On the other hand, Onicra, a division of Onida Finance, is a fully operational credit bureau, which has recently seen business look up after five years of being operational.

Worldwide, credit bureaux are companies which investigate an individual's credit worthiness and assign credit rating to consumers. So when a consumer applies for a loan or a credit card, the lender checks the individual's ability to repay the loan by looking at his/her financial records.

Known defaulters as well as heavily overdrawn individuals are recorded in the credit bureaux' database and lenders can reduce bad debts on the basis of past credit records and current financial position.

In India, although consumer finance is booming, the concept of credit bureaux has not takenoff so far -- in spite of attempts made by several companies.

Farooq Irani, managing director of First Leasing says: ``Even five years ago, we sensed the need to build up a database on individual creditworthiness and hence we tied up with one of the world's biggest credit bureau; but unfortunately it never did take off.''

And, he says, the reason for this is the unwillingness on the part of banks to share their databases. ``Without information from the banks, there was no way in which we could build a comprehensive credit profile. There was no point in investing in infrastrucuture only to find that we had no inputs.''So till date, the joint venture remains unoperational.

The company has a database worth about Rs 20 crore to Rs 30 crore. Irani says if banks are willing to become shareholders in the company and invest in the infrastructure, then the venture can take off. But until then, there is nothing that can be done, he adds. But so far there have been no takers.

Onicra, on the other hand, has beenrunning credit rating for its own consumer finance division and, of late, for a few clients. Official sources in the company said: ``Over the past year we have done some credit testing work for ANZ consumer loans division. Recently we did a dealer rating exercise for Honda City and the most recent client is Integrated Finance for whom we will do credit testing for consumer lending.''

But after years of languishing, the credit bureaux suddenly seem to be looking up. One does not have to look far for the reasons.

On an average, the consumer finance industry (inclusive of banks and NBFCs) faces an annual default close to 5 to 6 per cent on total lending. The cellular phone industry sees a 7 per cent default level on total turnover.

On an average, banks have bad debts close to 3 per cent. There are credit card defaulters who milk bank after bank. Yet, there is no system to profile the defaulters.

An increasing number of goods are available on easy finance these days. But consumer financing being a heavilycompetitive area with thin margins for the lenders, the financiers generally go all out to rope in a customer, never mind the credit record. This has led to an increasing number of defaults over the past two years. And hence lenders are looking for means to identify defaulters and have hit upon credit bureaux as a solution.

But even for fully operational credit bureaux, life is not so easy. For instance, while Onicra can check if an individual has disclosed correct information when applying for finance and some more qualitative data on spending patterns, life style, family orientations, social stature, etc, they come up against difficulties when it comes to the actual financial position of clients.

There are several problems facing credit bureaux today. First, banks cannot share information about client accounts and there are no norms for exchange of information. Second, there is no infrastructure; many banks are still not fully computerised. Without electronic systems, there is no possibility for dataexchange. Third, there is no referral identity for an individual.

For instance, in America everyone has a social security number, but in India there is no common identity factor for all the citizens. Fourth, there is no past record database: anything which has to be done will have to be recorded from now. And fifth, the massive investment required.

MN Murali, who heads the card marketing division of Citibank, says: ``There surely is a need for a credit bureau and banks would be the first to recognise this need. But there are a whole host of issues which need to be sorted out in this regard. The main issue would be, of course, the information sharing. While banks do swap some kind of information on creditworthiness, there is no credit profile done in totality. And sometimes we get information, sometimes we don't. It is a gamble."

``We need to clearly define what constitutes confidential information. We also need to protect our own interests. But this apart, we also need to develop a standard pattern ofassessing an individual's creditworthiness.Today each bank has its own method of assessing an individual and without a standard pattern sharing information would become meaningless,'' he says.

Denying that banks are loath to share information about their clients, he says that if banks don't give information, it is because there is an obligation to keep certain information on clients confidential and second is that the information should be shared by all banks.

``We would be the first to support a credit bureau, but we should first be convinced that it is a viable proposition. Until uniform norms are drafted and implemented there is no point in revealing our database. What we said is that first there should be a sharing of negative information on routine defaulters and once historical data is available, templates for positive information sharing could also be worked out,'' he said.

Already there are measures afoot to tackle the problem. A forum of banks has agreed upon sharing negative information onfraudulent customers. If credit bureaux come in, they would have readymade formats for standardised lending norms.