Crisil, Equifax, Tata Capital to form credit information company

Credit rating agency Crisil has announced that it has reached a preliminary understanding with Equifax Inc of the US, and Tata Capital Ltd to set up a credit information company, which provides credit histories and checks on retail borrowers.

This is the second announcement since April 2007 when the Reserve Bank of India invited applications for CIC licences. UK-based Experion had announced similar plans.

Last month, the government allowed 49 per cent foreign direct investment in credit information companies subject to government and Reserve Bank of India approval as part of a review of its FDI policy.

The government also specified foreign institutional investment of 24 per cent in such companies that are listed on the markets within the overall FDI limit.

Crisil has already applied to the RBI for permission to start and operate a CIC.

Equifax is a leading global credit information solutions company. Tata Capital is a non-banking finance company and a wholly-owned subsidiary of Tata Sons Ltd, the apex holding company of the Tata group.

"The shareholding among the partners, investments and the business plans of the CIC will be finalised based on the guidelines released by the RBI for CICs," said Roopa Kudva, Crisil's managing director and CEO.

"The combination of Equifax's international experience, products and services in credit information, Crisil's deep understanding of and research in the Indian financial services industry, and the Tata Group's vast resources and capabilities, will position us to provide the very best credit information services in India," said Richard F Smith, chairman and CEO, Equifax Inc.

Kudva added that Crisil's entry into the rapidly growing retail credit space "provides an attractive opportunity to broaden and diversify its range of services".

On a question on competition, Kudva said: "Today, banks and lenders have to take decisions on providing loans in a very short time. Therefore, we and our partners intend to provide cutting-edge credit information services and analytics to them."

The retail finance market in India is expected to grow at the rate of about 20 per cent annually over the next five years, buoyed by favourable demographics and substantial increases in disposable income.

"Tariffs will be in the range of 25 to 50 paise," promises an upcoming operator.