Understanding CIBIL Score in the Context of Vijay Mallya and Corporate Guarantors
The credit score of any individual or entity is not immediately available to the public. Access to such information is restricted to financial institutions like bankers who can evaluate your creditworthiness when you apply for loans or credit cards. This principle applies equally to individuals like Mr. Vijay Mallya, a well-known businessperson associated with Kingfisher.
Mr. Mallya's Credit Score
Mr. Mallya's credit score, as it pertains to corporate guarantors, is likely to be very low. This is due to his association with Kingfisher, where he acted as a guarantor for corporate loans that have become non-performing assets (NPAs) and have been classified as 'wilful defaults.' Wilful defaults indicate a strong negative indicator for credit scoring, leading to a low credit score. According to reports, his score may have dropped to as low as 300 from major credit bureaus like CIBIL or CRIF.
Understanding CIBIL Reporting
Nomatter the individual or the nature of the loan, the CIBIL report typically does not include company, firm, or proprietorship loans unless the individual takes on a personal loan. The case of Vijay Mallya itself highlights this complexity, as his credit score is a reflection of his personal financial practices, not the corporate ventures he was associated with.
Regulatory Factors and CIBIL Scores
The RBI and the government are well aware of the difference in treatment of personal and corporate loans. Prior to CIBIL version 2.0, branch-level managers had to ensure that loan proposals only proceeded under certain credit score thresholds. With the update to CIBIL version 2.0, many more factors were incorporated, leading to a reduced discretion at the branch level. Loans for individuals with a CIBIL score below 618 had to be processed by the head office level committee, which deals with significant loan amounts.
Implications for Mr. Mallya and Common Individuals
The difference in treatment between Mr. Mallya and your friend lies in the level at which their loan proposals are evaluated. In Mallya's case, as a corporate guarantor, his proposals would likely have been processed by a head office level committee due to the magnitude of the loan amounts. In contrast, personal loans for common individuals are typically processed at the branch level, where a CIBIL score of 700 was previously a threshold for processing applications. This explains why Mr. Mallya faced different treatment under the banking system compared to your friend.