LENDING POLICIES

Importance
• Economic function – fund consumption &
investment by business, individuals and units of
government
• Types of Loans
– Real Estate loan
– Financial institution loan
– Agriculture loan
– Commercial & Industrial Loan
– Loans to Individuals
– Miscellaneous loans
– Lease Financing Receivables
 Factors determining growth & mix
of Bank loans
• Characteristics of Market area it serves
• Size of bank
• Regulation of lending
 Loan Policy
• Goal statement
• Lending authority and Loan committee
• Line of responsibility for assignment and
reporting info within the loan dept.
• Operational procedure
• Required documentation
• Line of authority within the bank
• Statement of quality standards applicable to all
loans
• Statement of preferred upper limit for total
o/s
• Description of banks principal trade area,
from which most loans should come
• Procedure for dealing with deliquency
 Credit Analysis
• Credit worthiness – character, capacity,
cash, collateral, conditions, control
• Collaterals – Types
• Sources of information about loan
customers
 Typical loan agreement
• Note – contract
• Loan commitment Agreement – pledge by
lenders
• Collateral
• Restrictive covenants
• Warranties
• Events of default