The Borrower Behind the Borrower - a Business Novel

Related-Party Transactions: Credit Risks and Red Flags

Instructor: Resource Desk

Language: English

Validity Period: Lifetime

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THE BORROWER BEHIND THE BORROWER

A Business Novel

One company. A ₹32 crore loan proposal. A network of connected businesses. Hidden credit risks.

When BlueHaven Hospitality & Foods Pvt. Ltd., a fast-growing hospitality company, approaches a bank for ₹32 crore, its strong financial performance makes the proposal look promising.

But as Kabir Shah, a Relationship Manager, and Devika Iyer, an experienced Credit Manager, investigate further, they uncover a complex network of related-party transactions involving unsecured advances, overdue receivables, property deals, corporate guarantees and third-party security.

Are these genuine business arrangements, or could they threaten the borrower's repayment capacity?

Set in the world of Indian corporate banking, this business novel takes readers through financial statement analysis, credit red flags, management questioning, fund-flow investigations and real-world credit appraisal decisions.

A practical, story-driven learning experience for bankers, credit officers, financial analysts and finance professionals.

Because the company borrowing from the bank may not be the only company influencing its ability to repay.

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	INDEX
	Prologue
	Part I — The Connection Nobody Questioned
		Chapter 1 — The Proposal That Looked Perfect
		Chapter 2 — “Who Exactly Is a Related Party?”
		Chapter 3 — The Note Everyone Skipped
		Chapter 4 — Related Does Not Mean Wrong
		Chapter 5 — Mapping the Promoter’s Business Empire
	Part II — Sales, Purchases and Profits Within the Group
		Chapter 6 — The Customer Was Actually a Group Company
		Chapter 7 — Sales Are Growing—but Only Within the Group
		Chapter 8 — The Receivable That Never Became Cash
		Chapter 9 — Year-End Sales Between Related Companies
		Chapter 10 — The Group Company Buying at an Unusual Price
		Chapter 11 — Purchases From a Promoter-Controlled Supplier
		Chapter 12 — Is the Price Really Arm’s Length?
		Chapter 13 — The Margin That Moved From One Company to Another
		Chapter 14 — Circular Trading: Sales That Came Back Home
	Part III — When the Borrower’s Money Leaves the Business
		Chapter 15 — The Interest-Free Loan to a Group Company
		Chapter 16 — Advances That Never Turned Into Purchases
		Chapter 17 — “Why Is Our Borrower Funding Someone Else?”
		Chapter 18 — The Money Went Out Just Before Year-End
		Chapter 19 — The Money Came Back After Year-End
		Chapter 20 — The Loan With No Agreement, Interest or Repayment Date
		Chapter 21 — Working Capital Diverted to a Sister Concern
		Chapter 22 — Short-Term Borrowing, Long-Term Group Funding
	Part IV — Hidden Support and Contingent Exposure
		Chapter 23 — The Guarantee Nobody Discussed
		Chapter 24 — The Borrower Pledged Its Assets for Someone Else
		Chapter 25 — Corporate Guarantees: The Liability That Hasn't Arrived Yet
		Chapter 26 — Cross-Guarantees Across the Group
		Chapter 27 — One Company Defaults. Who Falls Next?
		Chapter 28 — The Strong Company Supporting the Weak Company
	Part V — Transactions That Change the Financial Story
		Chapter 29 — The Asset Purchased From the Promoter
		Chapter 30 — Was the Asset Really Worth That Much?
		Chapter 31 — The Property Sold to a Group Company
		Chapter 32 — Profit Created Inside the Group
		Chapter 33 — Management Fees, Consultancy Charges and Royalties
		Chapter 34 — Rent Paid to the Promoter
		Chapter 35 — The Promoter’s Salary Suddenly Doubled
		Chapter 36 — Dividend, Remuneration or Fund Diversion?
	Part VI — The Numbers Begin to Connect
		Chapter 37 — Profit Is Rising. Why Is Borrowing Rising Too?
		Chapter 38 — Receivables, Advances and Loans Tell the Same Story
		Chapter 39 — The Cash Flow Statement Exposes the Relationship
		Chapter 40 — Related-Party Transactions Hidden in Ordinary Ledger Heads
		Chapter 41 — What the Notes to Accounts Reveal
		Chapter 42 — What the Bank Statement Reveals
	Part VII — The Red Flags Become a Credit Investigation
		Chapter 43 — The Group Exposure Map
		Chapter 44 — Follow the Money
		Chapter 45 — Follow the Transaction, Not Just the Accounting Entry
		Chapter 46 — Questions the Borrower Could Not Answer Clearly
		Chapter 47 — When Disclosure Is Technically Correct but Economically Misleading
		Chapter 48 — Related-Party Transactions and Fund Diversion
	Part VIII — From Red Flags to Credit Decision
		Chapter 49 — Not Every Related-Party Transaction Is a Credit Risk
		Chapter 50 — The Related-Party Risk Matrix
		Chapter 51 — What Should the Credit Officer Verify?
		Chapter 52 — Questions to Ask Management
		Chapter 53 — Credit Covenants That Can Protect the Bank
		Chapter 54 — When Should the Bank Say No?
		Chapter 55 — The Final Credit Note
		Chapter 56 — The Decision
	Epilogue

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The Borrower Behind the Borrower - a Business Novel

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