1. A Presentation on
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CREDIT APPRISAL
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Report Submitted in
Partial Fulfillment for the award of
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Presented by,
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Regd. No. # 1206301008
Roll No. # 12MB36
Under the guidance of
Mr. Susant kumar Patro
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Lect. In MBA
VITAM
Mr. Sivaram Mahapatra
Chief Manager
Canara Bank
VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
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Definition:
Credit Appraisal: Credit appraisal means investigation/assessment
done by the bank before providing any loans .
Importance of credit appraisal:
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It carry the risk.
To determine the eligibility and quantum of the loan.
Evaluating the credit worthiness of the applicant.
It assures the repayment capacity of the borrower.
VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
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HISTORY: Founder Shri Ammembal Subba Rao Pai, a great visionary and
philanthropist,
VISION:
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To emerge as a Preferred Bank by perusing global bench mark in
profitability, operational efficiency, asset quality, and expanding the
global reach.
MISSION:
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To provide quality banking service with good customer care, create
value for all stakeholders and continue as a responsive corporate
social citizen.
FUNCTION:
It lends money.
It borrows money.
It hepls in investing securities.
M VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
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To understand all the financial data and necessary document
provided by the borrower is completely reliable or not.
To understand the commercial, financial & technical
viability of the proposal proposed and it’s funding pattern
To understand the work culture and environment of Canara
Bank.
To understand all the steps taken by Canara Bank provide
finance for the establishment of new industrial,
infrastructure, public service project, as well as expansion,
diversification and modification of the existing ones.
VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
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The study restricted to only one branch.
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The time constraint was a limiting factor, as more time
required carrying out study on other aspects of the topic.
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VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
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The present paper is a case study which is restricted to branch
of Canara bank in Bhubaneswar. The objective of research
paper is to study the Credit Risk Assessment Model of Canara
Bank and to check the commercial, financial & technical
viability of the project proposed & its funding pattern. To
observe the movements to reduce various risk parameters
which are broadly categorized into financial risk, business
risk, industrial risk & management risk. For the purpose, the
secondary data is collected through the Books & magazines,
Database at canara bank, etc.
VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
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Particulars
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Exposure up to rs.2 lakhs an direct
agriculture loans, educational loans,
exposure to individuals under retail
lending schemes ,priority loans and
non priority loans where financial
statement are not available.
Total exposure of 2lakhs and above
up to 20 lakhs
Portfolio model
Total exposure above 20 lakhs and
up to 200 lakhs.
Manual model
Total exposure of above rs 2 crore
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Models
CRISIL’S Risk assessment model
Small value
M VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
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CREDIT APPRAISAL PROCESS OF CANARA BANK WITH
KALINGA INSTITUTE
OF INFORMATION AND TECHNOLOGY (KIIT)
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Organisation : KIIT,Private institution.
Founder/Secretary: Dr. Achyuta Samanta
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Industry: Educational Institution
Date of incorporation: 30.06.1992
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Banking with canara bank since: 07.02.2008
VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
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GIST OF PROPOSAL
To sanction fresh term loan of Rs.10 crores for construction of
bio technology auditorium building in the KIIT campus at a total
cost of Rs 14.51 crores
PROPOSED CREDIT REQUIREMENT
Fund based= 10 crores
M VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
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AMOUNT
MEAN OF
FINANCE
AMOUNT
Land including
development
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COST OF THE
PROJECT
0.00
Promoters
contribution
4.51
Term loan
10.00
Total
14.51
Building and
14.51
other civil works
Preliminary and 0.00
pre operative
expenses
Total
14.51
M VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
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Null hypothesis: - ( H0 )
Profitability of kalinga institute of information and
technology is independent on the credit rating rated
by CANARA Bank.
NET
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PBDIT
2010-11
76.20
209.92
17.23
2011-12
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Year
93.71
274.44
15.01
REVENUE
NPAT
VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
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As the calculated f-ratio is greater than the
tabulated f-ratio at 5% level of significance. So
my H0 is rejected and H1 i.e my alternative
hypothesis is accepted.
H1 = Profitability of kalinga institute of
information and technology is
dependent on the credit rating rated by
CANARA Bank.
VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
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Sales: Net revenue receipts of the subject society has
increased from Rs 209.92 crore as at 31.03.2011 to Rs 274.44
crore as at 31.03.2012, registered growth of 30.745. Society
has estimated net revenue of Rs 317.61 crore for the financial
year 2012-2013.
Profit / profitability : Society has earned net profit of Rs
15.01 crore during the year 2011-2012. Profit of the society
has declined by Rs. 2.22 crore as compared to previous year
on account of increase in interest cost and other
administration cost.
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M VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
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The bank must bring more transparency in appraisal of the
project there should be explanation for a appraisal of the
project that was sanctioned by higher authority.
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The bank must not rely on software or information provided
by the client the bank should dig in for other sources in order
to draw a real picture for the company.
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Banks concerned should continuously monitor loans to identify
accounts that have potential to become non-performing.
M VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
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The loan processing time should be reduced.
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Current Appraisal System is good.
The documents required for processing the loan should be reduced.
The bank should completely eliminate the file system and go
computerization at every stage as this removes paper work and creates
transparency in the system.
Care must be taken to ensure that the judgment in appraisal process
does not depend on one single person and a single factor
M VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
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Credit appraisal is done to check the commercial, financial & technical
viability of the Project proposed its funding pattern & further checks the
primary or collateral security cover Available for the recovery of such funds
Canara bank loan policy contains various norms for sanction of different
types of loans such as Kalinga institute of information and technology case
Canara bank norms for providing loans are flexible & it may differ from
case to case
A banker’s task is to identify/assess the risk factors/parameters &
manage/mitigate them on continuous basis.
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M VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
VIGNAN INSTITUTE OF TECHNOLOGY AND MANAGEMENT
