Following the west, for the good or the bad, there is a considerable change in the lifestyle of Indians. Like the developed countries, we are also living our life on financial credit, attribute it to the growing banking system in our country or the regular flow of liquid assets. The plastic cards, the signatures of ink can grant enough money for a lifetime with the present scenario of credit grants. The creditabilty of the individual to pay back the credit lays on the discretion of the institutions granting the same, not a very transparent, rigid and fair criteria exists for the above though.
In the west for the same there exists credit rating agencies who rate incorporations and individuals on their ability to take credit based on their history from inception/birth. 'Standard & Poors' and Moody's are the global players when it comes to credit ratings, not denying the existence of ICRA (Indian Credit Rating Agency) and Crysal on the Indian grounds, ICRA and Crysal only rate corporations though it's high time the individuals also start getting rated. We have to sooner or later start the credit ratings to make things easier and smoother to attain credit instruments in terms of loans, Credit cards, certificate of credit and so on.
It could either start as a PSU (it would be difficult to trust their transparency then) or a private company which could tie up with the income tax department and other financial service providers to get the historical background of an individual on the financial grounds. Their could exists a chart of credit ratings with the amount of credit attainable for the same.
Quite often there are times when a a worthy individual is denied credit and there are times when individuals flee away after recieving such credits, its time to bring efficiency in this system and start a centralised agency to give the first green or red flag to indiviuals looking for financial credit. These ratings could be the next status symbol and directly or indirectly it would coax individuals to be more transparent with their financial dealings and tax returns.
2 comments:
It is not so simple my dear fellow. refer to the Indian banking laws. And moreover to the Basel conventions (I and II). And rating an individual does happen every time one goes for a loan from banks. The fuck up is that banks would like to make sure that the amount that they are lending will come back to them for sure. Good will and generosity does not come into the picture anymore. Actually they never did. Basel II revolves around the Total Quality Management principle... Hopefully that will change things... But i personally don't think that credit ratings for individuals is possible. At least not in a country like ours where most people who do go for loans and truly deserve it don't have enough collateral. Also our population is too great to have credit ratings for every individual.
I'm just going to speak for Canada because I am familiar with the happenings here. The fact is that over 28 million Canadians have a credit report with at least two major credit reporting agencies. Approximately 50% of these credit reports contain negative information, many of which are inaccurate. I am not completely convinced credit rating agencies really help when borrowing on an individual basis. Obstacles such as unavoidable late payments, bankruptcies, and pay cuts, down sizing or even divorce can adversely and severely affect the credit of those who used to have high scores. In the end it always boils down to collateral. Very few sub prime lenders actually take on larger risks. Nevertheless credit rating agencies do have an important role in the economic engine. It makes it quicker and easier to avail a debt instrument. The flip side is do Indians really want to live a consumer obsessed live that the west is addicted to????
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