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HO IT Department

PUNJAB & SIND BANK

H.O. IT Department
..

HO IT Circular No. 11 /2011
To:

DATE:18.03.2011

All Branches / Zonal Offices / Controlling Offices

Reg: Instructions related to CBS

Sub: PROCEDURE FOR HANDLING NPA / TWO ACCOUNTS AT CBS BRANCHES
The job cards for handling loan portfolio are already available at the PSB Intranet site. We are giving here under the detailed
procedure in respect of handling NPA/ TWO accounts for CBS branches:
MARKING / UNMARKING OF LOAN ACCOUNTS AS NPA / PERFORMING:
The MEAC menu should be used for changing the status of any loan account identified as NPA. The main classification code is
required to be modified as 002 for marking the account as NPA (Non Performing asset).
Sub classification should be modified as under:
002 Sub standard accounts,
003 Doubtful accounts,
004 Loss asset accounts.
The MEAC menu option can also be used to unmark and update the status as performing by modifying the main classification
code as 001 and sub classification code as 001.
FPlease note that classification of any account can be changed only on BOD date and there is no option to change the
classification from any previous date.
The system shall keep on levying the interest for NPA accounts as in the case of performing accounts thereby increasing the
outstanding balance in the Personal Ledger balances. Therefore, the system credits the interest amount to claw-back account
(which is having the same GL Code as that of Loan account) instead of income head so that the impact of interest in NPA at GL
level is nullified.
RECOVERY IN NPA LOAN ACCOUNTS:
Recovery in NPA account should be handled as per extant HO guidelines and any recovery affected in such loan account should
first be appropriated towards principal outstanding which will reduce the net outstanding balance in such accounts (step1 below).
Thereafter the interest should be recovered. The recovery amount appropriated
towards interest should be booked as income by passing following transactions (step 1 & step 2 below):
Step 1
DEBIT
CREDIT

Cash a/c or Operative a/c

Loan a/c

Step 2
DEBIT
CREDIT

Claw back a/c

Income a/c

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NPA ACCOUNTS WHICH ARE TO BE TECHNICALLY WRITTEN OFF (TWO):

The branches are required to transfer the net outstanding balance (leaving Rs.100.00) of TWO accounts (sanctioned by the HO)
to Charge off account and the technical write off flag should be modified accordingly to Y in the TIPS1 menu.
Please note that no entry should be passed in the PL, and as such, the account shall remain showing the total outstanding balance
recoverable from the borrower. By following the said procedure in TWO cases, the system will continue to apply interest and
corresponding credit shall be given to Claw back account (Memorandum Interest) which can be viewed in ACLI menu.
HANDLING OF RECOVERY AND CLOSURE OF TWO ACCOUNTS:
Any recovery affected in TWO accounts should be credited to loan account and the corresponding amount should be recognized
as income. For this, the following steps should be taken:
Step 1DEBIT Cash a/c or Operative a/c
CREDIT Loan a/c
Step 2DEBIT Charge off a/c
CREDIT Income on technical write off a/c
Step 3Applicable only after Charge off account is fully recovered
DEBIT Claw back a/c
CREDIT Income on technical write off a/c
It should be noted that the net outstanding balance in such accounts should always remain as Rs100.00 till the final closure of the
account.
TREATMENT OF OVERDUE AMOUNT:
During migration all loan accounts (specifically Education/ Housing Loans to public and where installments are to commence from
future date) where the moratorium period is over and the balance outstanding is more than the sanctioned limit, the amount in
excess of the sanctioned limit shall be shown by the system as overdue amount. A list of such accounts having overdue amount
will be provided to the branches at post migration
stage. Such accounts are required to be re-phased by capitalizing the interest so as to correct its overdue position. Document
containing detailed guidelines is available at Banks Intranet site, which may be referred to for doing the needful.
PRINTING THE LIST OF NPA ACCOUNTS:
Invoke menu ACSP, Press F6 and in the second screen enter the main asset classification as 002 and press F4. To retrieve the
list of NPA accounts (pertaining to Term Loans) enter the value as LAA in the field scheme type ( in the second screen) and
press F4.
REPORTING OF NPA/ TWO ACCOUNTS FOR TIPS PURPOSE:
Draw Claw back report (381A) through PSBRPT and report the outstanding balances shown under the head Diff in the
respective accounts for TIPS purposes (i.e. CLR_Bal minus Claw back for NPA accounts and CLR_BAL minus Claw back &
Charge off for TWO accounts).
OTHER PRECAUTIONS TO BE TAKEN:
A. The clearing cheques should not be lodged directly in loan account. Instead the amount should be collected in Sundry
Creditor account and on its realization, the proceeds should be credited to loan account.
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B. The Branches must refrain from debiting the loan account directly for charges like insurance, out of pocket expenses, law
charges etc., If the same are to be debited, these charges should be debited to the operative account of the borrower; otherwise,
the system will start raising the demand and penal interest will be charged by the system till the amount is recovered which will
also have effect on period of repayment of the loan account.
The branches are advised to strictly adhere to the above instructions and in case of any assistance may contact the helpdesk
and lodge issues in e-helpline or CBS cell with specific cases.

For any clarifications, please contact

CBS Help Desk at 18002003028 or CBS Cell, Naraina at 25790420 / 25791438

Deputy General Manager IT

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