Kathmandu. A loan is a service to borrow money today, pay interest for the period of use and return money at the end of the period. Loans are taken when savings are insufficient. Loans are disbursed for both capital formation or consumption.
Principles of 5 C’s to be followed when granting loan{
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Cash Flow, Self-Capital, Character and Past Financial History, Securities and Securities and Terms, Rights and Duties.
Step-by-step process of borrowing{
Loan Application: To begin with, the applicant has to fill the loan application form in the format prescribed by the bank or financial institution and submit all the documents related to his/her identity (citizenship÷PAN card), assets, liabilities, income proof, projection and mortgaged assets.
Borrower Valuation: The borrower is evaluated on the basis of the application, the ability of the person or business to repay, self-investment, creditworthiness, mortgage security, and other criteria.
Loan Approval: TAG_CLOSE_span_23 If the appraisal is found to be satisfactory, the loan is approved by the bank. The applicant is then given an acceptance letter. In which the total amount of the loan sanctioned, the structure of the interest rate, and the schedule of the repayment period are clearly written, among other conditions.
Loan Disbursement: After the completion of all the legal paperwork including collateral, guarantee, etc., the bank or financial institution transfers the loan amount to the borrower’s bank account at one time or repeatedly.
Monitoring and Payment: Banks and financial institutions monitor the utilization of loans from time to time. Borrowers should pay the principal and interest of the loan on time and monitor their accounts regularly.
Borrower’s Rights and Obligations
Adequate information, fair dealing, confidentiality, complaints, problem resolution, special protection for small customers are the rights of the borrower.
It is the responsibility of the borrower to provide accurate information, study the terms, make good use of the loan, and follow the discipline of the loan.
Nepal Rastra Bank (NRB) has been urging people to use the loan after analyzing the objective, cost, return and risk of the loan.
