PART 2: - MATCHING OF LOAN TYPES WITH CUSTOMER REQUIREMENTS
You are requested by the Head of Credit of Bank BBB to spot check existing loans of one of the bank branches and to compile a brief report about the extent to which products and the needs of customers were well matched. The following information was retrieved by you. If you find that the matching is not good, then recommend another type of loan that should be provided. Also please provide a brief reason why you regard the match as suitable or not.
|
Type of loan |
Type of customer |
Need |
Matching good or not? |
Recommended form of finance |
Reason why matching is good/not good |
|
6 month bank acceptance
of $6 million with overdraft replacing it for another 6 months |
Large boat manufacturing
company |
Funds needed for 6 months
to pay for material to complete the manufacturing of a commercial boat that
has to be built on order. Large contract payment will be used to repay loan. |
|
|
|
|
Revolving credit |
Medium size business in a
growing marketing environment |
The business provides
credit to its customers and requires additional working capital |
|
|
|
|
Overdraft supported by industrial
mortgage |
Manufacturing company |
Purchase of industrial
land and putting up of a large building for operational business activities |
|
|
|
|
Increase in existing term
loan on farm property supported by mortgage on farm |
Wealthy consumer |
Purchasing of a seaside
apartment for investment purchases |
|
|
|
|
Foreign currency seven
year variable rate loan financed from bank’s own foreign fund pool and
supported by mortgage on financed chattels |
Medium size business |
Local interest rates in
this country regarded as extremely high. Foreign rates much lower for
purchase of manufacturing equipment. |
|
|
|
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