Credit Policy of State Bank of India

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Credit Policy of State Bank of India

By | August 2012
Page 1 of 33
1.1 Theoretical Aspects of Credit Policy
Credit is the provision of resources (such as granting a loan) by one party to another party where that second party does not reimburse the first party immediately, thereby generating a debt, and instead arranges either to repay or return those resources (or material(s) of equal value) at a later date. The first party is called a creditor, also known as a lender, while the second party is called a debtor, also known as a borrower. Credit allows you to buy goods or commodities now, and pay for them later. We use credit to buy things with an agreement to repay the loans over a period of time. The most common way to avail credit is by the use of credit cards. Other credit plans include personal loans, home loans, vehicle loans, student loans, small business loans, trade. A credit is a legal contract where one party receives resource or wealth from another party and promises to repay him on a future date along with interest. In simple terms, a credit is an agreement of postponed payments of goods bought or loan. With the issuance of a credit, a debt is formed. The word "policy" can be a broad and frightening term. While most companies have their own policies, procedures, and guidelines; it is unlikely that any two firms will define them in a similar manner. Furthermore, while many individuals appreciate the need for a workable set of regulations, "policy" carries some negative connotations of bureaucracy and inflexibility. The process of Credit Appraisal is multidimensional and includes management Appraisal, Technical Appraisal, Commercial Appraisal, and Financial Appraisal. Management Appraisal has received lot of attention these days as it is one of the long term factors affecting the business of the concern. Technical Appraisal emphasizes on the technical feasibility of the venture and also finds out the possible economic life period of the present technology. Commercial Appraisal focuses on the...

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