BANK APPROVES NEW CREDIT POLICY, SETS REPAYMENT TERMS
Introduction
The Board of Directors of [Bank Name] has approved a new credit policy aimed at promoting responsible lending practices and ensuring the repayment of loans. The policy outlines key principles and guidelines for lending, including the development of a written plan that sets out clear objectives for the credit portfolio.
Objectives
The main objectives of the new policy are to:
- Grant collectable loans on a sound and safe basis
- Invest funds profitably for the benefit of shareholders
- Serve the legitimate credit needs of various economic areas, sectors, and activities
Principles and Guidelines for Lending
The policy outlines key principles and guidelines for lending, including:
- Development of a written plan that sets out clear objectives for the credit portfolio
- Periodic review of the plan to ensure it remains relevant and effective in achieving the bank’s goals
- Classification of credits into different categories based on their risk level
Credit Classification Categories
The new policy introduces a framework for classifying credits into different categories based on their risk level, including:
- Preferred Credit: loans secured by collateral with high liquidation value
- Good (Standard) Credit: loans supported by strong payment ability and financial position of the borrower
- Medium Credit: credit considered at risk due to weak financial position or late payments
- Sub-Standard Credit: credit past due for principal and/or interest payments, with losses expected if not managed properly
- Bad (Doubtful) Credit: credit with a high likelihood of complete collection being doubtful, making loss probable
- Loss Credit: credit deemed uncollectible
Loan Granting Procedures
The bank has established procedures for granting loans, including:
- Delegation of authority for approving loans
- Documentation required for each type of credit
- Follow-up on loan developments, including payment procedures, review and re-evaluation of loans, and communication with borrowers
Importance of Responsible Lending Practices
In a statement, [Bank Name] officials emphasized the importance of responsible lending practices and ensuring that loans are repaid in a timely manner. “Our new credit policy is designed to promote transparency, accountability, and effective risk management,” said [Official’s Name]. “We are committed to supporting economic growth and development while protecting our shareholders’ interests.”
Information System
The bank has also established an information system to manage the credit portfolio, generate reports necessary for taking appropriate actions on loans, and assess whether the credit portfolio is meeting the needs of customers and adhering to the bank’s credit policy.
Consequences of Non-Repayment
Borrowers who fail to repay their loans may face penalties and legal action. The bank has also established a procedure for reviewing and re-evaluating loans to ensure that they are being managed effectively and that losses are minimized.
Conclusion
Overall, [Bank Name]’s new credit policy is designed to promote responsible lending practices and ensure the repayment of loans while supporting economic growth and development in Iraq.