Historically banks have been relying on physical verification of documents and credit bureau data for taking lending decisions. Now with alternate sources of data banks can process applications for first time credit seekers as well who do not have a credit score.
With this partnership Bank of Baroda can also lend to SMEs in a real time basis.
Co-Founder of CreditMantri Rajit Punja explained that the applicant is credit profiled when they apply for a loan with Bank of Baroda. As part of this approach, the borrower’s credit worthiness is assessed across five key pillars which most lenders use to evaluate loan applications using over 1500 credit relevant data points. The data used in the profiling is obtained and used only after applicant’s consent.
Technology enables the bank to offer low ticket credit products to even first time borrowers and expand into newer segments without the need for related large-scale investments. It can also help the bank reduce credit processing turnaround times by cutting down on need for expensive physical verification processes and expand into new, digitally aware consumer segments where Credit Bureau data is limited.
“BOB has been one of the early adopters of this new paradigm. This proposition will help more Indians get credit included and facilitate credit availability,” said Punja.
Source: Economic Times
Image Courtesy: Financial Express