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Credit control and Credit Monitoring Part 2 Ques
What is the primary objective of credit monitoring in banks?
The primary objective is to ensure that credit facilities are used for the purpose sanctioned and that the borrower's financial health and repayment capacity are continuously assessed to prevent slippage into NPA.
What is the purpose of a 'Borrower Account Monitoring System' (BAMS) in credit control?
To track borrower transactions and detect financial stress early.
What is a 'Red Flag Account' in the context of credit monitoring?
A Red Flag Account is one where early warning signals of stress are detected, such as frequent overdrawals, return of cheques, or diversion of funds, prompting enhanced monitoring and corrective action by the bank.
What is 'Wilful Default' as defined by RBI in credit monitoring?
Deliberate non-repayment despite ability, misuse, or siphoning of funds.
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