Asst Manager - F&A
52 Points
Joined January 2011
Dear friend,
Prepare yourself about
1.Cash reserve ratio, Repo/Reverse Repo, Statutory liquidity ratio
2.Find out the bank's BPLR (benchmark prime lending rate)
3.Think from this point of view: Credit appraisal is just like internal audit. However, in internal audit, you're more concerned about frauds & internal controls etc., in credit apppraisal, you're concerned with "liquidity" - so remember & apply Acid test ratio & current ratio. Look at the working capital management of the applicant. How?
Look at Inventory conversion period, Drs. conversion period, Crs. conversio period.
4.The gist is that for credit appraisal, cash flows, and WC mgmt. are as important as profits.
Please find attached, a proforma of credit appraisal techniques of SBI.
Hope I was helpful.