Loan operations
What is credit committee?
Credit committee is a group of senior lenders and executives authorized to approve loans that exceed individual lending limits or require policy exceptions.
A credit committee reviews and decides on credit requests above individual delegated authority, requests with significant policy exceptions and other matters the loan policy reserves for it. Membership typically includes the chief credit officer, senior lenders and executives, and at smaller institutions may include directors. The committee usually reviews a credit memo and hears a presentation from the relationship manager or analyst.
Beyond individual approvals, credit committees often review watch list and problem loan reports, portfolio concentrations, policy exceptions and loan review findings. Minutes record the decision, the key risks discussed, any conditions imposed and dissenting views. Those minutes create an important record for internal auditors, loan review and examiners, who use them to assess whether approvals followed policy.
Committees lose effectiveness when meetings become routine approvals without real challenge, when members lack time to read materials, or when a dominant member drives decisions. Poor documentation of the discussion and conditions makes it hard to show sound judgment later. Independence between those who originate loans and those who approve them is a key principle.
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