Economics · Banking and Finance
Evaluate the following three statements regarding the technicalities of credit scoring in India: Statement 1: A credit scoring model's performance is traditionally measured using the Area Under the Receiver Operating Characteristic (AUROC) curve, where a value of 0.5 suggests the model is no better than a random guess while a value of 1.0 indicates perfect predictive accuracy. Statement 2: The introduction of the 'Account Aggregator' (AA) framework by the RBI allows lenders to access real-time, digitally signed financial data from various Financial Information Providers (FIPs) with customer consent, reducing turnaround time. Statement 3: When a borrower's credit score is affected by a 'Settled' status, it implies that the borrower paid an amount less than the full dues under a one-time settlement (OTS) agreement, which typically remains on the credit report for seven years. Which of the following evaluations is most accurate?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
- 1Only Statement 2 is correct, while Statement 1 and Statement 3 are based on outdated banking regulations
- 2All three statements (Statement 1, Statement 2, and Statement 3) are technically accurate and represent the current state of credit scoring in the Indian banking industry✓
- 3Statement 2 and Statement 3 are correct, but Statement 1 is incorrect because AUROC is only used in clinical trials
- 4Statement 1 and Statement 2 are factually correct, but Statement 3 contains an error regarding the duration the status remains on the report
Correct answer
All three statements (Statement 1, Statement 2, and Statement 3) are technically accurate and represent the current state of credit scoring in the Indian banking industry
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