Page 28 - Banking Finance June 2021

ARTICLE

Y Verify and ascertain quality of book debts, age-wise X Profit ploughed back and any onetime exceptional
classification and eligible book debt for arriving at the cash inflow such as profit on sale of fixed assets,
Drawing power tax refunds etc.

Y Verify substantial sales returns entries in books of the X Sources of margin to be ascertained to confirm
company and existence of any reciprocal receivables to whether it is through borrowing or through capital
be scrutinized infusion and if it is brought in as per sanction
Y Verify genuineness of supplier/debtors in addition to stipulations.
transaction involving merchant trade and invoice
discounting under trade finance at overseas branches. 2. Cash Outflow Monitoring:
Y Information/data as per monthly statement to be X Utilization in inventory buildup/acquisition of fixed
reconciled with account operation and published assets/purchase invoices of the company about
financials. quantum and reasonableness of rates for

Y In case of consortium lending, ASM shall monitor status procurement of raw material /spares/
of borrowing with other member banks, conduct of transportation etc.
accounts at their end, business sharing arrangement X Utilization in creditors repayment/repayment of
etc. term borrowing and advance to other firms
Y In case of term loan ASMs for large accounts should be X Capital drawing, if any, interest/dividend payouts,
engaged in order to ensure proper monitoring of project redemption of debentures, if any, shares by back,
implementation and utilization of funds. if any etc.
Y Conduct site reviews, document reviews and study of X Inter corporate transaction and /or related party
progress reports on continuous basis especially vis-à-vis transactions.
original timelines to avoid sudden shocks of overrun.
X Timely and full payment of government /statutory
Y Determine progress and appropriateness of related dues and analysis of any other kind of outflow, if
transactions like payment made to contractors ,vendors
observed.
and others
Y High value payment/dues to be clearly monitored to 3. Non Cash Parameters:
ensure proper utilization
X ASM is expected to keep a close watch on industry
Y Verification related to approval/clearances/compliance specific prevailing trends, cyclical changes,
in the project and analysis of Government letters/ government policies affecting the company,
instruction/audit reports/Independent Engineers report sustainability/sensitivity in products/business and
and status of insurance.
suggest precautionary measures to mitigate the
Y ASM report should also comment on the unbilled risks.
revenue, debtor's verification vis-à-vis acceptance by the X High value vendor due diligence, market values vis-
debtor based on milestones.
à-vis invoice price
Monitoring aspect covered by ASMs: X Technological obsolescence and substitution
measures.
Broadly classified into 4 category
X To report on any litigation, court cases including
1. Cash Inflow Monitoring: asset classification of associate concerns.
X Sources of cash inflow based on estimates/
projections X Changes in shareholding pattern and voting rights
X Any contract entered into which is unrelated to
X Source of Unsecured loan/Non-convertible
debentures, its tenor and rate of interest, if any sale business
of fixed assets or investment, interest/dividend X Implication of nay rearrangement like carve out,
received from investments. merger, demerger etc.

28 | 2021 | JUNE | BANKING FINANCE