EXPERT TAKE

There are around 57.7 million small business units in India. Most of these are small proprietorships with minimal physical assets and no credit history. Given that banks often lend capital based on asset-backed collaterals, they often miss out on the massive lending opportunities in th eSME segment. This inability to generate al ending decision, in the absence of any defined collateral, is why small-ticket lending remains a challenge. It is estimated nearly 75 per cent of the loan-eligible population in India has no credit history. This is what makes credit score vital. It can help fulfil the market gap for credit score analysis through technological tools, thereby enabling lenders to accurately and swiftly evaluate borrower credibility and worth. It can help bring down lender scepticism and foster more trust in the Indian lending landscape, thereby maximising business opportunities for both borrowers and lenders. CreditMantri has emerged as a leading player in this space and the experience of the founders in the field is a strength, which gives confidence to the investors. However, the segment currently does not have much of a size, as the ecosystem is not matured yet. The financial institutions are yet not relying much on the credit scores for lending. The customers are also not much aware of the importance of credit rating, unlike in some of the developed countries. The potential is huge since once the ratings are to be strictly followed, the demand will be more for such services.