Telangana plans alternative credit scoring mechanism

Hyderabad: Telangana is moving towards enabling formal credit access for individuals without a CIBIL score, especially women from self-help groups (SHGs) and low-income households. The state government is developing an alternative credit scoring mechanism that uses non-credit data such as utility bill payments, e-commerce transactions, and government tax records to evaluate an individual’s repayment discipline.

“This will allow lenders to confidently serve first-time borrowers using richer, real-time insights into financial behaviour. The composite alternative credit score will be generated through expert-led analytics that transform raw data into anonymised financial signals. This initiative aims to expand formal credit access for those currently excluded from the credit ecosystem,” a senior Telangana government official told DH.

The state is expected to unveil the plan for the Telangana Information Bureau (TIB) for individuals that will develop the alternative credit scoring mechanism, a key part of its financial inclusion vision at the two-day ‘Telangana Rising’ Global Summit on December 8-9.

To support the new credit scoring framework, the government will establish the TIB, a consent-based digital information bureau designed to integrate alternative data sources and generate verifiable individual credit histories. “The objective of this bureau is to expand affordable formal credit access for credit-invisible households by building trustworthy financial profiles derived from non-traditional data,” the official added.

According to a 2025 World Bank’s Global Findex report, India has made substantial progress in financial inclusion, with adult account ownership increasing from 35% in 2011, to 89% in 2024. However, access to formal credit has risen only modestly from 8% to 12%. Telangana mirrors this national trend, with over half of its Rs 2.03 lakh crore MSME credit potential still untapped, as per the Telangana State Level Bankers’ Committee (SLBC) report of 2025.

The proposed TIB seeks to bridge this gap by establishing a secure, privacy-preserving, research-led data infrastructure. It will integrate verified administrative datasets, such as property registration, electricity payments, welfare transfers, and tax records to generate alternative credit scores for individuals and enterprises.

Only the derived score, not the underlying data, will be shared with lenders, ensuring that financial inclusion advances alongside strong data protection standards.

The Telangana Data Exchange (TGDeX), launched by the ITE&C Department, will serve as the state’s foundational digital backbone for secure data-sharing, AI innovation, and governance modernisation. The TIB will operate within the TGDeX framework, leveraging its data repositories, AI model library, and sandbox testing environment to build and validate credit-scoring models using authenticated and anonymised datasets.

Telangana also plans to introduce a consent-driven data privacy and protection framework to ensure personal financial information is shared only with informed consent and protected from misuse or predatory lending. The initiative will work in close coordination with the Reserve Bank of India (RBI) to uphold transparency, consumer protection, and robust regulatory oversight.