Credit Operations Question

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Credit Operations and Management

Chapter 1
1. What are the types of borrowers of a bank?
2. Mention the types of credit according to CL reporting.
3. What are different types of funded credit?
4. Explain the categories of relationship between banker and customer.
5. Mention different steps to follow for an informed credit decision.
6. What are advantages of centralized credit management over decentralized credit (Branch/RM)
7. Mention qualities of a good borrower.

Chapter 2
1. State the activities associated with credit operations of a bank.
2. Draw a diagram showing the different stages of credit operations.
3. What are the functions of the relationship manager (RM) of a bank?
4. What are the functions of the credit administration department (CAD) of a bank?
5. What are the functions of the recovery unit (RU) of a bank?
6. Discuss the principles of sound lending. How do you select a good borrower?
7. Show the borrower selection process with the help of a flow chart.
8. What are the financial statements that should be obtained from the business borrowers?
9. What are the different categories of assets and liabilities that are reported in the balance
sheet of an organization?
10. What are the different techniques or tools of financial statement analysis?
11. What are the different categories of ratios that are commonly used in case of borrower
analysis?
12. Why is ICRR important for selecting the right borrower?
13. What are the parameters of measuring quantitative risk?
14. What are the exceptions to ICRR?
15. Which types of loans/exposures are not applicable for ICRR?

Chapter 3
1. What are the different aspects of credit appraisal?
2. Discuss different techniques of analyzing financial viability?
3. Why is environmental aspect very important for assessing feasibility of the project?
4. Why is credit appraisal so important?
5. Which of the aspects of credit appraisal is most important? Why?
6. Discuss the different techniques of capital budgeting.
7. Why NPV is considered better than pay back period?
8. What do you understand by sensitivity analysis?
9. What do you mean by working capital financing? (Section-8.1)
10. How will you assess the working capital requirement of a prospective borrower?

Chapter 4
1. State the different types of credit default.
2. Discuss the various categories of credit risk.
3. List the main causes of stand-alone credit risk.
4. What are the principles a bank should follow for sound management of credit risk?
5. Briefly explain the general steps of credit risk management process.
6. Define expected loan loss. What are the components of expected loan loss?
7. What is credit concentration? What are the different types of Credit concentration?
8. Write down the techniques for managing concentration risk.

Chapter 5
1. What are the essential characteristics of good security?
2. How will you determine the value of different types of securities?
3. Why is insurance coverage of the security important?
4. What do you mean by margin and drawing power?
5. What do you mean by creation of charge on security?
6. Describe the different modes of creating charge on securities?
7. What are the essentials of pledge?
8. ‗Pledge is preferable to lenders but hypothecation is preferable to borrowers‘-Explain.
9. What are the rights of the pledger?
10. What are the obligations of the pledger?
11. What are the rights of the pledgee?
12. What are the obligations of the pledgee?
13. What is hypothecation?
14. What are the circumstances under which hypothecation appropriate?
15. Distinguish between hypothecation and pledge.
16. What are the different features of hypothecation?
17. Discuss the different types of lien.
18. Discuss assignment process with example.
19. What are the essential features of set off?
20. What are the different types of mortgages?
21. State the rights of the mortgagee.
22. State the rights of the mortgagor.
23. State the rights of the mortgagee in possession.
24. List the required documents for creating mortgage over property.
25. What is documentation? What are the steps in documentation?

Chapter 6
1. Describe the significance of timely loan recovery.
2. Define Non-Performing Loan (NPL). What are the consequences of NPL?
3. Discuss the non-legal measures of recovering NPL.
4. What do you mean by Alternative Dispute Resolution (ADR)?
5. Write down a summary on the loan recovery process through the operation of Money
Loan Court Act.2003.
6. Describe the legal process for filing suits under Money Loan Court Act.

Chapter 7
1. ―Leasing is a task of NBFIs, so a bank should not get involved in leasing‖ – Do you
agree? Why or why not?
2. Distinguish between lease finance and term loan finance.
3. How is Hire Purchase different from Lease Financing?

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