Credit bureaus in India

Credit Bureaus in IndiaIndia is home to multiple credit bureaus including CIBIL, Equifax.

Advantages of having multiple credit bureaus in a country

A recent RBI directive has ensured that every bank in the country will have to submit the consumer data to all the 4 bureaus. While this may sound like an increased overhead at the bank's end, it is interesting to also understand why the regulator would have insisted on doing so. While each bureau has its own black-box model for building their scores, the fact that there are 4 different scoring models will definitely help in building confidence at the lenders end.

Banks can now avoid both types of errors i.e. classifying bad loan seekers as good and classifying good loan seekers as bad. If a majority of bureaus have the same classification for the consumer, the bank's staff can be assured that the chances of a wrong decision due to a poor model are low.