Credit Management

In: Other Topics

Submitted By tasnimsjn
Words 967
Pages 4
RATING Blr AAA (blr Triple A) (Highest Safety) blr AA+, blr AA, blr AA(blr Double A) (High Safety) blr A+, blr A, blr A(blr Single A) (Adequate Safety) blr BBB+, blr BBB, blr BBB(blr Triple B) (Moderate Safety) Blr BB+, blr BB, Bank Loan/ Facilities rated in this category are adjudged to carry adequate safety for timely repayment/ settlement. This level of rating indicates that the loan / facilities enjoyed by an entity has adequate and reliable credit profile. Risk factors are more variable and greater in periods of economic stress than those rated in the higher categories. Bank Loan/ Facilities rated in this category are adjudged to offer moderate degree of safety for timely repayment /fulfilling commitments. This level of rating indicates that the client enjoying loans/ facilities under-performing in some areas. However, these clients are considered to have the capability to overcome the above-mentioned limitations. Cash flows are irregular but the same is sufficient to service the laon/ fulfill commitments. Risk factors are more variable in periods of economic stress than those rated in the higher categories. Speculative/ Non investment Grade Bank Loan/ Facilities rated in this category are adjudged to lack key protection factors, which results in an inadequate safety. This level of rating indicates loans/ facilities enjoyed by a client are below investment grade. However, clients may discharge the obligation irregularly within reasonable time although they are in financial/ cash problem. These loans / facilities need strong monitoring from bankers side. There is possibility of overcoming the business situation with the support from group concerns/ owners. Overall quality may move up or down frequently within this category.…...

Similar Documents

Credit Risk Management

...Credit Risk Management Of AB Bank Limited 25. May, 2013 view with charts and images Executive Summary The ongoing development of contemporary management methods and the increased use of innovative financial products such as securitization and credit derivatives have brought about substantial changes in the business environment faced by credit institutions today. Especially in the field of lending, these changes and innovations are now forcing banks to adapt their in-house software systems and the relevant business processes to meet these new requirements. Credit Risk Management is intended to assist practitioners in redesigning a bank’s systems and processes in the course of implementing the Basel II framework. Throughout last five years securitization, rating and validation, credit approval processes and management, as well as credit risk mitigation techniques. Credit management is based on developments in the banking sectors is meant to provide readers with best practices AB bank would be well advised to implement regardless of the emergence of new regulatory capital requirements. AB Bank is to develop mutual understanding between regulatory authorities and banks with regard to the upcoming changes in banking. Credit risk Management provides interesting reading as well as a basis for efficient discussions of the current changes in AB Bank. The bank has been successful in holding its position as a progressive and dynamic financial institution in the country for a......

Words: 26105 - Pages: 105

Credit Risk Management

...supervisor in the host organization Mr. Md. Abdul Hannan, I decided to work on the policies and practices of credit risk management and appraisal process of IDLC. I strongly believe that, this study will enrich my knowledge in the very crucial area of the financial institutions (FIs): Credit Risk Management. 1.2 OBJECTIVES OF THE REPORT • MAIN OBJECTIVE: The main focus of the report is on credit risk management practices and credit appraisal procedure of IDLC Finance Limited. • SPECIFIC OBJECTIVES: The specific objectives are: ❖ To look at the portfolio of sectors financed by IDLC ❖ To evaluate the norms and rules practiced in assessing the borrower ❖ To compare the credit policy of IDLC with the credit policy guideline for the financial institutions (non-bank) of Bangladesh Bank and to identify the extent to which IDLC follows this guideline. ❖ To compare the credit risk management practices of IDLC Finance Limited with that of Industrial Promotion and Development Company of Bangladesh Limited, as a sample financial institution, to get an idea of the common deviations of credit risk management practices of the FIs from the central bank guideline. ❖ To summarize the fact findings and to give recommendations in improving the existing procedures wherever required. 1.3 SCOPE OF THE STUDY In broad the report highlights the credit risk management practices and appraisal process of IDLC Finance Limited. There are two major part of the report.......

Words: 20723 - Pages: 83

Credit Management

...Credit Management |Program |: |MBA |Class of |: |2007 | |Semester |: |IV |Sessions |: |33 | |Course Code |: |BKG 607 |Credit |: |3 Units | Objective The objective of this course is to provide the students with adequate knowledge about the management of Credit portfolio in banks. It will provide sufficient inputs to enable the student to develop an insight regarding the different phases of Credit management. |Reference Books |Author / Publication | |Credit Management |ICFAI | |Practical Banking Advances |H.L.Bedi and V.K. Hardikar/ UBS Publishers | |The Bank Credit Analysis |Jonathan Golin/John Wiley & Sons | |Frontiers in Credit Risk |Gordian Gaeta/ John Wiley & Sons | |Money, Credit and Capital |James Tobin/McGraw | |Credit Risk ......

Words: 446 - Pages: 2

Credit Management

...Part: FOUR Credit Management of The premier bank ltd. Part: Four Credit Management Credit Management: Credit management is a term used to identify accounting functions usually conducted under the umbrella of Accounts Receivables. Essentially, this collection of processes involves qualifying the extension of credit to a customer, monitors the reception and logging of payments on outstanding invoices, the initiation of collection procedures, and the resolution of disputes or queries regarding charges on a customer invoice. When functioning efficiently, credit management serves as an excellent way for the business to remain financially stable. The process of credit management begins with accurately assessing the credit-worthiness of the customer base. This is particularly important if the company chooses to extend some type of credit line or revolving credit to certain customers. Proper credit management calls for setting specific criteria that a customer must meet before receiving this type of credit arrangement. As part of the evaluation process, credit management also calls for determining the total credit line that will be extended to a given customer. Several factors are used as part of the credit management process to evaluate and qualify a customer for the receipt of some form of commercial credit. This includes gathering data on the potential customer’s current financial condition, including the current credit score. The current ratio between income......

Words: 10445 - Pages: 42

Credit Management

...Table of Contents Type chapter title (level 1)1 Type chapter title (level 2)2 Type chapter title (level 3)3 Type chapter title (level 3)3 Type chapter title (level 3)3 Type chapter title (level 3)3 Type chapter title (level 3)3 Type chapter title (level 1)4 Type chapter title (level 2)5 Type chapter title (level 3)6 TARGET MARKET:- BANK AL HABIB limited has conservative credit approach. They provide loan to those customers who are already their customers and have accounts with bank. We can say that they are solely focusing on relationship oriented lending for major corporate exposure. Thus it is clear that bank has mitigated their risk. This is the main reason that credit department have zero non performing loan. BANK AL HBAIB while providing loans to their existing customer’s bank pledge some security against that loan. So the risk is minimized. Against the loan the the security which is pledged by borrower should not be used by bank, but the pledged should be only for the purpose of security. For corporate sector bank also keep some proprety as a mortgage. Bank can use mortgage security. Procedure for mortgage is bank hire human resource for the legal opinion in which assigend person should prepare legal documents regarding the mortgage security, transfer letter. Assigned company also find the forseable value of the mortgagae security. For corporation bank also create a charge (portion). This is basically claimed of bank on the company assets. This......

Words: 4845 - Pages: 20

Credit Management

...Report on Bank Asia Limited May 21, 2013 | Author: Jannatul Ferdous | Posted in Credit Management Table of Contents * 1 Introduction * 1.1 Structure of the Corporate Office * 1.2 Directors’ and Key Persons’ Profile * 1.3 Mission Statement of Bank Asia * 1.4 Corporate Objectives * 1.5 SWOT Analysis of Bank Asia * 1.5.1 Strength * 1.5.2 Weaknesses * 1.5.3 Opportunities * 1.5.4 Threats * 1.6 Values Considered as Guiding Factors * 1.7 Equity Formation * 1.8 Performance of the Bank * 1.8.1 Profit and Operating Results * 1.8.2 Deposit * 1.8.3 Advance * 1.8.4 Foreign Exchange Business * 1.8.5 Investment * 1.8.6 Dividend * 1.9 Special Features of the Bank * 1.10 Products and Services * 1.11 Correspondence Relationship * 1.12 Customer Service * 1.13 Department: Cash * 1.14 Department: Accounts * 1.15 Department: Credit * 1.16 Department: Foreign Trade * 2 Introduction * 2.1 Types of Credit Facility by Bank Asia * 2.1.1 Funded Facilities * Over Draft * Secured Over Draft * Term Loan * 2.1.2 Personal Credit * 2.1.3 Non-Funded Facilities * Guarantee * Features of Bank Guarantee * Syndicate......

Words: 18907 - Pages: 76

Principles for the Management of Credit Risk

...Credit risk management Principles for the Management of Credit Risk I. 1. Introduction While financial institutions have faced difficulties over the years for a multitude of reasons, the major cause of serious banking problems continues to be directly related to lax credit standards for borrowers and counterparties, poor portfolio risk management, or a lack of attention to changes in economic or other circumstances that can lead to a deterioration in the credit standing of a bank’s counterparties. This experience is common in both G-10 and non-G-10 countries. 2. Credit risk is most simply defined as the potential that a bank borrower or counterparty will fail to meet its obligations in accordance with agreed terms. The goal of credit risk management is to maximise a bank’s risk-adjusted rate of return by maintaining credit risk exposure within acceptable parameters. Banks need to manage the credit risk inherent in the entire portfolio as well as the risk in individual credits or transactions. Banks should also consider the relationships between credit risk and other risks. The effective management of credit risk is a critical component of a comprehensive approach to risk management and essential to the long-term success of any banking organisation. 3. For most banks, loans are the largest and most obvious source of credit risk; however, other sources of credit risk exist throughout the activities of a bank, including in the banking book and in the trading......

Words: 12360 - Pages: 50

Credit Management

...Credit Management Activities Proposal on The City Bank Limited. Prepared for American International University-Bangladesh Submitted to TASEEN, M CHOWDHURY Faculty of AIUB (Finance Department) Prepared by Name: Akter Rume ID: 07-09524-3 Introduction Generally by the word “Bank” we can easily understand that the financial institution deal with money. But there are different types of banks such as; Central Bank, Commercial Bank, Saving Bank, Investment Bank Co-operative Bank etc. But where we use the term “Bank” without any prefix or qualification, it refers to the ‘Commercial Bank’. Commercial Bank is the primary contribution to the economy of a country. So we can say Commercial bank are a profit-making institution that hold the Deposit of individual & business in checking & saving account and then use these fund to make loans. As, Bank profit earning concern, they collect deposit at the lowest possible cost and provide loans and advance at higher cost. The difference between two are the bank profit. The City Bank Limited The City Bank Limited started its business in 1983 (march 27) with an authorized capital of Taka 20 crore and paid up capital 3.8 crore. The bank has now authorized capital of Taka 175 crore and paid up capital 72 crore with Taka 132 crore as reserves totaling Taka 204 crore as paid Up capital and reserves.The City Bank Limited is manned by 1829 personnel with 83 branches...

Words: 1076 - Pages: 5

Credit Risk Management

...CREDIT RISK MANAGEMENT Banks are in the business of risk management and, hence, are incentivized to develop sophisticated risk management systems. The basic components of risk management system are identifying the risks the bank is exposed to, assessing their magnitude, monitoring them, controlling/mitigating them using a variety of procedures and setting aside capital for potential losses. RBI prescribed risk management framework in terms of: a) Asset-Liability Management practices. b) Credit Risk Management. c) Operational Risk Management. d) Stress testing by Indian Banks in the perspective of international practices. BANKING RISKS: It can be categorized into: i) Business-related Risks. ii) Capital-related Risks. Business Related Risks: The business related risks to which banks are exposed are associated with their operational activities and market environment. They fall into six categories: namely, a) Credit Risk b) Market Risk c) Country Risk d) Business Environment Risk e) Operational Risk f) Group Risk Note: Market Risk comprising of interest rate risk, foreign exchange risk, equity price risk; commodity price risk and liquidity risk; Credit Risk: Credit risk, a major risk faced by banks, is inherent to any business of lending funds to individuals, corporate, trade, industry, agriculture, transport, or banks/financial institutions. It is defined as the possibility of loses associated with a diminution in the......

Words: 4669 - Pages: 19

Credit Management

...optimizethe use of public funds for the benefit of the greatest number of people. Itdraws strength and rationality from the Constitutional provision of grantinglocal government the power to create their own sources of revenuethrough local taxation. In public administration, local fiscal administration is commonly referred toas the formulation, implementation, and evaluation of local fiscal policiesby local governments. Among others, these fiscal policies set the framework and procedures onlocal revenue generation that includes property tax administration, revenueordinance codification as well as the operations of local economic enterprises. It also deals on the national government allotments, shares and subsidiestogether with the availment of credit financing through domestic andforeign institutions. Local Government Finances Fiscal relations between national and local government centre on the following major areas of fiscal administration: • Allotment of internal revenue shares; • Shares of local governments in national wealth exploitation; • Shares of earnings of government agencies or government- owned or controlled corporations engaged in the utilization and development of national wealth; • Local government borrowing; and • Review of local government budgets. 2 Aspects of local fiscal administration The major aspects of local fiscal administration are the fiscal relationsbetween the national government and local governments, and among thelocal......

Words: 2034 - Pages: 9

Credit Management

...How did increased competition affect credit ratings? Bo Becker Todd Milbourn Working Paper 09-051 Copyright © 2008, 2009, 2010 by Bo Becker and Todd Milbourn Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author. How did increased competition affect credit ratings? Draft Date: September 15, 2010 Bo Becker and Todd Milbourn* Abstract. The credit rating industry has historically been dominated by just two agencies, Moody’s and S&P, leading to longstanding legislative and regulatory calls for increased competition. The material entry of a third rating agency (Fitch) to the competitive landscape offers a unique experiment to empirically examine how in fact increased competition affects the credit ratings market. Increased competition from Fitch coincides with lower quality ratings from the incumbents: rating levels went up, the correlation between ratings and market-implied yields fell, and the ability of ratings to predict default deteriorated. We offer several possible explanations for these findings that are linked to existing theories. Key words: Credit ratings; competition and reputation; information quality * Harvard Business School (Becker) and Washington University in St Louis (Milbourn). Contact author’s e-mail address: We wish to thank Pierluigi......

Words: 19527 - Pages: 79

Credit Management

...AN INTERNSHIP REPORT On “CREDIT MANGEMENT OF SONALI BANK LTD. BANGLADESH, WITH SPECIAL REFERENCE TO MOTIHAR BRANCH, RAJSHAHI.” DEPARTMENT OF ACCOUNTING & INFORMATION SYSTEMS This Report is submitted to the Department of Accounting & Information Systems, University of Rajshahi, for the Partial Fulfillment of the Requirements for the Degree of Bachelor of Business Administration (BBA) - 2014. |SUBMITTED TO | SUBMITTED BY | |MOHA. MANZUR MURSHEDUL ABEDIN |MOHI UDDIN | |Professor, |B.B.A. -2014 | |Department of Accounting and Information Systems |Examination Roll-10067058 | |University of Rajshahi |Registration No: 1750 | |Rajshahi |Session: 2009-2010 | | |Department of Accounting | | | | | ...

Words: 6515 - Pages: 27

Credit Management

...INTERNATIONAL CAMPUS GB30803 CREDIT MANAGEMENT ------------------------------------------------- Semester 2 (Session 2015/2016) ------------------------------------------------- Assignment 1: Case Study 1 – Boat Builders Pty Ltd PREPARED FOR: Sir. Raymond Liew PREPARED BY: No. | Names | Matrix Number | Program Code | 1. | Lim Khai Sing | BG13110219 | HE20 | 2. | Lorraine Wong Syn Yi | BG13110236 | HE20 | 3. | Tan Chiu Ling | BG13110503 | HE20 | 4. | Yeo Kai Yuan | BG13110575 | HE20 | SUBMISSION DATE: 29th April 2016 1. The accountant has stated in the footnote to these financial statements that the accounts ‘constitute special-purpose financial statements’. a) What are special-purpose financial statements and how are they different from general-purpose financial statements? Special-purpose financial reports are different from general-purpose financial statements as it is a set of financial statements that are prepared using a special purpose framework to cater to the particular needs of specific users who intends to use it. It is not intended to be view by the public, and therefore have a very limited use for anyone other than the intended users. General-purpose financial reports however, provides fundamental and detailed information on the entity. The major differences between the 2 types of report is the special purpose framework. Special-purpose are usually for the use of internal users such as managements. It incorporates......

Words: 1573 - Pages: 7

Credit Management

...Credit Management 602023_1_2012 Módulo 1: El Crédito Interempresarial y el Credit Management 1.3.6 la actitud de las empresas Frente al crédito Las empresas deben cambiar el enfoque tradicional basado en una mentalidad excesivamente contable del crédito a clientes, que contempla las masas patrimoniales formadas por los derechos de cobro como un patrimonio de la empresa que se realiza por sí solo. Los directivos de las empresas deben ser conscientes que una visión excesivamente contable de la administración de empresas, centrada únicamente en controlar las partidas del debe y del haber y las masas patrimoniales del activo y del pasivo, no permite obtener una imagen real del riesgo crediticio y de la evolución de los cobros. muchas empresas adoptan la actitud de que lo único que se puede hacer con las cuentas de clientes es dejarlas madurar, ya que si se espera pacientemente el momento oportuno, por si solas darán sus frutos y generarán liquidez. en cambio lo que deberían hacer es incorporar el concepto de optimización de la gestión de sus cuentas de clientes, trabajándolas constantemente para acelerar su transformación en recursos líquidos y conseguir de este modo un incremento de la rentabilidad. Haciendo un símil muchas empresas actúan con la mentalidad de bodegueros y tratan a sus cuentas de clientes como a los vinos; dejándolos reposar durante cierto tiempo en los toneles para que aumenten su calidad y su valor en el mercado. Sin embargo, la......

Words: 4378 - Pages: 18

Credit Management

...enterprise risks can be broadly categorized as Credit Risk, Operational Risk, Market Risk and Other Risk. Credit risk is the possibility that a borrower or counter party will fail to meet agreed obligations. Thus managing credit risk for efficient management of a Financial Institution has gradually become the most crucial task. Credit risk management needs to be a robust process that enables Financial Institution s to proactively manage facility portfolios in order to minimize losses and earn an acceptable level of return for shareholders. Credit risk is most simply defined as the potential that a bank borrower or counterparty will fail to meet its obligations in accordance with agreed terms. The goal of credit risk management is to maximize a bank's risk-adjusted rate of return by maintaining credit risk exposure within acceptable parameters. Banks need to manage the credit risk inherent in the entire portfolio as well as the risk in individual credits or transactions. Banks should also consider the relationships between credit risk and other risks. The effective management of credit risk is a critical component of a comprehensive approach to risk management and essential to the long-term success of any banking organization. Prime Bank primarily lends for trade finance although some amount of project financing is also undertaken. The bank has generally maintained a conservative approach towards lending and management claims that their credit appraisal process is more......

Words: 9178 - Pages: 37

Ostry dyżur / ER (1994-2009) | Karta GPS - オフラインナビ | Finding Carter (3)