Analysis of Credit Policy in GP PARSIK SAHAKARI Bank Ltd

The Credit System Provides elasticity to the monetary system of a country. It can be conveniently expanded or contracted without much difficulty. The credit also provides a very convenient and economical medium of exchange. However, credit is a mixed blessing. It involves certain advantages as well as disadvantages. A More serious situation may arise if the credit is expanded beyond a certain limit. Creation of Credit is one of the most important function of a co-operative bank. The bank is also known as a factory of credit. GP Parsik Sahakari Bank sereceives deposits from the customers on the promise to pay them on their demand. The Bank lends out the major portion of theses deposit to the businessmen and keeps a small portion of cash reserves a bank can create huge superstructure of credit. This is known as credit creation power of the Bank. This power to create credit is subject to certain limitations. The essence of credit analysis is to determined the ability and willingness of a borrower to repay a loans in accordance with the terms of the Loan contract. Bank attempts to assess the degree of risk it will be willing to exposure and the amount of funds that would be prudently extended in view of risk involved. The word “credit” has been derived from the latin word “Credo” which means “I Believe or I Trust” credit signifies a trust or confidence reposed in another person. Thus, the Credit means reposing trust or confidence in somebody.