Page 63 - Demo

CORPORATE OVERVIEW
cRedit RiSk
Area
Mitigation measures
Early Warning Systems (EWS)
Credit Rating Scorecards
Expected Credit Loss
Process
Gaps and Enhancements
Industry Insights and Portfolio Analysis
Stress Testing
Natural Disasters
Branch level scorecards were enhanced to assess the performance on various parameters such as incremental overdues, error rates, non-starter cases, collection performance etc. The Bank has also incorporated external factors in addition to internal EWS parameters to have better early monitoring and to take proactive measures.
For MSE and Housing Loans, the Bank has developed an internal EWS model at an account level for enhanced monitoring. The revised EWS frameworks will enable the Bank to monitor a borrower’s internal/external repayment record and signs of overleveraging efficiently.
For all verticals, the Bank has subscribed to various bureau reports to provide real time data on changes in credit scores, change in residential and communication details and leverage etc. as part of monitoring activities.
Designed and successfully launched risk rating scorecards for Microfinance, MSe and Housing Loan portfolios. These scorecards are designed to provide an objective and unbiased assessment on potential customers, duly factoring their personal income, repayment track records and collateral aspects (for secured loans). The scorecards will be back-tested, validated and calibrated in the ensuing financial year.
Risk rating scorecards are also introduced for FIG loans during the year, which will be subjected to validation in the ensuing year.
For other verticals, the Bank intends to introduce risk rating scorecards to increase objectivity in lending practices in the ensuing year.
Computed key risk factors under ECL- Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD) have been kept in line with Ind-AS 109. The Bank has incorporated additional management overlays in its pD and lGD computation models to reflect the potential stress which can be caused by COVID-19 pandemic.
Revamped various processes in credit appraisal w.r.t. documentation management, loan deviations, exposure norms, and new policies or enhancements to name a few. Occupation mapping of borrowers is currently being enhanced to undertake meaningful industry/sector analysis and corroborate with external outcomes.
Continuous analysis of all loan portfolios to identify potential areas of stress on the basis of geography, ticket size, branch/clusters etc. Such analysis has helped the Bank to set mitigants in the form of limits and caps in exposure.
The Bank undertakes comprehensive stress testing of all loan portfolios using sensitivity and scenario analysis. The impact of adverse events on the PAR%, NPA%, provisions and capital adequacy are assessed at regular intervals.
The Bank has undertaken various programmes for customer outreach and communication, social development programmes, changes in underwriting/credit policies and additional provisioning as risk mitigation measures in states affected by natural disasters.
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