How to hire for a Credit Analyst?
Summary:
A Credit Analyst is a financial professional who is responsible for assessing the credit worthiness of securities, companies, individuals etc. A credit analyst working for a commercial bank will play a key role in recommending a new credit as well as extension of credit through research and analysis of financial documents. Also, a credit analyst is required to collect data about clients that have defaulted on their payments.
Standard Job Description:
Credit Analysts determine the likelihood that a borrower can repay his financial obligations by reviewing the borrower’s credit and financial history and determine whether economic conditions will be favorable for repayment. A credit analyst has an important role to play in the well-being of the economy as credit helps in stimulating the economy daily. Thus, their recommendations allow banks and other institutions to extend credit to individuals and businesses.
A credit analyst is responsible for various tasks as per his job requirements, some of which include:
a. retrieve information about the clients
b. determines their credit worthiness
c. analyzing the financial information of the client to assess the degree of risk involved in extending credit
d. ensure that the application requirements are duly met
e. making recommendations about procedural/policy changes
f. helping to enhance the quality of credit applications
g. keeping the company credit exposures within set risk bearing limits etc.
Key Job Responsibilities:
• Ensure quick turnaround of customer loan applications and provide decision based on the scoring matrix
• Experience in making CAM (Credit Assessment Memo) sheets and pulling CIBIL reports.
• Analyze the financial documents, check regulatory requirements, perform personal discussions with customers and undertake necessary documentation.
• Constantly evolve the risk and collection policy, add touch points for processing applications Pan India.
• Analyze lending decisions – accept and reject cases on an ongoing basis.
Ideal Candidate:
1. Experience in Credit and Risk department of Banks, NBFCs, Credit rating agencies.
2. Experience in Business Loans is must.
3. MBA/ Credit Risk course in Banking will be an added advantage.
Desired Education:
Minimum qualification- Graduation MBA/ Credit Risk course in Banking will be an added advantage.
Certifications Associated:
1. Certified Credit and Risk Analyst® (CCRA®) from NACM
2. Credit Risk Certification (CRC) from RMA
3. Certified Credit Professional (CCP) from CIC
4. Certified Banking & Credit Analyst (CBCA)™ from CFI
Key Skills:
Corporate Credit, Risk Assessment, Financial Risk, Management, Credit Audit, Credit Appraisal, Debt Restructuring, Credit Analysis, Credit Monitoring, Delinquency Management, Balance Sheet Analysis, Business Valuation, Retail Credit, Credit Research, Credit Rating, Financial
Modelling, Credit Underwriting.
Common Positions:
Interestingly, a credit analyst can work at various places like:
a. Credit Unions
b. Financial Institutions
c. Investment companies
d. Foreign banks
e. Investment and commercial banks
f. Credit rating agencies
g. Insurance companies
h. Asset Management companies etc.
Screening Questions/Assessment Parameters:
Prior Experience in Credit Analysis of Unsecured Business loans?
Product for which credit risk assessment was done?
Types of customers assessed.
Is the candidate comfortable of Job location?
Basic Terminologies:
1. Accounts Payable. This represents your small business’s obligations to pay debts owed to lenders, suppliers, and creditors.
2. Accounts Receivable. These accounts are labeled as assets because they represent a legal obligation for the customer to pay you cash for
their short-term debt.
3. Asset. This business finance key term is anything that has value—whether tangible or intangible—and is owned by the business is considered an asset.
4. Balance Sheet. The report is a summary of the business assets and liabilities.
5. Cash Flow Statement. Cash flow reports reflect activity for a specified period, usually one accounting period or one month.
6. Income Statement. It is also called a profit and loss statement, and it addresses the business’s bottom line, reporting how much the business has earned and spent over a given period. The result will be either a net gain or a net loss.
7. Liability. This business finance key term is a legal obligation to repay or otherwise settle a debt.
8. Accrual Basis. The accrual basis of accounting is an accounting method of recording income when it’s earned and expenses when they occur.
9. Annual Percentage Rate. The business finance term and definition APR represents the yearly real cost of a loan including all interest and fees.
10. Collateral. Any asset that you pledge as security for a loan instrument is called collateral.
Industry Jargons:
1.Bear: An investor who expects prices to fall.
2. Bid/Ask: A pair of prices, where “bid” is the price at which a trader is prepared to buy and “ask” is the price at which the trader is prepared to sell the security (note that “ask” is sometimes referred to as “offer”).
3. Chinese Wall: Imaginary barrier restricting the flow of information between the Public side of the business (e.g. Sales and Trading) and the Private side (e.g. Investment Banking).
4. DCF: Abbreviation for discounted cash flow analysis, a method used to value a project, company, or financial asset.
5. Due Diligence: An analysis that aims at preventing harm to both parties involved in a transaction by reviewing financial records.
6. FCA: Abbreviation for Financial Conduct Authority.
7. FIG: Abbreviation for Financial Institutions Group.
8. Plain Vanilla: A simple, straightforward financial product without any unusual characteristics.
9. Syndicate: A group of investment banks that spread the risk of a new issue by jointly underwriting and distributing a new security offering.
10. Yield: The return on a security expressed as a proportion of its price.
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