All India Management Association (AIMA) 2007 M.B.A Marketing Management Central Banking
Friday, 01 February 2013 11:25Web
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The Loan Review function is an essential part of loan quality with due diligence. Its overriding purpose is to improve the quality of the loan portfolio by providing a framework for making effective and improper loan decisions, maximizing earnings and minimizing the risk inherent in lending money. Now the focus of the regulatory bodies has shifted and bankers must now shift their priorities in order to:
• Assess the Loan Management function of the Financial Institution instead of just reviewing files.
• Determine the corrective action capabilities of the institutions' overall loan monitoring system.
• Safety and soundness doctrine.
• Scope of the review (dollar and percentage).
• Credit underwriting.
• Loan documentation.
• Standard of care.
• Loan grading.
• Review checklist
• Loan review officer qualifications.
Regulators insist that all financial institutions are needed to have a loan review system in place. The degree to which an institution implements its review system will not only affect its ratings from the regulators but will also have an impact on potential costly loan losses. A loan investigation is a detailed review and valuation of a potential customer's business that provides lenders with the info necessary to make informed credit judgments.
END OF CASELET 1
Caselet 2
learn the caselet carefully and ans the subsequent questions:
2. Why are Central Banks vital for any economy? ( 5 marks)
3. What can Central Banks do to achieve growth by keeping inflation stable through macro policies? ( 7 marks)
In latest years, in New Zealand as in many other countries, the public have come to believe that Central Banks can achieve much more than they can; in fact, they can really deliver. There is a serious risk that, when the realization dawns that the power of Central Banks is not in fact unlimited, or when economies which have been performing extremely well in latest years go through a period of slower growth, Central Banks will receive far more than their fair share of blame. Indeed, there are already signs of this blame and anger emerging in the United States for much of the last decade, Alan Greenspan was widely presumed to be able to walk on water. Now there are angry accusations from many quarters that imply that he should have been able to keep the US economy growing above its pattern potential indefinitely, and prices in the US share-market growing with it.
| Earning: Approval pending. |
