1. User Guide
  2. Stage Curing Rules

29 Stage Curing Rules

The Stage Curing Rule feature is introduced in this service to restrict any direct movement of accounts between the higher risk stage to the lower risk stage. The Out Of Box application supports rules between the following stages:
  1. Stage 3 to Stage 2
  2. Stage 2 to Stage 1
  3. Stage 3 to Stage 1

The basic principle behind this curing rule is that financial institutions assess the account characteristic for some period before moving any account from higher risk stages to lower risk stages.

While defining the Stage Curing Rule, the user has to select the modelling set.

By default, all stages are enabled for the curing logic, but the user can disable curing logic for some of those stages as per the requirements.

The below rule parameters are available for customization. By default, all rule parameters are enabled but the user can disable some of those rule parameters based on requirement. The cooling period is a mandatory rule parameter, and the user can select other parameters based on requirements. All selected rules should be passed then only curing logic will apply.

  • Cooling Period: The cooling period is in days. Users need to customize this for all stages.
  • Days Past Due: Users can customize days past due for all stages by selecting the combination of arithmetic signs and days.
  • Rating Long Term: Users can customize rating long term for all stages by selecting the combination of arithmetic sign and internal rating rank.
  • Rating Short Term: Users can customize rating short term for all stages by selecting the combination of arithmetic sign and internal rating rank.
  • LTV: Users can customize LTV for all stages by selecting the combination of arithmetic signs and LTV. LTV is in percentage.
  • FICO Score: Users can customize FICO Score for all stages by selecting the combination of arithmetic sign and FICO score.
  • 12 Month PD: Users can customize 12 Month PD for all stages by selecting the combination of arithmetic sign and 12 Month PD. 12 Month PD is in percentage.
  • Lifetime PD: Users can customize Lifetime PD for all stages by selecting the combination of arithmetic sign and Lifetime PD. Lifetime PD is in percentage.
The cooling period will start once any account is moved from stage 3 to stage 2 or stage 3 to stage 1 or stage 2 to 1 by comparing the last reporting stage and the current stage (which is the outcome of stage determination). The below conditions have primarily been used in the curing logic:
  • If curing of stage 3 to stage 2 or Stage 2 to stage 1 or stage 3 to stage 1 movement got interrupted because of the different stages get assigned in stage determination, then particular cooling period resets.
  • At any time, a single cooling period rule will be active. Example: If the stage 3 to stage 1 cooling period rule is active but because of some rules in the stage determination if the account gets tagged to stage 2 then the stage 3 to stage 2 cooling period rule gets active and the stage 3 to stage 1 cooling period gets reset.
  • If multiple rule parameters have been selected, the cooling period condition gets passed but if any other condition failed then the cooling period resets.