Credit Administration and Monitoring

Definition of credit, Reason for and benefits of extending credit , Effect of credit to a business , Categories of credit (consumer, trade and export)
Types of credit customers - Individuals, Sole traders, Partnerships, Limited companies, Government bodies, Unincorporated associations, Trusts/ Foundations/NGOs.
Overview of credit providers - Banks, Cooperative societies -, Microfinance institutions, Finance houses, Online credit providers.
Basic lending principle of lending, Credit policy of RBI, Advantages of a credit policy. Credit Risk Management, Credit risk rating and risk pricing

Types of bank credit facilities - Overdraft, Cash Credit, Bills Facility and Term Loans , Drawing Power and Drawing Limit, Fund-based and Non-fund-based Facilities – Bank Guarantee (BG), Letter of Credit
Overview of bank credit process, Attributes of sound bank lending, Monitoring and control of bank credit facilities.
Pre Sanction Appraisal- Know your Borrowers, Different types of borrowers. The credit process. Screening of applications, Appraisal of credit, Sanction limit
Financial Statement and Ratio Analysis- Meaning of Financial Statements – Directors’ Responsibility Statement ,Users’ Information Needs, Qualitative Characteristics of Financial Statements, Quantitative Tools of Financial Statement Analysis, Comparative Financial Statement Analysis ,Common Size Financial Statement Analysis , Ratio Analysis ,Funds Flow Analysis , Cash Flow Analysis , Limitations of Financial Statement Analysis , Creative Accounting/Window Dressing. Assigning a Credit Rating to a Customer.

Evaluation of Project Reports. - Technical Evaluation and Financial Evaluation: Calculation of Internal Rate of Return, Calculation of Payback Period, Using Net Present Value to Accept / Reject a Project, Using DCF techniques to evaluate projects, Sensitivity Analysis.
Working Capital Finance- Meaning of Working Capital – Kinds of Working Capital,
Non Fund based exposure- letters of credit and bank guarantees, Export Finance.

Types- Credit analysis of consumer loans- Risk–return analysis of consumer loans- Customer profitability analysis and loan pricing- Fixed Vs floating rates.
Post- Sanction Monitoring-
Loan Documentation and Charge creation;
Post Sanction Monitoring- purpose, need, tools, early warning signals
Credit Collection Techniques- telephone calls, personal visit, letters, using collection Agency, Legal action
Important guidelines of RBI on monitoring operations in loan accounts

NPA Management – Introduction- Identification of NPAs- Asset classification- Prudential norms, Capital asset classification, effect of NPA on profitability - Assessment procedure- Pre-sanction appraisal – Post sanction supervision- Monitoring systems for existing and likely NPAs—Tools to manage NPAs –Compromise scheme, Lok Adalats, Debt Recovery Tribunals, Corporate Debt Restructuring, Willful defaulters, SARFAESI Act, Asset Reconstruction Companies, Restructuring Stressed Assets. Creating Provisioning.
Restructuring of loans and advances and legal remedies for loan recovery.