CIBIL looks to expand information sources to rate first time borrowers

Writes to RBI, Trai and Irda; says it will help banks bring down risks

The Credit Information Bureau (India) Ltd (CIBIL), India's first credit information company, has said that it has written to Reserve Bank of India (RBI), Irda and Trai to enable the Bureau to collect data from service providers that would facilitate the first time borrowers to have an indicative credit score.

 

Speaking on the sidelines of Fifth Annual Credit Information Conference, organised by CIBIL, M V Nair, chairman, CIBIL said that this will go a long way in helping the Government's financial inclusion plans. 

 

As of now the lenders have no idea, about an individual's credit worthiness if that person happens to be first time borrower. By providing this data, the lenders will have an idea of the borrowers, which inturn will bring down the risk.

 

Industry is going through tough times and their is a strain in asset quality, which is a major concern.

 

For 8-11% growth in economy, we need about 20-25% bank credit growth. For sustain profitable growth, managing risk is important and information is key for the same, he added.

 

Nair also said that delinquency in the retail credit portfolio, which includes auto, credit cards, personal loans and housing, is less than 1.5%. "This is a healthy sign," said Nair, who insisted that accuracy is the key.

 

There are some concerns on data accuracy provided by financial institutions which leads to lots of mismatch when it comes to calculation of an individual score. The institutions should ensure the accuracy, said Nair.

 

He pointed out participation of FIs have gone up tremendously, especially public sector banks. Today compliance is 72%, compared to 65% three years back, and CIBIL hopes to increase it to 90% in 3-4 years. 

 

The company is also on the verge of completing data collection from MFIs and will put a system in place that would give credit score for MFIs borrowers. The system will be rolled out in two years, he said.