KASNEB CCP common mistakes
KASNEB CCP · Understand the traps and how to avoid them.
Answering a credit appraisal question by listing the 5 Cs of credit and stopping there, without applying them to the borrower in the scenario.
Candidates memorise the 5 Cs framework early and treat naming it as the complete answer, since it is easy to recall under time pressure.
What to do instead
After naming each C, write one sentence applying it to the facts given (e.g. 'Capacity: the applicant's DSCR of 1.1 leaves little headroom for a rate rise'). Treat the framework as an outline, not the answer.
Computing ratios and then not interpreting them, or stating a ratio without stating what decision it supports.
Candidates practise calculation mechanics but rarely practise the 'so what' step, and marks for interpretation are lost even when the arithmetic is right.
What to do instead
For every ratio calculated, add a line: what it shows, how it compares to a benchmark or prior period, and whether it supports approval, conditions, or decline.
Confusing the roles of the credit policy, credit committee, and board, and attributing approval authority to the wrong body.
Governance structures are studied as a block and the specific delegation limits are not memorised precisely.
What to do instead
Build a one-page table of approval tiers with the delegated authority limit and escalation trigger for each, and check every governance answer against it.
Describing credit risk mitigation techniques without linking each to the specific risk it mitigates.
Collateral, guarantees, covenants, and insurance are listed as a set, so candidates reproduce the list regardless of the risk described in the question.
What to do instead
For each mitigation, state the risk addressed (e.g. 'a floating charge addresses recovery risk on default, not default probability') and note its limitations.
Treating loan documentation as a formality and failing to identify which document creates which obligation.
The law domain feels abstract, so candidates skim document types and cannot match facility letters, debentures, and guarantees to their legal effect.
What to do instead
Learn a short table pairing each document with the right it creates, the party it binds, and the perfection step required (e.g. registration of a charge).
Ignoring the priority and perfection rules when a question involves competing claims on the same collateral.
Candidates focus on the borrower's default and forget that recovery depends on ranking among creditors.
What to do instead
When collateral appears, always ask: is the security perfected, when was it registered, and who ranks ahead? State the ranking explicitly in the answer.
Recommending 'monitor the account' as the whole answer to an early-warning-signals question.
Monitoring is the safest generic response and candidates stop once they have written it.
What to do instead
Specify the signal, the trigger threshold, the monitoring frequency, the responsible officer, and the pre-agreed action if the trigger is breached.
Proposing restructuring or write-off without first setting out the recovery options and their expected recoveries.
Candidates jump to the final action and skip the comparison of options that the question is actually testing.
What to do instead
Structure recovery answers as: options available, expected recovery and cost of each, legal and reputational constraints, then a justified recommendation.
Quoting a regulatory or statutory requirement from memory with no check on whether it applies to the institution in the scenario.
Rules are learned generically, and candidates apply prudential or licensing requirements to the wrong type of institution.
What to do instead
Identify the institution type first (bank, SACCO, microfinance, non-deposit-taking lender), then state which regulator and rule set applies before quoting any requirement.
Writing lending recommendations with no conditions precedent, covenants, or exit strategy, even when the case clearly needs them.
Candidates see the decision as binary, approve or decline, and overlook the structured middle ground that examiners reward.
What to do instead
End every lending answer with a short section on conditions precedent, ongoing covenants, security to be perfected, and review or exit triggers.