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1. GENERAL CONSIDERATIONS FOR BANK LOAN RITU M-COM(E-COM)

2. INTRODUCTION Granting of advances is the primary function of a bank. A major portion of its funds is used for this purpose and this also the major sources of bank’s income . However, lending money is not without risk and ,therefore, a banker must take Proper precaution in this process. Some of the Important consideration to be kept in mind by a banker.

3. CONSIDERATION FOR SOUND LENDING While lending money the banker has to take into Account various consideration . SAFETY:- The borrower is in a position to repay the loan ,along with interest ,according to the terms of the loan contract. LIQUIDITY:-The banker must ensure that the borrower is able to repay the loan on demand or within a short period. PROFITABILIY:-they must employ their funds profitably so as to earn sufficient income .

4. PURPOSE:-Bank do not grant loans for each and every purpose , they ensure the safety and liquidity of their funds by granting loan for productive purpose. THE PRINCIPLE OF DIVERSIFICATION OF RISKS:-To safeguard his interest against unforeseen contingencies ,the banker follows the principle of diversification of risks.

5. BANK LENDING -POLICIES Lending policies and careful practices are Essential if a bank is to perform its credit Creation function effectively. As the bank grow in size and the number of banking personnel Involved in extending credit increases , it become essentials to put the lending policy on a formal footing.

6. FACTOR AFFECTING LENDING POLICIES ASCERTANING TOTAL CREDIT REQUIREMENT OF THE CREDIT MARKET. APPRAISAL OF RESOURCES CAPITAL POSITION COMPETITIVE POSITION LOCAL AND NATIONAL ECONOMIC CONDITIONS. MONETARY AND FISCAL POLICY

7. ABILITY AND EXPERIENCE OF LOAN STAFF DEPOSIT VARIABILITY EARNING REQUIREMENT