Timely, accurate data not coming from banks, FIs: CIBIL chief--Business Line
Says information deficiency will lead to ‘uninformed lending decisions’, rise in bad loans
CHENNAI, DEC. 3:
Inadequate and poor quality data from financial institutions is a challenge for credit health assessing agency CIBIL (Credit Information Bureau (India) Ltd).
Though the RBI has repeatedly issued circulars for submission of timely and accurate data to CIBIL , banks and financial institutions are not always regular.
“There are many instances of junk values, incorrect data and incomplete information being submitted to the bureau,” said M. V. Nair, Chairman, CIBIL.
Urging financial institutions to ensure proper data flow, he said deficiency will lead “uninformed lending decisions, NPAs and deteriorating asset quality”.
However, he pointed out that even with the existing level of accuracy and quality, retail credit by banks saw a dramatic decline in bad debt. “With delinquencies coming down to less than 1 per cent from 2.5 per cent in 2010, the asset quality of banks has improved substantially as far as the retail lending is concerned.”
CIBIL has also made significant strides on the commercial bureau front last year. Along with the rapid increase in the size of the database, it has refined the database and introduced a new credit information solution, Commercial Triggers, for commercial lending. Nair said this solution helps banks stay updated and take quick actions in the event of a change in credit profile. On any change in the customers’ profile, banks will get alerts.
Four divisions
CIBIL has four divisions or bureaus — retail, commercial, mortgage and frauds — through which it serves banks, other financial institutions and telecom companies.
CIBIL has four divisions or bureaus — retail, commercial, mortgage and frauds — through which it serves banks, other financial institutions and telecom companies.
It will soon launch a ‘microfinance’ division, to offer credit information to microfinance institutions, he said.
According to Nair, the bureau currently has over 320 million records — from the retail bureau predominantly (305 million) and the commercial bureau (15 million).
The proposed microfinance division is expected to bring in over 70 million records, taking the total number of records to near 400 million. Its membership base has also scaled a “record growth of over 960 members and we should touch the 1,000-member mark shortly,” he said.
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