While the COVID-19 pandemic has created unprecedented business disruptions, it has in a way compelled us to speed up and revitalize digitalization across our systems, processes, and operations. Through the lockdowns over the recent months, digital financial services are enabling the finance industry and the government to provide quick and secure financial support to previously difficult to reach end consumers. The opportunities that emerge from this disruption need to be identified and capitalized with agility and astute foresight. As the disruptions have mandated digitalization across the width and breadth of our geography, the scope for aligning information and insights based digital lending strategies to find and fund the deserving consumers and businesses has never been more promising.
Data analytics-driven risk management to refuel credit growth
India’s credit Industry has gone through a rapid evolution over the last decade and has experienced a transformation of the consumer mind-set from a savings-focused and debt-averse country to a more consumption-focused, leveraged economy. Insights reveal the sheer scale of India’s growing credit economy and the rising number of consumers- with 22 Million Indian consumers applying for new credit opportunities each month prior to the pandemic disruptions.
Prior to COVID-19, India’s retail credit market was still growing at a much higher rate than most other credit markets around the world. However, this is a global crisis and no economy is immune. Despite the Indian government launching one of the largest economic relief packages in the world, the social, financial and economic impact of COVID-19 will be far-reaching and will lead to a realignment of the retail credit market. Consequently, lenders need to respond to the changing market conditions by redesigning their distribution networks and customer management frameworks, realigning their lending strategies based on their risk appetites, and implementing analytics-driven risk and collection management practices to minimize the impact of emerging risks. Information and insights based digitalization is the panacea for balancing portfolio stability and driving financial inclusion.
In order to support the credit industry to astutely drive access to finance for consumers during these times while monitoring, assessing, and controlling risks in the short and long term, TransUnion CIBIL is partnering with credit institutions on data, insights, products, and solutions across consumer and commercial lending.
Insights backed digitalization for driving economic opportunities
In recent months, most banks and credit institutions have launched special COVID Emergency Line of Credit for their existing retail and MSME customers to take care of immediate liquidity requirements. The timely origination, sanction, and disbursement of fund and non-fund based credit is critical for the revival of economic activity. Credit information insights and solutions are helping banks and credit institutions in this initiative to help find and fund the good consumers and companies who have a consistently good credit history and thereby lower risk of default.
Through these initiatives we are supporting lenders on policy frameworks and solutions combined with a mobile SMS enabled front-end for providing special emergency loans to asset and liabilities customers seamlessly, without requiring any major IT integration activity at their end. TransUnion CIBIL’s CreditVision Prescreen Solution is enabling credit institutions to identify and target the good prospects and launch COVID Emergency Loan campaigns efficiently.
Digitalization to empower consumers across India to transact with confidence
As India’s leader and long-standing information and insights partner, TransUnion CIBIL is committed to building trust in the modern economy and we are able to do this by providing a comprehensive picture of each person so they can be reliably and safely represented in the marketplace. By ensuring complete, accurate, and timely credit data and insights we are supporting the sustainable growth of the credit industry while also enabling personal empowerment for consumers to help them transact with confidence and achieve great things.
In order to reassert our commitment towards driving credit education and financial inclusion across the country, we have partnered with Common Service Centres (CSCs) to assist consumers in getting easy access to their CIBIL Score and Credit Report. The CSCs are a special purpose vehicle of the Ministry of Electronics and IT, and are an initiative under the Government of India’s- Digital India Flagship platform- designed to drive a socially, financially and digitally inclusive society.
With this partnership, consumers will be able to access their CIBIL Score and Credit Report from over 3.61 lakh CSC outlets nationally. As consumers look to secure funds to bridge any personal finance gap due to the economic impact of the COVID-19 pandemic, awareness of the importance of their CIBIL Score and credit history is vital for accessing credit opportunities quickly and easily. Through this collaboration with CSCs, we are reaching out to regional and rural consumers across our country to provide them with digital access to their credit score and report, enabling them to apply for credit and transact with confidence.
As several credit institutions now offer better terms and conditions to consumers with a higher CIBIL score, education, and awareness about it can also help consumers to access loans at a more competitive rate of interest. Moreover, this initiative paves the way for greater consumer empowerment by ensuring that their credit information is accurate and that they are reliably and safely represented in the marketplace.
Digitalized lending to MSMEs under ECLGS scheme
India’s credit industry has a pivotal role to play in refueling the economy by executing the INR 3 lakh crores of credit infusion to MSMEs under the Emergency Credit Line Guarantee Scheme (ECLGS).
To support the credit industry to judiciously lend under this scheme, TransUnion CIBIL undertook an in-depth analysis for helping identify structurally strong MSMEs based on their CIBIL Rank (CMR) and prioritize lending to them. Based on these insights, credit institutions have implemented CMR based policies to swiftly find and fund deserving MSMEs while complying with the ECLGS guidelines and also ensure astute monitoring of these portfolios. TransUnion CIBIL’s data and insights have played a pivotal role in helping the industry formulate policies, digitize CMR based lending to drive faster, easier, and more judicious disbursement of loans.
ECLGS has created an opportunity here for banks and financial institutions to identify and fund these entities and build a healthy portfolio. Such targeted interventions can help refuel the economy through these unprecedented times while ensuring that portfolio risk is under control.
Lending done well during these times has the potential to continue to drive economic opportunities for deserving consumers, refuel the economy while controlling the risks, and ensure stability of credit portfolios in the long term.