Bank Lending Assessment and Management

What are the Five Cs of Credit?

• 1. Capacity, Capital, Conditions, Character, Collateral

• 1. Credit, Cash, Conditions, Character, Collateral

• 1. Capacity, Capital, Conditions, Creditworthiness, Collateral

• 1. Capacity, Capital, Conditions, Character, Credit

How does income and employment affect lending assessment?

• It assesses the borrower's ability to make loan payments based on income and job stability.

• It determines the interest rate based on the borrower's credit score.

• It evaluates the property value to decide loan eligibility.

• It checks the borrower's previous loan history for defaults.

What is evaluated in assets and liabilities during lending assessment?

• The borrower's credit score and income level.

• The borrower's net worth and debt obligations.

• The borrower's employment history and savings account balance.

• The borrower's investment portfolio and insurance coverage.

What does financial history include in lending assessment?

• Examining the borrower's past credit performance, including payment history and defaults.

• Analyzing current market trends and interest rates.

• Reviewing the borrower's income and employment status.

• Assessing the value of collateral provided for the loan.

What factors are considered in lending assessment?

• Financial History

• Credit Score

• Debt-to-Income Ratio

• Collateral

What is credit scoring?

• A method of determining interest rates based on market trends.

• Using algorithms and statistical models to predict the likelihood of default.

• A process for evaluating the creditworthiness of a borrower based on income.

• A system for tracking the spending habits of consumers.

What does financial statement analysis involve?

• Examining the borrower's financial statements to assess their financial health.

• Calculating the interest rates on loans.

• Reviewing the stock market trends.

• Analyzing the economic policies of a country.

What is due diligence in lending?

• Conducting thorough research and verification of information provided by the borrower.

• A process of approving loans without any checks.

• A method to increase interest rates on loans.

• A strategy to minimize the lender's risk by avoiding all loans.

What is loan restructuring?

• A process of negotiating with borrowers who are experiencing financial difficulties to modify loan terms.

• A method of increasing the interest rate on existing loans.

• A strategy to consolidate multiple loans into a single loan with a higher amount.

• A technique to reduce the principal amount of a loan without any negotiations.

What is collateral in the context of lending?

• The interest rate charged on a loan.

• The value and security of any assets pledged as collateral for the loan.

• The total amount of money borrowed from a lender.

• The duration of time for which a loan is taken.