Podcast
Questions and Answers
What are the key principles of lending discussed in Chapter 2?
What are the key principles of lending discussed in Chapter 2?
- Loan documentation and security
- Risk assessment and mitigation (correct)
- Credit information acquisition
- Credit evaluation and verification
Which model is used for credit risk assessment in the chapter?
Which model is used for credit risk assessment in the chapter?
- The 5Cs Model
- The CAMPARI Model (correct)
- The Loan Agreement Model
- The Property Security Model
What is one of the objectives for students upon completion of Chapter 2?
What is one of the objectives for students upon completion of Chapter 2?
- Understanding property security
- Describing the credit evaluation framework
- Applying key lending principles (correct)
- Learning about loan documentation
Which aspect is included in the credit evaluation framework discussed in Chapter 2?
Which aspect is included in the credit evaluation framework discussed in Chapter 2?
What is the primary role of the Marketing/Sales Department in the bank process?
What is the primary role of the Marketing/Sales Department in the bank process?
What is the purpose of the appointed solicitor in the bank process?
What is the purpose of the appointed solicitor in the bank process?
Where does the credit analysis and verification take place in the bank process?
Where does the credit analysis and verification take place in the bank process?
What department is responsible for loan and securities documentation in the bank process?
What department is responsible for loan and securities documentation in the bank process?
In the context of lending principles, what does 'Principle of Proportionate Stake' refer to?
In the context of lending principles, what does 'Principle of Proportionate Stake' refer to?
What is the main purpose of 'Principle of Risk Taking in Credit and Lending'?
What is the main purpose of 'Principle of Risk Taking in Credit and Lending'?
What is the objective of promoting a strong credit culture according to the text?
What is the objective of promoting a strong credit culture according to the text?
What concept must a lender be mindful of, according to the text?
What concept must a lender be mindful of, according to the text?
What is the primary responsibility of the Business Banking / Business Center in the bank process?
What is the primary responsibility of the Business Banking / Business Center in the bank process?
What is a crucial aspect of 'Principle of Risk Taking in Credit and Lending', according to the text?
What is a crucial aspect of 'Principle of Risk Taking in Credit and Lending', according to the text?
What does 'Principle of Appropriate Tenure of Financing' emphasize?
What does 'Principle of Appropriate Tenure of Financing' emphasize?
When does 'Credit facilities recovery' occur in the bank process?
When does 'Credit facilities recovery' occur in the bank process?
Flashcards
Credit Risk Assessment
Credit Risk Assessment
Evaluating the likelihood of a borrower defaulting on a loan.
CAMPARI Model
CAMPARI Model
A framework used to assess credit risk, considering factors like Capacity, Capital, Assets, Management, Purpose, Repayment, and Insurance.
Guarantee and Indemnity
Guarantee and Indemnity
A legal arrangement where a third party promises to cover loan repayment if the borrower defaults.
Principle of Proportionate Stake
Principle of Proportionate Stake
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Principle of Risk Taking in Credit and Lending
Principle of Risk Taking in Credit and Lending
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Credit Culture Promotion
Credit Culture Promotion
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Loan and Securities Documentation
Loan and Securities Documentation
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Business Banking/Business Center
Business Banking/Business Center
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Lending Covenants
Lending Covenants
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Principle of Appropriate Tenure of Financing
Principle of Appropriate Tenure of Financing
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Credit Facilities Recovery
Credit Facilities Recovery
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Marketing/Sales Department Role
Marketing/Sales Department Role
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Appointed Solicitor's Role
Appointed Solicitor's Role
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Credit Analysis and Verification
Credit Analysis and Verification
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Credit Administration Department Role
Credit Administration Department Role
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Study Notes
Key Principles of Lending
- The key principles of lending include the Principle of Proportionate Stake, Principle of Risk Taking in Credit and Lending, and Principle of Appropriate Tenure of Financing.
- The Principle of Proportionate Stake refers to the lender's stake in the borrower's business being proportional to the borrower's risk.
Credit Risk Assessment
- The model used for credit risk assessment in Chapter 2 is not specified.
Objectives of Chapter 2
- One of the objectives for students upon completion of Chapter 2 is to understand the key principles of lending.
Credit Evaluation Framework
- The credit evaluation framework includes the aspect of credit worthiness of the borrower.
Bank Process
- The primary role of the Marketing/Sales Department is to identify and generate new business opportunities.
- The appointed solicitor is responsible for verifying the legal documentation of the borrower.
- Credit analysis and verification take place in the Credit Department.
- The Loan Documentation Department is responsible for loan and securities documentation.
- The primary responsibility of the Business Banking / Business Center is to manage the credit portfolio and develop new business.
Credit Culture and Risk
- The objective of promoting a strong credit culture is to ensure that lending decisions are made in a responsible and prudent manner.
- A lender must be mindful of the concept of risk taking and its implications.
- A crucial aspect of the Principle of Risk Taking in Credit and Lending is to balance risk and reward.
- The Principle of Appropriate Tenure of Financing emphasizes the importance of matching the loan tenure with the borrower's cash flow.
- Credit facilities recovery occurs when the borrower defaults on loan repayment and the bank takes steps to recover the loan amount.
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Description
Test your knowledge on principles of lending, credit evaluation framework, the 5Cs model, and other key concepts from Chapter 2 of Business Credit Essentials. This quiz was created by Module Authors Jasman Tuyon, PhD, Rapheedah Musneh, PhD, and Siti Julea Supar Nurziya Muzzawer from the Faculty of Business and Management at Universiti Teknologi MARA, Sabah Branch.
