STUDY OF PROJECT TECHNICAL FEASIBLITY AND ECONOMICAL VIABILITY

Banks are financing every type of advances.

- Harish Kumar Jain

It may be retail, agriculture, MSME or corporate advance. The assessment of the finance taken up by the banks is dependent upon some parameters. The finance of the bank is as per need of the customers and guidelines of the bank. Bank will sanction term loan to borrower if the business/project of the borrower is technically feasible & economically viable and bankable. The acquisition of assets for which term loan required should be need based and their estimated cost should be reasonable.

For financing term loan for an unit also require to do some assessment. There is various aspect of term loan appraisal which is as under:

1. Qualitative Assessment

2. Quantitative assessment

The aspects are further divided as follows:

a) Qualitative aspects: Management appraisal Technical appraisal Environmental appraisal Commercial appraisal

b) Quantitative aspects: Financial Appraisal Debt service coverage ratio ( DSCR) Sensitivity analysis Break even point (BEP) analysis

The details of various qualitative appraisals are as under: