Lenders face several challenges concerning the credit risk management process. Some of these include inadequate data quality, lack of skilled underwriting personnel, lack of data security, lack of inclusive risk assessment strategies, and poor compliance monitoring frameworks. These multiple challenges converge into one major challenge – the inability to appraise potential borrowers’ creditworthiness accurately. In […]
Rеsponsiblе lеnding is a concеpt gaining incrеasing prominеncе. It essentially involvеs еnsuring that loans arе disbursеd to borrowеrs who havе thе ability to rеpay thеm, thus rеducing thе risk of dеfaults and financial instability. To achiеvе this, credit appraisal systems havе bеcomе an indispеnsablе tool for financial institutions. Thе global data analytics in banking markеt rеachеd […]
Credit decision-making involves assessing a borrower’s repayment capacity and creditworthiness before approving a loan. It is a critical function for lenders as it helps them decide whether to extend credit to an applicant or not and helps them minimise their risk. However, businesses often face challenges in credit decision-making owing to its complexity, which involves […]
Credit appraisal is a crucial process which lenders use to make informed decisions while lending and stay away from defaults and other risks. It involves thoroughly examining the applicant’s total income, debt levels, assets and credit history. Balance sheet analysis for credit appraisal, which incorporates evaluating a borrower’s financial statements, is integral to the credit […]
A balance sheet is a vital financial statement that summarises a company’s assets, liabilities, and equity status as of the reporting date. Data in a balance sheet serves as the foundation for determining the firm’s financial performance, the resilience of its fundamentals, and forecasting its future performance. The principal use of balance-sheet analysis is for […]
Over the last decade, artificial intelligence (AI) has made a noteworthy impression across different industries, and finance is no exception. Banks and other financial institutions are increasingly favouring the inclusion of AI across various functions, including balance sheet analysis for credit appraisal and bank statement analysis. This trend will gain further momentum as banks continue […]
The creditworthiness of a person determines their probability of obtaining a loan from a bank or other financial institution. Furthermore, it also summarises how worthy they are of getting new credit in the future. Typically, lenders go through an individual’s debt and credit management history to assess their creditworthiness before approving or rejecting their application. […]
Digital transformation has influenced the rate at which business or personal loans can be disbursed. As of 2023, the value of the digital lending market in India is estimated to be $ 350 billion, primarily driven by fintech startups and non-banking financial companies (NBFCs). Despite this growth, loan rejection rates are also climbing. For instance, […]
The advent of credit bureaus in the 1960s was a turning point for the modern credit economy as credit scores and credit reports were first introduced. While we have come a long since then. The arrival of the fintech wave, coupled with innovations, is gradually transforming and streamlining the conventional approaches. For example, technology is […]
The terms underserved or unbanked refer to sections of a population with no access to banking services or financial institutions. These groups of people usually belong to vulnerable and low-income segments of society and are excluded from the robust financial infrastructure that the remainder of society enjoys. Despite supposedly easy access to financial products and […]
