The history and objectives of credit rating?
A credit rating is an opinion of a particular credit agency regarding the ability and willingness of an entity (government, business, or individual) to fulfill its financial obligations in completeness and within the established due dates. A credit rating also signifies the likelihood a debtor will default. Credit ratings date back to the early 20th…
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Understanding Third-Party Guarantees in Credit Transactions
Introduction A third-party guarantee is a legal commitment made by an external party—the guarantor—to assume responsibility for a borrower’s debt or obligation in the event of default. This form of financial assurance adds an additional layer of security to loan transactions, enhancing the lender’s confidence and reducing credit risk. Commonly used in personal, commercial, and…
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Enhancing Credit Delivery through Straight-Through Processing (STP): A Comprehensive Documentation Framework
Introduction Straight-Through Processing (STP) in credit delivery refers to the end-to-end automation of the lending lifecycle—from loan application to disbursement—without the need for manual intervention. This digital transformation facilitates seamless data capture, rule-based processing, automatic routing, transaction confirmation, and final settlement, thereby enabling an efficient, accurate, and scalable credit delivery system. To ensure the successful…
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Understanding important points about Term Loans: Key Types, Uses, and Features
IntroductionIn both business and personal finance, the need for funds often arises to meet various requirements such as working capital, large purchases, or expansion projects. Among the various funding options available, term loans remain one of the most commonly utilized instruments, offering structured financing with defined repayment schedules. Types of Term Loans Common Applications of…
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What is a consortium lending?
In consortium lending system, two or more lenders join together to finance a single borrower. The lending banks formally join together, by way of an inter-se agreement to meet the credit needs of a borrower. Here, the sanction of limits to a borrower is completed with common appraisal, common documentation and monitoring the advance with…
Difference between Term Loan Appraisal and Project Appraisal
A term loan appraisal is a specific type of project appraisal that focuses on evaluating a particular loan, whereas a project appraisal is a broader assessment of a project’s overall feasibility. Term Loan Appraisal Definition:Term loans can be classified as either short-term or long-term, with repayment periods typically ranging from one to twenty years. The…
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