Scribd
Upload
4 views

In

The document provides a comprehensive list of 53 in-depth questions aimed at evaluating the skills and approaches of credit managers in various scenarios. It covers topics such as loan types, credit metrics, financial analysis, and the creditworthiness assessment process. Additionally, it includes sample answers to common interview questions, emphasizing the importance of understanding credit analysis principles like the five Cs.

Uploaded by

manjunath.s
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
4 views

In

The document provides a comprehensive list of 53 in-depth questions aimed at evaluating the skills and approaches of credit managers in various scenarios. It covers topics such as loan types, credit metrics, financial analysis, and the creditworthiness assessment process. Additionally, it includes sample answers to common interview questions, emphasizing the importance of understanding credit analysis principles like the five Cs.

Uploaded by

manjunath.s
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

In-Depth Questions For Credit Managers

To evaluate your skill level or your approach to certain situations, you may face these 53
role-specific questions:

1. What is your management style as a credit manager?

2. What are the different types of loans?

3. How does a housing loan work? State its PSL guidelines.

4. How does an education loan work? State its PSL guidelines.

5. How does a business loan work? State its PSL guidelines.

6. What are the most common credit metrics banks look at?

7. How do you determine the affordability of a mortgage loan?

8. What is your approach to addressing inconsistencies in the finance of an


organisation?

9. Explain the loan analysis process for individuals, partnerships and companies,
respectively.

10. Define the credit rating of a company. What are MOA and AOA?

11. What are the methods for comparing the liquidity, profitability and credit history
of a company?

12. How do you determine a customer's financial ratios and financial status?

13. Which documents are important in processing a personal loan?

14. What are the RBI guidelines for personal loans?

15. Share a method for verifying applicants' references, employment, health history
and social behaviour.

16. Provide an efficient method for securing information about potential creditors.

17. Give an example of a time when you declined a vendor's request for more credit.

18. How do you monitor debt payments for customers who have missed a payment?

19. What is the right way of notifying clients who have missed payments?

20. How do you handle a debtor who refuses to settle their debts?

21. What is financial statement analysis? Outline its basic methods and tools.

22. What would you do if there is a discrepancy in a client's financial statements?


23. What do you know about ratio analysis? Outline its importance.

24. Define EPS and diluted EPS.

25. What is CIBIL? Outline its range.

26. What are the BASEL norms in banking?

27. Define ARR. What is its importance in the Indian banking system?

28. What is the interest coverage ratio?

29. What is the importance of the debt-equity ratio?

30. What is a reasonable debt-capital ratio?

31. Describe debt service coverage ratio (DSCR), current ratio and ideal ratio.

32. Differentiate between cash credit and overdraft facility.

33. What do you know about the SARFAESI act?

34. What is a letter of credit (LC)? List its types.

35. What is a non-performing asset (NPA)? How do you classify them?

36. Differentiate between derivatives and swaps.

37. What do you know about the terminal value and free cash flow?

38. How do you calculate the terminal value and the discount rate in a DCF
valuation?

39. How can you support junior staff and aid their development?

40. How do you manage a staff member who makes frequent mistakes?

41. What is the ideal relationship between the sales team and credit managers?

42. What is your method of determining the profitability of a loan?

43. How do you evaluate if a loan or investment is dangerous?

44. What sort of data do you require for updating the company's credit policy?

45. What techniques do you use to create scoring models?

46. What are some of the RBI circulars you follow in your job?

47. What do you know about the insolvency and bankruptcy code?

48. Share an effective method to compile and analyse credit information.

49. Share an experience when you successfully conveyed difficult information.


50. Provide an example of something which tested your professional ethics. What
did you do?

51. What processes can you implement to improve our credit management
processes and increase efficiency?

52. What is your prediction about the credit industry in the short term?

53. Give an example of a time you successfully handled a challenge as a credit


manager.

Related: 35 Credit Analyst Interview Questions (With Sample Answers)

Credit Manager Interview Questions With Sample Answers

Here are some sample credit management questions with strategic answers that can
help you understand how to create your answers effectively for your next interviews:

1. How do you determine the creditworthiness of a potential customer?

Determining customers' creditworthiness is one of the most important job functions of


a credit manager. It is a crucial step before approving loans. This question gauges the
candidate's knowledge of the essential parameters used to evaluate loan requests.
Provide two separate answers for businesses and individuals, respectively. Make sure
your response highlights your knowledge of credit score, experience in credit approval
and familiarity with the characteristics of creditworthiness.Example: With individuals, I
first check their payment history, cash flow and credit score to evaluate their
creditworthiness. A high credit score shows that the client can repay on time, while a
low credit score shows an inability to repay. For businesses, I usually assess the
company's financial health with big data, review its credit score by running a credit
report and check its authenticity by asking for references. I also check its financial
position, calculate the company's debt-to-income ratio and investigate regional trade
risk to evaluate its creditworthiness.Related: What Is A Background Check? (With
Details About The Process)

2. What are the five Cs of credit analysis?

As a credit manager, you often score a customer's loan application based on the five C's
of credit analysis. Knowing this principle and applying it correctly can help you
accurately determine whether a potential customer qualifies for the credit limit. It is one
of the basic banking operations. While answering this question, outline the utility of
each tenet instead of simply naming the five C's of credit analysis.Example: The five C's
of credit analysis are character, capacity, capital, collateral and conditions. Character
refers to credit history, which is helpful in determining whether an entity is likely to repay
the debt. Capacity measures the borrower's ability to have sufficient funds to repay the
loan. We can calculate capacity by comparing income against recurring debts and
assessing the borrower's debt-to-income (DTI) ratio. Capital is the amount the borrower
has invested in themselves. The higher the capital, the more risk the borrower is taking,
which shows they are more likely to repay the debt.Collateral is the security the client
puts up against the loan to give assurance to the lender. If the borrower defaults on the
loan, the lender can get something back by repossessing the collateral. Conditions are
the general criteria relating to the loan including the purpose of the loan, how a borrower
intends to use the money, the length of the applicant's employment at their current job,
how their industry is performing, their future job stability, state of the economy and other
predetermined repayment terms.

You might also like