Experian In The News

The latest entrant in the credit card market, IDFC First Bank, has offered the lowest interest among all credit cards: as low as 9 percent! In a recent interaction with Moneycontrol (before the bank’s silent period began due to its impending financial results), the bank’s managing director and chief executive officer, V. Vaidyanathan said that IDFC First Bank is the first bank in India to introduce the dynamic interest rate system for its credit card customers.

You may have heard this line by J. Wellington Wimpy from the Popeye comics: “I’ll gladly pay you Tuesday for a hamburger today.” The phrase is in many ways the byword of the debtor, who seeks fiscal gratification now in exchange for payment deferred. But Wimpy had a card up his sleeve: He would never show up on Tuesday.

The growing reluctance of banks to shell out big-ticket corporate loans is tilting the scale in favour of retail Borrowers. According to Akash Lal, senior partner, McKinsey, with these retail loans having accounted for almost 100 per cent of risk adjusted revenue in FY20 despite them constituting only 48 per cent of the banking system’s total revenues, the overall share of retail loans of banks is only set to go up.

When Canara Bank announced its qualified institutional placement (QIP) at Rs 103.5 apiece last week, critics questioned if a public sector bank (PSB) can go to the market by itself. After all, direct market equity sourcing has just been aspirational for a long time and turning to the government for recapitalisation is an easier option for PSBs.

Stress in retail loans had started building up around this time last year, owing to the slowdown in economic activity. The pandemic and subsequent lockdown may have added to stress, if the September quarter (Q2) results of India’s largest retail lenders across segments — HDFC Bank, Bajaj Finance, and SBI Cards — are anything to go by.

Borrowers must recommence regular repayments and ensure that they do not default on their loan obligations. A credit score is a dynamic one, given on the basis of a borrower’s behavior that summarises the historical information. The Reserve Bank of India’s (RBI’s) decision in March 2020 to allow a moratorium period of three months for all outstanding loans (which was subsequently extended to six months), aimed to provide relief and reassurance to those who were financially impacted due to the pandemic.

The loan restructuring facility the Reserve Bank of India (RBI) has allowed will leave no impact on the credit score of retail borrowers. According to officials in the banking industry, the credit score of a customer of any retail loan, like home or auto loans, will not be impacted even if they decide to restructure their loans. Instead, the credit score and future borrowing eligibility will be decided by the credit repayment history after the loan has been restructured.

Credit information company Experian on Wednesday said 43 per cent of Indian consumers witnessed a decline in their household income owing to the impact caused by the pandemic. It added that these households were concerned about their well-being. Though this concern was not only restricted to consumers, 53 per cent Indian businesses highlighted health & safety of customers as the biggest challenge.

In this week's podcast, Sathya Kalyanasundaram of Experian India talks about the parameters used in determining one's credit score, what is a good score and what can bring down your score.