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Appraisal of MSME proposals has four distinct stages:
  • Conducting Due Diligence about the promoters & the proposed activity.
  • Conducting Techno-economic Feasibility Study.
  • Undertaking Financial appraisal & assessing Credit Requirements.
  • Credit Risk Rating, Compliance of Takeover Codes & Decision Making.

Loan proposals falling within the delegation of the Branch are sanctioned and disposed off at Branch level.

The bank has set up SARAL / SARAL LITE CENTRES at its various Regional Offices, where all activities are attended under Single Window Concept in liaison with the concerned branch with a view to quicken the decision making process, For proposals above Branch Heads delegation, processing is done at Sarals, wherever they are operational.

Where Saral / SARAL Lite are not operational, the proposals are sent by branches through Credit Department of respective Regional Offices to Sanctioning Authority under copies to Controlling Offices.

Working Capital requirement of Micro & Small Enterprises borrower uptoRs 5.00 crores is assessed based on Turnover Method, in which 25% of the Projected Achievable Sales Turnover is computed as Working Capital Requirement, of which 20% is provided by the bank & balance 5% is to be brought by way of promoter's contribution towards margin money.

Working Capital requirement of MSE borrower above Rs 5.00 crores is assessed based on Flexible Bank Finance Method, which is an extension of Permissible Bank Finance Method with customer friendly approach in as much as the scope of Current Assets is made broad based and for evaluating projected liquidity, acceptable level of Current Ratio is taken at 1.15:1 against benchmark level of 1.33:1. The assessment of credit requirement is made based on the projected study of the borrowers business operations vis-a-vis the production / processing cycle of the industry. The projected levels of inventory & receivables are examined in relation to the past trend, market development & industry trend. An uniform Classification for Current Assets & Current Liabilities is adopted on the terms given in the CMA data Format.

In case of Specific Industries / Seasonal Industries such as Software Development, Construction Industry, Film Industry, Sugar, Fertilizers etc. assessment of Working Capital including Short Term Loans can be made based on Cash Budget Method. In such cases apart from projected profitability, liquidity, gearing & fund flows; projected cash flows are accounted for to compute Working Capital Finance.

Term Loans are appraised based on viability of projects after judging Debt Repayment Capacity, Break Even Capacity, Internal Rate of Return, Debt Equity Ratio, Fixed Assets Coverage Ratio etc.