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
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
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
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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