The Reserve Bank(RBI) of India has urged credit information companies (CICs) to create awareness among consumers about credit behavior and credit scores to manage their finances better.
Delivering the keynote address at the fourth annual CIBIL Credit Information Conference here on Tuesday, J. Sadakkadulla, Regional Director (Chennai), RBI, said: “The key deliverable for CICs in the coming days would be to facilitate a smoother credit decision-making process and, thereby, bring down the cost of financial transactions and credit inter mediation in the financial system for the benefit of the masses.”
Observing that credit information has enabled faster access to credit from financial institutions, he said, “India stands at a decent 28th rank amongst 189 countries on the ease of getting credit and has the best ranking amongst the BRICS economies — China is at 73, both Russia and Brazil are at rank 109.
However, he pointed out that though India has a large workforce with rising disposable incomes, the extent of credit penetration is still quite low compared to global standards. One of the reasons for this is the information asymmetry between the lender and the borrower. Emphasizing the need for a genuine database, he urged scheduled commercial banks, non-banking finance companies and housing finance companies to submit accurate data on regular basis. “The use of CIC inputs during the credit appraisal process at lending institutions can only be effective if the data is up-to-date,” Sadakkadulla said.
Source: Secondary
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