Page 43 - Banking Finance April 2022

ARTICLE

STUDY OF

PROJECT -

TECHNICAL

FEASIBLITY AND

ECONOMICAL

VIABILITY

B anks are financing every type of advances. It may The aspects are further divided as follows:

be retail, agriculture, MSME or corporate
a) Qualitative aspects:
advance. The assessment of the finance taken up
X
by the banks is dependent upon some parameters.
Technical appraisal
X Management appraisal
The finance of the bank is as per need of the customers and
guidelines of the bank. Bank will sanction term loan to X Environmental appraisal
borrower if the business / project of the borrower is technically X Commercial appraisal
feasible & economically viable and bankable. The acquisition
of assets for which term loan required should be need based b) Quantitative aspects:
and their estimated cost should be reasonable. X Financial Appraisal
X Debt service coverage ratio ( DSCR)
For financing term loan for an unit also require to do some
X Sensitivity analysis
assessment. There is various aspect of term loan appraisal
which is as under: X Break even point (BEP) analysis
1. Qualitative Assessment
2. Quantitative assessment The details of various qualitative appraisals
are as under:
About the author 1. Management Appraisal:

Harish Kumar Jain First and foremost assessment by a Banker is to judge
Chief Manager - Faculty the person who is behind the project and this is very
Union Bank of India crucial and most important point to be considered in
Staff Training Centre, Bhopal lending to prospective borrowers. The promoters should

BANKING FINANCE | APRIL | 2022 | 43