2. Credit Information Bureau (India)
• Ownership Structure: CIBIL, India’s first credit
information bureau was established by SBI and
HDFC, with a shareholding of 40% each, while
Dun & Bradstreet Information Services India
Private Ltd (D&B) and Trans Union International
Inc. (TU) hold 10% each.
• CIBIL is a repository of information, which
contains the credit history of commercial and
• CIBIL provides this info. To its members in the
form of credit information reports (CIRs)
3. • RBI in its ‘Annual Monetary and Credit Policy’ for
the year 2004-05, had stated that in respect of
credit bureaus, ‘it is desirable that the objective
should be to move towards a sufficiently
diversified ownership with no single entity owning
more than 10% of the paid up capital in the first
stage and 5% later’.
• As on 31 Dec. 2006, HDFC, SBI,ICICI Bank, D&B
and TU (Trance Union), hold 10% stake each in
CIBIL., whereas Citicorp Finance (India) Ltd.,
Standard Chartered bank, HSBC, Punjab National
Bank, Bank of India, Central Bank of India, Union
Bank of India, Bank of Baroda and Indian
Overseas bank hold 5% stake each, while the
remaining 5% is equally held by GE Strategic
Investments Ltd. and Sundaram Finance.
4. Functions of CIBIL
• It is a composite credit bureau, which caters to both
commercial and consumer segments. The Consumer
Credit Bureau covers credit availed by individuals while
the Commercial Credit Bureau covers credit availed by
non-individuals such as partnership firms, proprietary
concerns, private and public limited Co. etc.
• The aim of CIBIL’s Commercial Credit Bureau is to
minimise instances of concurrent and social defaultsby
providing credit information, pertaining to non-individual
borrowers such as public ltd. companies, private ltd. co. ,
partnership firms, proprietorships, etc.
• It maintains a central database of info. As received from
5. • It collects and sisseminates this info.on
demand to members in the form of
commercial Credit Information Reports
(CIR) to assist them in their loan appraisal
6. Fair Practices Code for Debt
• Demand for Lenders’ Liability Law:
• The Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act was
enacted in India in 2002.
• The Act allowed banks to take possession of assets of
defaulting companies without going through the
cumbersome legal process.
• On the basis of the recommendations of the working
group on Lenders’ Liability Laws constituted by the Govt.
of India., RBI, in consultation with the Govt and some
banks and financial institutions, finalised a set of codes
called ‘the Fair Practices Code for Lenders’ and adised
banks to adopt the guidelines.
7. • All the banks in India have framed their own set of
Fair Practices Codes as per the guideline and
implemented it from Nov. 1, 2003
• General Guidelines: Applications for Loans and
• A) Loan application forms in respect of priority
sector and advances of up to Rs. 2 lakh should be
comprehensive. It should include info. About the
fees/charges,if any payable for processing. The
amt. of such fees is refundable in the case of non-
acceptance of application.
8. • B) banks and fin. Intuitions shall give
acknowledgement for receipt of all loan
applications. The time frame, within which loan
applications up to Rs. 2 lakh will be disposed
should also be indicated in acknowledgement of
• C) Banks should scrutinise the loan applications
within a reasonable period of time. If additional
details/documents are required, they should
intimate the borrowers immediately.
• D) If small borrowers seeking loans up to 2 lakh,
the lenders should convey in writing, the main
reason which, in the opinion of the bank after due
consideration, have led to rejection of the loan
applications within the stipulated time.
9. • Loan Appraisal and Terms/Conditions:
• A) lenders should ensure that credit proposal Is
properly appraised after assessing the
creditworthiness of the applicants they should not
use margin and security stipulation a a substitute
for due diligence on credit-worthiness.
• B) Terms and conditions and other caveats
governing credit facilities are arrived at after due
negotiation with the borrower should be reduced
in writing and duly certified by the authorised
official. A copy of the loa agreement along with a
copy each of all enclosures quoted I the loan
agreement should be furnished to the borrower.
10. • Contd.
• C) The lender should convey to the borrower the
sanction of credit limit along with the terms and
conditions thereof and keep the borrower’s
acceptance of these terms and conditions on
• D) as far as possible, the loan agreement should
clearly stipulate that the credit facilities granted
are solely at the discretion of the lenders. These
may include approval or disallowing facilities,
such as drawings beyond the sanctioned limits,
honoring cheques issued for a purpose other than
the one specifically agreed to in the credit
sanction and disallowing drawing on a borrowal
account on its classificationa s a non-performing