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Agency for Structured Monitoring

The need for better monitoring of end use of funds lent by the Banks was emphasized as one of the PSB reforms by the Department of Financial Services(DFS). It was proposed that performance of Large Borrowings would be monitored by Lenders on common engagement basis through specialized Monitoring Agencies. The agency engaged is responsible for activities such as End use of Funds utilization, monitoring cash flows from the operations etc. Atlas Financial Research & Consulting Pvt ltd is empanelled by Indian Bankers Association as Agency to undertake the specialized monitoring  in 2 streams; CMA & PMA.

Credit Monitoring Agency (CMA)

  • Monitor the purchases/ invoices of the company (about quantum and reasonableness of the rates) for procurement of raw material/ spares/ transportation of raw materials etc. on daily/ weekly basis and compare vis-a-vis monthly operation budget submitted by the company. Periodicity will be decided by the Bank
  • Review of inventory buildup (including trade receivables and advances to the company) for operation of the units in commensurate with funds released
  • To monitor the actual operations (production /supplies etc.) vis-à-vis projections & to verify the necessity of each high value payment as regards beneficiary and purpose
  • Assessment of financial information that has been and that will be provided by the company to its lenders including information related to short term and long term cash flows
  • Identify key issues and submit the report along with the suggestions with regards to smooth operations of the project
  • Additional verification of evidence of end use of facilities to company and its utilization as per the conditions laid down by the lenders
  • To submit the monthly reports about the inventory/ receivables position of the company including slow moving inventory if any, to arrive at the correct drawing power to the company. Also perform other services as requested by the lenders and mutually agreed to by the party and lenders

Project Monitoring Agency (PMA)

  • Conduct Site Reviews, document reviews and study of progress reports in continuous basis especially vis-à-vis original time lines to avoid sudden shock to overrun
  • Determine the progress achieved and appropriations of related transactions (e.g. payment made to contractors and sub-contractors, vendors, orders placed and commercial terms thereof)
  • The consultant should also flag any issue which is resulting in Non/ Underperformance by the contractor.
  • All the payments to related parties should be closely monitored and highlighted in the consortium
  • Deviations in project progress vis-à-vis timelines and amount disbursed. High value payment/dues to be clearly monitored to ensure proper utilization
  • Periodical review of invoices and exception report to the bank
  • Fortnight review of production/supplies (quantities of works certified) vis-a –vis inventory consumption records and cash flow to contractors, sub-contractors and vendors, wastages, extent of rework and quality non-conformities raised by the company, and highlight exceptions
  • A single review report will be released each fortnight or at the interval sought by the lender for invoices raised and inventory consumed in that period
  • Suggestions, if any for improving the project management practices. Also perform such other services as requested by the lenders and mutually agreed to by the party and lenders