using campari analysis
In-class exercise Dr. A. Rahman Mohammad is a local doctor, aged 45 years who has maintained a satisfactory account with you for 20 years. His gross annual income is BD 20,000. He calls at the bank and requests assistance with the purchase of a new car costing BD 7000. His existing vehicle has been sold for BD 5000 and Dr. Mohammad requests a loan of BD 2000 to be repaid by monthly installments over a period of 3 years. Give your assessment using the seven point approach of the canons of good lending. 23 In-class exercise Your assessment using the seven point approach: 1) Borrower- a local doctor aged 45 years who has maintained a satisfactory account with the bank for 20 years. His income is not out of line with the amount requested. 2) Purpose- the advance is for the purchase of a car which presents no problem 3) Amount- BD 2000. His contribution of BD 5000 from sale of his existing car is more than adequate in relation to the amount of loan requested. For this type of loan, a contribution of 10% by the customer would be sufficient, in this case there is a 70% contribution by the customer towards the total cost. 4) Source of repayment-From Dr. Mohammad's income. From the operation of his account you will be able to check that he is able to make the necessary repayments. In-class exercise 5) Term of the advance- a 3 year term is quite acceptable and certainly less than the life of a new car 6) Security- The car itself in case Dr. Mohammad is unable to make the repayments for any reason 7) Remuneration- the bank's standard fee and interest rate for this type of advance will need to be charged. From the above, it is clear that this advance would be sanctioned. In-class exercise Dr. A. Rahman Mohammad is a local doctor, aged 45 years who has maintained a satisfactory account with you for 20 years. His gross annual income is BD 20,000. He calls at the bank and requests assistance with the purchase of a new car costing BD 7000. His existing vehicle has been sold for BD 5000 and Dr. Mohammad requests a loan of BD 2000 to be repaid by monthly installments over a period of 3 years. Give your assessment using the seven point approach of the canons of good lending. 23 In-class exercise Your assessment using the seven point approach: 1) Borrower- a local doctor aged 45 years who has maintained a satisfactory account with the bank for 20 years. His income is not out of line with the amount requested. 2) Purpose- the advance is for the purchase of a car which presents no problem 3) Amount- BD 2000. His contribution of BD 5000 from sale of his existing car is more than adequate in relation to the amount of loan requested. For this type of loan, a contribution of 10% by the customer would be sufficient, in this case there is a 70% contribution by the customer towards the total cost. 4) Source of repayment-From Dr. Mohammad's income. From the operation of his account you will be able to check that he is able to make the necessary repayments. In-class exercise 5) Term of the advance- a 3 year term is quite acceptable and certainly less than the life of a new car 6) Security- The car itself in case Dr. Mohammad is unable to make the repayments for any reason 7) Remuneration- the bank's standard fee and interest rate for this type of advance will need to be charged. From the above, it is clear that this advance would be sanctioned
