CREDIT MONITORING &RISK
MANAGEMENT
1.What is credit monitoring?
The
credit monitoring in a bank is to ensure that the funds are utilized for the
sanctioned purpose and at the same time complying with all sanction terms
&conditions.
2.List out the needs of credit
monitoring.
Accurate & comprehensive credit reports
Account details
Significant events
An Extra set of Eyes
3.What is Sickness at birth?
The
project itself has become infeasible either due to faulty assumptions or a
change in environment
4.Write about Induced sickeness.
caused by
the management in competencies (or) willful default.
5.Describe Genuine sickness
Where the
circumstance leading to sickness are beyond the borrowers control has happened
inspite of the borrowers sincere effort to avert the situations
6.List out financial distress
model.
Alman’s
Z model
ZETA
EMS
GAMBLER model
7. Rehabitalization
Banks to
detect the sickness at an early stage and facilitate corrective action for
revival of the firm
8. write a note on Risk
It is a
condition where there is a possibilty of an adverse deviation from a desired
outcome that is expected or hoped for it.
9. Define risk
possibilities
of adverse results flowing from any circumstances.
10 Define risk management
According
to Jorion,risk management is the process by which various risk exposures are
identified, measuredand controlled.
11.Write about Interest rate
risk(IRR)
It is the
exposure of a banks financial condition to adverse movements in interest rates.
12.What is Liquidity risk
It is a
risk that a company or bank may be unable to meet short term financial
demands.this is usually occur due to the inability to convert the securities or
assets to cash with out loss of capital or income in the process.
13.How to calculate NPA?
NPA‟s =
gross or net NPA‟s
Total
Advances * 100
Net NPA‟s
= gross NPAs- Provisions for NPA‟s
14.Write a note on forex risk
It is the
variability of domestic currency values of assets,liabilities or operating
incomes due to unanticipated changes in exchange rate
15.Write a note on credit risk
Credit
risk is risk due to uncertainty in a counterparty (also called an obligators or
credit)ability to meet its obligations .
16.What is credit rating
It is the
assessment of a borrowers credit quality.
17.Write about market risk
It is the
risk of losses due to movements in financial market variables.these may be
interest rates,foreign exchanges rates, security prices.
18.What is operational risk?
It can be
summarized as human risk. It is the risk of business operations failing due to
human error.
19.write about solvency
risk/capital risk
It is a
risk that is bank may become insolvent &fail.it is the potential decreases
in the market value of assets below the market value of liability,indicating
economic worth is zero or less.
20.Write about price risk
A seller
who wants to sell it in the future is thus concerned about the potential fall
in the price and a reduction in the realization or profits of the transactions.
21.What is foreign exchange
risk?.
it is the
exposure of an institution to the potential impact of movements in foreign
exchange rates.
22.List out the types of foreign
exchange risk
translation exposure.
economic exposure
transaction exposure.
23.Write about country risk.
A
domestic banking institution may transform itself in to an international one
when it starts lending across its borders are invests in instruments in issued
by foreign business
24.Describe the termValue at risk
(VaR)
it measure the potential of economic
losses
VaR corresponded to a presently of
portfolio P&L
And can be expressed as potential loss
from the current value of the portfolio or as the loss from the expected value
at the horizon.
25.Write about Operational risk
Operational
risk can be summarized as human risk; it is the risk of business operations
failing due to human error.
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