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19FOREIGN EXPERIENCE IN CREDIT POLICY AND LENDING PRACTICES OF COMMERCIAL BANKS
Rakhimov Akmal Matyaqubovich
PhD, Tashkent institute of Finance Khudaynazarov Abdunazar Urol ugli
master student of TFI
Annotation. This article discusses in detail the essence of bank credit policy. Also, the structure and specifics of bank lending policy and lending practices in developed countries were discussed in detail on the basis of theoretical and practical data, and scientific proposals for the use of foreign experience in our country were developed.
Keywords: bank, credit, credit policy, credit management, purpose of credit policy, lending practices.
Introduction. The role of credit policy in the organization of credit operations by commercial banks and in reducing the risks that may arise as a result is invaluable. Credit policy forms the basis of the overall process of credit management, defines the objective standards and parameters used by the bank staff responsible for the allocation and registration of loans, their management. The main purpose of the credit policy of commercial banks is to determine the direction and priority of credit activities of the bank, as well as to define the obligations of all employees and departments of the bank involved in lending to individuals and legal entities. Also, the credit policy of commercial banks is one of the main documents not only for the bank and its employees, but also for customers who receive loans.
It should be noted that the impact of bank credit policy on the real economy is enormous. Banks' credit policy is important in stimulating the economy by increasing economic activity. [1] Of course, the amount, interest, term and other requirements of the bank's loans play a key role in this.
At the same time, the analysis of the current situation in the banking sector reveals a number of systemic problems that hinder the development of the banking sector in line with economic reforms and the needs of society, such as high levels of government intervention in the banking sector, insufficient quality of management and risk management in state-owned banks and others. [2]
Literature review. The completeness of credit operations by commercial banks depends on the extent to which they have developed credit policies. An important aspect of bank lending is that each bank formulates its own credit policy, taking into account political, economic, organizational and other aspects.
Considering the profitability of the commercial bank, it strives to provide quality credit services to customers in accordance with international standards. Therefore, the main principles of the bank's credit policy include [3]:
• distribution of responsibilities at all levels of lending decision-making;
• availability of clearly defined conditions for credit operations carried out by
the bank;
• Special lending principles - mandatory control over loans issued on the basis of maturity, repayment, repayment, security and expediency;
• The general policy of the bank's management is inextricably linked with the policy of special activities (on deposits, investment, asset and liability management, etc.).
Panova GS, a Russian economist, argues that "credit policy should include the activities of banks to attract resources"[4]. In his opinion, the basis of the origin of credit policy is the same as the deposit policy of banks. However, the author emphasizes that the credit policy is a policy of the bank only related to the lending process.
The essence of the Bank's credit policy is to ensure the security, reliability and profitability of credit operations, ie to minimize credit risk. One of the functions of a commercial bank is to reflect the essence of its credit policy. Traditionally, they can be divided into two groups: general, specific to different elements of banking policy, and private, which distinguishes credit policy from other elements of banking policy. Thus, the credit policy is to determine the level of risk that the bank may assume [5].
The purpose of the credit policy is defined as follows [6]:
- creating conditions for the effective placement of borrowed funds, ensuring sustainable growth of the bank's profits;
- ensuring maximum efficiency of the bank's lending activities and reducing credit risks while maintaining the required level of profitability of lending operations.
Table 1
Elements of { credit policy of a commercial bank [6]
Lending stages Processes
1. Preliminary work on lending The composition of borrowers; Types of loans; Borrower's creditworthiness assessment standards; Interest rates; Quantitative credit limits; ways to ensure loan repayment; control over the correctness of the lending process.
2. Loan registration Forms of documents; Technological procedure of lending; Checking the correctness of the loan
3. Credit management Loan portfolio management procedure; Monitoring the implementation of loan agreements; Terms of extension and renewal of overdue loans; Procedure for compensation of losses; Credit management control.
The credit policy should define the categories and types of loans provided by the bank. For example, in the field of lending: business, industry, agriculture, financing of capital investments, etc. By types of loans: "open and unopened" credit
lines, pawnshops and paper loans, etc.
The credit policy should also specify the types and types of loans that are considered unsuitable or unacceptable for a particular bank, with a clear indication of the directive principles for granting loans.
Analysis and results. The credit policy of a commercial bank directly serves to increase the profitability of the bank through the proper organization of lending processes. It is obvious that every commercial bank is trying to expand its lending practices and increase its source of income. We will try to prove our point by analyzing the status of loans issued by banks in developed countries. In particular, we examined the status of loans provided by banks in the United States and Russia, which are among the most economically stable countries in the world.
A systematic study of the strategic objectives of a commercial bank's credit policy determines the overall content of the credit policy. It also directly affects the overall strategy of the bank. In other words, the achievement of the strategic goals of credit policy by commercial banks will have a positive effect.
A systematic study of the strategic objectives of a commercial bank's credit policy determines the overall content of the credit policy. It also directly affects the overall strategy of the bank. In other words, the achievement of the strategic goals of credit policy by commercial banks will have a positive effect.
Total loans Volume of issued mortgage loans
Figure 1. Dynamics of loans issued by Russian banks to resident individuals, including mortgage loans (billion rubles, per year) [7]
From the data, it can be seen that the volume of loans issued by Russian banks to resident individuals, including mortgage loans, has been growing over the years 2017-2021. In other words, the share of loans issued by Russian banks to individuals
at the beginning of 2017 amounted to 7,210 billion rubles. At the beginning of 2021, the figure was 8,361 billion rubles. rubles and amounted to 15 71 bln. rubles. By the beginning of 2021, we can see that total loans increased by 116% compared to the beginning of 2017.
18000,00
16000,00
14000,00
12000,00
10000,00
8000,00
6000,00
4000,00
2000,00
0,00
16505,54
13825,92 15065,81 9,56
L2548,9f L3128,7f J
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4,62 5,31 /
3,78 _____ ----
12,00
10,00
;,oo
6,00
4,00
2,00
0,00
2017
2018
2019
Total loans
2020
Changes from last year
2021
Figure 2. Volume and dynamics of changes in total loans issued by U.S. banks ($
billion, year-end) [8]
As can be seen from the data, the volume of loans issued by U.S. banks in 2017-2021 is on the rise. In particular, in 2021, US banks will issue 16,505.4 billion. USD, which is 1,439.73 bln. dollars, or an increase of 9.56 percent, and compared to 2017, an increase of 31.5 percent.
In addition to macro-level factors influencing the formation of credit policy of commercial banks, special attention should be paid to micro-level factors to ensure that the risks of the bank's lending activities do not increase in the future.
Conclusions. Based on the study of the above theoretical and practical data, the following conclusions and recommendations were developed:
- An author's definition of bank lending policy, which is the basis of lending activities carried out by commercial banks, has been formed. In our opinion, the bank's credit policy is a set of methods and approaches adopted by the bank in order to properly manage the risks arising in the course of lending activities of commercial banks, as well as the bank's management and effective management of the bank's loan portfolio. is a document that provides instructions to the responsible staff;
- Lending practices of U.S. banks from developed countries have been studied and analyzed. According to him, in order to properly regulate the lending activities of
US banks, the Code "On Single Consumer Loans" was developed, which allows all banks in the country to directly lend on the basis of this document. they do;
- There are a number of shortcomings in the development of credit policy in the activities of banks, which require the need to take into account the credit activities of the lower levels of the bank in the development of credit policy. In addition, every bank employee, regardless of the size of the bank, should be familiar with at least the goals and general directions of the bank's credit policy, and work on their implementation.
References:
1. Jiho Lee, The effectiveness of credit policy: evidence from the Republic of Korea. Asian Development Review, vol. 36, 2019. no. 1, pp. 206-224 . https://doi.org/10T 162/adev_a_00128
2. Decree of the President of the Republic of Uzbekistan No. PD-5992 of May 12, 2020 "On the strategy of reforming the banking system of the Republic of Uzbekistan for 2020 - 2025".
3. Abdullaeva Sh.Z. Banking risks and lending. Monograph.T .: Finance, 2002y.
4. Panova G.S. Credit policy of a commercial bank. - Moscow: MCC DIS, 2004. - 464s.
5. Banking / Ed. G. N. Beloglazova, L.P. Krolivetskaya. - St. Petersburg: Peter, 2008. - 113 pages
6. Banking: textbook / ed. Kolesnikova V.I., Krolivetskaya L.P. - M., 2011. -541 p.
7. Prepared by the author based on the information https: //www.cbr.ru/statistics/statpubl/.
8. Prepared by the author based on information from https://fred.stlouisfed.org/series/TOTBKCR.
9. Kurbonov, R. PhD (2021) "ANALYSIS OF EFFICIENCY INDICATORS OF PRIVATE BANKS ACTIVITY," International Finance and Accounting: Vol. 2021: Iss. 1, Article 11. Available at: https: //uzj ournals.edu.uz/interfinance/vol2021/iss1/11
10. Rakhimov, Akmal (2021) "ISSUES OF INCREASING CUSTOMERS SATISFACTION GRADE WITH BANKING SERVICES," International Finance and Accounting: Vol. 2021: Iss. 2, Article 15. Available at: https: //uzj ournals.edu.uz/interfinance/vol2021/iss2/15
11. Rahimov, A. (2019) "PRACTICAL AND THEORETICAL ASPECTS OF DEPOSIT OPERATIONS OF COMMERCIAL BANKS," International Finance and Accounting: Vol. 2019: Iss. 2, Article 21. Available at: https: //uzj ournals.edu.uz/interfinance/vol2019/iss2/21
