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Preparation of Credit Report and Selection of Right Type of Borrowers

In: Business and Management

Submitted By purween
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PREPARATION OF CREDIT REPORT AND
SELECTION OF RIGHT TYPE OF BORROWERS

1. Preparation of a credit report as well as selection of right type of borrowers are specialised type of works usually done by a well experienced officer under the direct supervision of the Branch Manager/Departmental Head.

2. In preparing a "Credit Report" the concerned officer is required to take into consideration a number qualities of the concerned borrower. It is as such of paramount importance that banks have to be very careful while selecting right type of borrowers.

3. While selecting a borrower security will not be the only thing to be relied upon.

4. If the banker has to realise every advance by going to the court or selling the securities, it will mean considerable expenditure and waste of time, apart from the loss which may occur in a forced sale.

5. It thus indicates that in the extension of bank credit, nothing is more significant than the ability and character of the borrower.
6. Practical bankers and experts suggest that the safest and the most dependable security that could be obtained is the integrity and business like dealings of the borrowers.

7. In view of what has been stated above it is evident that an advance, to be safe, would be granted to a reliable and honest borrower, who has the capacity to conduct his business. The study/selection of a right type of borrower involves the study of the three "Cs" of the party, i.e.

Character Capacity and Capital or, in other words three "Rs" i.e. Reliability Responsibility and Resourcefulness

8. For the purpose of obtaining information in respect of all the "Cs" of the borrower the lending banker will have to prepare a report which is termed as "Credit Report", sometimes called "Financial Report" on…...

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