The credit appraisal process in eight steps, and where the days actually go.

Monday, 10:15, at an NBFC branch office. The whiteboard still says “pending” against a working-capital file that came in on Thursday. The bank statements arrived on Friday, but one PDF is password-protected and nobody has the password. The field agent visited the shop on Saturday. His photos are still on his phone, and the report will be typed up when he is back in the office.

Our view is simple: the credit appraisal process has eight steps, and almost none of the delay lives inside them; it lives in the handoffs between them.

A typical credit appraisal process at Indian banks and NBFCs runs in eight steps: collect the documents, pull bureau and account-aggregator data, analyse cash flow, verify in the field, place the file in policy bands, prepare the credit appraisal memo (CAM), decide in committee and book the sanction in the LOS. Good credit appraisal memo (CAM) software shortens the gaps between those steps. It does not remove the judgement inside them.

The eight steps are the same at almost every Indian lender

Product, ticket size and policy change the detail, but the sequence barely moves. A home loan, a business loan and a loan against property all pass through the same eight gates. What differs is how much evidence each gate asks for.

If your team uses different names for these steps, that is fine. The point is to write them down once, because a process nobody has written down cannot be timed.

Most of the elapsed time is waiting, not work

Here is an illustrative file with made-up numbers, not a customer result. Say the actual work on one business loan looks like this: one hour checking documents, half an hour on bureau and AA data, four hours on banking analysis, ninety minutes for the field visit, one hour on policy fit, three hours writing the CAM, fifteen minutes in committee and thirty minutes booking. That adds up to 1 + 0.5 + 4 + 1.5 + 1 + 3 + 0.25 + 0.5 = 11.75 hours, call it 12.

Now the waiting. Two days chasing missing documents. One day on a locked statement. Two days for the FI report to be typed up. One day in the analyst’s queue. Three days until the next committee slot. That is 2 + 1 + 2 + 1 + 3 = 9 working days, or about 72 working hours at eight hours a day.

So the file spends 12 of its 72 hours being worked on, and 60 hours, five-sixths of its life, sitting still. Hiring another analyst speeds up the 12. It barely touches the 60. That is why branches with good analysts can still have slow turnaround.

Steps two to four do not need to wait for each other

Many desks run the eight steps in a strict line because that is how the form was laid out years ago. But bureau pulls, banking analysis and field verification do not depend on one another. Each needs the application and the borrower’s consent, and nothing else.

So schedule the field visit the day the file is logged, not after the analyst finishes the spreadsheet. Pull bureau and AA data at login. Let the banking analysis run while the agent is on the road. Three serial gaps collapse into one. In the illustrative file above, that alone removes most of the two-day wait on the FI report and part of the queue time.

Capture also matters. A field report filed from the site, with photos and GPS taken at the address, lands on the file the same day. A report typed up later from memory and a phone gallery does not.

CAM preparation should be assembly, not a writing task at the end

In most offices, CAM preparation in banking means an analyst opening a blank template after everything else is done, then copying figures across from five places. That is where transcription errors creep in, and where each analyst’s style makes memos hard to compare.

Turn it around. Each step deposits its own section into the memo as it finishes: documents into the proposal and profile, cash flow into banking and obligations, the FI report into field verification, the policy check into deviations. Our guide to the CAM format and its sections maps each section to its source, which makes this easy to set up.

A credit memo written at the end is a summary of a process. A memo assembled along the way is the process.

Picture the after. The analyst opens a file where the figures are already in place, each one cited to the statement or return it came from. Deviations sit in their own section. The analyst spends the morning on risks, mitigants and the recommendation, the part that actually needs a credit mind.

Policy fit is a check, so make it mechanical

Step five is the most rule-bound step in the whole process. Is FOIR inside the band? Is collateral cover above the floor? Is the vintage long enough? These are comparisons against a written policy, and a comparison is something a system does the same way every time.

Done by hand, policy fit is where deviations get missed and later surface in committee. Done mechanically, the file is placed in the bands as soon as the numbers exist, and anything outside them is flagged with the policy reference. The analyst then writes the case for each deviation instead of hunting for it.

The case for keeping the steps in strict order

Experienced credit heads push back on running steps in parallel, and the argument is a fair one. A field visit costs money and agent time. If a file is going to be declined on bureau grounds, sending an agent first is waste. Sequencing, they say, is a cost filter.

We agree with the filter and disagree with where it sits. Put a short eligibility gate at login: bureau score, basic policy criteria, a complete document set. Files that fail stop there. Files that pass go into parallel analysis and verification, because by then most of them will reach a decision. The filter stays, and only the waiting goes.

There is a second objection: committees want to see a finished file, not one assembled in pieces. That is right, and parallel work does not change it. The committee still receives a complete memo. It simply receives it sooner.

Software belongs in the gaps, and people belong in the decision

The handoffs are where software helps most. In AutoCredit, statements, GST returns, ITRs and KYC are collected on WhatsApp or a portal, bureau and AA data is pulled where consent allows, and banking, obligations, FOIR and GST trends are computed the same way on every file. The memo is drafted in your format against your policy bands, with every line cited and deviations flagged. Field agents file checklists, photos and GPS from their phone, and the memo updates when the report lands. Credit officers and the committee decide.

If your first gap is missing documents, start with our loan file document checklist. The rest of our material on underwriting, field verification and FOIR is in the AutoCredit guides.

The credit appraisal process does not need fewer steps. It needs fewer pauses between them, and a memo that is ready when the people who decide are.