SIP REPORT Bindu PDF

A REPORT
ON
“CREDIT ANALYSIS AT BHARAT FINANCIAL INCLUSION
LIMITED USING CREDIT SCORING MODEL”
By
BOGAVILLI BINDU MADHAVI
21BSPHH01C0297
At
“BHARAT FINANCIAL INCLUSION LIMITED”
A report submitted in partial fulfillment of the requirements of

MBA Program of
IBS Hyderabad
A REPORT
ON
“CREDIT ANALYSIS AT BHARAT FINANCIAL INCLUSION
LIMITED USING CREDIT SCORING MODEL”
By
21BSPHH01C0297
At
“BHARAT FINANCIAL INCLUSION LIMITED”
A report submitted in partial fulfillment of the requirements of

MBA Program of
IBS Hyderabad
Distribution List:
Faculty Guide Company Guide
Dr. D Saravanan Jasim Alam
ICFAI Business School Sr. Lead Manager
Hyderabad BFIL, Hyderabad
Date of submission: 12-05-2022
2|Page
AUTHORIZATION
This is to certify that the Final Report titled – “ CREDIT ANALYSIS IN BFIL USING A
CREDIT SCORING MODEL” is a record of work done by Ms. BOGAVILLI BINDU
MADHAVI , as partial fulfilment of the requirement of MBA program at IBS Hyderabad. The
work has not been submitted earlier for any other purpose, to the best of my belief.

(21BSPHH01C0297)
DATE:12-05-2022
PLACE: HYDERABAD
3|Page
ACKNOWLEDGEMENT
It is not possible to prepare a project report without the assistance and encouragement of other
people. This one is certainly no exception. On the very outset of this report, I would like to
extend my heartfelt and sincere obligation towards all the people who have helped me in this
endeavour. Without their active guidance, help and cooperation I would not have made
headway in my internship project.
I am ineffably indebted to Mr. Jasim Alam, Senior Lead Manager, BFIL for conscientious
guidance and encouragement to accomplish this assignment.
I am extremely thankful and pay my gratitude to faculty Professor Mr. D. Saravanan for his
valuable guidance and support through the journey of this project in its presently.
I extend my gratitude to ICFAI Business School, Hyderabad Campus for giving me this
opportunity.
I would also like to acknowledge my colleagues at BFIL for providing a welcoming

environment and an open work culture.
At last but not least I would like to thank my parents for supporting me mentally, emotionally
and financially.
4|Page
Table of Contents
Authorization
Acknowledgement
Abstract
1. Introduction ......................................................................................................................... 8
1.1 Internship Proposal ..................................................................................................... 9
1.2 Objective of the internship ........................................................................................ 10
1.3 Methodology ………………………………………………………………………11
1.4 Scope of the internship ……………………………………………………………11
1.5 Limitations ………………………………………………...………………………11
2. Industry Profile .................................................................................................................. 12
2.1 Concerns of Microfinance sector related to Consumer protection ............................ 12
2.2 Self-regulatory organizations for Microfinance........................................................ 14
2.3 Introduction of regulation for NBFC-MFI……………………...………………….17
3. Company Profile ................................................................................................................ 18
3.1 Features of BFIL ....................................................................................................... 18
3.2 Product Variants........................................................................................................ 18
3.3 Merger……………………………………...…………………..…………………..19
4. List of other Activities in BFIL ......................................................................................... 21
4.1 Branch/ Field visit Summary Report ....................................................................... 21
4.2 Hospicash…………………………………………………………………………26
4.3 Income Assessment for BSS Customers………………………….……………….35
4.4 Competitive Analysis for Customer Loyalty ………………...……………………41
4.5 Loan Amortization Schedule ................................................................................... 42
4.6 Uizard Wireframes ……………………………………………..…………………42
5. Credit Analysis ................................................................................................................... 43
5.1 CAMPARI ................................................................................................................ 43
5.2 PAPERS ................................................................................................................... 44
5.3 5C’s of Credit Analysis …………………………………………………………...45
6. Credit Scoring Model ………………...………………………………………………….48
6.1 FICO Scoring Model ............................................................................................... 48
5|Page
6.2 Vantage Scoring Model ......................................................................................... 49
6.3 Credit Scoring Model for BSS……………………………...……………………50
Findings ………………………………………..…………………………………….……..58
Conclusion………………………………..…………………………………………………59
Recommendations …………………………………….…………………………………...60
References ………….…………………………………….……………………….………..61
6|Page
Abstract:
In a country like India where 70 percent of its population lives in rural area, micro-finance can
play a vital role in providing financial services to the poor and low- income individuals. Micro-
finance is regarded as a useful tool for socio-economic upliftment in a developing country like
India. It is expected to play a significant role in poverty alleviation and development.
Micro-finance has been successful in providing access to credit. Microfinance is a banking

service provided to unemployed or low-income individuals or groups who otherwise would
have no other access to financial services. Microfinance institutions operate in the Indian
economy with the ultimate objective to serve the financially poor section of the society.
However, their objective of financial stability and their long-term viability can’t be overlooked.
Many times, to fulfil the objective of generating regular cash flows in the institution, proper
credit risk analysis is totally ignored.
The case of Andhra Pradesh’s microfinance crisis demonstrates the ill-effects of over- lending
and illicit recovery practices followed by the microfinance institutions. The crisis was a result
of many such institutions rushing to meet their sales target. This results in over-lending to
borrowers at exorbitant rates without due consideration of their repayment capacity. When the
time came for the borrowers to repay their loans, they failed to do so. It is extremely important
for banks to check the credit worthiness of the borrower (although not base their decisions on
the credit worthiness alone) and offer loans to borrowers at reasonable rates of interest so that
repayment of loan does not seem out of reach. This project uses cashflow analysis as a base to
evaluate credit with the customers. The main objective of this report is to develop a credit
scoring model by analyzing the various significant indicators and giving weightage to different
parameters for income of good and bad customers by using their Bank Statements data such
as, Average daily balances, credit & debit transactions, cheque or NACH bounces etc., Credit
Bureau data such as number of active accounts, DPD, Outstanding balance, written off
accounts, Co-applicant’s details etc. This model looks into different dimensions required by
the company for credit evaluation. Basis this scoring model, the existing customers will be
categorized into two different groups namely good and bad and subsequent product variant
offering to be recommended as per the customer segment.
7|Page
1. Introduction:
Credit analysis is a type of financial study that an investor or bond portfolio manager
undertakes on firms, governments, municipalities, or other debt-issuing entities in order to
assess their capacity to satisfy their debt commitments. Credit analysis is used to determine the
proper degree of default risk when investing in a company's debt instruments. Banks, bond
investors, and analysts conduct credit analyses on companies to determine their capacity to pay
their debts. An analyst can assess a company's ability to pay its debts using financial ratios,
cash flow analysis, trend analysis, and financial projections. A check of credit scores and any
collateral is also used to determine a company's creditworthiness.
Credit analysis is used to determine not just the likelihood of a borrower failing on its
obligation, but also the severity of the losses that will occur if the borrower defaults. The credit
analysis will establish what risk rating the loan issuer or borrower will receive. The risk rating
determines whether or not to issue credit or make a loan to the borrowing entity, as well as the
amount to be lent.
Many financial institutions are experimenting with new and varied lending models in order to
provide new product features or to reach out to new consumer categories. They frequently
discover that they lack the previous performance data necessary to construct a scoring model.
Introduction: Most firms can utilise the bureau's score as an input for their underwriting process
if external credit bureau data is available for their consumers. These scores aren't as accurate
as personalised scores, which are created on the fly based on unique consumer information.
Some credit bureaus, on the other hand, provide varied levels of customisation for their ratings.
If the external credit bureau does not have sufficient information on the organization's customer
base, customer cloning or profiling may be used to create a score for other loan applicants.
In customer cloning, the institution utilises the bureau's score as a proxy for "good" customers
and chooses the client with the lowest score to consider lending to.
1.1 About Internship
➢ Internship Proposed:
This Internship proposed is with BHARAT FINANCIAL INCLUSION LIMITED for a

duration of 12 weeks starting from 24rd February 2022 to 22nd May 2022. I will be interning
8|Page
as a full-time summer trainee under the Finance Department. My company guide will be Mr.
Jasim Alam (Senior Lead Manager - Bharat Financial Inclusion Ltd. Begumpet Branch).At the
completion of the internship period, I will be submitting a final report to both my Company
guide and my faculty guide based on my learnings and work-experience gained during the
internship. The title of the internship report will be “Credit Analysis of Customers using Credit
Scoring Model”
➢ Description of Internship in brief:

This internship is mainly concerned with, how we analyse the credit worthiness of the retailers.
I have been assigned to this ongoing project which helps this company in credit evaluation of
customers. This sector includes mostly unorganised micro-retailers. Most of them need credit
to run their business. For this, a generalized model will be developed which helps to analyse
the credit worthiness of the customer by using their credit scoring model. This project uses
scoring model as a base to evaluate credit with the customers. Previously, there was no such
scoring model followed by the company to give credit. It only uses credit bureau data to analyse
the worthiness of the customers. I was provided with a sample of 2500 customers to categorise
them into good and bad customers, i.e. to find:
1. What is a bad loan and how to differentiate customers basis their credit behaviour and
underwriting?
2. What characteristics mostly influence the risk i.e payment behaviour, willingness to
pay, payment capability etc ?
3. Credit worthiness of a customer – whether to lend subsequent loans or not ? How to
evaluate the parameters for second cycle and above loans with robust credit-rule
engines.
1.2 Objective of the Internship:

The main objective of this internship is to harness my finance knowledge and develop a
generalized credit scoring model for assessing the worthiness of customers by using their
repayment period, average daily balance, fixed obligations, financial discipline, Credit Bureau
data etc. This model looks into different multiple dimensions required by the company for
credit evaluation. An exhaustive report with key findings can be developed for this analysis.
9|Page
1.3 Methodology:
Primary data: Primary data is a type of data collected by researchers directly from main
sources through interviews, surveys, experiments etc. It is usually collected from the source –
where the data is originally originates from and are regarded as the best kind of data in research.
Primary data of respondents is collected using the closed ended questionnaire from the existing
customers of BSS product. The data is collected through telecalls.
Secondary Data: Secondary data refers to the data that is collected by someone other than the
primary user. Common sources of secondary data for social science include censuses,
information collected by government departments, organizational records and data that was
originally for other research purposes.
Research Methodology used for following activities are:
Field Survey Report: Primary data of respondents is collected using the closed ended
questionnaire from the customers who are into different business types like general store,
tailoring, stationary shops etc. The data is collected physically by going to their place of
business and excel is used to segregate and analyse the data collected.
Hospicash: This report is fully based on the secondary research by following various research
papers of Hasna Ashraf & Anjali Nambiar, K Swathi and R Anuradha, Rajeev Ahuja and
visiting the other companies policies , their offers e.t.c.
Income Assessment of BSS Customers: Primary data of respondents is collected using the
closed ended questionnaire from the existing and the new customers of BSS. This data is to be
collected by the cluster managers who have access to the portal. This questionnaire will be
uploaded in the portal.
Some portion of the report is also made using the secondary research which is through the RBI
website and a few newspaper articles.
Customer Loyalty Program: This program is mainly done through brain storming technique.
All are supposed to present the suggestions and research articles.
10 | P a g e
Credit Analysis: The main content of the report is developing the score model for BSS. The
data used as the sample is the historical data, since this data is developed by Equifax and BFIL
purchases it from them.
1.4 Scope of the Internship
From this internship, the scoring model gives the company, the potential customers and take
necessary steps to reduce portfolio of bad loans. This credit scoring model can be used by the
BSS team to strengthen the present rule engine. It covers wide range of
1.5 Limitations
➢ Privacy constraints and strict policies of the company. Unable to capture all the
variables like demographic and the credit history of customers.
➢ Score modelling is a very huge topic and needs a lot of time and research. Due to the
time constraint of 3 months, the variables and methods done are limited.
➢ The cost of getting the data from the customers is expensive since, the customers live
in rural areas and it is difficult to meet the customers.
11 | P a g e
2. Industry Profile:
Microfinance is a form of financial service which provides small loans and other financial
services to poor and low-income households. It is an economic tool designed to promote
financial inclusion which enables the poor and low-income households to come out of poverty,
increase their income levels and improve overall living standards. It can facilitate achievement
of national policies that target poverty reduction, women empowerment, assistance to
vulnerable groups, and improvement in the standards of living. Indian microfinance sector has
witnessed phenomenal growth over past two decades in terms of increase in both the number
of institutions providing microfinance as also the quantum of credit made available to the
microfinance customers.
Microcredit is delivered through a variety of institutional channels viz.,
(i) Scheduled commercial banks (SCBs) (including small finance banks (SFBs)
and regional rural banks (RRBs)) lending both directly as well as through
business correspondents (BCs) and self-help groups (SHGs)
(ii) Cooperative banks
(iii) Non-banking financial companies (NBFCs)
(iv) Microfinance institutions (MFIs) registered as NBFCs as well as in other forms.
2.1 Concerns in Microfinance Sector related to Customer Protection
➢ Over-indebtedness and Multiple Lending
The comprehensive regulatory framework is applicable only to NBFC-MFIs, whereas other

lenders, which comprise of around 70 per cent share in the microfinance portfolio, are not
subjected to similar regulatory conditions. As a result, small borrowers are increasingly able to
get multiple loans from several lenders, contributing to their over-indebtedness which, then,
can potentially get manifested into coercive recovery practices. This compromises the essential
objective of protection of small borrowers enshrined in the NBFC-MFI regulations which do
not permit more than two NBFC-MFIs to lend to the same borrower. Besides, there is a
regulatory ceiling on the maximum amount that can be lent by an NBFC-MFI to a microfinance
borrower. With decline in the share of NBFC-MFIs in the overall volume of microfinance, it
is the customer who ends up being the victim of over-indebtedness.
12 | P a g e
➢ Pricing of Microfinance Loans
The regulatory ceiling on interest rate is applicable only to NBFC-MFIs. Regulatory

instructions and clarifications over the years have led to a complex set of rules governing the
cost of funds. The prescribed ceiling on lending rate for NBFC-MFIs has had an unintended
consequence of not allowing competition to play out and most lenders have similar levels of
pricing. There is a concern that the current guidelines, prescribing an interest rate ceiling for
only NBFC-MFIs, are effectively acting as a regulatory benchmark for other lenders as well.
Lending rates of banks also hover around this ceiling despite comparatively lower cost of funds.
Even among NBFC-MFIs, increasing size of the operations leading to greater economy of scale
has not resulted in any perceptible decline in their lending rates. As a result, it is the borrowers
who are getting deprived of the benefits from enhanced competition as well as economy of
scale. Thus, there is a non-level playing field which results in customer protection getting
compromised
13 | P a g e
Microfinance activities gained prominence in the early 1990s and RBI recognized it as a new
paradigm, with immense potential and was very supportive for its growth. When the demands
for regulating the MFIs were made, Shri Jagdish Kapoor, the then Deputy Governor, in 2001
stated that “As MFIs are significantly different from commercial banks both in terms of
institutional structure and product portfolio, application of the same set of regulatory and
prudential guidelines to MFIs, in our view, not only runs the risk of distorting the emerging
market but it may also reduce the efficiency of these institutions.”
However, as the sector grew, certain inadequacies and failures became apparent culminating
in the Andhra Pradesh (AP) microfinance crisis in 2010. This crisis was attributed to the
irrational exuberance of some MFIs who, in their eagerness to grow business, had given a go
by to the conventional wisdom and good practices such as due diligence in lending and ethical
recovery practices. Over-indebtedness of the borrowers led to difficulties in repayments and
forced recoveries by some of the MFIs finally led to public uproar and subsequent intervention
by the state government. In the wake of this crisis, RBI constituted a Committee (Chairman:
Shri Y H Malegam) to study issues and concerns in the MFI sector.
The key recommendations of the Malegam Committee were as follows:
a) Creation of a separate category of NBFC operating in the microfinance sector to be

designated as NBFC-MFI
b) Criteria for defining ‘microfinance loans’ classified as ‘qualifying assets’
c) Prudential norms on capital adequacy and provisioning requirements
d) Prescriptions related to pricing of credit in terms of a margin cap and interest rate ceiling on
individual loans
e) Transparency in interest charges as well as other terms and conditions of the loan
f) Measures to address multiple lending, over-borrowing and coercive methods of recovery
g) Establishment of a proper system of grievance redressal
2.2 Self-regulatory organizations for Micro-finance
Microfinance Institutions Network (MFIN) and Sa-Dhan, the Reserve Bank of India recognised
self-regulatory organisations and industry associations for the microfinance industry, along
14 | P a g e
with Finance Industry Development Council (FIDC), have jointly unveiled the ‘Code for
Responsible Lending’ (CRL) for the micro-credit industry.
Microfinance Institutions Network (MFIN) was established in 2009 as an Industry

Association for NBFC-MFIs. In 2014, MFIN was recognised by the Reserve Bank of India
(RBI) as India’s first Self-Regulatory Organization (SRO) for the NBFC-MFIs. The year 2019
saw MFIN complete ten years of its existence as an Association. Over a period of time, as
members graduated as Universal Bank and Small Finance Bank coupled with entry of banks
and NBFCs in microfinance space, MFIN has expanded its umbrella to cover the entire
microfinance eco system. MFIN Members are RBI regulated entities comprising the Non-
Banking Financial Companies - Microfinance Institutions (NBFC-MFI), Banks, Small Finance
Banks, NBFCs, Banking Correspondents, Credit Bureau, Fintech companies, among several
others.
Keeping the larger objective of financial inclusion in mind, MFIN focuses on creating an
enabling policy and business environment for its members to purvey responsible finance with
the highest standards of customer protection and corporate governance. Towards this objective,
MFIN works closely with the microfinance providers, regulators, Government and other key
stakeholders across 35 states and union territories, spanning 591 districts to ensure that credit
reaches the low-income households.
The impact of Microfinance on borrowers can be gauged by the fact that over 6 crore women
are at present being reached through these small, easily serviceable, collateral free loans,
impacting as many as 300 million families. As a result, a vast unbanked and unserved
population of India today has access to formal credit even in the remotest districts of India.
Sa-Dhan the Association of Community Development Finance Institution has been working
for more than one and a half decades in supporting and strengthening the agenda of Financial
Inclusion in India and creates a space and understanding of microfinance with policy makers,
bankers, government, researchers, and practitioners. We are engaged with all kinds of operating
models, legal forms and have also roped in the technical institutions in the process. At present,
Sa-Dhan has a membership base of 213 institutions (Including NBFC-MFI, NBFCs, Societies,
Trusts, Cooperatives, and SHPIs) also including Banks / SFB, Rating agencies and Capacity
Building agencies, representing all legal forms and operating models. This diverse set of
representation acts as a comprehensive web for picking up the details and focusing on key
15 | P a g e
issues and challenges. Our membership network reaches out to approx. 44 million clients with
loans outstanding of more than ₹ 1,19,377 crores and over 90% of districts in India.
They believe that within the overarching objective of financial inclusion, microfinance is an
effective strategy for poverty alleviation and has the potential for far-reaching impact in
transforming the lives of millions of under-privileged people. Sa-Dhan remains committed to
ensuring client protection, transparency, reporting, adherence to the Industry Code of Conduct
which we have helped to finalise, compliance to regulation and financial and social
performance standards that we have been setting from time to time. During the last 16 years of
our existence, we have been successful in evolving a legal and regulatory framework for the
sector, building the capacities of member organizations, building a repository of research and
experience through our sectoral reports and studies.
Sa-Dhan is recognized by the RBI as Self-Regulatory Organisation (SRO) for the Microfinance
Sector. Sa-Dhan is recognized as National Support Organization (NSO) by National Rural
Livelihood Promotion (NRLM).
Sa-Dhan, a self-regulatory organisation for the microfinance sector, on February 17, 2022
stated it has brought the credit score evaluation framework (CAF) for microfinance borrowers.
Over the beyond one-and-a-1/2 of years, Sa-Dhan has labored to introduce a conducive and
powerful framework with the intention to allow earnings evaluation and threat profiling of
borrowers, consistent with a statement. The CAF has been advanced primarily based totally on
country wide and global fashions of poverty evaluation like PPI (Progress out of Poverty Index)
and Poverty Assessment framework of National Rural Livelihoods Mission, Government of
India.
The framework will assist to complement and enhance the present earnings evaluation version
of MFIs with verifiable wellness indicators, utilise and combine present records factors of
customers to be had with MFIs and offer a credit score worthiness score (CWS), threat profiling
for every client. It will even sell threat-primarily based totally mortgage pricing and mortgage
sizing and save you over-indebtedness of prone and low-earnings households. This model is
mainly developed by studying the behaviour of Indian microfinance customers at a reasonable
cost. This is to decrease the dependency of microfinance institutions on Credit Bureaus.
16 | P a g e
2.3 Introduction of Regulations for NBFC-MFIs
17 | P a g e
3. Company Profile :
Bharat Financial Inclusion Limited(formerly ‘SKS Microfinance Limited’), is a subsidiary of
IndusInd Bank engaged in providing micro-finance to low-income individuals in India,
essentially women borrowers, BFIL has a presence in 22 states, with 2,289 branches and 27,561
employees as of March 31, 2021. This organization gives loans at the lowest lending rate. BFIL
is the largest Micro Finance Institutions and first MFI to get publicly listed in India. With a
Portfolio Outstanding of ₹25,507 crores as of March 31, 2021, which accounts for more than
12% market share in sustainable livelihood. BFIL, is well-positioned within the Micro-finance
industry to lead this space in the coming years. BFIL’s conservative approach to lending,
concentration norms defined at a geographic level, muted ticket sizes and a high level of focus
on new customer acquisition, has held it to great advantage over the years and shall continue
to pursue these rigorously to ensure Qualitative Portable Growth.
While BFIL continues to grow its micro-finance operations, the focus shall also be on scaling
up its operations under Bharat Money Stores (BMS) and Bharat Super Shop (BSS).
3.1 Features of Bharat Financial Inclusion Limited
➢ It gives loans for low-cost house building

➢ It gives loan services and helps poor people to generate income
➢ It funds small and micro business retailers
➢ It helps in improving the living conditions of the marginalized people
➢ It aims at empowering poor women and enhance their livelihood Bharat Financial
Inclusion Limited Products and Service
3.2 Product Variants:
➢ Microfinance:
Microfinance is the core product. These are small collateral free loans provided
under Joint Liability Group (JLG) model wherein the credit facility is provided
to women for income generation purposes. Depending on the vintage and the
payment track record of the customer, the loan amount starts from a minimum
of INR. 10,000 and is subsequently increased over time.
➢ Loans to Retailers (Bharat Super Shop)
18 | P a g e
Under the flagship program of BSS, BFIL offers individual loans for working capital
to small retailers who generate daily cash flows. Current account, recurring deposit and
loans are offered at their doorstep in addition to the convenience of mobile and
WhatsApp banking facility. The loan tenure typically ranges from 20 Weeks to 104
Weeks with customized offerings on the amount and tenure depending on the customer
profile.
➢ Personal Loan
Apart from loans to merchants, BFIL provide loans to people in the vicinity of our
operations in the geographies where we operate. This is done actively through the
Bharat Money Store and the facility is offered on the basis of a pre-defined criterion.
3.3 Merger – A win-win situation to IIB & BFIL:
IndusInd Bank Limited ("the Bank") and Bharat Financial Inclusion Limited ("BFIL"), have
inter alia considered and noted the NCLT Order dated June 10, 2019 sanctioning the Scheme
of Arrangement among BFIL, the Bank, and IndusInd Financial Inclusion Limited ("IFIL")
and their respective Shareholders and Creditors ("Scheme").
Thursday, July 4, 2019 is the Record Date, following the effectiveness of the Scheme, for
determining the shareholders of BFIL who shall be entitled to receive shares of the Bank, as
consideration pursuant to the Scheme. Pursuant to the Scheme, all the assets and liabilities of
BFIL became assets and liabilities of the Bank from the Appointed Date, being January 1,
2018. Simultaneously with the Amalgamation, the Business Correspondent undertaking of
BFIL is transferred to IFIL, a Wholly-Owned Subsidiary of the Bank.
According to MOSL, their view is that, IIB could derive significant synergy benefits from the
possible merger with BHAFIN, including a diversified and granular retail loan book, RoA
acceleration, a strong PSL book, cross-sell opportunities, strong knowledge of local economy
and scale benefits. PPoP to average assets stands at ~7% for BHAFIN, higher than ~3.5% for
IIB. Furthermore, capitalization of BHAFIN is very high with a tier I ratio of ~36% (leverage
of just 3xRoEs higher under banking setup; Removes political risk.
Under a banking setup, BHAFIN can generate higher RoE’s with
a) elimination of the need to carry excess liquidity, which is required in day-to-day operations
and first loss margins for off balance sheet,
19 | P a g e
b) lower cost of,
c) no cap on lending rates,
d)higher leverage and
e) removal of political/regulatory over hang due to the diversified balance sheet.
These benefits should more than compensate for the negative carry of CRR and SLR on the
expanded balance sheet.
In accordance with the Scheme and pursuant to its effectiveness, the Bank will issue and allot
to those Shareholders of BFIL whose names would appear in the register of members of BFIL
on the Record Date, 639 (Six hundred and thirty nine) Equity shares of the Bank, credited as
fully paid up, for every 1,000 (One thousand) Equity shares of the face value of INR 10/-
(Rupees ten) each fully paid-up held by such member in BFIL.
The Bank also leverages its presence and customer service through 2,289 branches of Bharat
Financial Inclusion Limited (BFIL), a wholly-owned subsidiary of the Bank and 828 outlets of
IndusInd Marketing and Financial Services Private Limited (IMFS), an associate entity. As of
March 2021, there were more than 51,000 active Retail Distribution Service Points, managed
by BFIL, acting as the Business Correspondents of the Bank.
20 | P a g e
4. List of other activities in BFIL
4.1 BSS Branch/Field Visit Summary report
A preliminary Bharat Super Shop (BSS) branch and field visit was conducted to understand
the customer segment and the product variant. With the assistance of BSS Telangana State
Head, a pre-planned branch visit was scheduled on 10th March-22 at Lingampally Branch. BSS
has 6 branches in Hyderabad located at Begumpet, Lingampally, Suchitra, LB Nagar, ECIL &
Rajendra Nagar. All the branches have more than 3 years vintage except Rajendra Nagar which
was recently inaugurated.
I got the opportunity to visit Lingampally Branch. The branch opening timing is 8:30 AM. I
reached there well before the timing. The staff were very supporting and helped to understand
the branch operational process and business activities.
The branch model consists of two supervisors and 12 Feet-on-Street who are the brand
ambassadors of BSS Brand. They are known as Loan Officers. They are the ones who visit the
marketplace on daily basis, generate leads, open current accounts of the interested customers
and disburse loans basis eligibility criteria.
My branch visit was planned on 10th Mar’22 and went throughout the evening. Post the huddle
meeting, I was assigned one Loan Officer sir, with whom I visited the customer’s outlets.
Appended below is the summary of the customer’s responses analysis:
Total No of respondents: 12
Gender Ratio:
• 75 % of the customers are male and 25% are female.
21 | P a g e
• The business type for 33.33% of people is a Kirana store and the remaining customers
are running tailor shops, cloth shops, vegetable shops, cell points and stationary shops.
Customers Business Vintage:
➢ Most of the customers are running their shops for more than 10 years. The average
comes out to be 17 years. As a BSS shop criterion, customer is eligible for a loan with
a shop vintage of more than 1 year. This implies that:
➢ Lingampally is an old market in Hyderabad
➢ Most of the shops run family-owned business
➢ Running the business for than 10 years means, the risk of lending is low
➢ The possibility of migration is low
➢ Most of the shop owners are local people which is a win-win situation as per our product
requirement.
• On enquiring about the new loan requirement, we received mixed responses. One was
interested. One was not interested due to business loss during pandemic. One was not
sure.
22 | P a g e
• Most of the customers are satisfied with the service however, a few customers want to
increase the ticket size and want to have an extension period to pay the weekly
payments by 1 day.
• 100 % of the respondents are having idea about the insurance.
• 91.7 % of the respondents are not interested in taking insurance products and 8.3% of
people are interested to take insurance.
The unique selling preposition of BSS is doorstep banking facility since customers,
➢ Don’t need to go to the bank frequently for getting loan.
➢ Minimalistic paperwork.
➢ Good service.
➢ Cashless disbursement & collections
23 | P a g e
The collection process is very efficient as the loan officer’s gather at the branch and get the
data of the customers who don’t have the sufficient balance in the account for Standard
Instruction. The loan officers get an additional incentive of Rs. 50 a month for the loan officers
who maintain the balance for the loan and R.D. This is a motivation for the loan officer to insist
customers to maintain the balance.
The customers also get the benefit of raising the ticket size and reducing the interest rate by
1% which also motivates them to maintain the balance and cultivate the financial discipline.
I also found that the loan officer and the BM are a bit reluctant to give instant loans to the
customers to make them habituated to pay RD’s and make them financially disciplined.
SWOT Analysis:
Strengths Weaknesses
➢ Doorstep banking facility ➢ Collusion between the loan officer
➢ Minimalistic paperwork and branch credit manager or branch
➢ Huge employment opportunities manager.
➢ Competition is low ➢ Illiteracy of people which leads to
costs to give training to people.
Opportunities Threats
➢ Can add more business activities in ➢ Risk of non-payment of EWI’s.
the pre-defined list ➢ Field officers may get offers in other
➢ Can increase the branch operating companies
area through virtual mode ➢ Competitors can replicate the model
➢
Recommendation:
➢ Provide loans based on cash flow assessment

➢ Enhance ticket size bases on their credit transactions and bank balance maintenance
➢ Improve efficiency in the business portal and have an alternative back-up as business
continuity plan since if the server issue prevails for longer time, it may hamper the
work-flow.
24 | P a g e
Few snapshots of the branch visit are appended below:
Customer’s meet
Disbursement of loan at the place of the

customer.
25 | P a g e
5.2 Hospicash
We never know what will happen the next. The future is always unpredictable and uncertain.
Similarly, for life of an individual also who is always surrounded by several risks in the volatile
environment. Any small misfortune will lead to serious injuries and sometimes loss of life.
Money can never buy life but in this environment but to cope up with the situation, “insurance”
might be a solution. Over past 50 years, India has developed most in the health care sector but
it is way behind countries like China, Vietnam, Thailand. In government funded health system,
quality is always a major concern. The private sector is filling the gap between what the
government is providing and what the people want. This incurs cost which is not affordable by
most of the people. The present paper is an attempt to outline a picture of individuals who are
in need to be covered in health insurance but cannot afford. These people are also called
Missing middle category (which lacks health insurance, positioned between the deprived
poorer sections, and the relatively well-off organized sector). The privatization of insurance
and constitution IRDA envisage to improve the performance of the state insurance sector in the
country by increasing benefits from competition in terms of lowered costs and increased level
of consumer satisfaction. Health insurance is the most complex among all the insurance
products.
Literature Review
Hasna Ashraf & Anjali Nambiar(2021), Demand for health insurance: The value people
associate with health insurance and the intention to buy, and the translation of this intention to
actual purchase and renewal of insurance. The lower demand for health insurance, despite high
levels of out-of-pocket expenditures and forgone care in India, is baffling.
Satakshi Chatterjee, Dr. Arunangshu Giri, Dr. S.N. Bandyopadhyay (2018), Health insurance
sector in India: Non amalgamation between public and private companies is identified as a
major hindrance in development of the health insurance sector in the country. Health insurance
is regarded as an unsaturated market in India and the middle income will definitely create a
boom in health insurance in years to come.
K Swathi and R Anuradha (2017), Health insurance in India- An overview. Government to

introduce new health insurance schemes for welfare of the common people.
26 | P a g e
Rajeev Ahuja(2004), Health Insurance for the poor in India. In this paper he explored how
insurance sector reforms alter health insurance prospects facing the poor in India, and what
changes on the health front affecting the poor have happened or are likely to happen as a result
of insurance sector reforms. The development of private health insurance market in the country
will not leave the poor unaffected.
Problem Statement:
Problem Statements
Private Sector Insurance companies are covering most of the high income
✓ profiles due to which middle income people are not having any kind of insurance
policies.
Expensive premiums for the middle income ranged person since they neither get
✓
benefitted from the AB-PMJAY nor from the private sector companies
✓ Low government expenditure on health sector.
A negative opinion on insurance companies due to lack of awareness on the

✓
insurance products.
✓ Not willing to invest in insurance.
In life insurance business, India is ranked tenth in the world. India's share in global life
insurance market was 2.73 per cent during 2019. Compared to the previous year, the life
insurance premium in India increased by 9.63 per cent whereas global life insurance premium
increased by 1.18 per cent.
Insurance penetration and density are two metrics, among others, often used to assess the level
of development of the insurance sector in a country. While insurance penetration is measured
as the percentage of insurance premiums to GDP, insurance density is calculated as the ratio
of premiums to population (per capita premium).
Need of health insurance:
• Expansion of health insurance / assurance coverage is a necessary step, and a pathway

in India’s effort to achieve Universal Health Coverage (UHC).
27 | P a g e
• At least 30% of the population, or 40 crore individuals – called the missing middle
(target customers) – are devoid of any financial protection for health
Characteristics of Missing middle:
• The ‘missing middle’ is a broad category which lacks health insurance, positioned
between the deprived poorer sections, and the relatively well-off organized sector.
Schematic for missing middle population for health insurance.
• The missing middle is not a monolith – it contains multiple groups across all
expenditure quintiles
• The missing middle constitutes the self-employed (agriculture and non-agriculture) in
rural areas, and a broad array of occupations – informal, semi-formal, and formal – in
urban areas.
Primary occupation composition of rural ‘missing middle’ household
28 | P a g e
• The missing middle in rural areas, and some segments of urban areas are characterized
by informal or unorganized work. However, a substantial part of the urban missing
middle is also engaged in formal or semi-formal, managerial, professional, or technical
work.
Primary occupation composition of urban ‘missing middle’ households
Coverage:
A hospital cash insurance policy will calculate coverage based on the daily allowance you
choose. The amount of cash available on a regular basis range from Rs.500 to Rs.2000. If the
insured is admitted to the intensive care unit (ICU), the hospital cash benefit allowance is
usually doubled or increased by some other factor defined in the policy. Some policies often
allow for a multiple of the cash allowance in the event that the insured undergoes surgery.
Data Analysis and Interpretation:
1. Do you have any existing insurance policy?
Do you have any existing insurance policy? Count Percentage

No 71 72.4%
Yes 27 27.5%
Grand Total 98 100%
29 | P a g e
2. On which basis do you prefer to get the hospital cash?
Hospicash Requirement on Count Percentage

Daily basis 73 74.4%
Fixed 2 02.04%
No response 23 23.56%
Grand Total 98 100%
3. How much cash are you expecting from company on daily basis?
Daily Hospital Amt Count Percentage

2000 69 70.4%
2500 1 1%
3500 2 2%
5000 1 1%
Grand Total 98 100%
4. Are you interested in Personal Accident cover?
PA Cover Interested Count Percentage

No 9 9.1%
Yes 37 37.7%
Grand Total 98 100%
5. Respondent’s opinion on PA Coverage amount
PA Coverage Count Percentage

1000000 28 25.5%
1500000 3 3%
30 | P a g e
Grand Total 98 100%
6. Are you interested in EMI Cover?
EMI Cover Interested Count Percentage

No 9 9.18%
Yes 38 38.7%
Grand Total 98 100%
7. Do you want all 3-in-1 Policy or separate policy for each of the feature?
Do you want all 3-in-1 Policy or separate

policy for each of the feature? Count Percentage
3 in 1 32 32.6%
Separate 53 54.08%
Grand Total 98 100%
People interested in different policies
Count
0 10 20 30 40 50 60
No response Separate 3 in 1
31 | P a g e
8. Which policy do you want?
Policies Interested Count

Hospicash 35
PA Cover 7
EMI Cover 6
Hospicash & PA & EMI Cover 32
Hospicash & EMI Cover 5
No response 18
Grand Total 98
Policy distribution
40
35
30
25
20
15
10
5
0
Count of Do you want all 3-in-1 Policy or separate policy for each of the feature?
Hospicash PA Cover EMI Cover Hospicash & PA & EMI Cover Hospicash & EMI Cover
9. State wise distribution of respondents interested in various products?
Count of Hospicash Count of PA Count of EMI

State Requirement Cover Interested Cover Interested
Andhra Pradesh 4 3 2
Bihar 31 25 23
Chhattisgarh 7 8 7
Jharkhand 12 5 5
Madhya Pradesh 6 4 3
Rajasthan 5 0 2
Telangana 6 1 4
32 | P a g e
Uttar Pradesh 2 0 0
Uttarakhand 2 0 1
10. Which paying option do you prefer while paying the premium?
Premium paying option Count Percentage

Offer all the options 12 17.6%
Pay along with EWI/EMI 66 67.34%
Payment basis- - to be collected upfront from the 1%
customer via- cash or a/c debit 1
To be deducted from the loan amount 7 7.1%
Grand Total 98 100%
Conclusion:
Health Insurance Market size exceeded USD 2.8 trillion in 2020 and is anticipated to grow at
a CAGR of over 4.6% between 2021 and 2027. Increasing chronic diseases among the
population is one of the key factors driving the market growth. Also, growing healthcare costs
and high medical inflation rates are estimated to stimulate the market expansion. There may be
a huge increase in health insurance if the consumer awareness on the benefits of health
33 | P a g e
insurance (and insurance more generally), and of health insurance products increases. Cost of
health insurance i.e., the premium needs to come down, in line with the affordability of the
missing middle. The insurers and the agents must improve consumer trust and confidence in
health insurance through stronger regulatory mechanisms and can also take government data
and infrastructure as a public good to reduce operational and distribution costs with acceptance
of people.
Recommendation to BSS :
Characteristic Description
Coverage 10,00,000 . Rs( Sample )
Target Customers BSS Customers
Premium (1%*60,000)+(0.025%*10,00,000) = .
Rs
Hospital cash Silver Gold Diamond
PA Coverage 5,00,000 10,00,000 15,00,000
Premium (₹) 550. 850. 1150.
Hospital Cover (₹) 1000. Rs 2000. Rs 3000 .Rs

ICU Benefit 5000. Rs 10,000. Rs 15,000. Rs
Ticket size <=50,000. Rs 50,000.Rs - 1,00,000. Rs –
1,00,000 .Rs 2,00,000. Rs
Maximum benefit up 30 days 30 days 30 days
to within loan period
• Extra benefit if the policy holder loses life, the dependent child who is studying can
avail 3% benefit on the sum assured by paying an extra premium of 0.1%
The plan does not provide cover for pre-existing diseases, hospitalization cost for fertility
related treatments, cost incurred in plastic surgery, refractive error corrective procedures,
experimental, investigational or unproven procedures or treatments, non - Allopathic
treatments, expenses involved in hospitalization for any mental illness or psychiatric illness.
34 | P a g e
4.3 Income Assessment of BSS Customers:
Objective:
The main objective of the report is summarising the variables to be considered for assessing
income of the households of existing BSS customers as per RBI Guidelines.
Main text:
A consultative document on regulation of microfinance loans was issued for public comments
on June 14, 2021. It has now been decided to put in place the directions for microfinance loans
which has been come into existence from 01/04/2022.
Review Literature:
RBI approved MFIN and Sa-Dhan as Self-regulatory organisations for the microfinance
industry. Sa-Dhan, a self-regulatory organisation for the microfinance sector, on 16/02/2022
said it has introduced the credit assessment framework (CAF) for microfinance borrowers.
Over the past one-and-a-half years, Sa-Dhan has worked to introduce a conducive and effective
framework that will enable income assessment and risk profiling of borrower. The framework
will help to supplement and improve the existing income assessment model of MFIs with
verifiable wellbeing indicators, utilise and integrate existing data points of clients available
with MFIs and provide a credit worthiness score (CWS), risk profiling for each client. CAF
will not only promote client protection but also help MFIs in determining loan sizes based on
risk profiling thereby increasing repayment rates and reducing risk.
It will also promote risk-based loan pricing and loan sizing and prevent over-indebtedness of
vulnerable and low-income households.
The role of microfinance in poverty alleviation and the living standard of poor households is
very huge. It is found that microfinance credit positively affects income generation and
consumption level of poor; and the impact on productive activities is higher than the
consumption.(Tahir Mahmood, Muhammad Farooq, Tauqir Hussain and Abdul Sattar, 2016)
There is a growing acknowledgement that microfinance programs have the potential to help
the poor, especially women, to develop income-generating activities. The value of
microfinance lies in its ability to give credit to normally poor women, whose lack of collateral
forces them to rely on expensive informal credit. The cheaper credit is expected to become
capital for starting up micro or small businesses that generate income for women, and
subsequently increase the welfare of their household members (Pitt and Khandker, 1998).
35 | P a g e
A microfinance loan is defined as a collateral-free loan given to a household having annual
household income up to ₹3,00,000.
For this purpose, the household shall mean an individual family unit, i.e., husband, wife and
their unmarried children. All collateral-free loans, irrespective of end use, provided to low-
income households.
Guidelines by RBI
Assessment of household income:
Indicative Methodology for Household Income Assessment
1. For undertaking the income assessment of a low-income household, information

related to following parameters may be captured by the lender:
(i) Parameters to capture household profile
a) Composition of the household
• Number of earning members

• Number of non-earning members
b) Type of accommodation (owned/ rented, etc.)
36 | P a g e
c) Availability of basic amenities (electricity, water, toilet, sewage, LPG connection,
etc.)
d) Availability of other assets (land, livestock, vehicle, furniture, smartphone, electronic

items, etc.)
(ii) Parameters to capture household income
a) Primary source of income
• Sector of work (Agriculture & allied activities, trading, manufacturing, services,

etc.)
• Nature of work (Self-employed or salaried, regular or seasonal, etc.)
• Frequency of income (daily/ weekly/ monthly)
• Months/ days of employment over last one year
• Self-reported monthly income
• Average monthly income
b) Other sources of income
• Rent/ Lease
• Pension
• Government transfer
• Scholarship
• Others (specify details)
c) The income assessment may be carried out for all earning members with respect to
all sources. While assessing income of all members from all sources, it may be ensured
that there is no double counting of income.
d) While the income computation may be done on a monthly basis, the income
assessment for all members and sources may be done for 1 year.
37 | P a g e
(iii) Parameters to capture household expenses
a) Regular monthly expenses (food, utilities, transport, house/ shop rent, clothing,
regular medical costs, school/ college fees, etc.)
b) Irregular expenses over last one year (medical expenses, house renovation, purchase
of household goods, functions, etc.)
Limit on Loan Repayment Obligations of a Household:
• EMI's shall be subject to a limit of maximum 50 per cent of the monthly household
income.
• The computation of loan repayment obligations shall take into account all outstanding
loans.
• Existing loans, for which outflows on account of repayment of monthly loan obligations
of a household as a percentage of the monthly household income exceed the limit of 50
per cent, shall be allowed to mature. However, in such cases, no new loans shall be
provided to these households till the prescribed limit of 50 per cent is complied with.
• Each RE shall provide timely and accurate data to the CICs and use the data available
with them to ensure compliance with the level of indebtedness.
Gross Monthly Sales:

Gross sales are the total amount of sales a company earned throughout a specific period of
time, without taking into consideration any costs involved with running a business. Gross sales
do not factor in expenses related to running a business, also known as cost of goods sold
(COGS), which get deducted when calculating net sales. It doesn't include discounts on
damaged goods or customer returns. When you subtract those and similar items from gross
monthly revenue, you end up with net monthly revenue.
Other Income:
Other Income for a company that comes from anything other than its ordinary operations. Other
income includes items such as interest from the company's bank accounts, profit from the sale
38 | P a g e
of a fixed asset, and so forth. Other income is not recurring and, as a result, is not included in
some calculations of profit or loss.
Business income:
Business income is any income realized as a result of business activity. Business income is a
type of earned income and is classified as ordinary income for tax purposes.
Calculations:
• Annual Disposable income :
Total sales = Daily sales * No. of working days
= 45000*30
= 1,50,000 ₹
We assumed that the average gross profit % might be 20%
So profit = 1,50,000*20% = 30,000 ₹
Other Income = 23,000 ₹
Total Income = 53,000 ₹

Total Expenses = 21,000 ₹
So, annual income = (53,000 ₹- 21,000 ₹ *12)

= 3,84,000 ₹ ( As per assumption )
• Maximum permissible EMI :

EMI = ( 50% * Monthly income ) – EMI obligation at present
= 16,000 ₹ – 10,000 ₹
= 6,000 ₹
• Maximum Permissible loan :
PV = FV / ( 1+ 23.5%)^12
= 80,000 ₹ ( Approximately )
• As per CB, eligible loan may be 1,20,00 ₹
• Final loan eligibility should be minimum of ( Maximum permissible loan and
CB estimation ) & loan >= 30,000 ₹
39 | P a g e
Questionnaire:
The main intention of the survey is to find the gross profit margin % of the business activity.
The questionnaire is sent to the cluster managers. The managers are given the target to at-least
collect 5 responses from the customers.
Questions Answer type
Employee name _____________________
Employee ID _____________________
Customer name _____________________
Customer code _____________________
Mobile number _____________________
Business activity Refer Annexure 1
Average gross profit margin% _____________________
Annexure 1:
This is a process that proves that the organization is up-to date with new rules and
always in pace with the new developments.
40 | P a g e
4.4 Competitive Analysis on Customer Loyalty Program
Objective:
BFIL wanted to introduce a customer loyalty program to its existing customers who maintain
a good daily balance in their bank accounts. I have been assigned to find the customer
The program offers users points for every purchase they make using their credit card. The
number of points a user can earn depends on their annual credit card spendings. More exclusive
banking packages – Silver, Gold, Platinum – receive more points.
Rather, consumers are looking for better deals and pricing within financial products and the
diversity of digital banking options means customers can work with several different brands.
Financial institutions can make use of loyalty programs to offer existing customers better value
for the similar products.
Bank Details Earning points

State Bank Debit Card, Internet • From shopping with your Debit Card
of India Banking, Mobile to paying timely EMIs for your loan,
Banking, Personal you earn Reward Points for a variety
Banking, Loans of transactions.
(Both Domestic & • 1 Reward Point is equivalent to INR 25
NRI), Rural Banking Paise.
and SME Accounts.
https://rewardz.sbi/content/overview
Punjab Debit Card, Credit • Platinum Credit Card holders earn 2
National Card, Internet Reward Points per Rs 150 spent.
Bank Banking & Mobile • Non-platinum Credit Card holders
Banking earn 1 Reward Point per Rs 100
spent.
• The monetary worth of each Reward
Point is Rs 0.50.
https://www.pnbrewardz.com/CreditCard/cont
ent/overview
Central Debit Card • Each CBOI Point is valued at Rs.
Bank of 0.25.
India
https://debit.centrewardz.com/content/overvie
w
Karur Debit Card • With every Rs. 100 spent, you earn 1
Vysya Bank Anmol Point (Each Anmol Point is
valued at Rs. 0.25)
https://www.anmolrewardz.com/KarurVysyaB
ank/content/overview
41 | P a g e
Yes Bank Debit Card & Net • YES Rewardz points earned during
Banking transactions the month will be treated as
'Provisional points'. It will be added
in redeemable points balance if AMB
of minimum Rs. 10,000/- is
maintained.
• 1 YES Rewardz point equals 0.25
paisa.
https://www.yesrewardz.com/content/overvie
w
Bank of Debit Card
India
Federal Debit Card • Each Federal Point is valued at Rs.
Bank 0.25
Refer
https://www.federalrewards.in/content/overvie
w to more details for earning points.
Union Bank Debit and Credit • Each Union Point is valued at Rs. 0.25
Card
• All Union Bank of India Debit Card
holders get 1 point per Rs. 100 spent.
https://www.unionrewardz.com/content/overvi
ew
HDFC Debit and Credit https://www.hdfcbank.com/personal/pay/cards
cards, Net banking /credit-cards/claim-rewards
IndusInd ATMs, Internet https://www.indusind.com/in/en/personal/ca
Bank Banking, Mobile rds/indus-rewards.html
Banking,
5.5 Loan Amortization Schedules:
Loan Amorization
Schedules.xlsx
5.6 Uizard Wireframes

A small fintech solution of how tabs will be opened and the cluster manager will use it is
designed. The below link shows the tabs in the RLMS portal.
https://app.uizard.io/p/a47f874d
42 | P a g e
6. Credit Analysis
A bank’s decision to lend money to a borrower is not rocket science. This decision is made on
the basis of a few founding principles. For this, we should look through the eyes of the lender.
One basic point of any loan is a credit analysis in determining the risk associated with making
the loan and the chances of repayment of loans. It is not just to evaluate the business, but also
it looks at the persons associated with its operations and ownership. There are many methods
used to gauge the creditworthiness of potential borrowers. Expert systems are basically
traditional approaches to credit risk management.
Credit risk is defined because the risk of loss resulting from the failure by a borrower to repay
the principal and interest owed to the leader. The lender uses the interest payments from the
loan to catch up on the danger of potential losses. When the borrower defaults on his/her
obligations, it causes a disruption within the cash flows of the lender.
Performing credit risk analysis helps the lender determine the borrower’s ability to satisfy debt
obligations so as to cushion itself from loss of money flows and reduce the severity of losses.
Borrowers who present a high level of credit risk are charged a high rate of interest on the loan
to compensate the lender for the high risk of default.
They include CAMPARI, PAPERS, and 5C’s. Most important determinants in the decision to
grant credit is manager’s expertise, subjective judgement and weighting of certain key factors
during personal interaction. Once the client has visited the lender should proceed to prepare
with the credit proposal using these approaches.
6.1 CAMPARI
The abbreviation of CAMPARI stands for Character, Ability, Margin, Purpose, Amount,
Repayment, Insurance.
• Character – Under this category the lending officer looks at the age and health perspective of
the borrower, personal stability of the borrower like, borrower’s dependents, marital status,
type of employment, duration of current employment and whether the borrower is owner or
tenant. They also look at integrity and honesty, borrowers’ personal assets, Borrower’s lifestyle
and his connections.
43 | P a g e
• Ability – In this category lender will check for the borrower’s ability to repay the borrowed
funds and the intended use of the borrowed funds have to be checked. Lender should also make
sure that borrower should not use this borrowed fund to pay dividends or repay other loans.
• Margin – Microfinance should consider its expected return in all this process and it should
safeguard it for effective use. With a greater risk the interest rates should also be higher.
• Purpose – Lender should ask the borrower to provide a satisfactory proof that the intended
use of funds that are valid and this has to be in customer’s best interest.
• Amount – Certain guidelines has to be taken by the microfinance institution that will
determine the maximum and minimum amount for certain types of lending.
• Repayment – Lender should also look for the borrower’s commitment to repay the principal
amount and the interest payment. For this lender should access the borrower’s cash flows and
identify whether the repayments can be made without strain.
• Insurance - Any security provided by the borrower should be easily valued and the lender
should also know the value of the security and the procedures of registering security should be
simple, and easy to realize.
6.2 PAPERS
The abbreviation of PAPERS stands for Personality, Amount, Purpose, Earnings, Repayment,
Security
• Personality – Under this category lender looks into honesty, integrity, commitment as well as
experience. Management quality and market perception of management of the company should
also be assessed.
• Amount – Borrower should have his own funds committed to venture into the new project
that they want to embark on. Micro-finances should not be expected to provide all the risk
capital required. Loan advanced amount should be within the reach of the borrower so that it
can be paid back on time.
• Purpose - Lender should ask the borrower to provide a satisfactory proof that the intended
use of funds is valid and this has to be in customer’s best interest.
• Earnings – The amount provided by the microfinance should be fully justified and the risk it
is taking on by any facility available.
44 | P a g e
• Repayment - Lender should also look for the borrower’s commitment to repay the principal
amount and the interest payment. For this lender should access the borrower’s cash flows and
identify whether the repayments can be made without strain.
• Security - Security is not the sole standard in judging a facility but rather it is a safety net
essential for the protection of the microfinance against loss, diversion or default by the
customer.
6.3 5C’s OF CREDIT ANALYSIS

One of the methods is to use 5C’s of credit. In this system, it weighs the preliminary 5
characteristics of the borrower and conditions of the loan, which gives the estimation of the
chance of default and consequently it also insights the financial loss for the lender. The 5C’s
of credit lending are Capacity, Character, Collateral, Condition, Capital. To get a picture of
borrowers 5C’s some of the documents can be used. They include Balance Sheet, P&L
statements, Personal tax returns, Business tax returns, Personal Financial Statements (PF’s),
etc.
• Capacity - Capacity mainly gives the ability to the repayment of the loan. It also reflects the
borrower’s volatility of earnings. There should not be any significant deviations of the earnings
over time because this can obstruct periodic payments of interest. To determine the ability of
the borrower to repay the loan, capacity assessment has to be done. Some of the financial
information given by the borrower can help in the determination of borrowers’ capacity.
Capacity can be calculated by comparing cash generated to pay the loan. Some of the key
factors that predict the performance are Net Profit Margin, Debt Service Coverage Ratio, and
Quick Ratio.
• Character - Character is a subjective evaluation of the personality of the borrower or the
management of the borrowing firm. Assessment of a firm’s reputation, willingness to repay
and repayment history has to be thoroughly done. This helps in checking the integrity and
trustworthiness of the borrower. Past borrowing records of the customer have to be investigated
for checking the honesty in loan repayment. Character can be observed and assessed through
the profile reference given by the customer.
• Collateral - When a loan becomes the default, then the lender has claims on the collateral
provided by the borrower. Risk exposure of the loan is lower when there is a greater priority
of this claim and the market value of the underlying collateral is high. Collateral is the
45 | P a g e
alternative source for the loan repayment to be a failure. Collateral relates to the security made
available to secure financial exposure. Collateral provides should have a proper title,
marketable and a good value to secure the financial exposure. The quality of collateral is
assessed by using the Loan-to-Value Ratio.
• Condition - Condition analyses the purpose of the loan, the industry, economic and political
environment. A study of these conditions is required before the approval of loan. This has to
be done to ascertain the borrower’s vulnerability to happenings in the economy. Political
analysis involves looking at all levels of everyday happenings in politics which include power
and agency and its impact on the ongoing business. Condition is a measure any external
hindrance that hampers the loan repayment.
• Capital - Firm’s capital is important because it helps to assess the borrowers’ risk to an
unexpected loss in the industry. Capital refers to ownership and it shows the commitment and
confidence in the business. Capital structure of the firm is to be considered which can be
calculated from the leverage ratios which tells about the contributions of debt and equity of the
company. When a firm has higher equity, it can cover all the expenses to ensure break-even
and profitability. Capital also refers to economic conditions that talk about the state of the
business cycle and is an important factor in determining the credit risk exposure for cycle
dependent industries.
BFIL, mostly gathers all the credit information from the credit bureaus like Equifax, Experion,
TransUnion. Since most of the customers are from rural areas, it uses Equifax for credit history
of the customers. Equifax is a global data, analytics, and technology company. They believe
knowledge drives progress. They serve as a consumer advocate, steward of financial literacy,
and champion of economic advancement. As an innovative global company that enables access
to credit, they’re part of breakthrough collaborations and innovations that address complex
social challenges such as social welfare, community relations and financial education for
underprivileged youth. They help individuals gain financial independence by increasing access
to capital for small businesses. And we provide young adults entering college or university
with financial education tools.
“Every day, around the globe, we are Powering the World with Knowledge and helping
people live their financial best” – Equifax
According to RBI Guidelines,
46 | P a g e
➢ Age criteria
➢ Should not be a third lender
➢ Ticket size should not be more than 1,20,000. Rs for rural people and 1,60,000. Rs for semi
urban areas.
Equifax contains details like:
➢ Personal details: Name, Aadhar, PAN, Present and Permanent addresses, mobile number ,
income, Age , Date of birth etc.
➢ Account Summary: This consists of all the past credit accounts both opened and closed, loan
outstanding, written off accounts If any, delinquent accounts, highest credit, highest sanction,
repayment history.
➢ Enquiries Summary: This consists of number of enquiries made in the past 12 months and
any remarks if there.
These parameters help in making an Equifax score which helps in understanding the customers
having good credit history and financial discipline. Sometimes, these CB’s may not be reported
with the loans from the institutions who are not the members of these CB’s.
The below document is a sample credit report from Equifax of a customer:
Equifax report.pdf
47 | P a g e
7. Credit Scoring Models
What is a credit score?
The credit score is a three-digit number that reflects the likelihood that a consumer will repay
their debt. Because of the different models, so many scoring methods are used to determine
credit, depending on the model you use and what type of business (department store, car
dealership, bank, etc.) wants it. Scores may differ by a few points.
The best known credit score is the FICO score from Fair Isaac Company. FICO has over 50
different versions of scores to send to rental companies. Scores can vary depending on what
the company wants and what was important to the company when calculating the score. This
means that the FICO score of a department store can be slightly better (or worse) than the FICO
score of a bank considering a mortgage. And it's slightly different from your FICO insurance
score, which may be different from your mortgage score.
The requesting company can also use the Vantage score, Community Empower (CE) score, or
one of the three major credit bureaus, Experian, Equifax, and TransUnion to assess credit.
What is the Credit Scoring Model?

The credit scoring model is a statistical analysis used by credit bureaus to assess
creditworthiness. The institution selects the statistical characteristics found in an individual's
loan payment behaviour and analyses them to create a credit score. The scoring is based on
payment records, payment frequency, debt amount, charge off, and number of credit cards held.
Each element considered in the model's formula is assigned a weight and a credit score based
on the score. scores typically range from 300 (low end) to 850 (high end).
The lender uses the credit score to determine the risks associated with the loan, the terms of
the loan, and the interest rate. The higher your score, the better the loan terms are for you. There
are different credit score models that emphasize different factors.
7.1 FICO Scoring model

The FICO scoring model is considered to be the most reliable due to its best track record. It
has been around since 1989 and has undergone many revisions over the last 30 years to reflect
the changing factors that determine an accurate credit score. The "Classic" FICO rating model
gives consumers a number between 300 and 850. Ratings below 600 are considered bad. Scores
above 740 are considered excellent. In the meantime, it is considered average to above average.
48 | P a g e
The latest scoring model is FICO9, which was introduced in 2014. The main difference from
the FICO 9 model is that it does not place much emphasis on unpaid medical expenses.
Why change?
The thinking behind FICO 9 suggests that unpaid medical debt is not necessarily an indicator
of financial condition. One may be waiting for insurance payments before paying off the debt,
or they may not even know that the invoice was sent to the collection. In some cases, this
factor could cause the credit score to rise by as much as 25 points.
Another amendment in 2017, prohibited debt collectors and debt collectors from reporting their
medical debt until they were 180 days old. The FICO 9 is the successor to the FICO 8 launched
in 2009 and is the most commonly used version in the lending industry. FICO 8 penalized
consumers who spend close to their credit limits each month and give generosity to consumers
who make "isolated" payment delays. H. Payment delayed by 30 days or more. When FICO
releases a new version of the scoring model, the lender can choose to upgrade or keep the
version it owns. Many lenders choose to use their own version because upgrades can be
expensive.
FICO compares with consumers who update their computer's operating system with each new
version of Windows released. You may be happy with Windows XP or have upgraded to
Windows 8 or 10. The same thing happens to companies and creditors who use FICO scores.
Some lenders are still using FICO5. Some lenders are upgrading to FICO 9. The only way to
know what a FICO score means is to ask the lender you are dealing with.
7.2 Vantage Scoring Model:

The Vantage Score model was introduced in 2006 when the three major credit bureaus
(Experian, Equifax, and TransUnion) decided to give FICO competition in the credit scoring
business. The Vantage Score model calculates scores based on familiar data such as on-time
payments, low credit card balances, new loan commitments, bank accounts and other asset
avoidance.
➢ High Weight: Payment History (40%) – Paying on time is the most important indicator
of risk. Keep in mind that late payments are a disadvantage that can appear in a 7-year
credit report.
➢ Extreme Weights: Age and Credit Type (21%) – What is your credit history and your
account combination? Are you paying on a 30 year mortgage at the same time you are
49 | P a g e
paying on a 5 year car loan and monthly credit card bills? If you can handle all that –
with on time payments! – you will do very well in this category.
➢ Extreme Weight: Credit Utilization (20%) — It`s dividing your balances by your
available credit. It`s recommended to keep your utilization under 30%.
➢ Medium Weight: Total Balances (11%) — It`s your total debt (both current and
delinquent. Similar to credit utilization, by lowering your debt, it gives you a higher
chance of increasing your credit score.
➢ Low Weight: Recent Behaviour (5%) — It deals with newly opened accounts and the
number of hard inquiries. A high number is not a good sign for your credit report.
➢ Extremely Low Weight: Available Credit (3%) — It`s the amount of credit you have
available to use. Keep in mind that the Vantage Score model is used by Credit Karma,
a service that provides your free credit score and report, along with credit monitoring
and advice.
Vantage Score saw some scoring changes in 2017, primarily in the "Trends" data section.
People who are paying off their debts can be rated higher than those who are slowly
accumulating credit card debt with minimal payments. Other factors specific to the Vantage
Score include ignoring collections under $ 250 (paid or unpaid) and relieving accounts that
have been adversely affected by natural disasters. However, the Vantage Score rating scale is
the same as the FICO rating scale of 300 to 850 and includes letter ratings (A to F) to help you
understand the rating. The Vantage Score uses information from all three credit bureaus, but
weights certain elements more or less than the FICO algorithm. Therefore, the values should
be similar, but rarely the same.
7.3 Credit Scoring Model for BFIL

Two Types of Credit Scoring Models
While there are a number of credit scoring models utilized to determine a person’s credit
worthiness, there are essentially two distinct types of scoring models that can be validated
statistically.
These models will either use a statistical or judgmental scoring analysis. In each case, the end
credit score result can vary as well.
50 | P a g e
A statistical scoring model utilizes multiple factors from one or a number of credit reporting
agencies, correlates them and then assigns weights to each factor. The model does not consider
the individual judgments or experiences of any credit officials.
A judgmental scoring model considers an individual or organizational financial statement,
payment history, bank references and even the credit official’s own previous experience in
handling its products and services. By including these elements in someone’s credit history, a
subjective judgment is given more weight in determining the credit score rating scale.
Hybrid: some cross of statistical and judgmental techniques.
Process flow of credit scoring Project :

Step 1: Define the scoring segment
➢ The first step in a scoring project is to identify the type of customers and products
scoring for which the scoring model will be used.
Step 2: Select the type of scorecard
➢ There are three main types of scorecards:
• Statistical: empirically derived from data on past loans;
• Judgmental: structured from expert judgment and institutional experience; and
• Hybrid: some cross of statistical and judgmental techniques.
Step 3: Design the credit scorecard

➢ The scorecard design process, regardless of the type of scorecard, can be grouped into
the following three phases:
• Definition: what is a bad loan?
51 | P a g e
• Discovery: which characteristics most influence risk?
• Development: which combination of factors provides the best results in back
testing?
Step 4: Test, implement, and manage the scorecard
Types of Data Variables Different types of variables should be considered when creating a data
set for analysis.
➢ Raw variables. These are extracted from the systems “as is” without any
transformation. Most variables are raw variables (e.g., customer ID, gender, date of
birth, educational level, years as customer, etc.). Raw variables need to be scored in one
of two ways, depending on the nature of the information they contain:
a) Categorical. A variable that can take on one of a limited, and usually fixed
number, of possible values; it assigns individuals to a group or nominal category
based on a qualitative property (e.g., gender, nationality, type of ID, or level of
education).
b) Numerical. A variable that has a numeric value that has a numeric meaning (e.g.,
distances, income, or age).
➢ Derived variables. Derived variables are created by transforming a raw variable. The
main reason for doing this is usually mathematical or statistical. Among the derived
variables there are different types of transformations:
a) Target or dependent variable. This is the most important variable of the data set
because the model will try to predict this variable based on the independent
variables. In a scoring model, the different values for this variable are good (0)
or bad (1).
b) Tags or flags. These are variables that could be transformed from the data source
at the time of extraction. The IT analyst should be consulted and involved in the
extraction to learn which flags or tags are available in the systems. For example,
when a customer is enrolled strictly as a guarantor, a “Guarantor” flag could be
added that assigns 1 to these customers and a 0 to the rest.
I have been assigned to develop a credit score model. I am using various parameters to assess
the worthiness of a customer in Microfinance sector. I am using hybrid model scorecard
52 | P a g e
because the data used here is historical and score is being judged based on logical reasons and
various research papers.
To develop a scoring model, the parameters are most important. It is vital to decide what are
the parameters to be considered and at what proportion they are to be weighed. I have run a
regression analysis to decide upon the parameters and how these parameters affect the Equifax
score which is considered by BFIL.
The intention of credit score scoring models is to predict the creditworthiness of a borrower
and decide whether or not they may be capable of meet a given monetary responsibility or
default on it. Such models permit a monetary organization to limit the chance of loss via way
of means of putting choice guidelines concerning which clients get hold of mortgage and credit
score card approvals. Regression model in excel is the tool used to analyse the data.
Regression analysis is a powerful statistical method that allows you to examine the relationship
between two or more variables of interest. While there are many types of regression analysis,
at their core they all examine the influence of one or more independent variables on a dependent
variable.
• Dependent Variable: This is the main factor that I am going to understand or predict. (
Ex. Delinquency, Age, Outstanding Loan)
• Independent Variables: These are the factors that I am going hypothesize have an
impact on your dependent variable. (Equifax Score)
Multiple R. This is the correlation coefficient. It tells how strong the linear relationship is. For
example, a value of 1 means a perfect positive relationship and a value of zero means no
relationship at all. It is the square root of r squared.
R squared. This is r2, the Coefficient of Determination. It tells how many points fall on the
regression line. for example, 80% means that 80% of the variation of y-values around the mean
are explained by the x-values. In other words, 80% of the values fit the model.
T Statistic: The T Statistic for the null hypothesis vs. the alternate hypothesis.
P Value: Gives the p-value for the hypothesis test.
H0 : The parameters like Age, Gender, Income, Outstanding balance, Active accounts and
Delinquent accounts does not have impact on score.
53 | P a g e
Ha : The parameters like Age, Gender, Income, Outstanding balance, Active accounts and
Delinquent accounts does have impact on score.
The output I got after running regression analysis is as follows:
Parameter Multiple R R square Significant F P Value
Age 0.13 0.02 0.53 0.52
Gender 0.06 0.00 0.71 0.71
Income 0.29 0.08 0.14 0.14
Outstanding Loans 0.32 0.10 0.10 0.10
Active Accounts 0.338 0.114 0.08 0.08
Delinquent accounts 0.03 0.00 0.89 0.89
Every significant value is greater than 0.05, which says that we have to accept the null
hypothesis.
Ex: Y = 687.39 – 1.88 X
Age
900
800
700
600
500
400
300
200
100
0
0 10 20 30 40 50 60
Relationship between Age and Score
Here Y is the Score and X is the age. The above graph shows that most of the people fall under
the age group 26-44 years and they are having the score of 600 – 800. Three people of 22, 34
and 57 of age are falling under the score of 0 or below because they are new to borrowing and
having an Equifax score as 0.
54 | P a g e
Income
120000
100000
80000
60000
40000
20000
0
-100 0 100 200 300 400 500 600 700 800 900
Relationship between Income and Score
Scoring Parameters:
1.Gender
Male Female
100 50
2. Age
18-25 25-34 35-40 45 and Above
20 50 75 100
3. Income
0-20k 20k-40k 40k-60k 60k-80k 80k-100k
40 70 100 160 200
4. Delinquent Accounts
0 1
150 70
55 | P a g e
5. Active Accounts
0–5 5-10 10-15 15-20 Above 30
150 120 80 40 30
6. Outstanding balance
0 – 30K 30K-60K 60K-90K 90K-120K 120K-150K Above 150K
150 125 100 60 40 25
After deciding the weightage depending upon the risk and profits, I have given certain
weightages to the parameters.
Since the score ranges from 300-850, the score is distributed between the parameters like
Income, Delinquent accounts, Age, Gender, Active accounts and Outstanding principal. Since
the data of other parameters like Vintage of customer, Average daily balance, Years of
business, Written off accounts, Number of enquiries, Arrears, Fixed Obligations. The major
limitation of the project is the data privacy issues.
Multiple Regression is run to find the relationship of all the variables at a time. The data is 42%
reliable to do the analysis as R Square is 0.42.
56 | P a g e
Y = 2.85 X1 -1.12 X2 -0.72 X3 -3.41 X4 +2.77 X5 -2.05 X6 + 939.25
“Humans solve problems, not machines. Machines can surface the information needed to
solve problems and then be programmed to address that problem in an automated way—
based on the human solution provided for the problem”
-Mary Beth Ainsworth, AI and Language Analytics Strategist, SAS
The opportunities of innovation in credit scoring include the following:

• Greater financial access and inclusion
• Automation of processes
• Improved accuracy of models
• Enhanced consumer experience
The risks of innovation in credit scoring includes the following:
• Fairness
• Interpretability
• Accountability
• Data privacy and security
• Unintended consequences
Keeping this constraints’ in mind, the model is performed. The output of the model is the
disbursement amount of the borrower can be considered on the basis score, so that the “good”
customers are retained in the organization and it need not worry about defaults or arrears.
57 | P a g e
FINDINGS:
➢ It was found from the field survey that the customers want to have an increased ticket
size to expand the business.
➢ The collusion between the branch manager and loan officer have to be taken care off
to decrease the percentage of fraud loans.
➢ Missing middle category of people have to be captured in insurance to become a
market leader, because this group is untapped for a long period of time and is still
prevailing.
➢ BSS team should develop a model for assessing the income of the customers as RBI
guidelines have been passed for the microfinance sector.
➢ To retain the customers and make them to maintain good average daily balance, BFIL
have to launch loyalty programs and effectively communicate with them.
➢ From the credit scoring model, it is evident that, not only the parameters about credit
history and repayment affects the score but also various other parameters like Age,
Income, Outstanding loans affect the score.
58 | P a g e
CONCLUSION
When an organization decides to become data driven, it should expect the implementation
journey to be somewhat complicated and time consuming. There will be challenges along the
way, but experience shows that these can be overcome and lead to significant business benefits.
Organizations that have already made the journey, report significant improvements in business
efficiency and cost savings; improvements in their ability to identify and capitalize on new
opportunities; and better, customer-focused service.
When the company is having the huge amounts of data, using this data for credit scoring
replaces the company’s reliance on “gut feeling” with statistical probability and reduces the
potential risks associated with personal relationships, personal judgement, and dependence on
the individual employees that hold them. Loan applications can be processed much faster with
less in-person interaction, which increases customer satisfaction, the potential size of the loan
book, and the capacity of field operatives. Some small loans can even be assessed automatically
and disbursed in minutes.
However, credit scoring is a sophisticated discipline that requires special resources, including
staff with specialized expertise and a conducive infrastructure. The specialized expertise can
be in-house or outsourced. If the data management infrastructure is not already in place, it must
be acquired. Credit scoring may also require significant organizational change.
59 | P a g e
RECOMMENDATIONS
➢ Ticket size is being calculated by customer’s disposable income but score has a greater
impact on score according to the regression model. And it is also evident from various
research papers. The person having,
Income  Outstanding loan Delinquency Score
Income  Outstanding loan Delinquency Score
So, taking score into consideration, the ticket size should be finalised. This would
decrease the probability of bad loans and delinquent accounts.
➢ Customers who maintain financial discipline (experience in their business, income,
repayment of existing loans) can get the loan with ease and also higher ticket sizes.
➢ Maker-Checker coalition: The coalition between the branch credit manager and loan
officer can be resolved by disconnecting the connection and appointing a new person
who have to directly report to territorial operational manager, so that the discussions .
➢ Health industry will always be booming at any period of time. It is a costly affair for
the middle segment who cannot afford the costly medical treatments. Insurance
premium may be expensive for that segment and since private companies only target
above middle class and upper sections of the society. So, giving a facility of insurance
along with the loan may help them relieved of the burden of costly medical service.
➢ Review and update the business processes associated with providing credit and
maintain a separate vertical. It sis obvious that if the company does not have strict rules
for credit , it itself increases the probability of bad loans. A key benefit of credit scoring
is that it is more efficient than previous practices, so if the business processes do not
take account of efficiency improvements, the benefits may be lost.
➢ Post disbursement checks should be initiated to find whether the loan is being utilised
for the expansion of the business or not.
➢ Effective communication to the customers regarding withdrawals, deposits, loan
EWI’s, personalised messages for birthdays which will improve the trust of the
customers towards the company.
60 | P a g e
REFERENCES
Research Papers
➢ Dean Caire, DAI Europe (formerly Bannock Consulting) Susan Barton, ACCION
International Alexandra de Zubiria, ACCION International Zhivko Alexiev, DAI
Europe Jay Dyer, DAI Europe Frances Bundred, ECIAfrica (Pty) Ltd. Neil Brislin,
ECIAfrica (Pty) Ltd, February 2006, A Handbook For Developing Credit Scoring
Systems In A Microfinance Context, United States Agency for International
Development.
➢ Maria Fernandez Vidal and Fernando Barbon, July 2019, “Credit Scoring In Financial
Inclusion” , CGAP Publications.
➢ Kumar Anurag, and Sarwal Rakesh. 2021. “Health Insurance for India’s Missing
Middle”
Online Websites
➢ https://cgspace.cgiar.org/handle/10568/117717
➢ http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.988.2108&rep=rep1&type
=pdf
➢ https://www.dvara.com/research/wp-content/uploads/2021/07/Expanding-Health-
Coverage-through-Community-Based-Health-Insurance.pdf
➢ https://www.npci.org.in/who-we-are/about-us
➢ https://nbfclicenseindia.com/blog/nbfc-mfi/
➢ http://www.sa-dhan.net/about-us/
➢ https://www.bbc.com/news/world-south-asia-11997571
➢ http://utstat.toronto.edu/~ali/papers/creditworthinessProject.pdf
61 | P a g e

SIP REPORT Bindu PDF

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

SIP REPORT Bindu PDF

Uploaded by

Copyright:

Available Formats

A REPORT

A report submitted in partial fulfillment of the requirements of

A report submitted in partial fulfillment of the requirements of

Date of submission: 12-05-2022

BOGAVILLI BINDU MADHAVI

I would also like to acknowledge my colleagues at BFIL for providing a welcoming

Micro-finance has been successful in providing access to credit. Microfinance is a banking

This Internship proposed is with BHARAT FINANCIAL INCLUSION LIMITED for a

➢ Description of Internship in brief:

1.2 Objective of the Internship:

Research Methodology used for following activities are:

1.4 Scope of the Internship

Microcredit is delivered through a variety of institutional channels viz.,

2.1 Concerns in Microfinance Sector related to Customer Protection

➢ Over-indebtedness and Multiple Lending

The comprehensive regulatory framework is applicable only to NBFC-MFIs, whereas other

The regulatory ceiling on interest rate is applicable only to NBFC-MFIs. Regulatory

The key recommendations of the Malegam Committee were as follows:

a) Creation of a separate category of NBFC operating in the microfinance sector to be

b) Criteria for defining ‘microfinance loans’ classified as ‘qualifying assets’

c) Prudential norms on capital adequacy and provisioning requirements

f) Measures to address multiple lending, over-borrowing and coercive methods of recovery

g) Establishment of a proper system of grievance redressal

2.2 Self-regulatory organizations for Micro-finance

Microfinance Institutions Network (MFIN) was established in 2009 as an Industry

3.1 Features of Bharat Financial Inclusion Limited

➢ It gives loans for low-cost house building

3.2 Product Variants:

3.3 Merger – A win-win situation to IIB & BFIL:

Under a banking setup, BHAFIN can generate higher RoE’s with

c) no cap on lending rates,

d)higher leverage and

e) removal of political/regulatory over hang due to the diversified balance sheet.

4.1 BSS Branch/Field Visit Summary report

Appended below is the summary of the customer’s responses analysis:

• 75 % of the customers are male and 25% are female.

Customers Business Vintage:

➢ Provide loans based on cash flow assessment

Disbursement of loan at the place of the

K Swathi and R Anuradha (2017), Health insurance in India- An overview. Government to

✓ Low government expenditure on health sector.

A negative opinion on insurance companies due to lack of awareness on the

✓ Not willing to invest in insurance.

Need of health insurance:

• Expansion of health insurance / assurance coverage is a necessary step, and a pathway

Characteristics of Missing middle:

Schematic for missing middle population for health insurance.

Primary occupation composition of rural ‘missing middle’ household

Primary occupation composition of urban ‘missing middle’ households

Data Analysis and Interpretation:

1. Do you have any existing insurance policy?

Do you have any existing insurance policy? Count Percentage

Hospicash Requirement on Count Percentage

Daily Hospital Amt Count Percentage

4. Are you interested in Personal Accident cover?

PA Cover Interested Count Percentage

5. Respondent’s opinion on PA Coverage amount

PA Coverage Count Percentage

6. Are you interested in EMI Cover?

EMI Cover Interested Count Percentage

Do you want all 3-in-1 Policy or separate

People interested in different policies