INSUBCONTINENT EXCLUSIVE:
MUMBAI: Indian credit bureaus are waiting for the final draft of the personal data protection law to understand whether they can use
alternative data for generating scores, helping assess the creditworthiness of potential borrowers lacking loan records.
Alternative data
for credit bureaus are data sets acquired from sources outside the core banking systems, such as those from telecom companies, payment
firms, and government databases
These could supplement existing core bank data with bureaus in the analysis of transaction behaviour patterns of customers.
Banks use credit
scores for loan decisions
A consent-based framework enables us to access behavioural patterns of individuals who may not have a loan account or credit account, but
premature to make changes in existing technology infrastructure without seeing the final draft of the law, a framework for data usage for
Equifax.
Equifax has set up an analytic wing functioning separately from the bureau company, which has tied up with fintech companies to
provide customer analysis for banks.
A draft of the Indian Personal Data Protection Act has been placed in the public forum by the Ministry
of Information Technology (MeiTY), and it is widely anticipated to be tabled in parliament with some amendments by the end of the year.
The
government has announced that the law would be comprehensive and modelled after the European legislation on data protection.
Currently, the
alternative data in generating credit scores
These credit bureaus can only use loan account data from core banking system such as repayment time of loans, default history and the size
