What do you mean by a prospective borrower 1. What do you mean by a prospective borrower? In selecting a prospective borrower, what are the points to be taken into consideration? Highlight the role and responsibilities of a branch manager in identifying a prospective borrower and processing his loan proposal. May’12, Nov’11 Ans: Prospective borrower: An individual, organization or company having requirement of additional fund for utilization and have the ability to borrow the same is treated as potential borrower. Selecting a prospective borrower: Not all banks are giving concentration on the same area for all time to select a borrower, but many of them focus on the same areas throughout the loan review process. Following points to be taken into consideration in selecting a prospective borrower- a. Borrower (himself) analysis i. Man behind the business to be judged(Character, willingness)
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Some Important Ratio Net Interest Income = Interest Income - Interest Expense Net Non-interest Income = Non-interest Income - Non-interest Expenses Net Interest Margin = (Interest Income – Interest Expenses) / Total Assets Operating Efficiency Ratio = Total Operating Expenses / Total Operating Income PLL% = Provision for Loan Losses / Loans Burden% = (Non Interest Op Expenditure - Non Interest Income)/ Average Assets ROA = Net Income / Total Assets ROE = Net Income / Total Equity Equity Multiplier (EM) = Total Assets / Total Equity Equity to Asset Ratio = Total Equity / Total Assets NNIM= Net Non-interest Income / Total Assets SELECTED PROBLEM: 01. A summarized Balance sheet and other relevant information of Modern Bank Ltd, is given below: Liabilities & Capital Amount (Tk.) Assets Amount (Tk.) Deposit Borrowing Capital 5000 1000 800 Cash Loans 800 6000