Credit appraisal is the process used by banks and financial institutions to evaluate a borrower’s creditworthiness before approving a loan. It helps lenders assess repayment capacity, verify financial information, evaluate collateral, and minimise the risk of defaults. A sound credit appraisal process ensures responsible lending while protecting the interests of both borrowers and lenders.
Credit Appraisal FREE Notes PDF
Build a strong understanding of credit appraisal with our concise and easy-to-follow study notes. The PDF covers the meaning and objectives of credit appraisal, validation of credit proposals, KYC and documentation checks, the Five Cs of Credit, financial analysis, technical and managerial appraisal, collateral evaluation, and key regulatory considerations in a simplified format for quick learning and revision.
Credit Appraisal LIVE Quiz
Test your understanding of credit appraisal with our FREE LIVE quiz. Practice important questions on credit evaluation, the Five Cs of Credit, loan proposal validation, financial assessment, collateral, and lending principles to strengthen your concepts and measure your progress.
Q1. What does the term “Credit” refer to in the context of banking?
Q2. Credit Appraisal is best defined as:
Q3. Which of the following is NOT typically evaluated during credit appraisal?
Q4. The primary purpose of credit appraisal for a bank is to:
Q5. CIBIL score is used in credit appraisal to measure the borrower’s:
Q6. Validation of a credit proposal means:
Q7. KYC in the context of credit validation stands for:
Q8. For a business loan, which document is NOT typically required for KYC?
Q9. During documentation check, which financial statement reflects a company’s revenues and expenses?
Q10. A poor CIBIL score indicates:
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Q11. If a property worth ₹100 is pledged as collateral, and the bank gives a loan of ₹75, the margin maintained is:
Q12. RBI’s exposure limits restrict banks from lending:
Q13. “Character” in the Five Cs framework refers to the borrower’s:
Q14. Which ratio is commonly used to assess an individual’s repayment capacity?
Q15. A Debt-to-Income ratio of 70% for an individual would typically be considered:
Q16. “Capital” in the Five Cs refers to:
Q17. Collateral verification involves checking all EXCEPT:
Q18. “Conditions” in the Five Cs primarily refers to:
Q19. The Debt Service Coverage Ratio (DSCR) is used to evaluate:
Q20. Priority Sector Lending (PSL) requirements are set by:
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