Calculation of rate of interest from cma data

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seema singla (Querist)
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24 September 2011 Can anybody tell me how banks calculate rate of interest on the basis of CMA data.
Some ratings are done by the banks.
Plz help ....
Thanx

CA Divyesh Sodha

CA Divyesh Sodha (Expert)
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24 September 2011 Banks have its own rating chart in which they feeds data and ratios based on CMA data and gives rating accordingly and based on the rating arrived they Charges rate of interest. It covers various parameters like financials and non financials.

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seema singla

seema singla (Querist)
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24 September 2011 Thanx for the reply, sir.
But I want to know how the rating chart affects the rating chart so that the intt rate on CC limit can be minimised.
Plz reply again.

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CA Divyesh Sodha

CA Divyesh Sodha (Expert)
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25 September 2011 Rating chart contains various questions and comparisions like, Status of organisation, no.of years of its business, sales comparision, Profit comparision, Current ratios, net worth comparision, outside liabilities comparision, etc. Based on comparision of above items if the trend is positive then scorring increases and vice-versa. So to improve the rating and to minimise the ROI, you should see that above things are positive and in favor of the firm. Even if the above things are slightly negative, you should see that the projections which you are giving should improve the above ratios, etc. The main thing is that your Net worth as compared to total outside liabilites shoule be more then 25% at least i.e. TOL / TNS ratio should be 3:1, current ration above 1.33 debt equity ratio 2:1. These are minimum things.