Early warning system
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 »