gp credit appraisal

8/7/2019 gp credit appraisal

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PROJECT ON

CREDIT APPRAISAL SYSTEM IN BANKS

y Project Guide:

Prof. Samveg Patel

Submitted By:Harshil Badani (03)


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INTRODUCTION

y Products of The Bank

y Commercial lending is the bread &butter activity forthe banks

y Increase the market share by reducing the NPAs


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OBJECTIVE OF THE STUDY

y To know the risk management function for loans withthe help of credit appraisal system in the banks.

y To know the perspective of the customer towards

credit appraisal process .


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WHY THIS STUDY SHOULD BE DONE?

y Growth of the economy

y Reduction in the number of the NPAs as well asimprovement in the quality of the different portfolios


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WHAT IS CREDIT APPRAISAL?

Credit appraisal is the technique by which lenderappraises the creditworthiness of the prospectiveborrower using different tools.


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COMPONENTS USED FOR CREDIT

APPRAISAL

PARAMETERS (ON THE BASIS OF

DOCUMENTS)

Economic Viability Loan to Cost, Installment to

Income, FIOR

Technical easibilty Field Investigation, Market

Value of the AssetsBank Ability Past Month Bank Statements,

Security, CIBIL Report


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TYPES OF RISKS

y Credit Risk

y Liquidity Risk

y Operational Risk

y Interest Risk


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MODERN APPROACHES OF CREDIT

APPRAISAL

y Credit Scoring Model:

y Internal source of informationy applying statistical tools

y Compare score with cut-off which is decided by banks.

yWorking Capital Assessment


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TYPES OF CREDIT

y Fund Based Credit Facilities:

y Term loany Cash Credit

y Discounting Bills

y Non-fund based credit facilities:y Letter of Credit

y Bank Guarantee


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ROLE OF MONEY SUPPLY

y Banks raises funds by attracting deposits

y Lends to the seekers/ corporate

y By this way the growth of the economy is continued


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BANK CRISIS

yAs bank have many type of risk

y Due to this crisis happened many times in the history

yAs e.g. in U.S. savings &loan crisis during 1980, in 1990Japanese banking crisis are there.


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REGULATION

y Use of specific tools in lending the money by banks

y Proper Credit Appraisal System in the Banks

y There should be lender of the last resort


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CURRENT SCENAREO

y Indian banks have more clean & transparent balance-

sheets & positions compared to the other economiesbanks

yAs the RBI is the autonomous body which is giving all

guidelines to the banks for loans & every thing.


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CREDIT APPRAISAL TOOLSy Background Information

y Industry Analysis

y Market Analysis

y Financial Indicatorsy Net Worth

y Debt Equity Ratio

y Current Ratio

y Working Capitaly Sales

y Pat

y Depreciation


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y QUESTIONNAIRE FOR CUSTOMERS

y QUESTIONNAIRE FOR BANKS


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gp credit appraisal

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