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CREDIT APPRAISAL PROCESS

Receipt of application from applicant|

Receipt of documents

(Balance sheet, KYC papers, Different govt. registration no., MOA, AOA, and Propertiesdocuments)|

Pre-sanction visit by bank officers

|Check for RBI defaulters list, willful defaulters list, CIBIL data, ECGC caution list, etc.

|

Title clearance reports of the properties to be obtained from empanelled advocates

|Valuation reports of the properties to be obtained from empanelled valuer/engineers

|

Preparation of financial data|

Proposal preparation

|

Assessment of proposal|

Sanction/approval of proposal by appropriate sanctioning authority

|Documentations, agreements, mortgages

|

Disbursement of loan

Post sanction activities such as receiving stock statements, review of accounts, renew of

accounts, etc (On regular basis)

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DATA ANALYSIS

A) CREDIT RISK ASSESSMENT & APPRAISAL PROCESS OF SBI

CREDIT RISK ASSESSMENT

RISK: Risk is inability or unwillingness of borrower-customer or counter-party to meet theirrepayment obligations/ honor their commitments, as per the stipulated terms.

LENDER TASK

Identify the risk factors, and Mitigate the risk

RISK ARISE IN CREDIT: In the business world, Risk arises out of

Deficiencies / lapses on the part of the management (Internal factor)

Uncertainties in the business environment (External factor)

Uncertainties in the industrial environment (External factor)

Weakness in the financial position (Internal factor)

TO PUT IN ANOTHER WAY, SUCCESS FACTORS BEHIND A BUSINESS ARE

Managerial ability

Favorable business environment Favorable industrial environment

Adequate financial strength

CREDIT & RISK

Go hand in hand.

They are like twin brothers.

They can be compared to two sides of the same coin. All credit proposals have some inherent risks, excepting the almost negligible volume oflending against liquid collaterals with adequate margin.

LENDING DESPITE RISKS

So, risk should not deter a Banker from lending. A bankers task is to identify/ assess the risk factors/ parameters & manage / mitigate them on a

continuous basis.

But its always prudent to have some idea about the degree of risk associated with any creditproposal.

The banker has to take a calculated risk, based on risk-absorption/ risk-hedging capacity &risk-mitigation techniques of the Bank.