The lending practices are one of the significant aspects for the failure of the banks. It is been concluded that if these particular lending practices are ended then there is a possibility to reduce the closure rate. The actual reason for the failure is because of the insufficient capitalization as well as lack of the appropriate planning. In order to stand by within the market without any failures and to be successful there is a necessity of initial planning and much more time should be spent to analyze the entire concepts of the business.
On the other hand if the business is started without a proper plan and management this will lead to the failures within that particular company or a bank. As, the banks need an appropriate planning process by considering the lending practices. The bad planning with the bad lending equities leads to the failure of banks. While the investment banks will allot the loan to the companies by verifying the planning documents as well as the financial models of that particular company but in some cases even the documents provided by that company may not be correct and if the banks give priority to the company but not to the documents or guarantees sometimes it may leads to the mismanagement case and will cause the failure of that specific bank.
In other sense most of the banks will not consider their managers as the staff but they will consider as the sales person by offering him a commission amount other than his salary, in order to fulfill the targets allotted to them they give more preference to the customers but not to their standards to get the loan amount.
Some of the banks will have an outlook on the current economy of the borrower and his profile within minutes of time without cross checking their credentials and collateral properties. Hence this thought shows that some of the banks are not having the correct plan and procedure for allotting the loans.