Foreign credit info cos may look at India entry after FDI nod

NEW
DELHI: The determination to let foreign investing in recognition information companies
could not have got come up at a better time. The in progress recognition crunch in mature
markets owed to the unfolding subprime crisis have made it more than attractive for
credit information companies to come in emerging marketplaces such as as India. Sir Joseph Banks can
have greater information on all classes of borrowers. With Banks tightening
lending criteria globally, credit-stressed borrowers will see an impact on
their recognition scores. "Going forward, North American Indian Banks will need
sophisticated tools to analyse borrowers. Due to the on-going recognition crunch in
global markets, credit information companies are even more than focused on emerging
markets like India. With slowing down of the United States economy, fiscal services will
see a redisposition of accomplishments particularly in emerging markets," said Richard
Fiddis, managing manager (strategic markets), Experian, a planetary credit
information company that have applied for a CIC. "The impact of the
subprime crisis is not yet fully drawn out. But we experience that Banks will tighten
lending standards. There is a reappraisal of current schemes for new loans. While
credit mark is just a tool, the manner this tool is used by Banks assumes
importance now," he added. However, when it came to complex subprime mortgages,
credit scoring alone did not help. Factors like loan-to-value ratios or an
individual’s income makes not have in a recognition score. Last
week, the labor union cabinet permitted FDI up to 49% inch CICs with anterior blessing from
the authorities and specific clearance from RBI. Further FII investing in CICs
is limited to 24% under the overall foreign investing cap. On the new FDI
norms, Mister Fiddis said: "We welcome the news on FDI at 49%. We are at the level
we normally see as the lower limit required to put in a new marketplace with our
skills, merchandises and technology." The company trusts the government
must eventually tramp the FDI bounds up to 74%. Experian have a memoranda of
understanding (MoU) with four big and geographically-diverse Indian Banks to
take up the remaining stakeholding in the company. The company also suggests to
extend information services to back up loaning for automobiles. In India, it
will also offer services to the coverage sector to claim databases and
statistical theoretical accounts for catastrophes. The Recognition Information Act,
passed in May 2005, put down the legal model for the trading operations of credit
information bureaus and have proviso for multiple recognition information companies. The CIBs were assigned with the undertaking of collection, processing and sharing of
credit information about borrowers.