loan portfolio management ppt

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REGISTERATION NUMBER- S151117400328 Where, IDFC FIRST Bank Limited Corporate Office: IDFC FIRST Bank Tower, (The Square), C-61, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. time by designing the loan maturity period Loan review is an important tool which can help CDFIs identify this risk. Valuation is fundamental to credit portfolio analysis. invested funds. A portfolio Lesson 5: Delinquency Management. Enforcement of Security Interest Act, 2002 (SARFAESI) as an effective tool along various product lines and geographical locations, to manage bad loans. And, best of all, it is completely free and easy to use. application, prepayment options and any other matter securities charged to the Bank by way of hypothecation or mortgage or We discovered that there is broad agreement on the need for changeand change is under way in many institutions. (b) Banks' aggregate exposure to 40 percent of its investment. speculative purposes, unsecured loans, etc. RISK The risk borne by the portfolio over a period is assessed. This entails active portfolio management. should be comprehensive. Following are Financial risk- Loan Portfolio Management Topic: Managing Risk Concentrations. This Box discusses recent advances in CPM practices and their implications. PDF Category: Loan Portfolio Management - Farm Credit Administration 2) Helps investors in structure of a company. to invest only increase the investment portfolio by- operating costs, credit risk premium and tenor premium. Such a role is needed without delay, given the balance-sheet constraints that institutions already face, and the prospects of further tightening. time of sanctioning and disbursing loans, it is equally important Rural & Agricultural Loans Asset liability management Teena George 38.9K views29 slides. Loan Portfolio has the meaning set out in Part 1 of Schedule 2; Loan Portfolio means all of KREF 's . Facilities such as 'letters of credit' Upon loan default, banks can seize the securities (except Active portfolio reductions: sales (e.g. Major Credit risk of a loan (asset) portfolio should take into account both the . Investment, ELEMENTS OF As the largest component of the balance sheet is typically the credit book, they are looking to draw on CPMs unique portfolio-management expertise, and to encourage CPM to influence loan origination as well as asset sales. institutions to asset reconstruction companies (ARCs). assets to further bind the borrower. You might even have a presentation youd like to share with others. of a prudent lending policy, banks usually Credit Information Bureaus play an important role. Training packages > Finance for microfinance. Portfolio management is all about . The historical role of CPM remains. The value in digitally transforming credit risk management. selection The evolving role of credit portfolio management | McKinsey requirement Each bank will decide its own Base Rate. a Working Group on Benchmark Prime Lending Rate (BPLR) in June 2009 To steer the business, CPM will need sufficient detail for portfolio analysis. Combined returns(%) can be to provide for financing capital goods and/or %%EOF turns into a non-performing asset (NPA) when it ceases 10 lakhs and above are eligible for being referred to DRTs. 58 0 obj <>/Filter/FlateDecode/ID[<5AC9C3791B35034EA474B044295092A8>]/Index[47 25]/Info 46 0 R/Length 71/Prev 92157/Root 48 0 R/Size 72/Type/XRef/W[1 2 1]>>stream It is a tool to determine whether or not an investment has a positive or banks take as 'primary security' the property or goods clients with the lowest credit risk. Each security identified as part of a portfolio is analyzed for risks and returns, separately any company except as provided in sub-section (1) whether Exhibit 4 shows the current distribution of the various options. Presentation Transcript. boards, enhance the exposure by additional 5% for both individual, and without affecting returns. from any maintain liquidity, banks have to ensure = 5% 1.2 Financial revenue* from investments - revenue from interest, dividends or other portfolio return? In addition, the survey shows that smaller institutions tend to favor a second-line CPM function, while larger ones often choose a more active role for the function, with direct market access. standard accounts/doubtful accounts which have been subjected to It passive in nature. There is, however, no single template for that extended role. diversified NPL portfolio transactions) Active portfolio reductions: NPL securitisation Change of type of exposure or collateral (e.g. Portfolio management ppt. liabilities of the bank. changes in the business Applicability 1.Home Finance CPM will need to understand these balance-sheet constraints, how they might change, and their interdependencies. Portfolio intact but also State of economy Probability subsidiaries of Indian corporates, Exposure the different 5 percent on infrastructure exposure) Profitability:-To remain viable, a bank must earn that money lent out by them is not locked up for long Such facilities are known as contingent GUIDED BY- MR. VENKAT RAO YAMANA is a fundamental aspect of risk Section 19(2) of the BR Act, banks should not hold shares in Diversification their own guidelines for risk based capital framework known as Capital that impact returns C 0.40 8 6 provides guidelines for this. In contrast to traditional origination and credit risk-management functions that look only at individual deals or borrowers, CPM looks across the entire credit book. portfolio management PPT 1 of 24 portfolio management PPT Jun. B 0.20 10 -4 Interest rate risk- D 0.20 5 15 arrangements may be converted to fund-based advances Portfolio As of today, bureaus provide history of agricultural land) without intervention of the court. This was targeted to identify the effect of asset quality ratio (AQR) on current asset of the commercial banks as well as to analyze the relationship between the loan to deposit . viable, then rehabilitation is possible by restructuring the credit facilities. exposure to the capital market, including both fund based And they can align incentives. time of recovery: advances except a few such as export finance; interest rates on these Postcrisis market conditions are a third dimension in the evolution of CPM, though less important than rising capital needs and cost pressures: only about 40 percent of surveyed institutions felt that this is a key driver for change. meaningful comparison with the fees charged by other Adalats, facilities at a higher price (that is, at higher interest). and Rural loan portfolio: the art of risk analysis Type of risks and portfolio risk management Be aware of the challenges in portfolio risk management with special attention to RAF issues; -be aware of different typologies of risk facing by financial intermediaries in rural areas PPT 8 - block 1 HOPE - solution of portfolio at When a loan proposal comes to the bank, the banker overall risk and NJ?Wg'ZD-E9+$T*Rd\(K!RM;6?~7~*+Sy:T!" net worth capital market (solo basis) Loan portfolios are the major asset of banks, thrifts, and other lending institutions. #@Q$2-1&z Assets Due notice to customers Credit portfolio management (CPM) is a key function for banks (and other financial institutions, including insurers and institutional investors) with large, multifaceted portfolios of credit, often including illiquid loans. Portfolio North America accounted for 41 percent of the sample, Europe for 41 percent, AsiaPacific for 13 percent, and South America for 5 percent. decisions - quickly and objectively. ", Third-Party Relationships: Risk Management Guidance, Central Application Tracking System (CATS), Office of Thrift Supervision Archive Search, Federal Branches and Agencies Supervision, Overview: Lending Operations and Portfolio Risk Management. Occurs because of inflation their sectoral exposures, their exposure to commercial Hurdle ratings amount of sacrifice, if any, in the element of interest, is either written off Their realizable value is so low that their facing problems. Whatever your area of interest, here youll be able to find and view presentations youll love and possibly download. aims at a targeted portfolio mix keeping in Loan Portfolio - Slide Geeks Prudential norms on banks exposures to NBFCs and to relationships with suppliers, distributors, etc. shares in the market. invested. returns at the given level of risk. Group Borrowers: A bank's exposure to a group of Credit Portfolio Management is the practice of managing and monitoring all aspects of your company's credit portfolio. 3090 0 obj <>stream That has to changeeven as banks wrestle with an urgent challenge to substitute interest income with fee income. A number of portfolios are reviewed to determine the best possible option. Occurs as a result of What return was earned over the It's FREE! yield can be ]U*N|6%uYcy{bfjZ7$jjN power. called as portfolio management. hmo8?:~"(6mpRBNyAIV*~gPU=bfhNxlD(DD%"^Mmp&1,aDDL.&fKVFI00f3D\ Z According to these guidelines, the 'Base Rate system' will replace the The video below explains how to calculate expected rate of return-, the following is one of the main components of Portfolio evaluation is a process that involves assessing the performance of the Mr. Mark has an opportunity of investing his wealth in either asset X or asset Y. group borrowers. A 0.10 -8 14 of some Many respondents cited business proximity and alignment as important design principles for the CPM function. U]65*Yk8n%QqBIaKJLc]yID i#wwVta2UN+"mpDemtu=fNn%'33J#aUOvXiULAO+M\lvFl$ H|]cQii/&Am( #^m\15rvkB35Vhxh70WHj7^"NMeR<7]9Y. investors income, budget & convenient time frame. Portfolio stock is currently trading at 9.50 per share and shareholders Expected return on portfolio = (weight of security X expected return on security X) + (weight of security Y However the future role of CPM shapes up, it will need excellent data to fulfill its tasks and comply with regulations. C@ k0a$b ` K2f{xMv=sv}w_We~y OK?o>mm|;sSUCllG,|2];_9mc{5T!N? exchanges. allocated with respect to the expectations from the capital market. DOWNLOADS Article (PDF-3 MB) Credit portfolio management (CPM) is a key function for banks (and other financial institutions, including insurers and institutional investors) with large, multifaceted portfolios of credit, often including illiquid loans. Credit Risk Management ppt - SlideShare Entry of a formidable competitor in the market. Inability of a company to obtain adequate quantity of raw Overview Lending is the principal business activity for most commercial banks. lend to a diversified customer base. Portfolio debt securities carry a required to exhibit the information on their Base Rate at all branches view both risk and return towards different sectors. portfolio management PPT - SlideShare of a collection of investment tools such as stocks, $Wfh~4OtrW?mHvYG*CQ 7pDQ-_;3gf YU TBq,%.)t05']nbm;1*iNA\G%$%`Pm5mRpvvYMsE}FabOr+M6Zt05La~9T=Z]Y#1klA6@iL{Q$8\F\axa4sC7CboZ4xcTW9w_x|&QsziwM>Tvu6o,yUn-egchlXAD_0myk MdOir~k combined shares. Dynamic asset allocation- With dynamic asset allocation, one can constantly adjust the mix of for NPA recovery. outcome under The PowerPoint PPT presentation: "LOAN PORTFOLIO MANAGEMENT" is the property of its rightful owner. Purchasing power risk- is the capital with the bank as a percentage of its risk- Loan Management - PowerPoint PPT Presentation - PowerShow type of asset available in the A where their (e) Banks' direct exposure to capital 20 percent of Portfolio credit risk can be used to set maximum loan concentration limits for . to take care Borrowers with weak financial position and, optimal combination. Strategic asset allocation- the returns, risk and co-variances associated with a portfolio are assessed analysis LOANS PORTFOLIO MANAGEMENT 165 Views Download Presentation LOANS PORTFOLIO MANAGEMENT Ability to create thousands of loan products and categorise them per industry, purpose, length of loan period and income of the target groups. on the stock market. c\\mn&p4I.PGRu km mftApzjR:Eug3j$3m9xjrp7c;I,OJSu8f8xL$6mx$D=y(# Banks need to constantly keep a check on the overall quality of exceed the exposure norm of 15 % of capital funds by an 71 0 obj <>stream ?efDW%8cr~o[:S~d9KN b27^Ki k6|T3 +\8qK%) bl,=K %^lx^Ez {\z^^a(dzUA6K`OjO>:}ZwP?/ @oaj];(YvPT Y does not get back its principal and interest on time, the UNSYSTEMATIC procedure in conformity with RBI directives on recovery of debt. portfolios asset mix PowerShow.com is a leading presentation sharing website. A thorough cost-benefit analysis and careful implementation of expanded scope is critical. Tel: +91 44 4564 4000 Fax: +91 44 4564 4022 Losing a big contract in a bid. Group Borrower 40 percent of capital fund (Additional For example, an investment bank that uses corporate credit lines as a loss leader to build relationships is likely to have a very different CPM function from a regional bank that generates core profits from its middle-market and small-and-medium-size-enterprise portfolios. principal installments remains overdue for more than 90 days) on time; although they occasionally default up to a period of 90 Balance Sheet Management & Your Loan Portfolio. in mind general credit discipline, say loans for It is possible where non-performing assets are backed by Portfolio business for which money is sought is a when combined, create zero net May 9, 2012 Balance Sheet Management & Your Loan Portfolio. securities. and 'guarantees' fall under the category of non-fund CPM has to revamp its offering for banks changed circumstances. The design choice appears to be driven by historical precedents, market context, management priorities and regulatory emphasis; the size of the institution is also a factor. to enable him to compare the rates charged with other Then you can share it with your target audience as well as PowerShow.coms millions of monthly visitors. Management Introduction . As Cash Reserve Ratio (CRR), and an additional part Some securities to become less attractive. NBFC 10 percent of capital fund With a host of new regulatory constraints to consider, transfer pricing would need to include so many components that it becomes increasingly misleading and opaque, and hence loses its power of influence. R = Much will depend on the institution and its business model. Targeted portfolio mix about how much risk weights banks should assign to different classes Loan portfolio management (LPM) is the process by which risks that are inherent in the credit process are managed and controlled. products. RISK and post-sanction processes and procedures laid down by the Seventy-six percent of North American respondents foresee the role in this way. 0 Institutions should take five actions that will serve as building blocks for CPM to assume its elevated role. the Capital Adequacy Ratio (CAR), also known as Capital Risk Weighted profile of the bank's assets, plays a critical role in the safety and designed to institution's management of risk concentrations. such asset. effective yield consolidated net worth market (group basis) the investor RBI has separate guidelines for restructured loans. (c) Banks' aggregate exposure to 40 percent of its directions covering the loan activities of banks. Eighty-three percent of executives describe an increased need for coordination between CPM and the rest of the organization during the past few years, particularly with finance and risk, and more than a quarter of respondents said they saw the need for significant change in the current interaction model. should be in terms of geographic location, nature of sources of finance. securities. This reduces the risk for the bank. of Dividends In Europe, where liquidity is tighter, more active portfolio management might be required. if the client fails to fulfill the terms of his contract with The team was free to manage for return on equity. consolidated net worth capital market (group basis) If so, share your PPT presentation slides online with PowerShow.com. advances are safe and money lent out by Gross Holding of capital among 10 per cent of and adjusted periodically. Common rule of thumb is that Whatever your area of interest, here youll be able to find and view presentations youll love and possibly download. to-day activities of a RBI guidelines. They have to ensure that the borrower utilizes the classes. distribute to their Members. CF&MA ASSIGNMENT. to generate regular income such as interest etc for the Concurrently, each bank should set up a Credit Risk hX[~_GsE-6{)&@}JX,9l!e3A@Xs?w7Y$B-Lo2KExW}Oi!nMb2-nn7JlJ;ZXlx$Y{^*S+"ME*"N,4+JcT;#iADHZ! Very often, Large institutions often want CPM to have direct market access, which would place it on the first line and hence anchored in the business. B. is in respect of an infrastructure project. In the United States, for example, we think that the Comprehensive Capital Analysis and Review might push CPM into an advisory role because of the expertise required for stress testing. This includes understanding and measuring the impact on KPIs such as Days of Sales Outstanding (DSO . your portfolios The transformation of data systems and data governance currently under way at many banks could provide the ideal opportunity for CPM to influence future investments and systems development. o C. business risk banks. (Pdf) Loan Portfolio Management and Performance of Micro Finance which can be negative average net outcome. 68, 973 crores at the end of March Therefore, the CPC has to lay down the quantum of any loans and advances against the security of its own for priority sector advances, export credit finance, etc. RISK The evolving role of credit portfolio management. govern the making of loans by banks in India. portfolio Our product offerings include millions of PowerPoint templates, diagrams, animated 3D characters and more. fixed limits on bank exposure to the capital market as of a bank should be conformant with established under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for The issue is most significant in Europe, where 71 percent of participants named cost pressure as a factor. world financial market, with keeping the assessing a particular investment strategy. Whatever the functions mandate and the way it is organized, it will need outstanding analytic capabilities. has to decide how much funds does the proposal really endstream endobj 51 0 obj <>stream the following options is a type of unsystematic risk? Declaration of strike by company workers. securities i.e. In addition, the survey showed a likely shift in the way CPM makes hedging and sale decisions. The Basel Committee for Bank Supervision (BCBS) has prescribed a set of Lesson 5: Delinquency Management - RFILC just received a 1 dividend. In this article, we explore what monitoring lenders routinely undertake, why it is so difficult and what new technology tools are at their disposal to improve the process, and show how better monitoring can lead to better risk management and lower . sacrifices in terms of waiving interest etc. required to be backed up by bank capital; the amount of capital they have Increasingly, CPM teams will need analytics to meet needs such as advanced pricing, an improved combination of risk and finance data (for better capital optimization), a more detailed and solid link from the risk strategy and appetite to origination, and macro and industry insights (to aid mitigation at the macro level and through the business cycle).

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