Sushil Doshi’s interview with the prospective employer had gone off quite well. He was sure the job of an assistant vice-president with a private sector bank was his. The interviewers thought so, too.
But Doshi did not get the job, the reason being a tiny detail from the Credit Information Bureau of India (Cibil) that the human resource (HR) department had discovered. Doshi had failed to clear a credit card bill of Rs 20,000 during his college days.
The failure, even though it was a decade ago, led the HR department to reject him. Other banks or financial institutions may not be so harsh. But increasingly, companies, especially in the financial and business process outsourcing (BPO) sectors, are going into the credit history of prospective employees.
While it is believed to be an important part of the background check, recruiters are wary of lack of clarity with regard to privacy in India. “Such information is extremely personal in nature. Hence, they are subject to an individual’s consent and willingness to share such information,” says T V Mohandas Pai, member of the Infosys Technologies board. Such checks are usually carried out at very senior levels where one is privy to confidential information, he adds. Additionally, companies may run checks for employees in sensitive job roles that each company may define for itself.
For HR heads of financial companies the success of their organisations is related to the trust they enjoy with their customers. It is, therefore, important to be cautious. “Companies want to ascertain that their employees do not have a dubious credit history,” says Manish Verma, head-HR, Principal Mutual Fund.
For senior-level recruitments, this check could even extend to the individual’s previous organisation’s credit compliance. For example, Employee’s Provident Fund Organisation (EPFO) and Cibil put out lists of companies which have defaulted in either depositing their employees’ provident fund proceeds or on loan repayments, respectively. “If the candidate under consideration was associated with such an organisation, we would evaluate if he was in a position to influence either of the decisions. And if it is found that he was and had failed to take the necessary action, this would be a definite negative factor,” says Kaushal Sampat, CEO, Dun & Bradstreet.
In BPOs, this practice gained prominence after some employees of a BPO servicing a bank stole a customer’s financial data and embezzled funds. “Since executives dealt with sensitive financial information of the bank’s customers, clients of BPO firms started insisting on elaborate background checks of the employees,” says Harveen Singh Bedi, business head, Quadrangle, a division of naukri.com.
There is specialised help available as well. Called employee verification agencies, these companies do police verification, residence address validations and educational records authentication.
The latest verification in the list is credit history, albeit limited to the information available in public domain. For instance, banks and credit information bureaus regularly put out lists of individuals who have defaulted in their loan repayments. Websites such as world-check.com aggregate such data and are at the disposal of background referencing agencies, as Rima Revankar of CRP Technologies, one such agency, explains.
Most companies inform the employees upfront about the background checks that would be carried out. And a clause is included in the appointment letter of the employees that the final decision will be subject to the results of background verifications. Thus, even if an employee is found to have a poor credit history, post the appointment, his services may be terminated.
Currently such references are being carried out only at the time of recruitment. However, companies may soon start looking at running these checks, according to Verma. This would be applicable for certain cadres of employees, working in sensitive job roles such as treasury, transaction processing, fund management, information technology (IT) and so on, in financial companies.
The modus operandi is simplest for banks, as they are members of the credit information agencies. For other organisations, like asset management companies or insurance companies, background referencing agencies do the needful.
Industry experts feel this trend will soon start spreading to other sectors as well. For instance, IT companies which work closely with the financial services sector are already beginning to be intolerant towards a tainted credit record. “Clients are becoming very cautious as the cost of recruiting one wrong individual is huge. They are willing to put in an extra month into the recruiting process rather than take any chances,” says Bedi. (Some names changed on request)