The MSME entrepreneurs, who are already reeling under the crisis of poor credit flow, high interest rates and third party ratings, now have a new reason to worry about. The Credit Information Bureau (India) Limited (CIBIL), which maintains the credit history of the borrowers for the financial institution, keeps sending varying and “incorrect” scores to the lenders hitting the businesses of the MSMEs badly.
A bad CIBIL score takes away the chance of easy access to finance by the entrepreneurs as it is considered as the creditworthiness by most of the public as well as private sector lenders.
A low CIBIL score is indeed a reason enough to worry about as a loan application can be refused to pass on account of low score. Having bad credit health means the credit institution will have little or no confidence in one’s ability to repay the loan and so will either reject the loan application or charge rates of interest that will be exorbitant.
An MSME entrepreneur, Subhash Agarwal, from Kaushal Steels in Bangalore pointed that, “The agency keeps / gives a wrong data to the member institution.”
Today almost no loan or credit card application gets approved without checking the applicant’s CIBIL report and CIBIL TransUnion Score.
Sharing his experience, Agarwal said, “I am a HNI having a good credit and a good credit standing with the Financial Institution. Somehow CIBIL was showing my score to the level of 550. After various correspondences they realized their mistake and made it to 835 reflected by their control number: 668231897 dated 30/12/2013. Again to my surprise in the month of March 2014 it was dropped to 690 After bring this to their notice they have corrected their statement and send me the same without any apology and as showing my score to 805. But unfortunately again on 8th of July 2014 my score was showed as 651.”
Agarwal raised his concern with the agency saying, “I am writing them asking for the specific reason, they are just giving a vague and funny reply for the same.”
“In one of the answer they said that they have shifted their volume CIBIL 1 to CIBIL 2 and CIBIL 1 Score 700 is equal to CIBIL 2 600. On checking with various Banks, it’s been noted that nobody is aware of this. Again pointing out this to them, they have send me a corrected statement score of 805. Now again they have reduced my score to 715 and they have not replied since last 45 days,” he said.
In an email response, CIBIL said, “We regret to inform you that we are yet resolve the score disputes details and understand that it has taken longer than stipulated time. Further, please note that the disputed sections in your CIBIL report will be marked as ‘Under Dispute’ until your dispute/s is/are resolved.
Unfortunately, Agarwal is not alone. Many MSME entrepreneurs are finding dealing with CIBIL frustrating.
The Federation of Indian Micro and Small & Medium Enterprises (FISME), has decided to take up the issue with the Banks. In this context, the apex industry body for the MSMEs is also scheduling a meeting with Reserve Bank of India (RBI) and State Bank of India (SBI).
Image Courtesy : Money Life
