Bankable Feasibility Study in India: What Banks Look For Before They Fund a Project

A bankable feasibility study is a feasibility study written so that a lender can rely on it. It answers the questions a credit officer asks before sanctioning a term loan: is there real demand, can the project earn enough to repay, and what happens if things go wrong? If your study only says the market is big, a bank will ask for more. This guide explains what banks look for and how to prepare a study that stands up to questions.

What makes a feasibility study bankable?

Three things separate a bankable study from an ordinary one. It is built on primary evidence (not only published figures), it shows its assumptions openly, and it tests the project under stress. A lender wants to see where each number came from so the credit team can check it.

What banks check, step by step

1. Market demand

Revenue projections are only as strong as the demand estimate behind them. Banks look for a clear customer definition, a sample survey of buyers, dealer or trade feedback, and a realistic share of the market. A claim such as “India’s market is growing 10% a year” does not prove demand for one unit in one town. See how a survey sample size is chosen so the result is reliable.

2. Competition and pricing

Who already serves the market, at what price, and why will customers choose you? Include local and unorganised players. Our guide to competitor analysis shows how to build this section.

3. Cost of project and means of finance

The study should list the total project cost (land, building, machinery, working capital) and how it will be funded: the promoter’s own contribution, the term loan and any subsidy. Banks normally expect the promoter to put in a meaningful share of the cost from their own funds, and the required share varies by bank and scheme, so check this early.

4. Break-even point

At what level of sales does the project stop losing money? A project that breaks even at 90% of capacity is risky. Learn the method in our break-even analysis guide.

5. Debt service coverage ratio (DSCR)

DSCR shows whether yearly cash earnings can cover the loan’s interest and instalments.

6. Sensitivity and risk

What happens to DSCR if sales are 15% lower, raw material is 10% costlier, or the project starts three months late? A bankable study shows at least three scenarios: expected, conservative and stress. This section tells the bank you have thought about failure.

Bankable feasibility study checklist

• Clear project description and promoter background
• Customer survey with sample size, locations and questionnaire in the appendix
• Competitor and price comparison
• Demand estimate with the method shown
• Project cost and means of finance
• Revenue, cost and profit projections for the loan period
• Break-even point and DSCR for each year
• Three scenarios: expected, conservative and stress
• Licences, approvals and location details
• Executive summary with a clear recommendation

Common mistakes that make a study unbankable

• Copied demand numbers. Figures lifted from a national report with no local survey.
• One scenario only. A single rosy projection with no stress test.
• Hidden assumptions. The bank cannot see where occupancy, price or volume came from.
• Ignoring working capital. Many projects fail on cash, not on profit.
• No independent evidence. A study written by the promoter alone carries less weight than one backed by independent field research.

How independent market research helps

The market section is where most project reports are weakest, and it is where independent field research adds the most value. A survey of real buyers, dealer interviews and competitor visits give the bank evidence it can verify. ARS Market Research Services has carried out feasibility and location studies across Tamil Nadu and India since 2010. Read more about our feasibility study services, or see the feasibility study checklist.

ARS Market Research Services Pvt. Ltd., Chennai. Email: admin@arsmrs.in