Credit Appraisal of Long Term Advances

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I-INTRODUCTION

INTRODUCTION TO THE STUDY:The main aim of the study conducted at South Indian Bank on credit appraisal of term loans was to get an idea on the various procedures followed by the banks for the sanctioning of the Term loans. The study was also aimed to know about the various criteria of the banks in order to assess the Term loan finance of the applicants who approach the banks. 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 of Term Advances/Loans ” at South Indian Bank (SIB), Kochi.

Objectives:
 To study the Credit Appraisal Methods in Term Advancing.  To understand the commercial, financial & technical viability of the project proposed & it’s funding pattern.
 To understand the pattern for primary & collateral security cover availa ble for recovery of such funds.

Research Design:
Analytical in nature

Data Collection:
Primary Data:


Informal interviews with Branch Manager and other sta ff members at SIB bank.



E- circulars of SIB



Personal studying of various Files and Reports on Term Loans at SIB, Regional office.

Secondary Data:


Books and magazines



Database at SIB



Internal reports of the banks



Library research



Websites

Expected contrib ution of the study:
This study will help in understanding the credit appraisal system at SIB & 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 the researcher in improving the knowledge about the credit appraisal system and to have practical exposure of the credit appraisal scenario in SIB. M anagement student:
The project will help the management student to know the patterns of credit appraisal in SIB bank and to understand the means to prepare a Project Report seeking Loan.

SIB 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 an MBA student specializing in Finance at Bharata Mata Institute of Management, Kochi, affiliated to MG University and has carried out the study as part of the curriculum.



The reason for taking up the project is to know and understand the credit appraisal system in banking sector.



To understand the Method of Preparing Projects and Evaluate of a Proposed Project.



Credit appraisal is the major focus of banking industries these days, so the project will help in understanding and analysing 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 dilution to the information and my 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.

II-PROFILES

INDUSTRY PROFILE:

Banking System in India
Reserve bank of India
(Controlling Authority)

Development Financial institutions

IFCI IDBI ICICI

Commercial
Banks

NABARD NHB

IRBI

Regional Rural
Banks

P ublic Sector Banks

SBI Groups...
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