CBM in banking stands for Credit Bureau Monitoring.
It is a process where banks and financial institutions monitor the credit history of their borrowers. This includes tracking credit scores, payment history, and other financial data.
The purpose of CBM is to:
- Assess creditworthiness: By monitoring credit bureau reports, banks can evaluate the creditworthiness of borrowers before extending loans or credit lines.
- Identify potential risks: CBM helps banks detect early warning signs of potential credit risks, such as missed payments or significant changes in credit utilization.
- Manage risk exposure: Banks can use CBM to manage their overall risk exposure by making informed lending decisions based on real-time credit information.
- Improve customer service: By monitoring credit data, banks can better understand their customers' financial situations and provide tailored financial products and services.
CBM is a crucial part of risk management in banking. It helps banks make informed decisions and protect themselves against potential losses.
