Indian Banks and Credit Scoring Models …..An Empirical Study Dr. Moray Rashmy 1Associate Professor, Symbiosis Institute of Management Studies (SIMS), Constituent of Symbiosis International University, Pune, India, rashmy.moray@sims.ed Online published on 17 July, 2017. Abstract Purpose To study the various types of credit scoring methods used by the Indian Banks and to examine the extent of challenges faced and the benefits derived by the banks in adopting credit scoring models under the Basel prescribed approaches of credit risk. Methodology A questionnaire was developed consisting dichotomous and closed ended questions based on ordinal scale dealing with challenges and benefits to understand the degree amongst the banks. Findings Amongst the popular scoring models majority of the Indian banks have been following the popular Altman`s Z-Score model and/credit Metrics method. On the contrary all other banks have their internally developed models used for a certain category of borrowers. But as per the prescribed RBI norms the lending beyond a certain limit has to be accredited through an external rating agency. In adopting self-developed models, Indian banks differ in the degree of challenges faced by them. Equally significant difference is observed in the extent of benefits derived by these banks. This research is an attempt to find out the status of banks in implementing their credit scoring models and is valuable to those who are interested in banking industry which would help in identifying the extent of challenges encountered and benefits derived by the banks and how they differ in the phase of Basel implementation. Top Keywords Credit risk, Scoring models, Basel norms, Indian Banks, Challenges & benefits. Top |