Credit Risk Management In The Comoros Banking System

The banking sector is growing rapidly in Comoros unprecedented with the arrival of new banks and financial institutions, from three to nine over the past six years. The expansion of the banking sector shall be controlled and evaluated in a stable financial environment. Since banks are the causes of Comorian great risk because they do not possess the essential standards to cover the risks for the banking industry, this event strengthens the importance for bank to develop, maintain and update their risk management frameworks. Risks and risk management play an important role in any business but an exceptionally important one in the case of banks. Any problems faced by the bank affect immediately its clients and indirectly all subject which are interlinked with the bank itself or its client. Therefore, the banks need to make sure that all the risks they run are being well managed. This research seeks to analyze the major credit risks faced by banks and give suggestions strategies to cope against these risks. For example To reduce the lender’s credit risk, the lender may perform a credit check on the prospective borrower, may require the borrower to take out appropriate insurance, such as mortgage insurance or seek security or guarantees of third parties, besides other possible strategies. In general, the higher the risk, the higher will be the interest rate that the debtor will be asked to pay on the debt. As then The Central Bank of Comoros shall put optimal development, serene and secure banking and financial institutions, including decentralized financial institutions so as to put the suggested strategies on work.