In Just 14 Years, CIBIL Has Made A Huge Impact
CIBIL in nearly 15 of existence has changed the financial landscape of India
Recently, CIBIL [Credit Information Bureau (India) Ltd.] completed 14 years of service in the credit and finance sector.
It is incredible how the emergence of a single body like the CIBIL, can single-handedly, energize, galvanize and literally catapult the entire credit and financial sector into the next level. And to think that all it has done is to keep acquiring credit information on all types of customers from the banks and other lending institutions and process them. And on the basis of this analysis arrive at credit ratings that are totally unbiased, prudent and all encompassing in the sense that the credit outcomes takes care of the interests of all the parties concerned.
In this context, it is interesting to note that CIBIL on March, 2014 had organized its Sixth Annual Credit Information Conference. The central theme of this particular conference was “Transforming Credit Information into Action: Issues and Challenges”.
Expectedly, the leading luminaries of the financial and credit industry were present in full force at the conference. Each one of them shared their insights and inputs on the manner in which CIBIL has served the credit industry. They also showed the way ahead and cautioned CIBIL as to the pitfalls and challenges lying in store.
CIBIL has accomplished what it has set out to; but challenges are there ahead
The key note address for this conference was delivered by none other than Dr K.C. Chakrabarty, the Deputy Governor of RBI. The conference itself took place on March 20, 2014 in Mumbai.
Here one has attempted to look at the some of the vital points that has emerged out of the deliberations. But before doing so, here it would be relevant to have a brief understanding of what CIBIL is all about.
- CIBIL came into being with the sole objective of serving as a facilitator for the burgeoning credit, financial and investment needs of the economy. The credit bureau is India’s first licensed by RBI institution and today it has almost become the last word for all credit and financial decisions of banks and other lenders.
- CIBIL started with just four million credit records and only 13 members. This has over a decade or so grown into a giant force that has well over 290 million records for its Consumer Division and over 14 million records ready with its Commercial Division. It has more than 930 members across 300 and more trades and commercial activities.
- In a nutshell, CIBIL has been able to touch and positively influence every level of business – be it big multinationals, SMEs (small and medium enterprises), individual loan applicants, new and coming up enterprises (such as startups) and gradually is focusing on the lowest strata of society at the grassroots level to bring about a financial inclusion that matters the most.
Coming back to the keynote address of Dr Chakrabarty, at the very outset, he congratulated CIBIL for such a splendid innings. He then went on to systematically enumerate his insights on the subject —
- He began with a note of caution when he pointed out that at a time when there is so much information available on credit, credit behavior, etc. why there are still so many discrepancies and incompleteness in the credit records?
- He stated that one of the key objectives of the conference was to figure out a far detailed and in-depth credit system and suggested to CIBIL that they look into this seriously. He then felt that the banks are perhaps not able to manage this deluge of information piling on them continuously and hence are often missing out on vital points. They do need to enhance the quality of their key assets immediately. There is also the need for a better cooperation between the financial institutions and CIBIL so that each can benefit from the synergy thus unfolding.
- He stressed on the need for putting in place a credit information system that ensures complete credit information. Completeness of Information is a pre-requisite for engineering the Credit Information into Action stage in the economy. This theme is the central subject of the conference as well.
- Dr Chakrabarty, then invited everyone’s attention to the four pre-conditions for the above desired goals to take place. These are – Unbiasedness, Consistency, Efficiency and, last but not the least Sufficiency.
- For a robust and dynamic credit information system to evolve, he emphasized the extreme importance of maintaining Quality of Data. This is one parameter that according to him, should not be compromised at any cost and at any level. A few days delay is nothing when it comes to producing the correct in all respects data. Both the financial sector, as well as CIBIL can contribute and bring about this change.