CIBIL's microfinance credit info bureau

The31 MFIs are part of Microfinance Institutions Network (MFIN), a self regulatory organisation that aims to work with regulators to promote microfinance to achieve larger financial inclusion goals. The move is aimed at enabling informed credit decisions through information sharing.

Talking to Deccen Herald from Mumbai Managing Director Arun Thukral said this will help to increase credit penetration in rural areas and give a boost to financial inclusion. It will help promote responsible lending and enable MFIs to assess credit worthiness and current exposure levels of loan applicants. He added that  though CIBIL was initially planning a standalone database for MFI’s, going forward they would integrate it with the regular database. CIBIL’s database has grown to over 155 million records and a member base that exceeds 200 financial institutions. He said that the reason for this was as later the MFI customers may graduate to borrowing from banks, so there could be overlapping of information.  

The microfinance industry comprises a database of over 20 million individuals or records who have no documented credit history as of now and is looking at ramping it up to 100 million in the span a few years. This will definitely see an increase in the number of borrowings, and  issues over multiple lending and overexposure could become a concern. So, a credit information bureau will ensure prudent lending and improve the credit risk management and to help keep over-indebtedness under check. 

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