10 Questions
Who is responsible for confirming compliance with loan agreement covenants at least once a year?
Loan Monitoring unit
How often does Internal Control carry out covenant compliance check on all consumer credits?
Bi-annually
When does the Management Credit Committee review covenants compliance?
As needed
Who should ensure that the Loan Agreement/Offer Letter contains unambiguous covenants?
Legal Department
What is the responsibility of the Credit Risk Management during renewal/review requests going to the MCC?
Completing the covenant compliance sheet
What is the primary objective of pricing in the bank’s loan policy?
To ensure allocation of assets for the highest return
How often should interest on loans be paid, according to the text?
Monthly or quarterly
What should loan proposals carry to indicate customer’s capacity to cover cost increases due to interest rate fluctuations?
Sensitivity analysis
What should the Commitment/Offer Letter contain in relation to the interest rate?
Covenants that permit the bank’s periodic review of the interest rate
What are fees considered as, in relation to the bank’s income?
Key sources of income
Test your knowledge of loan covenants with this quiz. Explore the obligations and responsibilities that come with long-term exposure to bank loans and learn about the integral role of loan monitoring in ensuring customer compliance with loan agreement covenants.
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