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Credit Management Overview and Practices

This document provides an overview of credit management techniques used by banks. It discusses analyzing financial statements to evaluate borrowers, assessing working capital needs through various methods, extending term loans and monitoring credit risk. The document also covers credit delivery and documentation, control and monitoring tools, risk management, rehabilitating stressed assets, and the CDR mechanism for corporate debt restructuring.

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teju16sy
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784 views11 pages

Credit Management Overview and Practices

This document provides an overview of credit management techniques used by banks. It discusses analyzing financial statements to evaluate borrowers, assessing working capital needs through various methods, extending term loans and monitoring credit risk. The document also covers credit delivery and documentation, control and monitoring tools, risk management, rehabilitating stressed assets, and the CDR mechanism for corporate debt restructuring.

Uploaded by

teju16sy
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Welcome to session on

Credit Management

Overview of Credit Management


Principals of credit Overview of credit monitoring Type of borrowers Type of credit, Tenure, Security, purpose RBI Guidelines Priority Sector Lending MSMED Act 2006 Credit Exposure Norms Fair Practice Code

Analysis of Financial Statements


Purpose of Analysis of Financial Statements Legal position format Balance Sheet Profit & Loss Account Fund Flow Statements Techniques used in Analysis of Financial Statements - Fund Flow analysis, Trend Analysis & Ratio Analysis, Deficiency in Ratio Analysis method

Working Capital Finance


Working Capital Working Capital Cycle Methods of Assessment - Holding norms, Sources of meeting NWC - Calculation of Bank Finance 3 methods - Cash Budget Method - Turnover Method Comparison of above methods

Working Capital Finance


Bills Purchase Bills discounted Non Fund Based Working Capital Limits Guarantee Financial & Performance Letter of Credit Commercial Papers, a short term mm instrument Factoring, financing of receivables Forfaiting

Term Loans
Project Appraisal & term loan appraisal Different appraisal - Management appraisal - Technical appraisal - Economic Appraisal Take out finance

Credit Delivery
Documentation Guarantees Charge over securities Disbursal of loans - Working Capital - Term loans Syndication of Loans

Credit Control & Monitoring


Importance & Purpose Available tools for credit monitoring - Conduct of the A/c, Periodic information - Stock / receivable Audit, Annual statements - Field visits & inspection, market reports - Credit Audit Credit Audit Objective, Scope & Coverage

Risk Management & Credit Rating


Credit Risk inability / unwillingness of customer Factor affecting credit risk internal / external Credit Rating internal / external Basel II various approaches to access the credit risk. - Standardised, IRB, Advanced IRB

Rehabilitation & Recovery


IRAC Norms Options available to banks for stressed assets Exit from the A/c, Rescheduling/ restructuring, Rehabilitation, Compromise, Legal Action, Write Off CDR Mechanism CDR Standing Form, CDR Empowered Group, CDR Cell

Thanks

Welcome to session on Credit Management
Overview of Credit Management • Principals of credit • Overview of credit monitoring • Type of borrowers • Type of cre
Analysis of Financial Statements • Purpose of Analysis of Financial Statements • Legal position – format • Balance Sheet
Working Capital Finance • Working Capital • Working Capital Cycle • Methods of Assessment - Holding norms, Sources of me
Working Capital Finance … • Bills Purchase • Bills discounted • Non Fund Based Working Capital Limits • Guarantee – Finan
Term Loans • Project Appraisal & term loan appraisal • Different appraisal - Management appraisal - Technical appraisal
Credit Delivery • Documentation • Guarantees • Charge over securities • Disbursal of loans - Working Capital - Term l
Credit Control & Monitoring • Importance & Purpose • Available tools for credit monitoring - Conduct of the A/c, Periodic
Risk Management & Credit Rating • Credit Risk – inability / unwillingness of customer • Factor affecting credit risk – int
Rehabilitation & Recovery • IRAC Norms • Options available to banks for stressed assets Exit from the A/c, Rescheduling/

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