- Inadequate cash-flow.
- Un-planned, over ambitious, risky and
beyond capacity expansion for which fund is diverted from existing business.
- Sickness or death of main sponsor and
there is no competent successor.
- Over-trade or high leverage (taking more
loan than required).
- Any sort of unfavorable change in
market conditions.
- Irregular payment of loan
installments, utility bills, rent, tax and VAT etc.
- Non-fulfillment of regulatory
compliance.
- Gradual increase of inventory and
account receivables owning to huge credit rate.
- Entry of new of competitors.
- Technological change –new technology
may make the existing technology obsolete.
- Dependence on single or few
customers.
- Diversion of fund to other activities
outside business.
- Huge investment to unproductive areas
(land and building etc.)
- Dispute among sponsors.
- Ill motive and habitual default
character of borrowers.
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