FACULTY OF MANAGEMENT OF MUAMALAH

FINAL EXAMINATION
SESSION I, ACADEMIC YEAR 2022/2023

MBFB 3093
CREDIT MANAGEMENT

INSTRUCTIONS TO CANDIDATES:

1. The time allotted for this paper is 1 HOUR 30 MINUTES.

2. This question paper consists of THREE questions.
3. Answer any TWO questions only.
4. This question paper requires:
i) Answer Booklet.
5. Total marks for this paper is 40 MARKS.
6. This question paper is ALLOWED to be taken out from the examination hall.

THIS QUESTION PAPER CONSISTS OF 4 PRINTED PAGES.

DO NOT OPEN UNTIL YOU ARE TOLD TO DO SO.

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Answer any TWO questions in the answer booklet provided.

Question 1

a. Sehati Bank has approved a car loan to Encik Budeeman with amount of
RM136,000. Earlier he paid RM24,000 to a car dealer as a deposit before applying
the car loan. Sehati Bank agreed to charge the car loan at 4 percent per annum for
8 years.
You are required to calculate on the following:
i. the bank’s profit. (2 marks)
ii. monthly payment. (2 marks)
iii. total payment to the bank. (2 marks)
iv. selling price of the car from a car dealer. (2 marks)
v. margin of finance requested by Encik Budeeman from Sehati Bank. (2 marks)

b. Assume that the loan duration will be reduced to 6 years with an interest rate of 3
percent per annum.
Determine:
i. the bank’s profit. (2 marks)
ii. monthly payment. (2 marks)
iii. total payment to the bank. (2 marks)

c. Islamic bank is not allowed to impose late charges to their customers as this
considered as riba’. Nevertheless, Islamic bank is permissible on compensation
charges to reduce defaulters.
Describe how does compensation charges are different with late charges as
applied in conventional bank. (4 marks)

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Question 2

Khamarul, aged 28, intends to purchase a medium-cost terrace house for RM250,000
in Taman Senyum, a new housing scheme in Prima Kajang, Selangor. Khamarul
plans to move into this house upon its completion with his parents as the family is
currently renting a house for RM600 per month.

As an accountant executive in a multi-national company in Puchong, Selangor, he is

paid a basic salary of RM2,800 per month and a current customer with your bank.
Being single and currently staying with his parents, he has no financial commitments
apart from a credit card with a RM5,000 limit which he uses occasionally for shopping
and he is paying his credit card on time.

Both his parents are still working. His father, Ahmad Rizal, aged 55, is a lorry driver
earning RM2,000 per month inclusive of overtime. His mother, Siti Aminah, aged 48, is
a primary school teacher earning a basic salary plus allowances of RM1,900 per
month.

As your bank is the end-financier for the Taman Senyum housing project, Khamarul
has approached you for a 90 percent loan to part-finance the purchase of the house
over tenure of 35 years. Based on your bank’s current product offering, you have
calculated the monthly instalment amount to be RM1100 a month.

a. Identify five major documents required by the bank for Khamarul’s application.
(5 marks)

b. Applying the 5Cs model, would your bank support Khamarul’s application based on
his own merit? Justify your rationale. (10 marks)

c. Despite your response to Question (b), evaluate how would you strengthen
Khamarul’s case in the event the application is not approved by your
management? (5 marks)

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Question 3

a. To the lending bank, security provides some assurance of a contingency in the

event that the borrower fails to repay the loan. To be considered good security, an
asset must possess several qualities.
Discuss on these qualities by providing relevant examples. (10 marks)

b. Every industry and its main products have their respective life cycles; from sunrise
to sunset. As the cycle reaches the end (sunset), sustainability of sales revenue,
cash flows and profitability may be at risk. Lending at wrong end of cycle may raise
the risk of non-performing loans.
Discuss industry lifecycle as one of the condition and consideration for lending to a
business borrower. (10 marks)

END OF QUESTION PAPER

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