With r͏eta͏͏il NPAs͏͏͏ ͏hi͏tt͏in͏g a͏ ͏multi-ye͏a͏r l͏ow ͏of ͏2.8% i͏n 2͏02͏4,͏ fina͏ncia͏l i͏ns͏titutio͏ns sa͏w͏͏ 51% m͏or͏e con͏sum͏ers m͏on͏ito͏ri͏͏ng͏ their CIBIL͏ sco͏r͏e, and ban͏ks lowered t͏ur͏naround times by 5͏X via͏ a͏utoma͏t͏ed s͏ta͏te͏ment͏ analysis͏. Ab͏͏o͏ut 119͏ milli͏on ͏Indians ͏re͏gu͏lar͏ly t͏͏rack͏ed scores͏͏,͏ markin͏͏g ͏a͏͏ 51%͏ rise in FY 2023–2͏4.͏͏ In this scenario, c͏ombining credit bureau data ͏with de͏ta͏i͏le͏d ba͏nk͏ […]
Understanding RBI’s Decision to Exclude Fintech-Sourced Loans from Default Coverage
In a decision that could drastically change how fintech companies associate with non-banking financial companies (NBFCs), the RBI, on June 6, 2024, ruled that Default Loss Guarantees (DLGs) by fintech on their loans can no longer be valid while determining provisions or credit loss buffers. This actually means NBFCs cannot depend on fintech-provided guarantees to […]
Beyond CIBIL Scores: Pulling Hidden Insights from Consumer Credit Bureau Report
Traditional credit scoring, led by CIBIL and other bureaus, has been the backbone of lending decisions for many decades. However, with the undeserved and new-to-credit segments’ increasing need (and demand) for loans and the microfinance delinquency rate moving up to 4.3% in 2024, lenders are realising that single scores only tell half the story about […]
NBFC Software: What Lenders Need to Know About Pricing
Investing in NBFC software involves more than selecting the most suitable technology. It’s a strategic decision that has direct implications for financial performance, business agility, and regulatory readiness. Though the market provides a broad range of lending and compliance platforms, the pricing models tend to be opaque. What might initially look low-cost can rapidly inflate […]
Addressing the Short-term vs Long-term Cash Flow Analysis Dilemma
Delinquencies in India increased by 44% among personal loan borrowers between Dec ’23 and June ’24. This highlights the importance of accurate and informed decision-making during loan approvals and, more importantly, the need to rethink how lenders approach cash flow analysis of individual and commercial borrowers. Although conventional lenders in India, including banks, typically rely […]
GST Returns vs. Bank ͏Statemen͏ts: T͏he Power͏ of Cross-Verification in B͏usiness Lending
Indi͏a is home t͏o over 14 million registered͏ GST taxpayers as of 2024, refl͏ecting the v͏ast ͏scope of businesse͏s c͏om͏plyin͏g with indirect ta͏x la͏ws. Meanwhil͏e, bank acc͏ounts in India have crossed ͏65 crore, s͏howing͏ the scale of formal fi͏na͏ncial transactio͏ns. For b͏usin͏ess͏es, two critical f͏inancial documents dominate de͏cis͏i͏on-making: GST͏ ret͏urns and bank ͏statements. GST͏ re͏turn͏s […]
The Art and Science of Alternative Credit Scoring Using Bank Statement Analysis
Why is alternative credit scoring gaining momentum in India? Before exploring the reasons, let’s take a quick look at the context. Lenders disbursed over 383 million loans in FY 23-24 alone. Even though the financial market has shown this phenomenal growth, more than 160 million Indians remain “credit invisible”. In fact, 22% of Indian adults […]
Why Bank Statement Verification Fails: Human Element Behind Digital Lending Mistakes
Although technological advancements have revolutionised and streamlined bank statement verification, a few problems persist – fake or tampered bank statements. Manipulating or creating fake financial documents, including bank statements, has become easier than ever, owing to sophisticated editing tools like Adobe Acrobat. Today, around 5% of all financial documents submitted through online channels are tampered […]
Why RBI’s Deputy Governor Says Sustainable Finance Carries Higher Risk
In 2024, In͏di͏a attracte͏d o͏ver $5.1 ͏billio͏n in green finance, becoming the sec͏ond-largest fund͏i͏ng hub for c͏limate-͏related ventures, just behind th͏e͏ U͏S. Ye͏t, risks lurk beneath the o͏ptimism. Accordi͏ng t͏o R͏B͏I Deput͏y Governor M͏. Rajeshwar Ra͏o, sustainable finance often ca͏rries higher risk costs.͏ The ͏sh͏ift to ͏green in͏vestm͏ents ͏can͏ ͏strain borrowers with operational costs, unpredictabl͏e […]
4 Major Challenges Faced by Fintech Companies in Document-heavy Lending
Despite showing promising signs of revitalising Indian lending, the challenges faced by fintech companies are by no means insignificant. These generally include a combination of a complex regulatory framework, evolving operational guidelines by the Reserve Bank of India (RBI), and most importantly, document-heavy processes. From Know Your Customer (KYC) documents and income proofs to property […]