Lecture 76: What is credit summation/Churning? How to calculate credit summation/churning in banking

[@superamitkhatri]

Very good lectures .Every asset sales person should learn from these lectures , so that they can analyse the case before logging into the system.

[@AnkushJain]

Thank you

[@JitenderKumar-ku1pw]

Thank you sir....Your videos are very helpful for me as a fresher in this field 🙏

[@AnkushJain]

Thank you

[@tradingmindset1484]

Sir because of your viedios . I am able to dominate Credit Managers in my Bank. THANKS FOR VIEDIOS ON WORKING CAPITAL . REALLY HELPED IN MY CARRER PROGRESSION.

[@AnkushJain]

Thank you 👍

[@anirban28]

Awesome explanation is delivered by you in youtube platform.

[@AnkushJain]

Thank you

[@AmitSingh-fs2ot]

Very rich and valuable content

[@AnkushJain]

Thank you

[@saikatsaha6685]

Sir, thanks for this lecture. It's like an eye opener and really insightful ❤

[@AnkushJain]

Thank you

[@shubhthakkar16]

Sir give a lec on how to make credit and debit summary in excel from bank statements with the name of parties from which its having entry. Its a very tedious work while making committee notes. Please show us a better way if available

[@AnkushJain]

Pl watch this video 👇 kzbin.info/www/bejne/pJTZhH6ebJh2g5Isi=hvWWDHZgdivirT5G

[@BharatKumar-bn5fw]

Thanks sir , your videos gives me confidence in office & banking works.

[@AnkushJain]

Thank you 👍

[@akash_shah97]

Helping video, thanks sir

[@AnkushJain]

Your welcome

[@arnabganguly5634]

Sir i have 2 questions: 1. Suppose a retail shop borrower wants CC limit of 20 lskhs then on an average what should be the credit balance in his current account and for how long we need to check. 2. Suppose customer provides invoices to rach customers but deposits cash in bank on a cumulative basis either on the same day or else 2-3 days later then hiw to check it from the bank statement.

[@AnkushJain]

1. No fix formula.. we do limit basis sales achievement and credit summations of last 1 year usually and not basis current account balances

[@AnkushJain]

2. Just compare total sales of last 12 months with credits in last 12 months.. if 80% are achieved then u r good to go

[@arnabganguly5634]

​@@AnkushJainsir what is limit based sales achievement

[@arnabganguly5634]

Sir can you please tell what is limit based sales achievement.

[@Rohit-ru2tu]

Hello sir, Please make videos on gst (bankers perspective view). Highly recommended this channel. Thank you sir for this channel.

[@AnkushJain]

Thank you Rohit. Sure will do that

[@TheSuresh2022]

Yes sir, please make a video on gst also..

[@AnkushJain]

Sure 👍

[@saibaldatta6615]

Sir very much elaborative lectures. Any CD or pen drive available for all the lectures taken together

[@AnkushJain]

Thank you. No such CD or pendrive made for them

[@soumyaroy808]

Sir super analysis . Kindly make a video on working capital assessment method to be used for seasonal business if possible. Thank you.

[@AnkushJain]

Thank you 👍

[@yuvrajpatil1111]

Than you for video

[@AnkushJain]

Your welcome

[@sindhushb.1272]

Excellent tq sir

[@AnkushJain]

Thank you

[@cayogeshreddy33]

Thank you so much, really helpful. Please make a video on How to do Con coll with the customer, things to asked,

[@AnkushJain]

Sure yogesh. Thank you

[@sardarkhan5751]

Yes I want it as well

[@AnkushJain]

👍

[@yuvrajshisode2729]

Thank you sir...good one..

[@AnkushJain]

👍

[@yolopug3889]

sirji what is the risk if customer is not routing churn through my bank but is having churn in other bank accounts. WHY my bank is adamant on stipulating mandatory churn in our bank

[@AnkushJain]

We have charge over customer current assets and moreover we need to monitor where our limit funds are used and where the business of the client is headed

[@atulgupta3750]

Sir 1. How do I confirm that the borrower has not hidden any bank account statement from us i.e they have submitted the statements of their all bank accounts? 2. How do I come to know about all the related parties Sister concern in a partnership firm and LLP?

[@AnkushJain]

1. Check the bank account names in balance sheet, check the names if any appearing in ITR and rest check in the bank statement whether any transfer entries there from other account

[@AnkushJain]

2. Related parties can be known from ITR, tax audit report, CIBIL report as sometimes address or email id of other name appears, discussion with client, for LLP we can check in probe, and last is our general guess when we see buyers and suppliers and the name resembles with our borrower or its family members then we can ask

[@sumankumarsahu3192]

Dear Sir Kindly make video on Debt Schedule also if possible.

[@AnkushJain]

Ok will do that

[@atulgupta3750]

Sir If a customer says that from a particular debtor he received the money in cash thats why they are not appearing in bank statement. If we do not find such cash deposit in the bank statement. Should we consider it as withdrawal of capital. OR what should come in our mind in such situation.

[@AnkushJain]

If it is a nominal amount transaction then ignore. Otherwise the cash should have been deposited in the bank statement. If the client has not deposited in Bank then consider the debtor as sticky

[@kailashverma6566]

Hi sir , i love ur lectures and ur way of explanation Its awesome Sir i want to ask you By studing financial statements of company , Auditor report and board report of private limited company Can we identify financial performance of company and where company incurred unnecessary expenditure Plus could we identify possible reasons of excess cost I asked this question so many people but no body able to reply I really need this answer

[@AnkushJain]

You can identify but only upto limited extent. Basically first you need to compare the results of two financial year and identify if there is any unusual increase in any expenditure of the company or not. But in broader sense only the management can know about excess expense and you can't identify by merely studying the financial statement. For example, if management has incurred 1 cr on marketing the how would you know exactly on what marketing the expenses were done. It can for tv marketing, for selling samples, for having trade fairs, for door to door sales effort etc. You only will have broader sense of expense integrated in a group. For examples, many marketing expense merged in one head only. Only the management can know what exactly constitute marketing cost and they are only one then can identify whether the expense was necessary or not. Therefore you won't be able to decide about it from studying balance sheet. However we can have sense about company financial performance, for example if company incurred heavy capital expenditure then you can judge the risk that the company has done very high expense and can run into difficulty if the project does not becomes successful

[@kailashverma6566]

@@AnkushJain thq sir i got it. Ismall private limited company not normally pay attention of their current ratio , liquid ratio etc , they not pay attention on their customers profitably analysis , product profitably analysis, improvement in operating cycle , stock management system (on the name of stock management system they just use software name called busy software) but in actually they do nothing to improve their services So, i am a newly qualified CA I don't have a experience in the field of costing, i only have a bookish knowledge Now i want to offer private limited company that services Sir do u think i should proceed

[@AnkushJain]

With bookish knowledge you can't be effective. Please spend some time under experienced mentors then only join such company as advisor

[@kailashverma6566]

@@AnkushJain ok sir thq for the true suggestion 😊😊

[@AnkushJain]

👍

[@caajaykashyap]

During Bank statement analysis I found that there are some credit entries of related parties.. what points can be checked for risk point of view

[@AnkushJain]

There can following situations: 1. Temporary fund arrangement from them 2. Long term loans/quasi equity taken from them 3. Sales done to them and payment received 4. We had given loan to them in past and they are repaying it In all cases, same need to be checked from copy of their ledger accounts. Sales transactions are riskier. Since these sales Can be bogus sales just to inflate the sales in books of accounts

[@caajaykashyap]

@@AnkushJain thanks sir

[@AnkushJain]

👍

[@caaman93]

Sir pls make more detailed video on current ratio,, working capital and WC cycle

[@AnkushJain]

Already made them. Pl check lecture no. 16 to lecture 23

[@caaman93]

@@AnkushJain sure sir

[@AnkushJain]

👍

[@TheSuresh2022]

Sir, what r the main items we have to check from p& l and balance sheet for term loan??

[@AnkushJain]

Please watch DSCR and EBITDA video

[@ramugehlot1274]

Sir ap ne video uploaded nahe Kara sunday ka me to sunday ka entjar he ap ke video ke leye karta hu sir ji

[@AnkushJain]

Sorry, i was too busy in month end loan files. Therefore there was no time to upload. Will make it upto you next sunday

[@ramugehlot1274]

No sorry sir ap mere guruji ho

[@AnkushJain]

Its okay. We all are friends 👍

[@vaibhavoza8400]

​​​@@AnkushJain Hello Sir Minimum credit summation (sale) should be 4 time of sanction limit ??? Nd not so what it indicate from the bank point of view nd what the BANK AUDITOR SHOULD DO

[@dreamRao]

Sir associate concers/ sister concerns firms companies ke agar aapas me bahut transaction rehte hai statement meine. Ye kaha tak sahi hai ? Aur aesae cases me kin kin chizo ka dhyan rakhe ? Please bataye.

[@AnkushJain]

Agar to ik firm ka final product dusri firm ka raw material hai then to kuch theek hai.. but hamein totality mein group level pe dekhna pdega k net outside sales kitni hai and uske hisab se hi limit decide krni chahiye

[@gurpreetSingh-pz7bo]

Thanks alot sif

[@AnkushJain]

Your welcome 👍

[@viveksen9447]

Thank you sir.👍

[@AnkushJain]

👍

[@MONUKUMAR-xu7xg]

Hi, 1) if we are getting Churning on Higher side say at 150% even after ignoring all Key Credits as mentioned in this vedio, then what does it signify, is it okay to funs this business !! 2) While calculating churning in practical cases, we generally take Taxable Sales value from GST, is this correct !!

[@AnkushJain]

Higher churning could be due to advance payments from customers, difference of GST since we calculate sales from taxable value side while churning is received for invoice value. There could be temporary short term funds arrangement between the parties to support the business requirements. All this need to be discussed in detail with promoter. Prima facie, higher churning does not constitute reason for rejection

[@MONUKUMAR-xu7xg]

@@AnkushJain Thanks

[@AnkushJain]

👍

[@kamalsingh-di4jl]

Sir please tell transfer from self to be added in credit summation or not

[@AnkushJain]

No

[@kamalsingh-di4jl]

Thanks sir

[@AnkushJain]

👍

[@ankursri5167]

Sir, content too much productive and qualitative .. Pls increase ur audio volume.

[@AnkushJain]

Thank you. Sure will work on that

[@happyjain7896]

Wating for next🖖

[@AnkushJain]

Thank you 👍

[@ananyasrivastava04]

Sir at 26:11 what if both borrower and borrower’s customer are from same bank, how will discounting happen in that case

[@AnkushJain]

LC discounting?

[@ananyasrivastava04]

@@AnkushJain yes sir for lc discounting/bill discounting any

[@AnkushJain]

Generally LC discounting same bank nhi krta but kuch banks fir bhi kri ja rhe hain.. so it is not fixed

[@rahulnshenoy]

Sir, Do we get training if we are selected as credit manager at banks/NBFC's after clearing CA?

[@AnkushJain]

Yes but very little. You are expected to perform at full potential after a month or two

[@manharannishad1793]

Churning Account open karane ka charges kitna hota hai. Please reply me.

[@AnkushJain]

Vo to normal current account hi hota hai.. no charges

[@ramugehlot1274]

Tq sir ji

[@AnkushJain]

Your welcome

[@rounakagarwaal]

If a customer has a retail outlet where footfall is good and over there he is getting cash for his sales, which he is depositing in the bank in two three days and someone times he takes weeks time to deposit cash. Then how we can verify he is not showing bogus sales and depositing only valid cash in the bank. He is also not giving invoices to the customer.

[@AnkushJain]

If he is not issuing invoices then it means there is no sales booked in books of accounts and then banking analysis would not be of much relevance. But in order to know about him, you can check below: 1. Sometimes these customers hold very good average banking balances, you can check the credit balance in his accounts Further stock in his shop, seeing customer footfalls on visit, market ref. Check, conduct of existing running loans, net worth statement, collateral offered is of prime importance while arriving at decision to fund these clients

[@rounakagarwaal]

If no collateral is offered then should we provide him the loan.

[@AnkushJain]

If you are ok with balance with other parameters then you can give unsecured business loans. I cannot state the what amount should be given. It depends on case to case basis

[@kailashverma6566]

Hello sir , i want to ask you If a person has business other than transport and he already has trucks to transport their own good Now he wants to take a loan against this vehicle Then how much % of loan bank will provide against this vehicle and on what basis

[@AnkushJain]

I need to confirm since I haven't done vehicle financing as of yet

[@kailashverma6566]

@@AnkushJain ok sir

[@AnkushJain]

👍

[@chandan404]

Kailash verma ji, you May give him a OD loan for running his transport business. You can do a expenditure assessment to arrive for the od loan limit. Also bear in mind,if you take vehicle as security then it has depreciating nature value. During further renewals the value May go below the loan limit also. Better to take some immovable security for the loan. This is my perspective.

[@amanbhardwaj1000]

Sir, I'm processing a TL and CC Loan of a start-up company, .and there are two directors ( and they themselves are promotors too) , .. and both these directors have their own proprietary concern which they have been running for quite a long time Sir, My question is : Do I need to a detailed analysis of their individual proprietorship firms also ( by making their CMA data and all) ...or I just need to Look at KFIs of their respective proprietorship firms ....

[@AnkushJain]

Borrower must be providing financial comfort of one of the firm's therefore it's complete analysis is required. The firm which is having major business out of these two should be analysed completely and KFI of other firm to be analysed

[@amanbhardwaj1000]

@@AnkushJain ok .sir thanks 👍

[@AnkushJain]

👍

[@amanbhardwaj1000]

@@AnkushJain sir, can you please make video on what is the correct way of commenting on financials/KFIs .? ... Because I seen that most people just convert the digits of KFIs into words ...and I this that doesn't make much of a difference when we already have that data.... So, please make a video on how to comment on financials correctly which does make an impact and brings hiden things to view..

[@AnkushJain]

Yeah i will do that