Syllabus of Basics of Lending PBS - 108: Unit 1

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SYLLABUS OF BASICS OF LENDING

PBS - 108
UNIT 1 - Principles of lending -Safety, security, liquidity, purpose, profitability, Cannons of
sound financing- 5 C's of lending - Character, Capacity, Capital, Condition and Collateral. Types
of borrowers, Wholesale versus Retail Lending, Broad sources of finance, Needs of business
entities, Working capital and term loans. Forms and features of lending- short-term and long-
term finance. Concept of security – unsecured and secured advances, Primary security and
collateral security. Fund-based and non-fund based credit in terms of cash outflows 6

UNIT 2 - Types of advances - Working Capital Finance viz: Cash Credit, Overdrafts , purchase &
discounting of bills, Packing Credit, etc, Bank Guarantees, Deferred Payment Guarantees, LCs,
etc. 6

.UNIT 3 - Concept of Security -Comparison of banker’s involvement in borrower’s project,


assessment of borrower and project viability. Collateral for safety of advance , Concept of
margin – need for margin, Loan to value ratio, impact on debt equity relationship 4

UNIT 4 - Types of charges created on assets, Types of security and charge for various facilities.
Mortgage – registered and equitable. Pledge, hypothecation, assignment of debt. Perfection of
security – registration, filing, etc. Protection of security – insurance, inspection, monitoring.
Third party guarantee. Valuation of security 6

UNIT 5 - "Selection of clients: due diligence - evaluation of Promoters and Management team,
market enquiries, evaluation of security, Pricing of loans and returns on funds lent 3

UNIT 6 - Understanding financial statements, Analysis of Financial Statements, Ratio Analysis


and interpretation thereof, Working Capital assessment methods - operating cycle & sales
turnover methods. (Gauging the need) and extent of finance-need based financing.
Appropriate mode of dispensation 8

UNIT 7- "PRIORITY SECTOR – CATEGORIES AND TARGETS / SUB-TARGETS - 1)      Adjusted Net
Bank Credit, 2)      Categories of advances under priority sector- Agricultural, Micro/Small
enterprises, Housing, Education and Weaker sections 3)      Targets and Sub targets for
Scheduled commercial banks and foreign banks - AXIS approach on priority sector., Scale of
finance for Crop loans", "Micro and Small Enterprises (Manufacturing and Services). Fair
practices code for lenders, Impact of technology on banking sector - Introduction to Digital
Lending" 4

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