Borrowers beware, there are four bureaux watching

Taken a loan? Use a credit card? Make sure you don’t default, for with one more credit information provider entering the fray earlier this month, there would now be four pairs of eyes watching you.

The four players are Credit Information Bureau (India) Ltd, or Cibil, Experian Credit Information Company of India, Equifax Credit Information Services and the new entrant —- High Mark Credit Information Services.

Instances of defaults and frauds will continue to exist, of course. But the hardship of banks and other lenders in tracing such borrowers would be mitigated somewhat.

“If a bank inquires with all the four credit information bureaus, the chances of a defaulter or fraudster not getting caught would be extremely low,” said Siddharth Das, chief operating officer, High Mark Credit Information Services.
This would be possible due to the different technologies and different data cycles implemented by the bureaus, Das said.

The Credit Information Companies (Regulation) Act, enacted in 2005, requires banks and lending institutions to become members of a credit information bureau and provide that bureau credit information about an individual who has taken credit from them. These bureaus keep a record of the credit history of commercial and individual borrowers and share it with the members by providing credit information reports.

High Mark’s current members include the State Bank of India, Punjab National Bank, CitiFinancial, Shriram Group, Small Industries and Development Bank of India (Sidbi) and a consortium of microfinance companies.

Since there are only four players in this business, there is enough headroom for more entrants. But the ensuing competition sure calls for differentiators.
“With competition in the credit information sector, parameters like expense and quality of data, service and timeliness would be the key differentiators,” said Arun Thukral, managing director, Cibil.

With over 330 members and a database of 160 million records and counting, Cibil is in an enviable position, he said.

But, with multiple credit information providers in the fray, wouldn’t borrowers be at a loss to know which bureau to approach for a credit information report? Experts suggest a mechanism to collate the data of various service providers to ease the hassle.