28-06-2012, 12:13 PM
credit appraisal system
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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 AXIS Bank Ahmadabad.
OBJECTIVES:
• To study the credit appraisal methods.
• To understand the commercial, financial & technical viability of the proposal proposed and it’s finding pattern.
RESEARCH DESIGN:
Analytical in nature.
DATA COLLECTION:
• Primary data:
Informal interview with manager and other staff members at Axis Bank.
• Secondary data:
Books
websites
database at Axis Bank
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 AXIS Bank.
• Management Students:
The project will help the management student to know the patterns of credit appraisal in
Axis bank.
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.
INTRODUCTION TO BANKING SECTOR
A snapshot of the banking industry
The Reserve Bank of India (RBI), as the central bank of the country, closely monitors developments in the whole financial sector.
The banking sector is dominated by Scheduled Commercial Banks (SBCs). As at end March 2002, there were 296 Commercial banks operating in India. This included 27 Public Sector Banks (PSBs), 31 Private, 42 Foreign and 196 Regional Rural Banks. Also, there were 67 scheduled co-operative banks consisting of 51 scheduled urban cooperative banks and 16 scheduled state co-operative banks.
Scheduled commercial banks touched, on the deposit front, a growth of 14% as against 18% registered in the previous year. And on advances, the growth was 14.5% against 17.3% of the earlier year.
State Bank of India is still the largest bank in India with the market share of 20% ICICI and its two subsidiaries merged with ICICI Bank, leading creating the second largest bank in India with a balance sheet size of Rs. 1040bn.
Higher provisioning norms, tighter asset classification norms, dispensing with the concept of ‘past due’ for recognition of NPAs, lowering of ceiling on exposure to a single borrower and group exposure etc., are among the measures in order to improve the banking sector.
A minimum stipulated Capital Adequacy Ratio (CAR) was introduced to strengthen the ability of banks to absorb losses and the ratio has subsequently been raised from 8% to 9%. It is proposed to hike the CAR to 12% by 2004 based on the Basle Committee recommendations.