 "CIBIL to rate Micro Finance Institution borrowers")
After rating customers of Bankers, the Credit Information Bureau (India) Ltd (CIBIL) is now planning to extend its service to Micro Finance Institutions (MFIs). The Information Bureau, which has a record base of around 320 million , is planning to add another 70 million by roping in MFIs.
Speaking to reporters on the sidelines of the Fourth Annual Credit Information Conference at Chennai today, M V Nair, chairman, Credit Information Bureau (India) Ltd said CIBIL will be setting up a separate Bureau for MFIs.
Currently CIBIL has retail, consumer, mortgage depository and commercial Bureaus, will add the fifth Bureau for MFI in another 12 months. The proposed new Bureau is expected to add around 70 million records.
“We are quiet happy with the way our ratings impacting the retail portfolio,” said Nair, who noted, the delinquencies on the credit cards which was around seven% in 2010 has come down to one%.
Usage of CIBIL's data in retail space has substantially gone up and usage of credit scores by individuals have also gone up, he added.
By paying Rs 470, an individual can get a credit rating from CIBIL, which will help him when he approaches the financial institutions for credit. “Even he will get different pricing from the lenders, if he got good scores,” said Nair.
CIBIL gives rating from 300 to 900 points and anything above 700 points, lenders prefer to lend and if it is more than 800, lenders are after the borrowers.
Based on the CIBIL's score few players are structuring their acquisition strategy, said Nair. He noted, CIBIL gets around 5,000 request in a day from individuals for the rating purpose. This initiative was started a year and half before.
After retail, now CIBIL is planning to focus on commercial side. Seventy four% of the business are with the public sector banks and their substantial portfolio is SMEs and corporate lending. Besides rating, CIBIL also offers portfolio management to the lenders.
To a query on offering the service to insurance sector, Nair said, insurance companies and telecom companies can be users of the data, while they don't provide the information and as per the Act they can't be CIBIL's members.
The insurance regulator Irda, through Insurance Information Bureau (IIB), is developing a system for which CIBIL is in close co-ordination with the insurance regulator, so that the benefit could also be provided in the insurance sector. In life insurance, the persistence can grow and in general insurance it can help when it comes to claim settlement.
Similarly, CIBIL also shares information with telecom players, who looks at the track record of the post paid customers and based on that it can give credit.
Impact on NPA
Nair says CIBIL's data helps the Banking system when it comes to NPA management. For instance, in retail portfolio, according to Nair, NPA used to be around 2-2.5% in 2010, which has now comedown to around 1-1.5%. Its a good improvement and one of the key reasons is CIBIL's data.
“Making available of similar information on the commercial side is the priority for CIBIL,” said Nair.
Challenges
Quality of the data is a major challenge for the Bureau, said Nair. He added, data submitted by the Banks and other financial institutions to CIBIL are not always accurate or even regular.
"There are many instances of junk values, incorrect data and incomplete identifier field information being submitted to the bureau,"
Though in the last 3-4 years there is a substantial improvement on the data, but we have a long way to go, said Nair.
Banking system moved to Core Banking System only in 2010, old registers were moved to CBS without any full information, some half information they provide. They are going back to the customers to update. It is continuous process, but critical. KYC will help by capturing additional information, it is possible for us to give multiple level of information, said Nair.
He added, there are four Bureaus in the country and its tough competition, but CIBIL got 90% of market share, claims Nair, who refused to share revenue numbers adding that the company's revenue was growing at around 35-40%.
Speaking to reporters on the sidelines of the Fourth Annual Credit Information Conference at Chennai today, M V Nair, chairman, Credit Information Bureau (India) Ltd said CIBIL will be setting up a separate Bureau for MFIs.
Currently CIBIL has retail, consumer, mortgage depository and commercial Bureaus, will add the fifth Bureau for MFI in another 12 months. The proposed new Bureau is expected to add around 70 million records.
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The total record base with CIBIL currently stands at around 320 million across all the Bureaus.
“We are quiet happy with the way our ratings impacting the retail portfolio,” said Nair, who noted, the delinquencies on the credit cards which was around seven% in 2010 has come down to one%.
Usage of CIBIL's data in retail space has substantially gone up and usage of credit scores by individuals have also gone up, he added.
By paying Rs 470, an individual can get a credit rating from CIBIL, which will help him when he approaches the financial institutions for credit. “Even he will get different pricing from the lenders, if he got good scores,” said Nair.
CIBIL gives rating from 300 to 900 points and anything above 700 points, lenders prefer to lend and if it is more than 800, lenders are after the borrowers.
Based on the CIBIL's score few players are structuring their acquisition strategy, said Nair. He noted, CIBIL gets around 5,000 request in a day from individuals for the rating purpose. This initiative was started a year and half before.
After retail, now CIBIL is planning to focus on commercial side. Seventy four% of the business are with the public sector banks and their substantial portfolio is SMEs and corporate lending. Besides rating, CIBIL also offers portfolio management to the lenders.
To a query on offering the service to insurance sector, Nair said, insurance companies and telecom companies can be users of the data, while they don't provide the information and as per the Act they can't be CIBIL's members.
The insurance regulator Irda, through Insurance Information Bureau (IIB), is developing a system for which CIBIL is in close co-ordination with the insurance regulator, so that the benefit could also be provided in the insurance sector. In life insurance, the persistence can grow and in general insurance it can help when it comes to claim settlement.
Similarly, CIBIL also shares information with telecom players, who looks at the track record of the post paid customers and based on that it can give credit.
Impact on NPA
Nair says CIBIL's data helps the Banking system when it comes to NPA management. For instance, in retail portfolio, according to Nair, NPA used to be around 2-2.5% in 2010, which has now comedown to around 1-1.5%. Its a good improvement and one of the key reasons is CIBIL's data.
“Making available of similar information on the commercial side is the priority for CIBIL,” said Nair.
Challenges
Quality of the data is a major challenge for the Bureau, said Nair. He added, data submitted by the Banks and other financial institutions to CIBIL are not always accurate or even regular.
"There are many instances of junk values, incorrect data and incomplete identifier field information being submitted to the bureau,"
Though in the last 3-4 years there is a substantial improvement on the data, but we have a long way to go, said Nair.
Banking system moved to Core Banking System only in 2010, old registers were moved to CBS without any full information, some half information they provide. They are going back to the customers to update. It is continuous process, but critical. KYC will help by capturing additional information, it is possible for us to give multiple level of information, said Nair.
He added, there are four Bureaus in the country and its tough competition, but CIBIL got 90% of market share, claims Nair, who refused to share revenue numbers adding that the company's revenue was growing at around 35-40%.