(a) Liquidity – The term liquidity implies the ability to produce cash on demand. A bank mainly utilizes its deposits for the purpose of granting advanced.
(b) Profit ability – Banks earn profit to pay interest to depositors, declare a dividend to shareholders, meet establishment charges and other expenses provide for reserve and for bad and doubtful debts, depreciation, maintenance etc. So profit is an essential considerations.
(c) Safety and Security – The bankers should ensure that the barrower has the ability and the willingness to repay the advances as per agreement.
(d) Purpose – The banker has to carefully examine the purpose for which the advance has been applied for.
(e) Source of repayment – Before giving financial accommodation, a banker should consider the source from which repayment is promised.
(f) Diversification of Risk – The security consciousness of a banker and the integrity of the borrowers are not aducate factors to keep the banker on the safe side,
(g) Social responsibility
