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Credit Rating Framework (Small Business/Petty Trader Loan)

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Prasanna Ramamurthy
Prasanna Ramamurthy

The presentation has the framework designed for rating the credit worth of a customer for small business/petty trader loan

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Credit Rating Framework – Small Business/Petty Trader LoanBanking and Financial ServicesBy,PankajSariaPrasanna R
Small Business LoanFor individual conducting business with or without hired laborsUsed to purchase equipmentsRepair and renovate existing equipmentAcquire and repair the business premises or toolsGenerate working capital
Petty Trader LoanIndividuals, proprietorships, partnership firms, co-operative societiesFor working capital and development activitiesTerms and ConditionsBusiness units established for a minimum of 2 yearsMaximum: 25 LakhsNon-agricultural land and building mortgage
Credit Score CalculationFundamental elementsPayment history – consistency on time and terms of the agreementAvailable credit – Total credit availableCredit utilization – Credit of the total available which are in useCredit balances – Current account balancesDepth of credit – Credit history and mix of credit typeRecent credit – recently opened credit accounts and enquiries
Risk Assessment – Business (Internal) Weight: 50 %
Risk Assessment – Business (Internal) Weight: 50 %
Risk Assessment – Business (External) Weight: 30 %
Risk Assessment – Personal Weight: 20 %
Calculation – Final Rating
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Credit Rating Framework (Small Business/Petty Trader Loan)

  • 1. Credit Rating Framework – Small Business/Petty Trader LoanBanking and Financial ServicesBy,PankajSariaPrasanna R
  • 2. Small Business LoanFor individual conducting business with or without hired laborsUsed to purchase equipmentsRepair and renovate existing equipmentAcquire and repair the business premises or toolsGenerate working capital
  • 3. Petty Trader LoanIndividuals, proprietorships, partnership firms, co-operative societiesFor working capital and development activitiesTerms and ConditionsBusiness units established for a minimum of 2 yearsMaximum: 25 LakhsNon-agricultural land and building mortgage
  • 4. Credit Score CalculationFundamental elementsPayment history – consistency on time and terms of the agreementAvailable credit – Total credit availableCredit utilization – Credit of the total available which are in useCredit balances – Current account balancesDepth of credit – Credit history and mix of credit typeRecent credit – recently opened credit accounts and enquiries
  • 5. Risk Assessment – Business (Internal) Weight: 50 %
  • 6. Risk Assessment – Business (Internal) Weight: 50 %
  • 7. Risk Assessment – Business (External) Weight: 30 %
  • 8. Risk Assessment – Personal Weight: 20 %