Project Report on

PROJECT APPRAISAL OF PROJECT

FINANCING TO CORPORATES
BY OBC

SUBMITTED IN PARTIAL FULFILLMENT OF ALL

REQUIREMENTS OF POST GRADUATE DIPLOMA OF
BUSINESS MANAGEMENT (PGDBM) APPROVED
BY AICTE.
Submitted by
AFRIN SHAIKH
PGDBM (FINANCE)
YEAR 2008-10
Under the guidance of :
Prof. Jyotsna Arya.
N. L. Dalmia Institute of Management Studies and Research
Srishti, Sector-1, Mira Road (E), Mumbai -401104.

CERTIFICATE

This is to certify that the project entitled Project appraisal of project

financing to corporates by Oriental Bank Of Commerce is successfully
completed by Ms. Afrin Shaikh under our supervision and guidance in
partial fulfillment of the PGDBM course under AICTE, through N. L. Dalmia
Institute Of Management Studies & Research.

Prof. Jyotsna Arya

P.L.Arya
Project Guide
_________________________

Prof.
Director
_____________________

DECLARATION
I Afrin Shaikh a student of N. L. Dalmia Institute Of Management Studies &
Research, studying PGDBM Course hereby declare that I have completed
the project on Project appraisal of Project Financing to Corporates by
Oriental Bank Of Commerce in the academic year 2008-2010. The
information submitted is true and original to the best of my knowledge.

Signature

__________________

ACKNOWLEDGEMENT
In carrying out my project titled Project appraisal of Project financing
to corporates at Oriental bank of commerce I have received guidance
and assistance from many sources I take this opportunity to thank all who
had lead to the successful completion of my project.
I would like to express my sincere gratitude towards my project guide Prof.
Jyotsna Arya for giving guidance and taking active interest throughout my
project work.
My heartfelt thanks to Prof. P. L. Arya for providing me with the
infrastructure for the project work and also to the entire faculty whose
knowledge has immensely contributed in the preparation of the project.
I would like to extend my sincere thanks to Mr. S.K. Arora, Chief manager
of Oriental Bank of Commerce ( Lokhandwala Branch) and Mr. Alok
Kumar, Loan department officer ( Lokhandwala Branch) for their valuable
time and guidance for my project work .

Afrin Shaikh

EXECUTIVE SUMMARY
Efficient lending is the one of most important function of the bank which has gained
more significance after the world has faced trouble waves due to the subprime crises.
Banks play a very crucial role in the development of any economy. Banks are like the
heart of the economy and the finance provided by them is the blood stream of the
economy. If something goes wrong in the banking sector its consequences are
witnessed across all the other sectors as mostly all of them get their finance from the
banks.
In the project titled Project appraisal of Project Financing to corporates at Oriental Bank
of Commerce the various aspects of Project financing are covered like the reasons that
gives rise to project finance such as Expansion, Modernization and new establishments
of units , Steps followed for project financing , preparation of project report and the
assessment of the report, documents required for the loan purpose, disbursement of
loans etc.
Project financing has gained emphasis in the recent years due to development of the
infrastructure, manufacturing and the service sectors. Due to increasing demand for
project finance there has been rise in the competition level amongst the bank especially
for the projects of the renowned companies. Since there is huge demand for the project
finance it has to be ascertained that the finance is provided for the projects that are
viable and the bank would be able to recover these loans easily on the due date. Thus
Project Appraisal becomes extremely inevitable.
Project Appraisal is a holistic exercise which starts from the time a prospective borrower
walks into the branch and culminates in credit delivery and monitoring; with the
objective of ensuring and maintaining the quality of lending and managing credit risk
within acceptable limits.

Project appraisal begins by studying in depth the Project Report submitted by the
proponent to the bank for the purpose of availing the loan. This report is appraised from
various angles like the financial, technical, managerial and commercial to check the
feasibility of the project report.
The job of the appraising officer at Oriental bank of commerce is to study in detail the
financial aspect covering the Projected Balance Sheets, Projected cash flow
statements, Projected Profit and loss statements in detail so as to identify the
profitability of the project as banks would lend to those projects that are profitable and
viable. After studying the financial aspect the next is the technical aspect that covers the
technicalities such as technology to be used, availability of the resources, procurement
of the resources etc. Following the financial and technical is the managerial appraisal
that shows the quality, capacity and capability of the management handling the project.
And last is the Commercial appraisal giving details about the five crucial factors
demand, supply, distribution, pricing and external forces affecting the project.
After the appraisal is done then the sanctioning authority verifies the documents of
security papers so as to go ahead with the procedure. The sanctioning authority accepts
the project if the project is feasible, it has been passed by the Inspection officer and has
received a no default status from CIBIL. The sanction letter is issued once the project is
sanctioned than the loan agreement is signed by the borrower which contains the
details regarding the terms and conditions, rate of interest, repayment schedule etc.
After the documentation the loan is disbursed in lump sum or in installments depending
on the nature of the project or the need of the borrower. The last but the most important
step is supervision and Follow up.

TABLE OF CONTENTS
SR. NO.

PARTICULARS

1
2
3
4
5

Introduction about Banks.

Sources of Finance provided by Banks.
Project Finance and Reasons for Project financing.
Introduction about Oriental Bank of Commerce
Diagram of Procedure followed for project financing for

6
7
8

Corporates at Oriental bank of Commerce.

Interviewing the proponent.
Project Report Formulation and Submission.
Project Appraisal
a)
b)
c)
d)
e)
f)

Financial appraisal.
Technical appraisal.
Managerial appraisal.
Commercial appraisal.
Credit Ratings.
Priority sector lending.

PAGE NO.
1
2
3
7
8
9
10
14
25
29
31
33

9
10
11
12
13
14
15

Submission and Screening of the Loan Application.

Final Report to Sanctioning Authority.
Documentation and Disbursement.
Monitoring and Follow Up.
Conclusion.
Annexure.
Bibliography.

35
37
40
43
45
48
50
54