Populating the Parameter Table

Generation of a Transition Matrix requires certain parameters to be defined; this is done with the help of Rules that populates the values in a specific Param table. The parameters are defined at the segment or portfolio level. The parameters that are required to be defined are the following:

• EIR Computation Flag: Identifies the portfolios or segments for which Transition matrices have to be created.
• Transition Matrix Type: Defines whether the matrix must be based on Rating (R) or Delinquency Past Due Days Band or DPD Bands (D).
• Transition Matrix Frequency: Indicates the frequency of the matrix as Annual (Y), Semi-Annual, or Half Yearly (H), Quarterly (Q), and Monthly (M).
• Transition Matrix Basis: Indicates if the computation happens based on the Number of Accounts (N) or Outstanding Amount (O).

The Rules that populate the Param table are configurable based on the requirements of the customer, preferably as a one-time activity.

Note:

Segmentation (Portfolios) is a mandatory prerequisite for the computation of the Historical Transition Matrix.