Contact Us
×

Tag: Credit Analyst Course

What is Corporate Credit Analysis?

Posted on by Imarticus Learning

The importance of credit analysis has grown in the last two decades as the financial domain continues to evolve with innovations. After the global financial crisis, conducting credit analysis was an important step to filter the bad credit risk borrowers and improve the profitability of the lending party.

Corporate credit analysis can be explained as a process in which the creditworthiness of a corporate borrower seeking funds is assessed. The main emphasis is laid on evaluating the cash flow process of the business and check whether it will be able to meet its loan obligations or not.

Credit analysts have various financial tools to evaluate the creditworthiness of the borrower based on the information collected related to the financial standing of the corporations. The tools and techniques applied by the analysts include both qualitative and quantitative measures.

Relevant financial data is collected from multiple sources including the company’s financial statements like balance sheet, cash flow statements, profit and loss statements, etc. After conducting thorough research and analyzing all the financial data the lending party concludes as to whether or not it will be feasible to provide credit to the corporation.

The credit analysis process of a corporation depicts the financial performance of the business. It also evaluates whether the loan amount applied for by the business is enough to meet the financial requirements of the project being undertaken by the company.

The purpose of evaluating the loan amount is to find out whether it will be sufficient to meet the needs of the project or the company will require additional funds. If the loan amount applied for is lower than the actual amount needed to finance the project, the lending party might not approve the loan as the chances of project failure will be higher.

Let’s delve deeper into some of the major elements of the corporate credit analysis process.

  • The Asset to Liability Ratio: The asset to liability ratio is one of the key indicators of a corporation’s creditworthiness. It measures the overall assets owned by an entity in comparison to its aggregate liability. It can be easily computed by dividing the total asset figure by the total liabilities amount of the company.A higher asset to liability ratio acts in favour of the company and means that the creditworthiness of the corporation is high. Generally, the asset to liability ratio of 2 or higher is considered as good.
  • Unpaid Receivables: Unpaid receivables are among one of the major elements of the corporate credit analysis process. To evaluate the stability of a business, it is important to look at the rate at which the receivable is becoming bad debts. If the account receivables are not paid for a higher duration, the risk associated with that particular corporation is higher.
  • Stability of Capital: A stable capital source for the company means that the stakeholders believe in the mission of the company and are committed for the long haul. This commitment helps to establish trust with the lenders and it is easier to lend money to corporations with a stable capital source. If the shareholders of the corporation are committed to the long term performance it is easier for the business to borrow money for expansion and stabilizing operations.
  • Collateral: It’s no secret that borrowing a loan using collateral is way easier than without it. Having collateral helps to instil trust among the lenders and they are more confident to provide loans as they have a safety net in the form of collateral offered by the borrower. The collateral makes up for insurance for the lending party and they can use it to recover the loan amount in case the business fails to meet its debt obligations continuously.

 

Can credit analysts be replaced by machines? Here’s what you need to know

Posted on by Imarticus Learning

Can credit analysts be replaced by machines? Here’s what you need to know

With the extensive usage of machines, and technologies like artificial intelligence (AI), most routine tasks are now automated with reduced involvement of humans. Most of the functions that machines handle give better efficiency, more accuracy, and higher productivity, be it performing credit analysis. Such reasons will eventually put a question mark on professions like credit underwriter jobs.

According to the famous media house Business Standard, most jobs will be automated in the next 15-20 years. This conveys that people like us may lose jobs and be replaced by machines. This may drastically affect individuals’ financial growth.

Since machines will be working everywhere, you may ask, will credit underwriter jobs be at risk too? Can a credit analyst course or a certification in credit risk management be helpful? Let’s find out.

What Are Credit Underwriter Jobs?

First, you should know that a credit analyst is a professional who accesses the creditworthiness of individuals to help them perform their financial obligations successfully.

Their job is to do massive financial calculations and analyses of the creditworthiness of companies and securities. They gather past financial information from the customer and then evaluate their financial health and ability to repay the credit.

Their primary role is to provide the best solution to repay credit and improve the economic growth of individuals, companies, and even securities. Their main aim is to lower the financial risk and find the best possible solution within the limitations of the customers.

This Is What We Think Will Be Helpful

Do you know that the demand for automation occurs when the human efficiency and productivity of work decrease? In such cases, inefficient human resources get replaced by machines. However, machines lack creative thinking ability and qualitative and critical analysis.

However, humans have better creative thinking and qualitative and essential analysis abilities. Moreover, they have common sense while performing tasks. So, people will prosper in this field if they gather the skill set required for credit underwriting jobs.

Since a credit analyst not just analyzes credit worthiness, it also provides solutions according to the situation and its limitations. A machine will give the answers based on the data stored in them. They can’t refine new solutions according to the problem and the risks involved.

The following are steps that will help you ace credit analyst jobs:

·         Develop the required skills for the credit analyst role

·         Do courses and build knowledge and skills for this role

·         Provide better understanding and solutions to the problems

·         Perform certifications: this will prove your worthiness for this job role

Therefore, as a credit analyst, you will not just assess the situation correctly but also provide the best solution for your financial problem. Thus, it’s time to step up and gather the resources to secure the credit analyst role.

Time For Action

Machines won’t replace credit analysts. Instead, they will work together to improve efficiency, speed, reliability, and accuracy. Thus, It’s time for you to quickly take action and develop skills to improve productivity and provide the best solutions to your customers.

Take Up Credit Analyst-Related Courses

Look out for a credit analyst course or a certification in credit risk management. Having more accomplishments will upgrade your chances for such functions. Moreover, these credentials add to your skill set and help shape your career in this domain. These are the introductory courses whose accords are in demand in the financial market. Some of them are even rewarded.

Develop Skills by Getting Industry Exposure

Start working at an early stage. You can ask your tutors to help you get a little more practical exposure. Take up projects and look for work. You can always start with internships when you want to learn.

Suppose you are interested in finance and accounting and are willing to serve companies and consumers to solve their financial issues. Then credit underwriter jobs are perfect for you. There are various opportunities out there for the credit analyst role. Investment companies, commercial and private banks, and credit card companies are looking for an efficient individual with the proper skill set for credit underwriter jobs.

Bottom Line

Soon, technology will inevitably automate specific jobs. However, people need to understand that jobs that require deep analysis, critical analysis, creative solutions, and out-of-the-box thinking will not evaporate.

Credit underwriter jobs come under this category. They will survive the transformation wave, but after taking some actions. Analysts must be more efficient and productive and have the skills and knowledge to give the best solution. They can prove their worthiness by performing well in credit analyst courses and gathering certificates in risk management courses.

You can contact us through chat support or drive to our training centers in Mumbai, Thane, Pune, Chennai, Bengaluru, Delhi, Gurgaon, or Ahmedabad. We are here to help you out.

How Do I Become a Certified Credit Analyst?

Posted on by Imarticus Learning

How do I become a certified credit analyst?

A credit analyst is responsible for determining the credit risk associated with a person applying for a credit/loan. They analyse the borrower’s financial data and help in determining the worthy borrowers who will return the loan on time. Credit risk analysts create reports based on their findings which is used by the banks in loan authorisation. Credit risk is affected by many factors such as collateral associated, paying capacity, credit history, etc. Credit analysts use various applications for evaluating the credit risk associated with any borrower. Credit analysis is witnessing technological reforms as new-age technologies like machine learning, big data analysis, etc. are helping in making more accurate credit analysis models.

How to Become a Credit Analyst?

Many sources offer a certification course for becoming a credit risk analyst. Association of International Wealth Management of India offers a CCRA (Certified Credit Research Analyst) which is a comprehensive education program and aims at providing credit risk analyst certification. You can also opt for various online certification programs in credit analysis. Imarticus Learning is a trusted source that can provide you online certification course in credit analysis. It is tough to opt for a college degree amidst the Covid-19 scenario, so getting a certification in a credit risk analyst course via an online medium is the right choice. Choosing an online medium for a credit analysis certification course will help you in studying at your own pace. It is good if you have a bachelor’s degree in finance, accounting, statistics, economics, etc. as it will help you with the prerequisites required for becoming a certified credit analyst.

Why Choose Imarticus Learning?

Imarticus Learning will help you in learning the fundamentals of the finance industry via industry experts with in-depth case studies. The industry-oriented learning approach of Imarticus will help you in getting industry-ready. You will also get placement support by opting for their online courses. You can opt for a demo class and can decide for yourself. Imarticus Learning is tied up with the leading players in the finance industry & has experienced faculties. You will also learn the aspects of credit analysis experimentally with case studies.

What to Learn?

The terminologies of credit analysis which you should be aware of to become a successful credit analyst are as follows:

• You should be aware of the credit analysis fundamentals like credit history, the capacity to pay, etc.

• You should be familiar with the cash flow cycle & analyses which helps in sustaining capital.

• You need to know how to manage a loan using security. Credit risk analysts are also good at risk identification & management.
• A good credit analyst knows about the loan covenants which are the conditions in a loan agreement.

• You should be able to administrate and document credit.

• You should know about the credit application and the loan processes.

• You should be able to use various software(s)/applications used for credit analysis in banks/financial institutions. One should also be aware of various credit risk models used to determine the risk associated.

• You should be able to read, analyse, and combine financial statements of the borrowers to calculate the risk associated.

Note: Make sure you choose a certification course in credit analysis that covers all the aforementioned aspects of credit analysis.

Conclusion

Credit risk analysts will be in huge demand in the coming years as firms/financial institutions require individuals who can help them in minimising losses. The good borrowers may also face problems in terms of capital if a financial institution encounters many NPAs/defaulters. To maintain the cash flow & capital in a bank/financial institution, credit risk analysis is necessary. Browse Imarticus Learning courses now!

Legal Framework in India For Credit & Lending Introduction!

Posted on by Imarticus Learning

The legal framework in India is predicated on two acts, the 1949 Banking Regulation Act and the 1934 Reserve Bank of India Act. BR act helps to manage and supervise banking activities, acts as a banking guideline, whereas the RBI act authorizes RBI to issue currency notes, regulate all banks, and take care of the economic and financial situation of the country.

To get in-depth knowledge and understanding of the legal framework in India for credit and lending, you ought to choose a credit analysis course or a PGDM in banking and finance.

Banking Framework

Under the given framework, banks are allowed to perform the below activities:

  • Borrow or grant loans: Loan terms are set by negotiation and could be without any security too.
  • Issue credit letter: This letter ensures the customer would pay money to the vendor and just in case of the buyer’s default, the bank pays the amount. It’s crucial for international trade.
  • Issue promissory note: It’s a legal document, in which one party promises in writing to pay a determinate sum of cash to the other, either in a determinable future time or on demand of the payee, under specific terms.
  • Issue bill of exchange: A bill of exchange may be a written order that is in international (export/import) trade binding one party to pay an amount of cash to a different party at a scheduled date or on demand of the same.
  • Apart from that, banks are allowed to deal in stocks, shares, provide vaults, perform guarantees, fund charitable causes, promote their business and merchandise.

Features Of Banks Under Legal Frameworks

Let’s explore a few more features and aspects of banks under the legal frameworks:

  • Cash reserve: Every depository financial institution needs to take care of a sum like a percent of the demand in total and time liabilities with itself (referred to as Statutory Liquidity Ratio) and with the Federal Reserve Bank (referred to as CRR, or Cash Reserve Ratio) to regulate the credit growth and liquidity within the economy.
  • Private banks, co-operative society, small finance banks, and payment banks:
    • To operate in India, for private banks, the initial minimum paid-up capital is 200 crores, of which the promoter must pay 40% with 5 years locking, and the initial 200 crores need to raise to 300 crores in 3 years.
    • Co-operative societies also come under the BR act.
    • Small finance banks and payment banks are licensed under the BR act. To boost financial inclusion by providing aid to unorganized sectors, micro industries were introduced. Payment banks aren’t allowed to supply loans.
    • Regional Rural Banks: Regional Rural Banks with the target of providing sufficient funds to rural sectors and agriculture, was established and controlled under the RRB act 1976. National Bank for Agriculture and Rural Development regulates these banks.

RBI Lending Policies

More about RBI lending policies:

  • Recently, RBI relaxed lending norms to NBFC and also provided relaxation in bank’s exposure to limits, in order to assist under-stress sectors.
  • RBI allowed banks to prioritize agriculture, micro-small-medium industries, and affordable housing while granting loans.
  • Banks now can grant loans to agriculture with the capping of up to Rs 10 lakhs and to micro and little enterprises up to Rs 20 lakhs and to housing sector up to Rs 20 lakhs per borrower, and it is assessed as priority sector lending.
  • The RBI increased the loan exposure limit of banks to a single NBFC from 15% to 20% of its capital base, to aid increased credit supply to the crisis-ridden shadow banking sector.

Conclusion

The legal framework in India for credit and lending is vast and needs extensive study to become fully accustomed to it. And also, based on the economic situation, norms tend to update or new regulations come into the picture. To understand this, you should either go for a PGDM in banking and finance or at least take a credit analysis course, to begin with.