Defaulter have a 2nd chance of getting loan at Kotak Mahindra Bank, The bank comes out with a new test to measure credit profile of defaulters. Once a borrower has been declared as defaulter, is always a defaulter. That’s how Indian Banking System treats those borrower who fails to pay up their loans. Private Sector Lender Kotak Mahindra Bank is deciding to change this scenario with measuring credit profile of defaulter with Psychometric Test..
Psychometric Test to measure credit profile of defaulter
Kotak Mahindra Bank will use psychometric test to analyse whether the default in loan payment was deliberate or due to financial weakness. This test will help the bank whether the client has any intentions to default again, irrespective of the financial strength.
The bank intends to scale up this programme, it would be initially be for its customers in the asset reconstruction division of the bank.
Kotak Mahindra Bank tie up with Index advisory for Psychometric Test
The bank has tied up with index Advisory , the firm which has built the psychometric test to measure a borrower’s credit profile.
Venkattu Srinivasan, Group head Asset Reconstruction division at Kotak Mahindra Bank said,”You cannot cast someone as defaulter for what happened a few years ago”.
Nobody wants to touch them because of their past record, but from our point of view, we feel that many of them would have performed , so we want to give them a chance.
Bank to use test on individual borrowers
The bank will be implementing this test on individual borrowers who have defaulted on personal loans, credit cards and small ticket loans. If it comes out to be successful showing positive results, the bank has plan to scale it up to corporate and SME borrowers.
Psychometric Test : Key Parameters to measure credit profile
The Key standard parameters, the bank will measure with the test are INTEGRITY and INTENTION TO PAY. Risk taking is also measured depending on the situation. These test also measure the business acumen of the borrower.