Appraisal and assessment of credit facilities
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Principles and Practices of Banking — JAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is credit appraisal in the context of bank lending?
Credit appraisal is the process by which a bank evaluates the creditworthiness, repayment capacity, and viability of a borrower's proposal before sanctioning a loan or credit facility.
What is the purpose of a techno-economic viability study in project appraisal?
To assess technical feasibility and economic sustainability of a project.
What are the five 'C's of credit appraisal used by banks?
The five C's are Character (integrity of borrower), Capacity (ability to repay), Capital (financial strength), Collateral (security offered), and Conditions (economic environment).
What is Net Present Value (NPV) and how is it used in project appraisal?
NPV is present value of future cash flows minus initial investment cost.
What is the purpose of conducting a techno-economic viability (TEV) study?
A TEV study assesses the technical feasibility and economic viability of a project to ensure it can generate sufficient cash flows to service the proposed debt.
What is the purpose of projected financial statements in credit appraisal?
They assess future repayment capacity and financial health of borrower.
What does 'credit assessment' mean in bank lending operations?
Credit assessment refers to determining the quantum of credit (loan amount) that can be sanctioned based on the borrower's financial position, business requirements, and repayment capacity.
What is meant by 'collateral security' in bank lending?
Additional security pledged beyond primary charge to secure a loan.
Video classes for this chapter
Appraisal and assessment of credit facilities
Appraisal and assessment of credit facilities
Appraisal and Assessment of Credit Facilities
Appraisal and assessment of credit facilities
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