Razorpay Capital Underwriting Analyst Interview: Rounds, Questions and Preparation

What the job involves

An Underwriting Analyst at a neobanking or lending company evaluates loan applications from small businesses and individuals, using data from bank statements, GST returns, and digital transactions to assess credit risk. Day to day, they verify documents, run risk models, decide loan amounts and interest rates, and work with product and collections teams to balance growth with low defaults. In insurtech, they may also underwrite insurance policies for SMEs, assessing risk for products like fire or marine insurance.

Role and Technical Knowledge

1. 1

   What are the key financial ratios you would look at when underwriting a small business loan?

   Cover current ratio, debt-to-equity, interest coverage, and cash flow ratios. Explain how each indicates repayment capacity.

2. 2

   How do you assess credit risk for a borrower who has no formal credit score but has regular digital transactions?

   Mention alternative data like UPI history, GST filings, and bank statement analysis. Discuss building a surrogate score and setting conservative limits.

3. 3

   Explain the difference between secured and unsecured lending, and how underwriting changes for each.

   Highlight collateral, recovery options, and risk premium. For unsecured, focus on cash flow, stability, and higher interest rates.

4. 4

   What are some RBI guidelines that affect digital lending in India?

   Reference the 2022 Digital Lending Guidelines: direct disbursal to bank accounts, no automatic credit limit increase, and data privacy rules. Show awareness of compliance.

Practical Scenarios

1. 5

   A small business applies for a loan but its GST returns show declining sales while bank statements show consistent cash deposits. How do you proceed?

   Investigate the mismatch: possible cash sales not invoiced, or other income. Ask for clarification, verify with additional documents, and adjust risk accordingly.

2. 6

   You notice a borrower has multiple loan inquiries in the last 3 months but no approved loans. What does this indicate and what would you do?

   This suggests credit hunger or rejection by other lenders. Check reasons, assess current debt burden, and consider declining or offering a smaller amount with higher monitoring.

3. 7

   How would you handle a loan application where the borrower's income is high but the business operates in a volatile industry like travel?

   Apply industry risk adjustments: lower loan-to-value, shorter tenure, or additional collateral. Stress-test cash flows for downturns.

4. 8

   If a borrower defaults on the first EMI, what immediate steps would you take as an underwriter?

   Coordinate with collections, review underwriting assumptions, check for fraud, and document lessons for future policy changes. Emphasise early warning signals.

Behavioural and HR

1. 9

   Why do you want to work in underwriting at a neobanking or lending company?

   Show passion for fintech, data-driven decisions, and risk management. Link to India's credit gap and digital lending growth.

2. 10

   Tell me about a time you had to make a decision with incomplete information.

   Use STAR method: describe situation, data available, your judgment call, and outcome. Highlight risk assessment and learning.

3. 11

   How do you handle pressure when you have to approve or reject many loan applications quickly?

   Mention prioritisation, using checklists, and sticking to policy. Show you can balance speed with accuracy and escalate when unsure.

4. 12

   Describe a situation where you disagreed with a team member's assessment. How did you resolve it?

   Focus on data-backed discussion, listening, and finding common ground. Avoid blaming; show collaborative problem-solving.

Sector and Company Awareness

1. 13

   What are the main challenges in underwriting for neobanking compared to traditional banks?

   Discuss thin-file customers, reliance on alternative data, faster turnaround, and higher default risk. Mention need for robust tech and models.

2. 14

   How does insurtech underwriting differ from lending underwriting?

   Insurance underwriting assesses probability of events (fire, theft) and prices premiums; lending assesses repayment. Both use data but insurance focuses on risk pooling and claims.

3. 15

   What metrics would you track to measure the health of a lending portfolio?

   Include NPA ratio, delinquency rate, collection efficiency, and risk-adjusted return. Explain how each helps monitor underwriting quality.

4. 16

   How can underwriting contribute to financial inclusion in India?

   By using alternative data to serve thin-file customers, designing suitable products, and maintaining prudent risk checks. Balance inclusion with sustainability.