Credit Policy Guidelines
Credit Policy Guidelines
Credit Policy Guidelines
Amrit Shrestha, Deepa Shrestha, Kohinoor Thapaliya, Rabi Shrestha, Netra Bahadur Khatri Sarita Mahajan, Simant Pandit, Suresh Bhandari
Guiding Principles
Credit Risk Management will follow the principle of risk dispersion. High credit concentration in a single borrower group, industry type, sector, or geographical area will be avoided at all times. For diversification of risk, SDBL will, as a minimum requirement, follow prevailing NRB guidelines The management may however set its own, more stringent guidelines that it feels are necessary to protect the interests of SDBL.
Guiding Principles
SDBL will explore new business opportunities, apply new lending approaches and strive to develop credit products to meet the demand of dynamic market forces. All credit facilities will be for activities that make sound economic sense and are for legitimate purposes.
Depa ko Slide
Customer Criteria
prohibitions specified in Section 7, credit facilities may be provided to Nepali individuals and any legally registered entity in Nepal having an explicit authority in its constitution to borrow. Credit facilities - to borrowers with good creditworthiness and a sound reputation
Customer Type
Customer types to which this policy applies are detailed below:
Corporate/Commercial Entities Governments Financial Institutions Personal Borrowers: Individuals Others
Contd.
a) Medium or Long Term Loan (MTL or LTL) Fixed Assets Investments b) Short Term Loan (STL)
vi) Housing Loans (HL) vii) Hire Purchase Loans (HPL)/Clean Transport Loan (CTL)/Auto Loan (AL) viii) Bridge Financing (BF) ix) Bills Purchase or Negotiation x) Loan against Fixed Deposit Receipt (FDR) xi) Loan against Shares xii) Loan against Government Securities
Contd.
xiii) Personal Loan xiv) Education Loan
Credit facilities will be supported by a comprehensive and accurate appraisal of the risk associated with the proposed facility.
Historical operation and financial analysis Projected operation and financial analysis Management history and competence Market analysis Process and technology analysis analysis of debt service capacity and, Assessment of measures to protect against loan loss.
Risk Category
SDBL currently adopts a risk rating technique whereby all customers are judged on the basis of loan classification as prescribed by Nepal Rastra Bank Directives.
Risk Category
The risk perceives mechanism should be based on the following credit risk: Industry/ Market Risk Business/Management Risk Financial Risk Account Performance Risk
Risk Category
Risk Category (RC) 1: RC 1 has been mapped as PASS category as per NRB Guidelines. Hence all PASS or GOOD Customers/ Exposure qualify for RC 1.
Risk Category
Risk Category (RC) 1 A: RC 1 A to be assigned if the exposure is fully secured against liquid instruments ( Cash or near cash security) as Under: Fixed Deposit Receipt Lien over Deposit Accounts NRB/Government Bonds Unconditional Bank Guarantees issued by International Rated Bank
Risk Category
Risk Category (RC) 1 B: RC 1 B to be assigned in all other personal loans. However, the Relationship Officer may propose for better Category if the borrower is of a high net-worth and hold strong public / personal position.
Risk Category
Risk Category (RC) 2: RC 2 has been mapped as Sub-Standard Loan as per NRB Guidelines.All loans qualify as RC 2, if principal Repayment is in arrears greater than three months and less than six months.
Risk Category
Risk Category (RC) 3: RC 3 has been mapped as Doubtful Loan as per NRB Guidelines. All loans qualify as RC 3, if Principal Repayment in arrears is greater than six months and less than twelve months.
Risk Category
Risk Category (RC) 4: RC 4 has been mapped as Bad Loans as per NRB Guidelines. All loans qualify as RC 4, if Principal Repayment is in arrears is greater than twelve months.
Risk Category
Risk Category (RC) 4: However the loans would still be classified as RC 4 even if the principal repayment is in arrears is less than twelve months under following circumstances: If the security proven to be insufficient If the borrower becomes bankrupted If the borrower has absconded If the bills purchased / guarantees has remained unpaid greater than ninety days If the loans proven to be used for other purpose than intended If auction process has been initiated ( greater than six months) If the legal process has been filed against the borrower If the borrowers has been blacklisted as per Credit
Risk Category
Risk Category (RC) 5: RC 5 has been mapped as Restructured / ReScheduled Loan as per NRB Guidelines. All loans qualify as RC 5, if the loan has been Restructured / Rescheduled.
Account receivables, advances/deposits, government subsidy receivable, payment assurance contracts including power purchase agreement,
Loan Application
Sarita ko Slide
Simant ko Slide
Bhandari ko Slide
Amarit ko Slide