This is to certify that the project titled “Project Appraisal for working capital and term loan financing” is a bonafide work done by Mr. Nishit Chhabra, enrollment no : 09BSHYD0531, in partial fulfillment of the requirements of MBA program and submitted to IBS, Hyderabad. I also declare that the project is a result of my own efforts and that has not been copied from anyone. This work was not submitted earlier to any other university or institute for the award of the degree.
Place of SIP: New Delhi
It’s a great honor for me to undergo training at PUNJAB NATIONAL BANK, NEW DELHI as it gave me an opportunity to get practical exposure in the field of banking and understand the functioning of credit department. I am deeply indebted to my company guide, MR. SATISH PURI, SENIOR MANAGER, CAD, PNB for his valuable and enlightened guidance and encouragement during the training and who assisted me to a great extent in compilation of this report on PROJECT APPRAISAL FOR WORKING CAPITAL AND TERM LOAN FINANCING. I am extremely grateful to him for giving me an opportunity to work with him and providing me with maximum resources and his valuable time. I am also thankful to my faculty guide, MR. V. NARENDER, LECTURER, IBS, HYDERABAD who has regularly guided me with his thoughts and given me regular feedbacks about my report and without his help, I would not have been able to shape my report. Last but not the least, I am also grateful to the MR. MONISH MISHRA who has been of immense help in clearing my queries and preparation of the report.
MBA- 2009-2011 BATCH
ICFAI BUSINESS SCHOOL, HYDERABAD
Today, banks play a very important role in the economic life of the nation. The health of economy is closely related to the soundness of the banking system. The activities of the banks lead to stronger economic growth of country. Seeking opportunity for a wide exposure in banking sector, I, NISHIT CHHABRA (09BSHYD0531) undertook training at the CREDIT DIVISION of one of the most reputed bank in the country, PUNJAB NATIONAL BANK, NEW DELHI. Working here, I seek an opportunity to get the practical exposure of the banking industry and its functioning. The objective of the study was to analyze in depth, the loan policies and its sanctioning for corporate bodies. Different corporate bodies require capital for two main purposes: •
To finance their new projects
To meet their working capital requirements
Based on the above needs, I have prepared a report titled CREDIT APPRAISAL FOR WORKING CAPITAL AND TERM LOAN FINANCING focusing on various credit facilities provided by the bank. This project explains in detail both these kind of financing through different case studies on different companies. The study is undertaken to understand the process of project appraisal, credit risk rating and working capital assessment at PNB. Appraisal of project involves study of technical, economic and financial feasibility of the project. It is based on this analysis that a term loan for the project is sanctioned by the bank. However, in case of working capital financing, the basic task for the bank and the company is to calculate the Net working capital, which is done through working capital assessment. There are different ways based on which working capital can be calculated such as CMA Data, Nayak committee or Tandon Committee. Lastly, this project explains how PNB carries out its risk rating to rate a company, in order to determine the credit risk involved with the company. This credit risk rating can be helpful in fixing the correct pricing for financing. All the above mentioned topic put together, form the core functions of credit department at PNB. In order to understand this core functions, I went through various books provided by the bank’s library to understand the basic theory behind working capital and appraisal system. Apart from books, I also...
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