During the last few years, banks in Pakistan have suffered huge losses due to a high defunct rate in the case of consumer or business loans. The main reason for the losses were inadequate mechanisms and procedures for approving new loans to Small and Medium sized Enterprises (SMEs). In view of the increased infections amongst the population, banks in Pakistan have realized the significance of ascertaining the creditworthiness of new consumer loans.

In order to decrease their losses, more and more banks want to rely on credit scoring models. These credit scoring models are now more important than ever, since these SMEs are struggling to meet their daily requirements due to the Covid-19 pandemic. While SMEs plan to acquire loans from banks to overcome losses due to the virus, they are greatly hindered by the traditional means of acquiring credit loans from banks, which results in uncertainty when it comes to running a business in Pakistan.

Appropriately so, Karandaaz Pakistan has decided to support banks and SMEs, developing, and disseminating evidence-based insights through innovative credit scoring models. Karandaaz aims at promoting digital financial products and services that address the needs of the SMEs and banks while creating more valuable, appealing, and user-friendly solutions; and expand financial inclusion within the country. Both the banks and SMEs are waiting anxiously to see the results once the system is fully operational.