Help on Credit Appraisal and its Difference with Credit Policy

abhishreshthaa

New member
Credit Appraisal:
Credit Appraisal is a process to ascertain the risks associated with the extention of the credit facility. It is generally carried by the financial institutions which are involved in providing financial funding to its customers. Credit risk is a risk related to non repayment of the credit obtained by the customer of a bank. It is necessary to appraise the credibility of the customer in order to mitigate the credit risk. Proper evaluation of the customer is perfomed which measures the financial condition and the ability of the customer to repay back the loan in future. Generally the credit facilities are extented against the security know as collateral. But even though the loans are backed by the collateral, banks are normally interested in the actual loan amount to be repaid along with the interest. Thus, the customer's cash flows are ascsertained to ensure the timely payment of teh pricipal and the interest.


Credit appraisal is a skill which has to be acquired by study and supplemented by practice. Intuitive guess work has little place in appraising the credit rating or credit needs of a corporate unit. The credit managers of banks and Non Banking Finance Companies (NBFCs) are duty bound to accept or reject a proposal on the basis of its viability or non - viability.

TECHNIQUES USED IN CREDIT APPRAISAL

A.BY THE BANKS OR FINANCIAL INSTITUTIONS.B.BY THE COMPANY (BORROWER). Credit appraisal is done by banks or financial institutions by obtaining credit information of the borrowing company.

Credit information of the borrowing company can be obtained by the following sources:

1. BANKS AND FINANCIAL INSTITUTIONS:

2. BANK REFERENCES:

3. TRADE REFERENCE:

4. CREDIT RATING AGENCIES:

5. PUBLISHED BOOKS:

6. COMPANY FINANCIAL REPORTS:

7. PRESS REPORTS

8. STOCK MARKET OPINION:

9. CHARGES REGISTERED:
 

abhishreshthaa

New member
check out the attachment i think it give you more detail info about Credit Appraisal..


:SugarwareZ-235:
 

Attachments

  • 16634012-Project-Appraisal.pdf
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Jennyshine

Par 100 posts (V.I.P)
guys....... as per title hlp me out.......

Hi dear,

Please check attachment for Credit Appraisal Process Of SBI - A Case Study Of Branch Of SBI in HISAR, so please download and check it.
 

Attachments

  • Credit Appraisal Process Of SBI - A Case Study Of Branch Of SBI in HISAR.pdf
    256.1 KB · Views: 0
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