Credit Analysis

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RESEARCH METHODOLOGY

Introduction to Credit Appraisal:
Credit appraisal means an investigation/assessment done by the bank prior before providing any loans & advances/project finance & also checks the commercial, financial & technical viability of the project proposed its funding pattern & further checks the primary & collateral security cover available for recovery of such funds. Problem Statement:

To study the Credit Appraisal System of Rana Sugars in Sugar Industry, at UCO Bank. Objectives:
* To study the Credit Appraisal Methods.
* To understand the commercial, financial & technical viability of the project proposed & it’s funding pattern. * To understand the pattern for primary & collateral security cover available for recovery of such funds.

Research Design:
Analytical in nature
Data Collection:
Primary Data:
* Informal interviews with Branch Manager and other staff members at UCO bank. * E-circulars of UCO Bank.

Secondary Data:
* Books and magazines
* Database at UCO BANK.
* Internal reports of the banks
* Library research
* Websites

Expected contribution of the study:
This study will help in understanding the credit appraisal system at UCO BANK & to understand how to reduce various risk parameters, which are broadly categorized into financial risk, business risk, industrial risk & management risk associated in providing any loans or advances or project finance. Beneficiaries:

Researcher:
This report will help researcher in improving knowledge about the credit appraisal system and to have practical exposure of the credit appraisal scenario in UCO BANK. Management student:
The project will help the management student to know the patterns of credit appraisal in UCO BANK.

UCO Bank:
The project will help bank in reducing the credit risk parameters and to improve its efficiencies. It will also help to reduce risk associated in providing any loans & advances or project finance in future and to overcome the loopholes.

Short write-up on the researcher and reason for taking up the project: * The researcher is MBA 2nd year student, studying in UNIVERSITY BUSINESS SCHOOL, CHANDIGARH. * The reason for taking up the project is to know and understand the credit appraisal system in banking sector. * Credit appraisal is the major focus of banking industries these days, so the project will help in understanding and analyzing the situation prevailing currently.

Limitations of the study:
* As the credit rating is one of the crucial areas for any bank, some of the technicalities are not revealed which may have cause destruction to the information and our exploration of the problem. * As some of the information is not revealed, whatever suggestions generated, are based on certain assumptions. * Credit appraisal system includes various types of detail studies for different areas of analysis, but due to time constraint, our analysis was of limited areas only.

CHAPTER-1
INTRODUCTION TO BANKING SECTOR AND UCO BANK
A snapshot of the banking industry:
The Reserve Bank of India (RBI), as the central bank of the country, closely monitors developments in the whole financial sector.

The banking sector is dominated by Scheduled Commercial Banks (SBCs). As at end-March 2002, there were 296 Commercial banks operating in India. This included 27 Public Sector Banks (PSBs), 31 Private, 42 Foreign and 196 Regional Rural Banks. Also, there were 67 scheduled co-operative banks consisting of 51 scheduled urban co-operative banks and 16 scheduled state co-operative banks. Scheduled commercial banks touched, on the deposit front, a growth of 14% as against 18% registered in the previous year. And on advances, the growth was 14.5% against 17.3% of the earlier year. Higher provisioning norms, tighter asset classification norms, dispensing with the concept of ‘past due’ for recognition of NPAs,...
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