
ICICI Bank


40+ ICICI Bank Credit Manager Interview Questions and Answers
Q1. What are the most important ratios to analyse the balance sheet and profit loss statement of borrower?
The most important ratios to analyze balance sheet and profit loss statement of borrower are liquidity, solvency, and profitability ratios.
Liquidity ratios measure the borrower's ability to meet short-term obligations
Solvency ratios measure the borrower's ability to meet long-term obligations
Profitability ratios measure the borrower's ability to generate profits
Examples of liquidity ratios include current ratio and quick ratio
Examples of solvency ratios include debt-to-equity...read more
Q2. Which clauses are important in 3CD while sanctioning loan
Important clauses in 3CD for loan sanctioning
Clause 4 - Purpose of loan
Clause 5 - Amount of loan
Clause 6 - Repayment terms
Clause 7 - Security for loan
Clause 8 - Interest rate
Clause 9 - Default and consequences
Q3. What are the key skills of credit manager?
Key skills of a credit manager include financial analysis, risk assessment, communication, and negotiation.
Strong financial analysis skills to evaluate creditworthiness of potential borrowers
Ability to assess and manage risk effectively
Excellent communication skills to interact with clients and colleagues
Negotiation skills to establish favorable terms and conditions
Knowledge of relevant laws and regulations
Attention to detail and ability to work under pressure
Proficiency in f...read more
Q4. 1. What are Operating Cycle and Working Capital Cycle? How does calculate it?
Operating cycle and working capital cycle are measures of a company's efficiency in managing its cash flow.
Operating cycle is the time it takes for a company to convert its inventory into cash. It is calculated as the sum of the inventory holding period and the accounts receivable collection period.
Working capital cycle is the time it takes for a company to convert its current assets into cash to meet its current liabilities. It is calculated as the sum of the operating cycle...read more
Q5. If someone is earning less than EMI should he take a loan or not
No, someone earning less than EMI should not take a loan.
Taking a loan when earning less than the EMI can lead to financial strain and difficulty in repayment.
It is important to have a stable income that can comfortably cover the loan repayment.
If someone is already struggling to meet their financial obligations, taking on additional debt can worsen their situation.
It is advisable to explore alternative options such as increasing income or reducing expenses before considering...read more
Q6. What are the documents needed to complete a term loan file?
Documents required for a term loan file.
Loan application form
Income tax returns
Bank statements
Financial statements
Credit report
Collateral documents
Legal documents
Q7. Diffrence between concurrent audit and statutory audit
Concurrent audit is conducted during the course of business operations, while statutory audit is conducted at the end of the financial year.
Concurrent audit is performed concurrently with the operations of the organization.
Statutory audit is conducted to ensure compliance with legal and regulatory requirements.
Concurrent audit helps in detecting and preventing frauds and errors in real-time.
Statutory audit provides an independent opinion on the financial statements of the com...read more
Q8. How to classify the account of borrower in to SMA0, SMA1, SMA2 ?
The classification of borrower accounts into SMA0, SMA1, and SMA2 is based on the number of days the account is overdue.
SMA0: Account is not overdue
SMA1: Account is overdue for 1-30 days
SMA2: Account is overdue for 31-60 days
Q9. 3. What is Current Ratio and it's relevance? What is standard Current Ratio?
Current Ratio is a financial ratio that measures a company's ability to pay its short-term liabilities with its short-term assets.
Current Ratio = Current Assets / Current Liabilities
It indicates the liquidity of a company
A higher current ratio is generally considered better
Standard current ratio varies by industry
For example, a current ratio of 2:1 is considered good for most industries
Q10. What is DSCR and it's calculation? Ideal Ratio and it's relevance.
DSCR is Debt Service Coverage Ratio, a measure of a company's ability to repay its debt. It is calculated by dividing net operating income by total debt service.
DSCR is a financial ratio used by lenders to assess the creditworthiness of a borrower.
It measures the cash flow available to cover debt payments.
The formula for DSCR is: DSCR = Net Operating Income / Total Debt Service.
A higher DSCR indicates a better ability to repay debt.
An ideal DSCR ratio varies depending on the ...read more
Q11. Tell me profit and loss ratios
Profit and loss ratios are financial metrics used to assess the profitability of a company.
Profit ratio measures the percentage of profit earned on sales.
Gross profit ratio is calculated by dividing gross profit by net sales.
Net profit ratio indicates the percentage of net profit earned on sales.
Operating profit ratio measures the profitability of core operations.
Return on investment (ROI) is a common profitability ratio.
Q12. What is difference between repo and reverse repo rate?
Repo rate is the rate at which RBI lends money to banks, while reverse repo rate is the rate at which RBI borrows money from banks.
Repo rate is higher than reverse repo rate
Repo rate is used to control inflation
Reverse repo rate is used to control money supply
Example: If RBI increases repo rate, banks will increase their lending rates to customers
Q13. 4. What is important yardstick in assessment of Term Loan.
The repayment capacity of the borrower is the most important yardstick in assessment of Term Loan.
Repayment capacity of the borrower is assessed through various financial ratios such as Debt Service Coverage Ratio (DSCR), Interest Coverage Ratio (ICR), and Loan to Value Ratio (LTV).
The borrower's credit history, income, and assets are also considered in the assessment.
The purpose of the loan, the industry in which the borrower operates, and the economic conditions of the coun...read more
Q14. What are different types of credit that bank offers ?
Banks offer various types of credit including personal loans, credit cards, mortgages, and business loans.
Personal loans: unsecured loans for personal use
Credit cards: revolving credit with interest rates and rewards
Mortgages: loans for purchasing or refinancing a home
Business loans: loans for small or large businesses
Lines of credit: flexible credit for businesses or individuals
Auto loans: loans for purchasing a vehicle
Q15. How to determine the creditability of a borrower?
The creditability of a borrower can be determined by analyzing their credit history, financial statements, and references.
Check credit score and credit report
Analyze financial statements such as income statement and balance sheet
Verify references provided by the borrower
Consider the borrower's industry and market conditions
Assess the borrower's ability to repay the loan
Evaluate collateral offered by the borrower
Q16. What is Ideal debt equity ratio? What is Credit Appraisal?
Ideal debt equity ratio varies by industry and company, but generally ranges from 0.5 to 2.
Debt equity ratio is a measure of a company's financial leverage.
It compares a company's total debt to its total equity.
A higher debt equity ratio indicates higher financial risk.
Ideal debt equity ratio varies by industry and company, but generally ranges from 0.5 to 2.
For example, a technology company may have a higher debt equity ratio than a utility company.
Credit appraisal is the pr...read more
Q17. 3 ratios and its analysis What role you want What does credit manager do What is cibil Md of icici bank
Credit Manager should know 3 ratios and its analysis, role of credit manager, cibil and MD of ICICI Bank.
3 ratios: Debt-to-Equity, Current Ratio, and Gross Profit Margin. Analysis helps in assessing the financial health of a company.
Role of Credit Manager: Assessing creditworthiness of potential borrowers, setting credit limits, and managing collections.
CIBIL: Credit Information Bureau (India) Limited. It is a credit information company that maintains credit records of indivi...read more
Q18. What are the key takeaways of recent budget?
The recent budget focuses on healthcare, infrastructure, and digitalization.
Increased allocation for healthcare sector
Focus on building new highways and railways
Investment in digital infrastructure
Reduction in customs duty on certain products
Introduction of new tax regime for small businesses
Q19. What are components of balance sheet
Components of balance sheet include assets, liabilities, and equity.
Assets: resources owned by the company such as cash, inventory, and property
Liabilities: debts owed by the company such as loans and accounts payable
Equity: the residual interest in the assets of the company after liabilities are deducted
Examples: cash, accounts receivable, inventory, accounts payable, long-term debt, common stock, retained earnings
Q20. What is cibil ? What will you check in cibil
CIBIL is a credit information company that maintains credit records of individuals and companies.
CIBIL stands for Credit Information Bureau (India) Limited.
It is a credit information company that collects and maintains credit records of individuals and companies.
Creditors use CIBIL reports to evaluate the creditworthiness of borrowers before lending money.
CIBIL reports contain information on credit history, outstanding loans, defaults, and credit inquiries.
Credit managers che...read more
Q21. Explain Debt service coverage Ratio, Interest Coverage Ratio
Debt service coverage ratio measures a company's ability to pay its debt obligations. Interest coverage ratio measures a company's ability to pay interest on its debt.
Debt service coverage ratio is calculated by dividing a company's net operating income by its total debt service.
A ratio of 1 or higher indicates that a company is generating enough income to cover its debt obligations.
Interest coverage ratio is calculated by dividing a company's earnings before interest and tax...read more
Q22. What are the tools of credit analysis?
The tools of credit analysis include financial statements, credit reports, credit scoring models, and industry research.
Financial statements provide information on a company's financial health and performance.
Credit reports show a borrower's credit history and payment behavior.
Credit scoring models use data from credit reports to assess creditworthiness.
Industry research helps to understand the borrower's market and competition.
Other tools include cash flow analysis, collater...read more
Q23. What was your previous role, what does current ratio and dscr mean?
I was previously a Credit Analyst. Current ratio measures a company's ability to pay its short-term obligations, while DSCR measures a company's ability to cover its debt payments.
Current ratio is calculated by dividing current assets by current liabilities. A ratio above 1 indicates the company can cover its short-term obligations.
DSCR (Debt Service Coverage Ratio) is calculated by dividing a company's operating income by its debt payments. A ratio above 1 indicates the comp...read more
Q24. What is deferred tax, what is bank guarantee
Deferred tax is a liability that arises due to temporary differences between accounting and tax rules. Bank guarantee is a commitment by a bank to pay a specified amount if the beneficiary fails to meet certain obligations.
Deferred tax is a result of differences in timing between when income or expenses are recognized for accounting purposes and when they are recognized for tax purposes.
Bank guarantee is a form of security provided by a bank to a beneficiary to ensure that th...read more
Q25. How to finance Working Capital.
Working capital can be financed through various methods.
Short-term loans from banks or financial institutions
Trade credit from suppliers
Factoring or invoice discounting
Inventory financing
Receivables financing
Crowdfunding or peer-to-peer lending
Sale of assets
Equity financing
Leasing or renting of equipment
Negotiating extended payment terms with customers
Q26. Tell me about ratios such current Ratio,Leverage Ratio etc
Ratios such as current ratio and leverage ratio are used to evaluate a company's financial health.
Current ratio measures a company's ability to pay off its short-term liabilities with its current assets
Leverage ratio measures a company's debt levels in relation to its assets or equity
Other ratios include debt-to-equity ratio, return on equity, and gross profit margin
These ratios are important for credit managers to assess the creditworthiness of a company
Q27. Tell me about your, current CRR and SLR, repo rate and reverse repo rate
CRR stands for Cash Reserve Ratio, SLR stands for Statutory Liquidity Ratio, repo rate is the rate at which the central bank lends money to commercial banks, and reverse repo rate is the rate at which the central bank borrows money from commercial banks.
CRR is currently at 4%
SLR is currently at 18.25%
Repo rate is currently at 4%
Reverse repo rate is currently at 3.35%
Q28. What is DSCR and what does it signify?
DSCR stands for Debt Service Coverage Ratio. It signifies a company's ability to pay its debts.
DSCR is a financial ratio that measures a company's ability to pay its debts based on its cash flow.
It is calculated by dividing the company's net operating income by its total debt service.
A DSCR of 1 or higher indicates that the company is generating enough cash flow to cover its debt obligations.
A DSCR below 1 indicates that the company may have difficulty meeting its debt obliga...read more
Q29. How much CTC your are expecting
I am expecting a competitive salary based on my experience and qualifications.
I am looking for a salary that is in line with industry standards for a Credit Manager role
I am open to negotiation based on the overall compensation package offered
I am seeking a salary that reflects my skills, experience, and the responsibilities of the position
Q30. What is Working Capital.
Working capital is the difference between current assets and current liabilities.
Working capital is the amount of money a company has available to fund its day-to-day operations.
It is calculated by subtracting current liabilities from current assets.
Positive working capital means a company has enough funds to cover its short-term obligations.
Negative working capital means a company may struggle to pay its bills on time.
Examples of current assets include cash, inventory, and a...read more
Q31. Various methods of calculating WC.
Working capital can be calculated using various methods.
The Current Ratio method compares current assets to current liabilities.
The Quick Ratio method excludes inventory from current assets.
The Operating Cycle method considers the time it takes to convert inventory into cash.
The Cash Conversion Cycle method combines the operating cycle with the time it takes to collect receivables.
The Gross Working Capital method calculates the total current assets.
The Net Working Capital met...read more
Q32. Tell me about Different liquidity ratios
Liquidity ratios measure a company's ability to meet short-term obligations.
Current ratio: current assets divided by current liabilities
Quick ratio: (current assets - inventory) divided by current liabilities
Cash ratio: cash and cash equivalents divided by current liabilities
Operating cash flow ratio: operating cash flow divided by current liabilities
Net working capital ratio: current assets minus current liabilities
Accounts receivable turnover ratio: net credit sales divided...read more
Q33. what are the Loans and advances What is the current ratio and other financial ratios
Loans and advances are financial instruments provided by banks and financial institutions to individuals and businesses.
Loans are funds provided by lenders to borrowers, which are typically repaid with interest over a specified period of time.
Advances are short-term loans provided by banks to businesses to meet their immediate working capital needs.
Loans and advances can be secured or unsecured, depending on whether collateral is required.
Examples of loans include mortgages, ...read more
Q34. Scenarios where cash flow will be negative
Negative cash flow scenarios include high expenses, low sales, delayed payments, and economic downturns.
High expenses exceeding revenue
Low sales leading to decreased cash inflow
Delayed payments from customers affecting cash flow
Economic downturn impacting overall business performance
Q35. What do you understand by liquidity ratio
Liquidity ratio measures a company's ability to pay off its short-term debts with its liquid assets.
Liquidity ratio is calculated by dividing liquid assets by current liabilities.
It shows how easily a company can cover its short-term obligations.
Common liquidity ratios include the current ratio and the quick ratio.
A higher liquidity ratio indicates a better ability to meet short-term obligations.
Q36. Credit function and it's importance
Credit function is crucial for managing financial risk and ensuring timely payment from customers.
Credit function involves assessing the creditworthiness of customers and setting credit limits.
It also involves monitoring customer payment behavior and taking necessary actions in case of delinquency.
Effective credit management can improve cash flow and reduce bad debt.
For example, a credit manager may decide to offer a lower credit limit to a new customer with no credit history...read more
Q37. What is the role of credit manager
Credit managers are responsible for overseeing the credit granting process, managing credit risk, and ensuring customers pay on time.
Evaluate credit applications and determine credit limits
Monitor customer accounts and ensure timely payments
Manage relationships with credit reporting agencies and collection agencies
Develop and implement credit policies and procedures
Analyze financial data to assess creditworthiness
Negotiate payment terms with customers
Q38. How to calculate working capital cycle
Working capital cycle is calculated by adding the number of days it takes to sell inventory, the number of days it takes to collect receivables, and subtracting the number of days it takes to pay suppliers.
Calculate average inventory turnover ratio by dividing cost of goods sold by average inventory.
Calculate average collection period by dividing accounts receivable by average daily credit sales.
Calculate average payment period by dividing accounts payable by average daily cr...read more
Q39. What is bank guarantee
A bank guarantee is a promise from a bank to pay a specified amount if the person or company requesting the guarantee fails to fulfill their obligations.
Bank guarantees are often used in international trade to ensure payment and delivery of goods.
They can also be used in construction projects to ensure completion of the project.
The bank issuing the guarantee will typically require collateral or a fee from the person or company requesting the guarantee.
If the guarantee is call...read more
Q40. what is CR and quick ratio?
CR stands for Current Ratio, which measures a company's ability to pay its short-term obligations. Quick Ratio is a more stringent measure of liquidity.
CR is calculated by dividing current assets by current liabilities
Quick Ratio is calculated by subtracting inventory from current assets and then dividing by current liabilities
CR above 1 indicates a company can cover its short-term liabilities, while Quick Ratio above 1 indicates a company can cover its short-term liabilities...read more
Q41. what is letter of credit?
A letter of credit is a financial document issued by a bank on behalf of a buyer, guaranteeing payment to a seller upon presentation of specified documents.
Letter of credit is a payment method commonly used in international trade.
It provides a guarantee to the seller that they will receive payment for the goods or services provided.
The bank issuing the letter of credit acts as an intermediary, ensuring that the seller will be paid once the terms of the agreement are met.
Types...read more
Q42. What's OD and CC
OD stands for Overdraft and CC stands for Cash Credit.
OD is a facility provided by banks to withdraw more than the available balance in the account, up to a certain limit.
Interest is charged on the amount overdrawn.
CC is a type of loan where the borrower can withdraw funds up to a certain limit, and interest is charged only on the amount withdrawn.
CC is usually given to businesses to manage their working capital needs.
Q43. What is working capital gap
Working capital gap is the difference between current assets and current liabilities.
Working capital gap indicates the short-term financial health of a company.
It shows how much liquidity a company has to cover its short-term obligations.
A positive working capital gap means the company has more current assets than liabilities.
A negative working capital gap indicates potential liquidity issues.
Formula: Working Capital Gap = Current Assets - Current Liabilities
Q44. What is CIBIL report
CIBIL report is a credit report generated by Credit Information Bureau (India) Limited, containing an individual's credit history.
CIBIL report is used by lenders to evaluate an individual's creditworthiness before approving a loan or credit card.
It includes details such as credit score, repayment history, outstanding loans, and credit inquiries.
A good credit score in CIBIL report indicates a higher likelihood of loan approval at favorable terms.
On the other hand, a poor credi...read more
Q45. Explain working capital
Working capital is the difference between a company's current assets and current liabilities.
Working capital is essential for a company's day-to-day operations
It indicates the company's liquidity and ability to meet short-term obligations
Formula: Working Capital = Current Assets - Current Liabilities
Examples: Cash, accounts receivable, inventory are current assets; accounts payable, short-term debt are current liabilities
Q46. Full form of icici
ICICI stands for Industrial Credit and Investment Corporation of India.
ICICI was established in 1955 as a joint venture between the World Bank, the Government of India, and representatives of Indian industry.
It is one of the largest private sector banks in India.
ICICI Bank offers a wide range of financial products and services including retail banking, corporate banking, and wealth management.
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