Lending Risk Analysis (LRA) is a technique by which the risk of the loan is calculated. Banker must
analyze LRA when loan application is above 1 crore. This analysis is done by experienced people of Credit department of a bank. It is a ranking whose total score is 140. Among this score, 120 is for Total Business Risk and 20 for Total Security Risk.
In case of business risk, if the score falls ---------
―Between‖ 13-19, then-------Poor risk
―Between‖ 20-26, then -----Acceptable risk
―Between‖ 27-34, then-----Marginal risk
Over 34, then ------------- Good risk.
? In case of security risk, if the score fall --------
―Between‖ 0 to 10 then ------------Poor risk
―Between‖ 10 to 14, then -------- Acceptable risk
―Between‖ 14 to 20, then --------Marginal risk
Over 20, then ----------------------Good risk.
In LRA, following aspects are analyzed:
1) Supplies risk
2) Sales risk
3) Performance risk
4) Resilience risk
5) Management ability.
6) Level of Managerial teamwork
7) Management competent risk
8) Management integrity risk
9) Security control risk
10) Security covers risk.