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OBLIGOR BORROWER RISK
What is obligor risk in the context of credit risk management?
Obligor risk refers to the risk that a borrower (obligor) will fail to meet their contractual obligations, including repayment of principal and interest, due to financial deterioration or default.
What is the meaning of 'obligor' in credit risk terminology?
An entity legally obligated to repay a debt or loan.
How does RBI define a 'borrower' for the purpose of large exposure framework?
RBI defines a borrower as any entity, individual, or group of connected counterparties to whom a bank has a credit exposure, including both on-balance-sheet and off-balance-sheet items.
What is 'Loss Given Default' (LGD) in obligor risk measurement?
Percentage of exposure lost if the obligor defaults.
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