Commercial Lending

Commercial Lending

This course will enable you to understand commercial lending and enrich your knowledge about various related products and services. The course is focused on the needs of professionals wishing to acquire knowledge of commercial lending in order to enable them to provide technological solutions to banking Industry.

Delivery mode:Classroom/virtual classroom/online

Duration: Three full days

Course level: Foundation level

What will you learn?

When you complete this course, you will have understanding of :

  • What is commercial lending
  • Commercial lending origination process
  • Commercial lending servicing and management
  • Commercial lending collection and recovery
  • Regulation related to commercial lending

Course content:

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
    1. Limits, collateral, guarantors, derivatives, on-balance sheet netting
  • Loan classification based on
    1. Purpose
    2. Usage i.e. revolving/non-revolving
    3. Security i.e. secured/unsecured
    4. Interest type
    5. Method of repayment
    6. Currencies
    7. Business type and size
    8. Setting up/working capital

Loan origination process in detail

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

Brief overview of loan products

  • 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
  • Securitisation, mortgage backed securities, asset backed securities, pass-through-certificates, collateralised debt obligations, collateralised loan obligation, collateralised mortgage obligation

Credit execution and administration

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

Loan collection and recovery

  • Collection
  • Recovery process
  • Repossession
  • One time settlement

Problem loan management

  • Prudential norms/delinquency
  • Problem loan management process

Banking arrangements

  • Multiple banking/consortium banking
  • Loan syndications

Overview of loan regulation in some geography

  • Equal Credit Opportunity Act
  • Fair Lending Act
  • Truth in Lending Act
  • Fair Debt Collection Practices Act

Overview of loan/credit risk related regulation

  • Basel I/II/III

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