Chapter 29-30: Credit Applications

Question 1

Credit Application

Answer 1

1. Credit assessment interview
2. credit proposal formulation
3. credit offer

Question 2

Credit assessment interview

Answer 2

Info collected and assessed, includes:
* Who (credit applicant)
* Position within sector
* Business with other banks
* How much credit/why
* Security provided

Question 3

Credit proposal

Answer 3

Proposal includes:
* Info about bank/sector
* Financial info incl figures
* Credit requirement
* Security
* advice

Question 4

Credit offer

Answer 4

after internal credit offer is approved, credit offer is made:
* Legal form of company
* Security must be provided
* amount of credit
* conditions
* financial reports required
* general conditions

Question 5

Credit admin

Answer 5

Systematic record of credit details provided
* admin records and documents
* credit position of customer
* accounting and audit
* policy management

Question 6

Credit file

Answer 6

ceeps documents associated with credit facility:
* meeting records
* correspondence
* credit analysis
* company info
* credit arrangement
* etc

Question 7

Credit management

Answer 7

• credit monitoring
• credit review
• special credit management

Question 8

Credit monitoring

Answer 8

bank monitors credit risk to ensure borrower can meet credit conditions now and in future

warning signs:
* debit balance is continually near credit limit
* Limit is exceeded
* Payments are deferred

Other signs
* worsening economic culture
* trend in turnover of a sector e.g. shopping malls
* change of management

Question 9

Credit review

Answer 9

Businesses change, bank needs to check credit conditions remain the same

usually after financial figures are announced

Question 10

Special credit management

Answer 10

measures taken if problems are identified - transferred to a special department