Q:What is Credit Appraisal?
A:Credit appraisal means an investigation/assessment done by the bank prior before providing any loans & advances/project finance. This involves following viability checks:
commercial,
financial &
technical.
Q:What is Commercial Viability?
A: The ability of a business, product, or service to compete effectively and to make a profit.
Q:What is Financial Viability?
A: The ability to generate sufficient income to meet operating payments, debt commitments and, where applicable, to allow for growth, while maintaining service levels. In banks, this is measured in terms of DSCR & Debt Equity Ratio for term loans and Current Ratio for WC Loans.
Q:What is Technical Viability?
A: This report analyses the locational advantage of project, production process and technology to be employed, availability of market to sell its products, availability & suitability of raw material, cost of equipment and its availability. Further it analyses availability of other facilities such as fuel, water, electricity, transportation etc. and whether these are available at reasonable prices. It also discusses availability of skilled, unskilled and supervisory staff besides managerial staff.
Q:What is most important factor in case of individual loans?
A: The credit worthiness of applicant is foremost factor. The factors such as:
» Age
» Income
» Number of dependents
» Nature of employment
» Continuity of employment
» Repayment capacity
» Previous loans, etc. are taken into account while appraising the credit worthiness of a person.
Q What are 3 ‘C’ ?
A: while considering credit proposals Following 3 'C' are given importance: ,
» Character
» Capacity
» Collateral.
Q: What is broad classification of loans in banks?
A:Loans can be classified as fund based & non-fund based:
» FUND BASED
Working Capital Loans such as Cash Credit Limits or Overdraft Limits.
Term Loans for acquiring fixed assets.
» NON-FUND BASED
Letter of Credit:
Bank Guarantee:
Q: Discuss CREDIT APPRAISAL PROCESS IN BANKS (STEP-WISE) ?
A: Steps are:
Receipt of application from applicant on bank’s prescribed form
Receipt of supporting documents such as 3 years’ balance sheet, projected balance sheet, KYC documents, MOA, AOA in case of companies or Partnership Deed in case of a partnership firm & photocopies of title deeds of properties to be mortgaged etc.
Spot verification visit by bank officers or its authorised vendors
To check RBI defaulters list, wilful defaulters list, CIBIL data, ECGC caution list, etc. to check past record of the borrower
Obtaining non-encumbrance certificate from bank’s approved advocate
Valuation report of the properties from empanelled valuer/engineers
Preparation of financial data based on CMA and carry out risk rating as per bank prevailing model
Proposal preparation: this contains detailed information about borrower, its rating analysis of financial data, computation of PBF, terms and conditions of sanction and past conduct of account. This is prepared by one officer lower than sanctioning authority and such officer is called recommending authority. If there are more than one such officer then all of them have to sign.
Sanction/approval of limits/loan by competent sanctioning authority. In banks, various officers as per their rank are vested with loaning powers.
Documentation: This involves execution of appropriate agreements by borrower/guarantor.
Disbursement of term loan is done in phased manner as per progress of project. In case of WCL, limit is fixed in an operative account such as cash credit or overdraft and operations are allowed as per available drawing power. The drawing power is computed based on value of security available at a given point of time.
A:Credit appraisal means an investigation/assessment done by the bank prior before providing any loans & advances/project finance. This involves following viability checks:
commercial,
financial &
technical.
Q:What is Commercial Viability?
A: The ability of a business, product, or service to compete effectively and to make a profit.
Q:What is Financial Viability?
A: The ability to generate sufficient income to meet operating payments, debt commitments and, where applicable, to allow for growth, while maintaining service levels. In banks, this is measured in terms of DSCR & Debt Equity Ratio for term loans and Current Ratio for WC Loans.
Q:What is Technical Viability?
A: This report analyses the locational advantage of project, production process and technology to be employed, availability of market to sell its products, availability & suitability of raw material, cost of equipment and its availability. Further it analyses availability of other facilities such as fuel, water, electricity, transportation etc. and whether these are available at reasonable prices. It also discusses availability of skilled, unskilled and supervisory staff besides managerial staff.
Q:What is most important factor in case of individual loans?
A: The credit worthiness of applicant is foremost factor. The factors such as:
» Age
» Income
» Number of dependents
» Nature of employment
» Continuity of employment
» Repayment capacity
» Previous loans, etc. are taken into account while appraising the credit worthiness of a person.
Q What are 3 ‘C’ ?
A: while considering credit proposals Following 3 'C' are given importance: ,
» Character
» Capacity
» Collateral.
Q: What is broad classification of loans in banks?
A:Loans can be classified as fund based & non-fund based:
» FUND BASED
Working Capital Loans such as Cash Credit Limits or Overdraft Limits.
Term Loans for acquiring fixed assets.
» NON-FUND BASED
Letter of Credit:
Bank Guarantee:
Q: Discuss CREDIT APPRAISAL PROCESS IN BANKS (STEP-WISE) ?
A: Steps are:
Receipt of application from applicant on bank’s prescribed form
Receipt of supporting documents such as 3 years’ balance sheet, projected balance sheet, KYC documents, MOA, AOA in case of companies or Partnership Deed in case of a partnership firm & photocopies of title deeds of properties to be mortgaged etc.
Spot verification visit by bank officers or its authorised vendors
To check RBI defaulters list, wilful defaulters list, CIBIL data, ECGC caution list, etc. to check past record of the borrower
Obtaining non-encumbrance certificate from bank’s approved advocate
Valuation report of the properties from empanelled valuer/engineers
Preparation of financial data based on CMA and carry out risk rating as per bank prevailing model
Proposal preparation: this contains detailed information about borrower, its rating analysis of financial data, computation of PBF, terms and conditions of sanction and past conduct of account. This is prepared by one officer lower than sanctioning authority and such officer is called recommending authority. If there are more than one such officer then all of them have to sign.
Sanction/approval of limits/loan by competent sanctioning authority. In banks, various officers as per their rank are vested with loaning powers.
Documentation: This involves execution of appropriate agreements by borrower/guarantor.
Disbursement of term loan is done in phased manner as per progress of project. In case of WCL, limit is fixed in an operative account such as cash credit or overdraft and operations are allowed as per available drawing power. The drawing power is computed based on value of security available at a given point of time.
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Candidates across ALL INDIA Can avail this facility.
Medium of sessions ENGLISH/ENGLISH HINDI MIXED.(As per candidate choice).
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