This study helps in understanding the credit appraisal system of Banks in India and to understand how to reduce various parameters, which are broadly categorized into financial risk, business risk, industrial risk and management risk associated in providin loans or advances or project finance.The research design was analytical in nature. Only secondary data was collected to this project. Using this collected data; analysis work was done in the area of Micro and Small enterprises.After the analysis of this study, it was found that the following are the factors that will be considered by the Banks in credit appraisal process. They are financial performance, business performance, industry outlook, quality of management and conduct of account. In the factor of financial performance, the operating and financial viability of the proposal was found.This study helps to know the credit appraisal process and understand the operating and financial viability of the proposal.

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