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C Overview of credit management
What is the primary objective of credit management in a bank?
The primary objective of credit management is to ensure that credit is extended to eligible borrowers in a manner that maximises returns while minimising the risk of default and loss to the bank.
What is the meaning of 'credit' in the context of banking?
Trust extended by a lender allowing borrower to repay later.
How is credit risk defined in the context of bank lending?
Credit risk is the risk that a borrower or counterparty will fail to meet their obligations in accordance with agreed terms, resulting in a financial loss for the lending bank.
What is the difference between credit appraisal and credit sanction?
Appraisal evaluates viability; sanction is formal approval of credit.
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