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    Credit Risk Analysis

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    mesba_17
    Credit risk analysis involves assessing loan proposals from different perspectives to determine if a bank should provide financing. It helps bankers select the right loan opportunities and borrowers by evaluating several risk components, including financial risk, business risk, management risk, technical risk, and relationship risk. The analysis considers factors such as the borrower's financials, cash flows, sales forecasts, balance sheet, profit and loss statements, marketability, competition, size, ownership, management experience, location, infrastructure, collateral, and projected financial performance.

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    Credit Risk Analysis

    Uploaded by

    mesba_17
    223 views3 pages
    Credit risk analysis involves assessing loan proposals from different perspectives to determine if a bank should provide financing. It helps bankers select the right loan opportunities and borrowers by evaluating several risk components, including financial risk, business risk, management risk, technical risk, and relationship risk. The analysis considers factors such as the borrower's financials, cash flows, sales forecasts, balance sheet, profit and loss statements, marketability, competition, size, ownership, management experience, location, infrastructure, collateral, and projected financial performance.

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    Credit risk analysis involves assessing loan proposals from different perspectives to determine if a bank should provide financing. It helps bankers select the right loan opportunities and borrowers by evaluating several risk components, including financial risk, business risk, management risk, technical risk, and relationship risk. The analysis considers factors such as the borrower's financials, cash flows, sales forecasts, balance sheet, profit and loss statements, marketability, competition, size, ownership, management experience, location, infrastructure, collateral, and projected financial performance.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    223 views3 pages

    Credit Risk Analysis

    Uploaded by

    mesba_17
    Credit risk analysis involves assessing loan proposals from different perspectives to determine if a bank should provide financing. It helps bankers select the right loan opportunities and borrowers by evaluating several risk components, including financial risk, business risk, management risk, technical risk, and relationship risk. The analysis considers factors such as the borrower's financials, cash flows, sales forecasts, balance sheet, profit and loss statements, marketability, competition, size, ownership, management experience, location, infrastructure, collateral, and projected financial performance.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Credit Risk Analysis

    It refers to the assessment of a loan proposal from different point of view to decide not.
    whether the bank should go for finance or not.

    Credit Risk Analysis helps the banker to ensure selection of right type of loan
    proposals/projects/enterprise and right type of a borrower.

    Principle Risk Component

    Financial Risk

    Business Risk/Industry Risk

    Management Risk

    Technical Risk

    Relationship Risk.

    Security Risk

    Considering the principle risk component assessment occurs from following point of view-

    Financial Aspect-

    Borrowers contribution of the business.

    Cash Inflow and Cash Flow statement.

    Sales Forecast

    Balance sheet

    Profit & Loss Account

    Relationship & Marketing Aspect-

    Marketability of the product

    Scope of market expansion

    Utilization of limit

    Account conduct

    Possible threat of competition.

    Business/Organizational Aspect

    Size of business

    Age of business

    Business Outlook

    Industry Growth

    Competition

    Barriers to Business

    Managerial Aspect Ownership


    Experience of the borrower
    Educational Background
    Sincerity, Honesty & Integrity
    Ability of the management to run the project efficiently
    Succession
    Team work.
    Technical Aspect

    Location of the business

    Infrastructure

    Machineries

    Security Aspect Security Coverage


    Collateral Coverage and Support
    In Addition with this, the following risk areas should be addressed during the risk analysis

    Borrower Analysis

    Industry Analysis

    Supplier/ Buyer Analysis

    Projected Financial Performance

    Mitigating Factors

    Loan structure

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