Credit Appraisal Memo (CAM)

Credit Appraisal Memo (CAM): A Credit Appraisal Memo (CAM), also called a Credit Assessment Memo, is the document in which the credit team consolidates the applicant profile, verification outcomes, bureau and bank statement findings, ratios, collateral and policy deviations into a sanction recommendation. The approving authority under the delegation of power matrix signs off on the CAM, which then becomes the audit record of the decision.

Why Credit Appraisal Memo (CAM) matters in credit and collections

• Typical sections: borrower and promoter profile, purpose and structure of the facility, bureau summary, bank statement and financial analysis, key ratios (FOIR, DSCR, leverage), verification results (CPV, FI, TVR), collateral and security, policy deviations with justification, and the final recommendation with terms.
• Prepared by the credit team, not the sales team, to preserve the separation between origination and sanction; approval moves up the delegation of power ladder with ticket size, deviation count and risk grade.
• An auto-CAM generated by a loan origination system pre-populates data-driven sections from bureau, BSA and verification feeds, leaving the analyst to add judgement, deviation rationale and the recommendation.
• A well-structured CAM is also a collections asset: it tells the recovery team what the borrower looked like at sanction, which signals have since deteriorated, and what security is actually available.

What goes into a CAM and who signs it

A CAM is structured so that a reader who was not involved in the file can reconstruct the decision. It opens with the borrower and promoter profile and the purpose and structure of the facility, then moves through the bureau summary, Bank Statement Analysis, financial statements where applicable, and the key ratios — FOIR for individuals, DSCR and leverage for businesses. Verification outcomes from TVR, CPV and Field Investigation follow, then collateral valuation and security cover, then a deviations section listing every point where the file departs from credit policy and why that is acceptable, and finally the recommendation with proposed terms, covenants and conditions precedent.

The CAM is prepared by the credit function, not the sales function, to preserve the separation between origination and sanction. Authority to approve is set by a delegation of power (DoP) matrix: the ticket size, product, risk grade and number of deviations determine whether a branch credit manager, a regional head, a credit committee or the board-level committee must sign. Approval therefore escalates automatically as the file becomes less standard.

Auto-CAM is the practice of having the loan origination system generate the data-driven sections — bureau, BSA, ratios, verification results — directly from the integrated feeds, with policy rules pre-flagging deviations. The analyst's job becomes judgement: interpreting contradictions between sources, documenting mitigants, and writing the recommendation. Done well, this shortens turnaround and makes CAMs consistent; done badly, it produces documents nobody reads.

How lenders keep the CAM useful

• Make deviations a first-class section with a count and an approver, not a footnote; deviation density is the best early predictor of portfolio stress.
• Automate the data sections so the analyst's time goes into contradictions and mitigants, not transcription.
• Require the recommendation to state what would make the loan go wrong and what the lender will watch — covenants and monitoring triggers.
• Store the CAM in a form collections can read; at default, the recovery team needs the security position and the promoter profile, not a scanned PDF.
• Audit a sample of approved CAMs against outcomes at twelve months to find which sections actually predicted performance.

Credit Appraisal Memo (CAM) — frequently asked questions