Various Credit Committees

Credit committees are groups formed within banks and financial institutions to evaluate, approve, and monitor credit proposals. They ensure that lending decisions are taken carefully and in line with the loan and credit policy. In India, credit committees help reduce risk, improve transparency, and avoid concentration of decision-making power. They examine borrower details, risk factors, security, and repayment capacity before approving loans. Different committees are formed based on loan size and complexity. These committees support sound credit administration, reduce non-performing assets, and strengthen overall credit governance in banks.

1. Branch Credit Committee

The Branch Credit Committee operates at the branch level and handles small and routine loan proposals. In India, this committee generally approves retail loans, small business loans, and working capital limits within prescribed authority. It includes the branch manager and senior officers. The committee evaluates loan applications, borrower creditworthiness, purpose of loan, and security offered. It ensures compliance with bank policies and RBI guidelines. The Branch Credit Committee helps in quick decision-making and customer convenience. It also monitors loan accounts and ensures timely recovery. This committee plays an important role in promoting local lending while maintaining credit discipline.

2. Regional Credit Committee

The Regional Credit Committee functions at the regional or zonal level and handles medium-sized loan proposals. It reviews credit proposals forwarded by branch committees that exceed branch powers. In India, this committee includes senior regional managers and credit officers. It conducts a detailed assessment of risk, financial statements, and repayment capacity. The committee ensures uniform application of credit policy across branches. It also reviews performance of regional loan portfolios and non-performing assets. The Regional Credit Committee helps strengthen risk management and ensures balanced credit growth within the region while supporting business expansion.

3. Head Office Credit Committee

The Head Office Credit Committee deals with large and high-value loan proposals. It is responsible for approving loans involving significant risk or strategic importance. In India, this committee consists of top management, including senior executives and credit specialists. It evaluates complex credit proposals, large corporate loans, and consortium lending cases. The committee ensures compliance with RBI norms, internal policies, and risk limits. It also reviews overall credit performance and asset quality. The Head Office Credit Committee plays a key role in shaping credit strategy and maintaining financial stability of the bank.

4. Executive Credit Committee

The Executive Credit Committee operates at the highest operational level and focuses on major credit decisions. It handles very large loans, restructuring proposals, and stressed assets. In Indian banks, this committee includes executive directors and senior credit officials. It evaluates high-risk proposals and takes decisions on loan restructuring, recovery strategies, and write-offs. The committee ensures proper risk assessment and policy compliance. It also monitors trends in non-performing assets. The Executive Credit Committee supports sound credit governance and protects the bank from excessive exposure and financial losses.

5. Board Level Credit Committee

The Board Level Credit Committee is the topmost authority in credit decision-making. It is formed by the board of directors of the bank. In India, this committee frames overall credit policy, approves very large exposures, and reviews credit risk management practices. It ensures alignment with RBI regulations and long-term business objectives. The committee monitors portfolio quality and major stressed accounts. It also provides strategic guidance on sectoral exposure and risk appetite. The Board Level Credit Committee strengthens corporate governance and ensures accountability in lending decisions.

6. Credit Risk Management Committee

The Credit Risk Management Committee focuses on identifying, measuring, and controlling credit risk in the bank. It reviews risk exposure across different sectors, industries, and borrower categories. In India, this committee plays an important role in reducing non performing assets. It analyses stressed accounts, early warning signals, and risk concentration. The committee suggests corrective actions such as tightening credit norms or revising exposure limits. It also ensures that lending activities follow internal risk policies and RBI guidelines. By monitoring overall credit risk, this committee helps maintain asset quality and financial stability of the bank.

7. Loan Sanctioning Committee

The Loan Sanctioning Committee is responsible for approving loan proposals within delegated authority. It examines loan applications, borrower financial position, repayment capacity, and security offered. In Indian banks, this committee ensures that loans are sanctioned only after proper appraisal. It verifies compliance with loan policy and regulatory norms. The committee may approve, modify, or reject loan proposals. It also ensures fair and transparent decision making. Proper functioning of this committee reduces chances of arbitrary lending and helps maintain credit discipline within the bank.

8. Stressed Asset Management Committee

The Stressed Asset Management Committee deals with problem loans and stressed accounts. In India, rising stressed assets make this committee very important. It reviews accounts showing signs of default or financial weakness. The committee decides on restructuring, recovery action, or legal measures. It also monitors progress of recovery efforts and resolution plans. By focusing on early resolution, this committee helps reduce losses and prevent accounts from becoming non performing assets. Effective management of stressed assets improves the overall health of the bank’s loan portfolio.

9. Consortium Credit Committee

The Consortium Credit Committee is formed when multiple banks jointly finance a large borrower. In India, big industrial and infrastructure projects often require consortium lending. This committee includes representatives from all member banks. It jointly evaluates loan proposals, risk sharing, and security arrangements. Decisions on sanction, monitoring, and recovery are taken collectively. The committee ensures coordination among lenders and avoids duplication of efforts. Consortium committees help spread risk and ensure better monitoring of large borrowers.

10. Audit and Compliance Credit Committee

The Audit and Compliance Credit Committee ensures that credit decisions follow internal policies and RBI regulations. It reviews credit files, sanction procedures, and documentation. In Indian banks, this committee helps detect irregularities, policy deviations, and operational risks. It recommends corrective actions and process improvements. Regular audits strengthen transparency and accountability in lending. This committee plays a preventive role by ensuring that credit administration is clean, compliant, and well controlled.