From Scorekeepers To System Shapers: Next Role For India's Credit Bureaus

Few three-digit numbers shape Indian financial lives as sharply as the credit score. Drawn from payment history, loan exposure and lender-reported behaviour, it can open the door to a family home, a child’s education loan or working capital for a small entrepreneur. Just as quickly, it can keep those doors closed.

Yet behind this expanding system lies a quieter question. As more of India’s economy moves into formal credit and digital rails, do our credit bureaus still think like engines of growth, or have they settled into being mere custodians of old data? Their true potential won’t be reached if they simply refine what already exists, rather than invent anew.

It helps to remember how credit bureaus earned their place. In the early 2000s, the RBI licenced the first credit information companies, led by CIBIL, to build reliable borrower profiles in a system where data was patchy and often trapped in paper files. At a time when credit cards were new, retail lending was gathering pace and risk needed sharper tools, this was a critical step.

Since then, India’s data environment has changed dramatically. Millions now leave digital footprints through GST payments, utility bills, mobile recharges and digital wallets. Beyond large banks, fintech lenders, NBFCs and payment banks have widened formal credit’s reach. Credit bureaus have played an important role here, supporting unsecured lending and helping lenders keep retail NPAs in check. The data infrastructure they built has quietly underpinned much of India’s consumption-led growth.

Even so, the operational challenge remains complex. India’s financial system spans large private banks with sophisticated digital cores and small cooperative institutions still migrating from manual records. Ensuring accurate, timely data flows across this network is no small task. Before bureaus even add new data layers or scoring models, they must bridge gaps that are still structural.

The bigger question, though, is what comes next. Bureaus could choose to see themselves not just as gatekeepers, but as data stewards. They could help lenders look beyond risk to discover new potential, protect borrower dignity and design smarter, fairer decisions. This shift from compliance utility to trusted enabler can rebuild confidence among lenders, regulators and consumers alike.

Yet somewhere along the way, the hunger to become more seems to have dulled. Many bureaus have stayed inside the narrow box of static scorecards and core products. Instead of transforming into digital-first analytical firms driven by curiosity, they remain reactive and cautious. Within the industry, they are too often seen as a cost of compliance, not as essential partners for a dynamic economy.

Standing still is not a neutral choice. It risks missing the next phase of India’s credit revolution, led by small entrepreneurs, gig workers and young, first-time borrowers, amongst others. Whether these millions get affordable formal credit or remain stuck borrowing informally at high cost will partly depend on what bureaus choose to do now.

The frustration isn’t only slow tech adoption. It is a missed chance to become agile, consent-driven platforms that search actively for new, legitimate data signals. Instead, many remain as warehouses for lender-submitted data, rather than builders of new insight.

To be fair, credit bureaus do not create scores in isolation. They depend entirely on data submitted by banks and NBFCs, typically updated fortnightly in standard regulatory formats. They are custodians, not creators, and when lenders upload flawed or even punitive entries, bureaus often have limited power to correct them.

Credit scores themselves aren’t snapshots. They are trended, reflecting past repayment patterns and usage. Many consumers believe a single clean month should fix everything, but past delays or high utilisation still weigh on the score, as they should to capture behavioural risk.

The RBI has stepped in, mandating that disputes must be resolved within 30 days, forcing banks and bureaus to address complaints rather than ignore them. Yet most consumers don’t know how or where to start the process. Without a plain-language, well-publicised grievance mechanism, these protections mainly help those already financially literate.

Meanwhile, the regulator has nudged the system forward. Moving from monthly to fortnightly data updates was a quiet but significant step. With India’s digital rails now built, daily updates are technologically feasible. What remains is intent — from both the RBI and the bureaus — to make real-time data the new normal.

Bureaus do more than produce a number. They help lenders across the loan lifecycle, from acquisition and monitoring to collections and recovery. Their analytics help policymakers see emerging risk build-ups and credit trends. They operate under the Credit Information Companies Regulation Act, 2005, which leading bureaus comply with diligently.

Yet compliance alone cannot define their future. As Kenneth Arrow, the Nobel Laureate in Economics, observed, “Innovation is ultimately the search for the unknown, which no model can fully predict.” The sector must rediscover its hunger to innovate. It must ask what new consent-based data could reveal fresh pockets of creditworthy borrowers. India’s credit story cannot be built only on detecting risk. It must also be about discovering promise where formal data may not yet exist, always keeping borrower consent and transparency at the centre.

Reinvention does not mean acting alone. Credit bureaus are, in truth, fintechs themselves — built on data, algorithms and digital flows that shape everyday lending decisions. They could collaborate with new-age lenders, digital public infrastructure and regulators to build models that look beyond old risk templates. They must invest deeply in technology, people and ideas to build a long-term business model grounded in trust and inclusion.

Hunger is not about what we lack, but about what we refuse to stop seeking. It remains the quiet engine of reinvention. That’s an apt reminder for the credit bureaus to reimagine their future, and to shape it.

India’s growth journey is far from finished. Whether millions of new borrowers find open doors or closed gates will hinge, in part, on whether bureaus remain passive scorekeepers or become active architects of financial mobility. If they choose the latter, they could emerge as true champions of a future that is data-first, digital-first, decisioning-first — and, above all, dignity-first.

Srinath Sridharan is a corporate adviser & independent director on Corporate Boards. Author of Family and Dhanda.

Disclaimer: The views expressed here are those of the author and do not necessarily represent the views of NDTV Profit or its editorial team.