Banking · Retail Banking and Underwriting
A bank is designing a new 'Pre-approved Personal Loan' product using an automated credit scoring engine. The engine is programmed to filter out any applicant who has had a '30+ Days Past Due' (DPD) status in the last 6 months, even if their current credit score is above 750. A customer, Mr. Vivek, has a score of 765 but was recently rejected because he missed a small credit card payment by 32 days due to an international trip. Vivek argues that his high score should override a one-time minor delay. How does this scenario reflect the difference between 'Score-based' and 'Rule-based' underwriting in retail banking?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1The bank's scoring engine is faulty because it is mathematically impossible to have a score of 765 with a recent 30-day DPD.
- 2Vivek is right because a 30-day delay is considered a 'Technical Default' and is ignored by all professional credit scoring models worldwide.
- 3This is an example of 'Rule-based' underwriting where specific negative triggers (Knock-out criteria) override the numerical score to maintain strict credit discipline.✓
- 4The bank should ignore the rule because the RBI mandates that any score above 750 must be given an automatic approval for personal loans.
Correct answer
This is an example of 'Rule-based' underwriting where specific negative triggers (Knock-out criteria) override the numerical score to maintain strict credit discipline.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Banking?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Retail Banking and Underwriting MCQs →Want more practice questions on Retail Banking and Underwriting?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Banking · Retail Banking and Underwriting