FinTech companies cheer as RBI allows access to credit bureau

By Puja Sharma

The RBI’s decision to allow FinTech to access credit bureau has brought cheer among technology companies, with most of them offering last-mile financing solutions for the individual as well as retail customers.

Through a gazette notification in November 2021, the RBI amended the Credit Information Companies Regulation 2006. The notification enabled “entities to register” as users of credit information bureaus. The notification permitted “entities engaged in the processing of information for credit institutions and satisfying the central bank’s criteria” to access individual credit histories.

The move is being seen as a great enabler in expediting decision-making by Banks and NBFCs while working with technology companies.Vinay Bagri, Co-founder, and CEO, Niyo said: “It’s a very progressive move by RBI. It significantly helps customers because FinTechs, like us, are building innovative products to solve for consumer credit and direct access to bureau along with alternate data will further enhance the capabilities of fintech to innovate and simplify credit offerings.”

Gaurav Chopra, Founder and CEO of IndiaLends, the marketplace for credit products, personal loans, credit cards, among others, commented: “At the outset, we interpret the notification to be a positive step for credible players in the market. We’re carefully reviewing the notification along with our partner bureaus, and as a responsible and customer-centric service provider, we’ll like to comment on the matter once there’s absolute clarity on the notification’s impact on all stakeholders, including our customers.”

Rajesh Mirjankar, MD and CEO of Kiya. ai, said: “The initiative of RBI to permit FinTechs to access credit information is in the right direction. FinTech will continue to play an important role in the financial inclusion of the masses and providing FinTechs with the credit information will help in quicker and better credit decisions. Many of them have a partnership with or funding from banks for the origination of credit-based accounts. With access to data during origination,  banks will be able to make more informed decisions on underwriting the credit. It will also be useful if credit bureaus take inputs from FinTechs on other data parameters captured in their processes to evolve newer models of generating credit scores.”

Tarun Soni, Head of Finance at Bizongo, said: “The International Finance Corporation (IFC) has stated India’s credit gap to be Rs.25.8t, while the formal credit supply addresses only Rs.10.9t worth of MSME financing needs. While Banks and NBFCs have inculcated technology to address the credit gap, there are still several issues that delay loan disbursals. At Bizongo we welcome this move as it allows us to provide our partner banks and NBFCs with real-time information through credit bureaus. This expedites the decision-making process by reducing the time in the exchange of information, enhancing transparency, and also minimizing manual intervention. We believe this will act as a great catalyst for the growth of supply chain financing in India. Bizongo partners with over 20 Banks and NBFCs and has enabled INR 1200 crores of loans for MSMEs to meet their working capital needs.”

Priti Rathi Gupta, Founder of LXME, said: “This will be a good boost to Fintech’s assessment and ability to lend. However, it’s important to note that Fintech’s cater to demography, that may not have a credit score currently, but in the long run, as digitization permeates deep into the country, the credit information will be more widely captured.”

Gurjodhpal Singh, CEO of Tide India, said: “This is a huge positive for FinTech, this decision by RBI will not just enable openness in the eco-system, but will also empower the consumer. This will ensure efficient usage of customer data in a secure and compliant manner, that too with customer consent — thus being an amazing enabler and will strengthen people’s trust in the Indian digital ecosystem. As aptly stated by our Prime Minister, these positive steps by RBI will bring in a “FinTech revolution” that’s needed to achieve financial empowerment of every single Indian citizen.”

B2B FinTech Global PayEX that facilitates channel financing for MSME dealers and distributors for several Fortune 500 companies welcomed the move. Its Chief Operating Officer, Stuart Jackson, commented: “The inability to have transparent and real-time access to determine creditworthiness is the biggest challenge today for FinTech to facilitate loan disbursement to MSME. Despite the best intentions to reduce the credit gap for MSMEs in India, the decision-making process often suffers as financial institutions find it challenging to disburse loans without credit data. While FinTech players have been able to help financial institutions with alternate data such as transaction history, payments behaviour of MSMEs, having access to credit bureau ratings will help FinTechs present a curated list of borrowers based on their credit profile. This is a big win for fintech and their partner Banks and NBFCs.”