Credit Control and Monitoring : CAIIB Paper 1 (Module D), Unit 6

Credit Control and Monitoring : CAIIB Paper 1 (Module D), Unit 6

Dear Bankers,
We all know that CAIIB exams are conducted by the Indian Institute of Banking and Finance (IIBF).  CAIIB is said to be one of the difficult courses to be cleared for the bankers. But we assure you that with the help of our “CAIIB study material”, you will definitely clear the CAIIB exam.
CAIIB exams are conducted twice in a year. Candidates should have completed JAIIB before appearing for CAIIB Exam. Here, we will provide detailed notes of every unit of the CAIIB Exam on the latest pattern of IIBF.
So, here we are providing “Unit 6: Credit Control and Monitoring  of “Module D: Credit Management” from “Paper 1: Advanced Bank Management (ABM)”.

♦Important and Purpose

Credit control and monitoring, often referred as Loan Review Mechanism (L R M), plays an important role in the following aspects:

  • To ensure that the funds provided by the bank are put to the intended use and continue to be used properly.
  • To ascertain that the business continues to run on the projected lines.
  • If the deterioration of the business continues despite appropriate action, the bank should decide if any harsh action like, recalling the advance or seizing the security, etc. is necessary.

♦Available Tools for Credit Monitoring / LRM

  • Conduct of the Accounts with the Bank
  • Periodic Information Submitted as per the Terms of the Advance
  • Audit of Stocks and Receivables Conducted by the Bank
  • Financial Statements of the Business, Auditors’ Report
  • Periodic Visits and Inspection
  • Interaction
  • Periodic Scrutiny
  • Market Reports about the, Borrower and the Business Segment
  • Appointing Bank’s Nominee on Company’s Board
  • Credit Audit
  • Document Audit of title documents in respect of large value loan accounts (RBI circular dated June 7, 2013)

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