In FY25, only 16 percent of the NTC loans were extended by banks and the rest was facilitated by shadow credit providers, says a banker | Photocredit: Prashanth Vishwanathan
After the new Dring of the Government and Reserve Bank of India (RBI) for banks to punish loans to new customers of Nieuwe Credit (NTC) without established credit office scores, lenders started to turn alternative data sources for punishing loans to first borrowers.
“Alternative data sources such as payment of utilities, mobile, telecom accounts, UPI channels, e-commerce use of customers (are used to punish loans to NTC customers),” said Rajneesh Karnatak, MD & CEO, Bank of India.
Karnatak said in FY25, only 16 percent of the NTC loans were extended by banks and the rest was facilitated by shadow loans. The reason, he says, was the lack of structured data about NTC customers instead of risk -aversion by banks.
He said that only credit office scores have no influence on bankers’ decision to punish loans to new or existing customers. In housing credits, the credit office core only bears 15 percent weight when assessing the loan proposal, while for vehicle loans and personal loans, the credit agency score has 20 percent weight.
His comments come on the heels of the Minister of Foreign Affairs for Finance Pankaj Chaudary, so that the RBI has not prescribed a minimal credit score for loans to NTC. Referring to the main direction of the RBI published on January 6, 2025, said Chaudary: “First applications from borrowers should not be rejected just because they have no credit history.” He said that lenders are free to make commercial decisions on the basis of the policy approved by the board and broad guidelines for regulations.
Credit Signals
According to Nikhil Kurhe, co-founder and CEO at Finarkein Analytics, credit providers are increasingly used alternative data sources such as utility companies and reimbursements of the mobile invoice, digital payments, stability of employment and cash flows from San Appargens that are safely for consent systems-rame-sempties-systems system Sanctions for NTC customers.
“These signals give lenders valuable insight into repayment capacity and intention, even in the absence of a credit score. Some lenders also use psychometric assessments and social credit signals to build a holistic profile before they punish loans,” he said.
Kurhe says that large banks in the public and private sector were usually most dependent on the Cibil score when processing retail and home loans, and often used it as the most important benchmark. Housing financiers are also more dependent on desk scores, while microfinance differences and many NBFCs catering for informal or thin-file customers and fintech lenders are structurally less dependent on desks, because a large part of their borrowers fall outside the traditional credit net.
Published on September 3, 2025
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