Globally, bureaus have played a critical role in the development of credit markets by providing information on the credit history of the consumer and his past repayment pattern . Now few more players are eyeing Indian credit market. What do you have to say on that?

 

We have based our working on US model as we have partnered with Trans Union, which is one of the oldest players. Considering the market as big as US, there are only three major bureaus - Transunion, Experian and Equifax, which are globally big. Then there are few small regional players. Now many are looking to come to India, as they prefer India for variety of reasons. I believe that competition is good. Customer should be the King. He or she should have the choice. Not only this, competition also leads to industry expansion.

 

What does competition bring to the table?

I cannot specifically say that what these players are going to bring to India. If you study the industry globally over the years, you will know that there are multiple credit bureaus operational in most countries. But you need history of at least 2-3 years to come up with predictive risk zone. Our technical partners are Dun & Bradstreet and Trans Union. Trans Union has their own scores in many countries which are their proprietary score cards*.

 

What role do you see for credit bureau in India particularly CIBIL?

 

The basic objective of CIBIL is to create a sound lending culture and ensure that financial environment of the country remains healthy, which works in favour of the consumer. Today credit penetration in India is only around 15% so there is enough scope for expansion. One should appreciate that running a credit bureau in India is like running a credit bureau for the entire Europe. In India when we get data from the lenders it is in free flow data format because of so many variations in names, surnames and addresses etc. Implementing validation process is the biggest challenge.

 

As far as role is concerned, Credit information companies collect loan repayment data from various lenders, which become available to any lender whom the consumer approaches for fresh credit. This data from the CIC ensures that prospective lenders get to know the total borrowings made by the consumer in the past as well as their repayment track record. Therefore consumers who have taken care to pay their installments in time benefit by getting loans quicker and at better terms, whereas the consumers who have defaulted in the past have to pay higher rates or are denied credit facilities.

 

We started with database of 4 million with 13 members in 2004 and have grown to 164 members and database of over 135 million trades. The number of Corporate loan account information is over 2 million today, which we launched in 2006 with half a million database. This way we can say that credit information industry has evolved but challenges are also there.

 

Mostly history is taken into consideration for negative reasons, i.e. to deny the credit. It is rarely used to give better rates or faster sanctions to customers with good credit track records. Please comment.

 

I beg to differ here. It is ‘just’ credit history here in India, neither positive nor negative. Our score is in the range of 300 –900; it is better towards 900 as there is less risk. An aggressive lender may give credit with a score of 600 points whereas a conservative bank may take 700+ score as benchmark. But it is never used to stop credit. If that were the case, then the retail growth, which we have witnessed in the last few years, would not have happened. Australia, which is a very developed economy, does not capture positive history**, it captures only negative history.***

Infact owing to information from CIBIL, banks can now process loans faster and make prudent lending decisions. Credit information bureaus actually aide credit penetration.

 

Till now CIBIL was following closed-door policy towards the consumers. Now your website mentions that RBI has provided for the right of the consumers to their own credit reports. When these will be available to the consumers?

 

Normally people do not ask for the report except when their credit gets declined. Now we have recently started a customer cell, which caters to the customer’s complaints. We have a database of over 135 million, which is fully automated. Till now we function with a close-user group of 164 members on the principle of reciprocity. But if a consumer’s loan gets declined on account of his/ her CIBIL report, the borrower can get a copy of the report from the concerned lender. However getting your credit report may be possible at the end of this financial year. If there is still an issue, CIBIL will attempt to contact the lending institution basis the borrowers query. For this a 9-digit control number is there with the concerned lender who requests for the credit report, which will identify the report.