Are you paying your monthly bills like water, electricity, house rent on time? If you have, banks may charge a lower interest rate on your loan. The rate and loan entitlement may vary depending upon your credit score tied to your household bills.
The financial discipline of borrowers is already being tracked by banks and the Credit Information Bureau India Ltd (CIBIL), and officials say efforts are on to tighten the banking system in the wake of the financial meltdown in Western nations. Keeping track of retail and small borrowers are part of the drive.
A senior government policy-maker told Hindustan Times that the public sector banks that enjoy a market share of more than 80 per cent may soon start probing more than they have been doing so far in order to protect their books from defaults.
In this, an authentic credit history of borrowers would be crucial, he said.
“Once the data on credit history of customers is in place, we would ask the government banks to look at introducing differential pricing on loans,” the official said.
Allen CA Pereira, chairman and managing director, Bank of Maharashtra said that banks have already initiated credit score efforts. “Due diligence is key. It is extremely important to take note of these additional pieces of information while sanctioning loans to customers,” Pereira said.
A senior executive at a private bank said that credit history of borrowers must be upgraded. “In India, we do not have a very sophisticated mechanism of assessing the creditworthiness of customers but we need to have one at the earliest,” he said.