Coming, CIBIL alert on high-risk/very good customers

July 8, 2013 – Business Line

CIBIL, the country’s largest credit bureau, will soon launch a new service that will alert banks about defaults and on any profile change of an identified set of customers, Arun Thukral, Managing Director, CIBIL. 

Likely to be called ALERT, this subscription-based service will help member-banks to retain customers with good repayment record. 

“Alerts will also be sent on changes in credit scores or trade lines. Banks will be required to provide a set of customers who may be high-risk or very good ones and CIBIL will alert them as and when there is a profile change or an enquiry on new products”, Thukral said.

“Simply put, if a customer with an existing relationship with, say, bank A for a credit card were to look for a home loan from another credit institution, say, bank B, then CIBIL will notify bank A that its existing customer is looking for a new product. 
Then it is up to bank A to offer a better deal to that customer”, Thukral explained.

“To start with ALERT will be a B2B service”, he said. Later, it will also become a B2C service.

“Banks will be alerted on a real-time basis. User acceptance tests are going on. We will launch it very soon”, Thukral said.

He said CIBIL research showed that 70 per cent of customers in many banks moved to another institution to get a second product. “If my customers are looking for any other financial product, I should be able to offer them better terms and conditions so that I can retain them. One should not lose good customers if you want a healthy portfolio,” he said.

Such services are already being offered by credit bureaus in developed markets, he said.


NEW CREDIT

CIBIL data as of March 2013 shows that the number of applications for new credit has been on a steady rise, which grew by 200 per cent since the first quarter of 2010, Thukral said. New credit refers to people who never had a credit product and were looking to get one. “The number of new accounts opened has increased by over 80 per cent in last three years”, he added. 

This increase in the number of new credit applications and loans booked indicate an increased demand for credit. There is a bounce-back by lending institutions in sanctioning new credit after the downturn of 2008.