BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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is used to rate the borrowers while giving advances.
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is used to work out performance of the employees.
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is used to calculate the number of excellent auditrated branches.
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is not used in any bank.
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Detailed explanation-1: -A credit rating is a quantified assessment of the creditworthiness of a borrower in general terms or with respect to a financial obligation. Credit ratings determine whether a borrower is approved for credit as well as the interest rate at which it will be repaid.
Detailed explanation-2: -Credit rating is an analysis of the credit risks associated with a financial instrument or a financial entity. A rating is assigned to an instrument by a credit rating agency after a comprehensive analysis of business risks, financial risks, management quality and ability to service debt.
Detailed explanation-3: -A credit rating is used to determine an entity’s creditworthiness, wherein an entity could be an individual, a business, a corporation or a sovereign country. In case of a loan, the rating is used to establish whether a loan should be rendered in the first place.
Detailed explanation-4: -At the time of calculating the rating, credit rating agencies take into consideration several factors like the financial statements, level and type of debt, lending and borrowing history, ability to repay the debt, and past debts of the entity before rating them.