A Project Report ON: Analysis On "Credit Appraisal"
A Project Report ON: Analysis On "Credit Appraisal"
UNIVERSITY
A
PROJECT REPORT
ON
Analysis on
“CREDIT APPRAISAL”
UNDERTAKEN AT
SUBMITTED BY
SAURABH KUMAR
MBA (FINANCE AND CONTROL)
SEMESTER – 4TH
ROLL No: 6131048
SUBMITTED TO
PROF. ARPANA KATIYAR
INSTITUTE OF BUSINESS MANAGEMENT
1
C S J M UNIVERSITY, KANPUR
DECLARATION
I declare that this submitted work is done solely by me and to the best of my
knowledge; no such work has been submitted by any other person for the award
of post graduation degree or diploma.
I also declare that all the information collected from various secondary sources
has been duly acknowledged in this project report.
DATE:
2
ACKNOWLEDGEMENT
My debts are many and I acknowledge them with much pride and delight. This
project was undertaken as a part of MBA (FINANCE AND CONTROL)
Programme at Institute of Business Management Studies, CSJM UNIVERSITY
KANPUR . I would like to thank my institute and Central Bank of India which
has provided me with the infrastructure and opportunity for doing this project
work.
In fact it is very difficult to acknowledge all the names and nature of help and
encouragement provided by them. I would never forget the help and support
extended directly or indirectly to me by all.
3
4
TABLE OF CONTENTS
COMPANY PROFILE 6
4 INDUSTRY ANALYSIS 13
RESEARCH METHODOLOGY 21
6 INTRODUCTION TO CENTRAL BANK OF 26
INDIA
INTRODUCTION TO SME 28
11
12 CONCLUSION 63
13 BIBLIOGRAPHY 64
6
Profile
Type Public
Website www.centralbankofindia.co.in
The Reserve Bank of India (RBI), as the central bank of the country, closely
monitors developments in the whole financial sector.
DEFINITION/MEANING OF A BANK
As per Indian Banking Act, “ A service to accept deposits from people with
the intention to invest or lend with the condition of returning it immediately
whenever demanded at any predetermined time. An institute this service is
Bank”
While analyzing definition of bank as per Indian Banking Act, below mentioned
matters are clarified:
8
(1) Bank accepts monetary deposits from people.
(2) The intention behind accepting these deposits is to invest or lend the
respective fund.
(3) The function of accepting deposit or lending money is made under the
condition that on demand or as predetermined otherwise the same amount has
to be refunded immediately.
(4) The institution doing this type of business is called bank.
After the second phase of financial sector reforms and liberalization of the sector
in the early nineties, the Public Sector Banks (PSB) s found it extremely difficult
to complete with the new private sector banks and the foreign banks. The new
private sector banks first made their appearance after the guidelines permitting
them were issued in January 1993. Eight new private sector banks are presently
in operation. These banks due to their late start have access to state-of the- art
technology, which in turn helps them to save on manpower costs and provide
better services.
CLASSIFICATION OF BANKS:
The Indian banking industry, which is governed by the Banking Regulation Act
of India 1949 can be broadly classified into two major categories, non-scheduled
banks and scheduled banks. Scheduled banks comprise commercial banks and
the co-operative banks. In Terms of ownership, commercial banks can be further
grouped into nationalized banks, the State Bank of India and its group banks,
regional rural banks and private sector banks (the old / new domestic and
foreign). These banks have over 67,000 branches spread across the country. The
Indian banking industry is a mix of the public sector, private sector and foreign
banks. The private sector banks are again spilt into old banks and new banks.
10
Banking System in India
11
GLOBAL AND LOCAL SCENARIO OF BANKING SECTOR
INTRODUCTION:
Recent time has witnessed the world economy develop serious difficulties in
terms of lapse of banking & financial institutions and plunging demand.
Prospects became very uncertain causing recession in major economies.
However, amidst all this chaos India’s banking sector has been amongst the few
to maintain resilience.
On being asked what is the major strength of the Indian banking industry, which
makes it resilient in the current economic climate; 93.75% respondents feel the
regulatory system to be the major strength, 75% economic growth, 68.75%
relative insulation from external market, 56.25% credit quality, 25%
technological advancement and 43.75% our risk assessment systems.
Change is the only constant feature in this dynamic world and banking is not an
exception. The changes staring in the face of bankers relates to the fundamental
way of banking-which is going through rapid transformation in the world of
today. Adjust, adapt and change should be the key mantra. The major challenge
faced by banks today is the ever rising customer expectation as well as risk
management and maintaining growth rate. Following are the results of the
biggest challenge faced by the banking industry as declared by our respondents
(on a mode scale of 1 to 7 with 1 being the biggest challenge):
12
13
ORGANIC MEANS
INORGANIC MEANS
Subsidiaries 12%
Joint Venture 27%
Buyout Portfolios 9%
M & A 21%
Startegic Alliance 31%
14
We see from the above graph that amongst organic means of expansion, branch
expansion finds favor with banks while strategic alliances is the most popular
inorganic method for banks considering scaling up their operations. On the
other hand, new ventures and buyout portfolios are the least popular methods
for bank expansion.
BANKING ACTIVITIES:
Their survey finds that within retail operations, banks rate product development
and differentiation; innovation and customization; cost reduction; cross selling
and technological up gradation as equally important to the growth of their retail
operations. Additionally a few respondents also find proactive financial
inclusion, credit discipline and income growth of individuals and customer
orientation to be significant factors for their retail growth.
There is, at the same time, an urgent need for Indian banks to move beyond retail
banking, and further grow and expand their fee- based operations, which has
globally remained one of the key drivers of growth and profitability. In fact, over
80% of banks in their survey have only up to 15% of their total incomes
constituted by fee- based income; and barely 13% have 20-30% of their total
income constituted by fee-based income.
Out of avenues for non-interest income, we see that Banc assurance (85.71%)
and FOREX Management (71.43%) remain most profitable for banks.
Derivatives, understandably, remains the least profitable business opportunity
for banks as the market for derivatives is still in its nascent stage in India
15
Series 1
Bancassurance (85.71%)
Series 1
As Indian financial markets mature over time, there is also a need for innovative
instruments to deepen the market further. Suggestions ranged from micro saving
and micro insurance initiatives, Cash deposit machines, warehouse receipts, to
prepaid cash cards, derivatives, interest rate futures and credit default swaps as a
means to further the financial inclusion and expansionary process.
16
APPROACH TOWARDS RURAL LENDING
Opening of
branches in major
agriculturew (60%)
90%
80%
70%
Innovative and 60% customized 50% Rural internet kioks
40% (40.00%)
products (80%) 30%
20%
10% APPROACH TOWARDS RURAL
0%
LENDING
The great Indian industrial engine has nevertheless continued to hum its way
through most of the year long crisis. We asked banks about the sectors that they
consider to be most profitable in the coming years. All respondents were
confident in the infrastructure sector leading the profitability for the industry,
followed by retail loans (73.33%) and others
17
18
INDUSTRY ANALYSIS
Competitive Forces Model:
(2)
Potential Entrantsis
high as
development financial
institutions as well as
private
and Foreign Banks
have entered
(3)
The threat of substitute
product is very high like
credit
unions and investment
houses.
There are other substitutes as
well banks like mutual
funds,
stocks, government
securities,
debentures,
19
SWOT ANALYSIS:
The performance of banking industry is done through SWOT Analysis. It
mainly helps to know the strengths and Weakness of the industry and to
improve will be known through converting the opportunities into strengths. It
also helps for the competitive environment among the banks.
a) STRENGTHS
2. Banking network
After nationalization, banks have expanded their branches in the country, which
has helped banks build large networks in the rural and urban areas. Private Banks
allowed to operate but they mainly concentrate in metropolis.
b) WEAKNESS
1. Basel Committee
The banks need to comply with the norms of Basel committee but before that it
is challenge for banks to implement the Basel committee standard, which are of
international standard.
20
2. Powerful Unions
Nationalization of banks had a positive outcome in helping the Indian Economy
as a whole. But this had also proved detrimental in the form of strong unions,
which have a major influence in decision-making. They are against automation.
c) OPPORTUNITIES
4. Interest Banking
The advance in information technology has made banking easier. Business can
effectively carried out through internet banking.
21
d) THREATS
3. Inflation
The interest rates go down with a fall in inflation. Thus, the investors will shift
his investments to the other profitable sectors.
4. Recession
Due to the recession in the business cycle the economy functions poorly and
this has proved to be a threat to the banking sector. The market oriented
economy and globalization has resulted into competition for market share. The
spread in the banking sector is very narrow. To meet the competition the banks
has to grow at a faster rates and reduce the overheads. They can introduce the
new products and develop the existing services.
During the past 99 years of history the Bank has weathered many storms and
faced many challenges. The Bank could successfully transform every threat into
business opportunity and excelled over its peers in the Banking industry.
Among the Public Sector Banks, Central Bank of India can be truly described as
an All India Bank, due to distribution of its large network in 27 out of 29 States
as also in 3 out of 7 Union Territories in India. Central Bank of India holds a very
prominent place among the Public Sector Banks on account of its network of
4715 branches and 178 extension counters at various centres throughout the
length and breadth of the country.
23
DESCRIPTION OF SME IN THE MANUFACTURING SECTOR:
For the Manufacturing Sector, the MSMED Act 2006 defines micro, small and
medium enterprises (MSMEs) as mentioned below:
• A micro enterprise is an enterprise where investment in plant and
machinery does not exceed Rs 25 lakh.
• The investment in plant and machinery in a small enterprise is more than
Rs 25 lakh, but does not exceed Rs 5 crore.
• A medium enterprise is one where the investment in plant and machinery
is more than Rs 5 crore, but does not exceed Rs 10 crore.
In all these, the cost excludes that of land, building and the items specified by
the Ministry of Small Scale Industries with its notification No SO 1722 (E)
dated October 5, 2006.
• Small road and water transport operators that can now own a fleet of
vehicles not exceeding ten in number.
• Small business, whose original cost price of equipment used for business,
does not exceed Rs 20 lakh.
• Professional and self-employed persons, whose borrowing limits do not
exceed Rs 10 lakh of which not more than Rs 2 lakh should be for working
capital requirements
• Professionally qualified medical practitioners setting up a practice in semi
urban and rural areas, whose borrowing limits should not be less than Rs 15
lakh with a sub ceiling of Rs 3 lakh for working capital requirements.
OVERVIEW OF CREDIT APPRAISAL
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. 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. Generally the credits facilities are extended against the security know as
collateral.
It is the process of appraising the credit worthiness of a Loan applicant. Factors
like age, income, number of dependents, nature of employment, continuity of
employment, repayment capacity, previous Loans, credit cards, etc. are taken
into account while appraising the credit worthiness of a person.
However the 3 ‘C’ of credit are crucial & relevant to all borrowers/ lending,
which must be kept in mind, at all times.
• Character
• Capacity
• Collateral
If any one of these is missing in the equation then the lending officer must
question the viability of credit. There is no guarantee to ensure a Loan does not
run into problems; however if proper credit evaluation techniques and
monitoring are implemented then naturally the Loan loss probability / problems
will be minimized, which should be the objective of every lending Officer.
25
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.
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.
Credit cards are issued by individual retail stores, banks, or businesses. Using a
credit card can be the equivalent of an interest-free Loan- end of each month.-if
you pay for the use.
26
BRIEF OVERVIEW OF LOANS:
Loans can be of two types fund base & non-fund base:
Fund Base includes:
• Working Capital
• Term Loan
Particulars Amount
****
25% of estimated sales
Less : 5% of estimated sales(A) *****
OR ****
Net working capital(B) *****
Which is higher ( A or B)
MPBF *****
(Maximum Permissible Bank Finance)
24
Term Loan
A Term Loan is granted for a fixed Term of 3 years to 7 years intended normally
for financing fixed assets acquired with a repayment schedule normally not
exceeding 8 years. A Term Loan is a Loan granted for the purpose of capital
assets, such as purchase of land, construction of, buildings, purchase of
machinery, modernization, renovation or rationalization of plant, & repayable
from out of the future earning of the enterprise, in installments, as per a
prearranged schedule.
From the above definition, the following differences between a Term Loan &
the working capital credit afforded by the Bank are apparent:
• The purpose of the Term Loan is for acquisition of capital assets.
• The Term Loan is an advance not repayable on demand but only in
installments ranging over a period of years.
The repayment of a Term Loan depends on the future income of the borrowing
unit. Hence, the primary task of the bank before granting Term Loans is to assure
itself that the anticipated income from the unit would provide the necessary
amount for the repayment of the Loan. This will involve a detailed scrutiny of
the scheme, its capital assets. Financial aspects, economic aspects, technical
aspects, a projection of future trends of outputs & sales & estimates of cost,
returns, flow of funds & profits.
Particulars Amount
28
Cost of machineries *****
Cost of accessories/equipment *****
Total cost of machines *****
Less : 25% of margin *****
Eligible amount of term loan *****
Non-fund Base:
Letter of credit
25
• Bank Guarantees:
A contract of guarantee is defined as ‘a contract to perform the promise or
discharge the liability of the third person in case of the default’. The parties to
the contract of guarantees are:
a) Applicant: The principal debtor – person at whose request the guarantee is
executed
b) Beneficiary: Person to whom the guarantee is given & who can enforce it
in case of default.
c) Guarantee: The person who undertakes to discharge the obligations of the
applicant in case of his default.
Thus, guarantee is a collateral contract, consequential to a main co applicant &
the beneficiary.
30
CREDIT APPRAISAL PROCESS:
documents
31
from empaneled valuer/engineers
32
33
Proposal preparation
Assessment of proposal
Disbursement of Loan
34
Appraisal, Assessment and Sanction functions
1. Appraisal
A. Preliminary appraisal
Sound credit appraisal involves analysis of the viability of operations of a
business and the capacity of the promoters to run it profitably and repay the
bank the dues as and when they fall
Towards this end the preliminary appraisal will examine the following
aspects of a proposal.
35
• Projected profit and loss account and balance sheet for the operating years
during the
• Currency of the Bank assistance.
In respect of existing concerns, in addition to the above, particulars
regarding the history of the concern, its past performance, present financial
position, etc. should also be called for. This data/information should be
supplemented by the supporting statements Such as:
Audited profit loss account and balance sheet for the past three years (if
the latest audited balance sheet is more than 6 months old, a pro-forma
balance sheet as on a recent date should be obtained and analyzed). For
non-corporate borrowers, irrespective of market segment, enjoying credit
limits of Rs.10 lacs and above from the banking system, audited balance
sheet in the IBA approved formats should be submitted by the borrowers.
D. Credit risk rating: Draw up rating for (i) Working Capital and (ii) Term
Finance.
36
G. Structure of facilities and Terms of Sanction:
Fix Terms and conditions for exposures proposed - facility wise and overall:
J. Assistance to Assessment:
Interact with the assessor, provide additional inputs arising from the assessment,
incorporate these and required modifications in the draft proposal and generate
an integrated final proposal for sanction.
2. Assessment:
Indicative List of Activities Involved in Assessment Function is given below:
• Peruse the financial analysis (Balance Sheet/ Operating Statement/ Ratio
Analysis/
• Fund Flow Statement/ Working Capital assessment/Project cost & sources/
Break Even analysis/Debt Service/Security Cover, etc.) to see if this is
prima facie in order. If any deficiencies are seen, arrange with the appraiser
for the analysis on the correct lines.
• Bank’s lending policy and other guidelines issued by the Bank from time to
time
• RBI guidelines
• Market conditions
• Projected performance of the borrower vis-à-vis past estimates and
performance
37
• Strengths and Weaknesses of the borrower entity.
• Pricing and other charges and concessions, if any, proposed for the facilities
3. Sanction:
38
CREDIT APPRAISAL MODEL
Card Power:
Enterprise Power:
This product has been developed to meet the credit needs of the Micro and small
39
Enterprises covering both manufacturing and the service sectors. The facilities
Offered include CC Rupee export credit; pre & post shipment credit & non-fund
Based facilities like LC & BG. The maximum limit is restricted to Rs. 1.00
Crore
Business Power:
Business Power is an unsecured Term Loan (Maximum loan amount under the
product is Rs. 35 lacs) to be repaid by way of EMI’s over a maximum period of
4 years.
Their services ranging from Funded to Non-Funded, from Short Term to Long
Term and from Credit to Trade Services ensures to get finance the way it is best
suited for business.
Services:
• Cash Credit
• Working Capital Demand Loan
• Export Finance
• Short Term Loan
• Term Loan
• Clean Bill Discounting
• LC Backed Bill Discounting
• Co-Acceptance of Bills
• Credit Facilities against Guarantee or Stand By Letter of Credit issued by
Foreign Banks
• Letter of Credit
40
• Bank Guarantee
• Solvency Certificates
Cash Credit:
Bank offer Cash Credit facilities to meet day-to-day working capital needs. Cash
Credit is provided against the primary security of stock, debtors, other current
assets, etc., and/or collateral security of movable fixed assets, immovable
property, personal or corporate guarantee, etc. Interest is charged not on the
sanctioned amount but on the utilized amount
Bank also provides working capital facilities in the form of Working Capital
Demand Loan instead of cash credit facility. The primary or collateral security
will be as mentioned in cash credit facility. Here also interest is levied on the
amount drawn rather than on the amount utilized.
Export Finance:
Bank provides finance for export activities in the form of Pre-Shipment Credit
against firm order and or Letter of Credit and Post shipment credit. Credit is
available for procuring raw materials, manufacturing the goods, processing and
packaging the goods and shipping the goods. Finance is provided in Indian or
foreign currency depending upon the need of the borrower.
41
such situations it provides Short Term Loans for tenure up to a year to ensure that
business runs smoothly.
Term Loan:
Bank discount trade bills drawn under Letters of Credit issued by reputed banks
to fund receivables. This facility is provided for a period of 3-6 months
depending upon the tenor of the bill or Letter of Credit.
Co-Acceptance of Bills:
Bank also provides co-acceptance of trade bills depending upon the need of the
borrower.
42
Letter of Credit:
Apart from fund based working capital facilities Bank provides a range of
NonFund Based facilities such as Letter of credit, Bank Guarantees, Solvency
certificates, etc. Letter of Credit is provided to meet trade purchases. These are
generally provided for 3-6 months depending upon Trade cycle. Apart from this
it provides Import Letter of Credit for importing machinery or capital goods.
Such LCs are for tenure ranging from 1-3 years depending upon the need of the
borrower.
Bank Guarantee:
Bank provides Bank Guarantee on behalf of its client to various other entities
such as Government, quasi government bodies, corporate and so on. it provides
a range of guarantee such as Performance guarantee, financial guarantee, EPCG
etc. The tenure of Bank Guarantee range from 1 year to 10 years depending upon
the purpose of the guarantee.
Solvency Certificates:
Bank also provides solvency certificate depending upon the need of the borrower.
In order to have better control over the portfolio, it is felt that the budget for
schematic advances should be allotted only to select branches, where the
potential and manpower support exist for such business.
All requests for interest rate concessions are to be forwarded to the Advances
Cells.
DEFINITION:
Of all different types of risks that a bank is subject to, credit risk can be defined
as the risk of failure on the part of the borrower to meet obligations towards the
bank in accordance with the Terms and conditions that have been agreed upon.
44
Inability and/or unwillingness of the borrower to repay debts may be the cause
of such default.
The bank aims at minimizing this risk that could arise from individual
borrowers or the entire portfolio. The former can be addressed by having well-
developed systems to appraise the borrowers; the latter, on the other hand, can
be minimized by avoiding concentration of credit exposure with a few
borrowers who have similar risk profiles. Credit risk management becomes
even more relevant in the light of the changes that have been brought about in
the economic environment, including increasing competition and thinning
spreads on both the sides of Balance sheet
Factors determining credit risk of a bank’s portfolio can be divided into external
and internal factors. The banks do not have control on external factors. These
include factors across a wide spectrum ranging from the state of the economy to
the correlation among different segments of industry. The risk arising out of
external factors can be mitigated via diversification of the credit portfolio across
industries especially in light of any expectations of adverse developments in the
existing portfolio.
Given that the banks have very little control over such external factors, the bank
can minimize the credit risk that it faces mainly by managing the internal
factors.
These include the internal policies and processes of the bank like Loan policies,
appraisal processes, monitoring systems etc. These internal factors can be taken
care of, partly, via effective rating and monitoring systems, entry level criteria
etc. These processes would enable improvement in the quality of credit
decisions.
45
This would effectively improve the quality (and hence profitability) of the
portfolio. While monitoring systems are useful tool at post-sanction stage, rating
systems act as important aid at the pre-sanction stage.
The Bank has developed tools for better credit risk management. These focus on
the areas of rating of corporate (pre-sanctioning of Loans) and monitoring of
Loans (post-sanctioning). The focus of this manual is to familiarize the user with
the credit rating tool.
Use in decision-making
Credit rating helps the bank in making several key decisions regarding credit
including:
It should, however, be noted that credit rating is one of the inputs used in taking
credit decisions. There are various other factors that need to be considered in
taking the decision (e.g., adequacy of borrower’s cash flow, collateral provided,
and relationship with the borrower). The rating allows the bank to ascertain a
probability of the borrower’s default based on past data.
46
Main features of the rating tool:
47
The SME rating tool has been developed for the purpose of assigning a credit
rating to the SME borrower of the Bank. The aim of the tool is to provide a
standardized system for the bank to evaluate the credit risk of different
borrowers. It should, however, be noted that this tool is not the standalone
exercise for the purpose of sanctioning of Loan to a SME borrower. It should be
supplemented with other inputs important in the sanctioning process.
The following broad areas have been considered for determining the rating of
borrowers in the SME category:
• Financial performance
• Business performance
• Industry outlook
• Quality of management
• Conduct of account (after roll out of the Monitoring tool)
Within each of these broad areas, various parameters have been used for
obtaining an overall rating of the borrower. In the following sections, we shall
discuss in greater detail the structure of the tool and the methodology of using it.
• Financial performance
The tool in its current form uses various parameters for rating a borrower on its
financial strength. These various sub-parameters give us an idea of the different
sources of risk being faced by a company in different areas.
• Quality of management
48
Quality of the management of a borrower unit has a direct impact on the
performance of the unit. Also, it would have a direct impact on the integrity of
the borrower especially in Terms of its willingness to repay its debt.
• Industry
49
RATING SCALES:
The rating tool for SME has an 9-point rating scale, which ranges from A++ to D.
43
RESEARCH METHODOLOGY
INTRODUCTION:
Credit appraisal means investigation/assessment done by the bank before
providing any loans and advances/project finance and also checks the
commercial, financial &industrial viability of the project proposed its funding
pattern and further checks the primary & collateral security cover available for
recovery of such funds.
PROBLEM STATEMENT:
To study the credit appraisal system in SME sector, at Central bank of India.
OBJECTIVES:
• To study the credit appraisal methods.
• To understand the commercial, financial & technical viability of the
proposal proposed and it’s finding pattern.
DATA COLLECTION:
51
• Primary data:
Informal interview with manager and other staff members at Central bank
of India.
• Secondary data:
Books
websites
database at Central bank of India
library research
BENEFICIARIES:
Researchers:
This report will help researchers improving knowledge about the credit
appraisal system and to have practical exposure of the credit appraisal
system at Central bank of India.
Management Students:
The project will help the management student to know the patterns of credit
appraisal in Central bank of India.
CONCLUSION
From the study of Credit appraisal of SME, it can be concluded that credit
appraisal should therefore be based on the following factors, the same are
applied at Central bank of India:
• Financial performance
• Business performance
• Industry outlook
• Quality of management
• Conduct of account
52
Central Bank of India loan policy contains various norms for sanction of
different types of loans. These all norms do not apply to each & every case.
Central bank of India norms for providing loans are flexible & it may differ
from case to case.
In all, the viability of the project from every aspect is analyzed, as well as
type of business, industry, promoters, past records, experience, projected
data and estimates, goals, long term plans also plays crucial role in
increasing chances of getting project approved for loan.
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.
53
BIBLIOGRAPHY
WEB SITES:
• www.rbi.org.in
• www.centralbankof india.com
• www.indianbankassociation.com
• www.scird.com www.project99.com
BOOKS:
• Yes
• No
• Not Always
Q. 2.) Did the Bank updates its credit rating for the last financial year
within six months from the date of close of the financial year
• Yes
• No
• Not Always
Q. 3). Did the Bank submit the credit rating report complete in all respects to the
Credit Rating Agency within seven days of its receipt from credit rating agency?
• Yes
• No
• Not Always
Q. 4) Did the Bank make public the credit rating report within seven days of
its receipt from the credit rating agency?
• Yes
• No
• Not Always
Q. 5) Did the Bank fully secure itself against all guarantees issued for the
condi-tions mentioned in the Regulation of Credit Rating Agency?
• Yes
• No
• Not Always
•
Credit score provided by a credit reporting agency
•
Third party report
•
Credit information or history only, no credit score provided by a credit
reporting agency
• Yes
• No
• Not Always
56
Survey Questionnaire on Credit Appraisal Process of Bank Loans at
CENTRAL BANK OF INDIA.
I furnished here under the details on a survey conducted by me on BANK‟s
employees working in the credit department and queries to my question:
Q 1.) Did the Bank get itself credit rated by a credit rating agency,
No 0 0 0 0
Not Always 0 0 0 0
50
.
30
25
20
15
.
10
0
Yes No Not Always
From the survey it has been found that all the 25 respondents think that, CBI
Bank get itself credit rated by a credit rating agency, which is approved by
Credti Rating Agency. So here 100% of the respon-dent prefers option 1- Yes.
Q. 2.) Did the Bank updates its credit rating for the last financial year within six
months from the date of close of the financial year?
.
30
25
20
15
.
10
0
Yes No Not Always
From the survey it has been found that all the 25 respondents think that, CBI
Bank get itself credit rated by a credit rating agency, which is approved by
Credti Rating Agency. So here 100% of the respon-dent prefers option 1- Yes.
51
Q. 3). Did the Bank submit the credit rating report complete in all respects to the
Credit Rating Agency within seven days of its receipt from credit rating agency?
From the survey it has been found from 25 respondents 72% thinks that, CBI
Bank submit the credit rating report complete in all respects to the Credit Rating
Agency within seven days of its receipt from credit rating agency& 28% thinks
CBI bank didn‟
52
Q. 4) Did the Bank make public the credit rating report within seven
days of its receipt from the credit rating agency?
.
16
14
12
10
8
.
6
0
Yes No Not Always
From the survey it has been found from 25 respondents 60 % thinks that, CBI
Bank make public the credit rating report within seven days of its receipt from
the credit rating agency, 24% respondent thinks no, the Bank doesn‟t do it and
4% respondent thinks the Bank make public the credit rating re-port within
seven days of its receipt from the credit rating agency, but not always
53
Q. 5) Did the Bank fully secure itself against all guarantees issued for the condi-
tions mentioned in the Regulation of Credit Rating Agency?
20
15
.
10
0
Yes No Not Always
Here the survey shows that from 25 respondents, 80% prefer option 1 –Yes, 8%
prefer option 2 – No and 12% prefer option 3 – Not always
54
.
25
20
15
.
10
0
SOD HBL General Loan Corporate loan
From the survey it has been found that, form 25 respondents 88% respondent
prefer option 4 - “Corporate loan”, 8% prefer option - 3 “General Loan” and
remaining 4% prefer option 2 – “House Building Loan”.
55
Q. 7 What type of Credit rating score does Bank use?
25
20
15
.
10
0
Credit score provided by Third party report Credit information or history
a credit reporting agency only, no credit score provided
by a credit re-porting agency
Here the survey shows that from 25 respondents, 100% goes with option 1 –
“Credit score provided by a credit reporting agency”
56
.
30
25
20
15
.
10
0
Yes No Not Always
From the survey it has been found that, form 25 respondents the entire 100%
respondent pre-fers option 1 - “Yes”.
57
Q. 9 Is a credit rating score shared with other insurers?
.
25
20
15
.
10
0
Yes, on a request basis Yes, only within the No Total
only group of affi-liated
companies
From the survey it has been found that, form 25 respondents 88% respondent
prefer option 2 - “Yes, only within the group of affiliated companies”, and
remaining 3% prefer option 3 – “Yes, on a request basis only”.
58
Only on request 0 0 0 0
Never 0 0 0 0
From the survey it has been found that, form 25 respondents 88% prefer option
.
25
20
15
10 .
0
More than once a Annually Every two or Only on request Never
year more years