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PNB SO Credit Notes

The document provides detailed notes and multiple-choice questions on various types of credit facilities, including fund-based and non-fund-based options. It covers financial statements, key ratios, types of borrowers, credit appraisal criteria, mortgage types, regulatory bodies, credit risk management, priority sector lending, non-performing assets, and working capital assessment methods. This comprehensive overview is designed for professional knowledge in the banking and finance sector.

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khushi Goyal
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310 views4 pages

PNB SO Credit Notes

The document provides detailed notes and multiple-choice questions on various types of credit facilities, including fund-based and non-fund-based options. It covers financial statements, key ratios, types of borrowers, credit appraisal criteria, mortgage types, regulatory bodies, credit risk management, priority sector lending, non-performing assets, and working capital assessment methods. This comprehensive overview is designed for professional knowledge in the banking and finance sector.

Uploaded by

khushi Goyal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PNB SO Credit - Professional Knowledge: Detailed Notes & MCQs

SECTION 1: TYPES OF CREDIT FACILITIES

A. Fund-Based

- Cash Credit (CC): For working capital, operates like an overdraft.

- Term Loan: Lump sum amount repayable over time.

- Overdraft (OD): Facility over current account limit.

- Bills Discounting: Bank pays the seller upfront and collects from the buyer.

B. Non-Fund-Based

- Letter of Credit (LC): Guarantee for international/domestic trade.

- Bank Guarantee (BG): Bank promises payment if party defaults.

C. Retail & Corporate Loans

- Home, Personal, Vehicle Loans

- Working Capital, Project Finance

SECTION 2: FINANCIAL STATEMENTS & RATIOS

A. Financial Statements

- Balance Sheet: Snapshot of assets, liabilities, equity

- P&L Statement: Income and expenses over time

- Cash Flow: Cash in/out from Operations, Investing, Financing

B. Key Ratios

- Liquidity: Current Ratio = CA/CL; Quick Ratio


- Profitability: Net Profit Margin, ROA, ROE

- Leverage: Debt-Equity Ratio

- Efficiency: Inventory Turnover, Receivables Turnover

SECTION 3: TYPES OF BORROWERS

- Individuals

- Proprietorships

- Partnership Firms / LLPs

- Companies (Pvt/Public Ltd)

KYC & Documents:

- PAN, Aadhar, GST

- ITR, Financial Statements

- MOA, AOA, Partnership Deed

SECTION 4: CREDIT APPRAISAL (5 Cs)

1. Character - Creditworthiness

2. Capacity - Income and repayment ability

3. Capital - Financial position

4. Collateral - Security

5. Conditions - Industry & economic outlook

SECTION 5: MORTGAGE TYPES (TP Act, Sec 58)

1. Simple Mortgage - No possession; personal liability

2. Mortgage by Conditional Sale - Transfer if default


3. Usufructuary Mortgage - Possession with lender; enjoys income

4. English Mortgage - Absolute transfer with condition of retransfer

5. Equitable Mortgage - Deposit of title deeds

6. Anomalous Mortgage - Hybrid/combination

English Mortgage requires compulsory registration due to transfer of ownership.

SECTION 6: REGULATORY BODIES & ACTS

- RBI: CRR, SLR, Repo, Reverse Repo

- SEBI: Securities market regulation

- NABARD: Rural/agri development

- IRDAI: Insurance regulation

- IBC, 2016: Insolvency and Bankruptcy

- SARFAESI Act, 2002: Secured asset recovery

- NI Act, 1881: Cheques, negotiable instruments

SECTION 7: CREDIT RISK MANAGEMENT

- Credit Risk: Possibility of borrower default

- Rating Agencies: CRISIL, ICRA, CARE

- Basel Norms: Capital Adequacy (CAR)

- Exposure Norms: Limits on single/group borrower

SECTION 8: PRIORITY SECTOR LENDING (PSL)

- Sectors: Agri, MSME, Education, Housing, Renewable, Weaker Sec.

- Target: 40% of ANBC for banks


SECTION 9: NON-PERFORMING ASSETS (NPA)

- Definition: >90 days overdue

- Types:

- Substandard: <12 months

- Doubtful: >12 months NPA

- Loss Asset: Unrecoverable

- Provisioning norms as per RBI

SECTION 10: WORKING CAPITAL ASSESSMENT

- Tandon Committee: MPBF method

- Turnover Method: For small borrowers

- Cash Budget: Seasonal businesses

- Operating Cycle: Time to convert inventory to cash

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