Credit Risk Models for Managing Bank’s Agricultural Loan Portfolio

Bandyopadhyay, Arindam

Credit Risk Models for Managing Bank’s Agricultural Loan Portfolio

MPRA Paper from University Library of Munich, Germany

Abstract: 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.

Keywords: Credit Risk Modelling; Lending; Agriculture (search for similar items in EconPapers)
JEL-codes: C53 G21 Q14 (search for similar items in EconPapers)
Date: 2007-10-12
New Economics Papers: this item is included in nep-agr, nep-ban, nep-cwa and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Credit Risk Models for Managing Bank’s Agricultural Loan Portfolio (2007)
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