Three more credit information companies are into business after the RBI approval. But the existing local credit bureau Cibil (Credit Information Bureau India Ltd) is only approved by the banking regulators to maintain credit histories of insurance and telecom customers.
EquifaxCredit Information Services, Experian Credit Information Company, and Highmark Credit Information Services are the three new entrants. These entities were short-listed from 13 applicants including Cibil. Business for credit bureaus is expected to grow given rising defaults in consumer credit and growing risk consciousness among lenders.
Credit information companies inform banks whether a prospective borrower is creditworthy or not based on his past payment track record.
Among the new entrants Equifax, is US based and Experian an Irish company in the credit information business. Both have a long-established transnational presence. Highmark is a start-up promoted by individuals Anil Pandya and Anuj Desai.
With more players in credit information, competition is expected to hot up. Arun Thukral, managing director, Cibil, said that the approval allows it to extend service to more industries including insurance and telecom, which will help widen its customer base. Commenting on the competition that would emerge with the entry of more players, Mr Thukral said that in advanced markets companies rely on credit information from more than one source and new entrants would not eat into Cibil’s business. Cibil has close to 164 members from the financial sector that use its database.
Richard Fiddis, managing director, Emerging Markets at Experian said, the company has for now got a provisional licence to set up operations. Experian has already received the approval of the Foreign Investment Promotion Board to invest 49% in the venture. It had identified six local partners, but refused to divulge their names as well as the amount of money it was proposing to invest in the venture.
Cibil was originally promoted by SBI (40%), HDFC (40%), Dun & Bradstreet Information Services India (10%) and Trans Union International (10%). Subsequently, the company inducted more investors including ICICI Bank, HSBC, StanChart, Citicorp, Bank of Baroda, IOB, Sundaram Finance, Bank of India, GE, UBI and PNB. ICICI Bank, SBI, D&B and Trans Union hold 10% stake each in Cibil. Others own 2.5%-5% each
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