Mathematics · Financial Aptitude and Credit Risk Analysis
A bank's portfolio has a high concentration of unsecured loans. A stress test on 10,000 borrowers with average loans of ₹5,00,000 and an average Debt-to-Income (DTI) ratio of 45% shows that 20% of borrowers face a 30% reduction in monthly income. 1. Calculate the New DTI Ratio for the affected borrowers. 2. If the default threshold is a DTI of 60%, calculate the expected increase in Gross NPA (in Crores) from this segment. 3. What consumer requirement should the bank address to mitigate this risk?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1No change in DTI
- 2New DTI = 75%; NPA increase = 200 Crores; Requirement for 'Foreclosure'
- 3New DTI = 58%; NPA increase = 50 Crores; Requirement for 'New Credit'
- 4New DTI = 64.3%; NPA increase = 100 Crores; Requirement for 'Loan Restructuring'✓
Correct answer
New DTI = 64.3%; NPA increase = 100 Crores; Requirement for 'Loan Restructuring'
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