The Reserve Bank of India has issued a directive clarifying that while considering applications for grant of certificate of registration under the Credit Information Companies (Regulation) Act, 2005; it would ensure that no single investor, whether resident in India or outside India, holds more than 10 per cent of the equity capital of any credit information company. The ceiling of 10 per cent will be equally applicable to investments made under the Foreign Direct Investment Scheme. This is in line with its policy of ensuring well diversified ownership of banks and other entities in the financial sector as well as entities in financial sector infrastructure. 

Source: Reserve Bank of India Press Release July 22, 2008

BIIA Comment: The Reserve Bank of India has stated in an earlier communication that a decision on which companies would receive a certificate of registration to operate credit bureaus in India would be forthcoming on June 30, 2008.  That deadline has passed and no licenses have been issued so far.  The above indicates that certificates may only be issued to consortiums of Indian institutions without giving anyone a position of control.  Several banks had already taken multiple stakes in credit bureau consortiums that have applied for licenses.

Theses restrictions indicate the sensitivity of processing credit information on private individuals and providing a level playing field among banks.  However the restriction does not apply to Indian Business Process Outsourcers [receivables management / debt collection], who handle most of the world’s credit data on behalf of clients residing outside India.  Why can Indian companies process sensitive data on foreign individuals in India, while foreign information companies are denied same right?   This is an unfortunate development and a gross injustice and should be taken up with the WTO.

BIIA Newsletter July / august 2008 Issue