What do credit manager interviews in India test?
Credit manager interviews in India test whether a candidate can judge repayment capacity, read financials, bureau reports and bank statements, assess security, and state the applicable rule accurately. The 25 questions below cover analyst, credit officer and branch credit manager (BCM) roles across unsecured MSME loans, loan against property (LAP) and home loans.
RBI points come from the Reserve Bank of India (Commercial Banks - Credit Risk Management) Directions, 2025, dated November 28, 2025, updated as on October 1, 2026. Answers that cite no paragraph are general working practice. Limits and approval authority vary by institution.
| Questions | Topic |
|---|---|
| 1 to 5 | Appraisal basics and RBI framework |
| 6 to 13 | Financial appraisal and repayment capacity |
| 14 to 17 | Bureau analysis |
| 18 to 21 | Banking analysis and end use |
| 22 to 24 | Property, valuation and CERSAI |
| 25 | Deviations and judgment |
1. What does a credit manager assess before recommending a loan?
A credit manager assesses whether the borrower can and will repay, and what recovery is available if repayment fails. Working practice groups the assessment under character, capacity, capital, collateral and conditions.
What a strong answer adds: repayment capacity comes first, and collateral is the fallback, not the reason to lend.
2. Which RBI direction covers credit risk management at commercial banks?
The Reserve Bank of India (Commercial Banks - Credit Risk Management) Directions, 2025, dated November 28, 2025 and updated as on October 1, 2026, cover credit risk management at commercial banks. Paragraph 3 defines commercial banks as banking companies other than Small Finance Banks, Payments Banks and Local Area Banks, plus corresponding new banks and the State Bank of India.
What a strong answer adds: that definition does not name NBFCs or housing finance companies, so a candidate interviewing at one should check the directions for that lender type.
3. Can a bank rely on a consultant’s credit appraisal report?
A commercial bank cannot depend on a consultant’s credit appraisal report. Paragraph 7 of RBI’s Credit Risk Management Directions, 2025 (updated as on October 1, 2026) requires the bank’s own independent and objective appraisal in all cases, and singles out in-house consultants of the borrowing entity.
What a strong answer adds: a consultant’s numbers can be an input, but the underwriter still verifies them against primary documents and forms an independent view.
4. What must a bank’s Board-approved credit risk policy cover?
A commercial bank’s Board-approved Credit Risk Management policy must cover, among other aspects, the following, under paragraph 5 of RBI’s Credit Risk Management Directions, 2025, as substituted with effect from April 1, 2026:
- Lending to related parties
- Country risk management
- Unhedged foreign currency exposures
- Valuation of properties, including empanelment of valuers
- Opening of current accounts and cash credit or overdraft accounts
What a strong answer adds: a credit officer applies the institution’s credit policy to each file, and escalates when a file falls outside it.
5. What does RBI require on limits for unsecured consumer credit?
RBI requires commercial banks to set Board-approved limits for consumer credit sub-segments as the Board considers necessary, and limits for all unsecured consumer credit exposures. Paragraph 10 of the Credit Risk Management Directions, 2025 (updated as on October 1, 2026) also requires strict adherence and ongoing monitoring by the Risk Management Committee.
What a strong answer adds: these are portfolio limits for the bank. Paragraph 10 does not describe a repayment test for an individual borrower.
6. How is DSCR calculated? Worked example, made-up numbers
Debt Service Coverage Ratio (DSCR) measures how many times a borrower’s earnings cover its debt service, and the usual working formula is EBID divided by interest, principal and lease rentals due. Paragraph 4(1)(vi) of RBI’s Credit Risk Management Directions, 2025 (updated as on October 1, 2026) states EBID, Earnings before Interest and Depreciation, as Profit After Tax + Depreciation + Interest on debt + Lease Rentals, if any.
| Item, made-up numbers | ₹ lakh |
|---|---|
| Profit After Tax | 18 |
| Depreciation | 6 |
| Interest on debt | 10 |
| Lease rentals | 2 |
| EBID | 36 |
| Interest on debt | 10 |
| Principal repayment due | 18 |
| Lease rentals | 2 |
| Total debt service | 30 |
DSCR = 36 / 30 = 1.20 times.
What a strong answer adds: acceptable DSCR varies by institution, and the proposed loan’s obligations belong in the denominator.
7. How do you check whether an MSME borrower’s financials are reliable?
An MSME borrower’s financials are more reliable when turnover and profit reconcile across independent records. Common working checks are:
- Compare turnover across financial statements, income tax returns, GST returns and bank credits.
- Read the audit report and notes, not only the summary figures.
- Review debtor and creditor ageing and related-party balances.
- Question unusual year-end movements in sales, stock or debtors.
What a strong answer adds: a gap is not automatically a rejection. The underwriter asks for an explanation and tests it against documents.
8. How do you assess a borrower who reports low profit?
A borrower who reports low profit is assessed on documented repayment capacity, not on the borrower’s verbal claim of higher income. Where the institution’s policy permits, surrogate programmes may use banking or GST data as evidence of business scale.
What a strong answer adds: a good candidate says which evidence supports the assessed income and which claims were excluded, because surrogate programmes vary by institution.
9. How do you test the quality of promoter equity?
Promoter equity is tested by tracing its source, not by accepting the capital figure in the balance sheet. Paragraph 9 of RBI’s Credit Risk Management Directions, 2025 (updated as on October 1, 2026) requires a commercial bank to ascertain the source and quality of equity, and warns that multiple leveraging can mask ratios such as Debt Equity. The same paragraph requires the lender to ensure, at appraisal, that parent company debt is not infused as equity in a subsidiary or Special Purpose Vehicle.
What a strong answer adds: practical checks include the parent’s balance sheet, the bank trail of the capital infusion, and unsecured loans from related parties.
10. How is drawing power calculated? Worked example, made-up numbers
Drawing power (DP) is the amount a borrower may draw under a cash credit limit, calculated in working practice from eligible current assets after margins. Paragraph 4(1)(iii) of RBI’s Credit Risk Management Directions, 2025 (updated as on October 1, 2026) says DP is periodically determined with reference to the value of eligible current assets. Eligibility rules and margins vary by institution.
| Item, made-up numbers | ₹ lakh |
|---|---|
| Stock | 60 |
| Less unpaid creditors | 20 |
| Paid stock | 40 |
| Less 25% margin | 10 |
| Stock DP | 30 |
| Total debtors | 35 |
| Less debtors older than the lender’s cut-off | 5 |
| Eligible debtors | 30 |
| Less 40% margin | 12 |
| Debtor DP | 18 |
| Total DP | 48 |
With a sanctioned limit of ₹40 lakh, the borrower can draw up to ₹40 lakh, the lower of the limit and the DP.
What a strong answer adds: stock statements should be tested against sales, purchases and physical inspection.
11. What is the difference between cash credit, overdraft, demand loan and term loan?
Cash credit, overdraft, demand loan and term loan differ in how the facility is drawn and repaid. Paragraph 4(1) of RBI’s Credit Risk Management Directions, 2025 (updated as on October 1, 2026) defines the four as follows:
| Facility | Paragraph | How the direction describes the facility |
|---|---|---|
| Cash credit | 4(1)(iii) | Running account against hypothecation or pledge of goods, book debts, standing crops and similar security, with periodically determined DP, repayable on demand |
| Overdraft | 4(1)(xiii) | Drawing up to an agreed sum beyond the credit balance, secured or clean |
| Demand loan | 4(1)(v) | All loans repayable on demand, and short-term loans with maturity up to one year, secured or unsecured |
| Term loan | 4(1)(xix) | Specified maturity, payable in instalments or in bullet form |
What a strong answer adds: the facility should match the need, so a long-term asset purchase funded from a working capital limit deserves a question.
12. When does RBI require sensitivity testing in credit appraisal?
RBI requires sensitivity tests or scenario analysis by a commercial bank or lender under paragraph 8 of the Credit Risk Management Directions, 2025 (updated as on October 1, 2026), especially for infrastructure projects, including project delays and cost overruns. Separately, paragraph 12A, inserted with effect from July 1, 2026, requires credit assessments to suitably factor in the possible impact of calamities on borrowers who may be affected.
What a strong answer adds: on an MSME file, a working stress test asks what happens to repayment if sales fall, margins narrow or a major customer leaves.
13. How is FOIR calculated? Worked example, made-up numbers
Fixed Obligation to Income Ratio (FOIR) shows the share of a borrower’s income committed to fixed obligations, calculated as total monthly fixed obligations divided by monthly income. Definitions of eligible income and obligations vary by institution, as do FOIR limits.
| Item, made-up numbers | ₹ per month |
|---|---|
| Monthly income | 80,000 |
| Existing EMIs | 18,000 |
| Proposed EMI | 22,000 |
| Total fixed obligations | 40,000 |
Existing FOIR = 18,000 / 80,000 = 22.5%. FOIR after the proposed loan = 40,000 / 80,000 = 50%.
What a strong answer adds: the underwriter checks obligations against the bureau report and bank statements, because a declared list can be incomplete.
14. Does a bank have to use credit bureau reports?
A commercial bank must include suitable provisions for obtaining Credit Information Reports from one or more Credit Information Companies in its loan policies or credit appraisal processes, under paragraph 11 of RBI’s Credit Risk Management Directions, 2025 (updated as on October 1, 2026). The stated aim is that credit decisions rest on credit information available in the system.
What a strong answer adds: the number of bureaus pulled on a file is a matter of institution policy within that requirement.
15. What do you look for in a credit bureau report?
A credit bureau report is read for repayment behaviour, current indebtedness and recent credit appetite, not only for the score. Common working checks are:
- Days past due (DPD) history, including how recent and how repeated any delays are
- Settled, written-off or overdue accounts
- Existing loans and EMIs compared with what the applicant declared
- Card and revolving credit utilisation
- Recent enquiries and newly opened loans
- Identity details and any accounts that look unfamiliar to the applicant
What a strong answer adds: the same score can hide very different histories, so the trade lines matter more than the summary number.
16. How do you read many recent bureau enquiries or new unsecured loans?
Many recent bureau enquiries or new unsecured loans can signal credit hunger, and an underwriter treats the pattern as a question to investigate. The next steps are to ask why the applicant sought credit, identify which enquiries became loans, and add those new obligations to the repayment assessment.
What a strong answer adds: a run of enquiries for one purchase reads differently from small unsecured loans stacked across several lenders. Thresholds vary by institution.
17. How do you treat a settled or written-off account on a bureau report?
A settled or written-off account on a bureau report is an adverse signal that needs facts before any decision. The underwriter establishes the amount, date, product and reason, seeks closure evidence, and checks repayment conduct since the event. Whether the file can proceed depends on the institution’s credit policy.
What a strong answer adds: if the applicant disputes the entry, the candidate asks for documentary proof and a corrected report, and does not accept a verbal explanation.
18. What do you check in a borrower’s bank statements?
A borrower’s bank statements are checked to see whether real cash flows support the income claimed and the proposed EMI. Common working checks are:
- Monthly credits compared with reported turnover
- Average balance compared with the proposed EMI
- Inward cheque or ECS returns, meaning payments the account holder issued that were returned unpaid
- EMI or loan debits that are not declared or not on the bureau report
- Large cash deposits, and concentration of credits from a few parties
- Credits and debits with related parties
What a strong answer adds: all operative accounts should be covered, since one strong account can hide stress in another.
19. How do you spot fund diversion or pass-through activity in bank statements?
Fund diversion or pass-through activity often shows up as money moving in and out quickly with little link to the stated business. Paragraph 91L of RBI’s Credit Risk Management Directions, 2025, in force from April 1, 2026, says accounts must not be pass-through channels for third-party transactions, subject to an exception for licensed or authorised entities. Paragraph 91N requires commercial banks to flag unusually high volumes, frequent pass-through activity, and mismatches between the stated business and account transactions.
What a strong answer adds: at appraisal, practical checks include same-day credit and debit matches, round-tripping with related parties, and transfers to entities outside the declared business.
20. How do RBI’s current account and overdraft rules affect banking analysis?
RBI’s current account and overdraft rules tie which commercial bank may maintain a borrower’s account to banking system exposure and the bank’s share of that exposure. Chapter XIA of the Credit Risk Management Directions, 2025 applies from April 1, 2026:
| Paragraph | Condition | Rule |
|---|---|---|
| 91B | Cash credit account | No restriction under Chapter XIA |
| 91C | Banking system exposure below ₹10 crore | Current or overdraft account without restriction |
| 91D(1) | Exposure of ₹10 crore or more | Current or overdraft account if the bank holds at least 10 per cent of aggregate exposure or of aggregate fund-based exposure, subject to the provisos in the paragraph |
| 91D(2) | Exposure of ₹10 crore or more, bank not eligible | Collection accounts only |
| 91F | Collection account | Funds remitted to the designated account within two working days of receipt, with statutory dues and dues to that bank allowed as prior debits |
Exposure under Chapter XIA means all sanctioned fund-based and non-fund-based facilities from the banking system.
What a strong answer adds: paragraph 91K requires monitoring across multiple accounts at both borrower and account level, and the underwriter should likewise read a borrower’s accounts together.
21. How do you check end use of a loan?
End use of a loan is checked by following the money from disbursement to the stated purpose. Paragraph 12 of RBI’s Credit Risk Management Directions, 2025 (updated as on October 1, 2026) points commercial banks to circular DBS.CO.PPD.BC.No. 5/11.01.005/2010-11, dated January 14, 2011, on monitoring end use of funds. Paragraph 91O, in force from April 1, 2026, says term loans should preferably be remitted directly to the identifiable beneficiary, not routed through the borrower’s account.
What a strong answer adds: working checks include invoices, supplier payment proof, post-disbursement bank statements and site visits.
22. How do LAP and home loan appraisal differ? Worked example, made-up numbers
LAP appraisal depends mainly on the borrower’s business cash flows and the end use of funds, while home loan appraisal also tests the property purchase itself. Loan to value (LTV) is the loan divided by the property value accepted by the lender. LTV limits vary by product and institution, so check the direction for the lender type and the internal policy.
| Point | LAP | Home loan |
|---|---|---|
| Typical purpose | Business or other stated need, secured on property | Purchase or construction of a home |
| Main repayment check | Business or personal cash flows | Income, FOIR and own contribution |
| Extra focus | End use and business stability | Title, seller or builder, and construction stage |
| Case, made-up numbers | Loan (₹ lakh) | Property value (₹ lakh) | LTV |
|---|---|---|---|
| LAP | 50 | 100 | 50% |
| Home loan | 75 | 100 | 75% |
These LTV figures show the arithmetic only, and neither is a limit.
What a strong answer adds: a low LTV does not make up for weak repayment capacity.
23. What does RBI require on property valuation and valuers?
RBI requires a commercial bank to have a Board-approved policy for valuing properties, including collateral, under paragraph 70 of the Credit Risk Management Directions, 2025 (updated as on October 1, 2026). Valuations must come from professionally qualified independent valuers with no direct or indirect interest, and properties valued at ₹50 crore or above need at least two independent reports. Paragraph 72 requires an empanelment procedure and a register or record of approved valuers.
What a strong answer adds: in working practice, the underwriter compares the valuation with comparable properties, and confirms that the valued property matches the title documents and the site.
24. What is CERSAI and why does it matter in secured lending?
CERSAI, the Central Registry of Securitisation Asset Reconstruction and Security Interest of India, operates the Central Registry under the SARFAESI Act, 2002. Paragraph 75 of RBI’s Credit Risk Management Directions, 2025 (updated as on October 1, 2026) says searchable records help prevent multiple lending against the same property and sale of a property without disclosing the security interest. Paragraph 77 advises commercial banks to file charges on all current transactions on an ongoing basis.
Under paragraph 76, a Gazette Notification dated January 22, 2016 extends filing to:
- Mortgages of immovable property other than by deposit of title deeds
- Hypothecation of plant and machinery, stocks and debts, including book debts or receivables
- Intangible assets such as know-how, patents, copyrights, trademarks, licences and franchises
- Under-construction residential or commercial property secured by an agreement or instrument other than a mortgage
What a strong answer adds: on a property-backed file, a CERSAI search before sanction is a working check, alongside the legal opinion on title.
25. What do you do when a file falls outside credit policy or sales pushes for approval?
A file outside credit policy goes through the institution’s deviation process, with reasons on record, and is not approved informally under sales pressure. A deviation is a documented exception to policy, approved by the person holding that authority. Deviation categories and approval levels vary by institution.
A good answer covers these steps:
- Identify the exact policy point the file fails.
- Set out the risk and any real mitigant, using evidence.
- Escalate to the correct authority with a clear recommendation.
- Record the decision and its conditions.
- If the case cannot be supported, decline and give the reason plainly.
What a strong answer adds: a target or a good relationship with the sales team is never a mitigant.
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Sources
- Reserve Bank of India (Commercial Banks – Credit Risk Management) Directions, 2025, rbi.org.in, accessed 2026-11-06
