Setting a limit, for a client/party allows the bank to control the exposure to that party and also monitor its own overall position. Since limit is a risk perception of the parties, limit products could be grouped differently from business products of a bank.
- Limit per Party.
- Limit per Headquarter.
- Limit per Country.
- Limit per Pairing Buyer/Supplier.
- Limit per Party/Facility.
- Limit per Party/Facility/Business Sector.
- Blocked -This limit (line of credit) was stopped or blocked. For any reason, currently transactions for this object must not be settled. No new business transactions are allowed.
- No Limit - No business transaction involving a liability can be carried out; A warning message will appear during processing.
- Normal - A limit with currency and amount is associated to an object.
- Unlimited - The customer has an unlimited line of credit. Thus, the system does not perform any checks.
Facility/Agreement/Commitment could be created according to the bank's need/situation and this allows the bank to monitor its exposure to that party at each Facility level.
For instance, facility could be created for import Business as a whole or facility could be created exclusively for short term loans, thereby allowing the bank to monitor and control its exposure with respect to its risk perception.
- Liability per Party
- Liability per Party/Facility
Facility limits can be set up by the Banks under the Party limit. This allows further break-down or split-up of limits into different levels to better monitor the risk exposure. For example; the bank can decide to split the limits for Domestic and International business or can set up a limit for the Past Due Loans or for Sight and Usance L/C per party as different facilities.
The user needs to select first the party for which the facility limit needs to be defined, then details such as Facility ID , Facility Name, Expiry Date, Status, Limit amount etc. can be added.
- Liability per Party/Facility/Business Sector
Facility limit can also be setup per Business sector under the Party facility limit.
Once a facility node is added to the Party limit, the limit tree overview becomes active. This provides a nice overview of how the Limit tree looks like. It also provides a quick view of the limit utilization along with the type of Limit.