Kendriya Sehkari Bank (KSB) is one of the largest banks in the state.

The customer base of the

bank is increasing day by day, leading to the production of the extensive database for the bank.
However, a few years back, all the records were maintained on papers. Loan approvals were also
done manually. It required much workforce to maintain the files and perform all the tasks. Also,
the bank was unable to use the available data. With the advent of this technology era, management
decided to convert all these records in digital form.

In order to take advantage of new technology, the digitization process of KSB began. It took almost
two years to convert all the data in digital form and implement data management services. It has
been three years since this change. All this transformation has helped the bank to improve its
customer services. Now, customers’ queries are addressed in a matter of few minutes. However,
the loan approval tasks are done by people only, by their judgment. Since last year, the default in
loans has increased at an alarming rate. It has become a matter of concern for the management.

Mr. Shreyas Kulkarni has joined as a Manager in KSB a few days before. The first task on his
table is regarding the approval of a number of loan applications. He asked for the records of the
loan approvals given. The data included the attributes of customers like age, income, marital status,
region, number of children, savings or current account availability and default status, i.e., whether
the person has defaulted or not. He observed the increased rate of defaults during the past few
months. It created immense pressure on him to take the right decisions for future loan applications.
He called up a meeting of the team involved in loan approval tasks, seeking their suggestion for
curbing the default rate. However, the team could not come up with any solid plan.

During a corporate meet, Mr. Kulkarni met a number of managers of large MNCs. There they
discussed the power of data, and he came across the idea of data analytics. One statement from the
summit is stuck in his mind, which is – “Data can answer all your questions, you just have to probe
it.” Now, Mr. Kulkarni wants to probe the data but doesn’t know the way to do it. He again
discussed with his team and decided to hire a data analyst, who can help them to find answers
hidden in the customer data. He has following concerns to find answers to:

1. Which attributes are affecting the default status of a person?

2. What is the probability of default, for following three applicants:
Age Sex region income married children car save_act current_act mortgage pep
60 MALE TOWN 30000 YES 2 YES YES NO YES YES
23 FEMALE RURAL 10000 NO 1 NO NO YES NO NO
35 MALE TOWN 20000 YES 2 YES NO NO YES NO

3. Or predict whether abovementioned people will default or not?