The Hindu Business Line : Now, scorecards to help ease loan approvals

Scorecards use data from an application and collaborative information available from an agency like Credit Information Bureau of India Ltd to help arrive at a swift decision

V.Rishi Kumar

Hyderabad, July 23 Loan approvalscould soon become easy and involve little human involvement for banks and financial services institutions in India.

A software , developed by Fractal Analytics, is expected to help banks and companies prepare statistical scorecards to make this possible.

After feeding applicants’ information along with available data into these scorecards, companies will be able assess a candidate’s financial capability and take quick decisions.

The CEO of Mumbai-based Fractal Analytics, Mr Srikanth Velamakanni, said the company has deployed its first scorecard in a Mumbai-based financial institution and is in talks with several other banks and financial institutions to provide this software called F Matrix Scorecard.

With Basel II norms set to come in, Indian banks would have to switch to new automation approach for loan approvals. Mr Srikanth told Business Line these scorecards use data from an application and collaborative information available from an agency like Credit Information Bureau of India Ltd to help arrive at a swift decision.

This suite also enables banks to cross sell products and services. With banks now stepping up efforts on retail lending, scorecards are seen to be playing a more vital role in the banking industry in the country.

As per Basel II norms in the US and Europe, which are mandated by enactments such as Fair Credit Reporting Act, and Equal Credit Act, over 99 per cent of the lending decisions are based on such statistical scorecards. These scorecards simplify the process and also conform to the various laws. Banking and financial institutions in India would follow suit in using these scorecards that use algorithms that simplify customer credit analysis. These can be used in home loans, auto loans, personal loans and credit cards, Mr Srikanth said.

Fractal Analytics, which offers niche business analytics services, is planning to double its headcount to about 100 employees. The company employs statisticians, economists, business analysts and engineers. It has offices in Delhi,Kolkata New Jersey and Singapore.

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