Balanced Scorecard Approach for Credit Appraisal

The Indian Banker, Indian Bank Association, ISSN 2349-7483. Volume VII, Issue 4, November 2019, pp 21-25, https://www.theindianbanker.co.in/

9 Pages Posted: 3 Jul 2021 Last revised: 6 Jul 2021

Date Written: November 1, 2019

Abstract

Quality and efficiency of credit appraisal play a key role in the overall credit risk management framework of banks by addressing the troika of adverse selection, exposure risk, and default risk. Traditional approaches for credit appraisal primarily use techniques of financial statement analysis for assessment of the creditworthiness of potential borrowers. However, such analysis fails to provide a 360-degree view of the potential borrower and therefore, requires the implementation of better, incisive, and comprehensive methods. Use of balanced scorecard in credit appraisal expands the horizon of analysis and provides a holistic view about the risk, repayment capacity, and future prospects of the potential borrower.

Keywords: Banks, Credit, Appraisal, Scorecard

JEL Classification: G21

Suggested Citation

Srivastava, Ashish, Balanced Scorecard Approach for Credit Appraisal (November 1, 2019). The Indian Banker, Indian Bank Association, ISSN 2349-7483. Volume VII, Issue 4, November 2019, pp 21-25, https://www.theindianbanker.co.in/, Available at SSRN: https://ssrn.com/abstract=3871103 or http://dx.doi.org/10.2139/ssrn.3871103

Ashish Srivastava (Contact Author)

Reserve Bank of India ( email )

University Road
Pune 411016, Maharashtra
India

CAB, RBI, Pune ( email )

University Road, Pune
Maharashtra
India

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