Question

In Bank Management, appraise the role of a bank's credit culture in managing credit risk.

Answer 1

Ans. Its a very well known fact that a bank's credit culture is very important from managing credit risk point of view as ensuring the quality of the collateral which is given for the loan is good,also loan-to-value ration is as low as possible which means the amount of loan given is a relatively smaller value to the value of asset which is good as if the loan party defaults then it can be easily recovered by selling that collateral.

Also proper due diligence of the person and his source of income is very important while giving credit.