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Loan Approval Process Explained

The loan approval process involves a client requesting credit and filling out an application, documents being scrutinized and analyzed, a proposal being prepared and sent for sanctioning, and the client being informed of approval and loan disbursement if sanctioned.

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130 views4 pages

Loan Approval Process Explained

The loan approval process involves a client requesting credit and filling out an application, documents being scrutinized and analyzed, a proposal being prepared and sent for sanctioning, and the client being informed of approval and loan disbursement if sanctioned.

Uploaded by

asad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Loan Approval Process

Steps of Credit Approval Process

Request for credit from the client to a branch

Credit application form filled out by the client and the collection of
documents

Scrutinizing the documents

Analyzing the information

Preparing the proposal

The proposal goes to the authority through other necessary steps

Sanctioning of the credit

Informing the client, loan disbursement, supervision and monitoring


Contd.
The loan request is made in a prescribed form/application by a client to
the head office through the branch office.

The client is dealt by the credit officer I the branch office. Once the loan
application is made, a preliminary interview is conducted by the credit
officer in order to know the purpose and amount of the loan. At the
same time, the credit officer requests the client to submit some
documents.

When the documents are submitted, the credit officer takes a look on
them and then sent them to the head office.

The credit and administrative department at the head office scrutinize


the documents and see whether all documents have been attached.
This department is expert in scrutinizing the documents.
Contd.
Once the documents are verified, the proposal along with the
documents is sent to the credit risk manager who independently
determines the riskiness of the proposed loans. He finally makes an
assessment on the loans.
Before sending the proposal to the board of directors, it is analyzed by
the credit committee headed generally by Deputy managing director or
managing director.
The final proposal is prepared to send it to the board of directors. There
is a prescribed format for preparing the proposal to be sent to the
board of directors.
The final decision of approval or disapproval comes from the board of
directors. After the loan is approved, it is informed to the client; the
client then gives a disbursement letter mentioning the amount of loan
he intends to take. Sometimes it is seen that a client has applied for five
million taka, but then he finds that he actually needs four million taka.
The exact amount of loan could be known after the disbursement letter
is given by the client.

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