CorporateCredit

A Practical Approach
 Corporate Credit- An Introduction
What is Corporate and what is credit
A group of people forming an association i.e
incorporating a legal entity to manage and run the
Corporate business enterprise . Three pillars of a Corporate
• Management : Day to day operations
• Board of Directors :Oversees management
• Shareholders :Investors or owner of corporate

• Trust , Creditworthiness

• Ability of a customer to receive goods or

services before payment based on the trust that
Credit payment will be made in future

• It is established through a contractual agreement

 Financial Markets- Structure
It’s a virtual market where match making between
Financial Markets Buyer and Seller of securities and commodities is
carried out.

• Capital Market
Stock Market , Bonds markets, OTC
• Money markets ( short term instruments)
• Derivatives market (Forwards, Options, Futures)
Types of Financial • Forex market (spot, tom)
Market • Interbank market ( Transactions among banks)
• Credit market ( Lending and borrowings)
• Commodities markets ( precious metals)

Financial market Banks, NBFCs, Stock Exchanges, Investors, SEBI,

players RBI, Insurance Houses, Mutual Funds
 Indian Banking System & Structure

Reserve Bank of India

(Apex Bank)

Scheduled Banks Non Scheduled Banks

(LocalArea Bank, UCB)

Commercial Bank Cooperative Bank

Public Pvt Sector Foreign Regional Rural

Sector Bank Banks Banks Banks

State Bank of india State Coop Banks

Nationalised Banks District Coop banks

Other PublicSector Other Coop Bank

banks
 Concept of Risk & Type of Risks

Risk : Uncertanity of happening of an event, volatility

and consequences thereafter.
Business Risk
Unsystematic Risk
( diversifiable ) Financial Risk
Risk
Interest Rate Risk

Systematic Risk Purchasing Power Risk

( Non diversifiable)
Reinvestment Risk

Market Risk

Exchange rate Risk

 Structure within a Bank

Business • Retail Banking ( Liability business, Asset Business

Group • Wholesale Banking ( SME, Mid and Large Corporate)

Capital
Fund raising through bonds, equity, advisory services on
Market
M&A, Structured deals
Group

Treasury
Group Treasury sales group, Dealers, Treasury operations

Control Risk Group, Internal Audit, Compliance, Legal,

Groups Accounts, Infrastructure management, operations team
 Wholesale Banking
• Classification of segments based on the criterion of
Exposure, Turnover, Networth

Mid Credit proposals of mid size usually upto exposure of

Corporates Rs100.00 Crs, Turnover upto Rs 500 Crs.

Large Credit proposals of large size usually exposure of

Corporates more than Rs100.00 Crs,Turnover above Rs 500 Crs.

Project
New business plan, Exposure size ranges from small
Finance
amount to Large amount may be few thousand crores
(Green Field)
 Broad process flow credit appraisal

Understanding the
Homework before Meeting with
company, its
meeting Corporate Promoter or CFO
business model

Checklist of Promoters future

Appraisal of the
information plans and their
proposal
required vision

Clearance by the
Presented to the Approved/Deffered/
Risk, Legal and
sanctioning forum Rejected
Compliance