Supervisory Process

  • On-Site Inspection
On-site inspection of banks is carried out on a periodic basis. Besides the Head Office, certain regional/controlling offices and some branches are covered during inspection so as to ensure a minimum coverage of advances.
On-Site Inspection focuses on solvency, liquidity and operational health of the bank. While the compliance to the inspection findings is followed up in the usual course, NABARD addresses supervisory letters to the management of banks, State Governments, sponsor bank, etc., highlighting the major areas of supervisory concern that need immediate rectification and holds supervisory discussions to draw up an action plan, which can be monitored. All the inspected banks are rated as per supervisory ratings based on Capital Adequacy, Asset Quality, Management, Earnings, Liquidity, Systems and Compliance (CAMELSC) concept.
  • Supplementary Appraisal
Supplementary Appraisal/Portfolio Studies are also undertaken by NABARD, wherever warranted.
  • Off-Site Surveillance and Monitoring
As a part of the new strategy of supervision, a system of `Off-site Surveillance' (OSS) has been introduced as a supplementary tool to on-site inspection. Its objectives are to obtain and analyse critical data on a continuous basis, to identify areas of supervisory concern and to issue early warning signals on risky areas requiring further action by banks. The system basically envisages desk scrutiny of operations of Cooperative Banks and RRBs through a set of statutory and non-statutory returns. While the periodical statutory on-site inspections attempt an overall evaluation of the performance of the banks within a stipulated period, off-site surveillance envisages continuous supervision which will supplement the on-site inspections.