What are the different components of Credit Risk Grading (CRG) ?

Answer:

CRG: Principal risk component

1.      Financial Risk (50%)

·        Liquidity (15%)

·        Profitability (15%)

·        Leverage (15%)

·        Coverage (5%)

2.      Business Risk (18%)

·        Size of the business (5%)

·        Age of the business (3%)

·        Business Outlook (3%)

·        Competition (2%)

·        Entry/Exit Barrier (2%)

·        Growth                   (3%)

3.      Management Risk (12%)

·        Experience (5%)

·        Succession (4%)

·        Team Work (3%)

4.      Security Risk (10%)

·        Security Coverage (4%)

·        Collateral Coverage (4%)

·        Support (2%)

5.      Relationship Risk (10%)

·        Account Conduct (5%)

·        Utilization of limit (2%)

·        Covenants (2%)

·        Personal Deposits (1%)

Risk Grading as per CRG

Number	Grading	Short Name	Aggregate Score
01	Superior	SUP	Fully Cash Covered..
02	Good	GD	85+
03	Acceptable	ACCPT	75-84
04	Marginal/Watchlist	MG/WL	65-74
05	Special Mention	SM	55-64
06	Substandard	SS	45-54
07	Doubtful	DF	35-44
08	Bad & Loss	BL	<35