The objectives of the study are as follows:
• Assess the viability of the project and minimization of the credit risk
• Assess the requirements of the borrower and study credentials in order to decide upon the
acceptable level of exposure.
The objectives required a series of processes that needed to be carried out. Following are stated below:
• Gathering information about the SME and it’s operations. Studying various aspects of the company
• Turnover of the company, major customers and suppliers along with industry/ market profile.
• The capacity and quality of the plant and machinery, checking for availability of the
resources like land, raw material etc.
• The technology proposed to be used by the company, to check whether it is new or a wellaccepted
one and whether the technology is in compliance with the industry standard or not.
• General profile of the company and the directors/proprietor and the company’s past
dealings with bank are also considered.
• Carrying out the Industry analysis after studying about the company and it’s operations. Under this,
the current trends and future expectations in the industry are studied.
• Undertake credit appraisal process, the proposal, assessment of the working capital requirements,
proposed financing, shareholding pattern and security details are studied. Internal credit rating of the
company is done where the company is rated under different heads namely financial performance,
market position, industry outlook etc. according to the guidelines as per the bank’s manual for credit
• Understand and reiterate bank officials’ comments and recommendations on the conduct of the
existing banking arrangements of the company. The risk assessment is undertaken and the policy
compliance with the bank is considered.