Want to find out what your bank thinks of you?

A momentous moment in India’s retail lending history has just been ushered in very quietly.

A few days ago, Credit Information Bureau of India Ltd (Cibil), the only fully operational credit bureau in India, quietly introduced a manual system to provide consumers with their own credit history on a test basis.

A written communication from Cibil to Apna Paisa has clarified that “Cibil has started offering consumer disclosures through an interim solution. This interim solution is a testing phase and we will be able to operationalise the full-fledged consumer relations system basis our learning from this phase.

In this interim phase Cibil will be manually handling consumer requests for a copy of their credit information report. Cibil is also developing the infrastructure, systems and processes for an automated solution that would be needed to enable an individual direct access to their credit reports from Cibil online. The… consumer relations system will have world-class features that will allow consumers to access their report online and banks to respond to errors via an online maintenance tool. The automated phase is expected to be ready by the beginning of next fiscal year”.

So what makes this a momentous occasion? Cibil is one of four credit bureaus licensed by the RBI under the Credit Information Companies Regulations Act, 2005 (CICRA). Cibil, though, is the only one that already been operational for around a decade now and has the credit repayment history of around 13.7 crore loans or credit cards.

Almost all of the major lenders provide details of the credit facilities given by them to their customers as well as the amounts that have fallen due and the repayment made by the customers on a periodical basis (monthly or quarterly). Cibil collates and aggregates this information.

Thus when a customer (say, Promod Desai) approaches any bank (say, Bank of Bharat) for a credit facility, Cibil is in a position to go through its records and provide details of the existing credit facilities enjoyed by Desai to Bank of Bharat, as well as his repayment history on such facilities.

This enables Bank of Bharat to take a more informed decision on Desai’s credit application since it now has access to credible third-party information on Desai’s existing obligations as well as his repayment history. It also benefits Desai if he has maintained a spotless repayment history, since he is able to get the credit facility quickly and cheaper based on his good record.

Of course, if Desai’s earlier repayment history is not so good, he will find it difficult (and more expensive) to get the credit facility.

A large number of consumers today feel helpless about erroneous repayment history being reported by the banks to Cibil showing the consumer in default even where the so called “outstanding payment” is in dispute. This is highest in the case of credit cards.

Now that he can have access to his own report, the consumer can point out any errors in the report to Cibil who are, under the CICR Act, required to notify the concerned bank. The erroneous entry will have to be deleted by Cibil unless the concerned bank reverts within 30 days of the consumer filing his error report with the bureau.

If the consumer is not satisfied with the action of the bank in this regard, he can always file a grievance before the banking ombudsman.

Thus, by having access to their own credit report, good consumers can ensure that they do not fall victim to erroneous reporting by the banks. At the same time, consumers who delay payment for any reason will have to pay the price for such delays.

Good consumers who pay their installments will stop subsidising the consumers who delay payments. At a future point of time, Cibil may even share their proprietary credit score with the consumers.

This score predicts a customer’s likelihood of becoming a defaulter after 91 days and within the next year. Higher the score, fewer the chances that the consumer will default.
For your own credit report from Cibil, you can download the form available on the Apna Paisa website at http://www.apnapaisa.com/credit-card-india/CIBIL-credit-information-bureau-report-request-form.html

I have applied to Cibil too. Now I’m awaiting my own credit report.

Harsh Roongta is CEO, Apna Paisa, a search comparison engine for loans, insurance and investments. He can be reached at ceo@apnapaisa.com