Risk Management

The risk management function has a comprehensive framework for effective risk measurement, reporting and management. The function has been evolving and adapting to keep pace with the growth in size and diversification of the portfolio. The portfolio exposure is diversified across 30 states and 480 districts. The exposure comes from various asset classes like Microfinance, Vehicle finance, Affordable housing finance, Small business loans, and Agri finance.

The Risk Analytics and Risk Monitoring function feeds into each other in terms of utilization of analytics output to design monitoring visit and inputs from the field observation provides strong rationale to the performance analysis. This integrated approach risk management approach has resulted in consistently high quality portfolio across asset classes with a zero delinquency track record. Till date, there has not been any draw down upon the first loss credit enhancement for shortfalls in principal repayment of the securitized debt instruments. The instruments have consistently achieved the rating upgrades as well over the tenure.

Risk Analytics and Modeling

The risk analytics team is responsible for periodic reporting to internal and external stakeholders along with proactive surveillance of transaction and portfolio performance as well as monitoring adherence to credit exposure covenants. The team uses the proprietary models and matrices to calculate various risk and performance indicators such as Collection efficiency, Portfolio at risk , Prepayment rates along with the future expected cash flows on pool based products.

The risk modelling team aims to develop deep understanding of risk at all levels – asset class, originator, geography, transaction and overall portfolio for better estimation and mitigation of risk. With a wealth of data from over 7 million underlying loan contracts from more than 200 securitization transactions, financial and portfolio performance from more than 60 originators in four asset classes, across India , the risk modelling team carries out advanced data analytics using proprietary models to model the credit behavior of underlying borrowers under the base case and stress case scenarios. The output of such models forms a critical input for new product development, transaction structuring and investment decision-making. The Economic Capital framework developed in-house estimates value at risk against credit risk and extreme events including natural disasters to better estimate the risk at asset class, product and geography level.

Transaction and Performance Measurement

Predictive Risk Modeling

Data Driven Decision Making


Risk Monitoring

Role of Monitoring and Surveillance

Core Functions of the Team

IFMR’s risk monitoring framework
View Infrographic on the key attributes, process and scope of monitoring visits
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Monitoring visit snapshot ‘Mar 2015
View Report of the number of visits, meetings, entities covered and customers / organizations visited in the country along with a report on Pool Audits.
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