Bengaluru: The state government has backed the use of the Grameen Credit Score (GCS) as a new yardstick for bank loans to rural borrowers, recasting how women and farmers are assessed for their repayment capacity.
Announced in the 2025-26 Union Budget, the GCS is being developed by public sector banks for the credit needs of Self-Help Groups (SHG) and people in rural areas.
This is being positioned as an alternative to the 'stringent' Credit Information Bureau (India) Ltd, or Cibil, score. The Cibil score is a summary of a consumer's credit history based on past credit behavior, such as borrowing and repayment habits.
Study backs carbon credits for farmers in KarnatakaThe adoption of GCS in Karnataka was discussed in a recent State Level Bankers' Committee (SLBC) meeting.
"Guidelines for the Grameen Credit Score are being developed by individual banks in consultation with the Ministry of Rural Development," Additional Chief Secretary-cum-Development Commissioner Uma Mahadevan said.
According to Union Minister of State for Rural Development Dr Chandra Sekhar Pemmasani, the current scoring mechanism used by Credit Information Companies (ClC) is, by design, generic to all individual borrowers with no specific consideration for the rural sector.
Mahadevan made a similar point: "While Cibil is for those who're already financially active, GCS is meant to cater to SHGs, joint liability groups (JLG) and other rural sections, keeping in mind their financial discipline, availability of assets and payment of bills digitally."
Lending to the farm sector makes up the largest share of credit in Karnataka. Agricultural loans amounting to Rs 2.18 lakh crore are outstanding in the state, according to the latest available data.
However, the use of Cibil scores for farmers has been flagged repeatedly in the past. In December 2020, during the Covid-19 pandemic, the B S Yediyurappa-led BJP government directed banks to stop considering Cibil scores in view of farmers' complaints.
While welcoming the GCS, Melukote MLA Darshan Puttannaiah stressed on the need to address a larger problem troubling farmers: low income.
"Perhaps, the GCS won't be as stringent as Cibil. But we're trying to find solutions to symptomatic issues. We need to take 50-60 steps back," Darshan said. "The core issue isn't that of Cibil scores. The core issue is about how much farmers are getting paid, how much money they're making and whether or not they get the price they deserve for what they grow," he said.