Need for Credit Resilience Score in India

figurePaired with the borrower score/rating, a credit resilience score would better equip the financial institutions to account for borrower resilience and make credit decisions accordingly. The requirement for CRS in India helps credit to flow uninterruptedly during good and bad times. Recognising the parameters used in the existing credit score for individuals and corporate credit rating, a framework for the development of CRS is suggested.

As many economies across the globe are heading towards a recession, its repercussions on the Indian economy are being contemplated. Coupled with the global slowdown, India has its own devil to contest—the rising inflation. With high inflation and rising interest rates, India’s gross domestic product (GDP) projection for 2022 was lowered to 8.8% from the earlier 9.1% (Economic Times 2022). However, it is expected that albeit the rising inflation, growth will not be impeded severely as India is outperforming the pre-pandemic level in most macro activities (Business Standard 2022). In the short as well as the long run, sectoral credit growth has substantial influence on the economic growth of an emerging economy like India. Hence, to hold on to the growth momentum, a strong credit growth will be a crucial requisite.