisal,  disbursement  and  monitoring  mechanism,  problems  can  still  
arise   due   to   various   factors   and   Non-­‐Performing   Asset   (NPA)   may   arise.   These   factors   may   be  
internal  or  external.  
 
► Policy   outlines   structured   collection   mechanism   for   all   recognized   critical   and   stressed  

accounts.    
► The  Loan  Review  Mechanism  to  be  triggered  on  detection  of  early  warning  signals  to  ensure  

an  effective  and  expeditious  response  for  correction.  


► The   Policy   emphasizes   a   broad   approach,   including   critical   parameters   to   be   taken   into  

account,   towards   the   collection,   recovery   and   resolution   of   loans   through   rehabilitation,  
compromise  settlements  etc.  

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► The  Policy  also  proposes  an  approach  for  cleansing  of  NPA  portfolio  through  judicious  write-­‐
offs.  
 
Objectives:  
► To  minimize  delayed  payment  post  due  date  (or  bounce  rate  of  PDC/ECS).    
► To  ensure  lower  forward  flow  from  initial  bucket  (from  0-­‐30  DPD  to  >30  DPD).    
► To  reduce  the  impact  of  provision  and  losses  on  different  products  –  secured  &  unsecured.    
► To   reschedule   customers   who   have   short   term   genuine   repayment   inability   with   the   right  
intent  of  payment.    
► To  educate  customers  the  benefits  of  prompt  repayment  and  consequences  of  non-­‐payment  
► To  ensure  collection  cost  is  under  control    
► To  provide  inputs  to  credit  policy  based  on  collection  experience.    
► To  ensure  compliance  with  regulations  and  applicable  Code  of  conduct  
► To  manage  collection  of  penalty  fees  based  on  USFBL  norm.  

1.2. Guiding  Principles  of  Collection:  Code  of  Conduct  


“The  debt  collection  policy  of  the  USFBL  is  based  on  principle  of  dignity  and  respect  to  customers.      
The  USFBL  believes  in  following  fair  practices  with  regard  to  collection  of  dues  and  repossession  
of   security   thereby   fostering   customer   confidence   and   long-­‐term   relationship   and   thereby  
ensures  that  there  is  no  coercive  practice  followed  while  collecting  the  dues.  

The  repayment  schedule  for  any  loan  sanctioned  by  USFBL  is  fixed  taking  into  account  repayment  
capacity  and  cash  flow  pattern  of  the  borrower.      The  USFBL  explains  to  the  customer  upfront  the  
method  of  calculation  of  interest  and  how  the  Equated  Monthly  Instalments  (EMI)  or  payments  
through  any  other  mode  of  repayment  are  appropriated  against  interest  and  principal  due  from  
the  customers.      The  USFBL  expects  the  customers  to  adhere  to  the  repayment  schedule  agreed  to  
and   approach   it   for   assistance   and   guidance   in   case   of   genuine   difficulty   in   meeting   repayment  
obligations.    

The  USFBL’s  Security  Repossession  Policy  aims  at  recovery  of  dues  in  the  event  of  default  and  is  
not   aimed   at   whimsical   deprivation   of   the   property.       The   policy   recognizes   fairness   and  
transparency  in  repossession,  valuation  and  realization  of  security.      All  the  practices  adopted  by  
the  USFBL  for  follow-­‐up  and  recovery  of  dues  and  repossession  of  security  are  in  consonance  with  
the  Law.  The  security  repossession  procedure  is  set  in  motion  only  after  all  attempts  by  the  USFBL  
to   discuss   with   the   borrower   the   ways   and   means   to   overcome   the   financial   hurdles/default   in  
payment  have  failed.      As  an  exception,  it  is  to  be  noted  that  the  USFBL  has  the  right  to  possess  

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the  financed  asset,  as  a  preventive  measure,  even  in  instances  where  there  has  been  no  default  
but  violation  of  the  terms  and  conditions  of  the  Loan  Agreement.  

► Ujjivan's    recovery    procedure    shall  be    based    on    good    manners,    impartial    treatment    and  
persuasion.  
► Ujjivan  shall  treat  its  defaulters  with  respect  and  dignity.  
► All  communications  to  the  customer  are  in  writing,  by  telephone  or  through  personal  visit.  The  
customer  is  contacted  by  telephone  on  the  numbers  (residence/work  place/mobile)  provided  
by   him/her   in   the   application   form   filled   in   at   the   time   of   taking   the   loan/modified  
subsequently  as  intimated  to  the  USFBL.  If  the  customer  is  not  responding/not  reachable  over  
telephone   or   not   paying   even   after   telephonic   request,   the   USFBL's   representatives   make  
personal  visits  to  the  customer's  residence/workplace  during  reasonable  hours  of  the  day.  
► Ujjivan  shall  contact  people  other  than  the  Borrowers  only  to  locate  the  borrower  
► The  USFBL  staff  or  any  person  authorized  to  represent  the  USFBL  in  collection  of  dues  or/and  
security  repossession  identifies  himself  /  herself  and  displays  the  Identity  card/authority  letter  
issued  by  the  USFBL  upon  request.  
► Representatives   of   Ujjivan   will   not   harass   or   abuse   borrowers   with   threats   or   offensive  
mannerisms  /language  at  given  time  
► The   USFBL   is   committed   to   ensure   that   all   written   and   verbal   communication   with   its  
borrowers  are  in  simple  business  language  and  the  USFBL  adopts  civil  manners  for  interaction  
with  borrowers  
► Ujjivan  shall  follow  only  ethical  practices  and  will  not  resort  to  unduly  coercive  tactics  in  the  
process  for  recovering  NPAs.  
► Normally   the   USFBL’s   representatives   will   contact   the   borrower   between   0700   hours   and  
1900   hours,   unless   the   special   circumstance   of   his/her   business   or   occupation   requires   the  
USFBL  to  contact  at  a  different  time.  
► Tele  callers  of  call-­‐centres  will  ensure  simple  business  language,  decorum  and  persuasion  
while  making  follow-­‐up  calls    
► Borrower’s  requests  to  avoid  calls  at  a  particular  time  or  at  a  particular  place  are  honoured  as  
far  as  possible.  
► The   USFBL   documents   the   efforts   made   for   the   recovery   of   dues,   as   far   as   possible   and   the  
copies  of  communication  sent  to  customers,  if  any,  are  kept  on  record  
► All   assistance   is   given   to   resolve   disputes   or   differences   regarding   dues   in   a   mutually  
acceptable  and  in  an  orderly  manner  
► Inappropriate  occasions  such  as  bereavement  in  the  family  or  such  other  calamitous  occasions  
are  avoided  for  making  calls/visits  to  collect  dues  
► Up-­‐to-­‐date  details  of  the  recovery  agency  if  engaged  by  the  USFBL  are  displayed  at  its  website  

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► The   USFBL   provides   the   loan   account   statement   to   its   customers   on   request   basis   when  
changes  in  period  of  loan,  quantum  of  EMI  etc.  take  place.  Changes  in  the  rate  of  interest  are  
communicated  to  the  customers  as  and  when  they  are  effected  
► The  USFBL  bears  the  cost  of  getting  duplicate  sale  deed  in  case  the  original  furnished  to  it  is  
misplaced  at  its  end  on  account  of  any  eventuality  
► Collections  team  can  disclose  the  loan  obligations  only  to  the  customer,  co-­‐borrower  or  the  
co-­‐guarantor.    
► If  the  customer  is  not  present  and  only  minors/elderly  /  infirm  are  present  at  the  time  of  the  
visit,  the  Collections  Representative  should  end  the  visit  with  a  request  that  the  customer  call  
back.  He  should  not  enter  the  house  unless  invited.  He  should  not  wait  for  the  customer  in  the  
customer’s  residence  unless  specifically  asked  to  do  so  by  the  customer  or  family.  
► Ujjivan  representatives  shall  not  make  false,  deceptive,  or  misleading  claims  for  the  purpose  
of   collecting   repayments.   This   includes   misrepresenting   his/   her   identity   or   falsifying   facts  
about   debt   status   or   consequences   of   non-­‐repayment   or   claiming   any   monetary   or   non-­‐
monetary  awards  post  tracing  of  the  customer.  
► Ujjivan  shall  not  initiate  any  legal  or  recovery  measures  including  repossession  of  the  security  
without  giving  due  notice  to  the  borrower  in  writing.  Ujjivan  shall  follow  all  such  procedures  
as  required  under  law  for  recovery/repossession  of  the  security.  
► Repossession  of  security  is  aimed  at  recovery  of  dues  and  not  to  deprive  the  borrower  of  the  
security.   Repossession,   valuation   and   realization   of   security   shall   be   done   in   a   fair   and  
transparent  manner  within  the  purview  of  RBI’s  Guidelines.    
► All  communication/letters  to  the  customer  either  through  mail  or  through  telegrams  shall  be  
handled  directly  by  the  USFBL  as  appropriate.  Mail  dunning  /  telegrams/  Posts/  
phonograms/SMS  etc.  shall  be  in  a  format  approved  by  Collections  Unit  of  the  USFBL.    
► Customer’s  questions  should  be  answered  in  full.  They  should  be  provided  with  information  
requested,  given  assistance  and  issues  resolved.  Accounts  with  unresolved  issues  are  to  be  
escalated  to  management.  
► Customer  or  third  party  requests  for  supervisor  names  or  requests  to  speak  with  supervisor  
should  always  be  honored.  
► Customers  may  use  USFBL’s  grievance  redressal  mechanism/  escalation  matrix  in  case  of  any  
concerns  or  grievances  pertaining  to  collection  of  dues  &  recovery    

1.3. Collection  Dos  and  Don’ts  


DO’S   DON’TS  

Collection  Policy   February  2017   Page  10  


 
Confidential                                  
     
   
! Do   dress   in   formal   clothes   and   carry   the   " Do   not   get   personal,     tough   or   aggressive   or  
company   identity   card   during     work   hours   abusive  
positively   " Do   not   use   coercion   of   any   sort   to   make  
! Do   be   punctual   and   available   at   Centre   recovery  of  payments.  
Meetings  and  in  the  Branch  Office     " Do   not   humiliate   borrowers   in   public   places   by  
! Visit  and  analyze  the  customer  situation   discussing   their   loan   over   dues   with   third  
! Do   talk   in   a   pleasant,   polite   and   non-­‐   parties/neighbors  
aggressive   manner   at   all   times.   Answers   " Do  not  threaten  that  assets  will  be  seized  
should  be  factual  and  to  the  point     " Do   not   pressurize   the   members   &   make  
! Collection  interactions  should  be  based  on   unrealistic  demands    
fair  conduct  and  persuasion   " Do   not   claim   that   the   personal   documents  
! Present  all  the  information  required  by  the   collected  earlier  will  form  part  of  collateral  
customer  in  an  appropriate  manner   " Do   not   force   the   customers   to   make   payments  
! Do   answer   borrower’s   query   to   the   by  not  giving  them  an  alternative  option  
satisfaction  of  the  borrower   " Do  not  humiliate  the  customer,    lose  temper,  get  
! Keep   records   of   interactions   with   the   angry  or  irritated  irrespective  of  the  situation  
customer  in  the  IC4   " Tone  should  not  be  harsh  or  loud  
! Do   provide   a   valid   receipt   for   each   loan   " Do   not   have   unending   center   meetings   till  
installment   payment   received   (partial   or   payments  are  made  
full)   and   record   the   payment   in   the   " Do   not   give   false   promises   to   customers   like  
borrower’s   loan   passbook/loan   card   promising  higher  loans  in  case  of  part  payments,  
immediately   after   the   transaction   and   providing  jobs  to  family  members  etc.  
educate  customers  to  keep  all  the  receipts   " Do   not   seize   customer   assets   or   any   personal  
for  all  future  references.     documents  e.g.  Voter  ID,  ration  card  etc.    
! Visit  the  Customer  on  Promise  to  Pay  dates   " Do  not  share  customer’s  information  with  other  
given  by  them  on  working  days  only   member  borrowers/customers  
! Maintain   a   reasonable   distance   from   the   " Do   not   call   borrowers   at   inappropriate   times  
customer   such   as   bereavements,   illness,   social   occasions  
! Contact   customer   at   appropriate   hrs.   such  as  marriages,  births  etc.    
Timings:  Earliest-­‐  7.00  AM  &  7.00  PM   " Do  not  visit  or  call  borrowers  between  7  pm  to  7  
! Do  keep  borrower  information  confidential   am    positively  
and   use   it   only   for   permissible   purposes   " Do   not   discriminate   on   the   basis   of     caste     and    
defined    by  ujjivan   religion  
" Do  not  go  for  collections  in  a  group  of  more  than  
2  staff  members  at  a  time  
" Do   not   visit   the   customers   on   weekly   or   public  
holidays    
 
 
 

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Confidential                                  
     
   
1.4. Policy  Review  &  Approval  process  
The   ownership   of   this   policy   shall   lie   with   National   Manager   Collections   and   Recovery,   Head   of  
Credit  –  Micro  Finance  and  Head  of  Credit  -­‐  Housing  &  MSE.  The  Policy  would  be  reviewed  and  
updated   at   least   on   an   annual   basis.   However,   it   may   also   be   reviewed   on   an   ad-­‐hoc   basis   to  
reflect   changes   in   regulatory   guidelines   or   market   specific   changes.   The   reviewed   and   updated  
Policy  would  be  submitted  to  the  Credit  Risk  Management  Committee  (“CRMC”)  for  review  and  
sign  off.  Subsequently  the  same  will  be  placed  to  the  Risk  Management  Committee  of  the  Board  
(“RMCB”)1  for   review   and   approval.   The   minutes   of   meeting   of   the   Committee   and   the   Board  
would  be  documented.  
 
The  Credit  Risk  Management  Committee  shall  be  constituted  of  the  following  members:  
• Chief  Executive  Officer  (CEO)  and  Managing  Director  
• Chief  Risk  Officer  (CRO)  
• Head  of  Credit  and  Collections  –  Microfinance  
• Head  of  Legal    
• Head  of  Audit  
• Chief  Vigilance  Officer  
• Head  of  Credit  -­‐  Housing  &  MSE    

1.5. Collection  Organization  Hierarchy:  Micro  Finance  GL  &  IL  &  Housing  &MSE  

                                                                                                                         
1
Refer to the SFB’s Risk Management Governance Policy for further details on the RMCB

Collection  Policy   February  2017   Page  12  


 
Confidential                                  
     
   
• Collection   structure   is   common   for   all   business   verticals,   Collections   officers   will   be  
allocated   separately   for   secured   and   unsecured   verticals.  

Head  Credit  and  


Collecdons  

Nadonal  Manager  
Collecdon  &  Recovery  

Regional  collecdon   Collecdon  Operatons  


Telecalling  Team  lead   Manager   manager  

Area  Manager  -­‐  


Telecallers   Collecdons  

Cluster  Manager-­‐  
Collecdons  

Officer-­‐  Collecdon    
 
 

1.6. Product  Segment  


Micro  finance  Group  and  Individual  lending   Housing  and  MSE  

Joint  Liability  Group  (JLG)  loans   Housing  Loans  

Individual  Business  Loans     Loan  Against  Property  (LAP)  

Individual  Livestock  Loans     Secured  Business  Loans  

Collection  Policy   February  2017   Page  13  


 
Confidential                                  
     
   
Agriculture  Loans     Enterprise  business  Loans  

Individual  Home  Improvement  Loans  (HIL)  

Individual  Higher  Education  Loans    

 
2. MICRO  FINANCE-­‐  GROUP  LENDING  

CROs  are  primarily  responsible  for  both  sales  &  collections  of  JLG  loans.  They  are  the  1st  point  of  
contact   to   all   group   lending   borrowers.   The   supervisory   structure   from   CRM   to   AM   shall   get  
involved   in   the   collection   process   at   various   default   category   stages.   Accountability,   customer  
follow  ups  &co  allocation  of  accounts  have  been  explained  in  detail  in  this  section.  

2.1. Identifying  Overdue  


The  action  plan  for  recovering  defaults  will  vary  depending  on  the  reasons  of  default.  Hence  it  is  
necessary  to  first  identify  the   default   reasons&  subsequently  develop  an  action  plan  for  arrear  
collections.  

2.2. Broad  Default  Classification:  


1 . Individual  defaults  
2 . Technical  defaults  
3. Defaults  caused  by  Fraud  and  Mass  Defaults  
 

Type  of  Default   Action  Plan   Person  Responsible  


Individual  Defaults  
Temporary  repayment   Cause  shall  be  investigated  and   CRO  and  CRM  
problem   constant  follow-­‐up  with  group  and  
1. Late  receipt  of  salary     Borrower  shall  be  conducted  to  
2. Illness   of   a   family   collect  the  dues.  
member  
3. Sudden  cash  needs  
 
Long  –  term  repayment   CRO  shall  investigate  the  cause  and   CRO  and  CRM  
problem   escalate  to  CRM.  
1. Death   of   an   earning   CRM  shall  analyse  the  situation  
member   and  keep  in  constant  touch  with  

Collection  Policy   February  2017   Page  14  


 
Confidential                                  
     
   
Type  of  Default   Action  Plan   Person  Responsible  
2. Loss   of   job   or   the  customer  until  his/her  
Accident   leading   to   situation  improves.  
permanent   disability   And  depending  on  the  actual  
of   an   earning   situations  also  provide  an  option  to  
member   reschedule  the  loan  and  short  term  
3. Serious   illness   of   a   repayment  holiday  for  the  set  of  
family  member   customers  affected  by  natural  
4. Natural   calamity   calamities    
leading   to   loss   of    
assets  
5. Multiple  borrowings  
6. Major   business  
downturn   including  
crop  loss  
 
Wilful  defaulter   CRO  and  CRM  shall  follow  up  with   CRO  and  CRM  
the  borrower  and  group  member  
for  collection  in  accordance  with  
JLG  norms.  2  
Abscond  customers   Investigation  shall  be  conducted  to   CRO  and  CRM,  
in  accordance  with  skip  tracing   Collection  team  
process  as  defined  in  this  policy.  
Technical  Defaults  
Wrong  Posting  of   Branch  shall  intimate  the   Branch  and  
repayment   operations  department  to  have  the   Operations  
issue  rectified.  
Repayment  window   Branch  shall  notify  SQ,  collections   Branch  and  SQ  
changes   team  and  operations  department  
to  ensure  loans  are  booked  in  the  
actual  window.  Rectified  loan  card  
shall  be  handed  over  to  customer  
and  RO  copy  shall  be  sent  to  the  
regional  operations  department.  
Default  caused  by  Fraud  and  Mass  Defaults  
Default  caused  by  fraud   Cases  shall  be  reported   CRM/  CBH/  RFMC  
immediately  to  the  RFMC.  
Investigation  and  follow  through  
shall  be  done  in  accordance  with  
                                                                                                                         
2
As  per  Group  loan  Credit  Policy

Collection  Policy   February  2017   Page  15  


 
Confidential                                  
     
   
Type  of  Default   Action  Plan   Person  Responsible  
RFMC  Process.  
Mass  default   Upon  confirmation  from  Branch   CRM,  CBH  &  AM,  
supervisor  an  immediate   collection  team,  
intimation  along  with  initial   Vigilance,  RFMC  
observations  shall  be  sent  to  NCM,  
RFMC,    Head  credit  Micro  Business,  
Head  Vigilance  
 

2.3. Managing  Client  and  Spouse  demise  cases  


 
1. Deceased   customer:   In   the   event   of   customer   demise,   neither   the   family   nor   the   group  
members  should  be  forced  to  make  repayments.  The  life  insurance  company  will  settle  the  
claim  if  the  insurance  is  active.  
 
Action  Plan:  
• When   a   customer   expires   the   CRO   must   immediately   inform   the   CRM   and   update   IC4.  
CRM  will  inform  operations,  insurance  and  the  credit  department.    
• CRM  will  then  visit  the  customer’s  house,  speak  with  the  nominee  clearly  explaining  the  
benefits   they   will   receive   from   the   insurance   company   and   the   documents   he   /   she   is  
required  to  provide.    
• Once   the   death   claim   documents   are   received,   branches   will   courier   the   same   to   the  
insurance  department.    
• Insurance  department  will  submit  the  death  claim  documents  to  the  insurance  company.    
• Once   the   claim   amount   is   received   from   the   insurance   company,   Nominee   has   to   settle  
the  loan  amount  with  Ujjivan.  
 
2. Spouse  deceased:  In  the  event  of  spouse  death,  CRO  should  not  force  the  customer  or  the  
group  members  to  make  payments  during  the  period.  
 
Action  Plan:      
• When  a  customer’s  spouse  expires  the  CRO  must  immediately  inform  the  CRM  and  update  
in  IC4.    
• CRM   will   then   visit   the   customer’s   house,   speak   with   the   nominee   (customer)   clearly  
explaining  the  benefits  they  will  receive  from  the  insurance  company  and  the  documents  
he  /  she  is  required  to  provide.    

Collection  Policy   February  2017   Page  16  


 
Confidential                                  
     
   
• Once   the   death   claim   documents   are   received,   branches   will   courier   the   same   to   the  
insurance  department.    
• Insurance  department  will  submit  the  death  claim  documents  to  the  insurance  company.    
• Based   on   the   customer   preference,   Cashier/CCR   will   choose   one   of   the   below   options  
while  marking  the  case  as  demise  in  BR.Net.  
o Continue  repayment  as  per  schedule    
o Loan  closure  on  insurance  claim  settlement  
• CRM   will   contact/visit   the   customer   to   understand   her   preference   and   will   obtain   a  
request   letter   or   cheque   as   the   case   may   be   and   authorize   the   entry   posted   by   the  
Cashier/CCR.  
• In  few  instances  spouse  may  not  insured  or  insured  but  not  eligible  for  claim  due  to  nature  
of  death,  in  such  cases  customer  will  not  be  forced  to  pay  the  immediate  outstanding  EMI  
due  for  the  month.  The  emi  falling  due  on  the  subsequent  month  will  be  collected  as  per  
existing   process   in   center   meetings.   If   problem   seems   long   term/critical   we   can   lookout  
option   of   loan   rescheduling   or   repayment   holiday   for   such   customer   depending   on   the  
criticality.  Overdue  emi  will  reflect  as  an  overdue  till  it  is  not  regularized.  

If  the  customer  wishes  to  continue  her  loan  

• CRM  should  collect  a  request  letter  from  the  customer  along  with  the  claim  documents  

If  the  customer  wishes  to  settle  her  loan  through  insurance  settlement  

1. Customer   will   not   be   forced   to   pay   the   immediate   outstanding   EMI   due.   The   EMI   falling  
due  on  the  subsequent  month  will  be  collected  at  the  center  meeting  as  per  the  existing  
process.  The  overdue  EMI  will  reflect  as  an  overdue  till  the  tenure  of  the  loan.  However  if  
the  customer  wishes  to  clear  the  previous  overdue  or  close  the  existing  loan,  she  may  do  
so  at  her  convenience.  
2. On   intimation   from   the   insurance   company,   the   cheque   issued   by   the   customer   will   be  
sent  for  clearing  by  the  insurance  team.  
3. On  realization  of  the  cheque  the  loan  account  will  be  closed.    
4. If  the  cheque  is  dishonored  then  the  insurance  team  will  intimate  the  concerned  branch  
supervisors  by  email  
5. On  receipt  of  intimation  the  branch  team  will  follow  up  with  the  customer  for  collection  of  
outstanding  loan  amount.  
6. If   the   branch   team   is   unable   to   recover   they   will   input   appropriate   remarks   against   the  
customer  in  Indus  Collection  software  (IC4),  which  will  require  authorization  by  the  CRM.  
7. All   cases   reported   as   Intentional   defaulters   will   get   allocated   to   Collections   team  
automatically  on  Indus  Collections  software  (IC4).  

Collection  Policy   February  2017   Page  17  


 
Confidential                                  
     
   
8. Insurance   team   will   store   all   the   dishonored   cheques.   Collection/Vigilance   can   request  
retrieval  of  cheques  for  any  future  reference.  

Customers   will   be   eligible   for   a   repeat   loan   in   accordance   with   the   existing   credit   policy  
guidelines.   It   is   important   to   note   that   the   repayment   history   of   the   customer’s   previous   loan  
(during   the   demise   of   the   spouse)   shall   have   no   bearing   on   the   sanctioning   of   her   new   loan,  
provided  pre-­‐closure  or  repayment  has  happened  in  accordance  with  the  above  defined  process.  

Nominee   recovery   allocation   to   collection   team:   OD   Cases   where   Insurance   is   settled   to  


Nominee  and  crossed  45  days  (from  the  date  of  Insurance  settlement)  with  >5k  OSP  amount  will  
be  allocated  to  field  collection  team  on  a  monthly  basis  

2.4. Collection  strategy  


Collection  strategy  for  Ujjivan  will  be  based  on  days  past  due  &reasons  for  overdue.  

The  primary  responsibility  of  overdue  collection  lies  with  the  branch  staff.  Cases  are  co-­‐allocated  
to   other   functions   based   on   reasons/criticality   of   each   case   as   authorized   by   the   distribution  
supervisors:  
Overdue  
Activity   Responsibility   Monitoring   Account  allocation  in  IC4  
Bucket  
All  overdue  accounts  
Day  1   CRO/LO   CRM   CRO,CRM  
appear  in  IC4    
CRM  to  monitor  the  
1  to  7  days   collection  and  visit  the   CRO/CRM   CRM/CBH   CRO,  CRM,  CBH  
customer.    
Nonstarter  cases   CRO,  CRM,   CRM,  Cluster  
Day  8   allocated  to  field   Field  Credit   Credit   CRO,CRM    ,  FCO  
credit  team   Officer  (FCO)   Manager  
Auto  escalation  made  
8  to  30  
to  next  2  supervisory   CBH/AM   AM   CRO,  CRM,  FCO,  CBH,  AM  
days  
levels  based  on  reason  
>  90  Days  
Officer-­‐   Area   CRO,  CRM,  field  credit  
with  >75%   Allocation  to  field  
Collections   manager-­‐ team,  CBH,  AM,  Collection  
of  OSP   Collection  team  
Micro  finance   Collection     team  
cases  in  GL  
Legal   Legal  action  initiated   Collection   RVM   CRO,  ,  CRM,  ,  field  credit  

Collection  Policy   February  2017   Page  18  


 
Confidential                                  
     
   
cases   case  to  case  basis   Manager  and   team,  CBH,  AM,  Collection  
Legal  manager   team  and  legal  team  
 
• Abscond  cases  and  sub-­‐lending/  ghost  loans/mass  default  can  be  allocated  to  collections  
immediately  if  authorized  by  distribution  supervisor  within  15  days  of  default  in  IC4;  else  
auto  allocation  on  Day  15  
• All   Willful   defaulters   in   group   lending   will   be   auto   allocated   to   field   collections   after   60  
days  
• Deceased   Spouse   Insurance   Settled   cases,   If   nominee   is   a   willful   defaulter,   it   can   be  
allocated  to  collections  
 

2.5. Dunning  strategy  


Letters   will   be   issued   to   customer   from   the   system   for   debt   collection   purpose.     Multiple  
reminder  notices  can  be  sent  to  the  customers.    

For   difficult   accounts   multiple   reminder   notices   can   be   sent   to   the   customers   as   below.   The  
branch   team   can   raise   a   request   in   IC4   and   regional   office   will   send   across   the   notices   to   the  
customer.    

Reminder  Notice   GL  
First  reminder  notice   8  to  30  days    
Second  reminder  Notice   31  to  60  Days  
Final  reminder  notice   61  to  90  days  
 

3. MICRO  FINANCE  -­‐  INDIVIDUAL  LENDING  

Collection  Policy   February  2017   Page  19  


 
Confidential                                  
     
   
LOs   are   primarily   responsible   for   both   sales   &   collections   of   unsecured   individual   loans.   The  
supervisory   structure   from   CRM   to   AM   shall   get   involved   in   the   collection   process   at   various  
default   category   stages.   Accountability,   customer   follow   ups   &   co-­‐allocation   of   accounts   have  
been  explained  in  detail  in  this  section.  

3.1. Type  of  defaults:  


The  action  plan  for  collection  will  vary  depending  on  the  reasons  of  default.  Accordingly,  defaults  
are  broadly  classified  as  below:  

► Individual  defaults  
► Technical  defaults  
► Defaults  caused  by  Fraud  and  Mass  Defaults  
 
Type  of  Default   Action  Plan   Person  Responsible  
Individual  Defaults  
Temporary  repayment   Cause  shall  be  investigated  and   LO  and  CRM  
problem   Constant  follow-­‐up  with  
1. Late  receipt  of  salary     borrower/co-­‐borrower  shall  be  
2. Illness   of   a   family   conducted  to  collect  the  dues.  
member  
3. Sudden  cash  needs  
 
Long  –  term  repayment   LO  shall  investigate  the  cause  and   LO  and  CRM  
problem   escalate  to  CRM.  
1. Death   of   an   earning   CRM  shall  analyse  the  situation  
member   and  keep  in  constant  touch  with  
2. Loss   of   job   or   the  customer  until  his/her  
Accident   leading   to   situation  improves.  
permanent   disability   And  depending  on  the  actual  
of   an   earning   situations  also  provide  an  option  to  
member   reschedule  the  loan.    
3. Serious   illness   of   a    
family  member  
4. Natural   calamity  
leading   to   loss   of  
assets  
5. Multiple  borrowings  
6. Major   business  
downturn   including  
crop   loss,   Cattle  

Collection  Policy   February  2017   Page  20  


 
Confidential                                  
     
   
death  
Wilful  defaulter   LO  and  CRM  shall  follow  up  with   LO  and  CRM  
the  borrower  &  co-­‐borrower  for  
collections  
Abscond  customers   Investigation  shall  be  conducted  in   LO,  CRM,  CBH  Credit  
accordance  with  skip  tracing   officer  &Collection  
process  as  defined  in  this  policy.   team  
Technical  Defaults  
Wrong  Posting  of   Branch  shall  intimate  the   Branch  and  
repayment   operations  department  to  have  the   Operations  
issue  rectified.  
Repayment  window   Branch  shall  notify  SQ,  collections   Branch  and  SQ  
changes   team  and  operations  department  
to  ensure  loans  are  booked  in  the  
actual  window.  Rectified  loan  card  
shall  be  handed  over  to  customer  
and  RO  copy  shall  be  sent  to  the  
regional  operations  department.  
Default  caused  by  Fraud  
and  Mass  Defaults  
Default  caused  by  fraud   Cases  shall  be  reported   CRM/  CBH/  RFMC  
immediately  to  the  RFMC.  
Investigation  and  follow  through  
shall  be  done  in  accordance  with  
RFMC  Process.  
Mass  default   Upon  confirmation  from  Branch   CRM,  CBH  &  AM,  
supervisor  an  immediate   collection  team,  
intimation  along  with  initial   Vigilance,  RFMC  
observations  shall  be  sent  to  NCM,  
RFMC,    Head  credit  Micro  Business,  
Head  Vigilance  &Business  head    
 
 

Collection  Policy   February  2017   Page  21  


 
Confidential                                  
     
   
3.2. Collection  strategy:  
The  various  collection  strategies  based  on  aging  and  severity  of  the  cases  shall  be  as  below:  
BACK  END   FIELD  (Involvement  based  on  buckets)  
BUCKET   TELE-­‐ REMINDER   CREDIT   COLLECTION   COLLECTION   LEGAL  
SMS   LO   CBH   AM   RBM  
CALLING   NOTICE   OFFICER   OFFICER   MANAGER  

1  to  7  Days   !   ! 3   !  !   X   X   X   X   X   X   X  
8  to  30  Days   !   !   !  !   !   X   !   X   X   X   X  
31  to  60  Days   !   !   !  !   !   !   !   !   !   X   X  
61  to  90  Days   !   X   !  !   !   !   X   !   !   X   X  
91  to  180  Days   X   !   X   !   !   !   X   !   !   !   !  
>180  Days   X   !   X   !   !   !   X   !   !   !   !  
• Abscond  cases  and  sub-­‐lending/  ghost  loans/mass  default  can  be  allocated  to  collections  
immediately  if  authorized  by  distribution  supervisor  within  15  days  of  default  in  IC4;  else  
auto  allocation  on  Day  15  
• All  cases  >30days  DPD  will  be  allocated  to  field  collections  in  IC4  
• Deceased   Spouse   Insurance   Settled   cases,   If   nominee   is   a   willful   defaulter,   it   can   be  
allocated  to  collections  

3.3. Bucket  wise  collection  strategy  


Staff  
Bucket   Activities  
Responsible  
Bucket  1   • Missed  payment/Bounce  SMS  sent  from  the  core  system   Tele-­‐calling  
(1  to  30)   • 1   to   3   days:   Loan   officer   to   visit/   call   the   customer   to   collect   Manager,  
repayment  or  obtain  PTP  and  update  in  collection  software.     Collection  
• >3  days:  Bounce  calling  from  the  Collections  tele-­‐calling  team  to   Operations  
obtain  PTP  and  loan  officer  to  ensure  repayment  is  picked  up.  In   Manager,  
case   the   customer   has   not   honored   the   PTP   for   more   than   3   Branch  
times  the  account  will  be  escalated  to  next  2  supervisory  levels  in   Manager,  
distribution.   Loan  
• In   case   the   customer   is   temporarily   not   contactable   during   3   Officer,  
consecutive   field   visits   the   account   shall   be   allocated   to   next   2   Credit  
levels   in   distribution   and   subsequently   to   officer-­‐   IL   Credit   for   Officer  
mandatory  field  visit.  
• Focus  is  to  normalize  the  account    
• Based   on   the   request   from   Distribution   in   IC4   ECS/Cheque/ACH  
representation   will   be   done   by   collection   operation   manager   in  
                                                                                                                         
3
Reminder  notices  based  on  request

Collection  Policy   February  2017   Page  22  


 
Confidential                                  
     
   
consultation  with  National  manager-­‐  collection  and  recovery.  
• For  1-­‐12  MOB,  the  credit  officer  will  be  assisting  the  Loan  officer  
in  collection  
Bucket  2   • Overdue  calling  (tele-­‐calling  unit),  field  visit  and  overdue  EMI  and   Tele-­‐calling  
(31  to   other   applicable   charges   pick-­‐up   will   be   done   by   the   collection   Manager,  
60  DPD)   officer.   Collection  
• Based  on  severity  of  the  case  Cluster    collection  manager  will  also   Operations  
visit  the  customer     Manager,  
• The  prioritization  of  collection  effort  will  be  normalization  first  &   Collection  
then  stabilization.   Officer,  
• If  the  Cluster  collection  manager  is  of  the  opinion  that  customer   Area  
intent  is  good  but  ability  is  impaired  and  fit  case  for  reschedule,   Collection  
then  he  will  recommend  the  case  to  RCM  &NCM   Manager  
• Credit  Bureau  scrubs  shall  be  used  for  all  cases  >30  days.    
• The   collections   operation   manager   will   issue   overdue   payment  
reminder  notice  on  the  company  letterhead  (30  DPD  Notice)  
 
Bucket  3   • Overdue   calling   (tele-­‐calling),   field   visit   and   overdue   EMI   and   Tele-­‐calling  
(61-­‐90   other   applicable   charges   pick-­‐up   will   be   done   by   the   collection   Manager,  
DPD)   officer   Collection  
• The   collection   operations   manager   will   issue   notice   for   overdue   Operations  
payment   reminder   notice   on   the   company   letterhead   (60   DPD   Manager,  
Notice)   Collection  
• The   prioritization   of   collection   effort   will   be   normalization,   Officer,  
rollback  or  stabilization  in  that  order.   Area  
• Based   on   customer   risk   profile   (POS,   Vintage),   area   collection   Collection  
manager  will  continue  visit  the  customer     Manager  
• If   the   area   collection   manager   is   of   the   opinion   that   customer  
intent  is  good  but  ability  is  impaired  and  fit  case  for  reschedule,  
then  he  will  recommend  the  case  to  RCM&NCM  
• Credit    bureau  scrubs  shall  be  continuously  used  to  observe  the  
payment  behavior  of  Overdue  clients  
 
Bucket  4   • Overdue   calling   (Tele-­‐calling   team),   field   visit   and   overdue   EMI   Tele-­‐calling  
onwards   and   other   applicable   charges   pick-­‐up   will   be   done   by   the   Manager,  
(>90   collection  officer   Collection  
DPD)   • The   prioritization   of   collection   effort   will   be   normalization,   Operations  
rollback  or  stabilization  in  that  order.   Manager,  
• Based  on  customer  risk  profile  (POS,  Vintage),  collection  manager   Collection  
will  continue  visit  the  customer     Officer,  
• Collections  Operations  Manager  will  issue  loan  recall  notice  (LRN)   Area  

Collection  Policy   February  2017   Page  23  


 
Confidential                                  
     
   
to  the  customer.     Collection  
• Based  on  the  feedback  from  the  collection  manager  legal  action   Manager,  
(sec   138/25   of   Negotiable   instrument/Payment   act;   sec   9   Legal  Team  
arbitration,  will  be  initiated  by  legal  manager  through  empaneled  
advocate.  Any  deferral  of  legal  action  will  be  approved  by  NCM  
• In  some  exceptional  cases,  company  will  offer/accept  settlement  
to/from  the  customer  as  approved  by  Head  of  Credit&  Collection  
Micro  Finance.    
 
 

3.4. SMS  Strategy  


• Reminder  SMS  will  be  sent  to  all  customers  before  the  due  date  from  the  LMS  
• ACH/  ECH/  cheque  bounce  cases  will  be  flagged  in  LMS  by  central  Ops.  And  subsequently  
SMS  will  be  sent  from  LMS  
• Subsequent  SMSs  to  be  sent  basis  increase  in  DPD  bucket  using  (IC4)  
• In  case  of  repayment  collection  done  through  manual  receipts,  a  SMS  confirming  the  same  
will  be  sent  to  the  customer  once  the  payment  is  accounted  in  a  customer’s  loan  account.  
• In  future  in  case  of  payment  received  through  the  handheld,  a  system  generated  SMS  shall  
be  sent  acknowledging  the  receipt  of  the  same.    

3.5. Calling  Strategy  


Awareness  Calling  (Calling  Before  1st  EMI)  
For  enhanced  customer  experience  and  to  ensure  minimal  operational  delinquency  towards  early  
tenor  of  the  loans,  awareness  calling  will  be  done  for  all  customers  (based  on  contactability)  post  
loan  disbursement  to  make  them  aware  of  their  due  EMI  amount  and  the  installment  date.  The  
benefit   of   awareness   calling   is   the   confirmation   of   customer   contactability   at   specified   contact  
numbers  and  pre-­‐empting  any  customer  issues  that  could  have  led  to  customer  dissonance.  This  
activity  will  be  carried  by  Service  quality  tele-­‐calling  team  
 

Pre-­‐Bounce  or  Reminder  Calling  


Pre-­‐Bounce   and   Reminder   Calling   will   be   done   under   2   circumstances   by   Service   quality   tele-­‐
calling  team  
 

Collection  Policy   February  2017   Page  24  


 
Confidential                                  
     
   
o For  first  4  months,  all  customers  will  be  called  and  reminded  about  their  impending  due  
date  and  requesting  them  to  fund  their  account  before  the  due  date.  This  is  to  ensure  that  
customer  habit  of  clearing  EMI  thru  their  Ujjivan  account  is  established.    
o After   4   months,   only   customers   who   have   missed   their   repayment   previous   month,   but  
paid  within  the  end-­‐of-­‐month,  will  be  called  and  asking  them  to  fund  their  account  before  
due   date   (so   that   these   accounts   will   not   become   overdue   post   EOM)   irrespective   of  
ECS/Cheque  or  cash  mode  repayments  
 
Bounce  Calling  
o Bounce  calling  will  be  done  to  customers  whose  cheque/ECS/ACH  has  bounced  during  the  
month,   insisting   them   to   repay   the   overdue   installment   with   applicable   charges   by   tele-­‐
calling  collection  team  (4th  day)  

3.6. Field  Visit  Strategy  (>  30  DPD)  


• Prior  to  field  visit,  collection  team  to  refer  tele-­‐calling  trial  recorded  in  IC4  
• The   collector   shall   visit   the   customer   at   his   /her   residence   or   work   place   to   establish  
contact,  negotiate  and  collect  the  repayment  (or  take  a  PTP)  
• The  intensity  of  the  field  visit  will  be  based  on:  
o Bucket  status  
o Principal  outstanding  
o Payment  behavior  in  the  past  
• All  field  visit  remarks  must  be  updated  in  the  IC4.  
 

3.7. Dunning  strategy  


Reminder  notices  will  be  sent  to  the  customer  from  IC4.    Reminder  letters  for  debt  collection  will  
serve  several  purposes  
• It  is  alternate  soft  collection  method  reminding  them  for  overdue  repayment      
• Since  it  is  documented,  it  shall  serve  as  an  evidence  when  legal  action  is  initiated  
 
Different  types  of  notices  will  be  sent  to  the  customer  as  per  the  below  aging:  
 
Reminder  Notice   IL  
First  reminder  notice   30th  Day  
Second  reminder  Notice   31  to  60  days  

Collection  Policy   February  2017   Page  25  


 
Confidential                                  
     
   
Final  reminder  and  recall  notice   61  to  90  Days  
 
 

3.8. ECS/ACH  Representation  


ECS/ACH   representation   will   also   be   done   on   recommendation   by   collection/   distribution   team  
and  approved  by  NCM  based  on  data  analysis  of  past  customer  repayment  behavior.    
   

3.9. Legal  Strategy  


Legal  case  will  be  initiated  only  after  90  DPD  (exceptionally  before  90  DPD  with  NCM  approval)..  
Legal  action  will  be  in  parallel  with  other  collection  actions  (tele-­‐call,  field  visit,  settlement  effort,  
etc)  

Different  types  of  legal  actions  will  be  initiated  as  follows  -­‐  

• Arbitration  Sec  9  (for  all  cases  except  mortgage).    


• Sec  138/Sec  25  
• LokAdalat  
• Conciliation      
 
 
 
4. COLLECTION  PROCESS  FOR  HOUSING  &  MSE  

4.1. Introduction  
A   Loan   Officer   (LO)   shall   represent   Ujjivan   in   collection   and   secured   assets   repossession.     The  
process  would  follow  the  guidelines  set  out  below:  
► The  customer  would  be  contacted  ordinarily  at  the  place  of  his  /  her  choice  and  in  the  absence  
of   any   specified   place,   at   the   place   of   his   /   her   residence   and   if   unavailable   at   his   /   her  
residence,  at  the  place  of  business  /  occupation.  
► Identity  and  authority  of  persons  authorized  to  represent  ujjivan  for  follow  up  and  recovery  of  
dues  would  be  made  known  to  the  borrowers  at  the  first  instance.    Ujjivan  staff  or  any  person  

Collection  Policy   February  2017   Page  26  


 
Confidential                                  
     
   
authorized  to  represent  the  USFBLL  in  collection  of  dues  or  /  and  secured  assets,  repossession  
will   identify   himself   /   herself   and   display   the   authority   letter   issued   by   the   USFBLL   upon  
request.  
► The  USFBLL  would  respect  privacy  of  its  borrowers.  
► The   USFBLL   is   committed   to   ensure   that   all   written   and   verbal   communication   with   its  
borrowers   will   be   in   simple   business   language   and   USFBL   will   adopt   civil   manners   for  
interaction  with  borrowers.  
► Normally  Ujjivan's  representatives  will  contact  the  borrower  between  0700  hrs.  to  1900  hrs.  
Unless  the  special  circumstance  of  his  /  her  business  or  occupation  requires  Ujjivan  to  contact  
at  a  different  time.  
► Borrower's  request  to  avoid  calls  at  a  particular  time  or  at  a  particular  place  would  be  honored  
as  far  as  possible.  
► Ujjivan   will   document   the   efforts   made   for   the   recovery   of   dues   and   the   copies   of  
communication  sent  to  customers,  if  any,  will  be  kept  on  record  using  IC4.    
Inappropriate   occasions   such   as   bereavement   in   the   family   or   such   other   calamitous   occasions  
and  important  social  functions  such  as  marriages  will  be  avoided  for  making  calls  /  visits  to  collect  
dues.  

4.2. Collection  Strategy  


CLUSTER   CLUSTER   REGIONAL  
TELE-­‐ AREA   COLLECTI CLUSTER   COLLECTIO
SALES   RB CREDIT   CREDIT  
BUCKET/DPD   SMS   CALLIN LO/RO   MANAGE ON   COLLECTION   N  
MANAGE M   MANAGE MANAGER  
G   R   OFFICER   MANAGER   MANAGER  
R   R  

0  to  30  Days   !   !   !   !   X   X   !   X   X   X   X  


31  to  60  Days   !   !   !   !   !   X   !   X   !   !   !  
61  to  90  Days   !   !   !   !   !   !   !   !   !   !   !  
91  to  180  Days   !   !   !   !   !   !   !   !   !   !   !  
>180  Days   !   !   !   !   !   !   !   !   !   !   !  
Note:  Field  collections  will  involve  for  cases  after  30  days  of  delinquency  once  it  is  crossed  >12  MOB  
 
The  action  plan  for  collection  will  vary  depending  on  the  reasons  of  default.  Accordingly,  defaults  
are  broadly  classified  as:  
# Individual  Defaults  
# Technical  Defaults  
# Defaults  caused  due  to  Fraud/Skip  
Type  of  Default   Action  Plan   Person  Responsible  

Collection  Policy   February  2017   Page  27  


 
Confidential                                  
     
   
Type  of  Default   Action  Plan   Person  Responsible  
Individual  Defaults  
Temporary  repayment   Cases  shall  be  visited,   Loan  Officer/Relationship  
problem   situation  assessed  and   Manager  &  Program  
collection  to  be  made  within   Manager  
30  days.  
Long  –  term  repayment   Process  shall  vary  basis  the    
problem   cause  of  default.  
Technical  Defaults  
Wrong  Posting  of  Account   Branch  shall  intimate  the   Branch&  Back  end  team  
operations  department  to  
have  the  issue  rectified.  
Default  caused  by  Fraud/Skip  
Default  caused  by  fraud   Cases  shall  be  investigated    CBH/Cluster  Credit  
and  reported.  Collection   Manager  
&Vigilance  and  RBM/RCM  
shall  initiate  action  against  
staff/  customer  
Default  caused  by  Skip   Case  need  to  be  allocated  to   CBH  &  AM,  Collection  
Field  collections  &  need  to   Officers,  Collection  Manager  
trace  by  using  all  the   &  Vigilance  manager  
available  
technique/Resources.  
Sales/collections  &  Vigilance  
should  jointly  work  on  
resolving  such  cases  

4.3. Bucket  wise  collection  strategy  


Bucket   Activities   Staff  Responsible  
Bucket  1   • Missed  payment/Bounce  SMS  sent  from  IC4   Tele-­‐calling  Manager,  
(1  to  30   • 1   to   3   days:   Loan   officer/relationship   office   to   Collection  Operations  
Days)   visit/   call   the   customer   to   obtain   PTP/   re-­‐ Manager,  CBH,  Cluster  
payments  and  update  in  IC4.     Credit  Manager,  Loan  
• >3  days:  bounce  calling  from  the  collections  tele-­‐ Officer,  Credit  Officer  
calling   set-­‐up   to   obtain   PTP   and   relationship  
officer  to  ensure  re-­‐payment  is  picked.  In  case  the  
customer  has  not  honored  the  PTP  for  more  than  
3   times   the   account   will   be   escalated   to   next   2  
supervisory  levels  in  business.  
• In   case   the   customer   is   temporarily   not  

Collection  Policy   February  2017   Page  28  


 
Confidential                                  
     
   
contactable   for   3   consecutive   field   visits   the  
account   shall   be   allocated   to   next   2   levels   in  
distribution  and  credit  officer  for  mandatory  field  
visit.  
• Focus   is   to   normalize   the   account,   and   ensure  
corrective  action  for  no  future  delinquency  of  the  
case    
• Based   on   the   request   from   distribution   in   IC4  
ECS/Cheque/ACH   representation   will   be   done   by  
collection  operation  manager  in  consultation  with  
NCM  
• For   1-­‐12   MOB   for   IL,   the   credit   officer   will   be  
assisting  the  relationship  officer  in  collection  
 
Bucket  2   • Overdue   calling   (tele-­‐calling   unit),   field   visit   and   For  <12  Mth  MOB  Team  
(31  to  60   overdue  EMI  and  other  applicable  charges  pick-­‐up   responsible  will  be  –  
DPD)   will  be  done  by  the  collection  officer.   RBM,  RCM,  CCM,  CBH,  
• Based   on   severity   of   the   case   cluster   manager   -­‐ LO,CO  Tele-­‐calling  
collections  will  also  visit  the  customer     Manager,  Collection  
• The   prioritization   of   collection   effort   will   be   Operations  Manager,  
normalization  first  &  then  stabilization.    
• If   the   cluster   manager   -­‐   collections   is   of   the   Filed  collection  team  will  
opinion  that  customer  intent  is  good  but  ability  is   involve  after  >12  MOB  -­‐  
impaired  and  fit  case  for  reschedule,  then  he  will    Collection  Officer,  Area  
recommend  the  case  to  RCM    &  NCM   Collection  Manager  
• Credit   Bureau   scrubs   shall   be   used   for   all   cases    
>30  days.    
• The   collections   operation   manager   will   issue  
overdue   payment   reminder   notice   on   the  
company  letterhead  (30  DPD  Notice)  
Bucket  3   • Overdue   calling   (tele-­‐calling),   field   visit   and   For  <12  Mth  MOB  Team  
(61-­‐90   overdue  EMI  and  other  applicable  charges  pick-­‐up   responsible  will  be  –  
DPD)   will  be  done  by  the  collection  officer   RBM,  RCM,  CCM,  CBH,  
• The   collection   operations   manager   will   issue   LO,CO  Tele-­‐calling  
notice   for   overdue   payment   on   the   company   Manager,  Collection  
letterhead  (60  DPD  Notice)   Operations  Manager,    
• The   prioritization   of   collection   effort   will   be    
normalization,   rollback   or   stabilization   in   that   Filed  collection  team  will  
order.   involve  after  >12  MOB  
• Based   on   customer   risk   profile   (POS,   Vintage),   Collection  Officer,  Area  
area   collection   manager   will   continue   visit   the   Collection  Manager  

Collection  Policy   February  2017   Page  29  


 
Confidential                                  
     
   
customer      
• If   the   collection   manager   is   of   the   opinion   that  
customer   intent   is   good   but   ability   is   impaired  
and  fit  case  for  reschedule/rehabilitation,  then  he  
will  recommend  the  case  to  RCM    &  NCM  
• Credit     bureau   scrubs   shall   be   continuously   used  
to   observe   the   payment   behavior   of   Overdue  
clients  
• The   collections   operation   manager   will   send2nd  
overdue   payment   reminder   notice   on   the  
company  letterhead  
Bucket  4   • Overdue  calling  (Tele-­‐calling  team),  field  visit  and   For  <12  Mth  MOB  Team  
onwards   overdue  EMI  and  other  applicable  charges  pick-­‐up   responsible  will  be  –  
(>90  DPD)   will  be  done  by  the  collection  officer   RBM,  RCM,  CCM,  CBH,  
• The   prioritization   of   collection   effort   will   be   LO,CO  Tele-­‐calling  
normalization,   rollback   or   stabilization   in   that   Manager,  Collection  
order.   Operations  Manager,    
• Based   on   customer   risk   profile   (POS,   Vintage),    
collection   manager   will   continue   visit   the   Filed  collection  team  will  
customer     involve  after  >12  MOB  
• Collections   operations   manager   will   send   loan   Collection  Officer,  Area  
recall  notice  (LRN)  for  cases>90  days.     Collection  Manager    
• Based   on   the   feedback   from   the   collection   Filed  collection  team  will  
manager   legal   action   (sec   138/25   of   Negotiable   involve  after  >12  MOB  
instrument/Payment)   will   be   executed   through    
our  legal  team   Legal  Manager  
• For  MSE  demand  promissory  Note  can  be  invoked    
through   claiming   legal   suite   on   recommendation  
from  collection  manager  
• Based   on   the   feedback   from   the   collection  
manager   SARFESI   for   secured   loan   will   be  
initiated   by   legal   manager   through   empaneled  
advocate.   Any   deferral   of   legal   action   will   be  
approved  by  NCM  
• In   some   exceptional   cases,   company   will  
offer/accept  settlement  to/from  the  customer  as  
approved   by   Head   Secured/MSE   business   on  
recommendation  from  NCMs  
 

4.4. SMS  Strategy  

Collection  Policy   February  2017   Page  30  


 
Confidential                                  
     
   
• Reminder  SMS  will  be  sent  to  all  customers  before  the  due  date  by  the  LMS  
• ACH/  ECH/  cheque  bounce  cases  will  be  flagged  in  LMS  by  central  Ops.  And  subsequently  
SMS  will  be  sent  from  LMS  
• Subsequent  SMSs  to  be  sent  basis  increase  in  DPD  bucket  using  (IC4)  
• In  case  of  repayment  collection  done  through  manual  receipts,  a  SMS  confirming  the  same  
will  be  sent  to  the  customer  once  the  payment  is  accounted  in  a  customer’s  loan  account.  
• In   future   in   case   of   repayment   received   through   the   handheld,   a   system   generated   SMS  
shall  be  sent  acknowledging  the  receipt  of  the  same.    
 
 
 
 
 

4.5. Calling  Strategy  


Awareness  Calling  (Calling  Before  1st  EMI)  
For  enhanced  customer  experience  and  to  ensure  minimal  operational  delinquency  towards  early  
tenor  of  the  loans,  awareness  calling  will  be  done  for  all  customers  (based  on  contactability)  post  
loan  disbursement  to  make  them  aware  of  their  due  EMI  amount  and  the  installment  date.  The  
benefit   of   awareness   calling   is   the   confirmation   of   customer   contactability   at   specified   contact  
numbers  and  pre-­‐empting  any  customer  issues  that  could  have  led  to  customer  dissonance.  This  
activity  will  be  carried  by  Service  quality  tele-­‐calling  team    
 

Pre-­‐Bounce  or  Reminder  Calling  


Pre-­‐Bounce   and   Reminder   Calling   will   be   done   under   2   circumstances   by   Service   quality   tele-­‐
calling  team  
 
o For  first  4  months,  all  customers  will  be  called  and  reminded  about  their  impending  due  
date  and  requesting  them  to  fund  their  account  before  the  due  date.  This  is  to  ensure  that  
customer  habit  of  clearing  EMI  thru  their  Ujjivan  account  is  established.    
o After   4   months,   only   customers   who   have   missed   their   repayment   previous   month,   but  
paid  within  the  end-­‐of-­‐month,  will  be  called  and  asking  them  to  fund  their  account  before  
due   date   (so   that   these   accounts   will   not   become   overdue   post   EOM)   irrespective   of  
ECS/Cheque  or  cash  mode  repayments  
 
Bounce  Calling  

Collection  Policy   February  2017   Page  31  


 
Confidential                                  
     
   
o Bounce  calling  will  be  done  to  customers  whose  cheque/ECS/ACH  has  bounced  during  the  
month,  insisting  them  to  repay  the  overdue  installment  with  applicable  charges  by  phone  
USFBL  collection  team  (4th  day)  

4.6. Field  Visit  Strategy  (>  30  DPD)  


• Prior  to  field  visit,  collection  team  to  refer  tele  calling  trial  recorded  in  IC4  
• The   collector   shall   visit   the   customer   at   residence   or   work   place   to   establish   contact,  
negotiate  and  collect  repayment  (or  take  a  PTP)  
• The  intensity  of  the  field  visit  will  be  based    
o Bucket  status  
o POS  Status  
o Payment  behavior  in  the  past  
• All  field  visit  remarks  must  be  updated  in  the  IC4.  

4.7. Dunning  strategy  


Reminder  notices  will  be  sent  to  the  customer  from  IC4.    Reminder  notice  for  debt  collection  will  
serve  several  purposes  
• It  is  alternate  soft  collection  method  reminding  them  for  overdue  repayment      
• Since  it  is  documented,  it  shall  serve  as  an  evidence  when  legal  action  is  initiated  
 
Different  types  of  notices  will  be  sent  to  the  customer  as  per  the  below  aging:  
 
Reminder  Notice   SHL  &  MSE  
First  reminder  notice   30th  Day  
Second  reminder  Notice   31  to  60  days  
Final  reminder  and  recall  notice   61  to  90  Days  
Sec  138/25  NIA   >90  Days  
SARFESI  for  SHL   >90  Days  subsequently  
*  All  the  letter/notice  formats  are  enclosed  as  annexure  to  this  policy  

4.8. ECS/ACH  Representation  


ECS/ACH  representation  will  also  be  done  on  recommendation  by  collection/  distribution  team  
and  approved  by  NCM  based  on  data  analysis  of  past  customer  repayment  behavior.      

4.9. LEGAL  STRATEGY  

Collection  Policy   February  2017   Page  32  


 
Confidential                                  
     
   
• For   certain   defaulting   accounts,   if   other   collection   efforts   are   not   successful   or   not  
advisable  due  to  sensitivities  of  relationship  or  adverse  publicity,  the  collections  manager  
may  initiate  legal  action  though  Vigilance/Legal  department    
• For   carrying   out   legal   activity,   the   collections   manager   will   designate   an   officer   to   be   in  
charge  of  the  legal  activity.    
• For  legal  action,  specific  approved  lawyers  will  be  identified  and  empaneled  
• Legal   action   may   be   initiated   under   Civil/DRT   and/or   criminal   procedure   code   as  
appropriate  to  the  facts  of  the  case.    
• The   collection   unit   may   use   the   option   of   sending   legal   conciliation   letters/   Loan   recall  
notices   to   specific   customers   given   the   stage   of   delinquency   and   feedback   from   Tele-­‐
calling/  field.    
 
The  following  legal  strategy  will  be  used  for  customers    
 
>=60   DPD   -­‐   Send   notice   under   Section   138   of   Negotiable   Instruments   Act   (Check   Bounce)   &  
Execution  of  Demand  Promissory  Notes  as  per  NI  act.  
Once  declared  NPA  initiate  proceedings  DRT  /  SARFESI    
However,  there  may  be  instances  where  the  unit  may  not  file  legal  cases  under  Civil  /  DRT.  These  
will  be    
• All  cases  where  account;  balance  is  low.    
• Where  payment  has  been  received  in  the  last  three  months.    
• Where  there  is  a  settlement  /  negotiation  in  progress.    
 
Legal  activity  will  be  monitored  and  reported  through  monthly  reports  giving:    
• Fresh  cases  filed  in  the  month    
• Cases  resolved  in  the  month  and  therefore    
• Cases  in  progress    
 
The  report  will  also  indicate  the  amount  recovered  in  the  resolutions  obtained  in  the  month.    
The  report  will  be  reviewed  by  the  Regional  Collections  Manager.  The  legal  officer  should  also  
review  progress  of  cases  by  lawyers  and  by  type  of  cases.    
 
In  view  of  the  differing  court  procedures  in  various  locations,  it  is  recommended  that  procedure  
details  be  maintained  at  each  location  by  the  legal  cell  in-­‐charge.    
 
Legal  action  will  be  initiated  under  Sec  138,  Civil/Criminal  procedure  codes  based  on  the  following  
parameters  viz  bucket,  principal  outstanding,  check  amounts  and  collection  history.    
 
The  collections  unit  may  also  send  Conciliation  letters  to  specific  customers  who  threaten  to  
declare  bankruptcy  or  who,  because  of  a  life  event  (eg:  illness/divorce/  loss  of  job,  etc.),  no  longer  

Collection  Policy   February  2017   Page  33  


 
Confidential                                  
     
   
have  the  financial  capacity  to  pay  their  debts.  The  collections  unit  may  use  Conciliatory  
proceedings  to  provide  credit  counseling  to  such  customers.  

4.10. Recovery  &  Resolution  Mechanism  


Continuous  and  focused  follow  up  on  a  daily  basis  is  the  underlying  principle  for  good  recovery  
and   also   for   identifying   genuine   problems   of   the   borrowers   so   that   timely   assistance   can   be  
extended  to  correct  any  temporary  mismatch  of  the  cash  flow/  review  of  repayment  schedule  etc.  
► Endeavour  should  be  to  prevent  the  asset  from  becoming  NPA  rather  than  applying  remedial  
measures  at  post  NPA  stage.  
► Timely  restructuring  /  rehabilitation  in  deserving  cases  should  be  ensured.    
► In   exceptional   cases,   USFBL   may   opt   for   One   Time   Settlement   where   chances   of   entire  
recovery  are  remote  /  time  consuming.  
► USFBL  may  consider  Sale  of  NPA  assets  to  USFBLs/FIs  /Asset  Reconstruction  Companies.  
► USFBL  will  enforce  the  provisions  of  identifying  and  declaring  willful  defaulters  in  accordance  
with   RBI   guidelines4.   General   consistency   in   approach   is   expected   while   dealing   with   willful  
defaulters.  
Approach  for  recovery  should  be  practical  and  non-­‐prejudiced.  Fair  treatment  and  persuasion  are  
the   basic   principles   of   recovery   mechanism.   Enforcement   of   security   be   undertaken   only   where  
restructure  /  rehabilitation  has  failed  or  impossible  

The   recovery   mechanisms   for   retail   products   like   LAP,   Individual/Personal   Loans   will   be   as  
mentioned  in  section  4.4  of  this  policy  

The   recovery   mechanisms   for   MSEs   will   include   Rectification   &   Restructuring   and   in   case   these  
options  are  seen  as  not  feasible,  due  recovery  options  will  be  resorted  to  as  stated  in  section  4.4  
of  this  policy  

4.11. Engagement  of  Recovery  Agents   5

When   Ujjivan   prefers   to   utilize   the   services   of   recovery   agents   for   collection   of   dues   and  
repossession   of   securities,   Recovery   agents   will   be   appointed   as   per   the   regulatory   guidelines6  
issued  in  this  regard  in  this  respect:  
                                                                                                                         
4
Master Circular on Wilful Defaulters
https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=9044
5
"Agent" in this Policy would include agencies engaged by the SFB and the agents / employees of the concerned agencies.

Collection  Policy   February  2017   Page  34  


 
Confidential                                  
     
   
► The  name  and  address  of  all  Recovery  Agents  on  Ujjivan’s  approved  panel  will  be  placed  on  
their  website  for  information.  
► Only  recovery  agents  from  the  approved  panels  will  be  engaged  by  Ujjivan.  
► In  case  USFBL  engages  service  of  such  recovery/enforcement/seizure  agent  for  any  recovery  
case,  the  identity  of  the  agent  will  be  disclosed  to  the  borrower.    
► Agents   would   be   provided   with   an   Identity   card   (from   the   recovery   agent)   for   proper  
identification   and   shall   limit   his   role   of   recovery   of   dues   specifically   entrusted   to   them.   Any  
action  beyond  limits  of  law  shall  be  at  Recovery  Agents’  sole  risk  and  responsibility.  
► The  Recovery  Agents  shall  strictly  adhere  to  the  USFBL’s  Model  Code  of  Conduct  for  Collection  
of  dues  and  Repossession  of  Secured  Assets.  
► The   arrangement   of   placing   Recovery   Agents'   name   on   the   panel   does   not   amount   to   any  
employment  and  create  no  obligation  of  any  kind  on  the  USFBL.  
► Representatives   proposed   to   be   identified   as   Agent,   should   have   undergone   necessary  
training  and  obtained  the  prescribed  certificate  from  IIBF  as  per  RBI  guidelines.  
► Recovery  Agency  shall  keep  all  the  affairs  of  entrusted  borrowers  highly  confidential.    
► The Agency shall not have any right to sub-delegate or appoint any sub-agent.

4.12. Identification  of  Wilful  Defaulters    


As  per  the  scheme  framed  by  RBI  with  effect  from  01.04.19997,  USFBLs/FIs  are  required  to  submit  
the  list  of  suit  filed  accounts  of  willful  defaulters  of`  Rs.25  lac  and  above  as  at  end  of  every  quarter  
to  Credit  Bureaus  and/or  any  other  credit  information  company  of  which  it  is  a  member  and  the  
quarterly  list  of  willful  defaulters  of  Rs.25  lac  and  above  where  suit  has  not  been  filed  to  RBI.  
 
Classification  of  willful  defaulter  by  Ujjivan  for  internal  purposes:  
 
Ujjivan   shall   classify   willful   defaulters   irrespective   of   the   amount   outstanding,   for   internal  
purposes.  
The  term  "willful  default"  in  accordance  with  RBI  guidelines8  would  be  deemed  to  have  occurred  if  
any  of  the  following  events  is  noted:  

                                                                                                                                                                                                                                                                                                                                                                                                                 
6
RBI Circular on Recovery Agents engaged by Banks
https://www.rbi.org.in/commonman/English/Scripts/Notification.aspx?Id=347
7
RBI Master Circular on Wilful Defaulter
https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=9044
8
Refer RBI Master Circular on Wilful Defaulter

Collection  Policy   February  2017   Page  35  


 
Confidential                                  
     
   
The   borrower/unit   has   defaulted   in   meeting   its   payment/repayment   obligations   to   the   lender  
even  when  it  has  the  capacity  to  honor  the  said  obligations.  
► The   borrower/   unit   have   defaulted   in   meeting   its   payment/repayment   obligations   to   the  
lender  and  have  not  utilized  the  finance  from  the  lender  for  the  specific  purposes  for  which  
finance  was  availed  of  but  has  diverted  the  funds  for  other  purposes.  
► The  unit  has  defaulted  in  meeting  its  payment/repayment  obligations  to  the  lender  and  has  
siphoned   off   the   funds   so   that   the   funds   have   not   been   utilized   for   the   specific   purpose   for  
which  finance  was  availed  of,  nor  are  the  funds  available  with  the  borrower/unit  in  the  form  
of  other  assets.  
For  the  purpose  of  determining  future  course  of  action  in  an  account,  the  guiding  principle  will  be  
the  intention  of  the  borrowers  concerned.  Willful  defaults  broadly  cover  the  following:  
► Deliberate  non-­‐payment  of  the  dues  despite  adequate  cash  flow  and  good  net  worth;  
► Siphoning  off  of  funds  to  the  detriment  of  the  defaulting  unit;  
► Assets  financed  either  not  been  purchased  or  been  sold  and  proceeds  have  been  mis-­‐utilized;  
► Misrepresentation/falsification  of  records;  
► Disposal/removal  of  securities  without  USFBL's  knowledge;  
► Fraudulent  transactions  by  the  borrower.  
► Absconding  from  current  residence  without  giving  any  prior  notice  to  Ujjivan.  
► Involvement  in  sub  lending  activity  by  the  borrower.  
As  and  when  accounts  is  classified  as  NPA  or  on  occurrence  of  any  of  the  events  noted  above  in  an  
existing  NPA  account,  collection  team  shall  examine  whether  same  is  a  case  of  willful  default.    
Internal  Committee  for  approving  list  of  willful  defaulters:  
A   Sub   Committee   for   ‘   The   Risk   management   committee   of   the   board’,   constituting   Chief   Risk  
Officer,  Head  of  Credit  and  Collections  –  Microfinance,  Head  of  Credit  -­‐  Housing  &  MSE  and  MD  &  
CEO  shall  be  the  final  authority  to  approve  the  list  of  willful  defaulters  for  POS  Rs  0.5  lacs  to  Rs  25  
Lacs.    
System  tracking:  
The  complete  list  of  willful  defaulters  shall  be  shared  with  corporate  credit  team  once  in  a  month  
for  updation  in  internal  systems  as  negative  customer.    
 
Classification  of  accounts  as  willful  defaulter  with  outstanding  balance  >Rs  25  Lacs9  
                                                                                                                         
9
 These  guidelines  shall  be  adopted  when  Ujjivan  start  lending  loans  >Rs  25  Lacs  

Collection  Policy   February  2017   Page  36  


 
Confidential                                  
     
   
As   and   when   any   borrower   account   with   an   outstanding   balance   of   INR   25   lac   and   more   is  
classified  as  NPA  or  on  occurrence  of  any  of  the  events  noted  above  in  an  existing  NPA  account,  
branch/RO  shall  examine  whether  same  is  a  case  of  willful  default  in  terms  of  RBI  guidelines  and  
in  case  of  willful  default,  take  prompt  steps  to  get  the  borrower  classified  as  a  willful  defaulter,  as  
per  the  procedure  laid  down  hereunder.  
1. The  proposal  for  classification  of  willful  defaulters  shall  be  forwarded  by  branch/regional  
officer   (RO)   to   Legal   Department   at   Head   Office   substantiating   the   reasons   and   also  
supported  by  documentary  proof.    
2. Branch/Controlling  Office    should  examine  and  obtain  legal  opinion  as  to  whether  there  is  
prima   facie   case   warranting   criminal   prosecution   under   penal   law   and   forward   their  
recommendation  to  Legal  Department  at  Head  Office  
3. The   matter   shall   be   examined   from   the   legal   angle   and   placed   to   the   Willful   Defaulters  
Identification   Committee 10 .     The   committee   will   be   the   Sub   Committee   of   ‘Risk  
management   committee   of   the   board’,   constituting   Chief   Risk   Officer,   Head   of   Credit   -­‐  
Housing  &  MSE  and  MD&  CEO.    
4. If   in   the   opinion   of   the   committee,   the   case   is   fit   for   prosecution,   sanction   shall   be  
accorded  for  initiating  criminal  proceedings  
5. It  should  be  ensured  that  penal  provisions  are  used  effectively  and  determinedly  but  after  
careful  consideration  and  due  caution.    
6. The   decision   taken   on   classification   of   willful   defaulters   should   be   well   documented   and  
supported   by   requisite   evidence.   The   decision   should   clearly   spell   out   the   reasons   for  
which  the  borrower  has  been  declared  as  willful  defaulter  vis-­‐à-­‐vis  RBI  guidelines11.  
7. A   Show   Cause   Notice   will   be   issued   to   the   borrower   with   a   call   for   submissions.  
Subsequently,   an   order   will   be   issued   recording   the   fact   of   willful   default   as   well   as  
reasons  for  the  same.  
8. Reporting  of  willful  defaulters  to  authorities  like  RBI/  Credit  Bureaus  etc.,  shall  be  done  as  
per  the  RBI/Credit  Bureaus  etc.,  guidelines  in  this  regard.  
The  system  of  dissemination  of  credit  information  pertaining  to  willful  defaulters  was  put  in  place  
for  cautioning  USFBL  and  FIs,  so  as  to  ensure  that  further  finance  is  not  made  available  to  them.  

 Hence,   the   above   scheme   is   a   very   important   tool   which   can   be   effectively   used   against   the  
willful  defaulters  of  Ujjivan,  to  persuade  them  to  settle  their  dues.  

                                                                                                                         
10
As per RBI Master Circular on Wilful Defaulters RBI/2015-16/100 DBR.No.CID.BC.22/20.16.003/2015-16 dated July 1, 2015, the
“Committee will be headed by an Executive Director or equivalent and consisting of two other senior officers of the rank of GM / DGM”.
https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=9907
11
RBI Master Circular on Wilful Defaulters RBI/2015-16/100 DBR.No.CID.BC.22/20.16.003/2015-16 dated July 1, 2015

Collection  Policy   February  2017   Page  37  


 
Confidential                                  
     
   
4.13. Tools  for  Recovery  
The   repayment   record   of   borrowers   shall   be   monitored   both   with   regard   to   payment   of   interest   and  
repayment   of   principal.   Whenever   a   borrower   defaults   or   is   likely   to   default,   rigorous   follow-­‐up   shall   be  
made  for  the  collection  of  dues  /  arrears.  When  default  occurs,  oral  and  written  communications  are  to  be  
sent  to  the  borrower  to  regularize  their  accounts  within  a  specified  period.  In  case  the  loan  is  secured  by  a  
guarantee  (personal  or  corporate),  steps  shall  be  taken  to  recover  dues  from  the  guarantor.  

Ujjivan  shall  use  any  of  the  following  broad  methods  for  management  of  problem  accounts:  

1. Restructuring,  rephasement  and  rehabilitation  


2. Exit  strategy  
3. Settlement/  Compromise  
4. Sell  down  to  Asset  Reconstruction  Company  (ARC)  /  other  entities  
5. Write-­‐off  
6. Legal  Action  &  recovery  –  Procedure  
7. Invoking  of  the  provisions  of  SARFAESI  ACT  2002  
 
Tool   MSE  Loans   Housing  Loans  
Restructuring,  rephasement  
!   !  
and  rehabilitation  
Exit  Strategy   !   !  
Settlement/  Compromise   !   !  
Sell  down  to  Asset  
Reconstruction  Company/   !   !  
other  entities  
Write-­‐off   !   !  
Legal  Action  and  recovery   !   !  
Invoking  the  provisions  of  
!   !  
SARFAESI  ACT  2002  
 

4.13.1. Restructuring,  Rephasement&  Rehabilitation  


This  represents  those  accounts  where  the  borrower  is  willing  to  repay  his  dues  to  Ujjivan  but  does  
not   have   the   capacity/funds   to   do   so   right   away.   In   such   cases,   the   branch   should   examine   the  
causes   of   sickness   and   recommend   the   course   of   action.   The   first   focus   of   NPA   management   in  
such  cases  will  be  possible  up  gradation  of  the  loan,  by  rehabilitation  of  the  borrower’s  business.  

Collection  Policy   February  2017   Page  38  


 
Confidential                                  
     
   
The  rehabilitation  option  will  be  examined  in  cases  where  there  is  prima  facie  scope  for  restoring  
viability  of  the  business.  The  action  plan  will  be  put  in  place  in  such  cases  where  it  is  possible  to  
bring   the   unit   back   into   good   health   by   extending   minimum   additional   funds   and   marginal  
concessions  by  which  the  unit  will  be  able  to  meet  its  obligations  fully  within  a  maximum  period  
of  5-­‐7  years.  

The  rehabilitation  approach  will  generally  be  adopted  provided  Ujjivan  is  satisfied  that:  

► Eligibility  criteria  and  regulatory  guidelines  with  respect  to  restructuring  are  fulfilled  
► The   loan   has   become   an   NPA   due   to   factors   other   than   lack   of   integrity   on   the   part   of   the  
promoters.  
► Genuineness  of  the  obligor  and  viability  of  the  proposal  is  established  
► There  is  prima  facie  case  for  considering  such  a  proposal.  
The  following  steps  can  be  taken  to  rehabilitate  the  unit  so  that  it  may  gain  enough  strength  to  
service  the  borrowings  over  a  period  of  time:  

► Revision  of  interest  and/or  re-­‐schedulement  of  installments.  


► Making  available  need  based  minimum  additional  funds.  Ujjivan  will  explore  taking  additional  
securities  for  such  exposure.  
► In   cases   where   the   credit   requirements   of   a   borrower   are   being   met   by   a   number   of  
institutions  under  consortium/multiple  banking  arrangements,  Ujjivan  shall  be  in  continuous  
touch   with   other   lenders   to   the   borrower   and   shall   keep   a   close   watch   over   their  
contemplated  actions.  
 
 
 
The  Composition  of  the  Committee  shall  be  as  under:  
a) The   Regional   Business   Manager/Regional   Credit   Manager   of   the   convener   USFBL,  
shall  be  the  Chairperson  of  the  Committee;    
b) Cluster   Credit   Manager   of   the   Micro,   Small   and   Medium   Enterprises   Credit  
Department  of  the  convener  USFBL  at  the  regional  or  zonal  office  level,  shall  be  the  
member  and  convener  of  the  Committee;    
c) One   independent   external   expert   with   expertise   in   Micro,   Small   and   Medium  
Enterprises  related  matters  to  be  nominated  by  USFBL.    
d) One   representative   from   the   concerned   State   Government.   Endeavour   should   be  
made   to   bring   representative   from   the   respective   State   Government   in   the  

Collection  Policy   February  2017   Page  39  


 
Confidential                                  
     
   
Committee.   In   case   State   Government   does   not   nominate   any   member,   then   the  
convening   USFBL   should   proceed   to   include   an   independent   expert   in   the  
Committee,  namely  a  retired  executive  of  another  USFBL  of  the  rank  of  AGM  and  
above.    
e) When   handling   accounts   under   consortium   or   MBA,   senior   representatives   of   all  
USFBLs  /  lenders  having  exposure  to  the  borrower.  
 

4.13.2. Loan  Rescheduling  


Rescheduling  may  be  of  the  following  types12:  
a) Credit  Loan  Rescheduling  
The   Credit   Function   shall   be   entitled   to   authorize   a   change   in   repayment   terms   and  
structures   of   a   customer’s   loan   post   thorough   assessment   of   the   customer’s   inability   to  
repay  as  per  the  original  terms.  
► New  rescheduled  loan  shall  be  opened  by  aggregating  the  sum  of  principal  and  all  
outstanding  loans  
► The  current  rate  of  interest  shall  be  taken  into  account  
► Tenor  shall  be  determined  basis  the  finalized  installment  amount  
b) Procedural  Rescheduling  by  Operations  
Procedural/   Technical   rescheduling   by   Operations   shall   include   repayment   window  
changes,  product  type  changes  and  incorrect  loan  bookings.  
c) Repayment  Holiday  

4.13.2.1.Repayment   holiday   is   a   special   provision   which   shall   be   given   to   customers   who   are  
exposed   to   economic   losses   caused   by   natural   or   man-­‐made   disasters;   eg:   demolition  
drives  from  the  Govt,  flood  or  fire  destructions  or  sudden  strikes  or  bandhs.  As  an  instant  
relief  measure,  customers  shall  be  allowed  to  skip  a  maximum  of  90  days  depending  on  
the   extent   of   distress   caused   to   the   customer   and   the   surroundings.Corrective   Action  
Plan  for  MSEs13  
Rectification-­‐  This  approach  will  be  adopted  by  Ujjivan  after:  
► Obtaining   a   commitment,   specifying   actions   and   timelines,   from   the   borrower   to   regularize  
the  account  so  that  the  account  comes  out  of  the  SMA  status  or  does  not  slip  into  the  NPA  
category.  

                                                                                                                         
12
Further details contained in the Credit Policy Manual of loan products
13
Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises (MSMEs)
https://rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10304
Details of MSME account monitoring and subsequent CAP are covered in the Credit Policy

Collection  Policy   February  2017   Page  40  


 
Confidential                                  
     
   
► The  commitment  should  be  supported  with  identifiable  cash  flows  within  the  required  period  
and  without  involving  any  loss  or  sacrifice  on  the  part  of  the  existing  lenders  
► The   process   should   ideally   be   borrower   driven   but   in   certain   exceptional   cases   the  
Committee14  may  consider  providing  need  based  additional  finance  intended  only  for  meeting  
unavoidable  increased  working  capital  requirement.  
► Such  additional  finance  should  be  regularized  within  a  maximum  period  of  6  months  
► Repeated  rectification  with  funding  within  a  year,  will  be  treated  as  restructuring  
► No  additional  finance  to  be  sanctioned  where  the  account  has  been  reported  as  fraud  by  any  
lender  
 
Restructuring-­‐  This  approach  will  be  adopted  by  Ujjivan:  
► Only  if  the  assets  reported  belong  to  the  Standard,  Special  Mention  Account  or  Sub  Standard  
category  and  the  borrower  is  not  a  willful  defaulter15.However  the  Committee  may  review  the  
reasons   for   classification   of   the   borrower   as   a   willful   defaulter   and   satisfy   itself   that   the  
borrower  is  in  a  position  to  rectify  the  willful  default.  The  decision  to  restructure  such  cases  
shall  have  the  approval  of  the  Board,  along  with  the  recommendation  of  the  Committee  which  
has  classified  the  borrower  as  willful  defaulter  
► If  there  is  commitment  from  the  promoters  for  extending  their  personal  guarantee  along  with  
their  net  worth  statement  supported  by  copies  of  legal  titles  to  assets    
► It   should   be   noted   that   any   deviation   from   the   commitment   by   the   borrowers   affecting   the  
security   of   recoverability   of   the   loan   may   be   treated   as   a   valid   factor   for   initiating   recovery  
process  
► Cases  of  Frauds  and  Malfeasance  will  be  ineligible  for  restructuring.  However,  in  cases  of  fraud  
/  malfeasance  where  the  existing  promoters  are  replaced  by  new  promoters  and  the  borrower  
is  totally  delinked  from  such  erstwhile  promoters  /  management,  USFBLs  and  the  Committee16  
may  take  a  view  on  restructuring  of  such  accounts  based  on  their  viability,  without  prejudice  
to  the  continuance  of  criminal  action  against  the  erstwhile  promoters  /  management.  Further,  
such   accounts   may   also   be   eligible   for   asset   classification   benefits   available   on   refinancing  
after   change   in   ownership,   if   such   change   in   ownership   is   carried   out   under   guidelines  

                                                                                                                         
14
Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises (MSMEs)
15
Master Circular on Wilful Defaulters
https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=9044
16
Details of the committee as required by the RBI Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises
(MSMEs) are covered in the Credit Policy

Collection  Policy   February  2017   Page  41  


 
Confidential                                  
     
   
contained   in   circular   on   “Prudential   Norms   on   Change   in   Ownership   of   Borrowing   Entities  
(Outside  Strategic  Debt  Restructuring  Scheme)”17.    
► The  restructuring  package  shall  stipulate  the  timeline  during  which  certain  viability  milestones  
such  as  improvement  in  certain  financial  ratios  may  be  achieved.  
 
Recovery:–  Once  the  first  two  options  at  (a)  and  (b)  above  are  seen  as  not  feasible,  due  recovery  
process  may  be  resorted  to.  The  Committee  may  decide  the  best  recovery  process  to  be  followed,  
among   the   various   legal   and   other   recovery   options   available,   with   a   view   to   optimizing   the  
efforts  and  results.  
 
 

4.13.3. Exit  Strategy  


Ujjivan   may   consider   exit/exposure   reduction   on   accounts   gone   into   recovery   or   on   accounts  
where  the  return  on  capital  is  not  commensurate  with  their  overall  strategy.  Since  an  exit  strategy  
results  in  cessation  of  the  relationship  with  a  customer,  approval  for  the  same  shall  be  obtained  
from  an  authority  one  level  above  branch.    

The  methods  which  can  be  employed  by  Ujjivan  include:  

► Freeze  the  exposure  at  the  existing  level  after  serving  due  notice  
► Impose  cut-­‐backs  on  regular  credit    
► Modify  margin  requirements  to  reduce  drawing  power  
► Enhance  the  security  cover  by  insisting  on  additional  collateral,  personal  guarantees  of  
promoters  etc.  
► Opt  for  settlement  of  the  exposure,  if  necessary  at  a  discount  
► Sell  down  to  Asset  Reconstruction  Company  (ARC)  /  other  entities  
 
 

4.13.4. Settlement/Compromise  –  For  secured  &  Unsecured  IL  


Compromise   settlement   refers   to   a   negotiated   settlement   where   a   borrower   offers   to   pay   and  
Ujjivan   agrees   to   accept   in   full   and   final   settlement   of   its   dues   an   amount   less   than   the   total  
                                                                                                                         
17
Prudential Norms on Change in Ownership of Borrowing Entities (Outside Strategic Debt Restructuring Scheme)
https://rbi.org.in/Scripts/NotificationUser.aspx?Id=10039&Mode=0

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amount   due   to   Ujjivan   under   the   relative   loan   contract.   This   settlement   invariably   involves   a  
certain  sacrifice  by  way  of  write  off  and/or  waiver  of  a  portion  of  its  dues  on  a  one-­‐time  basis.  
All  settlement  /  compromise  decisions  would  be  approved  by  the  following  designated  approval  
authorities.  
Micro  Finance   Housing  &  MSE  
Head  of  Credit  and  Collections  -­‐  Microfinance   Head  of  Credit  -­‐  Housing  &  MSE  
Head  of  Microfinance  &  Branch  Banking   Head  of  Housing  &  MSE  
 
 
The  Policy  recognizes  that  it  is  not  possible  to  lay  down  precise  guidelines  which  can  be  followed  
uniformly  in  case  of  all  compromise  offers  as  each  offer  is  unique  in  the  context  of  circumstances  
necessitating  its  consideration  as  a  recovery  option.    
 
The   Policy   however,   lays   down   the   following   principles   which   are   to   be   kept   in   view   while  
considering  compromise  offers  
► Ujjivan   may   take   up   a   compromise   settlement   /one   time   Settlement   (OTS)   proposal   for  
consideration,  irrespective  of  the  present  stage  and  status  of  the  recovery  proceedings.  
► Any  compromise  will  be  a  negotiated  settlement  under  which  Ujjivan  will  endeavor  to  recover  
its   dues   to   the   maximum   extent   possible,   with   minimum   sacrifice.   However   it   is   recognized  
that   amicable   settlements   are   possible   only   in   a   win-­‐win   situation   and   sacrifice   is   a   part   of  
settlement.  
► The   latest   status   of   the   activity   of   the   borrowing   entity   which   seeks   a   compromise   will   be  
taken  into  reckoning  during  the  course  of  negotiation.  
► As  far  as  possible,  an  initial  down-­‐payment  should  be  taken  from  the  borrower  as  evidence  of  
his  intention  to  pursue  the  compromise  settlement  with  Ujjivan.  
► In  case  the  borrower  has  other  group  companies  dealing  with  the  USFBL,  influence  of  these  
companies   or   the   parent   company   may   be   used   for   a   better   settlement   and/or   for   getting  
additional  security,  pending  realization  of  the  entire  amount  of  compromise.  
► It  will  be  the  endeavor  of  Ujjivan  to  get  the  entire  compromise  amount  <<placeholder  for  time  
period>>from  the  date  of  settlement.  In  the  event  of  a  One  Time  Settlement,  in  cases  where  
the  borrower  is  unable  to  pay  the  entire  lump  sum,  USFBL  shall  recover  at  least  25%  of  the  
settlement  amount  upfront.  The  balance  shall  be  recovered  in  installments  within  a  period  of  

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one  year  together  with  interest  at  the  existing  Prime  Lending  Rate  from  the  date  of  settlement  
up  to  the  date  of  final  payment.18  
► At  the  time  of  One  Time  Settlement  negotiation  when  OTS  amount  is  proposed  to  be  paid  in  
installments  seriousness  and  preparedness  of  the  borrower  to  honor  OTS  commitments  shall  
be  looked  into.  
► In   the   case   of   suit   filed   account   if   need   be   and   if   practical,   the   terms   and   conditions   of  
settlement  should  be  finalized  and  consent  decree  from  the  court  should  be  obtained.  
► It   is   recognized   that   the   OTS   amount   normally   will   not   be   less   than   the   realizable   value   of  
securities.   While   considering   the   realizable   value   due   consideration   will   be   given   to   various  
factors   like   forced   sale   value,   early   realization   of   money,   sale   ability   of   the   property,   type,  
effort  and  cost  involved  &  yield  in  the  account.    
► Normally   no   Compromise   Settlement   will   be   made   with   willful   defaulters.   However,   it   is  
recognized  that,  sometimes  business  prudence  requires  compromise  settlement  in  the  case  of  
willful  defaulters  also,  which  will  be  considered  on  a  case  to  case  basis.  
► In   case   of   non-­‐receipt   of   the   committed   compromise   amount   as   per   the   terms   of   the  
settlement,   the   recovery   proceedings   already   initiated   before   the   settlement   shall   be  
continued  forthwith.  
► The   Authority   who   had   approved   the   compromise   settlement   earlier   may   consider   the  
modification   in   the   terms   of   the   settlement.   However,   in   case   of   settlement/compromise  
approved   by   the   Board,   Business   Head   –   Secured   and   Head   –   Unsecured   Credit   will   be   the  
permitting  authority  for  such  modifications.    
► In  the  case  of  sacrifice  of  undebated  Interest  the  same  may  be  calculated  at  USFBL  prevailing  
Base   Rate   (Simple)   or   the   contracted   rate/interest   claim   in   the   plaint/decreed   rate   (simple)  
whichever  is  less.  
► In  case  of  compromise  settlements  if  the  settlement  amount  is  more  than  Rs.1  lakh  and  more  
than  2  months’  time  is  given  for  payment  of  the  same  or  the  balance  thereof,  the  Net  Present  
Value  of  OTS  amount  will  be  calculated  taking  the  prevailing  90days  Treasury  bill  rate  as  the  
discounting  factor  for  tangible  assets.  
► In   compromise   settlements/write   off   cases,   the   amount   of   sacrifice   will   be   determined   with  
reference   to   balance/dues   as   on   the   ‘settlement   date’   which   shall   be   indicated   in   the  
compromise  settlement/write  off  proposals.  

                                                                                                                         
18
Refer RBI Guidelines on One-Time Settlement Scheme for SME Accounts, RBI/2005-06/153 RPCD.PLNFS. BC.No.39 / 06.02.31/
2005-06 dated September 3, 2005

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► In  case  of  compromise  settlements  normally  the  amount  of  settlement  shall  be  at  least  equal  
to   the   net   balance   or   75%   of   the   Forced   sale   values   of   the   immovable   property   securities  
whichever  less.    Any  deviation  in  this  regard  shall  be  with  the  permission  of  the  next  Higher  
Authority  up  to  the  level  of  CEO.    
► Wherever   OTS   amount   is   funded   by   other   Banks/Financial   Institutions/NBFCs/ARC   or   any  
other  entities/individuals,  Ujjivan  may  assign  the  debt/  securities  in  their  favor.    In  such  cases,  
the  guidelines  framed  for  sale  of  financial  assets  will  not  apply.  
 

4.13.5. Sell  down  to  Asset  Restructuring  Company/other  entities  


In  some  NPA  accounts,  recovery  proceedings  reach  a  stalemate  for  various  reasons  due  to  which  
resolution  of  such  NPA  gets  delayed.  

It  is  also  an  established  practice  in  Banking  Industry  to  Sell  NPAs  on  portfolio-­‐basis/segment-­‐wise  
viz.,   Retail   Credit   advances   such   as:   Housing   Loans,   Vehicle   loans   etc.   Individual   accounts   under  
these  segments  though  small  in  value  but  very  voluminous  in  nature  warranting  valuable  time  of  
Ujjivan  for  follow-­‐up  and  recovery.  

It  is  also  observed  recently  that  there  are  situations  where  majority  of  the  lenders  have  classified  
the  accounts  as  NPA  with  a  few  lenders  classifying  the  said  account  as  Standard  Assets.  There  are  
also   situation   where   majority   of   the   lenders   have   classified   financial   assets   as   SMA-­‐2   which   is  
reported   to   Central   Repository   for   Information   on   Large   Credit   as   per   RBI   guidelines19  and   is  
expected  to  become  NPA  within  a  short  period.    In  order  to  reap  higher  return  from  ARCs,  RBI  is  
encouraging  banks  to  consider  sale  of  such  assets  at  the  initial  stage  and  has  offered  incentive  by  
spreading  the  losses  over  a  period  of  two  years.        

The   basic   strategy   underlying   the   approach   to   management   of   problem   accounts   is   to   focus   on  
initiation  of  appropriate  preventive  corrective  action  at  the  right  time.  All  stressed  accounts  shall  
be  closely  and  continuously  monitored.  

4.13.6. Write  off/Waiving  of  Legal  action  


If   the   borrower   has   no   means   to   pay   and   USFBL   is   convinced   that   the   dues   are   irrecoverable,  
USFBL  shall  waive  legal  action  and  write  off  the  amount.  
                                                                                                                         
19
RBIFramework for Revitalising Distressed Assets in the Economy – Guidelines on Joint Lenders’ Forum (JLF) and Corrective Action
Plan (CAP)
https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=8754&Mode=0

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Waiver   of   legal   action/write   off   can   be   permitted   only   when   the   authorized   functionary   is  
satisfied   that   the   borrower   has   no   tangible   security   or   any   attachable   assets,   has   no   adequate  
income   for   repayment   and   no   useful   purpose   will   be   served   by   resorting   to   legal   recourse.  
However  initiation  of  Revenue  Recovery  measures  (wherever  applicable)  shall  be  a  precondition  
to  waiver  of  legal  action.  

For  proposals  backed  by  Govt.  sponsored  schemes,  waiver  of  legal  action  shall  be  obtained  from  
one  level  higher  than  the  sanctioning  authority  

Write-­‐offs  for  Housing  and  MSE  loans  shall  be  approved  by  the  Head  of  Credit  -­‐  Housing  &  MSE.  
All   cases   identified   as   fraud   by   Regional   Fraud   Management   Committee   with   POS   >Rs   100000  
shall  require  approval  from  CEO  &  MD.    

4.13.7. Invoking  the  Provisions  of  SARFAESI  Act  


The   provisions   of   “Securitization   and   Reconstruction   of   Financial   Assets   and   Enforcement   of  
Security   Interest   Act   2002   (SARFAESI   Act)20  are   applicable   for   only   secured   loans   once   accounts  
are   classified   as   NPA,   and   if   invoked   promptly   and   followed   up   diligently,   act   as   a   powerful  
deterrent  to  errant  borrowers.    

The  moment  a  SARFAESI  proposal  is  approved  by  NCM  as  recommended  by  Collection  Manager:  
Authorized  Officer  (AO)  from  Legal  department  shall  be  identified  who  should  assume  ownership  
of   the   account.   It   is   the   responsibility   of   the   AO   to   ensure   that   the   time   frame   for   taking   the  
SARFAESI  proceedings  forward  are  strictly  adhered  to.  

Steps  that  shall  be  followed  while  invoking  the  SARFAESI  are:  

Repossessions  for  Mortgages    


 
Repossession   of   Mortgages   shall   come   into   effect   post   the   customer   loan   becoming   a   Non  
Performing  Asset  (NPA)  on  the  USFBL’s  books  i.e.  the  customer’s  loan  is  90  days  overdue  and  all  
efforts  to  regularize  it  have  failed.    
 
Notice  
 
A   Notice   u/s   13(2)   of   Securitization   and   Reconstruction   of   Financial   Assets   and   Enforcement   of  
Security   Interest   Act,   2002   (SARFAESI   Act)   will   be   issued   to   the   borrower,   co-­‐borrower   and  
guarantor,  with  all  the  relevant  details.    
 

                                                                                                                         
20
http://www.drat.tn.nic.in/Docu/Securitisation-Act.pdf

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Confidential                                  
     
   
Notice  send  to  dead  person  is  bad  in  law.  The  AO  to  ascertain  all  the  details  of  Co-­‐applicant  &legal  
heirs  and  send  the  notice  to  them  
 
The  Notice  will  be  sent  to  the  mortgaged  property  address  and  other  addresses  provided  on  the  
application  form.    
 
Possession  
 
Notice  under  Sec  13.2  (SARFAESI)    
 
The   customer   will   be   allowed   60   days   post   issuance   of   the   notice   to   regularize   the   account   or  
come  forward  to  settle  the  account.    
 
Notice  under  Sec  13.4  (SARFAESI)    
After  expiry  of  60  day  notice  sent  under  13.2  (SARFAESI),  we  may  send  notice  to  customer  under  
13.4  (SARFAESI)  demanding  peaceful  possession  of  the  securities  through  our  authorized  officer.  
This  gives  ample  opportunity  to  the  customer  to  come  forward  and  pay  /  settle  with  the  USFBL.  
 
The  Authorized  officer  of  the  USFBL  may  visit  the  customer  demanding  peaceful  possession  of  the  
property  under  notice  sent  13.4.    
 
In  case  there  is  no  outcome  then  we  need  to  approach  Chief  Metropolitan  Magistrate  /  District  
Magistrate  applying  for  physical  possession  of  the  property.    
 
The  physical  possession  of  the  property  shall  be  taken  in  a  peaceful  manner  as  per  law.    
 
 
VOLUNTARY  SURRENDER  OF  IMMOVABLE  PROPERTY  
 
The  customer  will  be  requested  to  sign  a  surrender  letter.    
The   Panchnama   will   be   signed   by   the   authorized   officer,   two   independent   witnesses   and   the  
customer.    
 
An  inventory  list  will  be  made  for  all  the  articles  found  in  the  mortgaged  property.  The  customer  
will  also  have  to  give  a  written  declaration  that  all  his  valuables  like  jewellery;  cash  etc.  has  been  
retrieved   by   him.   This   also   needs   to   be   signed   by   the   authorized   officer   and   two   independent  
witnesses.    
 
 
POSSESSION  OF  IMMOVABLE  PROPERTY  
 

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Panchanama   will   be   signed   by   the   Authorized   Officer   of   the   USFBL   and   two   independent  
witnesses.  
 
In  case  the  borrower  refuses  to  hand  over  the  property  then  a  complaint  will  be  made  before  the  
Chief  Metropolitan  Magistrate/  District  Magistrate.    
 
The   Chief   Metropolitan   Magistrate/   District   Magistrate   will   appoint   an   officer   for   taking   the  
physical   possession   of   the   property.   Before   the   physical   possession   of   the   property   the   court  
order  needs  to  be  communicated  to  the  local  police  asking  for  assistance.    
 
An  inventory  list  will  be  made  for  all  the  articles  found  in  the  mortgaged  property.  The  customer  
will  have  to  give  a  written  declaration  that  all  his  valuables  like  jewelry;  cash  etc.  have  been  taken  
by  him.    
 
AO  to  ensure  that  safe  custody  of  movables  by  him  directly  or  through  agents  as  per  rule  
 
 
SALE  OF  SECURED  ASSETS  
 
The   USFBL   shall   proceed   with   the   Auction   of   the   attached   property   post   30   days   of   taking  
possession  of  the  property,  in  the  event,  that  the  customer  does  not  come  forward  and  settle  the  
loan.    
 
The  USFBL  shall  send  the  customer  a  letter  intimating  him,  of  the  venue  of  the  sale  indicating  date  
and  time  of  the  Auction  /  Sale.    
 
The   USFBL   will   consider   handing   over   possession   of   property   to   the   borrower   any   time   after  
repossession  and  before  concluding  sale  transaction  of  the  property,  provided  the  USFBL  dues  are  
cleared  in  full.    
 
In  case  of  a  settlement  by  the  customer,  the  property  documents  will  be  released  to  the  customer  
within  30  days  of  the  receipt  of  payment  of  the  total  settlement  amount.    
 
Note:  Further  as  per  the  direction  from  Ministry  of  finance  all  such  auctioning  assets  should  be  published  in  the  official  
website  of  the  government  “tender.gov.in”  to  get  wider  publicity  and  with  a  view  of  getting  better  response  
 
APPEAL  AGAINST  THE  USFBL’S  ATTACHMENT:  The  SARFAESI  act  gives  the  customer  the  right  to  
appeal  against  a  possession  order  only  in  DRT.  
 
RECOVERY   OF   THE   BALANCE   AMOUNT:   The   USFBL   shall   move   an   application   before   the   Debt  
Recovery  Tribunal  for  recovery  of  any  balance  due  on  the  loan  account  after  adjusting  dues  from  
the  sale  proceeds.    

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REFUND   OF   BALANCE   AMOUNT:   Any   excess   amount   obtained   after   adjusting   the   dues   on   the  
Loan  shall  be  refunded  to  the  borrower  within  30  days.    
 
PAPER  PUBLICATION  OF  DEFAULTERS    
 
USFBL   at   its   discretion   may   adopt   the   process   of   Publishing   Details   of   Defaulters   in   the  
Newspapers  specifically  for  Willful  Defaulters.    
 
Willful  defaulters,  according  to  the  Reserve  Bank  of  India,  are  those  who  do  not  repay  deliberately  
despite  having  sufficient  funds  and  a  solid  net  worth.    
 
If  the  borrower  does  not  comply  within  15  days  USFBL  may  even  publish  the  photographs  of  the  
guarantors.    
 
This  is  a  tool  for  USFBL  to  recover  dues.  But  this  must  be  used  carefully.  
 
Collection  Management  –  Applicabale  for  all  Products  
 
5. LEGAL  ACTION  &  RECOVERY  (Procedure)  
Recovery   proceedings   would   be   initiated   against   the   borrower   /   guarantor   wherever   exit,  
restructuring   and   rehabilitation   or   settlement   /   compromise   have   been   exhausted   or   are   not  
possible.   Wherever   possible   action   for   enforcement   of   security   under   the   Securitization   and  
Reconstruction  of  Financial  Assets  and  Enforcement  of  Security  Interest  (“SARFAESI”)  Act,  200221  
should  be  taken.  

All  legal  actions  /  recovery  actions  shall  be  approved  by  the  designated  approval  authorities  as  per  
the  Delegation  of  Authority  of  the  USFBL.  In  cases  of  willful  default,  (e.g.  diversion  and  siphoning  
of  funds),  fraud  and  malfeasance  on  the  part  of  the  borrower,  legal  action  may  be  the  first  and  
only  option  for  recovery,  as  any  other  option  of  recovery  would  not  be  appropriate.  

The  following  steps  can  be  initiated  in  respect  of  such  borrowers.  

5.1. Guidelines  on  seizure  /  repossession  of  assets  hypothecated  to  Ujjivan  
All  assets  hypothecated  to  Ujjivan  may  be  seized  /  repossessed  subject  to  the  following:  

                                                                                                                         
21
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
http://www.drat.tn.nic.in/Docu/Securitisation-Act.pdf

Collection  Policy   February  2017   Page  49  


 
Confidential                                  
     
   
• Assets  hypothecated  to  Ujjivan  under  all  NPA  borrower  accounts  may  be  seized  /  repossessed  
provided  such  seizure  /  repossession  is  legally  permitted  within  the  state.  
• A   Notice   indicating   the   proposed   action   should   be   served   to   the   borrower   giving   him  
minimum  15  days  and  maximum  of  60  days  of  time  to  regularize  /  close  the  account  and  only  
on  failure  of  the  borrower  to  comply,  the  action  should  follow.  
• Hypothecated   assets   should   be   seized   after   the   expiry   of   the   notice   period   if   the   account   is  
not  closed.  
• Within   15   days   of   taking   possession   of   the   assets   if   the   borrower   does   not   come   for  
regularization/closure/settling   the   dues,   valuation   of   the   assets   seized   shall   be   obtained  
through  Ujjivan’s  approved  valuers.  
• Arrangement   to   dispose-­‐off   the   assets   seized   shall   be   made   within   30   days   of   taking  
possession  of  such  assets  upon  failure  of  the  borrower  to  clear  the  dues  and  getting  the  assets  
released.  
• Assistance  of  professional  seizing  agents  may  be  availed  for  the      purpose  of  seizure  and  safe  
keeping  of  the  assets  seized.    All  such  agents  will  have  to  be  duly  approved  by  the  Collection  
Department  before  their  services  are  utilized.    Any  complaint  against  the  seizing  agents  will  be  
looked  into  by  the  collection  Department  immediately  and  corrective  action  including  deletion  
of  such  seizing  agents  from  the  approved  list  in  extreme  cases  shall  be  taken.  
In  addition  to  the  above  following  actions  will  also  be  initiated  

• Reporting   the   borrower/directors   as   wilful   defaulter   to   RBI   after   following   prescribed  


procedure.  
• Exercise  right  of  general  lien  and  set  off,  in  respect  of  all  accounts  of  borrower  at  any  of  the  
branches,  before  initiating  legal  proceedings  but  after  giving  due  notice  to  the  concerned.  
• The   guarantors/Co-­‐borrowers   may   be   pressurized   to   expedite   repayment   of   the   dues.  
Separate   meetings   with   guarantors/Co-­‐borrowers   can   be   arranged   for   this   purpose   where  
repercussions  of  legal  actions  upon  them  and  need  for  their  exerting  pressure  upon  borrowers  
for  repayment/regularization  may  be  explained  at  length.  
• Initiating  criminal  action  against  borrowers  wherever  it  is  found  that  the  borrower  has  been  
fraudulent   in   his   dealings   with   Ujjivan   and   there   is   a   case   of   misrepresentation   and/or  
diversion,  cheating,  criminal  breach  of  trust,  using  forged  documents,  dishonest  or  fraudulent  
removal  or  concealment  of  property  etc.  
• In  all  cases  where  legal  action  in  civil  courts/DRTs  is  contemplated  the  recovery  process  shall  
be   initiated   immediately   in   case   limitation   period   is   expiring   or   after   reaching   a   conclusion  
that  rehabilitation  and  other  avenues  of  recovery  have  been  exhausted.  In  case  it  is  observed  
that  the  borrower  is  trying  to  dispose-­‐off  the  securities  or  the  value  of  securities  is  eroding  for  

Collection  Policy   February  2017   Page  50  


 
Confidential                                  
     
   
some   other   reasons,   to   protect   Ujjivan’s   interest   and   prevent   dilution   of   securities,   suits  
should   be   filed   against   the   borrower/Co-­‐Borrowers   &   guarantors   forthwith.   The   USFBL   may  
approach  the  courts  for  granting  attachment  before  judgement22  whereby  the  USFBL  shall  be  
able  to  realise  the  amount  of  the  decree.  
• Simultaneous  with  filing  of  suits,  efforts  would  be  made,  through  process  of  law,  for  forcing  
the   borrower/guarantor   to   declare   all   their   assets   on   oath   and   towards   obtaining   the  
injunction/garnishee   against   disposal   of   assets/receivables   and   for   realization   of   available  
securities  and  impounding  the  passports  of  the  borrower/Co-­‐Borrowers/directors/guarantors.  
Necessary   application   for   this   purpose   shall   be   filed   with   DRT/competent   courts.   Attempts  
shall  also  be  made  for  obtaining  interim  decrees  on  the  basis  of  admission  of  debt  at  any  stage  
by  the  borrower.  
• Wherever  feasible,  winding  up  petition  shall  be  filed  against  the  companies  as  a  measure  of  
recovery  of  money  as  well  as  for  exerting  pressure  upon  the  defaulting  borrowers.  
• UUSFBLL   may   also   consider   filing   of   Insolvency   Petitions   against   individual   borrower/Co-­‐
borrowers  &guarantor.  
► The   status   of   each   suit   filed   account   at   branches   will   be   reviewed   by   the   Branch   Heads   at  
monthly  intervals,  in  consultation  with  the  advocates  concerned.  Quarterly  reports  on  all  such  
accounts   will   be   submitted   to   the   Head   office.   For   the   purpose   of   close   monitoring,   branch  
Heads  or  their  representative  will  attend  Court/DRT  proceedings  regularly  and  also  maintain  
close   liaison       with   the   advocates,   so   that   the   cases   may   be   disposed-­‐off   expeditiously   and  
unnecessary  delays  avoided.  
 

5.2. Arbitration  proceedings  


Arbitration  is  a  quick  and  inexpensive  method  of  redressal  of  commercial  disputes  between  parties.      
Procedure  
Steps   Description  
• Arbitration   proceedings   will   be   initiated   only   when   an  
Initiation  of  arbitration  proceeding  
Arbitration  agreement  is  in  writing  between  the  parties.  
  • Once   the   cases   are   identified   for   arbitration   proceedings,   a  
demand   notice   shall   be   issued   to   the   customer   demanding  
repayment   of   entire   loan   outstanding   (principal   +   interest   +  
other  charges)  within  10  -­‐15  days.      
• In   parallel,   USFBL   will   also   choose   to   issue   a   notice   for  
inspection  of  asset  (optional).    

                                                                                                                         
22
Refer Order XXXVIII, Arrest And Attachment Before Judgement, The Code Of Civil Procedure, 1908

Collection  Policy   February  2017   Page  51  


 
Confidential                                  
     
   
 
• After   expiry   of   the   notice   period   in   the   demand   notice   and  
Appointment  of  arbitrator  
provided  customer  has  not  complied  with  the  demand  notice,  
  the  USFBL  will  invoke  the  arbitration  clause  and  USFBL  will  on  
its  own  or  through  its  advocate  appoints  an  arbitrator  and  send  
a   notice   to   customer   stating   that   a   dispute   has   occurred   and  
the  USFBL  has  appointed  an  arbitrator  to  adjudicate  upon  the  
disputes  and  claims  between  the  parties  as  per  agreement.  The  
place   for   arbitration   is   also   notified   as   mentioned   in   the  
agreement  
• Upon   appointment,   the   arbitrator   will   inform   all   the   parties  
Arbitration  proceeding  
regarding  his  appointment  and  call  the  parties  for  a  preliminary  
hearing   and   after   such   hearing,   will   issue   necessary  
instructions   to   the   parties   and   will   fix   the   hearing   for  
submitting  statement  of  claim  and  other  things.  
 
• The  claimant  (USFBL)  has  to  file  statement  of  claim  before  the  
Filing  of  statement  of  claim  
arbitrator  within  the  period  of  time  agreed  upon  by  the  parties  
or   as   determined   by   the   arbitrator.   The   claim   shall   be  
supported   with   agreement   copy,   copies   of   notice   issued,  
statement  of  account  etc.    The  statement  of  claim  shall  contain  
statement  of  facts  supporting  the  claim,  the  points  at  issue  and  
the  relief  or  remedy  sought.    
 
• The   arbitrator   at   the   request   of   the   customer   will   allow   the  
Inspection   of   documents   &  
customer  to  inspect  the  documents  submitted  by  the  USFBL.    
customer  reply   • Post   filing   of   the   claim,   the   customer   will   state   his   defense   in  
respect  of  the  statement  of  claim  filed  in  a  written  statement  
with  all  supporting  documents.  
 
• Post   the   customer   reply   to   the   statement   of   claim,   the   USFBL  
Rejoinder  by  claimant  
will   amend   or   supplement   with   a   rejoinder   to   refute   the  
response  of  the  customer.  
• The  Arbitrator  will  frame  the  issues  among  the  parties  and  ask  
Framing  of  issues  
the  parties  to  file  original  documents  in  support  of  their  claim  
and  defense.  
• Proceedings   will   be   mainly   through   written   submissions   &  
Evidence,   examination,   arguments  
documents,   unless   otherwise   agreed   by   both   parties   or   one  
and  award   party  has  explicitly  requested  for  oral  hearing.      
• Both  the  parties,  with  arbitrator’s  permission,  will  examine  the  
evidence   (inspection   of   documents,   goods   or   other   property).  
Both  parties  have  chance  to  cross-­‐examine  the  other  party  and  
then  present  their  arguments.      
• The  decision  of  the  Arbitrator  /  Arbitrator  Tribunal  is  termed  as  
Arbitral  Award.    After  hearing  all  the  parties  and  going  through  

Collection  Policy   February  2017   Page  52  


 
Confidential                                  
     
   
the   evidence   placed   on   record,   the   arbitrator   will   pass   the  
award.    The  arbitrator  will  send  the  copies  of  the  award  to  all  
the   parties.   If   the   said   award,   after   service,   remains  
unchallenged  for  90  days,  the  same  will  have  effect  as  decree  
of  the  court.  
• It   is   permissible   for   the   parties   to   arrive   at   a   mutual  
settlement.    If  parties  settle  the  dispute  by  mutual  agreement,  
the   settlement   will   be   recorded   in   the   form   of   an   Arbitral  
Award   and   such   Arbitral   Award   shall   have   the   same   force   as  
any  other  Arbitral  Award  
• Based   on   the   final   Arbitral   Award,   the   parties   will   file   the  
Award   before   the   Court   to   initiate   execution   proceedings   i.e.  
sale   of   the   assets   of   the   Respondent   in   satisfaction   of   the  
claim.    
• A   three   months’   time   is   provided   to   the   parties   to   challenge  
Appeal  of  the  award:    
the   award   of   the   Arbitrator.     In   case   parties   fail   to   challenge  
  the   Arbitral   Award   within   the   stipulated   time,   the   Arbitral  
Award  becomes  final  and  binding  on  the  parties  
• Any   time   before   the   arbitration   or   during   the   arbitration  
Interim  measure  by  the  court  
proceeding   or   after   the   award   but   before   enforcement,   the  
USFBL  will  seek  interim  relief  from  the  court  on      the  following  
grounds  -­‐    
• Seeking  custody  of  asset  or  sale  of  asset  
• For  appointment  of  receiver    
• Seeking  injunction  to  restrict  customer  to  transfer  the  asset  to  
third  party  during  arbitration  
• To   seek   detention   or   inspection   of   property   as   this   is   subject  
matter  under  arbitration.    
• The   USFBL   under   section   9   of   the   arbitration   act   will   have   to  
Filing   of   application   under   section  
file  an  application  to  seek  interim  relief  for  either  of  the  above  
9     in  the  concerned  jurisdiction  court.    The  application  should  be  
accompanied   by   the   agreement   copy,   statement   of   payment,  
 
default  notices  issued  and  bounced  cheque.    
• The   Application   should   request   appointment   of   receiver   and  
instruct  to  take  into  custody  the  asset,  if  necessary  with  police  
help.  It  should  also  request  the  court  to  instruct  the  customer  
not   to   create   third   party   rights   till   the   petition   is   heard   and  
settled.     Additional   request   will   be   made   to   sell   the   asset   by  
public  auction.    
• On   receiving   the   petition,   the   court   will   ask   the   financier   to  
serve  a  notice  of  the  same  to  the  customer.    The  notice  will  be  
hand  delivered  or  sent  by  registered  AD.    
• The  customer,  on  receipt  of  this  notice,  is  supposed  to  appear  
in  the  court  and  file  his  reply  to  the  notice.    In  case,  he  doesn’t  
appear   and   reply   to   the   notice,   the   court   will   give   ex-­‐parte  

Collection  Policy   February  2017   Page  53  


 
Confidential                                  
     
   
order.    
• If  a  prima  facie  case  is  made  out,  the  court  will  also  grant  ex-­‐
Appointment   of   receiver   and  
parte   interim   injunction.   Receiver   will   be   appointed   after  
repossession  of  asset   hearing   out   both   parties   by   the   court.     The   court   will   order  
repossession  of  asset  by  the  receiver.    
• The  receiver  will  take  police  help  and  that  of  the  company  staff  
to   locate   and   take   the   asset   into   his   possession.     It   should   be  
ensured   that   Receiver   files   a   report   in   the   court   post  
possession  /action  taken  by  him  in  respect  of  the  asset.    
• The   Arbitral   tribunal   will   also   require   a   party   to   provide  
appropriate   security   in   connection   with   interim   order?   under  
the  Act    
• In  parallel,  claim  petition  should  be  filed  before  the  arbitrator  
and  proceeding  initiated  (this  is  in  case  sec  9  is  invoked  prior  to  
arbitration  proceeding  being  launched).  
• In   case   arbitration   is   taking   a   long   time   or   getting   prolonged,  
Disposal  of  asset  
then  the  company  will  request  the  court  for  disposal  of  asset.    
• The   sale   of   asset   is   done   by   public   auction   by   giving   an  
advertisement   in   the   newspaper.   This   is   carried   out   by   the  
receiver   only.     The   amount   received   on   sale   of   asset   is  
deposited  in  the  court.    
• For   the   shortfall   amount   (if   any),   arbitration   proceedings   will  
continue   and   court   will   grant   an   award   at   the   end   of   the  
arbitration  process  to  recover  from  customer’s  other  assets.  

5.3. SEC  138/25  NI  ACT  


 

Criminal   proceeding   under   section   138/Sec   25   of   NI   act   1881   &   2002&   Section   25   in   The   Payment   and  
Settlement  Systems  Act,  2007  
A  drawer  (customer)  would  have  committed  an  offence  under  this  act  which  is  punishable  by  law  provided  
a   cheque/ECS   issued   by   him   to   the   payee   USFBL   in   discharge   of   any   debt   or   liability   is   returned   unpaid  
(bounced)  by  the  drawee  (customer  USFBL)  for  insufficient  funds  in  the  customer  account  or  the  cheque  
amount  exceeds  the  arrangement  the  customer  has  with  his  bank  to  honor  the  cheque.    
Procedure  
Steps   Description  
• If   the   EMI   cheques/ECS   presented   for   payment   towards   loan  
Initiation    
liability  on  behalf  of  the  customer  returns  unpaid  from  the  bank  
due  to  insufficient  funds  or  exceeds  arrangement,  then  a  cause  

Collection  Policy   February  2017   Page  54  


 
Confidential                                  
     
   
is   created   to   initiate   proceedings   under   section   138   of   NI   Act  
&Section  25  in  The  Payment  and  Settlement  Systems  Act,  2007.    
• In   case   security   PDC’s   (postdated   cheques)   have   been   banked  
for   the   loan   outstanding   amount   after   the   loan   recall   notice  
(LRN)   has   been   sent   and   the   cheque   returns   unpaid   from   the  
bank  due  to  insufficient  funds  or  exceeds  arrangement,  then  a  
cause  is  created  to  initiate  proceedings  under  section  138  of  NI  
Act.    
 
• The  cheque  s  that  are  returned  unpaid  by  the  bank  with  a  memo  
Issue  of  notice  
indicating   that   the   cheque   s   have   returned   unpaid   due   to  
insufficient   funds   or   exceeds   arrangement   have   to   be   collected  
&  kept  in  custody  for  case  initiation.    
• Copy  of  the  cheque  and  bank  memo  have  to  be  handed  over  to  
the  company  lawyer  for  him  to  issue  notice  under  section  138  to  
the   drawer   (customer)   within   30   days   of   cheque   return   memo  
date,  demanding  payment  of  the  unpaid  amount  within  15  days  
of  receipt  of  notice.    The  notice  has  to  be  sent  by  registered  post  
with   acknowledgment   due.   In   case   of   Partnership   Firm,   the  
notice  should  be  sent  to  the  Firm  and  all  the  partners.    In  case  of  
Public   Limited   /   Private   Limited   Company,   the   notice   should   be  
sent  to  the  Company  and  all  the  Directors  who  are  in  charge  of  
and   are   responsible   for   the   conduct   of   the   business   of   the  
company.  
• In  case  the  customer  pays  the  amount  demanded  within  15  days  
of   notice   receipt,   then   no   further   proceeding   is   required   and  
case  is  closed.    
• If   the   customer   does   not   pay   within   15   days   of   notice   receipt,  
Filing  of  case  
then  based  on  the  delivery  acknowledgement  of  notice  received  
by  the  company,  within  the  next  30  days,  a  complaint  has  to  be  
filed   in   the   court   by   the   lawyer.     30   days   limit   will   be   counted  
after  expiry  of  15  days  from  the  date  of  receipt  of  the  notice  by  
customer.  In  case  acknowledgement  is  not  received  or  date  not  
mentioned,   then   the   case   will   still   be   filed   after   15   days   of  
issuance  of  notice  (assuming  that  the  notice  has  been  delivered)  
within  the  next  30  days.      
• The  documents  that  are  required  for  complaint  filing  are  original  
returned   cheque   s,   original   bank   memo,   Original   Notice   sent  
along   with   the   postal   receipt   and   acknowledgement   received  

Collection  Policy   February  2017   Page  55  


 
Confidential                                  
     
   
from   the   customer   (where   available)   and   Loan   Agreement  
(however  will  be  filed  at  subsequent  stage)    
• The  company  legal  team  based  on  the  recent  SC  judgment  &  bill  
passed   in   parliament   will   decide   the   jurisdiction   in   which   the  
case  shall  be  filed.    
• After   filing   of   the   case,   a   date   is   fixed   by   the   court   for  
Verification  of  documents  
verification/sworn   statement   of   the   complainant   in   relation   to  
the   complaint.   The   Power   of   attorney   holder   (which   is   a  
company   official   i.e.   the   Legal   manager/officer)   gives   a  
statement   confirming   the   facts   of   the   case   in   court   w.r.t   case.    
The   key   confirmations   are   existence   of   debt,   cheque   returning  
unpaid   due   to   insufficiency   of   funds,   adequate   notice   &   time  
given  to  customer  for  payment  on  demand  which  has  not  been  
honoured.    
 
• Post   the   verification   in   the   court,   either   on   the   same   day   or  
Issuance  and  service  of  summons  
future   date,   the   court   will   issue   summons   to   the   customer   to  
appear   before   the   court   to   defend   the   charges.   Summons   is  
issued  by  the  court  on  payment  of  processing  fee.    
• The   service   of   summons   is   one   of   the   most   critical   factors   for  
expediting   the   case.     Without   summons   being   served,   the   next  
stage   will   not     be   moved   to,   which   is   the   appearance   of   the  
accused   to   admit   or   deny   charges   based   on   which   further  
proceedings  or  judgement  will  be  delivered  
• Upon  serving  the  summons,  the  customer  is  expected  to  appear  
Bailable   or   non-­‐bailable   warrant  
before  the  court  either  to  contest  or  admit  the  charges.    In  case  
stage  
the  customer  fails  to  appear  in  court  without  proving  any  reason  
(ill-­‐health  or  death  in  family);  the  court  will  issue  bailable  or  non-­‐
bailable  warrant  against  the  customer  to  ensure  his  presence  in  
the   court   on   the   next   hearing   date.     Generally,   it   will   happen  
that   a   bailable   warrant   is   issued   first   and   then   non-­‐bailable  
warrant  is  issued  in  case  the  customer  doesn’t  heed  the  bailable  
warrant.    
• If   the   Bailable   warrant   (BW)   or   non   bailable   warrant   (NBW)   is  
issued   by   the   court,   the   same   has   to   be   served   through   the  
concerned   police   station   where   the   accused   customer   resides.  
Again  the  company  official  (collection  officer)  should  accompany  
the  policeman  at  the  time  of  execution  of  the  BW/NBW  on  the  
accused  customer  for  effective  recovery.  

Collection  Policy   February  2017   Page  56  


 
Confidential                                  
     
   
• Once  the  customer  is  present  in  the  court,  the  court  will  record  
Recording  of  plea  
his   plea   either   to   admit   the   offence   of   dishonor   of  cheque   s   or  
not.    In  case  he  denies  the  charges,  the  court  for  evidence  by  the  
complainant  fixes  a  date.    
• On  the  next  hearing  date,  evidence  is  led  by  the  complainant  by  
Evidence,   cross-­‐examination   &  
way  of  affidavit  and  supporting  documents.  Once  the  evidence  is  
argument   lead,   the   customer   gets   an   opportunity   to   defend   himself.     He  
will  choose  to  cross-­‐examine  the  complainant.    Also,  he  will  call  
on  witnesses  including  the  bank  to  support  his  argument.    
Post  the  argument  on  either  side,  the  judgment  is  delivered  in  favor  
Final  order  or  judgment  
of  or  against  the  accused  as  per  law.      

5.4. Demand  Promissory  Note  


Promissory   notes   are   one   part   of   NEGOTIABLE   INSTRUMENT.   Section   83   of   the   BILLS   OF   EXCHANGE  
ACT  1882&  Governed  by  section  4  of  NI  Act  1881  -­‐  refers  to  ‘an  unconditional  promise  in  writing  made  
by   one   person   to   another,   signed   by   the   maker,   engaging   to   pay   on   demand   or   at   a   fixed   or  
determinable  future  time,  a   sum  certain  in   money,  to  or  to   the  order  of  a   specified  person  or  to  a  
bearer.  

• Promissory  Note  executed  in  one  State  may  be  presented  in  another  State  in  India  with  
the  stamp  bearing  on  the  promissory  note.  No  additional  stamp  duty  need  to  be  paid  
• PN  has  TIME  validity.  The  Promissory  Note  is  valid  for  only  3  years  from  the  date  of  
execution  
• Upon  default  by  the  customer,  a  formal  notice  to  be  send    giving  7  days’  time  to  repay  the  
due  
• If   the   customer   doesn’t   pay   within   7   days   of   notice   receipt,   then   based   on   the   delivery  
acknowledgement  of  notice  received  by  the  company,  immediately  civil  suit  will  be    filed  in  
the  court  by  our  empaneled  advocate    
• After  filing  of  the  case,  a  date  is  fixed  by  the  court  for  verification/sworn  statement  of  the  
complainant   in   relation   to   the   complaint.   The   Power   of   attorney   holder   (which   is   a  
company  official  i.e.  the  Legal  manager/officer)  gives  a  statement  confirming  the  facts  of  
the  case  in  court  w.r.t  case.    The  key  confirmations  are  existence  of  debt,  cheque  returning  
unpaid   due   to   insufficiency   of   funds,   adequate   notice   &   time   given   to   customer   for  
payment  on  demand  which  has  not  been  honored.    

Collection  Policy   February  2017   Page  57  


 
Confidential                                  
     
   
• Promissory   Note   can   be   executed   partially   also   by   writing   behind   PN   about   the   part  
payment  received,  During  the  legal  course  customer  may  agree  to  make  the  part  payment,  
the  same  should  be  refer  to  the  court  of  law  and  PN  will  be  valid  for  further  execution  for  
the  balance  amt.  
• Post   the   argument   on   either   side,   the   judgment   is   delivered   in   favor   of   or   against   the  
accused  as  per  law  
 
 

5.5. LokAdalat  
 
LokAdalat   is   a   system   of   alternate   dispute   resolution.   The   lokadalat   (people’s   court)   settles  
dispute  through  conciliation  and  compromise.  The  courts  will  be  presided  by  sitting  judge  or  by  
retired  judge,  social  activists,  or  members  of  legal  profession  if  so  designated  by  competent  court  
or   by   state   government.     However,   it   does   not   have   jurisdiction   on   matters   related   to   non-­‐
compoundable  offences.    
Procedure:-­‐    
Steps   Description  

Making   an   application   in   case   of   Any   party   to   a   dispute   will,   before   the   dispute   is  
brought   before   any   Court,   make   an   application   to   the  
existing  litigation   Permanent  LokAdalat  for  the  settlement  of  dispute.    It  
is   written   statement   with   all   the   facts   of   the   case   &  
nature   of   dispute   and   is   submitted   with   all   necessary  
proofs.    Dates  for  lokadalat  are  fixed  at  locations  
Making   an   application   in   case   of   pre   Any   party,   which   is   aggrieved   by   some   action   of   non-­‐
performance  of  some  act  as  per  the  agreement,  will  file  
litigation:   necessary   application   duly   signed   by   the   Power   of  
Attorney   holder   for   referring   their   dispute   to   a  
LokAdalat.  A  single  application  also  will  be  filed  where  
there   are   a   number.   of   opposite   parties/customers.    
The  application  is  filed  before  the  District  Judge  or  The  
Secretary,  District  Legal  Service  Authority.    
Claim  petition  and  issue  of  summons   Notices   are   to   be   prepared   by   the   Counsel   on   the  
format   prescribed   by   the   authority   for   all   the  
customers   against   whom   the   proceedings   are  
intended.   Thereafter   all   the   notices   shall   be   stamped  
and  signed  by  the  concerned  officer  of  the  authority.  
 
Dispatch   of   notices   to   the   defaulters   is   done   through  
speed   post,   courier,   police   personnel,   and   even   by  

Collection  Policy   February  2017   Page  58  


 
Confidential                                  
     
   
hand   by   the   officials   of   the   company.   This   is   to   be  
ensured   so   that   there   is   a   maximum   turnout   of   the  
defaulting   customers.     If   applicable,   Petitions   are  
required  to  be  prepared  and  to  be  filed  well  in  advance  
before  the  authority.  
 

5.6. Debt  Recovery  Tribunal  


The  relief  from  DRT  shall  be  sought  in  cases  where  there  is  a  shortfall  of  greater  than  Rs.10  lakhs,  
in  recoveries  of  secured  assets  even  after  the  disposal  of  the  asset  or  in  unsecured  assets  with  
outstanding  greater  than  Rs.10  lakhs,  with  no  immediate  remedy  visible  by  pursuing  through  Sec  
138/25  or  Arbitration.  

Procedure:  -­‐    

• The   tribunal   consists   of   one   person   who   is   the   presiding   officer   appointed   by   the  
government.    
• The  USFBL  will  make  an  application  to  the  tribunal  within  local  limits  of  jurisdiction  where  
the  customer  is  residing  or  carrying  on  business.  Other  banks  may  also  join  the  application  
if  it  has  to  recover  dues  from  the  same  party.    
• Tribunal  will  issue  summons  to  the  customer  on  receipt  of  application  asking  him  to  reply  
within  30  days  as  to  why  relief  requested  by  the  bank/institution  should  not  be  granted.    
• The   defendant   (customer)   will   file   a   written   statement   within   the   stipulated   time   in   his  
defense  including  making  a  counter  claim.    
• The  applicant  (bank)  will  have  the  right  to  file  a  written  statement  in  reply  to  the  counter  
claim  of  the  defendant.    
• The  Tribunal  has  the  right  to  pass  an  interim  order  (injunction  or  attachment)  ordering  the  
customer  not  to  transfer  or  dispose  off  assets  without  permission  of  the  tribunal.    In  some  
cases,  it  will  ask  the  defendant  to  furnish  some  security  to  satisfy  recovery  of  debt.          
• The  tribunal  after  hearing  the  appeal  of  defendant  and  will  pass  a  final  order.    
• The  presiding  officer  will  issue  a  certificate  for  debt  recovery  based  on  the  final  order  to  
the  tribunal  recovery  officer.    
• The   aggrieved   party   will   appeal   against   the   DRT   order   to   the   debt   recovery   appellate  
tribunal  (DRAT)  within  45  days  of  receiving  the  order.    
• Appeal  to  DRAT  is  allowed  only  after  depositing  50/75%  of  the  dues  as  decided  by  the  DRT.    
• On  receipt  of  the  order,    the  recovery  officer  of  the  tribunal  will  recover  debt  either:-­‐  
(a)  By  attaching  and  sale  of  the  movable  or  immovable  property  of  the  defendant;  

(b)  By  arresting  the  defendant  and  his  detention  in  prison;  

Collection  Policy   February  2017   Page  59  


 
Confidential                                  
     
   
(c)  By  appointing  a  receiver  for  the  management  of  the  movable  or  immovable  properties  
of  the  defendant  

6. RECOVERY  MECHANISMS  -­‐  Repossessions  

The  guidelines  related  to  the  Collection  mechanisms  for  loan  products  offered  by  Ujjivan  are  as  
stated  below:  

6.1. Giving  notice  to  borrowers  


• While  written  communications,  telephonic  reminders  or  visits  by  Ujjivan's  representatives  
to  the  borrowers  place  or  residence  will  be  used  as  loan  follow  up  measures,  Ujjivan  shall  
not   initiate   any   legal   or   other   recovery   measures   including   repossession   of   the   secured  
assets  without  giving  due  notice  in  writing.      
 
• Any  genuine  difficulties  expressed/  disputes  raised  by  the  customer  shall  be  considered  by  
Ujjivan   before   initiating   recovery   measures.     USFBL   shall   follow   all   such   procedures   as  
required  under  law  for  recovery  /  repossession  of  secured  assets  

6.2. Repossession  of  Secured  assets  


• Repossession   of   secured   assets   is   aimed   at   recovery   of   dues   and   not   to   deprive   the  
borrower  of  the  secured  assets.      
• The   recovery   process   through   repossession   of   secured   assets   will   involve   repossession,  
valuation  of  secured  assets  and  realization  of  secured  assets  through  appropriate  means.      
• All  these  would  be  carried  out  in  a  fair  and  transparent  manner.      
• Repossession  will  be  done  only  after  issuing  the  notice  as  detailed  above.    Due  process  of  
law  will  be  followed  while  taking  repossession  of  the  secured  assets.      
• Ujjivan   shall   take   all   reasonable   care   for   ensuring   the   safety   and   security   of   the   secured  
assets  after  taking  custody,  in  the  ordinary  course  of  the  business  and  relevant  cost  will  be  
charged  to  borrower.      
 

Collection  Policy   February  2017   Page  60  


 
Confidential                                  
     
   
6.3. Valuation  &  sale  of  secured  assets  
• Valuation  and  sale  of  secured  assets  repossessed  by  Ujjivan  shall  be  carried  out  as  per  law  
and  in  a  fair  and  transparent  manner.    
• Ujjivan  shall  have  right  to  recover  from  the  borrower  the  balance  due  if  any,  after  sale  of  
secured  assets.      
• Excess  amount  if  any,  obtained  on  sale  of  the  secured  assets  shall  be  paid  to  the  person  
entitled  thereto  in  accordance  with  his  rights  and  interests,  after  meeting  all  the  related  
expenses,  provided  Ujjivan  is  not  having  any  other  claims  against  the  customer.        
• USFBL's  right  to  general  lien  and  its  implications  shall  be  made  clear  to  the  borrower  while  
executing  the  loan  documents.      
• In  the  case  of  hypothecated  assets  after  taking  possession  if  no  payment  is  forthcoming,  a  
sale  notice  of  7  days’  time  to  respond  will  be  sent  to  the  borrower.  Thereafter  Ujjivan  shall  
arrange  for  sale  of  the  hypothecated  assets  in  such  manner  as  deemed  fit  by  Ujjivan.    
• In  respect  of  cases  under  SARFAESI  Act  as  per  the  provisions  of  the  Act,  30  days’  notice  of  
sale   shall   be   sent.   When   public   auction   or   by   tender   is   envisaged,   the   same   shall   be  
published  in  two  leading  newspapers  out  of  which  one  is  in  local  vernacular  paper.  
 

6.4. Opportunity  for  the  borrower  to  take  back  the  secured  assets  
• Ujjivan  shall  resort  to  repossession  of  secured  assets  only  for  the  purpose  of  realization  of  
its  dues  as  the  last  resort  and  not  with  intention  of  depriving  the  borrower  of  the  secured  
assets.    
• Ujjivan   shall   be   willing   to   consider   handing   over   possession   of   secured   assets   to   the  
borrower  after  repossession  and  before  concluding  sale  transaction  of  the  secured  assets,  
provided  Ujjivan  dues  are  cleared  in  full.      
• If  satisfied  with  the  genuineness  of  borrower's  inability  to  pay  the  loan  installments  as  per  
the  schedule,  which  resulted  in  the  repossession  of  secured  assets,  Ujjivan  may  consider  
handing  over  the  secured  assets  after  receiving  the  installments  in  arrears.  However  this  
would   be   subject   to   giving   an   undertaking   by   the   borrower   to   repay   the   remaining  
installments   /   dues   in   future   and   to   maintain   the   loan   account   as   performing   asset   until  
closure   of   the   account   as   per   the   terms   of   the   loan   agreements(s)   to   the   satisfaction   of  
Ujjivan.  
• If   the   amounts   are   repaid,   either   as   stipulated   by   Ujjivan   or   dues   settled   as   agreed   to,  
possession  of  seized  assets  shall  be  handed  back  to  the  borrower  within  15  working  days  

Collection  Policy   February  2017   Page  61  


 
Confidential                                  
     
   
after  date  of  permission  from  the  competent  authority  of  Ujjivan  or  Court/DRT  concerned  
if  recovery  proceedings  are  filed  and  pending  before  such  forums.  
 

7. SKIP  TRACING  PROCESS  


Customer  who  are  not  traceable  at  her/his  residence  or  place  of  work  and  who  is  not  contactable  
through  telephone/mobile.  
1. These   are   customers   who   have   gone   away   suddenly   and   secretly   without   informing  
anybody.  Where  no  information  is  available  with  the  neighbors  or  group  members.  
2. Business   place   has   been   shut   down   and   no   information   known   to   the   fellow  
businessmen  
3. No  prior  notice  or  intimation  has  been  given  to  us.  
Customers  who  not  available  during  the  visit/door  is  locked/not  reachable  or  not  receiving  calls  
for  3  consecutive  times  will  be  classified  as  an  abscond  customer.  

Workflow:    

Activity   Ageing   Responsibility  


Overdue   cases   identified   to   be   marked   as   ‘temporarily   not   Day  1-­‐3   CRO/LO/RO  
contactable’  (TNC)    in  Indus  collections  software  (IC4)  
Mandatory  visit  by  CRM  after  2  consecutive  failed  attempts  by  the   Day  4-­‐7   CRM  &  CBH&  
CRO/LO   to   contact   the   customer.   Mark   as   abscond,   if   that   is   the   Cluster  credit  
case,  on  IC4;  overdue  reason  has  be  authorized  by  the  CBH  after   manager  
necessary  due  diligence  and/or  discussion  
Cases   authorized   by   CBH   will   be   automatically   allocated   to   the   Day  8  
CBH  and  
Collections  team   Collection  
Manager  
If  the  CBH  fails  to  authorize  the  overdue  reason,  cases  will  be  auto   Day  15   Collection  
allocated  to  collections  team  on  the  15th  day   Manager  
Operations  
Visit   by   the   Collection   officer   and   confirmation/additional   input   Day   8-­‐ Collection  
given  to  Cluster  Collections  Manager&  Collection  Manager   30     Manager  
Non-­‐traceable  abscond  overdue  cases  will  be  flagged  off  in  Br.net,   60  days   National  
interest   accrual   stopped   and   will   subsequently   attract   100%   Collections  
provisioning   over   60   days   (based   on   recommendation   by   the   Manager  (NCM)  
collection  manager)    
 

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The   various   steps   that   will   be   initiated   for   skip   tracing   to   locate   the   new   office   or   residence  
address  

1. Check  with  existing  neighbors    and  relatives  


2. Check  with  customer’s  customer  or  customer  suppliers  
3. Check  on  permanent  address,  KYC  info  mentioned  in  the  application  form    
4. Check  with  references  with  whom  TVR  was  done  
5. Check  with  the  local  gas  Collector  if  gas  receipt  was  provided  as  address  proof  
6. Do  a  Bureau  scrub  to  check  if  other  contact  and  addresses  are  available  
7. Check  with  the  local  post  office  if  the  customer  has  left  any  forwarding  address  
8. Check  with  local  school  where  customers  wards  were  studying  
9. Any  public  utility  service  &  site  –  electoral  rolls,  telephone  directories,  land  record  portals    
10. Last  place  worked  for  salaried  customer  or  Co-­‐applicant  
11. Check  with  ration  depo  to  see  if  there  are  any  updated  address  or  recent  purchases  
 
Alternate  searches    
1. In   case   of   self-­‐employed   professionals   or   non-­‐professional,   searches   can   be   made   in  
business  information  portal,  Job  portal,  Advertisement  portal  and  other  social  sites.    
2. For   customers   who   may   have   previously   downloaded   mobile   banking   application   of  
Ujjivan  onto  their  IOS  or  Android  phones,  updated  present  location  of  the  individual  may  
be   available   with   the   Ujjivan   in   case   they   have   not   changed   their   mobile   instrument.  
Collections  team  must  seek  necessary  information  from  IT  team  in  such  instances  to  get  
the  updated  co-­‐ordinates  of  such  customers.  
3. Check   with   social   network   sites   to   see   the   updated   information   or   check   with   common  
friends  if  any.    
4. Check  with  Job  portals  if  customer  has  applied  for  Jobs  in  any  jobsites  
5. Check  the  recent  client  ATM  transactions  of  Ujjivan  accounts  to  locate  the  client  location.    
 
Upon   tracing,   the   case   should   be   visited   by   collector   in   the   new   address   for   resolution.     The  
collector  can  be  reallocated  if  the  new  address  comes  under  the  working  area  of  other  branch  of  
Ujjivan.    
 
 
8. POLICY  ON  NON-­‐STARTERS  

Introduction:  

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After   our   experience   of   poor   customer   selection   in   the   last   two   years   in   pockets   leading   to  
extensive   credit   write-­‐offs,   it   is   necessary   to   put   in   place   strict   disciplines   for   future   customer  
selection.  The  ‘Non  Starter  Loan  monitoring  and  follow  through  disciplinary  process  is  one  such  
program.  A  loan  which  is  a  ‘non-­‐starter’  clearly  indicates  poor  customer  selection  either  through  
gross  negligence  or  fraud.  A  non-­‐starter  is  a  customer  who  intentionally  fails  to  repay  one  or  all  of  
the  first  four  installments.    

Non-­‐starter  Definition:  

A   Non-­‐starter   is   a   customer   who   intentionally   fails   to   repay   one   or   all   of   the   first   four  
installments.    

1. One   installment   means   –   1   monthly   installment,   2   bi-­‐monthly   installments,   4   weekly  


installments  
2. Disciplinary  actions  on  Nonstarters  for  CRO,  LO,  RO,  Sanctioning  authority  person,  House  
visit  and  GRT  person  shall  not  include:  
a. Rescheduled  loans  
b. Death  customers  &  spouse  death  cases  
c. Genuine   &   acceptable   reasons   as   identified   during   credit   investigation   (Refer  
annexure)  
Non-­‐starter  loans  under  group  lending:  

Lending   Loan   Non-­‐starter  


Actions    
Type   Originator   occurrence**  

− CRO   will   not   qualify   for   any   Performance   allowances   &  


First  time   other  incentives  (through  the  R  &  R  programs)*.    
− Warning  email  from  DM  with  a  copy  to  RHM,  RCM  
− Written   warning   from   HR.   Acknowledgment   of   Warning  
letter  shall  be  filed  in  the  employee  personal  file    
CRO  
Second  time   − Staff   will   not   be   eligible   to   take   Staff   loan   until   the  
accounts  get  regularized      
− Staff  will  not  be  eligible  for  annual  performance  grading  
Group   of  EE  and  FEE  during  the  FY  
Third  Time   − Termination   and   Recovery   of   the   loss   amount   from   the  
employee  final  settlement  shall  be  conditional^  
First  time   − House   visit   person   shall   be   put   under   watch   list   by  
Credit.  
House  visit  
− Warning  email  from  DM  with  a  copy  to  RHM,  RCM  
person   Second  time   − Staff   cannot   be   nominated   for   GRT   authorization   (if  
applicable)    
− Staff  will  not  be  eligible  for  annual  performance  grading  

Collection  Policy   February  2017   Page  64  


 
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of   EE   and   FEE     during   the   FY   until   regularization   of   the  
loan  account  

− Written   warning   from   HR.   Acknowledgment   of   Warning  


letter  shall  be  filed  in  the  employee  personal  file    
− Staff  will  not  qualify  for  any  applicable  incentives/R&  R*  
Third  Time  
− Staff   will   not   be   eligible   to   take   Staff   loan   until   the  
accounts  get  regularized.      
− House  visit  certification  will  be  retracted  if  the  accounts  
are  not  regularized  within  45  days  of  default.  
≥  4  Non  
− Termination   and   Recovery   of   the   loss   amount   from   the  
starters   employee  final  settlement  shall  be  conditional^  

  − Warning   email   from   DM   with   a   copy   to   RHM,   RCM   &  


5  to  8  non  
COO  
starters   − Staff   shall   not   qualify   for   any   applicable   incentives/   R&  
R*  
− Written   warning   from   HR.   Acknowledgment   of   Warning  
letter  shall  be  filed  in  the  employee  personal  file    
− Staff   will   not   be   eligible   to   take   Staff   loan   until   the  
GRT  Person   8  to  10  non  
accounts  get  regularized  
starters   − Staff  will  not  be  eligible  for  annual  performance  grading  
of  EE  and  FEE  during  the  FY  
− GRT   certification   will   be   retracted   until   the   number   of  
non-­‐starters  are  reduced  to  below  3  
>10  Non  
− Termination   and   Recovery   of   the   loss   amount   from   the  
starters   employee  final  settlement  shall  be  conditional^  

 
Other  Points:    
• **Occurrence  of  non-­‐starters  is  defined  as  follows:  Number  of  loans  in  default  with  first  
four  installments  yet  to  be  fully  recovered.  Eg:  Second  account  appears  in  non-­‐starter  
when  the  first  non-­‐starter  is  yet  to  be  regularized/is  partially  collected.    
• *Employee   will   start   receiving   incentives   from   the   month   the   accounts   get   regularized.  
(previous  month  incentives  shall  not  be  paid  out  as  arrears)    
 
Non-­‐starter  loan  under  Secured  and  unsecured  individual  lending:  
 
Lending   Loan  Originator   Non-­‐Starter   Actions  
Type   occurrence**  

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Individua Loan   First  time   Warning   email   from   RBM   with   a   copy  
l  loans   officer/Relationship   marked   to   RHM,   RCM.   Staff   shall   not  
officer   qualify  for  any  applicable  incentives/  R&  R  
Second  time   Written   warning   from   HR.  
Acknowledgment  of  Warning  letter  shall  be  
filed   in   the   employee   personal   file  
Staff   will   not   be   eligible   to   take   Staff   loan  
until   the   accounts   get   regularized.  
Staff   will   not   be   eligible   for   annual  
performance   grading   of   EE   and   FEE   during  
the  FY.  
Third  Time   Termination.   Recovery   of   the   loss   amount  
from   the   employee   final   settlement   shall  
be  conditional^.  
Credit   Officer   ≤3  Non  starters   Warning   email   from   RBM/   RCM   with   a  
Hub/Sanctioning   copy  marked  to  RHM.  
Authority  Person   4  to  6  Non  starters   Written   warning   from   HR.  
Acknowledgment  of  Warning  letter  shall  be  
filed   in   the   employee   personal   file  
Staff   shall   not   qualify   for   any   applicable  
incentives/R&R  
Staff   will   not   be   eligible   to   take   Staff   loan  
until   the   accounts   gets   regularized  
Staff   will   not   be   eligible   for   annual  
performance   grading   of   EE   and   FEE   during  
the  FY  
>6  Non  starters   Certification   shall   be   withdrawn   &  
employees  shall  be  put  on  PIP.  Recovery  of  
the   loss   amount   from   the   employee   final  
settlement  shall  be  conditional^.  
 
Action  plan:  
1. Branches  having  5  or  more  nonstarters  should  review  the  customer  acquisition  quality  and  
DM/RBM/RCM   should   present   an   action   plan   to   the   Collection   management   team.  
Branches  with  >  5  non-­‐starter  shall  not  be  eligible  for  best  branch  award  or  any  other  such  
awards  as  and  when  announced  by  Ujjivan.  
2. All   non-­‐starter   loans   shall   be   investigated   by   credit   within   30   days   of   default   and   the  
findings   of   the   investigation   shall   be   shared   with   DM,   RCM,   COO/RBM   and   Collection  
team.  
3. In  some  exceptional  cases  there  could  be  genuine  reasons  for  customers  not  being  able  to  
repay   the   first   four   installments.   These   cases   will   be   investigated   by   credit   &   if   found  
genuine  no  disciplinary  action  will  be  taken.  Ujjivan  is  undertaking  this  to  ensure  that  basic  
responsibilities  to  induct  good  customers  are  taken  care  off  and  credit  is  extended  only  to  
those  who  are  creditworthy.    

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4. Non  Starter  Report  will  be  produced  every  month  and  implementation  of  the  program  will  
be   the   responsibility   of   the   DM/RBM,   Regional   HR   Manager   &   the   Regional   Credit  
Manager.  
5. Non-­‐starter   status   for   each   region   &   the   action   taken   should   be   reviewed   during   the  
Regional  monthly  business  reviews.  
 

All   individual   records   of   persons   originating   the   loan/conducting   house   visit   and   GRT   will   be  
tracked   in   CBS   and   Credit   and   HR   will   be   responsible   to   initiate   disciplinary   action   through   HR  
Regional  committee    

^Important  Note:  Any  severe  negligence  (Conditional)  leading  to  loss  of  reputation  or  monetary  
shall  be  considered  for  recovery  of  loss  amount  from  employee  FFS.  

Recovery  of  the  loss  amount  from  the  employee  final  settlement  shall  be  conditional^.    

Genuine  reasons  of  exclusion  from  the  policy  on  non-­‐starter  

Medical  reasons  as  verified  through  medical  documents  

Financial  distress  caused  by  death  of  earning  member,  natural  calamities  or  act  of  nature  /  
accidents  caused  by  fire  &  any  other  act  that  has  an  impact  on  livelihood  of  the  customer  and  
business.  

Mass  default  caused  by  community  issues  or  any  other  such  external  factors  

Technical  reasons  such  as  window  changes,  wrong  product  booking  

 
 
 
9. COLLECTION  STRATEGIES  FOR  MASS  DEFAULT  BRANCHES  
Mass  Defaults  are  cases  of  defaults  encouraged  by  local  stakeholders  in  society  such  as  religious  
heads,  caste  based  organizations  and  local  politicians  etc.  These  are  often  initiated  by  local  ring  
leaders.   They   can   potentially   get   together   customers   not   to   repay   by   spreading   false   rumors  
regarding  the  lending  institutions  and  or  deliberately  instigate  customer  not  to  pay  on  religious,  
caste  or  political  grounds.  

9.1. Identification  of  mass  default  cases  

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The  branch  team  should  inform  the  distributions  supervisors  immediately  after  the  identification  
of  mass  defaults  in  their  working  areas.    

• CRO/LO   should   update   this   information   in   collection   software   and   which   will   be  
immediately  notified  to  the  Branch  manager.  
• CRM   should   visit   the   area   which   is   possibly   affected   by   mass   default   and   talk   to   the  
customers  and  understand  the  situation.  CRM  should  update  his  remarks  in  IC4  confirming  
the  mass  default  situation  and  inform  his  next  2  level  supervisors  
• CBH  (Cluster  Branch  Head)  and  AM  of  the  branch  to  thoroughly  discuss  the  situation  with  
branch  team  and  authorise  the  mass  default  remarks  in  IC4.  
• RBM,  RCM,  RVM,  RRCM  Head  of  Microfinance  &  Branch  Banking  and  Head  of  Credit  and  
Collections  –  Microfinance  shall  be  notified  immediately  and  action  will  be  taken  on  a  case  
to  case  basis  

9.2. Strategies  for  handling  mass  default  cases:      


• Form  a  branch  level  committee  for  handling  mass  default  cases  which  will  be  headed  by  a  
supervisory  team  member.  
• Committee  to  identify  the  most  critical  areas/  Centres/  groups  which  are  impacted  by  
repayment  issues  and  identify  the  CRO/LOs  with  highest  number  of  default  accounts.  
• Mentor  to  spend  two  days  in  a  week  in  the  affected  branch  and  visit  the  affected  areas.  
Discuss  the  strategies  with  Branch.  
• Allocate  a  dedicated  collection  officer/  Vigilance  officer/  Credit  officer  for  handling  high  
impact  areas/LO/CRO  
• We  prefer  to  send  women  employees  in  those  affected  areas,  if  required  accompanied  by  
other  CRO/LO/ACRM/CRM  etc  
• Based  upon  criticality,  we  prefer  to  discontinue  centre  meetings  and  start  door  step  
follow-­‐up  for  all  mass  default  customers.    
 
• Train  the  branch  staff  on  collection  strategies  and  disciplines  to  be  followed  during  
collections  (refer  to  Guidelines  laid  down  in  fair  practise  code  of  collection  policy)    
• CRO/LO/allotted  officer  to  visit  all  overdue  customers  of  the  branch  and  distribute  Ujjivan  
leaflet  (If  situation  demands)  and  showcase  newspapers  cut  outs  which  carries  the  
legitimate  information  regarding  lending  institution  and  negate  the  false  rumours.    
• Educate  customers  on  the  wrong  happenings  and  guide  them  suitably  on  the  ways  to  
overcome  such  situations.    

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• As  a  fair  collection  practice,  start  the  day  early  for  collection  @7  AM  and  close  by  dusk.  
Any  exceptions  for  collections  beyond  7  PM  will  require  approvals  from  the  Area  manager.    
• Use  of  coercive  collection  practices  may  prove  counterproductive;  hence  PM  &  AM  shall  
review  the  quality  of  staff  interactions  with  default  customers  and  evaluate  complaints  on  
forceful   collection   practices.   Branch   staff   shall   follow   the   guidelines   laid   down   in   fair  
practices  code  of  collections  policy.  
• CRM/ACRM  to  assist  collections  in  all  critical  areas.    
• Investigate  the  actual  reason  for  mass  default  (business  slow  down,  behaviour  issues  etc.)  
and  identify  customer’s  unwillingness/inability  to  pay.  
• Seek  support  from  state  MFI  associations  or  MFIN  wherever  necessary.    
• Ensure  collection  on  Promise  to  pay  dates  from  customers.    

Status  of  all  mass  default  branches  with  action  plan  should  be  discussed  in  RLTs.  RBM  &  RCM  to  
present  the  summary  of  affected  branches  to  management  as  part  of  monthly  business  
presentation.      

 
10. REPAYMENT  MODE  
Modes  of  repayments:  

Customer  can  opt  for  any  of  the  following  mode  of  payments.  

1. Cash  repayment  at  center  meeting  


2. Repayment  at  Branch  office  
3. Postdated  cheque  
4. ACH/ECS  
5. NEFT/RTGS  (In  future)  

Payment  process  for  cash  repayments:  

Collector  Hands-­‐off  to  Cashier:    

• All  payments  collected  by  the  collectors  in  a  day  must  be  handed  over  to  the  cashier  on  
the  same  day.    
• If   the   overdue   is   collected   within   7   days   of   due   date   the   relationship   officer   needs   to  
update  the  transactions  in  handheld  device.  
• All  greater  than  7  days  overdue  collection  needs  to  be  handed  over  to  Cashier.    
• All   the   collection   entries   posted   in   the   Core   system   will   be   supervised   by   the   branch  
manager.    

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• At   the   point   of   hands   off   cashier   must   scrutinize   each   receipt   for   correctness   of   the  
deposit.      
• The  Cashier  must  ensure  that  the  original  receipt  has  been  handed  over  to  the  customer  
and  all  the  signatures  are  present.    
• The   carbon   copies   must   not   be   overwritten   in   ink   under   any   circumstances.   Once   the  
cashier   is   satisfied   with   the   validity   of   the   receipt   issued   he   /   she   should   update   the  
payment  in  system,  with  the  details  of  the  payment.  
• The  collector  must  ensure  that  receipts  are  issued  serially  and  there  is  no  break  in  series.  
Any   such   discrepancies   must   be   highlighted   to   Collector   immediately   and   also   to   branch  
manager.  

Payment  deposit  process:    

For  all  the  cash  payments  collected  in  a  day,  the  collector  must  deposit  the  cash  with  Branch  on  
the  same  day.  All  Cheque  /  DD’s  collected  by  the  collector  needs  to  be  deposited  with  the  Branch  
with  proper  acknowledgement,  record  of  which  needs  to  be  filed  at  the  DCA/  IC4  

Receipt  Audit:    

Periodic   audit   on   receipts   shall   be   done   by   the   internal   auditors   of   Ujjivan.   Any   discrepancies  
found   will   be   highlighted   to   the   Distribution   supervisors/Collection   Managers   for   corrective  
actions.    
 
11. RECEIPT  BOOK  PROCESS  –  for  field  collections    

11.1. Indenting,  distribution,  custody  and  verification  of  Receipt  Books  


Each  collector  will  have  a  separate  receipt  book.  Supervisors  at  all  levels  must  ensure  that  there  is  
no   sharing   of   receipt   book.   The   Receipt   Books   are   given   to   collections   staffs   for   issuance   to  
customers  on  collection  of  overdue  amount  on  field.    
RESPONSIBILITY:  

Regional/  Collections  Manager  will  be  responsible  for  the  indent  and  record  maintenance.  

PROCESS  FLOW:  

1) Collections   Manager   is   responsibility   to   co-­‐ordinate   with   Admin   department   for   printing  


and  procurement  of  Receipt  Books  as  per  the  set  format  at  regular  intervals    

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2) Collections   Manager   will   indent   receipt   books   to   the   Admin   Department   (Stationery-­‐In-­‐
Charge)  as  and  when  required  for  supply  to  the  collections  staffs  

3) Numbers  of  receipt  books  issued,  should  be  tracked  collection  officer-­‐wise  

4) Concerned  staff  should  obtain  signature  of  Cashier/CRM  on  the  book  copy  of  each  receipt  
while  handing  over  cash  for  the  overdue  amount  collected  on  the  field      

5) Concerned   staff   should   send   the   details   of   issued   receipt   numbers   as   per   the   format   in  
ANNEXURE  I  to  the  respective  Regional  collections  Manger  every  month      

6) The  used  receipt  books  should  be  handed-­‐over  to  Collections  Manager  at  their  respective  
offices  for  custody  and  should  be  made  available  during  audit  period    
 

11.2. Record  maintenance  and  audit  checks:  

1) Collections  Manager  should  maintain  a  record  of  issued  Receipt  Books  


2) The  details  should  include,  number  of  books  indented,  issued,  Employee  name,  Employee  
Number,  Designation,  Receipt  Book  Number,  received  date  and  issued  date  
3) Vigilance  Supervisor  should  verify  the  physical  copies  of  receipt  books  during  their  branch  
visits  
4) Audit  should  verify  the  physical  copies  of  receipt  books  once  in  every  quarter  at  RO.  

11.3. Process  for  lost  receipt  book  


For  any  receipt  book  lost/stolen  reported  by  the  user,  a  complaint  (Diary  entry)  will  be  lodged  by  
the   Cluster/Collection   manager   along   with   Vigilance   team   with   the   nearest   police   station   and  
advertisement  issued  in  local  newspaper  giving  details  of  the  lost  receipt  book  and  advising  the  
public  not  to  accept  cash  from  such  receipt  nos.    
 
 

12. COLLECTION  MANAGEMENT  SOFTWARE  (IC4)  

12.1. Introduction  
• Indus   collection   system   (IC4)   is   Ujjivan’s   collection   management   system.   The   collection  
system   will   have   pre-­‐configured   workflows   to   manage   a   variety   of   collections   processes  
like  pre-­‐emptive  dunning,  Tele-­‐calling,  Field  visits,  write  off,  repot  viewing  etc.  In  Addition,  

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it   will   allow   users   to   modify   these   workflows   to   suit   their   business   requirements.   The  
workflow  can  also  be  done  by  configuring  Rules  that  can  be  automatically  triggered  after  
certain  number  of  days  or  performing  a  specific  activity  or  action-­‐result  by  collector.  
 
• The   collection   system   will   have   an   allocation   engine   (to   define   which   users   will   work   on  
what   kind   of   cases’).   The   list   of   the   allocated   cases   can   be   prioritized   and   pushed   for  
collector  follow-­‐ups  as  per  the  defined  sequence  
 
• There   will   be   work-­‐list   management   that   caters   to   the   requirement   of   different   lists   for  
both  the  supervisors  as  wells  as  the  collectors.  These  to-­‐do  lists  are  required  for  specific  
purposes  like  managing  authorizations,  escalations  &  supervisory  monitoring  
 
• The   collection   system   will   also   have   an   account   management   facility.   This   would   include  
single  view  of  customer  information,  smart  search  facility  using  multiple  parameters,  apply  
single  collection  action  on  multiple  cases  and  account  handling  of  exceptional  cases.  
 
• The   collection   system   will   help   track   overall   performance   of   the   tele-­‐caller   and   field  
collectors.  Performance  tracking  would  include  amongst  others  efficiency  (number  of  calls  
/   visits   made),   the   effectiveness   (%   of   promises   taken,   %   of   promises   kept)   and   the  
productivity  (sum  collected,  %  normalized  etc.)    
 
• The   system   will   have   the   capability   that   templates   can   be   configured   for   different  
purposes  like  Reminder,  Payment  received,  Legal  Action  initiation.  These  templates  will  be  
used   for   customer   communication.   The   communication   can   be   based   on   customer  
preference  in  terms  of  language,  mode  of  communication  (SMS,  Email,  Letter)  
 
• The  system  will  also  have  document  management  module,  which  allow  various  collection  
team   to   store   and   manage   electronic   documents.   It   facilitates   uploading   and   storage   of  
document  for  individuals.  
 
• The   collection   system   will   have   the   functionality   of   registering,   tracking   and   controlling  
receipt   books   &   receipts.   The   system   will   maintain   the   log   of   the   new   receipt   books  
printed   as   well   as   the   transaction   details   of   receipts   issued   to   the   customer.   It   also   will  
have  the  ability  to  mark  receipts,  as  lost  or  cancelled  when  receipts  are  either  physically  
damaged  or  are  cancelled.  

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12.2. IC4  Overview:    
Accounts  will  migrate  to  IC4  on  the  1st  day  of  overdue,  subsequent  to  the  EOD  process.    

IC4,   as   a   system   has   both   Mobile   and   Web   Interfaces   with   field   staff   using   the   Mobility  
platforms  and  Supervisory/back-­‐end  teams  using  the  Web  Interfaces  

12.3. Mobile  Module:  


Mobile  module  will  be  used  by  CRO,  LO/RO,  CRM  and  field  Collection  Officers  (CO)  

CRO/LO/RO  will  get  to  see  accounts  mapped  to  them  with  complete  details  

Collection  Officers  will  get  details  of  all  cases  allocated  to  them  centrally    

12.4. Web  module:  


Web  module  will  enable  all  supervisors  and  collection  managers  to  view  collections  progress  
made  by  each  CRO/LO/RO  &CO.    

12.5. Collection  Management  Responsibilities:    


The  below  section  defines  the  role  based  collection  responsibilities:  

Designation   Responsibilities  

CRO/LO/RO   • Should  mandatorily  log  in  to  the  mobile  IC4  app  at  the  start  of  
the  day    
• Fetch  current  overdue  data  from  menu  button  after  log  in  
• Study   the   Customer   follow   up   history   in   the   Stat   Card   prior  
visit    
• Input   reasons   for   Overdue   during   the   visit   (Standard   reasons  
Annexed)    
• Updated   contact   number   and/or   address   to   be   captured   in  
case  of  changes  
• Immediately  after  the  visit,  mark  complete  in  the  main  menu  
and  synch  data  
• Data  synch  is  mandatory  at  the  end  of  every  business  day    
CRM/ACRM   • CRM  can  access  overdue  details  on  Mobile  as  well  as  web  
• CRM  will  get  an  automated  email  every  day  morning  from  IC4  
with  the  following  details  

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o Overdue  report  with  all  follow-­‐up  details  
o CRO  wise  PTP  report  -­‐  PTPs  scheduled  for  the  day  and  
status  of  previous  day  
o Ageing  report:  bucket  wise  aging  of  accounts  (weekly)    
• Supervise  account  wise  actions  taken  by  the  CRO  
o Recommend   next   level   authorization   for   critical  
accounts    
o Authorize  change  in  overdue  reasons,  if  any,  based  on  
his  visit    
o Review   with   CROs   on   auto   escalated   cases   such   as,  
‘Visit  not  done’  and  ‘PTP  not  visited’    
• Visit  all  critical  cases    
• In   case   of   CRO   leave,   temporarily   re-­‐allocate   the   cases   to  
other  team  members  
• Initiate  Write  off  process  for  loans  >  180  days  
CBH   • Supervise   and   Recommend/Authorize   Critical   cases   after  
review/visit  for  further  action  –  Collections  and  legal  actions  
• Monitor   progress   of   IC4   Usage   and   Collections   using   dash  
boards  &  reports  
• Update  remarks  for  cases  visited  by  self  
• Approve  Write  offs  
AM/DM   • Monitor  collections  using  IC4  dashboards  and  reports  
• Review   performance   with   branch   team-­‐   ‘Unvisited   cases’,  
‘Action  not  taken’  or  ‘Poor  follow-­‐up’  
Field   credit   • Visit   Non   Starter   and   Critical   cases   as   assigned   and   IL   Cases  
officer/Credit  officer     <12  MOB  

Collection  officer   • Responsible   for   collection   of   GL,   IL   &   Critical   cases   as   per  
allocations  made  on  Indus  by  the  Collections  Manager    
Cluster/collection   • Ensure   monthly   allocation   of   accounts   to   Collection   Officers,  
manager   monitor   efficiency   and   co-­‐ordinate   with   the   legal   team   for  
legal  cases  
Tele-­‐calling  Team   • Call  CRMs  and  CROs  for  cases  not  updated  in  IC4  
• Call   Individual   Lending   Customers   >7   days   and   input   remarks  
in  IC4  
• Resolve   technical   overdue,   if   any,   as   reported   by   the   branch  
team  in  IC4  
• Collection  reminder  notices  to  GL  &  IL  OD  clients  through  IC4  
as   requested   by   the   Branch.   Pop   ups   will   appear   as   per   the  
matrix  shown  in  product  wise  work  flow  
 

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13. TELE-­‐CALLING  FOR  MICRO  FINANCE  IL,  HOUSING  &  MSE  


 
• Tele-­‐calling  will  be  based  on  auto  allocation  of  cases  from  core  system  to  COLLECTION  
SYSTEM  IC4.    
 
• Each  Tele-­‐caller  will  be  assigned  one  or  more  work  lists.  Prioritization  of  work  lists  for  auto  
pop-­‐up  will  be  done  by  the  Tele-­‐calling  Team  lead/Asst.  Manager  in  consultation  with  the  
Regional  Collections  Manager  for  each  region.    
 
• Prioritization  conditions  in  the  order  for  action  of  these  work  lists  will  be    
# Delinquency/bucket  
# Principal  outstanding  
# Loan  status  (Mature/Non  mature)  
# Point  in  time  of  the  cycle  (calling  schedule  requirement)  
 
• Unapplied  payment  and  cheque  bounce  information  will  be  taken  into  account  before  
making  a  collection  call.    
 
• Calling  schedule:  During  a  monthly  collection  cycle,  Tele-­‐calling  will  be    
carried  out  in  the  following  broad  Phases  
 
DAY  OF  MONTH     TELE-­‐CALLING  PHASE  
1st  to  5th     Special  calling  of  previous  month  cases.    
5th  to  20th     First  Bounce  Calling    
20th  to  30th     Normal  Calling  based  on  allocation.    
 

 
 
 
• Prioritization   of   pop-­‐ups   during   Tele-­‐calling   will   vary   with   the   requirement   of   the   Tele-­‐
calling   phases.   During   the   normal   Tele-­‐calling   period,   the   aim   will   be   to   maximize  
coverage/contacts,   elicit   Post   Pones   and   follow-­‐up   on   accounts   requiring   call   back.   The  
priority  of  pop-­‐ups  during  the  period  will  be:  

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# cases  with  no  follow-­‐up    
# cases  with  PTPs  for  the  next  day  s  
# cases  to  be  called  back  that  day    
# cases  with  no  contact    
# cases  with  PTP  but  not  contacted  by  field  team  
# others    
 
• Pop-­‐up   priority   for   first   bounce   calling   will   be   for   cases   that   move   to   4th   day   during   the  
month  system  run.  Balance  priority  will  be  as  per  the  normal  calling  phase.    
• Trails  will  be  updated  on-­‐line  by  the  Tele-­‐callers  for  cases  allocated  to  them  on  daily  basis  
in  IC4.    
• Any  supervisory  review  cases  will  be  auctioned  within  two  working  days  by  supervisor.    
• Daily  collector-­‐level  Tele-­‐calling  productivity  MIS  will  be  obtained  from  IC4  along  with  the  
bucket-­‐wise  flows  MIS.  These  will  be  consolidated  and  compiled  every  month  for  review  
by  the  Collection  Manager  along  with  tele-­‐calling  unit  head  
• Collections   team   to   ensure   that   all   Tele-­‐callers   have   an   easy   access   to   all   the   relevant  
policies   and   procedures,   in   order   to   enhance   knowledge/skills   which   will   help   improve  
collections.    
• Tele-­‐calling  schedule  to  be  modified  by  the  Tele-­‐calling  team  lead/asst.  manager  based  on  
capacity   and   situational   constraints,   also   needs   to   ensure   that   the   Tele-­‐calling   team   is  
adequately  capacitated.  
• The  ACR  (Account-­‐to-­‐Collector-­‐Ratio)  of  each  Tele-­‐caller  needs  to  be  monitored  and  load  
balancing  needs  to  be  done  across  the  unit.    
 
• Tele-­‐calling  team  lead/asst.  manager  of  each  collection  unit  must  monitor  the  calls  of  each  
Tele-­‐caller   (twice   a   month).   For   new   employees   and   those   with   performance   issues   the  
monitoring  needs  to  be  more  frequent.  Feedback  needs  to  be  given  to  each  Tele-­‐caller  in  
order  to  enhance  his/her  effectiveness.  
• The  Tele-­‐calling  team  lead/asst.  manager  needs  to  review  all  productivity  indicators  (Calls  
per   day,   success   calls,   PTP   generated,   PTP   conversion   rate,   accounts   resolved)   for   each  
Tele-­‐caller   at   least   once   a   week.   For   employees   who   are   new   and   for   those   with  
performance   issues,   this   review   needs   to   be   conducted   more   frequently   and   counselling  
and  remedial  training  must  be  provided  if  necessary.    
• The   Collections   Manager,   may   also,   from   time   to   time,   decide   to   run   contests   /  
motivational   programs   to   enhance   collection   effectiveness.   A   Performance-­‐   Incentive-­‐
Program  is  part  of  the  affiliate  compensation  structure  for  Tele-­‐callers.  

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• In   the   event   of   customer   raising   complaint   about   calling   for   any   reason,   this   will   be  
handled  by  Team  lead  as  a  first  level  and  Asst.  Manager  second  level  and  escalation  will  
move   on   till   tele-­‐calling   unit   head/NCM   depending   on   severity   of   the   complaint   and  
resolutions  
 
14. COLLECTIONS  CAPACITY  PLANNING  
 
It   is   the   responsibility   of   National   Collection   Manager   along   with   the   Strategy   team   to   have   a  
comprehensive  plan  for  people  management.  The  plan  must  include:  
# Formalized  capacity  planning  process  tied  to  hiring  plans  
# Recruitment  strategy  including  Job  descriptions  for  various  profiles  
# Performance  improvement  plans  and  monthly  goals    
# Process  to  manage  attrition  and  successor  planning  
# Compensation/  Incentive  plans  at  all  levels  
 
National  Collection  Manager  should  take  a  clear  line  of  sight  on  loan  volume  forecasting  for  the  
next   3   months   from   strategy   team,   basis   which   hiring   plans   need   to   be   recommended   to  
respective  Credit  Heads  for  approval.  The  forecasting  should  consider  the  following  parameters:  
 
# Business  portfolio  performance  and  growth  forecasts  
# Target   Staffing   (Accounts   to   Collector   Ratios   –ACR)   driven   by   strategy,  
management  span  of  control,  and  intensity  levels  
Guidelines  on  ACR  (with  a  +/-­‐  10%  tolerance  levels)  are  as  follows,    
Activity   Role   Bucket   Staffing  
1  caller  for  450  cases  (80  calls  
Tele-­‐calling(call-­‐ Fresh   bounce  
Tele-­‐caller   a   day   *   25   days   *   80%   RPC/4  
centre)   &  All  DPD  cases  
(avg.  intensity  per  accounts).    
Tele-­‐calling(call-­‐ Fresh   bounce  
Team  Leader   1  team  leader  for  10  agents  
centre)   &  All  DPD  cases  

Field  collection   Officers–  Collections   >30  Days  DPD   1  CO  for  70  accounts  
Cluster   Manager   –  
Field  collection   All  Buckets   1  CCM  for  6-­‐7  CO  
Collections    
Area   Manager-­‐  
Field  collections   All  Buckets   1  ACM  for  6  –  7  CCM  
Collections  
Field  collections   Regional   Manager   All  Buckets   1  RCM  for  every  region  

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Collections  
 

14.1. Collection  reviews  


Reviewer   Reviewee   Scope   Timeline  

Tele-­‐calling  Manager     • Team  leader   • Allocation     • Daily  


• Tele-­‐caller   • Productivity&   • Weekly(or  milestone)  
Performance      
• Staffing     • Monthly    
Cluster   Manager   -­‐   Officers  –  Collections     • Allocation   • Monthly  
Collections   • Productivity   &   • Daily   &   Weekly(or  
Performance     milestone)  
• Staffing     • Monthly  
Area   Manager   -­‐ Cluster   Manager   –   • Allocation   • Daily  
Collection  Manager   Collections   • Productivity   • Weekly(or  milestone)  
• Performance      
• Staffing     • Monthly  
Regional/State   Area   Manager   –   • Overall   • Daily  &  
Manager  -­‐  Collection   Collections     performance   Weekly(or  milestone)  
• Exception  cases     • Monthly  
National   Manager   –   Regional/Area   • Overall   • Daily  &  
Collections   &   Manager   –   Performance     Weekly(or  milestone)  
Recovery   Collections     • Exception  cases   • Monthly  

National   Manager   –   Collection   • Collection  System     • Weekly  


Collections   &   Operations  Manager   • Collection  MIS     • Monthly  
Recovery   • Collection   • Weekly  
Operations    
National   Collection   Regional   Legal   • Case  filing  status   • Monthly  
Along   with   RVM   &   Manager     • Filed  case  update    
Vigilance  Head  
Regional   Legal   Empanelled  lawyer   • Case  filing  status   • Weekly  
Manager   • Filed  case  update   • Monthly  

14.2. Supervisory  Review    

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The  objective  of  such  action  is  to  review  accounts  that  have  been  escalated  to  the  supervisor  or  
for  ascertaining  the  adequacy  of  follow-­‐up  in  IC4.  The  following  types  of  accounts  will  be  reviewed  
by  the  supervisor:-­‐  
$ Accounts  with  no  dispositions    
$ Accounts  with  no  contacts  after  repeated  follow-­‐ups    
$ Accounts  with  no  promises  after  repeated  contacts    
$ Accounts  have  promises  have  been  broken  repeatedly    
$ Accounts  which  is  declared  as  Abscond,  Mass  defaults,  Sub-­‐lending,  Disputes  
$ Exception/Sensitive  accounts    
 
 

15. COLLECTOR  TRAINING


• The  concerned  collection  manager  will  be  responsible  for  the  training  of  collector  
• Every  collector  who  joins  must  undergo  training  on  product,  process,  communication  and  
negotiation  skills  and  code  of  conduct  as  per  Induction  process.    
• As  part  of  induction,  new  collector  must  also  be  sent  on  joint  visits  with  senior  collector  
prior  to  doing  independent  skills.  
• No  collector  should  go  to  field  without  completion  of  training.  Each  collector  has  to  be  
trained  and  signed  off  the  training  record  before  going  on  filed  with  receipt  book.    
• Collection  Manager  to  ensure  completion  of  DRA  Certification  Training  for  collectors  

16. COLLECTION  MIS


 
To  track  the  effectiveness  of  collection  activity,  following  MIS  shall  be  generated,  circulated  and  
tracked.  The  following  reports  will  be  required  for  monitoring  (capturing  both  units  and  POS)  for  
each  product  separately  and  consolidated    
• %  paid  on  or  before  due  date  (for  cash  payment  customer)  /On  time  repayment  rate  
• Cheque  bounce  report  (where  PDC/ECS  is  used)  
• Bucket  wise  collection  efficiency  (bucket  0,  1-­‐30  DPD,  31-­‐60  DPD,  61-­‐90  DPD,  >  90  DPD,  >  
180  DPD,  >  365  DPD)  

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Confidential                                  
     
   
• 1+,  30+,  90+  DPD  delinquency  (coincidental  and  lag)  
• Bucket  wise  Flow  rates  (net  flow,  RF,  RB,  Stabilized,  Normalized)  
• Vintage  delinquency    
• Asset  held  for  sale  (SBL/LAP)  
• Legal  –  by  type  of  cases  &  stages    
• Productivity   MIS   (Collection   efficiency   by   field   collector,   collection   officer,   Product   wise  
collection  efficiency,  tele  caller  productivity  report)  
• Any  other  collection  MIS  required  by  business  or  Credit  
• Non-­‐starter  Report  
• Product  wise  delinquency    
• PTP  due  repot  and  PTP  status  report  
• Collection  log  in  &  activity  report  
 
All  the  predefined  MIS  is  been  in  built  in  IC4,  which  can  be  viewed  in  WEB  application  of  IC4  
 
The   above   MIS   should   be   tracked   at   branch,   regional   and   national   level.     All   MIS   should   have  
trend  analysis  for  3-­‐6  months  both  on  units  and  basis  amount    
 

17. DAILY  COLLECTION  REPORT  


DCR  will  be  monitored  through  collection  management  system  IC4,  all  the  trials  with  OD  reasons  
and   visit   details   will   be   captured   in   IC4   and   daily   automated   reports   are   triggered   to   the  
supervisors  for  better  control  
 
 

18. LATE  PAYMENT  CHARGES–  ALL  PRODUCTS  


For  all  Secured,  MSE  and  unsecured  individual  loans,  late  repayment  charges  applicable  shall  be  
as  per  the  respective  Product  Policy  programs.  

Any   exception   approval   on   charges   waive   off   shall   require   approvals   from   Credit   Policy  
committee.    

19. LOAN  WRITE  OFFs  

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When   all   avenues   of   recovery   of   overdue   accounts   have   been   exhausted   and   further   recovery  
efforts  are  deemed  futile,  a  recommendation  can  be  made  by  branch  head  to  RCM  for  loan  write  
off.  Upon  confirmation  from  Credit,  write  off  process  can  be  initiated  &  the  write  off  memo  shall  
be  updated  with  remarks  based  on  visits  made  by  all  parties.  The  write  off  memo  shall  be  signed  
off  by  Distribution  supervisors,  RCM  /RBM,  Head  of  Microfinance  &  Branch  Banking  and  Head  of  
Credit  and  Collections  –  Microfinance  for  Microfinance  GL  and  IL  loans.    

Head  of  Credit  and  Collections  –  Microfinance  shall  be  the  final  approval  authority  for  writing  off  
all   loans   in   Microfinance   GL   &   IL.   However   cases   identified   as   Fraud   by   regional   fraud  
management  committee  with  POS  greater  than  Rs  1  lacs  requires  final  approval  from  CEO    &  MD.  

19.1. Process  for  Write  off  (Existing)  


Step  1:  Area  manager  to  recommend  loan  write  off  

• Cases  that  exceed  >  180  days  can  be  recommended  for  Write  off    
• Death  (Not  claimable)/Suicide  can  be  written  off  before  180  days    
Step  2:  Field  credit  officer  to  visit  customers  and  submit  a  recommendation  to  the  Credit  Manager  
Step   3:   Based  on  the  FCO  recommendation,  Credit  to  send  the  final  list  of  write  of  cases  to  the  
branch.  
Step  4:  CRM,  FCO,  CBH/AM/DM  to  visit  customer  and  complete  “write  off  Memo.”      
Following  documents  to  be  verified  and  copies  submitted  to  RO  along  with  form:  

Death:  Verify  with  group  members  /  relatives  /  neighbors.  Collect  death  certificate  

Over  indebtedness:  Copy  of  Loan  Cards  of  all  live  loans  

Daily  Collections  Report:  Attaching  a  copy  of  the  DCR  with  the  form  is  mandatory  (Not  

required  if  the  trials  are  available  in  IC4)  
Step  5:  Regional  Credit  Department  to  verify  documents    
Step  6:  RBM  to  verify  documents  and  sign  off  the  form  
Step  7:  RCM  will  then  verify  all  the  recommendations  and  take  a  decision  &  sign  off.  It  is  then  sent  
to  the  Business  Heads  and  Head  of  Credit  and  Collections  –  Microfinance.  
Step  8:  Head  of  Credit  and  Collections  –  Microfinance  has  the  ultimate  Authority  to  take  final  call  
on  write  off  loans.    
Credit  will  pass  on  the  write-­‐  off  memos  to  Operations  and  ensure  appropriate  entries  are  passed  
in  the  respective  General  Ledger  to  close  the  customer’s  account.    
 
Backend  process  for  write  offs:  

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Confidential                                  
     
   
Upon  receiving  the  forms  from  credit,  Regional  operations  team  will  pass  the  write  off  entries  
in  system  which  will  work  on  a  maker  checker  concept.  The  forms  will  be  finally  get  sign  off  
from  regional  operations  manager  post  write  off  entries  in  system  
 

19.2. System  write-­‐off  process  using  IC4  


IC4  will  have  module  for  initiating  write  off  in  system.  Following  are  the  process  for  doing  system  
write-­‐offs.  

1. CRM/  Branch  head  to  initiate  the  write  off  for  >180  days  cases.  Write  off  process  can  be  
initiated  before  180  days  under  special  circumstances.  
2. Initiation  request  from  CRM/  Branch  head  shall  be  authorised  by  next  2  level  supervisors  
in  distribution.  
3. Authorised  write  off  requests  will  appear  to  area  collection  manager  who  will  assign  the  
cases  to  final  visit  from  a  collection  officer.    
4. Collection  officer  to  visit  the  case  and  provide  his  remarks  
5. Area   collection   manager   to   review   the   write   off   request   and   approve   the   case   for   next  
level  approval.  
6. The  write  off  request  to  go  through  the  following  approval  authorities  
a. RBM  
b. RCM    
c. NCM  
d. Business  Head  
e. Head  credit.  
7. Final  approvals:  Head  credit  will  be  the  final  authority  in  approving  all  write  off  requests.  
Post  Head  credit  approvals  a  write  off  trigger  will  be  send  from  IC4  to  core  system.  
8. Operations   team   to   pass   the   write   off   entries   in   system   as   per   the   write   off   trigger  
received  in  core  system  

19.3. Write  off  recovery:    


Once   the   account   is   classified   as   irrecoverable   and   has   been   written   off   from   the   books   of  
accounts,  an  MIS  of  the  same  shall  be  maintained  at  credit  and  shared  with  branches,  consisting  
the  amount  written  off  and  the  loan  originator  details  of  written  off  accounts  from  inception  to  
date.  This  information  will  be  sent  to  the  branches  with  a  copy  marked  to  distribution  supervisor  
&  DM.  This  exercise  will  be  carried  out  for  all  write  off  cases  except  for  write  offs  on  accounts  of  
staff  fraud.  

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Branch  should  make  all  efforts  to  collect  the  amount  due  from  default  customer.  If  they  feel  they  
need  assistance  from  the  loan  originated  staff,  the  same  can  be  taken  if  appropriate.  If  the  branch  
believes   that   customer   is   making   repayments   to   some   other   MFIs   those   customers   can   be  
referred  to  credit  dept.  to  see  the  current  status  of  the  customer  in  Credit  bureau  and  based  on  
the  bureau  details  collection  efforts  should  be  initiated.  

Post  recovery  of  written  off  accounts,  entries  are  passed  in  the  system  using  “Write  off  recovery  
module”   which   is   available   in   the   software.     The   current   system   allows   passing   the   entries   of  
written  off  account  post  recovery  to  the  written  off  Loan  ID  only  thereby  eliminating  the  earlier  
procedure  of  posting  entries  to  the  GL  account.  

Write  off  process  in  the  software:  

When   a   bad   debt   is   recovered   post   write   off,   the   write   off   recovery   module   of   Br.Net   shall   be  
used  to  pass  customer  specific  entries.  

• Loans   write   offs   are   done   through   module   Loan   write   off   in   the   software   post   August,  
2012.  
• Reasons  for  write  offs  should  be  selected  from  the  drop  down  available  in  the  module.  
• Select  “Is  recoverable”  screen  in  the  module  if  the  due  is  recoverable  post  write  offs.  
• Only  the  OSP  amount  will  be  written  off.  
 

Write  off  Recovery  module:  

Loans   which   are   recovered   post   write   off   post,   recovery   amount   will   be   posted   in   the   module  
“Write   off   recovery”   account   ID   wise(Only   for   loans   which   are   written   off   post   August   2012  
through  Loan  write  off  module)  eliminating  the  earlier  procedure  where  the  postings  were  done  
through  GL  account.  

Procedure  is  listed  below:  

• Select  Loan  ID    


• System  automatically  shows  recovery  ID  and  the  General  recovery  ledger  which  is  linked  
to  the  product    
• Add  the  recovery  amount  in  the  software  and  update  the  transaction.  
• Once  the  transaction  is  posted  successfully,  the  screen  shows  the  total  recovery  amount  
and  the  last  recovery  date.  
 

19.4. Monitoring  Bad  debt  Recovery  

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Confidential                                  
     
   
To   mitigate   the   possibilities   of   staff   misappropriation   of   recovered   amount   from   a   default  
customer,   a   random   verification   for   20%   of   write   off   accounts   must   be   done   by   credit   and  
vigilance   on   a   quarterly   basis.   MIS   team   to   share   write   off   recovery   report   with   credit   &   this  
tracker  shall  be  shared  with  distribution,  credit,  vigilance  and  audit  on  a  monthly  basis.  

20. STAFF  LOAN  RECOVERY  

 Introduction

With  the  increasing  numbers  of  staff  loan  ODs,  the  present  recovery  process  will  be  followed  for  
effective  supervision  and  control  of  staff  loan  ODs.  
 
Objective:  
The  basic  objective  of  the  process  is  to  establish  practical  guidelines  to  be  followed  by  the  related  
parties/  relevant  departments  in  the  event  of  reporting  of  staff  loan  OD.  The  revised  process  also  
aims   at   originating   preventive   steps   by   the   company   before   the   actual   OD   is   reported   in   the  
books.  
 
Responsibility:  
The   primary   responsibility   in   recovering   the   over   dues   lies   with   the   Regional   HR   Department.  
However,  the  Regional  HR  Department  will  work  closely  with  the  Regional  Collections  &  Vigilance  
Department  for  cases  beyond  60  days  for  initiating  Legal  actionable  and  closure  thereof.  
 
Classification  of  Staff  Loan  ODs:  
 
Staff   Loan   ODs   generally   arises   on   account   of   any   of   the   following   reasons   and   can   be   broadly  
classified  as  Pre  and  Post  staff  Loan  ODs:  
 
1. Employee  Resignation    
 
2. Female  Employee  on  Maternity  Leave    
 
3. Employee  Death    
 
4. Employee  Termination/  Employee  abscond/Employee  Fraud/willful  default  by  Employee    

20.1. Recovery  Process  -­‐  Pre-­‐Staff  Loan  OD:  


I. In  order  to  prevent  arising  of  Staff  Loan  ODs  at  the  initial  stage,  Regional  HR  Payroll  Officer  

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Confidential                                  
     
   
should   circulate   the   list   of   resigned/salary   hold   employees   having   outstanding   staff   loan  
dues  to  the  Regional  HR  and  Collection  manager  by  5th    of  every  month.  
 
II. Upon   receiving   the   list,   collection   team   should   contact   and   intimate   the   concerned  
employee  to  settle  the  outstanding  loan  amount  before  the  actual  OD  is  reported  in  the  
books.  
 

20.2. Recovery  Process  -­‐  Post-­‐Staff  Loan  OD:  


 
# ODs  arising  out  of  Employee  Resignation:  
All   Over-­‐dues   arising   out   of   Employee   Resignation   should   be   adjusted   from   the   Full   and   Final  
Settlement  amount  of  the  Employee.  The  immediate  supervisor  of  the  resigned  employee  should  
cross  check  with  the  HR  payroll  officer  for  any  staff  loan  dues  from  the  employee.  If  the  amount  
recoverable   is   higher   than   the   F   &F   amount,   the   employee   should   be   asked   to   clear   the   dues  
before   processing   the   F&F   amount.   Until   clearance   of   the   outstanding   loan   amount,  
relieving/experience  letter  should  not  be  issued  to  the  concerned  employee.  
 
# Female  Employee  on  Maternity  Leave:  
If  the  employee  who  has  availed  staff  loan  is  going  on  a  maternity  leave,  it  is  the  responsibility  of  
supervisor  to  intimate  the  respective  Payroll  Officer,  Regional  HR  Manager  &  Regional  collection  
manager  before  the  start  date  of  maternity  leave  of  the  particular  employee.  Payroll  officer  upon  
intimation   should   reschedule   the   Staff   loan   EMI   of   the   particular   employee   for   3   months   and  
intimate  the  respective  supervisor,  RHR  Manager  and  Regional  collection  manager.  
 
# Employee  Death:  
In   case   of   Employee   death,   the   immediate   supervisor   of   the   deceased   employee   should   cross  
check   with   the   respective   HR   payroll   officer   for   any   staff   loan   dues.   In   case   of   any   dues   found,  
supervisor   should   intimate   the   respective   HR   payroll   officer   to   adjust   the   outstanding   loan  
amount   from   the   Employee’s   FFS   or   collect   o/s   amount   from   the   nominee   while   giving   the  
Insurance  cheque.  
 
# Employee   Termination/   Employee   abscond/Employee   Fraud/willful   default   by  
Employee:  
 
 

20.2.1. Steps  of  Recovery    


# Recall/  Company  Notice
• HR   Team   shall   send   Recall   cum   Company   recovery   notice   to   the   employee  

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immediately  after  the  default  for  repaying  the  outstanding  loan  amount.    
 
• In  case  the  employee  do  not  repay  the  amount  within  the  given  timeline,  one  more  
notice   should   be   sent   to   the   employee   within   a   gap   of   15   days   from   the   date   of  
first   notice   sent.   The   2nd   Notice   sent   should   state   that   incase   of   non-­‐repayment  
within  the  given  timeline;  company  will  be  forced  to  initiate  legal  action.    
 
• HR   Team   shall   also   mark   the   letter   to   the   Local   Branch   (Base   Branch   of   the  
  Defaulted  Staff  to  follow  up)  for  employees  in  distribution  department.    
# Adjustment   from   Full   &   Final   Settlement   Amount   or   Refer   to   Collections/Vigilance/Legal  
Wing  
 
Following  are  the  actionable  in  case  of  no  response  from  the  Employee  to  the  notices  sent:  
 
• HR   team   shall   adjust   the   outstanding   loan   amount   from   the   Employee’s   FFS  
amount,  in  case  amount  is  due  to  the  employee.  
 
• If   the   outstanding   loan   amount   is   greater   than   the   F&F   amount,   the   amount  
available  under  F&F  will  be  adjusted  and  case  will  be  referred  further  to  Collection  
team  for  recovery  of  balance  outstanding.    
 
• In   case   of   Employee   Fraud,   the   F&F   amount   will   be   adjusted   after   adjusting   the  
fraud   amount   identified   against   the   defaulted   staff   before   recovery   of   the  
outstanding  loan  amount.  
 
# After  60  days  from  the  date  of  default,  Collections  team  shall  visit  Employee’s  House  for  
collections  
# If  the  Employee  does  not  make  payment  even  after  House  Visit,  Recovery  Notice  shall  be  
sent  through  lawyer  for  payment  of  OD  amount  with  the  timeline  of  7  days  for  employee  
to  respond.  
# In  case  of  no  response  from  Employee  within  the  given  timeline,  vigilance/collection  team  
shall  intimate  Regional  HR  Team  to  deposit  Security  cheques  collected  in  the  USFBL  based  
on  the  OD  amount.
# In  case  of  dishonour  of  security  cheque  for  ‘insufficient  funds’,  Regional  HR  Team  should  
ensure  to  submit  the  dishonour  Memo  accompanying  bounced  Security  Cheque  to  the  
Regional  Vigilance  Manager  within  21  days  TAT.
# Regional  Vigilance  Manager  shall  proceed  legally  and  ensure  below  actionable:  
• Intimation  to  concerned  supervisor  and  Regional  HR  Manager  on  cases  decided  for  

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Case  filing.  
 
• Proceed  legally  for  cases  recommended  by  RFCM  (Regional  Fraud  Control  
Meeting).    
 
• Retrieval  of  Employees  loan  documents  within  7  working  days  from  Regional  HR  
Team  for  case  filing.    
 
• If  the  employee  is  absconding,  Vigilance  should  file  legal  suit  against  the  guarantor  
who  has  signed  the  Deed  of  Guarantee.    
 
• Summarized  version  of  Legal  Cases  to  be  discussed  in  RFCM.    
 
HR  Department  shall  not  release  the  experience  letter  and  relieving  letter  until  the  outstanding  
loan  amount  is  fully  settled.  

General  Ledgers  maintained  for  Staff  Recoverable  

20.3. Receivables  from  Staff  


Any  amount  collected  under  the  staff  fraud  committed  which  were  not  against  any  customer  and  
the   recovery   of   late   payments   of   staff   loan   and   mobile   advances   will   be   credited   into   the  
“Receivables  from  Staff”  Account.  
 

21. DOCUMENT  PRESERVATION  


All   physical   records   and   documents   related   to   collection   functions   will   be   preserved   for   8   years  
after  it  is  created.    Post  8  years  it  will  be  destroyed  with  a  noting  kept  for  it  by  NCM.  All  records  &  
documents  stored  electronically  will  be  kept  beyond  8  year.  All  call  recordings  has  to  be  preserved  
for  12  months  by  the  call  center,  post  which  it  would  be  written  in  a  DVD  and  given  to  Ujjivan  for  
archival.  
 
Collection  documents  in  Micro  finance  loans    
• Write   off   memo   and   supporting   documents   such   as   KYC,   death   certificate   in   case   of  
deceased  clients.  
• Postal  proof  of  all  notices  sent  to  borrowers  
• IC4  audit  trial  
• Suite  filed  accounts  (Total  proceeding  with  hearing  documents  &  award  copy)  

Collection  Policy   February  2017   Page  87  


 
Confidential                                  
     
   
• Copy  of  Settlement  letter    
Collection  documents  in  Housing  and  MSE    
• Suite  filed  accounts  (Total  proceeding  with  hearing  documents  &  award  copy)  
• Postal  proof  of  all  notices  sent  to  borrowers  
• Pre  repo  notice  and  post  repot  notice  
• Repossession  kit  
• SARFAESI  Panchnama  document  
• Mortgaged  Asset  Valuation  document  
• Pre-­‐sale  notice,  post-­‐sale  notice  
• Newspaper  advertisement  
• Write   off   memo   and   supporting   documents   such   as   KYC,   death   certificate   in   case   of  
deceased  clients.  
• Copy  of  Settlement  letter  
 

22. PROVISIONING  NORMS  


Following  provisioning  Norms  shall  be  applicable  for  Unsecured  and  secured  loans.  23  

Unsecured  Loans  
Asset  classification    
Days  past  due    
GL    
IL    
MSE  Unsecured  Loans  
Standard  asset   0-­‐  07  days   Min  0.65%   Min  1%   Min  1%  
Standard  asset   8-­‐  30  days   5%   5%   5%  
Standard  asset   31-­‐  60  days   30%   30%   30%  
Standard  asset   61-­‐  90  Days   50%   50%   50%  
Substandard  asset   91-­‐  180  days   80%   80%   80%  
Substandard  asset   181-­‐360  Days   100%   100%   100%  
Substandard  asset   >366  Days   100%   100%   100%  
Rescheduled  Loans   50%   50%   50%   50%  
Total  minimum  Provisions  on  total  portfolio       1%   2%   1.5%  
 

Secured  Loans  
                                                                                                                         
23
Please  refer  Ujjivan  NPA  Policy  for  details.

Collection  Policy   February  2017   Page  88  


 
Confidential                                  
     
   
Asset  classification   Days  past  due   SHL   SBL  
Standard  asset   0-­‐  07  days   1%   1%  
Standard  asset   8-­‐  30  days   5%   5%  
Standard  asset   31-­‐  60  days   30%   30%  
Standard  asset   61-­‐  90  Days   50%   50%  
Substandard  asset   91-­‐  180  days   80%   80%  
Substandard  asset   181-­‐360  Days   100%   100%  
Doubtful-­‐1   366  -­‐545  days   100%   100%  
Doubtful-­‐1   546  -­‐720  days   100%   100%  
Doubtful-­‐1   721  -­‐970  days   100%   100%  
Doubtful-­‐2   971-­‐1000  days   100%   100%  
Loss  Asset   1551  days+   100%   100%  
Rescheduled  Loans       35%   35%  
 

23. ANNEXURE  1:  Abbreviations  


   No.   Abbreviation   Description  

1   ACH   Automated  Clearing  House  


2   ACM   Area  Collection  Manager  
3   AO   Authorized  Officer  
4   ARC   Asset  Reconstruction  Company  
5   CAP   Corrective  Action  Plan  
6   CBH   Cluster  Branch  Head    
7   CC   Cash  Credit  
8   CEO   Chief  Executive  Officer  
9   CIBIL   Credit  Information  Bureau  (India)  Limited  
10   CMS   Cash  Management  Services  
11   CO   Collections  Officer  
12   COM   Collections  Operation  Manager  
13   COP   Central  Operations  
14   DCR   Daily  Collection  Report  
15   DOP   Delegation  of  power  
16   DPD     Days  past  due  
17   DRA   Debt  Recovery  Agent  
18   DRT  &  DRAT   Debt  Recovery  Tribunal  &  Debt  Recovery  Appellate  Tribunal  
19   ECS   Electronic  clearing  service  
20   EMI   Equated  Monthly  Installment  
21   FI   Financial  Institutions  
22   HO   Head  Office  
23   IL   Individual  Lending  
24   JLG   Joint  Liability  Group  
25   LAP   Loan  Against  Property  
26   LO   Loan  Officer  
27   MOB   Month  on  board  
28   MSE   Micro,  Small  Enterprise  

Collection  Policy   February  2017   Page  89  


 
Confidential                                  
     
   
29   MSME   Micro  Small  and  Medium  Enterprises  
30   NBFC   Non-­‐Banking  Financial  Company  
31   NCM     National  Collection  Manager  
32   NOC   No-­‐objection  certificate  
33   NPA   Non-­‐Performing  Assets  
34   OD   Overdraft  
35   OTS   One  Time  Settlement  
36   PDC   Postdated  cheques  
37   POS   Principal  Outstanding  
38   PTP   Promise  to  pay  
39   PP   Post  pones  
40   RBI   Reserve  Bank  of  India  
41   RCM   Regional  Collection  Manager  
42   RMCB   Risk  Management  Committee  of  the  Board  
43   RO   Relationship  Officer  
44   USFBL   Ujjivan  Small  Finance  Bank  Ltd  
45   SMA   Special  Mention  Account  
46   SMS   Short  message  service  
47   SPDC     Security  postdated  cheque  
 
 
24. ANNEXURE  2:  References  to  Key  RBI  Circulars  

No.   Circular   Issue  Date  


(i)   Circular  -­‐  Guidance  Note  on  Credit  Risk  Management   September  20,  2001  
Master  Circular  -­‐  Prudential  norms  on  Income  Recognition,  Asset  
(ii)   July  1,  2015  
Classification  and  Provisioning  pertaining  to  Advances  
(iii)   Master  Circular  on  Wilful  Defaulters   July  1,  2015  
(iv)   Circular  on  Recovery  Agents  engaged  by  Banks   April  24,  2008  
Framework  for  Revitalizing  Distressed  Assets  in  the  Economy  –  
(v)   Guidelines  on  Joint  Lenders’  Forum  (JLF)    and  Corrective  Action  Plan   February  26,  2014  
(CAP)    
Framework  for  Revival  and  Rehabilitation  of  Micro,  Small  and  Medium  
(vi)   March  17,  2016  
Enterprises  (MSMEs)  
Prudential  Norms  on  Change  in  Ownership  of  Borrowing  Entities  
(vii)   September  24,  2015  
(Outside  Strategic  Debt  Restructuring  Scheme)  
(viii)   Guidelines  on  One-­‐Time  Settlement  Scheme  for  SME  Accounts   September  3,  2005  
Guidelines  on  Managing  Risks  and  Code  of  Conduct  in  Outsourcing  of  
(ix)   November  3,  2006  
Financial  Services  by  banks  
 
 
 

Collection  Policy   February  2017   Page  90  


 
Confidential                                  
     
   
 
 
 
 
 
 
 
 
 
25. ANNEXURE  3:  Notice  Formats  
 
ANNEXURE  –  A  
 
GL  -­‐  1st  Reminder  Notice  
To,  
__<Insert  Customer  Name>______________   Date   <  Insert  Notice  generated  date>  

___<Insert  Address  line  1>_______________   Branch   <  Insert  Branch  ID&  Name  >  
Customer  ID   <  Insert  Customer  ID>  
___  <Insert  Address  Line  2>______________  
Loan  Account  No   <  Insert  Account  ID  >  
__<insert  Sate  and  Pin  code>_____________   Sanctioned  amount  (Rs)   <  Insert  Loan  Amount  sanctioned  >  

  Current  outstanding  (Rs)   <  Insert  loan  outstanding>  

Subject:  Notice  for  payment  of  overdue  amount  

This  is  to  bring  to  your  notice  that,  your  above  said  loan  account  is  showing  an  overdue  of  Rs<Insert  
Overdue  Amount>  from  <insert  Installment  Due  date>which  is  due  and  payable.  

 
Please   arrange   to   make   payment   of   this   account   on   or   before   <Insert   deadline   date>,   if   you   cannot   make   full  
payment  at  this  time,  please  contact  us  to  make  a  payment  which  is  mutually  acceptable.  
 
Please  note  that,  we  are  required  to  share  your  credit  history  to  Credit  Bureau  agencies  authorized  by  the  
RBI  (Reserve  Bank  of  India)  and  this  may  impact  your  ability  to  avail  credit  facilities  from  any  other  financial  
institutions  in  future.  We  wish  to  hence  inform  you  to  pay  the  necessary  dues  in  a  timely  manner  in  order  
to  maintain  a  clear  credit  history  and  enjoy  benefits  of  other  financial  products.  
 

Collection  Policy   February  2017   Page  91  


 
Confidential                                  
     
   
Your  prompt  attention  to  this  matter  would  be  greatly  appreciated.  If  you  have  any  queries  regarding  this  
account,  please  contact  our  branch  office  nearest  to  your  area.  
 

If  the  payment  has  recently  been  made,  please  accept  our  acknowledgement  and  ignore  this  memo.    
 
With  regards,  
Ujjivan  Financial  Services  Ltd  
Authorized  Signatory  
 

ANNEXURE  –  B  
GL  -­‐  2nd  Reminder  Notice  
 

To,  
Date   <  Insert  Notice  generated  date>  
__<Insert  Customer  Name>______________  
Branch   <  Insert  Branch  ID&  Name  >  
___<Insert  Address  line  1>_______________   Customer  ID   <  Insert  Customer  ID>  

___  <Insert  Address  Line  2>______________   Loan  Account  No   <  Insert  Account  ID  >  
Sanctioned  amount  (Rs)   <  Insert  Loan  Amount  sanctioned  >  
__<insert  Sate  and  Pin  code>_____________   Current  outstanding  (Rs)   <  Insert  loan  outstanding>  
 

Subject:  Notice  for  payment  of  overdue  amount  


With  reference  to  the  letter  dated   <1ST  Reminder  notice  date>this  is  to  bring  to  your  notice  that,  your  
above   said   loan   account   is   showing   an   overdue   of   Rs<Insert   Overdue   Amount>from   <Insert   Installment   Due  
date>which  is  due  and  payable  

We  are  sorry  to  note  that  despite  repeated  requests,  tele-­‐calls  and  personal  visits  you  have  defaulted  and  
failed  to  repay  the  monthly  installments  on  their  respective  due  dates.  
 
Please  note  that,  we  are  required  to  share  your  credit  history  to  Credit  Bureau  agencies  authorized  by  the  
RBI  (Reserve  Bank  of  India)  and  this  may  impact  your  ability  to  avail  credit  facilities  from  any  other  financial  
institutions  in  future.  We  wish  to  hence  inform  you  to  pay  the  necessary  dues  in  a  timely  manner  in  order  
to  maintain  a  clear  credit  history  and  enjoy  benefits  of  other  financial  products.  
 

Collection  Policy   February  2017   Page  92  


 
Confidential                                  
     
   
Please  arrange  to  make  payment  of  this  account  on  or  before   <Insert  deadline  date>,   if  you  cannot  make  full  
payment  at  this  time,  please  contact  us  to  make  a  payment  which  is  mutually  acceptable.  
Your  prompt  attention  to  this  matter  would  be  greatly  appreciated.  If  you  have  any  queries  regarding  this  
account,  please  contact  our  branch  office  nearest  to  your  area.  
If  the  payment  has  recently  been  made,  please  accept  our  acknowledgement  and  ignore  this  memo.    
 
With  regards,  
Ujjivan  Financial  Services  Ltd  
 
Authorized  Signatory  
ANNEXURE  –  C  
 
GL  -­‐    Final  Reminder  Notice  
 
To,  
Date   <  Insert  Notice  generated  date>  
__<Insert  Customer  Name>______________   Branch   <  Insert  Branch  ID&  Name  >  

___<Insert  Address  line  1>_______________   Customer  ID   <  Insert  Customer  ID>  
Loan  Account  No   <  Insert  Account  ID  >  
___  <Insert  Address  Line  2>______________  
Sanctioned  amount  (Rs)   <  Insert  Loan  Amount  sanctioned  >  
__<insert  Sate  and  Pin  code>_____________   Current  outstanding  (Rs)   <  Insert  loan  outstanding>  

Subject:  Notice  for  payment  of  overdue  amount  

With   reference   to   our   earlier   reminders   to   settle   the   arrear   amount   of   Rs<Insert   Overdue  
Amount>which   was   due   to   be   paid   on   <insert   Installment   Due   date>,   remains   unpaid   despite   of   repeated  
requests,  tele-­‐calls  and  personal  visits.    
 

We  demand  that  the  payment  of  the  full  amount  should  be  made  to  us  on  or   before   <Insert  deadline  date>.  

In  the  event  of  non-­‐settlement  of  outstanding,  Ujjivan  reserves  the  right  to  commence  legal  proceedings  to  
recover  the  debt  without  further  notice  to  you,  and  you  may  be  responsible  for  any  associated  legal  fees  or  
collection  costs.    
 

Collection  Policy   February  2017   Page  93  


 
Confidential                                  
     
   
Please  visit  our  branch  office  nearest  to  your  area  as  a  matter  of  urgency  and  settle  your  account  before  
the  above  date.  
If  the  payment  has  recently  been  made,  please  accept  our  acknowledgement  and  ignore  this  memo.    
 
 

With  regards,  
Ujjivan  Financial  Services  Ltd  
 
Authorized  Signatory  

 
 
 
ANNEXURE  –  D  
SHL/IL/MSE  -­‐    1st  Reminder  Notice  
 

To,  
Date   <  Insert  Notice  generated  date>  
__<Insert  Customer  Name>______________  
Branch   <  Insert  Branch  ID&  Name  >  
___<Insert  Address  line  1>_______________   Customer  ID   <  Insert  Customer  ID>  

___  <Insert  Address  Line  2>______________   Loan  Account  No   <  Insert  Account  ID  >  
Sanctioned  amount  (Rs)   <  Insert  Loan  Amount  sanctioned  >  
__<insert  Sate  and  Pin  code>_____________  
Current  outstanding  (Rs)   <  Insert  loan  outstanding>  
 
Subject:  Notice  for  payment  of  overdue  amount  
This  is  to  bring  to  your  notice  that,  your  above  said  loan  account  is  showing  an  overdue  of  Rs<Insert  
Overdue  Amount>from  <insert  Installment  Due  date>which  is  due  and  payable    

 
Please   note   that   due   to   delay   in   payment   of   monthly   installment,   it   has   attracted   bounce   charges   and  
other   contractual   charges,   which   add   up   to   Rs<Insert   OD   Amount   including   Charges>.   Please   arrange   to   make  
payment   of   this   account   on   or   before   <Insert   deadline   date>,   if   you   cannot   make   full   payment   at   this   time,  
please  contact  us  to  make  a  payment  which  is  mutually  acceptable.    
 

Collection  Policy   February  2017   Page  94  


 
Confidential                                  
     
   
Please  note  that,  we  are  required  to  share  your  credit  history  to  Credit  Bureau  agencies  authorized  by  the  
RBI  (Reserve  Bank  of  India)  and  this  may  impact  your  ability  to  avail  credit  facilities  from  any  other  financial  
institutions  in  future.  We  wish  to  hence  inform  you  to  pay  the  necessary  dues  in  a  timely  manner  in  order  
to  maintain  a  clear  credit  history  and  enjoy  benefits  of  other  financial  products.  
 
Your  prompt  attention  to  this  matter  would  be  greatly  appreciated.  If  you  have  any  queries  regarding  this  
account,  please  contact  our  branch  office  nearest  to  your  area.  
 
If  the  payment  has  recently  been  made,  please  accept  our  acknowledgement  and  ignore  this  memo.    
With  regards,  
Ujjivan  Financial  Services  Ltd  
Authorized  Signatory  

 
ANNEXURE  –  E  
SHL/IL/MSE  -­‐  2nd  Reminder  Notice  
 
To,  
Date   <  Insert  Notice  generated  date>  
__<Insert  Customer  Name>______________   Branch   <  Insert  Branch  ID&  Name  >  

___<Insert  Address  line  1>_______________   Customer  ID   <  Insert  Customer  ID>  
Loan  Account  No   <  Insert  Account  ID  >  
___  <Insert  Address  Line  2>______________  
Sanctioned  amount  (Rs)   <  Insert  Loan  Amount  sanctioned  >  
__<insert  Sate  and  Pin  code>_____________   Current  outstanding  (Rs)   <  Insert  loan  outstanding>  

Subject:  Notice  for  payment  of  overdue  amount  

With  reference  to  the  letter  dated   <1ST  Reminder  notice  date>this  is  to  bring  to  your  notice  that,  your  
above   said   loan   account   is   showing   an   overdue   of   Rs<Insert   Overdue   Amount>from   <insert   Installment   Due  
date>which  is  due  and  payable  
 
Please   note   that   due   to   delay   in   payment   of   monthly   installment,   it   has   attracted   bounce   charges   and  
other   contractual   charges,   which   add   up   to   Rs<Insert   OD   Amount   including   Charges>.   Please   arrange   to   make  
payment   of   this   account   on   or   before   <Insert   deadline   date>,   if   you   cannot   make   full   payment   at   this   time,  
please  contact  us  to  make  a  payment  which  is  mutually  acceptable.    
 

Collection  Policy   February  2017   Page  95  


 
Confidential                                  
     
   
We  are  sorry  to  note  that  despite  repeated  requests,  tele-­‐calls  and  personal  visits  you  have  defaulted  and  
failed  to  repay  the  monthly  installment  on  the  due  date.  
 
Please  note  that,  we  are  required  to  share  your  credit  history  to  Credit  Bureau  agencies  authorized  by  the  
RBI  (Reserve  Bank  of  India)  and  this  may  impact  your  ability  to  avail  credit  facilities  from  any  other  financial  
institutions  in  future.  We  wish  to  hence  inform  you  to  pay  the  necessary  dues  in  a  timely  manner  in  order  
to  maintain  a  clear  credit  history  and  enjoy  benefits  of  other  financial  products.  
 
Your  prompt  attention  to  this  matter  would  be  greatly  appreciated.  If  you  have  any  queries  regarding  this  
account,  please  contact  our  branch  office  nearest  to  your  area.  
 

If  the  payment  has  recently  been  made,  please  accept  our  acknowledgement  and  ignore  this  memo.    
 
 
With  regards,  
Ujjivan  Financial  Services  Ltd  
 
Authorized  Signatory  
 
ANNEXURE  –  F  
SHL/IL/MSE  -­‐  Final  Reminder  Notice  
 

To,  
Date   <  Insert  Notice  generated  date>  
__<Insert  Customer  Name>______________   Branch   <  Insert  Branch  ID&  Name  >  

___<Insert  Address  line  1>_______________   Customer  ID   <  Insert  Customer  ID>  
Loan  Account  No   <  Insert  Account  ID  >  
___  <Insert  Address  Line  2>______________  
Sanctioned  amount  (Rs)   <  Insert  Loan  Amount  sanctioned  >  
__<insert  Sate  and  Pin  code>_____________   Current  outstanding  (Rs)   <  Insert  loan  outstanding>  

Subject:  Notice  for  payment  of  overdue  amount  

With   reference   to   our   earlier   reminders   to   settle   the   arrear   amount   of   Rs<Insert   Overdue  

Amount>which   was   due   to   be   paid   on   <insert   Installment   Due   date>,remains   unpaid   despite   of   repeated  
requests,  tele-­‐calls  and  personal  visits.    
 

We  demand  that  the  payment  of  the  full  amount  should  be  made  to  us  on  or  before  <Insert  deadline  date>.    

Collection  Policy   February  2017   Page  96  


 
Confidential                                  
     
   
 

In  the  event  of  non-­‐settlement  of  outstanding,  Ujjivan  reserves  the  right  to  commence  legal  proceedings  to  
recover  the  debt  without  further  notice  to  you,  and  you  may  be  responsible  for  any  associated  legal  fees  or  
collection  costs.    
 
Please  visit  our  branch  office  nearest  to  your  area  as  a  matter  of  urgency  and  settle  your  account  before  
the  above  date.  
 
 

If  the  payment  has  recently  been  made,  please  accept  our  acknowledgement  and  ignore  this  memo.    
 

With  regards,  
Ujjivan  Financial  Services  Ltd  
 
Authorized  Signatory  

 
ANNEXURE  –  G  
SHL/IL/MSE  -­‐  Company  Notice/Guarantor  Notice  

To,  
Date   <  Insert  Notice  generated  date>  

__<Insert  Guarantor  Name>______________   Branch   <  Insert  Branch  ID&  Name  >  

___<Insert  Address  line  1>_______________   Customer  ID   <  Insert  Customer  ID>  

Loan  Account  No   <  Insert  Account  ID  >  


___  <Insert  Address  Line  2>______________  
Sanctioned  amount  (Rs)   <  Insert  Loan  Amount  sanctioned  >  
__<insert  Sate  and  Pin  code>_____________  
Current  outstanding  (Rs)   <  Insert  loan  outstanding>  

Subject:  Payment  of  remaining  overdue  amount  of  your  guaranteed  customer  

Ujjivan  hereby  would  like  to  bring  to  your  notice  that  -­‐  you  have  agreed  to  be  the  Guarantor  for  
the   loan   taken   by   <   Insert   Customer   Name>agreement   dated   <   Insert   Loan   Disbursement   Date>with   your   own  

Collection  Policy   February  2017   Page  97  


 
Confidential                                  
     
   
interest  and  therefore,  you  are  liable  to  repay  the  overdue  amount  of  your  guarantee  as  per  the  terms  and  
conditions  signed  by  you  prior.  (Below  is  your  guarantee’s  loan  detail)  

With   reference   to   the   above   subject,   this   letter   is   to   inform   you   that   your   Guarantee’s   Individual   Loan  
taken   for   the   purpose   <   Insert   Loan   purpose>   from   Ujjivan   Financial   Services   Ltd.   is   overdue   from   <insert  
Installment   Due   date>   to   the   extent   of   Rs.<Insert   Overdue   Amount>.   The   total   outstanding   balance   of   your  
Guarantee’s  loan  is  Rs.<  Insert  loan  outstanding>.  In  this  regard  you  are  requested  visit   <  Insert  Branch  ID&  Name  
>Ujjivan   branch   office   and   pay   the   overdue   amount   before   <Insert   deadline   date>,   in   one   shot   or   in  
installments.   In   the   event   of   any   further   delay,   we   will   be   forced   to   inform   any   credit   bureau,   financial  
institution  or  any  agency  authorized  by  the  RBI  (Reserve  Bank  of  India)  as  per  the  loan  agreement  between  
us.  

Also  failing  to  this  we  will  be  executing  legal  case  against  you  as  per  the  agreed  terms  and  conditions  in  the  
deed  &  guarantee  signed  and  submitted  by  you.  

With  regards,  

Ujjivan  Financial  Services  Ltd  

Authorized  Signatory  

ANNEXURE  –  H  
PRAGATHI  LOAN  -­‐  1st  Reminder  Notice  
 
 

To,  
__<Insert  Customer  Name>______________  
Date   <  Insert  Notice  generated  date>  
___<Insert  Address  line  1>_______________   Branch   <  Insert  Branch  ID&  Name  >  

___  <Insert  Address  Line  2>______________   Customer  ID   <  Insert  Customer  ID>  
Loan  Account  No   <  Insert  Account  ID  >  
__<insert  Sate  and  Pin  code>_____________  
Sanctioned  amount  (Rs)   <  Insert  Loan  Amount  sanctioned  >  
  Current  outstanding  (Rs)   <  Insert  loan  outstanding>  

 
Subject:  Notice  for  payment  of  overdue  amount  

Collection  Policy   February  2017   Page  98  


 
Confidential                                  
     
   
This  is  to  bring  to  your  notice  that,  your  above  said  loan  account  is  showing  an  overdue  of   <Insert  
Overdue  Amount>from  <insert  Installment  Due  date>which  is  due  and  payable    

 
Please  arrange  to  make  payment  of  this  account  on  or  before   <Insert  deadline  date>,  if  you  cannot  make  full  
payment  at  this  time,  please  contact  us  to  make  a  payment  which  is  mutually  acceptable.    
 
Please  note  that,  we  are  required  to  share  your  credit  history  to  Credit  Bureau  agencies  authorized  by  the  
RBI  (Reserve  Bank  of  India)  and  this  may  impact  your  ability  to  avail  credit  facilities  from  any  other  financial  
institutions  in  future.  We  wish  to  hence  inform  you  to  pay  the  necessary  dues  in  a  timely  manner  in  order  
to  maintain  a  clear  credit  history  and  enjoy  benefits  of  other  financial  products.  
 
Your  prompt  attention  to  this  matter  would  be  greatly  appreciated.  If  you  have  any  queries  regarding  this  
account,  please  contact  our  branch  office  nearest  to  your  area.  
 
If  the  payment  has  recently  been  made,  please  accept  our  acknowledgement  and  ignore  this  memo.    
 
With  regards,  
Ujjivan  Financial  Services  Ltd  
 
Authorized  Signatory  

 
ANNEXURE  –  I  

PRAGATHI  LOAN  -­‐  2nd  Reminder  Notice  


 

To,   Date   <  Insert  Notice  generated  date>  

__<Insert  Customer  Name>______________   Branch   <  Insert  Branch  ID&  Name  >  
Customer  ID   <  Insert  Customer  ID>  
___<Insert  Address  line  1>_______________  
Loan  Account  No   <  Insert  Account  ID  >  
___  <Insert  Address  Line  2>______________   Sanctioned  amount  (Rs)   <  Insert  Loan  Amount  sanctioned  >  

__<insert  Sate  and  Pin  code>_____________   Current  outstanding  (Rs)   <  Insert  loan  outstanding>  

Subject:  Notice  for  payment  of  overdue  amount  

Collection  Policy   February  2017   Page  99  


 
Confidential                                  
     
   
With  reference  to  the  letter  dated   <1ST  Reminder  notice  date>this  is  to  bring  to  your  notice  that,  your  
above   said   loan   account   is   showing   an   overdue   of   Rs<Insert   Overdue   Amount>from   <insert   Installment   Due  
date>which  is  due  and  payable.  
 

Please  arrange  to  make  payment  of  this  account  on  or  before   <Insert  deadline  date>,  if  you  cannot  make  full  
payment  at  this  time,  please  contact  us  to  make  a  payment  which  is  mutually  acceptable.    
 

We  are  sorry  to  note  that  despite  repeated  requests,  tele-­‐calls  and  personal  visits  you  have  defaulted  and  
failed  to  repay  the  monthly  installment  on  the  due  date.  
Please  note  that,  we  are  required  to  share  your  credit  history  to  Credit  Bureau  agencies  authorized  by  the  
RBI  (Reserve  Bank  of  India)  and  this  may  impact  your  ability  to  avail  credit  facilities  from  any  other  financial  
institutions  in  future.  We  wish  to  hence  inform  you  to  pay  the  necessary  dues  in  a  timely  manner  in  order  
to  maintain  a  clear  credit  history  and  enjoy  benefits  of  other  financial  products.  
 

Your  prompt  attention  to  this  matter  would  be  greatly  appreciated.  If  you  have  any  queries  regarding  this  
account,  please  contact  our  branch  office  nearest  to  your  area.  
 

If  the  payment  has  recently  been  made,  please  accept  our  acknowledgement  and  ignore  this  memo.    
 

With  regards,  
Ujjivan  Financial  Services  Ltd  
 
Authorized  Signatory  

ANNEXURE  –  J  

PRAGATHI  LOAN  -­‐  Final  Reminder  Notice  


 

To,  
Date   <  Insert  Notice  generated  date>  
__<Insert  Customer  Name>______________   Branch   <  Insert  Branch  ID&  Name  >  

___<Insert  Address  line  1>_______________   Customer  ID   <  Insert  Customer  ID>  
Loan  Account  No   <  Insert  Account  ID  >  
___  <Insert  Address  Line  2>______________  
Sanctioned  amount  (Rs)   <  Insert  Loan  Amount  sanctioned  >  
__<insert  Sate  and  Pin  code>_____________   Current  outstanding  (Rs)   <  Insert  loan  outstanding>  

Collection  Policy   February  2017   Page  100  


 
Confidential                                  
     
   
Subject:  Notice  for  payment  of  overdue  amount  

With   reference   to   our   earlier   reminders   to   settle   the   arrear   amount   of   Rs<Insert   Overdue  

Amount>which   was   due   to   be   paid   on   <insert   Installment   Due   date>,remains   unpaid   despite   of   repeated  
requests,  tele-­‐calls  and  personal  visits.    
 

We  demand  that  the  payment  of  the  full  amount  should  be  made  to  us  on  or  before  <Insert  deadline  date>.    
 

In  the  event  of  non-­‐settlement  of  outstanding,  Ujjivan  reserves  the  right  to  commence  legal  proceedings  to  
recover  the  debt  without  further  notice  to  you,  and  you  may  be  responsible  for  any  associated  legal  fees  or  
collection  costs.    
 
Please  visit  our  branch  office  nearest  to  your  area  as  a  matter  of  urgency  and  settle  your  account  before  
the  above  date.  
 
 

If  the  payment  has  recently  been  made,  please  accept  our  acknowledgement  and  ignore  this  memo.    
 

With  regards,  
Ujjivan  Financial  Services  Ltd  
 
 
Authorized  Signatory  

 
ANNEXURE  -­‐  K  
LOAN  RECALL  NOTICE  AT  90  DPD  
(on  Ujjivan  letter  head)  

 
To,(Name  and  address  of  the  customer)  

Sub  :        Loan  account  number     ………….  

Collection  Policy   February  2017   Page  101  


 
Confidential                                  
     
   
 

Dear  Sir/Madam  

Inspite  of  repeated  reminders  you  have  failed  to  adhere  to  the  terms  and  conditions  expressly  agreed  by  
you  vide  the  Agreement  entered  between  us  for  the  said  loan  and  you  have  failed  to  maintain  the  financial  
discipline  required  of  you  with  the  said  loan.  Thus  we  are  constrained  to  state  as  under:  

That   pursuant   to   the   rights   vested   with   Ujjivan   Ltd,   your   entire   loan   (principal   and   interest)   is   being  
recalled  forthwith.  

You  are  required  to  make  payment  the  whole  of  the  amount  due  and  outstanding’s  by  you,  under  the  said  
Agreement,  to  us  and  amounting  to  Rs  …………  within  7  days  from  the  date  of  postage  of  this  notice.  

In   case   of   non-­‐payment   by   the   aforesaid   date,   we   will   be   constrained   to   take   legal   recourse   against   you  
entirely  at  your  risk  as  to  costs  and  consequences  thereof.  

No  further  notice  will  be  given  to  you  in  this  regard.  

Thanking  you,  

For  Ujjivan  Financial  Services  Ltd.,  

Authorized  Signature  

 
ANNEXURE  –  L  

Possession   cum   sale   notice   of   immovable   property   under   mortgage   under  


SARFAESI  Act  2002    
 

Whereas  

Collection  Policy   February  2017   Page  102  


 
Confidential                                  
     
   
The  undersigned  being  the  Authorized  Officer  of  the  Ujjivan  under  the  Securitisation  and  Reconstruction  of  
the   Financial   Assets   and   Enforcement   of   Security   Interest   Act   herein   after   termed   as   SARFAESI   Act   2002  
and   in   exercise   of   powers   conferred   under   Section   13   (12)   read   with   Rule   9   of   the   Security   Interest  
(Enforcement)   Rules,   2002   issued   demand   notices   on   different   dates   calling   upon   the   borrowers   /  
mortgagors  of  the  secured  interest  as  mentioned  hereinafter  to  repay  the  amount  mentioned  in  the  notice  
within  60  days  from  the  date  of  receipt  of  the  said  notice.  The  borrower(s)  /  guarantor(s)/  Mortgagor(s)/  
Legal   Heir(s)   having   failed   to   repay   the   amount,   the   undersigned   has   taken   possession   of   the   property  
described  herein  below  in  exercise  of  powers  conferred  under  Section  13(4)  of  the  said  Act  read  with  Rule  
9  on  different  dates  and  OFFERS  are  invited  by  the  undersigned  in  sealed  cover  for  purchase  of  immovable  
properties  on  ‘‘AS  IS  WHERE  IS  BASIS’’  and  ‘’AS  IS  WHAT  IS  BASIS’’  as  per  brief  particulars  given  here  under.  
The  borrower(s)  /  guarantor(s)  /  mortgagor(s)  in  particular  and  the  public  in  general  are  hereby  cautioned  
not  to  deal  with  the  property  and  any  dealings  with  the  property  will  be  subject  to  the  charge  of  Ujjivan,  
undernoted   Branches   for   an   amount   as   mentioned   against   each   account   herein   below   and   interest  
thereon.  

Sl   Name   of   the   Name   of   the   Description   of   the   charged/   mortgaged   Amount  O/S  as   Reserv
N Account   &   Borrower   /   property  (All  the  part  and  parcel  of  the   on   date   of   e  Price  
o.   Branch   Guarantor                                      
property  consisting  of)   Demand  
(Amt.  
(Owner   of   Notice   (Rs.)   &  
the  property)   Date   of   taking   in  
lacs)  
possession  

LAST  DATE  &  PLACE  OF  RECEIVING  OFFERS  :  ………………  

AT  UJJIVAN,  ………………………..  

DATE  &  PLACE  OF  OPENING  TENDERS:  …………………………….  

AT  I  UJJIVAN,  …………………………..  

Terms  &  Conditions:  

1]  Interested  parties  will  send/submit  their  offers  for  purchase  of  the  said  property  in  sealed  cover  super  
scribing   as   "Offer   for   Sale   of   Assets   at   -­‐   (write   the   address   of   the   asset)   -­‐   A/c.   (write   the   name   of   a/c.   &  
Branch)"   along   with   earnest   money   deposit   equivalent   to   10%   (ten   percent)   of   Reserve   Price   of   the  
property   by   Cheque/Demand   Draft   favoring   the   Authorized   Officer,   Ujjivan   payable   at   ………,   which   is  
refundable,   if   the   bid/tender   is   not   accepted.   Offer   should   reach   us   latest   by   the   …………..   at   the   above  
mentioned  address.  Offers  without  earnest  money  deposit  will  summarily  be  rejected.  

2]   The   successful   bidder   shall   deposit   25%   (Twenty-­‐five   percent)   of   the   bid   amount   immediately   by    
Cheque/Demand  Draft  favoring  the  Authorized  Officer,  Ujjivan  payable  at  ……,  on  the  sale  being  knocked  
down  in  his  favor.  In  case,  the  successful  bidder  fails  to  deposit  25%  of  the  bid  amount  immediately  on  the  

Collection  Policy   February  2017   Page  103  


 
Confidential                                  
     
   
sale  being  knocked  down  in  his  favor  the  entire  deposit  made  by  the  bidder  towards  earnest  money  shall  
be  forfeited  without  any  notice  and  the  property/ies  shall  forthwith  be  resold.  

3]  The  balance  amount  of  the  purchase  money  shall  be  paid  to  the  Authorized  Officer,  Ujjivan  on  or  before  
the   15th   (fifteenth)   day   of   confirmation   of   sale   in   default   of   payment   within   the   said   period,   the   entire  
deposit  made  by  the  bidder  together  with  the  earnest  money  shall  be  forfeited  without  any  notice  and  the  
properties  shall  be  resold.  

4]  The  defaulting  purchaser  shall  forfeit  all  claims  to  the  property  or  to  any  part  of  the  sum  for  which  it  will  
be  subsequently  sold.  

5]  All  such  payments  to  be  made  only  in  the  form  of  cash  or    Cheques  or  Demand  Draft  drawn  in  favor  of  
the  Authorized  Office,  Ujjivan.  

6]   The   successful   bidder   would   bear   the   charges/fees   payable   for   conveyance   such   as   stamp   duty.  
Registration  fees  etc.  as  applicable  as  per  law.  

7]   The   Authorized   Officer   will   not   be   responsible   for   any   charge,   lien,   encumbrance,   property   tax   or   any  
other  dues  to  the  Govt.  or  anybody  in  respect  of  the  property  under  sale.    

8]  The  Authorized  Officer  has  the  absolute  right  to  accept  or  reject  any  tender/bid  or  adjourn/postpone  the  
sale  without  assigning  any  reason  therefor.  

9]  The  sale  is  subject  to  confirmation  by  the  Ujjivan.  

10]  For  Inspection  of  the  property,  the  intending  bidders  will  contact  Ujjivan,  …………..during  office  hours,  
latest  by  …………..  

This   publication   is   also   a   notice   of   possession   cum   sale   under   the   above   Act   to  
borrowers/guarantors/mortgagers/owners  of  the  property  as  mentioned  above.  

Date  :  ……  

Authorized  Officer,  Ujjivan  

Place:  ……….                                                                                                                                                                                                                                                                                                        

26. ANNEXURE  4:  IC  4  Workflows  with  OD  reasons  

Collection  Policy   February  2017   Page  104  


 
Confidential                                  
     
   

Detailed WF.xlsx
 

Standard  Reasons  and  Remarks  for  all  products  in  IC4  


STD  CAT   SUB  
SL  NO.   STD  CATEGORY   DEFINITION  
CODE   CATEGORY  
Deceased   Deceased  customer  and  intimation  sent  to  
Customer   Insurance  Team  
1   DEC   DECEASED  
Deceased   Deceased  customer's  spouse  and  intimation  
Spouse   sent  to  Insurance  Team  
Customer  or  whole  family  left  the  City/village,  
new  address  unknown  to  group  
2   ABS   ABSCOND   Absconded  
members/neighbors  and  customer  not  
traceable    
Business  Loss/   Customer  or  Spouse  facing  short  term  
Temporary   financial  problems  in  business/Sudden  cash  
Loss   needs/Slowdown  in  business  (Seasonality)    
This  category  is  for  only  livestock  cases  where  
Cattle  Death   customer  is  facing  financial  problems  due  to  
cattle  death.  
Customer/Earning  Member  has  lost  his/her  
Job  Loss   Job.  They  do  not  have  any  other  source  for  
repayment  
Medical  
Permanent  disability  or  serious  illness  of  an  
reasons  -­‐  
earning  member/Customer  
Permanent  
FINANCIAL   Medical   Illness  of  a  family  member/Customer  and  
3   FIN  
DISTRESS   reasons  -­‐   Sudden  cash  needs  leading  to  diversion  of  
Temporary   funds  
Other  family   Death  in  the  family  and  unable  to  pay  on  
member  death   time.  
Part  Salary   Customer/Earning  Member  have  received  
received   part  salary    
Salary  not   Customer/Earning  member  have  not  received  
received   their  due  wages/salary  
Customer  taken  loans  from  other  financiers  
Multiple  
and  is  unable  to  pay  her  emi  due  to  
Borrower    
indebtedness    
Untimely  repayments  being  made  by  the  
Irregular  Payer    
borrower  

Collection  Policy   February  2017   Page  105  


 
Confidential                                  
     
   
Local  area/  Ring  leader  influencing  borrowers  
Ring  leader  
not  to  repay  the  EMIs  in  an  particular  
Influence  
center/area  
Community   Religious  heads,  Communal  Organizations  
issues  -­‐   and  Local  Government  Administration  have  
External   instructed  not  to  repay  the  loan  
Local  or  Government  Administration  has  
MASS   Demolition   ordered  demolition  of  the  whole  area  or  a  
4   MSD  
DEFAULT   part  of  the  area    
Political  parties  or  person  interrupting  into  
Political  issue   the  particular  area/Group/members  for  giving  
false  statement  to  stop  the  repayment.  
Default  caused  due  to  Flood,  Draught,  earth  
Natural   quake  etc.  and  epidemic  diseases  (rapid  
Calamities     spread  of  infectious  diseases  in  an  large  
population  in  particular  area)  
Where  a  customer  avails  loans  by  submitting  
another  individual’s  documents  and/or  by  
Ghost/Benami  
way  of  misrepresentation  of  facts/Dummy  
Loan  
loans  created  where  in  the  borrower  does  not  
5   SBL   SUB  LENDING   exist  
Whole  or  part  of  the  loan  amount  has  been  
Sub  Lending   given  by  the  borrower  to  another  member  or  
to  a  third  party  often  referred  to  as  ‘ring  
leader’  usually  on  payment  of  a  commission.  
Concerned  branch  staff  are  not  responding  to  
Service/   customer  queries  or  have  miscommunicated  
6   SRI   SERVICE  ISSUE  
Behavior  issues   product  features/  made  false  commitments.    
Staff  has  misbehaved  during  collections    
Defaults  may  occur  due  to  fraud  committed  
by  Ujjivan  staff  which  may  include  
misappropriation  of  customer’s  money,  
taking  loans  from  customers,  creating  
7   STF   STAFF  FRAUD   Staff  fraud  
phantom  loans  and  collecting  excess  fees  /  
charges  from  customers  or  collecting  
repayments  ahead  of  the  due  dates  &  not  
accounting  the  same  
Exact  repayments  are  not  updated  to  the  
right  customer’s  account/CMD  Change/Loan  
TECHNICAL   Technical  
8   TCI   card  Repayment  Date  mismatch/Wrong  
REASON   reasons  
repayment  schedule/ECS  or  ACH  status  not  
received  etc.  

Collection  Policy   February  2017   Page  106  


 
Confidential                                  
     
   
Temporarily   Customer  is  not  available  during  visit/door  
TEMPORARILY  
not   Locked/Not  reachable  or  is  not  receiving  the  
9   TNC   NOT  
contactable   call  
CONTACTABLE  
House  Shifted   Shifted  House  to  nearby  area    
Customer  has  ability  to  repay  but  has  no  
intention  or  commitment  to  repay.  Customer  
WILFUL   WILLFUL  
10   WLD   who  does  not  pay  for  >60  Days  in  GL  will  be  
DEFAULT   DEFAULT  
classified  as  a  willful  defaulter  &  field  
collections  will  take  over  collections  
Criminal  Case  initiation  for  IL  customer  with  
Initiate  138  
cheque  
11   LGL   LEGAL  
Civil  cases  initiation  for  GL  and  IL  customer  
Initiate  Civil  
where  cheques  are  not  available  
 

26.1. ANNEXURE  5:  IC4  Auto  Report  formats  

Collection  Policy   February  2017   Page  107  


 

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