5.6.

2 Credit Reports:
Credit reports obtained from other banks and the CIB report provide a base for the
lending decision of a banker.
5.6.3 Problem Identification:
The main objective of credit analysis is to avoid problems that may crop up due to
lack of good judgment with regard to the following:
Negative Macro Indicators Including:
a) Unfavorable change in the government policies.
b) Excessive and negative competition.
c) Change in consumer’s tastes, fashion, income and spending.
d) Labor unrest or deteriorating law and order situation.
Negative Business Factors Including:
Inconsistent business structure and Ineffective business plan.
Inadequate market share and unplanned expansion.
Plant and machinery obsolescence and loss of stakeholders’ confidence.
III. Negative Management Factors Including:
Change in ownership and unnecessary centralization.
Evasive style and lavish spending behavior.
Unsatisfactory past performance.
IV. Negative Financial Indicators Including:
Change in auditors, and accounting policy.
Late submission of statements.
Climbing up debt-equity ratio and abnormal reduction in fixed assets.
5.6.4 Processing of Credit Proposal:
Normally standard formats designed by the banks are used for this purpose wherein
all relevant information and recommendations for grant of credit are recorded.
Necessary documents are attached with proposal like request letter, financial
statements, resolution of the Board of directors, letter of partnership etc.
5.6.5 Sanction of Credit:
Credit level or branch offices controlled either by the competent authority are passed.
Credit control office and branch management evaluated the proposal recommended by
the credit analysis and approved based on accuracy considerations. Legal advice for
the purpose of approving the terms and conditions of a credit record, need proper

Internship Report on Bank Of Khyber Page 39