CM-3.3 CM-3.3 Name-lending
CM-3.3.1
Banks are exposed to credit risk when they provide large credit facilities on a 'clean' basis (i.e. without
collateral orsecurity ). This risk is amplified, specifically, when such clean lending is made without adequate (up to date) financial information.October 07CM-3.3.2
In many banks there is a tendency to indulge in '
name-lending ' without any credit analysis or understanding of the concernedcounterparty's current borrowings from other banks. The CBB strongly discourages the banks to engage in such activities in order to minimise their credit risk and reputational risk.Amended: January 2011
October 2007