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Overview of Credit Management
What is the core revenue-generating activity of commercial banks?
Lending (loans and advances); profit comes from spread between deposit cost and lending yield.
Name the five classical principles of lending.
Safety & Security, Risk Diversification, Profitability, Liquidity, Purpose.
What does the Safety & Security Principle require banks to assess?
Borrower's economic capacity, commercial capability, financial strength, management quality, and credit history.
Which RBI framework caps exposures to single counterparties and groups?
Large Exposure Framework (LEF) and prudential exposure norms.
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