IMPROVING THE ELEMENTS OF THE BANK CREDIT MECHANISM IN CREDITING FOR UPDATING OF CURRENT FACILITIES


Rakhaev V.A.

The effectiveness of bank lending is determined by the quality of the credit mechanism as a form of organization and method of using credit relations. The practice of lending indicates that the existing bank credit mechanism does not fully implement the principles of payment, urgency and repayment of loans. Thus, overdue debt on loans extended by Russian banks to legal entities and individual entrepreneurs amounted to 1,804 billion rubles as of 01.01.2018, or 6.4% of the banks` corporate loan portfolio. In this regard, it is relevant to search for tools of the credit mechanism, al-lowing implementing the principles of lending. The purposes are: explore the priority elements of the banking credit mechanism; describe the methods of justifying the needs of borrowers in loans; con-sider restrictive requirements (covenants) imposed by the bank on borrowers. The main research methods are: balance, analytical, regulatory, method of financial ratios, method of technical and economic calculations, method of forecast cash flow, economic and mathematical methods. Keywords: commercial bank, borrower, crediting, covenants, credit mechanism, net working capital, financial model, net cash flow, break-even point, penalties. Highlights: priority elements of the bank credit mechanism were studied; the needs of borrowers in loans were justified; restrictive requirements (covenants) established by the bank to borrowers were considered.

Valeriy A. Rakhaev, Candidate of Economics, Associate professor, Department of Finance and Credit, Samara State University of Economics.


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