Credit Appraisal Process of Sbi

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APJEM 
Arth Prabhand: A Journal of Economics and Management    Vol.2 Issue 1, January 2013, ISSN 2278‐0629  

 

CREDIT APPRAISAL PROCESS OF SBI: A CASE STUDY OF BRANCH OF SBI IN HISAR NANCY ARORA*; DR. ARTI GAUR**; MS. BABITA***
*Student, Department of Business Administration, CDLU, Sirsa. **Assistant Professor, Department of Business Administration, CDLU, Sirsa. **Teaching Associate, Department of Business Administration, CDLU, Sirsa.

ABSTRACT Credit risk is a risk related to non repayment of the credit obtained by the customer of a bank. Thus it is necessary to appraise the credibility of the customer in order to mitigate the credit risk. Proper evaluation of the customer is performed this measures the financial condition and the ability of the customer to repay back the loan in future. Credit Appraisal is a process to ascertain the risks associated with the extension of the credit facility. It is generally carried by the financial institutions which are involved in providing financial funding to its customers. In this paper, we study the Credit Risk Assessment Model of SBI Bank and to check the commercial, financial & technical viability of the project proposed & its funding pattern. Also to observe the movements to reduce various risk parameters which are broadly categorized into financial risk, business risk, industrial risk and management risk. The scope of the paper is restricted to branch of SBI in Hisar.             Pinnacle Research Journals                   10       http://www.pinnaclejournals.com                                                                                        KEYWORDS: Credit Risk Assessment Model, Credit Appraisal, Technical Viability. ______________________________________________________________________________ INTRODUCTION 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. Credit Appraisal is a process to ascertain the risks associated with the extension of the credit facility. It is generally carried by the financial institutions which are involved in providing financial funding to its customers. BASIC TYPES OF CREDIT There are four basic types of credit. By understanding how each works, you will be able to get the most for your money and avoid paying unnecessary charges.

 

APJEM 
Arth Prabhand: A Journal of Economics and Management    Vol.2 Issue 1, January 2013, ISSN 2278‐0629  

 

1. Service credit is monthly payments for utilities such as telephone, gas, electricity, and water. You often have to pay a deposit, and you may pay a late charge if your payment is not on time. 2. Loans let you borrow cash. Loans can be for small or large amounts and for a few days or several years. Money can be repaid in one lump sum or in several regular payments until the amount you borrowed and the finance charges are paid in full. Loans can be secured or unsecured. 3. Installment credit may be described as buying on time, financing through the store or the easy payment plan. The borrower takes the goods home in exchange for a promise to pay later. Cars, major appliances, and furniture are often purchased this way. You usually sign a contract, make a down payment, and agree to pay the balance with a specified number of equal payments called installments. The finance charges are included in the payments. The item you purchase may be used as security for the loan. 4. Credit cards are issued by individual retail stores, banks, or businesses. Using a credit card can be the equivalent of an interest-free loan--if you pay for the use of it in full at the end of each month. CREDIT APPRAISAL PROCESS Receipt of application from applicant | Receipt of documents (Balance sheet, KYC papers, Different govt....
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