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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/342
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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