Business

New credit bureaus try to retrieve old data

By Khyati Dharamsi, DNA-Daily News & Analysis

Firms to reduce number of mandatory fields in forms to be filled by banks to obtain lost information.

There is good news for banks as competition grows in the credit information bureau space. New bureaus that have either launched or will be launching operations are trying to better the deal, to make space for themselves, which is presently dominated by Credit Information Bureau of India (Cibil).

The RBI has granted a nod to three more entities to launch a credit bureau in India, of which one has launched operations this month.

cibil credit loan data

pic-credit:.cibil.com

Historical data on loan repayments by individual borrowers that was not accepted by Cibil because mandatory fields such as name, address, phone number, PAN, passport number, etc were not filled in by the lender or financial institution can now be available for banks to refer to before granting a new loan.

Experian Credit Information Company, (ECIC) which launched operations last week has said it is trying to upload data rejected by Cibil’s system. “We will get data that had not been loaded this far due to missing fields or other errors,” says Phil Nolan, managing director at Experian.

And how do the bureaus plan to do this?

By lowering the number of mandatory requirements, the firms will try to retrieve lost data from member banks, which will help determine identity of borrowers whose data was rejected.

“Some lenders send data with all fields populated, but others may not have captured them in the required format. Instead of making every single field mandatory, we are using a sufficient mix of voluntary data so that the identity issue is addressed. So may be out of 10 fields 7 would have to be filled in,” says Nolan.Experian has five major banks as its stakeholders and is getting historical loan repayment data from them and other financial institutions.

But will this move mean that data quality will be compromised by new bureaus? Nolan disagrees. “We are working at improving the data quality,” he says.DNA Money had reported last month on the high data rejections in the industry.

“Private banks have a better data quality where 80% data gets uploaded, but PSUs have abysmally low levels of updation — only 30-40% data gets updated and the rest is rejected,” an industry observer had said.

Arun Thukral, managing director of Cibil had said, “In case there is any data rejection, we share the reject data analysis with banks as to why it has happened, how and what they have to do to correct it. If there are any issues that banks are not able to resolve, our team goes to them. There could be issues, but it needs a resolution.”


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Abhay N

Author : 

Abhay is the founder and managing editor of India Microfinance. He is passionate about microfinance, financial inclusion and social entrepreneurship in India.

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