| The government is likely to cap foreign direct investment (FDI) in credit information bureaus at 49 per cent, as it prepares guidelines for entry of foreign companies in this sector.The sector has become attractive due to the booming retail financial services market. |
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| The government has been considering either 49 per cent or 74 per cent cap, but is more inclined to go ahead with a lower cap to begin with, banking sources said.Credit information bureaus collect borrower data from banks and financial institutions, both positive and negative, for use by financial institutions subscribing to it. |
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| Experian, which claims to be the only global credit information solutions company, is seeking to launch its subsidiary in India, with several banks including ICICI Bank having subscribed to its analytics and other services. |
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| India already has credit bureau called Credit Information Bureau India Ltd (CIBIL), in which 62.5 per cent is owned by Indian lenders including State Bank of India, ICICI Bank, Housing Development Finance Corporation (HDFC) with 10 per cent stake each. The foreign shareholders in CIBIL include Citicorp Finance, Dun & Bradstreet and GE Strategic Investments. |
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| CIBIL is a pure credit information bureau, whereas Experian is a provider of a range of services based on the core credit data. Experian earns only 10 per cent of its revenues globally from credit information with the balance coming from its various value-added services. |
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| Retail credit has been growing at over 40 per cent since 2004-05 increasing its share in total advances to 25.5 per cent at the end of March 2006 from 22 per cent in March 2004. The phenomenal growth in the last three years has thrown up opportunities for companies that provide credit information and related services. |
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| “We are waiting for the FDI rules to be framed so that we can apply for the launch of our joint venture,” said Richard Fiddis, Managing Director-Emerging Markets Development at Experian. |
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| Experian has been waiting for the last two years to enter India as their customer in various markets wanting them to set up shop in India. “We will want more number of partners with lower shareholdings in the Indian joint venture. We will have about six to 10 banks and may be a telecom company as our partners,” Fiddis said. |
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| Apart from borrower date from banks, Experian plans to use public sources like electoral rolls and court data for building its core database. |
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