Rating Parameters

Rating Parameters

 

The lenders (Banks/ Venture Capitalists, etc.) carefully assess your credit worthiness and assign ratings by analysing your business information with respect to various parameters. The main parameters that are generally used to rate business entities are provided below

 

Management

Some of the key parameters considered include:

  • Background
  • Industry experience and knowledge
  • Past conduct of borrower with banks
  • Qualifications
  • Background and Capability of the Promotors
  • Organisation's Preparedness for meeting Challenges
  • Combined net worth of promoters
  • Associate concerns

 

Financial

Some of the key parameters considered include:

  • Current ratio
  • Debt equity ratio
  • Average turnover
  • Net profits
  • Income growth
  • Net cash accruals
  • Financial Projects and Debt Servicing Capabilities
  • Provision of security for proposed assistance
  • Quality of collateral security

 

Operational

Some of the key parameters considered include:

  • Proximity to branch
  • Location of unit
  • Borrowers proximity to market
  • Type of technology
  • Equipment supplier
  • Quality certifications

 

Industry

Some of the key parameters considered include:

  • Nature of industry – cyclical/ seasonal
  • Eligibility under assistance scheme, if any
  • Competitive advantage
  • Branding of product
  • Number of applications of product/ machinery

 

Past Loan Performance

Some of the key parameters considered include:

  • Re-payment history
  • Missed installments
  • Revision in interest rates/ period
  • Prepayments
  • Defaults
    • Month of default
    • Amount of default
    • Reason of default, if provided
    • Security re-sale value
    • Capital loss to bank