If you are planning to apply for a loan in coming days, then your history of paying utility bills including your phone bills can become of the deciding factors. In case you have been late in making those payments, then CIBIL can deny you the loan.
Credit Information Bureau (India) Limited (CIBIL) Chairman M.V. Nair has made clear that they are expanding the profiling database of borrowers and their history of paying phone bills, insurance premium etc would become a major factor in deciding their loan application.
At the fifth Annual Credit Information Conference organized by CIBIL and Transunion in in Chennai, Nair said, “Payments made by borrowers towards telephone bills and other utilities like electricity and water charges also help establish track record and other relevant behavior patterns”
He further said that talks were on with Reserve Bank which can help them to give the clearance from TRAI and IRDA. He expressed his opinion that “time has come to collect such information.”
New Vertical for Micro Finance Institutions
Besides formulating their action steps on collecting history of utility payments, CIBIL is also working on procedures to make micro-financing easier.
A new vertical, specifically dedicated for Micro Finance Institutions (MFI) would be formed, which will provide credit scores for MFI borrowers. CIBIL shared that application for loan from first time borrowers have increased 200% in the last three years, majority of which belongs to MFI niche.
Even cooperative banks and NBFCs (non-banking finance companies) are now requesting CIBIL for credit history of borrowers, which is a good sign for the economy.
Borrower’s Information Collection Going Up
One of the interesting facts shared by CIBIL during the conference was the fact that borrowers and creditors are getting listed in CIBIL database. As of now, 72% of data about borrowers curated by financial institutions and banks matches with the CIBIL database. For the past 5 years, this percentage was 65%, and Nair shared his plans of making this information match 90% of all cases.
CIBIL has made clear that they are expanding their database about borrowers, and every mode of payment made by them will be scrutinized before allocating them further loan. Acquiring high quality data, which is authenticated and genuine is the most important task for CIBIL as of now.
Younger Population Driving Growth
CIBIL also shared the fact that younger population are now more active in approaching financial institutions for loans and credit, compared to older generation. More than 60% of new loan application is now coming from applicants who are less than 40 years old; and those who are less than 35 years constitute 40% of all loan applications.
The top three areas where loan application has increased in maximum proportion are:
- Personal Loans
- Two-Wheeler Loans
- Home Loans
CIBIL is India’s most powerful and biggest credit rating agency. As of now, it has financial database of more than 260 million Indians, and around 12 million traders, merchants and entrepreneurs. Along with a partnership with TransUnion, CIBIL has it’s presence in 30+ countries.
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The idea of collecting the payment history of premia and utility bills are a welcome initiative, however the rating agency also should provide the rating for the same which would get balanced with that of the score generated out of the borrowings … as well if some of the applicant has not borrowed the scoring on the regular payments on the utility bills and premia would help in borrowing which naturally need to have higher weightage than the scoring done on the repayment of the borrowed capital…
as well the rating agency has to standardise the reporting of the FI/Bank/NDFC in a structured and standard format which is uniform…
Is Mr.Nair hearing???