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Credit Management

Program : PGPM Class of : 2012

Credit : 3 Sessions : 30

Course Code : SL BK 604

Learning Objectives

1. To understand the management of Credit portfolio in banks2. Provide adequate inputs to develop the insight regarding the different phases of Credit

management.Learning Outcomes

1. Acquire knowledge of concepts relevant to Advances in Banks2. Ability to Explain various types of fund requirements of a business3. Interpret the strengths and weaknesses of the Balance Sheet of an entity4. Assess the credit proposals of a business5. Able to Estimate the amount of loan permissible6. Acquire knowledge in respect of Post Sanction Follow up and Monitoring7. Ability to Formulate a Recovery Strategy for a problem loan8. Demonstrate knowledge of contemporary topics in the area of bank credit

REFERENCE BOOKS AUTHOR / PUBLICATION

Bank Credit Management

S.Murali & K.R.Subbakrishna Himalaya

Publishing House, Mumbai

Practical Banking Advances Bedi, H.L. / Hardikar, V.K. UBS Publishers

Industrial Finance,3e Viswanathan, R. S Chand publishers

BankingPrinciples and OperationsM.N.Gopinath, Snowwhite Publication, 2010

Edition

Credit Appraisal, Risk Analysis & Decision

making

Mukherjee. Snow White Publications Pvt Ltd

Retail Banking, MonitoringDD Mukherjee, Snowwhite Publication, 2010

Edition

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Detailed Syllabus

Overview: Lending ActivityBasicRequirements forLending.

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: CreditAllocation

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 PolicyPursued 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 CreditTypes 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 Sanctionmethods of Credit appraisal.

Credit Evaluation: Working Capital Finance: Concept

of Working Capital FundBased 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 ofFinanceTerm 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-upReports- Credit Migration

Analysis.

Follow up Management: CreditAudit 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

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Table of Recommended Cases

Sl Case No. Name of the Case

1 INV0003K Rural Banking Shifting Paradigm

2 MBM00241RC Farm Loan Waiver

Remedy or Malady?3 MAC0027IRC Non Performing Loan in Chinese Banking Sector:Unsolved and Unsustainable

4 BSM0060A Micro Finance in India: The case of ICICI Bank

5 SEP0003 Micro Finance : A case of Grameen Bank, Bangladesh

Suggested Schedule of Sessions

TopicNo. of

Sessions

Overview 1

Principles of Credit Management 2Objectives of Credit Management 2

Credit Policy in Banks 2

Policy Rates and RBI Guidelines 2

Credit Deployment 2

Types of Borrowers 2

Credit Evaluation: Term Loans 2

Credit Evaluation: Working Capital 3Finance

Documentation 3

Credit Monitoring 1IRAC Norms and NPA 2

Follow up and Recovery 2Management

Legal Framework - Recovery 2

Infrastructure Financing 2

Contempoary Topics, RBI

Guidelines

Total 30

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