Micro finance borrowers to come under CIBIL ambit

Chennai:

Credit Information Bureau (India) Ltd (CIBIL) will be expanding its database by adding 50 million more records as it plans foray into micro finance sector.

 

Interestingly, this will increase the over all database of CIBIL, which is crucial for the lending agencies to cut down on non-performing assets, to more than 370 million.

 

Speaking to reporters on the sidelines of ‘The Fourth annual Credit Information Conference in Chennai’ here, M V Nair, chairman of CIBIL, said that CIBIL, which is monitoring the credit track record of consumers who are borrowing from the banks, has divided its portfolio into four bureaus. They are mortgage of land, fraud, consumer and commercial.

 

He said with the addition of micro finance, it would be adding another 50 million records to its existing database.

 

Interestingly, CIBIL has helped reduce the non-performing assets of banks and financial institutions as they are now cautious on lending to defaulters. “Since 2010, CIBIL has bought down non performing assets of its members from 2.5 per cent to less than one per cent,” says Nair.

 

While this may be a good news on the retail front but the commercial side is still bleeding due to economic recession. Nair says that the non performing assets in the commercial side has gone up from 2.3 per cent to 4.5 per cent.

 

He says every consumer is rated by CIBIL based on his earlier transactions with financial agencies and his promptness in repaying loans. “If the rating is good, the person can get loans easily. The behavior of the consumer is monitored regularly,” he says.

 

CIBIL’s credit score ranges from 300 to 900 points. A higher score reflects good credit history. That is lesser defaults in payment. A lower score close to 300 reflects bad credit history. 

 

He said the credit penetration in India is very less. Currently the credit to GDP ration is only 60 per cent in India while in China it is 120 per cent. “We expect it to go up with CIBIL kind of initiatives,” he says.

 

J Sadakkadulla, regional director of Reserve Bank of India, Chennai, says that there is a strong linkage in an economy between the depth of credit information index and credit penetration. He says India is ranked 28^th amongst 189 economies on the ease of getting credit and has the best ranking amongst BRIC nations