Lecture 1- Overview

Question 1

What are the approaches to lending adopted by the bank?

Answer 1

going concern

gone concern

Question 2

What are the types of credit facilities

Answer 2

overdraft

term loans

Question 3

What are the term loans

Answer 3

personal
housing
bridging

Question 4

What are the types of bridging loans

Answer 4

open ended

close ended

Question 5

Why does a bank need a strong and effective credit risk management process?

Answer 5

foundation of a successful and sustainable bank
credit risk does not occur in isolation
Failure of banks caused by deterioration of loan and asset portfolio

Question 6

What are the parties responsible for credit risk management?

Answer 6

account officer
line management
credit department

Question 7

What does the credit department consist of?

Answer 7

credit committee
credit support
non-performing loan management

Question 8

What are the key factors for successful credit risk management?

Answer 8

embracing a strong credit culture
senior management leadership and support for credit process and culture
clear business line accountability for credit risk and portfolio results
clear and well communicated credit policies
presence of a well defined loan risk rating and compliance system
regular and independent review of the overall credit risk management process

Question 9

What are the features of an overdraft

Answer 9

flexible and convenient form of short term financing

interest calculated daily

Question 10

What are the parties (borrowers) involved in a credit risk management process?

Answer 10

personal borrowers
businesses
non-profit organisations
government

Question 11

What are the parties (lenders) involved in a credit risk management process?

Answer 11

loan sharks
pawnshops
money lenders
finance companies
banks