Bank lending is both an art and science, which cannot be guided by merely a set of rules. It is to be guided by general principles only. No set of uniform rules can be invariably applied even in two similar circumstances. On the basis of experience, a banker has to shift good things out of the elements which he comes across. In place of being static, he must use his skill and diligence according to the changing types, times and conditions. A banker can take into consideration the aspects of credit appraisal communicated in this book while dealing with a lending proposal.
This book "Credit Appraisal & Lending Aspects in Banking" has fifteen self-sufficient chapters on the many domains of credit appraisal. Each chapter is comprehensive in its coverage of the subject matter. The style of presentation is lucid and to the point. Each chapter in this book is important, and pertains to a topic related to credit appraisal. A list of chapters and subject covered under each chapter in the book is as under:
1.FINANCIAL STATEMENTS
Balance sheet/P&L/Cash flow/Fund flow and Equity statement
2.FINANCIAL ANALYSIS
Appraisal of FS using trend analysis; common-size technique or vertical analysis; Use of debt yield ratio in appraisal.
3.RATIO ANALYSIS
Use of liquidity/ solvency /leverage/capital structure/ activity/turnover and profitability ratios in appraisal
4.OPERATING ANALYSIS
Preparation of flexible budget using different schedules of operating budget; Appraisal technique for different budgets using variance analysis
5.COST-VOLUME-PROFIT ANALYSIS
CVP analysis for single and multi-products; Effect of income tax on CVP Analysis; Targeted income; Target costing;BEP; Sensitivity analysis; Margin of safety; Operating leverage; Degree of operating leverage; Financial leverage; Profitability measures; Use and limitation of CVP analysis in credit appraisal
6.CAPITAL BUDGETING ANALYSIS
Concept of capital budgeting technique; PV of money; ARR; Pay-back period; Post payback profitability method; DCF or time adjustment technique; NPV; IRR; Conflict between NPV and IRR method; NTV; PI or benefit-cost ratio; Sensitivity analysis; Evaluation of proposal
7.WORKING CAPITAL ANALYSIS
Concepts of WC; Important committees; WC assessment by - Operating cycle/ Turnover/ MPBF /Projected balance sheet /Cash budget method
8. GENERAL AND LEGAL NORMS
Principles of bank credit; Different type of channels used for credit facility- Cash credit/Overdraft/Demand loan/Term loan/ Purchase or discount of bills/Packing credit/Credit card/LC/Loan syndication/ multiple banking/Takeover financing/ Consortium financing/Money market instruments/Commercial paper/ Certificate of deposits/Shares/Corporate bond/ Debentures; Mode of charging security- Lien/ Pledge/ Hypothecation/ Mortgage/ Assignment; Rules of Appropriation; Criteria of interest charge by bank on advances; MCLR; Central Registry; CIC; Credit scoring; Fair practice code
9. PRECAUTIONARY MEASURES
Precaution related to different borrowers/guarantor/tangible security
10.STATUTORY, REGULATORY AND EXPOSURE NORMS
11.SPECIAL TYPE OF BORROWERS
Individual/Non-corporate/Corporate borrower; Minor/Illiterate person/Blind person/Married Women/ Trust/HUF/ Joint borrower/ Sole proprietor/OPC/SHG/JLG/ Partnership Firm/LLP/ PPP/ Joint Stock Company / Cooperative Institutions/ Government Bodies/ Association of Persons
12. DOCUMENTATION
Use and importance of documents; Documentation for advances
13.RISK ASSESSMENT AND LENDING DECISION
Credit/default Risk/Interest rate/Liquidity / Operational /Compliance / Market /Strategic/ Reputation / Legal / Systematic/ Country risk; Sector specific lending risk - Agriculture/MSME/ Commercial Real Estate/ Infrastructure Lending/International Trade Finance; Steps to mitigate Bank's credit risk - Forward/Future/Option/Swap Contract
14.CREDIT APPRAISAL OF A BUSINESS ENTITY
15.CREDIT APPRAISAL AND LENDING DECISION

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• Education & ReferenceEducationEducation Theory

• Publication Date: January 4, 2018
• Text-to-Speech: Disabled
• Lending: Disabled
• Print Length: 1,384 Pages
• File Size: 25 KB