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Microfinance credit bureaux get going

After individuals and corporates, it’s now the turn of the micro-finance sector to get credit information reports. Credit bureaux will track the loan history of the borrowers of micro finance institutions (MFIs).

business Updated: Jul 12, 2011 23:17 IST
Sachin Kumar

After individuals and corporates, it’s now the turn of the micro-finance sector to get credit information reports. Credit bureaux will track the loan history of the borrowers of micro finance institutions (MFIs).

Equifax Credit Information Services (ECIS) launched ‘Microfinance Credit Bureau’ last month while India’s largest credit bureau Cibil (Credit Information Bureau India Ltd) is also planning to launch credit bureau in the next few months.

“We are working on credit bureau for micro-finance sector and expect to launch it in few months,” said Arun Thukral, managing director, Cibil. “Till now we have collected data of 40 million accounts.”

Introduction of dedicated credit bureaux will help the healthy growth of the Indian micro finance sector.

There were reports, in the past, of borrowers in rural areas committing suicide due to inability to repay the loan of micro-finance companies.

“Dedicated credit bureau will bring more transparency and will check over-leveraging in the micro finance sector,” said Samir Bhatia, managing director and chief executive officer, ECIS. “Companies will be able to judge the suitability of a prospective borrower by checking his or her credit history.”

The draft of micro finance bill unveiled last week by the ministry of finance asked micro finance institutions to become members of credit information bureaux.

Like the general credit bureau that collect the data of bank customers and track their credit history, micro finance credit bureau will collect the data of persons who borrow from MFIs. The data will include amount of loan taken, tenure of loan, default in payments in the past and other information related to borrowing.

You are under watch

Equifax Credit Information Services launched Microfinance Credit Bureau last month.

India’s largest credit bureau Cibil is also planning to launch credit bureau soon.

The Centre has also favoured setting up of such credit bureau.

Dedicated credit bureau will bring more transparency and will check over-leveraging in the micro finance sector.