Please enable JavaScript.
Coggle requires JavaScript to display documents.
CHAPTER 5 CM (Loans workout (Cooperative Workout Agreement (CWA)
is…
CHAPTER 5 CM
Loans workout
Cooperative Workout Agreement (CWA)
- is early stages of loan recovery
- Involves the negotiation between both parties without resorting to legal action
- The agreement is implemented upon corrective measures agreed by both parties
- Modify term of agreement
- Restructure loan amortization schedule
- Liquidating unnecessary assets
- Request additional collateral
- Restrict investment activities
- AKPK is to help individuals to take control of their financial situation and gain peace of mind that comes from the wise use of credit
Collateral liquidation - A process of converting all pledged securities to the bank into cash to repay the loan balance including the interest due
Enforcement of judgement
- Legal action will be taken to obtain judgement
- Steps will be taken for securities value that is not sufficient to cover principal and interest
Reduce Debt to judgement
- The procedure is to take legal proceeding on the problem loan so that it can be paid off
- Judgement is a legal document obtained through the process of court order that confirm the obligations and claims of parties
- Process involved furnishing borrowers' income and assets before deciding on the technique of collections
Enforcement and collection
- This step will require different modes of enforcement depending on the court order
- Enable the financial institutions to obtain judgement against the customer or guarantor
- To force the customer who pay failing which the financial institutions by levy, garnishment, equity receivership & public sale
Bankruptcy
- Application for a court order is required to declare for bankruptcy
- The purpose of applying for a court order is to provide an orderly manner in the repayment debts.
- Several step involves
-
-
Steps in Bankruptcy.
1.Court
- Apply to court by which the bank will proceed the claim of debt by using the enforcement of judgement to the court
- Appoint creditors committee
- Appoint creditors committee set up the committee for proceeding of claim and payment of debt
- Appoint trustee to take care of borrower's assess
- Appoint trustee will be appoint to manage the proceeding of bankruptcy
4.Trustee liquidate and divides proceeds among creditors
- Trustee will liquidate and divides the proceeds among creditors . They will allocate the portion amount of debt parties
-
A summary of the
guidelines ( Best practices in managing
problem credit or loans)
- Effective workout programmes are critical to manage risk in the portfolio
- The banking institution should recognize that additional resources , expertise and more concentrated focus of a specialized workout section
- The team will develop an effective strategy to rehabilitate post mortem troubled
- Post mortem review should be carried out by banking institutions
- The result of the review should be reported to the BOD and the committee
A post morterm review should be carried out significant cases
- Compare the credit's terms and characteristics with lending guideline
- Reassess the borrower's condition at the time of approval
- Assess the timeliness of problem identification
- Assess the accuracy of collateral evaluation
- Assess documentation adequacy
- Assess the effectiveness of credit conditions imposed.