Bandyopadhyay, Arindam (2007): Credit Risk Models for Managing Bank’s Agricultural Loan Portfolio.
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In this paper, we have developed a credit scoring model for agricultural loan portfolio of a large Public Sector Bank in India and suggest how such model would help the Bank to mitigate risk in Agricultural lending. The logistic model developed in this study reflects major risk characteristics of Indian agricultural sector, loans and borrowers and designed to be consistent with Basel II, including consideration given to forecasting accuracy and model applicability. In this study, we have shown how agricultural exposures are typically can be managed on a portfolio basis which will not only enable the bank to diversify the risk and optimize the profit in the business, but also will strengthen banker-borrower relationship and enables the bank to expand its reach to farmers because of transparency in loan decision making process.
|Item Type:||MPRA Paper|
|Institution:||National Institute of Bank Management, Pune, India|
|Original Title:||Credit Risk Models for Managing Bank’s Agricultural Loan Portfolio|
|Keywords:||Credit Risk Modelling; Lending; Agriculture|
|Subjects:||G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages
C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C53 - Forecasting and Prediction Methods; Simulation Methods
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q1 - Agriculture > Q14 - Agricultural Finance
|Depositing User:||Arindam Bandyopadhyay|
|Date Deposited:||18. Oct 2007|
|Last Modified:||12. Feb 2013 11:43|
Bandyopadhyay, A. (2007). A Note on Measurement and Management of Credit Risk under Basel II, NIBM Publication. Barry, P. J., Escalante, C. L., Ellinger, P. N. (2002). Credit Risk Mitigation Analysis of Farm Business, Agricultural Finance Review, Vol. 62, pp. 1-11. Barry, P.J. (2001). Modern capital management by financial institutions: Implications for agricultural lenders. Agricultural Finance Review, 61, 103-122. Basel Committee on Banking Supervision. (2004). The new Basel Capital Accord. Basel, Switzerland: Bank for International Settlements. Available on the World Wide Web: http://www.bis.org. Bliss, R., (2002). Comments on Credit Ratings and the BIS Capital Adequacy Reform Agenda, Journal of Banking & Finance, Vol. 26, pp. 923-928. Katchova, A.L., & Barry, P.J. (2005). Credit risk models and agricultural lending. American Journal of Agricultural Economics, Vol. 87, pp. 195-206.