DARE - Because Entrepreneurs Do

Credit investigation is a basic requirement of pre-sanction appraisal of a credit proposal. The objective of credit investigation is to know about five ‘C’s of the entrepreneur.

CHARACTER
The integrity of the borrower is the most important ingredient a banker looks for in an entrepreneur. The Bank satisfies through investigation that the applicant possesses unimpeachable integrity and that he is not involved in any unethical practices and is not involved in any fraudulent dealings.

CAPACITY
The financial capacity of the borrower is an important factor to be taken in to account by the Bank. The reputation of the applicant in his financial dealings is investigated through market enquiries by the banker. It is equally important to assess the competence of the entrepreneur to run the proposed business efficiently.

CAPITAL
The capital base of the entrepreneur determines his stake in the business as also his intrinsic financial strength. The larger the capital base, greater is the comfort for the bank. It provides a cushion to the borrower against any unforeseen circumstances.

COLLATERAL
The collateral securities available with the entrepreneur are looked in to by the banker as it provides additional comfort to the lender.

CASE HISTORY
If the entrepreneur is already having dealings with other banks enquiries are made about the same to determine his financial transactions, discipline and background etc. Banks also look in to the following aspects while appraising a loan proposal.
i) Technical feasibility
ii) Financial viability
iii) Overall bankability
iv) Identifiable activity and consistent and positive cash flow
v) Capacity to generate income and sufficient revenue to pay off the loan together with interest and other costs etc.

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