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1

CONTENTS

Process No Process Page No

Introduction

Accounting Policies01 Loans from GOI- Funded by bilateral/ multilateral

agencies

4

02 Loans in local currency 11

03 Loans in foreign currency 1604 Cash Credit 29

05 Acceptance of Public Deposits 32

06 Bonds Accounting 47

Appendices

Appendix I Formats for Loan Accounting

Appendix II Formats for Public Deposit Scheme

Appendix III Formats for Bonds Accounting

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Manual on Loan Accounting 0

Introduction

This manual lays down the procedure in respect of loan accounting both in domestic and

foreign currency. The manual also provides the procedure for public deposits and accounting for

bonds issued.

All loans are centralized at Corporate Centre. At CC the loans are allocated to the various

stations/ projects. The manual provides the accounting policies and procedure for accounting forthe loans received, allocation to the stations/projects, receiving the expenditure statements from

the stations/projects and filing for reimbursements with the lending agency. The manual also

provides the procedure in respect of cash credit accounts limits to be obtained from the banks,

allocation of the limits to the station, reporting of utilization, etc.

The manual provides the procedure for public deposits i.e. receipt of application,

processing the application, issuing of deposit receipts, brokerage payments, interest payments asper the terms of the deposit, refunds on maturity, procedure for premature withdrawal of

deposits and control over the stationary for deposits.

Bond accounting procedure as contained in the manual outlines the procedure for issue

and allotment of bond, payment of underwriting commission, payment of interest and on

maturity, control over pre-signed stationary and destruction of stationary.

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1.00 ACCOUNTING POLICIES

1.01 This section provides the accounting policies to be followed in respect of loan

accounting.

Borrowing cost

1.02 Borrowing cost includes the following items :

Interest and commitment charges on borrowings.

Amortisation of discounts or premiums relating to borrowings

Amortisation of ancillary costs incurred in connection with the arrangement of

borrowings

Finance charges in respect of assets acquired under finance leases or under other

similar arrangements

Exchange differences arising from foreign currency borrowings to the extent that theyare regarded as an adjustment to interest costs

Charges towards prepayment / foreclosure of loans

Charges on account of delayed payments

1.03 Borrowing costs that are directly attributable to the acquisition, construction orproduction of a qualifying asset (i.e. an asset that necessarily takes a substantial period of time to

get ready for its intended use or sale) should be capitalised as part of the cost of that asset. The

borrowing costs should be capitalized till such time the asset is capitalized / ready for use. Otherborrowing costs should be recognised as an expense in the period in which they are incurred.

Changes in Foreign Exchange rates

1.04 The necessity for adjustment on account of exchange rate variation arises in:

repayment of loan - the difference between the exchange rate at which the

repayment is effected and the rates at which the loan is appearing in the books

interest payments the difference between the rates at which the interest is accrued

in the books and the rates at which the interest is actually paid

restatement of asset and liability at the year-end the assets and liabilities at theyear-end should be restated in the books of account based on the closing exchange

rate.

1.05 The transactions in foreign currency should be recorded at the rates prevailing as on the

date of the transaction. At the year end, foreign currency denominated assets and liabilities

should be restated at the rates of exchange prevailing at the year-end.

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1.06 The exchange rate variation on restatement of the asset/ liability should be adjusted in the

carrying cost of the fixed assets or charged to profit and loss account, as the case may be

1.07 The exchange rate variation (ERV) on account of repayment and restatement of loan

liability relating to qualifying assets should be capitalised. The ERV on interest component

relating to the qualifying assets should be capitalised only during the construction period andthereafter should be charged to revenue.

1.08 The procedure to be followed and the basis of computing and allocating interest cost and

the ERV to capital assets has been provided in the manual on Fixed Assets Accounting.

Disclosure requirements

1.09 The financial statements should comply with the disclosure requirements as required

under the Companies Act, 1956 as well as the relevant Accounting Standards.

1.10 As per the Companies Act, 1956 the loans taken should be classified as secured /unsecured with the following disclosures under each of the categories:

Secured loans

Secured loans are to be classified as:

Debentures

Loans and advances from banks

Loans and advances from subsidiaries

Other loans and advances

Unsecured loans

Unsecured loans are to be classified as:

Fixed deposits

Loans and advances from subsidiaries

Short term loans and advances from

Banks

Others

Other loans and advances from

Banks Others

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Other disclosures

The following disclosures should be made in the financial statements:

Interest accrued and due on secured loans to be included under the appropriate sub-heads given above

The nature of security to be specified in each case of secured loans

Terms of redemption or conversion (if any) of debentures issued to be stated with theearliest date of redemption or conversion

Loans from directors to be shown separately

Where loans have been guaranteed by managers and/or directors a mention thereof

should be made and also the aggregate amount of such loans under each head

1.11 In addition to the above, the following are also required to be stated in the financial

statements of the company:

accounting policy adopted for borrowing costs; and

borrowing costs capitalised during the period.

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Process: Loans from Government of India (GOI) Process No: 01

Funded by bilateral/ multilateral agencies

Process Brief:

Certain loans from bilateral/multilateral agencies are routed through GOI who in turn on lendsuch loans to NTPC as budgetary support. The loan is given for specific projects and the

packages / parts of packages/ items that are to be funded out of the loan are also specified in theloan sanction.

In case of such loans, the expenditure incurred by NTPC should be compiled and a claim for

reimbursement should be lodged on the concerned agency. The claim is approved by the agencyand the amount is remitted to the GOI. NTPC in turn should apply to the GOI to draw the

amount as loan periodically. The claims should be lodged periodically as specified by the

agency.

These loans are received and repaid in local currency by NTPC. The interest on the loans is alsopaid in local currency. Hence, there is no ERV component on account of these loans.

The section concerned should ensure that:

The claims are lodged in the specified formats and within the time frame prescribed

No duplicate claims are filed

The claims are filed on the basis of the actual expenditure incurred i.e. cash basis.

Each reimbursement received from GOI is treated as a separate loan.

That the claims filed are periodically reconciled with the books of account

The loans are approved by the Board of directors

.

Departments/ Sections involved in the process:

Budget Section, CC

International Finance, CC

Treasury Section, CC

F&A Deptt, Project

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Process: Loans from GOI Receipt of loan

S.

No

Activity Person

Responsible

Frequency Remarks

Sanction of loan

1 Receive a sanction/ approval from GOIfor the loan component along with the

details of the:

Loan amount

Lending agency

Terms and conditions of the loan

Projects and the specific packagesto be funded out of the loan

Instructions for filing of claims(time period and formats for filing

the claim)

Other requirements to be fulfilled

Enter the details in the system to update

the loan master

IF Section CC

As andwhen

2 Provide to the projects concerned the

specifications of the packages/items to

be funded by the loan, the format andperiodicity of submitting the

information to the IF Section for filingthe claim

IF Section

CC

Within 2

days of

intimationfrom GOI

3 Generate a BPV for payment of the

front end fees i.e. commitment charges,

guarantee fee, etc (applicable as per theterms of the loan sanction)

Verify and authorise the BPV as per

IWA and forward to Treasury section

for releasing the payment

IF Section

CC

As and

when

4 Release payment as per procedure

detailed in Cash and Bank manual .

Treasury

section

Same day

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S.

No

Activity Person

Responsible

Frequency Remarks

Drawal of funds

5 In the case of project specific loans

enter the loan as the source of

financing on the vouchers as and whenbills are processed and payments are

released.

F&A Project As and

when

6 Compile a report of the expenditure

incurred in respect of the package/item

funded by the loan and forward it alongwith all the necessary supporting

documents( such as Invoices, proof of

payment, copies of Railway receipt

etc.) to I F section CC

F&A Project Monthly

By the 7th

of

the

followingmonth

7 Receive the report from the projects

Ensure that the reports have been

received from all the projects

concerned.

Verify the reports and ensure that

Only the qualifying expenditure in

respect of the specified packages/items has been included in the

report

all the necessary documents are

enclosed

The cumulative expenditure

claimed is within the sanctionedlimit as per the loan agreement

IF Section -

CC

Monthly

8 Consolidate the information received

from all the projects concerned and

compile the claim document

Comply with other requirements, if

any, and file the claim with GOI along

with all the necessary documents

IF Section

CC

Within 2

days

9 Receive the funds (vide cheque/ pay

order) from the GOI, as per the

sanction order.

Forward the cheque/ pay order to the

Budget Section

CC

As and

when

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S.

No

Activity Person

Responsible

Frequency Remarks

Treasury Section (along with the details

of the lending agency and the account

head to which the amount is to be

credited) to generate BRV and todeposit the cheque/pay order in the

bank

Update the loan ledger with the details

of the loan received

10 Generate BRV and deposit the

cheque/pay order in the bank as perprocedure detailed in the manual on

cash & Bank

Treasury

section

Same Day

MIR12 Statement of utilisation of the funds

Generate a statement (project-

wise/package-wise) of loan sanctioned

and the utilisation thereof in respect ofeach loan.

IF Section, CC Monthly

13 Reconciliation of claims filed with

the books of account

Prepare a reconciliation statement in

respect of expenditure reported forraising the claim on the lender with the

expenditure recorded in the books ofaccount

F&A Project Quarterly

13 Status of claims lodged and

reimbursements received

Prepare a report on the status of theclaims lodged and the reimbursements

received indicating the reasons for the

discrepancies/ delays, if any.

IF Section, CC Quarterly

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Process Interest payments

Each drawal from GOI is to be treated as a loan with a unique loan number assigned to it. The

interest should be paid as per the terms of the agreement at the rate of interest indicated in the

sanction order. Interest payments would accrue from the date of the drawal.

Process : Interest payments

S.

No

Activity Person

Responsible

Frequency Remarks

Interest payments

1 Update the interest rate in the system

to calculate the interest payable as perthe terms of the loan.

Budget Section

CC

As and

when(interest

rates are

intimated byGOI)

2 Generate a statement of interest

payments falling due in thesubsequent month providing the

interest computation for each loan.

Forward a copy of the statement to

the Treasury Section, CC for fundplanning

Generate a BPV for payment ofinterest.

Verify and authorize the BPV as per

IWA and forward to Treasury sectionfor releasing the payment

Budget Section

CC

Monthly

2 days prior

to the duedate forpayment of

interest.

Same day


detailed in manual on Cash & banksection

Treasury

section

Same day

Interest accrual

4 Generate statement of interest

accrued providing the computationfor each loan

Generate a JV for the interest accruedon all the loans

Budget Section

CC

Period

closing

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S.

No

Activity Person

Responsible

Frequency Remarks

Verify and authorize the JV as per

IWA. Follow procedure as per

manual on Books for generation and

updation of JV

Reverse the entry for interest accrued

Beginning

of the nextmonth after

period

closing

MIR

5 Interest payable during thefinancial year

Generate a statement of the totalinterest payable during the financial

year on account of all loans alongwith the due dates for payment

Forward a copy to Treasury section

for fund planning.

BudgetSection, CC Beginningof the year

6 Delays in interest payment

Prepare a report on delayed payment

of interest, indicating the reasons for

delays for review by competentauthority

Budget

Section, CC

Quarterly

Process : Repayment of Loan

All loan repayments should be made by the due date as stipulated in the loan agreements.


S.

No

Activity Person

Responsible

Frequency Remarks

1 Generate a statement of the loan

repayments falling due in the

succeeding month

Forward a copy to the Treasury

Section for fund planning

Budget

Section CC

Monthly

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S.

No

Activity Person

Responsible

Frequency Remarks

Generate a BPV for repayment of

loan

Verify and authorize the BPV as perIWA and forward to Treasury section

for releasing the payment

2 days prior to

the due date for

loan repayment

2 Release payment as per proceduredetailed in manual on Cash & bank

section

Treasurysection

Same day The BPVwould

update the

details of

the loanrepayments

in the loan

ledger/master

MIR

4 Repayment schedule of loans

during the financial year

Generate a statement of the loans

scheduled for repayment during the

financial year along with the due date

of repayment

Forward a copy to treasury Section

for funds planning.

Budget

Section, CC

Beginning of

the year

5 Delays in loan repayments

Prepare a report on delays inrepayments of loan indicating the

reasons for the delays for review by

of competent authority

BudgetSection, CC

Quarterly

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Process: Prepayment of Loans

S.No Activity Person

Responsible

Frequency Remarks

1 Seek internal approval ofCompetent Authority for

prepayment of GOI Loan

BudgetSection(For

Domestic

Loans)

As and when

2 Seek approval of GOI forprepayment of loan

- do - - do -

3 Generate a statement of the

prepayment charge if any

applicable as per the loanagreement payable to GOI

- do - - do -


amount proposed to be prepaid

- do - - do -

5 Generate a statement of the interest

payable up to the date of payment

of loan

- do - - do -

6 Generate a BPV for above. Verify

and authorise BPV as per IWA and

forward to Treasury Section for

releasing payment

- do - - do -

7 Release payment as per proceduredetailed in Manual Cash & Bank

Section

TreasurySection

Same day

Document - Records

Document

Title

Document

Type

Format Ref Frequency Distribution

Loan sanction from GOI I - As & when IF Section, CC

Loan/ Interest Ledger R LA/01 - IF Section, CC

Report of expenditure

incurred

O LA/02 As per the

time frame

specified

F&A Projects

IF Section, CC

Consolidated Statementof expenditure incurred

(Claim Form submitted

to lending agency)

O LA/03 As per thetime frame

specified

IF Section, CC Budget Section, CC

Lending Agency

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Document

Title

Document

Type


Statement of Interest

payable

MIR LA/MIR/01 Annually/

Monthly Budget Section, CC

Treasury Section,

CC

Schedule of loanrepayments

MIR LA/MIR/02 Annually/Monthly

Budget Section, CC Treasury Section,

CC

Statement of loan from

GOI and the projects

financed thereunder

O LA/04 As and

when Budget Section, CC

F&A Project

Statement of loan

utilisation

MIR LA/MIR/03 Monthly Budget Section, CC

F&A Project

Status of Claims Lodged

and disbursementsreceived

MIR LA/MIR/04 Monthly Budget Section, CC

Report On delays inInterest payment/ Loans

repayments

MIR LA/MIR/05 Quarterly Budget Section, CC

Reconciliation

Statement of claims filed

with the books ofaccount

MIR LA/MIR/06 F&A Project

IF Section, CC

BRV O As andwhen

Treasury aection,

CC

Budget Section, CC

BPV O As and

when Treasury aection,

CC

Budget Section, CC

JV O As andwhen

Budget Section, CC

Accounting Entries

At CC

On receipt of loan

Bank A/c Dr

Loan A/c Cr

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On accrual of interest

Interest A/c Dr

Interest accrued A/c Cr

On payment of interest

Interest Accrued a/c DrBank A/c Cr

On reversal of interest accrued

Interest accrued A/c Dr

Interest A/c Cr

On repayment of loan

Loan A/c Dr

Bank A/c Cr

On transfer of interest to Project / Station

Inter unit/Cash Credit a/c DrInterest a/c Cr

At projects/Stations

Interest A/c DrInter unit/Cash Credit A/c Cr

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Process: Loans in local currency Process No: 02

Process Brief:

This process describes the procedure to be followed in respect of loans taken in local currency

The section concerned should ensure that:

The loans are approved by the Board of Directors

The loan tranche is drawn after assessment of requirement and taking approval of

competent authority.

In case of project specific loans

a) The claims are lodged in the specified formats and within the time frame prescribedb) No duplicate claims are filed

c) The claims are filed on the basis of the actual expenditure incurred i.e. cash basisd) That the claims filed are periodically reconciled with the books of account

Certificates regarding compliance of loan covenants are issued in time as per the conditions ofLoan agreement

Departments/ sections involved in the process

Budget Section, CC


F&A Deptt Projects

Process : Receipt of Loan

S.

No

Activity Person

Responsible

Frequency Remarks

1 Receive the loan agreement and enter the

details in the system to update the loan

master

Budget Section

CC

As and when

2 In case of project specific loans, provide to

the projects concerned the specifications ofthe packages/items to be funded by the

loan, the format and periodicity ofsubmitting the information to the Budget

Section for filing the claim

Budget Section

CC

Within 2 days

of intimationfrom the

lender

3 Generate a BPV for payment of the front

end fee i.e. commitment charges, guarantee

Budget Section

CC

As and when In case the

charges are

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S.

No

Activity Person

Responsible

Frequency Remarks

fee, etc as applicable as per the terms of the

loan sanction. Verify and authorise the

BPV and forward to Treasury section for

releasing payment

deducted by the

bank then

account for the

same based onthe bank advice

4 Release payment as per procedure detailedin manual on Cash & Bank section

TreasurySection

Same Day

4 Forward the documentation (as required fordrawal of the loan as per the terms of the

loan) duly approved by the competent

authority to the lending agency

Budget Section CC

As and when

5 Receive the funds (vide cheque/ pay order/

direct credit in the bank account) from thelending agency.

Forward the cheque/ pay order to the

Treasury Section (along with the details ofthe lending agency and the account head to

which the amount is to be credited) to

generate BRV and to deposit thecheque/pay order in the bank

Budget Section

CC

As and when

6 In case of direct credit by the bank, account

for the same on the basis of the bank

advice as per the procedure provided in the

manual on Cash and Bank section.

Update the loan ledger with the details ofthe loans received

Treasury

Section/

Budget Section

As and when

7 Generate BRV and deposit the cheque/ payorder as per procedure detailed in the

manual on Cash & Bank section

Treasurysection

Same day

8 In case of project specific loans, enter theloan as the source of financing on the

vouchers as and when bills are processed

and payments are released.

F&A Project As and when

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S.

No

Activity Person

Responsible

Frequency Remarks

7 Compile a report of the expenditure

incurred in respect of the package/item

funded by the loan. (The expenditure

report to be generated by sorting thepayment vouchers by the source of

financing after the cut off date of the

earlier report)

Forward the report to the Budget Section,

CC along with all the necessarysupporting documents

F&A Project Monthly

By the 7th

of

the followingmonth

8 Receive the report from the projects Ensure

that the reports have been received from all

the projects concerned

Verify the reports and ensure that

Only the qualifying expenditure inrespect of the specified packages/ itemshas been included in the report

all the necessary documents are

enclosed

The cumulative expenditure claimed iswithin the sanctioned limit as per the

loan agreement

Budget

Section - CC

Monthly

Within 2 days

9 Consolidate the information receivedfrom all the projects concerned, compilethe claim document and file with the

lending agency (along with the

supporting documents). Also comply

with other requirements, if any, as per theloan agreement

Budget Section CC Within 2 days

Interest accounting and Repayment of loans

The procedure, MIR reports and the accounting entries for interest payments, accrued interest and

repayment of loans shall be as provided in the case of loans received from GOI, funded bybilateral/multilateral agencies (Process 1)

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Responsible

Frequency Remarks


prepayment of lender Loan

BudgetSection(For

Domestic

Loans)

As and when

2 Seek approval of lender forprepayment of loan

- do - - do -



applicable as per the loanagreement payable to lender

- do - - do -



- do - - do -



of loan

- do - - do -




releasing payment

- do - - do -


Section

TreasurySection, CC

Same day

Document - Records

Document

Title

Document

Type


Loan agreement I As & when Budget Section, CC

Company Secretary, forsafe custody.

Loan/interest ledger R LA/01 -

Report ofexpenditure incurred

R LA/02 As per thetime frame

specified

F&A Projects Budget Section, CC

Schedule of Interest

payable




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Document

Title

Document

Type


Schedule of

repayment




Report on delays in

loan repayments

MIR LA/MIR/05 Budget Section, CC

Reconciliation

Statement of claims

filed with the books

of account

MIR LA/MIR/06 F&A Project

BPV O As and when Cash and bank Section,

CC

Budget Section, CC

JV O As and when Budget Section, CC

Bank Advice I As and when Cash and bank Section,CC

Concerned Section

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Process : Loans/Bonds in foreign currency Process No : 03

Process Brief

This process lays down the procedure to be followed in respect of loans taken in foreign

currency. In case of loans in foreign currency, the necessary approvals from the Ministry ofFinance and RBI should be obtained. Moreover, it should be ensured that the guidelines as

provided by the RBI, Income-tax authorities, etc, as applicable in this respect have beencomplied with.

Types of loans in foreign currency

Loans in foreign currency are broadly classified as under:

- Syndicated Loan- Export Credit

- International Bonds

Drawal of loans

The drawal of the loans maybe in either of the following forms:

Bullet disbursement disbursement of the amount on the due dates as mentioned in theloan agreement

Staggered disbursement - disbursement of an amount over a period of time. The staggereddisbursement is made based on either of the following:

- Claims submitted (reimbursement of expenditure/ recoupment of imprest amount)- Direct payments to suppliers

It should be ensured that:

The loans are approved by the Board of Directors.

The loan tranche is drawn after assessment of requirement and taking approval of

competent authority.

The loan liability is restated at the time of closing of accounts.

The exchange rate variation has been appropriately computed and accounted for onrepayment/restatement of the loan liability

Claims for reimbursement are filed with the lending agency as per the terms of the loanagreement

Certificates regarding compliance of loan covenants are issued in time as per conditions ofLoan agreement

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IF Section, CC


F&A Deptt Projects

Process: Receipt of loan

S.

No

Activity Person

Responsible

Frequency Remarks

Sanction of Loan

1 Receive the loan agreement andensure that the terms are as agreed

and finalised with the lending

agency

Enter the details in a loan master

IF Section CC

As andwhen

2 Provide the Projects that are coveredunder the funding with the

specifications of the packages/items

to be funded by the loan, the formatand periodicity of submitting the

claim documents to the IF Section

Provide the details of loan amount

sanctioned, likely dates of loandrawal, terms of payment, etc toTreasury Section for fund planning

IF Section CC

Within 2days of

intimation

from thelender

4 Generate a BPV for payment of the

front end fees i.e. management fee,insurance premium, if any, etc. (the

charges/ fees that are payable in

local currency) as per the terms ofthe loan sanction

Generate an instruction to the banker

for payment of the commitmentcharges, etc. (the charges that are

payable in foreign currency) as per

the terms of the loan sanction

IF Section

CC

As and

when

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S.

No

Activity Person

Responsible

Frequency Remarks

Verify and authorise the BPV/

instruction to the banker as per the

IWA

Forward the BPV to the Treasury

Section for releasing the payment /

Forward the instruction to thebanker concerned to make the

payments

In case the charges are deducted by

the bank then account for the same

based on the bank advice as permanual on Cash & Bank section.


detailed in manual on Cash & Bank

section

Cash and

Bank Section

Same Day

4 Enter the loan as the source of

financing on the vouchers as andwhen bills are processed and

payments are released.

F&A

Project

As and

when

Drawal of funds

5 Provide a notice of draw down/claim to the lending agency to

arrange for the disbursement

IF Section CC

2 days priorto the draw

down date

6 Receive the funds in the (overseas)

bank account from the lendingagency or receive the funds directly

in the designated account of the

Bank located in India.

Finalise the terms for remittance of

funds with the (overseas) banker

(i.e. exchange rate, bank where theremittance is to be made, etc)

Generate a BPV to account for thetransfer of funds from the (overseas)

bank account to the (domestic) bank

account

IF Section

CC

As and

when

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S.

No

Activity Person

Responsible

Frequency Remarks

Receive a credit advice from the

Cash and Bank Section for the funds

received in the (domestic) bankaccount. Ensure that the credit has

been received for the drawal amount

at the agreed rate of exchange

Generate a BRV/ journal voucher to

account for the credit advice generation, approval and updation of

BRV as per the Cash and bank

system

7 In case the drawal of loan is by wayof release of payment directly by the

lender to the contractor

Prepare a JV to account for the

disbursement, as per the manual on

Books section.

IF Section CC As andwhen

Expenditure incurred against loans drawn

8 Compile a report of the expenditureincurred in respect of the

package/item funded by the loan.

Forward the report along with all theclaim documents to the IF Section,

CC

F&A Project/ IF

Section, CC

F&A Project

Within thetime frame

specified

This report wouldbe required only

in case of loans

received on a

reimbursementbasis

9 Receive the reports along with the

claim documents from the projects.

Ensure that the reports have been

received from all the projectsconcerned.

Verify the reports and ensure that:

Only the qualifying expenditure

in respect of the specified

IF Section

CC

As and

when

Within 2

days

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S.

No

Activity Person

Responsible

Frequency Remarks

packages/ items (as per the loan

agreement) has been included

All the necessary documents are

enclosed10 Consolidate the information

received from all the projects

concerned and the paymentsreleased from the IF Section on

account of the projects

Prepare the claim on the lending

agency (as per the prescribed

formats) After approval of the

competent authority as per the IWA,

forward the claim to the lendingagency

IF Section

CC

Within 2

days

MIR

11 Statement of utilisation of the

funds

Generate a (project/ package wise)

statement of the utilisation of theloan (both in rupees as well as in the

lender currency)

IF Section monthly

12 Reconciliation of claim documents

submitted to the IF Section with

the books of account

Prepare a reconciliation statement(loan-wise) of the expenditure

reported (against the specified

packages/ items financed under theloan) with the expenditure recorded

in the books of account

F&A - Project Quarterly

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S.

No

Activity Person

Responsible

Frequency Remarks

13 Status of claims lodged andreimbursements received

Prepare a report on the status of theclaims lodged and the

reimbursements received indicating

the reasons for the delays/discrepancies, if any.

IF Section,CC

Monthly

Process : Interest Accounting

S.

No

Activity Person

Responsible

Frequency Remarks

Interest payments

1 Generate a statement of interest

payments falling due in the

year/succeeding month providingthe interest computation for each

loan (the current date exchange rate

should be adopted to work out theindicative amount due in Rupee

terms)

Finalise the exchange rate with thebanker for payment of interest.

Intimate the Treasury Section about

the value date, amount and bank forarranging the funds

Receive the debit advice for thepayment from the Treasury Section.

Check that the advice is for theinterest amount due for payment at

the exchange rate agreed with thebanker

Generate a JV to account for the

adviceVerify and authorize the JV as per

IWA

IF Section

CC

Monthly/Yearly

As and

when (spot,

TOM,Cash).

As and

when

Same day

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S.

No

Activity Person

Responsible

Frequency Remarks

Follow procedure detailed in manual

on Books Section for generation and

updation of JV

The system to update the interest

ledger for the interest amount paid

Interest accrual

2 Generate statement of interestaccrued providing the computation

for each loan

Generate a JV to account for theinterest accrued on all the loans

Verify and authorize the JV as perIWA. Follow procedure as per

manual on Books for verification

and authorisation of JV

Reverse the entry for interest

accrued

BudgetSection CC

Periodclosing

Beginningof the next

month

MIR

3 Interest payable during the

financial year

Generate a statement of the total

interest payable during the financialyear on account of all loans along

with the due dates for payment,

based on the exchange rateprevailing on the date of generation

of the report.

Forward a copy to Treasury section

for funds planning

IF Section,

CC

Beginning

of the year

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S.

No

Activity Person

Responsible

Frequency Remarks

1 Generate a statement of loan

repayments falling due in thesubsequent month, providing the loan-

wise details (the exchange rate as on

the current date should be adopted towork out the indicative amount due in

Rupee terms )

Finalise the exchange rate with the

banker for the repayment of the loan

amount. Intimate the Treasury Sectionabout the value date, amount and bank

for arranging the funds

Receive the debit advice of the

amount of repayment from the

Treasury Section.

Check that the advice is for the

repayment amount and as per the

exchange rate agreed with the banker

Generate a JV to account for the

advice

Verify and authorize the JV as per

IWA Follow the procedure detailed in

manual on Books section forgeneration and updation of JV

For accounting for bank advicesfollow the procedure as outlined in the

manual on Cash and Bank Section

IF Section

CC

Monthly

As and

When

(spot,TOM,

Cash)

As and

when

The system would

update the loanledger for the

amount repaid.

2 Report on delays in loanrepaymentsPrepare a report on the delays in

repayment of loans indicating the

reasons for review of competentauthority

IF Section,

CC

Quarterly

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Responsible

Frequency Remarks


prepayment

IF Section(For

International

Loans)

As and when

2 Seek approval of the lender forprepayment of loan

- do - - do -



applicable as per the loanagreement payable to lender

- do - - do -



- do - - do -



of loan

- do - - do -




releasing payment

- do - - do -


Section

TreasurySection, CC

Same day

Restatement of loan liability


outstanding loan liability at the

closing rate of exchange

Generate a JV for restating the loan

liability outstanding at the rates of

exchange at the quarter end.Account for the gain/ loss on

exchange rate as exchange rate

variation (ERV)

Verify and authorise the JV as perIWA

IF Section

CC

At the

closing date

of Account

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Follow the procedure as detailed in

the manual on Book section forgeneration and updation of JV.

Reverse the entry

At the

beginning ofAccounting

period

MIR

4 Repayment schedule of loans

during the financial year

Generate a statement of the loans

scheduled for repayment during thefinancial year along with the due

dates for payment, based on the

exchange rate prevailing on the dateof generation of the report.

Forward a copy to Cash & Banksection for funds planning.

IF Section,

CC

Beginning

of the year

Document - Records

Document

Title

Document

Type


Loan Agreement I - As & when - IF Section, CC- F& A (concerned)

Project

Loan/ Interest Ledger R LA/01 - -

Statement ofexpenditure incurred

R LA/02 As per the timeframe specified

- F&A Projects- IF Section, CC

ConsolidatedStatement of

expenditure incurred

(Claim Form)submitted to the

lending agency

O LA/03 As per the timeframe specified

- IF Section, CC- Lending agency


payable


Monthly

- IF Section, CC

- Treasury Section, CC

Schedule of loanrepayments

MIR LA/MIR/02 Annually/Monthly

- IF Section, CC- Treasury Section, CC

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Document

Title

Document

Type


Statement of loans

from international

funding agencies and

the projects financedthereunder

O As and when - IF Section, CC

Statement of loanutilisation

MIR LA/MIR/03 Monthly - IF Section, CC

Status of ClaimsLodged and

disbursements

received

R LA/MIR/04 Monthly - IF Section, CC

Report on delays in

loan repayments

MIR LA/MIR/05 Quarterly - IF Section, CC

ReconciliationStatement of claims

filed with the books of

account

MIR LA/MIR/06 - IF Section, CC- F&A Project

BRV O - As and when - Cash and bank

Section, CC

BPV O - As and when - Cash and bank

Section, CC

Journal Voucher O - As and when - IF Section, CC

Accounting Entries

On receipt of loan

Bank A/c Dr

Loan A/c Cr

On payment of interest

Interest a/c DrBank A/c Cr

On accrual of interest

Interest A/c Dr

Interest accrued A/c Cr

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On reversal of interest accrued

Interest accrued A/c Dr

Interest A/c Cr

On repayment of loan

Loan A/c Dr

ERV A/c Dr/ Cr

Bank A/c Cr

On restatement of loan at the year-end

ERV A/c Dr/CrLoan A/c Cr/Dr


Inter unit/Cash Credit a/c DrInterest a/c Cr


Interest A/c DrInter unit/Cash Credit A/c Cr

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Process : Cash Credit Process No : 04

This process lays down the procedure to be followed in respect of utilisation of cash credit limits

from the Banks. An arrangement for cash credit facility by way of sanction of cash credit limits

is entered into with the Banks. The cash credit facility would entitle the company to utilise funds

to the extent of the limits as sanctioned by the Banks for financing the working capitalrequirement of the company.

The cash credit limits to be obtained from the bank should be based on the average working

capital requirement of the company as assessed at the beginning of each financial year based on

the Operation and Maintenance budget estimates as approved for the company.

The overall cash credit limit of the company may be allocated to the stations or it could be

retained as a central pool at Corporate Centre. In case the limits are to be allocated to the

stations, the quantum may be determined based on the working capital requirement of theindividual stations as projected in the budget estimates of the O & M budget of the respective

stations.

The cash credit limit availed should be periodically reviewed to ensure that the actual utilisation

of the limit is within the sanctioned limit. Based on the actual utilisation the limit should be

increased / decreased.

In case the cash credit limits are allocated to the stations, the day-end balances of all the cash

credit accounts of the stations should be transferred to the central pool account with the

respective banks at CC. At CC, the closing balance should be reviewed on a daily basis to ensureutilisation within the sanctioned limit and for revision of the limits to the stations, if required.

An MIR should be generated by the Cash and Bank Section on a weekly basis providing an

analysis of the cash credit limit and the actual utilisation during the period. The MIR should be

submitted to the ED (F)/ Director (F) for review and necessary action i.e. for increasing/decreasing the cash credit limit.

Accounting for cash credit

In case the cash credit limit is allocated to the stations and at the day end the closing balance is

transferred to the central pool at Corporate Centre then the transfer of the balance to CC is to beaccounted for by the stations and similarly an accounting entry would be passed at CC for the

balances received in the central pool.

The accounting entries should be passed through the Inter Unit Cash Credit Accounts.

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Interest payable on the cash credit limit

The interest on the cash credit account should be accounted for at CC after due verification. At

the period end, the interest on the cash credit utilised should be allocated in proportion to the

cash credit limits allocated to the stations through Inter Unit Cash credit Fund account.

Interest debited by the bank is to be verified to ensure that the rate of interest and the period areas per the actual utilisation by the company.

Bank Reconciliation Statement

A bank reconciliation statement should be prepared on a monthly basis as per the procedure

provided in the manual on Cash and Bank.

Procedure: Accounting for cash credit balances transferred and interest on cash credit

S.

No.

Activity Person

responsible

Frequency Remarks

Accounting for transfer of cash credit balances

1 Generate an IUA to account for thetransfer of the cash credit balance to

the central pool at CC as per the

procedure provided in the manual on

Books Section

Cash and BankSection - Unit

Monthly

2 Generate an IUA to account for thecash credit balances transferred fromthe stations to the central pool at CC

as per the procedure provided in the

manual on Books Section

Cash and BankSection, CC Monthly

Accounting for interest on cash credit

3 Receive the bank statements in respect

of the Cash credit account.

Review the statement and enter theday-end balance in the system toupdate the Cash Credit utilisation

Register

Cash and Bank

Section, CC

Monthly

4 Receive the debit advice from the

bank in respect of the interest payable.

Cash and Bank

Section, CC

Monthly

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S.

No.

Activity Person

responsible

Frequency Remarks

Verify the interest from the Cash

Credit Utilisation Register.

Account for the bank advice as per theprocedure provided in the manual on

Cash and Bank.

5. Generate an inter unit debit advice to

transfer the interest to the stations(based on the limits sanctioned to the

units) as per the procedure provided

in the manual on Book Section

Cash and Bank

Section, CC

Quarterly/

Period- End.

Document - Records

Document Title Document Type


Bank Statement I - Daily - Cash and Bank

Section

Cash Credit Utilisation

Register

R LA/05 - -

Inter unit Advice O - As and when - F&A Department,

Station

Statement of utilization of

Cash Credit Limits

MIR LA/MIR/07 Monthly - Finance Head

- ED (Finance)

- Director (Finance)

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Process : Acceptance of Public Deposits Process No : 05

Process Brief

This process lays down the procedure to be followed in respect acceptance of public deposits.

Public deposits should be accepted in accordance with the provisions of the Companies Act,1956 and the Rules prescribed thereunder, after due approvals from the Board of Directors have

been obtained.


Public Deposit (PD) Section, CC

F&A Deptt Regional Office/ inspection offices

Collection Centres

Process : Acceptance of Public Deposit

The applications for the deposits are received either through Manager-cum-Brokers (brokers)appointed by the Company or directly by the Company. The applications are received at the

Collection Centres as indicated in the application form. The collection centres represent the

specified Regional Offices, projects, inspection offices and Corporate Centre (Public Deposit

section). The applications received by the brokers should be deposited with any of the collectioncentres.

At the collection centres a separate bank account should be maintained and the funds received onaccount of deposits should be deposited in that account only. A standing instruction should be

issued to the banker to transfer the funds to the designated bank account in CC on a weekly

basis.

The PD certificates should be issued centrally by the Public Deposits Section at CC.

The Public Deposits Section should ensure the following:

A record of the deposits accepted is maintained containing the details as prescribed under

the Companies Act, 1956 and Acceptance of Deposit Rules

An Annual Return duly certified by the auditors of the company is submitted on or before30

thJune of every year, for the year ended 31

stMarch of that year

Process : Acceptance of Public Deposits

S.

No

Activity Person

Responsible

Frequency Remarks

1 Receive the application for publicdeposit (directly from the applicant/

Collectioncentres

As and when

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S.

No

Activity Person

Responsible

Frequency Remarks

broker).

Check that:

the application form has beencompleted in full

the documents as required havebeen furnished (including the

relevant form for non-deduction

of tax, wherever applicable)

amount of the deposit has beenreceived in the mode as specified

cheque/ DD

Ckeck the validity of the instrument

and issue an acknowledgment to theapplicant/ broker.

In case of deposits received by the

brokers, sign the duplicate copy of

the challan as acknowledgement ofreceipt of application form.

(Acknowledgement to the applicant

is issued by the broker)

2 Generate a pay-in-slip (PIS) for the

amount received and deposit the

same in the designated bank.

Collection

Centres

By the next

day

3 Review the bank statement to ensure

that the account has been credited

with for all the cheques deposited.

In case of cheques dishonoured

return the same to the applicant/broker as the case may be along with

the application form submitted

Collection

Centre

Daily

Weekly


collections received and realised onaccount of public deposit.

Forward the statement to the PDSection, CC along with the

application forms, other documents

Collection

Centre (otherthan

Corporate

PDS)

Weekly

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S.

No

Activity Person

Responsible

Frequency Remarks

received and a copy of the bank

statement for that period

5 Receive the statement of collections

received along with the documentsfrom the Collection Centres

Check that:

the application form along with

all the documents have been

received

the date of realisation of thecheque/ DD recorded on the

statement is as per the bank

statement

Enter the details in the system to

update the PD system

PD Section

CC

As and when

6 Review the bank statement of the

bank account maintained at CC toensure that the funds as transferred

from the collection centre as

reported in the statement have been

received

Generate the following:

On behalf of the collection centres

- BRV for the funds received at

the collection centre- BPV for transfer of funds from

collection centres to CC (PD

account)

On account of funds received in PD

account at CC

- BRV for funds received

- BPV for transfer of funds to CCmain account

On behalf of Treasury section

- BRV for funds received in the

main account

PD Section

CC

Daily/Weekly The BRV/ BPV

may begenerated by the

concerned

Collection

centre/ TreasurySection on

account of funds

received/transferred

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S.

No

Activity Person

Responsible

Frequency Remarks

For generation of BPV and BRV

follow procedure as per manual on

Cash and Bank section7 Generate a validation report of the

details entered and verify the details(name, address, amount, period of

deposit, scheme under which depositreceived, broker name and code, etc)

entered in the system with the

application forms.

Forward the verified validation

report along with the application

forms to the competent authority forapproval.

Review the validation report alongwith the application forms and other

supporting documents. Ensure that

the details have been correctlyentered in the system. Approve the

validation report and authorize the

updation in the system.

Generate the PD certificate andforward it to the applicant.

PD Section

CC

I/C BondsSection

Weekly In respect of any

changes to beeffected say

address of thedepositor, etc the

same procedure

should be

followed forchanges and

updation in the

PD system

8 Generate a brokerage reportproviding the broker-wise

computations after considering the

recoveries, if any, from the broker

(say on account of prematurewithdrawal, etc)

Generate a BPV for payment ofcommission to the brokers (as per

the rates agreed with the broker).

PD Section CC

Monthly

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S.

No

Activity Person

Responsible

Frequency Remarks


IWA

For generation and updating of BPVfollow the procedure detailed in the

manual on Cash & Bank

Forward the authorized BPV to the

Cash and Bank Section to releasing

the payment.


detailed in Cash & Bank manual andhand over the cheques to Bonds

section

Cash & Bank

section

Same day

9 Receive the cheques from theTreasury section and forward the

same to the brokers along with the

detailed computations

PD Section CC

As and when

Process: Payment of interest

The interest payments should be made at the rates and as per the terms approved by the Board of

Directors. In case of cumulative PDs the interest is payable only on maturity. In case of non-cumulative PDs the interest payable either monthly or quarterly as per the terms of the scheme.

The interest warrants should be sent to the depositors as per the guidelines issued in this respectfrom time to time. As per the current policy, in case of non-cumulative deposits the interest

warrants for the deposits upto Rs. 16,000 are furnished for the entire period of the PD i.e. till

maturity along with the PD receipt. In other cases, the interest warrants for the current financial

year are sent along with the PD receipt. For subsequent years, the interest warrants are issued fora year in advance.

In case of non-cumulative deposits, the TDS certificate is printed on the counterfoil of theinterest warrants and in case of cumulative deposits the TDS certificates are sent annually and on

maturity.

For payment of interest the PD Section should ensure the following:

Interest warrants are issued as per the approved terms

TDS at the applicable rates is deducted

TDS is deposited with the authorities within the stipulated period as prescribed

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Funds equivalent to the interest warrants vouchers issued are available in the designatedbank account prior to the due dates for payment

Accounting for interest warrants issued in advance

The interest amount should be accounted for in the period in which it is due.

Process : Payment of Interest

S.

No

Activity Person

Responsible

Frequency Remarks

1 Enter the interest rate and the

applicable Tax rates in the system to

calculate the interest payable and thetax to be deducted as per the terms of

the PD.

PD Section,

CC

As and when

2 Generate a statement of the totalinterest payable and the TDS

providing the detailed computations

Generate a BPV and forward the samealong with the computation statement

to the competent authority forverification and authorization

Verify and authorize the BPV as perIWA

Follow the procedure outlined in themanual on Cash and bank for

generation and updation of BPV.

PD Section,CC

Onprocessing

the PD/

period-end/

maturity

3 For subsequent years, generate theinterest warrants and issue the same to

the depositors along with the PDreceipt

PD Section,CC

Afterreceiving due

approvals

Cumulative PDs


accrued and the TDS component

providing the depositor-wise detailed

PD Section,

CC

Monthly/Ann

ually and on

maturity

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S.

No

Activity Person

Responsible

Frequency Remarks

computation

5 Generate a JV for the interest accrued

and the TDS payable. Forward to the

competent authority for approval

Follow the procedure as detailed in themanual on Book section for generation

and updation of JV

PD Section,

CC

Monthly/Ann

ually and on

maturity

TDS

6 Generate a BPV for the TDS payableVerify and authorize the BPV as per

IWA

Follow the procedure outlined in the

manual on Cash and bank forgeneration and updation of BPV.

Forward to Treasury section for

preparation of cheque

Receive cheque from Treasury section

and deposit TDS with the authorities

concerned

PD Section,CC

By the 7th

ofthe following

month

7 Issue the TDS certificates to the

depositors in case of cumulative

deposits

PD Section,

CC

Within

specified

timeschedule.

In case of

non-

cumulativedeposits, the

TDScertificates

are sent along

with the

interestwarrants

Process: Renewal of PD

PDs should be renewed based on the applications for renewals received from the depositorsalong with the duly discharged (original) deposit receipt.

In respect of renewal of PDs ensure the following:

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The PDs are renewed based on an application from the depositor sent along with the originalPD certificate

The PDs are renewed as per the terms and conditions of the PDs

The procedure followed in case of renewal of PD is the same as in the case of a fresh receipt of

PD except that in this case no funds are received. A new PD certificate is issued against theamount due in respect of the old PD certificate and the PD ledger is updated accordingly

In case the PD is not renewed for the full amount or in case of cumulative PD schemes for oddamounts, the balance/ odd amount should be refunded to the holder.

Process : Repayment of PD on maturity

The PDs should be repaid on maturity only after the duly discharged original PD certificateshave been received from the depositors. After carrying out the verification procedure the

payments should be released in the form of refund warrants.

In case of PDs that are unclaimed and unpaid within the period specified in this respect, the sameshould be deposited with the GOI.

Process : Repayment of PD on maturity

S.

No

Activity Person

Responsible

Frequency Remarks

1 Receive the duly discharged depositcertificates from the depositor

Enter the details in the system

Generate a statement of the PDs

received for refund pending payment

PD Section,CC

As and when

2 Process the deposits matured/ due for

maturity during the week for

repayments

PD Section,

CC

As and when

3 Generate the refund warrants for the

deposits processed and despatch thesame to the depositor after obtaining

the necessary approval of the

competent authority

PD Section,

CC

As and when

4 Generate a BPV (for the refundwarrants issued) to transfer the fundsto the designated bank account and

forward the same to the competent

authority for approval.

PD Section,CC

As and whenrefund

warrants are

mailed

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S.

No

Activity Person

Responsible

Frequency Remarks

Verify and authorize the BPV

Generate a BRV to account for the

funds received in the designated bankaccount

Follow the procedure as outlined inthe manual on Cash and bank for

generation and updation of BPV

Process: Premature withdrawal of PD

In respect of premature withdrawal of PD, the PD Section should ensure the following:

Premature withdrawal of the PD is processed only on the basis of an application receivedfrom the depositor along with the original PD receipt duly discharged and the un-encashed

(post dated) interest warrants, in case of non-cumulative PDs.

Penal interest as per the terms of the scheme has been deducted before releasing the payment

Proportionate brokerage has been recovered from the broker (in case of application received

through the broker).

Process : Premature withdrawal of PD

S.

No

Activity Person

Responsible

Frequency Remarks

1 Receive an application along with

the original PD receipt and unencashed interest warrants from the

depositor for premature withdrawal

of the deposit ( in case of non-cumulative deposits.)

Enter the date of processing of the

application in the system and theperiod upto which the interest

warrants have been encashed in the

system, in case of non-cumulativedeposits.

PD Section,

CC

As and when

As & When

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S.

No

Activity Person

Responsible

Frequency Remarks

Generate a note for approval of the

PDs that are to be considered for

pre-mature withdrawal (providing

the depositor-wise detailedcalculations).

Obtain the approval of thecompetent authority

Generate a statement for funds

required on account of pre mature

withdrawal of PDs. Forward a copyto the treasury Section.

Generate a BPV for the amount dueto the depositors and forward to the

competent authority for approval

along with the relevant supporting

documents.


IWA

For generation and updation of BPV

follow procedure as per manual onCash & Bank section

Weekly

2 Generate the refund warrants in

favour of the depositors and mail it

to the depositors

PD Section,

CC

As & When

Bank Reconciliation Statement

Separate bank accounts should be maintained for repayment of PDs and interest payments.

The bank should submit the reconciliation statement and the paid warrants on an annual basis.The statement should be checked with the records maintained by the PD Section.

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Filing of Annual Return

As per the requirements of the Companies Act, a return in the prescribed form duly certified by

the auditors of the company should be filed annually with the Registrar of Companies by the

30th of June for the year ended 31st March of that year. The relevant provisions of theCompanies Act in this respect should be complied with.

Control over pre-printed and pre-signed stationary

The bulk stationary for the PDs and the interest warrant should be kept in safe custody (in the

store). The stationary drawn for daily use should be kept in the safe custody in the office.Records of the stationary (at all the locations) should be maintained.

It should be ensured that:

The stationary is kept under safe custody. The stock of the stationary is periodically verified and reconciled with the records

maintained

Process : Control over pre-printed and pre-signed stationary

S.

No

Activity Person

Responsible

Frequency Remarks

Receipt of stationary godown

1 Prepare an LOA/ request to thesupplier/bank for the computerised/

pre-signed stationary and forwardthe same to the respectiveprinter/bank after obtaining due

approval

PD Section,CC

As and when The order to beplaced should

be based on thetrends of usageas observed in

the past

2 Receive the stationary from the

supplier/bank

Ensure that the stationary received isas per the order placed and in serial

order

Enter the details of the stationaryreceived in the system to update the

PDs Staionary Received register

Transfer the stationary received to

the store

PD Section,

CC

As and when

Immediatelyon receipt

Same day

Same day

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S.

No

Activity Person

Responsible

Frequency Remarks

Issue of stationary from the godown

3 Receive a request for the issue of

stationary from the store along with

a reconciliation statement of theopening balance of stationary in the

office premises, stationary utilisedduring the period and the balance in

hand (as applicable) from theconcerned official in the PD section

Review the request and ensure that it

is reasonable and authorise the issueof the stationary from the store

PD Section,

CC

(DesignatedOfficer)

As and when

Same day

4 Receive the stationary from the

store.

Ensure that it is in serial order andenter the details in the system to

update the stationary register

Concerned

Officer - PDSection, CC

As and when

Immediately/Same day

Issue of stationary from the office premises

5 Receive a request for issue ofstationary to be used for the day

Issue the stationary and enter the

details in the system to update thestationary register

PD Section,CC

As and when

Same day

Unusedstationary at the

end of the day

to be returned

for the safecustody

Physical verification

6 Generate a statement of the closing

balance of the stationary in hand

Physically verify the stock of the

stationary

Prepare a reconciliation statement of

the discrepancies observed, if any

Forward the report to the competent

authority for review

Review the report and take

necessary action

PD Section,

CC

Quarter end

Quarterly

Within a

fortnight of

completion ofverification

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Document - Records

Document

Title

Document

Type

Format

Ref

Frequency Distribution

Application fordeposits

I As and when - Collection Centres- PD Section, CC

Public Deposit/Interest Ledger

R PD/01 -

Statement ofdeposits received

and realised

O PD/02 Weekly - Collection Centre- PD Section, CC

PD Certificate O Weekly - PD Section, CC

- Depositor

Brokerage Report

(Summary)

R PD/03 Monthly - PD Section, CC

Brokerage Report(Broker-wise)

R PD/04 Monthly - PD Section, CC

Statement of Interestpayable (Scheme-

wise summary)

MIR PD/MIR/01

Annually/Monthly/

quarterly

- PD Section, CC


payable (Depositor -

wise)

MIR PD/MIR/

02

Annually/

Monthly/

quarterly

- PD Section, CC

Statement of TDS

payable (Depositor -wise)

O PD/05 Annually/

Monthly/quarterly

- PD Section, CC

Interest/ Refundwarrant

O PD/06 Monthly/Quarterly

- PD Section, CC- Depositor

Statement of Refund

payable

MIR PD/MIR/

03

-

Statement of PDsmatured/ due for

maturity

MIR PD/MIR/4

Monthly - PD Section, CC

Statement of

prematurewithdrawal of PDs

MIR PD/MIR/

05

Weekly - PD Section, CC

Statement of

brokerage recoverydue to premature

withdrawal of PDs

R PD/07 Weekly - PD Section, CC

Stationary Register R PD/08A&B

As and when - PD Section, CC

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Document

Title

Document

Type

Format

Ref

Frequency Distribution

Reconciliation

statement of

stationary in hand

R PD/09 -

Statement of Closingbalance of stationary

O PD/10 Quarterly - PD Section, CC

Physical Verification

report

R PD/11 Quarterly - PD Section, CC

Pay-in-slip O As and when - Collection Centres

Bank Statement R - Collection Centre

- PD Section, CC

BRV O As and when - Cash and Bank

Section

BPV O As and when - Cash and BankSection

LOA I As and when - PD Section, CC- Cash and Bank

Section

Accounting entries

On receipt of PD

Bank A/c Dr

Public Deposit A/c Cr

On payment of Interest

Interest on PD Dr

Bank A/c Cr

On repayment of PD

Public Deposit A/c Dr

Bank A/c Cr

On payment of Brokerage

Brokerage Expenses Dr

Bank A/c Cr

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Inter unit/Cash Credit a/c Dr

Interest a/c Cr


Interest A/c Dr

Inter unit/Cash Credit A/c Cr

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Process : Accounting for Bonds Process No : 06

Process Brief

This process describes the procedure to be followed in respect of issue of bonds.

Bonds Issue to the public

In case of public issue, the applications for the bonds are submitted to the company/ designated

banks. After the last date for receipt of application forms the various bankers are required to

(based on the Standing Instruction issued) transfer the money to the designated bank account atCC (Controlling Branch).

Private placement of bonds

The bonds may also be privately placed. The procedure for issue of allotment letters, bondcertificates, interest payments, redemption of the bonds would be the same as in the case ofbonds issued to the public. (In this case as the number of investors is not large, press

advertisements for announcing the exchange of allotment letters with the bond certificates,

announcing the dates interest payments, etc. may not be required).

The bond issue must be in compliance with the Companies Act, 1956, the guidelines issued by

the Securities and Exchange Control Board of India (SEBI), guidelines issued for public sector

enterprises and the provisions of the Articles of Association of the Company.

For issue of bonds, ensure the following:

Bonds have been issued only in pursuance of the approval from the Board of Directors

The underwriting commission/ brokerage has been paid to the brokers at the rates as per theLOAs entered with the brokers (considering the provisions of the Companies Act, 1956)

The fees to the Lead Manager (s)/ Arranger(s)has been approved by the Board and are paid

as per the agreement entered into with them


Bond Section, CC

Cash and Bank Section, CC

Company Secretariat

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Process : Issue of bonds

S.

No

Activity Person

Responsible

Frequency Remarks

1 Receive the applications for

issue of bonds

Check that the :

application form has beencompleted in full

documents as required for

submission have beenenclosed

the amount deposited hasbeen realised

Designated

Banker/

Registrar/Bond Section/

Arranger

As and when In case of public issue it is

the responsibility of the

Designated Banker/Registrar and in case of

private placement this

activity is carried out bythe Bond Section/ Arranger

2 Receive a statement from the

bank (Controlling branch)

regarding the total applicationmoney received and account for

the same as application money

received

Bond Section On receipt of

the statement

from thebanker

3 Enter the application details in

the system to create the allotmentregister.

Registrar/

Bond Section

After receipt

of theapplication

Allotment of bonds

4 Receive the allotment register

from the Registrar providing the

details of the allottees and obtainthe approval of the BOD in

respect of the same

Intimate the designated bank

(Controlling Branch) to transfer

the amount in respect of theunsuccessful applicants to therefund warrant account and in

respect of the successful

applicants to NTPCs bankaccount

Bond Section

As and when Allotment should be made

as per the guidelines

prescribed in this respect bySEBI

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S.

No

Activity Person

Responsible

Frequency Remarks

Generate and despatch the

following:

Allotment letter along withthe cheque for interest for the

period commencing from thedate of realisation of the

investors cheque to the date

of allotment

Refund cheque/ order to the

unsuccessful investors (for

non-allotment)

Account for the funds receivedand the money refundedgeneration of BRV/BPV as per

the Cash and Bank system

Bond Section/

Registrar

Bond Section

Payment of underwriting commission/brokerage


underwriting commission

payable to the brokers containing the detailed

computations

Bond Section/

Registrar

As and when Underwriting commission is

to be paid only in respect of

the bonds allotted

6 Generate a BPV for the underwriting commission and forward

to the competent authorities for

approval

- follow the procedure as

outlined in the manual on Cash

and Bank for generation andapproval of BPV

Bond Section Monthly

7 Receive the cheques from theCash and Bank Section and

despatch the same to the brokersalong with the detailedcomputation statement

Bond Section Same day

8 Exchange the allotment letterswith the bond certificates after

creation and registration of

security

Bond Section/Registrar

As and when

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S.

No

Activity Person

Responsible

Frequency Remarks

9 Generate a JV for creation of the

Debenture Redemption Reserve

Bond Section Annually This entry would be

required till the maturity of

the series

Payment of interest

The interest payments should be made as per the terms of the bonds issue. In case of cumulative

bonds the interest amount is to be paid on maturity of the bonds along with the principal amount.

In respect of interest payments, the Bond Section should ensure the following:

Interest warrants have been issued as per the terms of the issue

TDS at the applicable rates has been deducted and deposited with the authorities within

the stipulated period as prescribed

The bonds master has been updated for all transfer/ transmission/ requests for change ofname/ address, etc received till that period

It has been ensured that the funds equivalent to the interest warrants issued have beendeposited in the designated bank account before the due dates for payment

Interest is paid through interest accrued account only

Process : Payment of Interest

S.

No

Activity Person

Responsible

Frequency Remarks

1 Enter the interest rate (as per the

terms of the bond issue) in thesystem to calculate the interest

payable

Enter the TDS rates as prescribed

in the system

Bond

Section/Registrar and

Transfer

Agent

After the bond

issue

This should be done

before the due datefor interest payment

2 Update the interest master for all

requests (approved) for transfer/

transmissions, etc of bonds

Bond

Section/

Registrar

Before the

interest

payment date

3 Generate a statement of the total

interest payable and the TDS

component providing the detailedcomputations

In respect of cumulative bonds,

generate a journal voucher for the

interest accrued but not due

Bond

Section

By the next

day

This should be

carried out at least a

week in advance

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S.

No

Activity Person

Responsible

Frequency Remarks

Generate a request for transfer of

funds and forward it to the

Treasury Section

Generate a BPV for the interest

payable to transfer the funds to the

designated bank account and a JVfor the TDS to be deducted thereon

forward the BPV/JV to the

competent authority for approvalsalong with the statement of the

interest payable

Follow the procedure as outlined

in the manual on Cash and Bank

section for generation and approval

of BPV

2 weeks prior

to the due

date ofinterest

payment

4-5 days prior

to the due

date forinterest

payment

4 Generate the interest warrants and

despatch to the bond holders

Bond

Section/

Registrar

Before the

due date for

payment of

interest

TDS

5 Deposit the TDS with theauthorities

BondSection

Within thetime frame

stipulated

6 Issue TDS certificates to the

depositors

Bond Section On payment

of interest/Annually

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Transfer/ transmission, etc. of Bonds

In case a request for transfer/ transmission, etc. of bonds has been received, then after verifying

the request and ensuring that all the documents as required have been received, forward the

request to the competent authority to obtain approvals of the same. Forward the duly approvedtransfer request to the Registrar/ agent (as applicable) to effect the necessary changes in the bond

master and ensure that the transfer has been correctly effected in the system.

Redemption of bonds

The bonds should be redeemed as per the terms and conditions of the bond issue. In case of

cumulative bonds, the total interest accrued is payable on redemption. In case of non-cumulative

bonds, the interest till the date of redemption since the last date of interest payment is to be paidalong with the principal amount. The refund warrants should be accordingly generated.

In respect of redemption of bonds, the following should be ensured by the Bonds Section

Refund warrants have been issued only in respect of those bond certificates which have beenduly discharged

A separate bank account has been opened for redemption of the bonds for each series

The amount payable against the bonds processed for redemption has been transferred to thedesignated bank account before the due date for redemption of the bonds

In case of bonds that are not redeemed within the period specified in this respect (currently 7

years) the same should be deposited with the GOI.

Process : Redemption of bonds

S.

No

Activity Person

Responsible

Frequency Remarks

1 Generate JVs in respect of the

following:

to transfer the amount from the

Bond Account to Current liabilities

to transfer the DebentureRedemption Reserve to the

General Reserve

Bond Section On maturity

of the Bond

Series

2 Receive the duly discharged bond

certificates from the holders

Bond Section As and when

3 Review the certificates received andafter ensuring that the certificates have

matured carry out the necessary


As and when

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S.

No

Activity Person

Responsible

Frequency Remarks

verification procedure and update the

master to process the refund warrants

for redemption

4 Generate a statement of the bondsprocessed for redemption

Generate the refund warrants for the

certificates approved for redemption

Despatch the refund warrants to the

bond holders


As and when

5 Generate a BPV (in favour of thedesignated bank account) for the

amount on account of the duly

discharged bond certificates forredemption and forward the BPV

along with the necessary supporting

documents to the competent authorityfor approvals

Follow the procedure as outlined in themanual on Cash and Bank Section

Bond Section As and when onreceipt of the

duly discharged

bond certificates

6 In respect of TDS- follow theprocedure as provided under the

process payment of Interest

Bond Section As and when

Bank Reconciliation Statement (BRS)

Separate bank accounts should be maintained for each bond series for receipt of the applications,

interest payments and redemption of the bonds. The BRS should be prepared at periodic intervals

in respect of all the bank accounts maintained (follow the procedure as provided in the manual

on Book section). The first reconciliation should be carried out within a period of 2-3 months ofexpiry of the cheques receipt.

Control over pre-printed and pre-signed stationary (stationary)

The stationary for the allotment letters, bond certificates, interest warrants and refund warrantsshould be maintained in a central store under security and periodically (as and when required)the stationary should be withdrawn from the godown and maintained in the office premises or

handed over to agents (if any) involved for processing of the allotment letters, bond certificates,

interest/ refund warrants. Records for the stationary at all locations should be maintained.

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In case of the bonds that have been redeemed, once the redemption is complete the unutilised

bond certificates for that series should be destroyed after obtaining the necessary approvals.

The bank account maintained for payment of interest/ redemption of the bonds should be

reviewed and after a reasonable period, the stationary for the interest warrant should be

destroyed.

The Bonds Section should ensure the following:

The stationary has been kept under safe custody.

The stock of the stationary (at all the locations) has been periodically verified and reconciledwith the records maintained

An acknowledgement of the stationary handed over to any agent is obtained

A periodic reconciliation of the stationary handed over to the agent has been carried out

The stock of stationary is periodically reviewed and destroyed after a reasonable time (from

the date of maturity/ redemption)

Process : Control o

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Documents

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