Come January, along with a mortgage depository and fraud repository, the Credit Information Bureau India Limited (Cibil) plans to launch a personal loan score, which will mainly focus on the unsecured credit off-take. In next fiscal, Cibil also plans to launch 3-4 new products.
Cibil has claimed to have sold the credit history at a cheapest rate in the world, as low as 20 cents per report. After the proposed implementation of Credit Information Companies Regulation Act (2005), Cibil will be able to expand its ambit to utility companies, insurance companies telecom providers etc, and also allow the individuals to have a direct access to their credit reports.
Arun Thukral, managing director, Cibil has said that in the prevailing scenario, because of the downturn in the economy, the banks in India have felt a dire need to audit the quality of their credit portfolios in a bid to avoid the accumulation of non performing assets (NPA). He said, ?We are witnessing an environment where financial assurance among Indian spenders is little shaky. The retail credit lenders too have become wary. Credit information companies will thus play a pivotal role in monitoring the NPA levels across the Indian banking space.? Thukral said that data collection on the basis of reciprocity is a challenging, crucial and an ongoing process for all credit information companies including Cibil.
Thukral said since credit lenders are the sole owners of the data collected by credit information bureaus, in case of a dispute between lenders and the borrowers, the credit reports cannot be altered unless rectified by the lenders within a stipulated time.
?Credit information companies merely act as composite bureaus as they give both, positive and negative history of the borrowers. The credit lenders give loans based on our feedback with respect to their risk management practices, which vary from one institution to another.? He said that the credit information companies did not fail in the US in parting the right information on time. Although credit history information was readily available, the fiasco in American banking space happened mainly due to the high risk practices adopted by the local banks. Since home loans are getting cheaper now in India, the need to have credit history information of the individuals will assume utmost importance.
Also, the prevailing credit penetration hovering around 15% in India can be expanded up to 60-70% at par with that of in other South East Asian countries only if we have an access to the credit history.
We welcome competition by players like Satyam and Crisil, although Satyam’s current database of 20 lakh accounts mainly conveys a defaulters list and not the credit history of individuals or companies. Our current database is around 13 crore accounts.