AU Small Finance Bank Assistant Credit Manager Interview Questions, Process, and Tips

A bank is a financial institution that provides various services such as accepting deposits, lending money, and facilitating financial transactions.

• Accepts deposits from individuals and businesses

• Lends money to individuals and businesses

• Facilitates financial transactions such as wire transfers, bill payments, and issuing credit cards

• Provides investment and wealth management services

• Offers various types of accounts such...read more

Working capital is the amount of money a company has available to fund its day-to-day operations.

• Working capital is calculated by subtracting current liabilities from current assets.

• Current assets include cash, accounts receivable, and inventory.

• Current liabilities include accounts payable, taxes owed, and short-term loans.

• A positive working capital indicates that a company has enough funds to cover its short-term obli...read more

DSCR stands for Debt Service Coverage Ratio. It is a financial metric used to assess a borrower's ability to repay debt.

• DSCR is calculated by dividing the borrower's net operating income by their total debt service.

• A DSCR of 1 or higher indicates that the borrower has enough income to cover their debt obligations.

• A DSCR below 1 suggests that the borrower may struggle to meet their debt payments.

• Lenders typically prefer...read more

Operating cycle is the time it takes for a business to convert inventory into cash.

• Operating cycle = Inventory conversion period + Receivables conversion period

• Inventory conversion period = (Average inventory / Cost of goods sold) x 365

• Receivables conversion period = (Average accounts receivable / Credit sales) x 365

• Operating cycle helps in determining the efficiency of a business in managing its working capital

• A short...read more

Important ratios used in credit and financial analysis include debt-to-equity, current ratio, and gross profit margin.

• Debt-to-equity ratio measures a company's leverage and financial risk

• Current ratio measures a company's ability to pay its short-term debts

• Gross profit margin measures a company's profitability

• Other important ratios include return on equity, interest coverage, and inventory turnover

• These ratios help ass...read more

Factors and points to check while processing a loan application

• Credit score and history

• Income and employment status

• Debt-to-income ratio

• Collateral

• Purpose of the loan

• Repayment plan

• Credit report

• Legal documentation

Fraud cases can be found by analyzing transaction patterns and conducting thorough investigations.

• Analyze transaction patterns for any unusual activity

• Conduct thorough investigations of suspicious transactions

• Use fraud detection software to flag potential cases

• Monitor customer behavior for any red flags

• Stay up-to-date on industry trends and common fraud schemes

• Collaborate with law enforcement and other financial instit...read more