The examiner's evaluation of the Loan portfolio involves much more than merely appraising individual loans. Prudent management and administration of the overall loan account, including establishment of sound lending and collection policies, are of vital importance if the bank is to be continuously operated in an acceptable manner
Lending policies should be clearly defined and set forth in such a manner as to provide effective supervision by the directors and senior officers. The board of directors of every bank has the legal responsibility to formulate lending policies and to supervise their implementation. Therefore examiners should encourage establishment and maintenance of written, up-to-date lending policies which have been approved by the board of directors. A lending policy should not be a static document, but must be reviewed periodically and revised in light of changing circumstances surrounding the borrowing needs of the bank's customers as well as changes that may occur within the bank itself. To a large extent, the economy of the community served by the bank dictates the composition of the loan portfolio. The widely divergent circumstances of regional economies and the considerable variance in characteristics of individual loans preclude establishment of standard or universal lending policies. There are,
Comparing credit and loans
If you are shopping around for a credit card, get a ‘key facts sheet’ from the
card issuer so you can compare interest rates, fees and features.
1 Minimum repayment (or how it will be calculated)
2 Interest rate that applies to purchases and cash advances
3 Interest rate that applies to balance transfers (and for how long)
4 Promotional interest rate (if any)
5 Length of the interest-free period (if any)
6 Annual and late payment fees (if any)
If you are thinking about taking out a home loan, ask the lender for a key
Facts sheet. A set format is used to make it easier for you to compare loans
And understand how they work. Look for important information such as:
1 Total amount to be paid back over the life of the loan
2 Interest rate
3 Establishment fees (if any)
4 Ongoing fees
5 What happens if interest rates increase
6 How can I repay my loan faster
Credit providers must give a ‘comparison rate’ when they advertise a rate
or a weekly payment for home loans. The comparison rate includes the
interest rate or weekly repayment amount, plus most fees and charges.
This can be a better indicator of how much a loan will really cost you. For
example, a loan with a lower interest rate but higher fees and charges may
actually be more expensive than one with a higher interest rate.
Fees and charges
Home loan A
Home loan B
In the table above, home loan B will cost less than home loan A, even
though home loan A has a lower interest rate. Just remember to check the
features being offered by each loan to ensure they suit you.