Credit Decision Engine – AI-Powered Loan Risk Assessment
The Credit Decision Engine is an advanced AI and machine learning-based platform that automates risk evaluation for secured and unsecured loans. By combining OCR-based document parsing, real-time API validations, and predictive modeling, it streamlines credit decision-making, improves accuracy, and reduces default risks for lenders.
The system integrates KYC verification, repayment capability checks, and collateral valuation with an AI-driven risk scoring model trained on 500,000+ historical loan records. It enables faster, smarter, and more consistent credit approvals while ensuring compliance with banking regulations.
Challenges
Time-consuming and inconsistent credit checks relying on human judgment.
Inefficient identity matching across Aadhaar, PAN, and other documents.
Multiple document types and valuation requirements for secured loans.
Difficulty validating salary consistency across slips, bank statements, Form 16, and ITR.
Lack of early detection for high-risk applicants leading to defaults.
Solutions
For Secured Loans –
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Identity Verification
OCR extraction from Aadhaar and PAN, validated via live APIs with risk categorization (Low, Medium, High). -
Repayment Capability
Cross-verification of income details across salary slips, bank statements, Form 16, and ITR. -
Collateral Valuation
OCR-based parsing of property, land, and fixed deposit documents, with market-based value computation. Risk tiering based on loan-to-value ratio.
For Unsecured Loans –
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Identity Verification
Same OCR + API process as secured loans. -
Repayment Capability
Income verification with stricter matching criteria; additional eligibility calculation based on age and account balance-to-EMI ratio.
AI Risk Modeling –
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LightGBM Algorithm
Trained on 500,000+ historical loan records across multiple categories. -
Feature Inputs
Loan details, security value, demographics, repayment history, and overdue metrics. -
Risk Scoring Output
Applications classified into Low, Medium, or High risk for approval triage.
Impact and Transformative Outcomes
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Faster Processing
Automated OCR and AI evaluation cut loan approval time significantly. -
Higher Approval Accuracy
Data-driven decisioning reduces false approvals and NPAs. -
Smarter Underwriting
AI-assisted recommendations for credit officers. -
Lifecycle Monitoring
Post-disbursement behavioral analysis, early warning signals, and portfolio risk insights.
Conclusion
The Credit Decision Engine transforms lending operations by replacing manual, subjective evaluation with AI-powered, data-driven risk assessment. It enables faster approvals, reduces defaults, and provides ongoing portfolio monitoring — positioning lenders to make more accurate, compliant, and profitable credit decisions in the era of digital banking.