Loan Officer/ Credit Manager/ Underwriter plays a crucial role to balance the information and the risks involved in loan sanctioning process. Small & private firms which are opaque and non transparent face a lot of difficulties to analyze the risk. To improve the accuracy, screening and monitoring the potential borrower Personal Discussion works as a central tool for any bank/NBFC. The idea behind developing relationship is to get more detailed information that a loan officer can gather about the borrower. Loan officer need to keep few things in mind to know more about the borrower like the personal integrity, quality of business, loan pre-paying capacity ,competence and especially the borrower’s type.
Personal discussion between the lender and the borrower works as a bridge for the evaluation of the creditworthiness of the borrower. This process starts with visiting the customer at his business premises and discussing things in detail regarding the business background, educational qualification of an applicant, family background, owned assets, cash flow and other borrowings etc. The basis idea behind personal discussion is to know the repayment capacity of the borrower.
There is a lot of uneasiness in an applicant before one to one meet with the loan officer. Getting a loan is like gathering a lot of paper pieces together for the Banks/ NBFC’s to discover and judge the financial situation. A personal discussion is of key importance where the decisions regarding the loan amount as well as the sanction are discussed and made based on this meeting.
Being personal discussion so important, it is advantageous for the loan officer to understand the objectives of the meeting:
To Calculate Income Accurately
While assessing your income statements the lender would like to know if you have any other sources of income that can be used further to serve the loan. Any deposits, maturing instruments, any property to sell in near future or may be any other income which is not present there in financial statements.
To Understand Business
Income level of self employed customers fluctuate with time. Loan officer will be asking you the question to know about the business stability and your ability to manage the stress that comes with its irregularity. Based on this, he will be able to judge your ability to pay your EMI’s regularly.
To Access Business worthiness
The lender will be asking you the questions regarding your business, competition, growth potential, your assets which you have made through this business and about the future plans about your business. This is to estimate about your capability and your intention to repay the loan and if you face any stress with your regular income.
To Know Existing Loan and Other debts
Any repayments on the current loans have to be considered and your new debt of loan will be reasonable enough to carry forward.
To Discover Business / Personal Expenses
Every individual have different living standards and level of expenses. The lender has to understand and determine the EMI that you will be able to pay comfortably.
To Track End Use of Loan Funds
The loan officer is here to analyze and know the reasons behind the loan application. The reasons to take a debt and if there are any other investment places where the amount can be used further in future
To Understand Future Business Expectation
Finally after observing to the best of his knowledge, he will understand your current employment status as well as your future expansion plans. This will help to analyze the appropriate loan amount and the increased installment burden.
Though it is not needed for the customer to be very much prepared for the meeting so that it gives an impression that the picture perfect is being portrayed just to show and get the loan sanctioned.
Few things which the borrowers has to keep in mind before Personal Discussion:
It is always helpful to be honest in the personal discussion. Banks/ NBFC can access any information regarding your financial as well as other which is available on internet. Its an industry trend to make reference checks, so any false statements or lies can negatively affect the decision of the loan.
No doubt, it’s an extension to the above point. Just to get a loan it’s not worth to hide anything. In the industry itself, lenders share the information about the bad or fraud borrowers. In short, all debts, intention to repay the loan, reputation and other information can easily be verified from the market.
Be ready with the Documents
It can always enhance the probability of getting a sanction if the Bank/ NBFC is satisfied with the answers to all the queries in their mind. Provide all the necessary required documents on time.
Being a customer, one has an access to many lenders available in the market. One has be confident and clear about the financial situation with clarity in thoughts.