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ADVISORS
TRAINING MANUAL
Credit Process At NumberTree
Client Due
Documentation
Meeting Diligence
Credit Rating
• Checkout the rating of company published by CRISIL, ICRA, SMERA,
India ratings & Research etc. After getting the rating, you can
checkout scale. E.g. CRISIL AAA – HIGHEST SAFETY , CRISIL D-
DEFAULT.
Financial Status
• Try to find out Line of activity, turnover and profitability of the
company from Zaubacorp, Indiatrade or from any other site.
Sometimes It may happen that you can get the information from
News and Publications.
Rating scale for Long-Term Instruments
CRISIL AAA CRISIL AA CRISIL A CRISIL BBB CRISIL BB CRISIL B CRISIL C CRISIL D
(Highest (High Safety) (Adequate (Moderate (Moderate (High Risk) (Very High Default
Safety) •Instruments Safety) Safety) Risk) •Instruments Risk) •Instruments
•Instruments with this rating •Instruments •Instruments •Instruments with this rating •Instruments with this rating
with this rating are considered with this rating with this rating with this rating are considered with this rating are in default or
are considered to have high are considered are considered are considered to have high risk are considered are expected to
to have the degree of safety to have to have to have of default to have very be in default
highest degree regarding timely adequate moderate moderate risk regarding timely high risk of soon.
of safety servicing of degree of safety degree of safety of default servicing of default
regarding timely financial regarding timely regarding timely regarding timely financial regarding timely
servicing of obligations. servicing of servicing of servicing of obligations. servicing of
financial Such financial financial financial financial
obligations. instruments obligations. obligations. obligations. obligations.
Such carry very low Such Such
instruments credit risk. instruments instruments
carry lowest carry low credit carry moderate
credit risk. risk. credit risk.
DUE DILIGENCE
Credit Facility
• Firms need cash to pay for all their day-to-day activities. The money
available to them to do this is known as Firm’s Working Capital.
• The main sources of working capital are current assets as these are the
short term assets that firm can used to generate cash. However, the
firm also has current liabilities & so these have to be taken account of
when working out how much working capital a firm has at its disposal.
• Apart from financing for investing in fixed assets, every business also
requires funds on a continual basis for carrying on day to day
operations. These include amount expenses incurred for purchase of
raw materials, manufacturing, selling & administration until such goods
are sold.
CASH CREDIT
• This method runs like a current account except that the money that
can be withdrawn from this account is not restricted to the amount
deposited in the account.
• Instead, the account holder is permitted to withdraw a certain sum
called ‘Limit Credit Facility’ in excess of the amount deposited into
the account.
• Cash credits are payable on demand. These are, therefore counter
part of demand deposits of the bank.
• It is the facility where the borrower can borrow the money mainly for
working capital needs, up to a certain specified limit.
• It is sanctioned for a period of one year & can be further renewed for
the satisfactory operations. This facility is given against primary and
collateral securities.
BANK OVERDRAFT
Facility Rates
Cash Credit 9.0 – 12.00%