Bank Credit Risk Management Overview

Credit Policy Committee (CPC)

• CPC is a senior management committee led by the Managing Director & CEO
• CPC is responsible for implementing the bank's credit risk management policy & guidelines
• Overlapping functions with the Risk Management Committee (RMC) may exist; both exercise oversight at their level
• A Sub-Committee of CPC, headed by Executive Director(s), is a Board-approved committee
• Detailed guidelines for CPC & its Sub-Committee are in Policy Annex No. 1

Product & Process Approval Committee (PPAC)

• PPAC is a Board-approved committee for new product vetting & modifications to existing products
• PPAC also approves new processes & modifications to existing ones

Risk Management Department

• Measures, monitors, and controls credit risk across the bank
• Ensures compliance with board-set credit risk parameters & prudential limits
• Develops and implements credit risk measurement tools, systems, & procedures
• Creates a credit risk Management Information System (MIS)
• Monitors credit portfolio quality, identifies problem exposures, and formulates corrective actions
• Evaluates risk-return for different loan segments, providing insights for policy & marketing

Approval Processes

• Committee agenda notes are considered & approved
• Urgent approvals may be obtained through member circulation
• Circulation approval requires quorum completeness, with noted agenda placement before the committee
• COCC-CGM has power to deviate, modify, concede, or waive guidelines (unless specified elsewhere)
• COCC-ED and higher authorities may also deviate/modify/concede/waive as per delegated powers
• All deviation/modification/concession/waiver approvals must comply with regulations and be justified in writing.
• Scheme-specific deviations need higher approval depending on the level

Credit Proposal Processing

• Officers with specific qualifications & experience will process sector/product-specific credit proposals
• Proposals exceeding Rs. 50 crore (or equivalent) need officers with specific qualifications or 3+ years' credit function experience with sector-specific expertise/certification
• HR department is responsible for developing and maintaining qualified human resources

This quiz covers the essential roles and responsibilities of the Credit Policy Committee (CPC), Product & Process Approval Committee (PPAC), and the Risk Management Department within a bank. Participants will learn about credit risk management policies, product vetting, and compliance measures. Test your knowledge of these critical banking functions and their interrelations.