Bank credit refers to the provision of credit by banks and various financial institutions to all sectors of society in the form of money or their own reputation, the specific manifestations of which include issuing loans or guarantees to enterprises, issuing letters of credit and so on. To put it simply, bank credit is a kind of indirect financing, that is, the intermediate link in which the bank intervenes in the financing as an intermediary. In bank credit, the owner of monetary funds and the demander do not have a direct creditor debt relationship directly, but the bank plays an intermediate role.
The characteristics of bank credit
First, the flow of credit funds is not restricted by direction, not limited by quantity, wide range and large scale. That is, in commercial credit, only upstream enterprises can lend to downstream enterprises, while in bank credit, downstream enterprises can also lend to upstream enterprises if they have excess funds.
Second, it has strong credit and wide acceptance. Under commercial credit, borrowers and lenders need to agree on the scale of funds. However, under the bank credit, the accumulation of small monetary funds can meet the needs of large monetary funds, and the large monetary capital is easier to disperse to meet the needs of small borrowers.
Under the economic transformation, to better serve the transformation and upgrading of traditional industries and the development of new economic industries, commercial banks need to adhere to the basic principles of risk management, improve the collateral risk management mechanism, build a credit risk management mechanism based on customer value, and establish a scenario-based credit risk control mechanism to lay the foundation for banking business transformation and product innovation.
Suggestions on strengthening bank credit risk management
1. Explore new mortgage loan models and improve collateral risk management mechanisms.
2. Innovate the credit loan model and build a credit risk management mechanism based on customer value.
3. Create a scenario financial service model and establish a scenario-based credit risk control mechanism.
Post time: Nov-17-2023