Commercial Lending

Commercial Lending

Who should attend:

Professionals, project managers, business analysist, software developers, testers, intending to work in commercial banks or in software companies providing solutions in commercial lending in western countries.

Course contents

Introduction

• Concept of lending and lending related credit risk
• Twin goals of lending
• Risk management policy and credit policy
• Brief understanding of loan life cycle: from origination till closure
• Credit risk management
  • Limits, collateral, guarantors, derivatives, on-balance sheet netting
• Loan classification based on
  • Purpose
  • Usage i.e. revolving/non-revolving
  • Security i.e. secured/unsecured
  • Interest type
  • Method of repayment
  • Currencies
  • Business type and size
  • Setting up/working capital

Loan origination

• Credit risk assessment
• Five “C”s of good credit and 5 “C”s of bad credit
• Qualitative analysis
• Quantitative analysis
• Credit rating
• Credit scoring
  • Application scoring
  • Behavioral scoring
• Credit rating vs. credit scoring
• Internal scoring vs. external scoring
• Risk based pricing and methods of computing interest
  • Risk based pricing
  • Interest rate types: fixed, variable/floating, tiered/stepped, blended, LTV based, index-based rates
  • Prime Lending Rate (PLR) / LIBOR / LIBID / LIMEAN / MIBOR
• Loan underwriting/sanction terms
  • Covenants – positive covenants / negative covenants
  • Using covenants for risk mitigation

Credit execution and administration

• Loan documentation: loan covenants/terms
• Concept of drawing power/loan availability
• Loan monitoring and review

Loan products and loan processes in detail

• Revolving loans/non-revolving loans
• Term loan, project loan bridge loan
• Open credit lines and asset-based loans
• Working capital loans: overdraft, cash credit
• Pre-shipment loans/post-shipment loans
• Bill discounting and bill purchase
• Factoring, reverse factoring, forfaiting
• Letters of credit/bank guarantees/standby letters of credit
• Introduction to Incoterms/UCPDC/eUCP/URC/URDG
• Securitization, mortgage backed securities, asset backed securities, pass-through-certificates, collateralized debt obligations, collateralized loan obligation, collateralized mortgage obligation
• Capital market syndication

Loan collection and recovery

• Collection
• Recovery process
• Repossession
• One-time settlement

Problem loan management

• Prudential norms/delinquency
• Problem loan management process

Overview of loan/credit risk related regulation

• Basel I/II/III

Banking arrangements

•  Multiple banking/consortium banking
• Loan syndications

Overview of loan regulation in USA

• Equal Credit Opportunity Act
• Fair Lending Act
• Truth in Lending Act
• Fair Debt Collection Practices Act
• Regulations from other geography UK