Backed by technology, NBFCs now warming up more to high-risk borrowers

Technology is helping NBFCs show more confidence in high-risk borrowers with credit scores under 700; deep behavioral analysis is the key

Non-banking financial companies (NBFCs) seem to be taking more exposure to high-risk borrowers, mostly individuals and households.

They are reportedly using algorithms, social media behaviour and ratios to screen these clients and mitigate risk.
 
A report from credit bureau TransUnion CIBIL suggests banks and NBFCs might have shifted focus on lending to ‘near-prime’ and ‘sub-prime’ borrowers. Near-prime borrowers are those with credit scores between 650 and 700, while sub-prime borrowers have scores between 300 and 650. The range of these scores is up to 900 and one higher than 700 is considered good.
 
According to the report,