Credit scoring: How AI and machine learning can help

The banking industry in India has traditionally funded corporate loans to those corporations who could navigate their labyrinthine processes. This paradigm, however, is beginning to get disrupted, thanks to the advent of consumer lending startups, armed with complex algorithms and machine learning software to replace antiquated credit rating systems. RBI has identified 12 accounts with 25 percent (Rs 1.75 lakh crore) of bank NPAs for insolvency; now, corporates are selling their assets which never happened earlier; these are amongst the top 500 exposures in the banking system. The NPAs have been attributed to cyclicality of industry sectors and that entrepreneurs shouldn't be hounded. However, siphoning of funds and CBI investigations like the one being done for Vijay Mallya's Kingfisher Airlines paves the way for banks to shift focus to retail lending.