How do banks analyse the financial statement of a company to sanction an overdraft loan in India? April 1, 2010
Posted by Banking in : Chennai , trackback
What exactly do banks look for in the financials of a company to sanction an overdraft loan without security / collateral?
Sundar, Thanks for your answer, but i would like to know how they decide on what amount to give?Submited by:SL K
Comments»
For Overdraft Loans Banks will analyse the company’s last three year balance sheet to allow OD to them. If the last three years balance sheet shows any loss the bank does not provide the OD to the applicant. The OD is availed only on Profit of the Balance sheet. Then only the company will provide OD without the security/collateral.
I think they decide how much to give based on the projected future revenues of the company and likelyhood it will pay back.