The credit policy of the bank is the development of measures aimed at improving the ratio of risk and profitability from operations to provide loans to individuals and other business entities.
A credit policy is being developed based on macro- and microeconomic factors. That is, the specialist assesses the country's situation at the macro level, draws a conclusion about the stability of the national economy and the degree of state support for a particular industry. An important role is played by inflation, the dynamics of interest rates and the ability to compete with other credit institutions at the international level. In this case, it is precisely those factors that are considered that banks are not able to change.
Microeconomic, or internal, factors include the study of internal banking processes or relations between individual credit institutions. At the same time, such factors as the amount of borrowed funds, solvency, liquidity, profitability are subject to study. These indicators characterize the success of the bank in working with counterparties. And for this, a quality selection of personnel is required, because a qualified employee, being the face of the bank, creates his reputation.
Credit policy is carried out in order to achieve many tactical results, but the highest possible income is considered paramount. Profit increase is the main goal of the functioning of any commercial enterprise. Focusing on the developed strategic plans, the credit policy is based on specific tasks, which include careful supervision and control over the implementation of measures to expand creditworthiness, as well as the choice of purpose of a loan or loan.
When a monetary credit policy of the bank is drawn up , it is divided into work with business entities and individuals. Legal entities bring in the highest level of income, therefore, an employee of a credit institution should make every effort to enter into long-term cooperation. However, not all organizations can become first-class customers, because banks have their own list of requirements for this category of consumers. As a rule, the most important criteria are reliability, solvency, transparency of reporting, extremely positive reputation in the market, equity, level of liquidity and profitability.
If the loan is necessary for an individual entrepreneur, then the credit policy is aimed at studying the personal qualities of the leader, identifying the degree of trust on the part of counterparties. The decisive role, of course, is played by the credit history of the founder of the company.
Loans are issued to individuals according to other criteria. The bank puts forward many different lending proposals. Thanks to this, the client gets the opportunity to choose the best conditions for the provision and payment of a loan. Often the size and terms of lending are determined based on the level of wages, the age of the payer and the reliability of guarantees or sureties.
The most important thing is to understand that credit policy is necessary to minimize the risk of the parties. After all, the bank, carrying out operations to borrow funds, has the risk of not returning them due to unwillingness or inability to pay the loan body and interest on it. Accordingly, the higher the risk level, the greater the percentage of the transaction will receive a credit institution. The task of staff is to rationally combine these two factors.
With a well-organized banking system, credit policy is subject to regular review, as changing market conditions require flexibility in bank behavior. And the popularity and competitiveness of an organization depends on the speed of their reaction to a particular problem.