The Hindu Business Line : RBI urges banks to support credit information bureau

RBI has asked banks to liaise more effectively with the Credit Information Bureau (India) Ltd (CIBIL), which has been formed to provide information on credit worthiness of borrowers.

Ms Usha Thorat, Deputy Governor of RBI, urged bankers on Saturday to support the bureau, a statement that later found backing from the Indian Banks' Association (IBA). She was addressing BANCON 2005 here.

Mr H. N. Sinor, Chief Executive of IBA, confirmed that the Central bank wants its members to provide more details about their borrowers to CIBIL.

CIBIL, formally flagged off in 2004, furnishes the banking system with critical data, including information about smaller customers. Its users include banks, financial institutions and other financiers. The organisation is the first of its kind in the country. With increased liberalisation in the banking sector, part of the focus has shifted to only profitable customers. The skewed situation, however, calls for greater attention to those who have little access to banks, including sections that are shy of using banking services. These include the elderly, Ms Thorat said. Examples such as UK's initiatives on financial inclusion were cited in this context. It was also pointed out that the French have a right to access bank accounts.

Can banks in India ensure greater financial inclusion and simultaneously follow `Know Your Client' and anti-money laundering norms? The question, RBI feels, needs to be answered by bankers themselves, considering the poor penetration of banks in rural areas.

A very large portion of rural households is not indebted to banks at all, while merely 25 per cent have access to formal sources of credit. Incidentally, RBI's record shows that there are currently about 304 million savings accounts in the country.

"Today, finance and banking systems are very strong. It is time to focus on people at the bottom of the pyramid and align all sections with the systems that have been put in place," the RBI Deputy Governor said.

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