The bank has granted term loan facility secured against plant & machinery. Objective was to monitoring the borrower for end use of the fund, ensuring collateral & prime security is secured, assets in working conditions, understanding financial capabilities for repayment, etc. The process of monitoring requires existence verification of assets, operation activities, collaborating evidence matching with the records and enquiry with borrower officials.
NHBS LLP has obtained all the required information about the borrower, its collateral & prime assets, copy of insurance, details of purchase invoice of assets and have visited the borrowers premises. We have verified records to ensure that the invoice matches with the accounting records, the physical existence of the assets matches with the assets details mentioned on the invoice, assets details mentioned on the insurance copy matching with the invoice & physical assets, repayment verification & future capabilities of repayment of term loan.
We have noted that, the plant was operated by more than one entity and was related to the borrower. All the entities were using & operating the same plant for manufacturing. There was no identification on the plant & machinery which can be matched with the details on the invoice. We, than verified the total number of plant & machineries & matched the same with the accounting records and noted that, 14 machineries hypothecated to Bank were sold by the borrower & not reported to the Bank.
We have immediately escalated the situation & details of sale of machinery to the representative manager of Bank and sent Flash report detailing our findings.
The process of escalation & sending flash report immediately supported the Bank to take immediate redeemable action on the borrower. The bank took an informed decision on mitigating the risk & securing the outstanding loan balance.
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