Unnati Score - Unlocking finance for Bharat

35 year old Dilip Saini lives in Sonepat, Haryana. Third generation farmer with parents in their seventies, five years back he got married and just last year became a father. With more mouths to feed and fewer helping hands, Dilip Saini was struggling. What he earned from their two acre rice field and a small fair price shop wasn’t enough.

For a while he had been thinking, he needed a way to increase his income. With a few lakhs he could expand his shop and make an additional hardware store out of it. He knew several others that had done very well setting up their own business in Sonepat main market. His father could man the shop while Dilip worked the fields. As he asked around, it seemed about three lakhs would be enough to buy additional space and setup the hardware store.

So that Saturday, Dilip Saini set off for the town. He needed money and they told him banks could help. He had an account but had never used it. The Sainis’ had a good reputation in the small town, nobody would hesitate to loan us some money he hoped. For good measure, he carried some gold earrings from his wife and his scooter was just a year old.

As he sat down in front of the bank officer, he laid out all that he had brought. That was fine but it wouldn’t cover three lakhs. So they needed to check his background. Did he have a pan card? Yes, he got one done last year. As he sat there, the officer was busy checking his computer. He didn’t seem too pleased. Maybe he was having a bad day?

Now the bank officer looked at him. Have you taken a loan before? No sir. Dilip Saini has never asked anyone for help before. He was very proud of that. Well, you have no loan history, we can’t give you a loan.

Bewildered, he tried to reason. He always pays on time. Ask the best price store where he has been purchasing for the last twenty years. Maybe ask the electricity office? They’ll tell you he pays the first Saturday every month. Never missed for fifteen years. The Sainis are an up-standing family, ask anyone? No, it won’t work, they kept repeating. You have no loan history. We can’t give you a loan.

That Saturday morning a door closed for Dilip Saini.

But he wasn’t alone. Millions of Dilip Sainis’ go through the same experience every day. In fact, of the projected eligible borrower base in India only about 30% are credit active, meaning they have a live loan account. Millions others are like Dilip Saini - first time or thin file borrowers with in-adequate credit history for credit score to reflect their credibility accurately. The problem gets more acute in underserved Bharat.

For too long, we have kept finance inaccessible. And at the heart of it is our reliance on credit score to judge would-be borrower’s credibility.

Credit scores

Credit score’s work on past payment behaviour. If you have taken a loan your repayment record is an indicator of your good behaviour (or bad behaviour) and influences future loan decisions from banks. They are non-inclusive, insufficient and as you have seen with Dilip Saini, many times unfair as well.

Credit scores work on unidimensional input. It tells if the customer is good. But fails to recognize the payment capacity. It would view repayment of a small loan in the same way it would view a large loan repayment. It cannot differentiate the contextual difference between paying back a large loan and a small loan. When no prior loan records exist, then credit scores also do not exist. It’s a catch-22. You need a loan to get a loan.

Unnati score

We realized, Bharat deserves better.

Across our interactions with thousands of customers and prospective customers in Bharat, we have met remarkable men and women who live proud lives. They work hard, honour their word, stay true to their commitments and have great social reputations.

For many of them, they have no or in-active bank accounts and no loan history.

Yet, every day and for years, they have been part of commerce. Paying electricity bills, school fees, medical expenses, buying groceries, even indulging in festive shopping at times. Many of them have smart phones and are on the internet, interacting with social networks, consuming and generating data - millions of data points that all paint remarkably accurate financial personas even if they don’t have credit scores.

Unnati score is Davinta’s financial resilience score – designed to create accurate, comprehensive and most importantly fair assessment of an individual’s financial credibility and his ability and intent to honour financial obligations.

Built on the back of our proprietary AI / ML algorithms that do real time analysis on first and third party data, Unnati score:

·??????Accounts for multiple streams of customer data to identify the credit worthiness in a more specific context

·??????Provides a multivariate performance score which is based on a multitude of alternate data points

·??????Acknowledges that both data and our environment are in constant flux and therefore evolves itself over time

Together, Unnati score indicates not just the intent of payment but the capacity and capital to pay as well.

Today, we open the door again, for Dilip Saini and millions of others - just a little wider this time.