Private sector lender HDFC Bank delayed sharing its loan details with consumer credit reporting company Experian PLC. The Irish-domiciled multinational informed the Reserve Bank of India (RBI) in July (2020) about the delay on the bank's part in providing the details of its loans, comprising the repayment status of millions of its borrowers.
Such sluggishness has been an issue for around two years, sources in the know told Bloomberg. Credit bureaus like Experian provide data to Indian banks seeking to evaluate the credit worthiness of borrowers.
Banks are dependent on these companies for all such data, especially at a time when bad debt is expected to increase in the wake of COVID-19 pandemic. The RBI has made it obligatory for lenders to provide information on their borrowers to Experian and three other credit bureaus on a monthly basis.
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Denying any such delays in supplying the information, an HDFC spokesperson told the news agency that the bank "has always been sharing information with the credit bureaus on time both as a matter of policy and regulatory compliance" adding that the lender is "totally compliant in this regard."Meanwhile Experian's spokesperson also told the news agency that any information regarding the RBI, the banks, and the credit bureau is highly confidential adding that the company functions within a framework set out by the central bank and in compliance with the Credit Information Companies (Regulation) Act of 2005.
Credit bureaus serve as a central point for the country's banks to part details on the repayment status of their loans on a confidential basis.
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For instance, if a specific corporate or individual borrower has arrears to pay to one bank, such information from the bureaus can help prevent another lender from increasing its exposure (to such borrowers).According to a 2014 committee report on the bureaus' activities, an "adequate amount of quality information on counterparties is a critical component" of India's financial infrastructure.The banking sector is faced with the possibility of more debts going bad following a loan repayment freeze that ends later this month.Also Read: Will Aditya Puri leave banking industry post retirement from HDFC Bank?
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