At a time when the ailing micro finance institutions (MFI) industry is trying to revive operations, credit information bureau, CIBIL, said the current MFI borrowers data was not an established and proven data.
CIBIL also said it was working with the industry to get authenticated MFI borrowers list and accordingly provide a credit score. Currently, CIBIL has data pertaining to over 45 million-odd borrowers.
“As of now there can be no score on the existing MFI data and the challenge is that there is no value to it. We are working with the MFIs to increase the credit value through a common ID,” said Arun Thukral, Managing Director, CIBIL.
A credit bureau is a licensed institution which collects information on an individual’s credit history from various sources and provides this information to other institutions.
According to Thukral, the data needs to be re-classified and has to be authenticated using an ID such as UID number, voter ID or ration card number.
So far, MFIs have been extending credit to borrowers without accurate information on their past borrowing history and indebtedness. The proposed credit score from CIBIL will enable all registered NBFC-MFIs to guage whether a prospective borrower has repayment capability before extending credit to them. Importantly, it will also prevent multiple lending to the same borrower.
Meanwhile, CIBIL also said it was planning to introduce a ‘Risk Index’ for corporates and business entities.
“The Risk Index will help Indian banks and non-banking finance companies (NBFCs), most of which are shareholders in the company, in taking quicker decisions on extending loans to corporates and business entities. The lower a company figures in the Risk Index, the more confidence banks will have in their ability to service the loan,” said Thukral.
Currently, Cibil offers TransUnion Score, a three-digit numeric summary of individual borrowers’ credit history.