CIBIL is probably one of the less-appreciated success stories of India’s financial sector evolution. It is today, probably the back-bone of the relatively high-quality and disciplined retail credit build out in India.
CIBIL has over 350 Mn accounts and adding 4 million new accounts every month – of which 30% are new accounts. Almost all key financial sector participants are contributing and using data from CIBIL. It gained momentum and customer acceptance after 2007, when there was a retail credit crisis in the Indian market – has not looked back since. There are two other credit bureaus in India now – Experian and Equifax. CIBIL offers credit scores / Analytics – almost all participants use it, and typically overlay their own analytics on it. CIBIL also has 8 Million accounts in commercial credit.
Growth for CIBIL The total growth potential/market size is all adults in India – which can go up to 900m. The Aaadhar Card should be a big driver of growth. The retail credit bureau has been well adopted by participants (almost all): across private, government and foreign banks.
Asset Quality They do not see any real credit quality pressures in retail assets – across the product pipeline. This has been the case for the last two years. There is some pressure in Commercial vehicles – and newer vintage loans are also showing pressure. Effectively, it’s a relatively hard market to call. There is some difference in the quality of assets between govt and private banks…govt is weaker – in car and education loans.
It’s a structural change in the operating environment for retail credit, should support stronger for longer credit growth – and offer a better early warning system. That won’t necessarily protect the space from pricing / overcrowding challenges, but in our view future credit challenges will potentially lie more in not understanding the credit rather than not knowing the customer.