ABB in banking: meaning and how it is read
ABB is average bank balance. Credit teams use it to judge whether an account's usual balance can carry a proposed EMI.
Library
Terms, foundations and appraisal how-tos for the credit desk.
Terms
6Terms Terms DPD in a bureau report: meaning
DPD means days past due: how many days a payment was late at the time it was reported. A bureau report shows it month by month.
Terms Drawing power in banking: meaning and calculation
Drawing power in banking: the amount a borrower can draw on a working capital limit, based on current assets less margin. Calculation and RBI treatment.
Terms DSCR: meaning, full form and formula
DSCR is the debt service coverage ratio. It compares the cash a business generates with the interest and principal it must pay.
Terms FOIR: meaning, full form and formula
FOIR is the fixed obligation to income ratio: the share of monthly income already committed to EMIs and other fixed payments.
Terms MPBF: full form and what it measures
MPBF is maximum permissible bank finance, the working capital limit method from the Tandon Committee's 1975 report.
Foundations
4Foundations 5 Cs of Credit Applied to an Indian MSME File
Read an Indian MSME file through the 5 Cs: character, capacity, capital, collateral and conditions, with a worked DSCR example and RBI paragraph references.
Foundations Credit scoring basics: bureau, application, behavioural scores
Bureau, application and behavioural scores answer different questions at different stages. How each works and how to read them together.
Foundations DSCR explained for underwriters, with a worked example
How to calculate DSCR, where a good-looking ratio can mislead, and what to check before you trust it.
Foundations ISCR and FCCR meaning: interest and fixed charge cover explained
ISCR tests whether earnings cover interest. FCCR adds lease rentals and scheduled principal. Formulas and how to read both in Indian appraisal.
Appraisal how-tos
6Appraisal how-tos Bank statement analysis for loan: ABB, bounces and EMI to ABB
Bank statement analysis for a loan, step by step: account type first, then ABB, bounces split by cause, EMI to ABB and fit with the stated business.
Appraisal how-tos Credit appraisal memorandum format: how to structure a CAM
Section-by-section credit appraisal memorandum format for MSME term loans and LAP, with what good looks like and RBI references for commercial banks.
Appraisal how-tos LAP Loan Credit Appraisal: Income, Collateral and End Use
How to appraise a LAP file in India: reconcile income, test title and value, trace end use, then size the loan to the weakest of the three.
Appraisal how-tos MSME loan underwriting: common errors in unsecured cases
A checklist of MSME loan underwriting errors in unsecured cases: cash flow, hidden debt, Udyam classification, collateral limits and RBI timelines.
Appraisal how-tos Site visit report for loan: how to write one well
Site visit report for loan: separate what you saw from what you were told, test the file, and show what changes the credit decision.
Appraisal how-tos Stock statement drawing power: how to read and work it out
Test a stock statement line by line, strip out ineligible assets, work out drawing power and spot when a cash credit account turns irregular.