If you are looking for a car or home loan, start paying your power and phone bills on time. For, your loan proposal could well be rejected in case banks don't find your credit rating to be good enough.
Battered by the steady rise in bad loans during the last few months, banks are now insisting on payment schedules of household utilities to check the credit-worthiness of borrowers.
Most banks have set up rigorous systems, including reports from credit information bureaus, to determine the repayment capacity of a borrower.
"We have several layers to appraise a customer," TM Bhasin, chairman and managing director of Indian Bank told Hindustan Times.
Citibank has asked its employees to follow "responsible financing" norms, while others are going through the profiles of customers. "The credit rating agencies allow banks to take informed risks," Anand Selva, head of consumer bank, Citi India said.
The stringent checks are different from the situation till the crunch began, when banks competed for selling loans. "It is critical to be more vigilant as interest rates are inching upwards and liabilities (for banks) are getting extended with longer loan tenures," said DR Dogra, managing director, Care Rating, a credit rating research firm.
But the stricter credit norms will further squeeze consumers, caught between rising interest rates and soaring prices.