CREDIT INFORMATION BUREAU (INDIA) LIMITED

IN ASSOCIATION WITH DUN & BRADSTREET AND TRANS UNION

BY SURAJ CHHETRI & ANKIT SHARMA

Role of Credit bureau information in credit management

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

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

International Scenario
In developed countries, Bureaus have been in existence for a long time.

In USA
Dun & Bradstreet - 1841 Equifax - 1946 Trans Union 1968

In other countries
Germany - 1934 Turkey - 1951 Belgium -1967

Benefits of a Credit Bureau

Credit Bureaus improve efficiency
By improving loan processing speed By reducing operational costs

Benefits of a Credit Bureau

Credit penetration is higher in countries with credit bureaus

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 of previously volatile economies Economic crisis in the financial sector
Mexico Chile Singapore Argentina Hong Kong Sri Lanka Brazil Thailand Bangladesh

and now

CREDIT INFORMATION BUREAU (INDIA) LIMITED

IN ASSOCIATION WITH DUN & BRADSTREET AND TRANS UNION ________________________________________________________________

Indias First Credit Information Bureau

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.

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

CONTI.
CIBIL collects and maintains records of an individuals payments pertaining 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.

What is the CIBIL TransUnion Score?

The CIBIL TransUnion Score is a 3 digit numeric summary of your 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 loan application getting approved!

CONTI.

90% of new loans sanctioned are to individuals with a credit score of 700 and higher!

What goes in to your loan approval?

Getting your loan approved can be complicated process. Just go through the Loan evaluation process to understand the critical role, the CIBIL TransUnion score plays in getting your loan sanctioned.

CONTI.

What is the role in the Loan Approval Process?

CIBILs products, especially the CIBIL TransUnion Score and the CIR 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.

This means for you as an individual

Since, the credit score and CIR not only helps loan providers identify 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.

CIBIL The Promoters

CIBIL was established by

Indias largest bank

Indias largest HFC

40%

40%

10%
Amongst the worlds largest consumer bureaus

10%
Dun & Bradstreet
Worlds leading provider of B2B credit information

CIBIL The Shareholders

The shareholding pattern now is as follows: Shareholding Distribution (%)
Standard Chartered Bank 5% Central Bank of India 5% ICICI Bank Ltd. 10% Citicorp Finance (India) Ltd 5% Bank of India 5% Union Bank of India 5% Punjab National Bank Sundaram Finance Ltd. 5% Housing Development 2.5% Finance Corporation Ltd. Indian Overseas Bank 10% 5% The HongKong and Sanghai Banking Corporation Ltd. 5% Bank of Baroda 5% State Bank of India 10% Trans Union International Inc. 27.5%

CIBIL a unique business model

Members
Banks All-India Financial Institutions Non-Banking Financial Companies Credit Card Companies Housing Finance Companies State Financial Corporations

CIBIL a 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

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

Relationship Based Lending

Information Based Lending

Functioning of CIBIL

DISPUTE RESOLUTION
Your Credit Information Report (CIR) plays a large part in the loan 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..

Data Security

Data Security @ CIBIL

Information is accessed on a strictly Need to know basis. Access control devices, surveillance cameras installed at strategic locations. Biometric access system at our Data Center.

Firewall, Intrusion Detection and Vulnerability Assessment System to secure 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 our Servers and Network appliances.

Security Data transmission

128-bit SSL encryption for all Web-based transactions including FTP. Cryptographic solutions for all information sent or received through any physical media i.e. CD, DAT and DLT. Security measures information security (BS7799). aligned with stringent management standards

Membership
121 credit grantors have accepted membership
5 SFCs 2CCCs 16 NBFCs 10 FIs 13 HFCs

75 Banks

75 Banks Over 90% total credit outstanding amongst Commercial Banks 13 HFCs Over 80% total credit outstanding amongst HFCs 10 FIs Over 90% total credit outstanding amongst FIs 16 NBFCs Substantial 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

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

CONSUMER BUREAU
LAUNCHED ON

APRIL 5, 2004

Consumer Bureau
The Consumer Bureau was launched on April 5, 2004 with a database of 4 million accounts contributed by 13 Members. 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).

Success Stories
CASE 1: An individual, who had applied to one of our members for a loan of Rs. 10 lacs, was found to have 8 loans of the same type from a single bank 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 loans and the payment history of those loans. The borrower mentioned that he had one previous loan on which he had recently delayed the payment by a month. However the Credit Report accessed on the borrower from CIBIL reflected that payment was delayed by 8 months.

Success Stories
CASE 3: One of Indias 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.

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

Commercial Bureau

Update Commercial Bureau

Systems & Infrastructure
Commercial System Customised & Installed
Data Centre Commissioned & Operational

Data on suit-filed accounts of Rs.1 Crore and above and suit-filed accounts (willful defaulters) of Rs.25 lacs and above available on our site - www.cibil.com

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

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

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 long term Asset classification Wilful defaulter and suit filed status Guarantor details

Benefits of CIBIL
For Credit Grantor 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

Benefits of CIBIL
For Borrowers
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

3 Key Messages
Credit bureaus, over the medium term, benefit all market players 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

We are the CATALYST!

THANK YOU