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    Question

    A large borrower shows acceptable ratios, adequate

    security, but repeated governance issues, frequent management changes and adverse audit remarks over last three years. Financials are stable but qualitative risk is high. What is the best credit stance?
    A Sanction without conditions Correct Answer Incorrect Answer
    B Reject the proposal outright Correct Answer Incorrect Answer
    C Sanction with enhanced covenants and monitoring Correct Answer Incorrect Answer
    D Sanction only unsecured portion Correct Answer Incorrect Answer
    E Defer indefinitely Correct Answer Incorrect Answer

    Solution

    High management risk β†’ control through covenants & close supervision.

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