Borrowers Default Risk
The solution compensates banks and financial institutions in the event of non-payment/default on facilities extended to their corporate clients. The Borrower’s Default policy will provide credit risk mitigation to financial institutions supporting various contracts. Below are some typical credit risk mitigation scenarios:
01
Scenario 1
The lender extends credit to its client to make payments to a supplier (whether local or overseas) in fulfilment of the terms of a purchase agreement. The lender may pay the supplier directly or issue the supplier with a payment guarantee or letter of credit.
02
Scenario 2
The lender provides its client with an invoice discounting facility, ensuring early payment for goods shipped in line with an underlying agreement between the client (supplier) and its buyer.
03
Scenario 3
The lender extends off-balance sheet facilities such as bonds and guarantees to its clients.