Repayment Capability for Loan

1. Goal​ - Assess repayment capability of a salaried customer i.e whether to approve or

reject a loan basis the creditworthiness of a loan application

2. Pain Point​ -
● Customer Perspective​ - Dissatisfied as high turnaround time for loan disbursement
● Lender Perspective​ - Manual intervention leading to slow, errorsome credit
assessment

3. Activity to be done for the discussion​ - Identify variables from a risk perspective
using a bank statement

4. Result of Activity​ - Achieve 360-degree view of the loan applicant’s financial health

5. Assumption
a. Salaried Person requires a personal loan
b. All the documents produced are authentic

6. User Persona​ - Mohit, age 35 works at Infosys,looking for a personal loan to travel
as he loves exploring new places

7. Input Required from the customer

● Previous 3 months' bank account statements of your ​salary​ account
● KYC ​documents​ such as Aadhaar card, voter ID card and driving license.
● Employee ID card.
● Last 2 months' ​salary​ slips.

8. Next Steps -​ Build an automated system using the variables of the above activity to
determine the creditworthiness of individuals. The automation reduces manual effort,
eliminates errors arising from manual intervention freeing up manpower for core
activities, and increasing overall productivity.

​Variables to consider to assess creditworthiness

No Variable Source to Check
1 Salary Amount Net Amount in Salary Slip
Recurring amount in Bank
Statement & Date on Salary
2 Salary Credit Date Slip
Balance a day before salary
3 Saving Pattern date
Current Liabilities
4 - Existing Loans Bank Statement
Reason for choosing variable
Measures earning capacity, indication of ability
of customer to make repayment
Check for irregularities in salary to determines
if the customer has a regular incoming salary
Determines if customer has a saving habit &
has the ability to save enough to repay the loan
Makes sure that customer has adequate
income to repay existing liabilities along with
the new Personal Loan customer is planning to
take
 Helps the lender ensure that customer have an
adequate number of working years remaining
5 Age KYC Documents to pay off the loan
Determine living standard whether the
6 Location Job Location on Salary Slip customer lives in Tier 1/2/3 city
Social Spending - Buckets of Spends done to
determine responsible spending

● If a person is spending in online

learning courses or constructive
activities - Positive score

Areas of digital ● If a person is spending in medical

7 spending Bank Statement expenses - Negative score
Check categorisation of company as better
8 Company Name Salary Slip company signifies job stability
Behaviour with previous loan payment helps
track future loan payment behaviour of the
9 EMI Bounces Bank Statement customer
If customer has high debt in proportion to the
debt-to-income income this would help in gauging that the
ratio of the Can be calculated from Bank financial burden on the customer is already
10 borrower statement high
Loan against credit card is a bad form of debt
as it is at a high interest rate and signifies
Loan taken inability to have made payment for previous
11 against credit card Bank Statement debt (credit card here)
Credit mix—or the diversity of customer’s credit
accounts. Maintaining different types of credit
accounts, such as a mortgage, personal loan
and credit card, shows one can manage
12 Credit mix Bank Statement different types of debt at the same time
Service accounts, such as utility and phone
Check from Recovery agents bills can be checked for default by checking if
13 Service Accounts data account was referred to a collection agency
Opening new credit cards in a short amount of
New credit time is a red flag and signifies sudden need of
14 accounts Bank Statement funds