To expand channels that help decide the creditworthiness of borrowers, the Credit Information Bureau (India) (Cibil) is looking to tap alternative sources like data from insurance, telecom and utility services. This follows the Cibil’s move to provide credit rating of micro-financing institution (MFIs) customers, for which the ground work has been initiated.
As a prelude to widen its database, Cibil has written to RBI, seeking approval for networking with regulators such as Irda and Trai to enable the bureau collect data of customers from telecom and insurance service providers. The data would facilitate the first time borrowers to have their indicative credit scores by Cibil.
Speaking on the sidelines of an annual credit information conference on Wednesday, Cibil chairman MV Nair said the initiatives will go a long way in helping the government’s financial inclusion plan, besides helping the bureau understand the behavioural pattern of the customer creditworthiness.
Nair said: “As of now, the lenders have no idea about individual’s credit worthiness if the person happens to be a first time borrower. With additional information from alternate channels, beyond the conventional banking data, Cibil would be in a position to arrive at a comprehensive score which will in turn help lenders get an idea about the borrowers.”
As far as compliance by the lenders in submitting the customer information to the bureau was concerned, Nair said if only banks provide complete and accurate information, Cibil could capture the credit behaviour of the customers. “Getting clean and complete data is important and I must say substantial improvement has been achieved in the last 4 years, but a lot is yet to be done to get complete qualitative data,” he said.
Nair said initially PSBs lagged in filing data to the bureau, but with completion of CBS in most of the banks, things have improved.
There were some concerns on data accuracy provided by financial institutions which leads to lots of mismatch when it came to calculation of individual score. “Today compliance is 72%, compared with 65% some three years ago, and Cibil hopes to increase it to 90% in another 3-4 years,” he said.
The credit rating bureau was will soon complete the data collection from MFIs and put in a system that would give credit score for MFIs borrowers. The system will be rolled out in two years, he said.
“This year marks a special milestone for us as Cibil and TransUnion complete 10 years of dedicated service to the banking and credit sector in India and also crosses the 1100 member mark. Cibil has reiterated its leadership in the credit information sector by adding tremendous value to the risk management processes of banks and helping them improve portfolio quality while growing their business,” said Nair.
Cibil maintains information on over 370 million consumer trades and 19 million commercial trades.