Reshaping India’s Finance Ecosystem: The TransUnion CIBIL Story

As the Indian economy rapidly expands, flourishing into a vibrant ecosystem filled with immense opportunities, financial inclusion has emerged as a prominent backbone. By giving individuals and organizations easy access to state-of-the-art financial products and services, the country is set to achieve unprecedented economic milestones. One of the major driving factors behind the Indian economy’s boom has been a thriving credit sector.

However, this has not always been the case. Not too long ago, the country’s financial ecosystem was riddled with challenges such as unreliable assumptions of creditworthiness, risky loans, and trust issues. To tackle these obstacles, 25 years ago, a significant revolution swept across the Indian finance landscape: TransUnion CIBIL—the first credit information bureau of India.

In a bid to better understand India’s modern credit ecosystem along with the eminent role of TransUnion CIBIL in reshaping this burgeoning sector, an eye-opening conversation was held with Bhushan Padkil, SVP and Head, Direct to Consumer Business at TransUnion CIBIL. This powerful discussion was filled with amusing anecdotes and inspiring experiences, focusing on a diverse range of topics such as the start of TransUnion CIBIL, the value of CIBIL reports and scores, ways to improve CIBIL scores, and so much more. 

TransUnion CIBIL: The Start of India’s First Credit Information Bureau

The in-person conversation was a riveting journey encompassing the history of India’s credit sector and where the economy is headed. To kick things off, Bhushan went into detail about the inception of TransUnion CIBIL and the role it has managed to play. He said, “Speaking about TransUnion CIBIL, it takes me back 25 years to 1999. India was at the cusp of a financial transformation, but the ecosystem had a concern around information asymmetry.” Speaking on this issue, he added, “Lenders made credit decisions with limited data and took on more risks. And even for consumers, that limited their opportunities.

The conversation also focused on India’s credit history, with interesting facts surrounding the various institutes and regulations in the sector. Going into further detail, Bhushan added, “In 1999, RBI came up with a working group famously known as the Siddiqui Committee, and their recommendation led to the foundation of TransUnion CIBIL—India's first credit information company. We were founded with the purpose of bringing higher transparency, accuracy, and fairness in how credit data is reported, presented, and used in financial transactions.”

It’s undeniable that TransUnion CIBIL has played a monumental role in shaping India’s credit industry, even bolstering India's economic growth as a whole. This sentiment was made clear by Bhushan, as he said, “Fast-forward 25 years to today; we have seen a phase of glorious growth for the country. Not just in terms of our GDP and overall growth in industrial development and consumers, but also huge credit growth. I'm really proud to say that CIBIL has played a role as a catalyst in this.”

The numbers tell the same story. Currently, there are over 7,500 credit institutions, such as banks, NBFCs, regional rural banks, and fintechs, that submit their credit data to TransUnion CIBIL. This comprehensive credit data is collected and stored on their technology platforms and presented in the form of credit reports and scores. This credit data, along with CIBIL’s analytics tools, forms a bridge between financial institutions and borrowers. Further driving home his point, Bhushan said, “Today, lenders are not only objectively assessing consumers' risk in the loan application through credit information, reports, and scores, but are also able to optimize their portfolio and manage their portfolio better. Overall, we are led by a mission to bring down information asymmetry, bring down the cost of credit, foster higher financial inclusion, and foster or accelerate credit awareness and financial literacy in the country.” 

Looking at the Numbers That Matter: The CIBIL Score

The conversation then shifted to the all-important CIBIL score and why both lenders and borrowers need to keep an eye on it. Answering this question, Bhushan said, “Today, CIBIL reports and CIBIL scores have become powerful tools for any credit underwriter or lender. It won’t be an exaggeration if I say that CIBIL score has become a benchmark for credit underwriting in India. Our comprehensive reports have details such as loans and credit cards, repayment track, and even inquiries. Everything is captured in the report, and then the CIBIL score is the gold standard—a measure of the creditworthiness of an individual.”

Using the CIBIL report and score, lenders make critical decisions such as loan approvals, setting up interest rates, and determining the length of repayment tracks. These documents have become essential for decision-making, often determining whether a consumer can receive a financial service. Speaking on this subject, Bhushan added, “There are a lot of other important aspects in life where CIBIL score is used as a very important trust artifact. When it comes to critical job applications, CIBIL score is referred to. When it comes to projects, for a lot of entrepreneurs, a CIBIL report is a very important trust artifact. Currently, about 13 crore individuals have had access to their own CIBIL report and score. That means they are credit aware.” 

What Exactly Makes up a CIBIL Report?

The discussion then took an intriguing turn as an interesting question was put under the spotlight: “What exactly can you see in a CIBIL report?” Acknowledging this engaging question, Bhushan answered, “CIBIL score and report almost act like a financial resume of the individual. The first section includes personal information: the name, gender, date of birth, and ID details like PAN number. The second section is contact information: your phone numbers and addresses. The third section is employment information. The fourth and most important section is the loan account. All the loans, including credit cards, loan facilities you have availed in the past, sanction amounts, high credit amounts, and repayment track.”

During this conversation, it was also explained that whenever an individual applies for a credit card or a loan, lenders inquire with TransUnion CIBIL about the individual’s credit information. Even this detail gets captured in the CIBIL report. Tying up the CIBIL report with the final CIBIL score, Bhushan added, “The CIBIL score is calculated using a lot of the information in the report. It summarizes your credit report for lenders, and it objectively gives out a numeric indicator between 300 and 900. And the higher the score, the better.”

Busting Credit Myths: How to Improve Your CIBIL Score

Next, the discussion moved to whether or not an individual’s CIBIL score could be improved. Tackling the myth that this score cannot be changed, Bhushan answered by saying that that isn’t true at all and that these scores, similar to an exam, can be improved upon. He stressed the importance of having access to one’s CIBIL score and report in order to make enhancements. He said, “I would advocate that one should look at their CIBIL report and CIBIL score every now and then.”

In terms of making actual improvements to the score, Bhushan gave an analogy of a health report. He added, “If there is something off in your health report, what do you do? You take control of your diet, or you exercise more. But that process doesn’t happen overnight. It takes consistent effort. Similarly, if you have a not-so-great CIBIL score, you can always bounce back and correct it and have a strong credit profile. How you do this is by repaying all your loan obligations on time. If you have missed something, go back and pay it off.”

During this conversation, Bhushan also underscored the power of technology in helping individuals improve their CIBIL scores, explaining how a simple reminder can make all the difference. He said, “Personally, what I have done is I have set up automated reminders. Apps that help you will give you reminders on time, so you can set those default reminders, and they will automate this payment process for you.” He also advised individuals to use credit cards with caution and to never max them out, mentioning that limiting their usage can boost a person’s CIBIL score.

Finally, Bhushan also tackled the myth that individuals cannot check their credit scores at high frequencies or that doing so would bring their overall scores down. He promptly dismissed these claims and said, “It is not true at all. In fact, it’s a very good habit. We advocate that you become credit aware. Check your CIBIL report and CIBIL score every now and then.”

The Role of Credit to Realize Vikas Bharat 2047

Finally, the conversation then moved towards how financial literacy and credit awareness could help in the realization of Vikas Bharat 2047 by aiding MSMEs. Currently, the booming MSME sector adds value of about 30% to India’s GDP, a highly significant amount. However, these organizations need immediate support to bolster their financial well-being. If MSMEs can become more financially literate, they can pave the path towards the dream of Vikas Bharat 2047.

Speaking on this critical subject, Bhushan said, “Almost 20% of employment generation is by MSMEs. Also, more than 40% of exports are through MSMEs. But when it comes to financing, there are a lot of hurdles for them: inadequate financial documentation, lack of collateral, and an inability to demonstrate good financial health.”

In this scenario, organizations such as TransUnion CIBIL are playing an essential role in supporting MSMEs and their financial journeys. He said, “When it comes to our contribution, we have two points. One point is around making credit available. That's where our company credit information report and our CIBIL MSME rank play an important role. Lenders look at it to assess an MSME’s creditworthiness and make objective decisions around risks, bringing down the time to approve loans and creating more opportunities for MSMEs.” Adding to his answer, Bhushan said, “The second important aspect is that these CIBIL company credit information reports and CIBIL MSME rank are available for MSMEs on our website. So, I urge all MSMEs and business owners to look at the reports and gain a better understanding of their credit profiles.”

By helping MSMEs achieve greater financial literacy, TransUnion CIBIL can massively support the Prime Minister's vision of Vikas Bharat 2047. This can lead to not only success for MSMEs but also enormous growth for the entire Indian economy.

What Tomorrow Holds: Building a Financially Aware India

Bringing the session to a close, Bhushan delivered his final thoughts. He said, “We are just getting started, and there is so much work to be done when it comes to financial literacy and credit awareness. For businesses and individuals alike, it's important to understand how to cultivate it and use it correctly.” As the Indian economy strives confidently towards extraordinary milestones, these words ring truer than ever.

Empowering individuals and businesses with a robust understanding of credit and its responsible use will be pivotal in shaping a resilient and inclusive financial ecosystem. In India’s evolving financial landscape, being credit aware has become an imperative, emerging as the first step towards improving an individual’s CIBIL score. The numbers paint a similar picture; out of all the individuals who became credit aware by going through their CIBIL report and score, 46% ended up making improvements on them. 

Watch the full interview here: https://www.youtube.com/watch?v=8RChr3LDrhw 

So, to access your CIBIL report and score, go to cibil.com or the app and follow a few easy steps!

Note to the reader: This article has been produced on behalf of the brand by HT Brand Studio and does not have journalistic/editorial involvement of Mint.