Credit Appraisal Note Format: Section-by-Section Structure Used by Indian Lenders

A credit appraisal note runs sixteen sections in a fixed order: gist box, purpose, borrower profile, management, group exposure, conduct and credit history, industry, financials, limit assessment, security, pricing, rating, regulatory compliance, deviations, covenants, and recommendation — with annexures behind. Each section has one owner, one data source and one predictable way of going wrong.

Key facts

• YuSight's sample CAM runs 28 minutes end to end and carries 142 citations — every figure in every section linked back to the source document and page, which is what turns a section-by-section template from a drafting aid into an auditable artefact.
• Sixteen sections, four data sources. Almost everything in the note comes from one of four places: borrower-submitted documents, third-party registries and bureaus, the lender's own core banking system, or the analyst's judgement. Mislabelling which is which is the single commonest review comment.
• The deviations section is the one that gets read first. In most Indian lenders the sanctioning authority for a deviation sits one level above the authority sanctioning the limit itself, so a note with an unlisted deviation routes to the wrong desk.
• RBI puts a clock on the small end. Credit decisions on MSE loans up to ₹25 lakh must be taken within 14 working days, and banks are mandated not to accept collateral for MSE loans up to ₹10 lakh (RBI, MSME FAQs, updated 29 July 2025).
• Asset classification belongs in the note, and it moves daily. SMA-0, SMA-1 and SMA-2 are stamped at day-end for each calendar date, and an NPA follows beyond 90 days overdue (RBI, Master Circular RBI/2025-26/13, 1 April 2025).

This is a format guide. For what a credit appraisal memorandum is and how CMA data flows into it, start with what a credit appraisal memorandum is and the format Indian banks use. For who does what and when, see the full credit appraisal process in Indian banks.

The sixteen sections at a glance

Page counts are illustrative for a ₹10–25 crore mid-corporate proposal at a mid-sized Indian lender. They are not a published norm.

Section 1 — Gist of proposal

What goes in it. A single boxed page carrying the entire proposal: borrower, constitution, existing and proposed limits facility by facility, rate, tenor, security, key financials, rating, IRAC status, deviations count, recommending and sanctioning authority. If a committee member reads only one page, this is it.

Where the data comes from. Nowhere original. Every figure is pulled from a later section — which is why it is written last and why it is the fastest thing to get out of sync.

The common failure. The gist box says ₹13.50 crore and section 9 assesses ₹13.20 crore, because the limit was trimmed in review and only one place was updated. Committee members notice.

Fully specified example — illustrative only.

Section 2 — Purpose and nature of proposal

What goes in it. What is being asked for, why now, and which of six categories the proposal is: fresh, renewal, enhancement, ad-hoc, review-with-no-change, or restructuring. State the end use in one sentence a non-specialist could repeat.

Where the data comes from. The loan application and the RM's call report.

The common failure. Writing "for business purposes". An enhancement note that cannot say what the extra ₹2 crore funds — additional inventory holding for a new OEM order, a capex line, a receivable stretch — has not established need, and need is what the whole limit assessment rests on.

Section 3 — Borrower profile

What goes in it. Constitution and date of incorporation, CIN, PAN, GSTIN, Udyam Registration Number, registered office and works addresses, line of activity, installed and utilised capacity, key customers and suppliers, and the banking arrangement (sole, multiple or consortium).

Where the data comes from. Certificate of incorporation, MOA/AOA or partnership deed or LLP agreement, MCA master data, GST portal, Udyam certificate.

The common failure. Copying the borrower's own profile note. Verify the constitution documents independently — the number of proposals where the works address in the application does not match the address on the factory licence or the GST registration is not small.

Section 4 — Management and promoter profile

What goes in it. Directors or partners with DINs, date of appointment, qualifications and relevant experience, shareholding pattern, promoter and guarantor net-worth statements with a date, and succession position where the promoter is the business.

Where the data comes from. MCA director master data, share register, net-worth certificates from a chartered accountant, and consumer bureau reports on each promoter and guarantor.

The common failure. An undated net-worth statement, or one that carries the same illiquid asset — the promoter's residence, already mortgaged to you — into three different guarantors' statements. State which assets are encumbered.

Section 5 — Group structure and exposure

What goes in it. Associate and group concerns with their CINs, the nature of dealings between them, related-party transactions from the audited financials, and total group exposure to your lender against the group borrower ceiling.

Where the data comes from. MCA search on common directors, the related-party note in the audited financials, and your own exposure register.

The common failure. Group exposure computed from the credit system only, missing an exposure booked at another branch or in another product line. Run it at the group level in one query, not by asking around.

Section 6 — Credit history and conduct of account

What goes in it. Commercial bureau report and MSME Rank, consumer bureau on promoters and guarantors, CRILC position, wilful defaulter and suit-filed list checks, and — for an existing borrower — cheque returns, LC devolvement, BG invocation, drawing power shortfalls, and the SMA/IRAC history for the last 12 months.

Where the data comes from. TransUnion CIBIL, Experian, Equifax or CRIF; RBI's CRILC; and your core banking system. How to read the commercial report end to end is set out in CIBIL commercial report explained, and what the 1–10 rank actually signals in CIBIL Rank and CMR for MSMEs.

The common failure. Reporting the CMR without the implied default probability, and reporting IRAC status as at the date spreading finished rather than as at the note date. Classification is stamped at day-end every calendar date — the mechanics are in IRAC norms explained.

Section 7 — Industry and business analysis

What goes in it. Segment and sub-segment, demand drivers, the lender's internal industry rating and sectoral cap headroom, order book with named counterparties where disclosable, customer and supplier concentration expressed as a percentage of turnover, capacity utilisation, and the two or three sector-specific risks that actually apply.

Where the data comes from. Borrower disclosures, the internal sector research note, and GST return data on counterparty concentration.

The common failure. A page of general industry commentary with no borrower-specific number in it. Concentration is the test: if the top customer is 42% of turnover, say 42%, and say what happens to DSCR if that customer halves its offtake.

Section 8 — Financial analysis

What goes in it. Three years audited plus latest provisional plus projections, spread into the lender's common format; ratio analysis; auditor's report qualifications and emphasis-of-matter paragraphs; contingent liabilities; any change of auditor during the period; and reconciliation of declared turnover across the audited financials, GST returns and bank credits.

Where the data comes from. Audited financial statements with schedules, ITR and computation, Form 26AS, GSTR-1 and GSTR-3B, bank statements, and CMA data where called for. The seven CMA statements and where each lands are covered in what CMA data is. Where the borrower has consented through an Account Aggregator, statements and GST returns arrive as structured data instead of PDFs — what that pipe does and does not deliver is set out in the Account Aggregator framework explained.

The common failure. Presenting the borrower's projections as analysis. Projections are an input to be tested, not a finding. State the assumption you rejected and what you substituted.

Section 9 — Assessment of limits

What goes in it. The arithmetic, shown. For working capital: the method used (MPBF Method II, turnover method, or cash budget), the computation line by line, and the cross-check against the other method. For a term loan: project cost, means of finance, promoter contribution, repayment schedule, DSCR year by year and average, and at least two sensitivity cases. For non-fund-based: LC and BG assessed separately on their own operating cycles.

Where the data comes from. CMA statement 4 and 5, projections, quotations for capex, and the bank's margin norms. The MPBF working is set out in MPBF calculation explained, and monthly drawing power in the drawing power calculator.

The common failure. Reverse-engineering the computation to land on the limit the borrower asked for. If holding periods in the projection are longer than the audited history supports, the MPBF is fiction. Re-derive holding periods from the audited financials, then compute.

Section 10 — Security and collateral

What goes in it. Primary security with basis of charge; collateral with survey number or address, panel valuer name, valuation date and both market and realisable value; personal and corporate guarantees; insurance with sum insured and bank clause; CERSAI registration; and ROC charge creation via Form CHG-1.

Where the data comes from. Valuation report, title search report from the panel advocate, CERSAI and MCA searches, insurance policy.

The common failure. Quoting market value where the provisioning and drawing power both run on realisable value, and carrying a valuation more than a year old into a fresh sanction. Note the date next to every value.

Section 11 — Pricing and return

What goes in it. Benchmark (repo-linked EBLR or MCLR), spread and how it was derived, effective rate, reset frequency, processing fee, documentation and inspection charges, and the yield or RAROC computation where the lender runs one — including non-fund-based commission and float income.

Where the data comes from. The pricing grid and the RAROC model.

The common failure. Pricing off the rating grade without adjusting for the deviations granted at section 14. A file with three approved deviations is not a clean IRB-4.

Section 12 — Risk rating

What goes in it. The internal rating grade with the model version and the date it was run, the score contributions by module (financial, management, industry, conduct), external ratings from CRISIL, ICRA, CARE, India Ratings or Acuité where the borrower has one, and the facility rating where the lender rates facilities separately.

Where the data comes from. The internal rating model, fed by section 8.

The common failure. A rating run on the provisional financials that never gets re-run when the audited numbers arrive. Record the input set the rating was run on.

Section 13 — Regulatory and policy compliance

What goes in it. Single-borrower and group-borrower exposure against ceilings, sectoral exposure cap position, PSL classification and sub-category, current IRAC status, KYC completion, unhedged foreign currency exposure where relevant, and any statutory restriction that bites — Section 20 of the Banking Regulation Act for directors' interests, Section 180(1)(c) of the Companies Act for the borrower's own borrowing power.

Where the data comes from. Loan policy, exposure register, RBI Master Directions, the borrower's board and shareholder resolutions. For MSME classification and priority-sector treatment, see RBI's Master Direction on Lending to the MSME Sector.

The common failure. Treating this as a tick-box annexure. Each line needs a value, not a "Yes".

Section 14 — Deviations from loan policy

What goes in it. Each deviation separately, never bundled, with the policy norm, the actual position, the justification, the mitigant, and the authority competent to approve that specific deviation.

Where the data comes from. Sections 8 to 13, read against the loan policy.

The common failure. Burying a deviation in prose in section 8 so it never reaches the deviations table, and therefore never reaches the authority competent to approve it. That is a governance failure, not a drafting one.

Illustrative deviations table

Section 15 — Terms, conditions and covenants

What goes in it. Financial covenants with definitions and test dates; stock and book-debt statement periodicity; QIS returns; insurance obligations; end-use certification; inspection frequency; conditions precedent to disbursement; and events of default.

Where the data comes from. The sanction template and the deviations at section 14 — every mitigant in the deviations table must reappear here as an enforceable condition, or it is not a mitigant.

The common failure. A covenant with no stated definition and no test date. "DSCR not below 1.25x" without saying whether DSCR is on EBITDA or on cash accruals, and whether it is tested annually on audited numbers or quarterly on provisionals, is a dispute scheduled for eighteen months from now. Definitions and test mechanics are covered in covenant testing for DSCR and leverage.

Section 16 — Recommendation and signatures

What goes in it. A recommendation stated in one paragraph, the officers who prepared and recommended the note with their designations and dates, the credit committee minute reference where applicable, and the sanctioning authority's signature block.

Where the data comes from. The delegation of powers matrix in the loan policy.

The common failure. A recommendation that summarises rather than recommends. Say sanction, sanction with modification, or decline — and if sanction with modification, say which line item moved and by how much.

Annexures

Keep the note readable by pushing evidence behind it. A workable annexure set:

• A1 Spread financials, three years plus projections
• A2 Ratio sheet
• A3 MPBF or cash budget working
• A4 DSCR and sensitivity working
• A5 Bureau reports — commercial and consumer
• A6 CRILC and defaulter list search outputs
• A7 Valuation report summary
• A8 Title search report and legal opinion
• A9 CERSAI and MCA charge search outputs
• A10 KYC pack index
• A11 GST turnover reconciliation
• A12 Site visit and inspection report

How does the note change by proposal type?

The section order is fixed. The weight of each section is not. This is the comparison most templates leave out.

The single most common structural error is treating an enhancement as a renewal with a bigger number. An enhancement re-opens section 9 entirely — the working capital gap is recomputed on current holding periods, not scaled from last year's limit.

A restructuring note is a different animal again: the limit assessment becomes a sustainable-debt exercise, and the note must carry the asset-classification and provisioning consequence of the restructuring itself, set out in IRAC norms explained.

How long should an appraisal note be?

There is no RBI-prescribed length. What lenders converge on, indicatively:

Illustrative. The only hard rule is the 14 working days for MSE loans up to ₹25 lakh (RBI, MSME FAQs).

Length is not the quality signal. Citation density is. A twelve-page note where every number carries a document-and-page reference is more defensible than a thirty-page note where the committee has to ask where a figure came from. YuSight's sample CAM runs to 142 citations in a 28-minute draft, each one click-through to the source page, which is what lets the committee argue about the judgement instead of the provenance.

FAQ

What sections go into a credit appraisal note?

Sixteen, in a stable order: gist of proposal, purpose, borrower profile, management and promoters, group exposure, credit history and conduct, industry analysis, financial analysis, limit assessment, security, pricing, risk rating, regulatory compliance, deviations, terms and covenants, and recommendation — with annexures behind.

How long should an appraisal note be?

There is no prescribed length. A ₹5–50 crore proposal typically runs 12 to 20 body pages with 40 to 80 pages of annexures. What matters more than length is whether every figure is traceable to a source document and page.

Who signs a credit appraisal note?

The preparing officer and the recommending authority sign it, and the sanctioning authority signs the approval. Which authority that is depends on the lender's board-approved delegation of powers, and a note carrying a deviation usually routes one level higher than the limit alone would require.

Is the format prescribed by RBI?

No. RBI prescribes what must be assessed and reported — exposure norms, asset classification, priority sector treatment, MSE timelines — not the section order of the note. The order is set by each lender's loan policy, which is why the names differ while the content does not.

What is the difference between a credit appraisal note and a CAM?

Nothing substantive. Credit appraisal note, credit appraisal memorandum, credit assessment memo, proposal note and process note are the same document under different house styles. Branch and regional offices tend to say "note"; credit hubs and private lenders tend to say "CAM".

Where do deviations go?

In their own numbered section, one row per deviation, never bundled into a paragraph. Each row needs the policy norm, the actual position, the justification, the mitigant and the authority competent to approve that specific deviation.

What goes in the annexures rather than the body?

Evidence. Spread financials, ratio sheets, MPBF and DSCR workings, bureau reports, search outputs, valuation and title reports, the KYC index. The body carries conclusions and the arithmetic that produces them; the annexures carry the proof.

How do you keep the gist box in sync with the rest of the note?

Write it last, and generate it rather than retype it. The gist box holds no original data — every field is a restatement of a later section, so any manual re-entry is a chance for the two to diverge after review.

Should the note state the IRAC status?

Yes, with the as-at date. Classification is stamped at day-end for each calendar date, so "Standard" without a date tells the committee nothing about whether the position was checked yesterday or six weeks ago.

Key takeaways

• Sixteen sections, and each one has exactly one primary data source. If you cannot name the source for a section, that section is opinion.
• Write the gist box last and generate it from the body. It is the page that gets read and the page most likely to be stale.
• Every mitigant in the deviations table must reappear as an enforceable condition in section 15, or it is decoration.
• Show the arithmetic in section 9. A limit assessment that cannot be recomputed from the note is not an assessment.
• Citation density beats page count. A shorter note where every number links to a source document survives review; a long one where numbers float does not.

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