Lender's Appraisal procedure
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Retail Banking and Wealth Management — JAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is the primary purpose of a lender's appraisal in retail banking?
The lender's appraisal assesses the creditworthiness of a borrower and the viability of the loan proposal to determine the risk before sanctioning credit.
What is the meaning of 'conditions' in the 5 Cs of Credit framework?
Economic environment and loan purpose affecting repayment likelihood.
What does the '5 Cs of Credit' framework evaluate in a lender's appraisal?
The 5 Cs—Character, Capacity, Capital, Collateral, and Conditions—help the lender evaluate the borrower's ability and willingness to repay the loan.
What is a 'term loan' and how does it differ from a revolving credit facility?
Term loan has fixed tenure and schedule; revolving credit allows repeated drawdowns.
What is meant by 'character' in the context of credit appraisal?
Character refers to the borrower's integrity, credit history, and past repayment behaviour, indicating their willingness to honour financial obligations.
What is 'deduplication check' in the context of loan appraisal?
Verification to ensure borrower has no duplicate or multiple active loan applications.
What does 'capacity' mean during a lender's appraisal?
Capacity refers to the borrower's income-generating ability and cash flow adequacy to service the proposed debt within the repayment schedule.
What is 'net monthly income' (NMI) and how is it used in retail loan appraisal?
Take-home salary after deductions, used to determine eligible loan amount.
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