Retail credit refers to lending granted to individual or
groups for purchase of durables, house purchase or other financial needs.
Qualitative and quantitative parameters must be considered to establish the
borrower willingness to repay the loan and ability to service the loan as per
the lenders requirement.

Credit rating may be undertaken on the basis of exposure
size, duration of exposure, complexion of exposure and collateral/security
provided. The objective of rating is to ensure that the risk exposure is
minimal and acceptable. The parameters can be grouped in four broad categories:

    1. Personal Details

  • Age: to establish productive years of life
  •  Education qualification: probability of earning
    a higher income for loan repayment
  •  Marital status:Need for permanent settlement
  •  Number of dependent: impact on monthly outflow
  •  Mobility of the borrower in terms of location

2. Employment Details

  • Employment status: self employed or salaried
  • Designation
  •  Gross monthly income for ability to repay
  • Number of years in current employment

  3. Financial Details

  • Percentage of borrowers financing. Must be
  •  Borrowers worth in terms of assets
  •  Asset details like bank balances and securities

4. Additional Details of the Borrower

  •  Collateral status or security provided
  • Guarantor information
  •  Status of the borrower
  •  Account relationship
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