Credit Risk Management Solution

Over the years, banks' borrower profiles have undergone many changes due to socio-economic factors. Banks today face varied challenges in assessing and monitoring the credit risk of borrowers and in taking prompt corrective actions when required. Factors such as the introduction of new regulations like BASEL-II, exponential increase in the number of borrowers, cross-country exposures, and expanding geographical reach have increased these challenges.

Business Challenges That You Face

The BASEL Committee has developed separate papers on several topics related to credit risk, including credit risk modeling and credit risk management. Banking supervisors tend to promote the use of prudent credit risk assessment and valuation practices. A significant cause of bank failures is poor credit quality and credit risk assessment. Failure to identify deterioration in credit quality on time can aggravate and prolong the problem. Inadequate credit risk assessment policies and procedures, which may lead to inadequate and untimely recognition and measurement of loan losses, undermine the usefulness of capital requirements and hamper proper assessment and control of banks' credit risk exposure.

Now, a significant twin challenge faced by banks are the aggregation of risk-related information to assess the PD, LGD, and EAD and the implementation of a risk rating system that can correctly model these parameters.

What We Offer You

The process of measuring and managing credit risk is a complicated task. This is because there are many uncertain elements involved in determining both the likelihood of a default happening and the expense of the default.

Internal rating systems allow the analyses of thousands of borrowers within a consistent framework. These systems permit comparisons across the entire loan portfolio. According to new BASEL II, capital accord banks will be able to use their own internal risk rating systems to set credit risk capital requirements.

Credit risk implies default of the borrower or deterioration of borrowers' credit quality. A bank should be able to assess the default in each exposure for all types of transactions. This is just where Kumaran steps in to assist you with our Credit Risk Management services.

Credit Risk Management - Your Assured Benefits

IT-enabled Credit Risk Assessment and Management ensure accurate prediction and estimation of credit risk. By making accurate predictions about future credit losses, banks are able to keep their capital adequate enough to meet depositor's expectations. These are the benefits of proper credit risk management:

• Improved performance management
• Improved product pricing
• Improved selection of clients according to risk profile
• Reduction in losses
• Optimized allocation of economic capital
• Greater levels of compliance
• Protection against loss of reputation

Kumaran's Role in Credit Risk Management

The BASEL II capital management framework enhances the risk sensitivity of minimum regulatory capital requirements. As a technology partner to our banking clients, Kumaran continues to add tremendous value to them by efficiently rendering these services:

• Application Technology Transformation & Modernization
• Application Development
• Production Maintenance Support
• Manual & Automated Application Testing
• Solution Design & Prototyping.
• Resource Augmentation (Technology & Business Divisions)