An interview with Mr. Sanjeet Dawar, Managing Director of CRIF High Mark, for Sakal Money Magazine, August 2023.

In this interview, he shares insights about credit scores and loans.

1. Tell us something about your Company
   CRIF High Mark, an RBI-licensed credit bureau in India, is part of CRIF, a global company specializing in credit bureau and business information, outsourcing and processing services, and credit solutions. CRIF is ranked amongst the prestigious top 100 IDC Fintech Rankings. CRIF High Mark, with its extensive bureau database, provides information and analytical solutions to banks, NBFCs, insurance companies, and telecom service providers amongst others. With one of the largest databases of individuals and businesses from over 5000 financial institutions, CRIF High Mark provides credit information services and supports millions of lending decisions every month. CRIF Scores have become the trusted indicator for prudent decision-making by credit grantors.
   CRIF High Mark pioneered the setup of India’s first microfinance credit bureau and launched India's first Microfinance database in March 2011. Additionally, by leveraging proprietary sophisticated search algorithms designed and developed to handle complex Indian data, we have extended our offerings to provide Insights and Analytics for Customer Management, Collections & Strategic Decision Making to Banks, NBFCs, MFIs, Housing Finance Companies, Cooperative Banks, Rural Banks, Insurance Companies, as well as Telecom service providers. 

2. What sort of reports do you generate for your clients?
   CRIF High Mark provides Credit Information Reports (CIR) and Credit Scores for all borrower profiles such as MSMEs and Commercial borrowers, Retail consumers, and Microfinance borrowers across urban and rural areas. These precise, easy-to-read comprehensive CIR are useful for evaluating loan applications from both Consumer (Individuals), Commercial (Non-Individuals), and Microfinance segment of applicants.
   
   Individual Credit Report or Personal Credit Score: Your credit score is one of the most important indicators of your financial health. A personal credit score is a three-digit number that ranges from 300 to 900, which measures a person's ability to repay credit. Credit scores are calculated by taking several factors into account, such as the length of your credit history, repayment records, and credit inquiries among others. It enables lenders to assess the profiles of the borrowers. This score is essential for a banker or a lender to understand the risk factor before approving your loan. The higher your credit score, the easier it will be to obtain a loan and negotiate the interest rates. You should monitor your credit report regularly to track your financial behavior. Checking your credit report is considered a soft inquiry, and it will not affect your credit score in any way. Consumers are entitled to one free credit report per year (calendar year) from each credit bureau, as mandated by the Reserve Bank of India (RBI).
   
   Commercial Credit Report: CRIF High Mark's Commercial Credit Report is a comprehensive document providing the credit history of all borrowings of a business entity such as a public limited company, private limited company, partnership firm, proprietorship, etc. Financiers use the Commercial Credit Report to determine credit worthiness of enterprises. CRIF's Commercial Credit Report provides a numerical overview of the commercial borrower's profile through Commercial Credit Score, a first in India. This statistically developed commercial credit score is on a scale of 300-900, as prescribed by the RBI, with 900 indicating the lowest risk profile. CRIF's commercial credit score is designed to predict the probability of default within the next 12 months by the prospective commercial borrower.

3. How do these reports help the client in understanding borrower behavior?
    Basically, lenders such as banks, NBFCs, and financial institutions with the help of individual and business credit scores and reports can take informed lending decisions. Lenders keenly review various details in your credit report before approving the loan. It helps loan officers to easily segregate applications and prioritize them for further action. Banks and lenders use it to decide whether they will approve you for a credit card or loan.

          The lenders look at the following parameters to gauge the creditworthiness from the report:

1. Payment history: With the help of reports, lenders can understand a potential borrower's payment history, such as past dues that have been paid on time or if they tend to pay late. Also, the lender can determine the borrower's ability to repay.
   
   
2. Line of credits availed: Lenders can understand the credit line availed. As well as finding the amount of debt owed, it finds the amount of debt that has been paid. It can also help identify the outstanding debt amount. Further, the credit report helps to understand borrowers' credit utilization ratio.
   
   
3. Delinquency: The decision-makers, by referring to these reports and scores, can be aware of the delinquent account, i.e., accounts where payments have been missed. This information is available at max for the past 36 months.
   Thereby, lenders can evaluate the risk associated with an applicant based on the reports and scores generated. Lenders also use this data for positive reinforcement, such as offering better interest terms for a good credit score.

4. What is your observation (or Conclusion) about borrowing patterns?
   Our annual flagship report How India Lends presents an overview of the credit landscape in India and provides key insights into each of the major Retail product categories, Microfinance and Commercial loans. The second edition of How India Lends – FY2022 deep dives into major lending product categories in India and presents insights on the trends and patterns witnessed between FY21 and FY22. Post unprecedented challenges in FY21 due to the COVID pandemic and the deadly second wave in Q1 FY22, the lending landscape in India witnessed a sharp recovery in the remainder of FY22.
   
   Below is a summary of major product categories and their performance from FY21 to FY22:

• The size of the total lending market in India as of Mar’22 is ₹174.3 Lakh Crore, with Y-o-Y growth of 11.1% over Mar’21.
  
  
• Lending in most retail products was quick to recover from Q2 FY22 onwards. There has been a good improvement in portfolio quality across all these products from March’21 to March 22 Major retail lending products such as Home Loans, Personal Loans, Business Loans, Consumer Durable Loans, Two-wheeler Loans, Auto Loans, Credit Cards witnessed growth in Originations value and volume from FY21 to FY22. Home Loans witnessed 29% growth in originations (by value) and 20% growth in originations (by volume). From FY21 to FY22, Personal Loans witnessed 46% growth in originations (by value) and 122% by volume; Two-Wheeler Loans witnessed 9.2% growth in originations (by value) and 2% in volume; Auto Loans witnessed 23% growth in originations (by value) and 8.5% in volume; Business Loans witnessed 10% growth in originations (by value); Consumer Durable Loans witnessed 66% growth in originations (by value) and 43% by volume from FY 21 to FY 22. Credit cards witnessed a 48% growth in new card originations from FY21 to FY22.
  
  
• Microfinance loans witnessed 22% growth in originations (by value) and 13% by volume, while commercial loans witnessed 73% growth in originations (by value) from FY21 to FY22.