Sakchyam Introduces Alternative Credit (Psychometric) Scoring for the 1st time in Nepal

February 17, 2016

Kathmandu, February 10 – Sakchyam introduced Alternative Credit (Psychometric) Scoring for the first time in Nepal at a unique event organized together with the Nepal Bankers’ Association (NBA) and the Nepal Microfinance Banks Association (NMBA) on February 10, 2016. The launch of the transformational technology was attended by CEOs and senior leadership of all major banks, microfinance institutions, cooperative organizations and FINGOs.

Entrepreneurial Finance Lab presented the concept of AlternativeCredit (Psychometric) Scoring to a captive audience, made of largely of financial sector professionals and media persons. The presentation touched on topics such as the concept of Psychometric Credit Scoring, how lenders use this tool and how it helps improve control over risk for financial institutions. The products and customer segments where EFL can add the most value to the financial landscape are: for applicants with limited or unreliable credit information (the missing middle); products that have high risk of loss or those where most applicants are rejected due to their risky profiles; and institutions with high volumes of disbursed loans and products where defaults happen quickly.

AlternativeCredit (Psychometric) Scoring was first introduced by Entrepreneurial Finance Lab (EFL) through research at the Harvard University’s Center for International Development. EFL now partners with leading financial institutions across Africa, Asia, and Latin America to enable better and safer lending globally. It provides psychometric credit scores for any loan applicant. Banks and micro finance institutions use EFL to expand their portfolio and improve control over risk. Across the globe EFL is used to sort risk amongst a large range of credit products. Scores are weighted into decisions and cutoffs that are based on the partner financial institution’s risk tolerance and cost structure.

“On behalf of the NBA, I am pleased to be co-sponsoring the launch of such game-changing technology to Nepal’s financial landscape with the Sakchyam programme.Adopting new technology is the right way to go about changing the credit culture and lending in the financial sector,” said Mr. Upendra Poudyal, President, Nepal Bankers’ Association.

”Sakchyam stands for transformative change, whether it is through the financial products and services we have launched through partnerships with BFIs or through the introduction of new technology in the financial sector. The launch of alternative credit scoring for the first time in Nepal will prove beneficial for the entire sector; we are ready to support financial institutions to make optimum use of such new tools to usher in a paradigm shift toward extending credit for MSMEs,” said Mr. Baljit Vohra, Team Leader, Sakchyam.

“NMBA has always embraced new technology and we wholeheartedly support the launch of alternative credit (psychometric) scoring in Nepal. We are excited about the possibilities that this opens up for microfinance institutions to look beyond collateral based lending in Nepal,” said Mr. Dharma Raj Pandey, President, Nepal Microfinance Banks Association.

Sakchyam is an access to finance programme funded by UKaid. It is implemented by Louis Berger for the Department for International Development (DFID Nepal) in partnership with local and international institutions.