Credit Management

Program Credit : PGPM : 3 Class of Sessions : 2012 : 30

Course Code : SL BK 604

Learning Objectives To understand the management of Credit portfolio in banks Provide adequate inputs to develop the insight regarding the different phases of Credit management. Learning Outcomes 1. 2. 3. 4. 5. 6. 7. 8. Acquire knowledge of concepts relevant to Advances in Banks Ability to Explain various types of fund requirements of a business Interpret the strengths and weaknesses of the Balance Sheet of an entity Assess the credit proposals of a business Able to Estimate the amount of loan permissible Acquire knowledge in respect of Post Sanction Follow up and Monitoring Ability to Formulate a Recovery Strategy for a problem loan Demonstrate knowledge of contemporary topics in the area of bank credit 1. 2.

REFERENCE BOOKS Bank Credit Management Practical Banking Advances Industrial Finance,3e Banking Principles and Operations Credit Appraisal, Risk Analysis & Decision making Retail Banking, Monitoring

AUTHOR / PUBLICATION S.Murali & K.R.Subbakrishna Himalaya Publishing House, Mumbai Bedi, H.L. / Hardikar, V.K. UBS Publishers Viswanathan, R. S Chand publishers M.N.Gopinath, Snowwhite Publication, 2010 Edition Mukherjee. Snow White Publications Pvt Ltd DD Mukherjee, Snowwhite Publication, 2010 Edition

Detailed Syllabus Overview: Lending Activity Basic Requirements for Lending. Principles of Credit Management: Principles of Lending Evaluation of Borrower The 6 Cs Fair Practices Code. Need for Credit Policy Components of Credit Policy Objectives of Credit Management: Credit Allocation Credit Risk Assessment -Credit Evaluation - Credit Discipline Credit Monitoring, CIBIL.Equifax, Esperian. Credit Policy in Banks: Need for Credit Policy Components of Credit Policy Credit Policy Pursued by the Government Credit Culture. Regulatory Framework: Government Regulation of Banks Need for Statutory Reserves Cash Reserve Ratio (CRR) Statutory Liquidity Ratio (SLR). Credit Deployment: Role of Bank Credit Types of Credit Both Fund Based and Non Fund Based Bank Credit for Various Sectors Credit Deployment Scenario, Post-Financial Sector Reforms.- Financing of Imports and Exports, Pre Shipment, Post Shipment Credit, UCPDC 600 Prudential Norms Capital Adequacy of Banks Prudential Norms Capital Tiers I, II and III, Asset Classification, Income Recognition and Provisioning Norms. Types of Borrowers: Various Categories Joint Accounts of Individuals, Sole Proprietor, Partnership,LLP,Company,HUF,Clubs,Trusts,Associati ons,etc. Special Types of Customers. Minors, Lunatics, Pardanashin Women, etc. Principles of Lending , Process of Credit Sanction methods of Credit appraisal.

Credit Evaluation: Working Capital Finance: Concept of Working Capital Fund Based and Non Fund Based facilities Factors Determining Working Capital Working Capital Cycle (Operating), Methods of Assessment Tandon Committee and Nayak Committee, Cash Budget Method Assessment of Pre shipment , Post Shipment Limits, UCPDC600, Credit Evaluation: Term Loans: Sources of Finance Term Loans Project Appraisal. Documentation: Importance of Documentation, Execution of Documents Security of Documentation Renewal of Documents Security Offered for Documents. Creation and Registration of charges under Companies Act/ modification/satisfaction. Consequences of non registration. Mortgages- types of mortgages and safeguards. Creation of mortgage, Legal opinion and Non encumbrance certificate. Important provisions ofStamp Act,Registration Act. Letter of guarantee. Rights and obligations of guarantor- right of subrogation. Credit Monitoring: Physical Supervision Financial Follow-up Reports- Credit Migration Analysis. Follow up Management: Credit Audit Loan Review Mechanism Credit Migration Analysis, Identifying Problem Loans Loan Classification Contingent Risk, Reasons for Sickness and Symptoms of Incipient Sickness Recovery Mechanism for NPA: Legal Frame Work of Recovery DRT, Lok Adalat ,SARFAESI Act with special reference to Enforcement of Securities Interest, , RBI Guideline for OTS,CDR

Table of Recommended Cases

Sl 1 2 3 4 5 Case No. INV0003K MBM00241RC MAC0027IRC BSM0060A SEP0003 Name of the Case Rural Banking Shifting Paradigm Farm Loan Waiver Remedy or Malady? Non Performing Loan in Chinese Banking Sector:Unsolved and Unsustainable Micro Finance in India: The case of ICICI Bank Micro Finance : A case of Grameen Bank, Bangladesh

Suggested Schedule of Sessions Topic Overview Principles of Credit Management Objectives of Credit Management Credit Policy in Banks Policy Rates and RBI Guidelines Credit Deployment Types of Borrowers Credit Evaluation: Term Loans Credit Evaluation: Working Capital Finance Documentation Credit Monitoring IRAC Norms and NPA Follow up and Recovery Management Legal Framework - Recovery Infrastructure Financing Contempoary Topics, RBI Guidelines Total No. of Sessions 1 2 2 2 2 2 2 2 3 3 1 2 2 2
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