Credit Audit: Monitoring the Pulse of Large Exposures
In the financial sector, the risk doesn't end when a loan is sanctioned—it begins there. At Diwakar and Associates, we provide an independent and objective evaluation of the credit functions, ensuring that the bank’s lending remains within the established risk appetite and regulatory framework.
Why, When & Where is it done?
- Why : To ensure that the credit appraisal was diligent, the security documentation is legally enforceable, and that the borrower is complying with all post-disbursement covenants.
- When: Conducted shortly after the first disbursement (usually within 3–6 months) and subsequently on a periodic basis (Annual or Half-Yearly) for the life of the loan.
- Where: Performed at the Relationship Manager's office, Centralized Processing Cells (CPCs), or Zonal Offices where the credit files and security documents are maintained.
- What is it Done: A "post-mortem" of the credit file, verifying everything from the accuracy of the financial ratios to the physical existence of the primary and collateral security.
Applicability Limits (The Numbers)
High-Value Loans
Corporate and SME accounts with a total exposure (Funded + Non-Funded) of ₹5 Crore or more.
New Sanctions
All fresh loans or renewals/enhancements exceeding a specific threshold determined by the bank’s Board.
Risk-Prone Accounts
Any account showing signs of "incipient stress" or those classified under Special Mention Accounts (SMA-1 or SMA-2).
How we provide this service at Diwakar and Associates
We ensure the integrity of your credit portfolio through a clinical four-stage investigation:
1
Pre-Sanction & Appraisal Review
We re-examine the credit appraisal to ensure the financial projections were realistic and that the "Due Diligence" (CIBIL, KYC, and Field Investigation) was conducted as per policy.
2
Documentation & Creation of Charge
We verify the legal execution of loan agreements, mortgages, and guarantees. We specifically check for the filing of ROC charges (Form CHG-1) and the registration of CERSAI to ensure the bank has a valid claim over the assets.
3
End-Use Verification
We track the "Money Trail" to confirm that the loan funds were used for the intended purpose and not diverted to related parties or unproductive assets.
4
Risk Rating Validation
We review the internal credit rating assigned to the borrower. By analyzing the latest GST returns and bank statements, we determine if the risk grade needs to be downgraded due to deteriorating financial health.
The Impact
We review large-value loan accounts to verify that sanction terms are met and that the borrower’s financial health remains stable.
Our Commitment to You
Accuracy is the cornerstone of our practice. At Diwakar and Associates, we commit to providing a "No-Compromise" review of your credit assets. We promise to act as your early-warning system, highlighting documentation gaps and financial red flags with absolute transparency. Our goal is to give your management the "Truth in Lending" they need to maintain a healthy, NPA-free balance sheet.
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