Hello friends, I am working for a private loan company and want a helpful suggestion from you people. I want to know that while giving loans to so many people there are many risks of retrieving the loan amount along with the interest so how can we control the risks towards the company or how can we minimize the risks? Please suggest if anyone knows.

I took a class on this topic back when I was an undergraduate studying economics. Because of asymmetric information between the lender and borrower, the lender must must determine the interest rate that will cover the loans that will go into default. Depending on the characteristics on the individual (I am not sure how your company determines the riskiness of a client) the interest needs to be adjusted accordingly. I'm sorry if this is answer is not very helpful, but the way I was taught involves using complicated mathematical equations based on certain characteristics that determine risk. I am under the impression that many companies hire someone to determine the numbers you are seeking.

If you are in business making loans then you should understand how to construct a loan portfolio that manages risk before you make any loans.

This sounds like a question from a student. There is nothing wrong with that but unless you can provide more details, you are not likely to get much help.

Hehe, DH gets drawn in by a thread necromancer

Can we do something about these jokers? I frequent a board that closes threads after 90 days of inactivity. Can we do something like that around here? I'd go for an even shorter period, like 60 days.

Jeez...I feel so...dirty...and used!

What??!?

Not a student. Just someone who has no idea how to express himself or herself in English.