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Learning credit risk analysis online can benefit your career

Posted on by Imarticus Learning

Learning credit risk analysis online can benefit your career

A loss or an unknown event are both examples of risks in the financial world. It negatively affects investing. Risk also doesn’t just apply to human beings. Risks can also affect businesses. Certain decisions may carry significantly greater risk than others. It depends on various variables. For instance, the nature of investments and type of entities.

But can we measure risk? That’s where Credit Risk Analysis helps us. It is a process that calculates and anticipates all types of risks in various investments. One has to consider all relevant factors to conclude the results. This is a job of a Credit Risk Analyst.

Read to know more about the process and career options in Credit Risk Analysis.

There are multiple amazing career options in finance. One of them is credit risk analysis. Check for online courses if you want to kickstart your journey in a new direction. Also, ensure industry experts and mentors teach these courses. You get an opportunity to gain many skills like specialization in commercial and retail finance. It also includes ways for credit appraisal, credit monitoring, credit ratings, and credit strategy.

How does a Credit Risk Analyst Certification Course help?

A credit risk analyst certification helps you become an expert in lending and credit analysis processes. You get to work in the financial services sector. Your job includes assessing and controlling consumer, business, and corporate credit risk. It helps to increase financial security.

It also helps you learn about credit appraisals using industry-accepted best practices. You learn industry-related skills and develop the insight to develop better trade ideas.

Also, a candidate with a Credit Risk Analyst certificate can easily identify problems like loans, etc. One helps in amplifying their company’s internal Basel-based rating system. Also, credit risk analysts recommend lending and investment. This helps to design credit strategies and credit portfolios.

All about Credit Risk Analyst’s job roles

Credit risk evaluation

A credit analyst’s responsibility is to assess a customer’s credit risk. They investigate savings, debt repayment history, business profits and buying activity. They analyze all of these data and advise businesses about various future steps. For instance, whether or not to extend credit terms to a customer, etc. The whole thing is evaluated through credit risk analysis.

Become a pro at analysing financial data

Commercial and credit unions hire credit analysts to examine a potential client’s financial information. The analyst assesses the client’s earnings history, liabilities, assets, and credit payment history. It helps them to decide if they are qualified for credit terms. They examine audited management accounts, financial statements, annual reports, and market data.

They also check for other factors regarding lenders and buyers. For instance, if the lender has safety, if the borrower has failed to fulfil their obligations, etc. It helps them ascertain future terms. It helps them to find out all risks related to customers. This helps businesses to decide whether to approve or deny credit facilities. The lender may look to the audit report and credit analysis study.

Review the credit limitations of current customers

Examine the credit limits of current clients to check for eligibility for an increase in their credit limit. One has to factor in various metrics. For instance, borrowers’ credit history, earnings data, prior credit defaults, etc.

They also write reports about customers’ present financial situation. It helps to figure out if they can meet their financial obligations. This is done by collecting periodic financial data. According to credit analysis reports, businesses decide whether to raise or lower a customer’s credit limit.

Who can Pursue a Credit Risk Analyst Career?

This course is perfect for people who want to work in the financial sector. Their job roles would include financial risk analysis and evaluation.

People with a basic understanding of finance. These people would benefit better from such certification courses.

The Bottomline

A certificate in credit risk analysis opens up multiple options. Businesses of various sectors hire credit analysts. This includes healthcare, technology, real estate, etc.

You get a deep understanding of lending and borrowing, credit underwriting, and regulatory requirements. You study how modern technologies affect financial risks. Imarticus’s online PG Diploma course has a result-oriented curriculum. Also, the career-focused modules adhere to global industry standards. We have also included current global trends and best practices.

Want to know more?

Contact us through chat support. Visit our training centres in Mumbai, Thane, Pune, Chennai, Bengaluru, Delhi, Gurgaon, or Ahmedabad.

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.

How Much Do Credit Analysts Make

Posted on by Imarticus Learning

Who are Credit Analysts?

Credit analysts are professionals who are assigned the job of analyzing and concluding the creditworthiness of various customers and businesses. Most of their job includes examining the applications of credit and deciding if a particular person is worthy of the lenders’ money and can pay them back with other costs. The credit analysts also evaluate various risks associated with the credit element of the business.
Credit analysts also forecast and project future revenue streams and revenue from various fields. They also analyze various financial information like income and expense statements, profit and loss statements, cash flow statements, etc. One of the most important jobs of a credit analyst is to ascertain the creditworthiness of a person based on his or her salary or business income and then assign him a credit limit i.e. how much credit can a person take at a given time.
Credit analysts also decide on the rate of interest to be paid by the borrower on the amount of loan taken by him frequently. Credit analysts also conduct credit reviews of the current customer base and also resolve any credit-related issues their customers face. Risk analysis and trend pattern tracking are also very important functions of a credit analyst.
To become a credit analyst, one must have a bachelor’s degree in finance, business, economics or any other similar field. Some companies demand certification from specialized credit management institutes. The job of a credit analyst is laden with huge responsibilities and cannot be avoided.
Credit analysts can work for various commercial and investment banks, credit rating agencies like Standard and Poor, CRISIL, Moody’s, etc., companies that issue credit cards like American Express, Ru pay, VISA, etc. They also have to perform various quantitative analyses like ratio calculations, calculating the net worth of various assets, analyzing the industry by numbers, risk assessments and how these risks would affect the financial appetite of the company, etc.
The scope for a credit analyst is quite broad. All companies can have a credit analyst depending upon how volatile and dynamic the company is. It is a lucrative job for people who have a knack towards finance and want to make a career out of it.

How Much Do These Credit Analysts Make?

The salary of a credit analyst primarily depends on the sector they are working in. If they work for various commercial banks, they get decent pay but if they are working for an investment bank, chances/re that they are highly paid. Also, it depends from candidate to candidate and what skills and expertise he brings to the table.
The average salary of credit analysts ranges from somewhere between 72,000 USD to 132,000 USD depending on the institutions they are working for. In India, the average pay of any credit analyst is somewhere around 6.5 to 7 lakhs with companies like the State Bank of India paying them around 11 to 12 Lakh rupees annually. The role offers a lucrative salary and abundant growth opportunities. Once you become a credit analyst, you can be promoted to the role of Senior Credit Analyst with much higher pay than before. Commercial Banks like HSBC and Standard Chartered pay their credit analysts somewhere around 9 to 10 lakhs INR.
Conclusion
Credit analysts come under one of the highest-paid employees in the banking and finance sector. With a huge scope of professional development and growth, the job is a lucrative deal and has huge things in store. Though a little stressful, a credit analyst’s life is full of opportunities and is exposed to several new learnings.

What is Credit Risk Analysis and Why it is Important?

Posted on by Imarticus Learning

Credit risk analysis is assessing the possibility of the borrower’s repayment failure and the loss caused to the financer when the borrower does not for any reason repay the contractual loan obligations. Interest for credit-risk assumption forms the earnings and rewards from such debt-obligations and risks.

The cash flow of the financer is impacted when the interest accrued and principal amounts are not paid. Further, the cost of collections also increases. Though, there is a grey area in guessing who and when will default on borrowings, it is the process of intelligent credit analysis that can help mitigate the severity of complete loss of the borrowings and its recovery.

Who Needs Credit-Risk Analysis

Banks, financial institutions and NBFCs offer mortgages, loans, credit cards etc and need to exercise utmost caution in credit risk analysis. Similarly, companies that offer credit, bond issuers, insurance companies, and even investors need to know the techniques of effective risk analysis. Doing a credit analysis course is a smart move today since India is fast becoming digital, with easy credit being available online.

In all the above scenarios risk analysis of the credit or obligation being offered is very important to be prepared for risk management, mitigation and recovery of the loans/obligations. Borrowers too need to monitor their credit ratings to be eligible for a lower rate of interest and loan eligibility. Improving your credit score ensures you get even unsecured or collateral-free loans at low-interest rates.

The Conditions for Risk Assessment

Credit risks are assessed depending on the overall ability of the borrower to adhere to the original contractual terms of loan repayment. The important 5Cs that any wise-lender peruses are

• Capital in business or own-contribution of borrowers is important. Higher the cash flows and equity capital lower your leverage and better the loan terms. The thumb rule here is that more is better.

• Capacity to repay considers the cash-flow, ability to repay, and the terms of repayment.

• Credit history, how reliable and trustworthy your credit handling has been, foreclosures, bankruptcies, court cases and judgments revealed in your credit history which will be evaluated by lenders.

• Conditions of the loan depend on economic policies, current market rates, taxes, industry-relevant or economic conditions, size of the loan, intended use and market impact on the loan.

• Collateral associated with the loan cover the risks associated in case of non-repayment. Adequacy, acceptability of asset and market values can be gainfully leveraged when applying for loans.

Assessing the risk is done in several ways like the points-based system, personal appraisals by trained risk-assessors or by departments for credit-risk assessment of loan-customers. Investors look into the credit rating of bonds. Bonds with a B or C low-rating are more likely to offer higher returns and default on payments.

The safe investment is considered when ratings show an A, AA or AAA rating. These ratings are regularly updated by bond credit-risk rating agencies like Fitch, Moody’s Investor Services etc.

Impact on Interest rates:
Since all investments look for a higher rate of interest it is a thumb-rule that higher the credit-risk perceived, higher will be the interest rates for capital. When the risks are too high the creditors/ banks/financers may also decline to invest or offer loans. Banks will prefer a good credit rating borrower and offer lower interest rates to them.

Similarly, bonds with low ratings normally offer better returns and are for risk-preferring investors. The thumb rule here is thus better credit-ratings for borrowers attract lower interest rates.

Credit analysis is thus the method used to assess the creditworthiness of the borrower, organization, business or bond-issuer. It implies the ability and evaluation of the borrowing person or company to honor repayments of its financial obligations. The reading of the financial audited statements of bigger companies is used for rating credit-worthiness and bond issues.

Doing a credit analysis course with Imarticus Learning enables you to get a firm foothold in the financial sector. Their comprehensive courses cover the curriculum of risk assessment and management through practical assignments and project work.

 

They also have excellent modules on personality development, resume writing and teach you the latest technology used to make credit-risk analysis an accurate fail-proof method. Make use of their assured placement cell and attain your financial credit analysis certification with Imarticus. With so many plus features, why wait? Hurry and enrol!

Also Read: What is Credit Risk Underwriting