Sourcing Incentive Bias refers to the risk that incentives linked to loan sourcing, business targets, or customer acquisition may influence behaviour and compromise the objectivity of credit assessments within the Crop & Seasonal Agri Credit workflow. It focuses on identifying situations where commercial pressures may lead to inaccurate borrower evaluation or risk assessment.
Key components include misrepresentation, crop cycle alignment, income estimation, and repayment structuring, each requiring independent validation and documented rationale before any credit action is finalized. The assessment helps ensure that credit decisions are based on genuine borrower capacity and risk characteristics rather than incentive-driven considerations.
It differs from a portfolio diversification strategy, as it focuses on behavioural and assessment-related risks at the borrower level, while portfolio diversification addresses broader portfolio-level risk distribution and concentration management. Within Fraud, Misrepresentation & Data Quality, the credit manager validates team-level analysis, approves case recommendations, and manages segment-level exposure, supporting fair credit practices, effective risk identification, and sound lending decisions.