Credit Control monitoring
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Advanced Bank Management — CAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the primary objective of credit monitoring in banks?
The primary objective is to ensure that credit facilities are used for the sanctioned purpose and that the borrower's financial health remains adequate to service the debt.
What is the purpose of a credit information report in credit monitoring?
It provides borrower's credit history and repayment track record.
What does the term 'credit control' mean in the context of bank lending?
Credit control refers to the systematic process of supervising and regulating the credit extended by a bank to ensure repayment and prevent deterioration of loan quality.
What is 'evergreening' of loans and why is it a concern in credit monitoring?
Renewing loans to hide defaults, masking true NPA status.
What is a Stock Statement and why is it important in credit monitoring?
A Stock Statement is a periodic declaration by the borrower of current stock levels pledged as security; it is important because it helps the bank verify the adequacy of collateral backing working capital limits.
What is the significance of the Current Ratio in assessing a borrower's liquidity?
It measures short-term assets against short-term liabilities for liquidity.
What is the significance of the Drawing Power (DP) in cash credit accounts?
Drawing Power is the maximum amount a borrower can draw from a cash credit account, calculated based on the value of current assets minus margins; it ensures the borrower does not exceed the permissible credit limit.
What is a Credit Risk Rating (CRR) model used for in banks?
To quantify borrower's creditworthiness and assign risk grade.
Video classes for this chapter
More chapters in Module C - Credit Management
Master the full ABM syllabus
Every chapter of Advanced Bank Management — videos, tests, notes and one-liner decks in one place.