STAKEHOLDERS

Bank
For the bank itself, it is crucial to know the number of customers that could default in
repayment of credit. The risk involved depends not only on the probability of default but
also the amount of credit extended. The bank needs to secure repayment and mitigate the
risk for defaults. Credit extension is a key function of the bank. While a bank earns by
providing credit facility it also earns from delay of payment. The interest charged on delayed
repayment forms a part of the revenue generated by the bank. Although the bank would
earn from a delay, complete default in payment would be detrimental.

Lenders
From individual customers to organizations to other banks, any kind of person who has
deposited money or lent funds to the bank would be affected by the revenue generated or
the losses borne. Default in repayment of credit would largely affect this stakeholder as it
would jeopardize their money. Moreover, the image of the bank would suffer in terms of
lack of judgement while lending credit. This in turn could see a decrease in trust in the eyes
of the lender and eventually lead to fall in deposits.

Borrowers
The credit policy of the bank directly impacts the borrowers. The defaults and tolerance
towards delayed repayments sets an ideological barrier to other borrowers of large funds.
The way the bank deals with defaulters would determine the type and volume of borrowers
approaching the bank. Interest on loans are the primary source of income to the bank. The
volume of loans taken and defaults on them would impact revenues.