Chapter # 5

BANK OF KHYBER CREDIT / FINANCING

5.1 INTRODUCTION
Performance of a country, especially a developing country, development of industries,
trade, as well as agriculture is highly dependent on the dynamic development. BOK
appropriate jobs in all sectors of vital importance and high speed, the distribution of
funds for sustainable development plays an important role in ensuring. In addition, the
indicators which mainly reflects the high quality of the management of BOK prudent
financing decisions financing and quick recovery of the reasonable control of the bank
liabilities are determined by the borrower / withdrawal schedule.
Keeping all these factors in view, the State Bank's credit policy rules / guidelines lays
down and within this broad framework, BOK own individual financing strategies and
policies.

5.2 PRINCIPLES OF FINANCING

Basically, there are six principles, which must be duly observed while advancing
money to borrowers.
Safety:
It covers the elements of character, capacity, capital, collateral and condition. It means
taking all the risky factors into consideration and trying to hedge the bank from any
possible financial loss.
Liquidity:
Covering the element of capability to liquidate or repay on maturity and also prior to
the maturity, in case of need. It is an utmost important duty of a banker to assess the
financial position of the burrower i.e. if the party/client is financially sound or will be
completely dependent on the finances of the bank because a party/client with a shaky
financial position can be a greater risk to the bank.
Term or Period of the Finance:
The facilities granted should be for a predetermined period of time, which would
depend on whether the bank is offering short, medium, or long term facility
depending upon the purpose of financing.
Dispersal:
The lending portfolio should be as wide-based and diversified as possible in order to
spread the risk.

Internship Report on Bank Of Khyber Page 29