Loan Processing Stages Quiz
44 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the maximum time allocated for completing Stage-III?

  • 10-12 days (correct)
  • 5-7 days
  • 8-10 days
  • 7 days

Which of the following should be avoided when selecting customers?

  • Approaching known clients directly
  • Considering customers referred by existing clients
  • Involving experienced intermediaries
  • Giving multiple loans to a single family (correct)

What document is NOT required in Stage-2 during the financial verification process?

  • Valuation of securities (correct)
  • Assets and liabilities statements
  • Credit Information report
  • IT returns

What is a critical step to take before receiving a loan application from a customer?

<p>Identify the customer through KYC processes (B)</p> Signup and view all the answers

Which document is associated with Stage-3 of the loan processing?

<p>Sanction letter from the previous lender (D)</p> Signup and view all the answers

What is the maximum exposure for the group SB-1 & SB-2?

<p>42000 (D)</p> Signup and view all the answers

Which of the following is NOT a category of counterparties eligible for maximum exposure?

<p>Private LLCs (C)</p> Signup and view all the answers

Under what condition can units or promoters appearing in the 'Wilful defaulters' list receive fresh loan limits?

<p>With the approval of appropriate authority. (D)</p> Signup and view all the answers

What is a mandatory condition for loan applications of ₹10 lac and above?

<p>Search through SBIDBR. (A)</p> Signup and view all the answers

What does the SBI Default Borrower Registry (SBIDBR) aim to achieve?

<p>Align with best practices of data privacy. (A)</p> Signup and view all the answers

Which of the following categories has the highest maximum exposure value listed?

<p>SB-1 &amp; SB-2 (A)</p> Signup and view all the answers

Which statement is true regarding the search process through SBIDBR?

<p>It complements existing pre-sanction activities. (D)</p> Signup and view all the answers

What is the primary purpose of the Credit Policy & Procedures Committee (CPPC)?

<p>To manage credit risk and procedures. (D)</p> Signup and view all the answers

Which committee is responsible for approving the Credit Risk Assessment models?

<p>Credit Risk Management Committee (CRMC). (D)</p> Signup and view all the answers

When is the Loan Policy document reviewed?

<p>Once a year by the Board. (A)</p> Signup and view all the answers

What allows the Bank to permit waivers from prescribed loan norms?

<p>Commercial considerations agreed after evaluation. (A)</p> Signup and view all the answers

Which sub-group has powers equivalent to the CPPC?

<p>Sub-Group of CPPC. (B)</p> Signup and view all the answers

What guideline should the Loan Policy be read in conjunction with?

<p>With procedural circular instructions and periodic guidelines. (B)</p> Signup and view all the answers

What is the role of the DMD of Business Verticals in the loan approval process?

<p>They approve process-related changes without changing guidelines. (B)</p> Signup and view all the answers

What is the main focus of the policies approved by the CPPC?

<p>Managing credit risk through various measures. (C)</p> Signup and view all the answers

What must the advocate do with the TIR and related documents?

<p>Submit them directly to the operating unit. (C)</p> Signup and view all the answers

What is expected of the advocate regarding original title deeds?

<p>Verify and scrutinize them when subsequently provided. (A)</p> Signup and view all the answers

What percentage of one counterparty's gross receipts must be derived from transactions with the other counterparty to establish significant connectedness?

<p>50% (A)</p> Signup and view all the answers

Under what condition does a guarantee create significant connectedness between counterparties?

<p>When the guarantee amount is equal to or greater than 50% of the net worth of the guarantor. (A)</p> Signup and view all the answers

What should a conditional TIR certifying clear and marketable title include?

<p>Such a report would not be acceptable. (C)</p> Signup and view all the answers

What is the minimum percentage of a counterparty’s production that must be sold to another counterpart to indicate a dependency?

<p>30% (C)</p> Signup and view all the answers

What should be done if title deeds are in a vernacular language?

<p>An English translation signed by the bank’s advocate is needed. (D)</p> Signup and view all the answers

What is necessary regarding properties of a Hindu Undivided Family?

<p>Law Officer's opinion must be sought before mortgaging. (A)</p> Signup and view all the answers

What must be true about the expected source of funds to repay loans between connected counterparties?

<p>Both counterparties must be reliant on 100% from the same source. (A)</p> Signup and view all the answers

Which of the following factors is NOT specified in establishing whether one counterparty's financial problems affect another?

<p>No specific parameter is defined. (C)</p> Signup and view all the answers

What needs to be obtained from a borrower if a cooperative housing society is not yet formed?

<p>An undertaking stating the bank would be informed once the society is formed. (B)</p> Signup and view all the answers

What must be done when obtaining certified copies of title documents?

<p>Certify copies and compare them with customer documents. (C)</p> Signup and view all the answers

What percentage of intercorporate liabilities or trade receivables indicates potential connectedness between counterparties?

<p>50% (B)</p> Signup and view all the answers

Who is responsible for paying the professional fees/expenses of the advocate?

<p>The bank pays them directly and recovers the amount from the customer. (A)</p> Signup and view all the answers

What is the minimum percentage of funding that counterparties must share from the same source to indicate a connection?

<p>35% (A)</p> Signup and view all the answers

When counterparties are reliant on a single source for funding, what happens if there is a default by the provider?

<p>The funding problems will likely spread to the other counterparty. (C)</p> Signup and view all the answers

What is a requirement for a public company in terms of membership?

<p>Must have a minimum of 7 members (C)</p> Signup and view all the answers

Which of the following statements is true regarding private companies?

<p>They must have a minimum of 2 members (B)</p> Signup and view all the answers

What distinguishes a private company from a public company?

<p>Public companies can transfer shares freely (C)</p> Signup and view all the answers

What is the maximum number of members allowed in a private company?

<p>200 (C)</p> Signup and view all the answers

Which of the following is not required for a public company before starting business?

<p>Statutory Meeting (C)</p> Signup and view all the answers

Which statement regarding the paid-up share capital for private and public companies is accurate?

<p>The requirement for paid-up capital has been abolished for both company types (A)</p> Signup and view all the answers

What is the status of a private company that is a subsidiary of a public company?

<p>It is automatically termed as a public company (D)</p> Signup and view all the answers

Which of the following options correctly describes a public company's requirement for issuing prospectuses?

<p>Issuing a prospectus is compulsory (C)</p> Signup and view all the answers

Flashcards

KYC (Know Your Customer)

The process of verifying the identity and financial background of a loan applicant to assess their creditworthiness and prevent fraud.

Credit Information Report

A detailed report that includes information about an applicant's credit history, financial stability, and repayment capacity.

Financial Verification

Thorough examination of the borrower's financial statements, business operations, and proposed projects to determine their ability to repay.

Document Verification

A process of verifying essential documents including legal documents, financial statements, and other proof of assets and liabilities.

Signup and view all the flashcards

Credit Assessment

An assessment of the borrower's ability to repay a loan based on their income, expenses, and debt obligations.

Signup and view all the flashcards

Public Company

A company that is owned and traded by the general public, meaning anyone can buy or sell its shares.

Signup and view all the flashcards

Private Company

A company that is privately owned and traded, its shares are not available to the general public.

Signup and view all the flashcards

Minimum Members (Public Company)

The minimum number of members required to form a public company.

Signup and view all the flashcards

Minimum Members (Private Company)

The minimum number of members needed to form a private company.

Signup and view all the flashcards

Maximum Members (Private Company)

The maximum number of members allowed in a private company.

Signup and view all the flashcards

Holding Company

A company that has control over another company.

Signup and view all the flashcards

Subsidiary Company

A company that is controlled by another company.

Signup and view all the flashcards

Associate Company

A company where one company has significant influence but not control over another company.

Signup and view all the flashcards

What is the Credit Policy & Procedures Committee (CPPC) responsible for?

The Credit Policy & Procedures Committee (CPPC) at the Corporate Centre is responsible for managing credit risk and approving loan policies and procedures.

Signup and view all the flashcards

What are some of the key areas that the CPPC sets policies for?

The CPPC sets guidelines for loan appraisal, exposure limits, and managing Non-Performing Assets (NPAs), including industrial rehabilitation, compromises, and taking accounts off the balance sheet.

Signup and view all the flashcards

Who approves new types of loans?

The CPPC approves all new loan products. Their decisions are informed by the Risk Management Committee of the Board (RMCB) but ultimately, they have the final say.

Signup and view all the flashcards

Which committee sets credit risk assessment models and exposure limits?

The Credit Risk Management Committee (CRMC) sets models for assessing credit risk and determines exposure limits for different industries.

Signup and view all the flashcards

What does the Sub-Group of the CPPC do?

A Sub-Group of the CPPC has equivalent powers to the CPPC for reviewing asset products and processes, approving similar new products, and making modifications.

Signup and view all the flashcards

What happens when exceptions to the loan policy are needed?

The Bank recognizes that sometimes, based on sound commercial reasons and careful evaluation, they may need to make exceptions to the loan policy guidelines. A clear authority structure is in place to allow for these waivers.

Signup and view all the flashcards

How often is the Loan Policy reviewed?

The Loan Policy document is reviewed annually by the Board. Changes are made based on regulatory guidelines, annual policy directives, and requests from business groups.

Signup and view all the flashcards

Advocate

A legal professional who examines property ownership records to ensure they're clear and valid.

Signup and view all the flashcards

Title Investigation Report (TIR)

A document prepared by an advocate summarizing the results of their title investigation, verifying the ownership of a property.

Signup and view all the flashcards

Title Deeds

The original documents that prove ownership of a property, like deeds and contracts.

Signup and view all the flashcards

Operating Unit

The bank or financial institution lending money for a property purchase.

Signup and view all the flashcards

Borrower

The person who borrows money to buy a property.

Signup and view all the flashcards

Advocate

A legal professional who examines property records to confirm ownership and ensure no one has hidden claims on the property.

Signup and view all the flashcards

Clear and Marketable Title

A legal term for a property that is free from any claims or encumbrances, meaning it's safe to use as security for a loan.

Signup and view all the flashcards

Hindu Undivided Family (HUF)

A legal arrangement where a family's joint property is managed collectively, rather than individually.

Signup and view all the flashcards

Economic Interdependence: Revenue Dependence

When one counterparty relies on another for at least 50% of their revenue or expenditures.

Signup and view all the flashcards

Economic Interdependence: Guarantee Dependence

When one counterparty guarantees the other's debt, exposing themselves to financial risk if the borrower defaults.

Signup and view all the flashcards

Economic Interdependence: Output Dependence

When a significant portion of one counterparty's output is sold to another, creating a reliance for sales.

Signup and view all the flashcards

Economic Interdependence: Funding Dependence

When both counterparties rely on the same funding source, creating a vulnerability if the source is unreliable.

Signup and view all the flashcards

Assessing Interdependence: Qualitative Assessment

Assessing potential risks and dependency of one counterparty on another.

Signup and view all the flashcards

Economic Interdependence: Intercorporate Debt

When a significant portion of one counterparty's debt is with another company.

Signup and view all the flashcards

Economic Interdependence: Shared Funding Source

When multiple counterparties rely on the same source for funding.

Signup and view all the flashcards

Economic Interdependence: Shared Financial Problems

When the financial problems of one counterparty are likely to affect the other due to their interconnectedness.

Signup and view all the flashcards

Maximum exposure limit

The maximum exposure limit for different groups of connected counterparties in a credit risk scenario.

Signup and view all the flashcards

Connected counterparties

These are entities like government-backed autonomous bodies, profitable PSUs, and state-owned companies that the bank might deal with.

Signup and view all the flashcards

Loan policy

This indicates that the bank has specific loan policies for dealing with certain counterparties based on their creditworthiness.

Signup and view all the flashcards

Wilful defaulters

These are clients who failed to repay their loans despite their contractual obligation.

Signup and view all the flashcards

Wilful defaulters list

A list containing names of individuals or organizations who have not repaid their loans and are considered a higher credit risk.

Signup and view all the flashcards

SBI Default Borrower Registry (SBIDBR)

A web-based application developed by SBI to monitor and manage borrower information, especially defaulters.

Signup and view all the flashcards

Mandatory SBIDBR search

A mandatory search within the SBIDBR for loan applications above a certain amount.

Signup and view all the flashcards

SBIDBR search - risk mitigation

An additional risk mitigation step to supplement existing credit risk assessments.

Signup and view all the flashcards

Study Notes

SBI Training Unit - Role Guide Cum Certification Manual

  • This manual is for internal circulation only.
  • It covers the CP SME Basic Credit program for 2024-25.
  • The banking industry is changing rapidly, so it's crucial to continually update skills.
  • The manual provides clarity on roles and responsibilities, and helps mitigate risks in day-to-day work.

Loan Policy Matters - Manual Contents

  • The manual details the following sections:

    • Loan Policy Matters
      • SME Delivery Model (page 4)
      • Pre-Sanction Credit Process (page 4)
        • Types of Borrowers (page 11)
      • Valuation of Assets (page 11)
      • Creation of Equitable Mortgage (page 4)
      • Analysis of Financial Statements (page 4)
      • Prevention of Frauds (page 4)
      • Overview of Working Capital Assessment (page 4)
      • Letter of Credit (page 4)
      • Bank Guarantee (page 4)
      • Export Finance (page 4)
      • Import Finance (page 4)
      • Term Loan (page 4)
      • Credit Risk Assessment (page 4)
      • Preparation of Proposals and Common Mistakes (page 4)
      • Calculation of RAROC (page 4)
      • SME Asset Products (page 4)
      • Post Sanction Process (page 4)
      • Stress Management (page 4)
      • Recovery/ Resolution methods of stressed assets (page 4)

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

CP SME BASIC MANUAL 2024 PDF

Description

Test your knowledge on the various stages of loan processing with this quiz. Focus on key documents and critical steps associated with each stage. Perfect for anyone looking to enhance their understanding of loan applications.

More Like This

Loan Origination System (LOS)
10 questions

Loan Origination System (LOS)

AccessibleVolcano avatar
AccessibleVolcano
Gold Loan Processing Regulations Quiz
42 questions

Gold Loan Processing Regulations Quiz

WorkableLightYear823 avatar
WorkableLightYear823
Mortgage Loan Processing Quiz
29 questions

Mortgage Loan Processing Quiz

PleasingMotif5294 avatar
PleasingMotif5294
Mortgage Loan Processing Overview
30 questions

Mortgage Loan Processing Overview

PleasingMotif5294 avatar
PleasingMotif5294
Use Quizgecko on...
Browser
Open
Browser
Browser