Building an Effective Credit Information System – The Credit Bureau Perspective Sriram Kalyanaraman, Director Sales and Product Development Equifax Credit Information Service, Mumbai Aug’12

IBERIA Spain Consumer #1 Global Overview RUSSIA Consumer #1 UNITED KINGDOM Consumer #2 Commercial #3 CANADA Consumer #1 Commercial #2 UNITED STATES Consumer #1 Commercial #3 IBERIA Spain Consumer #1 Portugal Consumer #1 INDIA Consumer MFI ANDEAN REGION Peru #1 Uruguay #1 El Salvador #1 Honduras #1 Ecuador #1 BRAZIL Commercial #2 Consumer #2 CHILE #1 ARGENTINA #1 Equifax is a global information solutions company 113 years history of leadership in credit information services worldwide with a full suite of credit solutions Successful track record and reputation serving global markets across 17 countries Largest US Credit Database and # 1 ranking in most markets where Equifax does business Proprietary databases containing information on over 300 million consumers and 100 million commercial entities worldwide and average of over 10 trade-lines per consumer 2

The Microfinance Exchange - India Accurate and timely data collection by MFIs on prospects and borrowers from the credit bureau member institutions which is Data supplied by the MFIs to credit bureaus on a regular and timely basis. Collation, correction and standardization of the data and ensuring that the data is complete, searchable and standardized Credit Bureau Products that are accessible, accurate and usable across the lifecycle of a loan for better decision making resulting in more and better quality assets Key Updates Membership : 341 (MFI’s 95) Data 200 million + ( MFI 62 Mn) 4.28 mn enquiries processed in FY 2012-13 Equifax Services Unique search / match algorithm for MFI data Ability to do phonetics based name match Leverage family details Reports provide delinquency string Future Products Industry Reports Mobile Reports Scores Access Platforms Web based access using proprietary tool. Online batch and system readable format Output available in multiple formats Risks and Challenges Over-indebtedness and multiple lending Pressure to sustain operations for incumbent players Limit on total loan / exposure of a borrower All Institutions not sharing data SHG data not available Data Initiatives Built a data submission tool for the industry Ability to accept data without ID information Built database using MFI specific data elements such as joint liability group credit attributes Source: MFIN, RBI, Mint

Our proposed products for MFIs LAUNCHED PRODUCTS Credit Information Reports Enables Member to determine credit worthiness of a customer & help meets regulatory compliance - No. of active loans, total outstanding balance across MFIs, past due status Portfolio Review Assessment of portfolio quality & behavior of existing customer across all lenders. A powerful tool for regular monitoring of portfolio accounts for proactive risk management FUTURE PRODUCTS- Evolved MFI Bureau Usage Portfolio Alerts Provides a series of credit based triggers to pro-actively determine a set of existing customers which are showing either improvement or deterioration in financial status or are looking for fresh credit in the market Comprehensive report that provides valuable insights on industry trends sliced and diced across various dimensions such as geography, customer profile and other parameters; An effective tool to benchmark current operations and guide future business growth Industry Reports Scores Risk indicators that can be used for quick and accurate decision making which is predictive and objective which reduces the dependence on internal criteria and optimizes implementation of learning from market data. Leveraging the deep product suite, new products will be rolled out based on market needs and readiness

Illustration of Visual Analytics ILLUSTRATION ONLY

Key Enabler/Challenges: Search & Match Complete data submission Ensure all credit institutions participate in the bureaus Ensure that all institution submit complete data Data Quality Address Address Format is not standardized Regional Language References Name Vary from region to region Influenced by religion and caste Many instance of names with just Initials ID Population Not every one has to have one Socio-Economic Condition Joint Family Highly populated Name DOB ID Address Phone Zip Age

Key Challenges and the road ahead CURRENT GAPS WHAT NEEDS TO BE DONE Use of credit bureaus Early in the lifecycle on effective use of credit bureaus in decisioning – more information vs accurate information Use of data to make differential decisions rather than classification into black and white Score/Risk based pricing Best practice transfer from banking Risk ranking of bureau scores Technology Internet access in remote branches Limited number institution using loan origination systems and automated decisioning systems Mobile Reports Work with bureaus and software providers to create low cost solutions for LOSs and end to end decisioning systems Data Data Capture Low understanding of the importance of data quality and accurate data capture Data Submission Regular & timely submission of data Ensuring complete submission of data Accurate reporting of changes in the data Continuous changes in branches and account nos. SHG data not available in the data submission Investment in technology to ensure the branches are connected and there are basic checks in place on data capture MFIs to continuously work for improved data collection Sharing of SHG data by the banks and state governments (SHG/MFI overlap 80%) Awareness of data quality issues and sensitization of the teams to the importance of accuracy of reporting. Training and awareness Awareness of Information provided by Credit Bureaus and its importance in credit decisions for MFIs for risk management & regulatory compliance Partnership with Bureau, MFI associations and institutions like IFCI for creating awareness on credit bureau importance & need for financial inclusion

How does the future look? Consumer Demographic Data Surveys Telephone & Utility Exchanges Identification & Linking Data Tri-bureau Fraud & Authentication Employment Marketing Response Securities Compliance Number Commercial Exchange Address Hygiene Credit Database Monthly Updates: 15,000+ Data Providers 1.8 billion Trades 110M Collections 350K+ Bankruptcies 800K+ Judgments/Liens 12M Address Changes 144M+ Online Transactions Unique Business Models