Bank Credit Overview

A transaction where a bank (creditor) provides funds to a customer (debtor) with an agreement to repay the principal and interest.

Different ways a bank can provide credit, including loans, discounts, leases, factoring, guarantees, letters of credit, and credit cards.

The initial step in the credit process, involving identifying customer needs, consulting, and guiding them through the procedures necessary for a loan.

A critical step to evaluate the customer's creditworthiness and potential risk, using models like 5Cs or CAMPARI.

A model used to assess creditworthiness, considering Character, Capacity, Capital, Conditions, and Collateral.

A detailed analysis of credit risk considering Character, Ability, Margin, Purpose, Amount, Repayment, and Insurance

The actual release of funds to the customer after the credit is approved.

The process of deciding whether to grant credit or not to the customer.

The process of ending a credit agreement, typically involving full repayment of the loan.

A form of credit extension where a financial institution provides money to a borrower for a set period.

The duration of a loan, from initial disbursement to full repayment of principal and interest.

The specific timeframe for loan repayment, often broken down into specified intervals.

Credit given to individuals for personal or household expenses.

Credit extended to businesses or entrepreneurs for capital needs related to their operations.

The guidelines that govern lending activities, based on agreements and legal provisions.

The reason for taking out a loan, whether for personal use or business expansion.

The conditions for receiving a loan, such as creditworthiness, business structure, and legal capacity.

The legal ability of a borrower to enter into and fulfill the terms of a loan agreement.

A customer needs to be at least 18 years old with full legal capacity or between 15-18 years old without limitations, have a legal purpose for the loan, a feasible plan to use the funds, and the financial ability to repay the debt.

A credit line is a pre-approved maximum loan amount that a customer can borrow within a specific timeframe, agreed upon in the credit contract.

A loan with a pre-defined maximum amount that the customer can borrow within a specific period, agreed upon in the contract.

These are short-term loans provided to businesses for their day-to-day operations, such as purchasing inventory or paying for wages.

Discounting is a method where a bank buys a customer's financial instrument (like a promissory note) before its maturity date, giving the customer immediate cash.

Discounting can be classified by the object (e.g., negotiable instruments, import/export documents) or the refund method (refundable or non-refundable).

Discounting involves a 'right of recourse', meaning the bank can recover the discounted amount from the original debtor if they default.

Discounting typically involves a single disbursement and a single repayment at maturity, unlike loans with recurring payments.

A promise by a credit institution to repay a customer's loan if they fail to make payments on time.

A promise by a credit institution to make a customer's payment to a recipient if the customer cannot.

A promise by a credit institution to cover fines for violating bidding regulations if the customer fails to pay.

A promise by a credit institution to fulfill a customer's contractual obligations if they fail to do so.

A promise by a credit institution to compensate for product quality issues if the customer cannot.

A promise by a credit institution to refund an advance payment if the customer fails to fulfill their obligation.

A guarantee given directly by the credit institution to the recipient.

A guarantee given by a third party, not directly by the credit institution.

A type of lease where the lessor transfers ownership of the leased property to the lessee at the end of the lease term. This is often used for long-term asset rentals and resembles a loan with installment payments.

Financial leases come in various forms, including: - Financial lease between 2 parties: A standard transaction involving just the lessor and lessee. - Financial lease among 3 parties: Involves the lessor, lessee, and a third party who may be a manufacturer or vendor. - Re-lease: The lessee sublets the leased asset to another party. - Lease cooperation: Two or more parties jointly lease an asset. - Under lease: A lease agreement made within the terms of an existing lease.

A card issued by a financial institution that allows cardholders to borrow money up to a pre-approved limit. It enables them to make purchases and pay later, typically with interest.

The process of a financial institution providing a credit card to a qualified individual. This is done through the issuing organization's physical branches, online applications, or authorized third-party platforms.

The practice of using a credit card for purchases, payments, and cash withdrawals. This is governed by the terms and conditions of the credit card agreement.

Credit cards are ideal for recurring or daily spending needs, not for large-value asset purchases. Organizations can also issue credit cards to authorized individuals for their spending needs.

The maximum amount of money that you can borrow using your credit card.

A monthly bill sent by the card issuer detailing all transactions made with the credit card, including the outstanding balance owed for the billing period.

A method where a credit institution buys a customer's negotiable instrument (like a promissory note) before its maturity date, giving the customer immediate cash.

The period from when a credit institution discounts a negotiable instrument to the date the full amount is due. This is the time the bank has to collect the money.

The time between when the credit institution agrees to discount the instrument and when the customer has to repay. This includes holidays and days off.

A method where a financial institution buys a company's accounts receivable (money owed to them by customers) or provides an advance payment for a purchase.

A short-term lease where the lessee uses the lessor's asset but returns it at lease end. Ownership remains with the lessor.

A medium to long-term credit agreement where the lessee eventually owns the asset. It's like a loan financed through rental payments.

The key parties in a leasing agreement are the lessor (property owner) and the lessee (user of the asset).