New Delhi, India, October 29, 2012—IFC,
a member of the World Bank Group, is helping India’s High Mark to expand
its credit-reporting system in ways that will help strengthen the country’s
microfinance sector—by providing lenders with accurate information on
their customers’ creditworthiness, which will make it easier for entrepreneurs
to obtain a loan.
The initiative will encourage microfinance
lenders to use credit bureaus to help them assess the repayment capacity
of borrowers, lowering credit risk and helping ensure informed lending.
It will address the problem of multiple lending and over-indebtedness among
microfinance clients in India. High Mark, India’s fastest-growing credit
bureau, aims to add 50 more lenders to its existing credit-information
network under the project.
“With IFC’s support, we will develop
new products and channels over the next 18 months that will help our member
microfinance institutions comply with regulatory requirements, contribute
quality data, and make effective use of bureau services,” said Ajay Kohli,
High Mark’s Chief Executive Officer.
India’s growing microfinance market
is concentrated in just a few states, leading to multiple lending and over-indebtedness
within the same borrower base. Accurate credit reporting can help tackle
this. Moreover, borrowers can use their repayment history to obtain loans,
promoting financial inclusion.
Jennifer Isern, IFC Manager for Access
to Finance in South Asia, said, “IFC’s strategy is to help develop a
sustainable microfinance sector. The credit bureau will help institutions
offer services responsibly and help integrate low-income microfinance customers
into the formal financial sector.”
IFC has been working toward improving
credit reporting for microfinance in India since 2009.This initiative is
in line with IFC’s three-pronged strategy to strengthen this sector through
responsible finance, risk management, and improved financial infrastructure.
The current project builds on the achievements of an earlier project by
IFC that helped launch credit bureau service for microfinance institutions.
IFC, a member of the World Bank Group,
is the largest global development institution focused exclusively on the
private sector. We help developing countries achieve sustainable growth
by financing investment, mobilizing capital in international financial
markets, and providing advisory services to businesses and governments.
In FY12, our investments reached an all-time high of more than $20 billion,
leveraging the power of the private sector to create jobs, spark innovation,
and tackle the world’s most pressing development challenges. For more
information, visit www.ifc.org.