In a first, MFI customers to be given credit scores
07 Dec 2013
The Hindu Business Line
Edition: Page 11
This service by Equifax will give a holistic profile of borrowers
For the first time in India, a credit bureau is offering scores to
help understand the credit profile of microfinance customers.
Launched by Equifax Credit Information Services, a credit information
company, the product is called Equifax MFI Risk Score.Through this
product, a microfinance institution that is a member of ECIS, can
obtain credit reports of its customers.
By scoring their customers, MFIs will be able to understand the
credit profile of borrowers more holistically, which will help them
align their products and services accordingly, Sanjay Patel, Managing
Director and CEO, Equifax India told Business Line.
A credit score is a numerical representation of the customer’s credit
profile and also predicts the probability of a customer going
delinquent in the next 12 months.
While retail customers of banks and NBFCs have been scored for some
time now, the concept of a credit bureau is relatively new for the MFI sector.
The score is the next step in the evolution of credit information
services from a credit bureau since it provides predictive power along
with credit attributes in a credit report of a customer, Patel said.
ECIS was issued a certificate of registration by the Reserve Bank of
India in March 2010 and the dedicated Micro Finance Bureau was
launched in May 2011.Currently, Equifax has about 120 MFIs as
members.On an average, every microfinance institution has about 10
WHO WILL BENEFIT?
Both MFIs and their customers will benefit from a credit score.It
would provice MFIs a better understanding of their customers’ credit
profile as well as a predictive insight into customer behaviour.This
will help them target their products and services more efficiently.As
for customers, credit scores will help differentiate themselves based
on their credit behaviour.It will enable them have gain broader access
to products in this segment and possibly even credit at lower rates.