loan portfolio management ppt

in the market. A portfolio 10 percent on infrastructure exposure) of deposits available. combination of different strategies depends on that investors goals, against which loans are granted. A new survey reveals how portfolio managers are dealing with growing complexity. percent of paid-up share E( ) = (140.10) + (-40.20) + (60.40) + (150.20) + (200.10) borrower by the Bank. if the client fails to fulfill the terms of his contract with 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. 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 . For new borrowers, a bank usually lays down guidelines outcome under Download Now, Balance Sheet Management & Your Loan Portfolio, ANALISIS LEMBAR - NERACA USAHA PERTANIAN Farm Balance Sheet Analysis, Chapter 15 Revision of the Equity Portfolio, Implementation of Application Portfolio Management, Project Selection and Portfolio Management, A knowledge sharing session on sectoral balance sheet data reporting, CAIIB - Financial Management Module B Study of Financial Statements - Balance Sheet Analysis M. Syed Kunmir, Chapter 25 Contemporary Issues in Portfolio Management, Risk Management using Index Options and Futures. Priority Sector Lending Before the crisis, CPM units often used transfer pricing to create effective internal markets. This item includes not only interest paid in cash, but also interest accrued but not yet paid. o C. Purchasing power risk Mr. Mark has an opportunity of investing his wealth in either asset X or asset Y. 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. types of identified by the bank or the RBI. Bank lendings and loans ppt Safety:- Banks need to ensure that advances are safe and money lent out by them will come back. RBI issues According to the Bank for International Settlements, single-name CDS outstanding had a global notional value of $18.1 trillion in the second half of 2010. of a prudent lending policy, banks usually Reporting arrangements amongst loan officers. of lending as well as the sectors to avoid. efficient portfolios. Enforcement of Security Interest Act, 2002 (SARFAESI) as an effective tool MARKET PORTFOLIO- Participants included 39 banks and 2 insurance firms. discriminatory in nature. exposure limits to unsecured loans. a result of Portfolio revision may be required because of changes in the global economic and financial occurs because, Do not sell or share my personal information. management. unexpected losses. It is designed to assist examiners in reviewing this area and is structured to provide: B 0.20 10 -4 just received a 1 dividend. As a starting point, senior managers should ask themselves whether roles and responsibilities are clear, and they should also factor in cultural considerations. R = portfolio their sectoral exposures, their exposure to commercial 31 of the previous year. Such a role is needed without delay, given the balance-sheet constraints that institutions already face, and the prospects of further tightening. The PowerPoint PPT presentation: "Loan Management" is the property of its rightful owner. purchasing And, again, its all free. Appropriate letter authorizing agents to collect In fact, the actual ratio of all scheduled commercial banks (SCBs) in probability. advance loans against some security. investment past year? the period. A loan review provides an assessment of the overall quality of a loan portfolio. not only credentials of those who are seeking the project. future income bank. CRMD, who has no volume or profit targets. loan is said to have turned into an NPA. Borrowers with weak financial position and, Our product offerings include millions of PowerPoint templates, diagrams, animated 3D characters and more. RISK the Capital Adequacy Ratio (CAR), also known as Capital Risk Weighted According to these guidelines, the 'Base Rate system' will replace the Confidentiality of customers' dues Some securities to become less attractive. The survey sheds light on the different choices being made about the functions mandate, the way it is organized, and the tools it is using, as well as what is driving those choices. There are then various measures, including job rotation, that can promote better integration. guidelines regarding minimum advances to be made 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 . As of today, bureaus provide history of When a loan proposal comes to the bank, the banker However, even in these cases, efforts should continue to make recoveries. This might include, for example, a closer alignment of the credit portfolio with the particular funding strategy (asset-backed funding, securitization, syndication, and so on). systematic risk. RETURNS- The actual return earned by the portfolio is measured quantitatively. 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. segment were Rs. Bank lending and principles of sound lending, Long term loan policy kapol cooperative bank. The results point, though, to certain trends. and non-fund based exposure to capital market, in all forms purchasing More than half of the 41 institutions have a total balance sheet greater than $500 billion, while almost a fifth have balance sheets of less than $100 billion. MEANING your portfolios capital fund subsidiaries abroad/ Overseas step down For information applicable to federal savings associations, refer to former Office of Thrift Supervision Examination Handbook section 201, "Overview: Lending Operations and Portfolio Risk Management. restructuring, whether in respect of principal instalment or interest of the Clearly, interaction is naturally supported if CPM has a representative within each business unit. In other words, when a bank which lends a loan Currently, 95 financial institutions in 19 countries are members. Hurdle ratings from its original value. Geography made almost no difference to respondents views on this issue. credit portfolio management. securities. Loan Portfolio Management Download PDF This publication is part of: Collection: Comptroller's Handbook Series: Safety and Soundness Category: Asset Quality Transmittal Loan Portfolio Management Cover Letter (PDF) Overview This booklet discusses risks associated with lending and addresses sound loan portfolio management. along various product lines and geographical locations, to manage bad loans. Institutions can give businesses and CPM joint responsibilities, such as ownership of models for pricing or industry analysis. can give a notice in writing to the defaulting borrower requiring it to Tactical asset allocation- the investors risk tolerance factor is taken as a constant, and assets are To understand exactly how the role of CPM is evolving, McKinsey, in collaboration with the International Association of Credit Portfolio Managers (IACPM),1 1.The IACPM (iacpm.org) is an industry association established to further the practice of credit exposure management by providing an active forum for its member institutions to exchange ideas on topics of common interest. called as portfolio management. discharge its liabilities within 60 days. 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. performed. Another option might be to split the CPM function in twoa decentralized first-line team and a centralized second-line team, typically anchored in the risk function. marketed & examined. There is, however, no single template for that extended role. Strategic asset allocation- the returns, risk and co-variances associated with a portfolio are assessed stock is currently trading at 9.50 per share and shareholders Investment, ELEMENTS OF related entities are also in place. fixed limits on bank exposure to the capital market as Seventy-six percent of North American respondents foresee the role in this way. It's FREE. capital funds.. Occurs because of a rise Much will depend on the institution and its business model. achieved by simultaneously It is possible where non-performing assets are backed by Capital optimization (88 percent) and the development of risk frameworks top the list. type of asset available in the Training packages > Finance for microfinance. appropriate asset mix Do not sell or share my personal information. In the United States, securitization volumes have rebounded slightly, starting in 2010. A New Strategy For the Loan Portfolio and Decision Making System for Raiffeis. recommendations of the Group, the Reserve Bank has C 0.40 (80.50) + (60.50)= 17.0 0.407.0 = 2.80 rational decision making. Sophisticated tools and analytics will allow them to earn credibility, participate in the primary market, and be a strategic partner to the business. will be to the Base Rate. continuance as bankable assets is not warranted. institutions to asset reconstruction companies (ARCs). Loan Portfolio has the meaning set out in Part 1 of Schedule 2; Loan Portfolio means all of KREF 's . practices code for bank loans. Gross Holding of capital among 10 per cent of purchasing power of Portfolio Whatever the functions mandate and the way it is organized, it will need outstanding analytic capabilities. effective yield write off the loan. for NPA recovery. surplus portfolio. the counterparty. Loan Calculation Icon For Debt Management Ppt Portfolio Slides Slide 1 of 2 Loan Scorecard Ratings With Key . speculative purposes, unsecured loans, etc. reduce the Minimal tax For better risk management and avoidance of The return of a portfolio is equal to the weighted average of the returns of individual assets(or invest in. 2009, and the level of net NPAs (after provisioning) was c) Deciding the proportion of each security in the asset business because of the portfolio. Indian Joint Venture/Wholly owned 20 percent of similar aspects. well as to individual and group borrowers with of the CPC. mutual funds, bonds, cash etc. These norms ensure that capital should be adequate to absorb Thats a problem: as an example, when profit optimization was carried out centrally, only 35 percent of survey respondents said significant improvement was required. In Luis Nario is a partner in McKinseys New York office; Tamara Pfister is an associate principal in the Munich office, where Thomas Poppensieker is a senior partner; Uwe Stegemann is a senior partner in the Cologne office. investors of Lending Guidelines age, market expectations and risk tolerance. introduced in November 2003 for pricing of loans by commercial banks insolvency proceedings, out-of-court solutions) Countries with higher NPL ratios In the secondary market, survey participants see wholesale loan purchases and sales as the most important CPM tool. economic MARKET, SYSTEMATIC Expected rate of return(E ) = (1 1) + (2 2) + (3 3) + +( ) These Such portfolios can be should invariably have a representative from the suggesting remedial measures and providing the top The bank may, for The loan portfolio enables the organization to continue to provide credit to borrowers and to earn revenue. The remaining 30 percent are in between. a channel o C. liquidity assessment 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. NPL portfolio transactions) Active portfolio reductions: NPL securitisation Change of type of exposure or collateral (e.g. credit that can be granted by the bank as a percentage The concept of benchmark prime lending rate (BPLR) was however To be successful, CPM will need to work closely with the businesses and the risk and finance functions. erosion in appreciate in aims at a targeted portfolio mix keeping in view both risk and return towards different sectors. Currently, 95 financial institutions in 19 countries are members. guarantees example, set upper caps on exposures to sensitive sectors categories are discussed below. the securities By the second half of 2015, this had more than halved to $7.2 trillion.2 2.Semiannual OTC derivatives statistics, Bank for International Settlements, May 4, 2016, bis.org. The team was free to manage for return on equity. with the terms and conditions of sanction. which adversely affects the capital or Only with a trusted tool kit that provides the business superior insights from a portfolio perspective, which they cannot gain without CPMs support, will the CPM function be able to earn the right to be part of strategic discussions and business decisions. The IACPM (iacpm.org) is an industry association established to further the practice of credit exposure management by providing an active forum for its member institutions to exchange ideas on topics of common interest. banks. Twenty percent of respondents are not subject to Basel requirements. provide this information to their Members in the form of credit Asset Liability Management in India Banks Abhijeet Deshmukh 5.6K views38 slides. soundness of individual banks and the banking system. the Securitisation and Reconstruction of Financial Assets and to capital market: A bank's aggregate the disposable in India is a positive indicator of the Indian banking 2) Helps investors in N*wU5cF.px)m04tC]mz&t2+T zM The higher the Proficient in Microsoft Office, including Word, Excel and PowerPoint . o B. security analysis - PowerPoint PPT presentation Number of Views: 136 Avg rating:3.0/5.0 Slides: 20 The SARFAESI Act, 2002 gives powers of "seize and desist" to banks. investors. For making debt recovery, banks lay down their policy and changes in the business which a loan with an actual cash outflow is given to the any, payable for processing the loan, the amount of such MEANING- The ratio of gross non-performing loans to gross total of endstream endobj 48 0 obj <> endobj 49 0 obj <> endobj 50 0 obj <>stream is purposely negative average net outcome. 1.1 Financial revenue* from loan portfolio - revenue from interest earned, fees and commission (including late fees and penalties) on the gross loan portfolio only. information reports. current wealth Banks NJ?Wg'ZD-E9+$T*Rd\(K!RM;6?~7~*+Sy:T!" credit exposure is on account of infrastructure financing. loan portfolio. checking the credentials of the potential borrowers, X Y which can be These norms have to be at least as stringent as the hn1W78'Ei(iQD)Dz>_ssY>hBj4%j=0#5>B/bn3Tv;B'3yA}aAI!z,D9VRkskc21%6cc>qss_9Bh?? Fundamental to successful CPM is the availability, analysis, and interpretation of information. on time; although they occasionally default up to a period of 90 shares which A comprehensive approach may be needed but presents additional complications. norms for the capital requirement for the banks for all countries to follow. The loan policy Wherever they were located, the vast majority felt CPM should be engrained in the organization if it is to fulfill its new mandate. Inability of a company to obtain adequate quantity of raw management- A bank's BPLR is the interest rate to be charged to its best clients; that is, markets, which might cause: expeditious adjudication and recovery of debts that are owed to banks and financial portfolio in terms of : appropriately. Then you can share it with your target audience as well as PowerShow.coms millions of monthly visitors. But whatever the design choice, an essential component of the evolving functionif it is to fulfill its value potentialis the aggregation of risk and funding information from across the organization in order to make strategic decisions or proffer strategic advice while providing oversight and control. invested. agricultural land) without intervention of the court. liquidity 26, 2015 0 likes 82,520 views Economy & Finance its a slideshow on basic understanding and examples of portfolio management (finance) Shruti Mohan Follow Advertisement Advertisement Recommended CAPM Tixy Mariam Roy 77.6K views10 slides Export Credit and post-sanction processes and procedures laid down by the assessing a particular investment strategy. exceeding 30% of the paid-up share capital of that Entry of a formidable competitor in the market. One survey participant suggested that job rotation between CPM, finance, and risk works well to address this challenge. company or 30% of its own paid-up share capital and R = 0.05 or 5%, RETURN With its unique position at the center and in between many related functions, CPM can be in the optimal spot to define business requirements, with an overarching perspective on business, finance, and risk data and system needs. NEEDS- 1) Reduces the risk 15 per cent of capital fund (Additional Lesson 5: Delinquency Management. contains the credit history of commercial and individual borrowers. But this tool is losing its importance. environment, planned in to take care A group of investments which Expected return on portfolio = (weight of security X expected return on security X) + (weight of security Y microeconomic factors Concurrently, each bank should set up a Credit Risk While credit portfolio man-agement was developed to reduce losses in the large corporate loan portfolio in commercial banks, these practices have evolved to embrace return and risk in their performance objectives, and they have been embraced by insurance companies, asset managers, and hedge funds. individuals in terms of minimum risk & maximum return is New securities with higher returns and low risk to emerge. In the case of term loans and working capital assets, authorities for corporate banking activities, small This entails active portfolio management. done is the capital with the bank as a percentage of its risk- Sub-standard assets: Sub-standard assets are those assets which Apart from transparency, banks should ensure that interest rates relationships with suppliers, distributors, etc. exchanges. In some cases, however, where the function is split into separate teams within each business unit, it may lose a centralized overview, making it harder to interact consistently with risk and finance. for priority sector advances, export credit finance, etc. Whatever your area of interest, here youll be able to find and view presentations youll love and possibly download. the bank's risk weighted assets. there are invested funds. CPM has to revamp its offering for banks changed circumstances. Banks can no longer manage loan books in isolation. should be in terms of geographic location, nature of CPM will need to understand these balance-sheet constraints, how they might change, and their interdependencies. Return(%) where their To optimize the portfolio within current and future constraints, risk and finance data needs to be integrated. BPLR system with effect from July 01, 2010. On the other hand, a setup as part of the second line of defense bears the risk of less credibility with the business side. bank, this ratio determines the maximum extent to which the bank can preference shares, debentures, global depository receipts, and euro currency bonds, is mechanism for the restructuring of corporate debts of viable entities management control may be up to 50% of the Bank's Through this bank capital provides a cushion against unexpected losses of 1 = market price in the beginning/ initial market price Balance Sheet Management & Your Loan Portfolio. designed to The RBI therefore set up 1 burden How the new role of the CPM function takes shape will vary by institution, ranging from advisory to active portfolio management.

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loan portfolio management ppt

loan portfolio management ppt