The Bank 's Objective For Identifying Responsible Clients

2019 Words9 Pages
3.4. The bank’s objective is to:- • maximize its profit on the loan • To identifying responsible clients • ensuring they repay their loans on time • fostering ongoing relationships with them • Serving gaining market share. The main risks faced by banks include:- • Delayed payments or • Any default on the loan agreement by the borrower • And when the credit report serves as imperfect information. The credit report plays a very important in bank decision making process whether or not to approve a loan or deny it. Credit report shows the loan applicant credit history prepared by a credit bureau and used by the bank in determining a loan applicant 's creditworthiness, Personal information, Credit history, Credit Report, Inquiries Credit Report Inquiries. The simple influence diagram if profit is considered as the only objective: - The Choose node “Default.”, tells what really important is if the money is paid back or not to the bank.. We have to decide whether which way the arrow which way should from “Default” to “Credit Report “or from “Credit Report” to “Default” .From the given credit report it is easier to know about the probability of default .But it is not easy to make decision about the liability of a credit report from borrower defaults. The “Credit Report” node will have like ratings given by the credit bureau. Passing the credit test is difficult and a very important step of the process. The influence diagram can be converted into decision tree
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