Appraisal
is necessary to justify the soundness of
an
investment. It is done with a view to determine—
1.
Commercial profitability; i.e.-technical, marketing, financial, managerial
and organizational soundness
2. Economical viability
3. Social desirability
Loan proposal will be appraised with updated market prise, quality and other
information of the merchandise and product. The appraisal/updates will be
checked by the concerned higher
authority to ensure that it was in order
& reviewed time to time(at lease annually)
A detail analysis
id
documented to arrive at the following aspects:
a) Credit worthiness
b) Guarantor/borrower's cash flow
c) Debt service coverage ratio;
d) Benefit cost ratio;
e) NPV,BCR &
IRR
f) Break even analysis
g)
Margin/liquidity
h) Assessment of working capital
i)
Cash flow analysis
j) Environmental issues
k) Ability to penetrate market sector and comparative factors
Before appraisal officer
will verify the invoice and contract with suppliers & customer and will ensure genuineness. During implementation period disbursing official will verify the proper utilization of the loan/fund and ensure utilization for which loan is sanctioned.