A Study on Effectiveness of credit Appraisal Practices in Financial Services Providers
Keywords:
Credit Appraisal, Financial Service Providers, Credit Risk, Loan Approval, Credit worthiness, Non-Performing Assets (NPAs).Abstract
Credit appraisal is an essential process followed by financial service providers to evaluate the creditworthiness and repayment capacity of borrowers before approving loans. An effective credit appraisal system helps reduce credit risk, minimize Non-Performing Assets (NPAs), and promote responsible lending. The present study, titled "A Study on Effectiveness of Credit Appraisal Practices in Financial Services Providers" aims to examine the effectiveness of credit appraisal practices and their impact on customer satisfaction. The study adopts a descriptive research design and is based on primary data collected from 60 respondents using a structured questionnaire. Secondary data were obtained from journals, books, annual reports, and official websites. The collected data were analyzed using percentage analysis, descriptive statistics, correlation analysis, and simple linear regression. The findings reveal that most respondents are satisfied with the existing credit appraisal practices, particularly in income verification, document verification, credit history assessment, transparency, and loan processing. The statistical analysis indicates a significant positive relationship between effective credit appraisal practices and customer satisfaction. The study concludes that efficient credit appraisal practices improve lending decisions, strengthen customer confidence, reduce credit risk, and contribute to the sustainable growth of financial service providers. The study also recommends greater adoption of digital technologies, continuous employee training, and regular review of credit appraisal policies to further enhance the effectiveness of the lending process.
How to cite this article:
Susmitha K, Rao K K N. A Study on Effectiveness
of credit Appraisal Practices in Financial Services
Providers. J Adv Res Oper Markt Mgmt 2026;
9(2):
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