Shriram City Union Finance Limited - Karvy

All customer origination and evaluation, loan disbursement, loan administration and monitoring as well as loanrecovery processes are carried out by our executives at each business outlet, who are responsible for (i) loanorigination, (ii) credit evaluation, (iii) pre-lending field investigations and (iv) post lending credit appraisal. Theteam of officials responsible for origination of a loan is also responsible for the timely servicing of loans, recoveries,and monitoring performance of each loan from origination to closure of the loan. We offer incentivized salarystructures to such officials where their incentives are directly linked to recovery of installments of the principalamount and interest on the loans. We do not utilize or engage direct selling or other marketing and distributionagents or appraisers to carry out these processes. We follow certain procedures for the evaluation of thecreditworthiness of potential borrowers. The credit appraisal process is as follows:When a customer is identified and the requisite information for a financing proposal is received, a branch manageror our branch executive personally visits such customer at their homes and/or place of business to assess the loanrequirements and creditworthiness of such customer. We also require an applicant to provide appropriate referencesfrom existing or former customers. The proposal form requires the customer to provide information on the age,address, employment details and annual income of the customer, as well as information on outstanding loans. Theapplicant is required to provide proof of identification and residence for verification purposes. Generally, where thecustomer is unable to provide sufficient immovable or movable property to secure the entire value of the loan, theapplicant is also required to furnish a guarantee from an existing or a former customer. Detailed information relatingto such guarantor is also required to be provided.Credit policiesWe follow stringent credit policies to ensure the asset quality of our loans and the security provided for such loans.Any deviation from such credit policies in connection with a loan application requires prior approval from our headoffice. In connection with a customer who is also an existing customer of ‘Shriram Chits’ we generally create a lienover the chit deposits of such customer. If the value of the chit deposits is in-sufficient to cover the entire loanamount, we generally also require immovable or movable property to be provided for the remaining value of theloan amount. In cases where the customer is unable to provide such immovable or movable property as security, theapplicant is also required to furnish a guarantee from an existing or a former customer. For our two-wheeler andvehicle loans, the two-wheeler/vehicle is hypothecated in favour of our Company for the tenure of the loan. Fromtime to time, our management lays down loan approval parameters which are linked to the value of the underlyingsecurity and/or collateral. The borrower is charged prepayment charges in the event of termination of the loan byprepayment. Security received from the borrower, including unutilized post-dated cheques, if any, is released onrepayment of all dues or on collection of the entire outstanding loan amount, provided no other existing right or lienfor any other claim exists against the borrower.Approval ProcessAfter having verified the credentials of an applicant, our branch executive is responsible for signaling any earlywarning signals to the relevant branch manager and the disbursement team.The branch manager evaluates the loan proposal based on supporting documentation and various other factors. Theprimary criterion for approval of a loan proposal is based on the past reference of the prospective customer eitherfrom an existing or a past customer of our Company or of another Shriram Group entity, report of our branchexecutive and guarantee if required furnished by the customer. In addition, our branch managers may also considerother factors in the approval process such as the location and the time period of residence, past repayment recordand income sources.The branch manager is authorized to approve a loan if the proposal meets the criteria established for the approval ofa loan. The applicant is intimated of the outcome of the approval process, as well as the amount of loan approved,the terms and conditions of such financing, including the rate of interest (annualized) and the application of suchinterest during the tenure of the loan.DisbursementMargin money and other charges are collected prior to loan disbursements. The disbursing officer retains evidenceof the applicant’s acceptance of the terms and conditions of the loan as part of the loan documentation. For vehicle89