3.18 Guiding Principle of Credit appraisal of DBL for Credit Officer:


To determine the worth of a client, the following conceptual exercises should be undertaken. There are no fixed and set methods to perform credit marketing, and scope for application of individual judgment/ perception always plays over set rules in such work. For example, drop in revenue of a contractor may indicate the client’s failure to get work, or it may be due to adaptation of policy to do higher margin quality jobs.

3.18.1 Industry Information:


Gather and evaluate industry information, where the client is, which may be done in the following aspects: Determine the price behavior Of the product/ service of the client.

Records of prices can reveal trend, fluctuations through various lengths of

Time in short run/ long run. From the records it should be determined whether

The Product/ Service has short term jump in demand and hence in price in the increase / decrease. The effect of such Short Term Increase /Decrease of demand on Sales Volume and Profitability Short Term has to be understood and measured, viz., fluctuation range, fluctuation cycle duration, vis-a-vis clients cost/ revenue, etc. Examples of such products would be

Winter clothing, non‑essential items like ice cream, fast food, cars, and other luxury items. of the product.

If the Product is easily substitutable, then price rise in Dhaka will influence customers to the other, often market tolerance for short run fluctuation ' for such product is very low. Example of this situation may be Paper for Plastic, tea for coffee, etc. Diversity of source of procurement.

If there are very few sources of procurement, price fluctuations are often

Wider. Example of this is seen in steel sheet trading. Market pact to set price

It often happens to specialized trade centers, to either protect against unhealthy competition, or drive out competition, in which case pricing may be in stress. Existence of monopolist/ oligopolist as client's competitors may

Signal prDBLem. Item for which taste changes very fast.


Such industry is susceptible quick change in taste, sharp competition, large investment. Examples could be toy industry, office furniture, fashion design

Of clothing, etc.












.18.1.6 The class of the country is important to note, when there is dependence on foreign countries for import/ export.












In poorer countries/ or in countries with unstable political environment, Pricing of procurement / sale is more sensitive to political turmoil, natural disasters (flood / storm / earth quake) in the short run for cars, non‑essential foods like baby food (branded baby serial), etc.

Basic food and clothing demand may not be dented much.

Forei  country's dependence of Aid /Grant / Investment may influence certain industry such as building materials like cement rod, therefore scrap vessel, etc.

Major construction like bridge over river, establishment of large scale production industry of items like fertilizer, car, etc. may influence purchase capacity of consumers, govt. etc.

Some points to carefully watch in case of dependency on foreign market may be:

         (a) Currency fluctuation,

         (b) Festival Depression/ Boost in market demand,

         (c) Development of other country competition,

         (d) Government intervention in stock market, etc.


High dependency on technology, which may change suddenly.                      technology, which may               in Dhaka country may not be as popular in another country), in which case






Examples could be computers/ electronics, unfamiliar brands (popular brand in Dhaka country may not be as popular in another country), in which case large pile up of inventory may result in pricing stress at the least. Possible hazard



Some industries are associated with risk of hazard, such as mining, asbestos plant, industrial boiler, pressurized gas filling, nuclear plant, isotope for medical industry, building construction, etc. Such industry may require lot of safety inspections, certifications, insurance etc., shortage of which may result in serious consequence‑, or heavy cost at the least.
 Long Term Look

Quality of a relationship account may deteriorate due to long run replacement of technology, in computer industry, printing industry, medicine plant, etc. Deep stage of business cycle, world depression, etc. may cause raise in expenditure. Demography, change in population of consumer group may influence business, examples may be education, cars, insurance, baby food, travel, medicare, etc. Client in industry facing sun‑set, may eventually become ill quality.