The proposed credit bureau is positioned as the first reference for finance companies and banks before sanctioning any retail credit products like housing loans, hire-purchases and credit cards.

The proposed credit bureau will enable retail lending institutions like housing finance companies, credit card companies and consumer durable finance companies to check the antecedents of the borrower before sanctioning credit to him. The bureau will maintain a database on retail clients collected from various participating credit finance companies, which will be available for other finance companies for reference when they require it.

Apart from retail finance companies, the data could be accessed by consumer productscompanies and market research companies. This information can be utilised by them while targeting specific consumer bases and in designing product profiles and market positioning.

The data are sought to be accessed from participating institutions like banks, credit card companies, mortgage companies and consumer finance companies. The information collected will include a consumer's marital status, address, telephone number, income, driving license etc.

However, some operational details of the proposed venture are still to be sorted out. The most important will be the confidentiality requirement of a client. A proposal is to include an enabling clause in all future financing deeds to enable passing of client details to the bureau.

Although India has had some credit bureau companies earlier, none of them succeeded due to lack of participation from retail finance companies in sharing information about their clients.

The present venture is expected to succeed because of the initiative and committeddatabase of HDFC which boasts of over seven lakh retail client accounts. Besides, four retail financing giants will join hands with HDFC in promoting the venture. Learning from the failure of previous credit bureau ventures, the information vending is structured on a reciprocal basis.

According to a HDFC report, "Data-sharing among the data users and providers would be based on the principle of reciprocity." Explaining the concept of reciprocity, the HDFC report says a data user has to be a data provider and the users will receive the same level of data as is contributed to -- if only negative (or default) data is provided, only negative data can be accessed.

Within a portfolio, lenders will be required to supply information on all accounts -- a company which makes auto loans and loans for durables may decide to provide information on all auto loan accounts and cannot restrict it to part of the auto loan portfolio.

To start with, the proposed venture will have three sets of products: Credit accountinformation sharing (CAIS), credit application previous search (CAPS) and scoring models to analyse customer profiles.

CAIS will provide factual information on consumer's personal history and details of past and present credit accounts, while CAPS will provide information about an individual's past credit applications or details of the service sought. CAPS will also provide a record of the number of enquiries received from various lenders about an individual in connection with the processing of credit applications.