The 31 MFI’s are part of the Microfinance Institutions Network (MFIN), a self regulatory organization of Non-Bank Financial Companies (NBFC) MFIs that aims to work with regulators to promote microfinance to achieve larger financial inclusion goals.
The initiative by the MFIs is expected to change the current scenario of lending in the Indian microfinance sector by enabling informed credit decisions through information sharing.
Reportedly, the current Indian microfinance sector is estimated at around 120 million households which translate into a credit demand of INR1.2 trillion at an average per household credit demand of INR10,000.
Arun Thukral, managing director of CIBIL, said: “The establishment of Microfinance Credit Information Bureau is a vital step towards inculcating financial discipline among the borrowers of micro-loans and will increase credit penetration. It will help promote responsible lending and enable MFIs to assess the credit worthiness and current exposure levels of loan applicants.
“The global expertise of our technology partner, TransUnion, will be another reason to fully support a credit bureau for the MFI’s sector. Moreover, our technology architecture is scalable and will be geared to handle the challenges and uniqueness of the microfinance industry in India.”
Vijay Mahajan, chairman of MFIN, said: “Microfinance Institutions already serve over 25 million customers who have no documented credit history. The task of tracking the credit history of such large numbers is challenging. By supporting this initiative, CIBIL will be participating in a nation-building effort that will go a long way in reducing the risks caused by multiple lending and help maintain the 99% plus performing assets record of the sector.”
Currently, CIBIL’s database has over 155 million records and a member base that exceeds 200 financial institutions. Moreover, its partnership with the two global credit information companies TransUnion and Dun & Bradstreet will continue to support the credit industry.
