Credit Information Bureau (India) Ltd (CIBIL) is planning to introduce a risk index that will help the country’s banks take quicker decisions on extending loans to corporates and business houses.
While CIBIL is still hammering it out , banks would soon be in a position to ascertain the ability of companies to service their loans based on their position in the index.
“The Risk Index will be in the form of a score ranging from 300 to 900 and will give a quick snapshot of the credit history of the respective companies,” CIBIL managing director Arun Thukral said. The index follows the credit information firm’s TransUnion score for individual borrowers being used by financial institutions and banks to take decisions in respect of credit cards and home loans. “Any individual with over 750 score can be considered as good,” he said, addressing reporters here on Tuesday.
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Mr. Thukral, however, refused to set any timeline for the introduction of the new index and said that it was still being worked on. While credit rating agencies give a broader picture of the risk profile on the basis of their trade data and balance sheets, CIBIL’s index will help lenders gauge the profile of business establishments.
The index comes at a time when banks are increasingly looking for credit profiles of not just the businesses, but also their promoters. A recent survey conducted by the CIBIL revealed that 62 per cent of borrowers opting for home loans had scores of over 800 in the second quarter of the previous fiscal, against just 23 per cent in the 2008 financial year.