The incident we are about to describe took place during 2009 circa at a party, a year in which the world was going through one of its worst financial crisis for the longest time. Every average bloke on the streets was aware of terms like mortgage-backed securities (MBS), sub-prime lending and credit crisis, after all these are the reasons for his plight.
But at this party we are speaking of, I was fortunate enough to meet with an informed and highly compassionate elderly woman, and after a few minutes of discussion the topic came to what we here do for a living. She wanted to know more about credit scorecard systems. As I further went on to explain the details of how this system works, her expression changed from being just plainly curious to angry to pained. Continue reading “Introduction To Credit Score Cards: Its Use in Crisis”
While the developed nations are slowly recovering from the financial chaos of post depression, the credit risk managers are facing growing default rates as household debts are increasing with almost no relief in sight. As per the reports of the International Finance which stated at the end of 2015 that household debts have risen to by USD 7.7 trillion since the year 2007. It now stands at the heart stopping amount of a massive USD 44 trillion and the amount of debts increased in the emerging markets is of USD 6.2 trillion. The household loans of emerging economies calculating as per adult rose by 120 percent over the period and are now summed up to USD 3000.
To thrive in this market of increasing debts, credit risk managers must consider innovative methods to keep accuracy in check and decrease default rates. A good solution to this can be applying the data analytics to Big Data. Continue reading “Credit Risk Managers Must use Big Data in These Three Ways”
A valuation store, built up and kept up by charges against the bank’s working salary, is what we know by The Allowances for Loans and Lease Losses (ALLL). As an assessment measure, it is an evaluation of invalid sums that is utilized to decrease the book estimation of credits and rents to the sum that is relied upon to be gathered. The ALLL frames a piece of Capital of Tier-2; henceforth it is kept up to cover misfortunes that are plausible and admirable at the time of assessment. It does not work as a support against all conceivable future misfortunes; that assurance is given by the Capital of Tier 1. For building up and keeping up a satisfactory payment, a bank ought to:
Continue reading “Facts about Remittances for Credits and Rent Losses – Part 1”
In the last blog we had discussed three types of banking instruments, namely the Current account, Savings account and Certificate of Deposit. In this blog we discuss credit cards. Credit cards are the most expensive and profitable type of loan that a bank can extend. A credit card is a card issued by a financial institution giving the holder an option to borrow funds, usually at points of scales. Credit cards charge interest and are primarily used for short-term financing. Interest usually begins one month after a purchase is made and borrowing limit is pre-set according to the individual’s credit rating. Credit cards have higher interest rates than most consumer loans, or lines of credit.
Continue reading “Banking Business And Banking Instruments- Part 2”
Post the Financial Crisis of 2008, there has been an increase in the regulatory vigilance of the capital adequacy of commercial banks across the globe. Banks need to be compliant with different regulatory capital requirements, so that they can continue their operations under situations of stress. A majority of analytical work in Indian BFSI domain is to provide analytical support to US based multinational NBFC’s. We would like to throw some light on the opportunities and scope of credit risk analytics in the US banking and financial services industry. The Federal Reserve requires the banks to be compliant with three main regulatory requirements: BASEL- II, Dodd Frank Act Stress Testing (DFAST) and Comprehensive Capital Analysis and Review (CCAR).
Continue reading “Credit Risk Analytics and Regulatory Compliance – An Overview”