Plain-language definitions of lending, credit risk, and underwriting terms used across Indian banks, NBFCs, and fintech lenders.
DSCR measures a borrower's ability to repay debt from operating income. It is calculated as Net Operating Income ÷ Total Debt Service. A DSCR above 1.25x means the business generates ₹1.25 for every ₹1 owed — the standard threshold for MSME loan approval in India. Lenders use DSCR as the primary repayment capacity signal in working capital and term loan underwriting.
Try the DSCR EstimatorBank statement analysis is the process of extracting behavioural credit signals from a borrower's transaction history — bounce frequency, EMI regularity, average balance maintenance, cash deposit patterns, and net cash flow. For MSME lenders in India, it replaces ITR-only underwriting with real cash evidence, enabling accurate credit decisions for thin-file borrowers who lack formal audited financials.
View Bank Statement AnalyserThe working capital cycle — also called the cash conversion cycle — measures the number of days between paying for raw materials or goods and collecting payment from customers. It is calculated as Receivable Days + Inventory Days − Payable Days. A longer cycle means more capital is trapped in operations. For Indian lenders, cycle extension is the leading early-warning indicator for MSME NPA risk in trade and distributor finance.
Try the Stress CalculatorCashflow-based lending makes credit decisions based on a borrower's actual cash behaviour — inflows, outflows, and balance patterns — rather than relying solely on audited balance sheets or ITRs. This approach is critical for MSME segments in India where formal financial records are incomplete or lagged. It uses bank statement data, GST filings, and transaction analytics to assess repayment capacity in real time.
View MSME Credit ScoringWorking capital stress occurs when an MSME's cash conversion cycle extends faster than its inflows can cover. Common triggers include delayed customer payments, inventory pile-up, or a sudden drop in receivable collections. For lenders, stressed working capital is the most common root cause of short-term default in supply chain and distributor credit portfolios. Early detection requires live cashflow data, not just annual financials.
Try the Stress CalculatorIn lending context, bounce rate refers to the frequency of failed inward instrument presentations — NACH debits, cheques, or EMI pulls — against a borrower's bank account. A bounce rate above 5–8% is a significant credit risk signal. High bounce rates indicate insufficient balance management, repayment stress, or overleverage. It is one of the first indicators extracted in bank statement underwriting.
Check Statement HealthA thin-file borrower is an individual or business with limited or no formal credit history — no loans, no credit cards, no bureau records. In India, a large share of MSMEs are thin-file despite having active business operations and strong cashflows. Lenders use alternative data sources like bank statements and GST transactions to underwrite thin-file borrowers accurately.
View MSME Credit ScoringAutomated underwriting uses rules-based and AI-powered engines to assess creditworthiness without manual review at every step. It applies lender-defined policy rules to structured borrower data — cashflow, GST, KYC, bureau — and returns a credit decision or recommendation. For Indian banks and NBFCs, automated underwriting reduces TAT from days to minutes and standardises risk decisions across portfolios.
View Automated UnderwritingSee how Santulan AI operationalises these credit signals in real MSME underwriting.