Souvik Biswas

Risk Management @Utkarsh Small Finance Bank

Varanasi, IN

Credit risk is assessed using proprietary risk rating tools (varies by firm and borrower type).In personal lending:Focus on borrower’s financial health (assets, liabilities, income, credit history).Personal guarantee and collateral are common.In commercial lending:Involves both qualitative and quantitative assessments due to larger loan amounts.Qualitative assessment includes:Economic and business environment analysis.Industry analysis.Business evaluation (competitive advantage, growth strategy).Management and ownership analysis (including reputation and credit scores).Quantitative assessment includes:Financial analysis through performance and ratio evaluation.Credit assessment produces a score (e.g, credit rating, risk rating):Mitigating Credit RiskIf unaddressed, credit risk can lead to loan losses, affecting lender profitability. Mitigation strategies include:1. Credit StructureAdjust credit terms based on borrower risk.Key elements:Amortization periodCollateral quality and usageLoan-to-Value (LTV) ratiosLoan covenantsExample: Riskier borrowers may get shorter amortization or stricter reporting requirements.2. Sensitivity AnalysisTests how credit metrics respond to hypothetical scenarios.Examples:Assessing borrower risk at higher interest rates (e.g, 7% or 8% instead of 5%).Evaluating impact of shorter loan terms (e.g, 6–7 years vs. 10 years).3. Portfolio-Level ControlsLenders monitor the loan portfolio as a whole.Tactics include:Analyzing loan book concentration by credit type or risk score.Reporting to Credit Risk Management Committee (CRMC).Adjusting lending policies based on emerging risk trends.Tools

KAZI NAZRUL UNIVERSITY, ASANSOL

Bachelor of Commerce - BCom

Maulana Abul Kalam Azad University of Technology, West Bengal formerly WBUT

Master of Business Administration - MBA