GENERAL OBJECTIVE
This paper is intended to equip the candidate with the knowledge, skills and attitude that will enable
him/her to apply the principles of credit management in the financial sector
LEARNING OUTCOMES
A candidate who passes this paper should be able to:
Analyse different cre...
This paper is intended to equip the candidate with the knowledge, skills and attitude that will enable
him/her to apply the principles of credit management in the financial sector
LEARNING OUTCOMES
A candidate who passes this paper should be able to:
Analyse different credit applications
Extend different credit facilities for different customers
Apply credit management skills in the context of asset financing
Assess the impact of microfinance in promoting small and micro enterprises in the economy
Undertake credit management activities in the co-operative sector,
CONTENT PAGE
1. Credit card risk management……………………………………………….………………4
- Parties to credit card transactions
- Importance of credit cards
- Types of credit cards
- Main features of credit cards
- Assessment and appraisal of credit card applications
- Managing credit cards fraud
- Credit card risk management
- Delinquency management
2. Securities…………………………………………………………………………….…………….19
- Definitions
- Types of securities
- Secured debt
- Unsecured debt
- General principles of good lending
- Features of good securities
- Taking/perfection of securities
- Documentation of securities
- Lodging m securities
- Discharging/releasing of securities
3. Asset finance………………………………………………………………………………………30
- Overview of asset finance
- Types of asset finance
- Assessment of asset finance risks
- Asset finance risk management
- Choosing the right type of asset finance
- Definition of leasing
- Types of leasing
- Advantages and disadvantages of leasing
- Leasing process
- Assessment and appraisal of a leasing loan application
- Marketing and leasing
2 www.someakenya.com Contact: 0707 737 890
, - Risk management
- Nature of hire purchase
- Formation of a hire purchase contract
- Duties of the parties
- Termination of hire purchase contract
- Advertising for hire purchase
- Risk management
4. Microfinance………………………………………………………………………………………52
- Introduction to microfinance
- Microfinance scenario
- Formulation of policies and procedures
- Recruitment and retention of clients
- Savings and lending processes management
- Portfolio management
- Risk management
- Delinquency management
- Deposit taking microfinance(DTM)
15.5 Types and products of mortgage……………………………………………………………88
- Introduction to mortgage
- Types of mortgages
- Parties to a mortgage transaction
- Products offered under mortgage
- Target customers and mortgage financiers
- Credit appraisals
- Types of documents and registration process
- Risk management and recovery
- Deposit taking microfinance(DTM)
- Difference between microfinance and microcredit
15.6 Co-operative societies………………………………………………………………………105
- Nature of co-operatives
- Co-operative principles and practice
- Co-operative credit programmes and policies
- Co-operative structure
- Savings and lending processes
- Risk management
- Delinquency management
- The future of co-operatives
- Role of regulatory authorities
7. Emerging issues and trends
3 www.someakenya.com Contact: 0707 737 890
, TOPIC 1
CREDIT CARD RISK MANAGEMENT
CREDIT CARDS
A credit card is defined in the consumer Credit Act 1974 (UK) as a credit token, voucher,
coupon, stamp, form, booklet and or other documents.
The credit card provides:
- means of verification
- means of transferring value from a seller to a buyer
- use of a credit facility which has been agreed by a third party
The money transmission can be paper based or electronic through data capture transmission.
Credit cards are personal customer instruments but some organizations allow the use of cards by
individual company. employees.
PARTIES TO CREDIT CARD TRANSACTIONS
The parties involved in plastic money business are normally but not limited to the following
1. Card issuers: - This is a bank or any other organization that issue plastic cards to customers
to facilitate payments for good and services. For example in Kenya, Barclays bank, STD
Bank, KCB, Post Bank, Total (K), Caltex, Nakumart are issuers among others.
2. Cardholder – Any person issued with a plastic card is referred to as cardholder.
3. Merchants – All those businessmen that do accept plastic cards as means of payment for
goods and services e.g. Super markets, Petrol Stations, Hotels, airlines etc. are referred to as
merchants.
4. Acquirer- This is any organization in most cases banks that have been licensed to sign
agreements with merchants so that they can start accepting cards. Acquirers settle merchant’s
plastic card business transactions directly and then claim refund from card issuers. Card
issuers settle acquirers and in return they bill their customers (cardholders) who are later on
required to pay upon receipt of statements.
5. Visa International /Master Card / Diners International – these are among many
international Franchise holder of Visa, Master card & Dinners brand respectively. They are
regulatory bodies and card issuers are required to become members in order to be allowed to
issue cards pertaining to a specific brand. Issuers are bound by rules and regulations
4 www.someakenya.com Contact: 0707 737 890
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller SammyKN. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.19. You're not tied to anything after your purchase.
