Crif High Mark Credit Information Services Pvt. Ltd, one of the four credit bureaus in India, in November, launched its first customer- specific product—online credit report and credit score. These will come with risk indicators such as low, medium and high so that the customer can understand what the score means, said Kalpana P. Pandey, chief executive officer and managing director, of the company. The bureau offers two products—credit report at and credit report and score. Pandey spoke to Mint about the evolving landscape of credit bureaus in India, and the company’s plans to service small finance banks and payments banks.
Q: Does the launch of a customer-centric product indicate a shift in the way you view your business model?
So far, our model was only business-to-business, where we worked with banks, non-bank financial companies and micro finance institutions. Almost all the institutions that are in the lending business are our customers. But of late, awareness about credit reports and credit scores for individuals has increased. We noticed that people now want to know their credit scores before applying for loans such as home loans, personal loans and even car loans. Since there is a strong demand from the market for individual credit report and score, we felt the need to enter the business to consumer space. So, we launched our credit report. We have also launched a consumer grievance cell to rectify any discrepancies in the reports. This means you can generate queries on specific portions of the report online whenever required.
Q: If an individual has never taken a credit, can you still give her a credit score?
In case you have never taken credit from any financial institution, we as a bureau will not have any data to give you a score on. Hence, if we don’t have data, we will give you “no hit” as a comment.
In such cases, additional non-traditional data elements can come into play in the future—we will have another score with the use of additional data for the no-hit segment. By additional data I mean information such as (financial) behaviour on social media platforms such as Facebook, Twitter or LinkedIn, or how an individual is paying her utility bills or how she transacts on e-commerce sites. These would come into play, based on which we can take a decision. This can be possible because all these transactions leave a digital footprint. However, right now, this is in testing phase. Hence, the score that you get currently is without the use of non-traditional credit data.
Q: Credit bureaus at present work closely with financial institutions, telecom companies and insurance companies. In future, do you see other sectors using the services of credit bureaus?
Currently, only credit institutions and specified users such as telecom service providers and insurance companies come under the credit bureau ambit.
Recently, a Reserve Bank of India committee was formed, which spoke about using utility bills to build credit score.
Initially, there was a big question mark on how to use electricity bill data as these come under the universal service obligation and so that service has to be provided anyway. However, another angle emerged. Today, most utility service providers take some kind of deposit from customers. Hence, there can probably be some kind of decision-basis to score a person. For instance, if a person has a good credit history, maybe the quantum of the deposit amount can change. Hence, a different use of credit report that may emerge.
But for this to happen, of course, regulations need to change. The Cicra Act [Credit Information Companies (Regulation) Act] needs to enable utility companies to also come under the credit bureau umbrella. This could take some time to become a reality.
Q: Different types of banks are to be launched soon. Will you tie up with them as well?
Yes, we are in talks with payments banks as well as small finance banks. If you see, historically, as a credit bureau, we have been focused on micro finance industry. In 2010, the need of a credit bureau for the microfinance industry emerged and we were the first to launch credit report for microfinance companies. We have been working with them closely, and in the past five years, we have brought most of them under the credit bureau umbrella. If you look at small finance banks, their focus area, too, is the microfinance space. Eight out of the 10 entities granted the in-principle approval are microfinance institutions. Hence, small finance banks become our natural users. Currently, we are closely linked with them and are working with them on multiple requirements.
When it comes to payments banks, the way credit bureaus will be used is going to be different as they are not allowed to lend. Hence, their requirement from us would be around know-your-customer process, among others.