Question

1. What are the impact of credit risk on bank?

2. Result of bank’s exposure to credit risk?

Answer 1

Answer 1. Impact of Credit risk of bank : Bank face many type of risks from different sides , one of them is credit risk.

This is arise due to downfall in payment capacity of borrower(Such clients). Due to this there is many negative

impact as under :

A. Cost of capital is being increased of bank

B. Bank has fixed cost of providing of bed debts provison

C. due to credit risk reduction in profitablility

d. Bank face liquidity crunch. answer.....

2. Result of banks exposures to credit risk as under bank

suffer pressure on not only on profits also on assets

NPA create bad picture for Banks.

Due to exposure in credit it will give negative rating of bank assets quality.

credit risk low down liquidity due to this shortfall in credit growth and result short income / growth to bank.

Answer...