State owned bank Canara Bank recently launched a credit scoring model. In Order to provide the financial assistance to the medium and small enterprises, the bank has launched this model. Chairman and Managing director of the bank reported that the model will help to reduce rejection rate of MSME loan applications. Further it will also help in reducing the inconsistency in decision making for the loan eligibility.
The model will also assist branch managers in determining the eligibility of customers availing the loan from the bank under the MSME sector. The model will be used to decide whether the applicant is eligible for the loan or not. The score will be based on various parameters prescribed under behavioural, management, business and financial aspects. On the basis of score the eligibility will be decided. The model was launched in Mumbai by Deepali Pant Joshi, Executive Director, Reserve Bank of India.