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.
Objective of the Research
To study the credit appraisal system in SME sector, at AXIS Bank
• To study the credit appraisal methods.
• To understand the commercial, financial & technical viability of the proposal proposed and it's finding pattern.
This report will help researchers improving knowledge about the credit appraisal system and to have practical exposure of the credit appraisal system at AXIS Bank.
• Management Students:
The project will help the management student to know the patterns of credit appraisal in Axis bank.