Early warning system
The bad loans of Indian banks has touched a record high of Rs 9.5 trillion at the end of June 2017. The banks witnessed an increase of 4.5% in bad loans from January to June 2017, according to RBI data. The recent surge in bad loans suggests that there is no end to the NPA crisis anytime soon.
Heckyl believes there is a lot more that can be done in the credit risk space in the financial institutions. It is no secret anymore that be it the banks or the non-banking financial companies (NBFCs), the wrath of the non-performing assets has spared none. Although, these financial institutions have their existing risk models in place, the important question remains, that is, are they able to comprehensively highlight the impending risk ahead of time?
Heckyl has developed innovative Credit Risk Early Warning System (EWS) that collects, organizes and performs deep-dive analytics on structured and unstructured data sets to offer 360-degree view on lender’s loan portfolio. Our EWS application identifies the pre-default behavior of corporate borrowers to help lenders pick up warning signals ahead of time.
Heckyl EWS spots several red-flags on Sintex Industries Read the rest of this entry »
Heckyl Credit Risk Early Warning System has identified 50+ companies with a long working capital cycle based on analysis of 1,012 companies’ balance sheet for FY16 and FY17. The longer working capital cycle puts pressure on company’s cash flows and may result in higher short term debt. Hence, long working capital cycle is a red-flag for lenders.
Heckyl system captures company related red-flags based on a variety of business rules. Financial data is one of the important data points in the assessment of credit risk. Heckyl EWS consists of thousands of business rules that analyze the financial data.
Heckyl Credit Risk Early Warning System captures company-related red flags based on a variety of business rules. We have analyzed the data around pledging of shares by promoters of listed companies.
In our view, pledging of stake by promoters is a potential red-flag for lenders as it a) indicates the stress that has piled up on corporate finance and b) it may lead to loss of management control for the promoters in case of invocation of shares. Read the rest of this entry »
Indian banks tend to take on more risks during an upturn in credit growth while non-performing loans (NPLs) of private banks are more reactive to changes in interest rates, according to the recent RBI working paper. The report highlighted a one percent increase in loan growth leads to a 4.3 percent rise in NPLs over total advances (NPL ratio) in the long run.
Post demonetization of higher currency notes, banks have received whopping Rs 12.4 lakh crore in cash deposits. Some portion of these cash deposits is expected to remain with banks, which will improve liquidity in the system. It will enable banks to ease interest rates and boost lending operations.
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We highlighted – via a series of posts on Credit Risk Management (Read the previous blog – “Soaring Non-Performing Assets: The Paramount Problem“) – the ever-growing challenge of credit risk in financial institutions, the benefits of real-time analytics and the way in which Heckyl’s unique capabilities can be used to decipher credit risk management puzzle. We bring to you the third post, from the series.
Heckyl believes there is a lot more that can be done in the credit risk space in the financial institutions. It is no secret anymore that be it the banks or the non-banking financial companies (NBFC), the wrath of the non-performing assets has spared none. Although, these financial institutions have their existing risk models in place, the important question remains, that is, are they able to comprehensively highlight the impending crisis ahead of time? Read the rest of this entry »