Bank Statement Analysis
As an individual lender, whether you’re a bank, NBFC, or any other financial institution, you conduct analysis on the prospective borrower’s bank statements. This analysis is crucial for assessing their creditworthiness and making informed decisions on whether to lend money or not. The bank statement stands out as one of the most dependable sources, providing a comprehensive view of the borrower’s transactions and financial behavior over a period of time. Nevertheless, throughout this process, you encounter various challenges.
Understanding the Challenges of Bank Statement Evaluation
-
- Different formats: Prospective borrowers may submit their bank statements in various formats, such as digital PDF, scanned PDF, or as printed hard copies.
- Different periods and magnitudes of data: Depending on your lending policies and the required level of credit assessment, you may consider different periods of data, ranging from 3 to 12 months, within the bank statements provided by the prospective borrower.
- Many narrations: Bank statements often feature diverse narrations and layouts, unique to each bank, which adds complexity to the analysis process.
- Manual inspection, analysis, and calculations: Given the array of formats, data periods, narrations, and layouts, manually inspecting, analyzing, and calculating creditworthiness becomes a cumbersome and time-consuming task for lenders.
How does Bank Statement Analysis work?
This process typically involves parsing data from scanned images or PDF documents, structuring it, and summarizing the account activities of borrowers. Through bank statement analysis, financial institutions gain an understanding of an individual’s liabilities, recurring transactions, and monthly dues, enabling them to make informed decisions regarding the amount of money they can lend.
It’s important to note that bank statement analysis is not a one-size-fits-all solution due to variations between banks and the diverse formats used for statements. Therefore, investing in robust bank statement analysis software is essential for accurate and efficient analysis.
You can use FinAnalyz’s Bank Statement Analysis Tool for different purposes:
screening
- For the initial screening of the proposal.
creditworthiness
- To generate an independent opinion about the creditworthiness of the prospective borrower, easing your decision-making process.
borrowers periodically
- To check and verify the transactions of your existing borrowers periodically.