Lending Management

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Sheet – 01 & Lecture – 01

Question: Lending Management or lending policy

Answer: Lending Management or lending policy and proud we the main instrument towards achieving mission and vision of a Bank. As mentioned in the memorandum and articles of association of the Bank it is committed to invest in industrial and business enterprises by developing projects of national importance, including the small and medium enterprise (SME) consumer loan, capital market separation, lease financing, trade financing are also the eligible Banking business as defied on the Banking companies act 1991.

The leading policy / management outlines the general principles and procedure which are designed to be followed by the Bank official, associated with all kinds of Banking i.e. funded and non funded financing activities.

The guidelines contained herein indicate management’s views on business development priorities and the terms and conditions that are to be adhered to which approving credit facilities.

Definition of leading, loan, advance, credit and debit.

Leading, the term is action involved in many lending on interest making loan:

Loan:Permission to use something lead.
Advance :Pay before hand to implement the specific purpose. Credit:The term refers to reputation of having wealth roe ability in limit debit. Extension of credit in made under per-determined structural. Debit:Something in question of money term which it due from one person / limit to another person / limit.

Leading Policy / Management provides the guideline prepared in line in Bank’s Memorandum and articles of association in memorandum with which relationship with credit officers/ Branch Managers of the Bank will forward credit proposal along with their recommendation for approval. The guidelines focus on the following :-

i) Industry and Business segment
ii) Green Banking
iii) Types of loan facilities
iv) Maximum Exposer: Single Borrower / Group Limit / Syndication v) Lending Caps
vi) Discouraged Sectors
vii) Thrust Sector
viii) Loan Portfolio Management
ix) Loan Facility Parameter
x) Cross Border Risk.

Industry and Business segment

Bank’s lending activities are confined in the following broad areas : a) Industrial loan with emphasis in syndicated arrangements. b) Public Private partnership (PPP) Project
c) Small and Medium Enterprise (SME)
d) Trade and commerce both local and international
e) Consumer Credit
f) Lease Facilities
g) Real estate business (including loan)
h) Agro based venture

a) Industrial Loan
- Long term / capital financing in the form of term loan - Working capital
- Small and medium industries
Term Loan financing toward sitting up of new industrial units or balancing, modern units (Small, Medium and Large) is consider of major lending activity of a Bank, Generally Bank prefers syndicated / consortium arrangements for term loan of large quantum for industrial projects.

Working capital financing for industrial units of all types is also core lending activity of a Bank. Operational performance of industrial units, track record, Credit worthiness of the entrepreneurs and reasonable security coverage (mainly in the form of readily marketable inventories and covered by collateral of fixed assets small form the basis of such financing working capital financing is subject to careful assessment of viability, cash flow prospects entrepreneurial competence and conforming basis worms of financing as stipulated in the lending policy of central Bank as well as particular Bank.

b) Public Private Partnership (PPP) Project.
PPP initiatives our usually long term (15-30 Years) in nature. Development of infrastructure through private sector participation provides a boost on every sector of economy. Infrastructure development especially power and energy, communication...
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