Credit process and credit risk management in commercial banks

Banks have an important place in terms of both their share holding in the financial system and functions undertaken. The fundamental problem of banking consists of felicitous placing of collected resources by means of credit facility toward incresaing competition and narrowing profit margins in the banking sector particularly due to evolving economic conditions.Banking, by its nature, is an activity required to take risk to a large extent. Today, the subjects directly related to risk management such as to which extent it manages exposed risks, in which degree they overcome their unsettled periods without suffering loss, and at which pace they can keep up with changing conditions come into prominence among most important criteria of success of any bank in the sector it operates.One of the most important risks exposed by banks is credit risk, since ?Credit Facility? is one of the basic functions of classical banking. In this direction, as risk level in credits undertaken by banks is directly related to quality of their credits, credit decisions to be taken is of strategic importance for banks.As in every area of our lives, the subject of manage risks exposed at banks being one of the cornerstones of today?s economy is of vital importance. It is unlikely to completely eliminate credit risk, no matter how much diligence is shown when decisions of credit facility are taken at banks. In the process of credit facility, risk means the danger of a credit for the bank, in other words the sum of possible losses incurred by bank because of failure to return credit.Indeed, inactivity of some part of bank credits and difficulties encountered in collection of some part today are somehow revealed the importance of creditvrisk management, being main subject of this study, in terms of banking in concrete manner and it also provides to gain currency to the subject.