MANAGEMENT

Detailed explanation-1: -Risk rating involves the categorization of individual credit facilities based on credit analysis and local market conditions, into a series of graduating categories based on risk. A primary function of a risk rating model is to assist in the underwriting of new loans.

Detailed explanation-2: -The highest risk rating (6) is assigned to borrowers where there is little or no likelihood of repayment. Loans should only be granted for risk ratings of 1, 2 (low risk) or 3 (normal risk).

Detailed explanation-3: -A Facility Rating is a category or grade that you can select on a loan to specify the level of credit risk to calculate on the loan. Administrators can enable Facility Ratings instead of Collaterals and Guarantees for different products.

Detailed explanation-4: -Rating systems measure credit risk and differentiate individual credits and groups of credits by the risk they pose. This allows bank management and examiners to monitor changes and trends in risk levels. The process also allows bank management to manage risk to optimize returns.