Banking · Risk Management in Banking
In the context of retail lending and risk management, which mechanism provides the most robust defense against 'Adverse Selection' risk while ensuring a low Turnaround Time (TAT)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Outsourcing the entire credit appraisal process to a third-party Direct Selling Agent (DSA).
- 2Requiring physical collateral for every retail loan regardless of the customer's income profile.
- 3Integrating the loan origination system with Credit Information Companies (CICs) and utilizing automated Credit Scoring Models.✓
- 4Implementing a manual multi-layered credit committee structure to review every application above 5 lakhs.
Correct answer
Integrating the loan origination system with Credit Information Companies (CICs) and utilizing automated Credit Scoring Models.
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