Global Credit Exposure Management Policy 2024

Dealing with borrowers who have defaulted or acted fraudulently, including companies where such individuals are directors or promoters. This includes loans compromised or written off.

Restrictions on credit facilities for companies where directors are listed as defaulters. Banks must be extra cautious.

Limits on lending to groups or companies linked to a borrower who has a non-performing asset (NPA) or has settled their loan through a compromise. This aims to mitigate risk.

Banks are restricted from using their shares as collateral for loans, except in specific scenarios approved by the regulator.

Strict rules apply to loans given to bank directors, with limits on the amount and specific approval processes.

Restrictions imposed by regulators on certain types of lending to prevent risky activities or protect depositors' interests.

Loans secured by non-resident external (NRE) and foreign currency non-resident (FCNR) deposits are subject to specific regulations.

Banks are limited in how they can buy back their own shares, with rules designed to protect shareholders and the bank's financial stability.

A framework that outlines credit risk management principles and processes for all departments within the bank, ensuring consistent lending practices.

The document that provides detailed operational guidelines for implementing the bank's credit risk management policy.

Specific guidelines and standards tailored for given credit products, which may include financial or non-financial benchmarks.

To ensure safe and profitable deployment of the bank's resources for lending and related activities, while maintaining consistency across the bank.

The adoption of a standardized approach to credit risk management throughout the bank.

The practice of incorporating local currency limits into credit risk management policies in overseas branches.

The act of revising and updating credit operations manuals in overseas branches in consultation with the central credit department.

The use of circulars and master circulars to provide guidance for credit risk management.

Senior management committee responsible for implementing the bank's credit risk management policies and guidelines.

Board-approved committee that evaluates and approves new products or changes to existing products and processes.

Department responsible for measuring, monitoring, and controlling credit risk across the entire bank.

A collection of documents and guidelines that define the bank's credit risk management policies.

The senior executive who oversees the bank's credit risk management.

A subgroup of the CPC that provides additional oversight on specific credit-related matters.

Process where members of a committee approve agenda items without a formal meeting.

The documents submitted for consideration and approval by a committee.

A measure of profitability that considers the risk associated with an investment. It helps banks assess the return on their loans compared to the cost of their capital.

Purchasing or discounting bills from directors, essentially acting as a 'clean accommodation' for them, is considered a 'loan or advance' under the Banking Regulation Act, 1949. This is considered a type of loan and advances.

The minimum annual return that a bank needs to generate to cover its expenses and satisfy its investors.

A set threshold that determines the minimum RAROC that loans must meet before being approved. This is usually set by the bank's Global ALCO.

Banks are prohibited from lending money to directors or firms they are involved with, including their companies, subsidiaries, or those where they have a substantial interest. There are exceptions to this rule.

Loans with a RAROC below the COE do not provide sufficient returns after accounting for the risks involved. These loans are deemed unprofitable for the shareholders.

This law prevents banks from engaging in risky lending practices that could be harmful to shareholders and potentially lead to financial instability.

The bank's Global Asset Liability Committee (ALCO) has the authority to determine the benchmark RAROC for different sectors, products, and regions based on varying risk profiles.

The Bank is allowed to make loans and advances to directors in certain specific situations with prior approval from the board of directors.

These exempted loans might be considered safer because they are backed by tangible assets or less susceptible to financial distress.

Certain types of loans are exempted from the RAROC requirement. These include loans to retail customers with small exposures and loans for specific purposes like trade finance.

Even though individual loans for individuals might be exempt from the RAROC requirement, schemes and portfolios of such loans need to meet the RAROC benchmark.

These facilities are considered more like non-fund based transactions. They don't directly involve lending money, but rather providing services like guaranteeing payments. This might be less risky for banks.

RAROC is a key factor in evaluating credit decisions, and lenders are encouraged to actively manage risks to ensure profitable returns.

These are short-term loans that banks make to each other for liquidity management purposes.

This agreement ensures that the settlements in the securities market take place smoothly. This is a necessary service for facilitating trading.

Banks are restricted from granting personal loans exceeding Rs. 5 crore to directors of other banks (including cooperative banks, mutual funds, etc.) without prior board approval.

Loans exceeding Rs. 5 crore to relatives (excluding spouses and minor/dependent children) of bank directors require approval from the Management Committee.

Loans exceeding Rs. 5 crore to companies where directors' relatives have substantial interest or are directors or guarantors need approval from the Management Committee.

Loans exceeding Rs. 5 crore to companies where directors of other banks have substantial interest or are directors or guarantors need approval from the Management Committee.

Any director of the bank directly or indirectly involved in a credit proposal must reveal their interest to the board during discussion.

The Bank will not grant Personal Loans aggregating to Rs. 5 crore and above to any director of other banks, unless sanctioned by the Board of Directors/Management Committee.

The Bank shall not grant loans and advances aggregating Rs. 5 crore & above to relatives of the Chairman/Managing Directors or other Directors, unless sanctioned by the Management Committee of the Board.

The Bank shall not grant loans and advances aggregating Rs. 5 crore & above to any firm in which any of the relatives of the Chairman/Managing Directors or other Directors is interested as a partner or guarantor, unless sanctioned by the Management Committee of the Board.