 "CIBIL working on expanding information sources to help first time borrowers")
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 individuals 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. "Are we able to support?, considering Banks are starved of capital," said Nair.
For sustain profitable growth, managing risk is important and information is key for the same.
He also said, 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.
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There are some concerns on data accuracy provided by financial institutions which leads to lots of mismatch when it comes to calculation of 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.
Younger population drives credit score demand
Retail credit growth has been accompanied by increased CIBIL Report usage at loan origination. The credit applications has increased over 200% in the last three years. The growth is driven by younger population, says CIBIL.
India's largest credit information company, has said its membership base crossed 1100 and it maintain over 37 crore consumer trades and 1.9 crore commercial trades adding that younger population is driving the growth in credit with 60% of new credit applications coming from applications who are less than 40 years old.
In 2014, more than 40% of applications were from applicants less than 35 years as against 30% in 2008.
Highest growth was in personal loans and two wheelers loans segment followed by home loans over the last five years.
The Agency said that about 80% of credit active population has a CIBIL TransUnion Score greater than 750. This indicates that banks are increasingly lending to borrowers with a higher CIBIL TransUnion Score.