Credit Risk Assessment and Evaluation System for Industrial Project

Kabir, Golam; Jahan, Ishrat; Chisty, Md. Hassan; Hasin, M. Ahsan Akhtar

doi:10.7763/ijtef.2010.v1.59

Cited by 4 publications

(6 citation statements)

References 14 publications

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“…The essence of the five Cs is to ensure that the lender conducts due and adequate diligence that would prove reasonable assurance in line with their predetermined risk appetite, which will minimize the creation of non-performing loans. Several studies have established that the five Cs of credits technique is one of the techniques that lenders deploy in the assessment of their customers' loan requests (Peprah et al, 2017;Boahene et al, 2012;Kabir et al, 2010). Other credit evaluation techniques include the internal risk rating system (IRRS) and the strength, weakness, opportunity and threat (SWOT) technique (Dinu, 2012;Crouchy et al, 2006).…”

Section: Literature Reviewmentioning

confidence: 99%

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Assessment of the Five Cs of Credit in the Lending Requirements of the Nigerian Commercial Banks

Oseni

2023

IJEFI

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Credit evaluation and decision like any investment decision requires utmost due diligence from the decision makers to avoid high default rates. It is expected of the lender to apply caution all the way by eliminating all forms of asymmetry information that could lead to adverse selection and non-performing loans. To avoid adverse selection and high default rates that could jeopardize the lender’s going concern and profitability, caution is the silent C emedded in the five Cs of credit. The study administered a structured questionnaire to all the Nigerian banks that survived the 2005 recapitalization era and were still in operations at the time of this study. While the structured questions required the respondents to rank the five Cs of credit based on the importance their credit policy and practice attached to them, the hypothesis tested centred on the impacts of the Cs of credit on risk asset quality. The qualitative data were also analyzed using a module of the SPSS statistical software. The study observed that all the Cs of credit have a direct and significant correlation with the asset quality (non-performing loan ratio). The study recommended that Caution which it considered as a slient C of credit embedded in the five Cs and the only C provided by the lender should be the watchword throughout the credit risk management process. It imay be pertinent to also note that while the traditional five Cs (character, capacity, capital, collateral and conditions) are required from the borrower, the caution is required from the lender as a check on traditional five Cs.

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Section: Literature Reviewmentioning

confidence: 99%

“…For instance, delayed payments, prepayments, mobilization payments, bills for collection, letters of credit amongst others. In fact, Kabir et al (2010) made some classifications of risk. They argued that credit has two broad categories of funded and unfunded.…”

Section: Introductionmentioning

confidence: 99%

Assessment of the Five Cs of Credit in the Lending Requirements of the Nigerian Commercial Banks

Oseni

2023

IJEFI

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“…The prospective borrower's "past borrowing records are investigated for honesty in loan repayment without compulsion. This is a moral and human factor assessment of business ethics, commitment and responsibility" (Kabir, Jahan, Chisty & Hasin, 2010). Character evaluation may be observed through the profile and references given by the borrower.…”

Section: Primary Lending Institutions (Bank's) Credit Appraisalmentioning

confidence: 99%

Effect of shipping company demographic characteristics on cabotage vessel finance and repayment in Nigeria

Orogun,

Akpoghomeh,

Emenike

2023

J. sustain. dev. transp. logist.

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The research examined the effect of shipping company demographic characteristics on cabotage vessel finance and repayment in Nigeria. The Nigerian Maritime Administration and Safety Agency (NIMASA) have been concerned about the inability of the Ship Acquisition and Ship Building Fund (SASBF) beneficiaries to pay back disbursed loans fully, resulting in the suspension of further disbursement of the fund required for the development of Nigerian local content capacity. The Cabotage Act 2003 was intended for local content development of shipping and maritime logistics capacity. The fund realized through a 2% surcharge on cabotage trade has accrued since inception, but no shipowner has benefited from the CVFF loan. The study relied on both primary and secondary data. Data was collected through a well-structured questionnaire. The study utilized a Statistical Product Service Solution (SPSS v. 23) and a one-sample chi-square test as statistical tools for data analysis. The results reveal that demographic characteristics of shipping companies, such as age, number of vessels, number of employees and total annual revenue, significantly influence CVFF loan repayment. Purpose: To identify and analyze the shipping company demographic characteristics which influence cabotage vessel finance and repayment in Nigeria. The findings suggested practical steps for effective CVFF loan disbursement and reliable loan recovery. Methodology: The study utilized Statistical Product Service Solution (SPSS v. 23) and a one-sample chi-square test as statistical tools for data analysis. Results: The demographic characteristics of a shipping company, such as company age in years, number of employees, share capital, number of vessels and shipyards as well as the age of vessels and shipyards has a significant influence on her Character, Capacity, Credibility, Capital, Conditions, Collateral and Creditworthiness of the organization. Theoretical contribution: The research contributed to exploring, understanding, and applying the probability of credit default theory in shipping finance loan repayment. The demographic internal microeconomic organization Character, Capacity, Credibility, Capital, Conditions, Collateral and Creditworthiness significantly affects the ability of CVFF fund beneficiaries to repay the loans. Practical implications: Prospective borrower indigenous maritime operators should be duly and professionally evaluated to ensure sustainable cash flow and revenue projection during and after granting CVFF loans to guarantee complete repayment.

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“…whereas at the postsanction stage, the bank can decide about depth of the review or renewal, frequency of review etc. [10].…”

Section: Credit Risk Grading Standpointmentioning

confidence: 99%

“…In Bad & Loss Grade credit has long outstanding with no progress in obtaining repayment or on the verge of wind up/liquidation. Bangladesh Bank guidelines for timely write off of bad loans must be adhered to legal procedures/suit initiated [10]. The bank believes in its uncompromising commitment to fulfill its customer's needs and satisfaction and to become their first choice in banking.…”

Section: Credit Risk Grading Standpointmentioning

confidence: 99%

Credit Assessment Practice of a Commercial Bank in Bangladesh

Mosharrafa¹

2013

IJEFM

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Abstract:The banks act as an intermediary to mobilize the excess fund of surplus sectors to provide necessary finance, to those sectors, which are needed to promote for the sound development of the economy. Credit management is a dynamic field where a certain standard of long-range planning is needed to allocate the fund in diverse field and to minimize the risk and maximizing the return on the invested fund. Credit risk grading technique is an important tool for credit management as it helps a bank to understand various dimensions of risk involved in different credit transactions. The main purpose of this study is to make possible suggestions to improve present credit situation prevailing in the banking sector in Bangladesh by analyzing a reputed commercial bank's credit activity. The study was undertaken to get an in depth idea of the credit appraisal system of a commercial bank and understand its importance. Beside this a case study of a well known commercial bank's credit appraisal and risk grading technique were also revealed to identify some problems as well as propose some suggestions in this regard. From the study it was evident that the bank, maintained standard credit management policy in the changing market situation to establish a set of credit management policy.

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Credit Risk Assessment and Evaluation System for Industrial Project

Cited by 4 publications

References 14 publications

Assessment of the Five Cs of Credit in the Lending Requirements of the Nigerian Commercial Banks

Assessment of the Five Cs of Credit in the Lending Requirements of the Nigerian Commercial Banks

Effect of shipping company demographic characteristics on cabotage vessel finance and repayment in Nigeria

Credit Assessment Practice of a Commercial Bank in Bangladesh

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