Index Advisory tool improves repayment efficiency by over 95%
Mumbai, 19th September: In a country like India, where lenders are reeling under stressed loans and borrowers are starving for finance to grow, consulting firm Index Advisory today unveiled a unique technique called Psychometric Test that vigorously examines the credit worthiness of the borrower. Already, with the help of this tool, lenders are experiencing their collection efficiency in the range of 97-98%.
Mr. Yogesh Mariwala, Executive Director, Index Advisory, said: “It’s a new concept for the BFSI sector. The test promises to considerably reduce risks borne by BFSI sector by assessing various parameters like intention, stability, integrity, business acumen, risk taking ability of the borrower. These tests out-perform screening based on personal interviews, biographical data, and past performance on loans taken. With such fail-safe tool at hands, lenders will also feel more assured and confident to disburse loans. This will boost credit flow in our economy.”
Psychometrics and other methods of alternatively assessing ability and willingness to repay loans can play an important role in closing the credit gap. In India, many borrowers without credit history, collateral or active bank account remain “unbankable” for lenders. Around 48% of businesses need to find alternative sources of lending as banks reject loans due to insufficient data on credit history and the risk of repayment. Thousands of people are deprived of medical expenses as they can’t qualify for loans. Many more are left homeless as they can’t get loans from the banks. On the other hand, lenders are unable to expand their borrower base and hence are losing out on business development.
In such a scenario, better borrower profiling will result in better risk-assessment for the lenders. This can further reduce the danger of stressed and dud loans. Psychometric Test will thus give a definite push to credit and wealth creation. Also, the fact that the test can be conducted in almost all the Indian languages apart from English truly increases the scope for prospective borrowers.