Indian private sector banks are focused on retail lending, largely on account of process-driven lower turnaround time for lending decisions in the retail segment. Bureaus such as CIBIL, Experian and Equifax have played a key role in meaningfully reducing the probability of adverse selection by lenders, facilitating more sensible targeting and deeper mining of existing customer relationships. However, in the current cycle, the thrust is equally split between secured and unsecured (50:50) in contrast to 2007 where the mix was skewed towards unsecured (nearly 70%-80% of the proposals during 2007 were unsecured in nature).
In our previous article we presented that Credit Cards is the Next Big Product for Banks contributing to Banks Bottom-line in the Wealth Management Segment. Today we’d like to analyze on the basis of Data which Banks are Leading the Credit Cards Business Segment in India.
HDFC Bank, SBI and ICICI Bank seem set to lead this business. The share from this business is likely to be most significant to HDFC Bank (over 15% of fee income) given its high market share in credit card transactions or volumes. For most other banks, the share of this business is relatively lower at less than 10% of
Experian India is gradually unveiling its Global Tools and Analytical Services to Indian customers [Banks & FIs] Apart from Serving Credit Reports and Scores, they are now offering Value Added Services which covers Frauds and Consumers on the verge of Default.
Experian has rolled out tools that track consumers borrowing / spending heavily or acting credit hungry. The trigger will alert the lender and help him manage his portfolio risk. This is essential because the customer maybe in sound position while availing the Loan / Credit facility but it may change overtime and this is captured by the Experian’s Analytics tools.
Mr. Jayram of Experian said,
Experian leading Credit Bureau globally is prioritizing growth (6-8% organic in our model) over margin expansion. This is probably in the best interest of company and investors. The four main growth drivers Experian is focusing on are
- Geographic expansion,
- Increasing data depth
- Growing business segments within each geography, and
- Introducing and monetizing new products / verticals.
The company appears well positioned to profit from big global
Many readers have posed Authentic Questions to Us being the leading publication on Credit Bureau and Card industry in India. One of the readers asked me – Can CIBIL data be used for marketing ? Does CIBIL produce some information reports ?
By law [Credit Information Companies Act, 2005 2006] neither CIBIL nor any other Credit Bureau operating in India cannot use their data repository for soliciting business or for marketing purposes.
However, CIBIL, based on its significant database, has been helping banks profile customers in several new geographies. For eg, if a bank wants to do retail business in a certain region, CIBIL can generate
CIBIL Transunion is the leading Credit Bureau of India with with the largest number of credit information records. RBI the Indian Financial System regulator has mandated every Financial Institution including Banks in India to submit Lending Data to atleast one Credit Bureau / Information company. Over 800 FIs upload data about Borrowers on a monthly basis to CIBIL.
We’ll see what kind of Data Repository CIBIL is Maintaining and the Definition / Meaning of each of these terms,
Individual Consumer Database CIBIL has Information on 135mn Indian / NRI individuals or