Credit Info Companies Bill to 'expose' wilful defaulters

NEW DELHI: The government has heeded to the Left parties’ request for fixing the wilful defaulter. The Union Budget ’04-05 is likely to pave the way for dissemination of information about borrowers by lenders to anyone seeking such information.

This will form part of the Credit Information Companies (Regulation) Bill ’04 that is likely to be placed before the Parliament in the Budget session. The Bill, apart from disseminating information about borrowers, will also enable collection and compilation of data and convert the same into information for the pricing of credit. It will also enable companies to register with the RBI and regulate these companies, enabling competition.

While the first Credit Information Company has been formed with a capital of Rs 25 crore, the government feels competition should prevail in this sector too. As of now, lenders are restricted from disseminating information about the borrowers. In fact, whenever account-specific information is asked in the Parliament, even Parliamentarians are not provided details about specific accounts due to the secrecy clause.

This practice of marking files secret has been going on since the British times. The government feels information should be shared until and unless it is against national interest.

With expansion of credit, sharing of data has turned into great business. Banks, mobile companies and a host of other companies are chasing data on a good customer base, as they feel that their costs can be reduced as a result of focused marketing. The only company, Credit Information Bureau of India (Cibil), has also been acting on broadening services. This will involve storing data regarding buyers of insurance, telecom services and utilities.

Further, data from the non-banking finance companies could also be merged with the main data base, thus, expanding reach of the data. This will especially be interesting with retail customers being introduced in the horizon, as banks have already done their own data warehousing for the larger corporates. According to estimates, the consumer database of Cibil has touched the critical mass of 5.5m.that has been received from 13 banks.