Banking Operations: Scrutiny of Loan Applications

In today’s fast-paced environment, the banks that are operating in the retail market require a change in value chain for delivering their competitive products and services to its customers.So, I n this process of change attention has been given from lower end delivery channels to ensure a smooth and reliable services.In the process of loans and advances an integrated strategy from sourcing, evaluating, servicing, recoveries and write-offered one by banks in order to give a satiable services to the customers.

LOAN APPROVAL PROCESS

Though all the banks have their own internal procedures for final approval of loans.The essential minimum procedures for the approval of loan application is given as guidelines by the Reserve Bank Of India.The procedure is as follows

• Appraisal
• Security evaluation
• Loan sanction
• Disbursement

Appraisal:-

• Personal interview in which the borrowers are interviewed personally by the manager where they are explained about the process for availing the loan and all the required documents are called for scrutinizing.
• Eligibility status check is done by thorough review of the documents submitted by the borrower for availing loan for his eligilibility including the identity,a ddress and income is done,f ollowed by the CIBIL check to know abot his credit repayment habits.
• Documents submission is done after the borrower meets the basic eligibility criteria and he is required to submit a application form containing various details including details in accordace to the KYC norms.Once, these documents are submitted it will be scrutinized by the loan department of the concerned bank.
• Verification/scrutiny in this a bank personnel will visit the concerned borrower to check their capacity to repay the loans by cross-checking the borrowers work place.

Security evaluation

It is done in the case of business loans were the collateral securities are evaluated to come at asset value of the prospective borrower.An conservative approach is always done by the bank personnel.

Loan sanction

Determination of the amount to be sanctioned-once the above two procedures are completed,t he authority will determine the amount of loan to be granted to the borrower as per the procedure established by the bank.

Disbursement

The bank will ensure the timely disbursement of loans as per the terms and conditions as laid during the sanction of loan amount.The banks will also do a post disbursement supervision according to the conditions laid by the bank.