Credit Practice – KASNEB Syllabus

PAPER NO.18   CREDIT PRACTICE

GENERAL OBJECTIVE

This paper is intended to equip the candidate with the knowledge, skills and attitudes required for the application of various credit management concepts in a practical scenario.

LEARNING OUTCOMES

A candidate who passes this paper should be able to:

  • Demonstrate sound technical knowledge in credit management
  • Demonstrate diverse knowledge clearly applied in an analytical and practical manner in solving the problems in a case study
  • Present appropriate alternate solutions in credit management and make effective judgement in a logical and rational manner
  • Communicate effectively with realistic recommendations in a concise and logical manner
  • Prepare a comprehensive credit

CONTENT

Credit portfolio risk management

  • Definition of credit portfolio risk management
  • Pre and post credit disbursement risks
  • Measuring credit portfolio risk
  • Credit risk models
  • Credit enhancement methods
  • Credit portfolio segmentation and risk diversification
  • Identifying concentrations of risk
  • Evaluating and managing concentrations of risk
  • Concentration management techniques

Illustrative case studies on credit portfolio risk management

Regulatory requirements: minimum capital requirements

  • Basel capital adequacy framework for credit risk
  • Impact of changes to the Basel Capital Adequacy framework on credit risk
  • Key differences between regulatory capital (Under Basel framework) and economic capital
  • Uses of economic capital and economic value added concepts in a bank
  • Relationship between shareholder, regulatory and economic capital

Corporate failure and financial distress

  • Definition of Financial Distress
  • Indicators and Early Warning signs of corporate failure
  • Reasons of corporate failure
  • Use of statistical models in predicting corporate failure
  • Comparison of corporate failure prediction models
  • Strategies of Mitigating against Financial Distress and Corporate failure

Illustrative case studies on corporate failure and financial distress

Working capital and credit management

  • Relationship between working capital cycle and credit management
  • Effects of credit terms on working capital management
  • Impact of credit policy on working capital management
  • Determination of working capital
  • Strategies of improving working capital

Illustrative case studies on working capital and credit management

Delinquency management

  • Introduction to delinquency management
  • Causes of delinquency management
  • Delinquency classification
  • Effects of delinquency in credit portfolio
  • Work outs and restructuring
  • Negotiation and influencing
  • Dealing with problem loan accounts: nature of problems and immediate action drill

Illustrative case studies on delinquency management

Accounts receivables management information systems (MIS)

Case study on automation of receivables management function

 Case studies on:

  • Microfinance
  • Cooperatives
  • SME lending
  • Trade and export credit management
  • Credit policy

Emerging Issues and trends



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