Professional Documents
Culture Documents
Credit Management
Credit Management
Credit Management
Management
Jyoti Kumar Pandey
Deputy General Manager &
MOF
CAB, Pune
Credit Life Cycle Theory
Credit Completion
Credit Management
Agenda
• 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
• Two-pronged approach
Pre-Sanction appraisal
To determine the ‘bankability’ of each loan proposal
Post-Sanction control
To ensure proper documentation, follow-up and supervision
Pre-Sanction appraisal
• Credit Risk
• Market Risk
• Operational Risk
Credit Risk
• Organizational Structure
Banks should have an independent group responsible for
the CRM
Responsibilities to include formulation of credit policies,
procedures and controls extending to all of its credit risk
arising from corporate banking, treasury, credit cards,
personal banking, trade finance, securities processing,
payments and settlement systems
Board of Directors should have the overall responsibility
for management of risks
Policy Framework (Contd.)
• Organizational Structure
The Board should decide the risk management policy of
the bank and set limits for liquidity, interest rate, foreign
exchange and equity price risks
Risk Management Committee will be a Board level Sub
committee including CEO and heads of Credit, Market and
Operational Risk Management Committees. It will devise
the policy and strategy for integrated risk management
containing various risk exposures of the bank including
the credit risk
RMC should effectively coordinate between the Credit Risk
Management Committee (CRMC), the Asset Liability
Management Committee and other risk committees of the
bank, if any
Policy Framework (Contd.)
• Operations / Systems
Credit process typically involves the following phases:
Relationship management phase, that is, business
development
Transaction management phase to cover risk assessment,
pricing, structuring of the facilities, obtaining internal
approvals, documentation, loan administration and routine
monitoring and measurement, and
Portfolio management phase to entail the monitoring of
portfolio at a macro level and the management of problem
loans.
Credit Risk Rating Framework