Essay On Retail Lending

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For loan to be good three conditions should be fulfilled, ie. Which could be known by a detailed study of the following six aspects: • Character: The loan officer must know the purpose of the loan and make sure that the customer will be able to make the repayment of the loan.

He should also determine that the borrower has a responsible attitude towards using borrowed funds, is truthful in answering the bank’s questions and willing to make every effort to repay what is owned.

Banks take in deposits and in turn pay interest on these deposits.

A bank is unable to pay interest if they do not have a source of income or a way of making a profit.

There are many different canons of lending, from Campari, 5 C’s, Parsers and Parts, however they all pose the same components and information required to complete an assessment and assist with making a credit decision.

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A loan policy gives loan officers and the bank’s management specific guidelines in making some loan decisions and in shaping the over all portfolios of the bank.

The following are the most important elements of a Written Loan Policy; 1.

Apart from paying interest, a bank has a demand to staff, shareholders and society.

When lending funds the bank pose a risk of not only interest payable but also losing the depositors original funds. They are new clients of our bank, however they have reported that they are good long standing customers of their existing bank and are seeking financing through our bank due to their existing bank not having a local presence in Scotland. Shepherd are seeking to run the hotel together as a partnership; however they have no experience in this business.