Page 47 - Banking Finance August 2020

ARTICLE

CIBIL REPORT -

A TOOL FOR

EXERCISING

PROPER DUE

DILIGENCE

I t is the main business of Banks to lend the public be recovered within the stipulated time. Due diligence

money to earn profits. Borrowers who borrowed
begins right from identifying the prospective borrower and
money from Banks may forget to repay the loan in
ends with the repayment in full. Due diligence is process of
time due to various reasons. This forces the Banks to
decision. Due diligence is continuous process starting with
think carefully before taking a credit decision. In this verification of facts and figures to take an appropriate credit
situation, banks like to sanction loans or credit cards to those the interaction with the prospective borrower and end with
who they feel credit worthy. Due diligence is nothing but repayment of loan.
verification of facts before considering a proposal for credit
facility. Function of a Branch Manager is not only to increase To make the due diligence process more effective, branch
the volume of assets but also to keep them secure and in officials can adhere the below mentioned points
Standard category. o Interaction with the prospective borrower informally to
know basic details of the borrower and activity.
Exercising due diligence is all the most important before
o Application in proper format specific for the activity. It
sanction of a loan as the loan amount with interest are to
is an offer document and a basis of agreement between
the Bank and the customer
About the author o Scrutiny of the application thoroughly so that it may be
D. Surendranath ensured that applicant had filled all relevant columns
Chief Manager and also submitted all necessary enclosures
Union Bank of India o At this juncture, credit report is to be generated, read
Staff College, Kalkere, Bangalore and interpreted properly before taking a credit decision

BANKING FINANCE | AUGUST | 2020 | 47