Lesson-13 on Credit

Question: What is Asset and Liability Management (ALM) ?

Answer:

Ø    Asset and Liability Management is the practice of managing risks that arise due to mismatches between the assets and liabilities (debts and assets) of the bank.

Ø    Asset Liability management (ALM) is a strategic management tool to manage interest rate risk and liquidity risk faced by banks.

Question: What is Subprime Lending ?

Answer:

A loan that is made at a higher interest rate than most other loans. Subprime loans are made to borrowers who do not qualify for ordinary loans because of bad credit history or some other reason. There is a higher risk of default on Subprime loans.

 

Question: What is Subprime mortgage?

Answer:

The Subprime mortgage crisis is an ongoing real estate crisis and financial crisis triggered by a dramatic rise in mortgage delinquencies and foreclosures in the United States, with major adverse consequences for banks and financial markets around the globe.

 

Question: What are  03 pillars in Basel II ?

Answer:

1.     Minimum capital requirement (Based on Credit Risk, Market Risk, Operational Risk)

2.     Supervisory review process (Additional capital charge based on market risk)

3.     Market disclosure (Public Disclosure)

Question. What are the 6 Core Risk Guidelines provided by Bangladesh Bank?

Answer:

1.     Credit Risk Management

2.     Foreign Exchange Risk Management

3.     Asset Liability Management

4.     Internal Control & Compliance

5.     Prevention of Money Laundering

6.     Information & Communication Technology Risk

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