• MARCH 3, 2000

SBI and HDFC will together set up credit information bureau

State Bank of India (SBI) and Housing Development Finance Corporation (HDFC) will together be setting up the country's first credit information bureau. This is in line with the finance minister's announcement in the recent budget, to set up credit information bureau (CIB) to get better credit information on borrowers of banks and increase transparency.

The other partners slated for this joint venture are Dun & Bradstreet and Transunion, the world's largest credit information providers. Transunion will provide technical support for maintaining databases of corporate accounts and Dun & Bradstreet will provide assistance for retail accounts.

The constitution of the CIB will be on the same lines as recommended by the RBI committee's report on CIB. The Banking Secrecy Act prevents disclosure of individual account information currently and hence may need to be legally changed. The information bureau would collect consumer and commercial credit data and create, market, package, sell and distribute reports to banks, financial institutions and other businesses who agree to contribute data to the bureau on a regular basis.

This credit information bureau would be very useful for the banking and finance sectors as it would provide them information which would be useful for them in making transactions and increase transparency within the sector.

SBI, India's largest public sector bank and HDFC, India's largest housing finance development institution will be able to provide a substantial chunk of information on the corporate market and retail market due to their large database. SBI accounts for 22% of the banking sector loans and advances and hence would be in a position to provide adequate information for the database. HDFC too with its large retail database will be able to provide useful information to the finance industry.

This venture sure is a step in the right direction to increase transparency in the banking and finance sectors as this has been a drawback for investors, companies, bank and finance sectors in their business transactions. The areas which it should specifically throw light are non-performing assets, sector wise allocations, employee information, credit policies etc.

The CIB would be beneficial to both credit givers and credit receivers as both companies and individuals will save time on giving loans as well as on getting loans due to information available via the bureau. As this would provide a wide database of a company's loan schemes and of individual's credit worthiness it would be useful for speeding up future loan transactions. It would also help in bringing down non-performing assets in the corporate and retail segments due to transparency among institutions.

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