Loan Portfolio Audit

As a financial service provider expands its credit portfolio, it is critical that the institution is able to monitor its credit risk to guard against default, to ensure that policies and control procedures are fully implemented throughout operations, and that data matches the reality on the ground.  A loan portfolio audit is an important check on existing operational controls.

A Loan Portfolio Audit (LPA) provides a systematic, indepth investigation of systems, operations, data and field implementation to diagnose credit risks.

The loan portfolio audit covers:

  • Field investigation and cross-checking of portfolio data, reporting and client awareness for credit transactions and overdue tracking
  • Analysis of policies to manage credit risk
  • Examination of operational processes and policies for
    • loan origination, disbursal and recovery
    • various control systems
    • internal audit
    • reconciliation of cash and bank balances.

The methodology includes field level investigations, document review and interview in a number of branches. M-CRIL uses stratified random sampling for the selection of branches based usually on geographical location and age of the branches. Random sampling is applied within each stratum. We deliberately do not consider portfolio quality, audit grade and such quality parameters as a sampling criteria, since in our experience, random sampling gives a more representative estimate of quality and avoids bias.

Contact our Senior Vice President Gunjan Grover, for more information.