discriminant analysis
Date: 15/01/201411/27/2012
Time: 09:49:0704:11 PM
BRM0002 IBS Case Development Center
Assessment of Retail Credit in a Private Bank with the help of ‘Discriminant Analysis’
This case study was written by R Muthukumar, IBS, Hyderabad. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from generalized experience.
2009, IBS Case Development Center. All rights reserved.
To order copies, call +91-08417-236667/68 or write to IBS Case Development Center, IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: info@ibscdc.org www.ibscdc.org BRM0002
Assessment of Retail Credit in a Private Bank with the help of ‘Discriminant Analysis’
With the US Financial Crisis 2008, recession made strong inroads across the industries. It not only affected banks and financial services, but also almost all other industries, especially BPOs and IT/ITES. As a result, many lost their employment and many couldn’t repay their loans or debts. Banks started monitoring retail accounts of its customers continuously to avoid any further delinquency.
Exhibit I
Collected Details of Customers
Respondents
Repayment Behaviour
Age
Income
(in Thousands)
No. of Dependents
Years of Marriage
1
Default
55
20
3
30
2
Default
56
25
4
25
3
Default
69
6
4
35
4
Default
35
40
3
5
5
Default
45
42
4
10
6
Default
65
8
4
30
7
Clean
30
26
2
10
8
Default
63
6
5
30
9
Default
49
43
5
20
10
Clean
32
23
2
4
11
Clean
24
26
1
1
12
Clean
25
10
1
1
13
Default
55
40
1
20
14
Default
48
30
2
12
15
Clean
30
10
3
8
16
Clean
28
32
3
3
17
Clean
25
12
2
2
18
Clean
35
41
2
5
19
Clean
45
23
1
8
20
Clean
18
9
1
0
Prepared by the author
In the last few quarters, banks in
Time: 09:49:0704:11 PM
BRM0002 IBS Case Development Center
Assessment of Retail Credit in a Private Bank with the help of ‘Discriminant Analysis’
This case study was written by R Muthukumar, IBS, Hyderabad. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from generalized experience.
2009, IBS Case Development Center. All rights reserved.
To order copies, call +91-08417-236667/68 or write to IBS Case Development Center, IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: info@ibscdc.org www.ibscdc.org BRM0002
Assessment of Retail Credit in a Private Bank with the help of ‘Discriminant Analysis’
With the US Financial Crisis 2008, recession made strong inroads across the industries. It not only affected banks and financial services, but also almost all other industries, especially BPOs and IT/ITES. As a result, many lost their employment and many couldn’t repay their loans or debts. Banks started monitoring retail accounts of its customers continuously to avoid any further delinquency.
Exhibit I
Collected Details of Customers
Respondents
Repayment Behaviour
Age
Income
(in Thousands)
No. of Dependents
Years of Marriage
1
Default
55
20
3
30
2
Default
56
25
4
25
3
Default
69
6
4
35
4
Default
35
40
3
5
5
Default
45
42
4
10
6
Default
65
8
4
30
7
Clean
30
26
2
10
8
Default
63
6
5
30
9
Default
49
43
5
20
10
Clean
32
23
2
4
11
Clean
24
26
1
1
12
Clean
25
10
1
1
13
Default
55
40
1
20
14
Default
48
30
2
12
15
Clean
30
10
3
8
16
Clean
28
32
3
3
17
Clean
25
12
2
2
18
Clean
35
41
2
5
19
Clean
45
23
1
8
20
Clean
18
9
1
0
Prepared by the author
In the last few quarters, banks in