Borrower assessment gets Psychometric makeover

New technique by Index Advisory to boost credit flow

Mumbai, 13th October 2016: Piling-up of dud loans and non-performing assets in BFSI sector could be the result of inaccuracies in conventional borrower assessment techniques. It is also hampering the business confidence of banks and financial institutions, which in turn, are becoming increasingly wary to grant credit. The result: Vast populace in India, from SME sector to indigent borrowers, still remains deprived of credit and growth opportunities. Consulting firm Index Advisory has decided to address this problem by introducing a new borrower assessment technique called Psychometric Test. This test evaluates intention of the borrower to repay the loan, which makes it quite unique in the current credit ecosystem.

Yogesh Mariwalla, Executive Director of Index Advisory, said: ``Currently, borrowers without a credit history or collateral find few lenders willing to give loans. These borrowers are unable to tick all the boxes required to qualify as borrowers according to prevailing norms. On the other hand, with so many troubled assets, banks are under a lot of pressure to check creditworthiness of borrowers. Conventional screening methods like personal interviews, personal data, past credit transactions have their limitation. They check the ability but not the intent of the borrower. Psychometric Test has been designed to bridge this gap. On one hand, it brings underprivileged borrowers on a level-playing field; on the other hand, it helps the lenders in making better, risk free assessment of prospective borrowers.”

Index Advisory has so far successfully tied up with finance companies like Kianara Capital, Vistaar Finance, Electronica Finance Arogya Finance, Orb Energy, Medtronic for developing Psychometric Tests for their respective borrowers. This method of alternatively mapping the honesty, intelligence, aptitude and ability of borrowers is fast becoming popular across the globe.