* Working Capital – Def * amount of resources that a company requires to effectively cover the usual costs and expenses necessary to operate the business * Working Capital Required = (Increase in accounts receivable + Increase in inventory + Cash inflows i. e. cash in bank, bank loan, other current assets) – (Increase in accounts payable + Cash outflows i. e. prepaid expenses, payment to suppliers, other current liabilities) * Conversion Cycle – Mostly 90-120 days * Types of working capital * Fund – Based * CC (Cash Credit) * OD (Overdraft) * Pre-shipping/Post-Shipping credit Non-Fund Based * Letter of Credit * Bank Guarantee * Stages in the process * Sourcing * Acceptance of the limit by the client(GO/NOGO) * Credit Appraisal * Risk approval and sanction * Documentation/Disbursement * Sourcing * Inputs from the customer * Projected financial * Need * Profitability of the company in last 3 years * Business Profile * Industry functioning * Acceptance of the limit * Checks the feasibility of the case * Thorough analysis has to be done * GO/NOGO * Important Ratio * Current Ratio * EBITDA/TOI * Total debt/TNW * LTD/TNW * Assessment and Ratios 25% of the turnover * 20% by Bank * 5% Net worth * 3* TNW * TNW=Share Capital+Reserves & Surpluses-Fictitious asset * Production/Processing Cycle * Debtors + Inventory-Creditors * DER(Deb Equity Ratio) * TOL/TNW * Net Working Capital * Current Asset-Current Liability * Sales * PAT * PAT/Sale * Profitability for each Rs.
100 of sales * Credit appraisal * Dedupe Check * MCA * CIBIL * BIFR * Banking * Inward return * Outward Return * Overdrawing * DD Return * Credit summation * We deduct all the outward return from the total Credit summation * Credit Routing Take statement from another bank for less than 20% routing. * Why it is not using the limit provided * ETR/GTR * Only for renewal cases * Score Card * Provides rating based on some criteria * 60 is minimum * Property Valuation * Internal & External * Whose value is less * Kind of Property * Residential or Business ( which one is taken) * Some point revisited * Purpose of Facility * Deviation * Based on good conduct of the account * Increasing Business of the client * ETR of the existing Limit * Industry Growth * Property Valuation * Rates * Indian Exposure * Base Rate(8. 75) + Basis points Late charges * Overdrawing- 6% over documented rate * Non-Submission of Stock statement * 2% above * Foreign Exposure * LIBOR + Basis Points * PCFC(LIBOR + 200 Basis Points) * Working Capital Required = (Increase in accounts receivable + Increase in inventory + Cash inflows i. e. cash in bank, bank loan, other current assets) – (Increase in accounts payable + Cash outflows i.
e. prepaid expenses, payment to suppliers, other current liabilities) * Working Capital Management * Credit period * Early realization – less working capital need * Risk Approval/Sanction * RMOG – Risk Middle office Group Substantive errors * Erroneous Assessment * Procedural Error * Wrong Presentation * Incorrect Process of the credit approval * Credit Managers handles risk team queries * Disbursement * Agreement should be duly signed within 20 days of Sanctioning( deviation 30 days) * Disbursement should happen within 45 days of agreement * Documents * Customer * Stamped on Non- judicial stamp of Hypothecation deed * Mortgage paper * Board resolution * 2 Recourse Cheque on the name of ICICI Bank without any date * Guarantee – personal and corporate * Bank * Master Facility Agreement * Agreement