The Hindu : Business : RS nod for credit information bill

Online edition of India's National Newspaper
Tuesday, May 10, 2005

Business

Business

RS nod for credit information bill

Special Correspondent

The Bill seeks to provide legislative support to the business of credit information

NEW DELHI: A bill to set up and regulate credit information companies was passed by a voice vote by the Rajya Sabha on Monday after the Finance Minister, P. Chidambaram, assured the House that the government would take all steps to reduce non-performing assets (NPAs) of banks which were already on the decline.

The Finance Minister said that the Government was for giving more autonomy to the banks but at the same time would hold them responsible for any largescale NPAs. The Credit Information Companies (Regulation) Bill seeks to provide legislative support to the business of credit information to equip banks to deal with NPAs by providing information regarding crediworthiness of various categories of customers.

Mr. Chidambaram said that initially the Reserve Bank of India would restrict the number of such companies to three or four which would be reviewed by the central bank. He said the Bill was aimed at preventing accretion of NPAs, adding it does not deal with current NPAs. "The SBI has already set up Credit Information Bureaus (India) Ltd in collaboration with HDFC and Dun and Bradstreet and I hope one or two more public sector banks will set up other similar agencies," he said.

Mr. Chidambaram said that gross NPAs have come down from Rs. 70,861 crores in 2001-02 to Rs. 68,714 crores in 2002-03 and to Rs. 64,786 crores in 2003-04.The Bill stipulates that the minimum authorised capital of Credit Information Company should be Rs. 30 crores and issued capital no less than Rs. 20 crores.

The Bill states that every credit information company would have to register with the RBI and if the central bank rejects its application to commence business, it has the right to appeal to the Central Government. The central bank also has the power to cancel the certificate of registration. The Bill forbids credit information companies to engage in any other field of business.

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