Credit Appraisal and Credit Risk Management - 13437 Words

MANAGING CORE RISKS IN BANKING: CREDIT RISK MANAGEMENT Industry Best Practices BANGLADESH BANK CREDIT RISK MANAGEMENT Industry Best Practices PREPARED FOR: BANGLADESH BANK PREPARED BY: FOCUS GROUP ON CREDIT RISK MANAGEMENT Team Co-ordinator: Team Members: Sudhir Chandra Das Ali Reza Iftekhar Niaz Habib A.G. Sarwar Brian J. McGuire Naser Ezaz Bijoy Page 2 INTRODUCTION: Risk is inherent in all aspects of a commercial operation, however for Banks and financial institutions, credit risk is an essential factor that needs to be managed. Credit risk is the possibility that a borrower or counter party will fail to meet its obligations in accordance with agreed terms. Credit risk, therefore, arises from the bank’s dealings with or†¦show more content†¦The Lending Guidelines should be approved by the Managing Director/CEO Board of Directors of the bank based on the endorsement of the bank’s Head of Credit Risk Management and the Head of Corporate/Commercial Banking. (Section 2.1 of these guidelines refers) Any departure or deviation from the Lending Guidelines should be explicitly identified in credit applications and a justification for approval provided. Approval of loans that do not comply with Lending Guidelines should be restricted to the bank’s Head of Credit or Managing Director/CEO Board of Directors. T he Lending Guidelines should provide the key foundations for account officers/relatio nship managers (RM) to formulate their recommendations for approval, and should include the following:  § Industry and Business Segment Focus The Lending Guidelines should clearly identify the business/industry sectors that should constitute the majority of the bank’s loan portfolio. For each sector, a clear indication of the bank’s appetite for growth should be indicated (as an example, Textiles: Grow, Cement: Maintain, Construction: Shrink). This will provide necessary direction to the bank’s marketing staff. Types of Loan Facilities The type of loans that are permitted should be clearly indicated, such as Working Capital, Trade Finance, Term Loan, etc. Single Borrower/Group Limits/Syndication Details ofShow MoreRelatedEvaluating The Effectiveness Of Credit Risk Management Tools Essay1565 Words   |  7 Pagesloans arise from credit risk or default risk which as defined by Jorion(2003) is the risk of an economic loss from the failure of a counterparty to fulfill its contractual obligations. Its effect is measured by the cost of replacing cash flows if the other party defaults. Credit risk can thus be seen to contribute significantly to the profitability of an organization and hence the need to hedge against such risk. This study aims to assess the effectiveness of credit risk management tools which areRead MoreThe Trend Of Bad Loans Of The Bank During The Past Five Years Essay1324 Words   |  6 Pagesnational inflation causes many businesses to fold up therefore rendering those businesses that have accessed loan facilities unable to pay up. High interest rates on loans was the second most cited reason for loan defaults amongst Moreover poor credit appraisal, ineffective monitoring, death and diversion of funds were also some of the factors that accounted for bad loans. 5.2.3 To determine the sector that records higher bad loans Research question three sought to determine the sector that recordsRead MoreThe Importance Of A Credit Risk Management973 Words   |  4 Pagesin process of controlling credit risk management by the banking industries from all over the world. Proper consideration of these factors in for the proper credit risk management process is very essential. Thus the study of these factors is always helpful for the banks. 2.2.1.1 Importance of proper policy for risk management in banks While looking at the events of financial crisis of the various countries it can be said that misunderstanding of the development of the risk factors from their rootsRead MoreSignificant Class of Transactions Template3261 Words   |  14 Pages Significant class of transactions/significant disclosure process name: | Credit origination - Transaction processing | | Significant class of transactions/ significant disclosure process owner: | Credit Policty at HODebt management division Client Division | | We obtain an understanding of the significant classes of transactions (SCOTs) and significant disclosure processes to identify and understand the risks of material misstatement at the assertion level (i.e., what can go wrongs (WCGWs))Read MoreCredit Appraisal System9370 Words   |  38 Pagesto analysis of credit appraisal system with reference to Axis Bank. Axis banks one of private sector banks in India, which provides loans and advances when it is required by individuals or companies and accepts the deposits from the public. while providing loans advances to the public it faces number of problems like : * Of interest loans * Default interest security inadequate OBJECTIVES: * To study the credit appraisal methods. * To study existing credit appraisal system . * ToRead MoreRisk Management Is Not Avoiding Or Eliminating Risk Essay1622 Words   |  7 Pageshttps://www.youtube.com/watch?v=78c7fTnLCfc The essence of risk management is not avoiding or eliminating risk but deciding which risks to exploit, which ones to let pass through to investors and which ones to avoid or hedge. Risk management prevents an organization from suffering unacceptable loss that can cause failure or can materially damage its competitive position. Risk management should be a continuous and developing process which runs throughout the organization‟s strategy and the implementationRead MoreHigh Cost Mortgages : A New Office Of Housing Counseling1498 Words   |  6 Pages Subtitle C – High-Cost Mortgages redefines High-cost mortgage as a â€Å"consumer Credit transaction that is secured by the consumer’s principal dwelling†. These include credit transactions secured by a consumer’s principal dwelling whose interest rate is 6.5% more than the prime rate for similar transactions, subordinated mortgages secured by a consumers principal dwelling, points and fees, excluding mortgage insurance, and if the points and fees can be collected more than 36 months after a loan. NewRead MoreProject Finance and Loan Analysis Essay1668 Words   |  7 PagesIt is increasingly emerging as the preferred alternative to finance fixed assets and other large-scale projects. As a study, Project Finance includes understanding the rationale for project financing, how to prepare the financial plan, assess the risks, design the financing mix, and raise the funds. As per the International Project Finance Association, ‘Project Finance’ is defined as â€Å"The financing of long-term infrastructure, industrial projects and public services, based upon a non-recourse (ProjectRead MoreThe Risks Of The Wholesale And The Smes.credit Risk1561 Words   |  7 Pagesbusinesses such that they have to show their credit worthiness before they are given a loan. The UK has been fluctuating due to global inflation rates and therefore this has caused uncertainty of the business. This has made the lending institutions to be strict in evaluating the credit risks of the wholesale and the SMEs.Credit risk will measure the probability of a business getting a loss due to a business failure of settling loans. This convectional credit risks results from the the possibilities of defaultingRead MorePersonal Finanace Plan1061 Words   |  4 PagesPersonal Loan $20,000 Credit Card Balance $4,500 Total $231,000 This indicates that while there are significant liabilities, most notably in the remaining mortgage balance which relates to the specific property owned. In terms of financial health the value of the assets is considerably higher than the remaining liabilities which is a positive indicator. However, there are perhaps more liabilities than would be considered optimal particularly with regards to the Personal Loan and Credit Card Balance which

Biblical Truths Of The Christian Bible - 915 Words

1)PREFACE I) We unequivocally acknowledge the Christian Bible as the inspired-written Word of the living God given to humanity by way of dual authorship human and Divine for the purpose of revealing God the Father and His will for humankind; therefore comprehending the Godly priority and importance of knowing and obeying its truths; we are passionately committed to teaching Scripture in truth with clarity and do diligence under the anointing and the illuminating light of the Holy Spirit with the divine authority of the Lord Jesus Christ our Savior II) Furthermore, we are fully convinced that our Divine-calling mission and central goal of the body of Christ and to all who have ears to hear is the continual in parting of Biblical truths. Henceforth when the Word of God is preached in expository fashion and systematically taught in line with sound doctrine to the children of God, the servants of Christ become fully equipped with the truth of Scripture that is mature in sound doctrine; thus, not deceived and tossed to and fro by the wiles of the devil through the cunning craftiness of his demonic ministers who twist the plain truth about Scripture by teaching the false doctrines of demons therefore by the consistent teaching of Biblical truth the servants of God will become thoroughly equipped to do the work of the ministry, thus manifesting the fruit of the Spirit and the supernatural gifts of the Holy Ghost; whereby glorifying the Lord Jesus Christ, by exalting his death,Show MoreRelatedFree Essay Is a Scam1711 Words   |  7 Pagesperson as an aggregation of atoms, an open biochemical system in interaction with the environment, a specimen of homo sapiens, an object of beauty, someone who needs deserve my respect and compassion, a brother for whom Christ died. Myers believes Christians must appreciate the essential role of science in nuturing curiosity and humility. This will put a wrongheaded notion about existence to an empirical test. The levels-of-explanation view believes humans are best understood in terms of hierarchy ofRead MoreA Study On Biblical Inerrancy Essay1200 Words   |  5 PagesCASE STUDY ANALYSIS #2 (Biblical Inerrancy) By Tammy Alexander As I read this case study on biblical inerrancy, I needed more information. When I looked up the word inerrancy and saw that it meant lack of error, I didn’t realize the magnitude of information there was to prove the Bible isn’t true or has errors in it. After reading a majority of the book, Making Sense of Your World by Phillips, Brown, and Stonestreet, I have a better understanding of the different types of worldviews there are thatRead MoreThe Doctrine Of Biblical Inerrancy1076 Words   |  5 PagesThe Bible has challenged many people as a piece of literature containing history, poetry, and written letters. Some would argue that the contents of Scripture are inaccurate, however would still agree that it carries significant value as a piece of literature. Conversely, those who ascribe to the teachings of the Bible are dealt with questions about the authority and inerrancy of Scripture. It is becoming increasingly important that Christians understand and embrace the full inerrancy of ScriptureRead MoreBible as the Inspired Word of God Essay1103 Words   |  5 PagesBible as the Inspired Word of God The Bible is the work of various authors, who lived in different continents and wrote in different eras. Furthermore, much of the text does not claim to have been dictated by God and is not always God speaking to people. In parts it consists of people speaking to God, as in the Psalms, and people speaking to people, as in the New Testament letters written by Paul. In light of this, some maintain that it is not possible to treat theRead MoreMoral Relativism And The Biblical Worldview Of What Is Right And Wrong950 Words   |  4 Pagesdo not represent moral truths, but are effected by the environment in person’s life. Christians have a worldview that believes otherwise based on the biblical worldview of what is right and wrong proposed by James Sire. Issues that are ethically questionable but not specifically banned in Leviticus, or in the Bible in general, such as gambling, drinking alcohol, and divorce are examples of how even seemingly unclear topics are still outlined by God. The Lord gives Christians the instinctive knowledgeRead MoreCritique on Kingdom Education Essay893 Words   |  4 Pageshave a biblical worldview. This worldview is taught through Bible stories, but is also incorporated into every subject and into educational methods that reflect a biblical philosophy. Ultimately, parents are responsible before God for their child; however, it is the role of the church and the school to support the parents in their God given responsibility. In Kingdom education, these three cords must work in harmony to evangelize, discipline and train each child to incorporate a biblical worldviewRead MoreSeized By Truth: Reading The Bible As Scripture Is Written1048 Words   |  5 PagesSeized by Truth: Reading the Bible as Scripture is written by Joel Green, a New Testament scholar, and Professor of New Testament Interpretation at Fuller Theological Seminary in Pasadena, California. Prof. Green, has participated and contributed greatly on a wide range of topics related to both New Testament scholarship and theology. In Green’s book, he states Reading the Bible as you would read any other book does not support a reading of the Bible as Scripture (2). â€Å"This way of engaging theRead MoreGlobal Missions Paper1189 Words   |  5 Pagesof the Latin American people. In 1973 the Chicago Declaration was an effort to balance civic responsibility with Christian belief. Twenty years later as crisis arose it was renewed. Samuel Escobar was a leader who was among the first to know that a special methodology was necessary to get people to work together based on shared beliefs. His theology is structured by reevaluating Biblical disclosures and relating them to both social and political realities as he aims his concentration on a theologyRead MoreAPOL 104 QUIZ 1 Essay1014 Words   |  5 Pages1. The Bible Is not Historically Accurate. False 2. The Bible was composed in three languages Hebrew, Greek, and some Aramaic 3. The Bible has Scientific Knowledge Before Its Time. The Earth. Wisdom that predates the earliest scientific discoveries. The ocean floor contains deep valleys (2 Sam. 22:16; Job 38:16; Ps. 18:15) and towering mountains (Jonah 2:6). The ocean contains underwater springs (Genesis 7:11; Job 38:16; Proverbs 8:28). There are other examples. 4. Was written by someRead MoreWomen And The African American Race1220 Words   |  5 Pages Into Grimkà ©Ã¢â‚¬â„¢s adult life, she moved north and further developed her beliefs through her relationship with God and devotion to her Bible, as well as, historical documents like the Constitution. These developed beliefs seen in her published works, such as her â€Å"Appeal to the Christian Women of the South.† Through this letter to southern women, Grimkà © uses her biblical beliefs to structure her position and approach as an effective advocate for women and slaves. 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Active and Passive Indexing Free Essays

The first index fund began in 1971, with $6 million funded by Samsonite, the luggage-maker. Since then, there have been many arguments of whether an active index fund or a passive index fund offers better long-term results for investors. Index funds are already the fastest growing sector of the mutual fund business. We will write a custom essay sample on Active and Passive Indexing or any similar topic only for you Order Now From 1986 to 1996, the amount of money invested in index funds grew from $556 million to $65 Billion. And if anything, individual investors have been slow to embrace passive management. Institutional investors invest a far larger percentage of their assets passively. Many individual investors are simply uneducated and unaware of the arguments and experimental evidence supporting passive management. Institutional investors and academics have known for years (many for decades) that passive investing is extremely difficult to beat and that the majority of active investors will fail in their attempt to outperform the market. Active indexers assert they can outperform the marketplace. Passive (index) portfolios state they can mirror the performance of the indices. Both have their good times and their bad times. Active indexers raise cash in times of increased risk and instability while passive indexers remain fully invested. This can be quite painful during times of large declines in the market. Passive portfolios mirror the gains of the indices during roaring bull markets and eventually outperform the majority of active money managers who must remain diversified and who sometimes take on additional risks in an attempt to produce the performance and safety that they have promised their clients. The evidence has piled up during today’s bull market that the average dollar managed by active managers does not keep up with the market index. Finally, indexing is a way to avoid being blind-sided in certain areas of the marketplace. Active management themes can easily find themselves on the wrong side of an investment. There is a perception among investors that a strategy designed to match stock market returns is less risky than a comparable actively managed portfolio. Since the index approach invests in a manner that is most friendly with the market’s natural liquidity, it produces the least disturbance. The passive investor also has diversified his risk. Specific negative things can happen to individual companies or groups. As a passive investor, one is not exposed to any of these things. However, it does not mean you have a risk-free investment. The downside to passive index investors is that they â€Å"fuel the fire† of a market that appreciates well beyond its true value. Index mutual funds must put new money to work†¦ they can not hold cash†¦ and their investors all buy the exact same stocks. When stocks go down, index funds, being fully invested, will receive the ultimate effect of the decline. Combined with this loss is the fact that they will also have to sell shares to cover shareholder redemptions. These funds will get hit harder than many active portfolios with a cash cushion. Most active managers of investment portfolios raise cash as they perceive higher valuations, excessive instability, and extreme risks, therefore; reducing the display to loss during declining markets. Another downside to passive indexing is the impact they have on market instability. This gives the patient active money manager a welcome opportunity to take advantage of stock selection at very attractive prices and, to some extent, time the market in making their decisions of when to buy and when to sell. Index investing is a tricky business that can roil markets. Actively indexed funds have gone upward over the last decade. This has occurred despite the fact that investors have poured huge amounts of money into active funds over this period. The costs of investing in index funds have trended downward as they have become more popular with investors. The costs of active index funds just might decrease in the future, thereby narrowing the cost gap with passive index funds. But all evidence to date has shown just the opposite trend – the costs of active funds continue to go up and the costs of index funds continue to go down. Actively indexed funds typically generate relatively large amounts of taxes while passive index funds generate relatively small amounts. Some of the resulting gap in performance caused by taxes would seemingly be narrowed if the federal government were to lower tax rates. Congress did this at the end of July 1997 when it reduced the maximum long term capital gains tax rate from 28% on investments held more than one year to 20% on investments held 18 months or longer. The tax bill provides that in the year 2001 this rate will be reduced to 18% for investments held five years or longer. Finally, active money managers serve the specific needs of their clients. They manage portfolios based exactly on the investor’s objectives and tolerance for risk. They make decisions based on a stated time frame and they are capable of changing the goals and direction of a portfolio on a moment’s notice. They are the investor’s personal link to the market and the protector of their capital. The value of these services is immeasurable to most investors. One thing that really does not influence the investor as much as it should is the lack of appreciation with respect to the tax consequences of passive index management. The capital gains, created during the year by a fully active index manager, is reported to the IRS, and the investor ends up being taxed. For a taxed investor, the buy-and-hold is a winning strategy. Turnover is the enemy of the investor who pays taxes. Conversely, most investors would be more than happy to pay taxes on the returns produced by active money managers during periods of declining markets. Not many investors prefer losses to earning some gains and interest, even with the tax man waiting. The effect of so many investors buying index funds is that they tend to guard the money market. An investor could actually, in a cost-effective manner, buy and sell the market. The asset funding of active managers, combined with the efficiency of the passive manager, allows one to implement strategies that provide an optimal mix of securities to match a particular scenario, objective, or risk aversion. From time to time, it is possible that the major assets can get out of balance. Investors can run up prices where the lawfulness market is overvalued. When this reaches a untrustworthy level, more self-corrective measures are needed. This is where the expertise of the active manager becomes useful. As an investor, you are always trading off what Jeremy Bentham, the British economist, referred to as the â€Å"pain-pleasure calculus. † Good returns produce pleasure. Bad returns produce pain. An active money manager is always balancing off the pleasure vs. e potential pain. The active manager tends to determine what that balance is and if it finds that the market is deployed otherwise, it works in balancing the portfolio. Tactical asset funding combined with a passively managed portfolio has been called the â€Å"holy grail† of investing by Jonathan Burton, of Dow Jones’ Asset Management magazine. During declining markets, index funds take the full force of the market’s loss. Managers of these funds are forced to sell stocks in order to meet the demand for redemptions as their investors got out of the market. During markets of very little movement, investors quickly drain of insufficient or no returns on their investment. Finally, a philosophy of capital preservation causes the active manager to raise cash, providing a cushion for portfolios during times of extreme risk. Active or passive? Both have their advantages and their risks, but the two are found to be the best long-term plans for both performance and safety. Index (passive) funds are likely to beat active funds, yet the Morningstar data show that 92% of all the money is U. S. stock funds is in active funds. How to cite Active and Passive Indexing, Essay examples

Continuities Changes Over Time Essay (Silk Road Interactions Between 200 B.C.E †1450 C.E.) free essay sample

During the period of time between 200 B.C.E. and 1450 C.E., the silk road underwent many subtle transformations while at the same time holding on to its original purpose. The trade of spices and goods to and from Asia and Europe remained constant, while the materials bartered slowly changed. The political boundaries as well as the national identities of the encompassing countries also were altered. Despite changes in materials, the original purpose of the silk road remained intact throughout this time period. Asian commodities were traded with European merchants along the road and vice versa. Asia’s economy, such as that of China specifically, remained heavily reliant on the money from silk road trade, irregardless of the origin or type of goods that fueled such. Comparably, Europe’s economic status remained fueled by Asian trades. While the basic purpose of the silk road remained mostly unchanged, the goods traded on it and the areas it went through did. We will write a custom essay sample on Continuities Changes Over Time Essay (Silk Road Interactions Between 200 B.C.E – 1450 C.E.) or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page While the silk road originally began on a small scale as a simple route of transport for Eurasian merchants, it later grew into an international necessity, not only economically, but culturally as well. Once exposed to Asian spices, fabrics, etc., Europeans became increasingly â€Å"addicted† to their newfound luxuries. This, in addition to Europe having the same effect on Asia, gradually shaped both cultures. Because of the numerous political changes that took place during this expanse of time, the route travelled by silk road merchants passed through new nations formed at the collapse of the Roman Empire. This, in turn, shaped the identities of additional nations/cultures along the path of the silk road. Overall, the silk road’s basic purpose remained intact from 200 B.C.E. to 1450 C.E., but the specific patterns of interactions that occurred along it did not. Empires fell, new nations were formed, and that brought myriad changes to silk road cultures and the interactions between those that traveled on it.