Podcast
Questions and Answers
What is a key consideration for business seasonality?
What is a key consideration for business seasonality?
- The business should have very low business activity during peak season
- The business should be involved in standalone perishable items
- The business should have regular sales throughout the year (correct)
- The business should have high sales during off-season
When should a loan proposal not be considered?
When should a loan proposal not be considered?
- When there is no or very low business activity during off-season (correct)
- When the business is involved in capital intensive activities
- When the business has a high barrier to exit
- When the business has high sales during off-season
Why should businesses involved in standalone perishable items be avoided?
Why should businesses involved in standalone perishable items be avoided?
- Due to high sales during off-season
- Due to high capital intensiveness
- Due to low barrier to exit
- Due to low shelf life, high wastage, and low capital intensive nature (correct)
What type of business is eligible for consideration?
What type of business is eligible for consideration?
What is used to verify the nature of business activity?
What is used to verify the nature of business activity?
How long is a credit bureau report valid for?
How long is a credit bureau report valid for?
What is the requirement for New To Credit (NTC) cases?
What is the requirement for New To Credit (NTC) cases?
What is the maximum number of DPD allowed in the last 12 months?
What is the maximum number of DPD allowed in the last 12 months?
What type of accounts are not acceptable?
What type of accounts are not acceptable?
Who needs to approve any deviation from the credit check criteria?
Who needs to approve any deviation from the credit check criteria?
Study Notes
Seasonality of the Business
- A permanent business with regular sales throughout the year is a key requirement; businesses with only seasonal sales are not eligible.
- Seasonality is evaluated based on the regularity of primary activities throughout the year, which is verified through documentary evidence (if available).
- Loan proposals will not be considered if there is little to no business activity during the off-season.
- Businesses involved in standalone perishable items are to be avoided due to:
- Low shelf life
- High wastage
- Low capital intensity
- Low barrier to exit
Credit Bureau Check
- Report validity is 30 days, counting from the disbursement date
Eligibility Criteria
- No current delinquency allowed in any existing active loans
- Any discrepancy in the bureau report must be justified with a No Objection Certificate (NOC) from the financial institution
- New To Credit (NTC) cases are permitted based on the business profile, cash flow, and financials of the customer
- No instances of more than 60 Days Past Due (DPD) in the last 12 months, meaning no continuously missed 2 EMIs in active loans for the past year
Loan Conditions
- No Repayment Obligation delinquency is allowed
- The customer should not have any Non-Performing Asset (NPA), Written-off, Settled Account, Doubtful, or Sub-standard accounts
Approval
- Any deviations from the above criteria must be approved by the Head – Credit
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Description
Learn about the seasonality of business and its impact on loan eligibility. Understand the guidelines for business loan proposals and what to avoid.
