DEFINITION of 'Loan Committee'

The lending or management committee of a bank or other lending institution that analyzes and subsequently approves or rejects any loan that the initial loan officer does not have the authority to approve. First, the committee ensures that the loan meets standard lending policy. Assuming the loan meets this criteria, the committee can agree to fund and disburse the loan with a binding commitment.

BREAKING DOWN 'Loan Committee'

The loan committee is responsible for periodic credit reviews of the bank's maturing loans. It also determines what collection action should be taken on past-due loans. The loan committee is usually composed of upper-level officers of the bank or lending institution with management authority.

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