Credit Management Process in Commercial Banks

Main function of the banks is to let somebody use funds, but it appears that norms are taken as guidelines only not for decision-making. A banker's task is to identify and assess the risk factors and manage and mitigate them on continuous basis. The credit appraisal process adopted by the banks takes into account all possible factors which go into appraising the risk associated with a loan. Study shows that successful lending depends upon careful selection of the customer, proper appraisal of his credit needs and adequate control to ensure that his dealings with the bank are above board and that he is complying with the terms and conditions on which credit has been sanctioned to him. Safety of a bank loan or advance is directly related to the basis on which the decision to lend is taken, the type and quantum of credit to be provided and the terms and conditions on which the loan will be made available.