Lending process involves the following steps given below:
1. Potential Customer approach to bank
Loan process starts right from the time the customer walks into bank with the request for loan. Until the customer is satisfied with the scheme, they don’t borrow money. So the customer approach the bank either to have loan or full knowledge about the loan scheme. During this step, if customer gets satisfied with the scheme, they return with the loan application form and the list of required documents which should be submitted with the loan application.
2. Loan Application
A borrower submits a loan application to the bank along with the required documents such as project proposal and company’s legal existence for business loan and personal identification documents. Some times the bank also approach a customer as they don’t want to loose a profitable investment.
3. Interview with the bank
Concerned employees of the bank conduct direct interview with the applicant. Loan officer tries to get as much information as possible about demographic, employment, financial details and purpose during the interview for determining the credit worthiness of the customer and analyzing the risk in lending. If the loan officer is satisfied the loan processing heads up and asked for more required documents otherwise the proposal is discarded in this step.
4. Submission of necessary documents
Credit personnel ask for other necessary documents if they are not submitted with the loan application. Then the credit file is created as it is a central information source for everyone who works with the application.
5. Field or site visit
Authorised staff from credit department of the bank will visit business site with the attempt to comprehend the prospective customer and his business.
6. Credit Apprasisal/ Analysis
It is the critical examination of available information to confirm that the customer satisfied the basic norms and policies. Designated officers from credit department will carry a detailed analysis of loan application information obtained from interview and site visit report. In this step, the designated officers try to find out that the customer is not a fraud or blacklisted within the bank or with other institutions with the help of Credit Information Centre (CIC) of NRB. They verify the information supplied by the customer is correct and authentic by doing valuation of property through external agencies and by collecting and verifying documentary proofs for income, residence, age and other information.
7. Approval or rejection by competent authority
The competent authority will make decision of approval or rejection based on the above analysis. On the basis of loan amount, the approval decision is either carried at branch level or regional level or by head office authorities as per predetermined loan granting power. In case of approval of branch level other necessary steps are taken and if the loan application is found beyond the authority of a branch manager, a proposal is prepared and sent to the head office for decision.
8. Documentation
In case of approval at branch level, lending process will not be carried on until the borrower submits necessary documents to the bank. The need of documents depend on the nature of loan and types of borrower which have been mentioned in the detail in lending types. Documents should be recognised under the prevailing law and rules. General documentation of all kinds of loan includes demand promisory note, loan deed and loan agreement, personal guarantee of the borrowers, guarantors, co-owners and mortgage deed i.e tamsuk.
9. Disbursement of loan
After being satisfied with credit appraisal and security documentation mentioned in the offer letter, either a managerial cheque for sanctioned amount is issued to the customer, or the amount is transferred to the customer account.
