It is the process of granting credit, the terms it's granted on and recovering this credit when it's due. This is the function within a bank or company to control credit policies that will improve revenues and reduce financial risks.
Credit management is core process for commercial banks and therefore, the ability to manage its process is essential for their success. Credit Management goes beyond the ordinary dimension of loan administration. It involves the anticipation of problem loans. This demand an ability to perceive the early warning signals, which necessitates a control of both the quantitative and qualitative aspects of credit evaluation. Effective credit management separates loan review from credit analysis. The review process can be divided into two functions- monitoring the performance of existing loan and handling problem loans. The obvious and more serious banking problems arises due to tax credit standards, poor portfolio risk management, or a lack of attention to change in economic or circumstance. Therefore, the banking industry has been focusing more attention than ever on credit management.
Credit Management is important aspect of financial management. The management of credit is very important for all banks to enhance its profitability. The proper management of credit will increase the wealth of the shareholder. The appropriate management of credit will ensure that an organisation generates sufficient positive credit from ongoing business activities to continually fund of both deposit and lending. Therefore the efficient management of credit will solve the problems and save time.Hence the proper management of credit is a pay determinant in the enhancement of profitability and succeeds of a bank.