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    Stage 1: Business Development and Marketing Stage 2: Sound Lending Principles/Credit Analysis

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    saurabh_agra
    This document outlines the four stages of the lending process: 1) business development and marketing, 2) sound lending principles including quantitative and qualitative credit analysis, documentation, and capital adequacy, 3) monitoring through yearly reviews, and 4) remedial management such as winding up companies, enforcing guarantees, appointing receivers, and foreclosure. It also discusses microcredit as a way to provide very small loans to impoverished borrowers who lack collateral or credit history in order to support entrepreneurship and alleviate poverty. In India, post-nationalization of banks saw substantial resources allocated to meeting credit needs of the poor through branch expansion and manpower recruitment, with credit programs designed based on perceived needs and qualitative changes based on experiences.

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    Stage 1: Business Development and Marketing Stage 2: Sound Lending Principles/Credit Analysis

    Uploaded by

    saurabh_agra
    14 views2 pages
    This document outlines the four stages of the lending process: 1) business development and marketing, 2) sound lending principles including quantitative and qualitative credit analysis, documentation, and capital adequacy, 3) monitoring through yearly reviews, and 4) remedial management such as winding up companies, enforcing guarantees, appointing receivers, and foreclosure. It also discusses microcredit as a way to provide very small loans to impoverished borrowers who lack collateral or credit history in order to support entrepreneurship and alleviate poverty. In India, post-nationalization of banks saw substantial resources allocated to meeting credit needs of the poor through branch expansion and manpower recruitment, with credit programs designed based on perceived needs and qualitative changes based on experiences.

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    Banking Lending

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    Sound Lending Principles

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    This document outlines the four stages of the lending process: 1) business development and marketing, 2) sound lending principles including quantitative and qualitative credit analysis, documentation, and capital adequacy, 3) monitoring through yearly reviews, and 4) remedial management such as winding up companies, enforcing guarantees, appointing receivers, and foreclosure. It also discusses microcredit as a way to provide very small loans to impoverished borrowers who lack collateral or credit history in order to support entrepreneurship and alleviate poverty. In India, post-nationalization of banks saw substantial resources allocated to meeting credit needs of the poor through branch expansion and manpower recruitment, with credit programs designed based on perceived needs and qualitative changes based on experiences.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    14 views2 pages

    Stage 1: Business Development and Marketing Stage 2: Sound Lending Principles/Credit Analysis

    Uploaded by

    saurabh_agra
    This document outlines the four stages of the lending process: 1) business development and marketing, 2) sound lending principles including quantitative and qualitative credit analysis, documentation, and capital adequacy, 3) monitoring through yearly reviews, and 4) remedial management such as winding up companies, enforcing guarantees, appointing receivers, and foreclosure. It also discusses microcredit as a way to provide very small loans to impoverished borrowers who lack collateral or credit history in order to support entrepreneurship and alleviate poverty. In India, post-nationalization of banks saw substantial resources allocated to meeting credit needs of the poor through branch expansion and manpower recruitment, with credit programs designed based on perceived needs and qualitative changes based on experiences.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Sound Lending Principles

    Stage 1: Business Development and Marketing


    Through the selling cycle, lenders initiate the lending process.
    Stage 2: Sound Lending Principles/Credit Analysis
    (a) Quantitative
    Be able to read and analyse the financial statement (e.g. cash flows and ratios of a company).
    (b) Qualitative: Be able to understand the environment and trend of business.
    (c) Documentation Process: Be able to execute proper documentation on the collateral held.
    (d) Legal aspect of security: Be able to understand the procedures involved in taking debentures or a lien on
    fixed deposits and how to perfect a legal charge.
    (e) Relationship Income: Be able to analyse the profitability of the business.
    (f) Capital Adequacy: Be able to maintain a minimum of 8 percent ratio of equity capital to total risk-weighted
    loan assets.
    Stage 3: Monitoring
    A review is to be carried out on a yearly basis. Upon re-approval, should there be changes to certain
    terms and conditions, an Offer Letter will be sent to the borrower for his acceptance of the renewed
    facility.
    Stage 4: Remedial Management
    (a) Winding up winding-up action taken on the company.
    (b) Enforcement of guarantees to take legal action against the guarantors.
    (c) Receivership to appoint receivers and managers.
    (d) Foreclosure eventual recovery by auctioning a landed property.
    (e) Turnaround service to generate cash flows by salvaging the company.
    Landing to poor masses

    Microcredit is the extension of very small loans (microloans) to impoverished borrowers who typically lack collateral,
    steady employment and a verifiable credit history. It is designed not only to support entrepreneurship and alleviate
    poverty, but also in many cases to empower women and uplift entire communities by extension. In many communities
    worldwide, in developed and developing nations alike, women lack the highly stable employment histories that
    traditional lenders tend to require. This reality might result from factors such as leaving the paid workforce to care for
    children and elderly relatives. As of 2009 an estimated 74 million men and women held microloans that totalled US$38
    billion.
    MF in India - An Overview
    The post nationalisation period in the banking sector witnessed substantial amount of resources being earmarked
    towards meeting the credit needs of the poor. The banking network underwent an expansion phase without
    comparables in the world. The branch expansion was synergised with massive manpower recruitment drive for manning
    such branches. Credit came to be recognized as a remedy for many of the ills of the poverty. Credit packages and
    programmes were designed based on the perceived needs of the poor. Programmes also underwent qualitative changes
    based on the experiences gained. Besides the programmes initiated by the Central Government, a large number of
    credit-based programmes were introduced by the state governments with large resource allocations.

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