After providing support to establish creditworthiness of borrowers in the financial space, Credit and Information Bureau of India Ltd (CIBIL) has now set its sight on providing similar services in insurance, mortgage and utility spaces in India. Not only it will help in building a more comprehensive borrower profile, but help ascertain creditworthiness for lenders by helping them analyse spend and repayment patterns of borrowers.
Imagine this, suppose Rajiv is a young IT executive who has two credit cards on which he makes regular payments. He has also taken and paid off a personal loan worth Rs. 2 lakh last year. As per the current practice, his CIBIL score should be in good standing and he should find no difficulty in getting any type of credit.
But suppose CIBIL now also considers whether Rajiv has any mortgages. It reveals that Rajiv has mortgaged a plot of land in his hometown, but again searching for a home loan at his work place. Most likely, his home loan application now won’t pass muster with the lender.
Let’s say Rajiv wants to apply for a term insurance with a leading insurer for Rs. 1 crore. But the insurer puts a query at CIBIL which shows that Rajiv has not been very regular in payment of his electricity or telephone bills. The insurer may think that Rajiv lacks the means to service the premium and deny his cover.
Expanding CIBIL to encompass insurance, mortgage and utility payments would of course add more meat to its current standing about a credible source of verifying borrowers’ antecedents.
How CIBIL Works?
India’s first credit information company, Credit and Information Bureau of India Ltd (CIBIL) came into existence in August 2000 and has about 900 members—both PSUs and private sector banks, NBFCs, HFCs and financial institutions. CIBIL collects and maintains a database of consumer and commercial credit data and uses this data to generate credit scores and reports. These credit scores and reports are then evaluated by lenders to analyse credit risk.
CIBIL has as its partners Dun and Bradstreet- a leader in financial and credit related information and TransUnion International- a leading international credit rating agency. Certified ISO 27001:2005 --a high security standard recognized worldwide—CIBIL scores are widely used in the banking and financial domain to assess borrower risk profiles.
CIBIL in its two categories--Commercial Bureau and Consumer Bureau-- maintains a database of 220 million trades. While the first deals with credit scores of individuals and has 260 million records, the Commercial Bureau deals with commercial entities and has over 12 million records.
CIBIL’s Next Frontiers: Insurance, Mortgage and Utility Payments
While CIBIL has been doing a good job in improving safety of credit, it has also set its eyes on becoming a 360 degree information source of financial transactions. To this end it has set its eyes on providing mortgage, insurance and utility payment related information to its members.
Insurance: CIBIL has been trying to provide its services to insurance companies. This would help insurers set premiums better and assess the regularity of payments by applicants. CIBIL plans to open a new bureau exclusively to deal with this sector and would do so after obtaining approvals from the Insurance Regulatory and Development Authority (IRDA)
Mobile and utility payments: By looking at person’s habit of paying utility and telephone bills, lenders can assess the risk profile of the loan applicant. CIBIL plans to enter into agreements with various Telcos and other utility services provider to build a database of their consumers. For example, the billing and payment patterns of a mobile post-paid plan holder can provide indicators to his payment habits.
Mortgage: CIBIL and TransUnion have launched CIBIL Mortgage Check - India’s first repository of mortgage information in consultation with the National Housing Bank (NHB) and other leading industry institutions. Mortgage Check which is India’s first centralised nationwide database of mortgage information is expected to make real estate based financial transactions more secure. This is expected to reduce fraudulent activities—by keeping track of properties already under mortgage, opening and close dates of debt and information on who has availed the loan.
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