18 Questions
What unethical practice involves a conspiracy between the borrower or bank employees for loan approval?
Collusion
What is the advantage of having blood relations with the DIRECTORS, OFFICERS, STOCKHOLDERS AND RELATED INTEREST (DOSRI) in loan applications?
Higher chances of loan approval
Which culture still influences the evaluation or approval of loan applications?
Kumpare / padrino / pañero culture
What should the information gathered for the credit evaluation process be to obtain the desired credit judgment?
Credible, dependable, reliable
Who bears the responsibility for rendering judgment on loan applications in a fair and equitable manner?
A group with credit evaluation expertise
What is essential for credit investigators and evaluators according to the text?
Curiosity for data gathering
What does the 'C' in 'Cs in Communication' stand for?
Clarity
Which of the following is NOT a characteristic of a well-prepared credit report?
Ambiguous
What does the principle of 'Coordination' emphasize?
Cooperation between different organizational units
Which of the following is NOT mentioned as a characteristic of a well-prepared credit report?
Creative
What does the principle of 'Completeness' emphasize?
Providing a detailed and thorough credit report
Which of the following is NOT a responsibility of the credit department?
Promoting creativity in credit report writing
Why is it important for the lender to know the purpose of the loan?
To ensure the loan proceeds will be disbursed according to the borrower's plan.
What does 'commitment' refer to in the context of a loan application?
The borrower's equity in the business subject to the loan application.
Why do lenders conduct an ocular inspection or end use verification?
To understand the borrower's objectives and ensure loan proceeds are used as intended.
Why is it essential for lenders to be cautious in evaluating loans?
To ensure fair credit judgment and manage risks associated with lending.
What does 'protection' represent in a credit transaction?
The collateral and secondary sources of repayment in case of default.
How does knowing the purpose of a loan aid in structuring its repayment schedule?
By determining when the borrower will receive cash flows for repayment.
Test your knowledge on commensurate credit evaluation criteria and clear and concise communication in the credit industry. Understand the importance of proportionate loan provision and clear credit reports.
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