CRISIL today announced that it has reached a preliminary understanding with US-based Equifax Inc., and non banking finance company Tata Capital Limited, to set up a credit information company (CIC) in India.
CRISIL has applied to the Reserve Bank of India (RBI) for permission to start and operate a CIC, the establishment of which will depend on regulatory approval from RBI.
CRISIL is India's leading ratings, research, risk and policy advisory company, with revenues of Rs.2.94 billion in 2006, while Equifax is a leader in global credit information services and Tata Capital, a wholly owned subsidiary of Tata Sons Limited, the apex holding company of the Tata Group, undertakes fund- and fee-based activities in the financial sector.
CRISIL's majority shareholder is Standard & Poor's, a division of The McGraw-Hill Companies and the world's foremost provider of financial market intelligence.
In serving the growing demands of credit information in India, the proposed initiative will capitalise on CRISIL's understanding of the Indian markets, Equifax's sophisticated tools and analytics, and the Tata Group's credibility and capability.
"The positioning of the CIC in the Indian market will be unique", says Ms. Roopa Kudva, CRISIL's Managing Director and chief executive officer. "With our capable and respected partners, Equifax and Tata Capital, we look forward to providing the Indian market with cutting-edge credit information services and analytics."
CRISIL has rated instruments issued by more than 4600 large entities, and has evaluated more than 1500 small and medium enterprises.
As part of its structured finance rating process, CRISIL has analysed the behaviour of more than a million retail loans. CRISIL's credit risk assessment models have been implemented for various categories of borrowers (including retail), in more than 20 banks in India, and some outside.
"CRISIL has a 20-year tradition of helping India's credit markets function better. Strategically, our entry into the credit information business will help us to expand our footprint into the retail credit segment" adds Kudva.
"As a rapidly-growing segment, the retail credit space provides an attractive opportunity for CRISIL to broaden and diversify its range of services," elaborates Kudva. The retail finance market in India is expected to grow at about 20 per cent annually over the next five years, buoyed by favourable demographics, substantial increases in disposable income, and changing lifestyles. Lenders will require reliable, accurate information to be able to lend with confidence.
"The combination of Equifax's international experience, products and services in credit information, CRISIL's deep understanding of and research in the Indian financial services industry, and the Tata Group's vast resources and capabilities, will position us to provide the very best credit information services in India," said Mr. Richard F. Smith, Chairman and CEO, Equifax Inc.
According to Praveen P Kadle, managing director, Tata Capital Ltd, "We are extremely positive about this partnership with Equifax and CRISIL and see significant synergies in offering India a truly world-class credit information system. The relevant know-how of Tata Capital and CRISIL put together with Equifax's international experience makes this a winning combination for the Indian market."