Credit Information Bureau of India (CIBIL) has joined hands with 31 leading micro finance institutions (MFIs) of the country to build up credit information bureau for MFIs.

The MFIs are a part of the Micro Finance Institutions Network (MFIN). MFIN has recently been set up as a regulatory body of the MFIs.

"The establishment of Micro finance Credit Information Bureau is a vital step towards inculcating financial discipline among the borrowers of micro-loans and will increase credit penetration," Cibil's Managing Director, Arun Thukral said.

This bureau once created will ensure responsible lending on the part of the MFIs and also help them in assessing the credit worthiness of the borrower and thus the risk exposure of the borrower, Thukral said.

CIBIL said while quoting a CRISIL report that the Indian microfinance sector has an approximate 120 million households under its umbrella and this translates to a credit demand of Rs. 1.2 trillion.

"MFIs already serve over 25 million customers who have no documented credit history. The task of tracking the credit history of such large numbers is challenging. By supporting this initiative, Cibil will be participating in a nation-building effort," MFIN's Chairman, Vijay Mahajan said.

CIBIL currently possesses a database of over 155 million records and a member base of more than 200 financial institutions. The major shareholders of CIBIL include SBI, HDFC, D&B and TransUnion.