ManagementParadise.com : Worlds Leading Management Portal. MBA | Classroom, Boardroom and Beyond


Go Back   ManagementParadise.com Forums - Your MBA Online Degree Program and Management Students Forum for MBA,BMS, MMS, BMM, BBA, students & aspirants. > Projects HUB for Management Students ( MBA Projects and dissertations / BMS Projects / BBA Projects > PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT > Financial Management

PROCEDURE FOR LOAN APPRAISAL

PROCEDURE FOR LOAN APPRAISAL

Discuss PROCEDURE FOR LOAN APPRAISAL within the Financial Management forums, part of the PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT category; STEP I - SUBMISSION OF LOAN APPLICATION The financial institutions require that an entrepreneur seeking financing assistance should furnish detail ...

Reply

 

LinkBack Thread Tools Display Modes
Advertisements
PROCEDURE FOR LOAN APPRAISAL
Old
 (1 (permalink))
Sunanda K. Chavan
sunandaC has a spectacular aura aboutsunandaC has a spectacular aura aboutsunandaC has a spectacular aura about
 
sunandaC
Management Paradise Guru
 
Status: Offline
Posts: 6,685
Join Date: Jul 2010
PROCEDURE FOR LOAN APPRAISAL - October 15th, 2010

STEP I - SUBMISSION OF LOAN APPLICATION
The financial institutions require that an entrepreneur seeking financing assistance should furnish detail information about the project in a prescribed form the borrower submits an application form that seeks comprehensive information about the project. The application form covers the following aspects:
 Promoter’s background
 Particulars of the industrial concern
 Particulars of the project (Capacity, process, technical arrangements, management, location, land and building, plant & machinery, raw materials, labour & implementation schedule)
 Cost of the project
 Means of financing
 Marketing and selling arrangements
 Profitability and cash flow
 Economic considerations
 Government consents

STEP II - INITIAL PROCESSING OF LOAN APPLICATION
When the application is received, an officer of the financial institution reviews it to ascertain whether it is complete for processing. If it is incomplete the borrower is asked to provide the required additional information. When the application is considered complete, the financial institution prepares a ‘flash report’ which is essentially a summarization of the loan application. On the basis of the ‘Flash Report’, it is decided whether the project justifies a detailed appraisal or not.

STEP III - APPRAISAL OF THE PROPOSED PROJECT
The detailed appraisal of the project covers the Marketing, Technical, Financial, Managerial, and Economic aspects. The appraisal memorandum is normally prepared within two months after site inspection. Based on that a decision is taken whether the project will be accepted or not.

STEP IV - ISSUE OF THE LETTER OF SANCTION
If the project is accepted, a financial letter of sanction is issued to the borrower. This communicates to the borrower the assistance sanctioned and the terms and conditions relating thereto.

STEP V - ACCEPTANCE OF THE TERMS & CONDITIONS BY BORROWING UNIT
On receiving the letter of sanction from the financial institution, the borrowing unit convenes its board meeting at which the terms and conditions associated with the letter of sanction are accepted and an appropriate resolution is passed to that effect. The acceptance of the terms and conditions has to be conveyed to the financial institution within stipulated period.


STEP VI - EXECUTION OF LOAN AGREEMENT
The financial institution, after receiving the letter of acceptance from the borrower, sends the draft of the agreement to the borrower to be executed by the authorized persons and properly stamped as per the Indian Stamp Act, 1899. The agreement, properly executed and stamped, along with other documents as required by the financial institution must be returned to it. Once the financial institution also signs the agreement, it becomes effective.

STEP VII – DISBURSEMENT OF LOANS
Periodically, the borrower is required to submit information on the physical progress of the projects, financial status of the project, arrangements made for financing the project, contributions made by the promoters, projected funds flow statement, compliance with various statutory requirements, and fulfillment of the pre-disbursement conditions. Based on the information provided by the borrower, the financial institution will determine the amount of term loan to be disbursed from time to time. Before the entire term loan is disbursed, the borrower must fully comply with all the terms and conditions of the loan agreement.

STEP VIII - CREATION OF SECURITY
The term loans (both rupee and foreign currency) and the deferred payment guarantee assistance provided by the financial institutions are secured through the first mortgage, by way of deposit of title deeds, of immovable properties and hypothecation of movable properties. As the creation of mortgage, particularly in the case of land, tends to be a time consuming process, the institutions permit interim disbursements against alternate security (in the form of guarantees by the promoters). The mortgage, however, has to be created within a year from the date of the first disbursement. Otherwise, the borrower has to pay an additional charge of 1 per interest.

STEP IX - MONITORING
Monitoring of the project is done at the implementation stage as well as at the operational stage. During the implementation stage, the project is monitored through:
1. Regular reports, furnished by the promoters, which provide information about placement of orders, construction of buildings, procurement of plant, installation of plant and machinery, trial production, etc.
2. Periodic site visits
3. Discussion with promoters, bankers, suppliers, creditors, and other connected with the project
4. Progress reports submitted by the nominee directors, and
5. Audited accounts of the company.

During the operational stage, the project is monitored with the help of:
(i) Quarterly progress report on the project
(ii) Site inspection
(iii) Reports of nominee directors
(iv) Comparison of performance with promise.

The most important aspect of monitoring, of course, is the recovery of dues represented by interest and principal repayment.
Advertisements
Friends: (0)
Reply With Quote
Related to PROCEDURE FOR LOAN APPRAISAL
 

Similar Threads

Thread Thread Starter Forum Replies Last Post
EXPORT PROCEDURE Sunanda K. Chavan Managerial Economics ( Eco ) 0 October 13th, 2010 12:21 PM
Procedure Of Ipo vengabeats Stock Markets Tips & Gyan !! 22 September 5th, 2010 11:25 AM
What is the Procedure for Issuing an IPO? Kartik Raichura Articles !! 5 September 18th, 2009 06:19 PM
CUSTOMS LAW- PROCEDURE faaiz Taxation and financial services 0 January 4th, 2008 04:44 PM
ASSESSMENT PROCEDURE faaiz Taxation and financial services 0 January 4th, 2008 04:34 PM
 

Reply

Bookmarks

Tags
appraisal, loan, procedure

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Trackbacks are On
Pingbacks are On
Refbacks are On


Login
Forgot Password?  New User?
  

» Ads





» Recent Threads

Eid al-Fitr 2014 HD...
Last post by Pramit Singh
14 Hours Ago 07:59 PM
0 Replies
Eid al-Fitr SMS, Quotes,...
Last post by Pramit Singh
15 Hours Ago 07:35 PM
0 Replies
Eid al-Fitr 2014 Eid HD...
Last post by Pramit Singh
15 Hours Ago 07:23 PM
0 Replies
Eid al-Fitr 2014 : Eid...
Last post by Pramit Singh
15 Hours Ago 07:13 PM
0 Replies
Business environment... ( 1 2 3)
15 Hours Ago 06:53 PM
25 Replies
Indian Rupee Update by...
Last post by Market Magnify
17 Hours Ago 04:57 PM
4 Replies
Top 5 Best Happy Parents...
Last post by Pramit Singh
18 Hours Ago 04:09 PM
0 Replies
Parents Day SMS, Quotes,...
Last post by Pramit Singh
18 Hours Ago 03:55 PM
0 Replies
Happy Parents Day 2014...
Last post by Pramit Singh
18 Hours Ago 03:43 PM
0 Replies
MBA-IB Admission 2014 :...
Last post by Pramit Singh
22 Hours Ago 12:18 PM
0 Replies
Coalition Against...
Last post by Neil Man
22 Hours Ago 12:03 PM
0 Replies
Treasury and fund... ( 1 2)
Last post by Pramit Singh
22 Hours Ago 11:59 AM
14 Replies
MBA, MCA Admissions...
Last post by Pramit Singh
22 Hours Ago 11:57 AM
0 Replies
Asian Markets Update by...
Last post by Epic Research
23 Hours Ago 11:12 AM
3 Replies
Solution manual on... ( 1 2 3... Last Page)
Last post by Connie Tan
1 Day Ago 04:50 AM
42 Replies

» Projects Helpline

Retail Management Notes
Last post by Bhautik Kawa
4 Days Ago 10:56 AM

» THE BIG FIGHT

ManagementParadise.com is not responsible for the views and opinion of the posters. The posters and only posters shall be liable for any copyright infringement.


Management Paradise
About Us
Press
Jobs
Contact Us
Kartik Raichura
Legal
Terms & Conditions
Privacy Policy
Disclaimer
Copyrights
Help
Zeitgeist
Support
FAQs
Tour
Feedback
Partners
Follow
Copyright © 2004 - 2013 Management Paradise. Site Developed by Available.co.in