Risk control in credit business is mainly divided into three stages: pre-loan investigation, mid-loan review and post-loan management.

Credit business is actually a kind of credit granting behavior. When a customer applies for a loan, the lending institution will investigate and evaluate the borrower to decide whether the loan can be loaned and the amount of the loan. This is the task of pre-loan investigation. Pre-loan investigation is a top priority in the lending process of all banks, small loans and P2P institutions. There is always information asymmetry between lending institutions and borrowers. In the pre-loan investigation, it is necessary to understand the relevant information of the customer, which can be divided into financial information and non-financial information. Only by understanding the customer's information as truly and comprehensively as possible can we understand the customer's information. There is an objective and true assessment, which can then determine whether to lend and the amount to lend.

Pre-loan investigation is the first line of defense for risk control. The basic contents of the investigation include:

(1) Basic situation: the borrower’s qualifications as a loan subject and whether the basic conditions meet the requirements, such as age.

(2) Business conditions: The borrower’s production, sales, profitability and development prospects in recent years.

(3) Financial status: mainly the current status and changes of the borrower's assets and liabilities, capital structure, capital turnover, profitability, cash flow, etc. in recent years.

(4) Credit status: mainly refers to whether the borrower has defaulted on the principal and interest of the loan owed to the financial institution and has a bad credit record.

(5) Operator quality: mainly the knowledge, experience, performance, moral character and management capabilities of the legal representative and main leadership.

(6) Guarantee situation: mainly the ownership, value and ease of realization of the mortgage (pledge), and the guarantor’s qualifications and ability to guarantee.

1. Main contents of the review

(1) Whether the borrower’s subject qualifications are legal and whether he or she has the ability to bear civil liability.

(2) Whether the borrower meets the basic conditions for the loan.

(3) Whether the borrower’s production and operation, financial status, credit status, development prospects and internal management are in good condition.

(4) Whether the purpose of the loan is in compliance with regulations, and whether the amount, term, and interest rate are in compliance.

(5) The authenticity of the official seal of the legal person, the seal of the legal representative or authorized agent, and the signature sample.

(6) Review of the reliability of the mortgage (pledge) or the qualification and ability of the guarantor.

2. Loan approval

The pre-loan investigation will analyze and study the data and information to form an objective and fair conclusion, which will be submitted to the review department for review.

Based on the loan investigation and review opinions, approval will be carried out according to authority, and decisions will be made on whether to lend, the amount, term and interest rate, etc.

Post-loan management essentially guides the process between loan disbursement and complete recovery, which is the process of effective payment recovery and a good marketing process.

1. Main contents of post-loan inspection

(1) Regular inspection of the borrower’s production and operation status, credit status, debt repayment ability and loan usage.

(2) Focus on checking the use of loans, changes in debt solvency and performance of loan contracts.

(3) Check the current status and value changes of the mortgage (pledge) and the changes in the guarantor’s solvency.

2. Post-loan management

(1) One week before the loan is due, a notice (telephone reminder) to remind the borrower to repay the loan must be issued.

(2) If the loan is overdue, written reminder notices must be sent to the borrower every month and a receipt must be obtained.

(3) If the loan is overdue for more than three months, the loan must be collected from the borrower in accordance with the law.

(If you have different opinions, please feel free to enlighten me!)