Credit Monitoring: A Factor of Borrower

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About Credit MonitoringCredit Monitoring

In the efficient management of lending, credit monitoring in banks has taken on greater significance. The effectiveness of credit monitoring depends on two aspects of the borrowers’ cooperation in providing the banks with the necessary data and statements on time. If you have the knowledge of credit monitoring, you will take prompt decisions and remedial action to keep the accounts of the borrower in good health.

Proper and efficient credit monitoring can occur, many of the accounts may become NPA (gross non – performing) and the number of unproductive assets will also be terminated.

Borrowers who benefit from different bank facilities by capital expenditure and term loans are expected to request the following financial documents.

  • The monthly statement on the stock
  • Half-annual and annual balance sheet
  • Account Benefit and Loss
  • Monthly revenue statement including creditors and debtors

If the borrower maintains non-fund-based restrictions, more information on the progress of operations is required. The list of statements issued to banks is comprehensive, and it is a very difficult job for the borrower to request statements. There will be a penalty that banks will have to charge an extra interest of 2 percent for the creditor not to submit these control statements. If all information is inaccessible, then it will take more time to prepare these statements. Business organizations also meet and file various regulatory specifications that they can not miss or stop.

Dependent on the financial position and performance of the borrower, the submission of reports on time would allow the borrower to receive a good credit rating. Now, the question posed is whether the balance sheet that can represent the actual balance sheet must be provided by the borrower. To fulfill the need for reason, the various balance sheets have been prepared.

Cash transactions that may not represent the financial reports of business companies are a popular feature found in commercial transactions. In financial conditions, this can increase the distortion that can not provide a true image of the industry. The statements do not need to be sent on time because banks do not recognize the meaning of such statements.

It doesn’t happen all the time and it takes different statements to save their interests which will make it easier for them to request assistance from the bank in urgent need. For the debtor to run his company healthy and keep up the good partnership, financial discipline is important.

The basic point usually committed by borrowers is that they begin their arrangement with the first agent who meets their credit needs. The submission of all reports should be considered by the creditor on time.

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