Why do banks deduct loans and advances from capital during credit appraisal?
Why do banks deduct loans and advances from capital during credit appraisal?
These loans and advances on the asset side don’t contribute to regular business operations and often reflect funds diverted to non-core or external activities. Lenders assume such advances come only from own (promoter) funds, not external borrowings or working capital. Deducting them helps properly assess true net capital or promoter investment used directly in running and growing the business, ensuring that credit is given against genuinely employable capital��.
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#CreditAppraisal #LoansAndAdvances #NetCapital #BankingBasics #CAAnkushJain #FinanceEducation #BusinessCredit
Видео Why do banks deduct loans and advances from capital during credit appraisal? канала CA Ankush Jain
These loans and advances on the asset side don’t contribute to regular business operations and often reflect funds diverted to non-core or external activities. Lenders assume such advances come only from own (promoter) funds, not external borrowings or working capital. Deducting them helps properly assess true net capital or promoter investment used directly in running and growing the business, ensuring that credit is given against genuinely employable capital��.
Like, share, and comment if you want more credit appraisal or banking tips!
#CreditAppraisal #LoansAndAdvances #NetCapital #BankingBasics #CAAnkushJain #FinanceEducation #BusinessCredit
Видео Why do banks deduct loans and advances from capital during credit appraisal? канала CA Ankush Jain
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23 сентября 2025 г. 20:36:31
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