Which of the following is NOT a reason to conduct an annual review of a borrower?

Conducting an annual review of a borrower is vital to maintaining a healthy lending relationship and managing credit risk effectively. The correct answer indicates that providing the borrower with loan parameters is not a primary reason for performing this review.

The core purposes of an annual review typically involve updating financial projections, which are essential for understanding the borrower’s current financial health and predicting future performance. It also focuses on mitigating credit risk by assessing any changes in the borrower’s financial situation that could affect their ability to repay the loan. Additionally, reassessing the borrower’s changing needs is crucial as it ensures that the lender can tailor financial products and terms that best suit the borrower’s evolving circumstances.

While providing loan parameters may be part of the initial loan negotiation or setting terms, it is not a direct objective of the annual review process. The focus is primarily on evaluating ongoing financial performance and risks rather than reiterating previously established loan parameters.