Topic- Credit Appraisal In Sme Sector Name And Class- Parvinder Kaur Chawla: Mms II (Sem IV) Project

ct guide- Mrs.Sarika Mahajan Year- 2013 Introduction- Credit Appraisal means an investigation/assessment done by the banks before providing any Loans & advances/project finance & also checks the commercial, financial & technical viability of the project proposed, its funding pattern & further checks the primary & collateral security cover available for recovery of such funds. 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. But even though the Loans are backed by the collateral, banks are normally interested in the actual Loan amount to be repaid along with the interest. Thus, the customer's cash flows are ascertained to ensure the timely payment of principal and the interest. 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. Every bank or lending institution has its own panel of officials for this purpose. Objectives- To study the Credit Appraisal System in SME sector. To study the Credit Appraisals. To analyse the procedure followed by the bank for sanctioning loan. To study the documentation required for credit appraisal. Scope of study- The topic selected is Credit Appraisal with respect to banking industry which means how the managers in banks appraise the corporate firms lending process and how the whole process is carried forward like a system. Review of Literatureo Abstract 1: AUTHOR- N.RAMU (Anamalai, 2008 Indian Cooperative Review, Vol. 45, No. 5, April 2008, pp. 305-321 )
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A cooperative is the only form of enterprise in which wealth depends less on capital and more on the men and women who are committed to join it. Urban Cooperative Banks (UCBs) in India have evolved as a result of peoples own efforts to create an institutional mechanism for meeting their credit requirements. The growth of these institutions was facilitated by ascendancy of the middle classes on the one hand and the inability of the commercial banks to meet their increasing expectations on the other. A noticeable feature of urban banking sector is its financial independence. This is the only sector in the cooperative movement which depends on its own funds without getting any assistance from the State or the Central Government. In fact, UCBs have been supporting federal units (District Central Cooperative Banks and State Cooperative Banks) by keeping their surplus resources in the form of deposits. UCBs have a distinct role in the banking sector in India as thus represent the earliest attempts at micro-credit dispensation among small borrowers in semi-urban and urban areas. UCBs were pioneers in acknowledging the common man as their client who has to be serviced and they have managed to create a niche among lower and middle income groups. This institutional network has indeed succeeded in facilitating banking service in a more user-friendly environment. Link: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2197341 Abstract 2: Author: N. RAMU ( Anamalai University,Osmania Journal of International Business Studies, Vol. II, No. 2, July-December 2007, pp. 51-62 ) Ensuing improvement in efficiency and performance of Urban Cooperative Banks (UCBs) has been the constant endeavour of Reserve Bank of India. Even during this liberalization era UCBs are performed under the directed policies of RBI, because of the weakness and instances of gross mismanagement of the cooperative banking sector were highlighted when the Ahmedabad - based Madhavpura Mercantile Cooperative Bank, with deposits of Rs.1200 crores went on liquidation in March 2001. The UCBs are run entirely with the public money and the Central, State Government has no exposure to them. At the same time, the operational efficiency of the UCBs are crucial in ensuring adequate and timely flow of credit to urban, sub-urban and semi-urban people for diverse purposes, intensive observation on their financial performance deserves serious consideration. The efficiency of UCBs was measured using Annual growth rate in absolute terms of 14 parameters which are grouped into three financial measures i.e. Income statement analysis, capital adequacy analysis and funding and liquidity analysis. Further, Two-way ANOVA is carried out for the 14 parameters selected, between the banks and between the years. The study covers five sample UCBs operating in Tamil Nadu selected on random basis. Link: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2199412
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 Research Methodology Methods of Collection of data Secondary data: The secondary data have been collected through the various books, magazines, brouchers & websites. o Research Limitation: The period of the study is limited. Financial matters are sensitive in nature, the same could not be acquired easily. It may be due to restrictions imposed by management. The study was conducted with the data available and analysis was made accordingly o Data Analysis and interpretation and Findings o Conclusion o Recommendations o Annexure o Appendices / Glossary o Bibliography http://www.financialexpress.com/news/theres-challenge-in-sme-financing.../132109/0 http://www.seminarsonly.com/Engineering-Projects/Finance/Credit-Appraisa-Processi-SME-Sector-of-State-Bank-of-India.php