Critical Thinking Fundamentals

Module Information

• Module Title: Foundations of Bank Lending
• Module Number: FIN367
• Authors: Jasman Tuyon, PhD; Rapheedah Musneh, PhD; Siti Julea Supar; Nurziya Muzzawer
• Faculty: Business and Management
• University: Universiti Teknologi MARA, Sabah Branch, Kota Kinabalu Campus

Chapter 1 Outline

• 1.1 Fundamental Principles of Bank Credit
  • 1.1.1 Introduction to Bank Credit
    • Bank definition and scope of business
    • Bank lending business
    • Bank operation is highly regulated - Definition (Central Bank of Malaysia Act 2009 [Act 701] and Financial Services Act 2013 [139])
    • Business: "banking business" includes accepting deposits, paying/collecting cheques, and provision of finance.
    • Bank lending business (wholly owned; wholesale and corporate; business/SME; retail and consumer; treasury; asset management)
  • 1.1.2 The Credit Process Cycle (loan origination to repayment)
    • Origination (initial contact, business requirements, evaluate risk)
    • Approval (review & analysis of application, credit proposition)
    • Administration (documentation exectution, security agreement)
    • Monitoring (repayment, early warning signals)
    • Settlement/Recovery (repayment, restructuring or repossessions)
  • 1.1.3 Lending Decision Framework in Business Banking
• 1.2 Rules and Regulations Governing Bank Credit in Malaysia
• 1.3 Ethics and Corporate Governance in Bank Credit

Chapter 2 Outline

• 2.1 Principles of Lending (9 Principles)
• 2.2 Credit Evaluation Framework (5Cs Model, CAMPARI Model)
  • Character (integrity, responsibility, honesty)
  • Capacity (repayment ability, financial ratios)
  • Capital (financial commitment)
  • Condition (macroeconomic factors, industry conditions)
  • Collateral (security, value, marketability, stability)
• 2.3 Credit Information and Verification
  • Documents (certificate of business registration, articles of association, etc.)
  • Third party record/opinions (credit history, CIS, CCRIS, CTOS banking reports)
  • Warning signals (audit reports, frequent office changes, legal issues, incomplete financial statements)

Chapter 3 Outline

• 3.1 Small and Medium Enterprises (SME) Lending
  • 3.1.1 Introduction to SME Lending (types of businesses and financing needs)
    • 3.1.1.1 Types of Bank Business Lending
    • 3.1.1.2 SME Definition
    • 3.1.1.3 SMEs financing situation in Malaysia (statistics, growth, access and reliance on financing from financial institutions)
  • 3.1.2 Types of Business Credit Borrowers
  • 3.1.3 Types of Business Credit Products and Pricing Strategy
• 3.2 Evaluation of SME Lending Applications (business and financial analysis)
• 3.3 Business Credit Analysis (details of SME applications)

Learning Objectives

• Upon completion of Chapter 1, students should be able to define bank credit, clarify its importance to the bank, and understand the credit process cycle.
• Upon completion of Chapter2 , students should be able to apply key lending principles, use credit frameworks (5Cs & CAMPARI), understand credit information acquisition, and describe relevant documentation for loans and securities.
• Upon completion of Chapter 3, students should be able to comprehend SME financing, recognize various SME characteristics and financing needs, understand various types of financing facilities, conduct financial analysis for SMEs, and conduct analytical work with those findings.

Test your understanding of critical thinking concepts and methods. This quiz covers key aspects such as the purpose of critical thinking, the role of emotional intelligence, and the importance of skepticism. Challenge yourself to identify fallacies and the methods used in critical analysis.