Reserve Bank of India has allowed three more credit information companies to do business. The banking regulator has also permitted the only existing local credit bureau Cibil (Credit Information Bureau India Ltd) to maintain credit histories of insurance and telecom customers.
The three new entities include Equifax Credit Information Services, Experian Credit Information Company, and Highmark Credit Information Services. These entities were short-listed from 13 applicants including Cibil. Business for credit bureaus is expected to grow given rising defaults in consumer credit and growing risk consciousness among lenders.
Credit information companies inform banks whether a prospective borrower is creditworthy or not based on his past payment track record.
Among the new entrants Equifax, is US based and Experian an Irish company in the credit information business. Both have a long-established transnational presence. Highmark is a start-up promoted by individuals Anil Pandya and Anuj Desai.
With more players in credit information, competition is expected to hot up. Speaking to ET Arun Thukral, managing director, Cibil, said that the approval allows it to extend service to more industries including insurance and telecom, which will help widen its customer base. Commenting on the competition that would emerge with the entry of more players, Mr Thukral said that in advanced markets companies rely on credit information from more than one source and new entrants would not eat into Cibil’s business. Cibil has close to 164 members from the financial sector that use its database.