18-08-2012, 11:27 AM
Credit Management
Credit Management.ppt (Size: 425.5 KB / Downloads: 45)
Introduction
Credit refers to
Short Term Loans & Advances
Medium / Long Term Loans
Off-Balance Sheet Transactions
Management refers to
Pre-sanction appraisal
Documentation
Disbursement and Disbursal
Post-lending supervision and control
Credit Management
Credit Management now includes
Capital adequacy norms
Risk Management including ALM
Exposure Norms
Pricing policy and credit risk rating
IRAC norms
Appraisal, credit-decision making and loan review mechanism
Approach for safety of loans
Safety of loans is directly related
to the basis on which decision to lend is taken
Type and quantum of credit to be provided
Terms and conditions of the loan
Post-Sanction appraisal
Requirements are:
Documentation of the facility and ‘after care’ follow- up
Supervision through monitoring of transactions in loan amount
Scrutiny of periodical statements submitted by the borrower
Physical inspection of securities and books of accounts of the borrower
Periodical reviews etc.
Loans and Advances
Difference between Loans and Advances
Loans are extended in accounts in which no drawings are permitted to the borrowers
Generally there is one debit to principal amount to loan account – though disbursal in stages is possible depending on the need of the borrower
For operational purposes loan can be credited to a special account where withdrawal from time to time can be done by the party depending upon his requirements
In case of advances, the sanctioned limit is placed at the disposal of the borrower, subject to terms of sanction, in running accounts which can be drawn upon by cheques by the borrower