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Banks checks Eligibility of the applicant while giving loans. Eligibility is mainly determined on the basis of income. Need to be Salaried/ Self Employed/ some source of income other factors such as income, age, residence, work experience, repayment capacity, past payment track record and place of work are also taken into account. Loans are available for any purpose depending on the customer requirement.
For getting a lone, along with application form several documents are to be submitted. The lists of important documents are given below;
Credit analysis is related to the determination of the credit worthiness of an individual before a loan is granted to him. It is different from lending to companies as the amounts involved are much smaller and are given to support a lifestyle as opposed to run a business.
Lending is loaded with risk as the loan may not get repaid. The cost of a bad loan is very high. If a bank lends Rs. 10,000 and the bank’s earning on it is 5%, the bank would need to lend Rs. 2, 00,000 for one year if the loan goes bad.
In addition, in retail credit the risk is that the loan is usually given to an individual and often there is no information on the credit worthiness of the person easily available. In corporate lending one has balance sheets, profit and loss accounts and other data, so in this care it is easy to analyse the credit worthiness.