MUMBAI: Credit Information Bureau (Cibil), India’s oldest and biggest credit information company, is in talks with the government to broaden the ambit of the Credit Information Act that will allow it to use alternative sources of data for deciding the credit worthiness of loan applicants.
“As of now, we are tied up by the Credit Information Act, which restricts the people we can work with,” said chief operating officer Harshala Chandorkar. “We are in discussion with the regulators and the finance ministry so that the scope of the Act can be widened. But this requires regulations to change because it pertains to the confidentiality of an individual.”
Credit assessment is becoming data-driven with information being collected from various sources like social media and digital transactions to determine the credit worthiness of an individual. A lot of financial technology startups are using their own data analytics as credit assessment tools.
There is huge scope for banks to lend to first-time borrowers for whom credit information is not available with them and other financial institutions. Therefore, while the change in regulations would take time, Chandorkar said Cibil would launch a new product which would give banks some information regarding lending to first-time borrowers.
“While we provide a Cibil TransUnion score for people already having a loan account or a credit card now, in a few months, we would be able to help the banks take a call for a person who might have just passed out of college. For such cases, we have devised an `emerging consumer score’,” Chandorkar said. She said Cibil would look at people similar to the applicant and check if there is a score that can be given to those people. Thus, banks would have some reference points before lending.