Impaired Loans Management Solution

When the loans sanctioned to the borrowers are not repaid as agreed at the time of sanction, these loans are classified as non-performing loans or impaired loans in the books of Banks. The topic of Non-Performing Loans has climbed quickly to the top of the agenda in the world�s financial institutions in the last few years.

Business Challenges That You Face

Today, Banks want to have a separate system for loan loss information due to the following reasons.

• The rules of Basel II focus on off-loading impaired loans from the Bank's balance sheet.
• Until now, impaired loans managers have been obliged to rely on spreadsheets for valuation, analysis and asset organization. However, spreadsheets are unwieldy, slow, highly prone to error and cannot accept multi-input updates, especially for the complexity of portfolio valuations and transaction where cash flows are no longer present.
• The Banks are also frequently dependent on one or two employees who are conversant with loan loss provisioning.
• No consistent record for loan loss information.
• Need to record covenant breaches. I.e., loans where partial payments are still flowing. Technical default due to a covenant break, such as breach of limits on Debt-Coverage (DSCR) or Loan-to-Value (LTV) ratios is often a precursor to complete payment default.

What We Offer You

The application system developed by Kumaran Systems Inc for non-performing loans addresses all these challenges and lays out all possible cash flows of a loan until the optimal type of resolution is identified and can then be executed. This is achieved by calculating a discounted cash flow on all expected net cash flow from the loan through workout to performing status, or from underlying collateral if the loan is liquidated.

This is a professional solution that delivers a precise valuation of impaired loans portfolios and precise estimation of loan loss for the Bank. Loan losses consist of: write offs, recoveries, allowances and Time Value of Money Provision (TVMP). This solution captures all loan loss information - either directly or through source systems - and report on loan loss information - either through reports generated by providing information to other reporting and analysis systems.

Benefits of Impaired Loans Management Solution

The system helps to gather following:

• Loan loss information.
• Cash flow information.
• Outstanding balance.
• 'Demographic' information .
• Monitoring period.
• Customer default/instance of default.
• Facility classified.
• Facility resolved.

Technology Benefits

• Cost effective.
• Timely delivery.
• Fixing huge unsolved variances.
• Delivery of stable application.