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Experian Credit Information Company India plans to focus on value-added services such as providing risk triggers to banks for early detection of frauds.
The credit bureau has already rolled out certain triggers to manage portfolio risk arising from changes in customers’ spending habits.
According to Mohan Jayaraman, Managing Director of Experian, Indian banks, at present, mainly use only basic credit bureau reports before lending to consumers. However, the demand for value-added products is slowly picking up.
“The Indian credit bureau market started evolving post the crisis in 2007-08. Banks are now contributing data to multiple bureaus and have also got into the hygiene of using bureau report and, in some cases, credit scores before lending,” Jayaraman told Business Line .
While a customer might be in a sound financial position at present, there is a possibility of him defaulting on repayment later.
“By receiving regular alerts about any changes to your customers’ personal or financial situation, you can take immediate action to create individual customer strategies to manage bad debt levels,” he said.
Based on the requirements of a particular bank, the company would work out appropriate risk triggers based on factors such as change in account status (worsening or improving), significant balance changes, opening of new account and exceeding credit limit among others.
Credit Bureau market
There are close to 120 million credit active consumers in the country, which is similar to that in the UK. However, the credit bureau usage in the UK is 20 times higher than in India, Jayaraman pointed out.
The biggest challenge (for Indian credit bureau market) was not data sharing but the quality of data shared, particularly in case of public sector banks, where it differs from one branch to another.
While banks have already started building credit policies in the form of quicker processing based on credit scores, they will soon look at offering attractive rates to consumers with a good credit record, he said.
shobha.roy@thehindu.co.in
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