Integrated Approach to Credit Risk Management and Credit Rating
IntroductionCredit risk management and credit rating are interrelated components of a sound lending framework, enabling financial institutions to evaluate and mitigate the risk of borrower default. While credit risk management encompasses internal strategies and procedures aimed at minimizing losses from defaults, credit ratings—typically assigned by external agencies—provide an independent evaluation of a borrower’s creditworthiness. Together,…
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Timelines for large accounts under Insolvency and Bankruptcy Code 2016 (IBC)
(This post elucidates details of timelines for implementation of Resolution Plan (RP) and insolvency application to be filed by the lenders if a RP is not implemented as per the timeline.) In terms of RBI circular dated February 12, 2018, the ‘Resolution Plans’ (RP) under IBC shall be implemented within the timeline given below in…
Read article Instruments of Credit Control Used by the Reserve Bank of India
The Reserve Bank of India (RBI), as the central monetary authority of the country, employs credit control as a critical tool of monetary policy to regulate the availability, cost, and direction of credit in the economy. The objective is to achieve key macroeconomic goals such as price stability, sustainable economic growth, and overall financial stability.…
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Do you know the meaning of ‘Non-Cooperative Borrowers’?
The definition of Non-Cooperative Borrowers is originally defined in RBI circular dated 26.02.2014 on ‘Frame work for Revitalizing Distressed Assets in the Economy-Guidelines on Joint Lenders’ Forum (JLF) and Corrective Action Plan (CAP). The definition of a Non-Cooperative Borrower as contained therein is modified by RBI on December 22,2014, which reads as under: “A non-cooperative…
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The Importance and Purpose of Credit Control and Monitoring
IntroductionCredit control is a structured approach employed by businesses and financial institutions to manage credit risk and ensure that customers meet their payment obligations in a timely manner. It plays a pivotal role in sustaining financial stability and optimizing cash flow. What is Credit Control?Credit control refers to the procedures used by businesses to determine…
How to identify a wilful defaulter?
[The identification of a ‘wilful defaulter’ is done on the basis of eventual conclusion that the default is intentional, deliberate and calculated. The process of categorizations of the ‘wilful defaulter’ is required to be done thoughtfully on the basis of track record of the borrower/guarantor and not on the basis of an isolated transaction or incident.…
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