LENDER 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 66 rapid-fire Q&A cards.
What is lender appraisal in the context of retail lending?
Lender appraisal is the process by which a bank evaluates the creditworthiness, repayment capacity, and risk profile of a borrower before sanctioning a loan.
What is the primary objective of the lender appraisal procedure?
To assess borrower creditworthiness and repayment capacity before sanctioning.
What are the three Cs traditionally assessed during lender appraisal?
The three Cs are Character (willingness to repay), Capacity (ability to repay from income), and Collateral (security offered against the loan).
What is the meaning of 'due diligence' in retail loan appraisal?
Thorough investigation of borrower background, documents, and creditworthiness.
What does KYC compliance mean in the lender appraisal process?
KYC (Know Your Customer) compliance requires the lender to verify the identity, address, and financial profile of the borrower using prescribed documents before sanctioning any credit facility.
What is the role of income multiplier in determining loan eligibility?
It sets the maximum loan amount as a multiple of annual or monthly income.
What is the purpose of a credit information report (CIR) during appraisal?
A CIR obtained from bureaus like CIBIL provides the borrower's credit history, outstanding loans, repayment track record, and credit score, helping the lender assess default risk.
What is the purpose of obtaining a No Objection Certificate (NOC) during appraisal?
To confirm no dues or claims exist on the property or borrower from third parties.
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