Credit control and Credit Monitoring Part 2 Ques

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.

To track borrower transactions and detect financial stress early.

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.

Deliberate non-repayment despite ability, misuse, or siphoning of funds.

Evergreening refers to the practice of renewing or restructuring a stressed loan to avoid classifying it as an NPA, which masks the true credit quality of the portfolio and is discouraged by RBI.

When principal or interest overdue for 1 to 30 days.

Stock Audit verifies the quantity, quality, and valuation of stocks pledged or hypothecated as security, ensuring the drawing power calculated by the bank is accurate and the collateral is not overstated.

Borrower credit history report issued by credit bureaus like CIBIL.