Basic Parameters:
the banks before taking any individual into appraising does the following steps:
i. basic ratio analysis
here the banks reviews the various ratios like TOL, DE, CR, TNW and depending on their base values they calculate the risks involved in taking the project into appraisal.
ii. then the deploy their first hand tools of appraisal like the financial analysis which involves
a. background check of the individual/company
b. key personnel diligence
c. fund management of the co( although very essential not all banks does that)
d. success rate of the project undertaken and future's management of resources
e. analysis of the CMA data which is a key ingredient in deciding the interest rates as well the risk involved in taking the proposal forward
iii. when all this has been done including a thorough due diligence and a prompt SWOT analysis, the bank no gets into appraisal
this stage involves studying the risk and monitoring factors and the sensitivity of the project on hand
also the bankers are always keen on the commitment offered by the promoter on the repayment capacity and any disloated arousal of project on row. such as excess requirement of production than the allowed capacity to produce which requires the company to go for a outsourcing or take alternative initiatives to acheive the projected sales etc.
such details has to looked upon before taking the project to a proposal stage
even though this is only a general ideal of how banks appraise , the detailed appraisal varies with the type of industry/promoter being dealt with
the banks before taking any individual into appraising does the following steps:
i. basic ratio analysis
here the banks reviews the various ratios like TOL, DE, CR, TNW and depending on their base values they calculate the risks involved in taking the project into appraisal.
ii. then the deploy their first hand tools of appraisal like the financial analysis which involves
a. background check of the individual/company
b. key personnel diligence
c. fund management of the co( although very essential not all banks does that)
d. success rate of the project undertaken and future's management of resources
e. analysis of the CMA data which is a key ingredient in deciding the interest rates as well the risk involved in taking the proposal forward
iii. when all this has been done including a thorough due diligence and a prompt SWOT analysis, the bank no gets into appraisal
this stage involves studying the risk and monitoring factors and the sensitivity of the project on hand
also the bankers are always keen on the commitment offered by the promoter on the repayment capacity and any disloated arousal of project on row. such as excess requirement of production than the allowed capacity to produce which requires the company to go for a outsourcing or take alternative initiatives to acheive the projected sales etc.
such details has to looked upon before taking the project to a proposal stage
even though this is only a general ideal of how banks appraise , the detailed appraisal varies with the type of industry/promoter being dealt with