ICICI Bank Credit Risk Analyst Interview Questions and Answers

Pre and post shipment facilities refer to credit facilities provided to exporters before and after shipment of goods.

• Pre-shipment facility is a credit facility provided to exporters to finance the production and processing of goods before shipment.

• Post-shipment facility is a credit facility provided to exporters to finance the period between shipment of goods and receipt of payment from the importer.

• Pre-shipment facili...read more

Financial ratios used in credit risk assessment

• Debt-to-Equity Ratio: measures the amount of debt used to finance a company's assets

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

• Interest Coverage Ratio: measures a company's ability to pay its interest expenses

• Profit Margin Ratio: measures a company's profitability

• Asset Turnover Ratio: measures a company's efficiency in using its assets to genera

Financial BG is for payment obligations while Performance BG is for non-payment obligations.

• Financial BG is used to guarantee payment obligations such as loans, taxes, and customs duties.

• Performance BG is used to guarantee non-payment obligations such as completion of a project or delivery of goods.

• Financial BG is typically issued by banks while Performance BG can be issued by insurance companies or other financial ins...read more

SBLC stands for Standby Letter of Credit, which is a financial instrument used to guarantee payment.

• SBLC is a type of letter of credit that serves as a backup payment option for the beneficiary in case the buyer defaults on payment.

• It is often used in international trade transactions to reduce the risk of non-payment.

• The issuing bank guarantees payment to the beneficiary if the buyer fails to fulfill their payment obli...read more

Asset liability mismatch is when a company's assets and liabilities have different maturities or interest rates.

• Occurs when a company's assets and liabilities have different maturities or interest rates

• Can lead to financial instability and liquidity problems

• Example: A bank that borrows short-term funds to lend long-term

• Can be managed through asset-liability management techniques

Assessing cash credit account statement involves analyzing the inflow and outflow of funds, identifying any discrepancies, and evaluating the borrower's creditworthiness.

• Review the account statement for any irregularities or inconsistencies

• Check the borrower's payment history and credit score

• Assess the borrower's financial stability and ability to repay the loan

• Compare the account statement with the borrower's financia...read more

Solvency ratio measures a company's ability to meet its debt obligations. Short term ratio focuses on current assets and liabilities, while long term ratio considers long term debt.

• Short term solvency ratio is also known as the current ratio

• It measures a company's ability to pay off its short term debts with its current assets

• Formula: Current assets / Current liabilities

• Long term solvency ratio is also known as the deb...read more

Assess credit worthiness by analyzing credit history, financial statements, and other relevant data.

• Review credit reports and scores

• Analyze financial statements and income

• Consider employment history and stability

• Evaluate debt-to-income ratio

• Assess collateral and assets

• Look for red flags such as bankruptcies or late payments