From now on banks could reject your loan application if you forget to pay your telephone bill or electricity bill. Even delay in payment of insurance premium can keep you from getting a loan sanctioned.
Till date reasons for rejection of loan application were just non-payment of loan installments or credit card bills, but not anymore. Multiple credit bureaus will increase the purview of credit history.
Up until now there was just 1 bureau – the Credit Information Bureau India Limited (Cibil) but the Reserve Bank of India is giving licenses for more bureaus.
With the increasing competition, bureaus are promising lenders a horde of information, like a person’s history of telephone and electricity bill, and insurance premium payment among others. Experian Credit Information Company and Equifax Credit Information Services have already obtained the RBI license and would be start in six months. High Mark Credit Information Services is waiting for a license.
“Cibil gives banks details about a person’s credit cards and loans. But the new ones will extend that to telephone connections and insurance,” said a senior official at a private bank.
A public sector bank official said: “Electricity and phone bill payment will be of use in cases where the person has not taken loan in the past. If the person has not been paying bills of such essential services, we would question whether he will repay loans, which is an optional service.”
“There could be a market for such a thing. There is absolutely no credit history available for many people in villages, who would now come in for loans. Bureaus internationally prefer parallel sources of information such as phone and electricity bills.”
Samir Bhatia, managing director and chief executive officer, Equifax, says: “Under the global model, bureaus use 25 data sources. In other markets where Equifax is present, the bureau uses data sources on credit, utilities, employment, mutual fund holdings and market surveys.”
Nolan says his bureau is thinking of what other data it might be able to access. “We are exploring ways in which the data from one can be of use to others, of course, in consultation with the RBI and as per regulatory guidelines.”
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