Banks must refer to reports issued by Credit Information Bureaus not just when sanctioning retail loans but also corporate loans.
This was the message given by Reserve Bank of India Deputy Governor, Mr Anand Sinha, while speaking at a seminar in Mumbai on Wednesday.
Mr Sinha said that banks are actively using data available with credit information bureaus for retail loans, but not for corporate loans. “We hope this will change,” he said.
In his speech, Mr Sinha said that access to information about borrowers reduces the risk on a bank's loan portfolio. “When you are taking a decision, you should have full information on it,” said Mr Sinha. CIB ratings ensure this, he added.
He also said that CIBs should furnish the data accurately and on a timely basis for them to be used effectively.
Credit Information Bureau India Ltd (CIBIL), the first credit bureau to be set up in India, maintains more than 200 million consumer records and more than nine million commercial records.
Mr Arun Thukral, Managing Director, CIBIL, said that banks are using commercial records extensively and the usage is growing 100 per cent year-on-year.
Company data
“It is easier to get consumer data, than data about companies. But with the Credit Information Companies (Regulation) Act in place things should improve,” Mr Thukral said. As per the Act all banks must send regular data about their borrowers to credit information companies.
About 70-80 per cent of the commercial data is skewed towards the SME (small and medium enterprises) segment, Mr Thukral added.
Mr M. D. Mallya, Chairman and Managing Director, Bank of Baroda, and Mr M. V. Nair, CMD, Union Bank of India, who were present at the seminar, said that the usage of credit reports for commercial lending is evolving and will take time.