CREDIT

Definition :credit is money or bill application or

similar forms, base assent or deal borrows to borrow among bank with

clients, the borrower takes responsibility to pay due the given

time period along with interest(UU No. 10/1988)

Element SubjectEconomic value

the economic values of goods or fund that changing hands from the first party to other party

Trustthe lender confidential that approved credit will be accepted proximately

Timea period or a given time period restricting among credit and it redemption

Rewardreward or interest on credit application

Riskthe effect emerges from the beginning of approved credit until redemption such as the effort risk, geographical risk, inflation risk, politics risk etc.

Important Terminologies

Plafon/Credit Quotamaximal bounds of credit that

approved by bank, utilized by debtor

Unused Plafoncredit value has not be used by debtor

Outstanding Creditposition of total credit has already

be used by debtor at the time

Loan Collectabilityunsecured quality classification

based on particular criterion according to BI rule

Before application of credit is accomplished, bank has

to appraise :CharacterCapacityCapital

CollateralCondition

that is done by bank to analyse application of credit, are :

Character ApproachReplayment Approach

Collateral ApproachFeasibility Approach

Development Approach

Credit Application Process

General Type of Credit can be classified based on:

The effect of purpose :

1. Productive /Commercial Credit

fund requirement as an effort that gives value addition, obtains profit, or carries out activities:

- Trading

- Production/Exploitation

- Investation/Exploration

2. Consumptive Credit

utilized to fund consumption requirement

for example :buying private car, buying

private house

According to Duration

1. Short-term Credit loan with maximum duration 1 (one) year

2. Long-term Creditloan with duration more than 1 (one) year

According to way to thawed credit1. Afbetaling Credit2. Revolving Credit3. Contingency Financing

Interest Count1. With annuity

M : Credit quota

n : Duration

i : Interest/month

2. Flat installment (loan with fixed installments )

i = effective interest/month

n = duration