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CCP604 (B)
CCP604 (B)
ANDHRA PRADESH
Name.. : Sreenivasa Rao B.
Designation : Lecturer in CCP
Branch : Commercial and Computer Practice
Institute : S.U.V.R&S.R GPW,Ethamukkala
Semester : VI Semester
Subject Name : Banking II
Subject Code : CCP 604 (B)
Major Topic : Loans and Advances –Short term &Long
term
Duration : 50 minutes
Sub Topic : Principles of sound lending policy
Teaching Aids : PPTs
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Objectives:
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Recap
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General Principles of Sound Lending
Since all loans entail a Credit risk, the banks have to
follow the following principles while granting loans
And advances:
Safety :
”Safety first” should be the guiding principle to be
followed .
Banks have to ensure safety of the funds lent.
Safety means that the borrowers should be in a
position to repay the loans borrowed with
interest, as and when they are due.
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1. Liquidity:
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4. Security…
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1. Purpose of the loan:
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5. Purpose of the loan…
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6. Diversification of Risks:
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7. Assured Repayment:
A banker should come forward to lend only
when the repayment is assured.
The sound and safe credit is one , where timely
repayment is assured.
Example:
1. Loans against a FDR which is going to mature
shortly.
2. A Life Insurance Policy which is going to mature
soon.
3. A debenture which is to be redeemed shortly
etc.,
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Summary
The general principles of sound lending they
are.
1. Safety
2. Liquidity
3. Profitability
4. Security
5. Purpose of loan
6. Diversification of Risks
7. Assured Repayment
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Quiz
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Quiz
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Frequently Asked Questions
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