Getting a loan sanctioned through a bank is becoming hard as Indian banks are closely analyzing your credit history before approving a loan. So even if you have failed on a payment of very small amount then your loan approval might stand at a risk.
The Credit Information Bureau of India (CIBIL) has recently provided its data to its members that include all banks, financial institutions, non-banking financial companies (NBFCs) and housing finance companies (HFCs).
CIBIL is a body that keeps a track of the credit history of commercial and individual borrowers and later provides this information to its members that facilitate them to avoid the future defaults.
An official from HDFC Bank said, "Even if a person had defaulted on a payment of Rs 500 several years ago, we will take that into consideration. Recently we rejected a loan application because the person defaulted on an amount of Rs 28,000 in 2006. We checked his record from CIBIL."
The data supplied by CIBIL has caused a wave of panic amongst the customers who are unable to avail loans from their lenders. Earlier banks were requesting customer to take loans without producing any credit history but now they are refusing on loan approval even on a default of a small payment some years back.
Recently on account of CIBIL data, industry's leading auto dealers - Magnum Honda and Cauvery Ford - have reported a fall of around 15% to 20% in their fresh loan disbursals to the potential customers of mid-size cars. In case of small cars, this figure has declined by 25% to 30%.
Home loans have also not been spared by the lenders. A real estate developer said, "Though there are genuine home buyers, what is affecting the market now is the fact that they are not getting loans."
CIBIL categorizes the borrowers under two heads - a positive and a negative list. When customers start defaulting on payments or have outstanding dues to the credit card companies, their names shift from the positive list to negative list of CIBIL data. This negative list is where the banks eye upon while approving a fresh loan and therefore if the name fall under this list, it becomes tough to avail a loan.
Syndicate Bank's General Manager of Retail Banking, B R Pai said, "We don't lend to people if their names appear in the negative list of CIBIL, unless they come with a clean chit or a no-dues certificate from the bank."
CIBIL updates these lists after a period of every three months.