CM-1.3 CM-1.3 Credit Policy
CM-1.3.1
A properly documented credit policy is an essential element of and prerequisite for the credit risk management process. Consistent with the Board's objectives, it assists bank management in the maintenance of proper credit standards and the avoidance of unnecessary risks.
October 07CM-1.3.2
It is prudent to review the credit policy regularly to ensure that once it is established, it remains flexible enough to be current and continues to accomplish its original purpose taking into consideration market developments.
October 07CM-1.3.3
Explicit guidelines in credit policy provide the basis for effective credit portfolio management. A sound credit policy should consider which types of credit products and borrowers the bank is looking for and the underwriting standards the bank will utilize.
October 07CM-1.3.4
A bank's credit policy should address all credit matters of significance including:
(a) Objectives of credit monitoring;(b) Organisation and reporting structure of the credit department;(c)Designated markets and products;(d) Establishment of a credit limit framework;(e) Guidelines for assessment of concentration;(f) Authorisation procedures for the advancement of credit;(g) Establishment of credit committees;(h) Establishment of desirable pricing levels and criteria; and(i) Problem credit identification and administration.Amended: January 2011
October 2007CM-1.3.5
After the credit facility has been granted, its performance should be monitored at regular intervals. This includes an appropriate periodic review of financial statements, a reassessment of
collateral and update of appraisals, and attentive monitoring of conditions in the borrower's industry. Credit supervision constitutes the first line of detection of difficulties and provides the bank with an opportunity to address problems before losses are sustained.October 07
