Why your bank said no — and what you can actually do about it

The bank rejection that nobody explains

Your revenue grew 18% last year. Your customers are paying — mostly on time. Your CA filed everything correctly. And yet the relationship manager sent you a regret letter, or worse, just stopped returning calls.

Nobody told you why. Not in plain language.

The bank does not reject businesses. It rejects financial files. The business behind the file is often excellent — the file just did not tell that story.

What the bank is actually looking at

When a bank evaluates your credit application, they calculate four numbers:

• DSCR — can your cash flow cover your loan repayments? Bank wants above 1.25.
• TOL/TNW — how much do you owe compared to what you own? Bank wants below 3x.
• Current Ratio — can you cover short-term obligations? Bank wants above 1.2.
• Debtor Days — how long are customers taking to pay? Above 90 days is a red flag.

The three most common rejection reasons

1. DSCR below threshold. Your revenue may be healthy but margins are thin, or existing EMIs are eating your cash. Fix: reduce existing debt, improve margins, or restructure before applying.

2. GST vs bank turnover mismatch. If your GST shows ₹5Cr revenue but your bank account shows ₹3Cr credits, the bank assumes either cash sales or inflated numbers. Fix: reconcile and explain every significant difference.

3. High debtor days with no explanation. Above 90 days and the bank assumes collection problems. Fix: submit an ageing analysis with a written explanation of each major debtor.

What to do in the next 60 days

• Week 1: Get last 2 years audited accounts. List all existing debt — outstanding, EMI, rate.
• Week 2: Calculate your DSCR, TOL/TNW, and current ratio.
• Week 3: Write a one-page business narrative — who you are, what you sell, why your credit profile looks as it does.
• Week 4–8: Fix the one or two things your ratios show as weak before approaching the bank again.

The bank's credit team has seen thousands of files. A file that anticipates their questions and answers them proactively converts at a dramatically higher rate.