Вы находитесь на странице: 1из 3


1. Briefly explain why credit is important?

2. What are the three types of credit cultures and clearly explain each of them?

3. Explain the six basic C’s of lending?

4. What are the effects of bad loan on ?

5. Who does the regulation and why regulation is important while processing of loan
is performed?

6. What are the responsibilities of loan officers?

7. Explain why loan process is very vital for an economy?

1. Credit is important because it is a powerful force or a tool for good in an economy

meaning that it stimulates economic activity.

-A means to transform deposits of money (savings) into loans which is productive


-A source of empowerment and job creation

2. 3 types of credit culture

Current value driven culture

-Based on current market prices and it keeps fluctuating with time trend

-It includes everyone from shareholders to current and potential employees and
society as a whole

-Attracts and retains the right kind of people

Current profit driven culture

-Focus on short term earnings, main emphasis on banks annual profit plan, lending
attracted to high risk and high return borrowers.

-Typical outcome is higher profit in good terms; lower profit in bad times
Market share driven culture

-Focus is to have the highest market share of loans among competitors

-Main emphasis is on loan volume and growth with intent to be the largest bank

-Understanding is very aggressive and significant loan concentration and above

average risk is acceptable.

Typical outcome-is that loan quality suffers over time; profit is modest because loan
growth comes from below market pricing.

3. 6 C’s of Lending

 Character-specific purpose of loan and serious intent to repay loan

 Capacity-legal authority to sign binding contract
 Cash-Ability to generate enough cash to repay loan
 Collateral-Adequate assets to support the loan
 Conditions-economic conditions faced by the borrower
 Control-Does loan meet written loan policy and how would loan be affected
by changing laws and regulations.

4. If projects fail, the job created will fail too there won’t be any economic growth. In
a market share driven culture attracting more customers allows one to be a market
leader then the bank will give the depositors money as loans

Typical outcome-the quality of loan suffers, customer will default on loans.

5. The federal government or state charter the regulations and regulations are
important while processing loans to address concerns over safety and stability of
financial institutions and avoid bank run. It is designed to create market
transparency between banks and individuals for consumer protection.

6. Responsibilities

-Evaluate, authorize, and recommend approval of commercial, real estate or credit


-Advises borrowers on financial status and methods of payment

-Includes mortgage loan officers and agents, collection analysts

-Examine applicants financial records and determine how much money they can
borrow, credit and property evaluations for granting loans
-Meet with people applying for loans, approve loans

7. Proper loans mean more profits, job creation, employment, proper investment,
more variety and therefore economic growth. It plays a crucial role in a country’s
development. By sanctioning loans to developing countries and trade, banks provide
them with the necessary aid for improvement. This leads to increase in production,
profits and employment. Loan process help raise the standards of people through
providing loans to buy capital goods, houses and automobiles ensuring the flow of
money in the market thus the economy will grow.