Credit Information Bureau (India) Limited (Cibil), the country’s first credit information company, is planning to expand its portfolio of services by introducing a ‘Risk Index’ for corporate and business houses.
“The Risk Index will help Indian banks and non-banking finance companies (NBFCs), most of which are shareholders in the company, in taking quicker decisions on extending loans to corporate and business entities. The lower a company figures in the Risk Index, the more confidence banks will have in their ability to service the loan,” Arun Thukral managing director of Cibil, told mediapersons here on Tuesday.
At present, Cibil offers TransUnion Score, a three-digit numeric summary of individual borrower's credit history. The score is being used by banks and financial institutions for credit decisions. The score band is between 300 and 900.
Cibil has 14 shareholders, including Chicago-based credit information and information management services company TransUnion International Inc (27.5 per cent), and State Bank of India, HDFC and ICICI Bank Limited (10 per cent each). The company has a data base of 200 million consumer records and 10 million commercial bureau records.
“Our Risk Index will be a quick snapshot for lenders to assess the credit history of business entities. It (Risk Index) is still in the process ... we are working on it,” Thukral said, while declining to draw any time line for launching the product.
On whether the company was working on creating credit histories of borrowers from microfinance institutions (MFIs), Thukral said records of over 45 million MFI borrowers were currently available, which was not an established data.
It may be recalled that around 31 NBFC-MFIs, including all the top-10, had come together to set up Microfinance Institutions Network (MFIN), a self-regulatory organisation that aims to work with regulators to promote microfinance to achieve larger financial inclusion goals.
Later, MFIN members invested in Alpha Micro Finance Consultants Private Limited (Alpha), which in turn has invested Rs 2 crore in setting up a credit bureau, which will help improve credit risk management within the sector and ensure multiple borrowing and over indebtedness is checked.
“As of now, there can be no score on the existing MFI data and the challenge is that there is no value to it. We are working with the MFIs to increase the credit value through a common ID,” he said.