Policy Objective
The framework for acquiring Financial Assets and/or NPA Portfolio (Hereinafter referred to as Portfolio) shall conform to the provisions and the Rules made thereunder by the regulator, The Reserve Bank of India. The Financial Asset Acquisition Policy shall be implemented as adopted by BHARATIYA FINCOM PVT LTD Private Limited in its Board Meeting and amended from time to time.
Acquisition Process
The Directors/CEO and Management Team to look for business opportunities and scout for and identity NPAs to be acquired from banks, FIs, ARCs, NBFCs, and other entities permitted to sell NPAs ARCs.
I. Sourcing opportunities and Modes of Sourcing:
- Approach any eligible Seller / Originator for a specific individual Financial Assets or a portfolio
- Participate in the bidding process / open auctions by any Seller / Originator
- Participate in bidding process / specific invitation to sell Financial Assets by Sellers / Originators
- By accepting the offer made by a Seller / Originator to acquire a specific individual Financial Assets or a portfolio
- By participating in any other mode adopted by a Seller / Originator
II. NDA to be executed with Seller / Originator
If the Seller / Originator has prescribed NDA format, the Management team shall forward the draft NDA in MS Word format to Director/Legal Counsel (If any) for vetting.
Once the draft NDA is vetted and approved by the Director/Legal Counsel (If any), with or without changes, the same shall be executed by the authorized person and submitted to the Seller / Originator
III. Pre-Acquisition Stage
An initial assessment of the transaction is required to be done by the Management Team, keeping in view, inter-alia the following aspects:
- Size of the assets/portfolio (number of assets and value)
- Nature and realizable value of security available
- Status of pending litigation
- Statutory and contingent liabilities
- Promoters/management of the borrower
The Management Team shall analyze the data in the PIM and prepare a note to be submitted to the Sanctioning Authority. If the Sanctioning Authority is convinced of the opportunity, it shall accord approval to initiate the process for acquisition, including commencing valuation and legal, due diligence of the financial assets.
IV. Valuation and Due Diligence
Due diligence comprising legal and financial due diligence, ascertaining valuation of underlying security interest, i.e., the assets available as security or the estimation of cash flows from operations of the business of the borrower proposed to be acquired
Financial/credit due diligence will be carried out by the Management Team, who will analyze the financial documents, sanctions of credit facilities and disbursements, statement of accounts, etc.
If due diligence is not conducted in-house, an empanelled Consulting or Chartered Accountancy firm with relevant experience shall be engaged with the requisite scope of work for due diligence.
The Management team would submit to the Sanctioning Authority a note with the outcome of their due diligence, their recommendations, the terms of valuation, and the terms of acquisition as discussed and agreed with the potential Seller / Originator.
V. Data received from Bank to be verified for the adequacy
The Management Team shall insist on the Seller / Originator to provide the critical information such as CERSAI IDs, ROC charge IDS, information on pending litigation, name of advocate involved, actions for enforcement under the SARFAESI Act or through DRT initiated, etc. in respect of each borrower as part of the PIM and/or the due diligence conducted by BHARATIYA FINCOM PVT LTD PVT LTD.
VI. Final Submission to Board for Approval
Once the Portfolio assessment is completed and the Portfolio is eligible for acquisition. A Portfolio Acquisition Note would be prepared by the Management Team and presented to the Board with the rationale and commercial viability of the Portfolio with justification for acquisition. The Board would then convene a Board Meeting and approve the purchase of the Portfolio.