Chapter

Lending Strategy and Loan Policy

Hrishikes Bhattacharya

in Banking Strategy, Credit Appraisal, and Lending Decisions

Second edition

Published in print October 2011 | ISBN: 9780198074106
Published online September 2012 | e-ISBN: 9780199080861 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780198074106.003.0004
Lending Strategy and Loan Policy

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This chapter lays down the principles behind the formulation of the lending strategy and loan policy of a bank in a competitive environment. It begins by outlining the principal objectives of the lending strategy, which are primarily drawn from the strategic plan of a banking organization. It outlines important concepts such as credit-deposit ratio, interest rate policy, loan portfolio and exposure policy, loan-to-value ratio, and repayment policy. It emphasizes that the success of a loan policy document lies in its zealous implementation.

Keywords: lending policy; banks; credit–deposit ratio; interest rate policy; loan portfolio; exposure policy; loan-to-value ratio; repayment policy

Chapter.  10409 words. 

Subjects: Financial Markets

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