Credit Risk Management by ICICI Bank

Banks and other lending institutions must constantly balance risks and rewards. Too high a price on loan products, and you lose the customer; too low, and you starve the profit margin or take a loss. Too much capital on reserve, and you miss investment revenue; too little, and you risk regulatory noncompliance and financial instability. When every department, line of business and region measures and reports risks differently – with disparate risk management systems – it can be difficult to accurately gauge overall risk exposure and strike the right balance.

In ICICI Bank this department is managed and taken care by Credit Risk Compliance & Audit Department (CRC & AD).  It evaluates risk at the transaction level as well as in the portfolio context.

The following things need to be done in order to achieve complete Credit Risk Management.

• Review of Credit Origination & Monitoring: It is done through;
  • Cheching the  Credit rating of companies/structures 
  • Analysind Default risk & loan pricing 
  • Review of industry sectors 
  • Review of large exposures in industries/ corporate groups/ companies
  • Ensuring Monitoring and follow-up by building appropriate systems.

• Designing appropriate credit processes, operating policies & procedures 

• Portfolio monitoring through
• Designing a Methodology to measure portfolio risk
• Developing Credit Risk Information System (CRIS) 
• Focussed attention to structured financing deals: It includes Pricing, New Product Approval Policy, Monitoring etc.

 

• Monitor adherence to credit policies of RBI i.e. make sure whatever RBI guidelines RBI has given to ensure Credit Risk is managed effectively are followed.

 

If you follow these things then your Credit Risk Management policy will become full proof and you would be able to tackle it in a much better maner.