Following a complaint by Moneylife Foundation, the RBI has asked banks, FIs to share historical data with new credit bureaus, of which they had become members
The Reserve Bank of India (RBI) has asked banks and financial institutions (FIs) to provide historical data to new credit information companies. “Banks/FIs, which have become member/members of the new credit information companies (CICs) have been advised to also provide historical data in order to enable the new CICs to validate their software and develop a robust database,” the central bank said in its reply to Moneylife Foundation.
This was in response to a complaint filed by Moneylife Foundation to Dr D Subbarao, governor, RBI on 13 December 2012 about the mess in credit bureaus and how it affects savers.
The Foundation, through a day-long workshop and counselling on credit reports and issues and through few case studies, also discovered that most of the lenders only look at CIBIL data while others don’t even bother to look at a credit report at all before making lending decisions.
The financial literacy initiative of Moneylife Foundation, has led to the discovery that credit-tracking remains faulty in several ways. The Foundation also discovered that licensing of four credit bureaus without a level playing field, in terms of access to credit information and historical data, has created a system that is not functioning as it was supposed to.
Moneylife Foundation’s complaint says, “It is imperative that the mechanism to track credit by the four credit bureaus has to be fair and uniform. At any rate, the hapless saver cannot be made to bear the brunt of it. Nor can s/he be asked to get a score from each credit bureau because lenders are not willing to share data with each of them.”
Separately, the RBI also confirmed that one can obtain his/her own credit report from the banks by paying just Rs50. This fact was pointed out by R Gopalkrishnan, former deputy general manager (DGM) in the Customer Services Department at RBI and now a counsellor with Disha Financial Counselling during the day-long workshop and counselling on credit issues.
He told us that customers can avoid the whole credit bureau route by asking the lender to provide their credit report for just Rs50 or even for Rs10 under the Right to Information (RTI) Act. This fact was not known to us and even the credit bureaus were unaware about it.
In the reply, the RBI has said that in response to a number of complaints from customers, who were unable to get their own credit report from banks, it had already instructed banks to provide a copy of the credit information obtained by them from the CIC to the customer upon receipt of such request. (Here is the RBI circular)
Moneylife Foundation submitted that rules pertaining to credit bureaus, in so much as they affect customers and individuals, may be framed in consultation with the customers and at the least, the RBI’s own customer services department, which probably receives customer feedback.
Also, based on research and feedback from several seminars, workshops held across the country, Moneylife Foundation requested the RBI to take urgent steps on following points…
1. Mandate that all lenders share data with every credit bureau so that there is a level playing field. If not, the RBI must inform customers that only CIBIL has comprehensive data.
2. Mandate that lenders share all past data for all borrowers.
3. Mandate that every kind of borrowing be shared by all lenders to make it comprehensive.
4. Create a system where data goes into a secure pool or FTP server from which it can be equally accessed by all credit bureaus—this is in the interest of fairness to customers.
5. Ensure that an individual should be able to apply to just one credit bureau and be assured that the credit record obtained will be the same with the other three. Better still, the RBI note that allows a borrower to obtain a credit report from the lender by paying Rs50 must be publicised.
6. Ensure that data is cleaned so that borrowing is accurately reflected. Ask banks to correct their data whenever appropriate.
7. Put in place a mechanism to verify that the bureaus are collecting, collating information in a fair manner and have an appropriate mechanism for grievance handling.
The RBI, in its reply, said that some of the issues raised by Moneylife Foundation are under its consideration. “We further advice that the other issues raised in the (Foundation’s) letter are being looked into and will be taken up appropriately with CICs and credit institutions for bringing about improvement in the Credit Information System,” the central bank said.
The Vijay Mallya-owned airline owes Rs290 crore to AAI towards landing and parking fees and the Authority insisted said that its dues must be cleared before Kingfisher is allowed to fly again
Mumbai: Spelling fresh trouble for beleaguered Kingfisher Airlines, state-run Airports Authority of India (AAI) has said it will not go by the “empty promises” of the airline management and would insist on clearance of its dues before the carrier is allowed to fly again, reports PTI.
“We will not go by the empty promises of the Kingfisher Airlines management. We want our dues to be paid (before the airline is allowed to take off again),” a highly-placed AAI source told PTI.
The grounded airline owes Rs290 crore to AAI towards landing and parking fees.
The airline’s revival plan has already run into trouble with its engineers stating recently that they would file a winding-up petition against the company for non-payment of salaries for the last eight months while a section of its former pilots has already taken the company to the court on the same issue.
Stating that the state-run airport agency will not settle for anything “short of clearing of all dues,” the source said, “despite all their talks of resuming limited operations, no official from Kingfisher has approached us in this regard”.
“We have made our position clear on Kingfisher dues also to the aviation regulator DGCA, which has to approve the revival plan,” the source said.
Kingfisher, which has over Rs15,000 crore in the form of debt, accumulated losses and various dues, has remained grounded since 1st October and its flying licence expired on 31st December.
The airline’s chairman Vijay Mallya had said Kingfisher would be up and flying by the summer with a limited number of aircraft as part of its revival plan.
For the fifth time this fiscal, Mukesh Ambani-led Reliance Industries, which has a surplus cash of over Rs75,000 crore, is raising long-term debt citing historically low interest rates from the overseas markets
Mumbai: Reliance Industries (RIL), which is sitting on over Rs75,000 crore in surplus cash, on Monday launched an issue of bonds in Hong Kong and Singapore markets to raise a minimum $500 million (around Rs2,700 crore), reports PTI quoting company sources.
This is the fifth time that the Mukesh Ambani-led company is raising long-term debt this fiscal. So far, it has raised $4 billion from overseas in the current financial year.
“The company is planning to raise at least $500 million by issuing perpetual bonds. The issue hit the markets today and the final amount will depend on the investor appetite. The initial pricing is 6% over the US treasury,” an RIL official who did not wish to be named told PTI.
Perpetual bonds are those with no maturity date, therefore, it may be treated as equity, not as debt. Perpetual bonds pay coupons forever and the issuer does not have to redeem them. Their cash flows are, therefore, those of perpetuity.
However, he expressed hope that the final pricing will be much below the guidance because of the strong fundamentals of the company.
When asked why it is raising debt despite sitting on over Rs75,000 crore surplus cash, the official said, the interest rates are at historical lows and hence it’s a good time for Reliance to raise long-term money and that the long-term nature of the bond is in line with the long-term assets of the company.
He further said Bank of America, Citi, HSBC, Barclays Deutsche Bank, JP Morgan and RBS are mandated for the issue.
The RIL official also said this first senior long-rated bond issuance by a domestic company.
The funds will be used to meet the capex requirements of the company that runs the world’s largest refinery at Jamnagar.
The senior unsecured perpetual notes have a ‘BBB’ rating from S&P, the rating said in a note.
“The proposed notes will rank equally with all the company's other present and future unsecured and unsubordinated obligations,” S&P said in a note from Singapore.
“The rating on Reliance reflects the company’s strong competitive position and good business diversity. In addition, RIL has low leverage, and strong cash flows and liquidity,” S&P said, adding the positive rating outlook reflects our view that the company has a large cash surplus to protect its financial strength against any potential deterioration in operating conditions.
This bond represents the first senior long dated/perpetual issuance by a domestic issuer after Tata Power’s recent hybrid, the RIL official said, adding only a only a select few Asian issuers have been able to access this market.
The transaction extends Reliance’s maturity profile and establishes Reliance’s credit curve in 10-year, 30-year and perpetual bonds, the official added.
Stating the final pricing will be really tight he said the recent issuances from MNCs like Prudential Plc had 5.25%, Telekom Austria at 5.875%, Banco Do Brasil's at 6.25% and Axa’s a 5.50% among others.