Credit Appraisal & Assessment from Banker's Point of View in India
The area of credit appraisal and assessment is very vast and each new account poses new challenges and tests our skill. Whenever a proposal is received, what does a banker looks for in it? Answer to this question is not only very detailed but also very complex. Earlier speakers might have already covered the finer aspects of the project/credit appraisal i.e. from the selection of the project to preparation of projected financials and evaluation of the project from the angle of acceptability, more importantly the following points :
1. Commercial , financial, technical viability of the project proposed,
2. Compliance with the laws of the land, guidelines of the various regulatory authorities
3. Funding pattern.
4. Primary and Collateral security cover available, etc.
5. financial analysis and vetting of the proposal
I would therefore not go in to same details of the project appraisal. However, when a project/proposal is submitted to the banker, he reevaluates the proposal/project to satisfy himself about the correctness of the various facts and calculations and acceptability of the various assumptions/projections. The angle of a banker while evaluating a proposal /project report is to ascertain the viability of a project with a view to ensuring the repayment of the borrower’s obligation under the bank’s term assistance. Therefore it is not so much the quantum of the proposed term assistance as the prospects of its repayment that should be considered while appraising a project/proposal. This can be done by evaluating the project/proposal on the following broad parameters before undertaking detailed appraisal: 1. Man behind the project: A Banker enquires in to the academic background, antecedents of the promoters their background, experience as entrepreneurs, their market and social standing integrity etc. from various sources. Their conduct of the account with the existing banker and if dealing with the other banks, reasons for switching over / giving the new
1. Commercial , financial, technical viability of the project proposed,
2. Compliance with the laws of the land, guidelines of the various regulatory authorities
3. Funding pattern.
4. Primary and Collateral security cover available, etc.
5. financial analysis and vetting of the proposal
I would therefore not go in to same details of the project appraisal. However, when a project/proposal is submitted to the banker, he reevaluates the proposal/project to satisfy himself about the correctness of the various facts and calculations and acceptability of the various assumptions/projections. The angle of a banker while evaluating a proposal /project report is to ascertain the viability of a project with a view to ensuring the repayment of the borrower’s obligation under the bank’s term assistance. Therefore it is not so much the quantum of the proposed term assistance as the prospects of its repayment that should be considered while appraising a project/proposal. This can be done by evaluating the project/proposal on the following broad parameters before undertaking detailed appraisal: 1. Man behind the project: A Banker enquires in to the academic background, antecedents of the promoters their background, experience as entrepreneurs, their market and social standing integrity etc. from various sources. Their conduct of the account with the existing banker and if dealing with the other banks, reasons for switching over / giving the new