'Junk values are shared by lenders with credit information companies'

Many-a-time, junk values and incorrect data are shared with credit information companies (CIC) by their members despite several circulars issued by the Reserve Bank of India (RBI), a senior official said Tuesday.

Reserve Bank Deputy Governor R. Gandhi also said credit information companies have largely neglected the credit data on the corporate and micro small and medium enterprises (MSME) borrowers.

"The efficiency and effectiveness of any credit bureau depends on the quality of data collected in its database. However, it is learnt that the data submitted to the CICs by member credit institutions is not regular or accurate," Gandhi said.

Speaking at a conference organised by Credit Information Bureau of (India) Ltd (CIBIL) Gandhi said: "There are many instances of junk values, incorrect data and incomplete identifier field information being submitted to the bureaus."

Gandhi urged various lending institutions to furnish data in respect of their corporate borrowers to the CICs and start utilising the various solutions such as commercial triggers that CICs presently offer to mitigate risks associated with changes in credit profile in commercial lending.

He also suggested CICs to look at the payment data from power utilities and telecom companies in assessing the credit worthiness of small and medium borrowers in rural, hilly and tribal areas.

These segments currently do not have access to banking credit.

"Alternate data also improves the performance of analytical models that help lenders better predict the 'ability to pay', as a means of guarding against consumer over-indebtedness," Gandhi said.

He said RBI would examine whether vehicle leasing companies could be brought under the credit information regulations as it also takes credit risk till the lease gets over.