CHAPTER FIVE

Uses of Bank Funds—The Lending Function

CHAPTER STRUCTURE

Section I Basic Concepts

Section II The Credit Process

Section III Financial Appraisal for Credit Decisions

Section IV Fund Based, Non Fund Based and Asset Based Lending

Section V Loan Pricing and Customer Profitability Analysis

Chapter Summary

Test Your Understanding

Topics for Further Discussion

Annexures I, II, III, IV, V (Case study)

KEy TAKEAwAyS FROm THE CHAPTER
  • Understand why banks lend.
  • Learn how banks lend—Principles of lending.
  • Understand the process of making a loan from start to finish.
  • Learn the fundamentals of credit appraisal.
  • Understand how loans are priced.
  • Understand how banks choose profitable customers.
SECTION I
BASIC CONCEPTS

Introduction

Assume that ...

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