NBFC or Non-Banking Financial Company is a company that is registered under the Companies Act,...
Credit Information Companies are the Credit Institutions, Companies or Specified Users which collect “data or credit information” in respect of a borrower through data management services. Credit Information Companies collect, analyze, publish and disseminate data to its members and specified users.
The lender on the basis of Company credit Report and credit score decides whether to grant the borrower the loan or not. A Credit report is equally important as any other factors used to determine the financial position of the company.
CIC also termed as Credit bureaus in India, are licensed to work in the country under the CIC Regulation Act, 2005 of the RBI.
There are four well-versed and well -recognized companies in India who are treated as credit information companies –
Credit Information Bureau (India) Limited came into existence in August, 2000 in Mumbai which is also known as TransUnion CIBIL Limited, addition to that CIBIL was launched as India’s first Credit Bureau. In 2007 CRISIL had started launching their credit score termed as CIBIL Score. In 2011 CIBIL score, they made their score available to the individual consumers.
In the year 2010 Equifax listed its services in India, significantly later than CIBIL, under the name Equifax Credit Information Services Private Limited. In India, EQUIFAX is a combined venture of Equifax Inc., USA and 7 primary financial institutions of India with the objective to organize, consolidate, examine the credit/loan repayment information of millions of India’s consumers. In addition to this EQUIFAX has recorded a magnificent growth by assembling and assimilating the record of an individual’s financial data and helps in managing the financial profiles of individual consumers.
In the year 2006, Experian commenced its Indian operations and has been included as the world’s most innovative companies in the Forbes list. The Company provides various services to its customer like –
Furthermore, EXPERIAN has 2 companies in India –
It is helpful for the lenders’ point of view to do a credit check on the consumers and reflects the probability of a consumer paying back capacity of his loan and credit.
CRIF a well-known financial services brand across the world was established in India in the year 2007 which is well known for its services to banks and financial institutions. Subsequently, in the year 2010, CRIF has received a COR (Certificate of Registration) to operate as a Credit Bureau. Formerly CRIF High Mark was known High Mark. To ensure that there are no defaults in the future and the customer is credit worthy,
mostly banks and lenders prefer to go to credit rating companies.
All NBFCs are required to become a member of all 4 CICs as per RBI vide notification dated 15 January 2015 which has been granted a certificate of registration from RBI. The only motive of CIC is to ensure a centralized pool of information on customers. In order to realize their true potential, NBFCs are continuously strengthening their place on a par. With the help of CIC, NBFCs with advanced analytics is assessing the creditworthiness of the untapped customer segment.
As per Credit Information Companies Act, 2005, CIC allows only licensed entities to undertake the business of credit information by providing information of borrower related to loans, advances, amounts outstanding under credit cards, securities issued, guarantees or the creditworthiness of borrowers of credit institutions.
The financial information on repayment behavior is captured by CICs which allow in accessing credit score based on the data.
CIC is playing a vital role in developing the behavior-based credit risks models and this helps in introducing healthy competition, innovation in the Indian Financial system. CIC (Credit information Companies) is providing credit score and credit report to consumers. The most popular credit rating these days is CIBIL. Lenders prefer to go to credit rating companies, to ensure that there are no defaults in the future and the customer is creditworthy.