Financial Risk Manager Part 2
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Q-129. Which of the following statements about the scope and allocation of a bank's credit facilities and the management of its credit portfolio is correct?
A
In larger banks, lending authority is usually centralized, whereas in smaller banks, it tends to be decentralized based on geographical area, lending products, and customer types.
B
The lending policy should not establish limits for lending officers, allowing them flexibility in approving loans according to their authority and experience.
C
Prudent banking practice dictates that facilities extended to related parties should not require board approval.
D
A lending policy should provide an outline of the scope and allocation of credit facilities and the management of the credit portfolio, including the origination, appraisal, approval, disbursement, monitoring, collection, and handling procedures for various credit functions.