Credit Appraisal System

Topics: Credit rating, Credit, Debt Pages: 37 (9354 words) Published: April 8, 2011

1. Statement of the problem
The study relates to analysis of credit appraisal system with reference to Axis Bank. Axis banks one of private sector banks in India, which provides loans and advances when it is required by individuals or companies and accepts the deposits from the public. while providing loans advances to the public it faces number of problems like : * Of interest loans

* Default interest security inadequate

* To study the credit appraisal methods.
* To study existing credit appraisal system .
* To understand the commercial, financial & technical viability of the proposal proposed and it’s finding pattern.

Scope of the study:
The topic selected is credit appraisal system with respect to banking industry which means how the managers in banks appraise the corporate firms lending process and how the whole process carried forward like a system keeping certain aspects like risk, legal into concern. The scope lays in way a bank finances its potential borrowers which is tailor made at time to meet the client need and help with all the services the bank can deliver in order to meet its persons goals and objectives

Methodology :
Souces of data collection ;
The data is most vital and in tegral aspect which is responsible for the completion of any project. The data can be gained and derived from two methods that is : * Primary data
* Secondary data
Primary data collection:
The data is been collected through primary sources like personal observationin to banking system and also interviewing with the guide and other managers an other managers an also through some personnel guidance of employees working in organization Secondary data collection :

Internal sources
Internal sources include accounting records, sale force reports , miscellaneous reports, balance sheet and annual reports External sources
External sources do not originate from sources rather it originate from outside sources like government publications, non government publications, services renderd from public and private firm and agencies etc * LIMITATION OF THE STUDY:

* As the credit appraisal is one of the crucial areas for any bank, some of the Technicalities are not revealed.
* 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.

Credit appraisal system
Credit management is a branch of accountancy, and is a function that falls under the label of “credit and collection “or “accounts receivable” as a department in many companies and institutions. They will usually deal with the credit vetting of customers, the resolution of any invoice queries or disputes, allocations of payments or cash application, internal fund movements , reconciliations and also maintaining positive working relationships with customer during the debt collection or credit review and approval process

A key requirement for effective revenue and receivables management is the ability to intelligently and efficiently manage customers credit lines or credit limits. In order to minimize exposure to bad debt , over-reserving, and bankruptcies, companies changing payment patterns. Likewise the ability to penetrate new markets and customers hinges on he ability of a company to quickly make well informed credit decisions and set appropriate lines of credit .

Credit management has evolved now from being a pure accounting function into a front-end customer facing function. It involves screening ofcustomers and only those who is credit worthy are allowed to do business. A sound review of the financial position of the customer, and understandingof their business model is the first step in ensuring that the company does not end up selling to a customer who ends up seriously delinquent or in default .

Hence, before the...
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