Leading NBFC cut loan TAT by 20%+ with an automated, data-driven credit scorecard
09 Jun 2023
2 min read
A leading Indian NBFC wanted to update and improve its scorecard used to assess the creditworthiness of a loan applicant
Context
- A leading Indian NBFC wanted to update and improve its scorecard used to assess the creditworthiness of a loan applicant
Approach
- Understanding the current assessment methodology: Understood the current assessment methodology used to evaluate the creditworthiness of a loan applicant
- Gap analysis: Identified the parameters that could be added to the existing parameters to improve upon the existing assessment parameters, and designed a scorecard comprising relevant (high-attribution) parameters alongwith the analytics team. Assigned weights to the parameters by doing regression analysis and taking inputs from industry experts
- Automating the process of obtaining relevant data for the scorecard: Identified the parameters which could be availed by automatically filled using internal databases or third-party microservices to reduce the TAT
- Project Management Office (PMO): PMO for end-to-end implementation along with support to the teams to ensure the timely go-live of the new scorecard
Praxis
value delivered
- Designed the model to access the creditworthiness of a loan applicant to improve the quality of the loan book
- Reduced the TAT for loan sanction by >20% as compared to the earlier process
- Introduced many company-first initiatives like:
- STP underwriting for profiles meeting the target segment criteria, and where relevant data for the scorecard is available
- Objective assessment based on a consistent, data-driven methodology
- Clearly defined deviation approval process to ensure timely decisioning of loan applications