The DCA loan guarantee provided $6 million to support lending to SMEs through the Bank Center-Invest in Russia. While the objective was to expand lending in Krasnodar and Volgograd regions, most loans were provided in the Rostov region due to the bank's risk aversion to new markets. The guarantee helped increase access to credit for 137 SME borrowers and may have influenced the bank to participate in other guarantee programs. However, the guaranteed loans represented only 1% of the bank's total SME portfolio, so the full impact was likely larger but difficult to measure directly. The evaluation found the program generally achieved its goals of expanding credit to underserved businesses.
An empirical analysis on asset quality of public sector banks in india non p...chelliah paramasivan
This document discusses asset quality and non-performing assets (NPAs) in public sector banks in India. It defines key terms like gross NPAs, net NPAs, and classifications of assets. Gross NPAs include all non-performing assets, while net NPAs are calculated after deducting provisions. Assets are classified as substandard, doubtful or loss based on the period of being non-performing and recoverability. The document also discusses internal and external factors that can contribute to increasing NPAs and outlines prior literature on NPAs and financial reforms in India.
Banking credit concentration management -limiting setting Eric Kuo
The document discusses concentration risk management through implementing credit limit boundaries based on a bank's risk appetite. It proposes that credit limits should be set not just based on expert judgment but also using risk metrics like PD, LGD and EAD. Concentration risk can arise from large exposures to individual counterparties, related groups, or from concentrations in specific industries, regions or activities. Banks tend to have exposures concentrated in their largest customers and industries, so limits are needed to control this risk and protect banks from unexpected losses that could threaten their credit ratings and market capitalization.
This document discusses credit risk management in commercial banks in India. It begins by defining credit and risk, and then credit risk specifically. It describes how credit risk can arise from borrower failure to repay loans. It then provides recent examples of large loan defaults in various Indian banks. The document discusses various models that banks use to assess and mitigate credit risk, such as credit scoring, Altman's Z-score model, and value at risk. It concludes that commercial lending inherently carries some risk, so banks must carefully analyze borrowers' trustworthiness, financial health, and collateral to minimize credit risk in their lending.
Sound Credit Risk Experience Sharing Vietnam Fsa And BankEric Kuo
The document discusses credit risk management and can be grouped into 3 important parts: credit rating, underwriting, and management. It provides examples of rating models that focus on different business segments and discusses factors to consider in building an internal rating system, emphasizing the importance of data. It also covers credit risk measurement standards outlined in Basel II and the process of mapping internal ratings to external ratings.
This document is a questionnaire for a survey on credit risk management and the financial crisis in accordance with Basel II. It requests personal and professional information from respondents and asks questions about their bank's approach to credit risk management, internal factors and models used, external risk responses, and opinions on credit risk tolerance, capital reserves, and the introduction of credit bureaus in the UAE. The final questions inquire about preparations for implementing Basel III and suggestions for improving current credit risk management systems.
Writekraft Research and Publications LLP was initially formed, informally, in 2006 by a group of scholars to help fellow students. Gradually, with several dissertations, thesis and assignments receiving acclaim and a good grade, Writekraft was officially founded in 2011 . Since its establishment, Writekraft Research & Publications LLP is Guiding and Mentoring PhD Scholars.
Our Mission
“To provide breakthrough research works to our clients through Perseverant efforts towards creativity and innovation”.
Vision
Writekraft endeavours to be the leading global research and publications company that will fulfil all research needs of our clients. We will achieve this vision through:
Analyzing every customer’s aims, objectives and purpose of research
Using advanced and latest tools and technique of research and analysis
Coordinating and including their own ideas and knowledge
Providing the desired inferences and results of the research
In the past decade, we have successfully assisted students from various universities in India and globally. We at Writekraft Research & Publications LLP head office in Kanpur, India are most trusted and professional Research, Writing, Guidance and Publication Service Provider for PhD. Our services meet all your PhD Admissions, Thesis Preparation and Research Paper Publication needs with highest regards for the quality you prefer.
A report on Credit Risk Management in BanksAnurag Ghosh
This document discusses credit risk management in banks. It begins with an introduction and methodology section describing the sources of data analyzed. It then includes an index and sections on the banking scenario in India, credit policies, data analysis of NPA levels in major Indian banks showing a correlation between loans and NPAs, definitions of business and credit risk, causes of credit risk, credit risk assessment techniques, and other risk management strategies like credit ratings and ALM. The document analyzes challenges for banks and provides recommendations to better manage credit risk.
This document provides a final project report on credit risk management in banks. The report contains 12 chapters that discuss topics such as the importance of credit risk assessment, credit risk modeling, data collection, and model validation. The report finds that banks need sophisticated systems to quantify and manage credit risk across business lines. It evaluates traditional credit risk measurement approaches like expert systems and discusses the need for banks to have strong management information systems and analytical techniques to measure credit risk. The report aims to provide an accurate and comprehensive framework for estimating credit risk to help banks quantify capital needs to support risk-taking activities.
An empirical analysis on asset quality of public sector banks in india non p...chelliah paramasivan
This document discusses asset quality and non-performing assets (NPAs) in public sector banks in India. It defines key terms like gross NPAs, net NPAs, and classifications of assets. Gross NPAs include all non-performing assets, while net NPAs are calculated after deducting provisions. Assets are classified as substandard, doubtful or loss based on the period of being non-performing and recoverability. The document also discusses internal and external factors that can contribute to increasing NPAs and outlines prior literature on NPAs and financial reforms in India.
Banking credit concentration management -limiting setting Eric Kuo
The document discusses concentration risk management through implementing credit limit boundaries based on a bank's risk appetite. It proposes that credit limits should be set not just based on expert judgment but also using risk metrics like PD, LGD and EAD. Concentration risk can arise from large exposures to individual counterparties, related groups, or from concentrations in specific industries, regions or activities. Banks tend to have exposures concentrated in their largest customers and industries, so limits are needed to control this risk and protect banks from unexpected losses that could threaten their credit ratings and market capitalization.
This document discusses credit risk management in commercial banks in India. It begins by defining credit and risk, and then credit risk specifically. It describes how credit risk can arise from borrower failure to repay loans. It then provides recent examples of large loan defaults in various Indian banks. The document discusses various models that banks use to assess and mitigate credit risk, such as credit scoring, Altman's Z-score model, and value at risk. It concludes that commercial lending inherently carries some risk, so banks must carefully analyze borrowers' trustworthiness, financial health, and collateral to minimize credit risk in their lending.
Sound Credit Risk Experience Sharing Vietnam Fsa And BankEric Kuo
The document discusses credit risk management and can be grouped into 3 important parts: credit rating, underwriting, and management. It provides examples of rating models that focus on different business segments and discusses factors to consider in building an internal rating system, emphasizing the importance of data. It also covers credit risk measurement standards outlined in Basel II and the process of mapping internal ratings to external ratings.
This document is a questionnaire for a survey on credit risk management and the financial crisis in accordance with Basel II. It requests personal and professional information from respondents and asks questions about their bank's approach to credit risk management, internal factors and models used, external risk responses, and opinions on credit risk tolerance, capital reserves, and the introduction of credit bureaus in the UAE. The final questions inquire about preparations for implementing Basel III and suggestions for improving current credit risk management systems.
Writekraft Research and Publications LLP was initially formed, informally, in 2006 by a group of scholars to help fellow students. Gradually, with several dissertations, thesis and assignments receiving acclaim and a good grade, Writekraft was officially founded in 2011 . Since its establishment, Writekraft Research & Publications LLP is Guiding and Mentoring PhD Scholars.
Our Mission
“To provide breakthrough research works to our clients through Perseverant efforts towards creativity and innovation”.
Vision
Writekraft endeavours to be the leading global research and publications company that will fulfil all research needs of our clients. We will achieve this vision through:
Analyzing every customer’s aims, objectives and purpose of research
Using advanced and latest tools and technique of research and analysis
Coordinating and including their own ideas and knowledge
Providing the desired inferences and results of the research
In the past decade, we have successfully assisted students from various universities in India and globally. We at Writekraft Research & Publications LLP head office in Kanpur, India are most trusted and professional Research, Writing, Guidance and Publication Service Provider for PhD. Our services meet all your PhD Admissions, Thesis Preparation and Research Paper Publication needs with highest regards for the quality you prefer.
A report on Credit Risk Management in BanksAnurag Ghosh
This document discusses credit risk management in banks. It begins with an introduction and methodology section describing the sources of data analyzed. It then includes an index and sections on the banking scenario in India, credit policies, data analysis of NPA levels in major Indian banks showing a correlation between loans and NPAs, definitions of business and credit risk, causes of credit risk, credit risk assessment techniques, and other risk management strategies like credit ratings and ALM. The document analyzes challenges for banks and provides recommendations to better manage credit risk.
This document provides a final project report on credit risk management in banks. The report contains 12 chapters that discuss topics such as the importance of credit risk assessment, credit risk modeling, data collection, and model validation. The report finds that banks need sophisticated systems to quantify and manage credit risk across business lines. It evaluates traditional credit risk measurement approaches like expert systems and discusses the need for banks to have strong management information systems and analytical techniques to measure credit risk. The report aims to provide an accurate and comprehensive framework for estimating credit risk to help banks quantify capital needs to support risk-taking activities.
The document provides an introduction to credit portfolio modeling and management. It discusses [1] why banks need to estimate and hold capital to protect against unexpected credit losses, [2] an overview of several common credit portfolio models used in the industry, and [3] the development of a simple in-house credit portfolio model for estimating economic capital. The model is intended to help banks better understand and manage the unexpected loss of their credit portfolios.
The study examined credit risk and management in Nigeria Commercial Banks. From the findings it
is concluded that banks profitability is inversely influenced by the levels of loans and advances, non-performing
loans and deposits thereby exposing them to great risk of illiquidity and distress. Therefore, management need
to be cautious in setting up a credit policy that will not negatively affects profitability and also they need to
know how credit policy affects the operation of their banks to ensure judicious utilization of deposits and
maximization of profit. Improper credit risk management reduce the bank profitability, affects the quality of its
assets and increase loan losses and non-performing loan which may eventually lead to financial distress. CBN
for policy purposes should regularly assess the lending attitudes of commercial banks. One direct way is to
assess the degree of credit crunch by isolating the impact of supply side of loan from the demand side taking
into account the opinion of the firms about banks’ lending attitude.
Study on credit risk management of SBI CochiSreelakshmi_S
1. The document discusses credit risk management practices at SBI Kochi from 2013-2014. It provides background on credit risk and outlines key aspects of effective credit risk management like establishing appropriate risk environment, credit risk assessment, and portfolio management.
2. The theoretical background section defines terms like credit, risk, market risk, operational risk, and credit risk. It also discusses contributors to credit risk and key elements of credit risk management.
3. The document discusses credit rating and its use in credit decision making. It provides details on the rating tool used by SBI for assessing creditworthiness of borrowers, especially Small and Medium Enterprises.
This document discusses advanced credit risk management methods, including structural credit models like KMV and CreditMetrics that estimate default probability based on a firm's assets and leverage. It also discusses reduced form models that assume an exogenous default rate and incomplete information models that recognize uncertainty about default barriers. The final sections describe extensions of incomplete information models to better incorporate market reactions to default and integrate risks.
The Strategic Asset Fund is managed by ELP Capital Advisors and aims to provide consistent long-term returns of 12% annually through short-term, senior real estate loans. ELP evaluates borrowers based on their character, capacity, capability and collateral to ensure they can repay the loan. This focus on qualitative factors differentiates ELP from other hard money lenders. The current economic environment with reduced traditional lending presents opportunities for ELP to finance quality real estate projects and generate high returns for investors with relative safety of principal.
The document discusses the challenges that banks face in meeting new regulatory requirements for stress testing and capital planning. It notes that existing risk and finance systems are not well-suited to the more rigorous analysis now required, and that banks must improve data management, analytical models, and reporting in order to "break the black box" and increase transparency. The document outlines the complex data, modeling, and reporting needs to conduct comprehensive, forward-looking stress tests that meet regulatory expectations and can be useful for bank management.
This document discusses credit risk economic capital modeling. It provides an overview of the role of bank capital in absorbing unexpected losses while maintaining solvency. It then interprets Basel 2's capital equation, which incorporates factors like the Vasicek model, correlation, expected loss (EL), and tenor adjustment. The document introduces a model that follows Basel's approach while also using simulation to measure economic capital (EC). It discusses key applications of EC in areas like risk governance, external communication, and internal management. EC reflects a bank's risk appetite by indicating how much unexpected loss the bank is willing to absorb with its capital reserves.
Rbi securitisation guidelines may 2012 icraarjunarikeri
The RBI finalized new guidelines for securitization and direct assignment transactions that prohibit credit enhancement for direct assignments, severely impacting their volumes. The guidelines also introduce minimum holding period requirements for asset pools and clarify rules around profit recognition and excess interest release for originators. Investing banks will need to conduct stronger due diligence on acquired loan pools under the new regulations.
This document provides a summary and comparison of risk management theories from Hennie van Greuning, Joël Bessis, and Dennis Uyemura. It discusses the major categories of risk that banks face, including credit risk, country risk, performance risk, liquidity risk, interest rate risk, market risk, foreign exchange risk, solvency risk, and operational risk. While the theorists generally agree on the types of risks, there are some differences in how some risks are defined or categorized. The document will examine these risk management theories in the context of the current US mortgage crisis.
This document discusses credit risk and credit ratings. It provides an overview of credit risk modeling, key determinants of credit risk like probability of default and loss given default, and the major credit rating agencies and their rating scales. It also describes the credit rating process, which involves both quantitative financial analysis and qualitative assessments, and results in an opinion on the issuer's ability to repay debt. Regulators require banks to measure and manage credit risk using models and capital requirements.
This document discusses credit risk modeling and provides an outline for a course on the topic. It introduces statistical, structural, and reduced form models for analyzing default probability. Key aspects covered include probability of default, loss given default, credit ratings, factors that affect default, and using logistic regression to estimate credit scores and map them to default probabilities and rating classes. The document also lists relevant textbooks and academic papers on credit risk modeling.
Managing Risk Around Capital Structure, Liquidity, and Mission jsmatteo
The panel discusses managing risk around capital structure, liquidity, and mission at universities. They provide an overview of Washington University and University of Virginia's risk management approaches, which include developing comprehensive risk frameworks. A major topic is sizing optimal liquidity levels. Both schools are working to better quantify risks, stress test scenarios, and integrate risk management across departments given the interrelated nature of financial risks.
This document provides an overview of the X 430.611 course on credit markets. The course will cover macroeconomic and microeconomic aspects of credit, including various credit instruments, markets, and firm-level and consumer credit decisions. It will examine bubbles, bank runs, liquidity crises and defaults from both market and individual perspectives. The slides that follow provide examples of class content, including the importance of credit, capital structures, how credit is priced based on risk, and mechanisms like securitization that distribute credit risk. The course also examines the dark side of debt through topics like how leverage can inflate bubbles and how excessive leverage can distort the economy.
An Empirical Study of the Returns on Defaulted Debt and the Discount Rate for...Michael Jacobs, Jr.
This document summarizes an empirical study on estimating appropriate discount rates for loss-given-default (LGD) calculations. It analyzed returns on defaulted corporate debt from 1985-2007 using Moody's database. It found an average return on defaulted debt (RDD) of 29.2%, higher than previous benchmarks. RDD estimates varied by factors like collateral, seniority, and obligor characteristics. It proposed a theoretical 2-factor model incorporating systematic and idiosyncratic recovery risk. The study aimed to provide useful benchmarks for banks implementing Basel II internal ratings-based models and estimating economic capital.
The $4 million DCA loan guarantee to FinComBank in Moldova successfully increased lending to small businesses in the agriculture sector. The guarantee was almost fully utilized within 18 months and led FinComBank to expand its rural lending network. As a result of its positive experience with the guarantee, FinComBank significantly grew its agriculture portfolio and continued robust lending in the sector after the guarantee. The overall $27 million credit program in Moldova also increased competition among banks for rural borrowers and shifted lending toward smaller farms.
The document discusses establishing appropriate credit limits for customers. It recommends considering qualitative factors like a customer's character, capacity to pay, and capital, as well as quantitative factors from financial statements. A sample credit limit policy is provided that establishes criteria like granting 10% of a customer's tangible net worth as the base limit and adjusting up or down based on additional factors like security, payment history, and financial ratios. The policy outlines obtaining annual financial statements and reviewing accounts regularly.
A-study-on-Retail-Credit-Risk-and-Fraud-Management-of-Standard-Chartered-Bank(1)Shurid Zaman
This document is an internship report submitted by Shurid Zaman to Independent University, Bangladesh. The report details Shurid's internship at the Retail Clients department of Standard Chartered Bank, focusing on credit risk management and fraud management processes. The report includes sections on SCB's organizational structure, products and services, credit risk management framework, credit approval process, challenges observed, and lessons learned from the internship.
Diversification in asset class can reduce the risk and also can generate defined return based on the inventor’s risk perception. Client’s objective to get post retirement cash flow, financing and refinancing of mortgage loan is successfully implemented here.
Risk and return is related get high importance in portfolio construction. From Markowitz’s concept of the mean –variance relationship and along with modern creation of synthetic fund, the risk aversion nature of investors gets importance. The return of the portfolio decreases with the diversification but portfolios from efficient frontiers satisfy the need of investors.
Credit default, also known as non-performing loan (NPL), refers to a loan where payments of interest and principal are past due by 90 days or more. There are several causes of credit default in banks, including macroeconomic factors, issues related to lending, business-related problems, and factors related to entrepreneurs. Credit default can lead banks to have efficiency problems, a negative relationship between NPLs and performance, and credit crunch situations. Some remedies for banks include proper risk assessment, motivating loan performers, forming recovery agencies, monitoring collaterals, training staff, and balancing risk and return through investment portfolios.
Alexandria | AWGA Needs Assessment and Feasibilitynsegura85
This report examines private sector participation (PSP) opportunities in water and wastewater services in Alexandria, Egypt. Specifically, it assesses the feasibility of two pilot projects: [1] A metering, billing and collection contract for the Alexandria Water General Authority (AWGA) covering 125,000 customer accounts. [2] Contracts for septage collection and operation of a wastewater treatment site for the Alexandria General Organization for Sanitary Drainage (AGOSD). The report finds that a comprehensive 10-year contract for metering, billing and collection by a private operator could improve revenue collection for AWGA while helping modernize operations. However, issues with Alexandria's water distribution system require larger investments outside the scope
Wildomar Historical Society's presentation before the planning commission to support the Baxter Village project. Referenced are Historical Assessment Reports that determined that the house is a significant historical resource and special consideration in planning should be included.
Este documento presenta un plan de práctica para desfragmentar unidades de almacenamiento como parte de un curso de mantenimiento preventivo y correctivo de equipos de cómputo. El objetivo es que los estudiantes apliquen un desfragmentador siguiendo las políticas de seguridad. La práctica guía a los estudiantes a través de los pasos para desfragmentar un disco duro utilizando el programa Tune Up Utilities.
The document provides an introduction to credit portfolio modeling and management. It discusses [1] why banks need to estimate and hold capital to protect against unexpected credit losses, [2] an overview of several common credit portfolio models used in the industry, and [3] the development of a simple in-house credit portfolio model for estimating economic capital. The model is intended to help banks better understand and manage the unexpected loss of their credit portfolios.
The study examined credit risk and management in Nigeria Commercial Banks. From the findings it
is concluded that banks profitability is inversely influenced by the levels of loans and advances, non-performing
loans and deposits thereby exposing them to great risk of illiquidity and distress. Therefore, management need
to be cautious in setting up a credit policy that will not negatively affects profitability and also they need to
know how credit policy affects the operation of their banks to ensure judicious utilization of deposits and
maximization of profit. Improper credit risk management reduce the bank profitability, affects the quality of its
assets and increase loan losses and non-performing loan which may eventually lead to financial distress. CBN
for policy purposes should regularly assess the lending attitudes of commercial banks. One direct way is to
assess the degree of credit crunch by isolating the impact of supply side of loan from the demand side taking
into account the opinion of the firms about banks’ lending attitude.
Study on credit risk management of SBI CochiSreelakshmi_S
1. The document discusses credit risk management practices at SBI Kochi from 2013-2014. It provides background on credit risk and outlines key aspects of effective credit risk management like establishing appropriate risk environment, credit risk assessment, and portfolio management.
2. The theoretical background section defines terms like credit, risk, market risk, operational risk, and credit risk. It also discusses contributors to credit risk and key elements of credit risk management.
3. The document discusses credit rating and its use in credit decision making. It provides details on the rating tool used by SBI for assessing creditworthiness of borrowers, especially Small and Medium Enterprises.
This document discusses advanced credit risk management methods, including structural credit models like KMV and CreditMetrics that estimate default probability based on a firm's assets and leverage. It also discusses reduced form models that assume an exogenous default rate and incomplete information models that recognize uncertainty about default barriers. The final sections describe extensions of incomplete information models to better incorporate market reactions to default and integrate risks.
The Strategic Asset Fund is managed by ELP Capital Advisors and aims to provide consistent long-term returns of 12% annually through short-term, senior real estate loans. ELP evaluates borrowers based on their character, capacity, capability and collateral to ensure they can repay the loan. This focus on qualitative factors differentiates ELP from other hard money lenders. The current economic environment with reduced traditional lending presents opportunities for ELP to finance quality real estate projects and generate high returns for investors with relative safety of principal.
The document discusses the challenges that banks face in meeting new regulatory requirements for stress testing and capital planning. It notes that existing risk and finance systems are not well-suited to the more rigorous analysis now required, and that banks must improve data management, analytical models, and reporting in order to "break the black box" and increase transparency. The document outlines the complex data, modeling, and reporting needs to conduct comprehensive, forward-looking stress tests that meet regulatory expectations and can be useful for bank management.
This document discusses credit risk economic capital modeling. It provides an overview of the role of bank capital in absorbing unexpected losses while maintaining solvency. It then interprets Basel 2's capital equation, which incorporates factors like the Vasicek model, correlation, expected loss (EL), and tenor adjustment. The document introduces a model that follows Basel's approach while also using simulation to measure economic capital (EC). It discusses key applications of EC in areas like risk governance, external communication, and internal management. EC reflects a bank's risk appetite by indicating how much unexpected loss the bank is willing to absorb with its capital reserves.
Rbi securitisation guidelines may 2012 icraarjunarikeri
The RBI finalized new guidelines for securitization and direct assignment transactions that prohibit credit enhancement for direct assignments, severely impacting their volumes. The guidelines also introduce minimum holding period requirements for asset pools and clarify rules around profit recognition and excess interest release for originators. Investing banks will need to conduct stronger due diligence on acquired loan pools under the new regulations.
This document provides a summary and comparison of risk management theories from Hennie van Greuning, Joël Bessis, and Dennis Uyemura. It discusses the major categories of risk that banks face, including credit risk, country risk, performance risk, liquidity risk, interest rate risk, market risk, foreign exchange risk, solvency risk, and operational risk. While the theorists generally agree on the types of risks, there are some differences in how some risks are defined or categorized. The document will examine these risk management theories in the context of the current US mortgage crisis.
This document discusses credit risk and credit ratings. It provides an overview of credit risk modeling, key determinants of credit risk like probability of default and loss given default, and the major credit rating agencies and their rating scales. It also describes the credit rating process, which involves both quantitative financial analysis and qualitative assessments, and results in an opinion on the issuer's ability to repay debt. Regulators require banks to measure and manage credit risk using models and capital requirements.
This document discusses credit risk modeling and provides an outline for a course on the topic. It introduces statistical, structural, and reduced form models for analyzing default probability. Key aspects covered include probability of default, loss given default, credit ratings, factors that affect default, and using logistic regression to estimate credit scores and map them to default probabilities and rating classes. The document also lists relevant textbooks and academic papers on credit risk modeling.
Managing Risk Around Capital Structure, Liquidity, and Mission jsmatteo
The panel discusses managing risk around capital structure, liquidity, and mission at universities. They provide an overview of Washington University and University of Virginia's risk management approaches, which include developing comprehensive risk frameworks. A major topic is sizing optimal liquidity levels. Both schools are working to better quantify risks, stress test scenarios, and integrate risk management across departments given the interrelated nature of financial risks.
This document provides an overview of the X 430.611 course on credit markets. The course will cover macroeconomic and microeconomic aspects of credit, including various credit instruments, markets, and firm-level and consumer credit decisions. It will examine bubbles, bank runs, liquidity crises and defaults from both market and individual perspectives. The slides that follow provide examples of class content, including the importance of credit, capital structures, how credit is priced based on risk, and mechanisms like securitization that distribute credit risk. The course also examines the dark side of debt through topics like how leverage can inflate bubbles and how excessive leverage can distort the economy.
An Empirical Study of the Returns on Defaulted Debt and the Discount Rate for...Michael Jacobs, Jr.
This document summarizes an empirical study on estimating appropriate discount rates for loss-given-default (LGD) calculations. It analyzed returns on defaulted corporate debt from 1985-2007 using Moody's database. It found an average return on defaulted debt (RDD) of 29.2%, higher than previous benchmarks. RDD estimates varied by factors like collateral, seniority, and obligor characteristics. It proposed a theoretical 2-factor model incorporating systematic and idiosyncratic recovery risk. The study aimed to provide useful benchmarks for banks implementing Basel II internal ratings-based models and estimating economic capital.
The $4 million DCA loan guarantee to FinComBank in Moldova successfully increased lending to small businesses in the agriculture sector. The guarantee was almost fully utilized within 18 months and led FinComBank to expand its rural lending network. As a result of its positive experience with the guarantee, FinComBank significantly grew its agriculture portfolio and continued robust lending in the sector after the guarantee. The overall $27 million credit program in Moldova also increased competition among banks for rural borrowers and shifted lending toward smaller farms.
The document discusses establishing appropriate credit limits for customers. It recommends considering qualitative factors like a customer's character, capacity to pay, and capital, as well as quantitative factors from financial statements. A sample credit limit policy is provided that establishes criteria like granting 10% of a customer's tangible net worth as the base limit and adjusting up or down based on additional factors like security, payment history, and financial ratios. The policy outlines obtaining annual financial statements and reviewing accounts regularly.
A-study-on-Retail-Credit-Risk-and-Fraud-Management-of-Standard-Chartered-Bank(1)Shurid Zaman
This document is an internship report submitted by Shurid Zaman to Independent University, Bangladesh. The report details Shurid's internship at the Retail Clients department of Standard Chartered Bank, focusing on credit risk management and fraud management processes. The report includes sections on SCB's organizational structure, products and services, credit risk management framework, credit approval process, challenges observed, and lessons learned from the internship.
Diversification in asset class can reduce the risk and also can generate defined return based on the inventor’s risk perception. Client’s objective to get post retirement cash flow, financing and refinancing of mortgage loan is successfully implemented here.
Risk and return is related get high importance in portfolio construction. From Markowitz’s concept of the mean –variance relationship and along with modern creation of synthetic fund, the risk aversion nature of investors gets importance. The return of the portfolio decreases with the diversification but portfolios from efficient frontiers satisfy the need of investors.
Credit default, also known as non-performing loan (NPL), refers to a loan where payments of interest and principal are past due by 90 days or more. There are several causes of credit default in banks, including macroeconomic factors, issues related to lending, business-related problems, and factors related to entrepreneurs. Credit default can lead banks to have efficiency problems, a negative relationship between NPLs and performance, and credit crunch situations. Some remedies for banks include proper risk assessment, motivating loan performers, forming recovery agencies, monitoring collaterals, training staff, and balancing risk and return through investment portfolios.
Alexandria | AWGA Needs Assessment and Feasibilitynsegura85
This report examines private sector participation (PSP) opportunities in water and wastewater services in Alexandria, Egypt. Specifically, it assesses the feasibility of two pilot projects: [1] A metering, billing and collection contract for the Alexandria Water General Authority (AWGA) covering 125,000 customer accounts. [2] Contracts for septage collection and operation of a wastewater treatment site for the Alexandria General Organization for Sanitary Drainage (AGOSD). The report finds that a comprehensive 10-year contract for metering, billing and collection by a private operator could improve revenue collection for AWGA while helping modernize operations. However, issues with Alexandria's water distribution system require larger investments outside the scope
Wildomar Historical Society's presentation before the planning commission to support the Baxter Village project. Referenced are Historical Assessment Reports that determined that the house is a significant historical resource and special consideration in planning should be included.
Este documento presenta un plan de práctica para desfragmentar unidades de almacenamiento como parte de un curso de mantenimiento preventivo y correctivo de equipos de cómputo. El objetivo es que los estudiantes apliquen un desfragmentador siguiendo las políticas de seguridad. La práctica guía a los estudiantes a través de los pasos para desfragmentar un disco duro utilizando el programa Tune Up Utilities.
The evaluation report summarizes the mid-term performance of the Kosovo Cluster and Business Support Project. Some key findings include:
1. Project implementation has generally been on track, with most targets met. However, results have varied between components, with clusters making better progress than business associations.
2. Impact has included exceeding sales targets for client companies. However, there has been less impact on job creation and export readiness. Efficiency has been positive when comparing costs to increased sales, but costs per beneficiary appear higher.
3. Sustainability of activities depends on strengthening business associations and external factors like privatization and legal reforms. Relevance to strategic goals is high, but government support is still needed for sustainable
The document discusses two loan guarantees between USAID and EcoBank in Ghana from 2003 to 2008 and 2005 to 2012. It finds that the guarantees helped EcoBank expand lending to new sectors and industries, provide larger and longer-term loans, and increase lending to SMEs substantially. However, most of EcoBank's lending growth was due to its own strategy rather than the guarantees, which had a modest impact due to representing a small number of sectors. The guarantees gave EcoBank experience that informed but did not dramatically change its lending practices.
Welcome to Community Champions 101 - Week 1 - Getting to know you and your expectations. Learning to lead like a champion and come alongside someone to encourage, prepare, equip, and help others succeed. What is a champion? What isn't a champion! Pitfalls and the gift you are able to give someone.
This document provides a needs assessment and pre-feasibility report for increasing private sector participation in water and wastewater services in Alexandria, Egypt. It analyzes three potential service contracts: 1) Collection and disposal of septage, 2) Operation of the Site 9N wastewater facility, and 3) Transport of wastewater by-products. For septage collection, the report recommends a licensing model over a service contract to reduce costs and illegal dumping. It suggests a lease contract for Site 9N to incentivize improved operations. And it recommends separate service contracts for transport of by-products rather than including it in the Site 9N contract. The report provides background on population trends, existing services, and financial analyses
The consulting team conducted initial meetings in Egypt from March 18-29, 2004 to begin the water and wastewater feasibility study for private sector participation in Alexandria. They met with USAID officers, WWSPR project staff, and local professionals. In Alexandria, the team met with the Governor and utility leaders and received support for private sector involvement. The team proposed adjustments to the scope of work and a project implementation schedule outlining deliverables and meetings through November 2004 to complete the study within the estimated timeframe.
Phase Two Report: Feasibility Analysis of New Company - Mainnsegura85
This document provides a feasibility analysis for establishing a new water and sanitation company (NEWCO) in Jordan. It summarizes the key aspects of NEWCO's mandate, legal framework, organizational structure, human resources, operations, start-up project, pricing and subsidies, and financial viability. The analysis finds that NEWCO is legally and financially feasible and recommends its creation to improve water and wastewater services for Greater Amman through commercial management practices, private sector expertise, and a more sustainable financial model.
Root Capital received two loan guarantees from USAID's Development Credit Authority (DCA) totaling $3 million to expand lending to small and medium agribusinesses in Latin America and East Africa. The guarantees allowed Root Capital to provide loans to riskier borrowers and enter new markets. As a result, Root Capital was able to triple its Latin America portfolio and nearly triple its Africa portfolio. Many borrowers received additional, non-guaranteed loans from Root Capital and had increased access to finance from other sources over time. The DCA guarantees helped Root Capital demonstrate the creditworthiness of borrowers in these sectors and markets, contributing to improved access to finance for small agricultural businesses.
The document summarizes a Development Credit Authority (DCA) loan guarantee program between USAID and the Bank of Kigali in Rwanda from 2004 to 2007. The key findings were:
1) The guarantee was fully utilized, with the Bank of Kigali issuing over $1.7 million in loans to coffee washing station investors, achieving 86% of the $2 million guarantee ceiling.
2) The guarantee likely increased the Bank of Kigali's agricultural lending, allowing them to expand into this sector at reduced risk.
3) After the guarantee ended, the Bank of Kigali provided some additional working capital loans to borrowers they had experience with, but did not significantly change their lending
1) A USAID loan guarantee program in Honduras supported lending to agriculture and microenterprises by guaranteeing loans made by the José Maria Covelo Foundation (FJMC) between 2003-2009.
2) The guarantees helped FJMC expand lending to agriculture from 0 to over $222,000 and increase average loan sizes for microenterprises.
3) By 2007, FJMC had developed agricultural lending expertise and expanded their non-guaranteed portfolio, demonstrating the program's success in developing local capacity.
This document discusses the importance of credit discipline for borrowers and differences between how banks and credit rating agencies define default. It notes that credit rating agencies use a more stringent definition of default as even a single missed payment, while banks typically designate an account as non-performing only after 90 days of missed payments. The document argues that a more stringent definition of default aligned with global standards benefits borrowers as they seek diverse sources of funding. Adopting international credit discipline standards helps borrowers access global capital markets and improves their creditworthiness over time.
The document discusses the role of credit rating agencies in evaluating the creditworthiness of entities and issuing ratings. It outlines that credit rating agencies analyze factors like income, credit lines, and ability to repay debt. The largest agencies are Moody's, S&P, and Fitch that rate over 90% of global debt. The document also examines specific Indian credit rating agencies like CARE, CRISIL, ICRA, and SMERA. It describes the methodology agencies use to evaluate companies and financial instruments and assign letter ratings indicating credit risk.
This document is a student research project on credit rating agencies that was prepared by S. Avinash and supervised by Dr. Debi Prasad Satapaty. It discusses credit rating agencies, including their objectives and major findings. Some key points include: credit rating agencies evaluate creditworthiness and assess ability to repay debt; major agencies in India include CRISIL, ICRA, CARE, and Fitch; and credit ratings play a central role in debt markets by helping investors and lending institutions assess risk.
Madison Street Capital Investment Bank alternative lending white paper kdcunha
Alternative lending sources provide capital options for lower to middle market companies that are often deemed "unbankable" by commercial banks. These alternative lenders include specialty finance companies, credit hedge funds, business development companies, mezzanine lenders, private equity funds, and special situation funds. While alternative lending can fill capital gaps, the costs are typically higher, including high interest rates in the teens to low 20s, restrictive covenants, equity components, high fees, and personal guarantees. However, for some businesses, the rewards of accessing capital to pursue opportunities outweigh the costs of doing nothing or the inability to access traditional bank loans.
Credit ratings are opinions on the likelihood that a borrower will repay their debt. They are issued by independent rating agencies and help investors assess risk. The document discusses the history and role of credit ratings in India, provided by agencies such as CRISIL, the largest domestic rating agency. It outlines CRISIL's ratings scales and process for long-term and short-term instruments, corporate issuers, real estate projects, and developers.
The document provides an overview of project financing and Union Bank of India. It discusses how project financing is used to fund large infrastructure projects and is emerging as a preferred alternative to conventional financing. It also provides details on Union Bank of India such as its establishment, services offered, branches, technology initiatives and rankings. The document outlines the steps involved in project financing at Union Bank including conducting feasibility studies, assessing financial health, determining credit ratings, fixing interest rates and sanctioning and disbursing loans. Conducting in-depth feasibility studies of the technical, market and organizational aspects of a proposed project is a key part of the process.
Credit ratings are evaluations of an entity's ability and willingness to repay debt. They originated in the US in 1909 and gained importance after the Great Depression. Credit rating agencies analyze factors like an entity's finances, management, and industry to assign ratings symbols indicating different levels of default risk. In India, the top three rating agencies are CRISIL, ICRA, and CARE Ratings. They use methodologies involving economy, business, financial, management and fundamental analyses to determine ratings that guide investors and policymakers.
The document contains several news items related to the financial and economic situation in Sri Lanka in December 2012.
[1] It discusses the 21 point plan enumerated by the Central Bank Governor for bankers to follow, focusing on issues like risk management, corporate governance, succession planning and supporting economic growth.
[2] Other articles provide updates on the banking sector like relaxations in foreign exchange rules, Fitch's outlook for Sri Lankan banks in 2013, and the selection of Commercial Bank's annual report as the best in banking sector.
[3] The economic news items report Sri Lanka's GDP growth, inflation rates, and updates on sectors like tourism and external trade.
Shadow Banking: Implications for Financial Stability and Economic Rebalancing...pkconference
Shadow banking in China has grown rapidly in recent years, increasing financial stability risks. Major shadow banking institutions include trusts, wealth management products, and off-balance sheet bank activities. This rapid growth was driven by regulatory arbitrage as banks sought to expand credit outside of regulatory constraints. However, shadow banking also contributes to high leverage, liquidity and maturity transformation risks, exacerbating China's credit and economic imbalances. More research is needed to understand these systemic risks and appropriate regulatory responses.
ROLE OF CREDIT RATING AGENCIES ON LOAN ON BANK OF BARODAVaishali Upadhyay
This document is a project report submitted by Vaishali Sunil Upadhyay to Indira Institute of Business Management in partial fulfillment of an MMS degree from the University of Mumbai. The report examines the role of credit rating agencies in respect of loan portfolios of Bank of Baroda. It includes a declaration by the student, a certificate signed by the project guide, and acknowledgements. The report will analyze data and make recommendations on the topic.
This document provides an acknowledgement, declaration, contents list, and introduction for a study on credit risk management at Syndicate Bank. The study was conducted in partial fulfillment of an MBA degree from Osmania University between 2009-2011. It acknowledges the support provided by the college principal, head of department, college lecturers, and an employee from Syndicate Bank. The declaration confirms the work is original and was conducted under the guidance of an external project guide.
This document discusses credit analysis and financial distress prediction. It covers key topics including why firms use debt financing, potential downsides of debt financing, and differences in debt financing practices internationally. It also describes the credit analysis process in private debt markets, including conducting financial analysis and assembling loan structures. Methods of predicting financial distress like Altman's Z-score model are also discussed.
1) The document discusses credit profiles and ratings for small and medium enterprises (SMEs) in Asian emerging economies. It covers topics like the definition of credit profiles, constituents of credit profiles, credit rating migration, and problems faced by SMEs.
2) It provides details on credit rating processes in China and India, including common sources of financing for SMEs in China. Credit rating agencies that rate SMEs in India are also discussed.
3) Obtaining a credit rating can provide SMEs benefits like access to concessional funding from banks through lower interest rates and faster loan processing times. It can also help SMEs gain new business opportunities.
What is the role of credit rating agencies in our global financial system? Learn how credit ratings on securities are created and used. Part of a continuing series of introductory seminars for the financial services industry. We develop custom training, contact us for a quote or discussion of your needs.
The document summarizes an evaluation of loan guarantees provided by USAID to Kenya Commercial Bank (KCB) through the Development Credit Authority (DCA) program in 2006 and 2010. The guarantees were intended to encourage KCB to increase lending to small and medium enterprises (SMEs) in underserved areas by covering 50% of the risk. The evaluation found that the guarantees achieved their objectives by enabling KCB to issue over 1,900 loans totaling over $13.5 million to SMEs in sectors like agriculture, tourism, and manufacturing. Borrowers experienced growth in sales, profits, and employment. The guarantees also demonstrated to KCB and other Kenyan banks that lending to SMEs can be profitable.
The document discusses a USAID initiative called the Regional Competitiveness Initiative (RCI) that aimed to boost economic growth in South Eastern Europe. RCI provided small grants to establish Centers of Excellence and Innovation (CEIs) focused on sectors like ICT, agriculture, tourism, and manufacturing. This supported the development of 5 initial CEIs in various countries. It later expanded the network of CEIs and helped integrate them regionally. The CEIs worked to stimulate innovation, provide training, and increase competitiveness across multiple sectors in the region.
RCI leverages resources and partnerships to improve IT competitiveness in the E&E region. Through partnerships with organizations like ESI Center Bulgaria/Eastern Europe, RCI develops models for IT training and certification that are implemented regionally. This approach improves the processes of regional IT firms and helps them obtain international certifications while also leveraging co-funding from other donors to ensure sustainability. Initial programs launched in 2005-2007 in countries like Bulgaria, Macedonia, and Moldova have continued with support from other programs, demonstrating the sustainability of RCI's model.
- EcoBank implemented two DCA loan guarantees with USAID to increase lending to small and medium enterprises (SMEs) in Ghana.
- EcoBank used the guarantees to gain experience lending to new industries and borrowers, and to provide larger, longer-term loans for capital expenditures.
- While EcoBank significantly increased its SME lending, most of the growth was part of its broader strategy and not directly attributable to the guarantees, which accounted for a small portion of the SME portfolio.
The document discusses two loan guarantees between USAID and EcoBank in Ghana from 2003-2008 and 2005-2012. It finds that the guarantees helped EcoBank expand lending to new sectors and provide longer term loans, but that EcoBank's overall lending growth was driven more by its retail banking strategy than the guarantees. The guarantees had a modest demonstration effect on broader banking sector lending but did not significantly impact total SME lending growth in Ghana.
The USAID DCA loan guarantee in the Philippines had 3 objectives: 1) Strengthen the LGUGC's ability to mobilize private capital for local infrastructure projects, 2) Encourage private lending to local governments and water districts, and 3) Expand access to credit for these sectors. The guarantee supported $28.5 million in loans leading to increased private sector confidence in LGUGC and more long-term loans for water districts. While direct impact was modest, the guarantee helped launch private investment in these sectors and informed new programs like the Philippines Water Revolving Fund to continue this progress.
1) The document summarizes an evaluation of a USAID loan guarantee program with Bank Danamon in Indonesia following the 2004 tsunami.
2) The guarantee helped the bank resume and expand microfinance lending in disaster-affected Aceh and North Sumatra, meeting USAID's primary objective.
3) While the bank significantly expanded lending nationwide during the guarantee period, this was largely due to its aggressive growth strategy rather than the guarantee itself, except for lending increases in Aceh.
The USAID provided loan guarantees to the Bank of Abyssinia (BOA) to encourage lending to Ethiopia's agriculture sector. This increased BOA's agricultural lending from 0% to 2.3% of its portfolio. It allowed farmers access to larger loans than otherwise possible. While the guarantees influenced BOA, other banks also increased agricultural lending due to government policy and potential foreign currency from exports. However, lack of collateral and infrastructure still limit small farmers' access to credit.
This document provides a transaction implementation plan for a private sector participation (PSP) contract to provide metering services for a pilot area in Alexandria, Egypt. The plan involves procuring a contractor through a competitive bidding process over 9 months. Key activities include gathering customer data, replacing outdated meters, conducting a customer census, and installing advanced metering technology. The PSP contract aims to increase revenues an estimated $1 million per year by improving meter accuracy and identifying illegal connections. A transaction advisor will oversee the procurement process and help structure a 10-year performance-based contract. The plan aims to demonstrate the benefits of PSP for metering services to other Egyptian utilities.
This document provides a plan for implementing private sector participation contracts for three water and wastewater operations in Alexandria, Egypt: 1) septage collection and disposal, 2) operation of Site 9N, and 3) transport of waste materials. It recommends pursuing the contracts simultaneously and retaining transaction advisors to help. Key activities include enhancing information, selecting advisors, addressing staff impacts, assessing equipment conditions, and implementing pre-transaction tasks like creating an implementation unit and organizing a data room. The timeline is estimated at 9 months and costs at 4.2 million Egyptian pounds.
Alexandria Water Project Update-Implementation Plannsegura85
This document provides an updated project implementation schedule for the Alexandria Water & Wastewater PSP Study from March 2021 to November 2021. The schedule is divided into 4 main tasks: 1) Developing an initial policy statement; 2) Adjusting the scope of work for service contracts; 3) Conducting a feasibility study; and 4) Creating a transaction and implementation plan. Key deliverables include 7 reports providing recommendations and findings, as well as workshops in Egypt to discuss findings and next steps. The schedule notes that Ramadan religious holidays will occur from mid-October to mid-November.
This document presents the government policy statement for water supply and sanitation services in Alexandria, Egypt. It discusses the challenges facing the water and wastewater systems, including rapid population growth, large investment needs, rigid labor forces, and inadequate cost recovery. It identifies six key policy areas to address: governance, pricing of services, personnel management, financial viability, private sector participation, and regulation. The document provides background and recommendations for each of these areas.
This document discusses policy considerations regarding a feasibility study for private sector participation in the operation and maintenance of Alexandria, Egypt's water and wastewater system. Key points discussed include:
1. Merging the water and sanitation agencies could provide efficiencies but may be difficult due to organizational differences and financial imbalances. A merger is not necessary for reform.
2. Streamlining the over 9,000 personnel across the two agencies could significantly improve productivity but may face political challenges. A phased 50% reduction plan is recommended.
3. Tariff increases are needed but the structure should better target subsidies to the poor.
4. Local agencies should have operational and financial autonomy under the new holding company framework
Alexandria PSP Feasibility Study - Final Reportnsegura85
This document provides a summary of a feasibility study conducted for private sector participation in the water and wastewater systems of Alexandria, Egypt.
1) The study evaluated options for private contracting in metering, billing, and collections at AWGA and found that a comprehensive contract covering all three functions had the most benefits but AWGA preferred a more limited metering-only contract.
2) For AGOSD, licensing private operators for septage collection and disposal was recommended over service contracts, and a long-term lease of wastewater treatment Site 9N to a private operator was favored over a management contract.
3) Transportation of sludge and other waste was best handled through competitive private service contracts rather
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This document assesses economic conditions and identifies potential development projects in northern Kosovo, with a focus on northern Mitrovica. It finds that the economy can be described as a "kiosk economy" with high unemployment, dependence on subsidies, and supplemental subsistence agriculture. Unemployment is between 70-80%. The private sector is small, with most companies involved in trade. Government and donor support to businesses is limited. The region has weak economic foundations and faces constraints such as limited market access and political uncertainty. In the short term, the report recommends job creation programs and facilitating north-south trade. In the medium-term, it suggests improving economic foundations through training and university linkages. Longer-term options include
Este documento describe el proceso de corporatización de los servicios de agua y saneamiento en las ciudades de Aqaba y Ammán en Jordania. Explica que la corporatización involucró la creación de compañías de propiedad del gobierno para reemplazar las organizaciones existentes, resultando en la Compañía de Agua de Aqaba (AWC) y la Compañía de Agua de Ammán (MIYAHUNA). El proceso fue complejo e involucró negociaciones entre agencias gubernamentales, USAID y consultores. El documento anal
2. On the Cover: The city of Rostov-on-Don
BACKGROUND EVALUATION OBJECTIVES
In 2003, small and medium enterprises (SMEs) in USAID’s Office of Development Credit (EGAT/DC),
Russia accounted for 94 percent of the total number which administers the DCA guarantees,
of businesses in the country. However, despite their commissioned an evaluation of the Center-Invest
numbers, SMEs produced only 13 percent of GDP in guarantee in 2009. This evaluation assesses the
2004 and commercial performance of the guarantee relative to its objectives
ABOUT DCA
credit available to help as defined in the Action Package developed by
USAID's Development Credit Authority
(DCA) was created in 1999 to mobilize SMEs grow met only one USAID/Russia, i.e., increasing access to credit for
local private capital through the percent of demand. High SMEs in Rostov, Krasnodar, and Volgograd. The
establishment of real risk sharing transaction costs, evaluation assesses the outputs, outcomes, and
relationships with private financial
perceived riskiness of impacts of the guarantee.
institutions in USAID countries. The tool
commercial lending to
is available to all USAID overseas The evaluation covers Center-Invest’s lending
missions and can be used as a vehicle SMEs, lack of sound risk
behavior and potential demonstration effects in the
for providing much needed credit to an assessment methodology,
array of enterprises and underserved banking sector. It does not examine EGAT/DC’s or
and unfavorable
sectors. The evaluation in Russia is part USAID/Russia’s administration of the guarantee, nor
regulations governing
of a set of evaluations that EGAT/DC is does it examine the guarantee’s contribution to
undertaking in different countries, to test collateral possession in
USAID/Russia’s strategic objectives.
a series of developmental hypotheses case of default
related to the DCA guarantees. discouraged banks from EVALUATION METHODOLOGY
lending to SMEs. SMEs This evaluation used a mixed methods approach,
that wanted to borrow did not have sufficient including statistical analysis of loan data, key informant
collateral to meet bank requirements and faced and group interviews, and document review. It began
burdensome interest rates. with a review of background documents on Center-
Invest and its DCA guarantee, and continued in Russia
USAID responded to the lack of SME finance in 2004 from June 15-26 with semi-structured interviews with
by providing a $6 million, 5-year loan portfolio Center-Invest staff and clients, the USAID Mission,
guarantee (LPG) to a regional Southern Federal and other financial sector experts. The lead evaluator
District (SFD) bank, Bank Center-Invest. USAID had used comparative analysis, statistical analysis, and
discovered that Center-Invest was planning to expand content pattern analysis to draw findings from the
its SME lending to other oblasts in the SFD and collected data, from which she drew conclusions.
agreed to support the bank with an LPG under the
Agency’s Development Credit Authority (DCA). The Data limitations included: (1) unavailability of and non-
program proposed to cover 50 percent of Center- response from several Center-Invest staff members;
Invest’s principal losses on a portfolio of loans made (2) lack of data on Center-Invest’s non-guaranteed
to SMEs through its new branches in Krasnodar and lending; and (3) no interviews with recipients of
Volgograd, with the objective of providing credit to guaranteed loans. However, the evaluator does not
SMEs who would not otherwise have access to formal believe these limitations significantly impact the
financial markets. evaluation conclusions.
CENTER-INVEST DCA LOAN GUARANTEE
Ceiling Number of Median Average Loan
Starting Ending Aggregate Utilization
Amount Loans (as of Loan Size Tenor
Year Year Amount ($) Rate
($) 6/2009) ($) (months)
2004 2009 6 million 137 4,570,886 76.18 % 17,809 9
3. KEY FINDINGS AND CONCLUSIONS Krasnodar and Volgograd does not receive much
OUTPUTS government support, the environment is less
Conclusions The DCA guarantee purpose—to expand conducive for SME lending.
lending to Krasnodar and Volgograd—fit perfectly • Center-Invest principals said the bank used its
within Center-Invest’s business strategy. However, due standard processes to assess the creditworthiness
to its risk aversion and the challenging SME of SMEs and to calculate the collateral requirement
environments in Krasnodar and Volgograd, the bank for each loan. In cases in which otherwise solid
decided it was not ready to lend to these markets right businesses could not meet the collateral
away and therefore used most of the guarantee funds to requirement, Center-Invest made loans under the
loan to collateral-poor SMEs in the Rostov region. DCA guarantee.
• Center-Invest’s average collateral requirement is
Center-Invest’s lending portfolio has performed well 150 percent of the value of the loan. The average
since the DCA guarantee began. The guarantee’s collateral percentage among DCA guaranteed loans
influence on Center-Invest’s portfolio characteristics was 111 percent.
was minimal, simply because the guaranteed loans
• The value of Center-Invest’s SME portfolio
represented a small proportion of the Bank’s SME
increased from RUR 3,206 million in 2003 to RUR
portfolio and the bank made no procedural changes to
10,045 million in 2008, a 213 percent growth.
accommodate the guarantee.
• Together, the total value of the DCA guaranteed
Findings in support of these conclusions include:
loans represented one percent of Center-Invest’s
• The Purpose of the signed Guarantee Agreement SME portfolio value as of January 1, 2009.
between USAID and Center-Invest was “To
strengthen the Guaranteed Party’s ability to OUTCOMES
expand its SME loan portfolio through its newly Conclusions The DCA guarantee has contributed to
opened branches in two Russian regions: increased credit access for Center-Invest’s borrowers
Krasnodar and Volgograd….” This purpose is and may have influenced the bank to participate in other
consistent with Center-Invest’s objective for the guarantee funds. The full impact of the guarantee on
guarantee: developing relationships with clients in Center-Invest’s non-guaranteed lending business is
Krasnodar and Volgograd, which was also part of larger than the one percent it directly contributed to
Center-Invest’s 2003-2008 business plan. the bank’s growth, but we do not have sufficient data to
• Center-Invest provided eight of its 137 DCA make a reasonably accurate estimate.
guaranteed loans to businesses in the Krasnodar Findings to support these conclusions include:
region and five in Volgograd. • Center-Invest’s Head of SME Lending explained
• Center-Invest’s Head of the SME Lending that clients who received DCA guaranteed loans
Department explained that the bank had not would not likely have become clients without the
scrutinized the markets in Krasnodar and guarantee, because they could not meet the
Volgograd prior to receiving the DCA guarantee collateral requirements. The bank retained all but
and was hesitant to risk lending to unknown three or four of these clients.
markets. By the time Center-Invest felt more • The bank intends to participate in an upcoming
comfortable lending in Krasnodar and Volgograd, it tender from the Rostov regional government for a
had already come to within 76 percent of the guarantee fund that backs loans to SMEs short of
maximum portfolio amount allowed under the collateral. The bank also signed an agreement with
guarantee. the Regional Guarantee Fund of Volgograd for
• Representatives of Center-Invest and the European guaranteeing loans to SMEs lacking collateral.
Bank for Reconstruction and Development (EBRD) • Center-Invest expanded its credit product
in Rostov said that since the SME sector in offerings for SMEs between 2003 and 2009 from
4. fewer than six identifiable loan products to 13. CENTER-INVEST BANK SME LOAN PORTFOLIO
The Head of SME Lending at Center-Invest said 20,000
SME Portfolio value (million
that the DCA guarantee inspired the bank to 18,000
extend its credit product line. 16,000
14,000
• Center-Invest is now the largest provider of SME 12,000
RUR)
loans in the Rostov region in terms of volume, 10,000
overtaking the previously dominant, state-owned 8,000
6,000
Sberbank. 4,000
• Since clients who received a guaranteed loan 2,000
received additional loans from the bank, the 0
multiplier effect pushes the guarantee’s direct 2001 2002 2003 2004 2005 2006 2007 2008
one percent contribution to the bank’s loan
portfolio higher, but there is insufficient data to
estimate the multiplier value.
• Reasons given for Center-Invest’s success in the
Rostov region SME market include: effective public which attracted banks to lend to them.
relations, ties with the local administration and • SMEs said that it is still very difficult to obtain finance in
international partners, and an unwavering focus on the Rostov and collateral requirements can be as high as
needs of regional SMEs, along with strong community 400 percent. The EBRD said that banks still see
ties. crediting SMEs as risky and therefore do not offer
IMPACTS terms that are favorable to SMEs, or treat SMEs as
Conclusions Other banks have increased lending to SMEs corporate clients, with documentation, accounting, and
since 2004, especially in the SFD, because of a combination collateral requirements that are too high for SMEs to
of favorable economic and infrastructure conditions that attain.
fueled SME development, government programs encouraging • Since its founding, Center-Invest has supported SMEs
lending to SMEs, and experience with SMEs as profitable through a variety of charitable and financial projects.
customers. However, SMEs’ access to credit has not Center-Invest has been providing free legal advice to
significantly improved. Center-Invest seems to be unique in clients via a hotline since 2006. With funding from the
its concerted efforts to make financing accessible to small IFC, the bank introduced an energy efficiency program
businesses in the SFD, and it has significantly improved the in 2005, which finances projects that reduce companies’
environment for SME lending. operating costs and promote a greener economy.
Findings to support these conclusions include: • In 2006, the bank hosted its second international
• All interviewees, including Center-Invest clients, agreed conference, “Russian and German Day for SME
that banks have increased lending to SMEs in Russia in financing,” in which it connected its SME customers
general and in Rostov specifically since 2003 because: with entrepreneurs and financiers in Germany. The
(1) banks expected SME lending to grow; (2) SME loans bank recently hosted a workshop to instruct SMEs on
provide good yields; (3) the Russian economy was how to obtain government contracts, to which it
growing rapidly; (4) there was unmet demand for SME invited both SME clients and government officials.
credit; (5) banks found that SMEs were reliable
borrowers; (6) the regional Rostov administration This publication was produced for review by the United States Agency for
supported SMEs through subsidies; and (7) the International Development. It was prepared by SEGURA/IP3 Partners LLC under
SEGIR Global Business, Trade and Investment II – IQC Indefinite Quantity Contract,
favorable economy in Rostov attracted more SMEs, Number EEM-I-00-07-00001-00 Task Order # 04, Development Credit Authority
Evaluation.
CONTACT INFORMATION
U.S. Agency for International Development
Office of Development Credit
1300 Pennsylvania Avenue, NW
Washington, D.C. 20523
http://www.USAID.gov
Keyword: DCA