...Credit Policy of Ghana Commercial Bank THE CREDIT POLICY The credit policy of Ghana Commercial Bank Ltd is aimed at maintaining acceptable credit standards by holding reasonable risk limits, evaluating new business opportunities, complying with regulatory requirements and providing adequate liquidity for the effective running of the bank. This aim is achieved through the following objectives: 1. Attract and maintain a High Quality Portfolio of Assets 2. Efficiently manage its assets to ensure liquidity 3. Finance the needs of Corporate, medium and small scale as well as individual clients. 4. Join syndicates with other banks and financial institutions. The importance of these objectives is to ensure that clients who borrow from the bank have the ability to repay the funds they borrow on schedule and with interest. Businesses that borrow from the bank should demonstrate an ability to repay from their current and future net cash flows of the business. Individual client's repayments depend also on their personal cash inflows basically being their salaries. Another importance is the need to avoid bad debt as much as possible by not giving credit to clients who are likely to be unable to repay due to their peculiar circumstances. Also the bank must ensure that at all times it is able to meet its obligations to depositors since its stock in trade is money. This it does by diversifying loans it has given (assets) to have a wide array of maturity profiles. Also it ensures...
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...Setting Up a Credit Control System Mismanagement of cash flow is the single biggest reason that small businesses go under. Therefore, a good credit control system is an essential part of any business' accounting procedures. Maintaining consistent cash flow, avoiding bad debt and minimising late payments are essential for survival. Use the following checklist to set up a system. Things to do 1. Set up a detailed credit control system It must allow you to identify invoices that have been raised, sent to customers or paid. You must also be able to see which invoices need chasing up. Each customer must have a file with details such as: business name; business address; postal address for invoices; and a contact name and number for invoice enquiries. Train several people on the system and test it thoroughly. 2. Credit-check your customers To do this, you can approach their bank for a reference; use a credit reference agency; or ask their other suppliers. Establish how solvent the customer is and whether they are likely to have any problems paying their invoices on time. 3. Decide on your general payment terms Most importantly, decide on a payment date. Bear in mind that new customers should only be given a short time in which to pay. Go through the terms with each customer and print them clearly on each invoice. 4. Send invoices promptly Try to send all of them out the same day as goods are sent or delivered. Make sure the invoice is sent to the correctly named and...
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...The Reserve Bnak Of India With Specific Reference To Credit Control Policy The Reserve Bank of India (RBI) is India's central banking institution, which controls the monetary policyof the Indian rupee. It was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of India Act, 1934.[4] The share capital was divided into shares of 100 each fully paid, which were initially owned entirely by private shareholders.[5] Following India's independence in 1947, the RBI was nationalised in the year 1949. Structure Structure of RBI The organization of RBI can be divided into three parts: 1) Central Board of Directors. 2) Local Boards 3) Offices of RBI 1.Central Board of Directors : The organization and management of RBI is vested on the Central Board of Directors. It is responsible for the management of RBI.Central Board of Directors consist of 20 members. It is constituted as follows. a)One Governor: it is the highest authority of RBI. He is appointed by the Government of India for a term of 5 years. He can be re-appointed for another term. b)Four Deputy Governors: Four deputy Governors are nominated by Central Govt. for a term of 5 years c)Fifteen Directors :Other fifteen members of the Central Board are appointed by the Central Government. Out of these , four directors,one each from the four local Boards are nominated by the Government separately by the Central Government. Ten directors nominated by the Central Government...
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...- Mission Statement of the Credit Function Definition The mission statement is the statement of purpose. What is your department trying to accomplish? The mission is not a statement of your goals. Your goals are put into place to support the mission. The mission statement describes in what ways you are supporting or interacting in the overall company's mission. It defines your role in the unified vision. Illustration A Company with high margins and an aggressive sales growth target may have a mission statement like this: The mission of the Gorman Inc. credit department is to facilitate an annualized 20% growth in top line performance by assisting in the sales process. The credit department's role is to develop strong customer relationships by granting aggressive but appropriate credit limits and terms, easing the establishment of new accounts by processing applications quickly while protecting the margins by managing risk of loss represented by fraud, failure or severe delinquency Developing a Mission Statement Before a mission statement can be adequately defined, a general understanding of the environment or market in which your company operates must be obtained. In developing the mission statement, there needs to be a basic understanding of the following: A) B) C) D) E) F) Nature of the Marketplace Competition Location of your Customers Growth Plans Margins Internal Company Structure Exploring these areas will ensure that your credit department's mission statement...
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...Chapter 8: Personality 8.1 Meaning: Personality, Latin word “persona” literally means “a mask”. Personality refers to the characteristic patterns of behaviour and modes of thinking that determine a person’s adjustment to the environment. A good personality is often as synonymous to one’s charming appearance, healthy build up, pleasing behaviour patterns, good character, fine temperament (blend of nature, character, spirit, outlook etc), and so on. Hence a complete description of an individual’s personality would include many factors like intellectual abilities, motives acquired in the process of growing up, emotional reactivity, attitudes, beliefs, and moral values. In a nutshell, personality is the combination of physical and mental qualities, ideas, aspirations, ambitions, and interest that characterize a person. 8.2 Nature and Characteristics of Personality 2 Nature of Personality 1. Personality is something unique and specific. No two individuals, not even the twins, behave exactly the same way over any period of time. 2. Personality includes everything about a person. It includes all the behaviour patterns like conative, cognitive and affective activities. Besides, it includes his/her semi-conscious and unconscious behaviour. 3. Personality is organization of some psychophysical systems or some behaviour characteristics and functions as a unified whole. 4. Personality is dynamic since every individual has to struggle against his inner...
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...Store Credit Policy Dear value customers, We are so happy that we can offer services and products for all our customers, and we hope these services and products can make our customers happy. One of our store polices is our merchandises are not refundable and returnable, but exchangeable if the merchandises have some problems because of merchandises themselves, or our unskillful assembling and packages within 7 days after we ship and delivery it, but not including other problems that caused by our customers or third parties. We would like to offer the same value of store credits for our customers who would like to, and our customers can get the same value products from our store before it expired. Please inform these clauses of our store credit policy: 1. We ONLY offer store credits for the customers who want to cancel the orders that we have ordered from the manufactures, or before we ship or deliver to customers. 2. Our customers have the same value as they have paid for on their store credits, and there is NO EXTRA FEE apply on it. 3. All store credits will not cashable or be other forms of credits, services and merchandises, including other merchandises that we cannot offer. We only response for the merchandises within our store. 4. This store credits only apply to the customers who paid for it, and the deliver address should be the same as the first order. If our customers want the new order that ships to the other addresses, we may charge extra fee...
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...THE CREDIT POLICY The credit policy of Ghana Commercial Bank Ltd is aimed at maintaining acceptable credit standards by holding reasonable risk limits, evaluating new business opportunities, complying with regulatory requirements and providing adequate liquidity for the effective running of the bank. This aim is achieved through the following objectives: 1. Attract and maintain a High Quality Portfolio of Assets 2. Efficiently manage its assets to ensure liquidity 3. Finance the needs of Corporate, medium and small scale as well as individual clients. 4. Join syndicates with other banks and financial institutions. The importance of these objectives is to ensure that clients who borrow from the bank have the ability to repay the funds they borrow on schedule and with interest. Businesses that borrow from the bank should demonstrate an ability to repay from their current and future net cash flows of the business. Individual client's repayments depend also on their personal cash inflows basically being their salaries. Another importance is the need to avoid bad debt as much as possible by not giving credit to clients who are likely to be unable to repay due to their peculiar circumstances. Also the bank must ensure that at all times it is able to meet its obligations to depositors since its stock in trade is money. This it does by diversifying loans it has given (assets) to have a wide array of maturity profiles. Also it ensures that its assets are properly matched...
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...200 Annual Incremental Revenue…………………………………….. 72,800 Collection Costs (5% of New Sales)…………………………….. 4,000 Production and Collection Costs (78% of New Sales)………… 62,400 Annual Income Before Taxes……………………………………. 6,400 Taxes………………………………………………………………. 1,920 Annual Incremental Income After Taxes……………………….. $ 4,480 c. Yes, I believe that Collins should liberalize credit if a 15 percent after-tax return on investment was required because the above calculations show a 28% return on investments (profit). d. The total incremental investment in accounts receivable and inventory to support an $80,000 increase in sales would be: $80,000 / 4 = $20,000. So the answer would be $20,000. e. Let’s add the $16,000 from a/r to the $20,000 in inventory. If so then we would get $36,000. Next we’ll take $4,480 (incremental income after taxes) divided by the $36,000 incremental investment giving us a 12.44% return on investment. If this were the information we were to consider than Collins should NOT extend more liberal credit terms because 12.44% is less than a 15% return on investment or ROI as...
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...Financial Intermediation and Credit Policy in Business Cycle Analysis∗ 1 Introduction To motivate interest in a paper on financial factors in business fluctuations it use to be necessary to appeal either to the Great Depression or to the experiences of many emerging market economies. This is no longer necessary. Over the past few years the United States and much of the industrialized world have experienced the worst financial crisis of the post-war. The global recession that has followed also appears to have been the most severe of this era. At the time of this writing there is evidence that the financial sector has stabilized and the real economy has stopped contracting and output growth has resumed. The path to full recovery, however, remains highly uncertain. The timing of recent events, though, poses a challenge for writing a Handbook chapter on credit market frictions and aggregate economic activity. It is true that over the last several decades there has been a robust literature in this area. Bernanke, Gertler and Gilchrist (BGG, 1999) surveyed much of the earlier work a decade ago in the Handbook of Macroeconomics. Since the time of that survey, the literature has continued to grow. While much of this work is relevant to the current situation, this literature obviously did not anticipate all the key empirical phenomena that have played out during the current crisis. A new literature that builds on the earlier work is rapidly cropping up to address...
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...INTRODUCTION Many economic development advocates have stated that for a country like Ghana to come to reach the development heights of the developed nation, they must empower their citizens to break the bond of poverty, which is engulfing them. As the world is gradually becoming a global village most countries in the world are making unending quest to attain a higher level of development that is a type of development where most of its people are employed and are earning enough to subsist and perpetuate its generation. SME’s have an important role on many aspects, such as employment, taxes and innovation that most of times is regarded as something on the responsibility of large firms. In “The Theory of Economic Development” Schumpeter (1934) emphasizes the role of entrepreneur, as a prime cause of economic development, which is development achieved through innovation. Taking this into consideration if the entrepreneur has an important role for development, then this role is achieved through the “institution” that he/she represents. SME activities that would help to propel development and promote the wellbeing of the citizenry most governments are now playing various facilitation roles in collaboration with NGOs and other stakeholders to enable the private sector provide diverse goods and services, including job creation for the people. Many developing countries have shifted their strategic economic focus to embrace the development of an entrepreneural middle-class with the...
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...Investment (FDI) Policy With the promulgation of the MSMED Act, 2006, the restrictive 24% ceiling prescribed for equity holding by industrial undertakings, whether domestic or foreign, in the MSEs has been done away with and MSEs are defined solely on the basis of investment in plant and machinery (manufacturing enterprises) and equipment (service enterprises). Thus, the present policy on FDI in MSE permit FDI subject only to the sectoral equity caps, entry routes and other relevant sectoral regulations. The issue of de-reservation had been a subject of animated debate within government for more than twenty years. The Approach to the Eleventh Five Year Plan noted the adverse implications of reservation of products for exclusive manufacture by the MSEs and recommended the policy of progressive de-reservation. To facilitate further investments for technological up-gradation and higher productivity in the micro and small enterprises, 654 items have been taken off the list of items reserved for exclusive manufacture by the manufacturing micro and small enterprises in the last few years – reducing it to 21 at present. This has helped the sector in enlarging the scale of operations and also paved the way for entry of larger enterprises in the manufacture of these products in keeping with the global standards. Credit/Finance Credit is one of the critical inputs for the promotion and development of the micro and small enterprises. Some of the features of existing credit policy for the MSEs...
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...Credit Management |Program |: |MBA |Class of |: |2007 | |Semester |: |IV |Sessions |: |33 | |Course Code |: |BKG 607 |Credit |: |3 Units | Objective The objective of this course is to provide the students with adequate knowledge about the management of Credit portfolio in banks. It will provide sufficient inputs to enable the student to develop an insight regarding the different phases of Credit management. |Reference Books |Author / Publication | |Credit Management |ICFAI | |Practical Banking Advances |H.L.Bedi and V.K. Hardikar/ UBS Publishers | |The Bank Credit Analysis |Jonathan Golin/John Wiley & Sons | |Frontiers in Credit Risk |Gordian Gaeta/ John Wiley & Sons | |Money, Credit and Capital |James Tobin/McGraw | |Credit Risk |Michael...
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...SUMMARY OF MASTER CIRCULAR ON EXPOSURE NORMS INTRODUCTION As a prudential measure aimed at better risk management and avoidance of concentration of credit risks, the Reserve Bank of India has advised the banks to fix limits on their exposure to specific industry or sectors and has prescribed regulatory limits on banks’ exposure to individual and group borrowers in India. In addition, banks are also required to observe certain statutory and regulatory exposure limits in respect of advances against / investments in shares, convertible debentures /bonds, units of equity-oriented mutual funds and all exposures to Venture Capital Funds (VCFs). Banks should comply with the following guidelines relating to exposure norms. Purpose This is a summary on Master Circular providing framework of the rules/regulations/instructions issued by the Reserve Bank of India to Scheduled Commercial Banks relating to credit exposure limits for individual / group borrowers and credit exposure to specific industry or sectors, and the capital market exposure of banks. Definition of 'Credit Exposure' The total amount of credit extended to a borrower by a lender. The magnitude of credit exposure indicates the extent to which the lender is exposed to the risk of loss in the event of the borrower's default. Credit Exposures to Individual / Group Borrowers • Exposure to a single borrower not to exceed 15% of bank’s capital funds • Exposure to a group of borrowers not to exceed 40% of capital...
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...Internship report on Credit Appraisal of NCC Bank Ltd. PREPARED FOR Ms Halima Begum SeniorLecturer Department of Business Administration Leading University, Sylhet PREPARED BY: Fathema Jannath ID: 1201010750 Department of Business Administration Leading University, Sylhet Date: July 11, 2013 Credit Appraisal Of NCC Bank Ltd. LETTER OF TRANSMITTAL Date: 11th July, 2013 To The Supervisor Department of Business Administration Leading University Sylhet Subject: Submission of Internship Report Dear Madam, I am grateful to you for the submission of the report on “Credit Appraisal of NCC Bank”, Elephant Road Foreign Exchange Branch in the completion of the requirement for internship. This is an excellent opportunity for me to acquaint more closely with the organization. The association and coordination of all respective officers & staffs with me are full of exciting, re-discovering and entertainment. During the period of doing this report I have discovered and gained new & practical feelings, observations and learning. I have my utmost effort to reflect experience, skill and knowledge, which I acquired at the time of working at NCC Bank. All of my efforts will be successful if the thesis paper can serve its purpose. I have tried my best to explain everything related with the Credit Appraisal in this paper. Yours faithfully Fathema Jannath ID: 1201010750 Department of Business Administration Leading University Sylhet ...
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...Credit Risk Management of Prime Bank Limited University of Liberal Arts Bangladesh Internship Report Credit Risk Management of Prime Bank Limited Submitted to Sumaiya Zaman Senior Lecturer ULAB School of Business Submitted by Sadia Ferdous ID # 092011014 Date of submission 21 August 2013 Acknowledgements I would like to thank my supervisor, Sumaiya Zaman, Senior Lecturer, ULAB, for her guidance and feedback during this internship, without which I would have been unable to complete this task. I also express my gratitude to Prime Bank Limited for permitting me to do my internship in their organization. Special thanks to Credit Department of Shat Masjid Road Branch of prime Bank Limited for spending their valuable providing me with information, supervision and feedback during the course of my internship. I also like to thank the whole team of PBL for their help during my internship tenure. Page | 1 Letter of Transmittal August 21, 2013 Sumaiya Zaman Senior Lecturer ULAB School of Business University of Liberal Arts Bangladesh (ULAB) Subject: Submission of internship report on topic of ‘Credit Risk Management of Prime Bank Limited’. Dear Madam, This is my internship report on ‘Credit Risk Management of Prime Bank Limited’. I tried my best to work sincerely to cover all aspects regarding credit risk management at Prime Bank Limited. I hope you will find this report acceptable and thank you for allowing me to proceed with ...
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