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INDUSTRY GUIDE:
MR. GAURAV VARMA SR. LEAD REVENUE ASSURANCE MTS INDIA,LUCKNOW

INTERNAL GUIDE
DR. NIRAJ KUMAR DEPT. OF BUSINESS ADMINISTRATION UNIVERSITY OF LUCKNOW

SUBMITTED BY: ANUJ PANDEY(MBA) DEPARTMENT OF BUSINESS ADMINISTRATION UNIVERSITY OF LUCKNOW

CERTIFICATE OF APPROVAL

The following Summer Internship Report titled Credit Scoring Model" is hereby approved as a certified study in management carried out by the trainee during the period as a summer intern in the organization. It is understood that by this approval the undersigned do not necessarily endorse or approve any statement made, opinion expressed or conclusion drawn therein but approve the Summer Internship Report only for the purpose it is submitted.

Organizational Guide :
: Name: Mr. Gaurav Varma : Designation: Senior Lead, Revenue Assurance, MTS INDIA,LUCKNOW Signature

DECLARATION

I hereby declare that this project titled CREDIT SCORING MODEL submitted by me to Department Of Business Administration,University Of Lucknow and MTS INDIA Pvt. Ltd.in partial fulfillment of requirements of MBA programme is a bonafide work carried out by me has not been submitted earlier to any other university or institution for the award of any degree diploma/certificate or published any time before.

ANUJ PANDEY

ACKNOWLEDGEMENT
This project has been prepared as a part of an internship required during the completion of MBA program. I was involved with MTS INDIA Pvt. Ltd. Lucknow for 2 months and I came across a lot of people, who put in their time and effort towards acclimatizing me to the working of their of organization. I express my thanks to my industry guide Mr. GAURAV VARMA (lead, revenue assurance) who motivated me in all my efforts. I would like to express my gratitude to the entire staff of MTS INDIA for supporting me during this project and providing me an opportunity to learn The past two months were of utmost importance as they added value towards my path of knowledge. I would like end this acknowledgement by thanking the customers and people at large with whom I have interacted during the course of my training.

ANUJ PANDEY

TABLE OF CONTENT
ABOUT COMPANY: History of company MTS in India Details about company TOPIC DESCRIPTION: Introduction to credit scoring model Estimation method Variable Identification Variable coding Variable selection Model Estimation Credit scoring and company strategy

CREDIT PRODUCTS PROVIDED BY COMPANY RESEARCH WORK: Meaning and Objective of research Type of research Importance and Uses Data collection method

ANALYSIS: About questionnaire Major Players Analysis and Interpretations

FINDINGS & CONCLUSION

ANNEXURE: Questionnaire Bibliography

EXECUTIVE SUMMARY
This report has been completed in fulfillment of my management program, MASTER OF BUSINESS ADMINISTRATION (MBA) in the MTS INDIA,LUCKNOW.

OBJECTIVE:
The main objective of this project is to get detail practical knowledge about credit analysis. To know about the different credit scoring models used by other companies. To get a good insight of telecomm industry. To know about the working environment of company.

To know the practical experience of industry environment.

SCOPE:
Study of credit analysis in telecom industry. Study of various methods of credit analysis. Study of various parameters and credit rating of customers. Analysis of findings and observations of study. Recommendation based on observations. Study of credit scoring model and based on this model to decide the credit rating of any customer.

ABOUT COMPANY
MTS was established in October 1993 by Moscow City Telephone Network (MGTS), TMobile, an affiliate of Deutsche Telekom AG, Siemens AG (Siemens) and several other shareholders. In late 1996, Sistema JSFC acquired a majority stake in MTS and has remained the primary owner ever since. MTS was the first company to launch GSM services in the Moscow region in 1994. In subsequent years, MTS has expanded rapidly in Russia largely through the acquisition of smaller independent players and became the leading national mobile operator. MTS initiated its international expansion in 2002 through the establishment of Mobile TeleSystem LLC, a joint venture with Beltelecom, the national fixed line operator in Belarus. In 2003, MTS continued to expand in the CIS by acquiring the leading operator UMC in Ukraine, the biggest CIS market outside of Russia. MTS entered Central Asia in 2004 through the acquisition of the leading mobile phone operator in Uzbekistan, Uzdunrobita. In June 2005, the Company acquired Barash Communications Technologies, Inc., the number one operator in Turkmenistan. In 2008, Sistema formed 74:26 joint venture with Indias Shyam Group to form SISTEMA SHYAM Teleservices (SSTL), and acquired Pan-India license to provide CDMA services in the country. In March 2009, SSTL launched the MTS brand in state of Tamil Nadu, followed by neighboring state Kerala and W.Bengal in April and May respectively. At present MTS India present in 12 circles out of 22 telecom circles of India. The headquarter of MTS is situated in Moscow(RUSSIA). Andrey Dubovskov is the current president and CEO of MTS.In 2010 total revenue was US$ 11.2 billion and the net income was US$ 1.3 billion. There are total 26,343 employees working in MTS all around the world.

CREDIT SCORING MODEL

As Telecom markets in developing countries are maturing, companies face competition not only from other domestic companies but also from sophisticated foreign companies. Given the substantial growth of consumer credit and increased regulatory attention to risk management, the development of a well-functioning credit assessment framework is essential. Before the design of such a credit model two things are necessary. First, to identify those customer characteristics that should be part of a credit scoring model. Second, how such a model can be calibrated to achieve the strategic objectives of the company. Credit Scoring Models are commonly structured along the lines of ALTMANS Z-score model. First, the CSM must be developed and estimated. Typically, a CSM uses historical data to identify which customer characteristics are best able to distinguish between defaulted and non defaulted.During this developmental stage, decisions about the model's estimation method have to be made and all potentially relevant customer characteristics have to be identified and coded. Finally, the relevant characteristics have to be selected and their impact on defaults established in other words, the model has to be estimated. Now the CSM can be applied to new applications for which the probability of default (PD) is not known. Based on the estimated CSM, a credit score can be calculated for each new customer where a higher score indicates better expected performance of the customer and thus a lower PD. This score must be compared to the CSM's cut-off rate to determine whether the application is accepted, rejected or requires further assessment. Thus, as part of the CSM's developmental stage, calibration is also necessary such that an optimal cut-off rate.

The estimation method:The development of a CSM starts with the decision about the basic form of the model, i.e. its estimation method via decision trees, linear probability models, logit or probit regression models, or multiple discriminant analyses. Based on findings by Boyle, Crook, Hamilton, and Thomas (1992),Desai, Crook, and Overstreet (1996, 1997), Henley (1995), Srinivasan and Kim (1987), and Yobas,Crook, and Ross (2000) as reported by Thomas (2000), we opt for the logistic regression method. Thus, we first collect a sample of existing credit and observe their customers characteristics and the ex-post default status. A customer's ex-ante PD is unobservable. The logistic regression technique overcomes this problem by directly estimating this probability and has therefore been the methodology of choice for retail credits. This technique assumes the existence of a continuous variable Zj which is defined as the probability that customer j
defaults

and can be modeled as a linear function of a set of

...(1)

variables x which describe the applicant: Zj = Wx = w1xj1+w2xj2++wkxjk where wk is the coefficient of the kth variable and xjk is the value of variable k for applicant j. Zj is known as Z-Score of the jth applicant. Zj is ex-ante unobservable and default can only be defined expost as a 01 dummy. Eq. (2) thus derives the default probability using an iterative maximum likelihood estimation method. Here, larger values of reflect a higher PD. j=1/(1+e-(W x)) (2)

Variable identification:Next, a choice has to be made among the variables x that should initially be considered for Eqs. (1) and (2). There is no overall consensus regarding the number or type of initial variables.In CSMs for corporate credits, the variables are relatively similar across countries and limited to financial statement data. For retail credits, direct measures of the financial strength of the customer such as income or value of the home are included. Given the limited availability of such proxies for individuals, proxies that measure the financial strength of a customer indirectly (education, household size, years at employer, or postal code) also need to be included. There seem to be only a few variables that are typical for developing countries such as gender, religion, branch, and credit officer. This can be explained by the fact that companies in most developed countries are prohibited by law to use variables such as gender, whereas companies in developing countries are not. Branch and credit officer variables can reflect branch policy, bonuses, experience, or training levels. Their inclusion in the CSM for Bolivia might indicate that differences across branches and credit officers are more pronounced in less-developed companies markets. Except for these few variables, however, it seems that a retail CSM for a developing country can generally start with the same set of variables as a retail CSM for a developed country. Note that already at this early stage, a certain selection of variables has to be made. Even companies that do not use a CSM are collecting information from credit applicants during the lending-decision making process. This information can serve as a starting point. Practical experience will however show that not all variables are fully available. Values may be structurally missing (e.g. question which are asked conditionally on the responses to previous questions). Alternatively, missing values might be due to a deficient information system in some branches or due to customers who themselves were not willing to completely fill in the application forms. Excluding all variables with missing values might substantially reduce sample size and lead to a loss of valuable information whereas including variables with only a few valid observations might lead to unreliable results. In order to

balance these two problems, we first identify those variables which show a substantial number missing values. Second, we rely on the credit officers' expert knowledge and feeling for the data and characteristics to identify which of these variables can and which cannot be excluded from the model.

Variable coding:After the choice of the initial set of independent variables has been made, qualitative as well as quantitative variables need to be coded. The coding of quantitative variables is required when the relationship between the variable and default is not linear. As Thomas argues, instead of trying to map such a relationship as a straight line, customers can be grouped into a number of categories such that a categorical variable is created. The later approach is more commonly used in credit scoring mainly because it can also be applied to qualitative variables and we thus adopt this approach for all our variables. To complete the coding of the variables, a value has to be attached to each category.Boyle show that variables can be coded based on the distribution of defaulted and non-defaulted credits in the sample. If a variable has m categories, let gi the number of good (non-defaulted) credit who belong to the ith category and bi the number of bad (defaulted) credit that belong to the ith category. G and B are the total number of good and bad credits in the whole sample, respectively, such that G =gi and B=bi
.......(3).

Instead of using a simple coding rule, estimates of probability odds of the good and bad credits in the ith category are commonly used. We follow Crook and code our variables as:ln(gi/bi) + ln(B/G) .(4)

For qualitative variables for which the number of possible categories is very large, coding all categories becomes infeasible. For such cases, we follow Thomas' (2000) and Boyle recommendation and aggregate values of similar PD measured as bi / (gi+bi).

Variable selection :Once the variables have been coded, Eq. (2) can be estimated. As is evident from retail CSMs in developed countries, the model can initially contain a large number of variables. Whereas this might be statistically feasible for large samples, there are practical considerations. Too many questions in an application form deter credit applicants, who will not answer all questions or apply for a credit elsewhere. Efficiency and applicability thus stipulate that the number of variables is reduced. It is furthermore critical to determine not only how many but also which variables to incorporate in the model. We therefore apply a forward as well as a backward stepwise method which sequentially adds or withdraws variables to maximize the model's predictive accuracy. Now, the final version of the CSM can be determined and the coefficients wj of Eq. (2) can be estimated.

Model estimation:The variables initially selected for inclusion in the CSM overlap with the list of commonly used variables of Table. In line with our general discussion, we find that our variables are not unique for India in particular or even for developing countries in general. Exceptions are gender and region which seem to be exclusively used in developing countries. Outlined below are the details regarding these categories, the specific circumstances in the country, and the reasons why we expect these customer characteristics, i.e. those captured by the finally selected 7 variables, to be relevant. Regarding education we expect that better educated people have more stable, higherincome employment and thus a lower PD.We therefore distinguish customers by their educational degree ranging from post-graduate to non-high school graduate. In 2002, however, less than 0.5% of the working population held a graduate or post-graduate degree and only 13% held an undergraduate degree . The largest share of the working population thus falls into the lower two educational categories. Gender can no longer be included in CSMs for many industrialized countries as it is deemed discriminatory. In contrast, Schreiner (2003) argues that fair discrimination for example based on the statistical default rates of men versus women is acceptable as it is based on quantifiable data. The alternative subjective scoring discriminates equally if not more. Overall, there is ample evidence that women default less frequently but most of this gender effect disappears when other risk factors that are correlated with gender are accounted for. We thus initially include gender and rely on the variable selection procedure to determine whether gender remains in the final CSM. In INDIA there is furthermore a specific relationship between gender and income which in turn might be predictive of default.We did not include gender in this model because it didnt have significant impact on CSM.

Region represents the area of the country where the customer lives. As people of similar wealth tend to live in the same location (a suburb might attract richer residents and the resulting increase in housing and property prices make this suburb prohibitively expensive for poorer households),this geographic criterion can indicate a customer's level of financial wealth. A typical proxy is an area's postal code. According to the company's policy, customers can only obtain new connection from their local centre and therefore coincides with the customer's residential area. Note that given this coding, region might not only be a proxy for the customer's wealth but also reflect the current credit assessment ability of the different branches.Best customers can be understood in terms of the average income per person. Time at present address represents the number of years that the customer has been living at his current address. Crook, Hamilton, and Thomas (1992) find that default risk drops with an increase in this variable. In this sense, time at present address might be a proxy for the customer's maturity,stability, or risk aversion.People who acquire financial wealth tend to seek better living conditions and thus often move to a new home in a better area. Thus, changing address might be a signal that a customer's financial wealth is high and/or improving rapidly. Under these conditions, he is better able to repay his credit.

Residential status indicates whether customers own their home, rent, or live with their parents.Ex ante, the relationship between residential status and default is unclear. On the one hand,residential status can indicate financial wealth in particular in the case of home ownership. On the other hand, residential status can indicate increased financial pressure on the customer's income through insurance fees, taxes, or electricity cost. Crook (1992) find that customers who are most likely to default belong to the other category whereas customers living with their parents are least likely to default. We expect that this ranking will be different for our sample since the reasons of having a

certain residential status in INDIA are dissimilar from those in industrialized countries. Almost 90% of all customers in our sample own their homes. This properly reflects the country population as a whole where 95% of all households own their house. House ownership is with 98% somewhat higher in rural areas compared to 86% in urban areas . If this house is used as collateral, default rates are among the lowest whereas default rates are highest when this house is not used as collateral. This can be explained by the importance of owning a house in Indian society, which leads to a strong aversion of many customers to loose their house. Marital status can matter if it has an effect on the responsibility, reliability, or maturity of customers. In our sample, however, default rates are higher for married than for single customers. This result can be due to the fact that marital status is typically related to number of dependants which in turn reflects financial pressure on the customer and her ability to repay a credit. Another linkage exists between marital status and age. According to survey, women marry mainly in their 20s. Among 20- to 24-year old women only 46% are married compared to 80% to 90% of older women. Thus, the age group which shows the lowest default rates (18 to 24 years) also has the most unmarried people. However, as 87% of customers are married, it is unclear ex ante how informative marital status will be in contrast to other variables such as age or number of dependents. Number of dependants represents the number of people that the customer has to support. Crook (1992) separate this variable into two categories, the number of children and the number of other dependants. In this study, we measure the total number of dependants though this variable mostly reflects the number children. As the number of dependants increases, so does the pressure on the customer's income due to higher expenses such as school fees. In our country as in industrialized countries, the default rate increases steadily with the number of dependents. Home phone measures whether a customer has a home phone or not and can indicate how easily the company can keep contact with that customer. Thus Crook (1992) find

that not having a home phone is associated with a higher default risk. We expect this relationship to be present in country possibly stronger than in developed countries as the percentage of households with a home phone was only 27% in 2004. There are however big differences across areas: 74% of urban households have a telephone whereas only 11.5% of rural households do. In India, home phone and default are not only linked due to the ability to contact the customer but also due to the fact that home phone and income are correlated. While only 16% of households in the lowest 20% of the income distribution have a telephone, 74% of households in the highest 20% of the income distribution have a telephone . In our sample the percentage of customers with a home phone lies with 70% above the population average. As the first two variables that measure the customer's companying relationship, credit purpose describes how the funds are used and collateral type measures what type of collateral supports the credit. Collateral type is incorporated in by Schreiner (2004) who classifies guarantees as none,personal, multiple, or other guarantee. Our categorization is different due to specific features of the countrys telecomm market. Next to noncollateralized credits, we distinguish between real estate assets, mobile assets and fixed assets. Given the state of India's legal system, companies do not accept personal guarantees as these are difficult to enforce. In our sample there is clear relation between credit type and collateral type, partly due to the overlapping variable definitions.Generally speaking, requiring collateral is a signal of risk. Most defaults occur in the collateralized or business credit class. For business credits, 97.52% are collateralized with real estate, 1.4% with fixed assets such as machines, 0.49% with mobile assets and 0.06% with other collateral. Only 0.53% of business credits are not collateralized. At the other end of the distribution, credit cards do not require collateral and default rates are low. This can be due to the fact that a credit card is still very new product, which is offered only to those customers who have a very close and good relationship with the bank Time with company measures the length of the companying relationship in years. In the context of relationship lending, it can be assumed that the longer a customer stays with

a company, the more the company knows about him and the lower the default risk becomes. Whereas this is confirmed for industrialized countries , it does not quite hold in every country. The highest default rate can be found for those customers who have been with company for 13 to 36 years whereas customers who have been with company both shorter and longer are less likely to default. This could reflect the fact that the countrys market is being reformed and that credit officers still have room for preferential credit allocation. As reform progresses and CSMs are put in place, the effect of this variable is expected to change and should thus be updated regularly. Credits history counts the number of credits a customer has received during her whole relationship with the company. Many customers have not only a sequence of historical credits but also have more than one credit at a time. As a defaulted customer has difficulties in receiving a new credit, this proxy can be informative about default risk. As expected, default is least frequent for repeat customers: Whereas 7.94% of first-time customers default, only 0.15% of customers with three or more credits do so. This variable thus clearly reflects how important the companycustomer relationship, i.e. a good credit record, is.The inclusion of variables such as collateral type, credit duration, or gender is however unique to developing countries. Particularly, gender and credit duration are very effective predictors ranking 2nd and 4th in the CSM, respectively. First regarding gender, recall the above discussion whether gender is truly indicative of default or simply reflects underlying risks. For India, we have to conclude that gender helps in the proper assessment of credit risk even when other risk factors such as credit purpose or collateral value are taken into account. As women are coded with a higher value than men in our CSM, the negative coefficient of gender implies that countrys women default less frequently than men. Furthermore, we argued above that gender is indicative of income, a fact which can explain the absence of more traditional income proxies (income, occupation, employer type or type with employer) from our model. Second, credit duration, as a measure of the customer's intention, risk aversion, or selfassessment of repayment ability, is unique to the countrys situation. It indicates that

Indian companies cannot only rely on their own assessment of the customer but also on the customer herself, who appears to adequately and honestly state her own credit capacity. In this context, time with company and number of credits as 1st and 3rd most important predictors reflect the customer's relationship with the company and thus the role that such relationships play in India's credit market. To this extent, our CSM is consistent with the less formalized credit assessment approach of another Indian company presented , which also relies heavily on relationship proxies, i.e. in its second round of credit assessment.

Credit scoring and company strategy: Profitability

A CSM's benefit can lie in the effect that the new credit assessment policy has on the company's profitability. Schreiner (2003) suggests measuring the change in profits in terms of opportunity cost. In particular he focuses on the ratio of good credit lost (Gb) per bad credit avoided (Bb),The effect on profit can be calculated as:profit= cost per bad credit * Bb - benefit per good credit *Gb
.(5)

CREDIT PRODUCTS PROVIDED BY COMPANY:

Since credit word is generally used normally with banks but now a days it has become very common in almost every sectors.Now in telecom sector credit simply used for the postpaid users.In postpaid connection user makes call first or say he spends first and then he has to pay.The user is simply believed to pay the amount for what he had made call.This is called credit worthiness.

Research work

Meaning and objective of research:

The main purpose behind the research was to get an idea how much weightage is
given to various characteristics of customers in deciding credit score.That is to get a brief idea about the companys method in deciding credit score of customers.

Importance & Uses : Since its easy to design a raw scoring model based on self analysis but how can we
decide whether the model would produce the correct result or not.To ensure this we take the help of survey.The main use of the survey was to find out the exact percentage of weightage that should be given to various parameters for deciding credit worthiness of any customer.

Data collection method:

Primary data collection methods:
In primary data collection methods we collect the data ourselves using the methods such as questionnaire and interviews.In our research process we have to use both mean of primary data collection method.That is first of all we have to visit personal loan managers in banks and credit managers in telecom companies.Then we simply asked then few question related to our project and then request them to fill the questionnaire to gather information related to our project.

Secondary data collection methods:

Secondary data are those types of data that has already been collected by someone else for a different purpose of ours.In this research method we have used various secondary data sources like: Search Engines Wikipedia and Encyclopedia Company website

Statistical analysis:
In this section I am going to show my findings that I have gathered through the survey and research.Now for the questionnaire:-

Sample size -Area --

18 Credit Analysis Primary data,Secondary data Telecom industry

Type of data -Industry --

Respondent

--

personal loan manager(bank),credit manager(telecom)

Major players selected for the purpose: IDEA cellular Ltd. Reliance Communication Ltd. Vodafone Tata Indicom Aircel State Bank Of India Bank Of Baroda IDBI Bank ICICI Bank Union Bank Of India Bank Of India Panjab National Bank Mahindra Finance

ANALYSIS Q1: Does your company use a credit model for credit analysis:Having Credit Model
no 0%

yes 100%

INTERPRETATION: As it is clear from the pie chart each and every company use credit model for the credit analysis.

Q2: Is there any separate department for credit analysis:-

Seperate Department
no 17%

yes 83%

INTERPRETATION:
Since it is quite clear from the data almost each company has separate department for credit analysis.As we know credit analysis is very important task in any organization so separate department is desirable as well.

Q3: How many employees are there in the credit department:-

No. of employees
0-5 5-10 10-15 15-20 more than20

6% 14%

6%

6%

69%

INTERPRETATION
As the pie chart is showing majority of the companies want to keep the strength of its credit department in between 0 and 5.It means majority of companies dont want to keep more employees in credit department.

Q4: According to the model how much weightage is given to annual income?

Annual Income
0-10% 17% 10-20% 0% 20-30% 22% 30-40% 22%

more than 40% 39%

INTERPRETATION
Annual income plays a very crucial role in credit analysis.But different companies give different emphasis on this parameter.Majority of players give it more than 20% of weightage.

Q5:How much weightage is given to fixed assets (home, vehicle etc) that the customer
possessed:-

Fixed Assets
0-5% 11% more than 20% 39% 10-15% 33% 5-10% 11%

15-20% 6%

INTERPRETATION
As the pie chart is showing overall companies are divided into two groups.First group belongs to 10-15% and second group belongs to more than 20%.That is a group of companies give it weightage in between 10 to 15% whereas some other companies give fixed asset more than 20% weightage.

Q6:How
status):-

much weightage is given to personal characteristics (age, gender, maritial

Personal Characteristics
more than 40% 17% 30-40% 11% 20-30% 17%

0-10% 50%

10-20% 5%

INTERPRETATION
As it is quite clear from the data majority of companies give personal characteristic less than 10% weightage.It means the role of personal characteristics in deciding credit worthiness of any individual is not very much.It play a minor role.

Q7:How much weightage is given to credit history of the customers:-

0-10% 0%

Credit History
10-20% 18%

more than 40% 41%

20-30% 35%

30-40% 6%

INTERPRETATION
Again the players are divided in two groups.First group give it emphasis in the range 20 to 30% while the second group of companies give it more than 40% of weightage.Since we know also credit history plays a very essential role in credit analysis.

Q8: How much weightage is given to educational qualification:-

Educational Qualification
more than 20% 17% 0-5% 16% 15-20% 17% 10-15% 17% 5-10% 33%

INTERPRETATION
Educational qualification dont play a major role in credit analysis.As the pie chart is also showing majority of companies give it less than 10% weightage.

Q9: How much weightage is given to employment (sector, duration) status:-

Employment Status 0-10% 6%

10-20% 17% 20-30% 22%

more than 40% 33%

30-40% 22%

INTERPRETATION
Employment status also plays a vital role in deciding credit worthiness of any customer.Majority of companies give it more than 20 to 30% of weightage.Some companies give it weightage even more than 40%.

Q10:

How much weightage is given to the customers transaction history(bank)/

usage rate(telecomm):-

Transaction History
5-10% 17%

0-5% 6%

more than 20% 44%

10-15% 22% 15-20% 11%

INTERPRETATION
Since the pie chart is showing a majority of companies give the transaction history more than 20% of weightage.It means this parameter also plays a major role in credit analysis.

FINDINGS & CONCLUSION

From the analysis it is quite clear that all the parameters have some weightage in the Credit Scoring Model.The main thing here is that each parameters have different

weightage.The reason behind this is that each company has its own credit criteria,internal risk policies etc. .This is the reason why some companies give one parameters high weightage while other companies give it low value. Now based on the survey a projected model can be estimated by taking the average of all the response from various companies.This model can be considered to be effective because it is the average of all the responses from various companies. The overall structure can be shown through pie chart as:-

Overall Weightage
Transaction History 11% Annual Income 23% Fixed Assets 11%

Employment Status 23%

Credit History 23% Educational Qualification 6% Personal Characteristics 3%

Since it is quite clear from the pie chart that some parameters play major role in the credit scoring model.It includes Annual Income,Credit History and Employment Status.these parameters are very important while manipulating the model.These three parameters cover almost 70% of the overall weightage.Some parameters like

Transaction History,Fixed Assets have relatively moderate effect on the model while personal characteristics and educational qualification play very small role. Now as telecom markets in developing countries mature, companies not only benefit from credit growth but also face increasing competition and regulatory attention to risk management. Can credit scoring help in these circumstances? Based on our evidence from the Indian telecom market, the answer is yes. First and foremost, a CSM can reduce credit default. Be replacing its informal credit assessment method with a CSM, our company can expect a decrease in its default ratio from 3.3% to 2%. We have also shown how companies can calibrate the CSM to manage profits. Yet, in the case of our company, these effects were small. Finally, a CSM reduces the time and thus cost spent by the credit officer on credit assessment. A CSM can thus be calibrated with this consideration in mind. Overall, companies can benefit from reduced credit default, increased competitiveness, and reduced cost of credit assessment while optimally using its relationship lending tools, i.e. its creit officer's knowledge about the customer. In order to achieve these benefits, it is, however, important to align a CSM to the local market as the predictive customer-characteristics and their default probabilities are country-specific.

ANNEXURE

QUESTIONNAIRE
1:-Does your company use a credit model for credit analysis:(i) yes (ii) no

2:-Is there any separate department for credit analysis:(i) yes (ii) no

3:-How many employees are there in the credit department:(i) 0-5 (ii) 5-10 (iii) 10-15 (iv) 15-20 (v) more than 20

4:-According to the model how much weightage is given to annual income:(i) 0-10% (ii) 10-20% (iii) 20-30% (iv) 30-40% (v) more than 40% 5:-How much weightage is given to fixed assets (home, vehicle etc) that the customer possessed:(i ) 0-5% (ii) 5-10% (iii) 10-15% (iv) 15-20% (v) more than 20% 6:-How much weightage is given to personal characteristics (age, gender, maritial status):(i) 0-10% (ii) 10-20% (iii) 20-30% (iv) 30-40% (v) more than 40% 7:-How much weightage is given to credit history of the customers:(i) 0-10% (ii) 10-20% (iii) 20-30% (iv) 30-40% (v) more than 40% 8:-How much weightage is given to educational qualification:(i) 0-5% (ii) 5-10% (iii) 10-15% (iv) 15-20% (v) more than 20% 9:-How much weightage is given to employment (sector, duration) status:(i) 0-10% (ii) 10-20% (iii) 20-30% (iv) 30-40% (v) more than 40% 10:-How much weightage is given to the customers transaction history(bank)/ usage rate(telecomm):-

(i) 0-5% (ii) 5-10% (iii) 10-15% (iv) 15-20% (v) more than 20% What additional changes or recommendations would you propose to improve the credit model:

BIBLIOGRAPHY

WEBSITE:

http://www.mtsindia.in/

 http://en.wikipedia.org/wiki/MTS_India http://en.wikipedia.org/wiki/MTS_(network_pro vider) http://telecomtalk.info/category/mtsindia/page/ http://www.mtsgsm.com/about/

http://www.crfonline.org/orc/cro/cro-15-1.html http://en.wikipedia.org/wiki/Credit_score http://www.decisioncraft.com/dmdirect/creditriskscor ing.htm http://www.businessweek.com/smallbiz/0005/fi00051 6.htm http://finance.mapsofworld.com/creditreport/glossary/credit-model.html