- Central Bank uses Capital Risk Adequacy Ratio to measure credit
risk faced by the bank's capital as developed under the Basel
framework.
- Credit risk management is done with aim of maximising bank's
risk-adjusted rate of return within specified framework.
- Before lending to any individual or corporation,bank assess
creditability and collateral norms are strictly followed.
- Risk based pricing-Higher interest rate to lenders who are more
likely to default.
- Diversification of Loan book
- Using Credit insurance or Credit default swap.
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