PowerPoint Presentation

Credit PolicyBy Sanket Thakarea set of principles that a financial organization or business uses in deciding who it will loan money to or give creditWhat is a Credit Policy?What should Credit Policy include?Criteria related to borrowerCriteria related to securityCriteria related to businessCriteria related to industryCriteria related to diversificationCriteriaMandatory RequirementsDocumentsProjectionsLegal formalitiesCredit ScoresIt also includesTerms and conditionsAuthority hierarchy Actions to be taken in case of defaultPoints to be considered while formulation policy:Economic ConditionFinancial condition of lenderIndustry trendsOther investment optionsCompetitors StrategyTypes of Credit PolicyStrict analysis of risk and strict collections Strict analysis of risk and liberal collectionsLiberal analysis of risk and vigorous collection effortLiberal analysis of risk and liberal collectionsPurpose of Policyto define the objectives of credit extension in the context of corporate strategy and organization structureto define the authority and responsibilities for credit granting, establishing and varying terms and the timing of collection actionsto provide documented procedures in relation to the above that can be communicated to all staffto specify training policy for credit staff to specify performance targets and monitoring activities for credit staff 9AdvantagesTransparency in operationsUnbiased processingClear delegation of tasks and responsibilitiesFaster processing10Thank You