Credit risk management

Credit risk management is

identification, measurement of risk
and planning to manage the risk
Prerequisite:
Better modeling
Organizational structure
System and procedure to identify and
measure the risk

Default model

Credit scoring model:

Linear probability model
Logit model
Linear Discriminant Model

Recently developed model

Term structure of credit risk approach

Mortality rate approach
RAROC models
Option model

CRM in Bangladesh
Comprehensive guidelines including:
Lending guidelines
-Industry and Business Segment Focus
-Types of loan
- single/group borrower limit
Preferred organizational structure &
responsibilities
Procedural guidelines

Risk grade scorecard

NUMBER

GRADING

Score

Superior

100

Good

95 or more

Acceptable

75-84

Marginal/Watchlist

65-74

Special Mention

55-64

Sub standard

45-54

Doubtful

35-44

Bad & Loss

35 or less