0 Banks play a crucial role in ensuring financial transactions for business, and indeed the whole economy. Without banks, it would be difficult for a business to operate, whether it is through a cheque account, a savings account, an overdraft, or a loan facility. Basically, the fundamental business of most banks is to raise funds and on-lend these funds at a profit. Thus, when it comes to lending, banks need to be conservative and not take undue risks. The nature of banks, along with their size, explains their strict lending criteria.
Banks are, by nature, large conservative organisations.
Their size means lending policies and procedures need to be extensively documented. However, the culture of a bank will have an influence upon the behaviour of lending officers. This could include such factors as whether lending rules can be waived, the types of loans that are most readily approved, and the extent to which lending officers are held responsible for loan losses. Generally, to get your loan application accepted, you have to meet the bank's criteria. Criteria are used to assess your ability to pay back the loan.