METHODOLOGY FOR MEASURING NON-PERFORMING CONSUMER LOANS

Abstract

This technique assesses the risk of non-repayment of a consumer loan in a commercial bank. The bank must collect detailed information about the financial condition of a potential borrower based on the completed "application-questionnaire" on the CL and the list of documents provided by it. After receiving a loan application, the credit depart-ment of the bank should check the integrity of the submitted documents and their validity period, the accuracy of filling out certificates from the place of work (if any) - the validity of the employment contract, form, salary, etc. - by comparing the data specified in the loan application and received during the oral conversation. Further, the unit must determine their reliability, the validity of the monthly income indicated in the certificate from the main place of work, based on the specialty, field of activity by comparing with income paid (received) in similar fields of activity, assess the market position, stability, opportunities and development prospects an organization represented by the borrower, coborrower (or guarantor) and/or other family members. Based on the results of the verification of the above documents and the response to the request from the credit bureau, the bank's loan officer must substantiate and document his opinion on the approval / refusal of the bank's credit committee in issuing a loan in the form "Report on the results of underwriting". The credit committee of the bank must consider the opinion on underwriting of the loan and make a decision on granting or rejecting the CL to the borrower.