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BY SURAJ CHHETRI
& ANKIT SHARMA
CREDIT INFORMATION BUREAU (INDIA) LIMITED
IN ASSOCIATION WITH DUN & BRADSTREET AND TRANS UNION
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Role of Credit bureau
information in creditmanagement
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The Concept
Wish list of a credit grantor Make informed and objective credit decisions
Minimise adverse selection
Deter concurrent borrowings & serial defaulters
Improve asset quality and reduce NPAs
Increase market penetration
Reduce turn around time
Will happen with complete & reliable credit information
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What is a Credit Bureau?
An organization that:
Collects data pertaining to
Identity data about Consumer (Individual) and Commercial
(Business) entities
Credit Information
Payment History
Compiles Credit Information Reports on consumer and
commercial borrowers and makes these available to
members on request.
Is a third-party service provider for the financial sector
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International Scenario
In developed countries, Bureaus have been in existence for a
long time.
In USA
Dun & Bradstreet - 1841
Equifax - 1946
Trans Union1968
In other countries
Germany - 1934
Turkey - 1951
Belgium -1967
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Credit Bureaus improve efficiency
By improving loan processing speed
By reducing operational costs
Benefits of a Credit Bureau
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Credit penetration is higher in countries with credit bureaus
Benefits of a Credit Bureau
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International Scenario
In developing countries
Different factors spurred the growth of bureaus
Recognition of bureaus as integral to a maturing financial
sector
Lengthening loan terms following stabilisation ofpreviously volatile economies
Economic crisis in the financial sector
Mexico Argentina BrazilChile Hong Kong Thailand
Singapore Sri Lanka Bangladesh
and now
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________________________________________________________________
CREDIT INFORMATION BUREAU (INDIA) LIMITED
IN ASSOCIATION WITH DUN & BRADSTREET AND TRANS UNION
Indias First Credit Information Bureau
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MISSION / VISION
To Catalyze growth of Credit in India through: SOLUTIONS that enable well informed
Credit decisions.
TECHNOLOGY that enables superior
information availability.
PEOPLE that provide high quality
services.
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CIBIL
Provides Credit Information Centralized
Comprehensive
Reliable
Facilitates credit grantors in deciding on Whom not to give credit
Whom to give credit and what extent
Provides objective tools for risk management
from a Neutral Service Provider
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CONTI.
CIBIL collects and maintains records of an individuals paymentspertaining to loans and credit cards. These records are submitted to
CIBIL by banks and other lenders, on a monthly basis.
This information is then used to create Credit Information Reports(CIR) and credit scores which are provided to lenders in order to
help evaluate and approve loan applications.
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The CIBIL TransUnion Score is a 3 digit numeric summary ofyour credit history which indicates your financial & credit health.
The Score is derived from your credit history as detailed in the
Credit Information Report [CIR] and ranges from 300 to 900
points.
Your credit score tells the lender how likely you are to pay back
loan or credit card dues based on your past repayment behavior.
The higher your score, the more the chance of your loanapplication getting approved!
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CONTI.
90% of new loans sanctioned are to individuals with acredit score of 700 and higher!
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Getting your loan approved can be complicated process. Just gothrough the Loan evaluation process to understand the critical role,
the CIBIL TransUnion score plays in getting your loan sanctioned.
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CONTI.
http://www.cibil.com/node/3427/31/2019 Suraj & Ankit_cibil Final
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CIBILs products, especially the CIBIL TransUnion Score and theCIR are very important in the loan approval process.The credit
score helps loan providers quickly determine, who they would like
to evaluate further to provide credit. The CIBIL TransUnion Score
ranges from 300 to 900.
Once the loan provider has decided which set of loan applicants to
evaluate, it analyzes the CIR in order to determine the applicants
eligibility.
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Since, the credit score and CIR not only helps loan providersidentify consumers who are likely to be able to pay back their
loans, but also helps them to do this more quickly and
economically. This translates into faster loan approvals.
Since, CIBIL has made your credits score and CIR available to
you, you will be able to see how valuable a customer you are to
loan providers.
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Worlds leading providerof B2B credit information
Dun & Bradstreet
Amongst the worldslargest consumer bureaus
Indias largest bank Indias largest HFC
CIBIL The Promoters
40% 40%
10% 10%
CIBIL was established by
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CIBIL The Shareholders
The shareholding pattern now is as follows: -
Shareholding Distribution (%)Standard
Chartered Bank5% State Bank of India10%
Bank of Baroda5%
Trans Union InternationalInc. 27.5%
The HongKong and
Sanghai Banking
Corporation Ltd.5%
Bank of India5%
Indian Overseas Bank5%
Sundaram Finance Ltd.2.5%Housing Development
Finance Corporation Ltd.10%
Punjab National Bank5%
Citicorp Finance (India)
Ltd 5%
Union Bank of India5%
ICICI Bank Ltd.10%
Central Bank of India5%
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CIBILa unique business model
Members Banks
All-India Financial Institutions
Non-Banking Financial Companies
Credit Card Companies
Housing Finance Companies
State Financial Corporations
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CIBILa unique business model
CIBIL and its Members A close interdependent relationship
CIBIL to give prompt and meaningful credit information
This will depend upon
Reach of Membership
Quality and timeliness of data provided by Members
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CIBIL
A centralized Database for sharing information
A world class credit bureau dealing with
Commercial & Consumer credit information
Positive & Negative credit information
Offers Risk Management Solutions
Scoring
Fraud Detection
RelationshipBased Lending Information Based Lending
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Functioning of CIBIL
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DISPUTE RESOLUTION
Your Credit Information Report (CIR) plays a large part in theloan application process. Hence, any discrepancy in your CIR may
result in reduced chances of a loan approval. Therefore, it is
important that the information on your CIR is accurate and
updated.
The CIBIL CIR consists of Consumer / Borrower Information,
Account Information and Enquiries. If any information on your
CIR is inaccurate or needs to be updated, we shall be pleased to
assist you in rectifying / updating your CIR..
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Data Security
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Data Security @ CIBIL
Information is accessed on a strictly Need to know basis.
Access control devices, surveillance cameras installed at strategiclocations.
Biometric access system at our Data Center.
Firewall, Intrusion Detection and Vulnerability Assessment System tosecure our network infrastructure from external security risk.
Anti - Virus software installed on all servers in the Data Center.
Necessary configuration and updates continuously applied on ourServers and Network appliances.
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SecurityData transmission
128-bit SSL encryption for all Web-basedtransactions including FTP.
Cryptographic solutions for all information sent or
received through any physical media i.e. CD, DATand DLT.
Security measures aligned with stringentinformation security management standards
(BS7799).
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Membership
121 credit grantors have accepted membership
75 Banks
16NBFCs
10 FIs
13 HFCs
5 SFCs 2CCCs
75 BanksOver 90% total credit outstanding amongst Commercial Banks
13 HFCsOver 80% total credit outstanding amongst HFCs
10 FIsOver 90% total credit outstanding amongst FIs
16 NBFCsSubstantial portion of the credit outstanding amongst NBFCs
5 SFCs Substantial portion of the credit outstanding amongst SFCs
2 CCCs - 100% total credit outstanding amongst Credit Card Companies
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Legal Environment - Master Legislation
Cleared by
Parliament
Presidents
Assent
Obtained
Awaiting
official
Notification
Enable Banks / FIs / SFCs to share all data without consent
Establish the regulatory framework for Credit Bureaus in India
Enunciate the rights and responsibilities of Members and Bureaus
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CONSUMERBUREAU
LAUNCHED ON
APRIL 5, 2004
C B
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Consumer Bureau
The Consumer Bureau was launched on April 5, 2004
with a database of 4 million accounts contributed by 13Members.
Subsequently, our database has grown over 48 million
accounts contributed by 48 Members.
The Consumer Bureau reports are available to Members,
who have submitted all their data to CIBIL in an
acceptable format (Principle of Reciprocity).
S St i
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CASE 1:
An individual, who had applied to one of our members for a loan ofRs. 10 lacs, was found to have 8 loans of the same type from a singlebank and one credit card outstanding, totalling approx. Rs. 14 lacs.This was revealed in the CIBIL CIR.
CASE 2:
A member recently asked a new applicant about his previous loansand the payment history of those loans. The borrower mentioned thathe had one previous loan on which he had recently delayed the
payment by a month. However the Credit Report accessed on theborrower from CIBIL reflected that payment was delayed by 8months.
Success Stories
S St i
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Success Stories
CASE 3:
One ofIndias leading newspapers reported, "Four banks had turned down a
Pune businessmans housing loan application based on his payment data.
He apparently had a history of frequent defaults on his credit card
payments".
CASE 4:
A borrower recently approached a member for a housing loan of Rs. 1
crore. During the preliminary discussion, the member asked the borrower if
he had previously taken any other loans. The borrower said that he had
never borrowed in the past. However a Credit Report accessed on the
borrower from CIBIL reflected one closed housing loan taken by the
borrower in the past from another Credit Grantor.
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Advantages of CIBIL for Banks
Independent, trusted third party opinion on capabilities & credit
worthiness of SMEs
Faster processing of SME applications for bank loans, thereby
leading to time and cost savings for each SME credit evaluation
Better credit pricing depending on borrower performance
Improved credit risk portfolios (this is especially important
given the increased focus on credit risk management and Basel
II) Increased profitability, through cost savings as well as
improved SME loan portfolios
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Commercial Bureau
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Update Commercial Bureau
Systems & Infrastructure
Commercial SystemCustomised & Installed
Data CentreCommissioned & Operational
Data on suit-filed accounts of Rs.1 Crore and aboveand suit-filed accounts (willful defaulters) of Rs.25lacs and above available on our site - www.cibil.com
L h f th C i l B
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Launch of the Commercial Bureau
Launch of operations depends on receipt of critical
mass of data
Data inflow from Credit Grantors has commenced
Launch operations in 1st quarter of the FY 2006 - 07
C i l B R t
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Commercial Bureau Report
Commercial Credit Report contains Non-Individual Borrower Information
Name and Address
D-U-N-S
Number
Other Identification numbers e.g. PAN
Legal Constitution
Relationship details e.g. major shareholders, directors etc.
and their addresses, D-U-N-S Numbers
Number of inquiries made on that borrower
C i l B R t
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Commercial Bureau Report
Commercial Credit Report contains
Account details
Number of credit facilities
Credit type
Loan amount
Outstanding amount
History of credit outstanding - short, medium and longterm
Asset classification Wilful defaulter and suit filed status
Guarantor details
Benefits of CIBIL
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Benefits of CIBIL
Provides access to better credit information by allowing credit grantors to
exchange credit information while ensuring they do not lose their
competitive advantage
Automated decisioning system leading to lower cost of credit evaluation,
consistent decisioning and greater efficiency
Assists in evaluating and monitoring repayment ability and payment
diligence
Lowers default risk by assisting credit grantors improve their credit
portfolios
Allows credit grantors to price the risk appropriately
For Credit Grantor
Benefits of CIBIL
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Provides faster access to credit
Reduces cost of borrowing for borrowers with good credit records
Reduces subjectivity in the credit assessment process
Encourages borrowers to maintain greater self discipline in
acquiring financial commitments
Allows borrowers to build reputational collateral by following
correct repayment behaviour
Benefits of CIBIL
For Borrowers
3 Key Messages
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Credit bureaus, over the medium term, benefit all marketplayers
SME Lending is an untapped engine of growth for the
Indian economy, its development will be accompanied by
the establishment of a critical risk management
infrastructure, i.e. CIBIL
CIBIL will create a win-win situation for credit grantors
and consumers
3 Key Messages
We are the CATALYST!
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THANK YOU