Sa-Dhan introduces credit assessment framework for microfinance borrowers

Sa-Dhan introduces credit assessment framework for microfinance borrowers

AgenciesUpdated: Thursday, February 17, 2022, 09:55 PM IST
article-image
Over the past one-and-a-half years, Sa-Dhan has worked to introduce a conducive and effective framework that will enable income assessment and risk profiling of borrowers./ Representative image |

Sa-Dhan, a self-regulatory organisation for the microfinance sector, Thursday said it has introduced the credit assessment framework (CAF) for microfinance borrowers.

Over the past one-and-a-half years, Sa-Dhan has worked to introduce a conducive and effective framework that will enable income assessment and risk profiling of borrowers, according to a statement.

The CAF has been developed based on national and international models of poverty assessment like PPI (Progress out of Poverty Index) and Poverty Assessment framework of National Rural Livelihoods Mission, Government of India.

The framework will help to supplement and improve the existing income assessment model of MFIs with verifiable wellbeing indicators, utilise and integrate existing data points of clients available with MFIs and provide a credit worthiness score (CWS), risk profiling for each client.

It will also promote risk-based loan pricing and loan sizing and prevent over-indebtedness of vulnerable and low-income households.

''The credit assessment framework will not only promote client protection but will also help MFIs in determining loan sizes based on risk profiling thereby increasing repayment rates and reducing risk.

''CAF and its components will help MFIs in strengthening their existing credit appraisal system,'' Sa-Dhan's Executive Director P Satish said.

Once implemented, the framework will aid in creating a conducive lending and repayment environment for the industry.

(With inputs from PTI)

RECENT STORIES

Mumbai News: MHADA, Adani Realty Ink Landmark Pact For Goregaon's Largest Redevelopment Project

Mumbai News: MHADA, Adani Realty Ink Landmark Pact For Goregaon's Largest Redevelopment Project

Aviation News: Akasa Air Signs 3-Year C-Check Maintenance Deal With GMR Aero Technic For Boeing 737...

Aviation News: Akasa Air Signs 3-Year C-Check Maintenance Deal With GMR Aero Technic For Boeing 737...

IndiGo Launches Direct Daily Flight Between Mumbai And Jalndhar’s Adampur, Enhancing Regional...

IndiGo Launches Direct Daily Flight Between Mumbai And Jalndhar’s Adampur, Enhancing Regional...

Glen Industries IPO To Open On Jul 8; Fixes Issue Price Band At ₹92-97/ Share

Glen Industries IPO To Open On Jul 8; Fixes Issue Price Band At ₹92-97/ Share

Gold Falls ₹550 To ₹98,570/10 Grams Amid Muted Global Demand

Gold Falls ₹550 To ₹98,570/10 Grams Amid Muted Global Demand