This module is aimed at providing general guidance to AIs on the risks associated with credit card business, and the systems of control expected of them in managing such business. It also sets out the best practices that they should aim to achieve.
Experience has shown that the quality of AIs’ credit card portfolios mirrors the economic environment in which they operate. Very often, there is a strong correlation between an economic downturn and deterioration in the quality of such portfolios. The deterioration may become even more serious if AIs have relaxed their credit underwriting criteria and risk management standards as a result of intense competition in the market. It is therefore important for AIs to maintain prudent policies and practices for managing the risks of their credit card business which are relevant to the market environment that they operate in.
To facilitate a better understanding of the risks involved, the basic features of credit cards and their associated operations are highlighted in subsections 1.2 to 1.4 below.
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PDF Ebook Credit Card Business
